Define “contract” and briefly describe the four essential elements necessary for a valid contract to be executed.
A contract is an agreement between two or more parties that is enforceable in court. The four essential elements of a valid contract are capacities of the party involved, mutual agreement or assent, consideration and legality of subject matter.
Identify and describe the various ways that a contract can be classified.
Contracts can be classified broadly into three categories- 1) By type of formation, 2) By type of performance and 3) By enforceability.
What is meant by a “mistake” within the context of a legal contract? Describe the different types of mistakes that exist. How do each of these types of “mistakes” impact the enforceability of the contract?
In the process of negotiating and agreeing upon a contract, either of the parties or both can make mistakes. Some of these mistakes can have legal consequences as well. Mistakes other than those regarding the value or quality have the potential to affect the validity or legality of the contract. The two major types of factual mistakes are- unilateral and mutual. The contract cannot be avoided or nullified in a unilateral mistake as only one of the parties is responsible for the mistake. But in a mutual mistake, where the mistake in the contract is committed by both or all of the parties involved, both or all the parties involved in the contract can avoid or nullify the contract .
Define “fraud” in the context of contract law and briefly describe the five requirements for a contract to be found subject to fraud.
Fraud an intentional misdeed, where the first party intentionally misrepresents material facts with the intention of cheating the second party with the intention of gaining benefits for the first party and/or causing harm or injury to the second party. The five requirements for finding the fraud include- 1) misrepresentation of material facts, 2) made knowingly, 3) with the intent to defraud, 4) justifiably relied upon, 5) causing injury to the other party .
Define a) innocent misrepresentation, b) undue influence, c) duress, and d) unconscionability and describe their impact on the enforceability of a contract.
Innocent Misrepresentation is not a tort and cannot be claimed for damage
Undue Influence- When one party tries to take advantage of the other owing his/her superior position in a confidential relationship.
Duress- The coercion to accept the contract terms by use of physical or mental torture.
Unconscionability- Describes special situations in which the first party imposes outrageously unfair terms on the others through fine print and fast talk. The two categories of unconscionability are procedural and substantive.
What is meant by capacity of the parties? Identify and describe the different classifications of parties that may be found to lack capacity to contract.
The parties involved in the contract should have the capacity or the legally defined level of mental ability to enter into the contract. Any contract involving minors, a party who is mentally challenged, stupefied by alcohol/drugs can be considered as parties without capacity and the contracts thus created can by nullified .
What effect does “legality of subject matter” have on the enforceability of a contract?
If the subject matter of a contract is not legal, it cannot be enforced and will be considered as illegal. Such an illegal agreement will be considered as void.
What is the purpose of “the Statute of Frauds”? What types of contracts does it cover?
Statute of Frauds, originally called as an act for the prevention of frauds and perjuries was enacted by the British Parliament with the intention of preventing frauds by means of oral arguments . The act made it mandatory to have the evidence in writing for certain kinds of contracts that are susceptible to fraud and abuse. The statute targets six kinds of contracts- sale of land, a contract not to be performed within one year, contract to sell goods for $500 or more, lease goods for $1000 or more, promise made by a person to own the debt of another person, promise made in consideration of marriage, and the promise to pay the debts of an estate using own funds .
Describe the purpose of UETA of 1999 and ESIGN of 2000.
Both UETA and ESIGN target the enforcement of electronic contracts. They are procedural statutes that differ to existing substantive law, but remove any barriers based upon the method of transaction . Both UETA and ESIGN apply only if the stakeholders agree for an electronic transaction.
What do the “Parol Evidence Rule” and “Privity” mean?
Parol Evidence Rule attempts to prevent scuttling of a mutually agreed upon contract by citing evidences and historical facts by either parties which is external to the contract . Privity states that only those who are party to the contract can claim to have any legal interest or right in the contract . However, a party in the contract can assign a third person to act on behalf of him/her. Also, any intended beneficiary of the contract can sue the contract to obtain his/her benefit.
Define “discharge” in relation to a contract. Identify and BRIEFLY describe the different ways that a contract may be discharged.
In a contract, discharge is the legal term that describes its termination or completion. The different ways of discharging a contract include -
Discharge by Performance- When both parties are involved in the contract performance
Discharge by Breach- Occurs when one party fails to perform the contract and the second party having no obligation to adhere to the contract
Discharge by Anticipatory Breach- When one party informs the other that he is not willing to or cannot perform as agreed or acts in a way that does not inspire confidence to the other party/parties involved, the other party/parties can discharge the contract based on anticipatory breach.
Discharge by agreement of the parties- A contract that comes in to effect through mutual agreement can be discharged as well, mutually, if both the parties are not interested in performing the contract owing to various reasons.
Discharge by Operation of Law- Four categories of occurrences come into play here- subsequent illegality, bankruptcy and statute of limitations.
What must an individual prove to show that a contract was breached? Describe the types of damages a person may receive if she is a victim of a breached contract. If a contract is breached, what remedies other than damages may be required?
In order to claim the damages, the following should be made available for the case-
Proof of existence of the contract
Proof of contract breach by the defendant
Proof that, as a result of the breach, the plaintiff has suffered damages/injuries/losses
The types of damages that the plaintiff can expect to receive include compensatory damages, consequential damages, liquidated damages and punitive damages. Other remedies include specific performance, injunction and reformation & rescission .
What is Article 2 of the Uniform Commercial Code and what is its purpose? What are the primary impacts of this article on sales contracts?
Article 2 of the Uniform Commercial Code specifically deals with the sale of personal property and goods. The article imposes higher standards of conduct on merchants, sale of goods worth $500 or more will be subjected to the statute of frauds, permits greater flexibility in creation of sales contracts and helps in better interpretation of the meaning of a sales contract .
References
Emerson, R. W. (2015). Business Law. New York: Barron's Educational Series, Inc.
Karen L. Morris, N. G. (2008). Hotel, Restaurant and Travel Law: A Preventive Approach. New York: Cengage Learning.
