STUDY GUIDE FOR K'S
CONTRACTS
Definition of K –legally enforceable promises.
Theory-every contract has 4 elements
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Types of K - Formal Informal
Express Implied
Definition: Promisor/ee
Obligor/ee
Void voidable
Executed executory
A. Mutual Assent with Promise
1. Promise
a. Unilateral/bilateral
b. MA - each party understands
terms (meeting of minds)
c. With promise - something will
happen (action)
Exceptions - Quasi K
Unconscionable K
2. Offer/Acceptance
Offer: A promise proposed in ex
change for another act, forbearer on
returned promise
a. communicated
b. certainty of terms
c. intent to be an offer
d. accepted within reasonable time
Revocation of offer by offeror
Rejection of offer by offeree
Counter offer
Adhesion Contracts
Exculpatory clauses
Rule: Every K must have
consideration or a substitute
Acceptance: (medium of acceptance/
when accepted)
a. communicated
b. unqualified and unconditional
c. within reasonable or agreed time
3. Lack of Contractual Intent
Manifestation of mutual intent
(Generally voidable except for fraud)
a. mistakes of fact
b. misrepresentation
c. fraud/ concealment
d. duress/undue influence
B. Consideration - price of the promise
must be a benefit transferred
Substitutes for consideration
1. K under seal
2. Prom - estoppel
3. Pledge of gift
4. Detrimental reliance
5. Satisfaction and accord
C. Capacity - must be present to have a K
Lack of Capacity
1. mental incapacity
a. adjudged
b. without adjudication
c. intoxicated
2. fiduciaries, agents and guardians
3. minors
4. legal disabilities
D. Legality - all K's must conform to society's
standards
Public purpose - K must serve a public good
or conform to public policy (PP)
1. Violations of PP
a. licenses
b. usury
c. discrimination
d. contracts of chance
2. Violations of PP by Case Law
a. restraints of trade
b. corruption
3. Violations of PP because of Social
Conflict
Insurance K's against illegal acts
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K in Writing
EXCEPTION: Partial performance
II. Enforcement
A. Statute of Frauds - when writing is required
for evidence
1. performance w/in one year
2. real estate
3. marriage K's/duty of another/executor(s)
and administrator(s)
4. UCC - more than $500 in goods
K Interpretation
2. Parole Evidence Rule - no oral
modification of K – evidence rule
Exceptions: ambiguous
no assent (meeting of minds)
3. Statute of Limitations
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(what performance is required?)
Time is of the essence requirement
III. Discharge of the Contract
A. Performance - fulfill K obligation –
Effects of:
1. tender
2. substantial performance
3. when performance is required
conditions:
a. precedent
b. concurrent
c. subsequent
d. non-performance
e. threat of non-performance
f discharge
(1). discharge - complete performance
(2) non-discharge - partial or
incomplete
(3). impossibility of performance
(concept)
B. Exceptions to Performance
1. novation
2. accord and satisfaction
3. mutual recission
C. Discharge by Operation of Law
(Discharge without Performance)
1. statute of limitations
2. bankruptcy
3. judgment
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(what party has the right
to enforce the promise?)
IV. Contract Rights (3rd Party
A. Assignment (notice required)
B. Delegation
C. 3rd party beneficiary K
(i.e., life insurance, donee bene.)
D. novation - substitute parties
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what are the damages or remedy?)
Liquidated/unliquidated
V. Damages
A. Equity (duty) - specialty performance
1. injunction
2. specialty performance
B. Law (right)
1. compensatory - loss of bargain
2. consequential - foreseeable
3. incidental - normal or generally
4. liquidated damages (term of K)
Mitigation Rule--------------------- Duty on non breeching party to keep damages as
small/little as possible
Reformation------------------------ Minor Term - can be reformed to conduct of the
parties