MBE Contracts Flashcards

You may prefer our related Brainscape-certified flashcards:
1
Q

Formation General Rule

A

A valid contract is formed when there is: (1) mutual assent (an offer and acceptance of that offer by the other party); (2) adequate consideration or a substitute; AND (3) no defenses to formation that would invalidate an otherwise valid contract entered into by the parties.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Article 2 of the Uniform Commercial Code (UCC) governs…

A

all contracts for the sale of goods.

Goods are defined as all things that are movable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

An offer is

A

An offer is (1) a manifestation of intent to contract by one party, (2) with clear and definite terms, (3) that is communicated to an identified offeree.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Acceptance is

A

Acceptance is a manifestation of assent to the terms of the offer, which indicates a commitment to be bound.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

For bilateral contracts, _____________________ manifests acceptance.

A

the start of performance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

For unilateral contracts, the start of performance only makes an offer irrevocable, and the offer is accepted only when __________________________.

A

performance is complete

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Unless the offeror states otherwise, acceptance of an offer is deemed accepted once the acceptance is __________________.

A

sent or communicated (i.e. placed in the mail).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

However, _______________ of an offer is deemed effective when received by the offeree

A

revocation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Mailbox Rule

A

Under the Mailbox Rule, if the offeror mails a letter to the offeree revoking the offer, but the offeree sends a letter to the offeror accepting the offer before receiving the revocation letter, a valid contract has been created. This is because the acceptance was effective before the revocation became effective.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Does the Mailbox Rule apply to Option Contracts?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Mirror Image Rule – Common Law

A

The common law mirror image rule holds that an acceptance must exactly mirror the offer.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Does the Mirror Image Rule apply to the UCC?

A

NO

The UCC states that acceptance does not have to mirror the offer and the acceptance may include different or additional terms, without revocation of the offer and thus constituting a valid contract.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

When are the offeree’s additional or different terms deemed included in the contract?

A

The offeree’s different or additional terms are deemed included in the contract ONLY IF:
(1) both parties are merchants;
(2) the term is not a material change;
(3) the offer does not expressly limit acceptance to the exact terms of the offer; AND
(4) no objection was made within a reasonable time.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What’s a material change?

A

A material change is any change that is likely to cause hardship or surprise to the offeror (i.e. a disclaimer of warranties, an arbitration clause, payment of shipping/handling charges).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Implied in Fact Contracts General Rule

A

Contracts may be created by the conduct of the parties, without spoken or written words. Conduct by both parties will create a contract if:
(1) the conduct is intentional; AND
(2) each party knows (or has reason to know) that the other party will interpret the conduct as an agreement to enter into a contract.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Consideration General Rule

A

Consideration is a bargained for exchange of a promise. Contracts are NOT enforceable without consideration by BOTH parties.
Generally, past or moral consideration is NOT sufficient to support a contract.

17
Q

Is Past or Moral Consideration sufficient to contract?

A

NO

18
Q

Most offers may be revoked at any time before acceptance through______________.

A

unambiguous words or conduct.

19
Q

A revocation of an offer is effective when __________________.

A

received

20
Q

A counteroffer (an offer with new terms) constitutes BOTH a ________________AND a __________________.

A

A counteroffer (an offer with new terms) constitutes BOTH a rejection that terminates the original offer AND a new offer.

21
Q

Some offers are irrevocable including:

A

(1) Option contracts (when consideration is given for a promise to keep an offer open); (2) a Merchant’s firm offer; AND (3) Offers that were relied on to the offeree’s detriment.

22
Q

A Merchant’s Firm Offer is:

A

A Merchant’s Firm Offer is:
(1) an offer to buy or sell goods;
(2) by a merchant (a person who deals in goods of the kind);
(3) in a signed writing;
(4) which states that the offer will be held open and is not revocable during the time stated (or if no time is stated for a reasonable time), but not to exceed three months;
AND
(5) that the assurance to keep the offer open must be separately signed by the offeror if the form is supplied by the offeree (such as initialing the specific paragraph).

A merchant’s firm offer is enforceable without consideration.

23
Q

Under ________________, contract modifications MUST be supported by ______________.

A

Common Law; consideration.

24
Q

When modifying an agreement, past performance or performance of a preexisting duty owed to a party is NOT treated as adequate consideration.
EXCEPT?

A

(1) an addition or change in the performance or promise; OR
(2) a fair and equitable modification due to unanticipated changed circumstances and the contract is NOT yet fully performed by either party (usually the unanticipated circumstances must be severe or far beyond what was foreseen).

25
Q

Modifications must be in writing if:

A

(a) they fall within the Statute of Frauds; OR (b) the original contract states that modifications must be made in writing.

26
Q

Contracts that lack consideration may be enforced to avoid injustice under the doctrine of__________________.

A

promissory estoppel.

27
Q

Promissory estoppel applies when:

A

(1) a party reasonably and foreseeably relied to his detriment on the promise of the other party;
(2) the promisor should have reasonably expected a change in position in reliance of the promise; AND
(3) enforcement of the promise is necessary to avoid injustice.

28
Q

A contract is voidable (it may be rescinded or reformed) when there is a _______ mistake

A

mutual mistake.

29
Q

Mutual mistake occurs when:

A

(1) both parties are mistaken as to a basic assumption on which the contract is made;
(2) the mistake is material to the contract; AND
(3) the person asserting the mistake did not bear the risk of the mistake (by agreement or by a party treating their limited knowledge as sufficient).

30
Q

A unilateral mistake is

A

(1) a mistake made by one party,
(2) that is unknown to the other party,
(3) concerning a basic assumption,
(4) that has a material effect.