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

What will void an offer?

Answer 5

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

Contract is binding if acceptance occurs before death/insanity.

Question 6

What actions or circumstances will revoke a contract?

Answer 6

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 7

What is an Option?

Answer 7

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

Question 8

What is a Requirements Contract? How are they limited?

Answer 8

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 9

What is promissory estoppel?

Answer 9

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 10

What can make a contract VOID?

Answer 10

Fraud in the execution

Formed under extreme duress - extreme

Illegal

Question 11

What can make a contract VOIDABLE?

Answer 11

Fraud in the inducement

Party not competent to contract

Formed under SIMPLE duress

Undue influence

Question 12

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

Answer 12

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 13

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

Answer 13

They must be in writing.

Question 14

What makes a contract subject to the Statute of Frauds?

Answer 14

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

Question 15

What is the parol evidence rule?

Answer 15

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 16

What are the requirements for the assignment of a contract?

Answer 16

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 17

When can contracts be discharged by law?

Answer 17

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 18

What are the two elements that must be present to satisfy the consideration requirement?

Answer 18

1) Legal sufficiency

2) A bargained-for exchange (mutuality of consideration)

Question 19

What items are not sufficient consideration?

Answer 19

1) Past consideration
2) Moral consideration
3) Pre-existing legal duty
4) partial payment of a liquidated debt

Question 20

What are the substitution for consideration?

Answer 20

1) promissory estoppel

2) Quasi-constract

Question 21

Terms:

1. Unilateral Contract: A contract that is formed when, by the terms of the offer, acceptance is given by performance. That is exactly what happened in this problem. An offer was made to pay for post-graduate education if the prospective student did an act (obtained artifacts within two weeks). When performance was rendered, the contract was accepted, and therefore, is enforceable.
2. Unjust Enrichment: Refers to a theory that permits a court to redress a situation where one party has performed some act for the benefit of another and should receive compensation in the name of justice.
3. Public Policy: Refers to a justification that courts will sometimes use when there is no specific law or prior case dealing with the same set of facts, but where court action can be justified on the basis of common sense interpretation of what the general consensus might be over what a court should do.
4. Quasi Contract: A theory under which courts will apply a contractual remedy when there was actually no formal offer or acceptance (and, therefore, no legal contract).

Answer 21

Yes

Question 22

What are the contracts within the Statute of fraud?

Answer 22

MY LEGS

• Marriage
• Year
• Land
• Executor
• Goods
• Surety

Question 23

What type of conditions affecting performance may be present in contracts?

Answer 23

In some cases, performance under a contract is subject to a stated “condition.” A condition may be “precedent” (there is no contract until the condition is satisfied), “subsequent” (the contract is valid until the condition occurs, which invalidates the agreement), or “concurrent” (there are two conditions, one within the control of each party). All three kinds of conditions are recognized by the common law contracts.