Contracts

Question 1

Governing Law Statement for Common Law Contracts

Answer 1

The common law applies to transactions for services and real property.

Question 2

Governing Law Statement for Sale of Goods

Answer 2

The UCC applies to contracts for the sale of goods (movable, tangible property), and merchants (entities/individuals who regularly deal in goods of the kind sold).

Question 3

Valid Contract

Answer 3

A valid contract requires (1) offer, (2) acceptance, (3) consideration and (4) no defenses to formation

Question 4

Valid Contract: OFFER

Answer 4

An offer requires (1) an express present intent to be legally bound to a contract, (2) certain and definite terms and (3) communication to an identifiable offeree.

Question 5

Advertisement

Answer 5

An advertisement is an invitation to receive offers, unless (1) associated with a stated reward, or (2) the advertisement specifies who may accept and how acceptance is made, and is not negotiable.

Question 6

Bilateral Contract

Answer 6

A bilateral contract is one where a promise by one party is exchanged for a promise by the other party. The exchange of promises is enough to render them both enforceable. Here, the start of performance manifests acceptance.

Question 7

Unilateral Contract

Answer 7

In a unilateral contract, one party promises to do something in return for an act of the other party. The offeree’s promise to perform is insufficient to constitute acceptance; the offeree must perform the act to accept the offer.

Unilateral offer may be retracted either by LAPSE of a REASONABLE TIME, or earlier by an effective revocation.

Question 8

MERCHANT’s FIRM OFFER

Answer 8

Offer to buy or sell goods by a merchant, in a signed writing, states it will be held open & is not revocable during the time stated – or reasonable time no longer than three months. Must be signed by offeror. Enforce without consideration.

Question 9

Valid Contract: ACCEPTANCE (Unilateral K)

Answer 9

Acceptance requires (1) Unequivocal acceptance terms, (2) An offeree with the power to accept, & (3). Communication of acceptance.

Note that for Unilateral Contracts, the start of performance makes the offer irrevocable. But the offer is accepted only when performanance is completed.

Question 10

Valid Contract: ACCEPTANCE (Bilateral K)

Answer 10

For a Bilateral Contracxt, the start of Perform manifests acceptance.

Question 11

Timing of ACCEPTANCE, REVOCATION & Mailbox Rule

Answer 11

Unless the offeror requires otherwise, offer is accepted*** once the acceptance is sent or communicated. ***Revocation is deemed effective when received by the offeree; an offer can’t be accepted once it revoked.

Question 12

MAILBOX RULE

Answer 12

Under the mailbox rule, acceptance by mail or similar means, properly addressed, stamped, and sent, is effective at dispatch. The mailbox rule applies only to acceptance, and does not apply to other contract events.

Question 13

MIRROR IMAGE RULE (CL)

Answer 13

The common law MIRROR IMAGE RULE holds that an acceptance must exactly mirror the offer. Acceptance with any add’l terms or variations constitutes a counter-offer, which revokes the initial offer and creates a new offer.

Question 14

COUNTER OFFER (CL)

Answer 14

A counteroffer is a response made by the offeree to the offeror that contains the same subject matter as the original offer but differs in terms. It operates as a rejection of the original offer as well as a new offer.

Question 15

UCC ACCEPTANCE WITH ADD’L OR DIFFERENT TERMS (Battle of the Forms), UCC 2-207

Answer 15

Unlike the common law, Under 2-207: acceptance does not need to mirror the offer, and can include different or additional terms. Offeree’s additional terms are deemed included only if:

(1) both parties are merchants;

(2) the terms are not a material change;

(3) the offer doesn’t limit acceptance to the exact terms; and

(4) no objection was made within a reasonable time.

Question 16

Revocation of Offer:

Answer 16

A revocation is the retraction of an offer by the offeror and is only valid if communicated to the offeree before acceptance.

Question 17

Valid Contract: CONSIDERATION

Answer 17

Consideration involves (1) a bargained-for exchange (2) of something of legal value. It’s a promise for a return promise or performance that benefits the promisor or causes a detriment to the promisee. Courts generally will not question the adequacy of consideration.

Question 18

Consideration Substitute: Promisory Estoppel

Answer 18

A plaintiff can pursue damages when defendant makes a promise and:

(1) the plaintiff reasonably and foreseeably relied to their detriment on the promise;

(2) the promisor should have reasonably expected a change in position in reliance on that promise, and

(3) enforcement of the promise is necessary to avoid injustice.

Question 19

Consideration: PRE-EXISTING DUTY RULE

Answer 19

Performing or promising to perform an existing legal duty is insufficient consideration.

Question 20

No Defenaes to Formation: STATUTE OF FRAUDS (UCC)

Answer 20

Under the UCC, to be enforceable, agreements for the sale of goods for $500 or more must be in writing containing:

(1) identify of parties;

(2) contract’s subject matter,

(3) terms and conditions,

(4) recital of consideration, and

(5) signature of the party to be charged, unless both parties are merchants. The writing need not be an actual contract, or the terms be contained on one piece of paper. A series of correspondence between the parties may suffice.

Question 21

No Defenaes to Formation: STATUTE OF FRAUDS (CL)

Answer 21

Under the Statute of Frauds, the following contracts are not valid UNLESS they are in a writing signed by the party to be charged:

(1) Marriage contracts;

(2) Suretyships (unless the main purpose is to benefit the guarantor);

(3) contracts that cannot be fully performed within 1 year;

(4) Contracts for the sale of real property (or easements /Leases over one year)

(5) Promises to pay an estate’s debt from personal funds of the Executor/administrator; AND

(6) Contracts for the sale of goods for $500 or more.