Formation of Contracts

Question 1

Implied-in-law Contract

Answer 1

Courts will construct an implied-in-law contract where P has conferred a benefit onto D without gratuitous intent and it would be unfair to let D retain the benefit without compensation to P

Question 2

Warranty of Merchantability

Answer 2

The Warranty of Merchantability is implied in UCC contracts. Conditioning an acceptance on the Warranty of Merchantability will not void offer.

Question 3

UCC Battle of the Forms Rule

Answer 3

An acceptance is effective even when it contains new terms. If both parties are merchants, the new terms become part of the contract unless:

1) offer expressly required assent to new terms,
2) offeror rejected in reasonable time, OR
3) the new terms materially alter the contract

Question 4

UCC - Filling the Gap

Answer 4

UCC fills the gap when certain terms are missing from a sale-of-goods contract.

Place of delivery: sellers place of business

Payment date: due at time/place of delivery

Question 5

Exclusive Dealing

Answer 5

Contracts for exclusive dealing in the type of goods concerned carry with them an implied obligation by the seller to use its best efforts to supply the goods and by the buyer to promote their sale

Question 6

Revocability of Offers

Answer 6

Offers are generally revocable except for:

Option contracts

UCC firm offers

Unilateral contracts

Question 7

Option Contracts

Answer 7

Option contracts stay open for a certain period of time in exchange for consideration. If there is no consideration, the offer is revocable.

Question 8

UCC Firm Offer

Answer 8

A firm offer is a promise to keep an offer open – requires a writing signed by merchant

Stays open for specified time OR 3 months (if there is no specified time – after 3 months offer is valid but revocable)

Question 9

Unilateral Contract

Answer 9

A unilateral contract is a promise in exchange for an act - becomes irrevocable once offeree begins to perform/act. Promise not due until performance complete

Question 10

Acceptance

Answer 10

An offeree may accept by any reasonable manner unless offeror specified a from of acceptance

Question 11

CL Mirror Image Rule

Answer 11

Acceptance must mirror offer – no additional or different terms allowed

Question 12

Mailbox Rule

Answer 12

Acceptance is effective on date its mailed out

UNLESS rejection is mailed out first – then the first letter to arrive controls

Question 13

UCC Acceptance

Answer 13

Offeree can accept in any reasonable manner as long as parties are on the same page

EXCEPTIONS:
1) offeree changes material terms,
2) offeror rejects changes in reasonable time
3) offer limits acceptance

Question 14

Consideration

Answer 14

Bargained for exchange between parties

Unique:
- promise to pay debt after bankruptcy
- promise not to sue

Question 15

What is NOT consideration?

Answer 15

1) illusory promise (“if I feel like it”)
2) promise to give a gift
3) past or moral consideration
4) promise to pay a debt thats barred by SOL

Question 16

Promissory Estoppel

Answer 16

Promissory estoppel is a promise that induces someone to rely on promise to their detriment

Once someone relies on promise, promisor cannot take it back

Question 17

Accord & Satisfaction

Answer 17

parties can agree to change terms of a deal or compromise – change is enforceable after parties settle on a change

if someone doubts a debt but pays SOMETHING anyway, that debt is satisfied