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Reference Guide

Contracts - Reference Guides

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Department
Law and Business
Course Code
LAW 603
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All

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Description
l e a r n • r e f e r e n c e • r e v i e w permacharts TM CContracts WHAT IS A CONTRACT? STATUTE OF FRAUDS • A contract is an agreement voluntarily entered into, • This statute targets specific contrac• Various states have enacted “plain which the parties intend to be enforceable at law which must be made in writing language” laws, which relate to the • If the agreement is not fulfilled, both of the parties • Agreements may be deemed as void writing required for certain contracts would be able to either enforce performance or or voidable if they do not contain • Personal services: considered to be obtain some other legal remedy to make sure that the necessary writing not within the statute if they can be the other keeps the obligation • If, by the terms of an oral performed within one year agreement, there is a possibility of • Joint obligation: not an undertaking TYPES OF CONTRACTS performance within a year, it is said by one to answer for the debt of the to be not within the statute other Bilateral The parties to the agreement exchange promises to do some • Oral agreements: not invalid future act • In essence, it is a promise for a promise, including REQUIREMENTS SMALL PRINT rights and duties on each side • A written contract, or some note or • In general, parties are bound by the Constructive Similar to an implied contract, memorandum of it, that contains at printed terms on the document where the circumstances are such least the bare essential terms whether they read it or not that the intent of the creation of a • The writing must be signed in some • However, the fine print must be contract may be inferred form or another by the party brought to the offeree’s attention Executed All the terms of the agreement against whom the agreement is by the offeror have been completed by all parties sought to be enforced involved Executory All or part of the terms of the DOCTRINE OF PART PERFORMANCE TYPES OF CONTRACTS agreement remain to be performed • Where a contract has been partly • Long-term leases Express The terms of the contract are carried out by one of the parties, • Contracts that cannot be completed the other cannot use the absence of within one year of the making stated, orally or in writing, by the a written contract as an excuse not parties to pay for work done • Promises to pay another person’s Implied The contract is inferred from the debt conduct of the parties, although • The courts will not waive the normal • Agreements to marriage not spelled out in words requirement to have certain contracts• Agreements to convey interests in in writing when they meet the real property, except for leases for Simple The contract may be in written, standards of the Statute of Frauds less than one year spoken, or implied form, but is not under seal and requires no special UNIFORM COMMERCIAL CODE form to be enforceable • Implied PAROL EVIDENCE RULE actions include shaking hands or • This covers various types of p any physical movement that leads contracts for the sale of goods of a • Where there is a dispute concerning e the other party to assume a certain value and makes them a written contract, the court will contract has been made unenforceable without a signed consider only the terms of the r writing contract m Specialty This contract pertains to a special • According to the Merchant’s Firm • No matter what has been said formal event and, as such, must be Offer Rule,a written offer held between the parties, the court will a in writing and under seal • A wax open by the merchant is irrevocable only enforce what is put down in seal used to be required in the for the stated, or reasonable, writing c sealing of a contract, but it has amount of time, but not longer • Oral evidence: may be used to h been replaced by a red sticker or than three months without show that written contract is not the word “SEAL” is printed next to consideration entire contract a where the parties sign Unenforceable The law will not permit r enforcement of this contract t because some additional s requirements outside of the GLOSSARY OF TERMS . common law elements of the Beneficiary Person who benefits from the fulfillment of a contract c contract are missing Breach Failure, without legal excuse, to perform any promise which Unilateral This contract comes into existence forms a whole or part of a contract o when one party makes a promise m and, instead of receiving a promise Obligee One to whom another is obligated in return, is the recipient of an act Obligor One who is bound by a legal obligation by the other party Offeree The party that accepts the contract Void The acts, conduct, and writings of Offeror The party that tenders the contract the parties does not bring about a change in their legal status Party Includes human beings and any legal entity recognized by the • In essence, there is no contract law as being able to enter into a contract in its own right Voidable Voidability exists where either of the parties has the power to avoid Rescission Cancellation or annulment of a contract Notes: Please be advised that this chart does not account for jurisdictional the legal requirements created by a valid agreement simply by differences • It is an informational tool which should be supplemented by more electing to disaffirm the contract comprehensive materials and/or professional legal advice 1 CONTRACTS • A-810-9 © 2003-2009 Mindsource Technologies Inc. l e a r n • r e f e r e n c e • r e v i e w permachartsM FORMATION OF A CONTRACT OFFER WHAT IS CONTRACTUAL CAPACITY? • It is the ability to understand and agree to the terms of a contract Advertisement Distinguished from an offer Definition The display of willingness to enter into an • Refers to the person’s innate ability to understand that a contract has agreement been formed, and not that person’s misunderstanding, foolishness, or lack of care Invitation Not an offer • Protected by law: mental incompetents and children Irrevocable Supported by consideration or by statute • Remains open for a reasonable amount of time OPTION Requirements Must be made in such a way so as to justify another person in understanding that assent to Acceptance An option becomes effective as a complete and mutual that bargain is invited and will conclude it contract • Must be fully accepted in all its parts, within • Must be definite and certain • Judged by its the time and in the manner provided, in the option objective manifestations, not by any subjective agreement before it can become an executory contract intentions of the offeror • Must be published or Condition If the party to whom it is given accepts it or exercises it communicated, although the word “offer” is not before it has been withdrawn, a valid contract results in necessary spite of the lack of consideration for the option itself Revocation The offeror dies before acceptance • Acceptance Definition A continuing offer which is kept open for a certain time is not made within the time stipulated and is based upon a sufficient consideration • A counteroffer is made Enforcement No binding obligation upon the person holding the Validity Ends when it is withdrawn, revoked, rejected, option terminated, or accepted Irrevocable Must be based upon a consideration ACCEPTANCE CONSIDERATION Definition A display of assent to the terms made by the Common law Gratuitous promises are not enforceable by the offeror in a manner required by the offer courts since nothing is given in exchange Rejecting an A counteroffer may be made • Preceding offers offer regarding the same subject matter become void Debts Payment of a debt which is due and undisputed will not constitute a consideration for a promise Requirements Accepted without qualification and while it is • A promise to a debt for which the promisor is still open and existing • An offer can only be already bound is not a consideration sufficient to accepted by the offeree or someone else having support a new contract the right and capacity to accept the offer, which must be communicated to the offeror Definition That which is given and received by each party to an agreement • Also referred to as some right, Restrictions After acceptance, an offer cannot be withdrawn interest, profit, or benefit accruing to a party to a or revoked • Cannot be recalled after it has contract, and some responsibility, forbearance, loss, been delivered to the offeror • Unless specified, or detriment to the other party acceptance does not have to be in any particular form Legal sufficiency Does not depend upon the comparative value of the mutual promises, or a promise and an act Silence Inaction, or the failure to reject an offer when it • Parties to a contract should be deemed to be the is made, does not constitute an acceptance of best judges of the bargains they have made an offer • If the offeree gives the offeror reason m to believe that silence will be an acceptance, Mutual promises Sufficient consideration for each other, as is the o then the courts will consider it valid giving up of a right or claim or the performance of a non-obligatory act c Past consideration Not enough to support a new obligation . WHAT IS MUTUAL ASSENT? • The external manifestation of a party’s intention, in the form of Promises A promise to do something in the future in return s overt words and actions, is required for benefits to be immediately received in the t future results in future consideration r • Also described as a meeting of the minds • A binding contract depends upon the mutual assent of all Relief Inequality is shown to have arisen from mistake, a involved parties misrepresentation, or fraud • There can be no contract unless all the parties involved intend to Requirements Nothing is consideration for a contract that is not h accepted or regarded as such by both parties • In c enter into one general, if consideration is otherwise sufficient, it • Objective test is applied for question of assent and intention to does not matter from whom or to whom it moves a contract m r PERFORMANCE OF CONTRACTS e Acts of God Those which result in the impossibility of Offer of Unnecessary where it would be a useless gesture p performance are subject to the same performance principles as other causes Post-formation Facts not anticipated by the promisor which render Measure of Careful, timely, and diligent execution, performance impossible may discharge the promisor performance even in the absence of express demands for from completing the duty unless a contrary intention such execution was manifested Non-performance Party must either do or offer to tender the Requirement Unless specifically stated in the agreement, the law does not require the absolutely perfect adherence to performance necessary to the other side of the minute details of the contract the bargain • An act that becomes difficult Subjective Personal inability to perform one’s contractual promise or burdensome to perform will not excuse impossibility does not excuse the promisor from performing non-performance 2 CONTRACTS • A-810-9 © 2003-2009 Mindsource Technologies Inc. l e a r n • r e f e r e n c e • r e v i e w permachartsM FORMALITIES REQUIRED IMPOSSIBILITY OF PERFORMANCE Assent In the absence of statutory requirements Original Existing when the contract was entered into, and this may to the contrary, parties may be bound prevent the creation of a valid c
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