L S 3323 Exam 2 Lepak OU

Study like a bad bleep

contract

a set of legally enforcable promises

elements required for contract information

• agreement: offer and acceptance

• consideration: value given by both parties

• capacity: legal ability to enter into a binding agreement

• legal: contract cannot be illegal or against public policy

defenses to contract enforcement

• lack of genuine assent: fraud, duress, undue influence, misrepresentation

• lack of proper form: some contracts that lack a writing are not enforceable

sources of contract law

1. Common law: court cases/decisions

2. Uniform Commercial Code (UCC): a uniformly adopted state law that governs contracts for the sale of goods

bilateral contract

consists of a promise in exchange for a promise

unilateral contract

requires a performance in order to form (or activate) a contract

express contract

based on written or spoken words

implied contract

based on conduct of the parties

quas-contract (implied-in-law contract)

not actually contracts, but a liability imposed by courts in order to avoid unjust enrichment

valid contract

all elements of contract formation satisfied

void contract

has an illegal object or serious defect

voidable contract

one or both parties can withdraw from or enforce contract

unforceable contract

valid, but courts cannot legally enforce it

executed contract

all terms of contract fully performed

executory contract

some duties under contract not yet performed by one/both parties

agreement

An essential element for contract formation is agreement

• Parties must agree on mutual terms; mutual assent

• Agreement is evidenced by two events; an offer and an acceptance

offer

a promise or commitment to do or refrain from doing someone’s specified thing in the future

elements of a valid offer

• manifestation of offeror’s intent to be bound

• definite and certain terms: all material terms included (subject matter, price, quantity, etc.)

• communication of offer: to the offeree, resulting in the offeree’s knowledge of the offer

elements of termination of offer

• Revocation of offeror

• Rejection or counteroffer by offeree

• Death/incapacity of offeror

• Destruction of subject matter or offer

• Illegality of offeror

• Lapse of time

• Failure of condition specified by offeror

elements of acceptance

• Mirror-image rule: terms of acceptance must be identical to terms of offer

• Effective when communicated by offeree to offeror

consideration

something of value, given in exchange for something else of value, that is the product of mutually bargained

examples of consideration

• benefit to the other party

• detriment to the party giving the product

• promise to do something

• promise to refrain from doing something

• must be legally sufficient

lack of consideration

• illusory promise: does not constitute consideration

• past consideration: a consideration provided by one before a promise is made to another party

• preexisting duty rule: promise to do something you are already legally obligated to do is not valid consideration

accord and satisfaction

• accord = represents agreement

• satisfaction = represents payment

• accord and satisfaction = partial payment of disputed debt discharges, owed as mutually agreed

release

bars any further recovery beyond the terms stated in the release

promises enforcable without consideration

detrimental reliance—promissory estoppel

• clear and definite promise

• promise justifiably tied on the promise

• justice is better served

contractual capacity

mental ability to understand rights and obligations established by contract

• must be presumed of age (18+) to have legal capacity

individuals with limited capacity to contract

• Minors

• People suffering from mental deficiency

• People who are intoxicated/drug impaired

disaffirmance

minor’s right to disaffirm/void their contract

rules of minor’s contractual power

• need to demonstrate their intent to rescind contract

• minor must return any consideration regardless of its condition

• if considersation is damaged/destroyed, other party has no recourse against minor

exceptions to minor’s right to disaffirm

• contract for necessaries: contract that supply minor with basic necessities of life

• statutory expectations: vary by state

• ratification

ratification

acceptance of terms of contract after reaching age of majority

express ratification

when an individual states intent to be bound by contract entered into while a minor contract

implied ratification

when a former minor takes action after reaching age of majority consistent with intent to ratify contract

parental liability for minor’s contracts

• Parents not liable for contracts entered by their children, except contract for necessaries

• parents not liable for torts committed by their children, except failture to properly supervise child

individuals with no capacity to contract

• Adjudicated insane

• Adjudicated habitually intoxicated

• with appointed legal guardians

rules regarding intoxication

• contracts made by intoxicated people are voidable

• If intoxication merely causes person to exercise poor judgement, contract not voidable

• when intoxicated people become sober, contract can be ratified or disaffirmed

illegal contracts

contract is void if it has illegal subject matter or it would be illegal to perform

illegal contracts can be seen as:

• agreement that violates a statute

• agreement that violates public policy

• violates state or federal statutes

• agreement to commit crime

• gambling

• sabbath laws

• severable contracts

• indivisible contracts

iilegal contracts can be seen WITH:

• usury: a loan offered at an interest rate exceeding the legal maximum

• price fixing: contracts in restraint of trade