Contract Law

Question 1

What is the difference between a unilateral and bilateral contract?

Answer 1

A unilateral contract seeks a single promise make by the offeror to the offer, which seeks performance from the offeree rather than a promise. A Bilateral contract is a promise for a promise.

Question 2

A bilateral contract may be created by either _____ or _____

Answer 2

mutual promises or the start of the performance

Question 3

When we say a contract is express, implied or quasi what are we referring to?

Answer 3

The way the contract was formed, not the enforceability

Question 4

What is an express contract?

Answer 4

One formed by specific words, either oral or written.

Question 5

What is an implied contract?

Answer 5

Formed by an indication other than specific words, such as by conduct. Sometimes called a contract “implied in fact”

Question 6

What is a quasi-contract?

Answer 6

Not a contract in any technical sense. created by courts to prevent unjust enrichments of a defendant by allowing the plaintiff to seek restitution of a benefit conferred upon the defendant. Sometimes called contract “implied in law.”

Question 7

What does the term “void contract” mean?

Answer 7

Contract that had no legal effect and was invalid from the start. Not a contract at all.

Question 8

What is a “voidable contract”?

Answer 8

One that one or both parties may choose to avoid or may ratify. (i.e. contracts involving a minor)

Question 9

What is an unenforceable contract?

Answer 9

One that cannot be enforced because of defenses to the contract, none of which relate to its formation. (i.e. statute of frauds, statute of limitations, unconscionability, etc.)

Question 10

What is the difference between an “Executory” contract and an “Executed” Contract?

Answer 10

An executory contract is one where one party still has a duty or obligation to be done. An Executed contract is one in which both parties have fully performed their obligations and duties.

Question 11

What are the 3 things needed to form a valid, enforceable contract?

Answer 11

1) Mutual Assent
2) Consideration
3) Absence of defenses that would prevent enforcement

Question 12

Mutual Assent is often called ______?

Answer 12

Meeting of the Minds

Question 13

What are the 2 things that Mutual Assent require?

Answer 13

Offer and Acceptance

Question 14

What would not be considered a valid offer?

Answer 14

1) Statements made in jest or anger
2) Advertisement –> considered an invitation to make an offer. The exception is a store that lists a specific item for a specific price on a 1st come 1st served basis
3) Auctions –> Considered a solicitation for offers. The exception is when the auction is conducted without reserve
4) Invitation to bid

Question 15

What are considered the essential terms of an offer?

Answer 15

1) identity of the offeree
2) subject matter
3) price to be paid
4) time of the payment, delivery, or performance
5) The quantity involved
6) The nature of the work or performance required.

Question 16

How can termination of an offer occur?

Answer 16

1) Revocation
2) Rejection
3) Lapse of Time
4) Termination by Operation of Law

Question 17

What are the limitation on Revocation powers?

Answer 17

1) Option –> Independant contract in which offereor receives a separate consideration from the offeree to keep an offer open for a stated period of time.
2) U.C.C. Firm Offer
3) Detrimental Reliance
4) Part performance of a Unilateral Contract

Question 18

What is the key difference between a counteroffer and a mere inquiry?

Answer 18

A counteroffer constitutes a rejection

Question 19

What is the difference between the Common Law Rule regarding additional terms in the acceptance and the U.C.C.?

Answer 19

Under common law rules, different or additional terms in the acceptance make the response a rejection and a counteroffer. Under the UCC it does not; a contract is formed subject to certain limitations

Question 20

Acceptance by mail or similar medium creates a contract when?

Answer 20

At the moment of posting, properly addressed and stamped. A contract is formed if the acceptance is sent before the revocation is received.

Question 21

What are the 2 situations where an executory bilateral contract may be formed without communication of acceptance?

Answer 21

1) Express Waiver

2) Silence as Acceptance

Question 22

What are the 2 requirements for consideration?

Answer 22

1) There must be a bargained-for exchange between the parties.
2) THe bargained-for exchange must provide some benefit to the promisor or must provide some detriment to the promisee (Legal value)

Question 23

Does a Past consideration or Moral obligation qualify as “Bargained-for”

Answer 23

No

Question 24

Will Courts inquire into the adequacy of consideration?

Answer 24

as a general rule, no

Question 25

Define Token?

Answer 25

Entirely Without value; consideration is held insufficient and indicates a gift rather than bargained-for consideration

Question 26

Is a promise to perform a preexisting legal duty considered valid consideration?

Answer 26

NO

Question 27

What are Requirements and Output Contracts?

Answer 27

They are both Enforceable. The Requirements contract is a promise to buy all that I require, and a Output contract is a promise to sell all that I produce.

Question 28

Are Conditional Promises enforceable?

Answer 28

Yes, unless the "condition" is entirely within the promiser's control

Question 29

What is the statute of frauds

Answer 29

states that contracts for goods valued at $500 or more must be in writing.

Question 30

What are considered substitutes for Consideration?

Answer 30

1) Promises under seal (UCC has eliminated the seal as consideration for sales contracts) 2) Promises in Writing 3) Promises to pay obligations barred by law 4) Promissory Estoppel

Question 31

What must the promisee be able to show to enforce a claim of promissory estoppel?

Answer 31

1) The promisor reasonably should have expected to induce action or forbearance on the part of the promisee. 2) Of definite and substantial character 3) Action or forbearance occurs

Question 32

Contract defenses based on lack of capacity involve one of three types of incapacity:

Answer 32

1) minority 2) mental incapacity 3) intoxication These are VOIDABLE

Question 33

When might a minor not be able to avoid a contract?

Answer 33

If they misrepresent their age or if the contract provides the minor with necessities of life

Question 34

What are the 4 general categories for lack of consent?

Answer 34

1) Duress 2) undue influence 3) Misrepresentation 4) Fraud

Question 35

Threat of ____ prosecution consitutes duress

Answer 35

Criminal

Question 36

Define Misrepresentation

Answer 36

The innocent or negligent missatement of a material fact made by one party and relied upon by the other party as a basis for entering into an agreement to his or her damage.

Question 37

Fraud requires what?

Answer 37

Scienter (knowledge/awareness)

Question 38

Mutual Mistakes are sometimes called ______

Answer 38

Latent ambiguity

Question 39

What are the 2 criteria that judges use to determine unconscionability?

Answer 39

1) Hidden, Risk-Shifting provisions 2) Adhesion Contracts --> Those that contain unconscionable provisions concerning procurement of necessary goods when the buyer is unable to purchase similar items from any seller without agreeing to a similar provision.

Question 40

What falls under the statute of frauds?

Answer 40

1) Executor/administrator agreements 2) Debts of another 3) In consideration of Marriage 4) Interest in Land (Real estate, mortgage, etc.) 5) Contracts which cannot be performed within 1 year (Date of the agreement) 6) Goods priced at $500 or more

Question 41

In 3rd party beneficiary contracts who can and can't recover?

Answer 41

The intended beneficiary CAN Recover and the incidental beneficiary CAN NOT recover.

Question 42

What is the parol evidence rule?

Answer 42

Rule of substantive contract law. Any other expressions oral or written, made prior to or contemporaneous with the writing are inadmissible to vary the terms of the writing.