Formation

Question 1

Offer

Answer 1

1) Manifestation of an intention to contract which can be either words or conduct showing commitment.
2) Would a reasonable person believe that his or her assent creates a contract?

Question 2

Missing Price in offer

Answer 2

1) Ok under UCC, “gap filler” will allow court to provide a reasonable price for the goods
2) voids a land contract, price and description required under SOF

Question 3

Vague or Ambiguous Material Term of price in Offer

Answer 3

Not an offer under either UCC or CL: court will not fill in price terms that the parties attempted and fail to contract for
“reasonable”, “appropriate”, “fair”

Question 4

Requirements Contracts: generally

Answer 4

UCC: A contract for the sale of goods can state the quantity of goods to be delivered under the K in terms of the buyers requirements or seller’s output or in terms of exclusivity

Question 5

Requirements Contracts: not unreasonably disproportionate limitation on increases

Answer 5

Buyer may increase requirements so long as the increase is in line with prior demands

Question 6

Advertisement

Answer 6

Not an offer unless

1) reward
2) specific as to quantity and expressly indicates who can accept

Question 7

Termination of Offer

Answer 7

1) Lapse of time
2) Revocation by offeror
3) Rejection by offeree
4) Death of party prior to acceptance

Question 8

Offer Revocation

Answer 8

Generally offers may be freely revoked until accepted.
1) unambiguous statement by offeror to offeree of unwillingness or inability to contract OR
2) unambiguous conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of
Timing: NO MAILBOX RULE, only effective when received

Question 9

Offer Revocation: exceptions

Answer 9

1) option contract: where offeror has (a) promised to keep offer open AND (b) the promise is supported by consideration
2) Merchant firm offer rule (UCC): (a) 3 month time limit, (b) offer buy or sell goods, (c) signed, (d) written promise to keep the offer open, (e) party is a merchant
3) Reliance: offer cannot be revoked if there has been detrimental reliance by the offeree that is reasonably foreseeable
4) Start of performance of a unilateral contract: Brooklyn Bridge (mere preparation not enough)

Question 10

Offer rejection

Answer 10

Words or conduct by offeree –> Don’t mess with stuff that is dead
1) counteroffer: terminates the offer and becomes a new offer, distinguish from bargaining
2) conditional acceptance: terminates the offer and becomes a new offer, “if”, “but”, “provided”, “so long as”, “on condition that”
3) additional terms (common law only): mirror image rule, an acceptance that adds new terms is treated like a counteroffer
BUT: under UCC additional terms are ok so long as they are not material

Question 11

Additional Terms: acceptance under UCC

Answer 11

1) response to an offer that adds new terms is generally treated as an acceptance BUT they cannot show conditional acceptance
2) if both parties merchants, generally the additional term is a part of the agreement
3) EXCEPTIONS:
(a) additional term is not part of the contract between merchants if it materially changes the offer
(b) additional term is not part of the contract between merchants if the offeror objects to the change
4) If one or both parties are not merchants, then the additional term is merely a proposal that i to be separately accepted or rejected

Question 12

Lapse of Time: Offers

Answer 12

1) Time stated or reasonable under the facts and circumstances
2) If too long offer is dead

Question 13

Death of a Party Prior to Acceptance

Answer 13

Generally, death or incapacity of either party terminates the offer
EXCEPTIONS:
1) option contract
2) part performance of offer to enter into a unilateral contract

Question 14

Who can accept an offer

Answer 14

1) person who knows about the offer
2) the person to whom it was made
NOTE: offers cannot be assigned but options can be unless otherwise noted

Question 15

Acceptance: performance by offeree

Answer 15

This will generally always be an acceptance of both bilateral and unilateral contracts.
Notice of performance is required when
1) offer provides for it
2) when offeree has reason to believe that offeror will not learn of the acceptance

Question 16

Acceptance: part performance by offeree

Answer 16

Start of performance is an acceptance of an offer to enter into a bilateral contract.
BUT it is not acceptance to enter into a unilateral contract because they require full performance.

Question 17

Acceptance: Offeree promises to perform

Answer 17

1) Most offers may be accepted by a promise to perform

2) Except for offers that expressly require performance or reward offers

Question 18

Acceptance: Offeror and Offeree are at different places and there are conflicting communications

Answer 18

1) Mailbox rule: acceptances are valid when put in the mail with the correct address and postage
2) Three rules:
(a) communications are effective only when received
(b) acceptance is effective when sent
(c) if rejection is sent first, ignore rule (b)

Question 19

Acceptance: Seller of Goods sends “wrong goods”

Answer 19

1) General rule: acceptance and breach

2) Accommodation Exception: Counteroffer and no breach when goods are sent with letter of explanation

Question 20

Acceptance: Offeree is silent

Answer 20

1) Generally, silence is not acceptance
2) EXCEPTIONS:
(a) custom indicates silent acceptance is reasonable
(b) offeree by words or conduct agrees that silence is acceptance then silence is acceptance

Question 21

Modification

Answer 21

1) Common law: need consideration (preexisting legal duty rule)
2) UCC: good faith test
3) Common law: contract provisions requiring all modifications to be in writing should be ignored
4) UCC: contract provisions requiring written modifications are effective unless waived

Question 22

Lack of Capacity

Answer 22

1) infant under 18
2) mental incompetents: lack ability to understand agreement,
3) intoxicated persons if the other party has reason to know of the intoxication

Question 23

Void/Voidable from lack of capacity

Answer 23

1) person without capacity has right to disaffirm
2) affirmation is implied when retains benefits after reaching capacity
3) liability for necessaries: person without capacity is legally obligated to pay for things that are necessary such as food, clothing, medical care or shelter but that liability is based on quasi-contract law instead of contract law

Question 24

Statute of Frauds: when applies

Answer 24

MYLEGS

1) Promise in consideration of marriage: not merely a promise to marry but a promise to do something/or not do something if marry
2) Service contract not capable of being performed within 1 year from the time of the contract (does not include lifetime contract b/c could die)
3) Transfer of interest in Land for more than 1 year
4) Promise by executor or administrator to pay obligation of estate from own funds: cannot be out of estate’s funds
5) Sale of goods $500 or >
6) Surety: promise to pay the debt of another
(a) Main purpose exception: when the promise had to do with the main purpose of the contract, think owner of house telling painter she will pay for paint

Question 25

Statute of Frauds: satisfaction by performance, services and land

Answer 25

1) Services: full performance by either party, partial performance is not enough
2) Land: part performance by buyer of real estate can satisfy the statute, need 2 of the following 3
(a) payment in full or close to full
(b) possession
(c) improvements

Question 26

Statute of Frauds: satisfaction by writing

Answer 26

1) Common law: all material terms test (who and what) and must be signed by the person to be charged (D)
2) UCC: writing must contain quantity term (how many) and signed by D
3) Merchant Confirmatory Memo rule: both parties must be merchants, and the person who receives a signed writing with a quantity term that claims there is a contract fails to respond within 10 days

Question 27

Statute of Frauds: satisfaction by Judicial admission

Answer 27

1) admission by D acknowledging the agreement

2) appeared in pleadings, testimony, response to discovery

Question 28

Statute of Frauds: Equal dignity rule

Answer 28

When authorizing a person to execute a contract for you, the authorization must be in writing if the contract to be signed is within the SOF

Question 29

Statute of Frauds: Modification

Answer 29

If the modified deal falls under the SOF, then the modification must be in writing

Question 30

Subject Matter illegal

Answer 30

Contract is void

Question 31

Purpose is illegal

Answer 31

agreement only enforceable by the person who didn’t know of the illegal purpose

Question 32

Misrepresentation

Answer 32

1) false assertion of fact
2) concealment of facts
3) no requirement of fraud

Question 33

Economic Duress

Answer 33

1) improper threat

2) V has no reasonable alternative

Question 34

Unconscionability

Answer 34

1) applicable to both common law and UCC
2) empowers a court to refuse to enforce all or part of an agreement
3) unfair surprise and oppressive terms when contract was made
4) decided as a matter of law by court, not jury

Question 35

Ambiguity in words of agreement

Answer 35

NO Contract if:

1) parties use a material term that is open to at least two reasonable interpretations
2) each party attaches different meaning to the term
3) neither party knows or has reason to know the term is open to at least two reasonable interpretations

Question 36

Mutual mistake of material fact

Answer 36

NO contract if:
1) both parties are mistaken
2) on a basic assumption of fact and
3) the fact materially affects the agreed exchange
NOTE: value not considered enough, because not an assumption of fact

Question 37

Unilateral Mistake of material fact

Answer 37

1) Generally courts reluctant to allow a party to avoid a contract for a mistake made by only one party
2) EXCEPTION: palpable or obvious mistakes, if the other party to the contract knows or should have known of the mistake, courts grant relief to the mistaken party
3) EXCEPTION: mistakes discovered before significant reliance by the other party

Question 38

Statute of Frauds: satisfaction by performance, goods

Answer 38

1) Goods: generally part performance of a contract satisfies the SOF but only to the extent of the part performed
2) Specially Manufactured goods exception: if a contract is for the sale of goods that are to be specially manufactured, then the SOF is satisfied as soon as the seller makes a “substantial beginning” of making or obtaining the goods.