Contract Formation

Question 1

What is an express contract created by?

Answer 1

Words (oral or written).

Question 2

What is an implied-in-fact contract created by?

Answer 2

Created by conduct.

Question 3

What is a quasi contract?

Answer 3

It is restitution that creates a quasi contract to protect against unjust enrichment when contract law yields an unfair result.

Question 4

What is a bilateral offer?

Answer 4

Where offer can be accepted any reasonable way.

Question 5

What is an unilateral offer?

Answer 5

Where offer can be accepted only by performance.

Question 6

Is an advertisement an offer?

Answer 6

No, not unless quantity is given.

Question 7

Is an open price term too indefinite/vague to be enforced?

Answer 7

Generally no, the court will read in a reasonable price except in a contract for sale of real property

Question 8

Requirements contract too indefinite/vague to be enforced?

Answer 8

Generally okay under Article 2 despite uncertain quantity. However, even if in good faith, buyer cannot take seller by surprise; any increase must be in line with prior demands

Question 9

When does an offer lapse?

Answer 9

After a stated term or a reasonable time has passed.

Question 10

When is an offer revoked?

Answer 10

When offeror revokes offer. This can be via direct or indirect conduct.

Question 11

What are the four exceptions to revocation?

Answer 11

1) AN OPTION (Promise to keep offer open that’s paid for) in NY, can be written not paid for and enforceable.
2) FIRM OFFER (Article 2, in SOG, if merchant promises in signed writing it is irrevocable)
3) FORSEEABLE RELIANCE BEFORE ACCEPTANCE. ie subcontractors.
4) STARTING TO PERFORM UNITLATERAL (MBE: Cant revoke once I begin, NY can revoke until i complete performance).

Question 12

When is revocation effective? i.e. what time?

Answer 12

When it is received.

Question 13

When is an offer rejected?

Answer 13

When offered rejects it.

Question 14

Is a counter offer a rejection?

Answer 14

Yes it does operate as a rejection but mere bargaining doesn’t.

Question 15

Is conditional acceptance acceptance?

Answer 15

No!

Question 16

Can I accept but vary offer?

Answer 16

At common law it must mirror the offer.
Art 2 SOG, doesn’t have to mirror offer, adding/changing term doesn’t prevent acceptance, MUST BE 1) Merchants, 2) No material change 3) No objection in reasonable time

Question 17

What if I die before accepting the contract?

Answer 17

Death of either party before acceptance terminates a revocable offer.

Question 18

When is an offer accepted with a bilateral contract?

Answer 18

When you start performance.

Question 19

When is an offer accepted with a unilateral contract?

Answer 19

Completion is acceptance.

Question 20

Is silence acceptance?

Answer 20

No.

Question 21

When is acceptance effective when you are mailing it?

Answer 21

When it is mailed.

Question 22

What are the 8 defences to an agreement being legal enforceable?

Answer 22

1) Lack of capacity
2) Economic duress
3) Misrepresentation/non disclosure of a material fact
4) Ambiguity/misunderstanding
5) Mistake about material fact, a) mutual mistake or b) unilateral mistake
6) No consideration
7) Public policy
8) Unconscionability

Question 23

Explain lack of capacity

Answer 23

1) Incapacitated defendant may disaffirm contract BUT

2) but implied affirmation if you retain benefit after regaining capacity.

Question 24

Is past consideration consideration?

Answer 24

No, not on MBE, it is in NY if expressly stated in writing.

Question 25

Is new consideration required to modify a contract?

Answer 25

At common law, new consideration is required. In Article 2 it isn’t, but you must show good faith.

Question 26

What is a contract?

Answer 26

A legally enforceable agreement

Question 27

What is an offer?

Answer 27

Manifestation of an intention to be bound

Question 28

Gap’s ad reads: One blue dress just like Monica’s only $1!” Offer?

Answer 28

Yes because it specifies a quantity

Question 29

Improper performance = acceptance?

Answer 29

Common law: simultaneous acceptance and breach

Art. 2: simultaneous acceptance and breach UNLESS seller sending goods as accommodation (then counteroffer)

Question 30

Unconscionability (2 types)?

Answer 30

Generally not valid defense against enforcement
Substantive: terms of contract unfair
Procedural: process unfair; unbalance of power

Question 31

Consideration for agreement to pay time-barred debt?

Answer 31

Written promise to pay debt, collection of which barred by statute of limitations, enforceable without consideration

Question 32

Consideration for partial payment of debt?

Answer 32

If debt is undisputed, contract unenforceable for lack of consideration
NY: if in signed writing, no consideration needed for promise to forgive debtIf debt is disputed, enforceable without consideration because law favors debt resolution