CH. 3

Question 1

What are the six essential elements of the formation of a contract

Answer 1

Offer, acceptance, consideration, intention, capacity, and legality.

Question 2

void contract

Answer 2

A void contract has no legal effect. A contract may be declared by a judge to be void if it is for illegal purposes, or if one of the six essential elements is missing.

Question 3

an exchange of a promise for a performance; the performance brings the contract into existence.

Answer 3

unilateral contract

Question 4

an exchange of a promise for a promise, the exchange of promises brings the contract into existence.

Answer 4

bilateral contract

Question 5

lets ppl know that you are ready to accept offers eg. advertisement

Answer 5

Invitation to treat

Question 6

when can one party revoke an offer and have no consequence?

Answer 6

before accepted by the other party

Question 7

three instances under which an offer lapses?

Answer 7

1. Not accepted before it expires due to a deadline.
2. Not accepted within a reasonable time when there is not deadline.
3. A party dies, becomes mentally ill, or loses the capacity to contract.

Question 8

An agreement by an offerer to leave an offer open for a certain amount of time

Answer 8

Option

Question 9

The price a party pays for the promise. Price does not only include money, it could be any good or service of any value. The exchange of benefits

Answer 9

Consideration

Question 10

a promise with no consideration in return- no contract

Answer 10

Gratuitous Promise

Question 11

what does a seal do?

Answer 11

Promises made under a seal are binding even in the absence of consideration.

Question 12

Unconscionable transactions

Answer 12

The judge feels that the bargain was unfair due to

(1) lopsided bargaining power
(2) abuse of authority, or
(3) breach of fiduciary duty. The court may set the contract aside.

Question 13

How could someone lack the capacity to contract?

Answer 13

Mental illness, substance abuse, senility and sometimes being a minor

Question 14

When is it safe to contract with a minor and know they will be bound by the contract?

Answer 14

Contracts for employment or apprenticeship, or for a necessity of life, such as legal advice, medical treatment, clothing and reasonable transportation. A minor must be able to create valid contracts for things that are beneficial to the minor.

Question 15

agents and principals?

Answer 15

agent acts on behalf of the principal

Question 16

Why would anyone ever grant another person power of attorney over their affairs?

Answer 16

To manage property, personal care, and medical treatment if you are unable to manage these things yourself.

Question 17

When dealing with a corporation, is it necessary to verify whether the officer has the proper authority to contract for the corporation?

Answer 17

no- officer need only appear to have authority

Question 18

6 remedies one would expect when a contract is breached.

Answer 18

• rectification (typos to amending the contract)
• rescission
• Damages (general, punitive, exemplary)
• injunction
• specific performance
• quantum meruit (reasonable worth of the good)

Question 19

If a foreign embassy fails to pay for a convention hall, can they be sued

Answer 19

no- they have diplomatic immunity

Question 20

eight types of contracts which must be in writing:

Answer 20

1. Land
2. Marriage
3. Co-signing
4. Estate trustee’s promise to pay out of own pocket
5. Agreement involving minors that must be ratified when the minor is of age.
6. Longer than one year to complete.
7. Sale of goods over a certain amount when the money or the goods have not yet changed hands.
8. Agreement to deliver goods at a future date.

Question 21

9 exceptions to the privity of contract rule?

Answer 21

• Tort law bypass
• principal of agents
• vicarious liability
• corp. form by amalgamation
• collateral warranties
• novation (replacing the person who is obliged to do something with a new person who assumes the obligation)
• interest in land
• assignment of rights
• trusts
• life insurance policies.

Question 22

With cash on delivery (COD) contracts who retains title and risk until the goods are delivered and paid for?

Answer 22

the seller

Question 23

Once a contract is written, it cannot be changed without consent of both parties.

Answer 23

Parol Evidence Rule

Question 24

What are the four ways contracts can be discharged?

Answer 24

By Performance, agreement, frustration, & operation of law (bankruptcy, death, limitation acts)

Question 25

five reasons a contract may be impeached:

Answer 25

• For duress
• for undue influence
• if a mistake was made
• for misrepresentation
• where utmost good faith was not demonstrated

Question 26

three types of mistake the law recognizes?

Answer 26

common, mutual unilateral

Question 27

3 kinds of misrepresentation

Answer 27

innocent, negligent, & fraudulent

Question 28

setting the contract aside

Answer 28

rescission

Question 29

3 ways a contract is breached:

Answer 29

repudiation
sabotage
failure to perform

Question 30

when contract is breached, the injured party must do what is required to limit the losses they suffer

Answer 30

duty to mitigate

Question 31

awarded for compensation on the injured party

Answer 31

General damages

Question 32

Punitive & exemplary damages

Answer 32

imposed to punish & make an eg. of the offending party