Define: express contract, implied contract, and quasi-contract.
Express contract is a contract formed by words–written or oral.
Implied contract is an agreement in which the parties’ assent is inferred from their conduct.
A quasi-contract is not a contract, but rather is a remedy to prevent unjust enrichment.
Name the three elements necessary for an enforceable contract.
- An agreement made up of an offer and an acceptance;
- An exchange of consideration (something of legal value); and
- A lack of defenses.
To be enforceable, must a contract generally be in writing?
Generally, a writing is not required unless the contract is within the Statute of Frauds.
Define the term “offer” and state its key requirements.
An offer is a statement by the offeror that invites the offeree to form a contract. To be an offer:
- The offer must be seriously intended.
- The terms must be definite and certain.
- It must be communicated.
What is the general rule regarding the revocability of an offer by the offeror?
The general rule is that the offeror can revoke anytime before acceptance, even if the offeror promises to keep an offer open.
When is revocation of an offer effective?
When received by the offeree.
What are three exceptions to the offeror’s power to revoke?
- Option contract in which consideration is paid to keep an offer open
- Merchant’s firm offer under UCC
- Beginning performance of a unilateral contract
What is an option?
A distinct contract in which the offeree gives consideration in exchange for the offeror’s promise to keep an offer open.
What is the mailbox rule?
An acceptance is effective to create a contract at the time of dispatch if a reasonable means of communication is used.
What are the two elements of consideration?
(1) A bargained for exchange (2) of something of legal value.
In common law contracts what is required for modification of an existing contract between two parties?
Under the common law a contract can be modified if both parties agree and give additional or different consideration.
Name a circumstance in which a promise will be enforced without consideration.
Detrimental reliance/Promissory estoppel situation.
Name some of the defenses available in determining whether a promise will be binding as a contract.
Fraud
Innocent misrepresentation
Duress
Undue Influence
Mutual mistake
Unilateral mistake
Illegality
Minority
Intoxication
Insanity
Unconscionability
Statute of limitations
Statute of frauds
Impossibility
Impracticability
Frustration of purpose
Accord and satisfaction
Substituted contract
Novation
Failure of conditions
What are the elements of fraud?
To establish the defense of fraud, the victim must prove five elements:
- The defrauder made a misrepresentation of a material fact.
- Scienter–the misrepresentation was made with an intent to deceive (scienter) or with a reckless disregard of the truth (constructive fraud).
- The defrauder made the misrepresentation with intent to induce reliance.
- The victim justifiably relied on the misrepresentation.
- The victim suffered damages.
Under the Statute of Frauds, what types of promises must be evidenced by a writing?
- An agreement made in which marriage is the consideration
- A promise which by its terms cannot be performed within a year
- Agreements involving the sale or long-term lease of real estate (land)
- An executor’s promise to pay an estate debt out of personal funds
- Contracts involving the sale of goods for $500 or more
- A promise to pay the debt of another (suretyship)
- *M**arriage
- *Y**ear
- *L**and
- *E**xecutor’s promise
- *G**oods $500 or more
- *S**uretyship
Does a contract for the sale of land for $200 need to be evidenced by writing?
Yes. ALL contracts for the sale of land (regardless of dollar value) must be evidenced by a writing signed by the party to be charged.
What is the Parol Evidence Rule?
If the parties have entered into a fully integrated written contract, prior or contemporaneous oral statements and prior written statements cannot be admitted into evidence to vary the written terms of the contract.
If a party to a contract commits an act that constitutes an anticipatory repudiation, what are the options of the nonrepudiating party?
- Treat the repudiation as an immediate breach and sue for damages immediately.
- Ignore the repudiation, await the time specified for performance, and sue if the repudiating party does not perform.
- Cancel the contract.
In general, what is the goal of contract remedies?
Contract remedies are intended to put the nonbreaching party in as good a position as he or she would have been had the other party performed as promised.
What are liquidated damages and are they enforceable?
A liquidated damage clause is a clause in a contract that specifies what damages will be if there is a breach (e.g., forfeiture of a down payment for breach). A liquidated damage clause is enforceable if the amount is reasonable in relation to the actual harm done and not a penalty.
Distinguish between a creditor beneficiary and a donee beneficiary.
A creditor beneficiary is one to whom the promisee owes an obligation.
A donee beneficiary is one to whom the promisee wishes to give a gift or create a right.
What rights may NOT be assigned?
You cannot assign when the assignment will change the obligor’s risk or when the delegated duty involves a specialized personal service. Offers also cannot be assigned with the exception of option contracts.
Under the Sales Article, what are the exceptions to the Statute of Frauds?
- Specially manufactured goods
- Written confirmatory memo between merchants
- Admission in court
- Performance to the extent accepted
What is a merchant’s firm offer?
A written and signed offer by a merchant assuring that the offer will be held open for a period of time. Such offers must be kept open from the time stated or, if no time is stated, for a reasonable time but, in any event, no longer than three months.
