Business Law Contracts

Promissory Estoppel

doctrine which allows a recipient of a promise to enforce a contract in court

Requirements of a contract

Agreement, consideration, contractual capacity, legality

Agreement

offer and acceptance, objective standard

Consideration

legal value given in return for a promise

• to do something, to perform, to refrain from something of legal right

Contractual Capacity

parties of a contract assumed to have this

unless intoxicated, mentally incompetent, or a minor

Legality

legal subject matter, does not accomplish an illegal goal or purpose

Express Contract

oral or written contract

Implied Contract

contract inferred from actions of the parties

Bilateral Contract

contract has exchange of promises, legal liability to perform

Unilateral Contract

Offer can be accepted without need for a return promise

Executed Contract

contract fully performed by both parties

Executory Contract

contract not fully performed by one party

Formal Contract

subject to additional requirements of law

Voidable

option to nullify contract by one of the parties

Disaffirm

cancel a contract

Void

not a real contract, not legally enforceable as a contract

Unenforceable

is a valid contract but not enforceable in court

Outputs contract

buyer agrees to purchase all that is produced

Requirements contract

seller agrees to sell all the buyer would need

Options Contract

promise to keep offer open until a specified date with consideration from the offeree

Rejection

statement or conduct showing rejection or refusal to accept by the offeree

Counteroffer

rejection and a new offer

Mirror Image Rule

The acceptance must mirror the offer

UCC 2-207

for goods, merchants can incorporate additional acceptance terms

Revoke

eliminate offerees ability to accept, effective once received

Irrevocable contracts

Can not be withdraw if

• begun or prepared to perform

• options contract

Acceptance of a Unilateral Contract

acceptance occurs when fully performed

Acceptance of a Bilateral Contract

acceptance occurs with a return promise

Mailbox rule

contract acceptance is effective on dispatch

Doctrine of Unforeseen Circumstances

allow all parties to agree to renegotiate

Liability Requirements of Promissory Estoppel

a promisor, a promisee who relied on promise, suffered harm, justice served by enforcement of the promise

Mutual Rescission

both parties agree to undo the contract

Accord and Satisfaction

dispute of amount owed

Release

legally giving up right to make a claim or sue

• requires good faith, writing, and consideration

Restitution

return of merchandise by minors of a contract, if still in possession

Misrepresentation

minors may still disaffirm, even if they lied about their age

Necessaries

contractable for a minor, liable for goods/value received, still voidable

Ratification

accepting obligation not previously enforceable

Void contracts for mentally incompetent

previously adjudicated in court, removed capacity to contract

Voidable contracts for mentally incompetent

incompetent at time of contract but now lucid, not adjudicated

Fully enforceable contracts for mentally incompetent

Understood consequences of actions, lucid

Procedural Unconscionability

the process is wrong/immoral

Substantive Unconscionability

the subject matter is wrong/immoral

Exculpatory clause

relieves liability in the event of harm

Adhesion Contract

one party has superior amount of bargaining power, other party must agree

Statute of Fraud

certain contracts must be written to be enforceable and signed by opposing party

• MYLEGG

Parol Evidence Rule

the court will exclude all prior negotiations that contradicts terms of a fully integrated contract

Exception to the Parol Evidence Rule

if there are subsequent modifications or presence of ambiguous terms

Course of Dealings

clarify ambiguous terms based on performance in previous contracts

Course of Performance

clarify ambiguous terms based on performance under this contract

Usage of Trade

clarify ambiguous terms based on interpretation of other businesses in the industry

Bilateral Mistake of Fact

both parties are mistaken

Unilateral mistake of fact

only one party is mistaken

Intentional Misrepresentations

misrepresentation occurred, intent to deceive, innocent party relied on the misrepresentation

innocent misrepresentation

did not intentionally lie, other party relied on a misstated fact

negligent misrepresentation

carelessly telling an untruth, other party relied on it

Puffing

seller exaggerates value/performance of a good

Caveat Emptor

buyer beware

Undue Influence excuse

parties have a relationship which caused undue influence on formation of a contract

Physical Duress excuse

threat of violence, property, or false imprisonment used to contract

Economic Duress excuse

wrongful behavior causing financial hardship to a party who had no other alternatives

Complete Performance

perform with no errors and in accordance with contract terms, no further obligation

Material Breach

failure to perform significant duty under the contract

• no longer entitled to payment, other party not obligated to perform

Substantial Performance

performed in good faith but with deviation from immaterial terms of the contract

Conditions Precedent

conditions must occur before obligation to perform

Conditions Subsequent

must perform until condition is no longer met

Concurrent Conditions

both parties subject to conditions of the contract

Express Conditions

conditions stated in the contract

Implied Conditions

conditions not expressly stated in contract but inferred

Objective Conditions

conditions satisfied based on the beliefs of a reasonable person

Subjective Conditions

conditions satisfied based on opinion of one of the parties

Expectation Damages

Difference between expectation and state after the breach occurred

Reliance Damages

compensate plaintiff for expenses incurred

Restitution Damages

amount of value the defendant has received from the plaintiff

reformation

a court changes the contract in the case of fraud or mutual mistake

• equitable remedy

Liquidated Damages

predetermined amount to be awarded if a breach occurs

Mitigation

the plaintiff is required to minimize their losses

Anticipatory Repudiation

inform other party of inability to perform according to the contract

objective impossibility

cases where it is impossible for the contract to be performed by anyone

intended beneficiary

a third party who benefits from a contract, CAN sue if a breach occurs

incidental beneficiary

a third party who benefits from a contract, can NOT sue if a breach occurs

Assignment

transferring rights or benefits under a contract to an assignee

Delegation

transferring of duties under a contract to another party

Novation

replacing the original contract with a new one

general damages

compensate for direct loss caused by breach

special damages

damages that are unforeseeable and require notice