Quiz 4

Question 1

When is an offer
Made 
Accepted 
Rejected 
Revoked 
Counter offered

Answer 1

Made: by Offeror when sent to Offeree

Accepted: By Offeree when sent to Offeror

Rejected: by Offeree when offer is received

Revoked: by Offeror when offer is received

Counter offered: by Offeree when offer is received

Question 2

Fraud

Answer 2

Innocent party induced to enter a contract by misrepresentation

Elements: 
Misrepresentation of a material fact 
Intent to deceive 
Innocent party justifiably relies 
Innocent party harmed in a real way

Question 3

Undue Influence

Answer 3

Arises from relationships where one party can greatly influence another, taking their free will

Contract lacks voluntary consent and is voidable

Question 4

Duress

Answer 4

Party who enters into a contract under fear/threat

Contract voidable

Threatened act must be wrongful/illegal and take their free will

Question 5

Unconscionability

Answer 5

Contract’s terms are so oppressive that they can’t be enforced

Question 6

Contract discharged by:

Rescission

Answer 6

Parties agree to cancel the contract

Parties return to pre-contract position

Question 7

Contract discharged by:

Novation

Answer 7

New third party replaces one of the original contracting parties

Question 8

Contract discharged by:

Settlement Agreement

Answer 8

Compromise arises out of a genuine dispute over obligations

Recognized as law

Question 9

Contract discharged by:

Accord and Satisfaction

Answer 9

Parties agree to accept different performance than what was originally agreed upon

Question 10

Impossibility of Performance

Answer 10

One of the parties to the contract dies/becomes incapacitated or,

Specific subject matter of contract is destroyed or,

When a change in law renders performance illegal

Question 11

Commercial Impracticability

Answer 11

Parties excused from performance if it becomes a lot more difficult or expensive than originally expected

Question 12

Frustration of Purpose

Answer 12

Contract discharged if supervening circumstances make it impossible to do what both parties had in mind when they made the contract

Question 13

When is a contract subject to a condition?

Answer 13

Condition: qualification in a contract based on a future event

If condition isn’t satisfied, obligations of the parties are discharged

(Think about buying a house with a loan)

Question 14

Three levels of performance of a contract

Answer 14

Complete: parties performed exactly as agreed, conditions satisfied

Substantial: party in good faith performs substantially all the terms, contract enforced as long as the non-breaching party received substantially the same benefits
(think about the finishes for a remodel)

Material Breach: performance not substantial

Question 15

When is a contract void vs voidable?

Answer 15

Void: contract with no legal or binding effect (illegal contract)

Voidable: valid contract that can be legally avoided, cancelled or annulled

Mistake of fact occurs, parties have different understandings of facts related to performance

Undue influence or duress occurs

Question 16

Bilateral vs Unilateral contract

Answer 16

Bilateral: Offeree accepts by promising to perform
(Promise for return promise)

Unilateral: Offeree can only accept the offer by doing the act required
(Promise for performance)

Question 17

When does the Statute of Frauds apply?
(Contracts under this have to be signed in writing)
5 things

Answer 17

Contracts involving land

Contracts that can’t be performed within one year

Collateral contracts (like promises to guarantee another’s debt)

Promises made in consideration of marriage

Contracts for the sale of goods over $500

Question 18

When does Promissory Estoppel apply?

5 items

Answer 18

Promissory estoppel: opposite of statute of frauds, bounding even without a binding contract

Clear and definite promise made

Promisee relies on promise

Promisee relied by acting or refraining from acting on something

Promisee’s reliance resulted in substantial detriment

Justice served by enforcing promise

Question 19

Online offer should include:

7 things

Answer 19

Acceptance of terms

Payment

Return policy

Disclaimers

Limitations on Remedies

Privacy Policy

Dispute resolution

Question 20

Identify an
Assignment
Delegation
Third-party beneficiary contract

These are all for when a third party has rights under a contract

Answer 20

Assignment: Rights to be received under the contract to another

Delegation: Duties owned under a contract to another to perform

Third Party Beneficiary: parties to a contract intend for the contract to benefit a third party

Question 21

Compensatory Damages

Answer 21

Compensate for the loss of the bargain

Difference between contract price and price paid

Question 22

Incidental Damages

Answer 22

Expenses incurred to obtain performance from another source

Awarded in addition to compensatory damages

Question 23

Consequential Damages

Answer 23

Lost profits that were foreseeable at the time of contracting

Question 24

Punitive Damages

Answer 24

Awarded to punish/deter future bad conduct

Not usually available for mere breach of contract

Question 25

Nominal damages

Answer 25

Only awarded when parry suffered no financial loss

no other damages available

Question 26

Mitigation of Damages

Answer 26

Innocent party’s duty to reduce the damages they suffered

Think about the tenant leaving before the lease is up. Landlord still needs to look for new tenant

Question 27

Liquidated Damages

Answer 27

Specific amount agreed to be paid as damages when the contract was made in case of a breach

Question 28

Penalties

Answer 28

Designed to penalize

Usually unenforceable

Liquidated damages that are excessive are deemed penalties

Question 29

Equitable Remedies

4 total

Answer 29

Rescission: Cancellation of a contract in order to return the parties to their pre-contract position

Restitution: Returning of goods, property or funds previously conveyed

Specific Performance: Calls for performance of the act promised
only awarded when subject matter is unique
not rewarded for personal service contracts

Reformation: allows a contract to be rewritten (reformed) to reflect the parties’ true intentions