exam 2

Question 1

what is required to have a contract?

Answer 1

offer + acceptance = agreement + mutual exchange of consideration/promises = contract

Question 2

what are the essential terms of an offer?

Answer 2

• identification of parties
• subject matter
• quantity
• consideration to be paid(price)
• time of performance

Question 3

objective initiation

Answer 3

the offeror must objectively intend to be bound by the offer

Question 4

are advertisements considered offers?

Answer 4

• a general advertisement is deemed merely an invitation to negotiate
• however, an advertisement may constitute a binding offer if directed to a specific person or, if there is a language of commitment, or some invitation to take action without further communication

Question 5

when can an offer be revoked?

Answer 5

before the offeree accepts it

Question 6

what is the mirror image rule?

Answer 6

requires the offeree to accept the offer without modifications to any “material” terms in the offer

Question 7

what is considered a material term?

Answer 7

any term in the offer that “matters” to one or both of the parties

Question 8

how do you answer if the mirror image rule has been broken?

Answer 8

When purporting to accept the offeree changed a material term

Question 9

what is the mailbox rule(for acceptance)?

Answer 9

The moment the acceptance is dispatched by placing it in the custody of the US postal service acceptance occurs (doesn’t apply to offers)

Question 10

what are the main forms of consideration?

Answer 10

• payment(money or property)
• Performance of an act(e.g. Providing service)
• Promise to perform an act or pay money in the future

Question 11

what are the elements of a “consideration”?

Answer 11

• there must be a bargained-for exchange

- the consideration must be legal

Question 12

what is past consideration?

Answer 12

something that purports to have been a consideration, but was given in the past, prior to acceptance of the offer

Question 13

how to answer if it is a contract?

Answer 13

• talk about the offer, acceptance, which creates an agreement
• is there an exchange of consideration or exchange of promises?
• Capacity?
• Legal?
• Does it need to be in written form?

Question 14

who does not have the contractural capacity to make an offer?

Answer 14

minors, intoxicated persons, and incompetent or insane persons

Question 15

what is the statute of frauds?

Answer 15

State statutes that require certain types of contracts to be in writing in order to be enforceable

Question 16

what contracts fall under the statute of frauds?

Answer 16

• contracts involving land
• Contracts that cannot possibly be performed within one year
• Collateral contracts: a person promises to answer for the debt of another
• Promises made in consideration of marriage

Question 17

what is the one-year rule in the statute of frauds?

Answer 17

a contract that cannot be performed by its own terms within one year of its formation must be in writing

Question 18

what is an expressed contract?

Answer 18

an agreement in which all the essential terms are present

Question 19

what is an implied contract?

Answer 19

• a contract where an agreement between the parties is implied from conduct or actions
• usually after one party has already benefited
• Conduct of parties, rather than words, creates & defines at least some of the contract’s essential terms

Question 20

what are the typical instances where a contract will be implied?

Answer 20

• When someone has already benefited
• P furnished some service or property & expected to be paid
• D knew or should have known payment was expected and could have rejected the service or property

Question 21

what happens if the price term is missing?

Answer 21

the court may imply a reasonable price or normal rate

Question 22

what is a quasi-contract?

Answer 22

• A fiction imposed on parties by the court to avoid the unjust enrichment of one party at the expense of another
• only when the party who has been unjustly enriched would have been reasonably expected to perform the task

Question 23

what is promissory estoppel?

Answer 23

a doctrine in which the promisor is estopped(stopped) from denying the implied agreement resulting from the promise

Question 24

what are the required elements that the court needs to find an “enforceable promise” under promissory estoppel?

Answer 24

• a promise
• reasonable expectation to induce reliance
• justifiable reliance on a promise
• Failure to enforce the promise would result in injustice

Question 25

what does "reasonable expectation to induce reliance" mean?

Answer 25

- the promisor should reasonably expect the promise to induce “reliance” by the promisee - i.e. will cause the promisee to take some action or forbearance

Question 26

what generally determines an injustice under promissory estoppel?

Answer 26

the promisee suffered a substantial economic loss from action or forbearance based on the promise

Question 27

what is a breach of contract?

Answer 27

a contracting party fails to perform a duty owed under the contract

Question 28

what is substantial performance?

Answer 28

Where one party fails to fully perform, but performance is sufficiently substantial to discharge the contractual obligation

Question 29

what is the general rule of contract damages?

Answer 29

Place the injured party in the same position he would have been in if k had been fully performed

Question 30

what are nominal damages?

Answer 30

Upon finding of breach of k, awarded(in rare cases) to innocent party when no financial loss was suffered or where damages cannot be calculated

Question 31

what are compensatory damages?

Answer 31

Award of money intended to compensate for the loss of the bargain by placing the innocent party in the same position as if k had been fully performed

Question 32

what is the general formula for compensatory damages?

Answer 32

(breaching party’s promised performance - the value of actual performance) - any loss the injured party has avoided by not having to perform their part of the contract

Question 33

what is the formula for compensatory damages for the sale of goods?

Answer 33

contract price - market price

Question 34

what are consequential damages?

Answer 34

Indirect, but foreseeable damages that occur as a consequence of the breach of k

Question 35

what is a common example of consequential damages?

Answer 35

results from a situation where the defendant’s breach of the k causes the plaintiff to suffer damages flowing from some secondary k

Question 36

what are punitive damages?

Answer 36

- Awarded to punish the wrongdoers and deter similar conduct in the culture - however, they are generally not recoverable from a contract breach

Question 37

what is mitigation of damages?

Answer 37

Upon breach of k, the injured party must attempt to mitigate(reduce) the damages

Question 38

what is a cover purchase?

Answer 38

In certain situations, the injured party is expected to arrange a substitute transaction within a reasonable time after learning of the breach of k in order to mitigate damages

Question 39

who can accept an offer?

Answer 39

only the offeree

Question 40

when must consideration be exchanged?

Answer 40

at the exact moment, the offer is accepted

Question 41

what is illusionary consideration?

Answer 41

- 1 party makes a real promise, the other party uses an expression that seems to be a real promise/commitment but is not, since that promise really does not bind the party making the promise - e.x. promises to buy “as many as I need/want”

Question 42

what is sham consideration?

Answer 42

the value of the consideration is so low that it cannot have induced the offeree to make the deal

Question 43

what needs to be in an answer involving compensatory damages?

Answer 43

“to compensate the injured party for the loss of the deal” and “put the injured party in the position, she would have been in if the k had been fully performed”