Contracts

Question 1

Termination by Offeror - Revocation

Answer 1

A revocation is effective when recieved (written communication is received when it is delivered to a place of business through which the contract was made or another location authorized to receive that communication)

A revocation may be done by direct communication to the offeree.

An offer made by publication can be directly revoked only through comparable means,

An offer may also be revoked indirectly if he recieves:

1. correct information
2. from a reliable source
3. of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer

Question 2

Limitations on Offeror’s Power to Revoke:

Answer 2

1. Options
2. Merchant’s Firm Offer Under Article 2
3. Detrimental Reliance
4. Beginning performance in response to true unilateral contract offer
5. Beginning performance in which offer is indifferent as to manner of acceptence

Question 3

Beginning performance in response to true unilateral contract offer

Answer 3

• irrevocable once performance has begun
  
  • substantial preperations to perform does not make this irrevocable, but may constitute detrimental reliance
• offeror must give offeree a reasonable time to perform
• offeree is not bound to complete performance
• no acceptence until performance is complete

Question 4

Termination by Operation of Law

Answer 4

1. death or insantity of either party
   
   • exception: option supported by consideration
   • death or insanity does not need to be communicated to either party
2. destruction of the proposed contracts subject matter
3. supervening illegality

Question 5

Auction Rules

Answer 5

UCC rules

Auction is complete when the hammer falls or in another customary manner.

An auction sale is with reserve unless the gooods are explicitly put up without reserve.

“With reserve” means the auctioneer may withdraw the goods at any time until he announes completion of the sale

Question 6

Exceptions to Preexisting Duty Rule

Answer 6

1. new or different consideration is promised
2. the promise is to ratify a voidable obligation
   
   • Ex: ratifying a K with a minor when he reaches majority
   • Ex: ratifying a K induced by fraud
3. the preexisting duty is owed to a 3rd person, not the promisor
4. there is an honest dispute as to the duty
5. unforseen circumstances sufficient to discharge a party
   
   • impracticalability

Question 7

Forebearance to Sue

Answer 7

A promise to refrain from suing may constitute consideration if the claim is valid or the claimant in good faith believe the claim was valid

Question 8

Damages for Promissory Estoppel (Detrimental Reliance)

Answer 8

Some jurisidctions - expectation damages

2nd Restatement - the remedy may be limited as justice requires - thus reliance damages

Question 9

Covenants not to Compete

Answer 9

Enforcable if the services to be performed are:

1. unique and
2. the covenant is reasonable. Reasonable is:
   
   1. necesseary to protect a legitimate interest
   2. reasonable to geopgraphic scope and duration
   3. must not harm the public

Question 10

Ways to have Absense of Mutuality

Answer 10

1. Mutual mistake as to existing facts
2. Unilateral Mistake
3. Mistake by the Intermediary (Transmission)
4. Misunderstanding - Ambiguous K languange
5. Misrepresentation

Question 11

Mutual mistake as to existing facts

Answer 11

• if both parties are mistaken about existing facts (not future) then the K may be voidable if:
  
  1. mistake concerns basic assumption on which K was made
  2. the mistake has a material effect; and
  3. the party seeking avoidance did not assume the risk
     
     • this occurs where the party asserting the mistake assumed the risk because he was in a better position to better know the risk than the other party
• Mistake in value is generally not a defense, because parties usually assume the risk that their value is wrong

Question 12

Defenses

Answer 12

1. Absense of Mutual Assent
2. Absence of Consideration
3. Public Policy Defenses - Illegality
4. Lack of Capacity
5. Statute of Frauds
6. Unconscionablilty

Question 13

Unilateral Mistake

Answer 13

If one party was mistaken the mistake will not prevent formation of the K unless the nonmistaken party knew or had reason to know of the mistake - then the K is voidable

Question 14

Mistake by Intermediary (Transmission)

Answer 14

the message “as transmitted” is operative unless the other party knew or should have known of the mistake

Question 15

Misunderstanding - Ambiguous K Language

Answer 15

Ambiguouty is the one area where subjective intent is taken into acct

If a term has two possible meanings, result depends on the parties awareness of the ambiguity:

• neither party aware
  
  • no K unless both parties intended same meaning
• both parties aware
  
  • no K unless both parties intended same meaning
• One party aware
  
  • binding K based on what the ignorant party reasonably believed to be the meaning of the ambiguous words

Question 16

Types of Misrepresentation & Remedy

Answer 16

1. Fraudulent Misrepresentation (Fraud in the Inducement) - K Voiadable
2. Nonfraudulent Misrepresentation - K voided if Material

Innocent party can rescind K and recover all available remedies

Question 17

Public Policy Defenses - Illegality

Answer 17

If the consideration or subject matter of the K is illegal, it is void. Exceptions:

1. P is unaware of the illegality while D knows the illegality
2. one party is not as culpaple as the other; or
3. the illegality is a failure to obtain a license when the license is for revenue raising purposes rather than for protection of the public

If the only purpose to the K is illegal, the K is voidable by a party who was:

1. unaware of the purpose; or
2. aware but did not facilitate the purpose and the purpose does not involve serious moral turpitude

Question 18

Defenses based on lack of capacity:

Answer 18

1. Legal Incapactiy to K
2. Duress and Undue Influence

Question 19

Types of Legal Incapacities to a K

Answer 19

1. Contracts of Infants (Minors)
2. Mental Incapacity
3. Intoxicated Persons

Question 20

Dissaffirmance by infant

Answer 20

An infanct may choose to disaffirm a K any time before (or shortly after) reaching the age of majority.

If an infant chooses to disaffirm, she must return anything that she recieved under the K that still remains at the time of disaffirmance.

However, no obligation to return any part of the cinsideration that was:

• squandered
• wasted
• negligently destroyed

Question 21

Exceptions to Dissafirmance

Answer 21

• student loans
• insurance Ks
• agreements not to reveal an employer’s proprietary information

Question 22

Necessaries

Answer 22

Necessaries are items necessary for the minor’s substinence, health or education.

A minor may dissafirm a K for neccessaries but in most states will be liable in restitution for the value of benefits recieved.

Question 23

Affirmance upon attaining majority

Answer 23

An infant may affirm (choose to be bound) a K upon reaching majoirty.

He can affirm expressly or by conduct

• failing to disaffirm within a reasonable time after reaching majority is sufficient conduct to affirm

Question 24

Elements of Undue Influence:

Answer 24

1. undue susceptability to pressure by one party; and
2. excessive pressure by the other party

Often arises in the context of a confidential or caregivier relationship

Question 25

Statute of Frauds requires what to be indicated in the writing?

Answer 25

1. reasonably ID subject matter 2. indicate K made between the parties 3. state with reasonable certainty the essential terms Electronic Record satisfies writing

Question 26

Signature Req for Statute of Frauds

Answer 26

* any mark or symbol made with the intention to authenticate the writing as the signers - it need not be handwritten - Party's initials or letterhead or electronic signature is sufficient * only the party to be charged must sign

Question 27

Statute of Frauds applies to:

Answer 27

1. Executor or Administrator Promises Personally to Pay Estate Debts from his own funds 2. Promises to Pay Debt of Another (Suretyship Promise) 3. Promises in Consideration of Marriage 4. Interests in Land 5. Performance not within 1 year 6. Goods priced at $500 or More

Question 28

Merchants - Confirmatory Memo Rule

Answer 28

If one merchant send the other written confirmation sufficient to bind the sender under SOF, it will bind the receipient as well if: 1. he has reason to know of the confirmation's contents; and 2. he does not object to the writing within 10 days of receipt

Question 29

Situations in which the K is removed from SoF

Answer 29

1. Performance 2. Equitable or Promissory Estoppel 3. Judicial Admission

Question 30

Remedy if K is w/in the SoF

Answer 30

Reasonable value or restitution Expecatition damages if suing under part performance