1. novation
    Novation is available as a defense to a party who has been released from a contract. It occurs when a new contract substitutes a new party for an old party in existing contract. All parties must agree to release.
  2. accord and satisfaction and substituted contract
    an accord is an agreement to substitute one contract for another, and satisfaction is the execution of the accord. accord and satisfaction discharges the original duty.
  3. foreseeability
    Consequential damages are awardable only for those damages that at the time the contract was formed a party could reasonably foresee would result from a breach.
  4. mitigation
    (reasonable effort to avoid damages) under contract law a nonbreaching party cannot recover for damages that could have been reasonably avoided. S/he must mitigate damages.
  5. reasonable reliance
    the plantiff did actually and reasonable rely on the misrepresentation. (A in MAIDS)
  6. MAIDS
    a contracting party can establish the defense of fraud if (s)he can prove:

    • M: a misrepresentation of material fact
    • A: actual and justifiable (reasonable) reliance by the plantiff on the misrepresentation
    • I: an intent to induce plantiff's reliance on the misrepresentation
    • D: damages
    • S: scienter (knowing that the statement was false or made with a reckless disregard for the truth)
  7. when can punitive damages be collected
    only in the case of fraud
  8. to create a contract under common law what is needed
    • the identity of the offeree and the subject matter
    • the price to be paid
    • the time of performance
    • the quantity involved
    • and the the nature of the work to be performed
  9. True or False: a contract may have conditions precendent, subsequent, and concurrent
Card Set
Becker CPA Review Regulation: Contract