Contracts

Question 1

Contract Modification

+ Pre-existing duty rule

Answer 1

Contract modification must be supported by consideration.

Pre_Existing Duty Rule: a promise to do something a party is already legally obligated to do is not adequate consideration for modification.

Question 2

Doctrine of Promissory Estoppel

Answer 2

Promises that lack consideration may otherwise be enforced if:
1. The promisor should reasonably ecpect the promise to induce action/forbearance by the promisee,
2. The promise does induce such action or forbearance,
3. To avoid injustice, the promise should be enforced.

Question 3

Defenses to Contract Formation

Answer 3

1. Mistake (mutual and unilateral)
2. Misrepresentation
3. Undue Influence/Duress
4. Unconscionability
5. Illegality

Question 4

Mutual Mistake

When recission is available

Answer 4

A party adversely affected by a mutual mistake may rescind the deal if:
1. There is a mistake of fact, existing at the time that the deal is made,
2. Mistake concerns basic assumption of the agreement,
3. The mistake has a material impact on the deal, and
4. The impacted party did not assume the risk of mistake

Question 5

Misrepresentation

Defense to Enforcement

Answer 5

Mispresentation = a statement at the time of contracting that is not true.

Elements
1. misrepresentation of material fact
2. that are made under circumstances iin which a party would justifiably rely on the representation.

Question 6

Exceptions to the Parol Evidence Rule

Answer 6

Defenses (e.g., incapacity, mistake, duress, lack of consideration)
Separate Contracts (must be a distinct and separate contract)
Condition Precedent (party asserts there was an oral agreement that imposed a condition precedent)
Ambiguity (extrinsic evidence may be introduced to clarify, but not contradict, an ambiguous term)

Question 7

Elements of Impracticability

Excuse

Answer 7

A party’s duty to perform may be excused if:
1. an unforeseeable event occurred that makes performance extremely and unreasonably difficult/expensive;
2. The non-occurrence of the event was a basic assumption of the contract, and
3. The party seeking discharge was not at fault/assume risk.

Question 8

Elements of Frustration of Purpose

Answer 8

A party’s duty to perform may be discharged if:
1. Unexpected events arise that destroy one party’s purpose of entering the contract;
2. The event that arises is not the fault of the frustrated party, and
3. The nonoccurrence of the event was a basic assumption of the contract