contract law

contract

• is an enforceable promise(s) recognized by the courts, for the performance of which the law recognizes as a duty and for the breach of which the law gives a remedy.

mutual assent, consideration, competence of the parties, and legal purpose.

elements of a contract

mutual assent

means that both parties have to willingly agree to the contract. It considers both offer and acceptance.

offer

is the statement of intent or the proposal which must be reasonably definite–specific issues are communicated to the target offeree, serious in intent, and communicated to the offeree by the offeror.

acceptance

• is a statement by the offeree that demonstrates assent to the offer which must be a mirror image of the offer (except for merchants) –can't change parts of the contract, dispatched to the offeror, and only the intended offeree can accept. 

acceptance

• is a statement by the offeree that demonstrates assent to the offer which must be a mirror image of the offer (except for merchants) –can't change parts of the contract, dispatched to the offeror, and only the intended offeree can accept. 

legal value

means that the promisee suffers a legal detriment or the promisor receives a legal benefit including forbearance which is when one refrains from something that they have the right to do.

illusory promise

a statement that appears to be a commitment but lacks the necessary substance to be considered a binding agreement often due to vagueness or conditions that allow one party to avoid performance.

illegal consideration

is when the subject matter or purpose of a contract is illegal or against the law.

pre-existing duty

refers to a legal obligation a party is already bound to perform whether from another contract or law, and cannot be used as new consideration for a contract.

competence of the parties

means that the parties have to be sane adults who are confident to enter the contract. It concerns age and mental defects.

capacity

is the legal age of those engaging in a contract. In some jurisdictions it is 18, and in others it is 21. If an individual is adjudicated (the court proceedings and process which determines competence) and incompetent then all contracts without consent of the conservator are void. Additionally, if an individual has not been adjudicated, but they show signs of stress and a pattern of poor decision making, then the contract is voidable via court proceedings.

legal purpose

means the contract's overall purpose has to be lawful and free of criminality. It concerns: criminal enterprise, covenants not to compete, adhesions contract, and exculpatory clauses

criminal enterprise

• a group involved in ongoing criminal activity often structured like a business with a common purpose and continuity beyond individual criminal acts.

covenants not to compete

• can be valid and are tied to employment which must be reasonable with respect to time/geography. They can be illegal when they are too restrictive.

adhesions contract

is essential in the market place when there is unequal bargaining power–take it or leave it scenario, some are not valid. It questions if something is so grossly unfair that it is unconscionable. These are contracts which are the same for multiple companies usually decreasing their responsibility, but requires the customer to sign for the service because the same clause is a part of multiple companies contracts, so they have no choice.

exculpatory clause

is also known as a limitation of liability clause releasing a party from legal claims or liability for certain acts or negligence arising form a specific transaction or activity.

true consent

refers to a meeting of the minds in the understanding of a contract. There are situations which undermine true consent like mistakes in understanding of material terms, fraud, duress–when a person is operating under fear, and undue influence–power imbalance

mistakes in understanding of material terms

could be poor business judgment–not an excuse, mutual–both sides claiming a clear mistake in the contract, or unilateral–mistake by one party in the contract.

fraudulent misrepresentation

6 elements that must be satisfied

• False representation

• The misrepresentation of a material fact

• The maker of the false representation knows that it is false or has no reason to believe that it is true

• The misrepresentation is made with the intent to induce the other party to do something or refrain from doing something

• The other party justifiably relies on the misrepresentation

• The reliance on the misrepresentation causes the other party to suffer damages

duress

is the threat of harm made to compel a person to do something against their will or judgement, especially a wrongful threat made by one person to expel a manifestation of seeming assent by another person to a transaction without real volition

physical duress

 is the threat of physical harm to oneself or family which induces the party to enter a into a contract

economic duress

is a wrongful or improper threat with no reasonable alternative which induces the other party to enter into a contract because of financial distress.

undue influence

is when a confidential relationship exists in which the benefiting party exerts influence over the other party, so that their decision is not voluntary or free, for the benefit of the influencing party. This can be an attorney client, accountant client, doctor patient, disabled person and caregiver, etc.

quasi contract

corrects unjust enrichment when there is no contractual obligation between the parties by allowing recovery by the party who supplies goods/services to another party with the expectation of receiving payment from the other party. The goods or services must be received by the benefitting party without [payment to the party supplying that good/service. The party delivering the good/service must establish why the party accepting it is being unjustly enriched.

promissory estoppel

seeks to remedy the injustice that results when the promisee justifiably relies on the promise made by the promisor to his detriment. This theory allows the offeree to be compensated for their loss. 

statute of frauds

requires certain contracts to be in writing in order to be enforced: sale of real estate, leases for a year, surety/insurance, terms cannot be performed within one year from formation, sale of goods priced at $500 or more, contracts in consideration of marriage, promises by the executor and administrator to pay debts of the deceased.