Contracts

Question 1

Can past actions count as consideration for current promises? (i.e. can a person be held liable for a promise made currently on a past action)

Answer 1

No. For consideration to exist, a contract must be a bargained for exchange.

If, for example, you took me to work yesterday, and I say today, “Because you gave me a ride yesterday, I promise to pay you $20,” you cannot hold me to the promise. There is no consideration.

Question 2

Dunne and Cook signed a contract requiring Cook to rebind 500 of Dunne’s books at $3.00 per book. Later, Dunne requested, in good faith, that the price be reduced to $2.70 per book. Cook agreed orally to reduce the price to $2.70.

Under the circumstances, the oral agreement is:

A.  	Enforceable, but proof of it is inadmissible into evidence.
B.  	Enforceable, and proof of it is admissible into evidence.
C.  	Unenforceable, because Dunne failed to give consideration, but proof of it is otherwise admissible into evidence.
D.  	Unenforceable, due to the statute of frauds, and proof of it is inadmissible into evidence.

Answer 2

C

There are two issues here. The first is the enforceability of the modification. This modification is invalid, because it is a contract for services, and it is not supported by new consideration. Dunne has not agreed to do anything new, and, therefore, since he had a preexisting duty to pay $3.00 per book, the modification cannot be enforced. The second issue is whether evidence of the agreement can be introduced for other reasons. The answer here is yes. The parole evidence rule prohibits testimony about agreements that existed before a contract was signed, because contracts are generally presumed to be the final word on an agreement. However, evidence about things taking place after a contact was signed (subsequent modification) is admissible.

Question 3

What is required for a guarantor to be held liable on a guaranty contract?

Answer 3

Under statute of frauds, a guaranty contract is required to be in writing and signed by the guarantor, or a signed memorandum (written evidence of guaranty)

Question 4

Under statute of frauds, what is the $$ threshold for writing?

Answer 4

Sale of anything over $500 must be in writing to be enforceable. If under $500, oral agreements are enforceable

Question 5

Which of the following types of conduct renders a contract void?
A. Mutual mistake as to facts forming the basis of the contract.
B. Undue influence by a dominant party in a confidential relationship.
C. Duress through physical compulsion.
D. Duress through improper threats.

Answer 5

C

Question 6

A common law fraud action requires four proofs

Answer 6

a false statement of fact or misrepresentation by the defendant, knowledge of the false statement by the defendant, reliance by the plaintiff, and a loss suffered by the plaintiff

Question 7

What is the rescission of a contract?

Answer 7

A rescission is the undoing of a contract. Both sides are returned to their original positions, and the contractual obligations on both sides are discharged

Question 8

Under the Sales Article of the UCC, which of the following requirements must be met for a writing to be an enforceable contract for the sale of goods?
A. The writing must contain a term specifying the price of the goods.
B. The writing must contain a term specifying the quantity of the goods.
C. The writing must contain the signatures of all parties to the writing.
D. The writing must contain the signature of the party seeking to enforce the writing.

Answer 8

B - To be valid, the contract must specify the subject matter and if there is more than one, there must be a quantity. You cannot form a contract with, “I will sell you some bicycles.” There must be a quantity of bicycles.