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Flashcards in Contracts Rules Deck (19)
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Explain offer

an objective outward manifestation of a willingness to enter into a bargain that creates the power of acceptance. The manifestation can be oral, written, or made via conduct. Inward thoughts or subjective thoughts are irrelevant unless they are reasonably apparent to the other party.


explain the mirror image rule

At common law the mirror image rule requires that acceptance must mirror the terms of the offer and any variation results in a counteroffer and rejection of the initial offer.


Define merchant under the UCC

the ucc defines a merchant in terms of his special knowledge or skill with respect to the practices or goods involved in the transaction. A person may be considered a merchant even if he only has knowledge of the goods or practices.


Generally, an offeree's silence in response to an offer cannot constitute acceptance except in 3 circumstances

1. where the offeree takes the benefits of the offeror's services with a reasonable opportunity to object them and with reason to know the offeror's intention

2. where the offer has given the offeree reason to understand that acceptance may be communicated by silence, in which the offeree's silence will operate as acceptance if he intends as such; and

3. where because of prior dealings or circumstances, it is reasonable that the offeree should notify the offeror if he does not intend to accept, in which case his silence will operate as acceptance.


define the mailbox rule

Acceptance by mail is effective upon dispatch as long as the acceptance is properly posted, with the correct address and postage amount. the mailbox rule only applies to acceptances and not to any communications between the parties. Therefore, offers, revocations, rejections, and counteroffers are all effective only upon receipt by the other party.


what are two situations where the mailbox rule will nota apply?

involve an offeree who dispatches two responses to an offer: the first intending to reject the offer, and the second intending to accept the offer. The mailbox rule would not apply and therefore, the parties obligations would depend on which communication was received first.


What is the general rule for past or moral consideration?

what are the exceptions

As a general rule, a promise given in exchange for something already given or already performed will not satisfy the bargain requirement.


a written promise to pay a debt barred by the statute of limitations

a written promise to pay all or part of an indebtedness that has been discharged in a bankruptcy proceeding.


a minority of jurisdictions, courts will enforce a promise made in recognition of a past benefit conferred as long as:

the promisee conferred the benefit on the promisor and not a 3rd party; and

the benefit is material


State the rule of Promissory Estoppel

The doctrine of promissory estoppel allows for enforcement of certain promises even where there is no consideration in return. There are 4 requirements that must be met in order for promissory estoppel to be available.
1. a promise 2. foreseeable reliance 3. actual reliance and 4. injustice without enforcement.

note actual reliance must be induced by the promise.


The general rule in contract law is that a contract need not be in writing and that oral and written agreements are equally enforceable. State the Statute of Frauds exception to the general rule.

As an exception to the general rule, some classes of contracts (MYLEGS) are not enforceable unless reflected in a signed writing. The statute of frauds requires that these contracts be evidenced by a writing signed by the party against whom enforcement is sought. In terms of litigation, the SOF is a defense which may be raised against a party who has claimed a contract breach.


What is required to satisfy the UCC Statute of Frauds requirement?

Mnemonic: SMIPS

Signed writing
Merchant's confirmation
In Court admission
Part performance
Substantial Reliance by the Seller of specially manufactured goods.


what does the parol evidence rule govern?

governs the negotiations of the parties leading up to the execution of a written contract. The rule governs oral and documentary evidence of negotiations and other communications between the parties including communications that took place prior to or contemporaneously with the execution of the written contract.


When a party seeks to admit parol evidence, the court will determine the admissibility of the evidence based on two questions:

First: what is the purpose for which the evidence is being introduced?

Second: does the evidence relate to a term or contract which is integrated?


Define and explain Full Integration

When a particular contract is fully integrated (aka partial integration) it means that the terms contained within the contract are intended to be the final discussion of the parties as to those specific terms. It does not mean, however, that the parties have specifically excluded any provisions not contained within the agreement.


Define and explain Complete Integration

When a contract is completely integrated the parties intend for the contract to represent a "complete and exclusive statement of all the terms." When this is the case, only the written terms contained in the contract are considered part of the contract.


what evidence will a judge rely on in determining whether the terms of a contract are fully integrated?

1. The thoroughness and specificity of the written instrument in connection with the terms at issue, which are strong indicators that the parties intended the writing to represent their final agreement; and

2. parol and other extrinsic evidence are admissible

note: the determination is not made solely on the writing alone but all circumstances including the proffered parol evidence and other evidence extrinsic to the written contract.


what evidence is used to determine Complete integration of a contract?

whether or not the contract has a merger clause that specifically states that the written agreement represents a full account of their contractual obligations. (eg. "this writing contains the complete and entire agreement of the parties")

detail of the contract provisions and the length of the agreement.

parol and other extrinsic evidence admissible: subject to an "all circumstances test" and the proffered parol evidence as well as other extrinsic evidence may be considered.


The effect of the parol evidence rule depends on the purpose for which the evidence is being introduced. Identify the purposes for which parol evidence is being introduced and circumstances of admissibility. include UCC distinctions

to explain or interpret terms of the written contract- always admissible

To supplement terms of the written contract- admissible unless theK is completely integrated
UCC: usage of trade, course of dealing, and performance evidence are admissible in sale of goods cases to supplement the K terms.

To contradict the terms of the written contract- admissible unless the term in question are fully integrated (intended to represent the final agreement on the subjects in question).
UCC: Course of dealing or course of performance may be admissible in the sale of goods cases to qualify the meaning of an integrated term.


To what evidence does the Parol Evidence Rule Not apply?

1. Subsequent agreements

2. Attacks on validity of the written agreement including:
- mistake or duress
-absence of consideration
-failure of an oral condition precedent to the agreement

3. Collateral agreements - will not affect agreements that are completely distinct from the K at issue.