R7 Contracts

Question 1

Contract

Answer 1

Contract = legally enforcable agreement

**To be legally enforceable
1. Agreement made up of Offer and acceptance
2. Exchange of consideration (something of legal value) AND
3. Lack of defenses ( no reason not to enforce it)
…………………………….
Contract can be
1. Express ( Oral or written),
2. Implied-in-fact contract (e.g buying things in department store)
3. Implied-in-law contract (e.g. hospital treatment when you are unconscious)

………………………………………
Contract type

1. Unilateral Contract:
   - One promise
   - contract formed when the performance is completed
2. Bilateral Contract
   - two promises
   - contract formed as soon as the promises are exchanged

Question 2

Source of Contract law

Answer 2

1. Common law (RISE)
   - generally derived from courts
   R ( real estate)
   I ( insurance )
   S ( services)
   E (employment)
2. Uniform Commerical Code(UCC) Sales Article
   - statutory law
   - governs contracts for the sale of goods (movable things)

Question 3

Agreement (Mutual Assent ) (offer and acceptance )

1. the offer

Answer 3

1. The offer
   - can be expressed or implied

• Intent to Make a contract: follows objective theory ( a reasonable person believe the offer is serious)
• Advertisements are NOT offer: usually considered seeking offers

Exceptions: adv that limits the scope of person who can accept ( e.g reward for finding lost dog, first five customers to get free stuff )

• Valid offer ( terms must be definite and certain)
• for goods - include quantity
• for common law (RISE): include identity, price, time, quantity, nature of the work performed.

Question 4

2. termination of offer

Answer 4

Termination of offer

1. Revoke
2. reject
3. law
4. revoke
   - revocation by offeror : generl rule can revoke anytime before acceptance ( unless consideration is paid for option to keep offer open)

• revocation can be direct or by conduct ( sell it to someone else)

2. Rejection by offeree
   - once the offer is effectively rejected , Cannot be accepted
   - counter offer is rejection and new offer
   * *mere inquiry is not counteroffer
3. Termination
   - either party dies or become incompetent prior to acceptance
   - not necessary to communicate
   - exception: option contract is not terminated by death of party

• by law: subject matter is destroyed, or becomes illegal

Question 5

3. Acceptance

Answer 5

1. Who may accept:
   - only the person to whom the offer was made
   - options can be assigned
2. Method of acceptance
   - generally any reasonable manner

• Unless, specified method of communication mentioned

3, Acceptance generally must be unequivocal : mirror image rule;

new terms added is seen as counter offer

4. Generally effective upon dispatch - The mail box rule
   - unlike rejection and counteroffers- they are effective when received
   - acceptance is when mail is dispatched ( irrelevant if a properly addressed acceptance is lost or delayed)

• if for any reason an attempted acceptance is invalid- its a counteroffer

The exception to mailbox:
if the offeror opts out by stating offer acceptance must be received to be effective

Question 6

Consideration

Answer 6

• law will not enforce gratuitous promises
• both side consideration must be legally sufficient
• legally sufficient if:
  give up a legal right OR
  agrees to do something he or she is not already obligated to do
• doesn’t have to have monetary value
• doesn’t not need to flow through party: can promise to do something for thrid party
• fairness usually not required so long as it’s not unconscionable and its arms length
• preexisting or contractual legal duties generally not sufficient :
  e. g legal -police, contractual - contractor
• price cannot be modified unless the consideration is modified too

Question 7

Gift and promises

Answer 7

gift: not contract, lacks consideration
- exception: charity “detrimental reliance”

Past or moral consideration :
if something is already done or given before promise was made : will not suffice the bargain requirement