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Contracts Flashcards

1
Q

What are the three elements of contract formation?

A

(1) Offer
(2) Acceptance
(3) Consideration

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2
Q

What is an offer? What must it consist of?

A

An offer is an outward manifestation of intent to enter into a contract.

Intent + Specific Terms

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3
Q

Are ads in newspapers offers?

A

NO, ads are generally not offers, only invitations to offers. but they can become offers with specific enough terms.

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4
Q

How are offers terminated?

A

(1) Death
(2) Lapse of time
(3) Rejection
(4) Counteroffer
(5) Revocation

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5
Q

What is direct revocation of an offer?

A

Retraction of an offer by the offeror

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6
Q

What is indirect revocation?

A

Indirect revocation is when the person receiving the offer LEARNS that another deal was made that terminated their possible deal

[Most commonly tested]

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7
Q

Are offers revocable?

A

Yes, except for in three instances

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8
Q

When are offers not revocable?

A

(1) Option contract
(2) UCC firm offer
(3) Unilateral contract

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9
Q

What is an option contract?

A

(1) A promise to keep an offer open
(2) Additional consideration

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10
Q

What is a UCC firm offer?

A

(1) A sale of goods between merchants
(2) Writing signed by merchant
(3) Offer open for a maximum of 3 months

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11
Q

Does a UCC firm offer terminate after 3 months?

A

No, it doesn’t terminate! It just becomes revocable.

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12
Q

When is an offer for a unilateral contract revocable?

A

An offer for a unilateral contract is revocable UNTIL performance begins. Then it becomes irrevocable.

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13
Q

What is a merchant’s firm offer?

A

(1) Merchant offers to buy or sell goods
(2) In a signed writing
(3) That gives assurances that the offer will be held open
(4) For a reasonable time, no longer than 3 months

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14
Q

What’s the difference between a firm offer and an option contract?

A

Option contract = Common Law, offeree gives extra consideration to keep open

Firm offer = UCC, merchant gives assurances in writing to keep open

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15
Q

When does detrimental reliance limit an offeror’s power to revoke?

A

ONLY when:
(1) the offeror could reasonably expect that the offeree would detrimentally rely, and
(2) the offeree does so rely

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16
Q

Is a firm offer valid if it is promised to be held open for more than three months?

A

YES, it is a valid firm offer for the first three months! After the first three months, it becomes revocable

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17
Q

How does the mailbox rule affect options contracts?

A

The mailbox rule does not apply to the exercise of options! Acceptance is effective when RECEIVED by the offeror under an option contract

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18
Q

What is the preexisting duty rule?

A

The promise to perform, or the performance of, an existing legal duty is not consideration.

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19
Q

When the amount due on a debt is undisputed, can the debtor pay a smaller amount as consideration for the creditor to discharge the debt?

A

No. Paying small amounts of the debt is what he already does by nature of having debt?? So it is not new consideration.

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20
Q

Do modifications to a contract require the obligations of both parties to vary?

A

Generally YES. A modification solely for the benefit of one of the parties is generally unenforceable at common law.

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21
Q

If contractor has begun construction work on a property, and subsequently says he needs more money to complete the project, is the owner obligated to pay?

A

NO, not without extra consideration. The owner is not obligated to provide extra consideration for the work contractor already has a duty to complete.

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22
Q

Does the preexisting duty rule apply when the duty is owed to a third person?

A

NO - The rule applies only when the duty owed is to the promisee. If Promisor’s duty is unrelated to the 3rd party promisee, performance is valid consideration to the 3rd party.

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23
Q

What is the Statute of Frauds rule?

A

Certain agreements must be evidenced by a writing signed by the parties

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24
Q

What does the Statute of Frauds require at common law?

A

(1) An agreement reduced to writing
(2) Reflecting material terms of the contract
(3) Signed by the party to be held liable

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25
Does a mortgage contract need to be in writing?
YES, for statute of fraud purposes: SOF says a promise creating an interest in land must be evidenced by a writing.
26
Must a contract that lasts for the entirety of someone’s lifetime be in writing?
No - it would need to be in writing if it lasted longer than a year, but dude could croak any time, literally tomorrow. Any of us could! So lifetime contracts do not need to be in writing.
27
Does the time period for a contract subject to the Statute of Frauds run from the date of performance or the date of agreement?
SOF contracts run from the date of AGREEMENT, not the date of performance. So if performance starts over a year from now, contract needs to be in writing.
28
Do contracts that call for month-long performance that starts over a year from today need to be in writing?
YES, because the Statute of Frauds runs from the date of agreement, meaning this contract will take over a year to complete, meaning it needs to be in writing.
29
When must a promise for a sale of goods be in writing to be enforceable under SOF?
When the goods are priced at $500 or more
30
What must a writing for a UCC sale of goods include to satisfy the SOF?
(1) Quantity term!! (2) Signature of party to be charged (3) Writing sufficient to indicate a contract was formed
31
Must a UCC sale of goods writing include a price term? Quantity term?
Price term = NO Quantity term = YES
32
Must a contract for a sale of land include a price term?
YES, the price is an essential term for a sale of land and must be indicated in the writing.
33
What act alone is sufficient to allow enforcement of an oral contract for the sale of real property?
Conveyance of the property from the seller to the buyer
34
What is the doctrine of part performance + SOF?
Conduct that unequivocally indicated that the parties have contracted for the sale of land will take the contract out of the Statute of Frauds
35
What is typically required to show part performance of a sale of land?
At least two of the following: (1) Payment (in whole or part) (2) Possession (3) Valuable improvements OR alone: (4) Conveyance of the property
36
When is a writing NOT required to enforce a contract that would otherwise be covered by the SOF?
When the party against whom the contract is being enforced admits to the existence of the contract in court
37
When is a contract for a sale of goods enforceable without a writing?
If the goods are either: (1) Received and accepted, OR (2) Paid for If only some of the goods are accepted and paid for, contract is only partially enforceable
38
When can a buyer specifically enforce a seller’s oral promise to sell land?
When the part performance doctrine applies and the buyer can show 2/3: (a) payment (b) possession (c) valuable improvements
39
When can a seller enforce the oral contract for a sale of land and recover the purchase price from buyer?
ONLY when the seller conveys the property to the buyer
40
When is a writing not required for a UCC sale of goods worth over $500?
Writing not required for sale of goods over $500 where: (1) they are “specially manufactured” goods not suitable for resale in ordinary course of seller’s business, AND (2) Seller has made a substantial beginning of their manufacture or commitments for their procurement
41
Can you form an oral installment land sale contract to execute a sale from the owner to the renter of the land?
Usually no. The “installment payments” are really just month-to-month rental payments (which doesn’t require a writing). This will never obligate the owner to sale the property because rental payments are not consideration for purchase.
42
Is a partially performed oral contract enforceable under the UCC?
Yes, contracts are enforceable, despite the absence of a writing, to the extent of the goods accepted
43
What is quasi-contract theory used for?
Quasi-contract theory is used as a basis for recovery of restitution damages for UNenforceable contracts
44
What is an order for specific performance?
An order from the court directing the breaching party to perform as promised under the contract or daze contempt of court charges
45
Is specific performance available for breach of service contracts?
NO - this is involuntary servitude (or the more succinct 1 word/7 letter S-word)
46
When may a nonbreaching party seek specific performance?
(1) When legal remedy is inadequate (2) When subject matter of the contract is rare or unique (3) Land sale contracts
47
When a party offers rare or unique services and has breached a service contracts, can the court order specific performance? Any other remedy?
NO to specific performance - not allowed for service contracts Court can grant injunctive relief to enjoin breaching party from working for a competitor through duration of the contract.
48
When is the right to specific performance in a land sale contract cut off?
When there was a sale to a bona fide purchaser: the subject matter of the contract has already been sold to another who purchased for value and in good faith
49
What is the equitable defense of sale to a bona fide purchaser?
This happens when the subject matter of a goods or land contract has already been sold to another who purchased for value and in good faith
50
What is the equitable defense of laches?
Laches arises when a party delays in bringing an equitable action and the delay prejudices the defendant. NOTE: mere delay itself is not a ground for this defense
51
What is the unclean hands defense?
This arises when the party seeking specific performance is guilty of some wrongdoing in the transaction being sued upon. Note: CANNOT being wrongdoings from any other transaction
52
What is replevy?
Replevy is a UCC remedy where if the buyer has made at least part payment for goods and seller has not delivered the goods, then buyer may recover the goods from the seller if: (1) seller becomes insolvent within 10 days of receiving payment, OR (2) goods were bought for personal, family, or household purposes
53
What elements are required to be granted specific performance?
Specific performance is granted when: (1) there is a valid contract (2) the legal remedy is inadequate (3) enforcement is feasible (4) mutuality of remedy is present
54
When can buyers obtain specific performance of a contract for the sale of goods?
(1) When the goods are unique (2) When the goods are in short supply
55
What is the right to cover? Are there associated damages?
When a seller fails to deliver goods under a valid contract, the buyer can buy the goods from another distributor. Damages = Cost of substitute goods - Contract Price
56
In a single delivery contract, can the buyer reject defective goods? Can the seller cure?
Yes x2! Buyer can reject defective goods in a single delivery contract, but seller does get the right to cure within the original time for performance.
57
How must a seller cure defective shipment?
A seller curres by: (1) Giving reasonable notice of his intention to do so, and (2) Making a new tender of conforming goods within the time originally provided for performance
58
Must a buyer accept a seller’s cured delivery of defective goods?
Original defective goods = NO, buyer need not accept. CURED delivery = YES buyer must accept, or will be in breach
59
Does a seller have a right to cure delivery of nonconforming goods?
YES, the seller can cure delivery of nonconforming goods IF: (1) seller reasonably believed the nonconforming goods would be acceptable “with or without money allowance” (2) seller provides reasonable notice to buyer
60
How long does a seller have to cure defective goods?
Seller has until the original time allowed for performance is up to cure defective goods
61
How long does a seller have to cure nonconforming goods?
Seller has further reasonable time beyond the original contract time to make conforming tender
62
How can a seller reasonably believe that nonconforming goods would be acceptable?
(1) By showing trade practices or prior dealings with the buyer that give cause for belief (2) By being unaware of the defect despite proper business conduct
63
When can a delivery of nonconforming goods be rejected under an installment contract?
Nonconforming goods can only be rejected under installment contract if the nonconformity substantially impairs the value of the installment.
64
When is an installment contract deemed to be breached for delivery of nonconforming goods?
ONLY if the nonconformity substantially impairs the value of the entire contract
65
When does nonconformity NOT substantially impair the value of the entire contract?
When seller: (1) can cure the nonconforming delivery, and/or (2) can cure with the subsequent deliveries
66
Must a buyer give a seller the right to cure under an installment contract?
Yes, they must, or they’ll be in breach themselves
67
What is the perfect tender rule?
The perfect tender rule allows a buyer to reject goods if either the goods or delivery fail to conform to the contract in any way
68
When does the perfect tender rule apply?
🤔
69
When is letter of revocation effective?
When it is received by the offeree
70
When is a written communication “received” by an offeree?
At the moment it comes into the offeree’s physical possession
71
What is the mailbox rule?
Acceptance = Effective when dispatched Revocation = Effective when received
72
Is a contract formed if the acceptance is sent before the revocation is received?
No: Acceptance sent before revocation received = Contract is formed Revocation received before acceptance sent = No contract formed
73
Is a contract formed if the classmate sends first an acceptance and second a rejection?
Yes usually! Acceptance is effective when it’s posted, stamped, and addressed. UNLESS offeror changes his position in reliance on the rejection.
74
Must rejections to offers be in writing?
No! Answer choices will make it seem like rejection should be in writing, but this rule does not exist
75
Does the mailbox rule apply if offeree sends first a rejection, then an acceptance? What is the result?
NO. Rejection first = No mailbox tule Result: Whichever arrives first is effective
76
Is oral rejection to an offer for a contract for the sale of goods allowed? Or is written rejection required?
YES, oral rejection is allowed! Written rejection is NOT required
77
Does the mailbox rule apply to option contracts? What does that mean?
NO, mailbox rule does not apply to option contracts. That means where the offeree pays additional consideration to hold the offer open, their acceptance of that contract is effective upon receipt, NOT dispatch
78
If the offeree sends rejection then acceptance, and offeror receives a rejection letter first but only reads the acceptance letter, is there a contract?
NO - It does not matter that offeror did not READ the rejection first. He RECEIVED it first, so that’s what is effective.
79
Does a revocation letter have to be read to be effective?
No, it does not need to be read, it only needs to be in physical possession of offeree
80
Is a contractor’s duty to construct a building discharged by destruction of the work in progress?
NO - even if the work in progress is destroyed, the contractor still has a duty to construct the building
81
What happens if a contractor has a duty to construct a building, but the building is destroyed by reasons OTHER than the contractor? (Think act of nature)
The contractor still has a duty to perform, but the date of performance is extended
82
What happens if a contractor is working on renovations for a building, and the building is destroyed by an act of nature?
The contractor’s duties are discharged by reason of impossibility
83
If an act of nature destroys a building being worked on by a contractor, does it matter whether the contractor was renovating or constructing the building?
YES this matters! If renovating = duty is discharged by impossibility If constructing = duty is NOT discharged, date of performance is extended
84
What is discharge by impracticability?
This is when you no longer have a duty to perform because even though performance is possible, it can only be accomplished with extreme and unreasonable difficulty or expense.
85
What is discharge by frustration?
When the duty to perform is discharged because the purpose of the contract has become valueless by virtue of a supervening event
86
What defense is proper for a contractor trying to extinguish his duty to complete a renovation after the building was destroyed by an act of nature?
Frustration of purpose because there’s no point in renovating a building that doesn’t exist
87
Is death of the performing party a valid reason to discharge their duty to perform the contract?
No, usually! Death or physical incapacity of a person necessary to effectuate the contract does not discharge contractual duties, unless the services are “unique”
88
Are artistic skills that a famous painter has considered “unique”? What does this mean?
Yes! If artists cannot do the art anymore because they have died, their duty is discharged by impossibility
89
When will an unanticipated or extraordinary event discharge the duty to perform by impossibility?
Duties are discharged when: (1) the nonoccurence of the event was a basic assumption of the parties in making the contract, and (2) neither party has assumed the risk of the event’s occurrence
90
Can a party collect damages when their duties are discharged by impossibility? If so, when?
YES, parties can recover in quasi-contract for the reasonable value of their performance
91
How can the reasonable value of a party’s partial performance be determined?
(1) Unjust enrichment - the benefit received by the defendant OR (2) The reasonable value of the work performed - the detriment suffered by the plaintiff
92
What is the difference between objective impossibility and subjective impossibility? Do both discharge a duty to perform?
Objective = Nobody could have performed = Discharges duty Subjective = This particular defendant couldn’t perform = Does NOT discharge duty
93
When does the risk of loss of goods transfer from a nonmerchant seller to a buyer?
Risk of loss passes to the buyer at the time of tender
94
What happens if goods subject to UCC sale agreement are destroyed before risk of loss transfers to buyer?
Contract is AVOIDED if: (1) it requires particular goods (2) the particular goods are identified when contract is made (3) the risk of loss has not yet passed to buyer, and (4) the goods are destroyed without fault of either party

MBE (8 decks)

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