contract law

Question 1

purpose of contract law

Answer 1

to make businesses matters more predictable

Question 2

elements of a contract

Answer 2

1. agreement
2. consideration
3. lawful purpose
4. capacity

Question 3

what is an agreement?

Answer 3

requires an offer by the offerer and acceptance by the offeree

Question 4

what is consideration?

Answer 4

a bargain where both parties exchange something of value (item for money)

Question 5

what is lawful purpose

Answer 5

the contract must be for a legal activity

Question 6

what is capacity

Answer 6

both parties must be adults (+18) of sound mind

Question 7

what is an offer?

Answer 7

a statement proposing specific terms or specific steps to be taken to create a contract upon acceptance. the offeree must do something in return

Question 8

case for offer/contract

Answer 8

carlill vs. carbolic smokeball

Question 9

explain carlill vs. carbolic smokeball

Answer 9

1. carbolic smoke advertised that they would pay 100 dollars to anyone who used it’s smokeball meds for one week and still got influenza
2. mrs Carlill purchased the medicine and used it as instructed and still caught the influenza
3. she sued the company to win the $100.

the issue: was it a binding offer or invitation to treat

decision: the court ruled in favor of Mrs Carlill, stating that the ad constituted a unilateral offer that became binding when the conditions were met

Question 10

what is invitation to treat

Answer 10

the steps taken right before making an offer

Question 11

case for invitation to treat

Answer 11

Fisher vs bell

Question 12

explain fisher vs bell

Answer 12

1. shopkeeper bell displayed a flick knife in his shop window with a sale tag
2. under the “restiction of offensive weapon,” it was illegal to “offer for sale offensive weapons

3.the shopkeeper bell was charged with offering the knife for sale

issue: was displaying the knife an offer for sale or invitation to treat

decision: the court ruled that the display was just an invitation to treat

Question 13

what is acceptance?

Answer 13

the offeree must say or do something to accept

Question 14

what is the mirror image rule? (common law)

Answer 14

1. requires acceptance to be on exact terms of the offer
2. if offeror demands acceptance in a specific way, the offeree must follow precisely

Question 15

what is the mailbox rule (time of acceptance)?

Answer 15

1. acceptance is effective upon dispatch
2. once email, message, or call is sent, that means the acceptance is affective.

the agreement is done once email is sent, not when it’s recieved

Question 16

what makes a contract binding?

Answer 16

if it’s for a lawful purpose

Question 17

illegal contracts

Answer 17

1. wagers
2. licensing statutes
3. usury

Question 18

what are wagers?

Answer 18

when 2 parties bet on the outcome of an uncertain event, this is illegal unless authorized by the law

Question 19

what are licensing statutes?

Answer 19

any contract made by an unlicensed worker is unenforceable.

Question 20

what is usury?

Answer 20

charging an interest rate on a loan that exceeds the legal maximum set by law.

Question 21

what is an unconscionable contract?

Answer 21

a contract that court refuses to enforce because of unfairness to prevent injustice

Question 22

factors of unconscionable contract

Answer 22

1. oppression
2. surprise

Question 23

what is oppression?

Answer 23

when one party uses it’s power to force a contract on the weaker party

Question 24

example of oppression

Answer 24

your boss forces you to sell them your car at a low price. The boss used their power on you to create a contract, which makes it valid in court

Question 25

what is surprise?

Answer 25

the weaker party did not fully understand the consequences of an agreement

Question 26

example of surprise

Answer 26

you rent an apartment and sign the agreement. the landlord doesn't mention any extra fees, but you receive a bill for 1000 dollars for using the gym. this was not mentioned when signing the agreement

Question 27

what is misrepresentation?

Answer 27

when one party makes a false statement, that makes the other party enter the agreement/contract

Question 28

types of misrepresentation

Answer 28

1. innocent misrepresentation 2. fraudulent misrepresentation

Question 29

what is innocent misrepresentation?

Answer 29

a false statement is made honestly, without intention to decieve

Question 30

example of innocent misrepresentation

Answer 30

a seller sells a used car, and while believing that it has never been in an accident, the buyer finds out it has been repaired after a crash. the seller didn't know as the previous owner hadn't mentioned it

Question 31

what is fraudulent misrepresentation?

Answer 31

the owner knew the statement was false and lied to get the buyer to enter the contract

Question 32

how to prove misrepresentation

Answer 32

1. prove a false statement was made 2. prove how the false statement is fraudulent 3. prove the injured person relied on the false statement

Question 33

case for misrepresentation

Answer 33

bisset vs wilkinson

Question 34

explain bisset vs wilkinson

Answer 34

1. landowner bisset sold land in new zealand to a buyer, wilkinson 2. during negotiation, bisset mentioned that, in his opinion, the land could support 2000 sheep 3. wilkinson later discovered that the land wasn't big enough for all his sheep, so he wanted to rescind the contract issue: Was bisset's estimate about the land capacity a misrep? or just his opinion decision: the court decided that bisset estimate was an opinion, not fraudulent misrepresentation, since he didn't have actual expertise or factual information to make this estimate.

Question 35

what is mistake?

Answer 35

when one or both parties enter into a contract under a misunderstanding

Question 36

types of mistakes

Answer 36

1. bilateral mistake 2. unilateral mistake

Question 37

what is a bilateral mistake?

Answer 37

both parties share the same mistake about a fact in the contract

Question 38

example of bilateral mistake

Answer 38

a buyer and seller agree on the sale of a painting, thinking it's an original later they discover it's a replica. the contract may be voidable

Question 39

what is a unilateral mistake?

Answer 39

only one party is mistaken about a fact. the contract may be voidable if the non-mistaken party knew and took advantage

Question 40

example of unilateral mistake

Answer 40

If a contractor submits a bid with a pricing error, the client knew it was unusually low and took advantage

Question 41

example of case for mistake

Answer 41

Lewis V Avery

Question 42

explain the case Lewis V Avery

Answer 42

1. Lewis was selling his car 2. A fraud claimed to be a famous actor and presented a studio pass as identification 3. lewis accepted a check for the car 4. the check was later denied; the fraud sold the car and sold it to Averay, an innocent third party issue: was the contract between lewis and the fraud void for mistaken identity, meaning avery could not take ownership of the car? decision: the court ruled the contract as voidable. since lewis willingly handed over the car, the fraud had authority and ownership to pass the car to avery. so Avery retained ownership of the car