Week 3 - Test 1

Question 1

each party to a contract must get something to which that party was not legally entitled before entering the contract, and each party must give up something to which that party was legally entitled before the contract

Answer 1

consideration

Question 2

Common law included a concept that contracts (1) –formal contracts–could be binding without (2), but much modern law has abolished that theory.

Answer 2

1. under seal

2. consideration

Question 3

4 places consideration might be excused under law

Answer 3

1. promissory estoppel
2. promise to pay charitabe donation
3. promise to pay debt not legally enforceable
4. promise under which one person “guarantees” performance by another (cosigning)

Question 4

Consideration : Each party must (1) to which that party was not (2) before entering the contract, and each party must (3) to which that party was (4) before the contract.

Answer 4

1. get something (not weighed by courts)
2. legally entitled
3. give up something
4. legally entitled (smoking v. street racing)

Question 5

each party is induced to enter contract by consideration offered by the other party

Answer 5

bargained-for

Question 6

an illusion; stated consideration does not really obligate the party (such as “if I like it, I will pay you”)

Answer 6

illusory

Question 7

imposed or influenced by individual position or bias

Answer 7

subjective standard

Question 8

not influenced by personal opinion or bias–this may be able to be imposed on a more measurable standard such as “if you do a good job, I will pay you” (esp. for professionals)

Answer 8

objective standard

Question 9

an offer can be made irrevocable for a period of time, without consideration (gap-filling provision for at-first-glance illusory contracts)

Answer 9

“merchant’s firm offer” rule

Question 10

stated consideration did not really occur–not allowed.

Answer 10

sham consideration

Question 11

minimal–such as an amount sometimes recited in a contract even when the actual consideration is higher

Answer 11

nominal

Question 12

recital

Answer 12

formal statement

Question 13

If consideration is “shockingly” unequal, a court may invalidate a contract as (1). Especially likely if one party has no (2)–courts try to protect these people.

Answer 13

1. unconscionable

2. bargaining power

Question 14

event that must occue before the contemplated transaction is completed (for example, offer to buy a house if able to secure a loan–but not applying for that loan would be a breach)

Answer 14

condition precedent

Question 15

event that may “undo” an executed contract (e.g., allowing return of a dress if husband doesn’t like it)

Answer 15

condition subsequent

Question 16

contract under which buyer agrees to purchase all that seller produces; court may impose requirement of reasonable performance (third party will buy everything of what is made by a manufacturer–implication that manu will stick to normal output)

Answer 16

output contract

Question 17

contract under which buyer agrees to purchase all of buyer’s needs from seller (exclusive dealing); court may impose requirement of reasonable performance (e.g., agreement to buy all baked goods from one supplier–needs based because no guarantee how much will be bought from third party)

Answer 17

needs contract

Question 18

contract under which parties agree to deal only with each other with respect to particular needs (can have antitrust implications)

Answer 18

exclusive dealing

Question 19

The general rule is, “(1) is no consideration” (e.g., offering reward for something already done)

Answer 19

past consideration

Question 20

Consideration cannot be valid for (1), in which the offeree does not receive something new (professor offering tutoring during office hours)

Answer 20

preexisting obligations

Question 21

a way of sharing risk (I will build for cost of materials + 20%)

Answer 21

cost-plus contract

Question 22

contract total price includes “estimates” for components; if actual price of components differs from allowances, total contract price changes

Answer 22

allowances

Question 23

incentive consideration

Answer 23

consideration changes to motivate faster or better performance

Question 24

A new contract signed halfway through job completion (to complete the job) is considered (1) and is not a contract because it lacks (2). This can be overcome with an (3) though

Answer 24

1. blackmail
2. consideration
3. added offer

Question 25

The UCC does not require consideration to support modification of an existing contract for the sale of goods, if the modification is made in (1) and in repsonse to circumstances that would not have ebeen (2)

Answer 25

1. good faith

2. reasonably foreseeable

Question 26

agreement to accept and give payment or performance, different from that originally required by contract (e.g., in signing a new contract halfway)

Answer 26

accord and satisfaction

Question 27

to terminate a contract before all of its terms are compltely performed

Answer 27

rescind

Question 28

mutual agreement to cancel

Answer 28

recision

Question 29

waiver

Answer 29

intentional reliquishment of right, claim or privelege

Question 30

debt that is not in dispute (e.g., no complaints about service paid for)

Answer 30

liquidated debt

Question 31

debt, the amount of which is in dispute; settlement of which can constitute consideration

Answer 31

unliquidated debt

Question 32

Acceptance of a lower amount than agreed to could be ruled as (1), or (2)

Answer 32

1. waiver of the unpaid amount

2. a completed gift

Question 33

Courts are sometimes called on to review the fairness of (1), particularly in cases in which the losing party must pay for these for the winning part

Answer 33

1. legal fees

Question 34

Consideration makes a contract (1) as a (2), rather than (3) as a (4).

Answer 34

1. enforceable
2. contract
3. unenforceable
4. gift

Question 35

“No Purchase Necessary” in contests seeks to avoid a (1)

Answer 35

1. contractual relationship

Question 36

Consideration is only an issue when there is an (1) to be completed–it is not an issue with (2).

Answer 36

1. outstanding promise

2. executed contracts

Question 37

2 things that must be in place for a promise to be supported by consideration

Answer 37

1. promise gives up something of value or circumscribes (limits) a liberty in some way. (Ie, legal detriment)
2. Promissor makes their promise as part of a bargain in exchange for what the promisee has given up–either another promise OR execution of the contract

Question 38

Two approaches to consideration

Answer 38

1. Detriment Approach

2. Bargain Approach

Question 39

The detriment approach say that consideration is either a (1) by the (2) OR a (3) by the (4).

Answer 39

1. benefit received
2. promissor
3. detriment incurred
4. promissee

Question 40

The detriment approach has been found to be (1)–the question of whether something is a (2) or a (3) can sometimes be fuzzy. Sometimes courts will (4) on this old approach, though.

Answer 40

1. overbroad
2. benefit
3. detriment
4. fall back

Question 41

The bargain approach says that consideration is an exchange of (1), (2) or both, in which each party views what he or she gives up as the (3) of what he or she gets. Most courts use this approach.

Answer 41

1. promises
2. acts
3. price

Question 42

Not doing something someone has a legal right to do

Answer 42

forebearance

Question 43

if a party does or promises to do soemthing they are already legall obligated to do, they have not incurred any kind of detriment necessary to constitute consideration

Answer 43

Pre-Existing Duty Rule

Question 44

To be considered a gift, the person receiving the (1) does not have to do anything

Answer 44

offer

Question 45

Donations can be (1) because of lack of consideration, but cannot be (2) because they are executed contracts.

Answer 45

1. discontinued

2. returned.

Question 46

Courts may find consideration, for example, in large donations, because “to their detriment, Offeree acted.” Enforced because of reliance on the promise.

Answer 46

Promissory Estoppel

Question 47

If you see a contract which gives one party total discretion on whether to perform, nothing is promised

Answer 47

Illusory

Question 48

Analyze:

1. “Sell me as many as I choose to order.”
2. I’ll buy your painting if I like it.
3. Sell me as many as I require
4. I will cut your grass weekly for as long as I want. (termination at will)

Answer 48

1. Not promising anything - no consideration. Illusory.
2. Not promising anything really, but could hold up–subjective standard, good faith
3. Not illusory - consideration = exclusive sales - valid.
4. Illusory. Nothing promised. No contract.

Question 49

The court does not have to look at the (1) of a bargain. Also there is no obligation for one person to tell another about inadequacy–this applies to (2) OR (3)!

Answer 49

1. adequacy
2. intent
3. ignorance

Question 50

“$1 and other valuable consideration”–just to make a contract enforceable

Answer 50

sham consideration

Question 51

Agreement to accept promise other than what was agreed to in a contract, plus the promise that is newly agreed to.

Answer 51

accord and satisfaction

Question 52

Accord and satisfaction differs from a counter-offer because (1)

Answer 52

the agreement is already in place

Question 53

Accord and satisfaction comes into play with (1) and (2) amounts

Answer 53

1. disputed (did not know price right away–high service bill that can be negotiated down)
2. undisputed (knew price = preexisting duty to pay–cannot write “paid in full” on back of inadequate check)

Question 54

If the promise is contingent on a condition, consideration kicks in when the condition is met - but the person must make a good faith effort to meet the condition! (eg, will buy house if I can get a loan)

Answer 54

condition precedent

Question 55

If condition is outside control of both parties, the consideration kicks in at meeting of that condition–parties may not revoke (e.g., split will 50/50)

Answer 55

condition subsequent