Contract Law

Question 1

Contract. Elements?

Answer 1

An agreement creating obligations enforceable by law. The basic elements of a contract are mutual assent, offer, acceptance, consideration, capacity, legality (Contract cannot do anything illegal).

Question 2

Acceptance

Answer 2

Assent to the terms of an offer. Acceptance must be judged objectively, but can either be expressly stated or implied by the offeree’s conduct. To form a binding contract, acceptance should be relayed in a manner authorized, requested, or at least reasonably expected by the offeror.

Question 3

Assent

Answer 3

Agreement to be party to contract.

Question 4

Consideration

Answer 4

Something of value was promised in exchange for the specified action or nonaction like money.

Question 5

General contract damages vs expectation damages

Question 6

Mutual assent

Answer 6

Agreement by both parties to a contract. Mutual assent must be proven objectively, and is often established by showing an offer and acceptance

Question 7

Promissory estoppel

Answer 7

It states that an injured party can recover damages if those damages were the result of a promise made by a promisor and the promise was significant enough to move the promisee to act on it.

As a hypothetical example, imagine a person working in New York who seeks a new job. After a certain number of interviews, they receive a job offer from an employer in California offering a high salary and relocation expenses. The prospective employee immediately quits their job, ends their tenancy, and begins to relocate to California.

Question 8

Statute of frauds

Answer 8

A statute requiring certain contracts to be in writing and signed by the parties bound by the contract. The purpose is to prevent fraud and other injury. The most common types of contracts to which the statute applies are contracts that involve the sale or transfer of land, and contracts that cannot be completed within one year. Even sales that exceed $1000.

Question 9

Capability

Answer 9

To be “capable” of making a contract, the parties must understand what they’re doing. For example, there is a presumption that minors and insane people usually don’t know what they’re doing and, for that reason, contracts they enter into won’t be enforced under certain circumstances.

Question 10

Offer and acceptance

Answer 10

Party makes an offer to enter into a contract. Another party accepts. This can happen either in writing or verbally.

Accepting party must agree with all the terms the opposing party proposes in order for a contract to be in place. If one single change is proposed, the offer is not accepted yet.

Question 11

How long does an offer stay open?

Answer 11

It stays open for a “reasonable” period of time or until the expiration date the offering party provides.

Reasonable is rather ambiguous.

The offer may be revoked at any time with a few exceptions.

Question 12

An offer usually can be revoked at anytime. What are exceptions to this rule?

Answer 12

Offers with expiration dates.

Question 13

Can a contract be voided on minor details?

Answer 13

No. Ex: If you come to a contract to buy 100 1-inch loaves of Bread, and each bread is 0.99 inches, you cannot void the contract because it is such an inconsequential difference.

Question 14

Most contracts only need to contain two elements to be legally valid:

Answer 14

All parties must be in agreement (after an offer has been made by one party and accepted by the other).

Something of value must be exchanged – such as cash, services, or goods (or a promise to exchange such an item) – for something else of value.

Question 15

Are one-sided promises contracts?

Answer 15

No.

Question 16

Can actions instead of an exchange of promises make contracts binding?

Answer 16

Yes.

If, for instance, you leave your printer a voicemail message that you’ll pay an extra $100 if your brochures are cut and stapled when you pick them up, the printer can create a binding contract by actually doing the cutting and stapling. And once he does so, you can’t weasel out of the deal by claiming you changed your mind.

Question 17

American contract law tenents

Answer 17

Americans have the freedom to contract.

Contracts exist to facilitate economic exchanges.

Question 18

Lucy vs. Zehmer

Answer 18

Lucy and Zehmer signed a contract to sell Zehmer’s farm. Zehmer argued he was high and didn’t really mean to sell his farm; however, Zehmer wrote up a contract that no one asked him to, and both parties signed.

Virginia Court ruled for Lucy, saying as long as a party’s acts and words can be reasonably interpreted as assent, it is assent.

Question 19

What is considered assent by US courts?

Answer 19

As long as a party’s acts and words can be reasonably interpreted as assent, it is assent.

Question 20

Failure to contract. Does this concept exist in American contract law?

Answer 20

In some jurisdictions, even if there is no contract, in pre-contract negotiations, parties owe each other some duty. If these duties are not met, the opposing party can sue for damages and remedies.

This does not exist in American contract law with very few exceptions such as promissory estoppel.

Question 21

What happens when parties thought they were agreeing to different things when they contracted?

Answer 21

Depending on the situation, the court may either enforce the contract and hold one of the parties liable to perform their end of the bargain, or decide that there was no contract because when negotiating, the parties were thinking about two different things.

Question 22

Raffes v. Wichelhaus

Answer 22

There were two ships named Peerless. One of them had cotton; however, the contract did not specify which specific ship had the cotton and thus, had to be delivered the receiver. Thus, the court determined both parties were thinking two different things in reality when making an agreement, and thus, there was no single deal for the court to enforce.

Question 23

Frigaliment Importing Co. v. BNS International

Answer 23

Seller thought buyer wanted chickens. Buyer wanted young chickens. Court ruled in favor of seller, saying there was a contract. The buyer should have done due diligence to let the seller know they wanted to buy young chickens rather than chickens in general, and negotiated the contract accordingly.

Question 24

Doctrine of consideration

Answer 24

American contract law explicitly limits itself to exchanges that involve some form of consideration.

Gift giving is not a contract as it is a one-sided promise and does not involve any consideration.

Question 25

Hamer v. Sidway

Answer 25

Nephew was supposedly promised $5,000.00 by Uncle on condition that he quits a few vices until 21, which he did. Uncle said he didn’t mean to promise that he would give 5,000k to Nephew, but Court ruled that there was a contract as consideration was provided ($5,000.00 would be given for performance of certain actions by his nephew.)