Exam 2

Question 1

What are the elements of a Contract?

Answer 1

Agreement
Consideration
Contractual Capacity
Legality
Form

Question 2

What are the aspects of an Agreement?

Answer 2

Offer and Acceptance

Question 3

What makes an agreement valid?

Answer 3

Parties must show mutual assent to terms of contract

Question 4

Does an agreement need to be in writing?

Answer 4

Not always - No

Question 5

How is a valid contract formed?

Answer 5

Once an agreement is reach and other elements of a contract are present

Question 6

What are the requirements of an offer?

Answer 6

1- Offeror must have serious intention to be bound
2- Definiteness of terms, terms are reasonably certain
3- Communication to Offeree

Question 7

What makes a legally binding contract?

Answer 7

Offeree’s acceptance creates a legally binding contract

Question 8

What is Objective Theory of Contracts?

Answer 8

Contract is judged by what a “reasonable person” in the Offeree’s position would conclude about the offer

Question 9

When is an Offer not valid?

Answer 9

Offers made in anger, jest, or undue excitement are usually not offers

Expressions of opinion are not offers

Statements of future intentions

Preliminary negotiations, and agreements to agree, are not offers

Advertisements, catalogues, price lists, and circulars are not offers

Question 10

What is an example of an Expressions of Opinions?

Answer 10

The hand would probably heal in a few days

Question 11

What is an example of a Statements of Future Intentions?

Answer 11

I plan to sell my vacation home for $100,000

Question 12

What is an Invitation to submit a bid?

Answer 12

A preliminary negotiations, agreements to agree

Question 13

When will courts review an offer to see if a contract exists?

Answer 13

IF agreement on essential terms and no disputed issues remain to be resolved

Question 14

What are treated as invitations to negotiate and not contract offers?

Answer 14

Advertisements, catalogues, prices lists, circulars

Question 15

In what such instance can the Courts find an advertisement a valid offer? Example?

Answer 15

When it contains definite terms that invite acceptance

Example: Ad offering reward for return of a lost pet (unilateral contract)

Question 16

Are live and online auctions considered an offer?

Answer 16

No, but an invitation to submit offer through auctioneer (live) or to negotiate (online)

Question 17

When is an offer accepted in a live and online auctions?

Answer 17

When the auctioneer (offeree) strikes the hammer

Question 18

What is an agreement to agree (preliminary agreement)?

Answer 18

Agreement to agree to the material terms of a contract at a future date

Question 19

Are Preliminary Agreements binding?

Answer 19

No - not a binding contract

Question 20

What is the modern view on preliminary agreements?

Answer 20

Preliminary contracts may be enforceable if parties have agreed on
1- All essential terms
2- No disputed issues
3- Intended to be bound

Question 21

What are the terms of an offer to make it a definite contract?

Answer 21

Must have terms that are reasonably definite:
1- Identification of the parties
2- Object or subject matter of the contract
3- Consideration to be paid
4- Time of payment, Delivery, or Performance

Question 22

What are the two types of terms in an offer?

Answer 22

Expressed or Implied

Question 23

What can the Courts do when two parties clearly intended to form a contract?

Answer 23

A court can supply missing terms

Question 24

What are some ways an Offerer can communicate to the Offeree when it comes to an offer?

Answer 24

Communicate directly by the offerer

Communicate by the offeror to an agent of the offeree

Question 25

Prior to acceptance, when can an offer be terminated?

Answer 25

Action of the Parties
or
Operation of Law

Question 26

What is a revocation?

Answer 26

An offer, withdrawn by the offeror, at anytime before offeree accepts the offer

Question 27

How can a revocation happen?

Answer 27

By express repudiation

By performance of an act inconsistent with the existence of the offer

Question 28

When does a revocation become effective?

Answer 28

Effective when the Offeree or Offeree’s agent receives it.