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Flashcards in 2. Formation - Enforcement Issues Deck (45)
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Can A's promise to buy and B's promise to sell be consideration for one another?



What is the exception to the rule that past consideration is generally not sufficient?

When there is an express request from A to B to do something for which B would expect to be paid


What is the pre-existing duty rule?

Doing what you are already obligated to do is not new consideration for a promise to pay you more


Does the pre-existing duty rule apply to all contracts?

No, common law only


What is the new performance exception to the pre-existing duty rule?

Where there is an addition to or change in performance, doing it can provide new consideration


What is the third-party exception to the pre-existing duty rule?

Where a third party promises to pay the extra money, it is enforceable even without new consideration


What is the unexpected event exception to the pre-existing duty rule?

Where something unexpected happens after contracting, there is no need for new consideration if it is fair and equitible to pay more


Is new consideration needed to modify an Article 2 contract?

No, as long as the modifier acts in good faith


Can part payment of a debt be consideration for release?

If it is due and undisputed, no, because there is not new detriment


What are the two instances in which agreements are enforceable without consideration?


1. Written promise to satisfy an obligation for which there is a legal defence, e.g. Statute of Limitations

2. Promissory Estoppel


What are the three elements of promissory estoppel?

1. Promise

2. Reliance that is reasonable, detrimental, and foreseeable

3. Enforcement necessary to avoid injustice


When do intoxicated persons lack the capacity to contract?

When the other party had reason to know


What are the effects of incapacity on a party as a 

1. Plaintiff

2. Defendant

1. No effect: P can still enforce agreements entered into lacking capacity

2. D who was incapacitated at the time of the contract cannot have an agreement enforced against them


When can an agreement be enforced against D who lacked capacity when they contracted?

If they retain the benefits after gaining/regaining capacity


What are the four contracts which trigger the Statute of Frauds?

1. Guarantor for another's debt

2. Services contract not capable of being performed within one year

3. Transfer of real estate interest

4. Sale of goods worth $500 or more


What is the main purpose exception to the guarantee SoF requirement?

If the guarantor was to benefit from the thing for which he promised to pay the debt, SoF does not apply


Is a contract to be performed more than a year after the contract was entered into with SoF?



Is a huge task which could objectively take longer than a year to complete within SoF when the contract doesn't specify a timeframe? How come?


We assume unlimited resources to get it done


Is a services contract "for life" within SoF? How come?


We assume the party could die within a year


What is the one type of transfer of real estate interest not within SoF?

Leases for less than one year


What are the two ways SoF can be satisfied?

1. Writing

2. Part Performance


What is the SoF writing requirement for common law contracts?

Must state who and what, and must be signed by the party to be bound



On an MBE question regarding a common law contract writing for SoF purposes, if we are told only one party signed it, what are we to assume?

That the other party did not


What is the SoF writing requirement for Article 2 contracts?

Must state that the contract is for the sale of goods and must state the quantity


Does a writing in support of an Article 2 contract need to be signed?

Yes, by the party to be bound


What is the one exception to the rule that a writing in support of an Article 2 contract needs to be signed? Why?

Where both parties are merchants and there is a delay in responding

Because it is assumed a merchant who receives an erroneous order to buy/sell will object


For a contracts essay, what do we say about estoppel in a SoF context?


"Some cases hold that P's reliance on D's oral promise to put the agreement in writing can estop D from asserting a SoF defence"


For SoF purposes, what is the equal dignity rules?

Written authorisation is needed to enter into a contract for another only when that contract must be in writing


If written proof of a contract modification need for SoF purposes?

Only when the contract as modified is within SoF


What is the status of contract provisions requiring written modification in both common law and Article 2 contracts?

Common Law

Contractual language is irrelevant, apply general rules

Article 2

Contractual language governs unless waived


What is the difference between illegal subject matter and illegal purpose in a contract?

Subject Matter

The very thing in the contract is illegal (unenforceable)


Legal subject matter but for an illegal purpose


Is a contract for an illegal purpose enforceable?

Yes, unless the other party had reason to know of this purpose


What two types of agreements are unenforceable as contrary to public policy?

1. Agreements excusing liability for intentional or reckless conduct

2. Covenants not to compete without a reasonable need and reasonable limits on time and place


What is a misrepresentation?

False statement of fact made by a party or agent which induces the other to contract


What type of statement automatically triggers the misrepresentation defence?

Any fraudulent statement


In the absence of fraud, what is required of a false statement to trigger the misrepresentation defence?

The statement must be material


What are the two exceptions to there being no general duty to disclose?

1. Fiduciary relationship

2. Concealment


What are the requirements for economic duress?

A bad guy making an improper threat against a vulnerable guy with no reasonable alternative


In economic duress cases, what is usually the improper threat from the bad guy?

Threat to breach the existing contract unless other party pays more


What are the two types of unconscionability?

1. Procedural unconscionability

2. Substantive unconscionability


What is procedural unconscionability?

Unfair surprise


What is substantive unconscionability?

Oppressive terms


When must the alleged unconscionability have occurred?

At the time the contract was entered into


What are the three requirements for ambiguity?

1. Parties use a material term open to at least two reasonable interpretations

2. Each party attaches a different meaning to the term

3. Neither party knows or has reason to know that the term is open to multiple interpretations


In an ambiguity scenario, what happens if A knows that the material term is open to multiple interpretations, but B does not?

There is a contract under the terms as understood by B