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168 Cards in this Set

  • Front
  • Back
Occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due:
anticipatory breach
Occurs when a party to a contract renders performance exactly as required by the contract; discharges that party's obligations under the contract:
complete performance
Occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing:
fraud in the inception

(The contract is VOID)
Occurs when one party to a contract refuses to perform his or her contractual duties unless the other party pays an increased price, enters into a second contract with the threatening party, or undertakes a similar action:
economic duress

(The duressed party must prove that she had no choice but to give in to the threat)
____ to enter into a contract may be manifested in any manner sufficient to show agreement, including express words or conduct of the parties:
A court order that prohibits a person from doing a certain act:
Damages that are generally equal to the difference between the value of the goods as warranted and the actual value of the goods accepted at the time and place of acceptance:
compensatory damages
Occurs when one party takes specific action to conceal a material fact from another party:
fraud by concealment
Occurs if a contracting party fails to perform an absolute duty owed under a contract:
breach of contract
Foreseeable damages that arise from circumstances outside the contract:
consequential damages
Occurs when a party fails to perform express or implied contractual obligations that impair or destroy the essence of the contract:
inferior performance
Under this implied covenant, the parties to a contract not only are held to the express terms of the contract but also are required to act and deal fairly in all respects in obtaining the objective of the contract:
covenant of good faith and fair dealing
Occurs when an agent makes an untrue statement that he or she honestly and reasonably believes to be true:
innocent misrepresentation
What is a personal defense against the enforcement of a negotiable instrument?
fraud in the inducement
Occurs where one party threatens to do a wrongful act unless the other party enters into a contract:

(Contracts made under duress are not enforceable against the innocent party)
A tort that arises when a third party induces a contracting party to breach the contract with another party:
intentional interference with contractual relations
Damages that will be paid upon a breach of contract that are established in advance:
liquidated damages
A nonbreaching party is under a legal duty to avoid or reduce damages caused by a breach of contract:
A mistake that occurs if both parties know the object of the contract, but are mistaken as to its value:
mutual mistake of value

(The contract is enforceable by EITHER party b/c the identity of the subject matter is not at issue.)
A breach that occurs when a party renders inferior performance of his or her contractual duties:
material breach
An equitable doctrine that permits the court to rewrite a contract to express the parties' true intentions:
An award of money:
monetary damages
When a seller or lessor fraudulently misrepresents the quality of a product and a buyer is injured thereby. Also called fraud:
intentional misrepresentation
An action to rescind (undo) the contract:
Damages awarded when the nonbreaching party sues the breaching party the breaching party even though no financial loss has resulted from the breach, usually consists of $1 or some other small amounts:
nominal damages
An assertion that is made that is not in accord with the facts:
An equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed:
quasi- or implied-in-law contract

(Intended to prevent unjust enrichment and unjust detriment)
Damages that are awarded to punish the defendant, to deter the defendant from similar conduct in the future, and to set an example for others:
punitive damages
Occurs when a party renders substantial performance of his or her contractual duties:
minor breach
A mistake made by both parties concerning a material fact that is important to the subject matter of the contract:
mutual mistake of fact

(either party may rescind the contract)
Returning of goods or property received from the other party in order to rescind a contract:
A remedy that orders the breaching party to perform the acts promised in the contract:
specific performance
To prove fraud, what 4 elements must be shown?
1) The wrongdoer made a false representation of MATERIAL FACT.
2) The wrongdoer INTENDED TO DECEIVE the innocent party.
3) The innocent party JUSTIFIABLY RELIED on the misrepresentation.
4) The innocent party was INJURED.
An unconditional and absolute offer by a contracting party to perform his or her obligations under the contract:
tender of performance
What 2 elements must be shown to prove undue influence?
1) A fiduciary or confidential relationship existed between the parties.

2) The dominant party unduly used his influence to persuade the servient party to enter into a contract.
Performance by a contracting party that deviates only slightly from complete performance:
substantial performance
When only one party is mistaken about a material fact regarding the subject matter of the contract:
unilateral mistake
What remedy is usually awarded in cases where the subject matter is unique, such as in contracts involving land, heirlooms, paintings, etc.?
specific performance
Occurs where one person takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person to enter into a contract or will:
undue influence

(contract is VOIDABLE only by the innocent party)
Occurs when a wrongdoer makes a false statement to another person to lead that person to enter into a contract with the wrongdoer:
Intentional misrepresentation (fraud)

(The contract is VOIDABLE only by the inncoent party)
In order to be liable for these damages, the breaching party must know or have reason to know that the breach will cause special damages to the other party:
consequential damages
What damages usually place the nonbreaching party in the same position as if the contract had been fully performed?
Compensatory damages
If one party holds a loaded gun to another party's head and forces her to sign a contract, the contract was signed under:
A transfer of the right to use real property for a specified period of time:

(Required to be in writing if lease is for a term of MORE THAN ONE YEAR)
A homebuilder has a clause in his contract with a construction company stating if the contractor fails to have certain work done by a certain day, then the homebuilder will be compensated a certain amount of ____ ____.
liquidated damages
Unconditional promises made in a contract:
Excuses performance if an unforeseeable event makes it impractical for the promisor to perform his or her duties:
commercial impracticability
What kind of damages is recoverable for certain tortious conduct associated with the nonperformance of a contract?
punitive damages
What law contains the basic Statute of Frauds provisions for sales contracts?
Section 201 of the UCC
What permits (allows) the enforcement of oral contracts that should have been in writing?
The doctrine of promissory estoppel
Available if there has been a material breach of contract, fraud, duress, undue influence, or mistake:
Lyle tells Candice he is forming a partnership to invest in drilling for oil and invites her to invest in this venture. In reality, Lyle intends to use the money he receives for himself, and he flees the country with Candice’s $30,000 investment. What has occurred?
Fraud in the inducement

(Candice can rescind the contract and recover the money from Lyle)
Describe the 3 types of monetary damages:
1. COMPENSATORY damages are intended only to compensate for the amount of damage & nothing else.
2. CONSEQUENTIAL damages compensate for unforeseeable special damages.
3. LIQUIDATED damages are agreed upon by the parties that set the amount of damages recoverable in cases of breach.
When Giles turns back the odometer on a car he is trying to sell, he is guilty of:
What is the remedy for legal misrepresentation?
Rescission only
Donna is suing Jack for legal misrepresentation in connection with a car that Jack sold. In order to win this lawsuit, Donna does NOT need to prove that Jack:
Made a statement that Jack KNEW was untrue.
Shirley told her 87 year old mother that the mother's 1200 acre farm was losing money and that the smart thing to do was to sell the farm for $500,000 to Ted. In truth the farm was worth $1,500,000 and Ted was planning to give Shirley a kick-back of $500,000 in exchange for inducing her mother to sell for only $500,000. This is an example of:
Undue influence
Beverly entered into a contract to purchase the original oil painting of the Mona Lisa. The painting was to be delivered to her in Idaho on September 29, 2003. However, the seller changed his mind and now refuses to deliver the painting, which remains in his collection. Beverly’s best remedy in this situation is:
Specific performance
Laura uses duress to induce Ron to enter into a contract. Ron may choose to:
Either carry out the contract or to avoid the entire transaction.
Pete offered Liz a job at his new law firm. In anticipation, Liz quit her job, moved 500 miles, bought a new computer and invested in a new set of law books. Shortly before the start date with Pete's firm, Pete informed Liz that he had changed his mind, and no longer wanted to hire her. Can Liz recover any damages?
Liz may recover damages under the doctrine of promissory estoppel.
Trey wants to buy a car from the dealership. Although he decides to buy a car with a sunroof, he does not tell the salesman about this preference. The model named in the contract does not have a sunroof, even though Trey believes it does. What has occurred?

Trey's unilateral mistake will NOT relieve him of his contract to purchase the car.
What is/are often challenged as being made undue influence?
What doctrine is applied to prevent injustice?
The doctrine of promissory estoppel
What must be shown to prove economic duress?
The duressed party must prove that he had no choice but to give in to the threat.
A(n) ____ in a contract may constitute a mutual mistake of fact.
What ensures that the terms of important contract are not forgotten, misunderstood, or fabricated?
The Statute of Frauds
Certain personal property that is permanently affixed to the real property:
Fixtures (EX: built-in cabinents in a house)
Suppose Ellen cleans her attic and finds an old painting. She has no use for it & sells it to Fred for $100. Ellen later finds out that the painting is worth $200,000. Can she recover it?
No - neither party knew the real value of the painting at the time of contracting. It is a MISTAKE OF VALUE.
A promise in which one person agrees to answer for the debts or duties or another person:
Collateral contract (also called a guaranty contract)
Wills are often challenged as being made ____ ____.
undue influence
A rule that states that an executory contract that cannot be performed by its own terms w/in one year of its formation must be in writing:
The one-year rule
An agreement that substitutes a new party for one of the original contracting parties and relieves the exiting party of liability on the contract:
A rule that states that agents' contracts to sell property covered by the statute of frauds must be in writing to be enforceable:
equal dignity rule
The person who agrees to pay the debt if the primary debtor does not:
A qualification of a promise that becomes a covenant if it is met:
Nonperformance that is excused if the contract becomes impossible to perform:
impossibility of performance

(it must be OBJECTIVE impossibility, not subjective)
A provision for contracts that says that the sale of goods costing $500 or more must be in writing:
UCC Statute of Frauds
What are the 3 types of situations in which a contract is not enforced due to a unilateral mistake?
1) One party makes a unilateral mistake of fact & the other party knew or should have known that a mistake was made.
2) A unilateral mistake occurs b/c of a clerical or mathematical error that is not the result of gross negligence.
3) The mistake is so serious that enforcing the contract would be unconscionable.
Beth entered into a contract with Rob for the sale of a VanGogh painting. Rob changes his mind & keeps the painting. Beth sues Rob for breach of contract. What will remedy will be available to Beth?
A remedy of SPECIFIC PERFORMANCE b/c the subject matter (VanGogh painting) of the contract is UNIQUE.
Suppose Heather brings her professor a grade card to sign. The professor signs the front of the grade card. On the back, however, are contract terms that transfer all of the professor’s property to Heather. What has occurred?
Fraud in the inception (the contract is VOID)
The settlement of a contract dispute:
accord and satisfaction
Jim lives in a small town that has only one employer, Big Lumber Mills (BML). Jim is offered a job at BML but must sign an employment contract, which states that under no circumstances will he sue BLM. 6 months later, Jim's arm is caught in a machine & must be amputated. Can Jim sue BLM even though he signed the contract?
Yes - Jim can hold BLM liable because the contract is UNCONSCIONABLE.
The occurrence or (nonoccurrence) of a specified event that excuses the performance of an existing contractual duty to perform:
condition subsequent
The Statute of Frauds requires that written contracts must be signed by:
The party against whom enforcement is being sought.
Explain the concept of a minor's duty of restoration.
If a minor had to place an adult in status quo upon disaffirmance of a contract, there would be no incentive for the adult not to deal with the minor.
What does genuineness of assent mean?
All parties to a contract must agree to the contract.
Generally, the courts tolerate a greater degree of uncertainty in ____ contracts than in ____ contracts.
Business, personal
Sara offers to buy 100 of Jill's bracelets in a signed letter w/ all the terms of the offer. The letter states that Sara will keep the offer open for three weeks. A week later, Sara writes Jill another letter to revoke her offer. One week after that, Jill writes Sara a letter to accept Sara’s original offer. What is the result?
Jill’s acceptance is effective and a contract is created.
The doctrine of promissory estoppel does NOT require ____:
Tom owns “Tom’s Flying” (TF). He uses his plane to take skydivers up. Tom has his clients sign a contract that says they will not sue him if he is negligent & they suffer injury/death. Brad signs this contract, but Tom is careless & Brad is injured. Is TF liable for its negligence in causing Brad’s injuries?
No, because this exculpatory clause is enforceable.
A person lacking mental capacity seeking to avoid a contract must return the other party to status quo when:
The other party was not aware of the person's lack of mental capacity.
A person who enters into an illegal contract may recover any consideration he/she paid when:
The party rescinds the contract before any illegal act has been performed.
If an offeree dispatches both an acceptance and a rejection to an offer:
Whichever response reaches the offeror first will determine whether a contract is created. (mailbox rule doesn't apply)
Susan and Joe entered into a contract for Susan to sell her car to Joe for $5,000. Delivery & payment are to be made on March 1. Joe needs the car so he can commute to his new job that starts on March 1. Susan fails to deliver the car to Joe on March 1. Joe has to rent a car at $30 per day for 20 days b/c of Susan’s breach of contract. If Joe sues Susan, what damages can he receive?
Consequential damages for the $600
John tells Sally he will sell her his car for $1,000. Sally agrees to buy the car on John's terms. The contract between John and Sally is ____, ____, & ____.
bilateral, executory, and express.
Paula and Quinn contract for the sale of Paula's horse for $1,000. Unknown to either party, the horse has died. Is Quinn liable for Paula’s damages?
No – Quinn is not required to pay due to the mutual mistake of fact.
The Statute of Frauds requires writing ONLY for contracts that are:
Punitive damages may be assessed against a defendant where the evidence shows that the defendant has committed:
Bill, age 17, buys a used car from Tom for $2,000 so that Bill can travel to his job. When Bill is 19, he wants to return the car and get his money back. What will result if Bill sues Tom for rescission?
Tom will win b/c Bill ratified the contract as an adult.
In determining whether to enforce a contract that requires writing, how many signatures are needed?
Need only the signature of one party - the party against whom enforcement is being sought.
Joe’s mother wanted him to stop smoking. She promised that if he would stop smoking for 6 months, she would buy him a car. Joe stopped smoking for 6 months, but his mother refused to buy him a car. What will happen if Joe sues his mother to enforce her promise?
Joe will win because:
1) his forbearance was good consideration
2) his mother made an enforceable contract promise
GenInc. contracts to build an office building for RP Properties. If GenInc. fails to do everything the contract requires but substantially performs its obligations under the contract, RP is entitled to:
Compensatory damages
Alice offers to sell her computer, monitor and printer to Brad for $300. Brad says he will accept provided that Alice includes her word-processing software. What is the status of their discussions?
There is no contract, because Brad has made a counteroffer.
Susan had a 3 year lease for an apartment owned by Bev. After 2 years Susan needed to move. She did not want to break her lease, so she introduced her friend Alex to Bev. Alex was a student w/ good references. Bev agreed to substitute Alex in the apartment in place of Susan, & to completely release Susan of all legal obligations to her original lease. This process is known as:
A novation
A famous publisher makes an oral contract with Allen to write a new Legal Ethics book. Both parties agree that Allen’s work will be due in five years. Is the contract enforceable?
No, because the duration of time is long-term.
An exculpatory clause in a contract can relieve a party of that party’s liability for:
Any harm done to the plaintiff as a result of the defendant’s careless act.
An oral contract which was required by the common law Statute of Frauds to be in writing is:
Valid but unenforceable
Adam sent Ben an offer by letter on June 1 to sell his skis for $200. Adam’s letter was received on June 3. On June 4 Ben sent his acceptance to Adam. This acceptance was received on June 6. However, on June 2 Adam changed his mind & sent a revocation to Ben; this letter was received on June 5. Based on these facts:
Ben’s acceptance is not effective b/c Adam sent a revocation before Ben sent his acceptance.
Jake enters into a contract with Bon Inc. to build a house for Jake. The contract calls for completion by no later than Oct. 3. The contract has a clause that states that if Bon Inc. is late in completion, then for each day of lateness they will deduct $75 from the amount Jake must pay. This clause may be described as:
Liquidated damages
Harold makes an oral agreement to purchase Tina’s boat for $700. Under the UCC:
Contract enforcement is barred by the Statute of Frauds b/c the good is more than $500.
The death of the obligor in a contract will have what effect on that contract?
It terminates only personal service contracts.
Contract offers become effective when they are:
Received, always
If Ed buys a motor home from Matt and Matt told him that the home had a new engine, but in truth Matt knew that it did not have a new engine. What can Ed do?
Ed can either:

1) Return the motor home and get his money back.
2) Keep the motor home and sue Matt for the difference in value between a motor home with and without a new engine
One who transfers to another all of his/her rights and duties to an existing contract will be relieved of all obligations under that original contract when:
There has been a novation of the original contract.
What must be done if a minor has transferred consideration to the competent party before disaffirming a contract?
The competent party must place the minor in status quo.
Which of the following promises does not have to be in writing to be enforceable?
a. Jones' agreement with Smith to sell his condominium for $100,000.
b. Stewart's promise to work for Austin for a two-year period.
c. Dad's promise to the credit union that he will make payments on his son's truck.
d. Mindy's agreement with Susan to buy her bike for $400.
d. Mindy's agreement with Susan to buy her bike for $400.
Wayne helped Hank study for an exam. After Hank got an A on the exam, he told Wayne, "I will give you $10 for helping me." Wayne said, "Thanks, I’ll take it." Is there a contract?
There is no contract because there is no valid consideration.
What kinds of contracts are generally not assignable?
Personal service contracts
Abel was tired of working on the family farm and wanted to move to Hollywood. His parents told him "if you'll stay and help us, we'll leave you the farm when we die." As a result, Abel stayed and worked there for the next 20 years. When his parents died, they left the farm to his brother. Was Abel’s parents’ promise enforceable?
Abel's parents' promise is enforceable under a promissory estoppel theory.
What 3 things happen if a minor does not disaffirm a contract either during the period of minority or w/in a reasonable time after reaching the age of majority?
1) The contract is considered ratified (accepted).
2) The minor (now an adult) is bound by the contract.
3) The right to disaffirm the contract has been lost.
Which remedy for breach of contract involves the issuance of a court order commanding the breaching party to carry out its contract obligation or face charges of contempt of court?
Specific performance
Jeff entered into an oral contract to provide lawn care and snow removal services to Sharon. They created this contract on January 1, 2004. Under the terms of the contract the work was to be performed from September 1, 2004, until March 1, 2005. Is there a contract?
The contract is valid but unenforceable because it violates the one-year rule in the Statute of Frauds
Jeff told Sue that the car he was selling had been used for only 40,000 miles. The odometer read 40,000. Sue purchased the car and then learned that the car actually had 240,000 miles. Jeff will be liable for either fraud or misrepresentation, depending on whether:
Scienter is present
Sue makes an oral agreement with ChairRite to create 100 custom-made chairs for her restaurant for $14,000. After ChairRite had shifted around its production schedule to produce the chairs, Sue calls ChairRite and says that she no longer wants the chairs and that their deal is off. Under this scenario:
The parties’ agreement is enforceable under the exception for specially-manufactured goods.
When are exculpatory clauses are enforceable?
If they are written to avoid charges of negligent misconduct.
Joe sent Sam a letter offering to sell his bike for $300. Sam accepted Joe’s offer & asked if he intended to leave the radio on the bike. The next day, before Sam’s letter arrived, Joe phoned Sam and told him that he had decided to sell his bike to Jake, who had offered him $400. What 3 things are true about this scenario?
1) Sam used an implied authorized means of acceptance.
2) Sam’s acceptance was effective when Sam’ letter was mailed.
3) Joe’s attempted revocation is ineffective.
What are the 3 exceptions which excuse impossibility of performance?
1) DEATH OR INCAPCITY OF THE PROMISER prior to the performance of a personal service contract.
2) DESTRUCTION OF THE SUBJECT MATTER of a contract prior to performance.
3) A SUPERVENING ILLEGALITY which makes performance illegal.
Exculpatory clauses can only relieve a party of ____, NOT ____.
Ordinary negligence, not gross negligence (also includes recklessness, fraud, willful conduct, or intentional torts)
What are the 2 legal consequences of a MATERIAL breach (inferior performance)?
Nonbreaching party may:

1) rescind the contract and recover restitution
2) affirm the contract and recover damages
A contract through which the parties agree not to disclose information covered by the agreement:
Nondisclosure agreement
A given or required right to use another person’s land w/out owning or leasing it:

Express: MUST be in writing to be enforceable
Implied: does not have to be in writing to be enforceable
What exists if an employment contract includes a clause that permits the employer to terminate the contract if the employee fails a contract?
A condition subsequent
What was the court’s issue and holding in the City of Everett, Washington v. Mitchell case?
ISSUE: Was a contract formed between the seller and the buyer of the safe?

HOLDING: Under the objective theory of contracts, a contract WAS formed b/t the seller and the buyer of the safe.
Karen tells Jim, “I'll pay you $200 if you paint my barn by Tuesday." Jim accepts her offer; but on Monday night, Karen comes in when the barn is almost painted & says, "Sorry, I withdraw my offer." Has a contract been formed?
This is a UNILATERAL contract – & is not formed until the act is completed. However, b/c the offeree already started completing his performance, Karen cannot revoke her offer.
What is true about contracts based on sexual favors?
They are considered IMMORAL CONTRACTS & thus held void against PUBLIC POLICY.
What are the 2 types of exculpatory clauses usually found to be void as against public policy?
1) exculpatory clauses that affect the PUBLIC INTEREST.

2) exculpatory clauses that result from SUPERIOR BARGAINING POWER.
What will the complete performance do to a contract?
It discharges (terminates) it.
What can the courts do if a covenant not to complete is found to be unreasonable?
They may either refuse to enforce it or change it so that is reasonable.
What happens if an oral contract that should have been made in writing under the Statute of frauds has already been executed?
Nothing – NEITHER party can rescind the contract since it has already been executed.
What are the 4 types of equitable remedies?
1) reformation
2) injunction
3) specific performance
4) quasi-contract
What are the 4 most common types of consideration?
1) TANGIBLE PAYMENTS ($$/ property)
3) FORBEARANCE OF A LEGAL RIGHT (i.e. accepting an out-of-court settlement in exchange for dropping a lawsuit)
4) NONECONOMIC FORMS (i.e. refraining from drinking, smoking, etc. for a specific period of time)
Clause in a contract that states that certain events will excuse the nonperformance of the contract:
Force majeure clause (usually excuses nonperformance caused by natural disasters)
What happens to the lessees of an apartment if their building is destroyed by fire?
There is an IMPOSSIBILITY OF PERFORMANCE & the lessees are discharged from further performance & are not required to finish or pay their lease.
Why will a covenant not to complete that is is NOT ancillary to a legitimate employment contract be considered void as against public policy?
Because the noncompete clause is not protecting a legitimate business interest.
____, ____, ____, & ____ become effective at the time of receipt by the offeror (exceptions to the Mailbox rule).
Rejections, revocations, offers, and counter-offers
Which lawsuits constitute duress?
Only the threat to bring (or not drop) a CRIMINAL lawsuit constitutes duress; civil lawsuits do not.
What are the 5 contracts that are required to be in writing according to the Statute of Frauds?
1) contracts involving interests in land (MELL)
2) contracts that cannot be performed in less than 1 year
3) collateral promises
4) contracts involving the sale of goods over $500
5) agents’ contracts
___ ___ is/are usually found in leases, sales contracts, ticket stubs to sporting events, parking lot tickets, service contracts, etc.
Exculpatory clauses
How do judges determine the morality of a contract?
They cannot define morality based on their own individual views. Instead, they must look to the practices/beliefs of society when determining immoral conduct.
What happens if a professional athlete dies prior to or during his contract period?
His contract w/ the team is discharged b/c there is an IMPOSSIBILITY OR PERFORMANCE.
Contracts made in confidential relationships (i.e. lawyer/client, doctor/patient) where the servient party benefits the dominant party are presumed to be:
Entered into by UNDUE INFLUENCE
What happens if there is an executory contract that should be in writing under the Statute or Frauds but is instead made orally?
The contract is considered UNENFORCEABLE but can be done voluntarily by either party.
Why are exculpatory clauses used by doctors and hospitals often struck down?
Because they are against PUBLIC POLICY
What are the 2 exceptions which make a preexisting duty enforceable (even though it lacks consideration)?
The promise is enforceable if:

1) the parties rescind the contract and enter into a new contract.
2) there are unforeseen difficulties.
When does the acceptance of a bilateral contract occur?
At the time the offeree DISPATCHES the acceptance by an authorized means of communication.
What are the only formalities required in written contracts?
Only the ESSENTIAL TERMS of the parties’ agreement (can be written on anything and does not have to be drafted by a lawyer).
What does the contracting party owe if a contractual duty has not been discharged (terminated) or excused?
The contracting party owes an ABSOLUTE DUTY (covenant) to perform his/her duty.
Condition in which a certain event must occur (or not occur) before a party is obligated to perform a contractual duty:
Condition precedent
Generally, the courts do not favor exculpatory clauses unless both parties have what?
Equal bargaining power
What are the 2 times that a minor must put an adult back into status quo upon disaffirmance of a contract?
1) If the minor’s intentional or grossly negligent conduct caused the loss of value to the adult’s property.
2) The minor misrepresented his/her age when entering into the contract.
If party Tim contracts with Matt to sell his car to him for $10,000, Tim can later assign the benefits of the contract - the right to be paid $10,000 - to Stacy. What role does each party play?
Tim - obligee/assignor
Matt - obligor
Stacy - assignee
Exculpatory clauses do not have to be ____.
Reciprocal (i.e one party may be relieved of tort liability while the other party is not).
What option does the nonbreaching party have when there has been a MINOR breach of contract (substantial performance)?
The nonbreaching party may recover damages caused by the breach.
Ben says to Sally, “If I decide to buy a horse next year, I will buy it from you.” This is an example of:
An ILLUSORY PROMISE, since whether Ben buys or not depends entirely on his own will.
What are the 4 contracts in which the transfer of an ownership of land MUST be in writing?
1) mortgages
2) easements (servitudes)
3) leases
4) life estates (usufructs)
What are the 2 contracts involved in a collateral promise?
1) Original/Primary Contract: made b/t the debtor and creditor; (does NOT have to be in writing)

2) Guaranty/Collateral Contract: made b/t the guarantor and the original creditor; (MUST be made in writing)
What serves to create a confidential relationship between one person who has a trade secret and another to whom the secret is disclosed?
A nondisclosure agreement
What are the 3 types of performance of a contract?
1) complete performance
2) substantial performance (MINOR breach)
3) inferior performance (MATERIAL breach)