R5 Module 1

Question 1

contract definition

Answer 1

a promise that the law will enforce

Question 2

express contract definition

Answer 2

a contract formed by language, oral or written

Question 3

implied-in-fact contract definition

Answer 3

a contract formed by conduct

Question 4

implied-in-law contract (quasi-contract) definition

Answer 4

-not a contract
-a remedy that allows a plaintiff to recover a benefit unjustly given by the defendant (a remedy to prevent unjust enrichment)
-only used when a contract was not formed

Question 5

unilateral contract definition

Answer 5

one promise given in exchange for performance
-contract is not formed until performance is complete

Question 6

bilateral contract definition

Answer 6

two promises-a promise exchanged for a promise
-contract is formed as soon as the promises are exchanged

Question 7

common law contract types (RISE)

Answer 7

1) real estate
2) insurance
3) services
4) employment

Question 8

elements of legally enforceable contracts (all three must be met)

Answer 8

1) an agreement made with an offer and acceptance
2) an exchange of consideration (something of legal value) AND
3) lack of defenses
-remedies if one party breaches

Question 9

mutual assent definition

Answer 9

“a meeting of the minds”
-one party makes a proposal (an offer) and the other party will agree to it (an acceptance)

Question 10

offer definition

Answer 10

a statement by an offeror that gives the offeree (recipient) power to form a contract by accepting before offer is terminated

Question 11

intent to make a contract

Answer 11

-offer must be sufficient for a reasonable person to assume that offer was a serious offer
-statements made in jest or frustration and understood as such by a reasonable person are not offers

Question 12

Are advertisements offers?

Answer 12

No, they are wide statements made not addressed to anyone in particular, but simply invitations
-but if the advertisement limits scope of persons who can accept (ex. first five customers) will be considered an offer

Question 13

items for an offer to create a contract under common law

Answer 13

1) identity of offeree and subject matter
2) price to be paid
3) time of performance
4) quantity involved
5) nature of work to be performed

Question 14

termination of offer

Answer 14

1) revocation by offeror
2) rejection of offeree
3) operation of law (ex. death of party)

Question 15

Revocation of offeror

Answer 15

-done at anytime before offeree accepts even if offeror promises to keep offer open
-revocation can be direct (phone call to offeree) or indirect (offeree receives correct info that offeror no longer wants to make an offer
-consideration can be paid to keep offer open called an option contract which is exception to revocation rule

Question 16

option contract

Answer 16

in which the promisor promises to keep an offer open in exchange for consideration from the promisee

Question 17

rejection by offeree

Answer 17

-can terminate offer by rejecting it and once rejected cannot be accepted
-can reject expressly or by giving a counter offer and makes original offeror the offeree
-rejection effective when received

Question 18

termination by operation of law

Answer 18

-if either party dies or becomes incompetent prior to acceptance offer terminated by operation of law
-not necessary that death or incompetency be communicated to other party
EXCEPTION: an option contract is not terminated by death of party
-if subject matter of offer destroyed before offer accepted, offeree’s power of acceptance terminated by operation of law
-subject matter of proposed contract becomes illegal, offer terminate

Question 19

acceptance definition

Answer 19

the offeree’s assent to enter into a contract
-do not have to be in writing
-even simple nod of head constitute as acceptance

Question 20

rules of acceptance

Answer 20

1) only one person to whom offer was made may accept, offers not assignable (options are assignable)
2) acceptance be made by mailed offer, letter, email etc. using another method if not specified by offeror is a counter offer
3) acceptance must mirror the offer
4) acceptances effective when mailed, emailed, faxed etc. if properly addressed (mailbox rule) irrelevant if acceptance lost or delayed

Question 21

method of acceptance communication specified

Answer 21

if offeror required that acceptances be sent by specific method, an acceptance sent by that method is effective when it is sent

Question 22

no method of acceptance communication specified

Answer 22

if offer did not state how acceptances were to be sent, an acceptance sent by any reasonable means is effective upon dispatch

Question 23

offeror may opt out of acceptance

Answer 23

offeror can opt out of mailbox rule by stating in offer that acceptances must be received to be effective.
-acceptance must be received before offer terminates

Question 24

consideration definition

Answer 24

-price of contracting
-both sides of contact must be supported by legally sufficient consideration
-law will not enforce gratuitous promises
-something must be given for a promise to be enforceable
1) something of legal value by each party
2) must be bargained for exchange

Question 25

legal value definition

Answer 25

-promisor’s promise is supported by consideration only if promissee agrees to do something he or she is not already obligated to do (a detriment) or promisor will obtain some of benefit
ex. consideration is promise to perform acts or refrain from performing, promises to pay money, promises to give land, goods, stock etc.

Question 26

elements of consideration

Answer 26

1) need not have monetary value
2) need not flow to party (sufficient to promise to do something for or give something to third party)
3) courts not inquire of adequacy of consideration if not a sham (does not have to be nearly of equal value)
4) preexisting legal duties not sufficient (promise is not enough, actually have to do it; price term cannot be modified unless consideration is given for modification)
5) if each party offers to give something different from what originally promised, courts will usually enforce promise despite preexisting legal duty rule
6) honest dispute as to duty: legal duty owed is subject of honest dispute, modifying agreement relating to it will ordinarily be given effect, because parties giving up right to sue to have dispute settled and forbearance to sue is valid consideration

Question 27

bargained for exchange

Answer 27

-something is not consideration unless it was given in exchange for other consideration
1) gift: promises to make a gift are unenforceable because of lack of consideration
2) past or moral consideration: if something had already been given or performed before the promise was made, it will not satisfy bargain requirement