Exam 3 Finance contract law

Each contract must have 5 elements in order to be considered a element

true

5 elements of every contract

1. agreement (2 parts, offer and acceptance)

2. consideration

3. legality

4. capacity

Agreement

One party must make a offer and the other party must accept it. Offer and Acceptance

Consideration

NOT NEGOGATION - There has to be bargaining that leads to an exchange between the parties. Everybody in the contract must get something

Legality

all contracts must be legal

capacity

the parties must be adults of a sound mind

Consent in Contracts

certain kinds of trickery & force can prevent a formation of a contract

Writiing in contracts

Some contracts must be in writing

Bilateral Contract

Both parties make a promise to do something for each other  (promise for a promise)

Unilateral

One party makes a promise to the other, that the party can accept only by doing something specific.  (promise for an action. ex: offering 500 to anyone who finds & returns a lost dog, binding only when the dog is returned)

Express contract

the two parties to the contract explicitly state all the important terms of their agreement

Implied contract

• the words & conduct of the parties indicate that the parties intended to make an agreement 

  • Ex: buying a hamburger, you are not saying you agree to eating and buying this hamburger.

executory contract

• one or more parties has not fulfilled its obligations under the contract 

  • Ex someone delivering the contract - they havent paid

executed

when all parties of the contract have fulfilled their obligations under the contract

Paying for delivery = executed

valid contract

 satisfies all the laws requirements

unenforceable

 when the parties intend to form a valid bargain but some rule of law prevents enforcement

voidable

One party to a contact can get it out of the contract

void

One contract that neither party can enforce, usually because the purpose is illegal or one of the parties had no legal authority

3 types of contracts

common, ucc, mixed

common law contract

Not flexible, all 5 terms Contracts for services, real-estate, employmment and insurance (derived from judical precedent - varies by state , non goods like building a house or hiring an employee )

UCC

Flexible, addiotnal terms allowed, contract for sales of goods (tangible movable items, like cars, electronics, not money, securties, and certain legal rights, copryight/patent laws, bonds and stocks. moveable goods are not money)

Merchant

1. someone who deals in goods of the kind or otherwise by occupation, holds herself out as having knowledge or skill pecuilaar to the practices involved. Merchant sells moveable goods to higher standards 

2. Non merchant = customer

The UCC holds the merchant to a higher standard of conduict than a non-merchant.

true

 A quasi contract is a valid real contract. 

false

Minerals

•  diamonds, gemstones, copper, gold, sliver, coals, etc - not a moveable good in virginia – Sever - to remove 

  • If the owner of a diamond severs / removes the mineral , the UCCC applies

    • If the owner of the mine is not the one to sever the mineral, then common law applies. If the non-owner severs, its common law. If the owner of the mine its UCC. TO protect land owners in VA. 

mixed contracts

combo of both goods and services. UCC demoninates if the purpose is sale of goods, but common law will denominate if the main purpose is providing services.

promissory estoppel

No Contract

• Even when there is no contract, a plaintiff may use promissory estoppel to enforce the defendant’s promise if he can show that: 

  • 1. Defendant - made a promise knowing the plaintiff would likely rely on it 

  • 2. Plaintiff did rely on the purpose

  • 3. The only way to avoid injustice is to enforce the promise 

• Ex: I offer 10,000 dollars to mow your lawn on xx day and time. Person 2 accepts. Offer is accepted and all elements are shown. 

Quasi contract

not a contract. Even where there is no contract, a court may use a quasi contract to comepensate a plaintiff to show - Unjustice ENriched

• He gave some benefit to the defendant

• He reasonably expected to be paid for the benefit and the defendant knew this and 

• The defendant would be unjustly enriched if she did not pay

• What is the remedy? - Quantum meruit - the damages awarded, meaning the plaintiff gets as much as they deserved 

4 theories of recovery for when there is a breach

Compenstaory

Recission / restution

Specfic performance

Breach of warranty

Compenstaory damages

Standard, covers the party if the posistion if the breach had not occured

Recission / restituion

Equitable theory - contract is canceled, breaching party must return money or benefits occured, resotring injured party to pre-contractual posistion

Specfic preformance

breaching party preforms their exact contractual duties rather than just paying money (real/estate or rare obligations)

breach of warranty / strict liability

Product liability/service failures, plantiffs recover by proving the defendant failec to uphold an express/implied promise, acted with negeligence, or placed a defective product in commerce