Chapter 11-13

Question 1

Promises for past actions

Answer 1

Mere promise; offering something for past actions is not consideration

Question 2

Elements of a Contract

Answer 2

1) Agreement (Offer and Acceptance)
2) Consideration
3) Capacity
4) Legality

Question 3

Traditional vs Modern view of revocation of unilateral contracts

Answer 3

Traditional: Revocation allowed until full completion of performance
Modern: Can’t revoke once performance has been substantially undertaken

Question 4

Formal Contract

Answer 4

Contract that requires a special form or method to be enforceable

Question 5

Informal Contract

Answer 5

Does not require a specified form or method to be valid

Question 6

Elements to form an implied contract

Answer 6

1) Plaintiff furnished some goods or services
2) Plaintiff expected to be paid and defendant knew or should have known that payment was expected
3) Defendant had a chance to reject services and did not

Question 7

Quasi Contract

Answer 7

Contract that the courts create in order for someone to not experience injustice. Created to avoid the unjust enrichment of one party at the expense of another.
Ex. Abel fixes Ben’s pipes while he is out of town and requests $200. Ben refuses because no contract, Abel goes to court to enforce because it would have cost Ben thousands.

Question 8

Executed vs Executory

Answer 8

Executed: Contract has been fully performed by both parties
Executory: Contract has not been fully performed by one or more parties

Question 9

“Plain Meaning” Rule

Answer 9

A court will enforce a contract according to its obvious terms when it is clear and unequivocal. “A chicken is a chicken”

Question 10

Requirements of an Offer

Answer 10

1) Offeror must have a serious intent to be bound by the offer
2) The terms of the contract must be reasonably certain and definite
3) Offer must be communicated to the offeree and received.

Question 11

Statements that do NOT reflect intent

Answer 11

1) Expressing an opinion
2) Statements of future intent
3) Preliminary negotiations: “I would be open to considering your offer”
4) Invitation to bid
5) Advertisements
6) Live auctions

Question 12

Offers must express these terms

Answer 12

1) Identification of the parties
2) Object or subject matter of the contract
3) Consideration; and
4) Time of payment, delivery, or performance

Question 13

When is revocation effective?

Answer 13

Once it is received

Question 14

Option Contract

Answer 14

Irrevocable offer that is held open for a specified period of time in return of consideration

Question 15

Mirror Image Rule

Answer 15

Offeree’s acceptance must match the offeror’s offer exactly. Any change is a counteroffer.

Question 16

Operation of Law terminations of contracts

Answer 16

1) Lapse of time
2) Destruction of subject matter
3) Death or incompetence of a party (unless option contract)
4) Supervening illegality

Question 17

Mailbox Rule

Answer 17

Acceptance is valid when the offeree sends it using an authorized means. If the authorized means is not used, there is no acceptance.
If a substitute is used, accpetance is effective once received, not dispatch.

Question 18

E-SIGN Act

Answer 18

Recognizes the validity of electronic contracts, records, and signatures.

Question 19

Contracts that cannot be electronic

Answer 19

1) Court papers
2) Divorce Decrees
3) Evictions/Foreclosures
4) Prenups
5) Wills

Question 20

Uniform Electronic Transactions Act (UETA)

Answer 20

Law proposed by the UCC that removes barriers to forming E-Contracts. States that state law cannot give greater legal status or effect to one company or type of technology.

Question 21

Consideration must contain:

Answer 21

1) Legally sufficient value
2) Bargained for exchange

Question 22

Legally sufficient value can be:

Answer 22

1) Promise to do something you are not legally obligated to do
2) Performance of an action you are not required to take
3) Refrain from an action you have the right to take (forbearance).

Question 23

Forbearance

Answer 23

Refraining from taking an action you have the legal right to undertake.

Question 24

Bargained for exchange

Answer 24

An item of value must be given or promised by the offeror in return for the offeree’s promise or performance. Both parties must get something of value.

Question 25

Hamer v. Sidway

Answer 25

Hamer promised not to drink alcohol, shoot pool, swear, etc. until he was 25. Uncle died and he sued estate for his money and won. Set precedent for forbearance as consideration.

Question 26

Pre-existing Duty Rule

Answer 26

One cannot promise to do something they are legally liable to do or promise the same consideration in another active contract.

Question 27

Recission

Answer 27

The unmaking of a contract that returns the parties to their pre-contract positions, then creating a new contract at the same time. If one party is gaining more consideration, the other must gain more too.

Question 28

Past Consideration

Answer 28

Promises made in return for past actions are unenforceable. No bargained for exchange, both parties don’t get something.

Question 29

Illusory Promise

Answer 29

If the terms of the contract don’t definitely express a promise to perform. Anything with “might, may, consider.”

Question 30

Requirements Contract

Answer 30

A buyer and seller agree that the buyer will purchase all the goods of a designated type that the buyer needs. If the buyer buys goods from a different seller, broke requirements contract.

Question 31

Output Contract

Answer 31

Buyer agrees to purchase everything the seller produces, their entire output. If the seller begins to sell to other buyers, or buyer doesn’t buy everything, it’s a breach of contract.

Question 32

Option to cancel clause

Answer 32

If the promisor has the option to cancel the contract before performance has begun, even after acceptance, the promise is illusory.

Question 33

Accord and Satisfaction of debt

Answer 33

Debtor offers to pay, and the creditor agrees to accept a lesser amount than the creditor originally claimed to be owed.
1) Amount of debt must be in dispute (unliquidated)

Question 34

Liquidated vs Unliquidated Debt

Answer 34

Liquidated: Amount is certain and agreed upon
Unliquidated: Amount is in dispute

Question 35

Release

Answer 35

A contract where one party forfeits the right to pursue a legal claim against the other. Prevents any futher recovery beyond the terms in the release. Prevents people from suing after settlement agreements.

Question 36

Requirements for Release

Answer 36

1) Made in good faith
2) Be in writing (in most states); and
3) Be accompanied by consideration

Question 37

Covenant not to sue

Answer 37

An agreement to substitute a contractual obligation for refraining to sue. Must be supported by consideration.

Question 38

Promissory Estoppel

Answer 38

A person who has detrimentally relied on the promise of another may be able to obtain recovery.

Question 39

Promissory Estoppel Requirements

Answer 39

1) Must be a clear and definite promise
2) Promisor should have expected that the promisee would rely on the promise
3) Promisee reasonably relied on said promise
4) The promisee’s reliance resulted in substantial detriment
5) Enforcement of the promise is required to prevent injustice.

Question 40

Statute of Limitations for creditors to sue a debtor

Answer 40

4 years

Question 41

Consideration required when a debtor offers to pay a past debt past the statute of limitations.

Answer 41

Creditor does not have to provide any additional consideration if the debtor offers to pay past debts.