Contracts MBE

Question 1

For a consideration to be valid, has to be

Answer 1

present consideration.
(past consideration is not consideration.
Example: a person found a dog and returns it, the owner offers money reward, the person says no, AFTER returning the dog, [past consideration] no consideration, promise not enforceable)
(even if the person would had say yes, this consideration passed after the dog was returned, no consideration, no valid to enforce).

Question 2

An option in contract is the promise to

Answer 2

keep an offer open for a period of time

Question 3

Common law

in order to have an offer open, needs to be supported by _________.

Answer 3

Consideration.

Question 4

UCC Article 2.

Merchant’s firm offer rule (to keep an offer open):

Answer 4

The offeror must be a merchant.
The offer must be in writing.
which by it terms gives assurance that is going to be held open ->
is irrevocable during the time stated
(if no time stated, the period would not exceed 90 days)

Question 5

In order to a contract to be considered unconscionable:

Answer 5

The terms of the contract must be so one-sided to shock the conscience.

Question 6

The counteroffer is a _________ of the original offer.

Answer 6

The counteroffer is a rejection of the original offer.

Question 7

Effect of a counteroffer

Answer 7

Terminates the original offer.
Acts as a rejection and creates a new offer.
(words as “would you consider” “would you be willing” this would be taking as an inquiry and not terminate the original offer)

Question 8

A contract for land needs only:

Answer 8

Price

Description of the land (address is also good).

Question 9

When a landowner breaches a building/construction contract after the building has begun (but before is completed), the builder is entitled to the:

Answer 9

Profits + costs.

Question 10

Bilateral contracts are characterized by:

Answer 10

Mutual promises of performance.

Question 11

Unilateral contracts are characterized by:

Answer 11

One promise and one performance.
Offer is made and acceptance can only occur not by a promise to perform BUT by the performance itself.
Once performance begins, the offeror can’t cancel the offer.
The person performance, needs to finish the performance.

Question 12

Statute of Frauds.

When certain contracts NEEDS to be in writing in order to be enforceable:

Answer 12

[MY LEGS]
Marriage
Year (more than one year contract)
Land
Executory 
Goods (of $500 or more)
Surety (promises to perform if the other dead person does not perform)

Question 13

Exception of the Surety provision of the Statute of Frauds (when there is no need to be in writing to be enforceable in respect of surety):

Answer 13

If we can show that the main purpose of the guarantor was to benefit themselves , can be enforced it if no writing.
(I promise to be your guarantor in the car loan if you lend my your new car)

Question 14

Mistake:
Defense of a contract.
Mutual mistake:

Answer 14

When both parties are mutually mistaken of the material facts of the contract, the main purpose of the contract, essence of the agreement, there are grounds of rescission

Question 15

Mistake:
Defense of a contract.
Unilateral mistake:

Answer 15

One party is mistaken of the terms, this would usually not prevent a contract formation.

HOWEVER, exception:
if the non-mistaken party, know or has reasons to know, of the other party mistake, can’t be permitted to take advantage of the mistaken party and enforce the contract.

Question 16

Modification of a Contract
Common law:
In order to have a valid modification you need

Answer 16

• new consideration in support of that modification because of the preexisting duty rule.
• Or, even without new consideration, as long is fair, equitable, and the need for the modification was not foreseeable at the time of the contract.

Question 17

Modification of a Contract
UCC rule (sell of goods): 
allows for valid modification as long is entered in

Answer 17

Good faith.

Question 18

The defense of no enforceable contract entered by a minor, would not apply if the contract between the minor and the other person was created by

Answer 18

Necessity.

medical attention, food, clothes, this are going to be enforceable

Question 19

Merchant’s confirmatory memo exception:
or
Merchant’s 10 day rule exception
(UCC)

Answer 19

Exception of the writing.
Oral contract for the sale of goods, which subsequently followed by a writing will be enforceable against the parties.
1. both parties must be merchants
If with reasonably time after entering into a ronal agreement, one merchant sends a communication confirming the terms of the oral agreement, and,
if the receipt merchant does not object of the contents of the writing within 10 days of receipt, the receipting merchant is bound as well.

Question 20

Third-party beneficiaries.
Intended 3rd party beneficiaries.
When the contract can be cancelled or modificated without the consent of this 3rd party beneficiary?

Answer 20

1. a K can be modified or cancelled without the consent of the intended 3rd party beneficiary if the rights has not being yet vested.
2. if the right have already were already vested, the third party needs to consent the modification of cancellation of the contract.

Question 21

Vest of benefits to an intended third party beneficiary can occur in 03 ways:

Answer 21

1. when the intended 3rd party learns of the contract and they assent to it. (learns + assent)
2. when the intended 3rd party learns of the contract and relies on it. (learns + relies)
3. when the intended 3rd party learns of the contract and brings an immediate lawsuit to protect the rights (learns + sue)

Question 22

Promissory estoppel

Elements:

Answer 22

1. Need a promise
2. Reasonable expectation of reliance of that promise.
3. Reliance itself.
4. the interest of justice requires enforcement of the promise.

Question 23

All contract are assignable
All contracts are delegable
Except:

Answer 23

Unique personal service contracts and long term requirement contracts.

Question 24

Valid assignments/delegations of contracts can be oral and ____

Answer 24

writing

Question 25

Assignments/delegations of contracts can be gratuitous or for value but

Answer 25

Gratuitous, are usually revocable

For value, irrevocable

Question 26

An accord is a new agreement between parties who are already

Answer 26

under contract between each other.
(the accord calls for a new type of performance, new type of obligation)
(example, creditor says to the debtor, don’t pay me the money, give me a watch instead)
Suspends the original agreement until the accord is satisfied, then the original agreement is still enforceable.

Question 27

Time-of-the-essence clause, if giving in the exam pattern is because

Answer 27

if is not performed on time, would be a breach!

Time-of-the-essence would be a material breach.