Contracts

Question 1

What are the 2 governing laws of contracts?

Answer 1

UCC for goods.

Common law for services real property.

Question 2

What 2 things can make someone a merchant under the UCC?
(either one on its own makes someone a merchant)

Answer 2

They:
regularly deal in goods of the kind involved in the transaction;
or
have special knowledge or skills from their occupation related to the goods or practices involved

Question 3

What is the Predominant Purpose Test

Question 4

What are the elements of a contract?

Answer 4

(1) Offer,
(2) Acceptance, and
(3) Consideration.

Question 5

What are the elements of an offer?

Answer 5

(1) Manifestation of intent to be bound by contract;
(2) definite and certain terms; and
(3) communicated to an identified offerree.

Question 6

What is a unilateral contract?

Answer 6

A contract where the offer can only be accepted through performance. Payment is only due if the act is completed.

examples:
(1) promise to pay $ to whoever finds lost dog. K is binding only if dog is found and finder knows of the reward.
(2) contests. One party promises a prize (or eligibility for one) if another party completes a defined task.

Question 7

When can an offeror revoke a unilateral contract?

Answer 7

Any time before offerree begins performance.

Question 8

Generally, offers are revocable until _____?

Answer 8

Until ACCEPTED.

Question 9

Is a mere invitation to offer considered an offer?

Answer 9

No.

Question 10

What is the perfect tender rule under the UCC?

Question 11

Does the parol evidence rule bar the use of evidence from PRIOR or SUBSEQUENT to signing of the contract to show modification of the contract terms?

Answer 11

Parol Evidence Rule bars the use of evidence from PRIOR to signing of the contract to show modification of terms.

Question 12

What 2 things are needed for an offer to satisfy the “definite and certain” requirement in land sale contracts?

Answer 12

Satisfied if the offer:
(1) includes price: and
(2) an adequate description of the land being sold

Question 13

What is the most important offer term for the sale of goods?

Answer 13

Quantity.

Question 14

What requirement is satisfied in both requirements(?) and output contracts?

Answer 14

Quantity

Question 15

Can an offer be accepted if it is terminated prior to acceptance?

Answer 15

No.

Question 16

Offeror can revoke an offer at will, even if he promised not to revoke for a certain period.

What are the 5 times an offer CANNOT be revoked at will?

Answer 16

(1) options
(2) merchant’s firm offer
(3) detrimental reliance
(4) part performance (unilateral contracts)
(5) part performance (bilateral contracts)

Question 17

How can lapse of time terminate an offer?

Answer 17

An offer may be terminated by the offeree’s failure to accept
(1) within the time specified by the offer; or,
(2) if no deadline was specified, failure to accept within a reasonable period.

Question 18

What is an option?

Answer 18

An option is a distinct contract in which
- offeree gives consideration
- for a promise by the offeror
- to not revoke the offer for a certain period of time

Question 19

What does the Merchant’s Firm Offer Rule do?
(Rewrite this card’s answer more clearly)

Answer 19

Makes a merchant’s offer to buy or sell goods that was conveyed in a signed writing not revocable for lack of consideration for the time stated in the writing’s terms, or for a reasonable amount of time.

Under the Merchant’s Firm Offer Rule,
- An offer by a merchant to buy or sell goods contained
- in a signed writing that, by its terms, gives assurances that it will be held open
- is not revocable for lack of consideration for the time period stated in the terms
- or at least for a reasonable time, not to exceed 3 months

Question 20

How does detrimental reliance prevent an offer from being revoked?

Answer 20

• When the offeror could reasonably expect that the offeree would rely to her detriment on the offer,
• and the offeree does so rely,
• the offer is irrevocable as an option contract for a reasonable length of time

Question 21

What are the rules regarding part performance of a unilateral contract and revocation?

Answer 21

Offer for a true unilateral contract becomes irrevocable when performance begins.

Offeror must give offeree a reasonable time to complete performance.

Offeree is not bound to complete the performance and can withdraw at any time prior to completion.

No acceptance of the offer until performance is complete.

Question 22

What are the rules regarding part performance of a bilateral contract and revocation?

Answer 22

A bilateral contract may be formed upon start of performance by the offeree.

Once performance has begun, the contract is complete and revocation is impossible.

Question 23

What is an express rejection?

Answer 23

An express rejection is a statement by the offeree that she does not intend to accept the offer.

Question 24

When is a rejection effective?

Answer 24

A rejection is effective when received.

Question 25

How are counteroffers treated?

Answer 25

A counteroffer - serves as a rejection of the initial offer and - is treated as a new offer.

Question 26

How is attempted acceptance of a contract with different terms treated at common law?

Answer 26

At common law, an attempted acceptance with different terms - constitutes a rejection of the prior offer - and is considered a new counteroffer that includes the added terms, which can then be accepted or rejected by the original offeror.

Question 27

How are additional terms contained in an acceptance treated under the UCC?

Answer 27

Under the UCC, additional terms in an acceptance will become part of the contract unless (1) one party is not a merchant, (2) the offer is limited to the terms within the offer (3) the original offeror objects to the added terms within a reasonable time, or (4) the additional terms materially alter the obligations of the parties.

Question 28

What 3 things terminate a contract by operation of law?

Answer 28

A contract will be terminated by operation of law by (1) death or insanity of either party (2) destruction of the subject matter, or (3) a supervening illegality (which renders performance illegal)

Question 29

What is an acceptance?

Answer 29

An acceptance is - a manifestation of assent - to the terms of the offer - in the manner prescribed or authorized by the offer.

Question 30

How may an offer be accepted?

Answer 30

Unless otherwise provided, an offer may be accepted - in any reasonable manner - and by any medium reasonable under the circumstance. At common law, mirror image rule applies and the acceptance must mirror the offer.

Question 31

Is a unilateral contract only accepted when there has been complete performance?

Answer 31

Yes.

Question 32

What are the 2 ways in which a bilateral contract may be accepted?

Answer 32

A bilateral contract may be accepted either by (1) a promise to perform, or (2) the beginning of performance.

Question 33

How is an offer to buy goods for current or prompt shipment construed under the UCC?

Answer 33

Under the UCC, an offer to buy goods for current or prompt shipment is construed as inviting acceptance either by (1) a promise to ship, or (2) by current or prompt shipment of conforming or nonconforming goods.

Question 34

Under the UCC, how is a shipment of nonconforming goods construed?

Answer 34

Under the UCC, a shipment of nonconforming goods is construed as both (1) an acceptance creating a bilateral contract, and (2) a breach of contract Unless the seller notifies the buyer that a shipment of nonconforming goods is offered only as an accommodation.

Question 35

When is an acceptance effective under the Mailbox Rule?

Answer 35

Under the Mailbox Rule, an acceptance is effective upon dispatch.

Question 36

What are the 4 situations where the mailbox rule does not apply?

Answer 36

Mailbox Rule does not apply where (1) offer expressly requires acceptance on receipt (2) in an option contract, acceptance must be received prior to the expiration of the option (3) the offeree sends a rejection then sends an acceptance, in which case the first one received would be effective (4) offeree sends an acceptance, then a rejection, in which case the acceptance is effective. Unless the rejection was received first and the offeror detrimentally relied on the rejection.

Question 37

What does consideration for a contract require?

Answer 37

Consideration requires - a bargained for exchange - between the parties - involving legal value.

Question 38

Can promissory estoppel be a substitute for consideration?

Answer 38

Yes.

Question 39

Is performing or promising to perform an existing legal duty sufficient consideration?

Answer 39

Generally, no.

Question 40

What 6 kinds of contracts are required to be evidenced by a writing under the Statute of Frauds?

Answer 40

1. Marriage contracts 2. Contracts for the sale of goods $500 or more (UCC rule) 3. Any contract where performance cannot be completed within 1 year 4. Contracts for the sale of land 5. Contracts guaranteeing the debt of another 6. Executor contracts

Question 41

What does the Statute of Frauds require to be in a writing?

Answer 41

When the Statute of Frauds requires a writing, it must be - signed by the party to be charged, and - must contain all material terms.

Question 42

Does a UCC Confirmatory memo between merchants that summarizes the terms of the agreement satisfy the Statute of Frauds requirement?

Answer 42

Yes. Specifically between merchants.

Question 43

What 3 things are required for a mutual mistake to void a contract?

Answer 43

A mutual mistake voids the contract if (1) it concerns a basic assumption of the contract (2) there is a material effect on the agreed upon exchange, and (3) there has been no assumption by the adversely affected party.

Question 44

A unilateral mistake does not make a contract voidable unless __?

Answer 44

Unless the non-mistaken party knew or should have known of the mistake.

Question 45

An alleged contract is not valid unless both parties intended ___

Answer 45

Unless both parties intended the same meaning of a term.

Question 46

How is an ambiguous term’s meaning interpreted when a contract is formed where one party is aware of the ambiguity and another isn’t?

Answer 46

If one party is aware of the ambiguity, the contract is formed with the meaning of the unaware party’s meaning.

Question 47

Illegality of what 2 things voids a contract?

Answer 47

Illegality of - consideration, or - subject matter Voids a contract.

Question 48

When is a party said to lack capacity to contract?

Answer 48

A party lacks capacity if they are - under 18 - insane, or - intoxicated.

Question 49

Unconscionability as a defense to contract formation has a procedural and a substantive component. Both must be fulfilled in order to use the defense. What is required to show each?

Answer 49

Procedurally: - parties must have unfair bargaining positions Substantively: - the substance of the agreement is unfairly one-sided in favor of the party with greater bargaining power. Once both are satisfied, contract is unconscionable.

Question 50

A misrepresentation of material fact (Fraud) inducing a party to contract can make the contract voidable unless __?

Answer 50

Unless reforming the contract to eliminate the fraud can be accomplished without materially affecting the contract.

Question 51

Can duress make a contract voidable?

Answer 51

Yes. Physical or mental duress of the plaintiff, caused by the defendant, makes the contract voidable.

Question 52

What is the easy way to determine whether the agreement in question is a unilateral or bilateral contract?

Answer 52

Unilateral: promise for reward Bilateral: promise for promise