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Contracts Flashcards

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1
Q

Elements of Bargain

A

Manifestation of Mutual Assent + Certainty of Terms + Consideration

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2
Q

Mutual Assent

A

Intent to enter into bargain objectively, reasonably manifest from either party’s perspective

Most often: Offer + Assent

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3
Q

Common law certainty: required terms

A

parties, subject matter, price, quantity

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4
Q

U.C.C. certainty: required terms

A

parties, subject matter and quantity

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5
Q

No duration term specified (or vague duration term like “employment for life” or “permanent employment”) in employment contract?

A

Then at will contract implied

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6
Q

Do plans to memorialize contract in writing prevent formation of contract?

A

No, BUT circumstances may show that agreements are preliminary negotiations.

RC § 27 Manifestations of assent are themselves SUFFICIENT to conclude contract regardless fo manifest intention to memorialize bargain in writing

Factors:
- extent to which express agreement has been reached on all terms that will eventually be included in the writing
- whether contract of this type is usually reduced to a writing
- whether writing is required for full expression of bargain
- whether bargain included few or many details

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7
Q

Offer

A

manifestation of willingness to enter into bargain (must acknowledge, if not, define, both sides of the bargain)

must justify the other’s understanding that his acceptance is invited and if properly tendered, will conclude the bargain

Offers create power to accept in oferee

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8
Q

Unilateral or Bilateral?

A

Unilateral: FULL performance is only valid manner of acceptance (offer temporaily irrevocable when oferee begins performance)

  • unilateral is offeree’s performance in exchange for offeror’s promise

Thus, offeror only bound if offeree performs

Bilateral: acceptence in some form other than performance (promise) required prior to performance to create contract

bilateral is offeree’s promise in exchange for offeror’s promise

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9
Q

Do courts assume bilateral or unilateral?

A

bilateral unless offeror explicitly demands performance rather than promise

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10
Q

Acceptance

A
  1. manifestation of assent
  2. to terms of offer
  3. by offeree
  4. in proper manner (dictated by offeror, or if not, by any reasonable means)
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11
Q

Acceptance by Silence

A
  1. offeree takes benefit of offered services with reasonable opportunity to reject htem and reason to know that they were offered with the expection of compensation
  2. offeror has stated or given oferee reason to understand that assent may be manifested by silence or inaction, AND offeree remains silent and inactive AND offeree intents to accept offer (as determined by reasonable/objective standard)
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12
Q

Mailbox rule

A

ONLY APPLIES TO ACCEPTANCES

Acceptance generally takes effect upon its dispatch

Exception: Offeree sends rejection to offer, then sends acceptance–whichever the offeror receives first takes effect

BECAUSE REJECTION ONLY EFFECTIVE WHEN RECEIVED

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13
Q

Mirror image rule

A

Acceptance by promise only valid if it’s terms are precise mirror image of terms in offer

“acceptance” that conflicts at all with terms of offer is in fact a counter-offer

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14
Q

Promise to perform not followed by any acceptance, is this enforceable?

A

Only if promissory estoppel (detrimental reliance applies): promissee (1) reasonably and (2) detrimentally relied on promise

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15
Q

Promissory estoppel elements

A

Promisee’s reliance was reasonable:
- reasonably foreseeable to promisor that promisee would rely on promise

detrimental reliance
- promisee must have suffered some injury due to reliance on promise and promisor’s failure to perform

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16
Q

A offers for bilateral K to B; B sends acceptance; B sends rejection; A receives rejection first; A doesn’t perform; B sues for breach.

  1. Is there a K?
  2. Does B have a claim?
  3. Does A have a defense?
A
  1. Yes, there is a K per mailbox rule. A made offer and B sent acceptance. B’s acceptance was effective upon dispatch.
  2. Yes, there is a contract and A failed to perform. B has a claim against A.
  3. Yes, if A detrimentally relied on B’s rejection, a reasonable reliance since he received B’s rejection first, he has a claim to estoppel.
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17
Q

revocation

A

objective indication to offeree that offeror no longer has intent to enter bargain

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18
Q

when are revocations effective?

A

upon receipt

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19
Q

When may offeror revoke offer (terminate offeree’s power to accept)

A

Generally, an offeror may revoke offer anytime before acceptance

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20
Q

Ways to terminate offer/offeree’s power to accept

A
  • explicit acceptance/rejection
  • explicit revocation
  • lapse after reasonable amount of time
  • death/incapacity of offeror
  • counter offer by original offeree
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21
Q

U.C.C. firm offer elements

A
  • signed writing
  • by merchant offeror
  • indicating that offer will be held open for time indicated
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22
Q

When do bilateral contracts lapse?

A

after
- face to face conversation ends
- period expressed in offer passes
- reasonable amount of time passes

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23
Q

When does unilateral offer lapse?

A
  • period expressed in offer lapses
  • reasonable amount of time lapses
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24
Q

When may an offeror indirectly (not explicitly) revoke a unilteral contract?

A
  1. Offeror takes action inconsistent with offer; AND
  2. offeree discovers this action prior to starting performance
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25
Q

Promise to perform in exchange for performance (offer for unilateral contract), followed by start of performance: is there a contract?

A

No. Unilateral contract is not formed until performance is tendered (performance is the means of acceptance of a unilateral contract).

However, beginning performance terminates offeror’s power to revoke, offer must stay open for reasonable amount of time while other party completes performance.

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26
Q

When is notice of completion due in unilateral contract?

A

upon completion

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27
Q

Promise to perform in exchange for promise to perform (offer for bilateral contract), followed by begining to perform (no explicit promise made in response to offer): is there a contract?

A

Yes, beginning performance in response to offer for bilateral contract constitutes promise to perform and therefore acceptance.

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28
Q

Unilateral K, notificatino of completion required by K, what is effect of completion but no notification?

A

Offeror’s duties to perform are discharged UNLESS
1. offeror discovers completion; or
2. Offeree made reasonable effort to notify offeror or completion

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29
Q

Certainty

A

mutual assent must be to reasonably certain terms as to
- quantity
- price
- parties
- subject

time/place of delivery may be left uncertain, determinable by courts

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30
Q

Common law mirror image rule

A

acceptence must mirror all terms of offer, if not, then rejection of offer and counter offer

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31
Q

U.C.C. § 2-207

A
  1. Acceptance is any indication of intent to form a bargain
  2. Additional/differing terms only prevent acceptance and therefore contract formation IF acceptance is expressly conditional on additional/differing terms. In this case, the “acceptance” is a rejection and counter offer.
  3. If valid U.C.C. acceptance but with additional differing terms:
    - IF one/both parties NOT merchants: contract formed as to definite and seasonable acceptance to terms. Any terms not agreed upon ADDITIONAL are proposals to be added to contract.
    - IF both merchants: contract formed incorporating the ACCEPTANCE’s TERMS UNLESS the acceptances terms (1) materially alter the agreement; (2) offer expressly limits the terms; (3) offeror rejects new terms within reasonable time.
    - DIFFERING terms are generally knocked out (this is jurisdictional, minority of jurisdictions do not apply knock out rule and treat differing terms same as additional terms)
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32
Q

When is rejection effective

A

Generally, upon receipt by offeror: OBJECTIVE THEORY OF K’s (thus, exception to mailbox rule)

33
Q

A offers to B; B rejects; B accepts. Contract?

A

No, a rejection destroys an offer, so there is nothing to accept post effective rejection. “Acceptance” may constitute a new offer in the other direction.

34
Q

A offers to B; B counteroffers; B accepts A’s original offer. Contract?

A

No, counteroffers are generally rejections and destroy the offer

35
Q

A offers; A and B agree to option K, B provides consideration; while option is open, B counteroffers; A declines B’s counteroffer; B accepts A’s original offer. Contract?

A

Yes, counteroffers by option holders are not rejections while option is open.

36
Q

Consideration

A

that for which the parties have dealt; a bargained for exchange (whatever each party has sought to gain from the proposed contract)

37
Q

two forms of consideration

A
  1. promise
  2. performance
38
Q

Why isn’t a gift consideration

A

A gift is a promise to perform not in exchange for anything. So a promise to give $1000 when A turns 21 is a gift and not consideration because whether A turns 21 is not a performance that has anything to do with the $1000.

39
Q

Gift or consideration test

A

Could the offeree reasonably believe that the offeror’s promise is meant to induce the offeree to act in a specific way? If yes, then consideration and not gift.

40
Q

Inadequate considerations

A
  1. Nominal consideration
  2. Like kind exchange
  3. Past consideration
  4. Moral consideration
  5. Promise ot settle/release invalid claim w/out good faith/reasonable belief that claiim has colorable baiss
  6. Pre-existing duty: 2 contracts, one duty
  7. Illusory promise
41
Q

Elements of Illusory promise

A
  1. does not restrict promisor’s future right of action
  2. promisor free to perform or not perform at promisor’s discretion without liability for breach
    promise cannot be made to restrict the promisor’s discretion by imply duty of good faith, reasonable efforts, ro reasonableness
42
Q

When are gifts enforceable?

A

Promissory estoppel will enforce gifts even though there is no contract (no consideration)

43
Q

Promistory estoppel elements

A
  1. Promisor knows that promise will induce substantial reliance in the promisee, and failure to enforce promise will result in substantial injustice
44
Q

Can common law contracts be modified?

A

Yes, but consideration is usually required

45
Q

When are modifications allowed without consideration at common law?

A
  • recission (tearing up old contract and creation of new contract where one party must perform more than in old contract)
  • unanticipated dificulties and one party agrees to compensate the other for additional requirements to perform and new agreement is fair
  • new obligations added to both sides regarding circumstances not considered when forming the contract (although not necessarily unforeseeable).
46
Q

Is consideration required for UCC contracts?

A

no, just good faith

47
Q

General theme of contract defenses:

A

Despite the form of proper contract formation, there was not meeting of the minds

48
Q

Misrepresentation elements:

A
  • affirmative STATEMENT of fact, intention, or opinion
  • addressing a fact, intention or opinion MATERIAL to the contract
  • made with requisite state of mind (intentional, negligent, or innocent)
  • actually and justifiably relied on by other party; and
  • caused damage to other party
49
Q

Are all misrepresentaitons of fact actionable?

A

yes

50
Q

Are all misrepresentations of intention actionable?

A

yes

51
Q

Are all misrepresentations of opinions actionable?

A

No, only opinions which imply specific underlying facts are actionable

52
Q

When are misrepresentations that are not material sufficient to void contract?

A

when misrepresentations were intentional

53
Q

What is the difference between misrepresentation and non-disclosure

A

in non-disclosure there is no affirmative statement

54
Q

non-disclosure elements

A
  • failure to disclose a FACT
  • duty to disclose that fact
  • non-disclosed fact is material
  • other party actually and justifiably relied on the state of things absence of disclosure of hte fact
  • damage
55
Q

When is there a duty to disclose a fact

A
  • confidential and fiduciary duty
  • necessary to prevent some previous assertion from becoming misrepresentation or fraud
  • fact is basic to the deal
  • partial disclosure
56
Q

Concealment elements

A
  • active efforts to prevent other party form learning a fact
  • concealed fact was material
  • other party actually and justifiably relied on the facts as they appeared
  • damage
57
Q

Mutual Mistake elements

A
  • mistake made by BOTH parties
  • about facts surrounding transaction
    at the time contract is made
  • concerning basic assumption on which contract was made
  • which has material effect on parties
58
Q

When are parties unable to rescind contract even though mutual mistake elements are met

A
  1. One party is found to have assumed the risk
  2. the contract contains an “as is” clause and the mistake was made by both parties in good faith
59
Q

Unilateral mistake elements

A
  1. mistake by ONE party about the facts surrounding a transaction at the time the contract is made;
  2. Concerning the basic assumption on which the contract was made;
  3. Which has material effect on the parties’ contractual exchange;
  4. and either (a) the non-mistaken party knew of, or should have known of, or cause mistake; or (b) the mistake makes the contract a grossly unfair (unconscionable) bargain
60
Q

Duress elements

A
  1. wrongful act;
  2. wrongful act prevents other party from exercising free will
61
Q

Undue Influence elements

A
  1. undue pressure
  2. undue susceptibility
62
Q

Elements of Unconscionability

A
  1. Procedural unconscionability (process unconscionable due to oppression, lack of negotiation or meaningful choice, or surprise
  2. substantive unconscionability (terms grossly stacked in one party’s favor)
62
Q

SoF analysis

A
  1. is the contract subject to SoF
  2. does the contract comply with the writing requirement?
  3. is the contract enforceable notwithstanding its failure to comply with the writing requirement?
62
Q

When does SoF require writing?

A
  1. sale of interest in land
  2. suretyships
  3. contracts whose terms cannot be performed within a year of contracting
  4. contracts for sale of goods >$500
  5. contracts made in consideration of marriage
  6. contracts by executors to answer to a duty owed by their decedents
62
Q

Common law SoF requirements:

A
  1. essential terms of agreement in writing
  2. writing signed by party against whom enforcement is sought
63
Q

promissory estoppel elements:

A
  1. promise
  2. reasonably induces reliance
  3. injustice can only be avoided by enforcing promise
64
Q

Does parole evidence rule concern evidence of contract formation?

A

No, parole evidence rule only applies once contract has been proven to determine terms of contract

65
Q

What is extrinsic evidence?

A

evidence of alleged contract term not reflected in parties’ writing

66
Q

What is completely integrated contract?

A

writing says everything to which parties have agreed

67
Q

What is partially integrated contract?

A

writing does not include everything to which parties agreed

68
Q

When does PER apply to terms agreed to prior to formation?

A

oral or written terms without separate consideration (prior, oral or written, no separate consideration)

69
Q

Whed does PER apply to terms agreed to contemporaneously with formation?

A

oral, no separate consideration (contemporaneous, oral, no separate consideration)

70
Q

What is the effect of PER not applying?

A

extrinsic evidence is admissible

71
Q

Does PER ever bar evidence of extrinsic evidence of existence of non-integrated contract?

A

NO, extrinsic evidence seeking to establish existence of non-integrated contract is NEVER barred by PER

72
Q

What is consequence of PER when contract is fully integrated?

A

PER bars all extrinsic evidence

73
Q

What is consequence of PER when contract is partially integrated?

A

PER bars inconsistent extrinsic evidence

74
Q

What is consequence of PER if contract is not integrated at all?

A

PER bars NO extrinsic evidence

75
Q

when is contract non-integrated?

A

contract is purely oral or writing is only a draft writing superseded by a purely oral contract

76
Q
A

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