CONTRACTS

Question 1

Common Law vs UCC

Answer 1

Common law - real estate and employment contracts. Much more detailed because need more support to prove an answer.
UCC - sale of goods and services. Codified law much less detail

Question 2

Express contract

Answer 2

Contract made orally - I will see you my laptop for $1,000 you say “yes”

Question 3

Implied contract

Answer 3

Taking car to mechanic - you will not know exactly how much you will have to pay, but you will pay something.

Question 4

Quasi contract

Answer 4

implied in LAW - court imposes contract because there was performance. You order from caterer, you eat the food but then say it was not good and will not pay. The caterer performed - you are required to pay for the service.

Question 5

What makes a contract valid?

Answer 5

1. Offer & Acceptance
2. Does not lack legal capacity
3. Consideration
4. Legal purpose

Question 6

Void vs Voidable Contracts

Answer 6

Void - lacks a LEGAL purpose, or involves illegal act

Voidable - you have a valid contract, but can be voided i.e. selling a fake rolex watch

Question 7

What constitutes a valid offer?

Answer 7

1. Price
2. Subject matter
3. Identification of parties
4. Time for performance

Question 8

When does acceptance occur for unilateral contracts?

Answer 8

Completion (performance) of the contracts

Question 9

When does acceptance occur for bilateral contracts?

Answer 9

Depends.
Common Law - mirror image rule - if anything occurs other than the contract terms = rejection and/or counteroffer
UCC - depends if merchant or nonmerchant
merchant - offer + additional terms
nonmerchant - offer only

Question 10

When does the mailbox rule apply?

Answer 10

When acceptance terms are NOT specified and ONLY for original acceptance. Does not work for offers, counteroffers or rejections.

Question 11

What does consideration entail?

Answer 11

Must be of LEGALLY SUFFICIENT but does not have to be “fair” exchanging a honda for a lexus
Both sides are giving something up - if contract terms change, they have to change for both parties otherwise there is no consideration

Question 12

Legal detriment

Answer 12

Promising to do something without legal duty

Promising to refrain from doing something that had no prior legal duty

Question 13

Statue of Frauds

Answer 13

Requirement that certain contracts must be in writing
1. If goods sold is over $500 - otherwise can be oral
Sales contracts can made orally over $500
2. If cannot be returned to “status quo” after partial performance
3. If cannot be performed in less than 1 year

Question 14

Parole Evidence Rule

Answer 14

Items cannot be used in court if not specified in contract unless it is fraudulent

i.e. I bought $1,000 computer from Danielle; went to court and I said “Oh, but after the contact was signed, she said I could buy it for $800”

Question 15

Minor in contracts

Answer 15

Can void contract at any time while a minor, and within reasonable time after becoming an adult. If it has to do with an item that is a necessity, seller can seek some recovery of reasonable value.
If ratify after being an adult either ratify entire contract, or keep performing

Question 16

Mental Capacity

Answer 16

Void - if declared by courts “insane”

Voidable - Didn’t understand nature or effect

Question 17

2 Types of Mistakes

Answer 17

Unilateral - one party knows/should have known of mistake; material and obvious mistake i.e. writing $500 instead of $5,000; mathematical error
Bilateral - both mistaken to the subject matter; sold a Picasso painting, did not both know it was not a real Picasso painting

Question 18

Undue Influence

Answer 18

VOIDABLE - someone in position of authority or trust uses authority to get someone to enter a contract

Question 19

Conditions of Performance

Answer 19

1. Precedent - getting pre-approved for a mortgage
2. Subsequent - returning an item to receive a refund
3. Concurrent - simultaneous performance

Question 20

Discharge of Duty

Answer 20

Failure to perform conditions of performance
Mutual agreement
Novation - new party takes over assuming liability of another
Accord & satisfaction - you owe m $500 but I take $400 and say you no longer owe me

Question 21

Discharge by Operation of Law

Answer 21

Bankruptcy
Impossibility
Death/insanity
Destruction of subject matter
Illegality

Question 22

2 types of monetary damages

Answer 22

Punitive - money awarded to punish wrongdoer

Compensatory - COMPENSATES for damages - costs/loss actually suffered i.e. storage costs, legal fees

Question 23

Mitigation for breaches

Answer 23

1. Specific performance
2. Recession/Rescission - restore to positions before contract
3. Reformance - rewrite - reform contract terms

Question 24

Incidental beneficiary

Answer 24

Getting a benefit from the performance of a contract but is not does not directly impact them - cannot sue

Question 25

What happens if a party’s agreement attaches but is not perfected?

Answer 25

Does not have priority over third parties unless the third parties (C) knew of the agreement between A & B

Question 26

MYLEGS

Answer 26

Regarding Statute of Frauds - must be in writing

Marriage is consideration
Year - cannot be performed within 1 year
Land contracts
Estate being paid by executors out of personal funds
Goods - sale of goods over $500
Surety contracts

*Terms can be in more than one document

Question 27

Explain accord and satisfactions

Answer 27

Accord - agreement to substitute one contract for another
Satisfaction - execution of the accord

A party may sue any time before accord occurs - once it does it immediately discharges original contract

Question 28

Common Law & UCC remedies for material or substantial breach

Answer 28

CL - non-breaching party can be discharged for material breaches; minor only receive damages

UCC - can be discharged for any kind of breach

Question 29

Compensatory damages

Answer 29

putting the non-breaching party in the position he would have been if there was no breach

Question 30

Are consequential damages recoverable?

Answer 30

only if reasonable foreseeable

Question 31

Punitive damages

Answer 31

Punish the defendant

Usually not available for breach of contract

Question 32

Assignment of rights rule

Answer 32

In general - anyone can assign or delegate rights UNLESS the risk of the promisor’s/obligated party is increased or if the delegation requires special services