Contracts Law Flashcards
Valid Contract Requirements
1) Offer and acceptance, 2) Consideration or substitute, 3) Legal capacity of parties, and 4) a legal objective
Implied-in-Fact Ks
Consensual agreements that fail to express the agreement of the parties in its entirety. An example would be to pay “reasonable value” of services rendered or of goods delivered where price is not discussed by the parties in advance.
Implied-in-Law Ks
1) There is an equitable imposition of a would-be K (one P bestows benefit on another).
2) Also called quasi-K or restitutionary obligation.
3) P conferring benefit entitled to fair value of services rendered.
4) If necessary services are rendered when person lacks mental capacity to request (medical services) there is an implied-in-law contract for services.
Making Offer
Requirements:
1) Party makes outward manifestation
2) Signals that acceptance will conclude the deal
(Auctions w/o reserve are making offers; w/ reserve are inviting offers)
Terminating Power of Acceptance
1) Lapse of time
2) Death/incapacity of either party
3) Revocation by offeror, and
4) Counteroffer by offeree.
Revocation by Offeror
Free to revoke outstanding offer at any time for any reason, as long as:
a) before acceptance, AND
b) effectively communicated (by same means of offer is okay; FUNCTIONAL EQUIVALENTS RULE)
Preventing Revocation
Two ways:
1) Options contract:
(A) offer
(B) subsidiary promise to keep offer open, AND
(i) NC requires express promise/agreement to keep open for specific period of time
(C) consideration to keep offer open.
2) Firm Offer: Under UCC, offer made by merchant expressly stating it will remain open doesn’t need consideration.
Construction Ks and Offer/Acceptance
MAJ: if GC relies on SC bid to form his own, implied K through promissory estoppel.
O&A of Unilateral Ks
1) Offer seeking performance in return is unilateral.
2) Offeror bound only when offeree completes performance.
3) Modern rule (not followed by NC), once offeree begins performance, option contract and offeror may not revoke.
Acceptance (non-UCC)
Three general reqs:
1) Offeree knows of the offer,
2) Acceptance mirrors terms of offer (any changes = counteroffer), AND
3) Acceptance communicated to offeror
SILENCE: not acceptance, but 3 exceptions:
1) offeree takes benefit of services w/ R chance to reject and w/ reason to know of offeror’s intention,
2) offeror says silence=acceptance, and offeree is silent w/ intent to accept, AND
3) prior dealings/circs make it R to require offeree to notify of intent not to accept.
Acceptance (UCC)
No mirror-image rule; nonconforming acceptance creates a contract. Outcome of different terms depends on parties’ identities.
Merchant-consumer:
Additional/different terms are mere proposals for addition to K, which other party may accept or reject.
Merchant-merchant –> Additional v. different:
1) Additional terms:
(A) Address issue/topic not in orig K
(B) Become part of K unless:
(i) offer expressly limits acceptance to terms of offer
(ii) offeror objects to the add’l terms w/in R time (10 days?) after notice, OR
(iii) additional terms materially alter K
2) Different terms:
(A) MAJ –> “knockout” rule; omit both original and different terms from resulting K.
(B) MIN –> mere proposal, offeror can accept or reject.
Consideration
Two tests:
1) Legal detriment (NC), and
2) Bargained-for exchange.
NC: a seal raises rebuttable presumption of consideration (attack w/ C&C evid). No defense to equitable action or under UCC.
Illusory promise
A promise to perform that leaves performance to the discretion of the promising party is an illusory promise and won’t constitute consideration.
Condition on gratuitous promise
Condition = promisee must do it in order to receive gift; doesn’t count as consideration.
Promissory Estoppel
Elements:
1) Promise
2) Foreseeable reliance
3) Actual reliance
4) Injustice w/o enforcement
NC doesn’t allow to use affirmatively, but sometimes allowed as defense (e.g., to recover damages under unenforceable SoF K).
Requirements of SoF
1) Writing(s) evidencing agreement
2) Signed by party to be bound (no mutuality of obligation, except UCC)
3) Identity of parties
4) Nature and subject of K
5) Essential terms of contract (e.g., price and date)
Composite Document Rule
Tacking together multiple documents to satisfy SoF.
SoF Application - MBE
MYLEGS
Remember “main purpose” rule for guarantees
SoF Application - NC
Main ones:
S - Sale of goods $500+
L - Leases 3+ years
R - real property
Others:
1) Contracts to pay debts of another (not original suretyship agreement
2) non-compete contracts
3) reaffirmation of debt after SoL/BR
4) commerc loans $50K+ by bank
5) excessive interest rates
6) sale of securities
7) SH voting trusts
8) sale of business opportunity
9) entertainment Ks if prepaid
10) guarantees from HC providers
11) acceptance by employer for assigning employee’s wages
No writing needed:
1) Trusts in land (unless for benefit of Grantor)
2) Real estate brokerage Ks
3) Consideration of marriage
4) Year+ Ks
K Interp - Missing Terms
Default for missing price: R price at time of delivery.
K Interp - Output/Reqs Ks
Open quantity term –> duty of good faith
K Interp - Ambigs
Extrinsic evid of trade usage or course of dealings allowed to interpret. Also
