Contracts Set 1

Question 1

When is there an offer?

Was a manufacturer’s letter an offer?

Answer 1

Offer must create a reasonable expectation in the offeree that offeror is willing to enter K on the basis of the terms offered.

• Advertisements nor Catalogs ≠ Terms,

However, here, in this case, the catalog was accompanied by letter with specific terms attached.

Question 2

Breach Remedies/
Damanges

Theory of Remedies for Contracts

Answer 2

• GENERALLY SPEAKING:
Contract theory ≠ punishment, but …

K theory = putting the nonbreaching party in as good of a situation as if other party had not breached.

• Wholesaler is entitled to recover the incidental damages PLUS difference between K price and Salvage Price.

Question 3

Anticipatory Breach

Answer 3

Anticipatory Breach/Renunciation:

Where a promisor prior to the time set for performance indicates that they will not perform: Anticipatory renunciation = Excuse from performance if

• *1)** There is a bilateral K between the parties and
• *2)** There are EXECUTORY duties left to be performed on both sides.
• *3)** Words or Conduct of a promisor unequivocally indicate she cannot or will not perform

• Anticipatory Breach means that the non-renuncing party can sue immediately in anticipation of breach.

Question 4

Breach Remedies/Damanges

Incedental Damages

Answer 4

Incidental damages

Are allowed. But for case where there is no added production batches, NO Lost Profits are allowed.

Question 5

Unilateral Mistake of Contract

Answer 5

**Rule: ** K will not be voided by unilateral mistake

• _Exception: _*
• *Where non mistaken party, knew or should have known of the mistake**

•Consideration not required for a contract modification for fixing an error/mistake

PER - (Perol Evidence Rule)**: **

•PER prevents introduction of Evidence of Oral statements made prior to or contemporaneously with a written K.

•PER DOES NOT prevent evidence of subsequent oral statement made after contract formation

Question 6

PER - Perol Evidence Rule:

Answer 6

PER - (Perol Evidence Rule):

• PER prevents introduction of Evidence of Oral statements made prior to or contemporaneously with a written K.
• PER DOES NOT prevent evidence of subsequent oral statement made after contract formation

Question 7

Liquidated Damages

Answer 7

Liquidated Damages

• The purpose of K damages is to put the non-breaching party in as good of position as they would be if other party had not breached.
• Liquidated Damage clauses is enforceable only if damages are difficult to estimate at the time of K formation and is reasonable.

Question 8

Specific Performance in Service contracts

where and how is specific performance for service contracts applied/allowed?

Answer 8

Specific Performance in Service contracts Not allowed.

Question 9

Counter Offers: General Contractors versus Sub Contractors

General Rule regarding when and who controls the creation of a contract between bids by Contractor and Sub-Contractors.

Answer 9

General Rule:

Step1 • The General Contractor Puts forth an invitation for Sub-Contractors to bid (so, no K yet)

Step 2 • Sub-Contractor puts for a Bid, which represents an offer. So, No K yet!

Step 3 • The General Contractor must specifically accept the bid for their to be an offer. (they must also recognize that there is no

Here the Contractor’s phone call = Rejection and Counter offer.