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ECU FINA 2244 - CHAPTER 10

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CHAPTER 10ContractsI. Sources of Contract Law Pg. 244A. State common law: Created by judges following precedentsB. Lex mercatoria: Commercial rules by merchants doing business by national boundariesC. Restatement (2d): Treatise that summarizes the current state of the law andgives ways to improves itD. Statutes, especially the Uniform Commercial CodeII. Definition of a Contract: A promise you are legally required to honor Pg. 244A. Restatement (2d)B. Definition of Promise: Manifestation of the party to act or to refrain C. Binding vs. Nonbinding: Contracts, not a contractD. Written or Oral: Does not always have to be written E. Bilateral vs. Unilateral: Exchange of promises, acceptance by performanceIII. The Elements of a Contract Pg. 244-245A. The Offer Pg. 2451. Definition of offer: manifestation of willingness to enter into a bargain2. Offeror and offeree: Party making the offer, party who is receiving the offer 3. Three requirements for effective offer: Clear intent by the to be bound—would a reasonable person think an offer had been made, terms are clear and certain—Offer must be reasonably certain with no missing major terms, properly communicated—must actually be communicated4. Terminating an offer Pg. 247-248i. Revocation: Withdrawal of the offer by the offeror before the offer is acceptedii. Lapse: Time period expires or reasonable length of timeiii. Rejection: Saying no - Counteroffer: Proposal by the offeree to change the offeriv. termination by operation of law: Offer is made illegal after it is madev. termination by destruction of subject matter: Matter hasbeen destroyedvi. incapacity: Mental and Physical incapacityB. The Acceptance Pg. 248-2501. Definition of acceptance: Expression of agreement to an offer2. Three requirements for effective acceptance3. Unconditionali. mirror image rule: mirror image of the offer, same terms and conditions4. Unequivocal: Must be definite, words expressing content are acceptedi. Silence: Not acceptable, not unequivocalii. past business dealings: Acceptable, between merchants5. Properly communicatedi. method of acceptance: Any reasonable method is accepted. Email to emailii. timeliness of acceptance: Acceptance is effective when sentiii. performance as acceptance: Proper performance iv. Certified Fire Protection, Inc.: Pg. 248-249C. Consideration Pg. 2511. Definition: Something of value in exchange for a promise, if it creates legal detriment 2. Contract vs. gift: no promise involved 3. adequacy of consideration: Pg. 251i. general rule: Not questioned by the court if consideration is presentii. Caley Pg. 251-2524. Promissory estoppel: pg. 252i. Definition: Doctrine by the court to avoid injustice when a promise has been made without consideration, the promise is still enforceableii. Hinson Pg. 253iii. Promises to charities: Applies in charitiesD. Capacity to Contract: Pg. 2541. Capacity (definition): Ability to perform legal act acquire rights, minors, intoxicated, persons declared incompetent 2. Partial capacity: Minors, intoxicated persons, mentally disabled3. Void contracts vs. voidable contracts4. Minors and contractsi. general rule: Under the age of 18, may enter the contract but voidable by minorii. ratification: Minor may ratify if turns 18iii. contracts minors cannot disaffirm: Enlistment, insurance, and education loansE. Legality Pg. 255-2571. Illegal agreements: Must be lawful to be legal2. Unenforceable contracts3. Contracts contrary to public policy: Negative to publici. unconscionable contracts: Unfair to innocent party, consumer goods, ii. exculpatory agreements: Releases a party from negligence, skydiving or paintball iii. contracts with public servants: Influence a public servant to violate the public such a briberyiv. contracts in restraint of trade: Restrains trade or competition. EX: Merge a business. NC must be in writing and reasonable to times, terms and territory -covenants not to compete-Arthur J. Gallagher & Co. Pg. 257 E. Consent Pg. 258-259 1. Meeting of the minds: All parties have information 2. Mistake: a. unilateral: One person has false information b. mutual: Both parties are mistaken, void3. Genuineness of consent Pg. 259a. Fraud: b. Misrepresentation: Less elements, false statementthat influence the making of the contractIV. Contracts and the Statute of Frauds Pg. 259-260A. General rule: Contracts do not have to be in writing B. Preference of courts: Written documentsC. The Statute of Frauds - NCGS Chapter 22: Prevent fraudulent claims fromoral contracts. D. What contracts must be in writing? Must have names, consideration, and signed by party seeking enforcement 1. K for sale of real property: More than 3 years2. K that cannot be performed within 1 year3. Promises to pay the debt of another4. Promises by an administrator to personally pay estate debts5. Promises made in consideration of marriageE. Sufficiency Requirements: Must be signed, material terms, names, consideration, matter of contract, and signed Pg. 260F. The Parol Evidence Rule Pg. 2601. Definition: Restricts use of oral evidence that contradicts a written contract 2. When oral evidence may not be used: To contradict, change, or add terms to a written contract3. When oral evidence may be used: If incomplete or ambiguous to prove frauds, misstatements or misrepresentation 4. Deschamps Pg. 260V. Performance of Contracts Pg. 263A. Definition of performance: Completing performanceB. Complete performance: The contract is finishedC. Substantial performance: Obligations has been fulfilled,D. Expectation of good faith: Expectation your work will be doneE. Assignment and Delegation Pg. 2641. definition of assignment: Transferring rights to a third party2. definition of delegation: Transferring duties to third parties VI. Discharge of Contracts Pg. 264-265A. Discharge by Breach and Types of Breach: Not fulfilling duties by contract. Material Breech, performance provided is less than promised. Anticipatory Breech, lack of desire to perform a contract, can sue for damages, efficient breech, financially B. Discharge By Agreement of Parties1. Recission: Both parties agree the contract should be terminated 2. Novation: New agreement with a new party, discharge one party3. Accord and satisfaction: Agreement to give and accept a differentperformance from that is bargained forC. Discharge By Legal Impossibility: Has becoming impossible to complete the task, somebody passes away or a new law is passes Pg. 265D. Impracticability/Frustration: Not


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