Contracts - Ch. 8

Question 0

What are the elements of a binding contract?

Answer 0

Offer, acceptance and consideration.

Question 1

Uniform Commercial Code

Answer 1

A series of model statutory provisions originally drafted by the National Conference of Commissioners on Uniform State Law, it governs commercial transactions and has been adopted by all states, entirely or in part.

Question 2

Consideration

Answer 2

Anything of value; it must be present for a valid contract to exist, and each side must give consideration.

Question 3

What steps will the courts take when interpreting an ambiguous contract?

Answer 3

1. Read the contract and try to give the words their common sense meaning.
2. Determine the parties’ intent
3. Apply commonly accepted definitions from the relevant industry or business.
4. Interpret the language so as to favor the party who did not draft it

Question 4

What are the defenses used in contract cases?

Answer 4

1. Fraud
2. Mistakes of fact
3. Undue influence
4. Duress
5. Lack of contractual capacity
6. Illegal contract

Question 5

Adhesion contract

Answer 5

A contract formed where the weaker party has no realistic bargaining power. Typically a form contract offered on a “take it or leave it” basis.

Question 6

Unconscionable contract

Answer 6

A contract formed between parties of very unequal bargaining power where the terms are so unfair as to “shock the conscience.”

Question 7

Offer

Answer 7

In contract law, an indication of a firm desire to enter into an agreement, sufficiently definite that once accepted a contract is formed

Question 8

To be considered valid, the terms of an offer must contain reference to at least what four items?

Answer 8

1. The parties to the contract
2. The subject matter of the contract
3. The nature of the consideration
4. The time for performance

Question 9

Acceptance

Answer 9

In contract law, an act by the offeree indicating an agreement to be bound to the contract

Question 10

Consideration

Answer 10

Anything of value; it must be present for a valid contract to exist, and each side must give consideration

Question 11

Undue influence

Answer 11

When one party is in a position of trust and misuses that trust to influence the actions of another

Question 12

Unconscionable contract

Answer 12

Contract formed between parties of very unequal bargaining power where the terms are so unfair as to “shock the conscience”

Question 13

Implied warranty of fitness

Answer 13

An implied promise that the goods being sold will satisfy a special purpose

Question 14

Implied warranty of merchantability

Answer 14

An implied promise that the goods being sold will be usable for the ordinary purpose for which they were sold

Question 15

Statute of frauds

Answer 15

A statutory requirement that in order to be enforceable certain contracts must be in writing.

Question 16

According to the statute of frauds what are the types of contracts that must generally be in writing?

Answer 16

1. Contracts involving land, including fixtures, and documents dealing with land, such as mortgages and leases
2. Contracts that cannot be performed in one year
3. Collateral contracts, those that involve a secondary as opposed to a primary obligation, unless the main purpose is to secure a personal benefit
4. Promises made in consideration of marriage, such as prenuptial agreements
5. Contracts for the sale of goods valued at $500 or more.

Question 17

Assignment

Answer 17

The transfer by one of the original parties to the contract of part or all of his or her interest to a third-party

Question 18

Delegation

Answer 18

The transfer by one of the original parties to the contract of his or her obligations to a third party

Question 19

Third-party beneficiary

Answer 19

Although not a party to the contract, someone the contracting parties intended to benefit

Question 20

Specific performance

Answer 20

When money damages are inadequate, the court may use this equitable remedy and order the breaching party to perform his or her contractual obligations

Question 21

Mitigation of damages

Answer 21

The requirement that the nonbreaching party take Reasonable steps to limit his or her damages

Question 22

Consequential damages

Answer 22

Damages that arise out of special circumstances that must be foreseeable to the other party

Question 23

Nominal damages

Answer 23

Damages that are awarded when there has been a breach but no provable damages

Question 24

Liquidated damages

Answer 24

A clause in a contract which specifies what will happen in the case of a breach

Question 25

Reformation

Answer 25

An equitable remedy whereby the court rewrites a contract

Question 26

Voidable contract

Answer 26

A contract that is subject to Repudiation by one or both parties up to the time of performance

Question 27

In the event of mistakes of fact which type is not a basis to set aside a contract

Answer 27

Unilateral mistakes of fact

Question 28

Mirror image rule

Answer 28

The doctrine that the offeree’s acceptance must mirror the offer. “Meeting of the minds”

Question 29

What are the four main areas of contract law?

Answer 29

Formation, performance, breach, remedy

Question 30

Illusory consideration

Answer 30

Consideration based on a false impression

Question 31

Pre-existing duty rule

Answer 31

Rule which states that if a previous legal obligation to do something exists it cannot Constitute valid consideration for a new promise

Question 32

What is the shopkeepers rule?

Answer 32

A defense against false imprisonment which states that shopkeepers have the right to detain a customer with probable cause for a reasonable amount of time and in a reasonable manner