Chapter 7

Question 1

What are two different ways, one using a few more words than the other, of defining what a contract is?

Answer 1

1. an enforceable promise

2. a mutually binding consensual agreement between competent parties

Question 2

Who is an offeror, an offeree, a promisor, and a promisee and how are their relationships defined?

Answer 2

Offeror: one who makes an offer
Offeree: one to whom the offer is made
Promisor: makes a promise
Promisee: one to whom a promise is made

Question 3

Be able to identify the three ways contractual relationships can be entered into.

Answer 3

1. Express contract
2. Implied contract
3. Quasi contracts

Question 4

What is an express contract?

Answer 4

When the parties have a specific understanding and realize that they are entering into a contractual relationship.

Question 5

How are implied contracts formed?

Answer 5

also called “implied in fact” contracts
(when the parties may not have expressly understood to be involved in a contractual relationship)
When the nature of their relationship fits the definition of a contract.

Question 6

What are quasi contracts?

Answer 6

also called “implied in law” contracts or “apparent contracts”
no contractual relationship, but the court imposes one in order to avoid unjust enrichment

Question 7

Be able to list the six elements a person must prove in order to assert the existence of a contract.

Answer 7

1. an offer
2. an acceptance of the offer
3. there was consideration
   - even if those elements are satisfied, the other party can defend by proving:
4. a lack of capacity
5. no reality of consent
6. contract was illegal

Question 8

what is an offer?

Answer 8

A proposal to perform or refrain from performing some future act

Requirements of the offer:
• Must be reasonably specific
• Seriously intended
• It be communicated to the offeree

Question 9

How is acceptance defined?

Answer 9

Agreement to the terms of the offer

requirements are the same as offer

Question 10

What is the purpose of consideration (what does it determine)? When is it said to exist?

Answer 10

Consideration is means to distinguish those promises that should be enforceable by the law and those that shouldn’t

Question 11

What is frequently said about the adequacy of consideration?

Answer 11

What is good consideration under the law is not the same as what is good consideration in an economic sense.
Said that “courts don’t inquire into the adequacy of consideration”

Question 12

What does capacity (or its inverse, incapacity) mean?

Answer 12

Capacity: able to enter into a contract
Incapacity: the party lacks the judgment necessary to enter into a contract

Question 13

Be able to describe capacity as it relates to insane or intoxicated persons.

Answer 13

Contracts entered with them are void.

Question 14

Be able to describe capacity as it relates to minors (or infants)

Answer 14

Contracts entered with them are voidable at the action of the minor (or their guardian) up to the time after reaching adult age, without regard to the ability of the minor to return the consideration
-when minor reaches 18, contract becomes fully enforceable.

Question 15

What are two exceptions to the rule regarding capacity and minors (or infants)? 


Answer 15

A contract entered into by a minor for necessities is enforceable
Contract entered into by a minor who commits fraud by misrepresenting their age, will be enforceable against the minor

Question 16

Be able to describe what is meant by the defense of a lack of real consent (or lack of reality of consent).

Answer 16

If their was no real consent, there is no contract. Lack of reality of consent is a defense to use.

Question 17

What are the two general categories of illegality?

Answer 17

1. Bargains that are forbidden by the statute
   • Bargains to commit a crime, engage in gambling, providing a service without a license when a license is required (professionals)
2. Bargains that are contrary to public policy

• bargains that a person attempts to remove themselves from blame in negligence or breach of duty owed to public (water rafting, sign a contract, person forgets to give you helmet)
• bargains that require a tort to complete an enforcement

Question 18

What is usury?

Answer 18

Charge excessive interest on a loan

Question 19

What is the result of if a court determines a contract is illegal?

Answer 19

Usually, the parties are left where they were found.

Question 20

Are oral contracts ever valid?

Answer 20

Yes, generally valid. Harder to prove their bargain though

Question 21

What are the six general principles of contract interpretation and how would they be applied?

Answer 21

1. courts try to give effect to the parties intentions by examining the plain meaning of the language employed
2. interpretations that give lawful and effective meaning for all provisions are preferred
3. contract provisions are read taking into account the whole contract and in light of all the circumstances surrounding the contract
4. ambiguities are resolved against the drafting party
5. typed provisions prevail over form printing, and handwritten provisions prevail over typed
6. ambiguity will not be read into a contract if there is an unambiguous construction possible

Question 22

What that is absent an excuse, constitutes a breach of contract?

Answer 22

Any failure to perform as promised that is not excused

Question 23

What governs the law of sales?

Answer 23

A state statute

Question 24

What is the general purpose of civil remedies?

Answer 24

To put the injured party in as good a position as he would have been in had there been no breach

Question 25

. Identify and describe the two categories of legal remedies in tort.

Answer 25

1. special damages
   • Given for which the plaintiff has a receipt (loss ofincome, repair bills, etc)
2. general damages
   • Given for those for which there is no receipt (damages for pain and suffering, loss of child etc)

Question 26

Identify and briefly describe the four categories of legal remedies in contract.

Answer 26

1. compensatory damages
   • The plaintiff is entitled to be compensated for the direct loss caused by the breach of the contract
2. consequential damages
   • The indirect consequences caused by the breach
3. liquidated damages
   • Those said by the parties as payable in case of default, when its hard to see damages that could be made by the contract
4. Punitive damages
   • Those designed to punish the defendant
   o Generally unavailable in contract cases