Chapter 10 - Contracts

Question 1

Key Elements of a contract

Answer 1

Offer
Acceptance
Consideration
Contractual (Mental) Capacity
Legality
Genuine Consent

Question 2

Offer

Answer 2

Promise to do something or refrain from doing something

Question 3

Offers must show:

Answer 3

Intent by the offeror (the person making the offer) to enter into a K.
Express clear and specific terms of te agreement
Proper communication is made of the offer to the offeree (party to whom the offer is made)

Question 4

Example of proper communication of an offer.

Answer 4

• is an offer to conduct a business for as long as it is profitable
• Is an offer to conduct a business as long as its books and records show 10% increase in company equity over company debt over the course of 365 days.
• Jetta story (was it a valid owner)

Question 5

Advertisement

Answer 5

Advertisements generally are not considered to be offers, but invitations to negotiate.
ex) we have lots of cars under 10k, they are not required to sell the cars for under 10k

Question 6

The more specific the advertisement gets, the more likely it is not an advertisement at all but

Answer 6

An actual offer. (Mink coat example)

Question 7

Ways to terminate an offer.

Answer 7

Withdrawal
Option K 
Counteroffer
Lapse of time
By Operation of Law

Question 8

Withdrawal or Revoke

Answer 8

Offer can be revoked before it is accepted. Revocation must be made known (communicated) to the offeree.

Question 9

Option K

Answer 9

Offer open for a specified time. During that time period, offer cannot be withdrawn.

Question 10

Ex of Option K

Answer 10

Offer put on a house for $225,000. offer states that it is good for 24 hours.

Question 11

Counteroffer:

Answer 11

Offeree rejects offer when she ignores the original offer and prepares a different offer.

Question 12

Example of Counteroffer

Answer 12

Jack list his condo for 150k (advertisement) , Alysha offers him 140k. Instead accepting the offer , Jack counters back at 145k. Alysha now must decide to accept, reject or another counteroffer. You cannot re-open another counter offer that has already been closed or rejected.

Question 13

Lapse of time

Answer 13

When an offer states it is open until a particular date, the offer terminates on that date of it has not yet been accepted. Any offer after the expired time has no effect and gives no rise to a K.

Question 14

Example of a lapse of time

Answer 14

Jack lists his house for 150k , Alysha offers 140k with a stipulation that the offer is only good for 24hours. If jack doesn’t accept the offer within 24 hours then the contract is dead.

Question 15

By operation of law (two kinds)

Answer 15

Death/Disability of party , subsequent illegality.

Question 16

Death or Disability of party-

Answer 16

If the offeror or offeree dies or becomes mentally incompetent before the offer is accepted the offer automatically terminates.

Question 17

Subsequent illegality

Answer 17

If performance of the K becomes illegal after the offer is made, the offer is terminated .

Question 18

Acceptance

Answer 18

Offeree’s expression of intent to accept the offer.

• Must be communicated to the offeror
• Can be verbal or in writing , some may have specific ways of accepting

Question 19

Bilateral Contract

Answer 19

Exchange of promises between offeror and offeree. Ex) I will sell you my car for $8,000, B responds “great I accept”

Question 20

Unilateral K

Answer 20

When the offer calls for the performance of an act, the performance is the acceptance offer.

Question 21

Mirror Image Rule

Answer 21

The acceptance must “mirror” the offer. Any change (no matter how minor) to the offer is a counter offer, not an acceptance.

Question 22

Ex of Mirror Image Rule

Answer 22

“I will sell you my at for 8k, but you have to throw in 2 new tries for that price” “No acceptance” Pena v Fox

Question 23

Mailbox Rule

Answer 23

A mailed acceptance of an offer is effective when sent, not received.
-On Monday, A verbally offers to sell B his car

Question 24

Consideration

Answer 24

Something that is given in bargained for in exchange for a contract. So both parties have to give something and give up something is exchange for a contract.

Question 25

Gift

Answer 25

A offers it up, but B didn’t give up anything

Question 26

Adequacy of Consideration

Answer 26

Courts do not consider how much consideration is given for a promise. If I get conned , courts will not ask about the adequacy of consideration bc it was the parties responsibility to bargain. AKA HOW GOOD IS WHAT YOU GET AND WHAT YOU GIVE .

Question 27

Promissory Estoppel

Answer 27

Say when A promises to cut a lawn every month, and B doesn’t do it so a court will enforce it like it was a contract .

Question 28

Reliance on the promise was reasonable

Answer 28

Reliance is all about believing what is said.

and whether or not it was reasonable.

Question 29

Promissory Estoppel

Answer 29

Because the grass was not cut, you have to be considerably damaged to get a cause , courts will only enforce the promise is doing so is the only way too avoid injustice.

Question 30

Contractual Capacity

Answer 30

If you are crazy you cannot be held for a contract .

-This would not apply to an emancipated minor

Question 31

Void vs Voidable

Answer 31

A contract is voidable if from the jump if its not good. A contract is void if it cant exist at all or at law . Ex) Buick car (you cant what contract to sell cocaine because its illegal)

Question 32

Status Quo Ante

Answer 32

Return to previous state

Question 33

HW #5

Answer 33

Even if the girl wrecked the car, she would still be able to break the contract.

Question 34

Legality

Answer 34

In order for a contract to be valid it must be lawful

Question 35

Its formation or performance is a crime

Answer 35

Like you cant go to court for getting ran up on drugs

Question 36

Its formation or performance is a tort

Answer 36

You cannot get a hit man , or hire a thief on a contract.

Question 37

its is contrary to public policy

Answer 37

It is so messed up that it would be ridiculous to enforce

Question 38

Consent

Answer 38

Both parties entering into a contract must agree to the terms

Question 39

Mutual Mistake

Answer 39

If both parties mess up the contract becomes voidable.

Question 40

Fraud

Answer 40

You cannot get over on me . If Someone sells a house and claims that they have fixed the roof in order to get them to buy it and they don’t actually fix the roof then that person is guilty of fraud.

Question 41

Duress

Answer 41

You can not force someone into another contract with no options available.

Question 42

HW #3

Answer 42

This falls under the statue of frauds because it was over the amount of $500 . This is based on the fact that the confirmation letter never came.

Question 43

HW #4

Answer 43

It is enforceable and because the writing that she signed and her son witnessed had the terms and the parties and the consideration that meets the statue of frauds.

Question 44

Parole Evidence rule

Answer 44

It doesn’t apply to HW#4 because there is no outside evidence . The parole evidence rule you cant bring word of mouth into enforcing a contract.

Question 45

Caley V Gulfstream

Answer 45

So the employees of gulfstream were being told that as a condition of their continued employment they would be subject to a Dispute resolution policy in two weeks after the notice was given. The employees argued that they could not have accepted the terms of the agreement just by staying and that there was no official offer. But since there was an offer stated “staying or leaving” and that they were giving something “Their rights to go to a trial “ but getting something “their court and mediation costs paid for” which constitute consideration.

Question 46

Hinson V N&W Construction Company

Answer 46

Hinson was the apparent low bidder for the entire project at MJCC for the price of $92,000 although it was a verbal bid at the agreed upon price but he refused so N&W had to pay an extra $47,000 to the next lowest bidder to do the work . Because of promissory estoppel and the clear evidence that there was a huge detriment to the company. He said he was satisfied with the quote and even though there wasn’t consideration the detriment was still there.

Question 47

Deschamps v Treasure State Trailer Court

Answer 47

LONG AF: So there were two parties Deschamps vs Rasmussen . Ramussen had agreed to sell his trailer park to Deschamp for an agreed price of like 1.5 Million via a payment plan. Ramuseen died and his estate took over. 3 years later Deschamps stopped making payment bc of failing water supply issues and said the cost of the water system repairs should be deducted from the original payment plan price. The estate sued saying that he could not sue based on oral agreements stated before the actual contract was signed. Deschamp said that ramuseen knew of the water issues and the problematic turnover rate of occupants at the trailer park but the parole evidence rule block him from saying any of the above in court. The court said that ramueseen may have not known because he did not do an inspection, Deschamps could have done an inspection anytime during the negotiation process and that the real estate agreement included a clause saying that Deschamps had NOT relied on any assurances of the seller as to the condition of the property which also block him from using the right of fraud which directly contracted his statements made.

Question 48

Pena v Fox

Answer 48

Ms. Pena and Mr.Fox were in a car accident and Ms.Pena sustained injuries , before filing a lawsuit Ms.Pena lawyer’s drew up a settlement with USAA, Mr.Fox’s insurer. The settlement said that in order for Ms.Pena to sign the general release of Mr.Fox and his insurance agency but she would not agree to sign a form releasing USAA from an agreement. USAA drew up a settlement but there was a clause that was saying that she would agree to release them as well, which she didn’t agree with and pursued them in court . The original court found that the agreements were sound but in appellate court, they disagree because Mr.Fox’s and USAA acceptance would release additional parties , which Ms.Pena’s offer would not. Since his acceptance did not mirror her offer aka the mirror image rule, USAA and Mr.Fox simply returned a counter-offer which caused her to continue pursuing the case.

Question 49

Sherwood v Walker

Answer 49

Walker was going to sell a barren cow for 80 dollars but then he found out that the cow was not barren. Sherwood did not know that she was pregnant and priced the cow according to the inspection. The court found that the contract was voidable because of a mutual mistake.

Question 50

Statue of Frauds

Answer 50

MYLEGS
M-marriage contracts
Y- Contracts that cant be performed within 1 year
L- Contract for sale, mortgage, easement, lease of real estate
E- Promise by Executor/administrator of an estate to answer for decedent (ex. an executor of an estate is not personally liable for creditors claims against the estate of a decedent)
G-Contract for guarantee (A promise to pay the debts of another must be in writing to be enforceable)
S- Sale of goods