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Civ Pro > Contracts I > Flashcards

Contracts I Flashcards

1
Q

Elements of a contract

A
  1. Offer

2. Acceptance

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2
Q

restatement S24: a. Restatement Offer Defined

A

i. An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

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3
Q

a. Restatement §26: Preliminary Negotiations

A

i. A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

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4
Q

Restatement §63: Time When Acceptance Takes Effect

A

i. Unless the offer provides otherwise:
a. an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror; but
b. an acceptance under an option contract is not operative until received by the offeror.

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5
Q

Lucy v. Zehmer (1954)

A

D offered to sell farm to P for $50,000. D claimed was drunk, kidding and P knew that. Court upheld offer as P reasonably believed D, the conditions were not unreasonable and P made serious effort in reliance on the offer. Fault on offeror.

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6
Q

Fairmount Glass Works v. Grunden-Martin Woodenware (1899)

A

i. Requested quote on glass jars. D sent telegram with pricing and stating “for immediate acceptance”. Could not deliver when order placed.
ii. Court held that quote specifying for immediate acceptance was an offer as it was accepted immediately.
iii. Normally, a quotation or price sheet is treated like an invitation to an offer I with seller retaining right to accept or reject buyer’s offer.

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7
Q

Lefkowitz v. Great Minneapolis Surplus Store (1957)

A

a. advertisement offering stole for $1 to first customer in line demanded specific performance and thus was an offer.
However, advertisements usually are not offers.

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8
Q

Restatement §17: manifestation of mutual assent

A

This may entail a written document, oral agreement or commencement of performance.

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9
Q

Peerless case (1989)

A

Confusion over which Peerless ship was referred to in contract. No contract as there was no meeting of the minds.

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10
Q

Revoking an offer

A

a. Must occur before acceptance.

b. Offeror sets rules for form and manner of acceptance.

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11
Q

UCC 2-206

A

a purchase order can be coupled by any reasonable medium including performance.

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12
Q

Restatement §§32 and 62:

A

performance is a reasonable way to accept a contract. Starting such performance binds not only offeror but also the offeree.

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13
Q

Offer w/o a time limit stays opened for how long?

A

a reasonable time.

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14
Q

Ever-Tite Roofing Corp. v. Green (1955)

A

a roofer waited for a week to complete a credit check before accepting D’s offer. Then, sent truck only to find another Co. on the job. Court held that roofer had accepted the offer in reasonable time (no time-limit) and started performance by sending the truck.

Rule is now home repair customer must act before credit check is complete to revoke offer

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15
Q

Restatement §45

A

i. Commencement of performance creates an option contract in offeree.
ii. Free to complete work but not bound to do so.

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16
Q

Unilateral Contracts:

A

Promise in exchange for performance. The promise is the consideration for the promisee and the act is the consideration for the promisor

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17
Q

Cook v. Coldwell Banker (1998):

A

D announced a bonus sales program that would reward great sales with bonuses paid out at end of program. D tried to argue that offer was revoked when she left firm–that intention of program was to reward loyalty. Court held that a unilateral contract is binding on offeror once substantial performance has occurred

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18
Q

St. Landry Loan Co. v. Avie

A

Soldier needed an endorser to get a loan, so he got his illiterate elder father-in-law to cosign. When soldier defaulted, bank came after the old man. Bank claims they explained everything to him, which he denied. Court held for P under “ignorantia non excusat” and there was no evidence of foul play.

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19
Q

Ray v. William O. Eurice Borthers (1952):

A

A developer signed a contract without reading it and later tried to get out of the special demands the property owner had made. Court held that the standard for evaluating a contract is objective. “Meeting of the minds”. Absent fraud, duress or mutual mistake, signing is binding

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20
Q

Lonergan v. Scolnick (1954)

A

P responds to an ad in paper for land in Joshua Tree placed by D. D sent a form letter in response. P believed that there had been an offer and acceptance. Court holds that the form letter was merely an invitation to an offer.

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21
Q

Normile v. Miller (1985)

A

D put house up for sale. P made an offer, D made counter-offer asking for more money. While P was deciding, D told them the offer was gone as she had sold to someone else. P claims there was a contract or at least a first option. Court held that D’s counter-offer was a rejection of P’s offer. The ‘new’ offer was rescinded prior to P accepting

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22
Q

A promise to keep an offer open is binding. T or F?

A

False. Is not binding. Reasoning involves a lack of consideration on offeree’s part. No duty in return for option to buy

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23
Q

Dickinson v. Dodds (1876):

A

a. offer to sell real estate at a fixed price with offer held open until set date. D sold land to another and refused acceptance from P. Court held this offer was not firm and could be revoked.

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24
Q

Revocation

A

Once an offer is revoked, notice must be promptly given to offeree to prevent his further wasteful efforts.
Stating that offer is revoked before it is accepted terminates offer

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25
Q

Petterson v. Pattberg (1928):

A

D offered to discount P‘s mortgage if paid in full by certain date. D sold mortgage prior to another party. When P arrived at door, D refused to accept payment stating that offer was revoked. Court upheld.

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26
Q

Restatement §87: Option Contract

A

An offer is binding as an option contract if it

  1. is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or
  2. is made irrevocable
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27
Q

An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice. T or F?

A

True

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28
Q

Restatement §90

A

waves need for consideration to make a subcontractor’s bid a binding promise

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29
Q

UCC 2-205:

A

firm offer needs no consideration as long as such intent is clear and the time is not unreasonable.

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30
Q

Drennan v. Star Paving Co. (1958

A

P won contract from school to build based in part on quote from D. D then stated that made error and could not perform – attempt to w/draw offer. Court held that offer by subcontractor includes “subsidiary provision to accept if contractor wins bid, despite lock of conventional consideration

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31
Q

James Baird Co. v. Gimbel Bros. (1933

A

Judge Learned Hand held that subcontractor was not bound as he received no promise in return, and contractor was free to renegotiate. Furthermore, promissory estoppel was aimed at donative cases not offers of service or sale.

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32
Q

“Induced Reliance”

A

i. Contractor under current law is bound by its own bid to the subcontractor if he wins the bid.

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33
Q

Hoffman v. Red Owl Stores (1965):

A

P relied to his detriment on D’s representation about ability to get a grocery store franchise. When D suddenly raised capital investment requirement, P sued. Court granted P reliance damages due to D’s “promissory representations”. No expectation damages would be available as D never offered him a franchise.

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34
Q

Pop’s Cones, Inc. v. Resorts International Hotel (1998):

A

P was in extended and prolonged negotiations with D to open a TCBY franchise at D’s hotel. When P had to make decision about their present lease, D informally told them that their deal was as good as complete. Relying on this P did not renew. D then did not deliver a contract. Court holds that promissory estoppel applies

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35
Q

If party reasonably relies on offeror’s pre-contract representations to his great detriment, reliance damages may not be given under promissory estoppel. T or F?

A

False. They may be given reliance damage

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36
Q

Mirror Image Rule:

A

An acceptance that adds conditions or qualifications is not an acceptance but a counteroffer. (Common Law)

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37
Q

Restatement §59

A

acceptance must be a mirror image of offer. Even minor changes make if a counteroffer.

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38
Q

Restatement §39

A

a counteroffer functions as a rejection and terminates offer, unless offeree manifests a contrary intent.

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39
Q

Minneapolis & St Louis Railway Co. v. Columbus Rolling-Mill Co. (1886):

A

P requested quote for 2000 to 5000 tons rails and received price of $54. Requested 1200 rails at $54 and was told delivery could not be made at that price. Resent order at 2000. D stated offer was terminated as counteroffer at 1200 was a rejection. (Price had gone up to $60). Court upheld.

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40
Q

Poel v. Brunswick-Balke-Collender

A

P thought they had contracted with D to sell some rubber. P sent an offer, D responded with a counter offer, and then D contacted them with recission, claiming their agent had no authority to make it. Court held that there was never any acceptance because D’s counter offer was not an acceptance.

41
Q

UCC 2-207 (1)

A

i. Supplier’s acknowledgement of purchaser’s offer is an acceptance rather than counteroffer even though it includes additional or different terms from purchaser’s order form, unless supplier expressly conditions acceptance on purchasers assent to those terms, and thus there is a contract under the terms of purchaser’s offer.
ii. If no agreement was reached that could constitute a contract, but goods were ordered, shipped and paid for before dispute arose, a contract is presumed w/ terms being those in common on both forms. Neither time dominates.

42
Q

UCC 2-207 (2):

A

if supplier’s form contains additional terms (not conflicting), these are treated as proposals. Such proposals are considered adopted by purchaser unless:
i. Purchaser expressly limits offer to own terms
ii. Additional terms are objected to by offeror
“materially alter” contract

43
Q

Resolution of different terms in a form

A

may be resolved in favor of purchaser or be dropped under the knock-out rule, with terms supplied from the UCC

44
Q

Roto-Lith, Ltd. v. F.P. Bartlett & Co. (1962):

A

disclaimer of warranty on seller’s acknowledgement of buyer’s offer treated as counteroffer not proposal. This is in conflict w/ modern application of 2-207. Warranty disclaimers must now be explicitly agreed to by the buyer.

45
Q

Contracts with terms that are uncertain may not be enforced unless…

A

court finds it can clearly establish the intent of the parties.

46
Q

A. Consideration:

A

receipt by promisor of something of value by promisee

47
Q

Bilateral Contracts:

A

Promise in exchange for a promise

48
Q

Unilateral contracts:

A

exchange of promise for performance

49
Q

Nature of a Promise:

A

need not be written. Maybe expressed by word or action, such as commencement of performance

50
Q

Statute of Frauds

A

forbids enforcement of certain classes of contracts unless evidenced by written memorandum (sale of land, service contracts not to be completed w/in one year)

51
Q

Situations when consideration does not apply or is modified:

A 
Donative Promises
Promissory estoppel
Pure promise without consideration
Illusory Promise
Moral obligations and Past Consideration
52
Q

Donative Promises

A

In general, a promise to give a gift in the future is unenforceable

53
Q

Promissory estoppel:

A

a promise expected by promisor to cause promisee to take or forbear some action, and induces such action, is enforceable if necessary to avoid injustice. Remedy may be limited as justice requires

54
Q

Illusory Promise

A

a promise that does not bind promisor to any affirmative action or forbearance and thus is not a consideration. executed in good faith

55
Q

Limitations on Contract Terms:

A

a: Unfairness and Unconscionability
b: Misrepresentation & Concealment:
c: Standardized Forms & Unconscionability:

56
Q

Unfairness and Unconscionability:

A

a: Minority and mental incapacity
b: Duress
c: Physical violence
d: economic duress
e: Undue influence

57
Q

Misrepresentation & Concealment

A

a. Representations of fact, even if done in good faith, that are false, upon which P relied to his detriment, oblige representor to restore party to prior condition.
b. Non-disclosure

58
Q
  1. Standardized Forms & Unconscionability:
A

a contract entered into by competent adults is valid regardless of fairness unless one party did not, or could not, comprehend the meaning of the contract. In that event court may use its judgment.

59
Q

Contract of adherence

A

buyer has no option but to adhere as no other choice is available.

60
Q

Parole Evidence Rule

A

renders unenforceable any oral agreements entered into prior to adoption of the written contract

61
Q

Good Faith as Consideration

A

Fully committed party (manufacturer) depends on licensee’s best efforts. These are the consider attain offered in exchange fn exclusivity,

62
Q

Requirements and Output Contracts

A

a. Establish maximum and minimum quantities of goods to be refused or produced.
b. Where contractual limitations are not expressed, UCC 2-306(1) which sets a “good faith” standard on minimums and maximums except where limited or exceeded based on prior trade

63
Q

Condition precedent

A

an event which must take place before a party to a contract must perform or do their part

64
Q

Condition subsequent:

A

a happening which terminates the duty of a party to perform or do his/her part.

65
Q

Oral modification and waiver:

A

Parties are free to modify agreements by future oral agreements despite no-modification clauses.

66
Q

Remedies for Buyers: Sales of Goods and Perfect Tender

A

buyer of goods is entitled to insist upon perfect tender, i.e.: exactly the same good he believed he was purchasing.
Failure to reject after reasonable opportunity for inspection is considered acceptance

67
Q

Anticipatory Breach

A

anticipatory repudiation of a promise to perform, no less than a failure to perform at the time performance is due, may constitute a total breach

68
Q

Mutual Mistake

A

contract based on mutual mistake is voidable unless the adversely affected party bears the risk of mistake under a reasonable view of the circumstances

69
Q

Unilateral Mistake

A

May be a defense when the result is unconscionable and the cause is a clerical mistake, arithmetical blunder, misidentification or such.
Not a defense if it was simply a bad decision

70
Q

Expectation Damages:

Standard Formula

A

Damage recover is equal to loss by reason of other party’s default plus expenses incurred in fulfilling own obligations

71
Q

Avoidability as a Limitation on Damages

A

damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation. Exception if effort was made to avoid.

72
Q

Loss Due to Emotional Disturbance

A

Recovery for emotional disturbance will be excluded unless the breach also caused bodily harm or the contract or the breach is of such a kind that serious emotional disturbance was a particularly likely result.

73
Q

Punitive Damages

A

Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable

74
Q

Unforeseeability and Related Limitations on Damages

A

Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made

75
Q

Reliance Damages

A

Covers expenditures made in reliance upon a contract and recovers “detriments” to be put back in position before breach occurred

76
Q

Restitution Damages

A

Claim based solely on unjust enrichment to the breaching party. (price paid for item never received. the injured party is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance

77
Q

Liquidated Damages

A

damages may be pre-determined by contract so long as those damages do not exceed a figure that is reasonable in light of the loss caused by the breach and difficulty in proving such loss.

78
Q

Fuller’s Three Bases for Contractual Liability

A
  • Private Autonomy- b/c he contracted to bear such liability
  • Reliance- where breach of promise injury
  • Unjust Enrichment- pty end up w/ property or services they are not entitled to
79
Q

Consideration

A

A negotiation resulting in the voluntary assumption of an obligation by one party upon condition of an act or forbearance by the other

80
Q

Bargain Theory of Consideration

A

Gratuitous promises not enforceable b/c problems of proof, often emotionally involved not deliberative manner, if given in gratuitous spirit might be revocable for ingratitude

81
Q

Past Consideration/

A

No, there existed no consideration, since consideration cannot stem from services done before execution of the contract

82
Q

Promissory estoppel

A 
works by granting enforceability to a promise where there was no explicit consideration, but reliance on the promise that actually induces action.
o	If (Promise + Reasonably Foreseeable Acceptance + Injustice), then Contract
83
Q

Contract Implied in Fact

A

There is a bargain, but no specific promise. Not written down.

84
Q

Quasi Contract

A

Contract Implied in Law

85
Q

Contract Implied in Law

A

When A confers a benefit on B and A is aware of benefit being conferred and it is reasonable that A intended to be paid, then B must pay

86
Q

Promissory restitution

A

restitution in setting in which party has received benefit and promised to pay for benefit but only after having received it. under CNS rules, not enforceable

87
Q

Pre-Promissory Restitution

A

A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice

88
Q

Mailbox rule:

A

acceptance will in some circumstances be treated as effective as soon as dispatched (mailed, telegraphed, etc.) by the offeree.

89
Q

Option Contract

A

An ‘option’ is a contract by which the owner agrees to give another the exclusive right to buy property at a fixed price within a specified time” and must be supported by valuable consideration

90
Q

Last Shot Rule

A

When the terms do not match, allows the last form to serve as a counteroffer (the assent is the acceptance of goods by the buyer) and those terms prevail (usually favors the seller) (act is acceptance – terms in last shot stands)

91
Q

Overcome statute of frauds with…

A

Promissory estoppel

92
Q

contra proferentem

A

that interpretation will be preferred which is less favorable to the one by whom the contract was drafted

93
Q

Express warranties

A

Any description of the goods which is made a part of the basis of the bargain creates an express warranty that the goods shall conform to that description

94
Q

Implied Warranty

A

Where a seller…has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is…an implied warranty that the goods shall be fit for such purpose

95
Q

Defeater Doctrine

A

Sellers have a duty to disclose facts materially affecting the value of the property

96
Q

Modification

A

modification allowed only if there is consideration for the new promise.
Performance of the preexisting duty of the original contract is not consideration

97
Q

Express conditions must be

A

literally performed

98
Q

for constructive conditions (usually language of promise) ____ performance is sufficient

A

substantial

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