Common Law

Question 1

Where only one of the parties entering into a contract is mistaken about facts relating to the agreement, the unilateral mistake will not prevent formation of a contract unless

Answer 1

the nonmistaken party is or had reason to be aware of the mistake made by the other party, in which case the contract is voidable.

Question 2

An accord is

Answer 2

an agreement in which one party to an existing contract agrees to accept, in lieu of the performance that she is supposed to receive from the other party to the existing contract, some other, different performance.

Question 3

Satisfaction is

Answer 3

the performance of the accord agreement.

Question 4

Satisfaction discharges

Answer 4

the original contract and the accord contract.

Question 5

If a monetary claim is uncertain or subject to a bona fide dispute, an accord and satisfaction maybe accomplished by

Answer 5

a good faith tender and acceptance of a check (or an accompanying document) conspicuously states that the check is tendered in full satisfaction of the debt.

Question 6

The test of whether the reply is a counteroffer or inquiry is

Answer 6

whether a reasonable person would believe that the offer was being rejected.

Question 7

elements of enforceable contract

Answer 7

1. offer
2. acceptance
3. consideration
4. no defenses to enforcement

Question 8

option contract

Answer 8

a distinct contract where the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer for a period of time (or if no period stated, a reasonable time)

Question 9

methods of termination

Answer 9

• revocation by the offeror
• rejection (express or counteroffer)
• operation of law (death or insanity of party, destruction of subject matter, or supervening legal prohibition)

Question 10

necessary contract terms

Answer 10

sales contract: quantity
real estate contract: identification of property and price
employment contract: duration

Question 11

battle of the forms–inclusion of additional terms

Answer 11

If both parties are merchants, additional terms in acceptance included in contract unless:
-They materially alter original terms of offer (change risk or remedies available);
-Offer expressly limits acceptance to its terms; or
-Offeror has objected or objects within a reasonable time after notice received
If either party is not a merchant, additional terms treated as proposals to modify contract; they do not become party of contract unless expressly agreed to

Question 12

Mirror Image Rule

Answer 12

At common law, must accept every term of the offer; any different or additional terms in acceptance make the response a rejection and counteroffer

Question 13

Mailbox Rule

Answer 13

Acceptance by properly addressed and stamped mail or similar means (e.g., email) creates a contract at moment of dispatch, unless offer stipulates otherwise or an option contract is involved (effective on receipt)

Question 14

promissory estoppel

Answer 14

Promise that is otherwise enforceable because it lacks consideration can be enforceable if necessary to prevent injustice provided:

• Promisor should reasonably expect to induce action or forbearance; AND
• Such action or forbearance is in fact induced

Question 15

A condition precedent is one that

Answer 15

must occur before an absolute duty of immediate performance arises in the other party.

Question 16

Rights of a third-party beneficiary vest when the beneficiary:

Answer 16

(i) manifests assent to the promise in a manner invited or requested by the parties; (ii) brings suit to enforce the promise; or (iii) materially changes position in justifiable reliance on the promise.

Question 17

An agreement affecting a third-party beneficiary may be modified without the third party’s consent if

Answer 17

his rights have not yet vested.

Question 18

Modern courts hold that a promise to forbear suit on a claim that the promisor _____________ believes to be valid is good consideration to support an agreement, even if the claim ultimately turns out not to be valid.

Answer 18

honestly and reasonably

Question 19

Assuming nonoccurrence of event was basic assumption of parties and neither assumed risk, the following will discharge contractual duties:

Answer 19

1. Impossibility: no one can perform the duties
2. Impracticability: duties can be performed only with extreme and unreasonable difficulty or expense
3. Frustration: duties can still be performed but performance of contract is valueless

Question 20

When a sales contract provides that a seller may retain the buyer’s earnest money as liquidated damages, courts routinely uphold the seller’s retention of the money upon breach if

Answer 20

the amount appears reasonable in light of the seller’s anticipated and actual damages. Many courts uphold retention of earnest money of up to 10% of the sales price without inquiry into its reasonableness.

Question 21

Where there is an oral ______________, evidence of the condition falls outside the parol evidence rule.

Answer 21

condition precedent