Exam 3 Review: Contracts and Legal Capacity

Voidable contract

Contracts that can be canceled by one party.

Void contract

Contracts that have no legal effect.

Unenforceable

Contracts that cannot be enforced in court.

Capacity

Ability to enter into a legal contract.

Disaffirm

Minor's right to cancel a contract.

Status Quo Ante

Return to pre-contract position.

Minor's Contracts

Voidable contracts that minors can disaffirm.

Parental Binding

Parents cannot bind minors to voidable contracts.

Misrepresentation of Age

Lying about age affects disaffirmation rights.

Tort of Deceit

Liability for lying about age in contracts.

Mental Incapacity

Lack of mental capacity to enter contracts.

Lucid Moment

Time when a person can legally contract.

Intoxication

Ability to contract when not under influence.

Voluntary Consent

Agreement must be made without coercion.

Meeting of the Minds

Mutual agreement between parties in a contract.

Rescind

To cancel a contract and return received items.

Ratification

Approval of a contract after a delay.

Necessaries

Essential items for which reasonable value must be paid.

State Statutes

Laws governing contracts vary by state.

Fair Contracts

Contracts that may be enforced despite minor status.

Barriers to Disaffirming

Conditions limiting a minor's right to disaffirm.

Adult Responsibility

Adults must return minors to status quo ante.

Misrepresentation

False statement of material fact affecting decisions.

Material Fact

Present fact, not opinion or future prediction.

Justifiable Reliance

Trusting a misrepresentation without public information.

Harm/Detriment

Negative impact on the person relying on misrepresentation.

Fraud

Intentional misrepresentation to deceive another party.

Scienter

Intent to deceive inferred from actions.

Caveat Emptor

Buyer beware; common law principle.

Duty to Disclose

Obligation to reveal certain information in transactions.

Unseen Defects

Latent issues not visible to buyer during sale.

Duress

Coercion to force agreement or action.

Undue Influence

Excessive pressure affecting free will in agreements.

Mutual Mistake

Both parties share incorrect belief about contract.

Unilateral Mistake

Only one party holds a mistaken belief.

Rescission

Cancellation of a contract due to mistakes.

Illegal Agreement

Contract violating law or public policy.

Wagering Statutes

Laws regulating or prohibiting gambling activities.

Risk-Shifting Contract

Agreements transferring risk of loss, like insurance.

Speculative Bargaining

Contracts based on uncertain future events.

Usury Laws

Prohibit excessive interest rate charges.

Sunday Blue Laws

Restrict business activities on Sundays.

Regulatory Statutes

Laws regulating activities for public protection.

Unlicensed Agreements

Illegal contracts by unlicensed professionals.

Unconscionable Contracts

Contracts with unfair terms, unenforceable by law.

Procedural Unconscionability

Unequal bargaining power affecting contract fairness.

Substantive Unconscionability

Unfair terms in a contract, oppressive to one party.

Statute of Frauds

Requires certain contracts to be in writing.

Oral Contracts

Enforceable unless statute of frauds applies.

Quasi Contract

Recovery for reasonable value of performance without contract. Implied contract to prevent unjust enrichment.

Promissory Estoppel

Prevents withdrawal from a promise causing reliance.

Executory Bilateral Contracts

Contracts not fully performed within one year.

Lifetime Contracts

Agreements lasting for the lifetime of a party.

UCC Sale of Goods

Contracts for goods over $500 require writing.

Plain Reading Standard

Interprets contracts based on reasonable person understanding.

Parol Evidence Rule

Limits use of prior agreements to interpret written contracts.

Ambiguities in Contracts

Unclear terms resolved against the drafter.

Exceptions to Parol Evidence Rule

Includes lack of consent and proving ambiguities.