Study your flashcards anywhere!

Download the official Cram app for free >

  • Shuffle
    Toggle On
    Toggle Off
  • Alphabetize
    Toggle On
    Toggle Off
  • Front First
    Toggle On
    Toggle Off
  • Both Sides
    Toggle On
    Toggle Off
  • Read
    Toggle On
    Toggle Off
Reading...
Front

How to study your flashcards.

Right/Left arrow keys: Navigate between flashcards.right arrow keyleft arrow key

Up/Down arrow keys: Flip the card between the front and back.down keyup key

H key: Show hint (3rd side).h key

A key: Read text to speech.a key

image

Play button

image

Play button

image

Progress

1/102

Click to flip

102 Cards in this Set

  • Front
  • Back
What law governs contracts generally?
the common law
what law governs contracts for the sale of GOODS?
Article 2 of the UCC and the common law.
if there is a conflict, the UCC prevails.
What is a quasi-contract?
A quasi-contract is not a contract, rather, it is a way to avoid unjust enrichment.
even where an agreement is not actaully a contract, this doctrine allows people to recover the benefit they conferred on the other party, by means of restitution.
how is an express contract made?
when it is communicated by the parties using Language.
how is an implied contract made?
when the parties' conduct indicates that they assented to be bound
When a contract is formed by an exchange of promises, what is it called?
a bilateral contract
when a contract is formed by the exchange of a promise and an act, what is it called?
a unilateral contract.
in what two situations do unilateral contracts arise?
1. where the offeror has clearly indicated that performance is the ONLY manner of acceptance; or
2. where there is an offer to the public that clearly contemplates acceptance by performance (eg a reward offer)
if a contract is voidable, can it be enforced?
yes - a party can elect to enforce it or to have it voided.
What are the three elements necessary to complete a contract?
1. mutual assent
2. consideration
3. no defenses to formation
what are the 4 defenses to formation of a contract?
Mistake
lack of capacity
illegality
Statute of Frauds
What are the three requirements of a valid offer?
1. there must be a promise, undertaking or commitment to enter into a contract
2. it must be definite and certain
3. and it must be communicated to the offeree
What needs to be definitely described in an offer to buy or sell land?
a description of the land
and the price terms
What needs to be definitely described in an offer regarding the sale of goods?
the quantity must be certain, or capable of being ascertained. "requirements", "output", and ranges of quantity are usually sufficiently certain.
What needs to be definitely described in an employment contract?
the duration of employment must be specified.
if an offer provides that a material term will be agreed at a future date, has a contract been formed?
No.
How can an offeror revoke an offer?
by i) directly communicating the revocation, and ii) acting inconsistently with the continued willingness to maintain the offer and the offeree knows this.
--Offers made by publication can only be revoked by means of a similar publication.
when is the revocation of an offer effective?
when recieved by the offeree (or when published if offer was by publication)
if an offeror has promised not to revoke an offer for a certain period, can he revoke it anyway?
Yes - as long as there is no detrimental reliance or consideration, and as long as it is not a firm offer by a merchant in writing.
How can an offeree terminate an offer?
by expressly rejecting it
or by making a counter-offer
or by allowing for a lapse of time specified in the offer or in a reasonable time.
Does rejection of an option terminate the offer?
No - the offeree can still accept the option at any time during the option period. unless the offeror has detrimentally relied on the rejection
What are the three ways an offer can be terminated by operation of law?
1. Death or insanity of the offeror (does not need to be communicated to offeree)
2. Destruction of the subject matter of the contract; or
3. supervening illegality
Under the UCC, for a contract dealing with the sale of goods, does an acceptance have to mirror the offer's terms?
No - an acceptance that indicates an intention to enter into a contract is valid unless it is made conditional on new or different terms
in contracts for the sale of goods between merchants, where there have been additional contract terms specified in the acceptance, which terms prevail?
Acceptance terms are usually included - unless they materially alter the agreement
If two parties make offers and counteroffers that do not form a contract, but nevertheless begin performing as if they do have a contract, what are its terms?
the terms of such a contract will be those on which the writings of both parties agree plus supplementary terms supplied by the UCC
if an offeree acts in such a fashion that a reasonable person would conclude that he has accepted, but he himself does not intend to accept the offer, has there been acceptance?
Yes - it is an objective standard.
If an acceptance is mailed, when is it effective?
Mailbox rule --> at the moment it is dispatched.
If an acceptance is mailed but it is improperly addressed or stamped, but it nevertheless reaches the offeror, when is it effective?
when it is received
If an offerree sends a rejection by mail and then sends an acceptance, which counts?
whichever is received first
If an offerree sends an acceptance by mail and then sends a rejection, which counts?
the acceptance (mailbox rule applies)
Which type of contract communcations does the mailbox rule apply to?
only acceptances.
If an acceptance of an option contract is sent by mail, when is it effective?
when received.
If an offeree silently takes the offered benefits, but does not communicate an acceptance, what result?
this is an executory bilateral contract
If the offeree of a unilateral contract performs, is there a duty to notify the offeror?
only if
1. the offeror requests notice or
2. if the act is such that it would not normally come to his attention
If B loses a watch and offers a reward, then A finds B's watch and returns it, wihtout ever hearing about the reward, can A enforce the reward?
No - there has been no contract, even though A has perfomred the act required. He was not MOTIVATED by the offer.
If a person signs a contract that has a provision stipulating that it has been read and understood, but nevertheless is ignorant of its provisions, what result?
ignorance fo contractual terms can still be a defense to the bilateral formation of a contract, if the court finds that a reasonable person would not undertand the provisions.
Can the promissee's forbearance from doing something be consideration?
yes - if it benefits the promissor
if a party gains peace of mind or gratification from the act or forbearance of another, is that sufficient to be consideration?
Yes. economic benefit is not required.
If a person promises something in exchange for an act that was performed in the past, is that enforceable?
Generally no. Exception: if the promissor ASKED the other to perform the past act.
If the consideration paid is inadequate or unfair, is the contract enforceable?
Generally, yes. courts will not enquire about adequacy of consideration - exception -- consideration with no value at all may not suffice. also, sham consideration that is listed in a contract but never paid may not suffice
Where there is a contract that deals with the sale of goods as well as other matters, which law applies to the contract?
When we have a mixed contract, the question is which element is more important.
If you hire A to paint your house for $3,000, including the paint provided by A, what law applied to the contract.
This is a mixed contract. But it is primarily about services, hence the common law should apply.
What law governs the leases of goods?
Article 2A of the UCC.
Ben Affleck orally agreed to work for WB for 5 years for $20 million per film. After "Gigli" bombed, WB refused to pay Ben for the film. The Statute of Frauds bars Ben from enforcing the contract. Can Ben recover from WB in quasi-contract?
Yes, otherwise it wouldn't be fair, since WB would get Affleck's services for free. Hence when a contract is not enforceable we should always write in the essay a couple of lines about quasi-contract.

How much can Ben recover from WB in quasi-contract?
--The reasonable value of the benefit conferred on the other party, and NOT the contract price. Reasonable value is usually lower than the contract price.
IHOP advertises in the Post: "Incredible offer! Breakfast special for $2.49." is this an Offer?
No. Ads as a general rule are not offers, since there is no quantity term. An unlimited number of people could potentially accept.
Gap's ad reads: "1 blue dress just like Monica's, only $1! First come, first served."
This is an example of an exception to the "ads are not offers" rule. The ad specifies the quantity (one) and who can accept (the first come).
Seller agrees to sell buyer a car for a reasonable price. Offer?
No. Fair/reasonable/appropriate means we don't have an offer.
Flatus Café offers to buy all its requirements of beans for the next 5 years for $1 per can. is this an offer?
Yes -- All/only/solely means chances are we have an offer for requirements contract.
Flatus Café offers to buy all its requirements of beans for the next 5 years for $1 per can. Seller accepts the Café's offer. For the last 3 years, the Café has ordered 1,000 cans a year. Can the Café require seller to deliver 2,000 cans this year?
No. The buyer cannot take the seller by surprise. Any increase in the buyer's requirements has to be in-line with his prior demands. Even if the buyer is using good-faith
S sends B a letter in which S "offers to sell B Blackacre." The letter does not state a price. Is the letter an offer?
No. Blackacre is land so the common law applies. For sale of real property a contract requires describing the property and stating the price. Under the common law, the offer has to contain a price
S sends B a letter in which S "offers to sell B a painting of Blackacre." The letter does not state a price. Is the letter an offer?
Here we have sale of goods and Article 2 of the UCC applies. Under Article 2 of the UCC there is an offer if the parties so intend. (unlike the common law)
On May 15, I offer to sell Jane my 1999 Honda for $5,000. My offer does not contain a termination date. Can Jane accept my offer on December 22?
No. Even if no deadline is stated, offers don't last forever. An offer terminates after a reasonable time.
On January 3, I offer to sell Meg Ryan my Honda for $3,000. Then, If I sell my Honda to Mischa Barton on January 4, can Meg still accept my offer?
Yes - UNLESS she knew about your sale. this is an INDIRECT REVOCATION of an offer: conduct by the offeror unambiguously indicating a change of mind AND that the offeree is aware of.
On Monday, I offer to sell Meg my Honda. On Tuesday, I mail her a letter revoking the offer. She receives my letter on Thursday. When is the revocation effective?
Thursday. A revocation is effective on receipt. The mailbox rule only applies to acceptance, neither revocation nor rejection.
Generally, the offeror can revoke at any time before acceptance. However, there are 4 narrow exception, situations where an offer cannot be revoked. WHat are they?
a. Option: a promise to keep the offer open that's paid for.
b. Detrimental reliance that's reasonable & foreseeable
c. Part performance of an offer to enter a unilateral contract
d. Firm offer under Article 2: a signed, written promise by a merchant to keep an offer open [note: a "merchant" is a business person].
O offers P $5,000 to paint her house. The offer states that it can be accepted only by performance (waive the flag that we are dealing with unilateral conduct). P starts painting O's house. Can O still revoke?
No. On the MBE, in a unilateral contract when offeree starts painting offeror's house, offeror can no longer revoke.
However, DIFFERENT RULE IN NY. In NY the offer can be revoked until performance is completed.
O offers P $5,000 to paint her house. The offer states it can be accepted only by performance. P buys paint & goes to O's house, but has not started painting. Can O revoke?
Yes - . Mere preparation for performance is not enough to trigger the unilateral contract part performance rule. Offeree has to start performance.
(However, preparation can be reasonable and foreseeable reliance turning the offer irrevocable).
Smart Auto Sales, Inc., offers to sell Bart Simpson a 1971 Porsche. The offer is in writing, is signed by Smart, and provides that Smart will not revoke for 2 weeks. Can Smart still revoke?
Not for 2 weeks, since the requirements for a FIRM OFFER under the UCC are satisfied. Consideration is not required for a firm offer
Smart Auto Sales, Inc., offers to sell Bart Simpson a 1971 Porsche. The offer is in writing, is signed by Smart, and provides that Smart will not revoke for 6 months?Can Smart still revoke?
A firm offer has a 3 month cap. So here the firm offer will be scaled down to 3 months. But had there been consideration we would have an option and wouldn't need the firm offer rule
Smart Auto Sales, Inc. makes a signed, written offer to sell Bart Simpson a 1971 Porsche. Can Smart still revoke?
Yes. There is no promise to keep the offer open. NOT EVEY SIGNED, WRITTEN OFFER BY A MERCHANT IS A FIRM OFFER; YOU NEED A PROMISE TO KEEP THE OFFER OPEN AS WELL
S Realty Co. offers to sell Blackacre to Bart Simpson for $50,000. The offer is in writing, is signed by S, and provides that S will not revoke for 2 weeks. Can S revoke the offer?
Yes. it is not a firm offer because Article 2 of the UCC is not applicable since no goods.
NY distinction: In NY a SIGNED, written promise not to revoke is enforceable since the writing serves as substitute to consideration (EVEN WITHOUT PAYMENT)
Eva offers to sell Greenacres to Zsa Zsa for $50,000. Zsa Zsa responds, "Dahlink, I vill only pay $49,000." Eva refuses
No, since the counteroffer terminates the offer.
Eva offers to sell Greenacres to Zsa Zsa for $50,000. Zsa Zsa responds, "Dahlink, vill you take $49,000?" Can Zsa Zsa later accept Eva's original offer to sell Greenacres for $50,000?
Yes, since if the offeree asks a question that's considered mere bargaining and not a rejection.
Disney sends Bill Clinton an offer to appear in the film, "Waiting to Inhale." Bill agrees
on the condition that (or "provided that"/"so long as"/"if") he get top billing. Is there an agreement?
No. Conditional acceptance is not an acceptance at all. It’s just like saying NO.
What is the consequence of an acceptance containing additional or different terms?
it operates as a rejection under the common law: acceptance must mirror offer ("Mirror Image Rule")
--but not under Article 2.
Landlord sends Tenant a signed lease. The lease is silent about pets. Tenant adds, "Tenant may keep a parrot," signs the lease & returns it to Landlord. Is there an agreement?
No. Under the common law the terms of the acceptance must mirror completely the offer. Any difference, even trivial or insignificant, operates as a rejection and terminates the offer.
B makes a written offer to buy 100 widgets from S for $1,000. The offer does not mention warranties. S's written acceptance disclaims all warranties. Is there an agreement?
Yes, Article 2 of the UCC has no mirror image rule.
B makes a written offer to buy 100 widgets from S for $1,000. The offer does not mention warranties. S's written acceptance disclaims all warranties, which creates an agreement under Article 2 of the UCC, but Does the agreement include S's disclaimer?
No, because even if both parties are merchants, disclaimer is a material change likely to cause hardship or surprise for the offeror.
On April 2, X makes an offer to Y. X dies on April 6. Can Y still accept X's offer?
No. The offer was automatically terminated by X's death on April 2nd. It doesn't matter whether Y knew of X's death or not.
the Death of Either Party before Acceptance Terminates the Offer --> with a narrow exception to irrevocable offers.
On Monday, the Donald emails Kwame an offer of employment that states, "You can accept this offer only by reporting for work on Thursday." Kwame emails back the following response, "I am pleased to accept your offer." Has Kwame accepted the Donald's offer?
NO. this is a unilateral contract which can only be accepted by performing. The only way she can accept is by reporting for work on Thursday
what are the three basic ways an offer can be accepted?
by promising, performing or starting performance.
is the Start of Performance Acceptance of a bilateral contract?
Yes.
is the Start of Performance Acceptance of a unilateral contract?
no. a unilateral contract and it can be accepted only by completing performance.
BUT - Once offeree begins to perform the offeror can no longer revoke an offer to enter into a unilateral contract (However, DIFFERENT RULE IN NY. In NY the offer can be revoked until performance is completed.)
O offers P $5,000 to paint her house white. P does not respond with words; instead, P paints the house maroon. Has P accepted O's offer, so that O can sue for breach of contract?
There can be only implied contract, created by conduct rather than words. Improper performance operates as an acceptance of an offer and a simultaneous breach.
. B orders a Britney CD from S. S ships an Incubus CD instead, but includes a note saying, "I'm out of Britney, but am sending Incubus as an ACOMMODATION in the hope it meets your needs." Has S accepted?
This presents the ACCOMMODATION exception to Article 2 of the UCC: If the seller lets the buyer know why it is sending the wrong goods there's no acceptance and therefore no breach of contract. Buyer can send it back with no obligation.
Can silence be acceptance?
General rule: Silence or inaction are not acceptance.
Victoria's Secret sent Janet Jackson a letter offering her a job as a model. On February 2 (after her "wardrobe malfunction"), Victoria's Secret sent Janet a letter revoking its offer. Janet mailed her acceptance February 4. On February 6, Janet received the revocation. On February 8, Victoria's Secret received Janet's acceptance. Is Janet's acceptance effective?
Yes. The acceptance was effective when mailed on February 4th, whereas the revocation can only enter into effect when received on February 6th. Hence too late, the offer has already been accepted.
A Mailbox rule applies to an acceptance, but not to revocation.
What if the offeror never receives a mailed acceptance letter?
Doesn't matter. The burden of loss is on the offeror. The effective date is on mailing.
Captain Kirk offers to sell the Starship Enterprise to the Klingons for $5 million. His offer provides, "Your acceptance must be received by January 9." On January 9, the Klingons mail their acceptance. Captain Kirk receives it on January 11. Is Captain Kirk bound?
No, cause the offeror can override the mailbox rule. The mailbox rule is a DEFAULT rule.
Captain Kirk offers the Enterprise to the Klingons for $5 million. They pay him $3,000 for his promise to hold the offer open until January 9. On January 9, the Klingons mail their acceptance, which Captain Kirk receives on January 11. Is Captain Kirk bound?
No. this is an exception to the mailbox rule. The acceptance must be received within the option period. Here the rationale for the mailbox rule (protect the offeree) is inapplicable since the offeree is protected by the irrevocable offer.
Slash gets a letter from the Dixie Chicks inviting him to join the group. On May 14, he mails a letter accepting the offer. On May 16, he mails a letter rejecting it. Slash's rejection letter arrives on May 18. His acceptance letter arrives on May 20. Is his acceptance effective?
Yes - The mailbox rule applies, unless the rejection is received first AND the offeror relies on it.
This is the acceptance-rejection scenario - differntiate from the rejection-acceptance scenario
Now assume that Slash mails a letter rejecting the offer on May 14, then mails a letter accepting it on May 16. Which is effective—the rejection or the acceptance?
If offeree initially rejects and then accepts the offer: whichever arrives first wins!
If a rejection is sent first, the mailbox rule does NOT apply. A offeree that initially rejects doesn’t need the protection of the mailbox rule; again the protection is unnecessary. Acceptance is therefore effective only when received. Hence there is a race of sorts - whichever response arrives first is effective.
what are the three categories of lack of capacity to contract?
- under 18 (minors/infants) (check the NY distinctions)
- intoxicated;
- mentally incompetent.
What is the result if a party raises the DEFENSE of incapacity?
An incapacitated defendant has the right to disaffirm (avoid) the contract.
Sean Penn makes an agreement to sell his Harley to 17-year-old Lindsay Lohan for $27,000. Sean breaches. Can Lindsay enforce the agreement against him?
Yes. We only care about defendant's capacity. Plaintiff's capacity is irrelevant.
Sean Penn makes an agreement to sell his Harley to 17-year-old Lindsay Lohan for $27,000. Sean breaches. Can Lindsay enforce the agreement against him? yes. BUT IF Lindsay breaches, can Sean enforce the agreement against her?
No, she can disaffirm the contract, so it is not enforceable against her.
if a contracting party lacked capacity at the time of the agreement, but later gains capacity and retains the benefit of the contract without complaint, can they avoid the contract?
No - they have impliedly reaffirmed the contract.
Landlord leases an apartment to tenant for $800 a month. Tenant is mentally incompetent. Is tenant legally obligated to pay for the use of Landlord's apartment?
Yes, incapacitated parties are liable for necessaries, but only on a quasi contract basis - which is the reasonable value of the apartment (shelter) and not the contract price.
what is required to prove the defense of Economic duress?
(1) Somebody threatens to breach an existing contract unless he gets a better deal.
(2) The other guy makes a new agreement because he desperately needs the first deal.
(3) There's no alternative source of supply.
S tells B that his house has never had any roaches. That statement induces B to agree to buy S's house. Although S honestly & innocently believes that the house has never had any roaches, the house indeed has roaches. Is B's agreement to buy S's house legally enforceable?
No. Because of the material misrepresentation that induced the agreement. An honest and innocent misrepresentation is a fatal flaw as long it is material (there is no need for fraudulent, wrongful or negligent misrepresentation).
Madonna contracted to sell her home on Fire Island to Justice Scalia for $3 million. Neither was aware that a fire had destroyed the house 2 days earlier. Is Justice Scalia bound?
No. The existence of the house was a material fact and therefore the mutual mistake is fatal.
B and S agree on the sale of a drawing for $75,000. Although the agreement does not state that the drawing is a Warhol, and S has never represented to B that it is a Warhol, both B and S believe the drawing is a Warhol. After the agreement, but before performance, they learn that the drawing is not a Warhol. Is their agreement enforceable?
No. Again there is a fatal flaw, a mutual mistake in respect to material fact (identity of the painter).
What if the drawing contracted for is a Warhol, but is worth only $1,000, not $75,000, as both parties believed?
The agreement is enforceable. A mistake as to market value is not considered material. The buyer should have had it appraised
B believes the drawing is a Warhol. S does not believe the drawing is a Warhol, and does not know that B believes it is. After the agreement, but before performance, B learns the drawing is not a Warhol. Is the agreement enforceable?
Yes. The mere fact one party is laboring under mistaken belief is not a fatal flaw in the formation of the contract, as long as the other party was NOT aware of the mistake.
The agreement between B and S provides for the sale of bar exam "flash cards" by S & payment of $100 by B. B now refuses to pay S the $100. Was there consideration for B's promise to buy the flash cards?
Yes; the seller's promise to sell the flash cards was consideration for buyer's promise to buy.
I promise to pay you $100 if you stop listening to recordings by Nine Inch Nails. You do what I asked. Is there consideration for my promise to pay you the $100?
Yes, the forbearance is consideration for the promise to pay.
In August, Simon helps Paula unload a U-Haul. In September, Paula promises to pay Simon $300 for his help unloading the U-Haul. Paula now refuses to pay him. Was there consideration for Paula's promise to pay Simon?
No. Past consideration is not consideration at all. Once cannot bargain for something that had already been done.
We agree that I will pay you $500 for your John Denver "Greatest Hits" CD. The CD is only worth $10. Is there consideration for my promise to pay you $500?
Yes. This may be a bad bargain, but it is still enforceable. Adequacy of the consideration is irrelevant as long as there is a bargain.
Ashlee Simpson contracts to sing at Owner's venue for $25,000. Upon her arrival, Ashlee asks for $30,000 for the same performance covered by the contract. Owner agrees to pay her $30,000. Ashlee performs. Owner then refuses to pay the extra $5,000. Is there consideration for Owner's promise to pay Ashlee the extra $5,000?
No. All Ashlee did was what she was ALREADY LEGALLY OBLIGATED to do under the contract. She did not suffer any additional detriment and Owner received no additional benefit.
S contracts to sell 100 widgets to B for $700. Later, S and B orally agree to increase the price to $900. Is B's promise to pay the extra $200 enforceable?
Yes, as long as there is good faith. There is NO pre-existing duty rule under Article 2 of the UCC; you don’t need consideration to change a contract; we only need good faith.
You owe Visa $2,500. The debt is due & undisputed. You & Visa orally agree that if you pay $2,000 immediately, Visa will forgive the other $500 of the debt. You pay Visa $2,000, but Visa sues you for the other $500! Was your payment of $2,000 consideration for Visa's promise?
No. Partial payment of debt that is due AND undisputed is NOT consideration for the other party's promise to forgive the balance of the debt.
You owe Visa $2,500. The debt is in dispute. You & Visa orally agree that if you pay $2,000 immediately, Visa will forgive the other $500 of the debt. You pay Visa $2,000, but Visa sues you for the other $500! Was your payment of $2,000 consideration for Visa's promise?
YES - Whenever the debt is disputed partial payment IS consideration. The rationale is that the law favors settlement of disputed claims.