Contracts

Question 1

Implied-in-Fact Contract

Answer 1

Formed by manifestations of assent other than oral or written language (i.e. by conduct).

Question 2

Contract Formation

Answer 2

In order to accept an offer, you have to know of the offer to begin with.

Question 3

Battle of the Forms

Answer 3

• Both parties must be merchants
• If the offeree accepts the offer and makes a material alteration to that offer, there’s a contract on the terms and material alteration is not part of it
• If the offeree accepts and makes a nonmaterial change to contract, then the nonmaterial alteration will be included in the contract unless the offeror timely objects
• Material alteration is any change to an offer that effects money, liability, or remedies for a breach of contract (i.e. arbitration)
• If the offeree makes acceptance conditional upon asset to an additional term, then this is a rejection and counteroffer

Question 4

Offer Termination

Answer 4

• Offeror revokes prior to acceptance
• Offeree rejects offer
• Offeree makes a counteroffer
• Lapse of time (stock options; service contracts)

Question 5

Mailbox Rule

Answer 5

• Only applies to acceptance
• Acceptance is effective upon dispatch, not receipt
• If you write down the address incorrectly, rule doesn’t apply and acceptance is not effective upon dispatch, only receipt
• DOES NOT APPLY TO OPTIONS
○ Acceptance has to be in seller’s hand before option expires
• Does NOT APPLY when offeree sends a rejection followed by an acceptance
○ Here, whichever is received first controls
○ DOES apply to the reverse - when you send an acceptance and then a rejection

Question 6

Options

Answer 6

• Promise to keep an offer open for a period of time
• Common Law: must be supported by consideration
• UCC - Merchant’s Firm Offer Rule: no consideration needed if offer made by merchant offeror in writing who promises to irrevocably keep offer open for term (no more than 3 months/90 days)

Question 7

Gap Fillers - UCC

Answer 7

• Court can fill in missing terms
• Court cannot fill in quantity!
○ Exception: Requirements contract - no quantity term needed; measured by buyer’s good faith need

Question 8

Consideration

Answer 8

• Past consideration is not consideration
• Moral obligation is not consideration
• Adequacy of consideration will not be contemplated by court - consideration has to exist, but they don’t look at adequacy

Question 9

Promissory Estoppel

Answer 9

• Substitute for consideration

* Reasonable reliance on a promise

Question 10

Mutual Mistake

Answer 10

Both parties are mutually mistaken about contract terms

○ If mistake goes to essence of contract, grounds for rescission

Question 11

Unilateral Mistake

Answer 11

Only one party mistaken about terms of contract
○ Will not prevent contract formation
○ Exception: if the non-mistaken party knows or has reason to know of other party’s mistake, will not be able to keep benefit of bargain

Question 12

Modification - Common Law

Answer 12

In order to have a valid modification to an already existing contract, need new consideration - preexisting duty rule

Question 13

Modification - UCC

Answer 13

○ Allow for good faith modification with no consideration

○ Does not have to be in writing if both parties agree

Question 14

Statute of Frauds Categories

Answer 14

• Marriage contracts
• Years, term of (excess of 1 year)
• Land sale
• Executory contracts
• Goods, sale of over $500
○ Merchant’s 10 day exception - if both parties are merchants and one merchant w/in reasonable amnt of time after entering into oral agreement w/ other merchant sends a written confirmation of the oral agreement, binds the sending party immediately. If recipient merchant does not reject to terms of written confirmation w/in 10 days of receipt, binds recipient as well
• Surety contracts - promises to answer for debt of another; guarantees

Question 15

Perfect Tender Rule - UCC

Answer 15

• A seller must deliver perfect tender to a buyer
• Delivery of non-conforming goods is both acceptance and breach of contract by seller
• Buyer’s Options:
○ Buyer can accept goods and pay contract price
○ Buyer can timely reject goods and sue for damages
○ Buyer can accept in part and reject in part
• If the delivery of non-conforming goods is accompanied by notice of accommodation then it is not a breach, it is a counteroffer

Question 16

Breach & Remedy

Answer 16

• Note: Non-breaching party is expected to cover to mitigate damages
• If breaching party sues, entitled to reasonable value of services provided - the damages incurred by non-breaching party
• No unjust enrichment for non-breaching party

Question 17

UCC Standard Remedy for Breach

Answer 17

• For Buyer: Cover Price - Contract Price = Buyer’s Standard Remedy
• Non-Breaching Seller: Contract Price - Resale Price = Seller’s Standard Remedy
• Volume Sellers: Remedy = Lost Profits

Question 18

Third Party Beneficiaries - Vesting

Answer 18

• Prior to TPB's rights vesting, contracting parties can modify contract
• Vest when…
	○ Learn of contract AND assent to it
	○ Learn of contract AND rely on it
	○ Learn of contract AND sues on it

Question 19

Parol Evidence Rule

Answer 19

• Bars the introduction of prior or contemporaneous oral agreements that vary or modify terms of a complete and totally integrated contract
• Some Exceptions:
	○ Contract formation defenses
	○ Trade usage
	○ Prior dealings
	○ Evidence of a condition precedent

Question 20

Excuses to Performance

Answer 20

• Objective impossibility

* Act of God

Question 21

Assignments and Delegations

Answer 21

• All contracts are assignable and delegable EXCEPT unique personal service contracts and long-term requirement contracts
• Can be oral OR in writing
• Can be gratuitous/not for consideration (generally revocable) or for value (generally irrevocable)
○ If there’s reliance, can mean that revocable assignment can be revoked

Question 22

Novation

Answer 22

New contract substituting out one of the original parties for a new party and all the terms remain the same