Bar Exam Drills Flashcards
A metal mistake occurs when the parties to a contract:
are both mistaken about the same material fact within their contract
What are the three excuses to performance?
(1) impossibility
(2) frustration of purpose
(3) impracticability
Acceptance:
the offeree must communicate acceptance of the offer terms, and acceptance can be express, by conduct, or by manner stated in offer
Mailbox Rule:
acceptive of an offer is effective upon dispatch of the letter of acceptance
Mailbox rule does not apply to:
rejections (only valid upon receipt by the offeror)
Mutual Mistakes: both parties are under a common faulty assumption concerning present facts and requires - (a) ____ and (b) ___.
(a) both parties made an assumption of material fact
(b) disadvantaged party did not bear the risk of the mistake
Impracticability:
performance excused where unforeseen difficulties caused a party’s performance to be prohibitively expensive or otherwise extremely burdensome
Impracticability requires:
(a) impracticability was unforeseen
(b) risk not assumed by parties
(c) burden far beyond what parties would anticipate
A unilateral contract is a type of contract where:
one party (the offeror) makes a promise in exchange for the performance of a specific act by another party (the offeree)
The key aspects of unilateral contracts are:
(1) offeror makes a promise to act or pay upon the performance of a requested act by the offeree
(2) offeree is not obligated to perform the requested act, but if they do, the offeror must fulfill the promised obligation
(3) contract becomes binding only when the offeree performs the requested acts, not through a mutual exchange of promises
(4) offeror can revoke the offer at any time before the offeree begins performance, but not after
Common examples of unilateral contracts include:
- reward offers (for finding a lost item or providing information)
- sales promotions and contests (prizes for achieving sales targets)
- insurance contracts (insurer promises payment upon occurrence of an insured event
- performance bonuses (employer promises bonus for meeting performance criteria)
Offer:
(a) a manifestation of a present intent enter into a contract, (b) with definite and certain terms, and (c) communicated to an identified offeree who has the power to accept and believes acceptance will create a contract
Public Offers: (ads, catalogs, price quotes)
are invitations for offers except where there is a promises to specific offerrees (“first come, first serve”; “only one can win”)
Unilateral Contract:
the offer invites acceptance only by complete performance, not by a return promise; and once offeree begins performance, offer cannot be revoked
A revocation of offer is the:
withdrawal of a previous offer to engage in some sort of legally binding contract
Revocation of offer is used by:
the offering party to formally cancel the offer before the other party has accepted it
The offering party must ____ before they accept the offer, but once the revocation has been communicated the offer it pertains to is ____.
(a) communicate the revocation to the other party
(b) no longer considered valid and cannot legally be accepted
Revocation goes into effect as soon as:
it has been communicated to the relevant party
Termination of Offer:
unambiguous statement by offeror to offeree, or unambiguous conduct indicating unwillingness to contract that offeree is aware of
Termination of Offer - Lapse of Time:
offer must be accepted within a specified time stated or within a reasonable time if no time stated, starting from when the offer is received
Three exceptions to the statue of fraud rule pertaining to contracts of suretyship:
(1) if the third person makes the promise to the debtor instead of to the creditor, the promise does not have to be in writing
(2) if the third person promises to be primarily responsible for the debt, the promise is outside the statue
(3) even if the third person makes the promise to the creditor and promises only to be responsible for the debt if the debtor defaults, an oral promise will be enforceable if the third person’s main purpose for making the promise is for his own benefit
Consideration:
is a bargained-for-exchange between the parties (promise for performance, promise for promise)
Settlement of Claims: A party’s agreement not to enforce a claim is valid consideration for settlement purposes if:
(a) the claim or defense is valid or subject to a good-faith dispute as to the facts or law
or
(b) the party believes that the claim or defense may be valid, regardless of the other party’s belief
Past or Moral Consideration:
a promise in exchange for something already given or already performed will not satisfy the bargain requirements
Exception to past or moral consideration (enforceable):
written promise to pay a debt that has expired past the statute of limitation
Incapacity (minors):
a party under 18 is a minor who is incapable of contracting
Incapacity (minors): modern view
minors can enter in contact, but it is voidable at their option
Ratification (minors):
at 18, a minor can expressly or impliedly ratify a contract previously entered into during infancy and bind themselves to obligations; silence does not ratify
Illusory Promise:
promise to perform is left the discretion of the promising party (performances is at their discretion and is thus not a true promise)
Pre-Existing Duty Rule:
if a party already owes a duty to perform, that performance cannot be used as consideration for another promise
Pre-Existing Duty Rule (exception):
duty is pre-existing only if it is owed directly to the original promise, and therefore a promise to perform the same duty is valid consideration as long as the duty is not already owed to the new promisee
UCC Firm Offer:
an offer by a merchant in a signed writing to keep an offer open during the time stated, no consideration is required (if more than 3 months, consideration is required, also irrevocable
Unilateral Contract:
offer seeking performance in return for a promise
In a unilateral contract, offeror only bound when ____, but the offeree is never bound to finish, but once offeree begins performing, ____.
(a) performance is completed
(b) the offer may not be revoked
Option Contract:
a distinct contract in itself between the parties that provides that the offeror will leave an offer open for a specified time in exchange for consideration, is irrevocable
Termination of Offer - Revocation: offeror may revoke an offer at any time, but the offer must be: (a) ____ and (b) ____
(a) revoked before acceptance
(b) the revocation must be communicated to the offeree directly or indirectly
Indirect Revocation:
(a) offeror takes action that inconsistent with offer
(b) offeree learns of the action from a reliable source
Accord and Satisfaction:
new, mutual agreement between the parties where one party (obligee: person who is owed performance) agree to accept a substituted performance from the other party (obligor: person who must perform) instead of the originally agreed upon performance, or by acceptance of check marked “paid in full”
Trade Usage, Course of Dealings, and Course of Performance:
used to fill gaps and resolve ambiguities of contacts and are admissible to fill gaps or explain terms, but inadmissible to contradict express terms
Interpreting Ambiguous Language: the objective meaning of the contract language trumps a party’s subjective means, except: (a) ____ or (b)
(a) when one party has reason to know of the other party’s subjective meaning and they are thus bound by that meaning
(b) both parties have the same subjective meaning of the term, which is different from the objective meaning, then the parties are bound by that term
A condition precedent is ____.
an event or state of affairs that is required before something else will occur
Restitutionary Damages:
the value of the benefit(s) conferred upon the other party to the agreement
Limitation - Restitutionary Damages:
restitutionary damages are not available when the aggrieved party has fully performed
Substantive Unconscionability:
the contract unreasonably favors on party
Establishing a course of performance is often used to ____.
aid in interpreting contracts, particularly with gap filling
Course of performance is often the best evidence of ____.
what parties intended since it calls for looking at how both parties have performed up to the present time under the particular contract at issue
Condition precedents may be waived by ____.
the party that makes the condition
Express Conditions:
are conditions appearing within the four corners of the contract which are primary source for determining performance
Aware of the other party’s subjective meaning - and is thus ____.
bound by that meaning
If the offer does not specify the length time it is to remain open, then it ends ____.
after the passage of a reasonable period of time
An offer can end in various ways:
(a) time lapse
(b) death of parties
(c) conditions not met
(d) rejection/ counteroffer by the offeree
(e) revocation by the offeror
Under common law, a party to a contract needs new consideration (something of legal value) to ____.
modify a contract
Seller’s Acceptance: UCC under the UCC, a seller can accept a buyer’s offer by:
(a) promising to ship the goods in conformity with the terms of the offer
(b) prompt shipment of the goods in conformity of offer terms
(c) ship non-conforming goods (exception: if sent as accommodation, it is a counter-offer)
Perfect Tender Rule:
UCC terms of a contract are enforced exactly in that every contract term is treated as an express condition
The seller is in breach if the goods fail to conform to the contract and the buyer can:
(1) reject the goods
(2) accept the goods
(3) accept in part and reject in part
Perfect Tender Rule - Accepting Non-Conforming Goods: if accepted, buyer must:
(a) pay contract price for those goods
(b) may also seek damages for non-conformity after notifying seller of non-conformity
(c) can revoke previous acceptance
UCC - Buyer can revoke previous acceptance if:
(a) non-conformity substantially impairs contract
(b) (i) buyer was unaware of non-conformity
(ii) seller assured non-conformity would be cured but was not
Promissory Estoppel (Reliance): allows for a promisee to enforce a gratuitous promise (promise not supported by consideration) if:
(a) there was a promise
(b) that promisee would foreseeable rely on
(c) promises actually relied on the promise
(d) injustice without enforcement
Implied in Fact Contract:
is a form of an implied contract formed by non-verbal conduct, rather than by explicit words
A completely integrated agreement under the parol evidence rule will:
bar all other evidence which contradicts what is in the written agreement or even supplements the agreement
