Contracts

Question 1

What needs to be present for a contract?

Answer 1

Needs to be a legally enforceable agreement.

Question 2

What are the elements of a quasi contract?

Answer 2

P has conferred a benefit on D AND
P has reasonably expected to paid AND
D realized unjust enrichment if P doesn’t get compensated.

Question 3

How do you measure recovery on a quasi contract?

Answer 3

Focus on the value of benefits conferred.
Contract price is NOT the measure of recovery.
The contract price is the ceiling if P is in default.

Question 4

How can a bilateral contract be accepted?

Answer 4

Either by a promise to perform or to actually perform. The offer is open as to how it can be accepted.

Question 5

How can a unilateral contract be accepted?

Answer 5

Performance is expressly required as the only possible method of acceptance.
Buzz words are “offer only by…”
A reward that is offered for something is always unilateral.

Question 6

What is governed by common law and what is governed by Article 2?

Answer 6

Sale of goods are covered by Article 2; everything else is common law.

Question 7

How do you determine whether to use common law or Article 2?

Answer 7

Look at the type of transaction and the subject matter.

Question 8

Are service contracts common law or Article 2?

Answer 8

Common law. It’s a sale, but it’s not goods.

Question 9

Real estate contracts–common law or Article 2?

Answer 9

Always common law. Even if the actual house is movable, it’s still not goods, so covered under common law.

Question 10

How do you determine whether a mixed deal will be governed by common law or article 2?

Answer 10

Look at the more important part. If the services are more important than the goods being sold, then common law. If opposite, then Article 2. Look at the language of the contract. See if it is more common law or Article 2 heavy.

Question 11

Armadillos From Texas Play Rap, Eating Tacos

Answer 11

Applicable Law
Formation of Contracts
Terms of Contract
Performance
Remedies for unexcused nonperformance
Excuse of nonperformance
Third-party problems

Question 12

What is the general test for an offer?

Answer 12

Whether a reasonable person in the position of the offeree would believe that his or her assent creates a contract.

Question 13

Is an offer required to contain all material terms?

Answer 13

At common law, price and description are required.

For Art 2, there is no price requirement.

Question 14

Are vague or ambiguous terms allowed under common law or Article 2?

Answer 14

Vague or ambiguous terms are never allowed.

“Appropriate” “Fair” “Reasonable” are all buzz words.

Question 15

Can a contract state the quantity of goods to be delivered under the contracts?

Answer 15

Yes. It can also require the seller’s outputs or in terms of exclusivity.

Question 16

What are the rules for increasing requirements on the contract?

Answer 16

It’s okay if the increase is in line with prior demands. For example, a 1-2% increase is okay, but a 25% increase is a bit much and is unreasonable. Can’t be unreasonably disproportionate limitation on increases.

Question 17

When can ads be considered offers?

Answer 17

If an ad is in the nature of an award, then it can be an offer. (E.g., offer of $100 if use product and then the intended result doesn’t happen.)
If the ad is specific as to quantity and expressly indicates who can accept. (e.g. “Fur coat $10. First come, first serve.”

Question 18

What are the four methods in which termination can occur?

Answer 18

Lapse of time
Revocation- Words or conduct of Offeror
Rejection-Words or conduct of Offeree
Death of a party prior to Acceptance

Question 19

For termination due to lapse of time, how could this occur?

Answer 19

Either the time stated or a reasonable length of time has passed. Generally, more than 30 days is beyond reasonable. Also depends on what the offer is for. (Offers for bananas will last less than offers for canned goods.

Question 20

For termination due to revocation, what needs to be present?

Answer 20

Words or conduct of the offeror.
Needs to be an unambiguous statement by offeror to offeree of unwillingness or inability to contract; OR
Unambiguous conduct by offeror indicating an unwillingness or inability to contract that the offeree is aware of.

Question 21

When does revocation of an offer become effective?

Answer 21

If it is sent through the mail, it is not effective until it has been received. (Not mail box rule here–that’s only for acceptance!)

Question 22

Can an offer be revoked after it has been accepted?

Answer 22

No.

Question 23

What are the 4 kinds of offers that cannot be revoked?

Answer 23

Option contract.
Merchant Firm Offer Rule
Reliance
Start of performance pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete performance.

Question 24

What is an option contract?

Answer 24

When the offeror has offered to keep the offer open for a certain amount of time AND it has been supported by consideration.

Question 25

What is the Merchant Firm Offer Rule?

Answer 25

Offer cannot be revoked for up to 3 months (not more than) if:

(i) offer to buy or sell goods
(ii) signed, written promise to keep the offer open
(iii) and party is a merchant (generally anyone running a business)

Question 26

When can an offer not be revoked because of reliance?

Answer 26

An offer cannot be revoked if there has been detrimental reliance by the offeree that is reasonably foreseeable. (e.g. A contractor’s bid is made on the reliance of a bid they have gotten from a subcontractor. The subcontractor cannot revoke their bid because it was reasonably relied upon by the contractor.)

Question 27

When the start of performance has occurred, when can revocation still occur?

Answer 27

Not until there has been a reasonable time for the performance completion.
In unilateral contracts, once the first step has been taken, have to have reasonable time to complete.
However, difference in preparation and performance. (e.g. Buying the paint and paintbrushes isn’t performance; not performance until the paint hits the walls.)

Question 28

What are the methods of rejection?

Answer 28

Counteroffer
Conditional acceptance
Mirror Image (additional terms)
Additional Terms still Acceptance under 2-207; seasonable expression of acceptance.

Question 29

Does a counteroffer count as acceptance of an offer?

Answer 29

No. A counteroffer terminates the offer and becomes a new offer.
Bargaining, however, does not terminate the offer.