Contracts 1

Question 1

Offer

Answer 1

An offer is 1) an outward manifestation of present contractual intent, 2) certain and definite in its terms, 3) made to the offeree, and 4) has not been terminated

Question 2

Past Consideration

Answer 2

Unless, at the time of performance, both parties contemplated payment would be made for an act, a later promise to pay for the completed act will not constitute consideration, because there will be no detriment to the actor.

As a general rule, past consideration is insufficient to support the formation of a contract, because there is no detriment to the offeree and no benefit to the offeror

Question 3

Equity – Promissory Estoppel

Answer 3

A promise which the promisor should reasonably expect will induce action or forbearance by the promisee, which does induce such action or forbearance, is binding if injustice can be avoided only by its enforcement, and only to the extent that justice requires

Question 4

Promissory Estoppel

Answer 4

A promise which the promisor should expect to induce action or forbearance on the part of the promisee, which does induce such action or forbearance, will be enforced if injustice can be avoided only by enforcement of the promise, but only to the extent that justice requires. The promisee may recover for his foreseeable, definite and substantial reliance.

A doctrine under which a non-contractual promise may be enforced to avoid injustice. (Quasi-contracts have the same effect, but differ from promissory estoppel because, in quasi-contract situations, there was no effective promise made at all.)

Question 5

Standing to Sue

Answer 5

As a general rule, only a non-breacher may sue under the contract. A breacher cannot sue under the contract, but may sue for equitable relief

Question 6

Statute of Frauds

Answer 6

The Statute of Frauds requires contracts involving the following be in writing: marriage, transfers of interests in land, guarantees of debts of another, sales of goods for $500 or more, and contracts that cannot be performed in one year

Question 7

U.C.C. Article 2

Answer 7

The U.C.C. applies to sales of goods. Goods are anything in existence and movable at the time of identification to the contract. Special rules apply to transactions between merchants. A merchant is one who deals regularly in the goods or holds himself out as having special skills or knowledge with respect to the goods

Question 8

Valid Contract

Answer 8

A valid contract requires an offer, acceptance and consideration and must satisfy the Statute of Frauds

Question 9

Warranty – Express

Answer 9

An express warranty is an explicit guaranty by the seller as to the goods. Express warranties cannot be disclaimed

Question 10

Warranty – Implied, Fitness for Particular Purpose

Answer 10

If the seller at the time of contracting knows or has reason to know the particular purpose for which the goods are required and that the buyer is relying on the seller’s judgment to select or furnish suitable goods, there is an implied warranty of fitness for a particular purpose, unless disclaimed in writing. The warranty applies to sales by merchants and non-merchants

Question 11

Warranty – Implied, Merchantability

Answer 11

A warranty that goods are merchantable is implied in a sales contract if the seller is a merchant in the goods. The goods must be fit for their ordinary purpose, pass without objection in the trade, be properly and accurately labeled and, if fungible, be of fair average quality. The warranty may be disclaimed orally or in writing. The word “merchantability” must be included in the disclaimer. The warranty applies only to sales by merchants

Question 12

Acceptance

Answer 12

Acceptance is the offeree’s unequivocal assent to the terms of the offer

Question 13

Predominant Purpose (UCC)

Answer 13

When a contract involves both goods and services, courts will use the predominant purpose doctrine to determine whether the UCC applies. If the predominant purpose is to provide services, the UCC will not apply. If it is to provide goods, the UCC will apply

Question 14

Output Contract

Answer 14

An output contract is one in which a buyer agrees to purchase all of a seller’s output of a good. If buyer and seller have prior dealings together, the buyer is bound to purchase quantities not grossly disproportionate to their past transactions

Question 15

Option

Answer 15

An option is a right to purchase property at an agreed price within a specified time and must be held open for that time if consideration is given. Under the UCC, an option contract offered in writing by a merchant requires no consideration, if the option is irrevocable and for no more than three months

Question 16

Merchant’s Firm Offer

Answer 16

Under the UCC, a merchant’s offer to buy or sell goods is irrevocable if it is in a signed writing explicitly stating that it will be held open. Such an offer is firm and is irrevocable without consideration for up to three months. The offeree must pay actual consideration if it is to be held open longer. If the offer states no time period, it must remain open for a reasonable time

Question 17

Damages – General

Answer 17

General damages are monetary damages arising as the immediate, direct and proximate result of the breach

Question 18

Damages – Consequential

Answer 18

Consequential damages are those, above and beyond general damages, that flow from a breach because of the plaintiff’s particular circumstances. Consequential damages can only be recovered if the defendant, at the time the contract was entered, had reason to foresee the damage as a probable result of his breach.

Question 19

Acceptance: Unilateral Contract. (Contract by conduct)

Answer 19

A unilateral contract is one in which the offeree accepts by performance. The offer must be held open to allow the offeree reasonable time to complete the performance

Question 20

Statute of Frauds – Surety: main purpose rule

Answer 20

The main purpose rule provides that, if a promisor’s chief purpose in promising to answer for the debt of another is to further the promisor’s own interest, the Statute of Frauds does not require a writing. Consideration given under the contract must be examined to determine the promisor’s primary interest