MBE Wrong Answer Choices: Contracts Flashcards
June 1: Homeowner sent a letter to a painter that stated, “I will pay you $8,000 for painting the exterior of my home, provided you commence painting by July 1 and finish by July 10.”
June 5: Painter replies “I am available to paint your house, but I cannot do the work for less than $10,000.”
June 10: Painter sends another letter: “I have changed my mind. I will do the work for $8,000. I will start on July 1 and finish painting before July 10 unless I hear from you differently.”
What is the relationship between the homeowner and the painter?
NO CONTRACT
June 5 response from painter is a counteroffer/rejection. Therefore, the June 10 communication is a new offer that requires new acceptance.
When is acceptance of an option contract effective?
Effective only when received by the offeror
The usual “mailbox rule” does not apply to make the acceptance effective on dispatch.
Dad offered his son, a senior in HS, $1,000 if he quit playing video games for the rest of the school year. The son agreed to quit that very day.
Mother later told the son: “Go ahead and quit-if your father won’t pay, I’ll see that you get the money he promised you from my own account.”
The son quit playing video games for the rest of the school year, but did not get paid. Can he recover from mother?
Contracts in which one party promises to pay the debt of another, such as this contract, must be in writing. Therefore, son cannot recover.
“Your offer to supply me with flour is hereby accepted, provided that you agree to a 10% discount if payment is made within 10 days from date of billing.”
Is this an acceptance under the UCC?
An acceptance containing additional or different terms is effective UNLESS the offeree expressly makes his acceptance conditional on assent by the offeror to the additional terms.
When an acceptance is made expressly conditional on the acceptance of new terms, it is a rejection of the offer. The conditional acceptance is essentially a new offer, and the original offeror may form a contract by expressly assenting to the new terms.
So NO it is not an acceptance
When does a 3P not need to consent to the modification of a contract?
When their rights VEST. The rights of the third-party beneficiary do not vest until:
(i) it manifests assent in a manner invited or requested by the parties;
(ii) it learns of the contract and detrimentally relies on it, or
(iii) it brings a lawsuit to enforce its rights. Until a third party’s rights have vested, a modification of the contract can take place without the consent of the third party.
Exceptions to the Parole Evidence Rule
Formation Defects (e.g., fraud, duress, mistake, and illegality) may be shown by extrinsic evidence.
Conditions Precedent to Effectiveness: If a party asserts that there was an oral agreement that the written contract would not become effective until a condition occurred, all evidence of the understanding may be offered and received.
Collateral Agreements/ Terms: A term would naturally be omitted if:
(1) it does not conflict with the written integration; and
(2) it concerns a subject that similarly situated parties would not ordinarily be expected to include in the written instrument.
Interpretation of uncertain or ambiguous terms
To show the “true consideration” paid (such as evidence that the consideration stated in the contract was never paid)
Facts entitling a party to reformation of the agreement (e.g., mistake)
Subsequent modifications of a written contract
UCC: A party can’t contradict a written contract BUT may add consistent additional terms, UNLESS: (1) there is a merger clause, or (2) the courts find from all of the circumstances that the writing was intended as
a complete and exclusive statement of the terms of the agreement.
UCC: A written contract may be explained or supplemented by extrinsic evidence of course of performance, course of dealing, and usage of trade—regardless of whether or not the writing appears to be ambiguous.
Anticipatory Repudiation vs. Expression of Doubt
Language may constitute an expression of doubt as to one’s ability to perform under the contract WITHOUT being an outright refusal. This will not be an anticipatory repudiation, but a prospective inability to perform.
If anticipatory repudiation, then nonbreaching party can:
(i) sue for damages,
(ii) contract with a third party, or
(iii) do nothing.
If the fact pattern language amounts to a prospective inability to perform, the innocent party may suspend performance until he receives adequate assurances that performance will be forthcoming.
