Contract Law

Question 1

What are some Contract offer and acceptance basics?

Answer 1

1. Acceptance can be written or oral
2. Must be accepted by intended party (offeree)
3. Acceptance can only be made by a party who knows an offer has been made and has all of the facts –a.k.a. a meeting of the minds
   o They must intend to accept
   o Acceptance should be in form required by offeror
   o If Offeror requires certified mail and you send an e-mail – it’s not acceptance
   o If offeree accepts but puts added stipulations, it is not acceptance, but instead becomes a counter-offer and the original offeror is now the offeree
4. If offeror dies or becomes insane before acceptance, offer is void
   o Contract is binding if acceptance occurs before death/insanity

Question 2

CONTRACT REVOCATION

Answer 2

1. Offeror can revoke an offer but the revocation doesn’t count until the offeree receives it
2. If offeree finds out prior to acceptance that the offeror has sold the item, it counts as revocation and they cannot accept
3. Option – some amount of consideration (like money) is put forth by offeror to keep the offer open for a stated period of time
   o Offeror cannot revoke until the time has lapsed on the option
   o Initial rejection by offeree doesn’t void the option

Question 3

What are contract requirements?

Answer 3

1. These are contracts where someone becomes the exclusive provider of something in exchange for consideration
2. Companies can’t get locked in to one and then have market conditions force them to sell something at what has become an unreasonable price

Question 4

What is Promissory Estoppel?

Answer 4

1. Basically, you can’t tell a charity, Hey, if you buy this $100,000 piece of land, I’ll pay for the building that will go on it. and then renege on your promise
2. Promises to donate are legally enforceable

Question 5

What are invalid contracts?

Answer 5

1. Fraud in the Execution
o Person didn't know they were signing a contract
o Void
2. Fraud in the Inducement
o Person knew they were signing a contract, but were somewhere mislead as to what they were agreeing to - Voidable
3. Not Competent to Contract
o Person unable to enter into a contract due to competence - Voidable
4. Duress
o Extreme - Void
Gun to their head and were forced
o Simple - Voidable
5. Undue Influence
o Voidable
Parents get 18-year-old to sign contract
6. Illegal
o Void
o Contract was illegal in nature
Person signed a contract to be a hitman
7. Error
o Unenforceable
Person signs a contract to pay $500.00 to have their lawn re-seeded but due to clerical error, it actually reads $5000.00

Question 6

What are Contracts made under the Statute of Frauds?

Answer 6

These contracts must be in writing:
o Cannot be completed within one year
o Involves the purchase of real estate
o $500+ Sale of Goods
o Co-signing and guranteeing the debt of another

Question 7

Fraud in the Execution

Answer 7

• Void

Question 8

Fraud in the Inducement

Answer 8

• Voidable

Question 9

Not Competent to Contract

Answer 9

• Voidable

Question 10

Undue Influence

Answer 10

• Voidable

Question 11

Duress–Extreme

Answer 11

• Void

Question 12

Duress–Simple

Answer 12

• Voidable

Question 13

Illegal

Answer 13

• Void

Question 14

Error

Answer 14

• Unenforceable

Question 15

What are parole evidence rules?

Answer 15

1. Prevents one party to a written contract from coming in after the fact and claiming that a certain conversation took place that contradicts what is agreed upon in the written contract
2. It also prevents using an oral argument to read into the meaning of what is written on paper
3. If it’s on paper, it trumps what was agreed-upon orally prior to the written contract
4. Caveat
   o The Parole Evidence Rule does not:
   * Negate oral agreements made after the written contract
   * Disallow oral words to clarify ambiguous contract language

Question 16

Are contracts assinable to 3rd parties?

Answer 16

Yes, Contracts are assignable to a third party beneficiary, but must be done so in good faith

Question 17

Are Obligations assignable?

Answer 17

Yes and
o Assignor is still liable
o Assignor may be released from liability if other party grants a novation
When can Contracts be discharged by Law?
o Party under Contract is bankrupt
o Party under Contract dies or is incapacitated
o Party cannot physically complete the Contract
They are in prison, so they can’t finish building the new addition to your house