Contracts-Form and Def

Question 1

What is exchange sought in unilateral K?

Answer 1

Promise for complete performance (e.g. if you do X, I will do X)

Question 2

Once promise is given, when is offeror bound in unilateral K?

Answer 2

Offeror bound only when 1) performance completed + 2) Notice to offeror if offeree has reason to know offeror will not learn.
Offeree never bound to finish.

Question 3

When can offeror no longer offer in unilateral K?

Answer 3

Once offeree begins performing, offeror may not revoke (option K is created). Mere preparation does not trigger irrevocability.

Question 4

Definite certain terms required in offer

Answer 4

Offeree, definite subject matter
LSK: Land and price
Service K: Nature of work
UCC: Quantity

Ct may supply reasonable missing terms, except price in LSK

Question 5

4 types of irrevocable offers

Answer 5

1) UCC firm offer - offer by merchant in signed writing to keep offer open during time stated (or if not started up to 3 months). No consideration required;
2) Option K - promise to keep offer open for a time for consideration
3) Detrimental reliance
4) Part performance

Question 6

What is the mirror image rule in common law?

Answer 6

In CL, acceptance must mirror the terms of the offer

Question 7

Acceptance is effective when dispatched except…

Answer 7

When exercising option K, effective when received.

Question 8

Can a K be formed between merchants even though acceptance does not match offer?

Answer 8

Yes unless
1) Acceptance is made conditional on offeror’s assent to additional or different terms > Acts as rejection and counteroffer
2) Original offer expressly limits acceptance to offer terms > Terms dropped but K formed

Question 9

What if new terms materially alter original terms of offer re: K between merchants?

Answer 9

Terms dropped but K formed.
Examples: arbitration clause, disclaimer, materially shorten deadline, change usage of trade or past method of dealing

Question 10

What if new terms are different re: K between merchants?

Answer 10

Knockout rule (maj): conflicting terms are omitted from K; gaps left are filled by UCC default terms

Question 11

When can surrendering an invalid claim constitute consideration?

Answer 11

1) if the claim can be pursued in GF
2) or surrendering party (regardless of other party) believes the claim is well founded

Question 12

What is illusory promise? Is there consideration?

Answer 12

No.
Only one party bound to perform
“all the widgets I want” (not I require)
“all you want to sell me” (not you produce)

Question 13

What is gratuitous promise? Is there consideration

Answer 13

No.
A promise to make a gift and no return consideration

Question 14

Cases when promise in exchange for something already performed is still consideration

Answer 14

i. Statute of limitations: written promise to pay a debt barred by limitation
ii. Bankruptcy: written promise to pay a debt discharged by bankruptcy
iii. Creditor offer to discharge existing debt for less than amount owed due to prior date

Question 15

Substitute to consideration: promissory estoppel

Answer 15

1) Specific promise of future gratuitous action
2) Promisee’s action was reasonably foreseeable to promisor
3) Reliance induced by the promise and not other factors
4) Injustice w/o enforcement (willfulness of breach, relative pt positions, detriment, alternatives)

Question 16

Substitute to consideration: quasi k

Answer 16

Where II has conferred a benefit upon D under circumstances where no enforceable K results, II may be entitled to recover the value of the benefit conferred.

Question 17

Substitute to consideration: implied best efforts

Answer 17

Where a party is the exclusive distributor, courts will imply a promise to use best efforts to sell a product

Question 18

Defense to formation: Mutual mistake elements

Answer 18

Mutual mistake as to existing facts: K is voidable by adversely affected pt only if
(1) mistake concerns a basic assumption of K
(2) mistake has a material effect on agreement, and
(3) affected pt did not assume the risk of the mistake

Question 19

Defense: Unilateral mistake

Answer 19

K voidable only if non-mistaken pt knew or had reason to know of mistake by other pt

Question 20

Defense: Misunderstanding

Answer 20

Ambiguity concerning terms. If only 1 party unaware, K enforced based on unaware.

Question 21

Defense: Incapacity

Answer 21

Infancy (under 18) or mental incompetence at the time of K. K only voidable by that party
Exception: Can recover reasonable value for necessaries (food, clothing, shelter)

Question 22

Defense: Fraudulent misrepresentation

Answer 22

Inducing another pt to enter into K by asserting (or conduct such that other pt infers) untrue information
K voidable if innocent pt justifiably relied on misrepresentation

Question 23

Defense: Nonfraudulent misrepresentation

Answer 23

K voidable if innocent pt justifiably relied on material misrepresentation

Question 24

Defense: Fraudulent nondisclosure

Answer 24

Elements:
1) nondisclosure of material facts
2) Duty to disclose (e.g. fiduciary, assertion later made untrue, GF)
3) Reasonable reliance on nondisclosure

Question 25

Defense: Undue Influence

Answer 25

Elements: 1) Unfair persuasion 2) Against a vulnerable party

Question 25

Defense: Duress

Answer 25

Elements: 1) Intent to inflict harm 2) Wrongful threat 3) No reasonable means to prevent threat

Question 26

Defense: Unconscionability

Answer 26

Whether in light of the general commercial background and needs of the particular parties, K is so one sided as to be unconscionable under the circumstances at time of formation

Question 27

Defense: Public policy

Answer 27

If subject matter is illegal or crime or performance itself is a tort If K violates statute, might still be enforced if failing to enforce would be contrary to purpose of statute

Question 28

Defense: SOF generally

Answer 28

For certain agreements to be enforceable, they must be evidenced by a writing signed by the party sought to be bound (i.e. the one asserting SOF to say no K formed)

Question 29

SOF: MYLEGS - When K is within SOF

Answer 29

Marriage Year Bar Land Sale Executor Promise Guaranty Sale of Goods of $500+

Question 30

SOF: Year Bar - When K is within SOF

Answer 30

K that cannot be performed within 1 year of agreement must be in writing Excludes lifetime K

Question 31

SOF - Executor - When K is within SOF

Answer 31

A promise by an executor or administrator to pay estate's debts out of own funds

Question 32

SOF: Guaranty K - When K is within SOF

Answer 32

A promise to guarantee (not assume) the obligation of another person

Question 33

SOF: Guaranty K - When K is not within SOF Despite Guaranty K

Answer 33

Main purpose rule: If guarantor's main purpose in promising is for his own economic advantage (e.g. as shareholder), then writing not required)

Question 34

SOF: Sale of Goods for 500+ - When K is not within SOF Despite Sale

Answer 34

Merchant confirmation: If merchant sends written confirmation to another merchant after oral agreement within reasonable time, this binds recipient if reason to know of contents and no written objection within 10 days of receipt

Question 35

SOF: Satisfactory Writing Requirement - CL and UCC Generally

Answer 35

One more or signed writings that reflect material terms signed by party to be charged. Signature may be typed, initialed, on a letterhead or electronic.

Question 36

SOF: Satisfactory Writing Requirement - CL - Required Terms

Answer 36

Writing includes nature and subject matter of K, essential terms of agreement

Question 37

SOF: Satisfactory Writing Requirement - CL - When Several Writings Can Satisfy

Answer 37

Entire set of writings may be combined into one sufficient to satisfy SOF if: 1) Signed writing is attached to other writing by party to be charged, OR 2) Signed writing refers to the unsigned writings, OR 3) Signed and unsigned docs clearly refer to the same subject matter

Question 38

SOF: Satisfactory Writing Requirement: UCC - Required Terms

Answer 38

Requires quantity of goods. Enforceable up to stated quantity Note if SWAP, writing signed by charged by party not required for sale of goods

Question 39

SOF: Satisfactory Writing - UCC - When Writing signed by charged party not required for sale of goods

Answer 39

SWAP 1) Specially manufactured goods 2) Written confirmation by merchant 3) Admission in court up to quantity admitted 4) Partial performance: e.g. payment made and accepted, goods received and accepted

Question 40

SOF: Satisfactory Writing - UCC - When Writing signed by charged party not required for sale: Specially manufactured

Answer 40

Goods manufactured to buyer's specs + substantial reliance by seller (e.g. began manufacturing)

Question 41

SOF: Satisfactory Writing - UCC - When Writing signed by charged party not required for sale: Written confirmation by merchant

Answer 41

Between merchants, signed written confirmation of an oral agreement sent within reasonable time will also bind recipient, if + recipient has reason to know of confirmation's contents (quantity) + does not object in writing within 10 days + actually received by party to be charged

Question 42

When does part performance of real estate K satisfy SOF?

Answer 42

2 of the 3: 1) Full or part payment; 2) Possession; 3) Improvements