Ch. 4.1-4.7 Contracts

Question 1

The ____________ of Contracts is a set of statements reflecting generally agreed upon pronouncements of common law contract rules.

Answer 1

Restatement

Question 2

The Restatement defines a ________ as a “promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.”

Answer 2

contract

Question 3

Contract law is concerned with enforcing promises between ________, but only those promises that the law recognizes as enforceable.

Answer 3

parties

Question 4

An _______ contract is a promise stated in words, either oral or written.

Answer 4

express

Question 5

The UCC governs all transactions for the sale of _____, which is defined as all things that are movable at the time of the contract.

Answer 5

goods

Question 6

An ________ contract is a promise that is inferred from a person’s conduct or the circumstances of the transaction.

Answer 6

implied

Question 7

A _______ is an undertaking or commitment to act or refrain from acting in a specified way in the future.

Answer 7

promise

Question 8

When an exchange is entirely ___________ there is no contract because either party makes a promise to the other. Both parties have fully performed their obligation and no promises have been made. It is not a contract but is referred to as an _________ _______. If there is no immediate exchange, then a ______ has been formed.

Answer 8

instantaneous; executed exchange; contract

Question 9

The person who makes a promise is the __________. The person to whom the promise is made is the ________.

Answer 9

promisor; promisee

Question 10

When a promise or commitment will benefit someone other than the promisee - that person is referred to as a __________.

Answer 10

beneficiary

Question 11

A _____-________ arises in the absence of a promise and thus is not a contract all all. It’s a transaction that creates a basis for recovery to prevent _______ _____________ which means a situation where one person unfairly benefits from a transaction.

Answer 11

quasi-contract; unjust enrichment

Question 12

An action to avoid unjust enrichment is referred to as ____________. Sometimes quasi-contracts are referred to as contracts that are ______-in-law.

Answer 12

restitution; implied

Question 13

What’s this an example of?
A, who is a doctor, is seated next to B at a restaurant. When B begins choking, A administers emergency treatment. In this case, there is no contract b/c there are no exchanged promises. A can seek to recover from B in an action for _______ ____________, based on the notion that B has unjustly benefited from the medical services performed by A and should be required to pay A. This is referred to as a ?

Answer 13

quasi-contract.

Question 14

_____ ______ means that each part to the contract must manifest or reveal her intent to be bound to a given exchange. Some courts refer to this intent as a “meeting of the minds” to capture the notion that there must be mutual agreement about the exchange to be performed.

Answer 14

mutual assent

Question 15

An _________ standard means that courts determine intent by analyzing how a reasonable person would construe the words and conduct of the parties, generally without considering words or actions an individual may have intended, but do not communicate.

Answer 15

objective standard

Question 16

What are the two factors that must be shown in order to demonstrate mutual assent?

1. an ______ on the part of one party and
2. an ____________ on the part of the other.

Answer 16

offer; acceptance

Question 17

The person making an offer is called the _______ and the person to whom the offer is made is the called the _______.

Answer 17

offeror; offeree

Question 18

A preliminary negotiation is often referred to as a solicitation or ___________ to make an offer.

Answer 18

invitation

Question 19

Once a party manifest her intent to _____ an offer, there is mutual assent and a contract can be formed. However, an offer may be ___________ prior to acceptance.

Answer 19

accept; terminated

Question 20

If ther offeror indicates the offer must be accepted within a stated time. the offer will __________ once that time has passed.

Answer 20

terminate

Question 21

If an offeror dies before an offer is accepted, the offer is ____________, even if the offeree is not aware of the death.

Answer 21

terminated

Question 22

If an offeror is deemed to be ________ incompetent after an offer is made, then the offer is terminated, if acceptance has not occurred before the offeror is judged to be incompetent.

Answer 22

mentally

Question 23

Once acceptance occurs, an offeror’s death or mental incompetence [does/does not] negate the contract.

Answer 23

does not

Question 24

An offeror’s death or mental incompetence must occur ______ the offer is made, but prior to the acceptance, in order to impact the formation of the contract.

Answer 24

after

Question 25

As a general rule, the offeror may terminate the offer any time prior to the offeree’s acceptance - such action is referred to as __________.

Answer 25

revocation (it was revoked)

Question 26

An offer may be revoked directly or indirectly. _______, the offeror can indicate by words that she no longer wishes to be bound by the offer. _________, an offer may be revoked when the offeror takes actions that are inconsistent with the intent to be bound and the offeree has knowledge of those actions.

Answer 26

directly; indirectly

Question 27

Offers may not be revoked prior to termination in 3 circumstances:

a. if the offeree has paid to keep the offer open for some period of time - called an ______ contract
b. if the offeror has agreed to keep the offer open for some period of time, and the offeree has relied on that promise to her detriment, or
c. if the offeree has already begun performance under the contract called a ___________ contact.

Answer 27

option; unilateral

Question 28

A ______________ is both a rejection of the original offer and a new officer, and thus serves to terminate the original offer. In this case the offeree turns into the ______.

Answer 28

counteroffer; offeror

Question 29

The _____ _____ rule means that any response by the offeree that changed the terms of the agreement, however slightly, would be treated as a rejection.

Answer 29

mirror-image

Question 30

An ___________ is effective as soon as it is dispatched, this is known as the ________ rule. It will be effective when it is mailed or emailed/faxed.

Answer 30

acceptance; mailbox

Question 31

An offer, revocation, counteroffer, and rejection are only effective when they are _________>

Answer 31

received

Question 32

In the event an offeree rejects an offer and shortly after accepts an offer or made a counteroffer, the communication the offeror receives ____ is the one that would be effective.

Answer 32

first

Question 33

When at the time a contract is formed, one party already has performed her obligation so that there is only one performance obligation remaining, the contract is a called a ____________ contract. Once performance has begun, an offer cannot be revoked.

Answer 33

unilateral

Question 34

A _________ contract refers to a contract where two promises are outstanding at the time of the contract formation.

Answer 34

bilateral

Question 35

When the offeree pays for the offeror’s promise to keep the offer open for a period of time, the offer must remain open during the period of the option contract and can be accepted any time during that period. This is referred to as an ______ ________.

Answer 35

option contract

Question 36

In order for a contract to be legally enforceable, it must be supported by ______________.

Answer 36

consideration

Question 37

In order to constitute consideration, two factors must be present:

a. there must be a ___________-___ exchange and
b. the promisee must incur some legal __________.

Answer 37

bargained-for; detriment

Question 38

In the __________-___ exchange, the parties to a contract must bargain for or agree to some exchange. If one party is intending to confer a ____ to the other party, then there is no bargained-for exchange.

Answer 38

bargained-for; gift

Question 39

If a performance has already occurred or a promise has already been made, then it generally cannot serve as the basis for consideration because it cannot be considered to have induced a bargain - this is known as the doctrine of “____ ____________.”

Answer 39

past consideration

Question 40

A promisee suffers a ______ __________ if they

a. do something or promises to do something that he is not legally required to do or
b. refrains or promises to refrain from doing something that he legally has the right to do.

Answer 40

legal detriment

Question 41

The promise to perform a ___-________ duty (a duty that a person already is obligated to perform) will not constitute a legal detriment.

Answer 41

pre-existing

Question 42

An agreement where one of the parties does not actually promise to do anything lacks consideration because one of the promises is an _________ promise. Ex. If A agrees to sing a B’s party if they “feel like it”

Answer 42

illusory

Question 43

If something can be construed as _____ consideration because it lacks any value, the courts will find it legally insufficient. Additionally, if the parties to a contract state that consideration has been given, but it was not, then the statement will be viewed as ____ consideration and be legally insufficient.

Answer 43

token; sham

Question 44

Some contracts will be enforced even when they lack consideration. The primary doctrine used to substitute consideration is __________ ________ or detrimental reliance. Under this, a promise will be enforced without consideration if:

a. the ________ should reasonably expect her promise to induce action or forbearance by the promisee
b. the promise does in fact induce justifiable action or forbearance and
c. injustice can be avoided only by enforcement.

Answer 44

promissory estoppel; promisor

Question 45

Promissory estoppel is an equitable remedy designed to allow the ___________ of promises that a promisee reasonably and foreseeably relies upon.

Answer 45

enforcement

Question 46

______ _________ refers to the legal ability to form a contract. Proof of lack of capacity makes a contract voidable, enabling the person who lacks capacity to void the contract.

Answer 46

legal capacity

Question 47

People who are below the age of majority are referred to as _______ or _______. In most states this age is ___.

Answer 47

infants or minors; 18

Question 48

Contacts with minors are _________, but only by the minor, not the adult.

Answer 48

voidable

Question 49

Once a minor _________ a contract, neither the minor nor the other party will be obligated to perform any obligations under the contract. The adult must return anything of value given to them, and the minor generally must return any goods or benefits that remain, but is not liable for property that has been _________ or destroyed.

Answer 49

disaffirms; consumed

Question 50

A minor will be bound to pay the reasonable value of any contract for _____________, which are goods or services that a minor reasonably needs for her livelihood.

Answer 50

necessities

Question 51

In order to disaffirm a contract based on ________ ___________, the allegedly incompetent person must prove that, at the time they entered into the contract, they were unable to understand the nature and consequences of her actions.

Answer 51

mental incapacity

Question 52

A mental incompetent person must return the value of any property or services she has received, even if they have been consumed or destroyed - this would give the other party the opportunity to recover in ___________ any unjust enrichment.

Answer 52

restitution

Question 53

A contract entered into by a person who is intoxicated is [voidable/not voidable] by the intoxicated person.

Answer 53

voidable

Question 54

For an intoxicated person to void a contract, they must prove they were severely intoxicated such that:
a. they did not ___________ the nature and significance of her actions and
b. the other party had reason to know of the intoxication
Given the potential for abuse, courts are _______ to allow avoidance based on intoxication.

Answer 54

understand; reluctant

Question 55

An offer can be made to, and be accepted by, more than one person, when this occurs, the offeror has undertaken _____ obligation to all the offerees who accept.

Answer 55

joint

Question 56

Contracts may be formed that are intended to benefit some third party, creating a third party _________ contract.

Answer 56

beneficiary

Question 57

The party who is to render performance to a third party, is the _________, while the party whose right to performance is being conferred on a beneficiary is referred to as the ________>

Answer 57

promisor; promisee

Question 58

True/False Not all beneficiaries have enforceable rights.

Answer 58

True

Question 59

Someone is an _________ beneficiary if:

a. recognition of a right to performance is appropriate to effectuate the intention of the parties and
b. either the performance of the promise will satisfy the promisee’s obligation to pay money to the beneficiary OR the promisee intends to confer a benefit on the beneficiary.

Answer 59

intended;

Question 60

If a promisee is conferring a benefit on a third party in order to satisfy a prior obligation, the beneficiary is referred to as a __________ beneficiary.

Answer 60

creditor

Question 61

If the promisee merely intends to confer a gift, the third party is referred to as a ______ beneficiary.

Answer 61

donee

Question 62

A person who is not an intended beneficiary is an ___________ beneficiary and has no right to enforce a contract.

Answer 62

incidental

Question 63

Once a beneficiary’s rights ___, the promisee and promisor cannot modify or terminate the contract without the beneficiary’s consent.

Answer 63

vest

Question 64

A ___________’s rights vest when they:

a. manifest their assent to the contract
b. brings suit to enforce the contract or
c. materially changes her position in justifiable reliance on the contract.

Answer 64

beneficiary’s

Question 65

One a beneficiary rights have vested, they have an _____________ claim against the promisor and may sue the promisor directly to enforce the contract. If they are a donee beneficiary, then they do not have an enforceable claim against the promisee.

Answer 65

enforceable

Question 66

By general rule, the promisee cannot bring an action against the promisor when the contract involves a _____ beneficiary b/c such a beneficiary cannot bring suit against the promisee.

Answer 66

donee

Question 67

An _____________ involves a transaction pursuant to which one party transfers her rights under a contract to another. The person who assigns her rights is initially called the _______, but upon assignment becomes the ________. The person to whom the right is assigned to is called an ________. The final party is the obligor, signaling her obligation to the assignee.

Answer 67

assignment; obligee; assignor; assignee

Question 68

If a contract states that assignments are prohibited, the statement is construed only as a prohibition against delegation, and thus does not prohibit assignments. Instead, and assignment will be valid unless the contract specifically states that assignments are ____.

Answer 68

void

Question 69

Similar to a beneficiary, an assignee has an enforceable right against the obligor because she is considered the real _____ of _______.

Answer 69

party of interest

Question 70

Revocability relates to situation when an assignment can be taken away from the _______. An assignment that is not supported by consideration is ________ and such an assignment is referred to as a gratuitous assignment.

Answer 70

assignee; revocable

Question 71

An assignment that is revocable may be _________ by:

a. the assignor’s death or bankruptcy
b. a subsequent assignment of the same right to another party
c. notice of revocation from the assignor to either the assignee or the obligor, or
d. the assignor’s acceptance of performance from obligor.

Answer 71

terminated

Question 72

When a person transfers a duty, it is called _________. The difference from an assignment is that this transfers a duty and not a _____.

Answer 72

delegation; right

Question 73

A person who delegates their duty under and agreement is initially called the ______. After the delegation becomes the _________. The person who assumes the duty is referred to as the _________, while the other party to whom performance is owed is called the ________.

Answer 73

obligor; delegator; delegate; obligee

Question 74

When a contract is delegated, the obligee must accept performance from the ________. Unless the ______ agrees to release them from liability, the delegator remains liable under the contract until the delegate has performed.

Answer 74

delegate; obligee

Question 75

True/False: Some duties cannot be delegated.

Answer 75

True

Question 76

Duties that involve some _______ ______ or _____ or that would materially change the obligor’s expectancy under the contract may not be delegated. Only exception is if the obligor _______ to the delegation.

Answer 76

personal service or skill; consents

Question 77

True/False: As a general rule, oral contracts are not valid and enforceable.

Answer 77

False, they are valid; However certain agreements are not enforceable unless they are in writing and signed by the party to be bound.

Question 78

The _________ of Frauds is a rule referring to circumstances where agreements must be in writing and when oral agreements will be _______________.

Answer 78

Statute; unenforceable

Question 79

6 basic agreements that are covered by the Statute of Frauds:

1. A promise by and executor or administrator to pay the estate’s debts.
2. A promise to pay the debt of another, referred to as a _______ promise. Ex. “If you build X a pool house and he does not pay for it, I will”
3. A promise made in consideration of _________.
4. A promise for the sale of land or creating an interest in land. Includes leases and easements for [more/less] than a year, and mortgages or other security interests in land.
5. A promise that by its terms cannot be performed/completed within one year from when the contract was entered.
6. Contracts for the sale of goods for the price of ______ or more.

Answer 79

surety; marriage; more; $500

Question 80

In order for a written contract to be sufficient under the Statute of Frauds, it must:

a. reasonably identify the _______ _______ of the contract
b. contain enough information to indicate that a _______ has been formed
c. state with reasonable certainty the essential terms of contract (identify the parties, terms and conditions of the exchange)
d. must be ________

Answer 80

subject matter;contract; signed

Question 81

There are exceptions to the writing requirement in the Statute of Frauds - they are treated as taking the contract “___ of the Statute of Frauds.”

a. If a party admits in court that a contract was made, the contract is ______________ against the other party to the extent of ____________.
b. Performance can take a contract out of the statute of frauds - For goods, if payment has been made and accepted goods are delivered, then the contract is enforceable to the extent of such payment or delivery.
c. Courts also will use the doctrine of ___________ _______ to take a contract out of Statute of Frauds.

Answer 81

out; enforceable; admission; promissory estoppel

Question 82

The elements of _________ ________ are that:
a. a promise is made where there is a reasonable expectation of some action or forbearance
b. the promise induces justifiable reliance
c. enforcement is necessary to prevent injustice.
In the context of Statute of Frauds, the doctrine is applied when one party justifiably _______ on the oral promise of another party, and as a results suffers some _________.

Answer 82

promissory estoppel; relies; detriment