Contract Law Flashcards

Capacity

• Contracting parties must have the ability to enter into an agreement to be bound by a contract.

• Generally concerns minors, the mentally impaired, and intoxicated parties.

• Minors lack capacity until they are 18.

  • They may disaffirm contracts (i.e., cancel or reject the contract).

  • Ratification: If a contract is ratified, it cannot be disaffirmed later because the adult self has approved it.

Minor's Obligations Upon Disaffirmance

• If a minor disaffirms, they are entitled to the return of the consideration they provided.

• They are obligated to return any consideration they received, to the extent they are able.

• Necessaries: If the contract involves necessaries (essential items), the other party can collect on a quasi-contract theory, receiving the value of what they provided.

Misrepresentation

• Misstatement of a material fact.

• The victim of misrepresentation can undo the deal, making it voidable to them.

Fraud

• Misrepresentation + intent to deceive.

• If someone knows what they are saying is false when they say it, that is fraud.

• With fraud, the victim can:

  • Rescind the contract (get a refund).

  • Keep the contract and sue for damages (the difference between what was received and what was expected).

Duress

• (The provided context does not fully elaborate on Duress beyond mentioning influence from a caregiver; additional context would be needed to fully explain it.)

Restraint of Trade (Agreements Not to Compete)

• Arises in two contexts:

  • Employment: An agreement where an employee agrees not to work for competitors for a certain period.

    • Example: A Google employee agreeing not to work for other tech companies for six months.

  • Sale of a Business: When someone sells a business, they agree not to open a competing business nearby.

    • Example: Selling a pizzeria and then opening a competing one across the street.

Conditions in Contracts

• Condition Precedent: No deal until the event occurs, then there is a deal.

• Condition Subsequent: There is a deal unless the condition occurs, then there is no deal.

• Concurrent Conditions: Each party's performance is conditioned upon the other party's performance; they trade simultaneously.

• Conditions can be expressed (clearly stated) or implied.

Substantial Performance

• Substantial performance (otherwise known as the condition is otherwise known as substantial performance) is receiving substantially what was asked for, even with minor defects.

  • Example: Getting a car wash that was supposed to be premium but only got the basic wash.

Discharge

• How parties are released from their contractual obligations.

• Can occur by agreement or waiver.

Damages

• Must be actual; speculative damages are not allowed.

  • Injunction: An order to do something (mandatory) or prohibiting something (prohibitory).