Contracts

Question 1

What do you need to form a contract?

Answer 1

You need an offer, acceptance and consideration

Question 2

Do you need the party’s subjective intent?

Answer 2

No, modern K does not consider party’s private intent

Question 3

Are offers always revocable?

Answer 3

Generally yes… BUT there are three exceptions where offers will become irrevocable

Question 4

Offer exceptions

Answer 4

Option K: requires additional consideration and makes offer irrevocable for a reasonable time (or specified time) - only b/w non-merchants.

Firm offers: no additional consideration, remains open up to 3 months (max) and is b/w merchants

Unilateral K: once party started performing, the offer is irrevocable.

Question 5

Acceptance

Answer 5

You can accept in any reasonable manner UNLESS offer indicates method of acceptance

Question 6

Acceptance - other rules: what if the offer is mailed?

Answer 6

If the offer is mailed, it invites to accept the offer by mail and it triggers the mailbox rule.

This rule says that the date of acceptance will be when the letter is mailed/delivered (not when it is received).

Question 7

Mailbox rule exception

Answer 7

If you sent your rejection first and then your acceptance … whatever the offeror receives first wins

Question 8

Consideration def

Answer 8

Bargained for exchange - anything you find good is adequate consideration

Question 9

Consideration (gifts)

Answer 9

A promise of a a gift alone is never enforceable. There has to be an actual gift and then the gift-giver is SOL

Question 10

Consideration (past moral deeds)

Answer 10

Consideration for past moral deeds is never enforceable!

Question 11

Promissory estoppel

Answer 11

Someone detrimentally relied on what you promised, so you’re stopped from saying there was no offer (and they can recover)

Question 12

Statute of Fraud (SOF)

Answer 12

M: marriage
Y: contracts that cannot be performed in under a year
L: unique contracts, such as contracts for land
E: executor agreements to execute trusts etc.
G: guarantor
S: sale of goods $500++

Question 13

SOF exceptions (land and goods)

Answer 13

Partial performance of:
(1) land: where there was a partial payment and the payer either (a) took possession of the property or (b) made improvements
(2) sale of goods 500+ where there was (a) partial payment or (b) partial delivery

Question 14

Conditions

Def & types

Answer 14

Precedent (prior); concurrent (at time of K); subsequent (after K)

The non-occurrence of the condition will discharge parties of K

Question 15

Conditions

Language

Answer 15

Unless
Under the condition
IF
As long as
Subject to

It does not matter that the language says “subject to homeowner’s complete personal satisfaction”

Question 16

Conditions

Waiver

Answer 16

Parties can waive expressly or impliedly. Implied by: (i) continuing to perform after the non-ocurrence of the condition

Who does condition affect? B/w who does it create a responsibility?

Question 17

Conditions

Waiver - example & further explanation

Answer 17

Look closely to the facts of the waiver b/c it does not have to come directly from one of the parties in the contract … the waiver occurs by one of the parties that the condition creates a responsibility b/w.

i.e. the seller of shares and buyer conditioned the sale on the “parent company’s approval.” The seller cancelled K b/c buyer didnt seek the approval, but then the parent company said it would have routinely approved buyer - which means they want buyer to buy! Here… there is a waiver b/c the responsibility is b/w the buyer and the parent company.

Question 18

Parole evidence

Partial K

Answer 18

Default is that there is a partial K so then any evidence supplementing K can be admitted EXCEPT for evidence that contradicts a material term K (price, quantity)

Question 19

Parole evidence

Final K

Answer 19

If the facts tell you that the K is final (there is a merger… all the terms are final, etc.) — NO parole evidence accepted …
Unless, there’s an ambiguity in the K

Question 20

Parole evidence

EXCEPTIONS

Answer 20

Regardless of the type of K, parole evidence will always come to:
1. Prevent fraud or duress
2. Show the existence of a condition
3. Show customs b/w parties or trade usage

Question 21

Anticipatory repudiation

Answer 21

Someone unequivocally stated they will not perform (absolute denial) — you can repudiate K or wait for them to act.

Question 22

If you’re worried about performance (b/c you have facts showing worry is granted) … then?

Answer 22

You can ask for assurances and if they respond in a reasonable time — you have to wait for performance
If they don’t respond in reasonable time — breach

Question 23

Assignment / delegation

Default

Answer 23

1. Parties can always assign
2. Non-assigning (OG party) must accept performance
3. If new guy performs poorly/does not perform, then OG party can recover from new guy AND/or assigning party

Question 24

Assignment/delegation (exceptions)

Answer 24

(1) prohibition against assignment = you can still assign.
(2) prohibition against delegation = NO delegation
(3) void against assignment/delegation = NEITHER
(4) if there is a unique skill/training involved, specifically contracted for, no one can replace (even w/same or similar training

Question 25

Third party beneficiary

Def

Answer 25

Party A and party B entered into K for the explicit benefit of party C.

Think of the lady opening a bank account for her nephew

Question 26

Intended beneficiary

Third-party beneficiary

Answer 26

Party A and party B know that their K is supposed to be for the benefit of party C.

C then has a right over the performance/non-performance of K IF C’s rights have vested

Question 27

When do rights vest to the intended beneficiary?

Answer 27

Rights vest when (a) contracting parties (A/B) inform the beneficiary OR (b) beneficiary learn about it AND began to rely on it

Question 28

Incidental beneficiary

Third party beneficiary

Answer 28

Either Party A OR party B (or both) did not know that the contract they entered into was supposed to benefit party C –> so party C would not be a beneficiary AND cannot bring a claim (or could but will not succeed lol)