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Flashcards in Formation Deck (46)
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1
Define

contract

Legally enforceable agreement that contains the rights and responsibilities of the contracting parties.

2

What are the types of law that govern contracts?

  1. Common Law: employment contracts, personal service contracts
  2. UCC Article II: anything moveable; tangible personal property
  3. Mixed: When the contract deals with both services and good, predominant purpose of the contract reigns

3

Elements needed to form a valid contract

  1. Mutual assent (offer + acceptance); 
  2. Consideration (bargained for legal detriment); and
  3. No defenses to formation

4
Define

bilateral contract

Contract created by mutual promise of performance. The most common type of contract.

Ex. You agree to pay a certain amount of money in exchange for title of a home.

5
Define

unilateral contract

Requires full performance as method of acceptance

 

6
Define

offer

  1. An outward, objective manifestation of willingness to enter into a bargain; 
  2. That creates the power of acceptance in the offeree (i.e. nothing left to do except say "yes")

7

Under common law, what terms must be included in the offer?

  1. Parties
  2. Subject matter
  3. Price
  4. Quantity

8

What terms are required for real estate K's? 

identity of the land and price terms

9

What is the only essential term the UCC requires in a contract?

Quantity 

⭐️ As long as parties intended to make K, UCC will supply gap fillers for missing terms

10

What terms are required for a requirement or output contract?

Quantity expressed in terms such as "all" or "only" or "solely"

11

Are advertisements offers?

No, unless they contain specific and detailed information as to the price, quantity, and who can accept

(Ex. "50 blazers for sale for $50 for law students who passed the bar)

12

Are rewards offers?

Yes, because they generally offer money in exchange for performance of a specified task

13

How can an offer be terminated?

  1. Counter-offer;
  2. Death;
  3. Incapacity
  4. Lapse;
  5. Rejection; or
  6. Revocation

14

When can an offer be terminated?

Any time before acceptance

15

What types of offers are irrevocable?

  1. Option contracts; 
  2. Firm offers; 
  3. When there is detrimental reliance
  4. When offeree has started performance on a unilateral contract

16
Define

option contract

Makes an offer irrevocable if: 

  1. Offeror promised to keep offer open for a specific period of time; and
  2. Promise was supported by consideration

17
Define

firm offer

Irrevocable offer under the UCC if: 

  1. Offeror is a merchant;
  2. Offer is signed, in writing; and
  3. Expressly provides that the offer will be held open

18

Does the offeree need to know about the offer to accept?

Yes, otherwise no power of acceptance was created

19

Who prescribes the method by which the offer can be accepted?

Offeror.

If no method specified, can be accepted by any reasonable method.

20

How does one accept a unilateral contract?

  1. Full performance; and
  2. Notice to offeror that you accepted within a reasonable time frame after performance starts

⚠️ Note: partial performance does not constitute acceptance (but you may still be able to argue detrimental reliance or quasi-contract)

21

What does a counteroffer function as?

rejection + new offer

22
Define

mirror image rule

(common law)

Acceptance must be a mirror image of every single term of the offer.

If any part of the terms are different, it will function as a counter-offer and rejection.

 

23

Under UCC §2-207, what happens if an acceptance contains "additional or different" terms from the original offer if both parties are merchants?

The terms will automatically become part of the contract, unless:

  • the terms materially change the contract;
  • the offeror objects; or
  • the offer was explicitly limited to the original terms

24

Under UCC §2-207, what happens if an acceptance contains "additional or different" terms from the original offer if both parties are NOT merchants?

Additional terms are not incorporated, but the acceptance is still valid

25

How does a merchant accept an offer to buy goods?

  1. Promise to ship the goods; or
  2. Shipping the goods within a reasonable time period

26

Does shipment of nonconforming goods qualify as acceptance?

Yes, but also constitutes breach

27

What is the UCC knock-out rule?

If one term conflicts with another in the contract, they will "knock" each other out and a UCC gap filler will used instead

28

What is the mailbox rule?

Acceptance is effective upon DISPATCH

29

Does the mailbox rule still apply if the offer says otherwise?

No, the offer controls

30

What happens if both an acceptance and rejection are sent by the offeree when the:

  1. Rejection is sent first?
  2. Acceptance is sent first?

  1. Acceptance will be effective if received BEFORE the rejection
  2. Acceptance effective upon dispatch (regardless of whether rejection is received before)

31

When is acceptance of an option contract effective?

Upon receipt by offeror.

32

If an offeree reasonably knows or suspects that an offer was mistaken, can they still accept the offer?

No.

(Ex. If Max knew that he was supposed to get an offer for 500 toys at $5 a piece, but instead receives an offer for 500 at $0.05 a piece, he cannot grab the offer).

33
Define

consideration

  1. Detriment to promisee (promisee forgoes something of value); or
  2. Bargained-for exchange (must not be nominal)

34

What qualifies as a legal detriment?

  1. Doing something you are not legally obligated to do; or
  2. Refraining from doing something you are legally entitled to do

35

Do gifts qualify as consideration?

Generally no, unless: 

  1. Giver knows gift will induce substantial reliance; and 
  2. Failure to uphold promise will cause injustice 

36
Define

illusory promise

Promise that doesn't obligate the promisee to anything, and therefore doesn't qualify for consideration

37

What is the pre-existing duty rule?

Promises to satisfy a pre-existing duty (e.g. pay a past debt or perform a prior duty) does not constitute consideration 

 

 

38

What are exceptions to the pre-existing duty rule?

  1. Mutual modification (ex. promise to pay more $$ for  different performance)
  2. Unforeseen circumstances that render performance substantially more burdensome than was reasonably anticipated;
  3. Valid defense to K formation (voidable obligation); 
  4. Third party offers a promise contingent upon performance of a contractual obligation by a party;
  5. Honest dispute as to duty;
  6. Modification of K for the sale of goods

39

Does the UCC follow the pre-existing duty rule?

No, modifications do not require new consideration as long as they were made in good faith

UCC § 2-209(1)

40

What types of agreements are enforceable without consideration?

  1. Payment of past debts;
  2. Promissory Estoppel; and
  3. Option contracts (sometimes)

41

Is consideration required to modify a contract under common law?

Yes, unless:

  1. New obligations on both sides; or
  2. Existence of circumstances unforeseen by either party 

42

True or False: When modifying a contract, assuming even the smallest additional or different duties counts as consideration

True

43

Does the UCC require consideration for modification? 

No, as long as both parties are acting in good faith

44

Under the UCC, what is a bad-faith modification?

One that attempts to extort another party

45

Does putting up an item for auction constitute an offer?

No

46

When can an auctioneer withdraw goods from the auction after bidding has started?

In an auction with reserve, the auctioneer may withdraw the goods at any time until he announces completion of the sale.

In an auction without reserve, after the auctioneer calls for bids on an article or lot, that article or lot can be withdrawn only if no bid is made within a reasonable time

UCC § 2-328(3)