Legal Terminology Lectia 2 27 Martie 2014

8/11/2019 Legal Terminology Lectia 2 27 Martie 2014

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LEGAL TRERMINOLOGY

Academic year

2013/2014

2nd Sem.


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Unit 1.

Terms Used in Law of Contracts

ChapterFormation of Contracts

ChapterContract Requirements

ChapterThird Parties and Discharge of

Contracts


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Revision

Contract definition & Elements

Definition:

CONTRACT is anyagreement that is

enforceable in a

court of law.

An enforceableagreement has the

following elements:

Mutual assent

Lawful object

Capacity of person to

perform

Consideration

Appropriate form


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Consideration

To be binding onthe parties, anagreement must

have consideration.

Consideration = an

exchange of benefitsand detriments by the

parties to the

agreement.

Detriment = the givingup of a legal right.


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Note

In a bilateral contract, consideration is

found in the promises made by each

party.

In a unilateral contract, consideration is

found in the promise of one and the act ofthe other; it does not come about until the

act is completed.


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Legal terms used in Contract law

Nudum pactum= abarren promise with no

consideration. Option contract= a

binding promise by anofferor to hold an offeropen and requiresconsideration from theofferee to make itbinding.

Firm offer= a promise

that requires no

considferation to be

binding.

Lack of consideration

= a barren promise

containing noconsideration in the

agrement.


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Legal terms used in Contract law

Failure of

consideration=refers ot acontractcontainingconsiderationthat is in fcatgiven to the partybeing sued.

Promissory estoppel

= no consideration is

necessary whensomeone makes a

promise that induces

anothers action or

forbearance (refrainingfrom taking action).


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Contract required to be in writing

Thw writing that isnecessary to satisfy the

statute of frauds is calleda memorandum. It mayconsist of any writing(such as words on apiece of scrap paper,receipt, or check) so longas it meets thefoilklowing requirements:

a) Identifies the parties to the

contract.

b) States the terms of the contract.

c) Identifies the locus if landthat

is, the exact parcel of land under

contract.

d) States proice.

e) Is signed by the person against

whom enforcement is sought.


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If the parties agree, the federal law and

many state laws allow contracts to be

signed with an e/signature (electronic

signature)a method of signing and

electronic mesaage that identifies thesender and signifies his or her approval

of the messages content.


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Deffective agreements

Certain agreements are defective and are

therefore not recognized as valid, bindingcontracts.

The most common of these are agreements

involving mutual mistake, fraud, dures, and

undue influence. Unconscionable contracts may also be

declared unenforceable by the courts.


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Mistake

Mistake. When both parties

are mistaken about an

importtant aspect of anagreement that they entered

into, so that no meeting of the

minds occurs, it is known as a

bilateralor mutual mistake,and the contrcat is voidable at

the option of either party.

In contrast, when

only one of the

parties makes amistake, it is known

as unilateral(one-

sided) mistake,

and the contractcannot be avoided

(made void) by the

parties.


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Deffective agreements:

Durress & Undue influence

Durress. Contracts thatare entered into

because of duress orundue influence mayalso be avoided by the Injured party.

Durressis theovercoming of apersons free willl bythe use of threat ofphysical harm.

Undue influenceis

the overcoming of a

persons free will bymisusing a position

of trust and taking

advantage of the

other person who isrelying on the trust

relationship.


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Fraud 1

Fraud, called deceitintort alw, occurs when

one party to the contractmakes a misrepresenta-tion of a material,existing fact that the

other party to the to thecontract relies on andthereby suffers damages.

If the defrauded party

was induced by fraudto enter into thecontract, it is calledfraud in the

inducement,and thecontract is voidable atthe option of theinjured party.


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Fraud 2

Fraud as to the essential nature

of the transaction occurred, such

as telling a blind man that he is

signing a receipt when it is really

a check, it is called fraud in esse

contractus, and the contract is

void.A defrauded party alwayshas the right to rescind(cancel)

the contract and return any

consideration received.

Thus , rescission

(cancellation) restoresthe parties to their

original positions. A

defraud party may

choose, instead, to keep

the consideration and

affirm(approve) thecontract and bring suit for

damages.


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Unconscionable Contracts

Some contracts (or partsof them) are so harshly

one-sided and unfairthat they shock theconscience of the court.These are calledunconscionableby the

courts and will not beenforced. Sometimesadhesion contractsfall into this category.

These are contracts that aredrawn by one party that

partys benefit and must beaccepted as is on an take-it-or-leave-it basis if acontract is to result.

Adhesion contracts oftencontain boilerplate, whichis standard language usedcommonly in documents ofthe same type.


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Illegality

To be valid andenforceable,contracts mustbe within theframework of thelaw. Illegal

contracts arevoid: they haveno legal effect.

Usury,for example, which is thecharging of a greater amount of

interest than is allowed by law, isillegal in every state.

Except when the parties are not

in pari delicto(in equal fault), the

copurt will not aid either party to anillegal contract. It will leave theparties where they placedthemselves.

Legal Terminology Lectia 2 27 Martie 2014

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