BLAW Chapter 10

contract

A contract is a legally binding agreement between two or more parties who agree to perform or to refrain from performing some act now or in the future.

executed contract

A contract that has been fully performed on both sides

executory contract

A contract that has not been fully performed by the parties

implied contract

A contract that is implied from the conduct of the parties is called an implied contract or an implied-in-fact contract. This type of contract differs from an express contract in that the conduct of the parties, rather than their words, creates and defines the terms of the contract.

valid contract

A valid contract has the elements necessary to entitle at least one of the parties to enforce it in court. Those elements, as mentioned earlier, consist of (1) an agreement, including an offer and an acceptance of that offer; (2) support by legally sufficient consideration; (3) parties who have the legal capacity to enter into the contract; and 4) a legal purpose.

voidable contract

A voidable contract is a valid contract but one that can be avoided at the option of one or both of the parties.

In a unilateral contract the consideration for a promise is ______. A. Action B. A return promise C. An acknowledgement D. Consideration E. An agreement

A. Action

Which of the following is true regarding illusory promises? A. Illusory promises are not consideration. B. Illusory promises are consideration. C. Illusory promises qualify as consideration when past consideration is at issue. D. Illusory promises qualify as consideration when promissory estoppel is at issue. E. Illusory promises are consideration only when a sale of goods is involved.

A. Illusory promises are not consideration.

Which of the following is true of a requirement contract under the UCC? A. It is valid so long as the requirement is made in good faith. B. It is valid so long as there is a writing setting forth the terms signed by the offeree. C. It is valid so long as there is a writing setting forth the terms signed by the offeror and the offeree. D. It is valid so long as more than nominal consideration is provided. E. It is not valid because of the lack of consideration.

A. It is valid so long as the requirement is made in good faith.

Under the ______ promises based on past consideration may be enforceable to the extent necessary to avoid injustice. A. Restatement (Second) of Contracts B. Uniform Commercial Code C. Restatement (Second) of Remedies D. Common law E. Civil law

A. Restatement (Second) of Contracts

Sam, who has a retail clothing store, orders 50 white shirts from XYZ manufacturer. He later calls a representative of XYZ and requests that blue shirts be sent instead. The representative agrees. Sam gets white shirts and complains. The XYZ representative says there was no consideration for the contract. Which of the following is the correct resolution of the dispute? A. Sam is correct because under the UCC no additional consideration was needed. B. Sam is correct because a valid unilateral contract existed. C. The XYZ representative is correct because no additional consideration was provided. D. The XYZ representative is correct because no valid bilateral contract existed. E. The XYZ representative is correct both because no additional consideration was provided and because no valid bilateral contract existed.

A. Sam is correct because under the UCC no additional consideration was needed.

In the case of Smith v. Riley, referenced in the text, what did the court rule in regard to whether a purchase in the amount of "the sum of One Dollar ($1.00) and other and good and valuable consideration" was sufficient consideration to support an agreement? A. The Court ruled that the purchase amount was sufficient consideration. B. The Court ruled that the purchase amount was insufficient consideration only because the sale of an interest in a lease was involved. C. The Court ruled that the purchase amount was insufficient consideration only because a sale of goods was involved. D. The Court ruled that the purchase amount was insufficient consideration only because a domestic partnership was involved. E. The Court ruled that the purchase amount was insufficient consideration because over $50,000 was at issue.

A. The Court ruled that the purchase amount was sufficient consideration.

quasi contract

An obligation that the law creates in the absence of an agreement between the parties. It is invoked by the courts where Unjust Enrichment, which occurs when a person retains money or benefits that in all fairness belong to another, would exist without judicial relief.

unenforceable contract

An unenforceable contract is one that cannot be enforced because of certain legal defenses against it.

void contract

An unenforceable contract is one that cannot be enforced because of certain legal defenses against it.

Under Article ______ of the UCC, an agreement modifying a contract needs no consideration to be binding. A. One B. Two C. Three D. Five E. None of the above. There is no such rule in the UCC.

B. Two

Which of the following are examples of consideration? A. A benefit to the promisor only. B. A detriment to the promisee only. C. A promise to do something, a benefit to the promisor, or a detriment to the promisee. D. An accepted offer. E. A valid counteroffer.

C. A promise to do something, a benefit to the promisor, or a detriment to the promisee.

Yolanda agrees to bathe and groom Wendy's dog, Fluffy, for $20. Yolanda agreed to the price before seeing Fluffy who is actually a very heavy dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy, the price will be $30. Wendy agrees. Yolanda bathes and grooms Fluffy, but Wendy will only pay $20. Which of the following is correct regarding Yolanda's entitlement to the extra $10? A. Yolanda is entitled to the extra $10 because a valid bilateral contract existed. B. Yolanda is entitled to the extra $10 because a valid unilateral contract existed. C. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $20. D. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory. E. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because past consideration was involved.

C. Assuming the unforeseen circumstances rule is inapplicable, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy for $20.

A[n] ______ contract is an agreement whereby the buyer agrees to purchase all his goods from one seller. A. Supply B. Use C. Requirement D. Output E. Arranged

C. Requirement

In a bilateral contract the consideration for each promise is ______. A. A completed act B. The beginning of action in acceptance, even if it is not complete C. An acknowledgement D. A return promise E. An agreement

D. A return promise

In a[n] ______ debt, there is no dispute about the fact that money is owed and the amount of money owed. A. Actual B. Acknowledged C. Certain D. Liquidated E. Unliquidated

D. Liquidated

A[n] ______ contract is an agreement whereby the seller guarantees to sell everything she produces to one buyer. A. Supply B. Use C. Requirement D. Output E. Arranged

D. Output

Which of the following is true regarding whether an accepted offer to satisfy a debt by paying only part is consideration? A. Partial payment is consideration under all circumstances. B. Partial payment is not consideration under any circumstances. C. Partial payment is consideration if a liquidated debt is involved. D. Partial payment is consideration if an unliquidated debt is involved. E. Partial payment is consideration only if a liquidated or unliquidated debt is involved.

D. Partial payment is consideration if an unliquidated debt is involved.

Which of the following are exceptions to the preexisting-duty rule? A. Unforeseen circumstances only. B. Additional work only. C. Past consideration only. D. Unforeseen circumstances and additional work, but not past consideration. E. Unforeseen circumstances, additional work, and past consideration.

D. Unforeseen circumstances and additional work, but not past consideration.

For a court to enforce a promise ______ must offer consideration. A. Only the offeror B. Only the offeree C. Only the acceptee D. Only the acceptor E. Both sides

E. Both sides

Which of the following is true regarding the adequacy of consideration? A. Courts generally consider the adequacy of consideration in determining whether to enforce a contract. B. Courts consider the adequacy of consideration only if something is sold for less than 90% of its market value. C. Courts consider the adequacy of consideration only if something is sold for less than 80% of its market value. D. Courts consider the adequacy of consideration only if something is sold for less than 70% of its market value. E. Courts seldom consider the adequacy of consideration but will do so if an item was sold for a low sum in order to avoid claims of creditors.

E. Courts seldom consider the adequacy of consideration but will do so if an item was sold for a low sum in order to avoid claims of creditors.

Mary has a pet shop and verbally orders 50 packages of dog food for puppies from a supplier for a total cost of $1,000. Later she calls the supplier and changes the order to food for adult dogs. When 50 packages of puppy food arrive, Mary complains. The supplier tells her that the modification was not valid because nothing was put in writing. Which of the following is the correct resolution of the dispute? A. The supplier is correct because modification of orders of over $200 must be in writing. B. The supplier is correct because modification of orders of over $500 must be in writing. C. The supplier is correct because modification of orders of over $600 must be in writing. D. The supplier is correct because modification of orders of over $800 must be in writing. E. Mary is correct because under the circumstances, there was no requirement of a writing to modify the agreement.

E. Mary is correct because under the circumstances, there was no requirement of a writing to modify the agreement.

formal contract

Formal contracts are contracts that require a special form or method of creation (formation) to be enforceable. Ex: checks

unilateral contract

If the offer is phrased so that the offeree can accept the offer only by completing the contract performance, the contract is a unilateral contract. Hence, a unilateral contract is a "promise for an act." In other words, the time of contract formation in a unilateral contract is not the moment when promises are exchanged but the moment when the contract is performed.

bilateral contract

If the offeree can accept simply by promising to perform, the contract is a bilateral contract. A bilateral contract is a "promise for a promise." No performance, such as payment of funds or delivery of goods, need take place for a bilateral contract to be formed.

express contract

In an express contract, the terms of the agreement are fully and explicitly stated in words, oral or written. A signed lease for an apartment or a house is an express written contract.

offeree

The offeree is the party to whom the offer is made.

offeror

The offeror is the party making the offer.

promisee /promisor

The promisor (the person making the promise) and the promisee (the person to whom the promise is made)

objective theory of contracts

The theory is that a party's intention to enter into a legally binding agreement, or contract, is judged by a reasonable person, rather than by the party's own secret, subjective intentions. Objective facts include (1) what the party said when entering into the contract (2) how the party acted or appeared (intent may be manifested by conduct as well as by oral or written words) (3) the circumstances surrounding the transaction.

quantum meruit

When the court imposes a quasi contract, a plaintiff may recover in quantum meruit, a Latin phrase meaning "as much as he or she deserves." Quantum meruit essentially describes the extent of compensation owed under a contract implied in law.

informal contract

also called simple contracts include all other contracts. No special form is required (except for certain types of contracts that must be in writing), as the contracts are usually based on their substance rather than their form.

Consideration is optional in every contract. True False

false

Past consideration as a rule qualifies as consideration. True False

false

promise

firm agreement to perform an act, refrain from acting or make a payment or delivery.

An exception to the rule requiring consideration is promissory estoppel. True False

true

An illusory promise is not consideration. True False

true

Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated. True False

true

In some cases if past consideration was given with expectation of future payment, the court may enforce the promise. True False

ture