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47 Cards in this Set

  • Front
  • Back
What is the definition of a contract?
A legally enforceable agreement.
How is an express contract created?
Through words
How is an implied contract created?
Through conduct
What is a quasi contract?
An equitable remedy that applies whenever contract rules yield an unfair result.

It is designed to protect against unjust enrichment.
What are the elements of a quasi-contract?
1. P has conferred a benefit on D, and
2. P reasonably expected to be paid, and
3. D will be unjustly enriched if P is not compensated.
What is the Measure of Recovery for a quasi-contract?
Reasonable value of benefit conferred.
What is the definition of a bilateral contract?
The offer can be accepted in any reasonable way (flexible).
What is definition of a unilateral contract?
The offer can be accepted only through performance. A promise is not good enough.
All contracts are bilateral unless what?
Unless the offer says it can be accepted ONLY by performing.
Subject card
Definition of an offer?
Manifestation of an intention to enter into a contract.
From whose perspective do you turn to for determining the acts of the offeror?
From the perspective of a reasonable person - how an offeree would view offeror's actions.

Reasoning: To protect a reasonable offeree against the offeror's secret intent.
Is an advertisment an offer?
Usually NOT.
Subject card
What is the effect of the termination of an offer?
An offer can't be accepted if it has been terminated - it is dead.
When does an offer lapse then?
After a stated term, after a reasonable time has passed, or when the offeror revokes the offer.
How can an offeror revoke an offer?
Either directly or indirectly.
What is a direct revocation?
The offeror unambiguously indicates directly to the offeree that he has changed his mind.
What is an indirect revocation?
The offeror engages in conduct that unambiguously indicates that he has changed his mind AND the offeree is aware of this conduct.
When is revocation of an offer effective?
Only on receipt.
General rule: Offeror can revoke at any time before acceptance.

But there are 4 exceptions to this, what are they?
1. Option: a promise to keep the offer open that is paid for (consideration).
2. Forseeable reliance: offeror can expect offeree to accept and then rely. This is rare, but could be a contractor relying on subcontractor bid.
3. Beginning performance of an offer to enter a unilateral contract.
4. Firm offer under Art 2: signed, written promise to keep an offer open made by a merchant (broad definition)
An offer also terminates when the offeree rejects the offer.

What are 3 examples that operate as a rejection?
1. A counteroffer operates as a rejection, but mere bargaining does not.
2. A conditional acceptance operates as a rejection
3. An acceptance containing an additional term is a rejection under common law, but not under Art 2.
What is the mirror image rule?
Under the common law, an acceptance must mirror the offer!
Under Art 2, acceptance need not mirror the offer. Why?
The policy is to facilitate K formation.
What are the 2 elements under Art 2 under Art 2's "no Mirror Image rule"?
1. Additional terms do not prevent acceptance if price and quantity are unchanged.
2. But additional terms do not automatically become part of the contract.
Under Art 2, when do additional terms become part of the contract?
1. Both parties are merchants.
2. The term is not a "material" change, AND
3. Offeror does not object within a reasonable time.
What does the death of either party before acceptance act as?
It terminates a revocable offer.
Subject card
What are the 4 methods of acceptance?
1. Start of performance - acceptance of an offer to enter into a bilateral contract, but not an offer to enter into a unilateral contract (only full performance will do).
2. A return promise: an acceptance of an offer to enter into a bilateral contract, but not oan offer to enter into a unilateral K (only full performance will do).
4 methods of acceptance (continued).
3. Improper performance: usually operates as acceptance
4. Offeree's silence: Generally not acceptance.
Effective Acceptance.
What is the Mailbox Rule?
Acceptance is effective when mailed!
Policy: to protect the offeree against revocation; offeree can rely on having reached an agreement.
What are the exceptions to the Mailbox Rule?
1. Offer provides otherwise
2. Irrevocable offer
3. Acceptance, then rejection: mailbox rule applies unless the rejection gets there first AND the offeror relies on the rejection
4. Rejection, then acceptance: whichever arrives first is effective.
Subject card
What are the 4 major defenses against contract formation?
1. D's lack of capacity to contract at the time of agreement.
2. Ambiguity of term
3. Mistake of Existing Fact (usually material fact)
4. Lack of Consideration or Substitute for It
What are examples of D's lack of capacity to contract?
1. Categories: infant under 18, intoxicated, mental incompetence.
2. An incapacitate D has the right to disaffirm/avoid the K
3. An incapacitated party can impliedly confirm a K by retaining the benefit of the K without complaint after he gains capacity.
4. An incapacitated party is liable for necessaries (food, shelter, med care, clothing), but only on a quasi-K basis.
Ambiguity of term: what if the Buyer knows or has reason to know of an ambiguity?
Then the K will be on the Seller's terms. The innocent party's meaning governs the K.
What are the examples of Mutual Mistake?
1. Mutual mistake
2. Unilateral mistake
What if the mistake is as to value?
Mistake as to value is not considered material. (mutual mistake)
Under unilateral mistake, is one party's mistake fatal to the K?
No, unless the one party is aware that the other party holds a mistaken belief, etc.
Lack of Consideration Defense.
What is the definition of consideration?
A bargained for legal detriment, such as promise, performance, or forbearance.
What is past consideration?
NOT consideration at all. Can't bargain for something that has been done in the past.
Adequacy of consideration.
Are "requirements contracts" permissible under Art 2?
Yes, even if there's no specific quantity mentioned.
However, a quantity cannot become completely different than other years, to where it seems unreasonable.
What is the pre-existing duty rule as it relates to contract modifications?
1. Common law: Must have consideration to modify a K.
2. Art 2: Can modify a K without consideration, but must show good faith
When would part payment be considered?
When part payment is consideration for a promise to forgive the rest of a DISPUTED debt.
Is a written promise to pay a debt enforceable?
Yes, even without consideration and even if the debt is no longer collectable b/c of the statute of limitations.
What can serve as a substitute for consideration?
Promissory estoppel - a promise and forseeable detrimental reliance on the promise.