CL Formation

Question 1

Applicable Law

Answer 1

Common Law - Contract for Services

UCC - Sale of Goods; Merchants or Non-Merchants

Question 2

Offer

Answer 2

CL - 1) Present contractual intent, 2) Definite and certain terms (QTIPS), 3) communicated to the offerree.

ML: 1) Present contractual intent, 2) Definiteness of terms (Reasonable terms to determine existence of breach and give remedy), 3) communicated to the offerree.

Advertisement:
Majority - Invitation to receive offer from the public.
Minority - If terms definite/certain. Advertisement specifies who may accept and how acceptance is to be made, leaves nothing for further negotiation.

Question 3

Termination or Revocation of Offer

Answer 3

GR - Freely terminable by the offeror prior to acceptance, except when

1) Option contract with consideration even nominal or recited
2) Detrimental reliance by offeree in bilateral contract. reasonable foreseeable reliance or forbearance.
3) Performance begins in unilateral contract, kept open for reasonable period of time, implied option contract, death or incapacity of offeror will not terminate.

Mail - revoked upon receipt.

Public Offer - Revoke through same method of offer

Indirect - Offeree acquires reliable information that
Offeror cannot perform and inconsistent with offer.

Agent - same as offeree

Question 4

Termination by Law

Answer 4

1) Lapse of Time - If offer specifies date, offer terminates at midnight of that day. If specifies number of days, days start from day offer received.
2) Oral Offers - Terminate at end of conversation unless held open by offeror.
3) Death/Destruction of Subject Matter - Terminates at death or destruction.
4) Death or Insanity - Terminates on death or insanity of offeror, unless option contract.
5) Supervening Illegality - Terminates at time subject matter becomes illegal.

Question 5

Rejection by Offeree

Answer 5

1) Conduct - Express or Implied
2) Mail - Rejected upon receipt.
3) Counter Offer - Implied rejection, does not terminate option contract.

Question 6

Acceptance

Answer 6

Unequivocal assent to the terms of the offer. Mirror image rule.

Only person intended by the offeror may accept.

Bilateral - Accepted by return promise
Unilateral - Accepted by performance

CL - Same mode of offer.
ML - Same or Reasonable mode.

Question 7

Mailbox Rule

Answer 7

Acceptance effective upon dispatch, when properly mailed.

Revocations and Rejections effective upon receipt.

Options effective upon receipt.

1) Acceptance sent then Rejection - Contract, unless Rejection received first and offer detrimentally relies upon rejection.
2) Rejection sent then Acceptance, Rejection received first - No Contract
3) Rejection sent then Acceptance, Acceptance first - Contract
4) Revocation sent then Acceptance then Revocation received - Contract
5) Revocation sent then Revocation Received then Acceptance sent - No Contract.

Exceptions: 1) Exercising Option, 2) Unilateral Contract, 3) Offer rules out

Question 8

Silence as Acceptance

Answer 8

Not generally acceptance, except when offer states or implies silence will constitute acceptance, or offeree improperly exercises dominion over goods.

Question 9

Rewards

Answer 9

Majority - Must have knowledge of offer prior to performance of act.

Minority - Do not need knowledge prior to performance of act.

Question 10

Mistake

Answer 10

A material misrepresentation of past or present facts, which goes to the essence of the contract.

Mutual Mistake - Contract is voidable by adversely affected party.

Unilateral Mistake - If nonmistaken party knew or should of known, no contract.

If nonmistaken party neither knew nor had reason to know of other parties mistake, contract exists. If mistaken party refuses to perform, nonmistaken party is entitled to expectational damages.

Modernly if mistaken party notifies nonmistaken party before change of position, mistaken party can rescind, if position changed reliance damages.

Question 11

Mistranscription

Answer 11

When oral contract is reduced to writing but due to clerical mistake the contract contains an error. The adversely affected party can use parole evidence and be entitled to reformation.

Question 12

Ambiguity

Answer 12

Terms of offer open to multiple interpretations.

1) If both or neither parties had reason to know of the ambiguity, no contract unless they give same meaning.
2) If one party had reason to know of the ambiguity, favor interpretation by innocent party.

Question 13

Consideration

Answer 13

Bargain made in exchange for a legal detriment. Both parties view their promise or performance as the price for the other’s promise or performance.

Question 14

Non-Consideration

Answer 14

1) Donative Promise - A promise to make a gift. Does the act or forbearance benefit the gift-giver in any way. A offers B to pay $1,000 if B quits smoking, valid consideration.
2) Past Consideration - The bargained element requires a conscious exchange at the time of the promise.
3) Moral Consideration - Not consideration unless: promise to pay past debt, promise to perform avoidable obligation, promise to pay debt discharged by BK, minority will allow under quasi contract.
4) Nominal Consideration - Recital of a bargain, but no real bargain.

Question 15

Legal Detriment

Answer 15

Each party must change their legal rights or liabilities by promise, act or forbearance.

Forbearance - Valid if validity of claim is reasonable or held in good faith.

Payment of a Lesser Amount - Liquidated debt, not valid unless different performance or different method of payment. Unliquidated debt, valid consideration

Question 16

Pre-existing Duty

Answer 16

Majority - Not consideration.
Minority - Consideration if benefit received.

Exceptions - Different performance, pre-existing duty owed to third party, valid defense to perform under original defense.

Question 17

Modification

Answer 17

Mutual assent and new consideration required.

New consideration not required if unanticipated circumstances and modification is fair and equitable given circumstances

Question 18

No Oral Modification Clause

Answer 18

If written contract says all modifications must be in writing and parties orally modify, this waives the clause. Oral modification is enforceable if supported by consideration and not in statute of frauds.

Question 19

Illusory Promise

Answer 19

If a bilateral contract has no actual obligations. Requirement/output contracts are not illusory when in good faith.

Question 20

Promissory Estoppel

Answer 20

When there is no valid consideration.

CL - foreseeable reasonable reliance resulting in substantial economic loss, donative promise enforced to full extent.

ML - damages limited to extent of reliance.

Question 21

Statute of Frauds

Answer 21

Applies to oral contracts or incomplete writings.

MR. DOG Should Poop More Frequently Religiously.

Marriage, Real Property, Debt of Another, One Year, Goods more than $500.

Sufficient Memo - Containing QTIPS and signed by party to be charged.

Part Performance - Contract for real property where payments made, taxes paid or improvements made.

Main Purpose - Main purpose in taking debt of another must be to benefit themselves.

Full Performance - If completed in less than 1 year valid even if contract was more than 1 year.

Receipt of goods or Payment - Either removes from Statute of Frauds.

Question 22

Statute of Frauds Estoppel

Answer 22

If oral contract falls into statute of frauds but promisor induces reliance by promisee and injustice cannot be avoided except by enforcement of promise.

Question 23

Unconscionability

Answer 23

Disparity in bargaining process. Court will strike oppressive provisions.

Procedural - Minor and Expert
Substantive - Terms of contract

Question 24

Incapacity

Answer 24

Legal - Contracts entered into by minor are voidable by the minor before or within a reasonable period of time after reaching majority. Still liable under quasi-conract for reasonable value of necessities. Ratification after reaching majority will result in liability.

Mental - Inability to comprehend the nature and consequences of the transaction. Intoxication or mental defect.

Question 25

Misrepresentation

Answer 25

A material misrepresentation by one party makes contract voidable. Would misrepresentation induce reasonable person to assent.

Nondisclosure is generally not sufficient, unless fiduciary relationship or trust/confidence or could not be easily determined by adversely affected party party

Tort Crossover

Question 26

Duress

Answer 26

Deprivation of free will.

Threat to Person - threat of physical harm to the person or close relative which forces him to enter contract.

Economic Threat - Wrongful threat to withhold goods, services or payment.

Question 27

Fraud

Answer 27

One party defrauds other into entering contract. Voidable by innocent party.

Question 28

Public Policy

Answer 28

Illegal subject matter will not be enforced and no recovery under quasi contract if both parties guilty. If on party guilty quasi contract allowed.

Question 29

Parole Evidence Rule

Answer 29

Any written/oral statement made prior or oral statement made contemporaneous with the contract cannot vary, alter or contradict term or original contract.

Fully Integrated - If contract is intended to be final expression of the bargain, parole evidence is barred.

Four Corners Test - Fully integrated with merger clause parole evidence barred.

Partially Integrated - Parole evidence allowed for terms not fully integrated.

Question 30

Parole Evidence Exceptions

Answer 30

1) Defenses to Formation
2) Collateral agreements
3) Modifications to agreement
4) New agreement with new consideration
5) Naturally omitted terms
6) Condition Precedent to Contract
7) Course of Performance, dealing and usage