FRL 2010 Midterm 2

Jon said to Anthony: "I will buy your car for $10,000.00." Anthony responded: "I agree, as long as you agree not to sell it to someone else for more than $10,000.00." What is Anthony's response? A. A counteroffer, because Anthony's response changed the terms of the offer. B. An acceptance, because Anthony's response was not a material deviation from the offer. C. An acceptance because the offer was not revoked before Anthony's response D. A void contract because it was not in writing and was required to be in writing under the statute of frauds..

A

Louis and Greg signed a written contract which stated that Louis would transfer real estate he owned in Long Beach to Greg. In exchange, Greg agreed to pay $100,000.00 to Louis. After Louis recorded the grant deed to finalize this transaction, Louis received an offer from Ken to buy the real estate for $500,000.00 (way above the fair market value). Louis then claimed that his contract with Greg was unenforceable since there was no consideration by Greg. Which of the following is the best description of Louis's claim as to his contract with Greg? A. The contract had consideration because Greg agreed to pay $100,000.00 for Louis's real estate. B. The contract had consideration because it was in writing. C. The contract did not have consideration because $100,000.00 is unreasonable given the fair market value of the real estate and was obviously made by mistake. D. The contract had consideration because Louis recorded the grant deed after Ken made his offer.

A

Which of the following is the best example of a void contract? A. A contract which has an illegal purpose. B. A contract where one of the parties is unsure about signing it. C. A contract which is not in writing. D. A contract where one of the parties is mentally ill.

A

Void Contract

A contract having no legal force or binding effect.

Express contract

A contract in which the terms of the agreement are stated in words, oral or written.

executory contract

A contract that has not yet been fully performed.

oral contract

A contract that is created by word of mouth and comes into existence when two or more people from a contract by speaking to each other.

electronic contract

A contract that is formed electronically.

Voidable Contract

A contract that may be legally avoided (canceled, or annulled) at the option of one of the parties.

Valid Contract

A contract that results when elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present.

assumption of risk

A defense against negligence that can be used when the plaintiff was aware of a danger and voluntarily assumed the risk of injury from that danger. ( football injury)

Special Damages

A form of compensatory damages that awards a sum of money for specific, identifiable expenses associated with the injured person's loss, such as medical expenses or lost wages.

Contributory Negligence

A legal defense that may be raised when the defendant feels that the conduct of the plaintiff somehow contributed to any injuries or damages that were sustained by the plaintiff.

Bilateral contract

A promise made in exchange for another promise

comparative negligence

A rule in tort law that reduces the plaintiff's recovery in proportion to the plaintiff's degree of fault, rather than barring recovery completely; used in the majority of states.

Intentional tort

A tort committed by one who intends to do the act that creates the harm.

contract is AKA

Agreement, Bargain, Pact

mutual assent

An offer and acceptance which together form the terms of a contract.

Remedies at law and in equity

At law - damages (money), which are the most common. Equitable - non-monetary judgment, though may have great economic value. Election of remedies rule - usually only one remedy available for one Br/K.

Alan and Robert entered into a contract under which Alan was to deliver products on a regular basis to Robert for two years and Robert was to pay for these products upon delivery. After about two months, Lauren told Robert that Alan was "selling counterfeit products." Lauren had no reason to believe the statements were true. Due to Lauren's statement, Robert told Alan he would not accept or pay for any more products delivered by Alan. Alan wants to sue Lauren. What is his best theory against Lauren? A. Negligent product liability. B. Wrongful interference with contractual relations. C. Business libel. D. Intentional infliction of emotional distress.

B

Mark sold a car to Mary, who was persuaded to buy the car because Mark said that "this car gets 27 miles to the gallon." Mary soon discovered that the car got only 17 miles to the gallon. The sale price of the car ($25,000.00) was higher than the fair market value based on its actual gas mileage ($21,000). Assume for the purposes of this question only that Mary successfully sued Mark for breach of contract. Which of the following best shows the damages Mary should win against Mark? A. Consequential damages in the amount of $4,000.00. B. Compensatory damages in the amount of $4,000.00. C. Liquidated damages in the amount of $4,000.00. D. No damages because the breach was not material.

B

Scott lost his dog and posted signs in his neighborhood offering a $100.00 reward for the dog's return. Dominic found Scott's dog and was returning the dog to Scott at Scott's house when he saw the sign offering the $100.00 reward on a telephone pole. Dominic asked for the reward, but Scott refused to pay. Is Scott obligated to pay the reward to Dominic? A. Yes, because Dominic returned the dog to Scott. B. Yes, because Dominic saw the sign offering the reward by Scott. C. No, because Dominic did not return the dog to Scott under the terms of the sign. D. No, because Dominic did not see the sign offering the reward until after he was already returning the dog to Scott.

B

Which of the following is the best example of liquidated damages? A. Mike agreed to pay Allison $10,000.00 for a car; Allison delivered the car but Mike never paid the $10,000.00 to Allison; Allison sued Mike for the $10,000.00. B. Grace sued Ken for $10,000.00 based on a contract which stated that "in the event of a breach of this contract, damages shall be set in the amount of $10,000.00." C. Connie sued Stephanie for delivery of a rare painting for which Connie had already paid Stephanie $10,000.00 according to their contract. D. All of the above.

B

Punitive Damages

Based on (1) defendant's oppression, fraud or malice (how "bad" was the defendant?), and (2) defendant's wealth (in order to truly punish the defendant) Available - but not required - in intentional tort cases only; not available in negligence, strict/product liability, or Br/K cases. Subject of much political debate re "tort reform" though rarely awarded. U.S. Supreme Court has ruled there should be a single-digit ratio between (1) amount of punitive damages and (2) amount of general and special damages.

Discharge from a contract

By full or "substantial" performance - most common; case study -By subsequent agreement - accord and satisfaction (same parties, new contract); novation (same contract, new party). By operation of law - e.g., statute of limitations expires, defendant files for bankruptcy

electronic consent/ Signature

By full or "substantial" performance - most common; case study -By subsequent agreement - accord and satisfaction (same parties, new contract); novation (same contract, new party). By operation of law - e.g., statute of limitations expires, defendant files for bankruptcy

Henry sued Donald for breach of contract. If Henry can prove that Donald intentionally breached the contract so he could make more money performing a different contract, can Henry get an award of punitive damages in the judgment against Donald? A. Yes, because intentional fraud supports an award of punitive damages. B. Yes, because an intentional breach of contract supports an award of punitive damages. C. No, because a breach of contract cannot support an award of punitive damages. D. None of the above.

C

In California, the statute of limitations for breach of an oral contract is two years after the breach. If Angela, a party to an oral contract made in July 2012, breached the contract in July, 2013, can Robert, the other party to the contract, now sue for breach of the oral contract? A. No, because Angela is entitled to reformation of the contract. B. Yes, because Angela is not entitled to reformation of the contract. C. No, because Angela is discharged from performing the contract. D. Yes, because Angela is not discharged from performing the contract

C

The phrase "a meeting of the minds" applies to: A. An offer. B. An acceptance C. Mutual assent D. All of the above.

C

Which of the following best features a situation where specific performance would be an appropriate remedy? A. Sharon breached a contract with Wendy to sell office equipment to Wendy. B. Wendy breached a contract with Sharon to buy office equipment from Sharon. C. Taylor breached a contract with Swift to sell her house to Swift. D. Swift breached a contract with Taylor to buy a house from Taylor.

C

Br/K Damages

Compensatory - mathematical calculation based on value of contract less value of defendant's performance. Consequential - loss based on consequences of defendant's breach. Liquidated - exact amount of damages stated in contract.

A contract to purchase a home that is communicated orally is which type of contract: A. Express contract. B. Oral contract. C. Voidable contract because of the statute of frauds. D. All of the above.

D

Barbara and the bank signed a contract in which they agreed that the bank would loan $100,000.00 to Barbara. She would then repay the loan by making monthly payments of $2,500.00 for 50 months. After 2 years of Barbara's making payments, she and the bank agreed that Barbara could pay off the loan with a lump sum payment of $60,000.00. This is an example of: A. A novation. B. A void contract C A voidable contract D. None of the above

D

In 2016, Carl made an offer to sell real estate to William for $500,000.00 which was near the fair market value for the real estate. The offer contained no deadline. In 2018, after the real estate boom market had caused the real estate's fair market value to go up to about $750,000.00, William accepted Carl's offer. Do Carl and William have a valid contract? A. Yes, because Carl's offer contained no deadline. B. Yes, because Carl's offer was near the fair market value for the real estate at the time the offer was made. C. No, because Carl's offer to sell real estate was required to be in writing. D. None of the above.

D

In September 2011, Rebecca said to Larry: "If you finish the Long Beach Marathon, I will pay you $5,000.00 upon your request." Larry began running 10-15 miles every day and he was soon in fine physical condition. On the day of the Long Beach Marathon, Larry was sick but he was able to run 20 miles before he had to quit.. Larry called Rebecca after he finished running the 20 miles around the track and requested the $5,000.00. She refused to pay so Larry sued her for the $5,000.00. What should be the result of Larry's lawsuit? A. He should win $4,000.00 because he substantially performed the contract with Rebecca. B. He should win $5,000.00 because he substantially performed the contract with Rebecca. C. He should lose because he did not have a valid contract with Rebecca. D. He should lose because he did not perform the contract with Rebecca.

D

Jose was running in a cross country race at Cal Poly Pomona when another runner, Frank, tripped Jose and he suffered a broken nose. Frank hit Jose by accident and was truly sorry. However, Jose sued Frank for negligence. What should be the result of Jose's lawsuit? A. He should win because his injuries were caused by Frank's negligence. B. He should win because he was running the race as intended. C. He should lose due to his comparative negligence. D. He should lose because of the assumption of the risk.

D

Lola sued Ryan for injuries resulting from an ordinary car accident. They were attempting to negotiate a settlement without having to have a court decide the matter. They agreed that Lola's special damages were approximately $10,000.00. Using the traditional formula discussed in class, what should be the approximate amount of Lola's general damages? A. $30,000.00. B. $35,000.00 C. $40,000.00 D. All of the above.

D

Victor said to Ivan: "I'll buy your car for $10,000.00." Ivan replied: "I accept your offer to buy my car, but I need to get all of my personal stuff out of the first." Ivan's reply was: A. An offer. B. A rejection. C. A counter-offer. D. None of the above.

D

Which of the following is the best example of a claim for general damages? A. James agreed to pay Abigail $10,000.00 for a car; Abigail delivered the car but James never paid the $10,000.00 to Abigail; Abigail sued James for the $10,000.00. B. Grace sued Patrick for $10,000.00 based on a contract which stated that "in the event of a breach of this contract, damages shall be set in the amount of $10,000.00." C. Connie sued Steven for delivery of a rare painting for which Connie had already paid Steven $10,000.00 according to their contract. D. None of the above.

D

Which of the following is the best example of a voidable contract? A. A contract which has an illegal purpose. B. A contract where one of the parties is unsure about signing it. C. A contract which is not in writing. D. None of the above.

D

Consideration of contract by law

Each party must give up something of legal value; no consideration if party purports to give up something he or she is already obligated to do (or not do) - has each party sacrificed something? Preexisting duty required by law. Past consideration. There is no "reasonableness" requirements, so contract does not have to be "fair" or "equal" in order to have the requisite consideration; case study -Hamer v. Sidway (Blackboard) Be careful - many times, parties will agree to the same thing (mutual assent) but, with no consideration, there will be no contract that can be enforced in court.

Br/K defenses

First line of defense - one or more elements missing. Capacity - legal ability to enter into a contract (voidable); e.g., contracting party has mental disability or is under age of 18. Legality - contract must have legal purpose; contract with illegal purpose unenforceable (void). Assignment/delegation - transfer of contract rights/duties to 3rd party. Mitigation of damages - plaintiff's obligation to take reasonable steps to reduce damages; any mitigation that could or actually did happen will be deducted from total amount of damages. Non-compete clause in employment contract (restraint of trade) - illegal in California; subject to reasonableness rule in other states.

Examples of Substantive Unconscionability from Simpson case

First, this arbitration clause violates statutory law because it prevents Simpson from receiving the mandatory statutory remedies to which she may be entitled [under the two state statutes which applied to plaintiff's case]...Second, unconditionally permitting the weaker party to waive these statutory remedies pursuant to an adhesion contract runs contrary to the underlying statutes' very purposes of punishing acts that adversely affect the public interest...we find the provision prohibiting double and treble damages to be oppressive, one-sided, and not geared toward achieving an unbiased decision by a neutral decision-maker"

elimination of mutual assent

Fraud - also called misrepresentation or deceit. Mistake - unilateral, which is usually not a defense, or bilateral, which is usually a defense; fact, which can be a defense, or law, which is usually not a defense. Duress - use or threat of physical or economic harm. Undue influence - abuse of authority, power or position. Existence of any of the above can provide basis for or defense to a contract case.

Remedies in tort cases

General and special damages

General Damages

In a tort case, an amount awarded to compensate individuals for the nonmonetary aspects of the harm suffered, such as pain and suffering; not available to companies. However, in ordinary injury cases, settlements often based on multiplying the amount of special damages by three to calculate the amount of general damages

strict liability elements

Liability without fault as a matter of public policy based on considerations such as Whether the activity involves potentially serious harm to persons or property. Whether the activity involves a high degree of risk that cannot be guarded against completely by the exercise of reasonable care. Product liability is part of strict liability

Damages

Must be present, if not then defendant wins. examples include, Medical bills, loss of income, pain and suffering, emotional distress, and property repair bills due to vehicular accident. Loss of income and damage to reputation due to business tort such as fraud, defamation or wrongful interference. Special or General damages

Intenional torts elements

Physical harm to another person, intentional infliction of emotional distress, defamation, wrongful interference, conversion, intrusion of privacy, fraud,

elements for breach of contract case

Plaintiff must prove all of the following or defendant will win without needing to put on any defense Valid contract between the plaintiff and the defendant. The defendant's "material" breach of the contract (failure to perform) - "substantial" performance is not Br/K (common abbreviation). The defendant's breach of the contract causes damage (any financial loss, sometimes called injury) to the plaintiff. The plaintiff's performance or excuse for nonperformance. But, even if plaintiff proves all of the above, defendant may still have some defenses

Examples of Procedural Unconscionability

Quote from Circuit City showing procedural unconscionability based on classic "take-it-or-leave-it" presentation by stronger party to weaker party GeoEx "advis[ed] participants that they must sign an unmodified release form to participate in the expedition; that GeoEx's 'lawyers, insurance carriers and medical consultants give [it] no discretion' on that point; and that other travel companies were no different...GeoEx led plaintiffs to understand not only that its terms and conditions were nonnegotiable, but that plaintiffs would encounter the same requirements with any other travel company. This is a sufficient basis for us to conclude plaintiffs lacked bargaining power"

Br/K - Equitable Remedies

Specific performance - plaintiff wants judge to order defendant to perform the contract as agreed; plaintiff must be seeking unique subject matter (e.g., real estate, custom or rare item). Reformation - plaintiff seeks order changing written contract to correct mistake. Rescission and restitution - plaintiff requests judgment which requires both parties return any benefit they may have received.

Examples of Substantive Unconscionability from Lohtka case

The arbitration provision in GeoEx's release is similarly one-sided [since i]t guaranteed that plaintiffs could not possibly obtain anything approaching full recompense for their harm by limiting any recovery they could obtain to the amount they paid GeoEx for their trip. In addition to a limit on their recovery, plaintiffs, residents of Colorado, were required to mediate and arbitrate in San Francisco—all but guaranteeing both that GeoEx would never be out more than the amount plaintiffs had paid for their trip, and that any recovery plaintiffs might obtain would be devoured by the expense they incur in pursing their remedy. The release also required plaintiffs to indemnify GeoEx for its costs and attorney fees for defending any claims covered by the release of liability form. Notably, there is no reciprocal limitation on damages or indemnification obligations imposed on GeoEx."

Is forbearance from permissible legal conduct ( not drinking, smoking or partying) sufficient consideration to create a valid and enforceable contract?

The court stated that consideration may consist in either a some right, interest, profit, or benefit to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other. It is immaterial whether the consideration does in fact benefit the promisee or a third party or is of substantial value to anyone. Refraining from something that one is entitled to do is a sufficient detriment to create an enforceable contract. reversed on appeal in favor of Hamer.

Product Liability

The legal liability of manufacturers, sellers, and lessors of goods to consumers, users, and bystanders for injuries or damages that are caused by the goods.

Causation

The link between defendant's wrongful act and injury/loss suffered by plaintiff.("But for" test) Requires a reasonable relationship between defendant's bad act and plaintiff's injury/loss - "foreseeability" is often the basis for whether or not causation exists. ("Proximate" or "Legal" Cause)

unconscionable contract

a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust

Executed Contract

a contract that has been fully performed by both parties

negligence

careless neglect, often resulting in injury, no intent required

Unilateral contract

contract based on one party's making a promise that calls for action.

written contract

contract with terms in writing

negligence defenses

contributory negligence, comparative negligence, assumption of risk

Substantive Unconscionability

determined by "whether the terms of the contract are unduly harsh or oppressive" (Circuit City); "one-sided" (Lhotka); "violative of public policy, statutory law, or provisions of the Constitution" (Simpson).

negligence elements

duty of care, breach of the duty, causation and damage

Unconscionability challenge

has two aspects... procedural and substantive. both are required to be present to invalidate a contract however they dont need to be to the same extent. Example only a small proof of procedural unconcionability needs to be show if there is a lot more substantive unconscionabilty.

Types of Torts

intentional, negligence, strict liability

Strict Liabilty

liability in which responsibility for damages is imposed regardless of the existence of negligence

Three types of product liability

manufacturing defect design defect warning defect

Acceptance of an offer

must be of the offers rule( mirrored image rule or mutual assent)

Implied contract

no express contract but parties' actions/relationship support avoiding unjust enrichment.

Elements required for contract formation

offer, acceptance, consideration

Procedural Unconscionabilty

oppression (occurs where a contract involves lack of negotiation and meaningful choice) and suprise (where the allegedly unconscionable provision is hidden within a prolix [wordy, tedious] printed form)

Requirments of an offer

proposal, ojective intent by the offeror to be obligated to the contract ( reasonable person). term must be reasonably definite (need not be exact, Must be communicated to the offeree.

Statute of frauds

requires certain contracts to be in writing

Termination of an offer

revocation, rejection, counteroffer, expiration of time, death or insanity

offeror/promisor

the person that is making either the offer or promise to another party

offeree/promisee

the person to whom an offer or promise is being made to

Examples of Substantive Unconscionability from circuit city case

unilaterally forces employees to arbitrate claims against the employer...The provision does not require Circuit City to arbitrate its claims against employees...This unjustified one-sidedness deprives the DRA of the 'modicum of bilaterality' that the California Supreme Court requires..." "...limits the relief available to employees...the remedies are limited to injunctive relief, up to one year of back pay and up to two years of front pay, compensatory damages, and punitive damages in an amount up to the greater of the amount of back pay and front pay awarded or $ 5,000. By contrast, a plaintiff in a civil suit for sexual harassment under the FEHA is eligible for all forms of relief...including appropriate punitive damages and damages for emotional distress." "...requires the employee to split the arbitrator's fees with Circuit City. This fee allocation scheme alone would render an arbitration agreement unenforceable." "...imposes a strict one year statute of limitations on arbitrating claims that would deprive Adams of the benefit of the continuing violation doctrine available in FEHA suits."