exam 2 Flashcards
what is required to have a contract?
offer + acceptance = agreement + mutual exchange of consideration/promises = contract
what are the essential terms of an offer?
- identification of parties
- subject matter
- quantity
- consideration to be paid(price)
- time of performance
objective initiation
the offeror must objectively intend to be bound by the offer
are advertisements considered offers?
- 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
when can an offer be revoked?
before the offeree accepts it
what is the mirror image rule?
requires the offeree to accept the offer without modifications to any “material” terms in the offer
what is considered a material term?
any term in the offer that “matters” to one or both of the parties
how do you answer if the mirror image rule has been broken?
When purporting to accept the offeree changed a material term
what is the mailbox rule(for acceptance)?
The moment the acceptance is dispatched by placing it in the custody of the US postal service acceptance occurs (doesn’t apply to offers)
what are the main forms of consideration?
- payment(money or property)
- Performance of an act(e.g. Providing service)
- Promise to perform an act or pay money in the future
what are the elements of a “consideration”?
- there must be a bargained-for exchange
- the consideration must be legal
what is past consideration?
something that purports to have been a consideration, but was given in the past, prior to acceptance of the offer
how to answer if it is a contract?
- 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?
who does not have the contractural capacity to make an offer?
minors, intoxicated persons, and incompetent or insane persons
what is the statute of frauds?
State statutes that require certain types of contracts to be in writing in order to be enforceable
what contracts fall under the statute of frauds?
- 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
what is the one-year rule in the statute of frauds?
a contract that cannot be performed by its own terms within one year of its formation must be in writing
what is an expressed contract?
an agreement in which all the essential terms are present
what is an implied contract?
- 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
what are the typical instances where a contract will be implied?
- 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
what happens if the price term is missing?
the court may imply a reasonable price or normal rate
what is a quasi-contract?
- 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
what is promissory estoppel?
a doctrine in which the promisor is estopped(stopped) from denying the implied agreement resulting from the promise
what are the required elements that the court needs to find an “enforceable promise” under promissory estoppel?
- a promise
- reasonable expectation to induce reliance
- justifiable reliance on a promise
- Failure to enforce the promise would result in injustice
what does “reasonable expectation to induce reliance” mean?
- 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
what generally determines an injustice under promissory estoppel?
the promisee suffered a substantial economic loss from action or forbearance based on the promise
what is a breach of contract?
a contracting party fails to perform a duty owed under the contract
what is substantial performance?
Where one party fails to fully perform, but performance is sufficiently substantial to discharge the contractual obligation
what is the general rule of contract damages?
Place the injured party in the same position he would have been in if k had been fully performed
what are nominal damages?
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
what are compensatory damages?
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
what is the general formula for compensatory damages?
(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
what is the formula for compensatory damages for the sale of goods?
contract price - market price
what are consequential damages?
Indirect, but foreseeable damages that occur as a consequence of the breach of k
what is a common example of consequential damages?
results from a situation where the defendant’s breach of the k causes the plaintiff to suffer damages flowing from some secondary k
what are punitive damages?
- Awarded to punish the wrongdoers and deter similar conduct in the culture
- however, they are generally not recoverable from a contract breach
what is mitigation of damages?
Upon breach of k, the injured party must attempt to mitigate(reduce) the damages
what is a cover purchase?
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
who can accept an offer?
only the offeree
when must consideration be exchanged?
at the exact moment, the offer is accepted
what is illusionary consideration?
- 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”
what is sham consideration?
the value of the consideration is so low that it cannot have induced the offeree to make the deal
what needs to be in an answer involving compensatory damages?
“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”
