Chapter 12 - Consideration, Chapter 13 - Illegal Contracts, and Chapter 14 - Capacity

Legal Sufficiency

ensures that the consideration for the promise must be either a legal detriment to the promisee or a legal benefit to the promisor

Exclusive Dealing Contract

seller restricts a buyer from purchasing goods or services from the seller's competitors

Modification of a Preexisting Contract

under the common law, this must be supported by mutual consideration; under the Code, a contract can be modified without new consideration

Past Consideration

an act done before the contract is made is not consideration

Licensing Statutes

require formal authorization to engage in certain trades, professions, or businesses

Gambling statutes

prohibit wagers (agreements that one party will win and the other party will lose depending on the outcome of an event in which their only interest is the gain or loss) (usually void and unenforceable because they violate public policy)

Restraint of trade

A clause in a contract that limits a person's freedom to work or conduct business. 

• It can involve prohibiting certain activities, restricting the geographic area of business, or limiting the duration of the restriction

Employment Contracts

prohibits an employee from competing with his employer for a reasonable period following termination. it’s enforceable provided the restriction is necessary to protect legitimate interests of the employer

Exculpatory Clause

contract provision that relieves one party of liability for damages or injuries that may occur to the other party

Unconscionable

contract with terms that are severely unfair towards one party (these can be unenforceable)

Disaffirmance

avoidance of the contract; party may not be bound by terms (usually minor)

Ratification

affirmation of the entire contract; makes agreement legally binding

Minor

their contract, whether executory or executed, is voidable (at their option) unless the contract has been ratified

Mental Illness or Defect

a contract entered into by a non adjudicated mentally incompetent person (unable to understand the nature/consequences of his acts) is voidable

Intoxicated Persons

a contract entered into by an intoxicated person (who cannot understand the nature/consequence of their actions) is voidable

Person Under Guardianship

a contract made by a mentally incompetent person placed under guardianship by court order is void

Liability for Necessaries

the legal responsibility to pay for essential goods and services for someone who lacks the capacity to contract