Business law exam 2

exceptions to the statute of frauds

-->admission- statement made in court under oath or some stage of legal proceeding where an oral word admits that a contract exists -->Partial performance -->Promissory estoppel

Quasi-contract

1. plantiff has conferred a benefit on defendant 2. plantiff reasonably expected to be paid AND 3. defendant would be unjustly enriched if plantiff is not compensated-> reasonable value of services rendered

Elements of an offer

1. serious intent by offeror to be bound to agreement 2. reasonably definite terms 3. Communication to the offeree

Which of the following statements is true of the rights of an assignee to a contract? An assignee cannot be assigned the rights to a contract if the assignment decreases the obligor's risk or duties. An assignee is well-protected against any defenses for nonperformance the obligor may plan to raise. An assignee cannot decline an assignment under any circumstance. An assignee cannot be assigned the rights to a contract when the contract is personal in nature.

An assignee cannot be assigned the rights to a contract when the contract is personal in nature. The rights to a contract cannot be assigned when the contract is personal in nature, meaning the obligor has promised something specific to the person receiving it. Third parties cannot legally become the recipient in such situations unless the only part of a contract left to be fulfilled is the payment.

equal dignity rule

IF X enters into a contract with Y, where X will pay Y to enter into a contract with Z on X's behalf AND The contract that Y enters into with Z on X's behalf is within the statue of frauds THEN both contracts must be in writing

Which of the following can be in the form of an oral contract to be enforceable? A prenuptial agreement Mutual promises to marry A contract of suretyship Contract for a sale of land

Mutual promises to marry Mutual promises to marry do not fall within the statute of frauds. This agreement does not need to be in writing because neither party is gaining anything other than a return on his or her promise to marry; thus the agreement does not fall within the statute.

In which of the following situations do the parties to a contract lack contractual capacity? When the parties to the contract are from different countries When the parties to the contract are from different race When one of the parties to the contract is intoxicated When one of the parties to the contract is physically impaired

When one of the parties to the contract is intoxicated Contractual capacity is the legal ability to enter into a binding agreement. Most adults over the age of majority have capacity; those under the age of majority, people suffering from mental illness, and intoxicated persons do not.

Before a contract can be voided for a mutual mistake, it must be proved that: a basic assumption about the subject matter of the contract is present. a party to the contract made erroneous judgment about the value of an item. there is no material effect on the agreement. both the parties to the contract consciously made false statements about a fact material to the agreement.

a basic assumption about the subject matter of the contract is present. For a mutual mistake to interfere with legal consent, all the following must be present, a basic assumption about the subject matter of the contract, a material effect on the agreement, and an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement.

counteroffer

a rejection + a new offer

contract

a set of legally enforceable promises

offer+acceptance

agreement

reasonably definite terms

all material terms are included in offer such as: --> subject matter, price, quantity, quality, parties OR --> method for determining the material term

A(n) _____ occurs when a party to a contract transfers his or her rights to receive something under the contract to a third party. aleatory contract assignment third-party beneficiary contract delegation

assignment Assignment occurs when a party to a contract—an assignor transfers her rights to receive something under the contract to a third party—an assignee. When an assignor transfers her rights to an assignee, the assignor legally gives up all rights she had to collect on the contract.

A person who transfers his or her rights to receive something under a contract to a third party is referred to as a(n) _____. creditor beneficiary assignor delegator

assignor A person who transfers his or her rights under a third party is an assignor, and the person who receives the transfer and is now entitled to enforce the rights is the assignee.

consideration

baragained for exchange

mirror image rule

bilateral, has to be exact mirror image acceptance

forebearance

can be consideration, al pacino scene?

Valid contract

contains all the legal elements of a contract

statute of frauds: cannot complete contract within a year

count from day contract created do not consider likelihood of completing, instead consider possibility

Jason agrees to buy Sara's car for $10,000. However, Sara tells Jason that she will only sell the car to him if he pays $12,000. In this scenario, Sara makes a(n): counteroffer. collective bargain. addendum. reverse bid.

counteroffer. In this scenario, Sara makes a counteroffer. A counteroffer is defined by the Restatement as "an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer."

unilateral mistake of fact

generally not void UNLESS -->one party made the mistake, and the other knew or should have known that the other party was mistaken

parol evidence rule

integrated contracts (intended to be complete and final representation--> merger clause) Partially integrated not intended to be complete and final

sufficiency or writing

name of the parties to the contract subject matter of the agreement consideration given for the contract all relevant contractual terms the signature of atleast the party against whom action is brought

void contract

not a contract, no legal object, or missing an element

bilateral contract

promise exchange. Ex: i promise to charge your phone if you promise to lick my ********

why require a written contract?

reliability and specificity

recission

rescinding (or voiding) a contract

A debt is unliquidated when: it is provided by the creditor without charging an interest. it cannot be recovered due to the debtor's bankruptcy. the parties dispute over the existence or amount of the debt. the debtor is made to pay more than he or she owes.

the parties dispute over the existence or amount of the debt. In an unliquidated debt, the parties either disagree about whether money is owed or dispute the amount. They can settle for less than the full amount if they enter into an accord and satisfaction.

what contracts must be written?

those in the statute of frauds

If a party to a contract asks for an additional amount of money and agrees to do more work than the contract requires, the result is that the promise: becomes an option contract. to do the extra work is an illusory promise. to do the extra work is valid consideration. becomes a part of the party's preexisting duty.

to do the extra work is valid consideration. If a party to a contract agrees to do additional work for an extra amount of money (more than the contract requires), the promise to do it is valid consideration.

effective parties intent

try to give effect to what parties try to do

third party beneficiary contracts

two parties enter into a contract with the purpose of benefitting a third party, called the intended beneficiary Ex: Lazares (promisee) promises to pay Hilton (promisor) if Hilton teaches Teddy (3rd party beneficiary) speaking skills

An agreement can be rescinded on grounds of _____, when one of the parties to the contract has so much more bargaining power than the other that he or she dictates the terms of the agreement. libel unconscionability false light defalcation

unconscionability An agreement can be rescinded on grounds of unconscionability, when one of the parties has so much more bargaining power than the other that he or she dictates the terms of the agreement.

misrepresentation

untruthful assertion by one of the parties about material fact

promises/marriage, whats included in statute of frauds

yes contract for marriage plus something else (prenup) no contract for marriage alone

illusory promise

"if" i decide to buy, absolute disgression, not consideration --> good faith condition- i will buy your house as long as my loan is accepted.

Which of the following can be considered an offer? An invitation to negotiate An expression of possible interest in an exchange A request for bids An auction without reserve

An auction without reserve In an auction without reserve, the seller is treated as making an offer to accept the highest bid and therefore must accept it.

Parts of assignment

Assignor gives up rights, assignee has gained them Assignee has gained ability to legally demand performance under the contract Assignee is still subject to all of the same defenses that the other original party to the contract can raise If the rights assigned are within the statute of frauds, must be written as always Assignee must agree to accept (or decline) rights

_____ is best described as what a person will receive in return for performing a contract obligation. Recognizance Capitalization Consideration Commission

Consideration Consideration is required in every contract. It is what a person will receive in return for performing a contract obligation. Consideration can be anything, as long as it is the product of a bargained-for exchange. In a business context it is often (but not always) money.

Which of the following conditions must be present for an offer to have a legal effect? Invitation to negotiate Definite and certain terms Neutral third parties Expression of interest in an exchange

Definite and certain terms Under the common law, the terms of the offer must be definite and certain. In other words, all the material terms must be included. The material terms allow a court to determine damages in the event that one of the parties breaches the contract. They include the subject matter, price, quantity, quality, and parties.

Felipe, Adam, and Shirley are neighbors. Felipe overhears Adam's offer to sell an antique clock to Shirley for $3,000. Under these circumstances, _____. Shirley cannot make a counteroffer to Adam to buy the clock for $2,500 Felipe makes a new offer to Adam when he offers to buy the clock for $3,000 Felipe accepts the original offer made to Shirley when he accepts to buy the clock from Adam for $3,000 Adam cannot make a new offer to sell the clock for $3,500 to Felipe

Felipe makes a new offer to Adam when he offers to buy the clock for $3,000 Under the given circumstances, Felipe makes a new offer to Adam when he offers to buy the clock for $3,000. If he says to Adam "I'll give you $3,000 for the clock," he is not accepting the offer but, rather, is making a new offer. The offer must be communicated to the offeree or the offeree's agent. Only the offeree (or his agent acting on his behalf) can accept the offer.

contracts related to land

anything attached to land (trees, building, etc) mortgages and leases

implied contract

arises from conduct of the parties. Ex: injured in a bad car accident, implied that you/insurance will pay for the treatment

mutual mistake of fact is not a contract if

both parties are mistaken about a basic assumption of fact that materially affects the agreed exchange AND not a risk that either party bears (sold "as is")

contract is void or illegal if any of the following

commit crime or tort usury (higher interest rate) gambling contracts in restraint of trade unconscionable (so onesided that its unfair) exculpatory clauses--> if contractor relieves on side of liability regardless of result

executed contract

contract that has been fully performed

Auction with reserve

default, seller expresses interest in receiving offers.

partially integrated contracts and parol evidence

emissable on both parol evidence and PE exceptions parol evidence is allowed to clarify incomplete terms

elements of fraudulent misrepresentation

false assertion of material fact intent to deceive justifiable reliance on false assertion

Example of equal dignity rule, is writing required?

i agree to pay you $1000 to buy me a house, YES i agree to pay you 500 to buy me 100 in goods NO

make it work

if multiple interpretations, choose the one that makes lawful and reasonable

groups that fail to meet legal capacity

minors (under 18) mentally incompetent intoxicated people (cannot reasonably understand) result, contract is VOIDABLE

past consideration

not consideration if in the past

offer

offeror makes offer, offeree accepts

voidable

one or both parties is able to withdraw

duress

one party forced into an agreement by the wrongful act of another. threat must leave no reasonable alternatives so that free will is removed ex: physical coersion, economic coersion, criminal charges

prexisting duty

performing duty under law ex- policeman, man is wanted, cant collect reward for doing his job exceptions- unforeseen difficulties, additional work (going beyond preexisting terms)

fraudulent misrepresentation

person who made statement intended to mislead the other party

promisor

person who makes a promise

promisee

person who receives the promise

A _____ is an agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party's property. coverture arrangement prenuptial agreement cartel arrangement nondisclosure agreement

prenuptial agreement A prenuptial agreement is an agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party's property. While mutual promises to marry do not fall within the statute of frauds, prenuptial agreements do.

termination of offer

revocation by offeror rejection/counteroffer death/incapacity destruction/illegality lapse of time/failure of condition

auction without reserve

seller is making offers for what they want it to be made at

executory contract

some elements of the contract have yet to be performed

_____ is best described as those special relationships in which one person takes advantage of a dominant position in a relationship to unfairly persuade the other and interfere with that person's ability to make his or her own decision. Duress Unconscionability Undue influence Defalcation

undue influence Undue influence refers to those special relationships in which one person takes advantage of a dominant position in a relationship to unfairly persuade the other and interfere with that person's ability to make his or her own decision. The essential element of undue influence is the existence of a dominant-subservient relationship.

resolve ambiguity against drafter

writers clarification, interpretation of reader prevails

Which of the following falls under Article 2 of the Uniform Commercial Code (UCC)? Contract for an arbitration agreement Contract for a joint venture Contract between an employer and employee Contract for the sale of a good

Contract for the sale of a good All contracts are governed by either common law or the Uniform Commercial Code (UCC). If the contract is for the sale of a good, it falls under Article 2 of the UCC; if it is for anything else, it falls under common law.

Which of the following contracts falls within the statute of frauds? Contracts for lifetime employment Contracts related to an interest in land Contracts for the sale of goods totaling not more than $100 Contracts whose terms could be performed within six months

Contracts related to an interest in land Only specific types of contracts are within the scope of the statute of frauds and thus required to be evidenced by writing. They are (1) contracts whose terms prevent possible performance within one year, (2) promises made in consideration of marriage, (3) contracts for one party to pay the debt of another if the initial party fails to pay, (4) contracts related to an interest in land, and (5) contracts for the sale of goods totaling more than $500.

Ronald agrees that he owes a bank $10,000, as claimed by the bank. Ronald explains to the bank that he can only pay the bank $8,000 as full payment toward the money he owes. The bank agrees to accept $8,000 from him. The following month, Ronald receives his new bank statement claiming that he still owes the bank $2,000. Which of the following statements is true of this scenario? Ronald can sue the bank on the basis of breach of promissory estoppel. If Ronald does not agree to pay the remaining $2,000, the creditor may sue Ronald for the balance it believes is owed. Both Ronald and the bank can settle their dispute through an accord and satisfaction, as this is a case of an unliquidated debt. Ronald cannot be sued by the bank for nonpayment because of the different payment that has already been made by him.

If Ronald does not agree to pay the remaining $2,000, the creditor may sue Ronald for the balance it believes is owed. In this situation, if Ronald does not agree to pay the remaining $2,000, the creditor may sue Ronald for the balance it believes is owed. A creditor's promise to accept less than owed, when the debtor is already obligated to pay the full amount, is not binding.

Which of the following is true of the mailbox rule? It prohibits the formation or drafting of contracts over e-mails. It applies to offers accepted or rejected through instantaneous communication, such as over the phone, in person, or by telex. It provides that a revocation of an offer is valid as soon as the offeror places it in the mailbox. It provides that the acceptance of an offer is valid when the offeree places it in the mailbox.

It provides that the acceptance of an offer is valid when the offeree places it in the mailbox. The mailbox rule provides that an acceptance is valid when the offeree places it in the mailbox, whereas a revocation is effective only when the offeree receives it. The mailbox rule is not applicable when there is instantaneous communication, such as over the phone, in person, or by telex.

Amy offers to paint Louis's house for $1,000. The offer stated that acceptance in person was required. Within a reasonable time, Louis e-mailed Amy his acceptance. Which of the following statements is true about this situation? Louis has not accepted the offer as required by the offeror, and there is no contract. Louis has accepted the offer because an e-mail is a reasonable means of acceptance. The agreement between Louis and Amy will be valid but unenforceable. The acceptance by Louis will be presumed as an implied contract.

Louis has not accepted the offer as required by the offeror, and there is no contract. In this situation, Louis has not accepted the offer as required by the offeror, and there is no contract. An offeror has the power to control the means by which the acceptance is communicated, so if the offeror specifies that only a certain means of communication will be accepted, then only an acceptance by that means forms a valid contract.

Maya pays $5,000 and purchases a car from her friend, Jane. Later, Maya realizes that the car is worth less than $3000. Which of the following statements will be true if Maya plans to sue her friend? The court will hold Jane liable as she made an illusory promise. Jane will be held guilty because her action is a breach of promissory estoppel. Maya cannot sue Jane because the court seldom considers adequacy of consideration. The court will hold the contract to be invalid as it involves falsification of data.

Maya cannot sue Jane because the court seldom considers adequacy of consideration. The court does not weigh whether a party in a contract made a good bargain. The court seldom considers adequacy of consideration.

Lucas is planning to buy a house owned by Janet. He gives her an initial amount of $10,000 to hold the offer open for a 45-day period. Janet will deduct the $10,000 from the purchase price if Lucas purchases the property within those 45 days. If he does not, Janet can keep the $10,000 and offer the house to another party. Which of the following contracts does this scenario best illustrate? Option contract Void contract Implied contract Executed contract

Option contract The scenario best illustrates an option contract. An offeree who wishes to ensure that an offer will in fact be held open for a set period of time may do so by entering into an option contract with the offeror. In an option contract, the offeree gives the offeror a piece of consideration in exchange for holding the offer open for the specified period of time.

_____ are best described as contractual obligations imposed by the courts in order to prevent one party from being unjustly enriched at the expense of another. Bilateral contracts Quasi-contracts Express contracts Void contracts

Quasi-contracts Quasi-contracts are sometimes called implied-in-law contracts, but they are not actually contracts. Rather, in order to prevent one party from being unjustly enriched at the expense of another, the courts impose contractual obligations on one of the parties as if that party had entered into a contract.

Which of the following is true of authorized means of acceptance of an offer? The means by which an offeree can communicate acceptance to an offeror cannot be implied from the facts and circumstances surrounding the communication. A reasonable means of communication is acceptable, even if the offer specifies that acceptance must be communicated by a specific mode. The means by which an offeree can communicate acceptance to an offeror can be expressly stated in the offer. If no mode of communication is specified in the offer, the offer is deemed void.

The means by which an offeree can communicate acceptance to an offeror can be expressly stated in the offer. The means by which an offeree can communicate acceptance to an offeror may either be expressly stated in the offer, which is called an express authorization, or be implied from the facts and circumstances surrounding the communication of the offer to the offeree.

Which of the following indicates that the terms of an acceptance must reflect the terms of an offer? The mailbox rule The near-privity rule The mirror-image rule The Ultramares rule

The mirror-image rule The mirror-image rule says that the terms of the acceptance must mirror the terms of the offer. If they do not, no contract is formed. Instead, the attempted acceptance is a counteroffer.

Which of the following statements is true of incidental beneficiaries? They benefit from the direct reception of contractual performance. They do not have the rights to enforce other people's contracts. They are the intended beneficiaries of a contract. They can only sue the promisor for a breach of contract, and not the promisee.

They do not have the rights to enforce other people's contracts. Incidental beneficiaries maintain no rights to enforce other people's contract. The incidental beneficiary is in the worst legal position because he cannot sue anyone.

contracts for the sales of goods > 500

UCC based --> BUT, writing only needs to state the quantity (other terms can be oral --> BUT, writing can only be enforced against a party that signed the agreement

Under the statute of frauds, which of the following statements is true of the one-year rule for contracts? The possibility that a contract's terms could be performed within one year does not remove the contract from the statute's written requirements. If a contract can possibly be performed within a year, but such performance is highly unlikely, then the contract needs to be in writing to be enforceable. Under the statute, the one-year period begins the day after the contract is created, not when it is scheduled to begin. The test for compliance with the one-year rule considers the likelihood of completing the contract in one year rather than the possibility.

Under the statute, the one-year period begins the day after the contract is created, not when it is scheduled to begin. Contracts whose performance, based on the terms of the contract, could not possibly occur within one year fall within the statute of frauds and therefore must be in writing. The one-year period begins the day after the contract is created, not when it is scheduled to begin.

In which of the following cases is parol evidence inadmissible? When a contract contains ambiguous terms that significantly affect its interpretation When certain conditions make an otherwise valid contract void When a contract is deemed integrated by the courts When a contract contains obvious typographical errors

When a contract is deemed integrated by the courts Integrated contracts are written contracts intended to be the complete and final representation of the parties' agreement. When the courts deem a contract integrated, the parol evidence is inadmissible.

In which of the following cases is the assignment of rights prohibited? When the assignment increases the risk or duties the obligor would face in fulfilling the original contract When either party to a contract, which has an anti assignment clause, wants to assign his or her right to receive payment When the law necessitates an assignment in bankruptcy cases, but the contract has an antiassignment clause When a party to the contract wants to assign the right to receive damages for a breach of contract to sell goods or services

When the assignment increases the risk or duties the obligor would face in fulfilling the original contract Rights cannot be assigned when the assignment increases the risk or duties the obligor would face in fulfilling the original contract.

Which of the following conditions would terminate an offer, even if the offeree does not know of the terminating event? When the offeror and the offeree are in an option contract that is still valid When the offeror loses the legal capacity to enter into a contract When the offeree has begun performance of the action necessary to accept a unilateral offer When the offeror decides to revoke the offer made to the offeree

When the offeror loses the legal capacity to enter into a contract An offer terminates immediately if the offeror dies or loses the legal capacity to enter into the contract, even if the offeree does not know of the terminating event. If the parties had already entered into an option contract to hold the offer open for a set period of time, however, the administrator of the offeror's estate or the guardian of the offeror must hold the offer open until it expires in accordance with the option contract.

A(n) _____ is best described as a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing. recognizance illusory promise admission assignment

admission An admission is a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing. All states except Louisiana and California allow the admission exception.

Bob agrees to sell his farm to Joseph for $80,000. He then transfers his right to receive Joseph's payment to Kiara. In this scenario, the transfer of Bob's rights to Kiara is an example of a(n) _____. collateral promise adhesion contract delegation assignment

assignment In this scenario, the transfer of Bob's rights to Kiara is an example of an assignment. Assignment occurs when a party to a contract—an assignor transfers her rights to receive something under the contract to a third party—an assignee. When an assignor transfers her rights to an assignee, the assignor legally gives up all rights she had to collect on the contract.

What is in statute? (what needs to be written?)

cannot complete contract within a year promises (ex marriage) contract to pay debt of another contract related to land contracts for sale of goods > 500 equal dignity rule

Expressed contract

clearly set forth in writing or in words contract

A(n) _____ occurs when a party outside a primary agreement promises to fulfill one of the original party's obligations if the original party fails to fulfill it. recognizance collateral promise primary obligation illusory promise

collateral promise A secondary obligation occurs when a party outside a primary agreement promises to fulfill one of the original party's (primary debtor's) obligations if the original party fails to fulfill it. These secondary obligations are also called secondary promises, collateral promises, or suretyship promises.

The law of contracts is primarily _____. uniform law common law statutory law constitutional law

common law The two most important sources of contract law are case law and the Uniform Commercial Code (UCC). The law of contracts is primarily common law. Today's law of contracts actually originated in judicial decisions in England, later modified by early courts in the United States.

sources of contract law

common law (services, property) UCC- contracts for the sale of goods

When an entire contract is conditioned on something else's occurring first, that first event is known as a(n) _____. constructive action condition precedent undue influence adhesion clause

condition precedent When an entire contract is conditioned on something else's occurring first, that first event is known as a condition precedent. Evidence of the existence of a condition precedent agreed to orally is admissible, as stated previously, because the contract is not modified by such evidence; rather, its enforceability is called into question.

A(n) _____ is defined as a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty. contract statute agreement affidavit

contract The Restatement (Second) of contracts defines a contract as "a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty." Another way to think of a contract is as a set of legally enforceable promises.

Plain meaning

contract has to mean what it says

Contracts that are required to be in writing by the statute of frauds include: promises to sell crops annually. contracts between parties for profit sharing from the sale of real property. contracts of suretyship promises. mutual promises to marry.

contracts of suretyship promises. The contracts within the statute of frauds that concern promises to pay a debt are of a very limited kind. Known as secondary obligations, they are also called secondary promises, collateral promises, or suretyship promises. Secondary obligations are within the statute and need to be in writing.

_____ are an exception to the common law rule requiring consideration. Option contracts Unilateral contracts Contracts under hand Contracts under seal

contracts under seal Promissory estoppel and contracts under seal are two exceptions to the common law rule requiring consideration.

elements of a contract

contractual capacity offer acceptance legal object consideration

Any consideration will do

court will generally not inquire into the adequacy of consideration --> more peppercorn will suffice, unless its sham

Ronald contracts with Saba to have her deliver some machinery to his factory. Saba then transfers her duty to Liam, a third party, who delivers the machinery to Ronald. In this scenario, the transfer of Saba's duties to Liam is an example of a(n): third-party beneficiary contract. adhesion contract. assignment. delegation.

delegation In this scenario, the transfer of Saba's duties to Liam is an example of a delegation. A delegation occurs when a party to a contract—a delegator—transfers her duty to perform to a third party—a delegatee—who is not part of the original contract. Delegations transfer duties.

A party transferring her or his duties under a contract to a third party is referred to as the _____. assignor creditor delegator beneficiary

delegator A party transferring her or his duties under the contract is the delegator, and the one receiving the transfer is the delegatee.

statute of frauds

doesnt really relate to fraud or something criminal or illegal

When one party is forced to enter into a contract by the wrongful threat of another, the contract is voidable by the innocent party due to _____. duress false light negligence per se duty to retreat

duress When one party is forced to enter into a contract by the wrongful threat of another, the contract is voidable by the innocent party due to duress. Duress occurs when one party is forced into the agreement by the wrongful act of another. The wrongful act may come in various forms.

what is transferred in a delegation

duties instead of rights

what cant you delegate?

duties that are personal in nature duties for which the delegatees performance will vary significantly from the delegators guties in contracts that forbid delegations

revocation by offeror

effective when offeree receives it Exceptions- --> option contracts (offeree pays offeror to keep contract open) -->detrimental reliance by offeree- promised to keep offer open, relied on that, takes actions that are detrimental

oral condition precedent

entire contract doesnt come into effect until something happens, you can orally state those terms

Under the _____, contracts that would normally fall under the statute of frauds and need a writing if negotiated by the principal must be in writing even if negotiated by an agent. mirror image rule preexisting duty rule equal dignity rule parol evidence rule

equal dignity rule Because the statute of frauds is actually state law, certain states have various requirements not found in others. In some states, under the equal dignity rule contracts that would normally fall under the statute and need a writing if negotiated by the principal must be in writing even if negotiated by an agent.

innocent misrepresentation

false statement about material fact that one person made and honestly believe it to be true

negligent misrepresentation

false statement about material fact that person who made it could have known with reasonable inspection DAMAGES!

fraud in the factum

false statement about the nature of a document being signed

fraud in the inducement

false statement about the subject matter

Naomi sold her five-year-old car to the buyer claiming that she had bought the car three years ago. This is an example of: duress. mistake of fact. mistake of law. fraudulent misrepresentation.

fraudulent misrepresentation. A fraudulent misrepresentation is a consciously false representation of a material fact intended to mislead the other party. For fraudulent misrepresentation to be the basis for a contract rescission, the statement of fact need not be an actual assertion. It can also be an act of concealment or nondisclosure. Concealment is the active hiding of the truth about a material fact.

specific>

general

partial performance of land contracts

if a buyer has an alleged contract for the sale of land has: paid any portion of the sale price OR begun to permanently improve the land OR taken possession of the land

Brian offers to sell Rachel his computer for $200. Rachel says that she will look at the computer in the morning, and if she likes it she will buy it for $200. At this point, Rachel has not committed to doing anything. This is an example of a(n): promissory estoppel. illusory promise. recognizance. option contract.

illusory promise. This is an example of an illusory promise, since Rachel has not committed to doing anything. The law considers this an illusory promise—it is not a promise at all.

A(n) _____ is best described as a contract that arises not from words but from the conduct of the parties. implied contract void contract pseudo contract express contract

implied contract Implied contracts arise not from words but from the conduct of the parties. In contrast, the terms of express contracts are all clearly set forth in either written or spoken words.

A void contract is: in effect not a contract at all; either its object is illegal or it has some defect so serious that it is not a contract. one that contains all the four legal elements of a contract but the law prohibits the courts from enforcing it. one in which both parties have the ability to either withdraw from the contract or enforce it. a contractual obligation imposed by the courts in order to prevent one party from being unjustly enriched at the expense of another.

in effect not a contract at all; either its object is illegal or it has some defect so serious that it is not a contract. A void contract is in effect not a contract at all. Either its object is illegal or it has some defect so serious that it is not a contract.

When the contracting parties do not intend to benefit someone but unintentionally do so, that third party is referred to as a(n): incidental beneficiary. contingent beneficiary. donee beneficiary. creditor beneficiary.

incidental beneficiary When the contracting parties do not intend to benefit someone but unintentionally do so, that third party is an incidental beneficiary. One significant difference between intended and incidental beneficiaries is that incidental beneficiaries maintain no rights to enforce other people's contracts.

A(n) _____ results from a false statement about a fact material to an agreement that the person making it believed to be true. fraudulent misrepresentation negligent misrepresentation innocent misrepresentation intentional misrepresentation

innocent misrepresentation An innocent misrepresentation results from a false statement about a fact material to an agreement that the person making it believed to be true. The person had no knowledge of the claim's falsity. He or she lacked scienter.

Jason contracts with Kylie to paint her house. In exchange, the small amount of money that Jason owes to a local bank will be paid off by Kylie. In this scenario, the bank is referred to as the: incidental beneficiary. promisor. promisee. intended beneficiary.

intended beneficiary The bank is referred to as the intended beneficiary. A third-party beneficiary is created when two parties enter into a contract with the purpose of benefiting a third party, called the intended beneficiary. An intended beneficiary is a third party to a contract whom the contracting parties intended to benefit directly from their contract.

A third-party beneficiary: is created when three different parties enter into a contract with the purpose of mutual benefit. occurs when a party to a contract transfers his duties under the contract to a third party, who is not part of the original contract. is created when two parties enter into a contract with the purpose of benefiting a third party. occurs when a party to a contract transfers her rights to receive something under the contract to a third party.

is created when two parties enter into a contract with the purpose of benefiting a third party. A third-party beneficiary is created when two parties enter into a contract with the purpose of benefiting a third party, called the intended beneficiary. The beneficiary need not be named in the contract, as long as the terms of the contract or events occurring after its creation make it clear who he or she is.

When a counteroffer is made by an offeree, the original offer: is deemed accepted. is terminated. becomes a quasi-contract. becomes part of the counteroffer.

is terminated A counteroffer terminates the original offer. A counteroffer is defined by the Restatement as "an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer."

two main categories of defenses

lack of genuine asset failure to satisfy the "statue of frauds"

contractual capacity

legal ability to enter into binding agreement

When there is no dispute over the amount of debt or existence of debt, it is referred to as a _____. liquidated debt venture debt good debt subordinated debt

liquidated debt In a liquidated debt, there is no dispute that money is owed or how much. Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated.

partial payment on debt

liquidated- no dispute to validity or amount of debt (not consideration) unliquidated- dispute in the amount of debt (can be consideration)

elements of acceptance

manifest intent to be bound (objective, bilateral/unilateral, silence doesnt equal acceptance) ->exceptions to silence: if parties agree that silence is acceptance, course of dealing (wholesaler dealing to retailer, typically 5 days to report defects, accepts benefits without rejecting) Also elements of acceptance: agreement to definite and certain terms communication to offeror

offeror is

master of the offer, can specify specific modes of aceeptance

unenforceable contract

may have all elements, but lacks specific legality (in writing, statue of frauds, etc)

In contract law, _____ refers to having an erroneous belief about the facts of a contract at the time the contract is concluded. mistake of fact defalcation false light implied-in-fact

mistake of fact In contract law, a mistake of fact is an erroneous belief about the facts of the contract at the time the contract is concluded. Legal assent is absent when a mistake of fact occurs.

mistake of fact

mutual mistake of fact will void a contract unilateral mistake will not

A(n) _____ occurs only when the party making a false statement, without the intentions to deceive, should have known the truth using the skills and competence required of a person in his position or profession. fraudulent misrepresentation intentional misrepresentation innocent misrepresentation negligent misrepresentation

negligent misrepresentation In some contract negotiations, one party makes a statement of material fact that he thinks is true. If he could have known the truth by using reasonable care to discover or reveal it, his statement is a negligent misrepresentation.

In an unliquidated debt, an accord is best described as the: new agreement to pay less than the creditor claims is owed. new agreement to pay more than what is owed to the creditor. acceptance by the creditor to settle the dispute through arbitration. acceptance by the creditor that he or she did not loan any money to the debtor.

new agreement to pay less than the creditor claims is owed. The accord is the new agreement to pay less than the creditor claims is owed. In an unliquidated debt, the parties either disagree about whether money is owed or dispute the amount. They can settle for less than the full amount if they enter into an accord and satisfaction.

integrated contracts and parol evidence

not emissable on parol evidence but yes emissable with PE exceptions parol evidence is not allowed to come in

The _____ states that we base the existence of a contract on the parties' outward manifestations of intent and we base its interpretation on how a reasonable person would interpret it. efficient theory of contracts social contract theory objective theory of contracts bargain theory of consideration

objective theory of contracts Contract law is based on an objective theory of contracts, which means we base the existence of a contract on the parties' outward manifestations of intent and we base its interpretation on how a reasonable person would interpret it. Thus, the subjective intent of the parties is not usually relevant.

objective or subjective?

objective- reasonable person would believe that the offer was made or accepted under the circumstances instead of subjective- what did this SPECIFIC person think?

Why is it important to give notice of assignment ASAP?

obligor may perform under original contract with assignor and once this is performed obligations are fulfilled and there is no longer a contract --> assuming there is no notice given to the obligor

Communication to the offeree

offer communicated to offeree or agent others can make new offers, but cannot accept original offer

rejection

once an offer is rejected, it can no longer be accepted unless the offeror agrees

For an unliquidated debt, _____. even if the debtor pays the money agreed to, the creditor may still sue for the balance it believes is owed even if the debtor fails to pay a lesser amount as agreed, the creditor cannot sue the debtor for payment debtors cannot create an accord and satisfaction by sending the creditor a check with "paid in full" written on it once the debtor pays the amount agreed on by both the parties, the debt is fully discharged

once the debtor pays the amount agreed on by both the parties, the debt is fully discharged In an unliquidated debt, once the debtor pays the amount agreed on by both the parties, the debt is fully discharged. In an unliquidated debt, the parties can settle for less than the full amount if they enter into an accord and satisfaction. Under this circumstance, the debt is fully discharged.

A key feature of a voidable contract is that: one or both parties have the ability to either withdraw from or enforce the contract. a law or statute prohibits the courts from enforcing the contract. the terms of the contract have been fully performed. its object is illegal, or it has some serious defect.

one or both parties have the ability to either withdraw from or enforce the contract. A contract is voidable if one or both parties has the ability to either withdraw from the contract or enforce it. If the parties discover the contract is voidable after one or both have partially performed, and one party chooses to have the contract terminated, both parties must return anything they had already exchanged under the agreement.

undue influence

one person takes advantage of dominant position in a relationship to persuade another to interfere with his or her ability to make a decision

Who can sue on third party beneficiary contracts?

only intended beneficiary, or third party who contracting party intended to benefit. Not incidental beneficiary (speaking skills arent taught, students have a poor speaker due to it, students cant sue) third party beneficiary can sue promisor promisee can sue promisor

Who can sue on third party beneficiary contracts?

only intended beneficiary, or third party who contracting party intended to benefit. Not incidental beneficiary (speaking skills arent taught, students have a poor speaker due to it, students cant sue) third party beneficiary can sue promisor promisee can sue promisor --> if they dont fulfill their duties

subsequent modifications

oral or written modification after the original contract AND clearly indicates later modification unless modification is written statue of frauds OR original contract terms require modifications in writing

delegator remains liable to who?

original contract if 3rd party to whom duty was delegated does not perform

delegation

original party to a contract (delegator) transfers duty to perform under the contract to a third party (delegatee)

In a unilateral contract, if one party's consideration is a promise, the: other party's consideration will be an illusory promise. other party's consideration will be an act. other party will be legally obligated to make a counteroffer. other party will not be obligated to pay any consideration.

other party's consideration will be an act. In a unilateral contract (a promise for an act), one party's consideration is the promise and the other party's consideration is the act.

The _____ makes oral evidence of an agreement inadmissible if it is made before or at the same time as a writing that the parties intend to be the complete and final version of their agreement. equal dignity rule parol evidence rule collateral agreement rule mirror image rule

parol evidence rule The parol evidence rule, a common law rule, makes oral evidence of an agreement inadmissible if it is made before or at the same time as a writing that the parties intend to be the complete and final version of their agreement. Parol in "parol evidence rule" means speech or words, specifically words outside the original writing.

intent by offeror to be bound

preliminary negotiations doesnt equal offer advertisements arent offers, yet invitations to make an offer Auctions- depends

only those in the ____ of the contract have rights to the contract

privity

unilateral contract

promise + requested action Ex: poster for lost dog Offeree (person trying to take up the promise) is under not obligation to perform and offeror can revoke offeree at anytime, unless offeree has pursued it. At that point has to leave award available for reasonable amount of time

promisory estoppel (exceptions)

promisor makes a promise promisor knows or should know that promise will reasonably rely promisee does reasonably rely must enforce promise to avoid injustice

promissory estoppel (Jerry Maguire contract)

promisor makes a promise promisor knows or should know that promisee will reasonably rely promisee does reasonably rely must enforce promise to avoid injustice

Kevin is offered a job by a reputed company in a different city. To take up the new job, Kevin quits his previous job and moves to the new city along with his family. When he shows up at work, he is told that there is no job. Kevin can sue the employer under the theory of _____. illusory promise promissory estoppel recognizance preexisting duty

promissory estoppel Kevin can sue the employer under the theory of promissory estoppel. Promissory estoppel occurs when three conditions are met: one party makes a promise knowing the other party will rely on it, the other party does rely on the promise, and the only way to avoid injustice is to enforce the promise.

Agreements for a sale of goods in which the total price is $500 or more are required by the Uniform Commercial Code (UCC) to be recorded in a written contract. This writing need only state the: names of the buyer and seller. method of payment. price of the goods. quantity to be sold.

quantity to be sold. Agreements for a sale of goods in which the total price is $500 or more are required by the Uniform Commercial Code (UCC), Section 2-201, to be recorded in a written contract or a memorandum. This writing need only state the quantity to be sold; buyer, seller, price, and method of payment do not need to be included.

What cant you assign?

rights that are personal in nature rights whose assignment would increase the obligors risks or duties right whose assignment is prohibited by contract rights whose assignment is prohibited by law or public policy (ex: marriage)

parol evidence

spoken or written words made prior to or contemporaneous with the original contract, usually explaining or redefining parts of the contract

Tracy offers Liam a job as a store manager at a liquor store, which she plans to open in a small property owned by her husband. The property is located near a school. Before Liam accepts the offer, the state passes a rule that liquor stores cannot be located within a five-mile radius of a school. In this scenario, the employment offer terminates due to: expiration of the option contract. subsequent illegality of the subject matter. lack of contractual capacity of the offeree. lack of genuine assent.

subsequent illegality of the subject matter. In this scenario, the offer of employment terminates due to subsequent illegality of the subject matter. If the subject matter of the offer is destroyed or becomes illegal, the offer immediately terminates.

exceptions to Parol evidence (when can you use PE to clarify)

subsequent modifications conditions precedent and subsequent clarify ambiguity obvious typos usage of trade (UCC)

contract to pay debt of other (party outside of original agreement steps in to help if you fail) Ex: cosigner

surety promise/collateral promise/secondary obligation distinguished from primary obligation (original contract) includes administrator promise to personally pay for estate debts

legal object

what we are contracting cant be against public policy

assignment

when a party to a contract (assignor) transfers rights to receive something under the contract to a third party (assignee)

when can third party sue?

when rights have vested 1) when 3rd party accepts the rights (usually by notifying the promisor and promisee OR 2) when the 3rd party changes their position in reliance on contractual rights.