LGS 200Exam # 3 Study Guide LGS 200 Test#3 Study Guide Chapter 9  Page 193:Contract = a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a dutyRequirements of a Valid Contract:- Agreemento Includes an offer and an acceptance- Considerationo Any promises made by the parties to the contract must be supported by legally sufficientand bargained-for consideration (something of value received or promised, like money, to convince a person to make a deal)- Contractual Capacityo Possess characteristics that qualify each party as competent- Legalityo Accomplish some goal that is legal and not against public policyContract Formation:- Bilateral = a promise for a promise- Unilateral = a promise for an act- Formal = requires a special form for creation- Informal = requires no special form for creation- Express = formed by words (oral, written, or combination of both)- Implied-In-Fact = formed by the conduct of the partiesValid Contract: a contract with the necessary elements (agreement, consideration, legal capacity of the parties, and legal purpose)- Enforceable- Voidable = one party has the option of avoiding or enforcing the contractual obligation- Unenforceable = a contract exists, but it cannot be enforced because of legal defenseVoid Contract: no contract exists, or there is a contract without legal obligationsMutual Assent = agreement to the same bargain Requirements of the Offer:- Offer  a promise or commitment to do or refrain from doing some specified thing in the future- Offeror must have a serious intention to become bound by the offer- Terms of offer must be reasonably certain/definite- Offer must be communicated by offerorIntention: page 199Termination of the Offer: (page 206-207)- Revocation  the offeror’s act of withdrawing (revoking) an offer- Irrevocable Offers  - Rejection of the Offer by the Offeree  - Counteroffer by the Offeree  counteroffer occurs when the offeree rejects the original offer and simultaneously makes a new offerCapacity: (page 215)- Capacity = the legal ability to enter into a contractual relationship- Minors:o Age of majority = when a person is no longer a minor (18 years old)o Emancipation = occurs when a child’s parent or guardian relinquishes the legal right to exercise control over the child- Intoxication:o Normal capacity to act/think is inhibited by alcohol or some drugo A contract entered into by an intoxicated person can be either voidable or valid- Mental Incompetence:o Any contract made by mentally incompetent person is void (no contract exists) o Only the guardian can enter into binding legal obligations on the incompetent person’s behalfFraudulent Misrepresentation (page 219):- Generally, fraudulent misrepresentation refers to misrepresentation that is consciously false and is intended to mislead another- Example: ticket selling, but wrong advertisement of ticket seats- Misrepresentation occurs, act is of intent/deceive, innocent party must justifiably rely on the misrepresentationNon-Fraudulent Misrepresentation:- Innocent = he or she makes a statement that believes to be true but actually misrepresents material facts- Negligent = misrepresentation through carelessnessStatutes of Frauds:- Statute = stipulates what types of contracts must be in writing- Statute of Frauds = denies enforceability to certain contracts that do not comply with its requirements - The following are said to fall under the Statute of Frauds, and therefore require writing:o Contracts involving interests in lando Contracts that cannot by their terms be performed within one year from the date of formationo Collateral or secondary contracts, such as promises to answer for the debt or duty of another and promises by the administrator or executor of an estate to pay a debt of the estate personally (that is, out of his/her own pocket)o Promises made in consideration of marriage (pre-nup)o Under the UCC, contracts for the sale of goods priced at $500 or more ($5,000 or more under the 2003 amendments to the UCC)Assignments: one party has the right to require the other to perform some task, and the other has a duty to perform it- The transfer of contractual rights to a third party is known as an assignment - Assignor = party making the assignmento When rights are assigned unconditionally, rights of assignor are extinguished - Assignee = third party, one receiving the assignment o Has right to demand performance from the other original party to the contracto The assignee takes only those rights that the assignor originally had- As a general rule, all rights can be assigned- Example: leases; land lordsDelegations:- Example: contractors- The transfer of contractual duties to a third party is known as a delegation- Delegator = party making the delegation- A delegation of duties does not relieve the party making the delegation (delegator) of the obligation to perform in the event that the part of the duty has be delegated (delagatee) fails to perform- As long as the delegator expresses an intention to make the delegation, it is effectiveThird Party Beneficiaries:- Third Party Beneficiary = - Intended Beneficiary = - Incidental Beneficiary = Chapter 10: (page 228):Condition = a possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contractDischarge by Performance:- The contract comes to an end when both parties fulfill their respective duties by performing the act they have promised- Complete Performance:- Substantial Performance:- Performance to the Satisfaction of One Party:- Performance to the Satisfaction of Third Party:- Material Breach of Contract:o The nonperformance of a contractual dutyo The breach is material when performance is not at least substantial o If there is a material breach, then the non-breaching party is excused from the performance of contractual duties and has a cause of action to sue for damages resultingfrom the breachDischarge by Agreement:- Discharge by Recession:Discharge by Operations of Law:- Alteration of the Contract:- Statute of Limitations- Bankruptcy:- Impossibility or Impracticality of Performance:o After contract is made, performance may become impossible in an objective sense and may result in a discharged contracto Objective  when a person dies, when subject matter is destroyed, when change in law renders performance