R5 Contracts

Question 1

Define: Express, implied and quasi-contract

Answer 1

• Express: is a contract formed by words (written or oral)
• Implied: is an agreement in which the parties’ assent is inferred from their conduct
• Quasi: is not a contract, but rather is a remedy to prevent unjust enrichment

Question 2

Name the 3 elements necessary for an enforceable contract

Answer 2

• An agreement made up of an offer and an acceptance
• An exchange of consideration (legal value)
• A lack of defenses

Question 3

The be enforceable, must a contract generally be in writing?

Answer 3

No, not required to be in writing unless the contract is within the Statue of Frauds MYLEGS

Question 4

Define the term “offer” and state its key requirements

Answer 4

An offer is a statement by the offeror that invites the offeree to form a contract. To be an offer:

• The offer must be seriously intended
• The terms must be definite and certain
• It must be communicated

Question 5

What is the general rule regarding the revocability of an offer by the offeror?

Answer 5

The general rule is that the offeror can revoke anytime before acceptance, even if the offeror promises to keep and offer open. There are exceptions for option contract, a substantial start on unilateral contract and a merchant’s firm offer.

Question 6

When is revocation of an offer effective?

Answer 6

When received by the offeree

Question 7

What are 3 exceptions on the offeror’s power to revoke?

Answer 7

• Option contract in which consideration is paid to keep the offer open or promise is exchanged
• Merchant’s firm offer under UCC
• Beginning performance of a unilateral contract

Question 8

What is an option?

Answer 8

A distinct contract in which the offeree gives consideration in exchange for the offeror’s promise to keep the offer open

Question 9

What is the mailbox rule?

Answer 9

An acceptance is effective to create a contract at the time of dispatch if a reasonable means of communication is used

Question 10

What are the two elements of consideration?

Answer 10

1. A bargained for exchange

2. Something of legal value

Question 11

In common law contracts what is required for modification of an existing contract between two parties?

Answer 11

Under common law a contract can be modified if both parties agree and give additional or different consideration

Question 12

Name a circumstance in which a promise will be enforced without consideration

Answer 12

Detrimental reliance/Promissory estoppel situation

When one party relied on the promise of the other party and did something substantial due to that promise

Question 13

Name some of the defenses available in determining whether a promise will be binding as a contract

Answer 13

Fraud
Statue of Limitations
Innocent Misrepresentation
Statue of Fraud
Duress
Impossibility
Undue Influence
Impracticability
Mutual Mistake 
Frustration of Purpose
Unilateral Mistake
Accord and Satisfaction
Illegality
Substituted Contract
Minority
Novation
Intoxication
Failure of Conditions
Insanity
Unconscionability

Question 14

What are the elements of fraud?

Answer 14

M - Misrepresentation of material fact
A - Actual and reasonable reliance in the misrepresentation
I - Intent to induce reliance
D - Damages
S - Scienter (intent to deceive) or with a reckless disregard of the truth (constructive fraud)

Question 15

Under the Statue of Frauds, what types of promises must be evidenced by a writing?

Answer 15

M - Marriage was a consideration
Y - Terms cannot be performed within a Year
L - Land or long-term leases of real estate
E - Executor’s promise to pay an estate debt out of personal funds
G - Sale of Goods for $500 or more
S - Surety a promise to pay the debt of another

Question 16

Does a contract for the sale of land for $200 need to be evidenced by a writing?

Answer 16

Yes, ALL contracts for the sale of land (regardless of dollar amount) must be evidenced by a writing signed by the party to be charged

Question 17

What is the parole evidence rule?

Answer 17

If the parties have entered into a full integrated written contract, prior or contemporaneous oral statements and prior written statements cannot be admitted into evidence to vary the written terms of the contract

Question 18

If a party to a contract commits and act that constitutes and anticipatory repudiation, what are the options of the non-repudiating party?

Answer 18

• Treat the repudiation as an immediate breach and sue for damages immediately
• Ignore the repudiation, await the time specified for performance, and sue if the repudiating party does not perform
• Cancel the contract

Question 19

In general, what is the goal of contract remedies?

Answer 19

Remedies are intended to put the non-breaching party in as good a position as he or she should have been had the other party performed as promised

Question 20

What are liquidated damages and are they enforceable?

Answer 20

A liquidated damage clause is a clause in a contract that specifies what damages will be if there is a breach (forfeiture of a down payment for breach). A liquidated damage clause in enforceable if the amount is reasonable in relation to the actual harm done and not a penalty.

Question 21

Distinguish between a creditor beneficiary and donee beneficiary

Answer 21

A creditor - is one to whom the promisee owes a debt

A donee - is on to whom the promisee wishes to give a gift or create a right

Question 22

What rights may not be assigned?

Answer 22

You cannot assign when the assignment will change the obligor’s risk or when the delegated duty involves a specialized personal service. Offers also cannot be assigned with the exception of option contract.

Question 23

What is void?

Answer 23

VOID - a contract is unenforceable by either party this includes:

• Fraud in execution
• Duress involving harm or threat by physical force
• Nonexisting subject matter
• Illegality of contract (no license to practice)
• After adjudicated mentally incompetent

Question 24

What is voidable?

Answer 24

VOIDABLE - a contract may be avoided at the option of the affected party this includes:

• Fraud in the inducement
• Duress involving harm or threat by economical/social
• Undue influence (taking advantage of position)
• Mutual Mistake
• Mental incompetence after the contract