Contracts Flashcards
What are the seven general issues?
“Armadillos from Texas play rap eating tacos”
- Applicable law
- Formation of contracts
- Terms of a contract
- Performance
- Remedies for unexcused performance
- Excuse of nonperformance
- Third party problems
When you have a unilateral contract?
Two times:
1) When there’s an offer that expressly requires performance as the only possible method of acceptance.
2) reward prize or contest
When does Article 2 apply?
1) there’s a sale
2) for tangible personal property
Only need the K to be $500 or greater for SoF. The rest of A2 applies even if K price is less than $500.
When the contract involves both goods and something covered under common law, such as real estate or services, what is the general rule?
More important part of the contract determines whether A2 or common law unless contract divides payment between sale of goods part (UCC governs) and rest (common law governs).
Bob agrees with Sam to buy Sam’s car. Sam is also obligated to provide Bob with two lessons in parallel parking. Does A2 apply?
Yes.
What is a contract?
A contract is
- an agreement
- that is legally enforceable.
What is an offer?
An offer is
1) a manifestation of intent to the offeree
2) to contract on the basis of sufficiently definite offered terms
3) that creates a reasonable expectation in the offeree that agreement thereto would bind the offeror to the promise, undertaking, or commitment.
Can there be an offer under common law without a price term?
Yes, except for real estate contracts, if parties intended to form a contract.
Can there be an offer under A2 without a price term?
Yes, the price will be a reasonable price at the time of delivery.
Can a communication from seller to a buyer relating to Seller’s sale of her car to buyer be an offer if it provides for the sale “for a fair price?”
No. The material terms are too vague or ambiguous. The result would be the same as if the contract was for services, that is under common law.
Buyer offers to buy grits from seller for five years. There is no specific quantity term in the offer. It provides that the show purchase all its grits from Seller. Did buyer make an offer?
Yes. This is a requirements or output contract. Under article to requirements or output contracts are not vague or ambiguous and are valid. Look for the following words: all, only, exclusively, solely.
Under the requirements contract buyer buys 1000 pounds of Chris each of the first three years of the agreement. Buyers and orders 1020 pounds in the fourth year. What is the result?
Buyer can increase requirements so long as the increase is in line with prior demands. No unreasonably disproportionate limitation on increases.
What is the general rule and the three exceptions concerning whether an advertisement or price quotation is an offer?
An advertisement are price quotation is not an offer. Rather, it’s an invitation to deal. There are three exceptions:
1) reward
2) specifies quantity and expressly indicates who can accept. For example “one fur coat $10.00 first, first served.”
3) price quote is sent in response to an inquiry
What are the four ways in which an offer can be terminated?
- Lapse of stated or reasonable time
- Death of a party prior to acceptance
- Words or conduct of the offeror revoking the offer
- Words or conduct of the offeree rejecting the offer
Seller offers to sell a car for $400. The offer fails to indicate how long the offer will be kept open. Can buyer accept the offer five years from now?
No. The offer has lapsed because a reasonable amount of time has passed.
True or false. Only the death or incapacity of the offeror made after the offer, but before acceptance, terminates the offer.
False. Death or incapacity of either party after the offer, but before acceptance, terminates the offer
How is an offer revoked?
Through either
1) a later unambiguous statement by the offeror to the offeree of unwillingness or inability to contract; or
2) later unambiguous conduct by the offeor indicating an unwillingness or inability to contract that the offeree is aware of.
O offers to sell B a car for 400. Next day, O makes the same offer to X. B learns that O made the offer to X. Is the offer to B revoked?
No. Multiple offers aren’t a revocation; there’s been no unambiguous communication to B revoking the offer.
What are the four situations where an offer cannot be revoked?
1) Options
2) UCC firm offer rule
3) Reliance
4) Unilateral contract
S offers to sell B her car for 400. B pays S 10 for S’s promise not to revoke the offer for 6 months. Can S still revoke the offer? Why or why not?
Offer cannot be revoked because it’s an option contract:
1) S promised to not revoke (or keep the offer open) and
2) the promise is supported by payment or other consideration.
Don’t need to use UCC Firm Offer Rule where option is supported by consideration.
S, a used car dealer, offers to sell B a car for 400. The written offer is signed by S. Can S revoke? Why or why not?
S can revoke because the offer didn’t include a promise not to revoke.
What is the UCC Firm Offer Rule?
An offer cannot be revoked for up to 3 months if
1) offer to buy or sell goods;
2) signed written promise to keep offer open; and
3) party is a merchant
S offers to sell B a car for 400. The written offer is signed by S and states it will not be revoked but doesn’t state a time period. Can S revoke? Why or why not?
No under UCC Firm Offer Rule. Time kept open isn’t necessary to state. Court will supply a reasonable time (not more than 3 months).
CSC is a diversified service company who is bidding (offer) on a contract to service the Dept of Ed using multiple subcontractors. Natec, a subcontractor submits a bid to CSC do to the cataloging work for 100k. CSC relies on Natech’s bid in making its bid and is awarded the contract. Can Natech still revoke its bid?
No because CSC’s reliance was
1) FORESEEABLE to Natech and
2) without Natech’s bid, CSC will be DETRIMENTED
DoE opens a bid to run ERIC for one year 10m. DoE’s offer states that it can only be accepted by complete performance for an entire year. CSC begins to hire staff. Can DoE revoke? What if CSC begins to actually run ERIC?
Yes. Although CSC has made preparations to perform, CSC hasn’t actually begun to perform. Therefore, DoE can revoke. CSC may have a claim that it detrimentally relied on DoE.
There’s still no contract until CSC actually completes the year. If CSC begins to run ERIC, DoE can’t revoke. But CSC isn’t bound to complete performance.
What is the unilateral contract offer rule?
The start of performance pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete performance.
A2 “merchant” definition
Anyone in business for:
1) SoF
2) confirmatory memos
3) firm offers
4) modification
Merchant with respect to goods of the kind involved for implied warranty of merchantability.
X fills car at Y’s gas station. T or F: X has made a quasi-contract with Y.
F. The parties have an implied contract: their conduct indicates that they asset to be bound. A quasi-contract is not a contract.
Difference between a contract which is void, voidable, and unenforceable.
Void: without legal effect from the beginning.
Voidable: one or both parties may elect to avoid by raising a defense that makes it voidable.
Unenforceable: otherwise valid contract that is unenforceable due to a defense extraneous to formation.
What are the four elements necessary to form a contract?
1) Offer
2) Acceptance
3) Consideration
4) Lack of defenses
Is there an offer where price terms are missing?
Yes, except for real property contracts, if it appears that parties intended to contract and there’s a reasonable basis for giving a remedy, a court can supply reasonable terms.
Can there be an offer where the time in which to perform isn’t specified?
Yes. Law implies reasonable time.
Is there an offer where terms are vague?
No, but can be cured by part performance.
What are the requirements for any indirect revocation of an offer?
Offeree receives
1) correct information
2) from reliable source
3) of the acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer.
When is a revocation effective?
When received by the Offeree, except if by publication in which case it’s when published.
In common law contracts, what three actions of an offeree reject the offer, other than an explicit rejection?
- Counteroffer
- Conditional acceptance
- Additional terms
S offers to sell land to B for $10000 dollars. B responds “ I will pay only $9000.” Can B later except S’s offer to sell for $10,000?
No
S offers land to B for $10000 dollars. B responds “will you take $9000?” Can B later accept A’s offeror?
Yes. This is an invitation to bargain.
What is the common law rule for conditional acceptance?
Rejects offer but becomes a counteroffer that can be accepted by conduct with conditional term becoming part of the contract.
How do you recognize a conditional acceptance?
Look for a response to an offer with the word “ accept” followed by one of these words or phrases: if, only if, provided, so long as, but, or on condition that.
What is the rule under the UCC for conditional acceptance?
Rejection of offer. Parties’ later performance of their promises under the rejected contract will make a contract based upon their conduct. However, such conduct isn’t a counteroffer such that the conditional term becomes part of the contract (that’s the common law rule).
Distinguish conditional acceptance from a seasonable expression of acceptance.
When is a rejection effective?
When received by the offeror.
L offers to lease an apartment to T by sending T a signed lease that is silent about arbitration of disputes. T adds a paragraph that states that T “accepts provided that all disputes shall be resolved by arbitration of disputes” and signs.
Has T accepted L’s offer creating an express contract?
What if, after receiving T’s response, L sends T the keys to the apartment, is there a contract and is a arbitration part of a contract?
T has rejected L’s offer. A conditional acceptance, as distinguished from bargaining, generally terminates the offer (rejection) and create a new offer, unless there’s an option. Here, there’s no language that indicates T’s intent to bargain. Rather, T’s language of “provided that” is a conditional acceptance which rejects L’s offer. Hence, there’s no contract.
Yes and T’s response is the offer. L’s conduct is the acceptance.
Using an online form B places an order for pants from S which makes no mention of arbitration. S sends an acknowledgement form that provides for arbitration of disputes and states “accept only if you agree that all disputes shall be submitted to arbitration.” No further communications or actions.
1) Has S accepted B’s offer creating an express contract?
2) If S sends B the pants and he pays for them is there a contract? And is arbitration part of it?
- No. A conditional acceptance is a rejection under the UCC. S’s offer indicates conditional acceptance by the use of the words “accept only if.”
- Under the UCC, a conditional acceptance isn’t a counteroffer (termination) that can be accepted by conduct. While a contract can be formed consisting solely on conduct of the parties, arbitration is not a term.
What is the mirror image rule?
A response to an offer that adds new terms is treated it like a counteroffer rather than an acceptance., Common law only .
L offers to lease a building to T by sending T a signed lease that is silent about arbitration. T adds a sentence “all disputes shall be resolved by arbitration” and signs.
Has T accepted L’s offer creating an express contract? If no, can T later accept L’s offer?
Rule: Under the common law’s mirror image rule, a response to an offer that adds new terms is treated it like a counteroffer rather than an acceptance. As a counteroffer, T has rejected L’s offer; therefore, there’s no contract.
Rule: once an offer is rejected, it’s terminated and can no longer be accepted. As T’s counteroffer was a termination of the offer, T can no longer accept.
What is a seasonable expression of acceptance and what does it mean for the contract?
Under A2’s seasonal expression of acceptance rule, a response to an offer that adds terms or changes terms (but doesn’t make those terms a condition of acceptance), isn’t a rejection, regardless of whether the parties are merchants. Rather, there a contract.
The different or additional term is only part of the contract if
(1) both parties are merchants and
(2) the term is not material AND wasn’t objected to by the original offeror.
O offers to sell his car to B. B replies “I accept. Deliver it on Saturday.”
Is there a contract? And if so is Saturday delivery a term?
If B’s response were “I accept on the condition that you agree to Saturday delivery” would there be a contract?
Yes, there is a contract but Saturday delivery is not a contract term. UCC seasonable expression of acceptance.
No. A conditional acceptance becomes a counteroffer (termination) that can be accepted by conduct.
Where the offer is that silent as the method of acceptance, is starting to perform an acceptance?
Yes, because it is an implied promise to perform. Therefore there is a bilateral contract.
Exception: start of performances is not an acceptance of unilateral contract offers. Completion of performance is required. Offers to enter into a unilateral contracts cannot be accepted by a promise.
What are the offer and acceptance timing rules?
- All communications other than acceptance are effective only when received.
- Acceptance is generally effective when mailed (“mailbox rule”)
- If a rejection is mailed before an acceptance is mailed, then neither is effective until received.
- You cannot use the mailbox rule to meet an option deadline.
B receives a letter from S offering to sell his car. On January 10, B mails his letter of acceptance. On January 11 B receives a letter from S revoking the offer. Is there a contract?
Yes. Acceptance is effective when mailed while a revocation is effective the only when received.
Who makes a rejection? Who makes a revocation?
The Offeree makes a rejection of the offer. The offeror makes a revocation of the offer.
Buyer mails a letter rejecting an offer and then changes mind and mails letter of acceptance. What result if the rejection letter arrives first?
No contract.
Buyer and seller execute an option contract that gives buyer the option to buy expiring on December 1 at 4:00 PM. Buyer mails seller a letter exercising the option on December 1 at 350 PM. What result?
B did not meet the option deadline because you cannot use the mailbox rule to meet an option deadline.
Buyer orders a Panasonic television. Seller sends a Sony television. Is there a contract? If so what is the result?
There is a contract but seller has breached the contract
I offer a $500 reward to the person who finds my lost dog. You find in return my dog, not knowing of the reward. Is that acceptance of my offer? Why or why not?
No. An offer can be accepted only by a person who knows about the offer at the time she accepts.
I offer to sell you my car. Can you sell the offer to someone else so that he can accept the offer?
No. An offer can be accepted only by the person to whom it was made.
You pay me $10.00 for a 10 day option to buy my car. Can you sell the option to another person so that he can now exercise the option and accept the offer?
Yes. While offers cannot be assigned, options can be assigned, unless the option otherwise provides.
What is consideration?
Bargain for legal detriment.
Must consideration confer an economic benefit?
No
A saves B’s life. B’s father is so grateful that he promises to pay A $10,000. Is the promise the legally enforceable?
No. Past consideration is not considered consideration.
Buyer and seller enter into an agreement in which buyer promises to buy Sellers house and the seller promises to sell his house to buyer with buyers payment and Sellers transfer of title. Is there adequate consideration?
Yes. A promise to act is sufficient consideration.
Seller promises to sell and buyer promises to buy a car. Seller reserves the right to terminate the agreement at any time without notice. Is there a consideration for B’s promise?
If S reserved the right to terminate on 10 days notice, would that be adequate consideration?
No. S is promise is an illusory promise.
Yes.
What is the preexisting duty rule and what are the three main exceptions?
Doing what you are already legally obligated to do is insufficient consideration for a new promise to pay more (common law only); new consideration is required such as:
- Addition to or change in performance
- Unforeseen difficulty so severe as to excuse performance
- Third party promise to pay
Coke contracts to sell a dozen cases too hot dog stand for $1000. Coke subsequently tells owner that it cannot deliver the dozen for less than $1300. Owner promises to pay the additional $300 and coke delivers the cases. Is the subsequent promise enforceable?
Even though there is no new consideration for owners promise to pay additional, the new promise is legally enforceable if made in good faith because UCC does not have a preexisting legal duty rule.
Is part payment consideration for promise to forgive the balance of the debt?
If the debt is due and undisputed, then part payment is not consideration for release.
What are the two consideration substitutes?
1 . A written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration.
2. Promissory estoppel.
Debtor owes creditor $1000. Collection is barred by the statute of limitations. Debtor promises to pay the $600 of the debt. Is the promise enforceable?
Even though there is no new consideration, the promise is enforceable because the debtor had a legal defense.
What are the elements of promissory estoppel?
- Promise;
- Reliance that is reasonable, detrimental, and foreseeable; and
- Enforcement necessary to avoid injustice.
Who lacks capacity to contract? What is the consequence of incapacity?
- Under 18
- Mental incompetent
- Intoxicated persons if other party has reason to know
Person without capacity has the right to disaffirm but may have a quasi contract liability.
Seller sells car to a drunk who does not pay at the time intoxicated. After sobering, trunk keeps car. Can seller enforce the agreement?
Yes. Drunk implied affirmation by retaining benefits after gaining capacity.
What is the consequence of a contract being within the statute of frauds?
Statute of frauds is a defense to the existence of a contract.
Plaintiff must bring objective proof that a contract exists in the form of proof of performance or a writing signed by the defendant before the plaintiff can go to trial.
What are the main contracts within the statute of frauds?
SaLLY G Suretyship Leases Land Year Goods for $500 or more
