question

Basic Elements of a Contract

answer

offer, acceptance, consideration, capacity, legal

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Bilateral

answer

both parties make a promise ex) pay rent in exchange for a leased house

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Unilateral

answer

a promise for an act ex) reward for finding a lost dog

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Valid Contract

answer

meets legal requirements for a binding contract and are enforceable in court

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Unenforceable

answer

meets basic legal requirements, but cannot be enforced in court

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Voidable Contract

answer

one of the parties has the legal right to cancel their contract

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Void Contract

answer

no legal obligations and no remedy

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Express Contract

answer

terms of the contract are directly stated orally or in writing at the time the contract was formed

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Implied Contract

answer

surrounding facts and circumstances indicate an agreement has in fact been reached

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Executed

answer

all parties have performed their contractual duties

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Executory

answer

some duties under the contract still need to be performed

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UCC

answer

statute that represents modern contract law; - applies only to sale of goods - applies to contracts that deal predominantly with sale of goods - more flexible, less weight to technical requirements like consideration - reasonable standard and duty of good faith - gives broad discretionary powers to deal with unconscionable contracts - merchants are held to a higher standard than nonmerchants

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Common Law

answer

case law, judge-made law; applies to sale of real estate, intangibles, and services

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Duty of Good Faith

answer

"honesty in fact" and fair dealing, imposed in the performance and enforcement of every contract

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Unconscionable Contract

answer

grossly unfair or one-sided, and it gives the courts broad discretionary powers to deal fairly with such contracts

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Merchant

answer

a person that regularly deals in the kind of goods being sold, or pretends to have some special knowledge about the goods, or employed an agent in the sale who fits either of those two descriptions

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Quasi-Contract

answer

Used to prevent unjust enrichment of persons who have not contracted for, but nonetheless received a benefit. It is only imposed where that benefit was knowingly received or retained by the other party.

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Promissory Estoppel

answer

protects persons who rely on the promises of others by preventing promissors from raising legal defenses to the enforcement of their promises despite the fact that technically, no enforceable contract exists; exact elements: a promise made by a promisor, foreseeable, reasonable and justifiable reliance by the promisee, and resulting legal detriment

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Offer, Offeror, and Offeree

answer

Offer: "if you agree to these terms, we have a contract" Offeror: person who makes the offer Offeree: person who receives the offer

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Offer Requirements

answer

present intent to contract, definiteness, communicated to the offeree

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Objective Standard of Intent

answer

An offeror's intent will be judged by an objective standard- what his words, acts, and the circumstances signify about his intent. If a reasonable person would believe that the offeror intended to make a contract , the requirements would be satisfied

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Definiteness Standards

answer

Under common law: "contract enforcers, not contract makers", all essential terms must be stated in the contract Under UCC: if the parties are acting as though they have a contract by delivering or accepting goods or payment may create binding contract, gap-filling

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Are advertisements offers?

answer

no, advertisements are invitations to offer or negotiate UNLESS the ad was very specific and there was nothing to negotiate

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Rewards

answer

considered to be an offer for a unilateral contract

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Auctions

answer

considered to be an offer that the seller is free to accept or reject

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Bids

answer

considered to be an offer, the offeror may reject any time before acceptances, the offeree is free to reject or accept

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What terminates an offer?

answer

*notes*

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Lapse of Time

answer

*notes (315-316 in tb)*

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General Rule for Revocation

answer

*notes*

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When Offers Cannot be Revoked

answer

Options, Firm Offers, Unilateral Contract Offers, and Promissory Estoppel

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Options

answer

A separate contract in which an offeror agrees not to revoke his offer for a stated time in exchange for some valuable consideration

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Firm Offers

answer

MERCHANT offeror makes WRITTEN offer to buy or sell GOODS, giving assurances that the offer will be held open

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Offers for Unilateral Contract

answer

Offeree has started to perform requested act before offeror revokes

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Promissory Estoppel

answer

Offeree foreseeably and reasonably relies on offer being held open, and will suffer injustice if it is revoked

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Time of Effectiveness of Revocations

answer

*notes*

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Evidence of an Acceptance

answer

1) the offeree intended to enter the contract 2) the offeree accepted on the terms proposed by the offeror 3) the offeree communiated acceptance to the offeror

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Common Law: Traditional "Mirror Image" Rule

answer

must be exactly the same; changes in terms are considered to be counteroffers

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Inquiry Regarding Terms

answer

is still an acceptance, NOT a rejection

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Grumbling Acceptance

answer

is still an acceptance, NOT a rejection

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"Battle of the Forms"

answer

-UCC changed the mirror image rule for contracts involving the sale of goods, allowing the formation of a contract even when there is some variance between the terms of the offer and the terms of the acceptance -A definite and timely expression of acceptance creates a contract, even if it includes terms that are different from those stated in the offer or even if it states additional terms that the offer did not address -An attempted acceptance that was expressly conditioned on the offeror's agreement to the offeree's terms would not be a valid acceptance -If the parties are both merchants, the additional terms become part of the contract unless: -the offer expressly limited acceptance to its own terms -the new terms would materially alter the offer, or -the offer gives notice of objection to the new terms within a reasonable time after receiving the acceptance - When the offeree has made his acceptance expressly conditional on the offeror's agreement to the new terms or when the offeree's response to the offer is clearly not "an express of acceptance" (rejection), no contract is created - A contract will only result in such cases if the parties engage in conduct that "recognizes the existence of a contract," such as an exchange of performances

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Communication of Acceptance

answer

-If the offeror stipulates a particular manner of acceptance, the offeree must respond in this way to form a valid acceptance; the offeror can accept anyway, but it is his choice -If the offer merely suggest a method or place of communication or is silent on such matters, the offeree may accept within a reasonable time by any reasonable means of communication -With instantaneous forms of acceptance, such as face-to-face or telephone, as soon as the offeree says "I accept" a contract is formed

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Mailbox Rule

answer

properly addressed and dispatched acceptances can become effective when they are dispatched, even if they are lost and never received by the offeror (unless stipulated only effective on receipt)

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Special Acceptance Problem Areas

answer

*notes*

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Who can accept an offer?

answer

-The only person with the legal power to accept an offer and create a contract is the original offeree; an attempt to accept by anyone other than the offeree is treated as an offer

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Consideration

answer

legal value, bargained for and given in exchange for an act or a promise

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Illusory Promises

answer

does not really bind the promisee to do or refrain from doing anything, no consideration, not enforceable ex) cancellation or termination clauses

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Preexisting Duties

answer

occur when the parties to an existing contract agree to modify the contract; the common law rule holds that an agreement to modify an existing contract requires some new consideration to be binding

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Contract Modification under UCC

answer

does not require consideration for firm offers or modifications for sale of goods contract

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Liquidated Debt

answer

a debt that is both due and certain

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Unliquidated Debt

answer

a good faith dispute about either the existence or the amount of a debt, settled w/ accord and satisfaction

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Composition Agreements

answer

agreements between a debtor and two or more creditors who agree to accept as full payment a stated percentage of their liquidated debts

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Forbearance to Sue

answer

an agreement by a promisee to refrain, or forbear, from pursuing a legal claim against a promisor (considered to be valid consideration)

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Past Consideration

answer

not considered to be consideration

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Exceptions to the Consideration Requirement

answer

1) Promissory Estoppel 2) Promises to Pay Debts Barred by Statues of Limitations (must be in writing) 3) Promises to Pay Debts Barred by Bankruptcy Discharge (can revoke reaffirmation w/in 30 days) 4) Charitable Subscriptions

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Tort

answer

a private (civil) wrong against his person or his property

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Voidable

answer

capable of being made void

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Rescind

answer

terminate the contract as to future transactions or to annul the contract from the beginning

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Ratification

answer

the adoption or affirmance by a person of a prior act that did not bind him

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Scienter

answer

in cases of fraud and deceipt, the word means knowledge on the part of the person making representations, at the time they are made, that they are false. In an action for deceit, scienter must be approved

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Deceit

answer

a tort involving intentional misrepresentation or cheating by means of some device

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Concealment

answer

taking active steps to prevent another from learning the truth (committed by conduct)

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Nondisclosure

answer

failure to volunteer information where there is a legal duty (b/c of contract, statute, or case law) to do so

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Material

answer

important; information that is sufficiently significant to influence an individual into acting in a certain way, such as entering into a contract

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Mistake

answer

an erroneous belief about some fact that exists at the time the contract was formed (knowing you are ignorant or have limited knowledge is NOT a mistake)

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Unilateral Mistake

answer

mistake made by just one of the parties

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Courts will allow avoidance of a contract if the unilateral mistake:

answer

1. meets all the elements of mutual mistakes 2. the consequences of the mistake are such that it would be unconscionable to enforce the contract OR that the other party caused or knew, or had reason to know about his mistake

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Mutual Mistake

answer

mistake made by both parties

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Courts will allow avoidance of a contract if the mutual mistake:

answer

1. relates to a fact that was a basic assumption on which the contract was made 2. the fact was material 3. the person adversely affected by the mistake does not consciously bear the risk of the mistake

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Undue Influence

answer

unfair persuasion of a person by one who stands in a legally recognized relationship of trust and confidence or has a relationship of dominance over that person

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Adjudicate

answer

to settle by judicial decree

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Quasi-Contract

answer

the doctrine by which the courts imply, as a matter of law, a promise to pay the reasonable value of goods or services when the party receiving such goods or services has knowingly done so under circumstances that make it unfair to retain them without paying for them

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Public Policy

answer

A principle that no person or government official can legally perform an act that tends to injure the public

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Regulatory License

answer

the purpose of the legislation is to protect the public against dishonest or incompetent practitioners; state-mandatory testing or educational requirements for this type of license; because it is in the public's interest, the unlicensed person will not be able to enforce a contract for such services with another person

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Revenue-Raising License

answer

a means of collecting money rather than as a means of protecting the public; failing to obtain this kind of license will not preclude them from enforcing an otherwise valid contract for those services

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Ancillary Covenant Not to Compete

answer

(Noncompetition Clause or "Noncomplete") a formal agreement asking former employees not to perform similar work within a designated area for a specified amount of time after leaving their original employer

question

When courts will and will not enforce ancillary covenants:

answer

Will enforce: -If part of a greater legitimate agreement -If no greater than necessary in scope, time, and geographic area -If bears a reasonable relationship to a legitimate interest owned to the party who drafted that clause Will NOT enforce: -If it is the sole purpose of a contract -Employment contracts in California -If it does not serve public interest

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Confidentiality/Nondisclosure Agreements

answer

an agreement that prevents an employee from divulging or using certain information gained during his/her employment

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Nonsolicitation Agreements

answer

an agreement that forbids an employee from soliciting the employer's employees, clients, or customers

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Exculpatory Clause

answer

("Release" or "Liability Waiver") a provision in a contract that purports to relieve one of the parties from tort liability

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An exculpatory clause is generally unenforceable UNLESS:

answer

the clause is clearly written and readily visible

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An exculpatory clause is generally unenforceable when:

answer

-It attempts to exclude an intentional tort or gross negligence -The affected activity is in the public interest, such as medical care, public transportation, or some essential service -The parties have greatly unequal bargaining power

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Unconscionability

answer

Unusually harsh, grossly unfair, or "shocks the conscience of the court"; when something is judged unconscionable, a court will refuse to allow the perpetrator of the conduct to benefit

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Contract of Adhesion

answer

a contract that heavily restricts one party while leaving the other free; implies inequality in bargaining power

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Procedural Unconscioncability

answer

refers to the unconscionability in the conditions of contract formation; results from inequalities between the parties as to age, intelligence, and relative bargaining power; meaning that both parties did not freely consent to all terms proposed; the doctrine of unconscionability permits a court to refuse to enforce a contract when it feels that the contract is unfair

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Substantive Unconscionability

answer

refers to the unconscionability in the terms of a contract; the objective terms of the contract are unfair; results when contract terms are excessively oppressive or harsh; the doctrine of unconscionability permits a court to refuse to enforce a contract when it feels the contract is unfair

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5 Contracts that are Voidable

answer

1. misrepresentation 2. fraud 3. mistake 4. economic duress 5. undue influence

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Misrepresentation

answer

an assertion about a fact material to a contract that is not in accordance with the truth and upon which the party actually and justifiably relies

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Remedy for Innocent Misrepresentation

answer

Rescission

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Fraud

answer

misrepresentation knowingly made (scienter) with intent to deceive

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Remedy for fraud (negligent misrepresentation)

answer

Rescission or damages (California law and the UCC allow the injured party to select both)

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Necessary Elements of Fraud

answer

1. INTENTIONAL misstatement/untrue assertion of past or existing fact 2. actually relied upon 3. reliance was reasonable and justifiable

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Necessary Elements of Misrepresentation

answer

1. misstatement/untrue assertion of past or existing fact 2. actually relied upon 3. reliance was reasonable and justifiable 4. fact misstated was material

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Modern Law on Innocent and Negligent Misrepresentation

answer

One has no duty to investigate the truth of a fact represented to him/her and will not prevent rescission unless he/she failed to comply with duty of good faith and reasonable standards of commercial dealing (GROSSLY negligent)

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Economic Duress

answer

exertion of wrongful coercion that induces another person to enter a contract (the threat must be one that law considers improper)

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Improper Threats/Claim of Duress

answer

threats to commit a tort or a crime, file an unfounded criminal or civil lawsuit, or breach a contract without justification

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Is a statement of opinion generally grounds for fraud?

answer

Generally, no. The misrepresentation must be of a past or existing fact. Opinions, sales talk, and statements about the future do not count. The exception is where a fiduciary or expert is hired.

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Fiduciaries

answer

Specially recognized legal relationship of trust and confidence that gives rise to special duties which include: higher duties of disclosure toward the person whose interest they are supposed to be serving and their opinion may be grounds for a fraud claim if there was no reasonable basis for the opinion ex) husband and wife, parents toward children, employee to employer, etc.

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What are the 3 categories of people who may not have the capacity to contract? What happens to these contracts?

answer

1. minors 2. people suffering from mental illnesses 3. intoxicated persons The contracts become VOIDABLE

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Prior Adjudication

answer

occurs when a family member has petitioned the court to make a determination of mental incompetence of the affected person, if the court agrees, then that person's contracts from date of entry of judgement on, are VOID

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Disaffirm

answer

a party's exercise of his power to avoid a contract entered before the party reached the age of majority; a minor's cancellation of his contract

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What are some contracts that a minor CANNOT disaffirm?

answer

Marriage contracts, alimony agreements, student loans, medical insurance contracts, entertainment contracts, etc.

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How can a minor disaffirm a contract?

answer

Through words (oral or written), conduct, or a combination of both

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General common law rule regarding the period during which a minor can disaffirm a contract:

answer

A minor can disaffirm a contract before age of majority and up until a reasonable time after reaching the age of majority, although some states specify this period of time (i.e. 6 months) in statutes Exception: contracts for the sale of real estate cannot be disaffirmed until after majority

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Minor's Obligation Upon Disaffirmance

answer

1. return the consideration if available 2. determine if the consideration was a necessary 3. determine whether or not the minor is also liable for depreciation or destruction

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Necessaries

answer

that which is reasonably necessary for a minor's proper and suitable maintenance, in view of the income level and social position of the minor's family Examples: food, clothing, shelter, and sometimes transportation

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If the disaffirming minor has purchased something from the other party that is considered to be a necessary:

answer

the minor is liable for the reasonable value of what he has actually received

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If the disaffirming minor has purchased something from the other party that is considered to be a non-necessary:

answer

the minor gets a full refund ** To promote the fair treatment of innocent adults, a growing number of states require that minors pay for expenses like depreciation or repair costs**

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Ratification by minors

answer

Minors can ratify contracts only after he/she reaches age of majority, through any way that shows his intent to be bound by the contract (cannot later be disaffirmed)

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Emancipate

answer

a parent's waiver of his rights to control and receive the services of his minor child; same laws apply to unemancipated minors

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When a minor lies about their age...

answer

Makes no difference in some states. In others, makes him liable in tort for deceit or precludes him for asserting his minority as a claim or defense

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Capacity

answer

the ability to incur legal obligations and acquire legal rights

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Determining Mental Capacity

answer

Unless there is prior adjudication, the courts will examine the individual's state of mind at the exact moment he entered the contract. If lucid, the contract is valid and enforceable. If not, the contract is voidable. Tests: 1. cognitive test (capable of understanding the basic nature and consequences of the contract) 2. volitional test (inability to act reasonably b/c of mental defect or illness and the other party has reason to know of his impairment)

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Mentally Ill Person's Duties on Disaffirmance

answer

Upon disaffirmance, the incapacitated person must return any consideration that remains in his possession (similar to minors)

question

What happens to contracts for intoxicated persons?

answer

Persons who are SO intoxicated that they do not understand the nature and consequences of a contract are treated as lacking capacity to contract. If the other party had reason to know he was unable to understand the contract or act in a reasonable way due to his intoxication the contract is VOIDABLE. To avoid the contract, he must disaffirm it within a reasonable time after regaining sobriety. (similar to minors)

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Illegality

answer

unlawfulness by virtue of violating some legal statute

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Illegal agreements are generally considered:

answer

VOID or unenforceable ex: courts won't give remedy for buying fake cocaine

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Exceptions to hands-off policy on illegal agreements:

answer

Exception given when it is in the public interest to do so... -Where a party has rescinded the contract prior to the doing of an illegal act, he/she may be able to get damages -Where the parties are not parti delicto (equally guilty) but, in fact, there is a very large difference in degrees of wrong-doing between them -Where one party was excusably ignorant of the illegality -Where one party was aware of the illegal purposes, but did not participate in the illegality, itself -Where the contract is divisible

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Statute of Frauds

answer

requirement that certain kinds of contracts be memorialized in a signed writing with sufficient content to evidence the contract; a contract that fails to comply is UNENFORCEABLE

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Contracts Covered by the Statute of Frauds

answer

- Collateral - Land - Year - Sale of goods $500 or more - Executor's Promise - Marriage

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Statute of Frauds applies only to:

answer

executory contracts. if an oral agreement is fully executed, the need for a writing becomes totally irrelevant

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Collateral Contracts

answer

A contract in which one person promises to pay the debt or obligation of another person

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Statute of Frauds Exception

answer

Main Purpose or Leading Object Rule, Full Performance by the Vendor, Part Performance (Action in Reliance) by the Vendee

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Main Purpose or Leading Object Rule

answer

If a person's primary purpose in promising to pay the debt of another is to benefit himself, the promise does not need to be evidenced by writing

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Full Performance by the Vendor

answer

An oral contract for the SALE OF LAND that has been completely performed by the vendor (seller) is enforceable without a writing

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Part Performance (Action in Reliance) by the Vendee

answer

When a vendee (purchaser of land) does an act in clear reliance on an oral contract for the SALE OF LAND and enforcement of the contract is the only way to prevent injustice, the oral contract is enforced with specific performance

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Specific Performance

answer

A remedy whereby the court orders the breaching party to perform his contract

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Bilateral Contracts that Cannot be Performed within One Year

answer

A bilateral, executory contract that cannot be performed within in one year from the day on which it comes into existence, guards against faulty or willfully inaccurate recollection of long-term contracts Exceptions: a contract that has been fully performed by one of the parties and contracts for an indefinite period of time are enforceable without writing

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Sale of Goods for $500 or More

answer

Contracts for sale of goods $500 or more must be in writing to be enforceable. Also applies to modifications of existing sales contracts if $500 or more.

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Executor's Promise

answer

If an executor, acting in her capacity as a private individual rather than in her representative capacity, promises to pay one of the descendent's debts out of her own funds, the contract must be in writing to be enforceable

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Marriage as Consideration

answer

Statute of Frauds does not apply to agreements that involve only mutual promises to marry, but can be used for business-like marriage contracts ex) marriage for property, prenuptial or antenuptial agreements, etc

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Writing Requirements for Statute of Frauds

answer

Most states require only a memorandum of the parties' agreement; they do not require the entire contract to be in writing

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Memorandum

answer

The memorandum must provide written evidence that a contract was made, but it need not have been created with the intent that the memorandum itself be binding. The memorandum need not be made at the same time the contract came into being. If a memorandum of the parties' agreement is lost, its loss and its contents may be proven through oral testimony. Memorandum must have: the essential terms, identity of the parties, subject matter, and quantity.

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Rules for Memorandum: Contents under the UCC, Signature Requirement, and Several Writings

answer

UCC: The writing must be sufficient to indicate that a contract for sale has been made b/w the parties, but can omit or incorrectly state a term agreed upon (but not enforceable for more than the quantity stated) Signature Requirement: the memorandum must be signed by the party to be charged (defendant) Several Writings: can combine several documents as proof, provided that they relate to the same agreement- can be shown by physical attachment or by reference

question

UCC: Alternative Means of Satisfying the Statutes of Frauds in Sale of Goods Contracts

answer

- Confirmatory memorandum b/w merchants (if received w/ appropriate info and not objected to w/in 10 days) - Part payment or part delivery (only for the quantity of goods that have been delivered or paid for) - Admission in pleadings or court - Specially manufactured goods (only if the nature of the good is such that they are not suitable for sale in the ordinary course of the seller's business; must have made a substantial beginning in manufacturing)

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Promissory Estoppel and the Statute of Frauds

answer

When one of the parties would suffer serious losses because of her reliance on an oral contract, the other party is estopped from raising the statute of frauds as a defense

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The Parol Evidence Rule

answer

Says "now that the parties have entered into a mutually signed written contract, what kind of evidence will be allowed in front of the jury for the purpose of contradicting the terms of the that writing?"

question

When can the Parol Evidence Rule be used and not used?

answer

Cannot be used: - when it provides that evidence of written or oral statements made prior to or during the signing of a written contract to add to, alter to, or vary the terms of the written contract. Can be used: - when it gives evidence of subsequent agreements - to add to partially integrated contracts - to demonstrate circumstances invalidating the contract (fraud, illegality, etc) - to explain genuinely ambiguous terms - to show that the contract was not to be effective until the occurrence of a condition

question

Merger Clause/Integration Clause

answer

Specifically state that the writing is the the complete statement of the parties' agreement

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Condition

answer

an uncertain future event that affects a party's duty to perform

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Condition Precedent

answer

"if x, then y"; event must occur before duty is performed; if the event never occurs, then there is no duty to perform

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Concurrent Condition

answer

when the contract calls for the parties to perform at the same time, each person's performance is conditioned on the performance or tender of performance by the other

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Condition Subsequent

answer

"for so long as" or "provided that"; duty will continue on, until and unless the event mentioned actually occurs and discharges any further duty to perform

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Express Condition

answer

condition that is specified in the language of the parties' contract ex) satisfaction of third parties or personal satisfaction

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Implied-in-fact Condition

answer

not specifically stated by the parties, but is implied by the nature of the parties promises

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Constructive Condition

answer

conditions that are imposed by law rather than by the agreement of the parties

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Excuse of Conditions

answer

Excuses: - the occurrence of the condition has been prevented or hindered by the party who is benefited by the condition - waiver - estoppel

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Waiver

answer

occurs when a person whose duty is conditional voluntarily gives up his right to the occurrence of the condition

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Estoppel

answer

when a person whose duty is conditional leads the other party to rely on his nonexistence on the condition

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Strict Performance

answer

standard of performance that required virtually perfect compliance with the contract terms

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Substantial Performance

answer

applies to duties that are difficult to perform without some deviation from perfection if performance of those duties is not an express condition

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Effect of Material Breach

answer

injured party has the right to withhold his own performance

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Effect of Nonmaterial Breach

answer

may sue for damages caused by breach, but must also continue with contractual duties- cannot cancel contract

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Consequence of Late Performance

answer

if parties expressly state "time is of the essence" or "vital", late performance constitutes a material breach

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Anticipatory Repudiation/Breach

answer

occurs when the promisor indicates before the time for his performance that he is unwilling or unable to carry out the contract; constitutes a material breach of contract that discharges the promisee from all further obligation under the contract

question

Recovery by a party who has committed material breach

answer

1) Quasi-Contract- recover reasonable value of any benefits conferred 2) Partial Performance of a Divisible Contract- recover at contract price for the part he did perform

question

Excuses for Nonperformance

answer

Impossibility and Impractibility

question

Impossibility

answer

examples) illness or death of promisor, supervening illegality, or destruction of the subject matter of the contract

question

Impracticability

answer

a promisor must be able to establish that the event that makes performance impracticable occurred w/o his fault and the contract was made with the basic assumption that this event would not occur

question

Grounds for Discharge

answer

mutual agreement, accord and satisfaction, waiver, alteration, statute of limitations, decree of bankruptcy

question

Accord and Satisfaction

answer

accord- an agreement whereby a promisee who has an existing claim agrees with the promisor that he will accept some performance different from which was originally agreed on satisfaction- performs the accord

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Types of Contract Remedies

answer

1) legal remedies (money damages) 2) equitable remedies 3) restitution

question

Legal Remedy/Remedy at Law

answer

(most common) award of money damages that will compensate the injured party for his losses

question

Equitable Remedies

answer

those remedies that had their origins in courts of equity rather than in courts of law (specific performance and injunction)

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Restitution

answer

requires the defendant to pay the value of the benefits that the plaintiff has conferred on him

question

Interests Protected by Contract Remedies

answer

Expectation interests

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Limitations on Recovery of Damages in Contract Cases

answer

1) a party can recover damages only for those losses that he can prove with reasonable certainty 2) a breaching party is responsible for paying only those losses that were foreseeable to hm at the time of contracting 3) plaintiffs injured by a breach of contract have the duty to mitigate damages

question

Compensatory Damages

answer

damages recovered in payment for actual injury or economic loss (does not include punitive damages)

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Consequential Damages/Special Damages

answer

compensate for losses that occur as a consequence of the breach of contract, occur because of some special or unusual circumstances

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Incidental Damages

answer

compensate for reasonable costs that the injured party incurs after the breach in an effort to avoid further loss

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Nominal Damages

answer

very small damage awards that are given when a technical breach of contract has occurred

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Liquidated Damages

answer

the parties to a contract expressly provide in their contract that a specific sum shall be recoverable if the contract is breached

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Punitive Damages

answer

damages awarded in addition to the compensatory remedy that are designed to punish a defendant for particularly reprehensible behavior and deter similar future behavior

question

Equitable Remedy

answer

granted when money damages alone or not adequate to fully compensate for a party's injuries, can be granted alone or in combination with a legal remedy, primary equitable remedies for breach of contract are specific performance and injunction

question

Specific Performance

answer

an equitable remedy whereby the court orders the breaching party to perform his contractual duties as promised, only available when the injured party has no adequate remedy at law

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Injunction

answer

an equitable remedy that is employed in many different contexts and is sometimes used as a remedy for breach of contract, can be invoked when a breach has merely been threatened, only available when the breach or threatened breach is likely to cause irreparable injury

question

Mandatory Injunction

answer

a court order requiring a person to do something

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Negative Injunction

answer

a court order requiring a person to refrain from doing something

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Specific Restitution

answer

the defendant is required to return the exact property conferred on him by the plaintiff

question

Substitutionary Restitution

answer

a court awards the plaintiff a sum of money that reflects the amount by which he benefited the defendant

Business Law: Contracts Final – Flashcards

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