Contracts

Question 1

Elements of a contract

Answer 1

Offer, Acceptance, consideration

Question 2

What does the UCC apply to?

Answer 2

The UCC applies to the sale of goods.

Question 3

Offer

Answer 3

manifesting a willingness to enter a bargain on specific terms. An offer must contain reasonably certain terms, communicated to the offeree, and must not have been terminated prior to acceptance. Mere puffery or exaggerated terms in advertising is not an offer.

Question 4

Termination

Answer 4

Ends an offer. You may terminate by rejection, lapse of time, revocation, offeror’s death or incapacity, or the destruction of the subject matter. An option may prevent termination.

Question 5

Option

Answer 5

distinct contract where offeror agrees to hold an offer open for a definite time in exchange for consideration. Under the UCC a firm offer does create an option. To be considered an option the offer must be amde by a merchant, signed in writing, and the offer is held for no more than 3 months

Question 6

Acceptance

Answer 6

Manifestation of assent to the offer. An object response that a reasonable person in the offeror’s shoes would understand as acceptance. Requests for more information is not acceptance.

Question 7

Bi-lateral Contract

Answer 7

promise that induces a return promise, the contract is formed when the promises are made

Question 8

Uni-lateral Contract

Answer 8

acceptance happens when the offeree begins work on the contract, the offeree must know about the contract, if completion takes a period of time then the offeree is given reasonable time to perform the contract

Question 9

Mailbox Rule

Answer 9

Offers are accepted when dispatched.

Question 10

How can acceptance be delivered?

Answer 10

Acceptance can be delivered in any way that the offeror will receive and be aware of, if offereor has no way of being aware then notice is required

Question 11

Mirror Image Rule

Answer 11

to be effecting an acceptance must be on terms identical to those contained in the offer. Any deleted terms, additional terms, or changes act as a rejection of the original offer and the presentation of a counter-offer. Implied terms may be added without rejecting the original offer.

Question 12

UCC and counter offers

Answer 12

If a party’s expression is otherwise valid as an acceptance but contains terms additional to or different from those in the offer, a contract is formed. If the 1 party is not a merchant then the UCC acts much like common law. If both parties are merchants than any additional terms are added to the contract unless the original offer explicitly limits the terms, the additional terms materially alter the deal, or the offeror rejects the additional terms within a reasonable time.

Question 13

Drop out rule and Gap Filling

Answer 13

Terms that are not rolled into the new contract are dropped from the writings. Courts may then fill gaps by implication or by industry standard.

Question 14

Consideration

Answer 14

Consideration is the bargained for exchange of value that induces another promise. Any exchange of value is sufficient. A gross disparity may support a claim against enforceability but usually not without additional factors. Consideration must be new to the bargain. You cannot exchange something that is already done as consideration.

Question 15

Illusionary Contract

Answer 15

When 1 party determines whether or not a contract will be performed it is considered an illusory contract and will not be enforced.

Question 16

Promissory Estoppel

Answer 16

1) Promise that induces a change in position
2) promise was intended to change their position
3) Party materially alters their position in anticipation of this promise
4) this reliance causes harm

Question 17

Pre-existing duty rule

Answer 17

A promise to do something a party is already obliged to do or to refrain from doing something that the party has no legal right to do cannot be exchanged as consideration.

Question 18

Modifications

Answer 18

Under Common Law, modifications require new consideration. Under the UCC an agreed upon modification, made in good faith, does not require new consideration. In fact there is also a good faith allowance for common law if the original terms of the contract are now materially different from those that originally motivated the contract.

Question 19

Statute of Frauds

Answer 19

Specific types of otherwise valid contracts are unenforceable unless the terms appear in a writing signed by the part to be charged or the party against whom enforcement is sought. This applies to surety/guaranty contracts, transfer of interest in land, contracts that cant be performed by all parties within 1 year, sale of goods of $500 or more, executor/administer of deceased, contracts in consideration of marriage.

Question 20

Writing requirements of the statute of frauds

Answer 20

1) lists the parties
2) lists the subject matter
3) consideration exchanged
4) nature and time of parties performance
Exceptions: confirmatory memos, partial performance of an oral contract, basically anything that confirms the existence of the contract beyond he said/she said

Question 21

Writing requirements for the UCC

Answer 21

1) must provide the basis to believe the contract exists
2) states the quantity to be sold
The writings may be a single document or a sufficiently linked series of documents that set forth the necessary information

Question 22

Misrepresentation

Answer 22

assertion not in accord with the facts, that is related to a material fact that substantially contributed to the decision to contract, and the injured party reasonably relies on this assertion. Time begins to run on a misrepresentation claim when the misrepresentation is discovered. The injured party may void the contracts or continue to perform and seek damages.

Question 23

Fraudulent Misrepresentation

Answer 23

Knowingly and intentionally using a statement that is false, with the intent to induce the other party to enter an agreement. A party may void this contract regardless of the fairness of the terms.

Question 24

Negligent Misrepresentation

Answer 24

Without deceptive intent, a party misrepresents some part of a contract. the injured party may void contract on a showing that the misrepresentation is material and the other party breached their duty.

Question 25

Mistake

Answer 25

Belief is not in accordance with facts existing at the time of the contract. In order to void the contract the mistake must be involving a basic assumption on which the contract is made, the mistake must have a material effect on agreed upon terms, the harmed party must not be the one who imposed the risk.

Question 26

Incapacity

Answer 26

Minors cannot legally contract and any contracts made with minor may be voided. However, this doesnt apply to necessities such as medical care and housing. Only the minor may enforce this requirement, an adult cannot use incapacity to escape a contract with a minor.

Question 27

Duress

Answer 27

Free will is overcome by threat leaving no other options but to consent to the contract. Improper conduct is criminal or tortuous conduct or a breach of good faith.

Question 28

Undue Influence

Answer 28

Especially strong influence by someone with a special relationship where the influence has a dominant position and this position is used to unfairly persuade the victim

Question 29

UCC Gap Filler

Answer 29

Price: if contract is silent on price or it is left open for future agreement and the parties fail to agree on a price, or the price is intended to be set by a third party, there must be a showing that the price was intentionally left off or the contract will be deemed unfinished and there can be no enforcement
Time and Place of Delivery: Sellers place of business at a reasonable time based on nature, purpose, and circumstances
Payment: time and place which the buyer is set to receive the goods, unless specified all goods should be delivered at once
Quantity: Good faith delivery, nothing unreasonably disproportionate to any stated estimates

Question 30

Common-law PArol-Evidence Rule

Answer 30

generally the court may not consider extrinsic evidence to change, contradict, or sometimes add to the unambiguous terms of a written agreement

Question 31

Integrated Writing

Answer 31

If the writing is intended to embody the entirety or final expression of a contract. Because this is a final expression, extrinsic or parole evidence is not allowed if it contradicts the terms of the document. In a partially integrated document it my supplement the agreements express terms but not change or contradict them.

Question 32

Exceptions to Integration

Answer 32

1) Determine if there was an integration
2) clarify ambiguities
3) valid defense to enforceability
4) whether contract was formed
5) grant or deny a remedy for breach
6) establish a later modification

Question 33

What are the General Prionciples of Contract Negotiation

Answer 33

Each party is subject to each term of the contract, regardless of whether they are aware of them. When terms are omitted the contracts obligations will be determined from the language, the parties conduct, and the facts and circumstances surrounding the event. Courts will then supply reasonable other terms as necessary. Each party is then bound to a good faith duty to fulfill the contracting parties objectives that brought them to contract.

Question 34

Conditions

Answer 34

Uncertain events that trigger another parties actions. If the parties have different times of completion, than the longer time shall condition the shorter. Conditions must be expressly created or implied from the surrounding circumstances. In any case there is always an implied duty of good faith and dealings, each parties compliance with constructive conditions.