Barbri 2013 Contracts

Front 1

Armadillos from Texas play rap, eating tacos

Back 1

A. Applicable Law
F. Formation of Contracts
T. Terms of Contract
P. Performance
R. Remedies for unexcused nonperformance
E. Excuse of nonperformance
T. Third-party problems

Front 2

Unilateral contract

Back 2

Results from an offer that expressly requires performance as the ONLY possible method of acceptance

Front 3

Types of Unilateral Contracts on Bar exam

Back 3

Reward, contest or offer expressly requires performance for acceptance

Front 4

Bilateral Contract

Back 4

All other offers. Usually offer is silent as to the method of acceptance. Always assume bilateral contract unless one of the unilateral contract situations applies

Front 5

Quasi-contract

Back 5

Equitable Remedy

Front 6

Article 2 of the UCC applies to

Back 6

1) Type of transaction- Sale
2) Subject off transaction- Goods, i.e. tangible, personal property

Front 7

Common Law

Back 7

Everything else

Front 8

Real Estate Contract is governed by

Back 8

Common law

Front 9

Services Contracts are governed by

Back 9

common law

Front 10

Mixed Deals General Rule

Back 10

All or nothing, determined by more important part of the contract

Front 11

Exception to General Rule for Mixed Deals

Back 11

If Contract divides payment, then apply UCC to sale of goods part and common law to the rest

Front 12

Formation of Contract- Definition of Contract

Back 12

An agreement that is legally enforceable. First, look to whether there is an agreement. Second, look to whether agreement is legally enforceable.

Front 13

Factors when looking for an agreement

Back 13

1) the initial communication ("offer")
2) What happens after the initial communication ("termination of the offer") and
3) who responds and how she responds ("acceptance")

Front 14

General Test for Whether Initial Communication is an Offer

Back 14

manifestation of committment

Front 15

Test for Manifestation of Commitment

Back 15

Whether a reasonable person in the position of the offeree would believe that his or her assent creates a contract

Front 16

Problems to watch for in an offer- Content

Back 16

a) Missing price in real estate sales contract.

b) Vague or ambiguous material terms not an offer under common law or UCC [Appropriate, Fair, Reasonable]

c) Requirements Contracts/Output contracts- Quantity is in terms of buyer's requirements or seller's output. [All, only, exclusively, solely]
i. Not too vague and are valid
ii. Increase in requirements is okay so long as increase is in line with prior demands. No unreasonably disproportionate limitation on increases.

Front 17

Advertisements and Price Quotations

Back 17

Generally, not an offer

Front 18

Exceptions to Advertisements and Price Quotations

Back 18

1) Ad can be a unilateral offer if in the nature of a reward- Carbolic Smoke Ball
2) Ad= offer if it specifies quantity and expressly indicates who can accept- "$1 fur coat- first come, first served"
3) Price quotation can be offer if sent in RESPONSE to an inquiry.

Front 19

Four Methods of Termination of an Offer

Back 19

A. Lapse of Time
B. Death of a party prior to acceptance
C. Revocation
D. Rejection

Front 20

Termination of Offer- Lapse of Time

Back 20

Time stated or reasonable time

Front 21

Termination of Offer- death of a party prior to acceptance (general rule)

Back 21

General Rule: Death or incapacity of either party after the offer, but before acceptance, terminates the offer

Front 22

Exception to Gen Rule governing Termination by death or incapacity of a party prior to acceptance

Back 22

Irrevocable offers

Front 23

Termination by Revocation- Definition

Back 23

Words or conduct of offeror

Front 24

Ways to Revoke an Offer

Back 24

a) Later unambiguous statement by offeror to offeree of unwillingness or inability to contract, or
b) later unambiguous conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of.

Front 25

Are Multiple Offers Revocation

Back 25

No

Front 26

Four Types of Irrevocable Offers

Back 26

1. Option Contract
2. UCC Firm Offer Rule
3. Reliance
4. Unilateral Contract

Front 27

Option Contract

Back 27

Offeror has made offer and:
1) Promised to not revoke or keep offer open; AND
2) This promise is supported by payment or other consideration ("option")

Front 28

UCC "Firm Offer Rule"

Back 28

Offer can't be revoked for up to three months if:
i) offer to buy or sell GOODS,
ii) signed, written promise to keep the offer open, and
iii) party is a merchant (merchant=generally a person in business)

Front 29

Reliance

Back 29

An offer cannot be revoked if there has been
1) reliance that is
2) reasonably foreseeable and
3) detrimental

Front 30

Unilateral Contract

Back 30

General rule: Start of performance pursuant to an offer to enter into a unilateral contract makes that offer permanent

BUT: Mere prep is not enough to make offer irrevocable under this rule- Look for DETRIMENTAL RELIANCE

Front 31

Three methods of Indirect Rejection

Back 31

1) Counteroffer
2) Conditional acceptance
3) additional terms (common law only)

Front 32

Counteroffer

Back 32

Generally terminates the offer and creates a new offer. No express contract unless counteroffer itself has been accepted.

Front 33

Counteroffer-option exception

Back 33

A counteroffer made within the time period of an option does not terminate the offer. Therefore, even if counteroffer is not accepted, original offeree can still accept the offer within that time period.

Front 34

Does bargaining terminate?

Back 34

No, if in form of a question

Front 35

Conditional Acceptance

Back 35

Look for response with the word "accept" followed by one of these words or phrases: "if" "only if" "provided" "so long as" "but" or "on condition that"

Front 36

Common law rule of conditional acceptance

Back 36

rejects and becomes a counteroffer that can be accepted by conduct

Front 37

UCC rule of Conditional Acceptance

Back 37

B sends S a purchase order for polyester pant suits. 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." S sends B the pant suits and B pays for them.
Rule: there is a contract here, based solely on the conduct of both parties, but arbitration term is not a part of the contract.

Front 38

Mirror Image Rule (common law)

Back 38

A response to an offer that adds new terms is treated like a counteroffer rather than an acceptance.

Front 39

Seasonable Expression of Acceptance (UCC Article 2)

Back 39

Response to an offer that adds add'l or different terms, but does not make terms condition of acceptance, is treated as an acceptance. "a seasonable expression of acceptance"

Front 40

If "seasonable expression of Acceptance (UCC), is the additional term a part of the contract?

Back 40

No, unless:
i) both parties are merchants, AND
ii) add'l term is not "material" [fact question] AND
iii) add'l term is objected to by original offeror

Front 41

Methods of Acceptance- Three Bar Fact Patterns

Back 41

1) Offeree starts to perform
2) Distance and delay in communications
3) Seller sends the "wrong" goods

Front 42

Start of Performance as a Method of Acceptance- General Rule

Back 42

Start of performance is acceptance. Treated as implied promise to perform and there is a bilateral contract. Look for 1) verbal offer, 2) no words in response, 3) start of performance

Front 43

Start of Performance as a Method of Acceptance- Exception

Back 43

Unilateral Contracts
- accepted by full performance only

Front 44

Distance and Delay in communications Fact pattern for method of acceptance- Four Rules

Back 44

1) All communications OTHER THAN ACCEPTANCE are effective only when received
2) Acceptance is GENERALLY effective when mailed (i.e. the mailbox rule)
3) If a rejection is mailed before an acceptance is mailed, then neither is effective until received.
4) You cannot use the mailbox rule to meet an option deadline

Front 45

Three Steps in Analyzing A consideration problem on bar exam

Back 45

1) Identify promise breaker
2) ask whether that person asked for something in return for her promise
3) look at the person who is trying to enforce the promise and ask what requested legal detriment that person sustain

Front 46

Possible Consideration Issues- Bargained for

Back 46

Asked for by the promisor in exchange for her promises. consideration fact patterns have people doin stuff that they were asked to do

Front 47

Consideration Issues- Legal Detriment

Back 47

stop listening to Kinky Friedman for two months and I'll pay you $100. You stop listening to Kinky Friedman and and then he says nope sorry not paying. Legal detriment b/c you refrained from doing something.

Front 48

Consideration Issues- Promise as Consideration

Back 48

B and S enter into a written agreement in which B promises to buy S's house and S promises to sell his house to B, with B's payment and S's transfer of title to occur on June 6. Promise counts as consideration.

Front 49

Illusory Promise Exception

Back 49

"I promise to sell unless I change my mind" not really consideration then

Front 50

Past Consideration- general rule

Back 50

Generally, Not consideration

Front 51

Exception for General Rule concerning past consideration

Back 51

Expressly requested by promisor and expectation of payment by promisee

Front 52

Pre-existing contractual or statutory duty rule - Common Law

Back 52

Common law rule:
Doing what you are already legally obligated to do is not new consideration for a new promise to pay you more to do merely that. New consideration is required for contract modification.

Front 53

Exceptions to Common Law Rule for Pre-existing contractual or statutory duty

Back 53

1) addition to or change in performance
2) Unforeseen difficulty so severe as to excuse performance (The sound system is shut down, but I will pay you an additional $5,000 if you will still perform)
3) Third party promise to pay

Front 54

Article 2- Is new consideration required to modify a sale of goods contract?

Back 54

No- Good faith is the test for changes to an existing sale of goods contract.

Front 55

Part Payment as consideration for release (promise to forgive balance of debt) Test:

Back 55

Whether debt is due and undisputed
1) Due and undisputed= part payment is not consideration
2) Not due (or disputed)= Part payment IS consideration

Front 56

Consideration Substitutes

Back 56

1) Written promise to satisfy obligation for which there is a legal defense
2) Promissory Estoppel
3) Seals (not on MBE)

Front 57

D owes C $1000. legal action to collect this debt is barred by the statute of limitations. D writes C, "I know that I owe you $1000. I will pay you $600." A) Is there new consideration for D's new promise? B) Can C enforce the new $600 promise?

Back 57

A) No consideration, BUT
B) Yes. C can enforce b/c it's a written promise to satisfy an obligation for which there is a legal defense.

Front 58

Elements of Promissory Estoppel

Back 58

1) Promise,
2) Reliance that is reasonable, detrimental, and foreseeable, and
3) Enforcement necessary to avoid injustice

Front 59

Who lacks capacity to contract?

Back 59

1) Infant- under 18
2) mental incompetents- lacks ability to understand agreement, or
3) intoxicated persons if other party has reason to know

Front 60

Who holds the right to disaffirm a contract on the basis of incapacity?

Back 60

The incapacitated party

Front 61

Implied Affirmation of Capacity (ratification)

Back 61

Occurs when incapacitated party retains benefits after gaining capacity.

Front 62

Quasi-Contract Liability for necessaries

Back 62

A person who does not have capacity is legally obligated to pay for things that are necessary such as good, clothing, medical care or shelter, but that liability is based on quasi-contract law, not contract law.

Front 63

Proof required to satisfy Statute of Frauds

Back 63

1) Performance; OR
2) A writing signed by person who is asserting that there was no such agreement

Front 64

Four Contracts within the Statute of Frauds

Back 64

1. Promises to answer for the debts of another [suretyship]. Not just promise to pay, but promise to pay if someone else does not.
2. Service contract not "capable" of being performed within a year from the time of the contract
3. Transfers of interest in real estate (with exception for leases of 1 year of less)
4. Sale of goods for $500 or more

Front 65

Things to look for in a Suretyship

Back 65

- Guarantee
- Main purpose Exception- If the "main purpose" of the obligation allegedly guaranteed was to benefit the guarantor, then not even that guarantee is within the Statute of Frauds

Front 66

Contracts within SOF- Service Contract not "capable" of being performed within a year from the time of the contract (i.e. more than one year)

Back 66

a) Specific Time period- more than a year- SOF applies
b) Specific time, more than a year from date of contract- SOF applies
c) Task (says nothing about time)- ignore what actually happens- SOF DOES NOT APPLY
d) LIFE- Sof does not apply

Front 67

How is Statute of Frauds Satisfied

Back 67

Performance or writing