Contracts 1 - Units 1-7

Question 1

Rule for “past consideration”

Answer 1

IF a promisor made a promise because of a performance or action in the past AND IF the promise was not bargained (made in the past) for THEN that promise is generally unenforceable

Question 2

Something given before the _______ was made cannot serve as consideration BECAUSE:

Answer 2

promise; it was neither induced by the promise nor made in exchange for the promise

Question 3

Rule for Consideration

Answer 3

requires a bargained for exchange of
something of legal value. A bargained for exchange occurs when the
promise induces the detriment and the detriment induces the promise

Question 4

“Legal value” consists of

Answer 4

either a detriment to the promisee or a benefit to the promisor

Question 5

When does a “detriment” exist?

Answer 5

where there is a waiver of a legal right

Question 6

What is the “secret” of nailing a Q on the material benefit rule/ Sect. 86?

Answer 6

to remember the fact-pattern of the case that inspired the rule: Webb v. McGowin

Question 7

Webb v. McGowin court on the past consideration doctrine 6 elements of a VERY limited rule/life-saving situations

Answer 7

1) a promise made in recognition of a benefit previously received by the promisor from the promise is binding
2) to the extent NECESSARY to prevent injustice
3) BUT a promise is not binding under this section if
4) the promisee conferred the benefit as a gift
5) or for other reasons the promisor has not been unjustly enriched OR
6) to the extent its value is disproportionate to the benefit

Question 8

Section 86 (2)(a)

Answer 8

a promise is not binding IF the promise conferred the benefit as a gift

Question 9

What might “sink” you in getting restitution for unjust enrichment? Martin v. Brown

Answer 9

where the benefit was gratuitously conferred without the expectation of compensation - a volunteer or an officious intermeddler - no restitution for unjust enrichment

Question 10

What is officious intermeddling?

Answer 10

you do something without invitation or without the privilege to do so

Question 11

Restatement Sect 86 - the Material Benefit Rule

Question 12

Consideration exception - MBR

Answer 12

situations in which a debtor makes a promise to pay an earlier, unenforceable debt: 1) a promise to pay a debt barred by the SOL, 2) a promise to pay a debt discharged by bankruptcy, and 3) a promise to pay an avoidable debt

Question 13

define voidable debt

Answer 13

a debt that can be avoided by the debtor because of some defect in formation such as FRAUD or MISTAKE OR a lack of contractual capacity

Question 14

Was McGowin’s promise enforceable? How did the court fix this for Webb?

Answer 14

NO - not enforceable as a contract because Webb’s falling with the block preceded and was not exchanged for the promise. Fixed by deeming the detriment to have been contemporaneous with the promise

Question 15

What is the requirement of “mutuality of obligation”? (EE p.198)

Answer 15

both parties must be bound, or neither is bound (except for unilateral contracts)

Question 16

In unilateral contracts, the offeree’s act of acceptance is also_________?

Answer 16

the completion of that party’s performance under the contract, so upon CT formation, only the offeror’s promise of future performance remains outstanding

Question 17

Notice of termination in bilateral contracts:

Answer 17

committing only one party to future commitment; a contract can validly grant to only one party the right to end the relationship by giving notice of term.

Question 18

An option contract paid for in advance only binds ___ _________.

Answer 18

the offeror

Question 19

illusory promise

Answer 19

the party does not actually make a binding commitment and thus, does not qualify as consideration; or where the terms allow the party to escape the commitment at will

Question 20

2-205 Merchants Firm Offer

Answer 20

ANY offer by a merchant to BUY or SELL goods in a signed record, giving assurance in its terms that it will be held open is NOT revocable for lack of consideration, during the time stated (or if no time stated a reasonable time no longer than 3 months)

Question 21

Sale - defined in 2-106(1)

Answer 21

the passing of title from buyer to seller for a price

Question 22

Goods - defined in 2-105(1)

Answer 22

all things (including specially manufactured goods) that are moveable at the time of identification to the contract for sale other than money in which the price is to be paid

Question 23

Special provisions as to merchants (comment 2 on 2-104)

Answer 23

the statute of frauds, firm offers, confirmatory memoranda, and modification rest on NORMAL BUSINESS practices which are or ought to be typical of and familiar to ANY PERSON in BUSINESS

Question 24

2-104 - Merchant defined

Answer 24

(1) a person who deals in goods of the kind OR otherwise by his occupation holding himself out as having knowledge or skill particular to the practices or goods involved in the transaction (or by his employment)

Question 25

How do we determine the predominant purpose of a hybrid transaction? Comment 3 of 2-102

Answer 25

1. language of the agreement 2. the portion of the total price that is attributable to the sale of goods (and the latter) 3. the purpose of the parties entering into the transaction 4. the nature of the business of the parties

Question 26

"Good faith" 1-201 comment 20

Answer 26

except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing

Question 27

Where in the UCC are option contracts covered other than firm offers?

Answer 27

(incorporates some CL provisions) 1-103 purpose and policies include: the law merchant and law relative to the capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions

Question 28

An agreement modifying a contract within this article needs __ _____________ to be binding.

Answer 28

no consideration; 2-209(1)

Question 29

Between merchants, a signed agreement excluding modification or rescission except by a signed record, may not be excluded or modified EXCEPT -

Answer 29

such requirement on a form supplied by the merchant MUST be signed separately by the other party. (2-209(2)

Question 30

Where in Article II of the UCC are waivers discussed?

Answer 30

2-209(4) - an attempt to modify or rescission does not satisfy (2) or (3) of 2-209 (signed mod or SOF) it CAN operate as a waiver

Question 31

Where and what is being tested in the test for "justifiable inducement"?

Answer 31

in promissory estoppel relief actions; actions by the promisee that signal to the court CAUSAL links to the promise made that were justifiable - i.e., application, the deposit, and non-refundable fee

Question 32

Where a promise is not considered to be binding because it was gratuitous, another party may have the legal right to _________, breaking the causal link between the conferred promise and promisee's actions.

Answer 32

REVOKE or refuse payment; removes promisee's justification for relying on the promise