Chapter 9 Blaw

Consideration consists of two elements:

(1) something of legal value must be given (2) there must be a bargained for exchange

What are the four basic requirements for a contract to be enforceable?

1. Agreement 2. Consideration 3. Contractual Capacity 4. Lawful Object

What are the two defenses that can be raised to the enforcement of contracts?

1. Genuineness of assent 2. Writing and Form

What contracts lack consideration?

1. Illegal Consideration 2. Illusory promise 3. Preexisting duty 4. Past Consideration

What are the most common forms of Formal Contracts?

1. Negotiable Instrument- (check needs the words "Pay to the order of") 2. Letter of credit- ( a bank guarnatees the payment by a buyer who purchases goods on credit from a seller if the buyer does not pay for the goods) 3. Recognize- where someone agrees to pay a sum of money if another perosn does not pay it (bail bond) 4. Contract under seal- (a wax seal is placed on the contract)

How can there be a termination of an offer?

1. Revocation of an offer by the offeror 2. Rejection of an offer by the offeree 3. Counteroffer by the offeree 4. Lapse of time 5. Option Contract 6. Operation of Law

What are the categories that Contract law places contracts in?

1. Valid Contract 2. Void Contract 3. Voidable Contract 4. Unenforceable Contract

What must an offer (and contract) must contain?

1. identification of the parties 2. identification of the subject matter and quantity 3. consideration to be paid 4. time of performace

Quasi Contract is imposed where

1. one person confers a benefit on another, who retains the benefit 2. it would be unjust not to require that person to pay for the benefit recieved

What are three elements that are required for an offer to be effective?

1. the offeror must objectively intend to be bound by the offer 2. the terms of the offer must be definite or reasonably certain 3. the offer must be communicated to the offeree

What elements must be established to create an implied-in-fact contract?

1. the plaintiff provided property or services to the defendant 2. the plaintiff expected to be paid by the defendant for the property or services and did not provide the property or services gratuitously 3. the defendant was given an opportunity to reject the property or services provided by the plaintiff but failed to do so

Elliot and Sarah enter into an oral contract whereby Elliot will sell his house to Sarah for $ 1 million.

Because this is a contract for the sale of real estate, it is required to be in writing. Because it is an oral contract, however, neither Elliot nor Sarah can sue the other for not performing the contract. However, if Elliot and Sarah complete the contract- that is Elliot signs over the deed to his house to Sarah, and Sarah pays Elliot $1 million- the contract is performed, and neither party can undo the contract

Mary, the owner of the Chic Dress Shop, says to Peter, a painter, "If you promise to paint my store by July 1m I will pay you $300." Peter says, "I promise to do so." What type of contract is this? If Peter failed to paint the paint shop or is Mary failed to pay Peter what could one another do?

Bilateral Contract. Mary and Peter could both sue to recover the damages from the breach of the contract

In a Voidable Contract what happens if the party with the option chooses to ratify the contract?

Both parties must fully perform their obligations

What type of contract is a written agreement to buy an automobile from a dealership or an oral agreement to purchase a neighbors bicycle?

Express Contract

A contract that provides that one of the parties has to perform only if he or she chooses to so is what type of promise?

Illusory promise

Harold and Melville enter into a contract to burglarize University Bank and steak the money on deposit at the bank. What happens if Harold refuses to perform the contract?

Melville cannot sue Harold to perform the contract because it is a crime which is void

Are illegal contracts enforceable?

No

Can an offer to create an Unilateral Contract be accepted by a promise to perform?

No

Can there be a contract if there was no acceptance of the offer?

No

In an Unilateral Contract is there a contract if the offeree has not performed the requested act?

No

Ross makes an offer to Elizabeth to sell his automobile to her for $10,000. Who is the offeror and who is the offeree?

Ross is the OFFEROR Elizabeth is the OFFEREE

Mailbox Rule

Rule stating that an acceptance of the bilateral contract occurs when the offeree dispatches the acceptance by an authorized means of communication, even if it is lost in transmission. "acceptance-upon-dispatch rule"

Felipe, who has worked in management for the Acme Corporation for thirty years, is retiring. The president of Acme says, 'Because you were such a loyal employee, Acme will pay you a bonus of $100,000." The corporation refuses to pay the $100,000. Unfortunately, for Felipe, he has already done the work for which has been promised to be paid.

The contract is unenforceable against Acme because it is based on past connsideration.

Statutes prohibit police officers from demanding money for investigating and apprehending criminals and prohibit firefighters from demanding payment for fighting fires. If a person agrees to such a demand, she does not have to pay it because public servants are under what?

The public servants are under a preexisting duty to perform their functions.

On May 1, Mrs. Colby promises to give her son $10,000 on June 1. When June 1 arrives, Mrs. Colby refuses to pay the $10,000.

The son cannot recover the $10,000 because it was a gift promise that lacked consideration. If, Mrs. Colby promises to pay her son $10,000 if he earns an A in his business law course and the son earns the A, the contract is enforceable and the son can recover the $10,000

Helen enters into a written contract to purchase a house from Marilyn for $ 1 million. What type of contract is this?

There is legal consideration- a house in exchange for $1 million- and the object of the contract is lawful. Both Helen and Marilyn have contractual capacity. In this case, there a Valid Contract. If either party fails to perform the contract when due, the other party can sue to enforce the contract against the breaching party.

A person threatens a business owner, "I will burn your business down unless you agree to pay me $10,000." Out of fear, the business owner promises to pay the money. What type of agreement is this?

This agreement is not an enforceable contract because the consideration given-not to burn a business- is illegal consideration. Thus, the extortionist cannot enforce the contract against the business owner

Suppose Elizabeth signs a contract to purchase a new BMW automobile from Ace Motors. She has not yet paid for the car, and Ace Motors has not yet delivered the car to Elizabeth. What type of contract is this?

This is a executory contract because the contract has not yet been performed. If Elizabeth has paid for the car but Ace Motors has not yet delivered the car to Elizabeth, there is an executory contract because Ace Motors has not performed the contract

Mary, the owner of the Chic Dress Shop, says to Peter, a painter, "If you paint my shop by July 1, I will pay you $3000." What type of contract is this?

This offer creates a Unilateral Contract. The offer can by accepted only by the painters performance of the requested act. If Peter does not paint the shop by July 1, there has been no acceptance, and Mary cannot sue Peter for damages. If Mary refuses to pay, Peter can sue Mary to collect payment.

Is it true that the failure of a contract to be in writing or to be in proper form may be raised against the enforcement of the contract?

True

There are several types of contracts

True

Heather is driving her automobile when she is involved in a serious accident in which she is knocked unconscious. She is rushed to Metrpolitan Hospital, where the doctors and other staff members perform necessary medical procedures to save her life. Heather comes out of her coma and, after recovering, is released from the hospital. The hospital sends Heather a bill for its services. The charges are reasonable. What type of contract is this?

Under the Doctrine of Quasi Contract, heather is responsible for any charges that are not covered by her insurance.

A seller offers to sell a specific automobile she owns for $30,000. The Automobile is a certain brand, color, year, model, and condition. The automobile contains a radio. A buyer accepts the exact terms of the offer.

Under the mirror imagine rule, a contract has been created. But if the potential buyer agrees to all the terms of the seller's offer but demands a different radio; the terms of the mirror image rule has not been met

How can Unilateral Contracts be accepted?

Unilateral contracts can be accepted only by the offeree's performance of the required act

Are contracts voluntarily entered into by parties, where the terms of a contract become private law between the parties?

Yes

Are most contracts performed without the aid of the court system?

Yes

Do the parties to a contract have to have contractual capacity to make a contract enforceable?

Yes

Does a contract have to involve at least two parties?

Yes

Does the object of a contract have to lawful?

Yes

If a party fails to perform a contract can the other party call on the courts to enforce the contract?

Yes

Can the offer to create an unilateral contract be revoked?

Yes, an offer to create an unilateral contract can by revoked by the offeror any time prior to the offeree's performance of the requested act. The offer cannot be revoked if the offeree has begun or has substantially completed performance

How can a Bilateral Contract be accepted?

a Bilateral Contract can be accepted by an offeree who promises to perform the requested act

Illegal Consideration

a contract cannot be supported by a promise to refrain from doing an illegal act.

What are legally enforceable contracts?

a contract if one party fails to perform as promised, the other party can use the court system to enforce the contract and recover damages or other remedy.

Implied-in-fact-contract

a contract in which agreement between parties has been inferred from their conduct

Voidable Contract

a contract in which at least one party has the option to void her or her contractual obligations. If the contract is voided, both parties are released from their obligations under the contract.

Unenforceable Contract

a contract in which the essential elements to create a valid contract are met but there is some legal defense to the enforcement of the contract

Illusory Promsie

a contract into which both parties enter but in which one or both of the parties can choose not to perform their contractual obligations. Thus, the contract lacks consideration-unenforceable

When is a contract formed in an auction with reserve?

a contract is formed only when the auctioneer strikes the gravel down or indicates acceptance by some other means. Bidder may withdraw his or her bid prior to that time

Actual Contract

a contract that can either be express or implied in fact

Executed Contract

a contract that has been fully performed on both sides; a completed contract

Executory Contract

a contract that has not been fully performed by either or both sides

Valid Contract

a contract that meets all the essential elements to establish a contract. It 1. consists of an agreement between the parties, 2. supported by legally sufficient consideration, 3. is between parties with contractual capacity, 4. accomplishes a lawful object.

Formal Contract

a contract that requires a special form or method of creation; usually require specific words

Informal Contracts (simple contracts)

a contract that requires no special form or method of creation. term is "misnomer"

Unilateral Contract

a contract that the offeror's offer can be accepted only by the performance of an act by the offeree, "promise for an act."

Bilateral contract

a contract where the offeror's promise is answered with the offeree's promise of acceptance, "promise for a promise"

What is E-commerce?

a large part of commerce and trade

Past Consiteration

a party promises to pay someone money or other compensation for work done in the past. It is not consideration for a new promise. Not Enforceable

Preexisting Duty

a promise lacks consideration if a person promises to perform an act or do something he is already under an obligation to do

Gift Promise (Gratuitous promise)

a promise that is unenforceable because it lacks consideration

Counteroffer

a response by an offeree that contains terms and conditions different from or in addition to those of the offer. terminates the previous offer. not effective until received by the offeror

Lapse of time

a stated time period after which an offer terminates. If no time is stated, an offer terminates after a reasonable time. Time period begins to run when the offer is actually received by the offeree and terminates when the stated time period expires.

Ida, an adult, enters into a contract with Spencer, who is 16 years old and a minor, to purchase an automobile owned by Spencer. What type of contract is this?

a voidable contract because Spencer is a minor and can get out of the contract. Ida the adult cannot get out of the contract because she is an adult

What is the definition of a contract?

an agreement that is enforceable by a court of law or equity. A promise or a 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.

Express Contract

an agreement that is expressed in written or oral words

Auction without reserve

an auction in which the seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid. the seller is the offeror, and the bidders are the offerees

Auction with reserve

an auction in which the seller retains the right to refuse the highest bid and withdraw the goods from sale.

What does the exchange of promises in a bilateral contract create?

an enforceable contract

Implied-in- law contract (Quasi Contract)

an equitable doctorine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. Intended to prevent unjust enrichment and unjust detirement. Does not apply where there is an enforceable contract between the parties.

Express Authorization

an offer can stipulate that acceptance must be by a specified means of communication. If the offeree uses an unauthorized means of communication to transmit the acceptance, the acceptance is not effective

Revocation of an offer by the offeror

an offeror may revoke an offer any time prior to its acceptance by the offeree. an offer can by revoked even if the offeror promised to keep the offer open for a longer time

If there is any questioning about what type of contract it is between bilateral or unilateral which is presumed to be it?

bilateral contract

Contracts are either __________ or _____________ depending on what the offeree must do to accept the offeror's offer.

bilateral, unilateral

What happpens when death or incompetency of either party happens in a option contract?

death or incompetency of either party does not terminate an option contract unless the contract is for the performance of a personal service

Bargained for Exchange

exchange that parties engage in that leads to an enforceable contract

What are contracts that have been fulled performed by one side but not by the other classified as?

executory contracts

Rejection

express words or conduct by the offeree to reject an offer

What are the less than usual forms of Consideration?

forbearance of a legal right (accepting an out of court settlement in exchange for dropping a lawsuit) and noneconomic forms of consideration (refraining from drinking, using tobacco, swearing, or playing cards or billiards for money for a specified period of time)

Contracts may be classified as either _______ or _______________

formal,informal

The consent of the parties to create a contract must be ___________.

genunie

What are E-contracts and how are they formed?

goods are sold over the internet through commercial and other websites and can be formed by the use of email

Void Contract

has no legal effect. As id no contract had ever been created.

Majority of the contracts entered into by individuals and businesses are _____________________

informal contracts

The statement "I will buy your building for $2 million"

is a valid offer because it indicated the offeror's present intent to contract

A statement such as "Are you interested in selling your building for $2 million?"

is not an offer, it is an invitation to make an offer or an invitation to negotiate

What are some reasons that contracts can be voided?

minors, insane persons, intoxicated persons, persons acting under duress, undue influence, fraud, and in cases involving mutual mistake.

If a contract is void what happens?

neither party is obligated to perform the contract and neither party can enforce the contract

Do offers that are made in jest, anger, or undue excitement include the necessary objective intent?

no

Suppose Allen Matthews tells Sherry Levine that he will pay her $5,000 if she finishes the Boston Marathon. Can Allen revoke the offer once Sherry starts running the marathon?

no

If an auction is an an auction with reserve and an item is offered at $100,000, but the highest bid is $75,000 does the auctioneer have to sell the item?

no the auctioneer does not have to sell the item

Rejection of an offer by the offeree

offer is terminated if the offeree rejects it

Option Contract

offeree can prevent the offeror from revoking his or her offer by paying the offeror compensation to keep the offer open for an agreed on period of time

How do parties agree to E-licenses?

over the internet

Operation of Law

prior to the acceptance of the offer, one of the following event occur: (1) the subject matter of the offer is destroyed through no fault of either party (2) either the offeror or the offeree dies or becomes incompetent (3) the object of the offer is made illegal by law

Consideration

something of legal value given in exchange for a promise ex.) money, personal property, real property, provision of services.

Legal Value

support for a contract when either (1) the promisee suffers a legal detirement (2) the promisor revives a legal benefit

What happens if the auctioneer has set a minimum bid that it will accept?

the auctioneer had to sell the item only if the highest bid is equal to or greater than the minimum bid

If a contract is required to be in writing under the Statute of Frauds but is not in writing what happens?

the contract is unenforceable

What happens to contacts that have an illegal object?

the contracts are void and cannot be enforced

What are the most common types of consideration?

the most common types of consideration are either tangible payment (money, property) or the performance of an act (providing legal services)

Who has the power to create a contract by accepting the offer?

the offeree

Minor Image Rule

the offeree must accept the terms as stated in the offer without modifications. Any attempt to accept the offer on different terms constitutes a counteroffer, which rejects the offeror's offer.

When making an offer who promises to do or refrain from doing something?

the offeror

What is the Offeree?

the party to whom the offer is made and has the power to accept the offer and create a contract

What is an Offeror?

the party who makes an offer to enter into a contract.

Objective theory of contracts

theory stating that the intent to contract is judged by a reasonable person viewing the circumstances to conclude that the parties intended to be legally bound

If the consent to create a contract is obtained by duress, undue influence, or fraud, is there a real contract?

there is no real contract

How can you change a gift promise into something enforceable?

to change a gift promise into an enforceable promise, the promisee must offer to do something inexchange

Agreement

to have an enforceable contract, there must be an agreement between the parties. This requires an offer by the offeror and an acceptance of the offer by the offeree. THERE MUST BE A MUTUAL ASSENT BY THE PARTIES.

An offer may be terminated by certain acts of the parties.

true

An offeree's acceptance must be unequivocal (the offeree must accept the terms as stated in the offer)

true

NO act of performance is necessary to create a bilateral contract

true

Valid informal contracts are fully enforceable and may by sued on if breached

true

Written contracts are presumed to be supported by consideration. This rebuttable presumption, may be overcome by sufficient evidence.

true

A _____________________ is enforceable by at least on of the parties

valid contract

What is a contract to commit a crime?

void

Revocation

withdrawal of an offer by the offeror that terminates the offer. May be communicated to the offeree by the offeror or by third party and made by (1) the offeror's express statement (2) an act of the offeror that is inconsistent with the offer.

The law requires that certain contracts be in _________ or in a certain ________.

writing, form

Can parties voluntarily perform a contract that is unenforceable?

yes

Can the parties of an informal contract use any words they choose to express their contract?

yes

Is an auction an auction with reserve?

yes