Formation

Question 1

Define

contract

Answer 1

Legally enforceable agreement that contains the rights and responsibilities of the contracting parties.

Question 2

What are the types of law that govern contracts?

Answer 2

1. Common Law: employment contracts, personal service contracts
2. UCC Article II: anything moveable; tangible personal property
3. Mixed: When the contract deals with both services and good, predominant purpose of the contract reigns

Question 3

Elements needed to form a valid contract

Answer 3

1. Mutual assent (offer + acceptance);
2. Consideration (bargained for legal detriment); and
3. No defenses to formation

Question 4

Define

bilateral contract

Answer 4

Contract created by mutual promise of performance. The most common type of contract.

Ex. You agree to pay a certain amount of money in exchange for title of a home.

Question 5

Define

unilateral contract

Answer 5

Requires full performance as method of acceptance; binding once performing party begins performance

Question 6

Define

offer

Answer 6

1. An outward, objective manifestation of willingness to enter into a bargain;
2. That creates the power of acceptance in the offeree (i.e. nothing left to do except say “yes”)

Question 7

Under common law, what terms must be included in the offer?

Answer 7

1. Parties
2. Subject matter
3. Price
4. Quantity

Question 8

What terms are required for real estate K’s?

Answer 8

Description of the land and price terms

Question 9

What is the only essential term the UCC requires in a contract?

Answer 9

Quantity

⭐️ As long as parties intended to make K, UCC will supply gap fillers for missing terms

Question 10

What terms are required for a requirement or output contract?

Answer 10

Quantity expressed in terms such as “all” or “only” or “solely”

Question 11

Are advertisements offers?

Answer 11

No, unless they contain specific and detailed information as to the price, quantity, and who can accept

(Ex. “50 blazers for sale for $50 for law students who passed the bar)

Question 12

Are rewards offers?

Answer 12

Yes, because they generally offer money in exchange for performance of a specified task

Question 13

How can an offer be terminated?

Answer 13

1. Counter-offer;
2. Death;
3. Incapacity
4. Lapse;
5. Rejection; or
6. Revocation

Question 14

When can an offer be terminated?

Answer 14

Any time before acceptance

Question 15

What types of offers are irrevocable?

Answer 15

1. Option contracts;
2. Firm offers;
3. When there is detrimental reliance;
4. When offeree has started performance on a unilateral contract

Question 16

Define

option contracts operate to:

Answer 16

Make an offer irrevocable if:

1. Offeror promised to keep offer open for a specific period of time; and
2. Promise was supported by consideration

Question 17

Define

firm offer

Answer 17

Offer that is irrevocable (for a maximum of 3 months) under the UCC as long as:

1. Offeror is a merchant;
2. Offer is signed, in writing; and
3. Expressly provides that the offer will be held open

Question 18

Does the offeree need to know about the offer to accept?

Answer 18

Yes, otherwise no power of acceptance was created

Question 19

Who prescribes the method by which the offer can be accepted?

Answer 19

Offeror.

If no method specified, can be accepted by any reasonable method.

Question 20

Where can I find key Brainscape advice on passing the bar exam and overcoming common challenges?

Answer 20

Brainscape Law Academy

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• Our best tips on studying efficiently for the bar exam
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Question 21

How does one accept a unilateral contract?

Answer 21

1. Full performance; and
2. Notice to offeror that you accepted within a reasonable time frame after performance starts

⚠️ Note: partial performance does not constitute acceptance (but you may still be able to argue detrimental reliance or quasi-contract)

Question 22

What does a counteroffer function as?

Answer 22

rejection + new offer

Question 23

Define

mirror image rule

(common law)

Answer 23

Acceptance must be a mirror image of every single term of the offer.

If any part of the terms are different, it will function as a counter-offer and rejection.

Question 24

Under UCC §2-207, what happens if an acceptance contains “additional or different” terms from the original offer if both parties are merchants?

Answer 24

The terms will automatically become part of the contract, unless:

• the terms materially change the contract;
• the offeror has already objected to the additional terms, or objects within a reasonable time frame; or
• the offer was explicitly limited to the original terms

Question 25

Under **UCC §2-207**, what happens if an acceptance contains "**additional or different**" terms from the original offer if both parties are **NOT merchants**?

Answer 25

Additional terms are **not incorporated**, but the acceptance is still valid

Question 26

How does a merchant **accept** an offer to buy goods?

Answer 26

1. **Promise** to ship the goods; or 2. **Shipping** the goods within a reasonable time period

Question 27

Does shipment of **nonconforming goods** qualify as acceptance?

Answer 27

**Yes**, but also constitutes **breach**

Question 28

What is the UCC **knock-out rule**? (majority approach)

Answer 28

If one term conflicts with another in the contract, they will **"knock" each other out** and a **UCC gap filler** will used instead.

Question 29

What is the **mailbox rule**?

Answer 29

Acceptance is effective upon **DISPATCH**

Question 30

Does the mailbox rule still apply **if the offer says otherwise**?

Answer 30

**No**, the offer controls

Question 31

What happens if both an **acceptance and rejection** are sent by the offeree when the: 1. Rejection is sent first? 2. Acceptance is sent first?

Answer 31

1. Rejection is sent first: Acceptance will be **effective if received BEFORE** the rejection 2. Acceptance is sent first: Acceptance **effective upon dispatch** (regardless of whether rejection is received before)

Question 32

When is acceptance of an **option contract** effective?

Answer 32

Upon receipt by offeror.

Question 33

If an offeree **reasonably knows or suspects** that an offer was **mistaken**, can they still accept the offer?

Answer 33

**No.** ## Footnote (Ex. If Max knew that he was supposed to get an offer for 500 toys at $5 a piece, but instead receives an offer for 500 at $0.05 a piece, he cannot grab the offer).

Question 34

# Define consideration

Answer 34

1. **Detriment to promisee** (promisee forgoes something of value); or 2. **Bargained-for exchange** (must not be nominal)

Question 35

What qualifies as a **legal detriment**?

Answer 35

1. **Doing** something you are **not legally obligated to do**; or 2. **Refraining** from doing something you are **legally entitled to do**

Question 36

Do **gifts** qualify as consideration?

Answer 36

Generally **no**, unless: 1. Giver knows gift will induce **substantial reliance**; and 2. Failure to uphold promise will cause **injustice**

Question 37

# Define illusory promise

Answer 37

Promise that **doesn't obligate** the promisee to anything, and therefore doesn't qualify for consideration

Question 38

What is the **pre-existing duty** rule?

Answer 38

Promises to satisfy a **pre-existing duty** (e.g. pay a past debt or perform a prior duty) does **not** constitute consideration

Question 39

What are **exceptions** to the **pre-existing duty** rule?

Answer 39

1. **Mutual modification** (ex. promise to pay more $$ for different performance) 2. **Unforeseen circumstances** that render performance substantially more burdensome than was reasonably anticipated; 3. **Valid defense** to K formation (voidable obligation); 4. **Third party** offers a promise contingent upon performance of a contractual obligation by a party; 5. **Honest dispute** as to duty; 6. Modification of K for the **sale of goods**

Question 40

Where can I **watch a video** or **listen to a podcast** of these bar prep questions?

Answer 40

[Brainscape's "Hands-free" Bar Prep YouTube playlist](https://www.youtube.com/watch?v=16iLSk4leLM&list=PLnnMeFOl2XiVey4fhTQYcxA8yQB8W0Ohp) [Brainscape's "Hands-free" Bar Prep Podcast](https://www.brainscape.com/academy/best-podcast-law-students/) | Rate this card a five if you don't need to see it again.

Question 41

Does the **UCC** follow the **pre-existing duty** rule?

Answer 41

**No**, modifications do not require new consideration as long as they were made in **good faith** ## Footnote [UCC § 2-209(1)](https://www.law.cornell.edu/ucc/2/2-209)

Question 42

What types of agreements are enforceable **without consideration**?

Answer 42

1. Payment of past debts; 2. Promissory Estoppel; and 3. Firm offers Note: Option contracts are sometimes enforceable without consideration

Question 43

Is **consideration** required to modify a contract under common law?

Answer 43

Yes, unless: 1. New obligations on both sides; or 2. Existence of circumstances unforeseen by either party

Question 44

True or False: When modifying a contract, **assuming even the smallest additional or different duties** counts as consideration

Answer 44

True

Question 45

Does the **UCC** require consideration for modification?

Answer 45

No, as long as both parties are acting in **good faith**

Question 46

Under the UCC, what is a **bad-faith** modification?

Answer 46

One that attempts to **extort** another party

Question 47

Does putting up an item for **auction** constitute an offer?

Answer 47

No

Question 48

When can an auctioneer **withdraw goods** from the auction after bidding has started?

Answer 48

In an auction **with reserve,** the auctioneer may withdraw the goods at any time until he announces completion of the sale. In an auction **without reserve**, after the auctioneer calls for bids on an article or lot, that article or lot can be withdrawn **only if no bid is made within a reasonable time**. ## Footnote [UCC § 2-328(3)](https://www.law.cornell.edu/ucc/2/2-328)