Contract Essentials

Question 1

Express contract

Answer 1

parties clearly state the terms of their agreement, written or verbal

Question 2

Implied contract

Answer 2

occur when the conduct indicates that an agreement exists, but no formal proof of exchange or promises

Question 3

Agreement

Answer 3

determine if there was mutual agreement by considering whether the parties had the same understanding regarding the material terms of the agreement starting with the offer and acceptance

Question 4

Offer

Answer 4

conditional promise from the offeror to the offeree. conditional because it is not binding until accepted

Question 5

Bilateral contract

Answer 5

Private U offers to pay $100,000 in exchange for State U’s promise to play an away contest on Private U’s campus

Question 6

Unilateral contract

Answer 6

involves an offeror making a promise to the offeree if the offeree takes some specified action. EX. Running a 5k and the first-place finisher gets prize money

Question 7

Acceptance

Answer 7

offer is not bound, and an agreement is not formed until the offeree accepts the offer- can only be made by the party to whom the offer is made “would you consider?”
Must mirror the essential terms of the offer

Question 8

Conditions of Acceptance

Answer 8

Must mirror the essential terms of the offer
- Mailbox rule- unless parties agree otherwise an offer is accepted when it is sent (mailed, faxed or email) even if acceptance is lost in delivery or transmission
- Counteroffer- terminates the original offer and creates a new offer
- Rejection- either expressly or within a reasonable time
- Revocation- offer withdrawn
- Death/Incapacity of offeror or offeree

Question 9

Consideration

Answer 9

exchange of something of value between the parties- exchange of value ($$) hire you, have a contract, looking for bonus

without consideration, all you have is unenforceable promise to do something which is not legally binding

Question 10

Gifts

Answer 10

agreements in which only one person is giving up something, not enforced by courts as they lack consideration

Question 11

Past consideration

Answer 11

giving up something before the making of an agreement is insufficient

Question 12

Capacity

Answer 12

ability to comprehend the agreements terms and how those terms affect the party’s legal interests
Minors- unenforceable against the minor, but enforceable against the other party
Diminished mental capacity
Corporations- no physical existence and derive their capacity to contract through state statutes- enter contracts via authorized agents

Question 13

Legality

Answer 13

court will not enforce an illegal contract or one that violates public policy
Waivers (in some states)
Commission of a crime
Covenants not to compete (if too broad) “can’t play basketball for the

Question 14

Promissory estoppel

Answer 14

when an agreement lacks the requirements of a contract, but plaintiff has shown that the agreement included 1. Promise that reasonably expected reliance 2. There was detrimental reliance on the promise and 3. An injustice to the party who relied on the promise

Question 15

Statutes of frauds

Answer 15

intended to prevent fraudulent contract claims by requiring that certain agreements to be reduced to writing or verbal
Requires certain contracts to be in writing to prevent fraudulent claims and broken promises
Contracts that cannot be performed in one year
Agreements to guarantee another party’s debt
Agreements for the sale or lease of land

Question 16

Parol Evidence Rule

Answer 16

prohibits the admission of oral statements, preliminary agreements, or writings made prior to the final written contract
The contract speaks for itself and is intended to be the final expression of the parties
Exception- when the contract is ambiguous

Question 17

Breach of contract

Answer 17

when a party to a contract fails to perform the duties imposed under the contract- have to have all 4
Valid contract
Performed as specified in contract
Defendant failed to perform as specified in contract
Plaintiff suffered economic loss as a result in breach of contract

Question 18

Compensatory damages

Answer 18

compensate the non=breaching party for the loss of bargain

Question 19

Consequential damages

Answer 19

awarded where there are foreseeable damages resulting from the contract

Question 20

Nominal damages

Answer 20

where breach of contract occurred but did not result in any significant losses

Question 21

Punitive damages

Answer 21

awarded to punish defendant behavior and discourage in future

Question 22

Liquidated damages

Answer 22

arise from clause in the contract that specifies the damage awarded should either party fail to perform duties under contract

Question 23

Specific performance

Answer 23

requires the breaching party to perform his or her duties under the contract

Question 24

Injunction

Answer 24

the opposite of specific performance, when a party wishes to stop another party from performing his or her duties under the contract