Contract Law

Question 1

Under contract law, what is the effect of an acceptance that differs from the terms of the offer?

Answer 1

The offer is considered as refused and it is no more valid. It is therefore a rejection of the initial offer and the proposal of a new one. This happens when the offeree makes a counteroffer (an acceptance which modifies terms of the original offer) or the offeree doesn’t accept according to the constraints requested in the offer (example: it is requested to accept by an email and the offeree sends a fax).

Question 2

What’s a statute of limitations?

Answer 2

The statute of limitations defines a limited period of time wherein a contract is valid. After this time has passed a claim can’t be filed anymore.

Question 3

Explain what is a “third-party beneficiary” and which general contractual principle is derogated by it:

Answer 3

A third-party beneficiary is a person who benefits from a contract, even though they didn’t sign it.

It goes against the principle of privity: This principle states that only the parties who enter into a contract (the promisor and promisee) have rights and obligations under that contract. People who are not parties to the contract cannot enforce its terms or sue for a breach of contract.

Question 4

What are the cases of discharge by operation of law?

Answer 4

4 cases
1. Subsequent illegality: the contract might have been legal when agreed upon but may now be illegal due to new legislation.
2. Impossibility of the performance: If something happens that makes it impossible for either party to fulfill their obligations. Ex:
- Illness or death of someone essential to the contract.
- The thing promised in the contract no longer exists (e.g., a building burns down before it can be sold).
- Acts of God: Force majeure (covid19)
3. Bankruptcy: If a company goes bankrupt, their contracts may be affected. Depending on the situation, the contract might be discharged entirely, or there might be special rules on how it’s handled.
4. Statute of limitations: the contract may not be valid anymore due to the passage of a certain time frame defined by the statute of limitations. Any right has an expiration term, you cannot claim damages after a certain period of time.

Question 5

Explain the difference between ratification and express appointment.

Answer 5

Ratification: acceptance made ex post by the principal. The principal accept the agents’ actions after the actions were taken. The agent had no previous authority.

Express appointment: action made ex ante. The agent is appointed by the principal to do a task before.
Ex: hiring a layer to represent you in court.

Question 6

Under contract law what are the requirements to have a valid offer?

Answer 6

1. Clear intent to make a contract.
2. Sufficiently definite: a court must be able to evaluate the actual intent of the parties.
3. Communicated to the other party.

Question 7

Briefly explain the concept of meeting of the minds under contract law.

Answer 7

The meeting of the minds points out the clear intentions of the parties to form a contract. There has to be a common understanding of the subject matter in the formation of the contract. Also, a contract has to be agreed upon by two parties in their full mental capacities and no fraud, material mistake, unconscionability, undue influence or duress can take place.

Question 8

In what sense it is incorrect to refer to a written document in a contract?

Answer 8

It is incorrect to refer to a written document in a contract because a contract doesn’t have to be written in order to be valid.

Question 9

Briefly explain what is duress under contract law and how it influences the meeting of the minds.

Answer 9

Duress is coercion (physical or mental), that deprives a party of free will and leaves them no reasonable alternative. It is really difficult to prove the contract was signed under duress. Duress prevents a genuine meeting of the minds.

coercion (tvång)

Question 10

What is usury and how it may affect the validity of a loan agreement?

Answer 10

Usury is an unlawful rate of interest set by statute that is different in each country. Loan contracts which charge interest rates above the usury limit are illegal and, thus, void.

Question 11

Briefly explain the difference between compensatory damages and punitive damages.

Answer 11

Compensatory damages compensate a loss suffered by a plaintiff: the court tries to make him “whole” by setting a sufficient amount of money.

Punitive damages (called exemplary damages) are punishments for outrageous, malicious and oppressive conduct of the defendant. The aim is to make the breaching party an example and never let the case happen again.

plaintiff (målsägande)

Question 12

Which elements are needed to claim for damages?

Answer 12

To claim for damages, the plaintiff must follow the following requirements:
a. Proof of existence of the contract.
b. Proof that the contract was breached by the defendant.
c. Proof that, because of defendant’s breach, the plaintiff has been injured or damaged.

Limitations applied to the damages: certainty of damages, foreseeability of damages and mitigation of the plaintiff to avoid or minimize damages.

Question 13

Please explain the concept of material mistake.

Answer 13

A material mistake is a serious error about a key aspect of a contract that prevents a true meeting of the minds. It can potentially void the contract or lead to its reformation.

You agree to purchase a car based on the seller’s claim it has 50,000 miles, but it actually has 150,000 miles

Question 14

Under contract law what are the requirements to have a valid acceptance?

Answer 14

The acceptance must be
1. Clear
2. Unqualified: cannot be a counteroffer (a rejection of the original offer and the making of a new one. The offeree becomes the offeror). Thus, the acceptance cannot involve other qualification, so further requests.
3. In any matter required by the offeror.

Question 15

Under contract law, what is the statute of frauds?

Answer 15

The statute of frauds lists contracts that needs to have a Memorandum (not the whole contract but written evidence of the agreement). It’s designed to prevent fraud and perjury (lying under oath) by requiring evidence of the agreement beyond just someone’s word.

The contracts in the statute of frauds are ex:
* contracts for sales of goods >500$
* contracts that connot be performed within one year
* contracts for the sale of lands

Question 16

Briefly explain what is undue influence and how it affects the meeting of the minds.

Answer 16

Undue influence occurs when one party takes advantage of another by reason of a superior position in a close or confidential relationship. Thus, it is possible to identify a dominant and a dominated party. Attorney and client, doctor and patient are examples of such relationship.
Any contract showing these characteristics is therefore voidable.

Question 17

How would you go about proving an expressed contract, an implied-in-fact contract, a quasi contract?

Answer 17

Express contract (Verbal, written or oral): can be proven by demonstrating the clear intent of a party to make a contract or an actual document.

Implied contract (Conduct/actions/behaviour): it has to be proven that actions took place for which a contract was, in fact, formed.

Quasi-contract (by operation of law, court): more difficult to say if there has been a real agreement because a party performs without actual consent of the other but in his interest.

Question 18

Why is a lawsuit based on an implied contract is more likely to produce greater damages and a larger verdict that one based on quasi-contract?

damages (skadestånd)
verdict (dom)

Answer 18

A lawsuit based on an implied contract is more likely to produce greater damages and a larger verdict because a quasi contract may be presumed by a court in the absence of a true contract. Because a quasi contract is not a true contract, mutual assent is not necessary, and a court may impose an obligation without regard to the intent of the parties. When a party sues for damages under a quasi-contract, the remedy is typically restitution or recovery under a theory of quantum meruit.

Question 19

How can a unilateral offeree convert the contract into a bilateral contract? When should he do so?

Answer 19

A unilateral contract, by definition, involves a promise by one party (the offeror) in exchange for an act by the other party (the offeree). The offeree doesn’t make a promise; they simply perform the act. However, there are a few ways an offeree can convert a unilateral contract into a bilateral contract:
1. Make a Promise in Return: The offeree can explicitly promise to perform the act in exchange for the offeror’s promise. This can be done verbally or in writing.
2. Full Performance with Additional Conditions:
The offeree can convert them to bilateral contracts when he wants to secure the promised consideration, clarify expectations, and potentially negotiate for additional benefits.

For example, imagine a company offers a reward for finding a lost pet. By actively searching for the pet, the offeree is performing the act. However, if they verbally promise to return the pet if they find it, in exchange for the reward, this creates a bilateral contract.

Question 20

When is an advertisement an offer?

Answer 20

1. The advertisement includes definite terms.
2. The advertisement targets a specific person or a limited group.
3. The circumstances of publication make it clear that the advertiser intended to offer a contract.

“The first person in our store on this date will receive $100 toward the purchase of an appliance”

Question 21

What are the four exceptions to the rule that an offer can be withdrawn at any moment before it is accepted?

Answer 21

1. The offer has expired.
2. The offeree rejects.
3. The offer is countered by the offeree.
4. The offeree has begun performance.

Question 22

What is the effect of a conditional acceptance?

Answer 22

A conditional acceptance does not create a contract in most jurisdictions. When a recipient accepts an offer with added conditions, it’s essentially a counteroffer. This counteroffer rejects the original offer and proposes new terms. The original offeror now needs to decide whether to accept the counteroffer (with the new conditions) or propose further negotiations.

Question 23

What is the meaning of the term “adequacy of consideration”?

adequacy (accepterbarhet, tillräcklighet)

Answer 23

In contract law, “adequacy of consideration” refers to the fairness of the value exchanged between parties in a contract. It essentially asks whether the consideration offered by one party seems like a reasonable exchange for what they receive from the other party.

Question 24

What is the essential element of consideration?

Answer 24

The essential element of consideration is a promise or an action from each side. Consideration doesn’t have to be adequate or fair but it has to be something of substance or value. “something for something”: something of value in return for a performance.

Question 25

What is the consideration for the promise in a unilateral contract?

Answer 25

In a unilateral contract the performance is the consideration for the promise.

Question 26

Assignment in a contract with release?

Answer 26

Assignment of a contract: swapping the entire position of a contractor party. For example, a supplier is stepping out of a business and another company is willing to continue the supplies. The first company assigns the whole contract upon approval of the other party. If the contract is with release the assignor is released from his obligations and thus the new contract is only between the assignee or the other party.

assignor (överlåtare)

Question 27

Assignment in a contract without release?

Answer 27

Assignment of a contract: swapping the entire position of a contractor party. For example, a supplier is stepping out of a business and another company is willing to continue the supplies. The first company assigns the whole contract upon approval of the other party. If the contract is without release the assignor has to remain and continue to guarantee performances.

assignor (överlåtare)