Contracts

Question 1

What must a contract contain?

Answer 1

Offer, Acceptance, Consideration, Proper form (oral or written), Legal subject matter, 2 Competent parties

Question 2

What forms may acceptance of a contract take?

Answer 2

Can be written or oral

Must be in the form/method required by offeror

Must be mirror image - i.e. no changes in terms

Question 3

Who can accept an offer?

Answer 3

Must be accepted by intended party (offeree)

Acceptance can only be made by a party who knows an offer has been made and has all of the facts - AKA a meeting of the minds

They must intend to accept

Question 4

What happens if an offeree accepts a contract but puts added stipulations?

Answer 4

It is not acceptance; but instead becomes a counter-offer and the original offeror is now the offeree

Question 5

When is an offeror bound by a contract?

Answer 5

When they RECEIVE the acceptance.

If the offeree rejects; then accepts - whatever gets to the offeror first is what is binding.

Question 6

What will void an offer?

Answer 6

If offeror dies or becomes insane before acceptance; offer is void.

Contract is binding if acceptance occurs before death/insanity.

Question 7

What actions or circumstances will revoke a contract?

Answer 7

Offeror revokes and offeree receives revocation

Offeree finds out prior to acceptance that offeror has sold the item

In the case of an Option; offeror cannot revoke until the time of the option has elapsed

Initial rejection by offeree doesn’t void the option.

Question 8

What is an Option?

Answer 8

Some amount of consideration (like money) is put forth by offeror to keep the offer open for a
stated period of time

Question 9

What is a Requirements Contract? How are they limited?

Answer 9

These are contracts where someone becomes the exclusive provider of something in exchange for
consideration

Companies can’t get locked in to one and then have market conditions force them to sell something at
what has become an unreasonable price

Question 10

What is promissory estoppel?

Answer 10

Promises to donate are legally enforceable

Basically; you can’t tell a charity; Hey; if you buy this
$100;000 piece of land; I’ll pay for the building that
will go on it; and then renege on your promise

Question 11

What can make a contract VOID?

Answer 11

Fraud in the execution (mutual mistake)

Formed under extreme duress - extreme

Illegal

Question 12

What can make a contract VOIDABLE?

Answer 12

Fraud in the inducement

Party not competent to contract

Formed under SIMPLE duress

Undue influence (by a dominant party in a confidential relationship)

Question 13

What is the result of a clerical error in a contract?

Answer 13

The contract is unenforceable.

Example: Person signs a contract to pay $500.00 to have
their lawn re-seeded but due to clerical error; it actually reads $5000.00

Question 14

Contracts under the Statute of Frauds must be in what form to be valid?

Answer 14

They must be in writing.

Question 15

What makes a contract subject to the Statute of Frauds?

Answer 15

o Cannot be completed within one year
o Involves the purchase of real estate
o $500+ Sale of Goods
o Co-signing and guaranteeing the debt of another

These must all be in writing

Question 16

What is the parol evidence rule?

Answer 16

Prevents one party to a written contract from coming in after the fact and claiming that a certain conversation took place that conflicts with what is agreed upon in the written contract

It also prevents using an oral argument to read into the meaning of what is written on paper

If it’s on paper; it trumps what was agreed-upon orally prior to the written contract

Note: does not negate oral agreements made AFTER the contract or disallow oral words from clarifying ambiguous contract language.

Question 17

What are the requirements for the assignment of a contract?

Answer 17

Contracts are assignable to a third party beneficiary; but must be done so in good faith

Obligations may be assignable- Assignor is still liable

Assignor may be released from liability if other party grants a novation

Question 18

When can contracts be discharged by law?

Answer 18

Party under contract is bankrupt

Party under contract dies or is incapacitated

Party cannot physically complete the contract (i.e. They are in prison so can’t finish building your house)

Question 19

what is a Quasi Contract?

Answer 19

Implied by Law. One party is unjustly enriched at the expense of the other party such that the court will impose an obligation on the enriched party to pay the other party. No quasi contract will be imposed if there is an express or implied contract existing btw the parties. the court implies a contractual obligation wo regard to the agreement of the parties in order to prevent the unjust enrichment from occurring.

Question 20

What is a Unilateral Contract?

Answer 20

A contract that is formed when, by the terms of the offer, acceptance is given by performance. When performance is rendered, the contract is accepted, therefore, enforceable.

Question 21

What would constitute as a counteroffer?

Answer 21

When an offer acceptance is sent after the due date.

Question 22

What is Disaffirmance?

Answer 22

It is getting out of the contract

Question 23

Minors and contracts

Answer 23

• contracts with minors are VOIDABLE at their option.
• if contract for necessities, minor will have to pay reasonable value
• parent is not liable for minors contract unless minor is acting as parent’s agent.

Question 24

Incompetent (insane) person and contracts

Answer 24

Any contracts entered into by an adjudicated (by law) incompetent person are by matter of law invalid or void.

Question 25

What is suretyship?

Answer 25

it is a promise to pay the debt of another. Must be in writing to be enforceable.