Blaw test 2 (quiz 2) OKSTATE- Holden

material breaches

(major term of contract) - Non-breaching party may (1) suspend performance or (2) be discharged from further obligations

Contracts of Minors

(persons younger than 18 years of age) are voidable at their option

consent defects

- misrepresentation -fraud -duress -undue influence - unconscionablitly

Steps of terminating an offer

-Action of the Parties -Revocation -Option Contracts -Partial Performance-Detrimental Reliance -Counter Offer -Rejection

Types of contracts

-Bilateral -Unilateral -Common Law -UCC Sales -Explicit -Implied

Contract interpretation and the parol evidence rule

-Contracts will be read and interpreted to the plain meaning of its terms. -Outside (Parol) Evidence not allowed unless necessary to correct ambiguous terms.

Types of agreements

-E-Contracts -Click Wrap Agreements -Browse Wrap Agreements -Shrink Wrap Agreements

Intoxication

-Intoxication, through drugs or alcohol, can also affect capacity. -Courts use an objective standard to determine if a reasonable person would have believed the intoxicated person had sufficient capacity to enter into an agreement.

Qualified attorneys

-Listens carefully to business details of a transaction. -Asks questions about background and purpose of transaction. -Understands major risks involved. -Assess major negotiating points. -Translates legal terminology into business terminology. -See Big picture, importance of business relationships or reputation. -Drafts customized contracts not templates, legalese, and boilerplates. -Solicits your input in contract-drafting process. -Legally astute businesspeople seek out strategically qualified attorneys. -Legally astute managers have superior knowledge of the law and work proactively with legal counsel to find ethical business solutions.

Elements of contracts

-Mutual Assent -Consideration -Legality of Purpose -Capacity to Contract

Agreements that lack consideration

-Preexisting Duty -Illusory Promises -Past Consideration -Promissory Estoppel -translates legal terminology into business terminology

Discharge by mutual agreement

-Rescission -Accord and Satisfaction -Substitute Agreement (Reformation) -Novation

Discharge by operation of law

-impossibility -destruction of subject matter -death or incapacity to the contract -impracticability -frustration of purpose

According to the contract laws of capacity, the age at which a person can contract is

18 years

Condition Precedent

A condition in a contract that must be met before a party's promise becomes absolute.

Condition Subsequent

A condition in a contract that operates to terminate a party's absolute promise to perform.

Unconscionability

A defense that may allow a party to potentially avoid a contract on the grounds that she suffered a grossly unfair burden that shocks the objective conscience.

To determine if a person is lucid, courts employ

A flexible standard

Toy Tech (TT) has ordered 50,000 aluminum widgets from the Acme Widget Corporation (AWC) with delivery to be made on November 1. These widgets will be used in TT products to create toys for the holiday season. Under which circumstance may TT claim that AWC has made an anticipatory repudiation of the contract?

AWC's sole manufacturing plant burned down on October 1, yet AWC insists that it will rebuild and honor the contract.

Which of the following is a type of contract that is deemed to be against the public interest?

An agreement for the sale of, or traffic in, a public office

Anticipatory repudiation

An assertion or action by a party indicating that he or she will not perform an obligation that the party is contractually obligated to perform at a future time.

Condition Concurrent

An event that must occur at the same time as another condition in a contract.

In order to have mutual asset, there must be

An offer and an acceptance that is the precise mirror image of the offer

An event that occurs after the performance under a contract and discharges the parties' contractual obligations is best referred to as a(n)

Condition subsequent.

Meghan has some very embarrassing pictures of Kalieh. Meghan tells Kalieh that she will post the pictures all over various social media accounts unless Kalieh agrees to sell Meghan an antique wedding ring for $500.00. Out of fear that Meghan will indeed publish the pictures, Kalieh agrees to sell the ring for $500.00. Kalieh will be able to claim the defense of

Duress

Discharging obligations through good faith performance

FULL PERFORMANCE SUBSTANTIAL PERFORMANCE (Executory)

Tasha contracts with Marquel to mow her lawn. Totally unexplained and unplanned, it snow six inches before Marquel is supposed to mow her lawn. Most likely the contract will be discharged by operation of law under the concept of

Impracticability

Maddie cannot read. She signs a cell phone agreement without being able to read the document. This is an example of

Information asymmetry

Which of the following is not an example of when a contract must be in writing according to the statute of frauds?

Jeff agrees to mow Julie's lawn for $100.00

Acceptance

Mailbox Rule or Specific Method set in the Offer

In which of the following situations would anticipatory repudiation not be allowed?

Manny calls Moe and tells him that the sculpture he's creating for him is coming along slower than anticipated but he's pretty sure he'll be done by the contract deadline.

Necessities

Minors may be liable for purchases of food, medical and other necessities.

Which of the following is true regarding breach of contract?

Money damage awards are one of the ways the law provides to compensate the nonbreaching party for losses suffered.

What are the four basic required elements of a valid contract?

Mutual assent, consideration, legality of purpose, and capacity

Gabrielle, a 19 year old college freshman, promises not to drink any alcohol while she is away at college in exchange for her parents' promise to pay for her tuition. Is there consideration?

No because Gabrielle is not giving up something of legal value as she is under 21 years.

Cliff sells a calculator to Lydia. He states he has only used it for his geometry class which was a lie because he never took geometry. He used it in his basic math class. Since Cliff lied to Lydia, most likely would Lydia be successful in asserting the defense of misrepresentation to get out of the contract?

No, unless the court determines his lie about the class in which he used the calculator was a lie about a material fact.

Most business contracts are bilateral because they are enforceable before the other party performs because

One party does not have to wait to see if the other person will breach the agreement before taking action.

Contract structure

Preamble Recitals Definitions Clauses Termination Appendices

What is the common sense and conscience of the community extended and applied throughout the state to matters of public morals, health, safety, and welfare?

Public policy

Which of the following contract sections explains why the parties are entering into the agreement?

Recitals

__________ is a model law that most states have adopted to govern service contracts and real estate contracts.

Restatement (Second) of Contracts

Which of the following are the three ways in which an offer may be terminated by action of the parties?

Revocation, rejection, and a counteroffer

Sally has just purchased a home and wants to have an in-ground pool installed. She calls Cool Pools, the company that put in her neighbors' pools. When the company rep comes to her property, he does some soil tests that are standard for the industry and gets the same results as he got when the other pools were put in, so the company gives her a price quote of $16,000. When Cool Pools begins excavating, it discovers solid rock four feet below ground level. The neighbors had no such rock. Cool Pools stops work and informs Sally that it will have to use explosives to remove the rock and the cost of the pool will now be $32,000

Sally can have the contract discharged based on impracticability.

Les orders a set of vitamins online. When it arrives the vitamins were packaged in shrink wrap. When he opens the packaging, he is accepting what type of agreement?

Shrink Wrap

Which of the following is true regarding the amount and type of consideration?

So long as some bargained-for exchange between the parties is contemplated, the contract will be deemed enforceable.

Consideration

Something of value bargained for in exchange for an agreement -Legal Detriment -Amount and Type of Consideration -Nominal Consideration

Thomas, an attorney, enters into a contract of representation with Cybil to represent her in a probate matter. Which body of law applies to this contract?

State common law

The duty to mitigate damages requires the non-breaching party to

Take reasonable steps to lessen damage

Which of the following laws limits government interference with contracts and says that "No State shall...pass any...Law impairing the Obligation of Contracts?"

The United States Constitution

What typically happens if a contract contains an ambiguous term?

The ambiguity is construed by the court against the interest of the side that drafted the agreement.

At an after work networking event, Mike drinks wine while negotiating the terms of an employment contract with Cyndy to start the next day. Cyndy shows up to work the next day and Mike states that he was drunk the night before and therefore lacked capacity. The court will most likely rule

The contract is voidable by Mike if he can prove that at the time he entered into the contract his intoxication prevented him from understanding the consequences of his actions.

Which of the following provides that the acceptance of an offer is generally effective upon dispatch of the acceptance when sent in a commercially reasonable manner, and not when the acceptance is received by the offeror?

The mailbox rule

Which rule states that any writing intended by the parties to be the final expression of their agreement may not be contradicted by any oral or written agreements made prior to the writing?

The parol evidence rule

Which of the following is a requirement for promissory estoppel?

The promisee actually relied on the promise.

Which of the following is true of strategically qualified attorneys?

They play an active role in helping a businessperson translate the important terms of a deal into the legal terms in a contract.

Which of the following is generally true regarding courts that support freedom of contract principles?

They will enforce valid contracts against parties absent evidence of fraud, mistake, oppression, or lack of legal purpose.

Which of the following is recognized as duress?

Threats of a violent act

What is the current trend among contract drafters?

To use plain English whenever possible

Cell phone contracts are an example of which type of contract?

Transactional

In Waters v. Min Ltd., an appellate court allowed one party to avoid a contract in which she signed over an annuity insurance contract with an immediate value in excess of $150,000 in exchange for a check for $50,000. (The fully annuitized value of the contract would have been over $530,000.) On what basis did the appellate court refuse to enforce the agreement?

Unconscionability

Amaya is a new attorney who is focusing on business matters especially contract negotiations. When she is hired by Holshauser Industries to negotiate all of their product purchase contracts for their car detailing business, as a strategically qualified attorney, she should do all the following except,

Use strong-arm techniques to exploit maximum advantage over opposing interests

Disaffirmance

When a contract with a minor has been performed or partially performed the minor must invoke an action to avoid obligation under the contract

Material Breach

When a party to an agreement owes a duty to perform and fails to fulfill their obligation, a breach of contract has occurred.

Exception

When a party to the contract is member of the class of persons for whose protection the contract was made illegal, he may enforce it or obtain restitution

Mandy, a minor, disaffirms an agreement to purchase a car from Jamie, an adult, for $1000.00. Must Mandy give back the car?

Yes in order to disaffirm it, the minor must return whatever consideration received

Home Security Experts, Inc., a manufacturer and seller of home security systems, employs Jennifer to be a sales representative for the company. The term of her employment contract will begin on May 1, 2019, and end on April 30, 2022. Must this contract be in writing to be enforceable?

Yes, because it cannot be performed in under one year.

Donnie Howell, Jr. is a very wealthy individual, having accumulated $30 million dollars in net worth over the course of his career in the transportation industry. Donnie has met a flight attendant, Melanie, while traveling to a conference last month, and theirs has been a "whirlwind" courtship. Donnie would like to make Melanie his fourth wife (his previous three marriages have ended in divorce), but he would also like to protect his assets with a prenuptial agreement. Must such an agreement be in writing to be enforceable?

Yes, contracts made in consideration of marriage must be in writing to be enforceable.

In which of the following scenarios would enforcement of specific performance be appropriate?

You own the pistol used by Hamilton and contract to buy the pistol used by Burr in the Hamilton-Burr duel to complete your set, but despite the contract the Burr pistol owner refuses to sell at the last minute.

Contract

a binding agreement between two or more persons that is enforceable by law

Timothy contracts with Howard Construction Company to build him a new house for $350,000. In the contract, there is a provision indicating that Timothy must obtain "suitable financing" (defined by the contract as a 3.75 percent annual percentage rate of interest or lower interest rate, for the entire purchase price of the home) before his obligation to purchase the house arises. The "suitable financing" provision in this contract is known as __________.

a condition precedent

Capacity

a legal doctrine used by courts to protect parties who may lack the ability to understand the terms of an agreement.

contract

a legally enforceable promise or set of promises

Frustration of purpose may be used to discharge an obligation if, after the parties enter into an agreement:

a party's principal purpose is substantially frustrated without her fault; some event occurs, when the nonoccurrence of the event was a central assumption of both parties when entering into the contract; and the parties have not otherwise agreed on who bears the risk of such an occurrence.

If the promises to perform in a contract are not conditional, the duty to perform is __________.

absolute

Under the doctrine of __________, one party agrees to render a substitute performance in the future, and the other party promises to accept that substitute performance in discharge of the existing performance obligation. Once the substitute performance has been rendered, this acts as a __________ of the obligation.

accord and satisfaction; satisfaction

Typically, contracting parties reach mutual assent using a combination of __________.

an offer and an acceptance

Suppose that on December 15, 2020, Manager Yang enters into an agreement with Consultant Anderson to provide operation-consulting services for a period of six months to commence on January 2, 2021. On December 20, 2020, Manager Yang is instructed by upper management to cut costs, so he contacts Consultant Anderson the same day by the following e-mail: "Dear Consultant Anderson: We don't require your services. Sorry.—Manager Yang." As of December 20, 2020, Manager Yang has __________ the contract with Consultant Anderson.

anticipatorily repudiated

Anticipatory repudiation is also called __________.

anticipatory breach

Equitable remedies

any form of relief that does not involve a request for monetary damages

Bright-lines rules

are clear-cut and easy to apply, such as determining whether a given person has reached the age of majority.

Flexible standards

are more general guidelines. Providing greater range of choice or discretion.

As a general rule, an illegal contract is __________.

automatically void

A speed limit of 55 miles per hour is an example of a(n) __________.

bright-line rule

In terms of contractual capacity, the age of majority is a(n) __________.

bright-line rule

In a contract claim, money damages are primarily limited to __________.

compensatory damages, consequential damages, restitution, and liquidated damages

Duress

compulsion by threat; forcible confinement

Beth has just signed a contract to work for a bank. A clause in the contract says that before she begins work, she must pass a drug test and should drug use be discovered, the contract becomes void. This clause would be a

condition subsequent.

Statute of Frauds

contracts must be in writing if: -Involve the sale or use of land; -Cannot be performed within one year; (3) -Are to pay the debt of another -Made in consideration of marriage; (5) -Made by the executor of a will to pay the debts of an estate with own money; and -For sale of goods for $500 or more and lease of goods pf to $1,000 or more

General rule

courts will not enforce illegal bargains; leaving the parties where it finds them.

A lack of genuine assent occurs in cases of __________.

duress

Suppose Laura Menendez, a tenant at Ashley Forest Apartments in Durham, North Carolina, moves out of town with nine months remaining on her lease term. Laura is contractually obligated to pay $1,500 per month in rent. Durham has a 98 percent apartment occupancy rate (meaning that 98 percent of all apartments in the city are occupied by tenants). Ashley Forest Apartments will most likely not be able to recover $13,500 in remaining rent from Laura due to its __________.

duty to mitigate damages

Riots, threats of terrorism, fires, earthquakes, wars, and embargoes are often mentioned in __________ clauses as events that will discharge the duties of the parties.

force majeure

A substitute agreement __________.

immediately discharges any obligations under the original contract

A court order to refrain from performing a particular act is known as __________.

injunctive relief

Misrepresentation (innocent and fraudulent)

innocent-When one party to an agreement makes a promise or representation about a material fact that is not true, the other party may avoid the contract on the basis of misrepresentation, even if the business did not know or should have known of the misrepresentation. fraudulent-Misrepresented fact was material (i.e., concerns a basic assumption in the agreement, or false representation somehow changes the value of the contract); Party justifiably relied on the misstatement when forming an agreement; and Misrepresentation was one of fact and not just someone's opinion or puffery

Ratification

is any act that indicates the minor intends to be bound by his promise; may be expressed orally, in writing, or it can be implied.

The contract provision "This Agreement and the benefits and advantages herein contained are personal to the Member and shall not be sold, assigned or transferred by the Member" is an example of __________.

legalese

Which of the following is a consent defect to contract enforceability?

misrepresentation

For most contracts, the remedy at law will be __________.

money damages

The first step in determining whether a valid offer exists is analyzing the offeror's __________.

objective intent

When encountering a situation in which one party is claiming impossibility of performance, the impossibility must be __________ rather than __________ in order for the obligation to be discharged.

objective; subjective

Undue influence

occurs when one party to a contract is in a position of trust and wrongfully dominates the other party

Minors

persons younger than 18 years of age

Formation Asymmetry

refers to the problem of contracts in which one contracting party has more or better information than the other

A condition __________ stipulates an event that occurs after performance under the contract and discharges the parties' obligations.

subsequent

Partial Breach

the innocent party may not rescind the contract and must still perform his/her promise-the remedy is to bring an action for damages caused by the partial breach

Mutual assent

the parties to a contract must manifest by words or conduct that they have agreed to enter into a contract

The defense of __________ gives legal relief to a party who has been induced to enter into a contract through the improper pressure of a trusted relationship.

undue influence

In order for a burdensome contract obligation to be discharged due to impracticability, the burden must be both __________ and __________.

unforeseeable; extreme

In general, a contract with a minor is:

voidable at the election of the minor.

According to the mailbox rule, an acceptance if effective

when dispatched by the offeree in a commercially reasonable manner.

Remedies at law

•Compensatory Damages •Consequential Damages •Restitution •Liquidated Damages

Duty to mitigate

•Law imposes obligation on parties in contract to take appropriate steps to avoid incurring damages and losses. •Failure to Mitigate is grounds in law to reduce or eliminate damage awards