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                               REVIEW FOR EXAM #2   1)

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                REVIEW FOR EXAM #2

 

1). What the elements of a contract? Ch. 10

1.Elements: Agreement, consideration, legal capacity to contract, lawful subject matter, genuine consent and compliance with the statute of frauds

1. 1. 1. Manifestation of mutual assent
         1. contract must have offer and acceptance to be in effect
      2. consideration
         1. Consideration Is legally sufficient if what is given in exchange is of legal detriment or legal benefit to the promisor (even exchange doesn’t matter)
            1. CONTRACT HAS TO HAVE LEGAL SUFFICIENCT TO BE BINDING IN EFFECT
         2. CONSIDERATION- something of value/ something bargained for, in exchange of a promise (both parties get/give something), does not have to be currency
            1. legal sufficiency of consideration: an exchange for the promise, the promisee either incurs a legal detriment, or confers a legal benefit on the promiser
            2. Legal detriment: act, promise to act, or promise to refrain from acting; an exchange for the promise to the promisee who either did something or undertook to do something that the promisee had no previous legal obligation to do
2. What are the differences among void, voidable, and unenforceable contracts? Ch. 10
   1. Void contract:
      1. A contract based on an ILLEGAL promise of exchange is VOID.
      2. when there’s an essential element is missing
      3. void consists of  illegal subject matter
   2. voidable contract:
      1. is a good contract, but one of the parties is able to avoid liability on it? Generally, all of the elements are present, but a party is able to show grounds for avoiding liability (e.g. duress, fraud in the inducement, etc.). exception: if the first three elements are present (conset, consideration, legality), but the fourth element (capacity) is missing, the contract is voidable at the option of the party lacking capacity.
      2. when one party has the right to avoid a legal obligation (like a minor)  (such as those with legal ability enter contracts) or when fraud is involved.
   3. Unenforceable
      1. Some contracts were legal and enforceable when they were made, but a change has made them UNENFORCEABLE
      2. Being contradictory to public policy, or violating statutes makes contracts unenforceable.
3. What are the remedies at law and remedies in equity? What are the different kinds of money damages? What are the examples of equitable remedies and what must the plaintiff first show before being entitled to an equitable remedy?
   1. Remedy in equity
      1. Any plaintiff seeking an equitable remedy, has to first establish that the remedy at law is not adequate
      2. Equitable remedies:
         1. Injunction: Warning (you’re doing this, stop doing it; you’re not doing this, start doing it)
         2. Recission of a contract: innocent misrepresentation of a contract
         3. equitable remedy of a specific performance: plaintiff is asking court to enforce the contract according to its terms ex, A makes a contract with B, then A backs out, B sues for specific performance to hold up the contract
   2. Remedies law
      1. Includes money damages
   3. Different types of money damages
      1. Compensatory damages:
      2. Punitive:
         1. Punitive damages are awarded in addition to actual damages when the defendant behavior is especially harmful
            1. not ordinary negligance
         2. are strictly tort damages
            1. you don’t get punitive damages from breach (punitive is not contract; not recoverable for breach of contract)
4. What is meant by “discharge” of a contract? Examples? Ch. 10
   1. Presupposes an existing contractual obligation that no longer exists
   2. When the obligations have been performed and the party is no longer obligated it is called a discharge
   3. Obligation can be discharged by condition, law, or performance (once it’s done, so there no further duty)
   4. Both parties are discharged by 1. Failure of a condition? 2. Performance impossible 3. Rescission? 4. Accord and satisfaction
      1. Contracting parties always have the right to change, modify or rescind contract
      2. Discharge by agreement
         1. Mutual rescission: occurs when both parties agree that the contract should be terminated without performance.
         2. Substituted contract (novation): all the parties agree to discharge one party from the contract and create a new contract with another party, who becomes responsible for the discharged party’s performance.
         3. Accord and satisfaction: An accord is an agreement by the parties to offer and accept some performance different from that originally bargained for. Satisfaction is the actual performance of the new obligation. The original obligation is discharged when the new consideration is provided.
      3. Discharge by breach
         1. If the breach of contract is material, the non-breaching party is discharged from further performance (objective duty has to be done fully, or there is a breach, cannot be replaced by substantial)
            1. Anticipatory breach: party is notified before performance by defendant that there backing out ex, homeowner feels painter isn’t motivated so discharges contract
            2. Material breach is one that goes to the essence of contract
               1. discharges the non breaching party from any further duty (marketable title has to be conveyed at closing)
               2. Ex, if seller backs out (from paying for something etc..); essence of contract is essentially selling and rightfully paying- doesn’t factor in delay in performance
         2. Has to do with whether the contract was performed

 

1. Discharge of a contract means termination of the contractual relations between the parties to a contract. A contract is said to be discharged when the rights and obligations of the parties under the contract come to an end.
2. Example: A" agrees to deliver one cycle to "B" on Sunday. He does not deliver the cycle on Sunday. There is breach of contract.

5.  What is the Parol Evidence Rule?

1. Restricts the use of oral (parol) evidence in a lawsuit when the evidence is contrary to the written terms of a contract. Oral evidence cannot contradict, add, or change terms of a written contract. May be introduced when the introduced when the written contract is ambiguous or incomplete.

a. Evidence agreed in writing

6.  What is the difference between legal sufficiency of consideration and adequacy of consideration?

a. Adequate consideration whether or not the party made a good or bad deal.

B. Legal sufficiency- Something of legal value must be given in exchange for a promise.

7.  What is the difference between the common law of contracts and Article 2 of the Uniform Commercial Code?

a. UCC and common law are constant.

Only worry about common law-

Definition: Contract law is governed by the common law and the Uniform Commercial Code "UCC." Common law governs contractual transactions with real estate, services, insurance, intangible assets and employment.

8.  What distinction is there between fraud in the execution (aka fraud in the inception) and fraud in the inducement?  Between “actual fraud” and “constructive fraud.”

a. Fraud in the Execution occurs when the defrauded party was tricked into signing a contract under circumstances in which the nature of the writing could not be understood.

b. Fraud in the Inducement occurs when the party defrauded intended to make the contract but was told a false statement regarding the terms or obligations of the transaction between the parties.

c. Constructive fraud is a legal fiction describing a situation where a person or entity gained an unfair advantage over another by deceitful or unfair methods. Fraudulent intent

d. Actual fraud is fraud that is committed with the actual intent to deceive and thereby injure.

9.  What is the difference between absolute performance and substantial performance?

1. absolute performance-  Fulfills the whole contract or doesn’t
2. Substantial performance-  Can’t measure performance from a standard of absolute

                For example: Construction contracts

 

 

10.     What is a tort?  What kinds of torts justify the recovery of punitive damages?  What are the two paradigms of tort law?

 

A.) Tort is a breach of duty owed to another that causes harm. Liability is imposed for conduct that unreasonably interferes with the legally protected interests of another. B.) only for Intentionals Torts. Cannot exceed 3 times the actual damages (in some cases) and ordinary negligence will not result in punitive damages. C.) Fault Paradigm- Negligence, Intentional Torts. Strict Liability- falls within reciprocal risk

a. Civil wrong other than breach of contract.

11.     What is concurrent ownership of property?

1. 1.) Tenancy in common - a shared tenancy in which each holder has a distinct, separately transferable interest.
2.                 2.) joint tenancy - A type of property right where two or more people own or rent a property together, each with equal rights and obligations, until one owner dies. Upon an owner's death, that owner's interest in the property passes to the survivors without the property having to go through probate
3.                 3.) tenancy by entirety- a method in some states by which married couples can hold the title to a property. In order for one spouse to modify his or her interest in the property in any way, the consent of both spouses is required by tenants by entirety.
4.                 4.) community property- is a marital property regime under which most property acquired during the marriage (except for gifts or inheritances), the community, is owned jointly by both spouses and is divided upon divorce, annulment, or death

12.     What is the difference between real and personal property?

1. Real property refers to land; things under the land, such as oil and minerals; and things solidly attached to the land, such as buildings and trees.
2.  Personal property refers to physical things that are movable, such as furniture and clothing (traditionally called chattel).

13.     What is the significance of recording statutes in real estate law?

1. So the whole word knows your interest on the property. Making sure that note is secured , (constructive notice)

14.     What are the stages in a sale of land?

1. Contract stage- Negotiation state of a contract nothing is official
2. Closing stage - Event at which possession and title to real estate normally are transferred from seller to buyer.