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Exam 3 Study Guide

by: Jennifer Scheuer

Exam 3 Study Guide LGS200-002

Jennifer Scheuer

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Material covered on exam 3
Legal Studies
Ruth Ann Hall
Study Guide
Legal Studies
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This 4 page Study Guide was uploaded by Jennifer Scheuer on Sunday March 6, 2016. The Study Guide belongs to LGS200-002 at University of Alabama - Tuscaloosa taught by Ruth Ann Hall in Spring 2016. Since its upload, it has received 121 views.


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Date Created: 03/06/16
LGS-200 Exam 3 Study Guide Four Essential Elements of a contract: 1. Agreement: offer and acceptance of an offer. 2. Consideration: must be supported by a bargained-for- consideration (aka money, property, services) 3. Contractual capacity: both parties must be in a state of contractual capacity. (Cannot be a minor, drunk, mentally challenged, or an incarcerated convict) 4. Lawful object: the object of the contract must be legal. Contracts under U.C.C (Uniform Commercial Code) Governs commercial contracts (sales contracts). Sale of good contracts > than 500$ must be in writing. Lease of goods contracts > than 1000$ must be in writing. Bilateral Contract: offeror’s promise is answered with offeree’s promise to accept. (a promise for a promise). Unilateral Contract: offeror’s promise can only be accepted by performance of an act. (Promise for an act). Requirements of an offer: 1. Objective intent: determined using objective theory of contracts (reasonable person can see parties intend to be legally bound). 2. Terms must be definite or reasonable certain: must be clear enough for the offeree to decide to accept. Must contain:  ID of the parties  ID of subject and quantity  Consideration to be paid  Time of performance 3. The offer must be communicated to the offeree. Termination of an offer: 1. Revocation of an offer: an offer may be withdrawn anytime prior to acceptance just must be communicated to the offeree. 2. Rejection of an offer: offer is terminated if offeree rejects it. Any further attempt to negotiate is considered a new offer. 3. Counteroffer: terminates the existing offer and puts a new offer into play. 4. Lapse of time: terminates when the time period stated expires. If no time stated it terminates after “reasonable time”. Acceptance of a contract:  Mirror image rule: offeree must accept the terms as stated in offer.  Must be unequivocal. Mailbox rule: acceptance is effective when it is dispatched. (Mail, overnight delivery, fax, or email)  Faxes are exception; may not always be binding Offers of a reward: an incentive to do a task only redeemable if asked for at time of completion.  EX. Return a missing dog, go outside to see posters describing a reward, cannot go back asking for the reward. Unilateral Offer: an offer made to the public rather than one specific party. The offer is accepted when the act is performed. Lucy vs. Zehmer:  Zehmer writes contract on a napkin while at dinner.  Lucy (plaintiff) tries to enforce it.  Zehmer says he is only joking.  If party to the contract has reasonable belief that other party has intent to enter the agreement when he actually does not, contract is enforceable. Contracts implied in law: courts can award monetary damages for a service even though no actual contract existed. (Quasi-contract; prevents unjust enrichment). Contracts implied in fact: implied from the conduct of the parties. 1. Plaintiff provides property/service to defendant. 2. Plaintiff expects to be paid. 3. Defendant was given a chance to reject the property/service but didn’t. Consideration: something of legal value given in exchange for a promise. Consists of two elements: 1. Something of legal value must be given. 2. Must be a bargained-for-exchange: exchange leads to an enforceable contract. Peppercorn Rule: as long as the parties agree to terms of an exchange and its bargained for, there does not need to be equivalence in value. Capacity: Minors  Infancy doctrine: minors can disaffirm (cancel) most contracts entered into with adults.  Minors must pay for the necessaries of life that they contract for.  Emancipation: legal doctrine that gives teenagers 16 or older legal independence from their parents or guardians. Exculpatory Clauses: contractual provision that relieves on or both parties of a contract from tort liability. (Found in leases, sales contracts, parking tickets, and sales contracts). Non-compete clause: one party agrees not to enter/start a similar profession or trade against another party. (Convenient not to compete) Statute of Frauds: a state statute that requires some contracts to be in writing. Such as: 1. Contracts involving real property. (Exception: part performance: court order to be oral part of the deal must occur). 2. Agents’ contracts: equal dignity rule: agents contracts to sell property. 3. One year rule: an executory contract that cannot be performed in a year by its own terms must be in writing. 4. Guaranty contract: one person agrees to answer for the debts of another. 5. UCC contracts: sale of goods >500$ must be in writing, lease of goods >1000$. Types of damages for breach of contract: 1. Compensatory damages: intended to compensate a non- breaching party for the loss of the deal. (Restores benefit of the bargain). 2. Consequential damages: foreseeable damages that arise from outside circumstances. To be liable the breeching party must know that the breech will cause damage. 3. Liquidated damages: damages the parties agree in advance that should be paid if the contract is breeched. Equitable Remedies for breech: 1. Specific Performance: court orders party to perform the acts promised in the contract. Used in “unique cases”. (Contracts involving land, heirlooms, and paintings). 2. Reformation: courts rewrite a contract to express the parties’ true intentions. 3. Injunction: court order that prohibits a person from doing a certain act. Mitigation of damages: the non-breaching party’s responsibility to avoid or reduce damages caused by the breech of contract. Reality of assent: voluntary, willing to promise. Duress: a party threatens to do a wrongful act unless another party enters into a contract. Fraud: a person consciously decides to induce another person to rely and act on misrepresentation. Must have the following aspects to prove: 1. Misrepresentation of material fact: must be of past material fact, oral or written. 2. Intent to deceive: knowledge that representation is false or made without sufficient knowledge. (Scienter “guilty minded”). 3. Reliance on the misrepresentation: innocent party must have justifiably relied on the misrepresentation. 4. Injury to innocent party: must have experienced economic damages from the fraud. Undue influence: one person takes advantage of another’s weakness (mental, emotional, or physical) and persuades them to enter into a contract. Persuasion must overcome free will. Mistake of value:  Unilateral: only one party is confused about the material fact regarding the contract.  Mutual: a mistake by both parties regarding the subject of the contract. Mutual rescission: both parties enter into a second agreement that terminates the first one. Novation: substitutes a third party for one of the original contracting parties. Anticipatory breach: declaration by the promising party that they do not intend to live up to their obligations under the contract. Executory contract: made by two parties in which the terms are going to be fulfilled at a later date. Illegal contract: contract that is made for an illegal purpose, which consequently violates the law.


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