CHAT GPT study

Question 1

Flashcard 1: Q: What is a contract?

Answer 1

A promise or set of promises for which the law provides a remedy or recognizes as a duty.

Question 2

What determines intent in contract law?

Answer 2

The objective theory of contracts, not personal or subjective intent.

Question 3

What are the elements of a contract?

Answer 3

1) Agreement (offer and acceptance)
2) Consideration
3) Legal Capacity
4) Legal Purpose

Question 4

What are the required elements in common law contracts?

Answer 4

1) Identification of Parties
2) Subject Matter
3) Price
4) Quantity
5) Time for Performance

Question 5

In Stambovsky v. Ackley, house haunting

Answer 5

In Stambovsky v. Ackley, why was the buyer allowed to rescind the contract? A: The seller knew the house had a reputation for being haunted and failed to disclose it, which the buyer could not have discovered through inspection.

Question 6

What is the difference between State Common Law and the Uniform Commercial Code (UCC)

Answer 6

Common Law governs most contracts, including employment and real property, while UCC generally applies to the sale of goods.

Question 7

What is an express contract?

Answer 7

An agreement manifested by oral or written language.

Question 8

What is an implied contract?

Answer 8

A contract inferred from the conduct of the parties.

Question 9

What is a unilateral contract?

Answer 9

A promise for performance. Example: April promises to pay Bill if he paints her house.

Question 10

What is a bilateral contract?

Answer 10

A promise for a promise. Example: Mary promises to sell her truck to Dan for $5,000, and Dan promises to pay $5,000.

Question 11

What happens if a contest participant complies with the rules of the contest?

Answer 11

A unilateral contract is formed, and the organization is bound to fulfill the offer.

Question 12

What is a valid contract?

Answer 12

A contract that meets all the requirements for a binding agreement.

Question 13

What is a void contract?

Answer 13

A contract that is void from the beginning or illegal, such as a contract entered by someone adjudged incompetent.

Question 14

What is a voidable contract?

Answer 14

A contract that can be avoided due to reasons such as fraud or misrepresentation.

Question 15

What is an unenforceable contract?

Answer 15

A contract where breach provides no remedy, such as one not satisfying the Statute of Frauds.

Question 16

What is the difference between executed and executory contracts?

Answer 16

Executed contracts are fully performed, while executory contracts have yet to be fully performed.

Question 17

What is the difference between formal and informal contracts?

Answer 17

Formal contracts include contracts under seal and negotiable instruments, while informal contracts include all other agreements.

Question 18

What is a quasi-contract

Answer 18

An equitable contract imposed to prevent unjust enrichment of one party at the expense of another.

Question 19

What is the contra preferentem rule?

Answer 19

Ambiguities in a contract are interpreted against the party who drafted the contract.

Question 20

Agreement

Answer 20

Definition: Mutual assent to the same bargain.
Key: Parties must agree on contract terms.

Question 21

Offer

Answer 21

A promise or commitment to do or refrain from doing something in the future. Distinguish: Not preliminary negotiations, price quotations, advertisements, social invitations, or offers made in jest.

Question 22

Preliminary Negotiations

Answer 22

Example: A statement like “I would consider $200,000” is not an offer. It’s a negotiation starter, not a commitment.

Question 23

Advertisements.

Answer 23

Rule: General rule – advertisements are not offers, unless they contain a definite promise and a specified person or group can accept

Question 24

Ads: Case: Leftkowitz v. Great Minneapolis Surplus Store—Leonard v. Pepsico, 88 F. Supp.2d 116 (S.D. N.Y. 1999). COMPARE WITH: Leftkowitz v. Great
Minneapolis Surplus Store, 86 N.W.2d 689 (Minnesota 1957) : “Saturday 9 AM Sharp, 2 Brand New Fur Coats, Worth
to $100.00, First Come First Served, $1 Each.”

Answer 24

Case: Leftkowitz v. Great Minneapolis Surplus Store—Ad specific enough to be an offer

Question 25

Social Invitations

Answer 25

Social Invitations
Rule: Social invitations are not binding offers.
Example: Cancelled social events offer no legal remedy.

Question 26

Revocation of Offers

Answer 26

Rule: Offers can be revoked anytime before acceptance but are effective only when received by the offeree.

Question 27

Mailbox Rule

Answer 27

Definition: Acceptance of an offer is effective when mailed, not when received by the offeror (unless otherwise stated).

Question 28

Consideration

Answer 28

Consideration
Definition: Something of value given in exchange for a promise. It can be a promise for a promise, performance, or forbearance.

Question 29

Past Consideration

Answer 29

Rule: Past acts cannot serve as valid consideration for a current promise.

Question 30

past consideration: Case: In re Estate of LovekampFacts: Appellant (former wife) and decedent (former husband) were previously married but had been
divorced for eighteen years. She alleged that the time of the divorce she and decedent entered into a
verbal agreement that he would pay her $60,000.00. The agreement, she alleged, was “to prevent the
forced sale and partition of the ranch and cattle jointly held by the parties.” In Appellant’s deposition
and answers to interrogatories, however, she clarified that the agreement was not entered into at the
time of the divorce in 1975, but rather in July, 1981. They did not own any property jointly at that
time. The circumstances were that several months after the decedent had been feeling ill and,
according to Appellant, talked about selling his house and 80 acre ranch. He said he was going to ask
$120,000.00 for it. He then gave Appellant a check for $60,000.00 and told her it was for coming back
and staying with him after they divorced. He told her that she could cash the check if he sold the
property or if something happened to him. The check was dated July 29, 1981. When decedent died in
September, 1999, the check, of course, was too old to cash, thus this claim was asserted against the
estate

Answer 30

Case: In re Estate of Lovekamp—No valid consideration for a past act.

Question 31

Promissory Estoppel

Answer 31

Definition: A doctrine allowing recovery if someone reasonably relies on a promise and suffers a detriment, even if no formal contract exists.
Example: A church relying on pledges to build a new structure.

Question 32

Illusory Promises

Answer 32

Illusory Promises: Rule: A promise that does not bind the promisor to any legal detriment is illusory.
Example: “I promise to buy your car if it rains tomorrow” – valid because rain is beyond control.

Question 33

Q: What are void contracts?

Answer 33

A: Void contracts have no legal effect. Examples include:

Question 34

Persons Under Conservatorship: void or voidable

Answer 34

void

Question 35

Habitual Drunkards: void or voidable

Answer 35

void

Question 36

Duress by Physical Compulsion: void or voidable

Answer 36

void

Question 37

Minors: void or voidable

Answer 37

voidable

Question 38

intoxication: void or voidable

Answer 38

voidable

Question 39

Those Who Claim Mental Incompetence: void or voidable

Answer 39

voidable

Question 40

Duress by Improper Threats: void or voidable

Answer 40

voidable

Question 41

Example of void or voidable : P works for D under an at-will arrangement, by which the employment may be terminated at
any time at the option of either party. D threatens to fire P unless he agrees to sell shares of stock in D
back to the company. This would probably be found to constitute duress, even though D theoretically
has the right to fire P for no reason. Therefore, if P sold (or agreed to sell) the shares to D under these
circumstances, a court would probably

Answer 41

Therefore, if P sold (or agreed to sell) the shares to D under these
circumstances, a court would probably void the transaction.

Question 42

void or voidable: Example of Economic Duress: The Internal Revenue Service assesses a large tax and penalty against
Weller. Weller retains Eyman, the accountant who prepared the tax returns on which the assessment
was based, to challenge the assessment. Two days before the deadline for filing a reply with the IRS,
Eyman declines to represent Weller unless he signs a very expensive contingency fee agreement for
the services.

Answer 42

In this situation, a court might find that the agreement is voidable because of economic
duress. Eyman threatened only to withdraw his services, something that he was legally entitled to do.
However, he delayed the withdrawal until two days before the IRS deadline. It would have been
impossible at that late date to obtain adequate representation elsewhere.

Question 43

void vs voidable validity

Answer 43

A void contract is never valid and has no legal effect from the outset.
A voidable contract is valid until voided by one of the parties.

Question 44

legal consequence void vs voidable

Answer 44

In a void contract, neither party can enforce the contract.
In a voidable contract, one party has the right to enforce or cancel the contract.

Question 45

Undue influence may be rounds for rescission of a contract. This is where one person overpowers the
will of another by use of moral, social or domestic force. This frequently arises in situations involving
the elderly: void or voidable

Answer 45

voidable

Question 46

Fraudulent Misrepresentation:
4 Fraudulent Misrepresentation Elements:

Answer 46

1) A misrepresentation of material fact must occur;
2) There must be an intent to deceive;
3) The innocent party must justifiably rely on the misrepresentation; and
4) To collect damages, a party must have been harmed as a result of the misrepresentation.

Question 47

fraud misrepresentation, fraud inducement, or fraud of factum/execution: A misrepresentation that is consciously false and is intended to
mislead another

Answer 47

Fraudulent Misrepresentation:

Question 48

fraud misrepresentation, fraud inducement, or fraud of factum/execution: A defendant misrepresents a material fact to motivate a plaintiff to take an
action on the basis of false information

Answer 48

fraud inducement

Question 49

fraud misrepresentation, fraud inducement, or fraud of factum/execution: A defendant misrepresents a signature on a document (forging the
signature of another on a contract)

Answer 49

fraud of factum/execution

Question 50

outcome of possible fraud: Selleck v. Cuenca
Facts: Actor Tom Selleck purchased a 10-year old horse named Zorro for his 20-year old daughter
from Dolores Cuenca. Selleck purchased the horse for $120,000 as his daughter wished to ride the
horse in high-level amateur competitions. However, several weeks after purchasing the horse, the
Selleck family discovered the horse was lame. The sellers allegedly gave the horse steroid injections
for the horse to appear healthier prior to the sale. The defendant argued that the Selleck family did not
do their due diligence in checking the horse’s veterinarian records

Answer 50

Outcome? The Selleck family was awarded more than $187,000 for the defendant’s misrepresentation
by conduct.

Question 51

fraud misrep or misrep of law: A misrepresentation that is consciously false and is intended to
mislead another.

Answer 51

fraud misrep

Question 52

fraud misrep or misrep of law: A misrepresentation of law ordinarily does not entitle a party to relief from a contract. exception with experts

Answer 52

misrep of law

Question 53

Doctrine of Mistakes who is responsible

Answer 53

Courts are likely to grant relief only when there has been a mutual mistake of material
fact as to the very essence of an item (both parties mistaken) as contrasted with a unilateral mistake
(one party mistaken) or a bilateral mistake of value.
Example: A case out of 1880s Michigan involved the sale of a cow thought to be “barren” (sterile).
The seller was about to sell the cow for $80, and both parties thought the cow was sterile. Right before
the cow was delivered, the seller discovered the cow was pregnant (the value of a breeding cow in that
time was approximately $750), and the seller refused to deliver the cow. Who wins?
In the case of Sherwood v. Walker, 33 N.W. 919 (Mich. 1887), the Michigan Supreme Court found that
the mistake went “to the very nature of the thing” and the seller won.
Example 2: A decedent’s estate sells two oil paintings for $60. The buyer likes the paintings and
believes they are not originals, but buys them anyway. Later, the buyer finds out the paintings are in
fact originals and worth over $1 million. The decedent’s estate would like to rescind the contract. Who
wins?
In the case of Nelson v. Rice, 12 P.3d 238 (Ariz. App. 2000), the Arizona Court of Appeals ruled for
the buyer. The court reasoned that the Estate had every opportunity to investigate the paintings and
assumed the risk of the mistake.

Question 54

What is of higher importance verbal or written contracts

Answer 54

General Rule: A verbal contract is just as valid and enforceable as a written contract.

Question 55

does statue of frauds put verbal and written contracts on same level or different

Answer 55

under a law known as the statute of frauds.
Contract “Within the Statute of Frauds” – Contract that requires written proof. If written proof is
not required, then it is “outside the statute of frauds

Question 56

inside or outside Statute of Frauds: Verbal agreements that don’t involve land or marriage.

Answer 56

outside

Question 57

inside or outside Statute of Frauds: Contracts for the Sale of Land or an Interest in Land

Answer 57

within Contracts for the Sale of Land or an Interest in Land (e.g., life estates, mortgages, easements, leases over 1 year).

Question 58

inside or outside Statute of Frauds: Contracts that Cannot Be Performed Within One Year

Answer 58

within Contracts that Cannot Be Performed Within One Year (if no slight possibility of completion within a year).

Question 59

inside or outside Statute of Frauds: Contracts to Pay Another’s Debt

Answer 59

within
Contracts to Pay Another’s Debt (guaranty/surety).

Question 60

inside or outside Statute of Frauds: Contracts in Consideration of Marriage

Answer 60

within Contracts in Consideration of Marriage (e.g., prenuptial agreements).

Question 61

inside or outside Statute of Frauds: Contracts for the Sale of Goods

Answer 61

within Contracts for the Sale of Goods Worth $500 or More.

Question 62

inside or outside Statute of Frauds: Contracts by Executors to Pay Estate Debts from Personal Funds.

Answer 62

within

Question 63

inside or outside Statute of Frauds: verbal contracts

Answer 63

within Contracts that Cannot Be Performed Within One Year (if no slight possibility of completion within a year).

Question 64

What evidence can be used in contracts according to parol evidence

Answer 64

Parol Evidence Rule: If a court finds that a written contract represents the complete and final
statement of the parties’ agreement, it will not allow either party to present parol evidence. Parol
evidence is testimony or other evidence of communications between the parties that is not contained in the contract itself

Question 65

parol evidence: Can prior negotiations be introduced as parol evidence?

Answer 65

no

Question 66

parol evidence: Can agreements made before the contract be used as parol evidence?

Answer 66

no

Question 67

Are verbal agreements made at the same time as the contract allowed as parol evidence?

Answer 67

no

Question 67

parol evidence: Can evidence outside the contract ever be allowed under the Parol Evidence Rule?

Answer 67

no unless exception

Question 67

inside or outside Statute of Frauds: can evidence that has been subsequently modified be used as parol evidence

Answer 67

yes. Exceptions to Parol Evidence Rule
Contracts Subsequently Modified: Evidence of any subsequent modification (verbal or written) of a
written contract can be introduced in court; however, any modification subject to the statute of frauds
must be in writing.

Question 68

inside or outside Statute of Frauds: can incomplete contracts be used as parol evidence

Answer 68

yes. exception of parol evidence : Incomplete Contracts: When the written contract is incomplete in that it lacks one or more of the
essential terms (a partially integrated contract), the courts allow additional evidence to “fill in the
gaps.” If a contract is a total integration, then it is complete. A merger clause in the contract is
excellent evidence that the parties intend the contract to be a complete expression of the agreement

Question 68

inside or outside Statute of Frauds: can contracts with ambiguous term be used as parol evidence

Answer 68

yes . exception of parol evidence : Contracts Containing Ambiguous Terms: When the terms of a written contract are ambiguous and
require interpretation, evidence is admissible to show the meaning of the terms

Question 68

inside or outside Statute of Frauds: can with errors be used as parol evidence

Answer 68

yes exception of parol evidence: When an obvious or gross
clerical or typographic error exists that would not represent the agreement of the parties, parol
evidence is admissible to correct the error

Question 69

parol evidence accepted or not: Example: Davis agrees to lease office space from Stone Enterprises for $3,000 per month. The signed
written lease provides for a monthly payment of $300 rather than the $3,000 agreed to by the parties

Answer 69

Example: Davis agrees to lease office space from Stone Enterprises for $3,000 per month. The signed
written lease provides for a monthly payment of $300 rather than the $3,000 agreed to by the parties.
Because the error is obvious, Stone Enterprises will be allowed to admit parol evidence to correct the
mistake

Question 70

What is a Covenant Not to Compete?

Answer 70

An agreement in employment contracts where employees agree not to work for competitors or start competing businesses for a specified time after leaving the company.

Question 71

In what types of jobs are Covenants Not to Compete typically found?

Answer 71

They are typically found in employment contracts for workers in middle or upper-level management positions.

Question 72

Are Covenants Not to Compete enforceable in all states?

Answer 72

No, enforceability varies among states. Some states, like California, Minnesota, North Dakota, and Oklahoma, generally do not enforce them in employment contracts.

Question 73

Are Covenants Not to Compete enforceable in Pennsylvania?

Answer 73

They are disfavored in Pennsylvania, but can be enforced if they are:

Closely related to the employment relationship,
Reasonably necessary to protect a legitimate business interest, and
Limited in scope.

Question 74

What is Champerty

Answer 74

Champerty is the unlawful maintenance of a lawsuit in exchange for a share of the thing in dispute or profits from the litigation.

Question 75

What is Maintenance in the context of champerty?

Answer 75

Maintenance is the officious intermeddling in a lawsuit by supporting either party with money or other resources without having a legitimate interest in the case.

Question 76

Contract Law Part IV: Statute of Frauds: General Rule to Statute of Frauds

Answer 76

general rule: a verbal contract is just as valid and enforceable as a written contract . However, some verbal contracts are unenforceable under a law known as the statute of frauds.

Question 77

What is a contract “within the statue of frauds”

Answer 77

a contract that requires written proof. If written proof is not required, then it is “outside of frauds”

Question 78

Contract Law: Agreement and Consideration is this an offer When a government entity or private firm needs to have construction work done,
contractors are invited to submit bids

Answer 78

Invitations to Bid: When a government entity or private firm needs to have construction work done,
contractors are invited to submit bids. The invitation to submit bids is not an offer. The bids that
contractors submit are offers, however, and the government entity or private firm can bind the
contractor by accepting the bid

Question 79

Invitation to Bid: Is this an offer Live Auctions: In a live auction, a seller “offers” goods for sale through an auctioneer

Answer 79

Live Auctions: In a live auction, a seller “offers” goods for sale through an auctioneer, but this is not
an offer to form a contract. Rather, it is an invitation asking bidders to submit offers. In the context of
an auction, a bidder is the offeror, and the auctioneer is the offeree. The offer is accepted when the
auctioneer strikes the hammer.

Question 80

Contract Law Agreement and Consideration: is specific offer to contract an offer

Answer 80

Specific Offer to Contract: A person or business expresses a clear intention to be bound by certain terms if accepted.

Example: “I will sell you my car for $5,000, if you agree by Friday.”

Question 81

Contract Law Agreement and Consideration: Offers in Commercial Transaction

Answer 81

Offers in Commercial Transactions: Offers made with the intent to create a binding contract.

Example: A company sends a written proposal offering to supply goods at a fixed price within a specific time frame.

Question 82

Contract Law Agreement and Consideration: Communication of Offers Rule

Answer 82

One cannot agree to a bargain without knowing that it exists

Question 83

Contract Law Agreement and Consideration (Communication of Offers): Gyabaah v. Rivlab Transportation Corp., 958 N.Y.S.2d 109 (N.Y.A.D. 2013)
Adwoa Gyabaah was hit by a bus owned by Rivlab Transportation Corporation. Gyabaah filed a suit in
a New York state court against the bus company. Rivlab’s insurer offered to tender the company’s
policy limit of $1 million in full settlement of Gyabaah’s claims. On the advice of her attorney, Jeffrey
Aronsky, Gyabaah signed a release (a contract forfeiting the right to pursue a legal claim) to obtain the
settlement funds.
The release, however, was not sent to Rivlab or its insurer, National Casualty. Moreover, Gyabaah
claimed that she had not decided whether to settle. Two months later, Gyabaah changed lawyers and
changed her mind about signing the release. Her former attorney, Aronsky, filed a motion to enforce
the release so that he could obtain his fees from the settlement funds.

Answer 83

Gyabaah v. Rivlab Transportation Corp., 958 N.Y.S.2d 109 (N.Y.A.D. 2013)
Adwoa Gyabaah was hit by a bus owned by Rivlab Transportation Corporation. Gyabaah filed a suit in
a New York state court against the bus company. Rivlab’s insurer offered to tender the company’s
policy limit of $1 million in full settlement of Gyabaah’s claims. On the advice of her attorney, Jeffrey
Aronsky, Gyabaah signed a release (a contract forfeiting the right to pursue a legal claim) to obtain the
settlement funds.
The release, however, was not sent to Rivlab or its insurer, National Casualty. Moreover, Gyabaah
claimed that she had not decided whether to settle. Two months later, Gyabaah changed lawyers and
changed her mind about signing the release. Her former attorney, Aronsky, filed a motion to enforce
the release so that he could obtain his fees from the settlement funds. The court denied the motion, and
Aronsky appealed. The reviewing court held that there was no binding settlement agreement. The
release was never delivered to Rivlab or its insurer nor was acceptance of the settlement offer
otherwise communicated to them

Question 84

Contract Law Agreement and Consideration (Revocation and Acceptance): Revocation

Answer 84

An offeror may revoke the offer at any time before the offeree accepts - revocation is not effective until received by the offeree.

Question 85

Contract Law Agreement and Consideration (Revocation and Acceptance): Supervening Illegality - Revocation

Answer 85

A statue or court decision that make an offer illegal automatically terminates the offer

Question 86

Contract Law Agreement and Consideration (Revocation and Acceptance): Revocation, supervening illegality - revocation, acceptance, silence as acceptance. what is the following an example of Example: Lee offers to lend Kim $10,000 at an annual interest rate of 15 percent. Before Kim can
accept the offer, a law is enacted that prohibits interest rates higher than 8 percent. Lee’s offer is
automatically terminated.

Answer 86

Supervening Illegality – Revocation: A statute or court decision that makes an offer illegal
automatically terminates the offer.
Example: Lee offers to lend Kim $10,000 at an annual interest rate of 15 percent. Before Kim can
accept the offer, a law is enacted that prohibits interest rates higher than 8 percent. Lee’s offer is
automatically terminated. (If the statute is enacted after Kim accepts the offer, a valid contract is
formed, but the contract may still be unenforceable).

Question 87

Contract Law Agreement and Consideration (Revocation and Acceptance): Acceptance

Answer 87

Voluntary act the offer that shows assent (agreement to the terms of an offer.

Question 88

Contract Law Agreement and Consideration (Revocation and Acceptance): Silence as Acceptance

Answer 88

The general rule is that mere silence of the offerree does not amount to acceptance of an offer. However there is an exception in the case of previous dealings between an offeror - offeree where silence has previously constoitued acceptance

Question 89

Contract Law Agreement and Consideration (Revocation and Acceptance): Revocation or supervening illegality - revocation. A statute or court decision that makes an offer illegal automatically terminates the offer.

Answer 89

Supervening Illegality – Revocation: A statute or court decision that makes an offer illegal
automatically terminates the offer.

Question 90

Contract Law Agreement and Consideration (Revocation and Acceptance): Revocation or supervening illegality - revocation.

Answer 90

Revocation: An offeror may revoke the offer at any time before the offeree accepts – revocation is not
effective until actually received by the offeree.

Question 91

Contract Law Agreement and Consideration (Revocation and Acceptance): When does acceptance take effect - upon receipt of the offeror, or dispatch by the offeree?

Answer 91

Mailbox Rule: If mail is the authorized medium, the acceptance letter is effective the moment it is mailed, even if the offeror never recieves the letter of acceptance

However,

the offeror can work around the mailbox rule by simply stating in the offer that the acceptance is not effective until it actually received

Question 92

Contract Law Agreement and Consideration : Law of Consiideration

Answer 92

Consideration: Element of bargained-for-exchange it can be a promit for a promise for performance or a promise for a forebearance to act

Question 93

Contract Law Agreement and Consideration : Law of Consideration - gifts

Answer 93

promises to make gifts are generally unenforceable due to lack of consideration. The reason for this is because no “detriment” is suffered by the promise

Question 94

Contract Law Agreement and Consideration : Law of Consideration - can this be a law of consideration: Example: Relative says to A, “I will give you my diamond engagement ring when I die.” If the relative
dies, and gives the diamond engagement ring to B, A

Answer 94

Lack of Consideration – Gifts
Rule: Promises to make gifts are generally unenforceable due to lack of consideration. The reason for
this is because no “detriment” is suffered by the promisee.
Example: Relative says to A, “I will give you my diamond engagement ring when I die.” If the relative
dies, and gives the diamond engagement ring to B, A cannot enforce the promise in court to obtain the
ring.

Question 95

Contract Law Agreement and Consideration : Law of Consideration - can this be a law of consideration: An uncle promises his nephew $5,000 if the nephew will refrain from smoking, drinking and gambling until he reaches the age of 21. The nephew abstains. Is there consideration?

Answer 95

Answer: In the case of Hamer v. Sidway, 124 N.Y. 538 (1891 New York), the New York Court of
Appeals held the uncle’s promise was supported by consideration and was “bargained for.” Even
though the uncle did not economically benefit from the promise, he obtained something in exchange
from the nephew that was desirable (his relative’s health).

Question 96

Contract Law Agreement and Consideration : Law of Consideration (illusory promise)

Answer 96

Illusory promise: courts require that there be a possibility that the promisor will incur legal detriment; otherwise, the promisor’s promise is illusory

Question 97

Contract Law Agreement and Consideration : Law of Consideration Gifts, Void, Illusory: courts require that there be a possibility that the promisor will incur legal detriment

Answer 97

law of consideration illusory promise

Question 98

Which of the following best describes an illusory promise?

A. A promise where the promisor is legally bound to perform specific actions.
B. A promise that appears to create an obligation but does not actually bind the promisor to any performance.
C. A promise that requires a legal detriment on both parties.
D. A promise where both parties agree to exchange something of value.
E. A promise that is enforceable only when in written form.

Answer 98

Answer:
B. A promise that appears to create an obligation but does not actually bind the promisor to any performance.

Question 98

Illusory Promise and fortuitous events

Answer 98

If a promise is conditioned on a fortuitous event (something beyond either party’s control),
the promise is not illusory.

Question 99

Illusory Promise True or False: “I promise to buy your car for $4,500 if it rains tomorrow or if I am hired by TNT Corporation or if the Philadelphia Phillies win the next World Series.”

Answer 99

. Since it is possible that it will
rain or that I will get the job or Philadelphia may win, there is a possibility I will have to buy your car
(and incur a legal detriment).

Question 100

Illusory Promise True or False: “If profits continue to be high, everyone
will get a 10 percent bonus at the end of the year – if management agrees.

Answer 100

Example: If the condition is within the total control of the promisor, then the promise is illusory.
The President of Tuscan Corporation says to her employees, “If profits continue to be high, everyone
will get a 10 percent bonus at the end of the year – if management agrees.” This is illusory since
performance depends solely on the discretion of management.

Question 101

Illusory promise: Abe contracts to hire Chris for one year at $5,000 per month, reserving the right to
cancel the contract at any time.

Answer 101

Abe contracts to hire Chris for one year at $5,000 per month, reserving the right to
cancel the contract at any time. On close examination of these words, you can see that Abe has not
actually agreed to hire Chris, as Abe could cancel without liability before Chris started performance.
This contract is illusory

Question 102

Illusory promise: Abe contracts to hire Chris for one year at $5,000 per month, reserving the right to cancel contract after Chris has begun performace by giving Chris 30 day notice.

Answer 102

f Abe reserves the right to cancel the contract at any time after Chris has begun
performance by giving Chris thirty days’ notice, the promise is not illusory. Abe, by saying that he will
give Chris thirty days’ notice, is relinquishing the opportunity (legal right) to hire someone else instead
of Chris for a thirty-day period. If Chris works for one month and Abe then gives him thirty days’
notice, Chris has an enforceable claim for two months’ salary ($10,000).

Question 103

Lack of Consideration – Past Consideration

Answer 103

A promise to pay for services received in the past is usually not held to be supported by
consideration

Question 104

Past consideration: Appellant (former wife) and decedent (former husband) were previously married but had been
divorced for eighteen years. She alleged that the time of the divorce she and decedent entered into a
verbal agreement that he would pay her $60,000.00. The agreement, she alleged, was “to prevent the
forced sale and partition of the ranch and cattle jointly held by the parties.” In Appellant’s deposition
and answers to interrogatories, however, she clarified that the agreement was not entered into at the
time of the divorce in 1975, but rather in July, 1981. They did not own any property jointly at that
time. The circumstances were that several months after the decedent had been feeling ill and,
according to Appellant, talked about selling his house and 80 acre ranch. He said he was going to ask
$120,000.00 for it. He then gave Appellant a check for $60,000.00 and told her it was for coming back
and staying with him after they divorced. He told her that she could cash the check if he sold the
property or if something happened to him. The check was dated July 29, 1981

Answer 104

Is this claim against the estate valid? The Oklahoma Court of Civil Appeals upheld a trial court
ruling which found the agreement was invalid due to past consideration.

Question 105

Lack of Consideration – Preexisting Duty

Answer 105

Rule: Under most circumstances, a promise to do what one already has a legal duty to do does not
constitute legally sufficient consideration.

Question 106

Preexisting Duty: Ajax Contractors begins construction on a seven-story office building and after three months
demands an extra $75,000 on its contract. If the extra $75,000 is not paid, the contractor will stop
working. The owner of the land, finding no one else to complete the construction, agrees to pay the
extra $75,000.

Answer 106

The agreement is unenforceable because it is not supported by legally sufficient
consideration. Ajax Contractors had a preexisting contractual duty to complete the building.

Question 107

Preexisting Duty: Ajax Contractors begins construction on a seven-story office building and after three months jax Contractors had asked for the extra $75,000
because it encountered a rock formation that no one knew existed.

Answer 107

Example: Looking at the prior example, suppose that Ajax Contractors had asked for the extra $75,000
because it encountered a rock formation that no one knew existed. If the landowner agrees to pay the
extra $75,000 to excavate the rock and the court finds that it is fair to do so, Ajax Contractors can
enforce the agreement. If rock formations are common in the area, however, the court may determine
that the contractor should have known the risk. In that situation, the court may choose to apply the
preexisting duty rule and prevent Ajax Contractors from obtaining the extra $75,000.

Question 108

Uniform Written Obligations Act

Answer 108

Uniform Written Obligations Act: “A written release or promise, hereafter made and signed by the
person releasing or promising, shall not be invalid or unenforceable for lack of consideration, if the
writing also contains an additional express statement, in any form of language, in any form of
language, that the signer intends to be legally bound.” – 33 Pa. Stat. § 6

Question 109

Promissory Estoppel:

Answer 109

Also known as detrimental reliance. Under this doctrine, a person who has
reasonably and substantially relied on the promise of another may be able to obtain some measure of
recovery. Under this doctrine, a court may enforce an otherwise unenforceable promise to avoid the
injustice that would otherwise result.

Question 110

Agreement and Offer: A church solicits and receives pledges (commitments to contribute funds) from church
members to erect a new church building. On the basis of these pledges, the church purchases land,
hires architects, and makes other contracts that change its position.

Answer 110

Example: A church solicits and receives pledges (commitments to contribute funds) from church
members to erect a new church building. On the basis of these pledges, the church purchases land,
hires architects, and makes other contracts that change its position. Because of the church’s detrimental
reliance, a court may enforce the pledges under the theory of promissory estoppel.

Answer 111

Example: A church solicits and receives pledges (commitments to contribute funds) from church
members to erect a new church building. On the basis of these pledges, the church purchases land,
hires architects, and makes other contracts that change its position. Because of the church’s detrimental
reliance, a court may enforce the pledges under the theory of promissory estoppel.