Themis Essay - Contracts

Question 1

Formation of K Checklist

Answer 1

a. Offer
▪
Unilateral/Bilateral
▪
Irrevocable Offers
▪
Termination of Offer
*
Revocation of Offer
*
Rejection by Offeree
*Counteroffer by Offeree
*Lapse of Time
*Death

b. Acceptance
▪Unilateral/Bilateral
▪
Manner of Acceptance
▪
Counteroffer & Mirror Image Rule
▪Mailbox Rule

c. Consideration
▪Legal Detriment
▪
Adequacy of Consideration
▪
Gifts
▪
Preexisting Duty Rule
▪
Past Consideration
▪Promissory Estoppel (Consideration Substitute)

d. Defenses to Formation & Enforcement
1) Formation
*
Mistake – Mutual & Unilateral
*
Misrepresentation
*
Duress
*
Capacity
2) Enforcement
*
Illegality
*
Unconscionability
*
Statute of Frauds
o
Exceptions

Question 2

Terms of the Contract Checklist

Answer 2

o
Modification – UCC/CL
o
Parol Evidence Rule
▪
Exceptions
*
Ambiguity
*
Collateral Deal
*
Condition Precedent

Question 3

Performance of the Contract Checklist

Answer 3

o
Conditions
▪
Express/Implied
▪
Satisfaction
▪
Excuse of Conditions
*
Waiver
*
Wrongful Interference
*
Estoppel

o
Discharge of Duty to Perform
▪
Impracticability
▪
Impossibility
▪
Frustration of Purpose

o
Express and Implied Warranties, Sale of Goods Contracts

Question 4

Breach of Contract Checklist

Answer 4

o
Anticipatory Breach/Repudiation
▪
UCC Request Assurances
o
Material Breach
o
Minor Breach
o
UCC
o
Perfect Tender
o
Right to Cure
o
Method of Tender: Free on Board, “F.O.B.”

Question 5

Remedies Checklist

Answer 5

Legal Remedies
▪Expectation Damages
*Partial Performance

▪Consequential Damages
*Foreseeability
*Causation
*Certainty
▪Incidental Damages
▪Mitigating Damages
*Cost of Cover

Equitable Remedies
▪Reliance Damages
▪Quasi-Contract
▪Restitution Damages
▪Specific Performance
*Laches
*Unclean Hands

c. UCC Remedies
▪Limitation of Remedies
▪Risk of Loss

Question 6

Applicable Law

Answer 6

Exam Tip 1: Always start by discussing the applicable law in the question.

*The UCC governs all contracts involving the sale of goods, and common-law rules govern contracts involving services.

*Mixed contract: When a contract includes both goods and services, whichever one predominates will determine the governing law.

Exam Tip 2: Look for facts in the question that involve both goods and services. Explain why the UCC and the common law (CL) could both apply, then determine whether the goods or services are the main point (i.e., predominate purpose) of the contract.

*Merchants: Special rules apply to merchants under the UCC. A merchant includes not only a person who regularly deals in the type of goods involved in the transaction, but also any businessperson when the transaction is of a commercial nature.

Question 7

Offer

Answer 7

Exam Tip 4: If the question is testing formation of contract, you should discuss each potential offer in chronological order until you find the actual offer. Do not omit the analysis of potential offers!
▪
An offer requires a promise, terms, and communication to the offeree.

Question 8

Promise

Answer 8

a statement indicating a present intent to enter into a contract

Question 9

Terms

Answer 9

▪
CL—all essential terms must be provided (parties, subject matter, price, quantity).
▪
UCC—the essential terms are the parties, subject matter, and quantity. A court will “gap fill” any other missing terms.

Question 10

Communication

Answer 10

The offer must be communicated to the offeree (offeree must know of the offer).

Exam Tip 5: Advertisements are generally not offers unless they are specific and limit who may accept the offer. If an ad is presented in the facts, discuss it as a potential offer.

Question 11

Unilateral and bilateral offers

Answer 11

Exam Tip 6: After you find the actual offer, discuss whether the offer is for a bilateral or unilateral contract. Most offers on the essay exam are bilateral.

▪
Bilateral contract—parties exchange promises. Can be accepted by a promise OR by the beginning of performance.
▪
Unilateral contract—the offeror makes a promise, and the offeree must perform. Can only be accepted by complete performance.

Question 12

Irrevocable offers

Answer 12

▪
Offers are generally revocable. However, an offer can be irrevocable under certain circumstances.
▪
Common law—Option Contract: An offer where the offeror promises to hold the offer open for a certain period of time. The offeree must pay consideration to the offeror to hold the offer open.
▪
UCC—Merchant’s Firm Offer: An offer in writing where the offeror (must be a merchant) promises to hold the offer open for a certain period of time (cannot exceed 90 days). No consideration is required.

Question 13

Termination of Offer

Answer 13

Exam Tip 7: Offers can be terminated in various ways; be sure to discuss all possible theories (based on the facts) for termination of the offer.

a. Revocation of offer
▪Offer can be terminated if the offeror revokes the offer prior to acceptance.
▪Effective when received (e.g., a mailed revocation not effective until received).
▪Offers can be irrevocable in certain circumstances:

*Option/firm offer
*Unilateral contract: If the offeree has started to perform in a unilateral contract, the offeror cannot revoke the offer (offeree must be given a chance to complete the performance)

Question 14

Rejection

Answer 14

b. Rejection: If the offeree rejects the offer, it will be terminated.

Question 15

Counteroffer

Answer 15

If the offeree counteroffers, the original offer will be deemed to be terminated. A “mere suggestion” of a different term or a “mere inquiry” about changing the terms is not a counteroffer and will not terminate the original offer.

Question 16

Lapse of Time

Answer 16

If an offer is not accepted within a reasonable amount of time, it will be deemed to be terminated.

Question 17

Death

Answer 17

If the offeror dies before the offer is accepted, the offer will be terminated.

Question 18

Acceptance

Answer 18

o
Acceptance is the objective manifestation by the offeree to be bound by the terms of the offer.

Question 19

Bilateral or unilateral contract

Answer 19

a. Bilateral or unilateral contract
▪
A bilateral contract can be accepted by a promise OR by the beginning of performance.
▪
A unilateral contract can only be accepted by complete performance.

Question 20

Manner of acceptance

Answer 20

▪
Any reasonable means of acceptance is allowed unless the offer limits the means of acceptance.
▪
Silence is generally not acceptance, unless the offeree has reason to believe that silence will constitute an acceptance.

Question 21

Counteroffers and Mirror Image Rule

Answer 21

Mirror image rule (CL): The acceptance must mirror the terms of the offer; any changes/additions to the terms constitutes a rejection of the original offer and a counteroffer.

Question 22

UCC 2-207 Battle of the Forms

Answer 22

*If any party is a non-merchant:
oAn acceptance with changes/additions will be a valid acceptance.
oContract will not include the changes/additions unless offeror agrees to them.

*If both parties are merchants:
oAn acceptance with changes/additions will be a valid acceptance.
oContract will include the changes/additions unless they (i) materially alter the terms of the original offer (e.g., disclaimer of warranties, severe limitation of remedies, (ii) the original offer limits acceptance to the terms of the offer, or (iii) the offeror has previously objected, or objects to the changed/new terms.

Exam Tip 8: Terms that materially alter a contract include a warranty disclaimer or severely limit a party’s remedies. Terms that do not materially alter a contract include: (i) setting a reasonable time for a party to complain about the goods or (ii) reasonable limitations on remedies.

Question 23

Mailbox Rule

Answer 23

▪
Under the mailbox rule, an acceptance is valid when placed in the mail.
▪
Exception: If there is an option contract or firm offer, the acceptance is valid when received and must be received before the offer expires.

Exam Tip 9: A recent essay question involved facts where the acceptance was placed outside the home on the doorstep for the mailperson to pick up the next morning. The answer required you to discuss the arguments for why the acceptance could be viewed as “mailed” or not “mailed.”

Question 24

Consideration

Answer 24

o
Consideration requires a bargained-for change in the legal position between parties. Most courts find consideration if there is a detriment to the promisee, regardless of the benefit to the promisor. A minority of courts look to either a detriment or a benefit, not requiring both.