Contracts

Question 1

What are the tests to determine whether a contract exists?

Answer 1

1. Was there mutual assent?
2. Was there consideration?
3. Are there any defenses to the formation of the contract?

Question 2

What must a contract contain?

Answer 2

Offer, acceptance, consideration, manifestation of mutual assent & reasonable/enforceable terms

Question 3

What is the objective theory of contracts?

Answer 3

• A party is bound by the apparent intention they manifest to the other party.
• when determining whether a party intended on creating a contract, objective theory looks at the words and conduct of the parties from the perspective of a hypothetical “reasonable person” rather than attempting to examine their actual, subjective intentions.

Question 4

Contract definition

Answer 4

An agreement between two or more persons as to
something that is to be done in the future by one or both of them.

or: An agreement that a has a legal effect , and creates obligations for which some sort of legal enforcement will be available if performance is not forthcoming as promised.

Question 5

When is one bound by a contract even if he is ignorant of the terms of the writing, or of its proper interpretation?

Answer 5

when one who makes a written offer which is accepted, or when who manifests acceptance of the terms of a writing which he should reasonably understand the terms to be a proposed contract

Question 6

What is mutual assent?

Answer 6

Often said to be a meeting of the minds.

Question 7

Offer and acceptance in bilateral contracts

Answer 7

• In the context of a bilateral contract, an offer creates a power of acceptance in the offeree so that he can create the contract by signifying acceptance of the transaction on the proposed terms.
• The offeree can reject the offer either (1) expressly or (2) by simply by not accepting it within a particular time (offer lapses and no contract arises).
• Offeree can also propose different terms if interested in forming a contract. This is called a counteroffer which terminates original offer.

Question 8

Offer definition (restatement of contracts)

Answer 8

“manifestation of willingness to
enter into a bargain, that justifies another person in understanding his assent to
that bargain is invited and will conclude it.

Question 9

What elements must an offer contain?

Answer 9

1. Communicated to the person to whom it is addressed.
2. it must indicate a desire to enter into a contract
3. prescribed manner and time for effective acceptance
4. offer must invite acceptance.. It may or may not indicate how and by what time
   this acceptance is to be communicated, if a mode and time are prescribed, they must be followed, if they are not set out, then the court must decide whether the acceptance was timely and reasonable
5. must engender the reasonable understanding that acceptance will create
   the contract.

• 4. The offer must be directed at some person or group of persons. It is legally possible to make an offer to a defined or undefined group

Question 10

Definite terms of a contract?

Answer 10

(Ducks say quack quack when people pass)

1. Duration
2. Subject matter
3. Quality
4. Quantity
5. Work to be done
6. Price
7. Payment terms

Question 11

Counteroffer definition (Restatements)

Answer 11

A counteroffer is defined in Restatement Section 39 as “an offer by the offeree to the
offeror, relating to the same matter as the original offer and proposing a different substitute bargain”

Question 12

Conditional acceptance

Answer 12

Buyer purports to accept but changes or modifies terms of the offer, this is a conditional acceptance and constitutes a counter offer which terminates the original offer.

Question 13

Is an advertisement an offer?

Answer 13

No, an advertisement does not constitute an offer, but rather an invitation to receive an offer. An advertisement is only an offer when the advertisement invites acceptance without further negotiation in advertisement (1) unconditional (2) definite) (3) clear (4) express language.

Question 14

Can an offer be ACCEPTED by any medium?

Answer 14

Offer may be accepted by any medium unless unambiguously stated otherwise.

Question 15

Executors contract:

Answer 15

an agreement that call for future performance

Question 16

How is an offer in a Bilateral Contract accepted?

Answer 16

an offer in a bilateral contract may be accepted by promise. Offeree may also accept by performance
but must inform offerer.

Question 17

How is an offer in a Unilateral contract accepted?

Answer 17

because a unilateral contract specifically calls for performance, An offer in a unilateral contract is accepted by substantial performance. The offeree doesn’t need to give the offererr notice prior to performance.

Question 18

The Mailbox Rule (Restatement of Contracts Section 66)

Answer 18

If there is distance between the parties and the means of communication entail a delay between the offeree’s acceptance and the offerer’s knowledge of it, there are two possible points in which acceptance becomes effective.
(1) acceptance is effective upon dispatch
(2) if specified by the offeror, acceptance is effective when the offeror receives the acceptance.
(if the offer does not state whether acceptance is effective upon sending or receiving
the acceptance, then it defiantly becomes effective upon being sent)

Question 19

Duties of the offeree in relation to the mailbox rule

Answer 19

• burden is on the offeree to provide proper dispatch for the acceptance, and should make good record of the mailing
• Offeree also must ensure the letter is properly addressed and prepared for mailing

Question 20

In what circumstances does the Mailbox rule not apply?

Answer 20

The mailbox rule does not apply when the offeree send a rejection or counter prior t chnaging his mind and sending an acceptance. In these circumstances, the offerer is protected and the acceptance only takes effect on receipt.
- a revocation sent by the offeror is also
effective only on receipts

Question 21

When is silence a valid acceptance to an offer?

Answer 21

Silence is a valid acceptance to an offer when (1) the offeror specifies that silence is an effective method of acceptance (2) when prior dealings imply that silence is an effective method of acceptance (3) when offeree has opportunity to reject but takes benefits of offer or exercises dominion over offered good anyway.

Question 22

Which type of mistake voids and does not void a contract?

Answer 22

A unilateral (one sided) mistake does not void a contract. 
A mutual mistake can void.

Question 23

What is a unilateral contract?

Answer 23

A unilateral contract is an agreement between two parties in which on party offers compensation on the condition that the other party performs some act or forebears from an action.

Question 24

In a unilateral contract, what does the offeree’s performance serve as?

Answer 24

In a unilateral contract, the offerees performance serves as acceptance and consideration.

Question 25

In a unilateral contract, is the offeree bound by a promise to perform?

Answer 25

In Unilateral contracts the offeree cannot bind himself by a promise to perform, so he is free to not perform at all without liability.

Question 26

In the context of an offer for a unilateral contract, when can an offer not be revoked?

Answer 26

In the context of an offer for a unilateral contract, an offer may not be revoked when the offeree has substantially performed. Substantial performance is considered an acceptance.

Question 27

What are the elements of consideration?

Answer 27

- Detriment: a relinquishment of a legal right - Could take the form of an immediate act, or partial or complete abandonment of an intangible right. - Consideration may be found either in the action of incurring the detriment or in the promise to perform (to act or forbear) in the future - Restatement Section 79, states that a gain or advantage to the promisor is not a requirement for consideration

Question 28

What is an illusory promise?

Answer 28

An illusory promise is when the offeree reserves a choice of alternative performances in his promise, thereby rendering the promise insufficient consideration unless each of the alternative performance would be sufficient consideration alone.

Question 29

The Doctrine of Promissory Estoppel:

Answer 29

When a promisor makes a promise reasonably expecting to induce an act or forbearance, the promisee relies on the promise, the reliance causes the promisee a detriment, and thus the only way to avoid injustice is to enforce the promise.

Question 30

What is an option contract?

Answer 30

- An option contract is an agreement between two or more parties involving a promise to keep an offer open for a specified amount of time in exchange for r consideration (money or services that are agreed upon) - If no consideration is given, the option contract is not enforceable and merely a continuing offer, that may be revoked any time before acceptance - The Mailbox Rule does not apply to option contracts, options are only effective upon receipt

Question 31

What is a firm offer?

Answer 31

A firm offer is a written offer to enter into a contract for the sale of good that is irrevocable for a specified period of time, or if no time is stated, then for a reasonable period. (revocable after 3 months) (signed writing, writer gives assurances the offer will be held open) ( no consideration needed)

Question 32

Liability for benefits received, what is the principle of unjust enrichment?

Answer 32

A person who is unjustly enriched at the expensive of another is subject to liability in restitution.

Question 33

What are the two elements central to restitutional recovery?

Answer 33

Enrichment of one person under the circumstances where the retention of benefits would be unjust to another person.

Question 34

What is enrichment?

Answer 34

enrichment is either (1) an economic benefit (2) consumption of goods, or (3) receiving intangible services that result in no financial advantage.

Question 35

What are the elements for a cause for action for unjust enrichment?

Answer 35

(1) the plaintiff conferred a benefit on the defendant (2) the defendant had knowledge of the benifit (3) the defendant ACCEPTED or RETAINED the benefit conferred (4) the circumstances are such that it would be inequitable for the defendant to retain the conferred benefits without paying fair value for it.

Question 36

What is an implied in fact contract?

Answer 36

An implied in fact contract an an enforceable contract based on a tacit promise, one that is inferred in whole or in part from the parties conduct, not solely from their words.

Question 37

How must a fact finder examine and interpret an "implied in fact contract" given that this type of contract is not put into promissory words with sufficient clarity?

Answer 37

a fact finder must examine and interpret the parties’ conduct to give definition to their unspoken agreement

Question 38

Can a contract implied in fact be enforced even where a defendant has received nothing of value

Answer 38

yes. repeat question in answer form.

Question 39

Implied in law contracts (quasi contract)

Answer 39

A legal fiction, an obligation created by the law without regard to the parties’ expression of assent by words or conduct. - this type of contract is not based on implication of facts from an agreement between the parties - If there has been unjust enrichment, then the injured party is entitled to restitution whether or not there is an enforceable contract

Question 40

the material benefit rule

Answer 40

Doctrine as a distinct cause of action under which a promise to pay for a previous benefit may be enforced despite the lack of consideration.

Question 41

requirements of the material benifit rule:

Answer 41

(1) The promisor has been unjustly enriched by a benefit previously received by the promisee (2) The benefit was not given as a gift (the later promise shifts the burden of showing gratuitous intent to the recipient, the effect of this in that in ambiguous circumstances, where it is not clear if there was gratuitous intent, the benefit will not be treated as a gift, unless the recipient (promisor) can prove it was intended. (3) The promisor subsequently makes a promise in recognition of the benefit (4) The promise is not binding to the extent that its value is disproportionate to the benefit (5) If these requirements are satisfied, the promise is binding to the extent necessary to prevent injustice

Question 42

Statute of frauds

Answer 42

General rule is that a contract within its scope may not be enforced unless a memorandum of it is written and signed by the party to be charged. - entire contrct does not need to be written,. at the very least a memorandum of it - only the party who is to be charged, that is against whom enforcement is sought, needs to have signed it, the signature of the other party is not needed

Question 43

what is a signature? and when a contract consists of several pieces of paper or other records, is it necessary that every piece has been signed?

Answer 43

(1) iv. A signature is any symbol made or adopted with an intention, actual or apparent, to authenticate the writing as that of the signer (2) , it is not necessary that every piece has been signed, provided that all the writings themselves refer to the same transaction

Question 44

which classes of contract are subject to the statute of fraud?

Answer 44

(1) A contract of an executor or administrator to answer the for a duty of his decedent, aka executor administrator contracts (2) a contract to answer for the duty of another (suretyship) (3) a contract made upon the consideration of marriage (marriage contracts) (4) A contract for the sale of an interest in land (5) a contract that cannot be performed or completed within one years time.