Exam 3 Study Guide
Exam 3 Study Guide LGS200-002
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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 Revocation of an offer: an offer may be withdrawn anytime prior to acceptance just must be communicated to the offeree. 2.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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