Contracts

Question 2

What must a contract contain?

Answer 2

Offer Acceptance Consideration (something of value) Proper form (oral or written) Legal subject matter Two or more competent parties

Question 3

What forms may acceptance of a contract take?

Answer 3

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 4

Who can accept an offer?

Answer 4

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 5

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

Answer 5

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

Question 6

When is an offeror bound by a contract?

Answer 6

When they RECEIVE the acceptance. If the offeree rejects, then accepts - whatever gets to the offeror first is what is binding.

Question 7

What will void an offer?

Answer 7

If offeror dies or becomes insane before acceptance, offer is void. Contract is binding if acceptance occurs before death/insanity.

Question 8

What actions or circumstances will revoke a contract?

Answer 8

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 9

What is an Option?

Answer 9

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

Question 10

What is a Requirements Contract? How are they limited?

Answer 10

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 11

What is promissory estoppel?

Answer 11

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 12

What can make a contract VOID?

Answer 12

Fraud in the execution Formed under extreme duress - extreme Illegal

Question 13

What can make a contract VOIDABLE?

Answer 13

Fraud in the inducement Party not competent to contract Formed under SIMPLE duress Undue influence

Question 14

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

Answer 14

The contract is unenforceable. Example: Person signs a contract to pay $500.00 to have their lawn re-seeded but due to clearical error, it actually reads $5000.00

Question 15

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

Answer 15

They must be in writing.

Question 16

What makes a contract subject to the Statute of Frauds?

Answer 16

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

Question 17

What is the parol evidence rule?

Answer 17

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 18

What are the requirements for the assignment of a contract?

Answer 18

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 19

When can contracts be discharged by law?

Answer 19

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)