Formation Flashcards
(172 cards)
1
Q
4 questions to determine whether a contract is enforceable
A
- Is there mutual assent between the parties?
- Is the agreement supported by consideration?
- Are there any defenses to formation or enforcement that could invalidate the otherwise valid contract?
- Does this agreement trigger/satisfy the statute of frauds?
2
Q
What are the three elements required to form a traditional, enforceable contract?
A
- Mutual assent between the parties
- Offer and acceptance supported by consideration
- No defenses to formation or enforcement
3
Q
What does mutual assent require in the context of contract formation?
A
A meeting of the minds between the parties, established by a valid offer and a valid acceptance
4
Q
What is consideration in contract law?
A
A transfer of legal value in a bargained-for exchange between the parties
5
Q
Can promises to give gifts be enforced under traditional contract theory?
A
No, they lack consideration and cannot be enforced
6
Q
What is an example of an alternative legal theory of enforcement for promises lacking consideration?
A
Promissory estoppel
7
Q
What can a party assert to avoid liability even if mutual assent and consideration are present?
A
A valid defense to contract formation or enforcement
8
Q
List some common defenses to contract formation or enforcement.
A
- Incapacity
- Mistake
- Misunderstanding
- Misrepresentation
- Duress
- Undue Influence
- Illegality
- Unconscionability
9
Q
True or False: A contract can be enforced if there is mutual assent and consideration but a valid defense exists.
A
False
10
Q
Fill in the blank: A traditional, enforceable contract is formed when there is mutual assent, consideration, and _______.
A
no defenses to formation or enforcement
11
Q
What is mutual assent?
A
Mutual assent is present when there is a valid offer and acceptance.
Mutual assent is a fundamental principle in contract law indicating that both parties agree to the terms of the contract.
12
Q
What must an offeror do to form a valid offer?
A
An offeror must:
* Manifest an objective willingness to enter into the agreement
* Create a power of acceptance in the offeree
* Specify all necessary terms of the agreement
13
Q
What does it mean to manifest an objective willingness?
A
It means that the offer is governed by an objective test based on outward appearances of words and actions, not hidden intentions.
For example, an offer made with crossed fingers is not considered valid.
14
Q
What is the power of acceptance?
A
The power of acceptance is created when the offeree can simply say, ‘I accept’ and know that the deal is concluded.
15
Q
To whom must an offer generally be directed?
A
An offer must generally be directed to a specific offeree.
There are exceptions for contest and reward offers that can be made to the public.
16
Q
What is the nature of advertisements in contract law?
A
Advertisements are usually considered an invitation to deal rather than an offer.
This is because they typically do not confer a power of acceptance unless they are very specific.
17
Q
What are the essential terms that must be specified in a common law offer?
A
Essential terms include:
* Parties
* Subject
* Quantity
* Price
All these terms must be clear for a valid offer under common law.
18
Q
What is the UCC’s requirement regarding price in an offer?
A
Under the UCC, the price term is not required in the offer.
The only required terms under the UCC are parties, subject, and quantity.
19
Q
What is a requirements contract under the UCC?
A
A requirements contract is when the seller agrees to sell as much as the buyer would require.
This type of contract does not specify an exact quantity.
20
Q
What is an output contract under the UCC?
A
An output contract is when the seller agrees to sell his entire production to the buyer.
Like requirements contracts, this does not specify an exact quantity.
21
Q
What happens to a valid offer if it is terminated before acceptance?
A
The offer is invalidated and cannot be accepted or revived unless a new offer is made.
22
Q
What is one way an offer can be terminated?
A
The offeror revokes the offer by express communication to the offeree.
23
Q
What occurs if the offeree learns the offeror has taken an action inconsistent with the ability to contract?
A
The offer is terminated.
24
Q
What action by the offeree results in the termination of the offer?
A
The offeree rejects the offer by express communication to the offeror.
25
What is a counteroffer in relation to an offer?
The offeree expressly communicates a counteroffer to the offeror.
| different terms than the original offer
26
What happens to an offer if the offeror dies or becomes incapacitated?
The offer is terminated.
27
What can cause an offer to be terminated after a reasonable amount of time?
offeree has neither expressly nor impliedly accepted the offer
28
What does 'operation of law' refer to in the context of offer termination?
Supervening illegality or destruction of property.
29
What is the general rule regarding the revocation of offers?
The offeror is free to revoke an offer at any time prior to acceptance.
30
What is an option contract?
An irrevocable offer if consideration is given in exchange for a promise to keep the offer open.
| additional consideration on top of that for the contract itself
31
Under what conditions is a UCC firm offer irrevocable?
If it...
(1) is in writing,
(2) contains an explicit promise not to revoke, and
(3) is signed by the merchant.
32
What is the maximum duration a UCC firm offer can last?
For a reasonable amount of time not to exceed 90 days.
33
How does the UCC define a merchant?
A person who deals in goods of the kind or holds himself out as having knowledge or skill peculiar to the practices or goods involved.
34
When does a unilateral offer become irrevocable?
Once the offeree starts performance.
35
What distinguishes a unilateral offer from a bilateral offer?
A unilateral offer requests acceptance by performance, while a bilateral offer invites acceptance by a return promise.
36
What is the significance of detrimental reliance in the context of irrevocable offers?
An offer is irrevocable if the offeree reasonably and detrimentally relies on the offer in a foreseeable manner.
37
What is required for the offeree to accept an offer?
offeree must manifest an objective willingness to enter into the agreement
## Footnote
Acceptance is governed by an objective test based on outward appearances, not hidden intentions.
38
How must the offeree accept the offer?
According to the rules established by the offeror
| The offeror can set specific terms for acceptance.
## Footnote
(e.g., offeror can require offeree to accept by sending a signed writing within a certain time period).
39
What distinguishes a unilateral offer from a bilateral offer?
A unilateral offer requests acceptance by an action or performance, while a bilateral offer invites acceptance by a return promise or the method of acceptance is unspecified
## Footnote
Unilateral offers become irrevocable once performance begins (accepted upon completion), whereas bilateral offers can be accepted through performance.
40
When does the start of performance manifest acceptance in bilateral offers?
unless otherwise specified by offeror
## Footnote
This indicates that the offeree has accepted the offer.
41
What happens when the start of performance occurs in unilateral offers?
The offer becomes irrevocable
## Footnote
The offer is considered accepted only once performance is complete.
42
To whom must an offer generally be directed?
A specific offeree
## Footnote
There are exceptions for contest and reward offers that can be directed to anyone fulfilling a certain task.
43
What must the offeree be aware of to validly accept a contest or reward offer?
That the contest or reward offer exists
## Footnote
Awareness is crucial for acceptance in these cases.
44
Under the mailbox rule, when is an acceptance valid?
An acceptance is valid at the moment of dispatch.
45
exceptions to the mailbox rule?
* Wrong address or improper postage
* Offeror stipulates acceptance valid upon receipt
* Involvement of an option contract
* Termination letter sent before acceptance
* Offeror relies on termination before receiving acceptance
46
Does the mailbox rule apply to all types of communication?
No, it only applies to acceptance letters.
47
What is the difference between a counteroffer and an acceptance?
A counteroffer is both a rejection of the original offer and a new offer.
48
What is the Mirror Image Rule?
@ CL The terms in the acceptance must match the terms of the offer exactly. If they don't its a counteroffer not an acceptance
49
How does UCC § 2-207 differ from the Mirror Image Rule?
Under UCC § 2-207, acceptance can include different or additional terms — different terms will knock each other out and be replaced by UCC gap fillers
50
What are the requirements for a valid acceptance under UCC § 2-207(1)?
* Definite and seasonable expression of acceptance
* Sent within a reasonable amount of time
* Operates as acceptance even with different/additional terms
* Unless expressly conditional upon assent to those terms
51
When do additional terms govern the contract under UCC § 2-207(2)?
If both parties are merchants and none of the exceptions apply.
52
What are the exceptions to additional terms governing the contract under UCC § 2-207(2)?
* Initial offer limits acceptance to its terms
* Additional terms materially alter the deal
* Offeror objects to additional terms in a reasonable time
53
What is the Knockout Rule?
when an acceptance includes different (as opposed to additional) terms from the offer, these terms knock each other out, creating a gap filled by UCC gap fillers.
54
Define 'different term' in the context of the Knockout Rule.
A term not included in the original offer that conflicts with the terms of the original offer.
55
Define 'additional term' in the context of the Knockout Rule.
A term not included in the original offer that does not conflict with the original offer.
56
what are UCC gap fillers in the context of the Knockout Rule?
UCC gap fillers are used to fill the gap created by knockout of different terms.
57
What is consideration?
Consideration refers to the transfer of legal value in a bargained-for exchange between two parties.
58
What are the two conditions for consideration to be present?
1. The promisee incurs a legal detriment OR the promisor receives a legal benefit;
2. The promise induces the detriment AND the detriment induces the promise.
59
What is a legal detriment?
A legal detriment generally consists of:
* Promising to do something the party has no prior legal duty to do
* Performing an action that the party is not otherwise obligated to undertake; OR
* Refraining from or promising to refrain from exercising a legal right which the party is otherwise entitled to exercise.
60
Does promising not to sue constitute a legal detriment?
Yes, promising not to sue will act as a legal detriment if the party has an honest and good faith belief in the validity of the claim.
61
Are gift promises considered valid consideration?
No, gift promises are NOT consideration.
| no bargained for exchange/no detriment to the gift recipient
62
Are conditional gifts valid consideration?
No, conditional gifts are NOT consideration.
| inducement only going in one direction > no bargained for consideration
63
A promises to give B his truck if B will drive 30 minutes away to pick it up — consideration?
NO. This is a conditional gift, not bargained-for consideration.
| A's promise not induced by B's performance
64
Is a preexisting legal duty considered valid consideration?
No, a preexisting legal duty is NOT consideration.
| no legal detriment where induced behavior already required by law
65
A promises to pay B $100 if B refrains from smoking crack-cocaine for 6 months — consideration?
NO. B has a preexisting legal duty to refrain from smoking crack, by doing so B incurs no legal detriment.
66
What happens if A promises to pay B $100 for refraining from smoking tobacco?
Consideration would be present, assuming B is of legal age.
67
Is past consideration valid consideration?
No, past consideration is NOT consideration.
| action can't be induced by promise made after action occurs
68
A promises to pay B $100 for rescuing him after B has already extinguished a fire that endangered A — consideration?
NO. This is past consideration
69
What is sham consideration?
Sham consideration is NOT consideration; it occurs when parties pretend to exchange value but do not.
70
A and B are cousins. A wishes to give B his truck that is valued at $10,000 as a gift for B’s birthday. Attempting to form an enforceable contract, A “sells” B his truck for $1 solely to meet the consideration requirement — consideration?
NO. A is not induced to give B his truck for the $1. This is merely a pretense of consideration, not bargained-for consideration.
71
What is an illusory promise?
An illusory promise occurs when the promisor fails to clearly commit to the deal.
72
A promises to buy B’s truck if “he feels like it.” Here, A is not committing to the deal — consideration?
NO. This is an illusory promise, not bargained-for consideration
73
What is a contract modification?
A contract modification occurs when the parties to a contract change or add additional terms to an existing enforceable contract.
74
Under the common law, what is required for a contract modification to be valid?
A contract modification must be supported by consideration.
75
What is the significance of the preexisting duty rule in the context of contract modification?
@ CL any modification of an enforceable contract must be accompanied by additional consideration because the existant consideration is a preexisting legal duty and therefore cannot serve as valid consideration for the modifications
## Footnote
once a contract becomes enforceable the consideration becomes a preexisting legal duty
76
Under the UCC, what is not required for a contract modification to be valid?
A contract modification need NOT be supported by consideration – it will be considered valid so long as the parties are deemed to have entered into it in good faith
77
What condition must be met for a contract modification to be valid under the UCC?
The parties must enter into the modification in good faith.
78
What are some defenses to the formation and enforcement of a contract?
* Incapacity
* Mistake
* Misunderstanding
* Misrepresentation
* Duress
* Undue Influence
* Illegality
* Unconscionability
## Footnote
These defenses can invalidate a contract even if mutual assent and consideration are present.
79
What is the outcome if a defense to a contract is successfully asserted?
The contract will generally be void or voidable.
## Footnote
A void contract is treated as though it never existed, while a voidable contract remains enforceable until rescinded by the adversely affected party.
80
Define a void contract.
A contract treated as though it never existed, meaning neither party can enforce it.
## Footnote
Void contracts have no legal effect.
81
Define a voidable contract.
A contract that is enforceable until a party takes action to rescind it.
## Footnote
The adversely affected party may choose to enforce or rescind the contract.
82
True or False: A void contract can be enforced by either party.
False
## Footnote
Void contracts cannot be enforced by either party.
83
Fill in the blank: A contract is considered _______ if it can be enforced until a party takes action to rescind it.
voidable
## Footnote
Voidable contracts provide the option to rescind for the adversely affected party.
84
What is the capacity of a minor to incur contractual duties?
A person has the capacity to incur only VOIDABLE contractual duties until the day before turning 18.
## Footnote
Unless a statute provides otherwise.
85
What options does a minor have when entering into a contract with an adult?
A minor may choose to either:
* Disaffirm (rescind) the contract
* Affirm (enforce) the contract
## Footnote
Restatement (Second) of Contracts § 14.
86
What must a minor do if they choose to disaffirm a contract?
Return anything received under the contract that remains in possession.
## Footnote
There is no obligation to return negligently squandered or destroyed items.
87
How can a minor affirm a contract?
Expressly or by failing to disaffirm within a reasonable time after reaching majority.
## Footnote
Restatement (Second) of Contracts § 14.
88
What is the capacity of a person with mental illness to incur contractual duties?
A mentally ill person incurs only VOIDABLE contractual duties if unable to:
* Understand the nature and consequences of the transaction
* Act in a reasonable manner in relation to the transaction
## Footnote
Restatement (Second) of Contracts § 15.
89
Under what conditions can a mentally ill party disaffirm a contract?
When lucid or by legal representative.
## Footnote
They cannot disaffirm if the contract was made on fair terms and the other party was unaware of the mental illness.
90
What is the effect of intoxication on contractual duties?
A person incurs only VOIDABLE contractual duties if the other party is aware that due to the person's intoxication he is unable to:
* Understand the nature and consequences of the transaction
* Act in a reasonable manner in relation to the transaction
## Footnote
Restatement (Second) of Contracts § 16.
91
What must an intoxicated party do to avoid liability under a contract?
Act promptly upon recovery to disaffirm the contract and return any value received, if possible.
## Footnote
Restatement (Second) of Contracts § 16.
92
What is the necessaries doctrine?
A party lacking capacity is liable for the reasonable value (rather than the agreed upon price) of necessaries furnished under a quasi-contract theory.
## Footnote
Necessaries include food, shelter, clothing, healthcare, etc.
93
What is a mistake in the context of contracts?
A belief that is not in accord with the facts
## Footnote
Restatement (Second) of Contracts § 151
94
What is a mutual mistake?
Occurs when both parties are mistaken as to a basic assumption of the contract
95
What is a unilateral mistake?
Occurs when only one party is mistaken as to a basic assumption of the contract
96
What are the conditions for a contract to be voidable (at the adversely affected party's discretion) due to mutual mistake?
1. There is a mistake of fact existing at the time the deal is made
2. The mistake relates to a basic assumption of the contract
3. The mistake has a material impact on the deal
4. The adversely affected party did NOT assume the risk of mistake
97
When does a party assume the risk of a mistake?
1. The risk is allocated to him by agreement of the parties
2. He is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient (i.e., “conscious ignorance”.
98
an auctioneer sells a safe without knowledge as to the contents of a locked compartment in the safe. Later, the buyer discovers more than $32,000 of cash in the locked compartment. Can the seller recover the $32k?
NO. The seller assumed the risk of mistake by treating his limited knowledge of the contents of the locked compartment as sufficient when entering the sale (i.e., he acted with conscious ignorance)
99
What are the conditions for a contract to be voidable due to unilateral mistake?
1. There is a mistake of fact existing at the time the deal is made;
2. The mistake relates to a basic assumption of the contract;
3. The mistake has a material impact on the deal;
4. The adversely affected party did NOT assume the risk of mistake; AND
5. The mistake would make the contract unconscionable OR the other party had reason to know of the mistake or his fault caused the mistake.
100
True or False: A unilateral mistake can make a contract voidable if the adversely affected party assumes the risk of mistake.
False
101
What happens if neither party knows or should know of a misunderstanding in an agreement?
| (a misunderstanding of a term in the contract)
No contract exists, unless both parties intended the same meaning
## Footnote
This implies that a lack of awareness of the misunderstanding can prevent contract formation.
102
What is the outcome if both parties know or should know of a misunderstanding?
| (a misunderstanding of a term in the contract)
No contract exists, unless both parties intended the same meaning
## Footnote
Awareness of the misunderstanding by both parties does not guarantee contract validity.
103
What occurs if one party knows or should know of the misunderstanding?
| (a misunderstanding of a term in the contract)
A binding contract exists based on the ignorant party’s reasonable interpretation of the ambiguous terms
104
What determines the existence of a contract when one party is aware of a misunderstanding?
The ignorant party’s reasonable interpretation of the ambiguous terms
## Footnote
This principle emphasizes the significance of how terms are interpreted by parties in contract disputes.
105
What is a misrepresentation?
An assertion of fact that is not true (i.e., a 'lie')
106
What does non-disclosure of a fact equate to in the context of misrepresentation?
An assertion that the fact does not exist (a misrepresentation)
107
When is disclosure of a fact necessary to prevent misrepresentation?
* Disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material;
* Disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and the failure to disclose would constitute a breach of good faith and fair dealing;
* Disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part; OR
* The other person is entitled to know the fact because of a relation of trust and confidence between them.
108
What are the two types of fraudulent misrepresentation?
* Fraud in the factum
* Fraud in the inducement
109
What occurs in fraud in the factum?
A person tricks someone into signing a contract by making it appear as a different document
110
What is the status of a contract obtained through fraud in the factum?
VOID
111
What is fraud in the inducement?
A fraudulent misrepresentation used to induce another to enter a contract
112
What conditions make a contract voidable due to fraud in the inducement?
* A fraudulent misrepresentation of fact
* Induced the adversely affected party to manifest assent; AND
* The adversely affected party was justified in relying on the misrepresentation
113
What makes a misrepresentation fraudulent?
* Made knowingly or recklessly without knowledge of its truth
* With the intent to induce assent
114
Can a misrepresentation of opinion be actionable?
Yes, if an 'expert' expresses a high opinion when their opinion is actually low
115
A dance studio's false representations of a woman's skill/potential as a dancer induced her to pay for more than 2,000 hours of dance instruction — fraudulent misrepresentation?
YES. This is fraud in the inducement.
116
What is puffery?
A promotional statement that no reasonable person would take literally
117
What defines a nonfraudulent misrepresentation?
A material misrepresentation of fact that induces the adversely affected party to manifest assent
118
What makes a misrepresentation material?
* Likely to induce a reasonable person to manifest assent
* Maker knows it would likely induce the recipient
119
What are the necessary conditions for a contract to be voidable due to nonfraudulent misrepresentation?
* A material misrepresentation of fact
* Induced the adversely affected party to manifest assent
* The adversely affected party was justified in relying on the misrepresentation
120
What happens to a contract if a party is compelled by physical duress?
The contract is VOID
## Footnote
Physical duress includes threats of physical harm.
121
Under what condition (in the context of duress) is a contract VOIDABLE?
If the adversely affected party's assent is induced by an improper threat that leaves no reasonable alternative
## Footnote
Refer to Restatement (Second) of Contracts § 175.
122
What constitutes an improper threat?
* What is threatened is a crime or a tort, or the threat itself would be a crime or a tort if it resulted in obtaining property;
* What is threatened is a criminal prosecution;
* What is threatened is the use of civil process and the threat is made in bad faith;
* The threat is a breach of the duty of good faith and fair dealing under a contract with the recipient;
* The resulting exchange is not on fair terms, AND:
* The threatened act would harm the recipient and would not significantly benefit the party making the threat;
* The effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat; OR
* What is threatened is otherwise a use of power for illegitimate ends.
## Footnote
These factors determine the impropriety of a threat in contract law.
123
Fill in the blank: A contract is _____ if a party is compelled by physical duress.
VOID
124
True or False: A contract is automatically void if it is signed under an improper threat.
False
## Footnote
The contract is VOIDABLE, not automatically void.
125
What is the effect of prior unfair dealing on a threat?
It significantly increases the effectiveness of the threat in inducing assent
## Footnote
This emphasizes the context in which threats are made.
126
What is the effect of undue influence on a contract?
A contract is VOIDABLE by the adversely affected party if their assent is induced due to undue influence
## Footnote
Undue influence occurs when one party takes advantage of their position over another party's susceptibility to pressure.
127
What must be proven for a contract to be considered voidable due to undue influence?
1. Susceptibility to pressure by the adversely affected party.
2. Application of excessive pressure by the other side.
## Footnote
Both conditions must be met for a contract to be voidable.
128
What factors do courts consider to determine susceptibility to pressure?
* Nature of the relationship between the parties
* Relative levels of sophistication and expertise between parties
* Physical, mental, emotional, or financial conditions making a party more susceptible
## Footnote
Relationships like trustee-beneficiary or lawyer-client often demonstrate higher susceptibility.
129
What are the Odorizzi factors used to determine excessive pressure?
* Discussion at an unusual or inappropriate time
* Consummation of transaction in an unusual place
* Insistent demand to finish immediately
* Extreme emphasis on consequences of delay
* Use of multiple persuaders against a single party
* Absence of third-party advisers
* Statements indicating no time to consult advisers
## Footnote
These factors help assess whether the pressure applied was excessive.
130
True or False: A lawyer-client relationship is likely to demonstrate susceptibility to undue influence.
True
## Footnote
The nature of such relationships often makes one party more susceptible to pressure.
131
Fill in the blank: A contract is voidable if the adversely affected party's assent is induced by their susceptibility to _______.
[pressure]
## Footnote
This susceptibility is a key factor in determining undue influence.
132
What is the status of a contract if the consideration or performance is illegal?
A contract is VOID
## Footnote
Example: Hiring someone to commit a crime makes the contract void.
133
Under what condition may a contract not be void despite illegal consideration?
If the plaintiff is justifiably ignorant of the facts that make the contract illegal and the defendant acted with knowledge of the illegality
## Footnote
The plaintiff may still enforce the contract.
134
What happens if a contract is easily divisible into legal and illegal parts?
The legal parts of the contract may still be enforced
## Footnote
This means that only the illegal parts are void.
135
What is the implication if one party is less culpable than the other in an illegal contract?
The less culpable party may recover restitution
## Footnote
This applies when the parties are not in pari delicto.
136
When is a contract considered voidable because of an illegal purpose?
If the party was unaware of the illegal purpose or aware but did not facilitate it and it does not involve grave social harm
## Footnote
Example: A seller unaware that the buyer intends to use the product for illegal activities.
137
What does unconscionability refer to in contract law?
A court may refuse to enforce a contract if its terms are so unfair and oppressive that it shocks the conscience of the court
## Footnote
This is based on Restatement (Second) of Contracts § 208.
138
What are the two types of unconscionability considered by courts?
Procedural unconscionability and substantive unconscionability
## Footnote
Procedural involves defects in the bargaining process; substantive involves grossly unfair terms.
139
What characterizes procedural unconscionability?
A defect in the bargaining process, such as excessive pressure from one side
## Footnote
This can affect the fairness of the contract formation.
140
What characterizes substantive unconscionability?
Terms of the deal that are grossly unfair and one-sided in favor of one party
## Footnote
This focuses on the content of the agreement.
141
Do all courts require both types of unconscionability to refuse enforcement of a contract?
No, some courts may refuse enforcement if only one type is present
## Footnote
This indicates variability in judicial approaches.
142
What is the statute of frauds?
The statute of frauds requires certain contracts to be in writing to be enforceable.An otherwise valid contract is unenforceable if it triggers the statute of frauds and fails to satisfy it.
## Footnote
An otherwise valid contract is unenforceable if it triggers the statute of frauds and fails to satisfy it.
143
what 2 elements result in an invalid contract under the statute of frauds
contract must:
(1) trigger the statute of frauds and
(2) fail to satisfy it.
144
What does 'M.O.U.S.E.R.' stand for in the context of the statute of frauds?
Marriage (contract made in consideration of marriage... not marriage contract itself),
One-Year Provision,
UCC Goods Contracts for $500 or More,
Suretyship (3rd party promises to cover principal's debt to obligee),
Executor/Administrator of an Estate,
Real Estate Contracts.
145
What type of contract related to marriage triggers the statute of frauds?
A contract made in consideration of marriage triggers the statute of frauds.
## Footnote
The promise between two people to marry does NOT trigger the statute.
146
What is the one-year provision in relation to the statute of frauds?
A contract that by its terms CANNOT be performed within one year from the day after its formation triggers the statute of frauds.
147
How is the one-year provision interpreted?
Very narrowly; there must be no possible way that the contract could be performed within one year from formation.
148
Does a contract for A hiring B for life trigger the statute of frauds under the one-year provision?
No, because A could die within one year from formation.
149
A hiries B to build a full-scale replica of the Egyptian pyramids – does this trigger the one-year provision under the statute of frauds?
NO. It is technically possible to build a full scale replica of the pyramids in under one year
150
What type of goods contracts trigger the statute of frauds?
Contracts for the purchase or sale of goods for $500 or more.
151
What is a suretyship contract?
A three-party agreement where the surety promises to pay the principal's debt if the principal fails to pay the obligee.
152
What is the main purpose exception in suretyship contracts?
If the surety's main purpose in agreeing to pay the principal's debt is for their own economic benefit, then the statute of frauds is NOT triggered.
153
What is the role of an executor or administrator of an estate?
Responsible for using the estate's assets to pay off debts to creditors before distributing assets to beneficiaries.
154
When does the statute of frauds get triggered concerning executors or administrators?
If they promise to personally pay a debt that the estate owes to a creditor.
155
What types of contracts related to real estate trigger the statute of frauds?
Any agreement or promise to transfer, receive, or create an interest in real estate.
156
Do construction project contracts trigger the statute of frauds?
No, unless they fall under the one-year provision.
157
What are the two main ways to satisfy the statute of frauds?
1. By a signed writing
2. By performance
## Footnote
These are the primary methods to ensure compliance with the statute of frauds in contractual agreements.
158
What are the requirements for a writing to satisfy the statute of frauds?
1. Signed by the party against whom enforcement is sought
2. Shows that a contract was formed
3. Includes the requisite terms
## Footnote
The requisite terms differ under common law and UCC.
159
Under common law, what are the requisite terms for a contract?
1. Parties
2. Subject matter
3. Quantity
4. Price
## Footnote
These terms must be included in the writing to satisfy the statute of frauds.
160
Under UCC, what are the requisite terms for a contract?
1. Parties
2. Subject matter
3. Quantity
## Footnote
UCC simplifies the requisite terms compared to common law.
161
What satisfies the statute of frauds for common law services contracts under the one-year provision?
FULL performance of a services contract by either side
## Footnote
Part performance does NOT satisfy the statute of frauds.
162
How can a seller in a real estate contract satisfy the statute of frauds?
By FULL performance (conveying the land to the buyer)
## Footnote
This is a common requirement across most jurisdictions.
163
What must a buyer do to satisfy the statute of frauds in a real estate contract?
Any two of the following:
* Take possession of the property
* Make payment in full or part
* Make substantial improvements to the land
## Footnote
These actions must indicate the transaction is more than just a lease agreement.
164
What is the limitation on a real estate buyer's recovery if they satisfy the statute of frauds by performance?
Limited to equitable relief (specific performance), not monetary damages
## Footnote
This emphasizes the nature of recovery in real estate transactions.
165
4 ways statute of frauds can be satisfied Under UCC § 2-201 (contract for goods $500+)
(P) Performance
(A) Admission in Court
(W) Written confirmation between merchants
(S) Specially manufactured goods
## Footnote
The contract is not enforceable beyond this quantity.
166
What satisfies the statute of frauds under UCC § 2-201(3)(b)? [A]
| P.A.W.S.
If the party against whom enforcement is sought admits in court that a contract for sale was made
## Footnote
This admission must be clear and documented.
167
What are the conditions for written confirmation between merchants under UCC § 2-201(2)?
1. After an oral agreement between merchants (both parties must be merchants);
2. Either party sends a signed, written confirmation of the oral contract (must be signed by the sender); AND
3. The written confirmation is received by the other party to the oral agreement; UNLESS
4. The party receiving the written confirmation gives a written notice of objection within 10 days after receipt of the written confirmation.
## Footnote
These conditions help enforce oral agreements through written documentation.
168
Under UCC § 2-201(3)(a), when is the statute of frauds satisfied for specially manufactured goods?
When a seller makes a substantial beginning toward manufacture of custom goods to be specially made for the buyer
## Footnote
These goods must not be suitable for sale to others in the ordinary course of business.
169
does the writing need to be written at the time the promise is made to satisfy the S.o.F? Does it need to be addressed to the promisee?
No & No
## Footnote
it just needs to include the requisite terms (parties, subject, quantity (+ price @CL))
170
When parties attach significantly different meanings to the same material term which meaning controls?
the meaning:
“attached by one of them if at the time the agreement was made . . . that party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party.”
## Footnote
if both parties knew what meaning one of the parties attached, that meaning controls
171
As stated in UCC § 2-509(1)(b), under a destination contract, when does the risk of loss shift from the seller to the buyer?
when the goods are duly tendered to the buyer rather than when the goods are unloaded.
172
under a shipment contract, when does the risk of loss shift from the seller to the buyer?
when the seller duly delivered the goods to the third-party carrier.
## Footnote
(unless otherwise specified, all UCC contracts that involve a 3rd party carrier are classified as shipment contracts)
