Section 13: Contracts

Question 1

Bilateral Contract

Answer 1

• Two promises made
  
  • I promise to pay $50k if you promise to do my audit
• Contract when the promises are exhanged

Question 2

Unilateral Contract

Answer 2

• One promise for an act
  
  • I’ll pay anyone $100 who will find my dog
• A contract is formed when performance is completed

Question 3

Formation of a valid Common Law contract requires…

Answer 3

• Offer
• Appectance
• Consideration
• Lack of Defenses

Question 4

Offer

Answer 4

• Definite Terms - may be implied
  
  • Price to be paid
  • Parties
  • Nature of the subject matter
  • Quantity involved
  • Time for performance
• Intent - to make offer
• Communicated to offeree - constructively received when available to offeree

Question 5

Quasi-Contract

Answer 5

• Courts decide that parties should be treated as if they had an agreement but did not, in order to prevent one party being unjustly enriched at the expense of the other
  
  • Ex: Doctor gives out free services to patient but then finds out patient is wealthy

Question 6

Termination of an Offer

Answer 6

• Exppiration - expires after reasonable time if no stated date
• Revocation - may revoke even if promised not to do so
  
  • Direct - phone call
  • Indirect - knowing lost dog has been found
• Rejection - refusal by offeree, must be received by offeror
• Counteroffer - a form of rejection by offeree
• Operation of Law
  
  • Death or insanity
  • Destruction of subject matter
  • Illegality of subject matter

Question 7

Mirror Image Rule

Answer 7

• Must accept all terms and conitions of offer without any alterations, otherwise its a counteroffer

Question 8

Early Acceptance Rule (Mail-Box Rule)

Answer 8

• Acceptance is effective when transmitted or dispatched

Question 9

Consideration

Answer 9

• Of Value - legally sufficient
  
  • Money, goods, services or promise to perform
  • Give up a legal right
  • NO preexisting legal obligation
  • Need not be of equal value
• Bargianed for exchanged
  
  • What the parties intened to receive
  • A gift is not bargained for
  • Past consideration is no consideration
• Modification of contract requires additional consideration by both
• No consideration required
  
  • Promises to charity where a charity mught rely upon that promise to its detriment

Question 10

Voidable Contracts

Answer 10

• Duress
• Undue Influence
• Misrepresentation of a Material Fact
• Mistake
  
  • Mutual mistake of fact - allows contract to be rescinded
  • Unilateral - one person is mistaken, usually offeror
    
    • If other party knew or should have known - material
    • An immaterial unilateral mistake does not permit void of contract
• Capitacy
  
  • Minor
  • Intoxication
  • Incompentent persons

Question 11

Void Contracts

Answer 11

• Extreme Duress
• Fraud in the Execution
• Illegal Substance matter
• Incompetent persons

Question 12

Statute of Frauds (requires written evidence) (GROSS)

Answer 12

• Sale of Goods worth $500 or more
• Real estate sales
• Over one yr required to perform contract (bilateral)
• Suretyship (guarantee debt of another)
• Statements in consideration of marriage

Question 13

Exemptions involving sale of goods (SPAM)

Answer 13

• Specifically manufactured goods - contract can be enforced
• Partially performed - enforcable to the extent of performance
• Admits in court to making of contract
• Merchant does not object to written communication within 10 days of receiving

Question 14

Parol Evidence Rule

Answer 14

• Prohibits the use of oral or written evidence that contridicts the terms of the written contract