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Flashcards in Exam 3 Deck (56)
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1

Sources of contract law

Common law
uniform commercial code (UCC0
International Sales Contract Law (CISG)

2

UCC governs...

contracts for the sale and lease of goods

3

what makes a contract

a legally binding agreement between two or more parties who agree to perform or refrain from performing some act now or in the future
-promises, favors, gifts and contracts

4

requirements for common law contracts

1. agreement
2. consideration
3. contractual capacity
4. legality

5

define "agreement"

an offer and an acceptance

6

define "consideration"

-"bargained for" consideration
-something of value received or promised such as money to convince the person to make the deal. -does not have to be of equal value, but must show there was exchange e.g. selling a house for $1
-prior contracts or something you already have a legal obligation to do is not a sufficient consideration
-negated by being able to demonstrate fraud, coercion or distress, language barrier, mental capacity or anything that would make them an inferior bargaining party

7

define "contractual capacity"

law must recognize the parties as possessing characteristics that qualify them as competent

8

define "legality"

purpose of contract must be to accomplish something legal, and not against public policy

9

unilateral contract

one side has all the risk. one side will perform and the other will pay later
e.g. any service contract
NOT a simultaneous promise for a promise
high risk for the common man so special rules are in place

10

bilateral contract

both parties perform at the same time

11

executory contract

one that has not been performed yet

12

executed contract

one that has already been performed

13

illusory consideration

fiction, imagined
consideration for the act never actually happened
e.g. loose promise for a bonus "we'll see"

14

accord and satisfaction

even though performance wasn't exactly as specified, the parties agree it's good enough to satisfy the contract
-some money is paid based on contract

15

release

release the right to sue over a contract

16

covenant not to sue

typically included as part of a release

17

rescission

reverses a contract.
-can be reversed as of today, or reverse it back to the very beginning of the contracg

18

compensatory damages

covers direct losses.
-you buy something and its defective, you're awarded cost of what you paid plus the time value of money.
-pay your own court costs
-usually written into a contract to protect you incase it comes up

19

mitigation of damages

you must try to do everything in your power to come to court with clean hands. must show you've tried to help yourself, try to solve your own problem and minimize the damages to you

20

nominal damages

suing for a small amount just to prove that the other party has done wrong and prove a point.
it'll create a record of their breach of contract and wrong-doing

21

waiver of breach of contract

even though the other party breached, you agree not to sue

22

Hadley v. Baxendale

limitations on consequential damages.
-where special circumstance apply, the parties must communicate them, you can't assume the other party just knows

23

bad faith

breaking a contract to sell to someone else at a higher price
-illegal in the US
-not necessarily illegal outside the US

24

damages in equity

court forces a non-monetary payment. requires specific performance
-doesn't apply well to labor contracts--seems too much like slavery (except union contracts)
e.g. union strike- can order teachers back to work

25

anticipatory repudiation

you must communicate with the other party as soon as you anticipate a breach.
-gives either side time to cancel the contract and find a substitute before the breach actually occurs
-also gives you a chance to amend the contract. the goods will be late--can you work around that?

26

novation

substitute a new buyer or seller into the contract (3rd party) so no breach occurs

27

consequential damages

breaching party is responsible for lost profit damages or direct yet unforeseeable damages that arise from the breach
e.g. homeowners rental fees from our negotiating exercise

28

punitive damages

monetary damages to punish and deter wrongdoing and prevent it from happening again
-gives warning to chill the industry

29

rescission ab initio

restore both parties to before the contract even started

30

rescission ab initio

restore both parties to before the contract even started