Contracts

Question 1

What is a K?

Answer 1

A legally enforceable agreement

Question 2

What is an Express K?

Answer 2

K resulting from words, written or oral

Question 3

What is an implied K?

Answer 3

K resulting from conduct?

Question 4

Hypo: Samson walks into hair dresser, sits in the chair, and gets his hair cut. When finished, Samson gets up to leave without paying. When the hair dresser asks for payment, Samson responds “I never said I would pay anything. We have no K!” Is he correct?

Answer 4

No, a reasonable person in the hair dresser’s position would infer a promise to pay from Samson.

Question 5

What is a Quasi K?

Answer 5

A remedy that may be granted when certain elements exist.

Question 6

Elements of Quasi K?

Answer 6

1) P has conferred benefit to D
2) P reasonably expected to be paid
3) D would be unjustly enriched if P is not compensated.

Question 7

What is the measure of recovery for Quasi K?

Answer 7

As justice requires by either
1) Quantum Merit: reasonable value of serve rendered
OR
2) extent to which the other party’s prop has been increased in value or other interests advanced.

**K price is not measure of recovery, but K price may act as ceiling if P is in default or if K recovery is barred by SoF.

Question 8

Can a breaching party recover under a Quasi K?

Answer 8

Yes, so long as it is not a willful breach for the party’s own convince or financial advantage.

Question 9

What is a bilateral K?

Answer 9

It is formed from an offer that is open to the method of acceptance.

Ex. I will pay you $100 to paint my house.
Acceptance can be by 1) a return promise or 2) beginning performance

Question 10

What is an unilateral K?

Answer 10

It is formed from an offer requiring performance as acceptance

Question 11

Types of unilateral K?

Answer 11

1) Offer expressly requires performance

2) Offer of award, prize or contest

Question 12

Article 2 of UCC applies to what?

Answer 12

The sale of goods.

Sale = passing of title from seller to buyer for a price
Goods = movable, personal property (no real/land)

Doesn’t apply to renting prop
Doesn’t apply to service K

It applies regardless of the amount of money
It applies regardless of whether the seller = a merchant

Question 13

What is a mixed or hybrid K?

Answer 13

It is a K containing both a sale of goods and services.

Question 14

In a hybrid K, do you apply the UCC or CL?

Answer 14

Predominant Purpose Test: If mainly a K for goods, apply UCC. If mainly a service K then apply Cl.

If UCC applies, then apply the UCC to the entire K.

Question 15

Factors to determine a mixed K predominant purpose?

Answer 15

1) how much $ was spent on the goods vs the services
2) how much time is spent on labor
3) how sophisticated is the labor (more sophisticated = CL will apply b/c/ more likely a service K. Ex. Doctor putting in pace maker = sophisticated service)
4) does K contain typical sale language

Question 16

What is an offer?

Answer 16

Manifestation of an intention to a K

Question 17

Basic test for an offer?

Answer 17

Whether a reasonable person in the position of the offer would believe that his assent creates a K/

Key =manifestation (focus on what was said, wrote, did)

Doesn’t matter what person intended in his heart or what he really meant

Question 18

Basic inquiry into the offer’s terms?

Answer 18

Must have definite and certain terms
Inquire: whether enough of the terms have been provided so that a K including them would be capable of being enforced.

More terms left open = more likely cts will view communication as negotiations not amounting to an offer.

Question 19

Offer essential elements

Answer 19

1) identify offeree and subject matter
2) price to paid
3) time of payment, delivery, performance
4) quantity involved
5) nature of work involved

Question 20

Missing Price Terms in an Offer

Answer 20

Real Estate K: follows CL- offers must identify land & price

Sale of Goods K: UCC: price not required if the parties so intend. Ct will presume that a reasonable price = intended

Question 21

Vague or Ambiguous Material Terms in an Offer

Answer 21

CL and UCC: can’t be too vague. Must be more definite

Question 22

Requirements K/Output K

Answer 22

K for sale of goods: quantity being offered must be certain (a reasonable quantity will not be implied)

K can measure quantity by buyer’s requirements or seller’s output. (Ex. Buyer promises to buy all of seller’s wine requirements for next 3 years. —Quantity here is measured by seller’s output)

Cant be unreasonably disproportionate (Ex. under a 5 year K, buyer can’t order 2000 objects for the first 4 years then only order 600 objects in the last year. This is unreasonably disproportionate)

Question 23

Advertisements

Answer 23

Not an offer. Mere Invitation for offers

Except:

1) can be offer if there is a specific quantity and indicates who can accept
2) can be an offer if its in the nature of a reward

Question 24

Auctions: What is the offer?

Answer 24

The bid, not the auctioneer asking for the bid, is the offer. Auctioneer is inviting offers

Question 25

Auction without reserve

Answer 25

Auctioneer is obligated to sell to highest bidder

Question 26

Auction with reserve

Answer 26

Auctioneer is not obligated to sell to highest bidder.
Can refuse highest bid

All auctions are with reserve unless terms state otherwise.

Question 27

Four ways to terminate an offer

Answer 27

1) Termination by lapse of time
2) termination of an offer because of words/conduct of offeror (Revocation of offer)
3) termination of an offer because of words/conduct of offeree (Rejection of offer)
4) Termination of offer due to death of a party prior to acceptance

Question 28

When can an offer not be accepted?

Answer 28

An offer can’t be accepted if its been terminated.

Question 29

Offer termination by lapse of time

Answer 29

If no time limit in the offer–offer lapses after a reasonable time.

Reasonableness depends on the circumstances of the offer

Question 30

Offer termination by Offeror Revocation

Answer 30

Revocation done by:

1) Statement by offeror to offeree indicating an unwillingness to K
2) conduct of offeror that is inconsistent with an intention to make the K and of which the offeree is aware

Question 31

When does revocation of an offer become effective?

Answer 31

Revocation of an offer sent through the mail is effective upon receipt.

An offer can’t be revoked after it has been accepted.

An offer can be revoke any time prior to acceptance subject to four exceptions.

Question 32

Offers that cant be revoked?

Answer 32

1) Offer cannot be revoked if a) the offeror has promised to keep the offer open and b) this promise is supported by consideration.
- Maj rule: must pay consideration, Min/GA: reciting the consideration raises an implied promise to pay it
- ct dont inquire into the adequacy of the consideration
- consideration that is nominal/sham = no real consideration
- even nominal consideration = sufficient for an option K

2) Offer cannot be revoked if it is a) a K for the sale of goods, b) written promiser to keep the offer open, c) promise is made by merchant
- -only irrevocable for a reasonable time not to exceed 3 mo absent consideration for a longer time period

3) Offer cannot be revoked if there has been a) reliance by the offeree b) that is reasonably foreseeable.

4) An offer to enter into a unilateral K cannot be revoked if performance has begun
- mere preparation = still revocable (ask has offeror benefited in any way? If yes, then its more like performance)
- Look for divisible K where consideration can be broken down into clear distinct segments

Question 33

What is a merchant?

Answer 33

A person who deals in goods of the kind or who otherwise holds himself as having knowledge or skill peculate to the practices/goods involved

Question 34

Rejection of an offer by offeree

Answer 34

Done by words/conduct

Terminates any right to accept the offer
Rejection sent through mail is effective when received
A counter offer terminates any right to accept the offer

Question 35

Rejection by Counteroffer

Answer 35

Counteroffers terminates the offer.

Bargaining (mere inquiries) does not terminate the offer
(If its in the form of a ?, more likely its negotiating/bargaining)

A counteroffer/rejection does not terminate an offer in an option K.

Question 36

Conditional Acceptance as Rejection

Answer 36

Terminates the offer b/c its really a counter offer.

Question 37

Acceptance with additional terms: is this a rejection?

Answer 37

CL: acceptance must be the mirror image of the offer or it acts as a rejection

UCC: Acceptance can add terms

• New terms become part of the K if:
  1) both parties = merchants
  2) new terms does not materially alter K
  3) offeror does not object within reasonable time

Question 38

Acceptance with Different Conflicting Terms: Rejection?

Answer 38

CL: Acceptance must be the mirror image of the offer or it acts as a rejection

UCC: Can contain different terms if it is a “definite and seasonable expression of acceptance”.
Two ways to deal with it:
1) diff term becomes part of K if its doesn’t materially alter it and it isn’t objected to
2) Knock Out: conflicting terms in the K knock each other out and the UCC fills in the gap based on whats reasonable

Question 39

Termination of an Offer b/c of Death of a party prior to acceptance

Answer 39

Death of a party terminates an offer.

Exceptions: Death does not terminate when:

1) Option K
2) part performance of offer to enter into unilateral K

Question 40

Who can accept an offer?

Answer 40

Only the person to whom the offer was made.
Person must the aware of offer in order to accept it

Power to accept cannot be assigned
Options can be assigned unless otherwise provided

Question 41

Method of Accepting an Offer

Answer 41

1) offeree starts to perform
2) offeree promises to perform
3) Offeree sends its acceptance through the mail (Mailbox Rule)
4) seller of goods sends wrong goods
5) offeree is silent

Question 42

Accepting an offer by starting performance

Answer 42

Seen in
1) offers to enter into a unilateral K–here, starting to perform locks in the offeror (offer is then irrevocable) but Offeree hasn’t accepted offer until full performance (starting to perform is insufficient to accept)

2) Offers open as to method of acceptance (bilateral K): if the acceptance method is left open then starting performance = acceptance

Question 43

Accepting an offer by promising to perform

Answer 43

Most offers are accepted in this manner

If offer requires performance, merely promising to perform = insufficient

Question 44

Acceptance through the mail (MailBox Rule)

Answer 44

If its reasonable to accept by mail, acceptance is effective when posted.

Question 45

If offeree sends both acceptance and rejection through mail, when does the mailbox rule apply?

Answer 45

B/C rejection = effective when received, and acceptance = effective when mailed, sometimes applying the mailbox rule = problematic

1) Offeree sends rejection, then acceptance: DONT apply mailbox rule. Whichever is received first = effective.
2) Offeree sends acceptance, then rejection: DO apply Mailbox rule. But if offeror receives the rejection first and changed his position in reliance on the rejection, the offeree will be estopped form enforcing the K.

Question 46

Can you use the mailbox rule to meet option deadlines?

Answer 46

No. Cant use mailbox rule to meet an option deadline. Response must be received by deadline.

Question 47

What occurs when the seller sends the wrong/nonconforming goods?

Answer 47

General Rule = this is an acceptance/breach

Accommodation Exception: If seller sends nonconforming goods and makes it clear that they are being sent as an accommodation to the buyer. This is a counter offer, not acceptance/breach. Buyer can reject or accept the goods. Buyer cannot sue for breach.

Question 48

Acceptance through offeree’s silence

Answer 48

General Rule: offeror cannot unilaterally turn offeree’s silence into acceptance

Question 49

Elements of consideration

Answer 49

1) Promisee must suffer some legal detriment
2) detriment must induce the promise (promisor makes his promise to induce the conduct of the promisee)
3) promise must induce the detriment (promisee is induced to act by the promise)

Question 50

Forms of Legal Detriment

Answer 50

1) Performance (doing something not legally obliged to do)
2) Forbearance (not doing something legally entitled to do)
3) Promise to perform
4) promise to perform

Question 51

Consideration essential ?

Answer 51

Did the promise made by the promisor induce the conduct of the promisee AND did the conduct of the promisee induce the making of the promise by the promisor

Look for a bargained for exchange- the party making the promise must be bargaining for something

Question 52

Conditional Gifts: Consideration?

Answer 52

If either of the parties intended to make a gift, there was no bargain and thus no consideration.