M2-Contracts: Part 1 Flashcards
A contract generally must be supported by valid consideration. Valid consideration will be present if there is a bargained for exchange of something of legal value. If the act promised has already has been performed, the bargain elements fails. Thus, it is said that past consideration is no consideration. (true or false)
true
Advertisements are generally not offers, but invitations to negotiate. An advertisement is an offer only if it is a promise to perform a specific act conditioned upon acceptance. (true or false)
true
Example: If a new car dealer had stated in a commercial that they would sell 10 specifically identified cars for a specified price during the sale, the advertisement would be an offer.
Generally, under the mailbox rule, acceptance is effective when sent. However, an offeror may opt out of the mailbox rule by stating that the acceptance must be received by a certain date to be effective. (true or false)
true
Anything having legally recognized value can constitute consideration. If parties legitimately disagree as to the amount owed under their contract, a promise to compromise, such as the parties are doing here, has legal value and constitutes consideration since both parties are giving up the right to liquidate the dispute. (true or false)
true
Example: A debtor’s promise to pay $500 for a creditor’s promise to forgive the balance of a $600 disputed debt.
In order to form a contract, there must be at least an offer, an acceptance, and consideration. (true or false)
true
Example: Card’s communication is an offer. The stereo and the $250 would be the consideration for the contract here. But Card will not be bound until Bend accepts the offer.
An offer may be terminated by the offeror at any time unless the offeree gave consideration to keep the offer open. An offer is considered to be revoked if the offeree obtains information from a reliable source that the subject matter of the offer has been sold. (true or false)
true
To be sufficient to be an offer, the communication must create a reasonable expectation in the offeree that the offeror intends to make a contract. (true or false)
true
A unilateral contract is formed when a promise is made in exchange for an act. Consideration need not have monetary value to the promisor; a detriment to the promisee is sufficient. (true or false)
true
Under common law, if the offer does not state that acceptance is effective upon receipt and does not specify the means of acceptance, the offeree may invoke the “mailbox rule” and make the acceptance upon dispatch by using a reasonable means of acceptance. (true or false)
true
Consideration to be binding must be “legally sufficient.” (true or false)
true
Some of the more common examples of consideration include money, a promise, acting, not acting, etc.
There is NO requirement that:
- all consideration be payable in legal tender
- consideration has to be simultaneously paid and received (for example, consideration may be a promise to perform an act in the future)
- consideration has to have the same economic value
In a common law contract situation, such as the contract for the sale of real property, a communication will be effective as an acceptance only if it assents to each and every term of the offer (the mirror image rule). (true or false)
True
If a communication includes a term different from one in the offer, it constitutes a rejection of the offer and a counteroffer, which the original offeror may accept or reject.
Example:
Summers offered to sell the home to Fox for $150,000 and Fox agreed to buy it for $145,000. Thus, Fox’s communication is a counteroffer and a rejection of Summers’ offer. Summers did nothing to accept Fox’s counteroffer, thus no contract was formed.
The death of an offeror prior to acceptance terminates the offer by operation of law without notice to the offeree. (true or false)
true
To be a valid basis for a contract, an offer must state essential terms of the contract in a definite and certain way. At common law, the price is an essential contract term. (true or false)
true
Example: The proposed agreement here is for services (to fix a broken window) and so is governed by the common law. Thus, the contract here will fail for lack of the price term. Note that if this were treated as a contract for the sale of goods (e.g., a pane of glass), the contract would not fail; a reasonable price term would be implied by the Uniform Commercial Code Sales Article.
Generally speaking the statute of limitations commences on the date of the alleged breach. The Statute of limitations refers to the time period in which the case must be filed. The time period varies from state to state depending on the type of case. (true or false)
true
The running of the statute of limitations bars access to judicial remedies, i.e., it makes the contract unenforceable, but does not make the contract invalid or void in any way.
