Contracts - General Flashcards
What is a contract?
A contract is a legally enforceable agreement.
What is a bilateral contract?
A bilateral contract leaves open the method of acceptance.
What is a unilateral contract?
A unilateral contract can be accepted only by performance.
In a mixed deal, how do you determine whether to apply Article 2 of UCC or Common Law?
Look at the predominant purpose and relative values of each aspect of the contract.
How do we know if there has been a valid offer?
Whether a reasonable person in the position of the offeree would believe that his assent will create a contract.
What if the price is missing in a sale contract? (2)
Real Estate: no price, no deal
Goods: just look @ intent of parties
What if there is a vague or ambiguous material term in the contract? (2)
(1) No deal
(2) Look for “fair, appropriate, reasonable”
Pursuant to an output contract, can the buyer increase the requirements?
Yes, so long as the increase is “in line with prior demands.”
Is an advertisement an offer? (3)
(1) No, except:
(2) ad in the nature of a reward, or
(3) specific as to quantity and expressly indicates who can accept
How can offers be terminated? (4)
(1) Lapse of time
(2) Words/Conduct of the Offeror
(3) Words/conduct of the offeree
(4) Death of either party prior to acceptance
How can an offeror revoke an offer?
(1) unambiguous statement to offeree
(2) unambiguous condoct that the offeree is awayre of
When does revocation of an offer become effective?
Revocation of an offer becomes effective upon receipt.
What types of offers cannot be revoked? (4)
(1) Option contract
(2) Merchant firm offer rule
(3) Foreseeable detrimental reliance
(4) Unilateral contract after performance has started (not just mere preparation)
What is the Merchant Firm Offer Rule?
An offer cannot be revoked for up to 3 months, IF:
(1) offer to buy/sell goods
(2) Signed, written promise to keep offer open, and
(3) party is a merchant
How do you apply the Merchant Firm Offer Rule if there is a promise to keep the offer open for more than three months?
The agreement defaults to three months.
What is the effect of a conditional acceptance? (“I accept if…”)
Deemed a counteroffer, rejection.
What is the effect of the offeree adding additional terms to the contract? (3)
(1) @ Common law, this is a rejection.
(2) Under UCC, just need “seasonable expression of acceptance,” and
(3) If both merchants, new terms are automatically incorporated unless the term materially changes the offer or there is objection.
How can an offeree accept? (4)
(1) Offeree fully performs
(2) Offeree starts to perform bilateral contract
(3) Offeree promises to perform
(4) Offeree is silent where custom or agreement means silence = acceptance
What if revocation and acceptance are sent at the same time?
Contract formed.
Revocation effective upon receipt.
Acceptance effective upon sending.
What if the seller of goods sends the wrong goods? (2)
(1) Wrong goods = acceptance + Breach, unless
(2) seller had reasonable belief that an accommodation due to circumstances would work
Can “past consideration” be used to form that basis of a binding contract?
(1) Generally no, unless
(2) Action taken in emergency/@ request, then subsequent promise to pay
What is the Preexisting Duty Rule?
Preexisting duty ≠ consideration, except:
(1) unforeseen difficulty so severe as to excuse performance, or
(2) 3rd party promise to pay additional consideration
Can past payment for a debt be consideration for release from debt?
Only if the debt is not due yet, or if it is undisputed.
When does the Preexisting Duty Rule apply?
Applies to Common Law contracts.
Article 2 has no such rule.
What are the elements of Promissory Estoppel? (3)
(1) A promise
(2) which was foreseeably and reasonably relied upon to the promisee’s detriment, and
(3) enforcement is necessary to avoid injustice.
Who lacks capacity to contract? (3)
(1) Infant (under 18)
(2) Mentally incompetent
(3) Intoxicated, if other party has reason to know
Can a contract with a party that lacks capacity be enforced? (4)
(1) Generally no, but
(2) Person lacking capacity may enforce
(3) If party retains benefits then gains capacity contract is enforceable, and
(4) person lacking capacity must still pay for necessities
What types of contracts fall within the Statute of Frauds? (6)
(1) Promise in consideration of marriage
(2) Promise by executor to pay obligation of estate from own funds
(3) Promise to answer for debts if others fail to pay
(4) Service contract not capable of being performed within one year
(5) Transfer of real estate interest for more than one year
(6) Sale of goods valued at $500 or more
What ways can the Statute of Frauds be satisfied?
(1) Performance
(2) Writing
(3) Judicial admission of sale of goods agreement
Does partial performance of service contracts satisfy the Statute of Frauds?
No, to satisfy the Statute of Frauds by performance of a service contract, performance must be complete.
Does partial performance of a sale of ordinary goods satisfy the Statute of Frauds?
Yes, but only to the extent of that part of performance.
Does partial performance of sale of specially manufactured goods satisfy the Statute of Frauds?
The Statute of Frauds is satisfied as soon as the seller makes “substantial beginning” of making/obtaining the goods.
Does partial performance of a Real Estate Transfer contract satisfy the Statute of Frauds?
Yes, if 2 of these 3 are satisfied:
1) payment (full or close to full
(2) Possession
(3) Transferee has made improvements
What must be in a writing to satisfy the Statute of Frauds for a non-UCC contract?
(1) All materials terms, and
2) signature of person to be charged (∆
What must be in a writing to satisfy the Statute of Frauds for a UCC contract?
(1) All material terms
(2) Signed by ∆, and
(3) Quantity of sale
What is the exception to the signature requirement of the Statute of Frauds writing for a UCC contract?
Merchant Confirmatory Memorandum Rule:
(1) If both parties are merchants and
(2) a person receives a signed writing w/ quantity term that claims that is a contract
(3) fails to respond w/in 10 days of receipt
What is the Equal Dignity Rule?
An agency contract must be in writing IF:
the underlying contact being entered into by the agent is within the Statute of Frauds
When must there be written evidence of a contract modification?
When, after the modification, the contract falls within the Statute of Frauds
What is the effect of “modifications to this contract must be in writing” clauses?
Common Law: clause is ignored
UCC: clause is upheld unless waived
Can a contract for something illegal be enforced? (2)
(1) Contracts with illegal subject matter are not enforceable.
(2) Contracts with an illegal purpose are enforceable only by a party that was not aware of the illegal purpose.
What is the effect of an innocent misrepresentation in a contract deal?
Even if person was honestly mistaken, a misrepresentation can make an agreement unenforceable.
What are the tests for unconscionability, and to what point in time is the test applied?
Tests:
(1) “unfair surprise”
(2) “oppressive terms”
Tested @ time of formation.