11 Questions
What is the term used to describe the proposal made by one party to another party expressing the willingness to enter into a contract?
Counteroffer
In a unilateral contract, what is required for acceptance?
Full performance
Which term refers to the value given by each party in the exchange, and is necessary to create a legally enforceable contract?
Consideration
What happens in a breach of contract?
One party fails to fulfill obligations
If non-performance of a contract leads to losses, what can be claimed to compensate for these losses?
Damages
Which of the following is NOT a valid method for terminating a contract?
One party unilaterally deciding to terminate the contract
Which of the following individuals would typically NOT have the capacity to enter into a legally binding contract?
A 16-year-old high school student
Which of the following is NOT a necessary element for a valid contract?
Written documentation
What is the term used to describe a situation where an unexpected event fundamentally changes the nature of a contract, potentially allowing for its termination?
Frustration of purpose
Which of the following statements about consideration in a contract is TRUE?
Consideration can be a promise to perform an act or refrain from an act
If one party fails to fulfill their obligations under a contract, what is this called?
Breach of contract
Study Notes
Contracts
Contracts are legally binding agreements between individuals or organizations that outline the terms and conditions of an exchange. They establish a duty to perform and obligations that can be enforced in court. This article explores various aspects of contracts, including contract termination, capacity to contract, offer and acceptance, consideration, and breach of contract.
Contract Termination
Contracts can be terminated through various methods:
- Mutual consent: Both parties agree to end the contract.
- Performance completion: Once both parties fulfill their respective obligations, the contract ends.
- Impossibility of performance: If the performance becomes impossible due to a change in circumstances, the contract automatically terminates.
- Frustration: If an unexpected event occurs that fundamentally changes the nature of the contract, it can be terminated due to frustration of purpose.
Capacity to Contract
Individuals must have contractual capacity to enter into agreements. Legal incapacity includes minors, mentally incompetent persons, and those under the influence of drugs or alcohol. However, close relationships, duress, undue influence, or mutual mistake can sometimes invalidate contracts.
Offer and Acceptance
To form a valid contract, three key elements are necessary: offer, acceptance, and consideration.
- Offer: This is a proposal made by one party to another party, expressing the willingness to enter into a contract and specifying terms such as price, quantity, and parties involved.
- Acceptance: This is the agreement of the other party to those terms. Acceptance must match the offer exactly unless it is a unilateral contract, in which case full performance is needed.
- Consideration: Consideration is the value given by each party in the exchange. It may be goods, services, or money. Consideration is necessary to create a legally enforceable contract.
Breach of Contract
A breach of contract occurs when one party fails to fulfill their obligations according to the agreed terms. This might involve non-payment, non-delivery, or poor quality goods or services. Damages may be claimed in such cases to compensate for losses suffered as a result of the breach.
Explore the fundamental concepts of contracts, including contract termination, capacity to contract, offer and acceptance, consideration, and breach of contract. Learn about key elements like mutual consent, performance completion, offer proposals, acceptance agreements, and consequences of breaches.
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