Midterm Exam Spring 2020 Flashcards

Question

J. LOI: Enforceable Obligation

Answer 1

1. Issue is interpreting partie’s intent a) Intent is often a jury question. A jury may have difficulty finding a mutually signed contract-like document totally nonbinding 2. Duty of good faith and fair dealing 3. Creation of a fiduciary relationship 4. Promissory estoppel claims (sometimes dealings that lead to a party’s

Answer 2

1. General rule a) When a general contractor seeks bids from subcontractors to include in the overall bid to an owner stating a construction project, the general contractor’s request for bids is an invitation for offers and the subcontractor’s bids as offers 2. Why? a) Predictability: No general would bind itself before getting the contract with the owner L. Acceptance

Answer 3

a) Mirror reflection of the offer is the best way to make an acceptance (1) §50 Acceptance of Offer Defined (2) §30 Form of Acceptance Invited (3) §32 Invitation of Promise or Performance (4) §72 Revocation by Communication from Offeror Received by Offeree (5) §60 Acceptance of offer which states place, time or manner of acceptance (6) §48 Death or incapacity of offeror or offeree (7) §69 Acceptance by Silence (a) Book of the month (monthly subscriptions) (8) Knowledge of Reward: cannot be after the fact but can be during

Answer 4

a) Manifestation of assent b) To the terms of the offer c) By the offeree d) In a manner invited or required by the offer

Answer 5

(1) Accept by promising to perform (2) This is the typical situation c) Offeror is the master of the offer d) There is a presumption that offer is for bilateral contract

Answer 6

(1) Accept by doing this thing asked for | (2) Contests, rewards

Answer 7

● Facts: ○ 3/18/31- letter from rupert to caro saying dr things that it would help considerably if she came back to CA ○ 3/24/31- telegram from frank to rupert saying caro can be there in 2 weeks please wire if you think she should come ○ 3/30/31- letter from rupert to Davis ○ 4/9/31- Another letter from Rupert to Davis ○ 4/12/31- Letter from Rupert to Davises saying Caro will inherit everything and will you let me hear as soon as possible ○ 4/14/31- Davis send letter by air mail noting receipt of 4/12 letter and promising to leave for CA on 4/25 ○ 4/22/31- Rubert commits suicide ○ 5/30/31- Blanche dies ■ The defense says that it was a unilateral contract dependent on specific performance but it was actually a bilateral contract as what Rubert wanted was a promise that Caro would come ■ Court decides that Rupert estate is to go to Caro as outlined in the letter on 4/12

Answer 8

a) Lapse of time b) Death of offeror/offeree c) Incapacity of offeror/offeree d) Rejection e) Counter-offer f) Revocation (1) §36 Methods of Termination of the Power of Acceptance (2) §38 Rejection (3) §41 Lapse of Time (4) §42 Revocation by communication from offeror received by offeree (5) §43 Indirect communication of revocation 2. In addition, an offeree’s power of acceptance is terminated by the non occurrence of any condition of acceptance under the terms of the offer

Answer 9

a) Firm offers under the UCC 2-204 b) Option contracts (1) Contract that provides times for acceptance in exchange for money (2) Basically a deal to bargain away the right to revoke 4. Brooklyn Bridge Hypo a) Old Rule: The offeror of a unilateral contract may withdraw the offer any time before the offeree has completed the requested performance (1) Rationale for old rule: The offer of any unilateral contract is not accepted until performance is completed, and an offeror may withdraw any offer before it's accepted b) New Rule: The offeree’s commencement of the requested performance creates an option in favor of the offeree (1) Rationale for new rule: protects offeree’s reliance (a) §45 Option Contract created by part performance or tender

Answer 10

● Facts: Petterson makes a deal with Pattberg and shows up to his house to pay the rest of the payment. Before he can Pattberg revokes the contract ○ Petterson has no right to prepay because it is a commercial property ■ He might have initially agreed because of the time value of money; money today is better than money tomorrow ○ Pattberg has taken action consistent with not enforcing the contract and until Petterson actually hands over the money he has not tendered and has not completed performance by the time the offer was revoked ■ Dissent reflects a more modern view of unilateral contracts ○ People should communicate revocation although there is no obligation to communicate ● §42 Revocation by Communication from offeror received by offeree

Answer 11

● Facts: June 10, 1874 defendant John Dodds signed and delivered memorandum to plaintiff agreeing to sell all property had until Friday, June 12 9 am ○ Can offer property however many times he wants but can only accept once ○ Keeping promises open without consideration=naked promise ■ §43 Indirect communication of revocation

Answer 12

● Facts: Employment contract case- owner hires a new manager to manage the company. They had a meeting with Mrs. Sedberry and offered to resign at the time but she rejected it. Later they get a letter that says resignation was accepted and they were terminated. ● Issue: Can she accept the offer much later, was it a reasonable amount of time? ○ Akers has a 5 year contract and he gets a percentage of the net profit if he leaves or fired for a good reason no need to pay- but if he is doing his job then if he leaves he’ll need to be paid out ■ Court says there was no contract because offer had expired because not accepted under a reasonable amount of time ■ Court said that a reasonable amount of time would be accepting it right there and then, within the span of the face to face conversation ● Refer to §41 Lapse of time, §38 Rejection

Answer 13

● Facts: Will sell for $1800 can you sell for $1600? Cannot reduce price and then he says kay I will take $1800. ○ Court says that when you said you can’t lower the price it was a rejection except, with the way he rejected he renewed the original offer ■ If the judge says that the renew reinvigorates the original offer than the T4 is an acceptance of the offer ● §39 Counteroffers (think ebay you can make obo but you still have the ability to accept original offer)

Answer 14

1. An offer a) Run offer subroutine (1) Manifest a willingness to enter into a bargain (2) Made in a way that invites the offeree’s acceptance (3) And such that offeree’s acceptance concludes the bargain 2. From the original offeree to the original offeror 3. Relating to the same subject 4. Proposing a different bargain a) Refer to §37 Termination of Power of Acceptance under option contract

Answer 15

1. Need to accept with the right medium; if wrong medium then needs to be during the right time a) §40 Rejection or counteroffer

Answer 16

Acceptance deemed made at the time of mailing

Answer 17

Effective at time of receipt 4. Acceptance is accepted after out of the hands of the offeree even if it never gets to the offeror a) §63 Time when acceptance takes effect b) §66 Acceptance must be properly dispatched c) §67 Effect if receipt of acceptance improperly dispatched d) §68 What constitutes receipt of revocation, rejection or acceptance e) §40 Time when rejection or counteroffer terminates the power of acceptance f) §42 Revocation by communication from offeror received by offeree

Answer 18

(1) (If properly sent) Acceptance is effective as soon as put out of the offeree's possession, even if it never reaches the offeror; (2) BUT acceptance under an option K is not operative until received

Answer 19

(1) Rejection/Counter-offer is not effective until received by offeror

Answer 20

(1) Revocations are not effective until received by offeree

Answer 21

a) §67. EFFECT OF RECEIPT OF ACCEPTANCE IMPROPERLY DISPATCHED. Where an acceptance is seasonably dispatched but the offeree uses means of transmission not invited by the offer or fails to exercise reasonable diligence to ensure safe transmission, it is treated as operative upon dispatch if received within the time in which a properly dispatched acceptance would normally have arrived.

Answer 22

a) §64. ACCEPTANCE BY TELEPHONE OR TELETYPE. Acceptance given by telephone or other medium of substantially instantaneously two-way communication is governed by the principles applicable to acceptances where the parties are in the presence of each other.

Answer 23

a) More flexible than the common law b) Reflects commercial custom and practice c) Fills gaps where practices are sloppy or lazy see, 2-305, 2-307, 2-308, 2-309, 2-310 d) Default protections for buyers 2. Every state has some version of the UCC article 2 (overlaid on top of existing laws) 2-102: Scope

Answer 24

a) Transaction in goods- governed by UCC | b) Transaction in services- governed by CL

Answer 25

a) Mainly goods and services are merely incidental= UCC | b) Mainly services and goods are merely incidental= CL

Answer 26

a) If complaint is about goods, UCC applies | b) If complaint is about non-goods than CL applies

Answer 27

a) An offer by a merchant in a signed writing assurances it will be held open → separately signed by offeror if on offeree’s form (1) Effect: Can’t revoke (a) For time stated up to three months (b) For reasonable time if none stated up to three months

Answer 28

If contract silent regarding the manner of acceptance any reasonable manner is okay

Answer 29

c) If offer for prompt shipment may accpet by promise to ship or may accept by prompt shipment of the goods→ if non-conforming not an acceptance if seller seasonably says its just an accomodation

Answer 30

(1) Offer (defined by CL) is implied (a) Definite and seasonable expression of acceptance or written confirmation sent within a reasonable time (i) States additional or different terms (a) In CL Creates counter-offer and extinguishes power to accept original offer UNLESS acceptance is expressly conditional on assent to the additional or different terms

Answer 31

different terms cancel each other out supply with UCC default (a) UCC tries to make it easier to find a contract (b) Changes the option contract through a firm offer (c) Any reasonable acceptance of an offer is okay (d) UCC supplies terms off the shelf to fill out forms that are not complete

Answer 32

A. §1 Contracts Defined: all contracts are promises, but not all promises are contracts B. Contract requires adequate consideration 1. §71 Requirement of exchange 2. §79 Adequacy of consideration C. Formality has three functions: 1. Evidentiary function- provides evidence that a contract exists 2. Cautionary function- forces parties to think about what they’re doing 3. Channeling function- let’s everyone know this is a contract and not a gift

Answer 33

● Facts: Uncle Willy promised nephew William that if he did not “drink, smoke, gamble, etc” until you turn 21 you get $5,000. William sells assignments to Hamer (because he wanted money now) which leads to sue. At 21 nephew tells Uncle he has not done any of the prohibited activities but Uncle Willy says that he is not responsible enough yet so he will wait until he is. Uncle dies before he gives nephew the money. ● Issue: Is there consideration in this case? ● Holding: William gets $5,000 and what does Uncle Willy get ut of this deal- court says that a valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit, accruing to the one party or some forbearance, detriment, loss or responsibility given suffered or undertaken by another. ○ Consideration was forbearance of nephew

Answer 34

● Facts: Tracey Honer worked for Lucht’s Concrete Pumping as an employee at-will. After 2 years they had him sign a non-compete agreement because he was working with proprietary information/trade secret/ special skills that he had while working with them. He leaves a year later and he goes to work for a competitor breaching his non compete contract. He gets sued and claims there was no consideration ○ What the company gets: (their consideration) Horner agreement not to compete ○ What he gets: (his consideration) they don’t fire him- forbearance of terminating his employment ■ Forbearance by employer can be consideration ■ In Massachusetts there has to be more than forbearance of right to terminate

Answer 35

● Facts: Guy lives in Massachusetts. He goes out to foreign country and comes back really sick. Mills a good samaritan tries to nurse him back to health but the man dies (he is 25 years old). Father in ill consideration promises to pay him back for all of his efforts and then rescinds his offer. ○ Court thinks that the father should pay because it is the morally right thing to do- but there is no legal duty ○ No bargain for exchange- Mills took care of the son but he did not bargain for Mills to take care of his son ■ Miles did it without knowing he was going to get paid ● Defenses: infancy/minors have no capacity for bargaining

Answer 36

● Facts: WEbb clearing a log jam and save McGowin from getting killed by wood and Webb gets permanently injured. McGowin pays Webb every 2 weeks until McGowin dies and then heirs stop payment to Webb. ○ Why did the court say there was good consideration in this case? ■ Promissory restitution: benefit previously received by promissor- this was not a contract just an enforceable promise ● §86 Promise for Benefit Received D. Adequacy of consideration- does not allow court to police adequacy of consideration (Lucht’s concrete pumping) 1. §71 Requirement of Exchange, Types of Exchange 2. §79 Adequacy of consideration; mutuality of obligation 3. §74 Settlement of Claims

Answer 37

Why might a party settle a claim even though that party believed it would win at trial? ● Facts: Boehm becomes pregnant by Louis Fiege and she says that he needs to pay her or she will sue for bastardy. Later he finds out the child is not his and he violates the contract. ○ Rule from Fiege ■ Settlement of invalid claim is consideration if: ● P asserts the claim in good faith AND ● Claim has a reasonable basis E. Pre-Existing Duty Rule 1. Basic Rule: A party who agrees only to do what that party already was legally obligated to do has given no consideration 2. Spotting Pre-existing duty issues a) Parties make a first contract then… b) Parties make a second contract purporting to revise K1 obligations

Answer 38

● Facts: Alaska Packers’ Association (APA) (defendants) contracted with a group of sailors (plaintiff) to sail between San Francisco and Alaska, and en route perform regular duties as well as other duties requested by the captain or agents of APA. APA agreed to pay each sailor $50 for the season and two cents per salmon they assisted in catching. After arriving in Alaska, the sailors stopped working and demanded $100 for the season in order to resume their work. However, upon returning to San Francisco, APA paid only the original contract price of $50. The sailors sued APA in admiralty to recover the full amount payable under the new agreement, alleging they had demanded the new contract price because APA had provided them faulty fishing nets. ● Issue: Is an agreement made between parties who have obligations to one another under an existing contract enforceable if one party is required to perform only what he or she was already obligated to perform under the original contract? ○ No because of the preexisting duty rule ■ §73 Performance of Legal Duty ■ §89 Modification of Executory Contract 3. Pre-existing duty exam approach flow charge a) Spot issue: 2 K’s, one duty (1) Promise to only do what already had to do then no contract (a) Exceptions (i) Doubtful Claim (Honest disputes) (ii) Addition of genuine new duties (iii) Unforeseen circumstances and executory and fair deal? (minority rule) b) UCC §2-209 Modification, Rescission & Waiver- no consideration to be binding

Answer 39

a) Spot issue: 2 K’s, one duty (1) Promise to only do what already had to do then no contract (a) Exceptions (i) Doubtful Claim (Honest disputes) (ii) Addition of genuine new duties (iii) Unforeseen circumstances and executory and fair deal? (minority rule) b) UCC §2-209 Modification, Rescission & Waiver- no consideration to be binding

Answer 40

1. Not a promise at all, speaker has not bound herself to any obligation a) Any party can choose to breach the contract and suffer the consequences of doing so

Answer 41

a) A promise for actions or forbearances rendered in the past= past consideration b) A promise based solely on moral grounds= moral consideration c) A promise for a settlement or release (forbearance) of an invalid claim without an honest or reasonable belief that the claim has a colorable basis.

Answer 42

a) A promise is illusory if it does not restrict the promisor’s right of action b) A promise is illusory if it gives the promisor unfettered discretion to perform or not to perform the promise or c) A promise is illusory if it does not restrict the promisor’s autonomy (1) Courts also consider: (a) Good faith (b) Reasonableness

Answer 43

a) Language of promise b) The promise leaves the promisor free to perform or not at the promisor’s discretion (without liability for breach) c) The promise cannot be made to restrict the promisor’s discretion by implying a duty of good faith, reasonable efforts or reasonableness

Answer 44

a) There must be a possibility of proving breach if the promisor chooses not to perform

Answer 45

● Facts: December 1977- Mr. and Mrs. Clark executed an exclusive agency listing agreement with Royal Realty Company of Bellevue for the sale of about 59 acres of property for $3,000 per acre was the list price. On May 17, 1977- Omni signed an earnest money agreement offering $2,000 per acre. Clarks signed but instructed brokers to get further consideration which was not communicated to the Omni. Omni had 15 days to get a land report and notify Clark’s in writing of purchase. June 2, 1977- Omni forgoes feasibility study and finds out only 50.3 acres. June 8, 1977- Omni agrees with all Clark’s additional terms but they refuse to proceed with the sale. ● Issue: Was the promise by the Omni Group illusory? ○ The illusory promise component has to do with completing a “satisfactory” engineering feasibility report so soller says the Omni is basically saying “if we feel like it we will buy this” ○ Court in this case says that this is a condition to protect the buyer ○ Predictability and fairness are vital to this case because of a the daisy chain of reliance ○ A promise given for a promise dependant on a condition does not necessarily render it illusory or affect its validity as consideration. The promisor duty to exercise his judgement in good faith is adequate consideration

Answer 46

● Facts: Defendant Lady Duff-Gordon is a creator of fashion. Her and Wood have an agreement in which he has the exclusive right, subject always to her approval to place her endorsements on the designs of others. Also he has the exclusive right to place her designs on sale and license to others. In return, she has ½ of “all profits and revenue” from any contracts he might make. Defendant placed endorsement without his knowledge and withheld profit. ● Issue: Whether Woods promise was illusory? ○ Nothing in this contract requires Wood to get her contracts just that he has the exclusive right to contract ○ Court says that there is an implied promise (implied duty of reasonable effort) because he would not make any money unless he did work

Answer 47

A. Alternative to traditional formation 1. Remember all contracts are promises but not all promises are contracts 2. Other kinds of promises that are not contracts but are enforced: a) §90 Promise reasonably inducing action or forbearance (1) Usually these promises ladck (a) Consideration (b) Reliance B. In promissory estoppel the remedy might just be to remedy in justice as opposed to contracts where the remedy is typically to make the promissor fulfill the contract

Answer 48

a) Present commitment to deal in the here and now b) Bargained for exchange: (1) Give to get in the here and now (2) Common law extends niton of bargain to forbearance (3) General rules re moral, past and illusory consideration all explicable by reference to bargain theory (i.e. there is no genuine exchange)

Answer 49

a) Alternative basis for according promises a “contract like” effect even in the absence of traditional bargained for consideration b) Examples to date of reliance theory (1) Brooklyn Bridge hypo §45 (2) Promissory restitution in Webb v McGowin

Answer 50

1. As a substitute for consideration 2. As a substitute for a writing required by a statute of frauds 3. As a way of making bids (offers) irrevocable 4. As a way of policing unfair negotiation behavior a) §90 Promise reasonably inducing action or forbearance

Answer 51

1. A promise 2. That the promisor should reasonably expect to induce action or forbearance 3. Which does induce such action or forbearance 4. And justice can be avoided only by enforcing the promise

Answer 52

● Facts: Grandfather told granddaughter he had a promissory note for her of $2,000 so she quit her job as a bookkeeper because of it, then executor tries not to uphold the promise. ○ There was no consideration so this is not a contract supported by consideration ○ This case was one of the ones that founded the principle of promissory estoppel in this case it is referred to as equitable estoppel ■ Executor had to pay the note ○ This is based on the equitable principle that after allowing the granddaughter to incur obligations on the faith that the note would be paid (p. 170)

Answer 53

● Facts: Defendants wanted to buy a car and borrowed a loan and were given a promissory note. Geremia was sick and could not pay the premium for their insurance. Mrs. Geremia tells the credit union that they can go ahead and pay insurance as they said they would do in note. Banks say that they need to call the treasurer. Car got totaled in an accident and no one had insurance on the car. ○ Geremia’s find themselves in a deficit- court is looking at the “promise” to pay the insurance premium made by the credit union ○ Consideration for credit union: interest due on any sum paid on plaintiff (principle to loan and interest) ○ Consideration for Geremia: insurance on car ■ Court also addresses promissory estoppel- they address it to add dicta for a state without much case law on it

Answer 54

● Facts: Drennan is the contractor and is going to put in a bid to do work at this school. Star Paving calls in a bid of their part of the project at $7,131.60. Drennan puts together the full bid and his bid is selected. At this point Star Paving refuses to do the work for less than $15,000 ○ Hoon (sub) says that they cannot do it for that price ■ In a classic contract they revoked he head not accepted and it would not be enforced ● §45- court is saying that this is an option and the offeror has bargained away right to revoke ○ The court reads in subsidiary promise that has justifiable reliance ■ Holding: General contractor could rely on subcontractor bid because Subcontractors are sending in an irrevocable contract (offer)

Answer 55

● Facts: Hoffmans owned a successful little bakery business in a small town in Wisconsin. Mr. Hoffman wanted to go into the grocery business and he wanted to open a Red Owl franchise. So he got to talking to the local representative of Red Owl. They said that he’d have to put up $18,000 of his own money to open a Red Owl Store. Agents engaged in continuing negotiations for over 2 years with Hoffman. Hoffman sold his bakery at the agent’s request and bought and worked in a small grocery store. During this period the price of the franchise was raised twice. Seeing the final price, and Red Owl’s insistence that $13,000 put up by Hoffman’s father-in-law be treated as a gift, Hoffman balked. ● Issues: ○ Whether the promise necessary to sustain a cause of action for promissory estoppel must embrace all essential details of a proposed transaction between promisor and promisee so as to be equivalent of an offer that would result in a binding contract between the parties if the promisee were to accept ○ Whether plaintiffs are entitled to contract remedies ■ Holding: No, promissory estoppel can provide remedy even without a full flown contract-like promise. Though there was no documentation of an agreement, the court allowed compensation for detrimental reliance ● Reasoning §90 ○ Was the promise one which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee? ○ Did the promise induce such action or forbearance? ○ Can injustice be avoided only by enforcement of the promise? ■ Jury has to answer elements of promissory estoppel which allows special verdict

Answer 56

is there a good reason not to enforce the promise?

Answer 57

a) Misrepresentation (1) Intentional (ex. fraud) (2) Negligent (ex. Not doing your homework) (3) Innocent (ex. Innocent mistake) b) Non-Disclosure c) Concealment

Answer 58

a) D makes false statement of fact, intention or opinion (1) To be actionable, opinion must imply specific underlying facts b) That is material (some states don’t require for intentional) (1) “likely to induce a reasonable person to manifest his assent” c) Made with the requisite state of mind (scienter): (1) Intentional (knowledge of falsity) and (2) Intending to deceive P d) P actually relied (justifiably) on the false statements e) P suffered damages (1) Fact= something that exists or occurs (2) Intention= a determination to act in a certain way in the future (3) Opinion= is an expression of a person’s belief or viewpoint, but not a matter of positive knowledge (a) A fact is material if a reasonable person in the same circumstances would regard the fact as important in deciding whether or not to make a contract

Answer 59

a) A party claiming misrepresentation can show that the speaker either: (1) Knew or believed the representation was not true (an “intentional” misrepresentation) (2) Unreasonably believed the representation to be true (a negligent representation) (3) Reasonably believed the representation to be true (an innocent misrepresentation

Answer 60

if the party acted because of a representation

Answer 61

reliance is justifiable if it is not completely irrational, preposterous or absurd

Answer 62

● Facts: Buyer sues to rescind the contract because the listing stated 580 feet of highway and said that there was over 1 million in gravel. Sellers only allow them to dig to level because the seller does not want a hole. Seller wanted a commercial log to sell not a gravel bank. ○ Trial court said that reliance by the buyer was not justified ■ Reversed and remanded to benefit the buyer

Answer 63

a) D makes false statement of fact, intention or opinion (1) To be actionable, opinion must imply specific underlying facts b) That is material (required for unintentional) (1) “likely to induce a reasonable person to manifest his assent” c) Made with the requisite state of mind (scienter): (1) Negligent or (2) Innocent d) P actually relied (justifiably) on the false statements e) P suffered damages

Answer 64

a) Failure to disclose a fact b) Where there was a duty to disclose the fact c) Fact was material d) Other party actually and justifiably relied on the state of things in the absence of the fact e) Damages (1) §161 When Non-Disclosure is Equivalent to an Assertion (a) Party knowing undisclosed fact must disclose if: (i) The party learns facts that make a past representation now untrue or material; or (ii) The undisclosed fact is basic to the deal; or (iii) There’s a partial disclosure in a writing that will be misconstrued without knowledge of the undisclosed fact; or (iv) The parties are in a confidential or fiduciary relationship

Answer 65

a) Active efforts to prevent another from learning the facts b) The concealed fact was material c) The other party actually and justifiably relied on the misrepresentation d) Damages

Answer 66

makes contract voidable( §152 Mistake of Both parties + §154 when a party bears the risk of a mistake)

Answer 67

(1) A mistake by both parties about (a) The facts surrounding a transaction (b) At the time a contract is made (2) Concerning a basic assumption on which the contract was made and (3) Which has a material effect on the parties contractual exchange

Answer 68

● Facts: Sherwood has a hunch that the cow could be fertile but buys it as meat and pays $0.05 but when it comes time to get the cow Walker refuses to sell the cow because she is pregnant and therefore not barren. ○ Court says that the basic assumption was that she was barren so therefore it was a mutual mistake ■ Dissent says it was not a mutual mistake

Answer 69

a) Difference or misapprehension as to the substance of the thing bargained for b) Different in substance c) Is going to the root of the matter

Answer 70

a) 1.A mistake by both parties about the facts surrounding a transaction at the time a contract is made; b) Concerning a basic assumption on which the contract was made; and c) Which has a material effect on the parties’ contractual exchange; and d) Either (a) the non-mistaken party knew of, should have known of or caused the mistake, or (b) the mistake makes the K grossly unfair.

Answer 71

wrongful act + precludes exercise of free will- threat of breach qualifies if it would be a breach of good faith duty (1) You need a wrongful act and it needs to preclude the exercise of free will- if you have one without the other than no duress b) §174 When Duress by Physical Compulsion prevents formation of a contract c) §175 When duress by threat makes a contract voidable d) §177 When undue influence makes a contract voidable

Answer 72

● Facts: Loral making radar sets. In the 1st contract Austin was subcontracted for 23/40 parts. 2nd contract Austin wants all 40 or they will not perform on K1 and a 0.25/unit price increase. ○ Trial court decision that said that they were not under duress was reversed because they were under economic duress

Answer 73

● Facts: Donald Odorizzi was an elementary school teacher who was arrested for homosexual activity and was forced to resign from his job. His ex-boyfriend went to police and said that Donald was gay. Principal and superintendent show up to his home with resignation papers if he doesn’t sign them he will be publicly shamed and fired in front of the entire district. ○ The difference between undue influence and duress focuses on precluding exercise of free will ○ No duress or menace in this case, no fraud, no mistake

Answer 74

○ Unfair persuasion + by dominant person over subjegated person ■ Any dominant person or ■ Person reasonably trusted ○ Undue influence= lessened capacity + excessive persuasion

Answer 75

``` ● Multiple persuaders ● Improper time and place ● Emphasis on danger of delay ● Absence of third party advisors ● Statements regarding no time for advice ```

Answer 76

a) Contracts prohibited by statute b) Contracts in violation of licensing statutes c) Covenants not to compete d) Tangential illegality

Answer 77

a) Must be necessary to protect a legitimate employer interest (1) Trade secrets, (2) Confidential customer lists, (3) Investment in training b) AND c) Must be reasonable as to (1) Geography (2) Time, and (3) Scope of work restricted

Answer 78

a) Refuse to enforce the promise at all b) “Blue pencil” rule: only enforce the clause to the extent it is reasonable c) Only enforce contract to the extent the offending portions of the clause can be deleted

Answer 79

● Facts: Gordon Wood employed William May as an apprentice horseshoer. May signed a non compete that says from 5 years after he leaves he cannot horseshoe for a 100 mile radius. He leaves and sets up his own horseshoeing business 5 miles away. ○ Can public give and get services they need- if they can't that violates public policy ○ Contract is held by adequate consideration ○ The restrictions were not reasonable because they exceeded what would be necessary to protect employer ■ Court says that the covenant was overly restrictive and remands to a lower court to instruct on reasonableness ● The dissent is saying that the covenant is only appropriate when selling a business because it is too burdensome for the employee

Answer 80

1. §12 Capacity to contract: Cannot contract if a) Persons affected by guardianship b) Infants (persons under 18 years old) c) Mental illness or defect d) Intoxicated person

Answer 81

1. §208 Unconscionable contract or term

Answer 82

2. Elements of Unconscionability a) Procedural unconscionability (K of adhesion) (1) Absence of meaningful choice (a) Opportunity to understand terms (b) Use of fine print (c) No meaningful opportunity to negotiate (d) Deceptive sales practices (e) Take it or leave it (2) OR (3) Gross inequality of bargaining power (consider wealth, expertise, education, access to legal counsel) b) Substantive unconscionability (1) Contract terms “shock the conscience of the court” (a) Consider things like (i) Market place (ii) Parties respective risks (iii) Economic realities of deal (iv) Competition

Answer 83

● Facts: Son dies while climbing Mt. Killomanjara with his mom. Waiver says that they must go to arbitration and there is a cap to how much can get paid. ○ Procedural unconscionability falls under the take it or leave it and could not negotiate the terms ○ Substantive unconscionability the amount of recovery capped at 16K and you foot the bill

Answer 84

1. For certain types of contracts we need to have formality observed a) Evidentiary function- provides evidence that a contract exists and what was agreed to b) Cautionary function- forces parties to think about what they’re doing c) Channeling function- let’s everyone know this is a contract and not a gift (1) Times were policy weighs in favor of formality for certain types of contracts dependent on subject matter

Answer 85

(i) A contract of an executor or administrator to answer for the duty of his decedent (executor provision) (ii) A contract to answer for the duty of another (suretyship provision) (iii) A contract made upon consideration of marriage (iv) A contract for the sale of an interest in land (v) A contract that is not to be performed within one year from the making thereof (the one-year provision). (a) UCC has a provision that says an contract for the sale of goods over $500 needs to be in writing

Answer 86

(1) Makes it harder for bogus contracts to be given effect especially with regard to land

Answer 87

a) Does a statute of frauds apply? (1) If no, end analysis of statute of frauds (2) If yes one of the six provisions than move to Q2 b) Is there a writing that complies with the requirements of the applicable statute? (1) Writing requirement (a) Need a sufficient memorandum that (i) Identifies the subject of the contract (ii) Is sufficient to indicate that a contract has been made and (iii) Includes the essential terms (b) Must be “signed” by the party against whom enforcement is sought (2) If yes, end analysis of statue of frauds (3) If no, proceed to Q3 c) Can the contract be enforced notwithstanding the non-compliance with statute of frauds? (1) Remember promissory estoppel could be used