Contracts (Formation of K's)

Question 1

An offer is…

Answer 1

An objective manifestation of a present intent to contract

Question 2

Advertisements are…

Answer 2

generally not offers, unless highly specific as to quantity and clearly indicate who may accept

NOTE it is NOT exclusive to newspapers!! It can be a notice of a competition for a school offering a first-place award, etc.

Question 3

An offer may be TERMINATED by

Answer 3

-Death or insanity of either party
-Indirect revocation (learning of someone else about destruction of K)
-Express rejection
-Counteroffer

Question 4

An offer may be REVOKED by

Answer 4

• Lapse of reasonable time

-Unambiguous statement by the offeror to the offeree

-Offeree becomes aware of offeror’s unambiguous conduct or statement indicating an unwillingness or inability to contract

Question 5

Mailbox Rule for OFFER

Answer 5

effective upon RECEIPT by the offeree

• Rejections and counteroffers are also effective upon receipt by offeree’s physical possession

Question 6

Mailbox Rule for acceptance

Answer 6

Effective upon DISPATCH/WHEN SENT

Question 7

Exception to Mailbox Rule is…

Answer 7

If offeree sends a rejection FOLLOWED by an acceptance, first to arrive/first to receive controls

Question 8

Mailbox Rule and Option K’s

Answer 8

the mailbox rule DOES NOT apply to option contracts.

An acceptance under an option contract is EFFECTIVE UPON RECEIPT.

Question 9

UCC Acceptance—two issues often arise: (Battle of the Forms)

Acceptance with additional terms—are both parties merchants?

Answer 9

Yes?—K is formed with additional terms UNLESS either: (“MELO”)
a) Additional terms Materially change the offer,

      b) Offer Expressly Limits acceptance to the offer’s terms,

      c) Offeror Objects within a reasonable time

No?—K is formed, but without additional terms

Question 10

“Knockout Rule” - in a contract between merchants for the sale of goods, if the acceptance DOES NOT match the terms of the offer-

Answer 10

Additional terms that do not materially alter the original terms of the offer will be included in the contract, but different terms may be KNOCKED OUT of the contract.

Question 11

Consideration-

Answer 11

is a bargained for exchange for value;
- consideration will not be invalidated because of the amount (ex. I can sell my house to you for a dollar)
- “ a peppercorn will suffice!”

Question 12

An Illusory Promise is-

Answer 12

when the party making the offer retains control (ex. I will sell you my car whenever I feel like it” or “If I want to”)
-Modern trend:

Question 13

A promise to give a gift

Answer 13

is INVALID consideration (ex. grandma calls son and says I promise to give you $100 to boy, then changes her mind.. this is ok)

Question 14

Past or Moral consideration…

Answer 14

is NOT consideration
-(ex. Little John is drowning in the ocean and Carlos saves Little John. Mr. John says “phew, thank you for saving my son’s life! Come to my house and I will give you $10k”. Next day, Mr. John only gives $10.)
- This is fine, and Mr. John doesnt need to give anything!

Question 15

A promise to pay a debt that was barred by SOL is-

Answer 15

Valid consideration.
- (ex. If i promise to pay you a debt even though its been barred by SOL can still be enforced)

Question 16

A promise to pay a debt that has been discharged by bankruptcy-

Answer 16

is valid and enforceable consideration

Question 17

If I have the right to sue you, but I give up the right to sue, it is-

Answer 17

Valid consideration

Question 18

The forbearance to sue/giving up the right to sue is…

Answer 18

valid consideration

Question 19

Promissory Estoppel occurs when

Answer 19

a promise is made and one relies to their detriment on that promise

Question 20

Accord and Satisfaction occurs when-

Answer 20

parties to an existing K agree to accept different performance in satisfaction of the original, existing obligation

-ex. If I owe you $100, but agree to $75 and send the $75, the deal is $75. Think of debt collectors agreeing to a lower debt/negotiating on different amounts

• Ex. Resolving a good-faith dispute… if you agree to a new deal after debating/questioning the debt in good-faith, that new figure is acceptable and enforceable

Question 21

Partial payment of an original debt will satisfy as an…

Answer 21

Accord and Satisfaction if there is a bona fide dispute about the validity of the claim

Question 22

A promise to settle a claim may be-

Answer 22

valid consideration to support a return promise so long as
there is a good faith dispute over the validity of the claim.

Question 23

Under the pre-existing duty rule in the common law-

Answer 23

a promise to perform a pre-existing duty or obligation generally does not constitute consideration

Question 24

A bilateral contract is a-

Answer 24

Promise for a promise; exchange of mutual promises
-E.g., A offers to sell his car to B for $5,000 and B promises to purchase A’s car at that price

Question 25

A unilateral contract is a-

Answer 25

Promise for an act/performance
- E.g., A promises to pay B $100 if B paints A’s fence; B is not obligated to paint A’s fence, but if B does, K is formed and A must pay B $100

Question 26

A quasi-contract is

Answer 26

not a K, but rather a restitution remedy designed to prevent unjust enrichment;

Think of a haircut– barber gives you haircut, he expects to be paid (implied-in-fact K)

Look for:
-P has conferred a benefit to D;
-P reasonably expects to be paid;
-D knowingly accepted the benefit; and
-D will be unjustly enriched if P is not compensated

Question 27

An Implied-in-law K occurs when-

Answer 27

-the plaintiff has conferred a measurable benefit (eg, medical services) on the defendant
- the plaintiff acted without gratuitous intent
- it would be unfair to let the defendant retain the benefit without compensating the plaintiff.