BAR FLASHCARDS - C1 What is a Contract

Question 1

WHAT IS A CONTRACT AND WHAT LAW APPLIES?

Answer 1

A contract is a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law, in some way, recognizes as a duty.simply a legally enforceable agreement.
Look first for an agreement formed, then see if it’s legally enforceable.

Question 2

TYPES OF CONTRACTS

Answer 2

• Express contracts
• Implied contracts
• Quasi-contracts

Question 3

• Express contracts

Answer 3

• Express contracts are formed by language, oral or written. Promises are communicated by language.

Question 4

• Implied contracts

Answer 4

• Implied contracts are formed by conduct. Parties’ conduct indicates that they assented to be bound.

Question 5

• Quasi-contracts

Answer 5

• Quasi-contracts are not contracts at all. Quasi-contract is the name given when an unenforceable contract results in unjust enrichment. Courts permit a plaintiff to bring an action in restitution to recover the amount of the benefit conferred on the defendant.

One party is unjustly enriched at the expense of the other party, so that the enriched party must pay restitution to the other party equal to the unjust enrichment.

Question 6

Quasi-contracts are..

Answer 6

Not contracts at all. One party is unjustly enriched at the expense of the other party, so that the enriched party must pay restitution to the other party equal to the unjust enrichment.

Question 7

Bilateral Contracts—Exchange of Mutual Promises

Answer 7

A bilateral contract is one consisting of the exchange of mutual promises; that is, a promise for a promise. Each party is both a promisor and a promisee. A bilateral contract offer can be accepted in any reasonable way. Most contracts are bilateral, which means that most offers are “indifferent” offers that may be accepted by promising or beginning performance. Unless expressly indicated otherwise, assume any contract is a bilateral contract.

Question 8

Bilateral Contracts involve an…

Answer 8

Exchange of Mutual Promises

Question 9

A bilateral contract offer can be accepted by….

Answer 9

A bilateral contract offer can be accepted in any reasonable way. Most contracts are bilateral, which means that most offers are “indifferent” offers that may be accepted by promising or beginning performance.

Question 10

Unilateral Contracts—Acceptance by Performance.

When is it accepted?
When is a contract formed?
When does the promisor pay?

Two situations where you have unilateral contract:

Answer 10

A unilateral contract is one in which the offeror requests performance rather than a promise.
Here, the offeror-promisor promises to pay upon the completion of the requested act by the promisee.
Once the act is completed, a contract is formed.
A unilateral contract, which requires full performance, occurs in only two situations: (1) when the offeror clearly (unambiguously) indicates that completion of perfor- mance is the only manner of acceptance; and (2) where there is an offer to the public, such as a reward offer.

Question 11

Unilateral Contracts involve an….

Answer 11

Acceptance by Performance

Question 12

A unilateral contract, which requires full performance, occurs in only two situations:

Answer 12

A unilateral contract, which requires full performance, occurs in only two situations: (1) when the offeror clearly (unambiguously) indicates that completion of performance is the only manner of acceptance; and (2) where there is an offer to the public, such as a reward offer.

Question 13

Validity: (3 types of contracts)

Answer 13

Void K, Voidable K, Unenforceable K.

Question 14

a. Void Contract

Answer 14

A void contract is one that is totally without any legal effect from the beginning (for example, an agreement to commit a crime). It cannot be enforced by either party.

Question 15

b. Voidable Contract

Answer 15

A voidable contract is one that one or both parties may elect to avoid, such as by raising a defense that makes it voidable, like infancy or mental illness.

Question 16

c. Unenforceable Contract

Answer 16

An unenforceable contract is otherwise valid but isn’t enforceable due to a defense, such as the statute of limitations or Statute of Frauds.

Question 17

enforcability of a void K vs a voidable contract.

Answer 17

void contracts can never be enforced, but an aggrieved party may elect to enforce a voidable contract.

Question 18

COMMON LAW VS. ARTICLE 2 SALE OF GOODS

Answer 18

Generally, the common law governs contracts.
However, for contracts involving the sale of goods, Article 2 of the Uniform Commercial Code (“UCC”) applies.
Article 2 has adopted much of the common law of contracts, but when the common law and Article 2 differ, Article 2 governs in a contract for the sale of goods.

Question 19

“Goods” Defined

Answer 19

“Goods” are all things movable at the time they are identified as the items to be sold under the contract. Thus, Article 2 applies to sales of most tangible things (including cars, horses, hamburgers), but doesn’t apply to the sale of real estate, services (such as a health club membership or employment), or intangibles (such as a patent), or to construction contracts.

Question 20

Merchants vs. Nonmerchants

Answer 20

A number of the rules in Article 2 depend on whether the seller and/ or buyer are merchants.
Article 2 generally defines “merchant” as one who regularly deals in goods of the kind sold or who otherwise by their profession holds themselves out as having special knowl- edge or skills as to the practices or goods involved.
For Article 2 provisions dealing with general business practices (for example, Statute of Frauds, confirmatory memos, firm offers, modification), almost anyone in business can be deemed a merchant. But remember that some Article 2 provisions (for example, the implied warranty of merchantability) are narrower and require a person to be a merchant with respect to goods of the kind involved in the subject transaction.

Question 21

Merchants defined

Answer 21

Article 2 generally defines “merchant” as one who regularly deals in goods of the kind sold or who otherwise by their profession holds themselves out as having special knowl- edge or skills as to the practices or goods involved.
For Article 2 provisions dealing with general business practices (for example, Statute of Frauds, confirmatory memos, firm offers, modification), almost anyone in business can be deemed a merchant.
But remember that some Article 2 provisions (for example, the implied warranty of merchantability) are narrower and require a person to be a merchant with respect to goods of the kind involved in the subject transaction.

Question 22

in order for the merchant rules to apply….

Answer 22

a merchant must be acting in their mer- cantile capacity (that is, in a way that relates to their business) in order for the merchant rules to apply. A party
is not a merchant for purposes of sales that are solely personal (for example, sales related to a collecting hobby).

Question 23

Contracts Involving Goods and Nongoods

Answer 23

If a sale involves both goods and services, you will determine which aspect is dominant and apply the law governing that aspect to the whole contract. However, if the contract divides payment between goods and services, then Article 2 will apply to the sale portion and the common law will apply to the services portion.

Question 24

Good Faith and Fair Dealing

Answer 24

Every contract within the UCC imposes an obligation of good faith in its performance and enforcement. “Good faith” is honesty in fact and the observance of reasonable commercial standards. The common law also imposes a duty of good faith and fair dealing. A breach of this duty usually involves exercising discretion in a way that deprives the other party of the fruits of the contract.