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Contracts Law
47 flashcards
A contract is a legally binding agreement between two or more parties that creates mutual obligations to do or not do something.
The essential elements are: 1) offer, 2) acceptance, 3) consideration, 4) intention to create legal relations, and 5) capacity of the parties.
An offer is a statement of terms on which the offeror is willing to be bound, made with the intention that it will become binding on acceptance.
Acceptance is the unqualified expression of assent to the terms of an offer by the offeree.
Consideration is something of value given by each party to the contract, which could be money, goods, services, or a promise to do or not do something.
Commercial contracts require an intention to create legal relations, while domestic/social agreements may not.
Capacity means that the parties are legally able to enter into a contract, e.g. not minors or mentally incapacitated.
A bilateral contract involves an exchange of promises, while a unilateral contract involves a promise in exchange for an act.
The battle of the forms arises when each party tries to impose their own standard terms, leading to a question of which terms form the contract.
Remedies include damages, specific performance, injunction, and rescission of the contract.
Liquidated damages are an agreed sum for breach, while unliquidated damages are assessed by the court based on the losses suffered.
Privity means that only parties to the contract can sue or be sued for breach - third parties cannot enforce the contract.
An anticipatory breach occurs when one party indicates they will not perform their contractual obligations before performance is due.
The mirror image rule requires that an acceptance match the terms of the offer exactly to form a contract.
The parol evidence rule excludes previous statements or representations that add to, vary or contradict a written contract.
Contracts for interests in land, guarantees, contracts that cannot be performed within one year, and contracts for sale of goods over a certain value.
A condition is an essential term that allows termination for breach, while a warranty is a less vital term for which damages may be claimed.
Misrepresentation can render a contract voidable, allowing the innocent party to rescind or claim damages.
Frustration discharges parties from further performance when an event occurs after formation that makes the contract impossible or radically different.
For innocent misrepresentation, the remedies are rescission or damages in lieu of rescission.
Promissory estoppel allows enforcement of a promise if the promisee reasonably relied on it to their detriment.
Damages are too remote if they were not reasonably foreseeable as a probable result of the breach.
Exemption clauses excluding liability are construed strictly against the party relying on them.
Severance removes an unenforceable part of a contract, while rectification corrects mistakes in reducing an agreement to writing.
Terms may be implied based on custom/trade practice, previous course of dealings, or to give business efficacy.
The CISG applies to contracts for the sale of goods between parties from different signatory countries.
A penalty clause that imposes excessive damages for breach is unenforceable.
Equitable remedies include specific performance (enforcing the contract) and injunctions (prohibiting breach).
An executed contract has no remaining obligations, while an executory contract has outstanding obligations by one or both parties.
Contracts in restraint of trade, such as non-competes, must be reasonable to be enforceable.
Yes, a minor's contract for necessaries like food, lodging and education may be enforceable.
Duress, which involves threats or pressure amounting to coercion, can render a contract voidable.
Courts seek to determine the objective intentions of the parties based on the natural meaning of the words used.
An entire contract requires complete performance by all parties before any party's obligations are discharged.
Contracts for an illegal purpose, such as a criminal conspiracy, are unenforceable as being contrary to public policy.
This Convention deals with formation of contracts by electronic means like email between parties from different countries.
A unilateral mistake by one party that was unknown and unreasonable to assume by the other party may allow that party to avoid the contract.
Contracts that cannot be fully performed within one year from the date of formation require written evidence under the Statute of Frauds.
The pre-existing duty rule states that performing something already owed under an existing contract cannot constitute fresh consideration.
Promissory estoppel and principles of unjust enrichment may enforce promises despite a lack of consideration.
If a party lacks contractual capacity due to age, mental incapacity, etc., the contract is voidable by the incapacitated party.
A condition precedent must occur before performance is required, while a condition subsequent terminates existing obligations if it occurs.
There is an implied duty of good faith and fair dealing in the performance and enforcement of every contract.
Ambiguous terms in a contract are construed against the party that drafted or should have clarified the ambiguous language.
If revocation occurs before the acceptance takes effect, damages may be available but the contract will not be enforced.
Oral contracts are valid but evidence issues make them harder to prove than written contracts.
For an anticipatory breach, the non-breaching party can sue for damages immediately without awaiting the actual breach.