BUSLAW EXAM 2

What is the subjective test for Invalidating consent?

was there real consent, or was the formation of contract process tainted in some way? if it was tainted then the contract is voidable

Does an electronic "record" satisfies the writing requirement?

Yes

Does an electronic "signature" satisfies the signature requirement?

Yes

What Is the Result if the Contract's Subject Matter is Illegal?

"hands off doctrine" Courts won't do anything and leave the parties as they came EXCEPTIONS TO 'HANDS OFF' 1) One party withdraws from the agreement before performance by both parties (the court will order the return of any money/property paid or transferred by the withdrawing party) 2) One party is intended to be protected by the statute that was violated (example: violations of regulatory statutes) 3) Divisible contracts - if part of an agreement is legal and part is illegal, the court may enforce the legal part if the two parts can be reasonably separated

There are certain transactions that don't require consideration in order to be enforceable.... What are they?

1) A new promise based on an unfulfilled past duty 2) Promises the induce detrimental reliance (promissory estoppel) 3) Promises made under seal 4) Promises made enforceable by statute

Statutes of fraud require that certain contracts be evidenced by a satisfactory writing... What are these contracts? THIS IS UNDER COMMON LAW

1) Guarantee/suretyship contracts (if he doesn't pay I will...) 2) Real Estate contracts 3) Contracts incapable of performance within one year from the date THE CONTRACT IS made

What 2 things must consideration contain?

1) Legal Sufficiency (legal value) 2) A Bargained for Exchange

What must happen for Accord and Satisfaction to take effect?

1) Unliquidated/Disputed no agreement on amount / as to what is owed 2) Dispute is both genuine and non-firvoulous 3) Debtor in good faith offers partial payment as full 4) Partial payment is accepted by creditor EXCEPTIONS -DOESNT WORK FOR LARGE COMPANIES -CAN RETURN CHECK/AMOUNT WITHIN 90 days

What makes a contract Subject matter "Illegal"

1) Violation of a statutes 2) Violation of a public policy Exceptions: Exculpatory clause, Non-competes, Unconsiable agreements

In determining whether the consideration requirement to form a contract has been satisfied, the parties must show that the consideration exchanged between the parties had what?

1) Was legally sufficient (i.e., each party is doing something or refraining from doing something for the benefit of the other party). 2) Was bargained for by the parties.

What are the statutes That Address Certain Types of Contracts Where Abuse in the Formation Process Can Occur

1) Wisconsin Statute Chapter 100 - Unfair Marketing and Trade Practices 2) Section 100.18 of the Wisconsin Statutes - advertisements, announcements, statements or representations made to the public with respect to the sale of goods, services or real estate may not contain any assertions, representations or statements of fact which are untrue, deceptive or misleading - elements of a claim under this statute 3) Chapter 110 of the Wisconsin Administrative Code - specifies prohibited trade practices in the home improvement industry,

What makes a false representation material?

1) must induce reliance and influence, to a substantial degree, the making of the decision to contract 2) would knowing the truth of the matter have made a difference with regard to the decision to enter into the contract?

What are the elements of promissory estoppal? USED WHEN CONTRACTS ARE FOUND TO BE UNENFORCEABLE

1) one party makes a promise to another 2) That party reasonably relies on that promise 3) The promise leads to significant economic detriment from relying on the promise 4) The court will enforce the promise if necessary to avoid injustice

What UCC-2 Sale of Goods contracts must be in writing?

1) sale of goods over $500 2) Modifications increasing price to over $500

How are mistakes in conducting invalid assent categorized?

1) unilateral mistake 2) mutual mistake 3)

Exceptions to the Parol Evidence Rule

1. Contracts that have been subsequently modified 2. contracts conditioned on orally agreed-on terms 3. contracts that are not final as they are part written and part oral 4. contracts with ambiguous terms 5. incomplete contracts 6. contracts with obvious typographical errors 7. voidable or void contracts 8. evidence of prior dealings or usage of trade

What is missing from "Past Consideration" that makes the promise not binding?

A Bargained-For-Exchange, this is not given when a promise is given for an act already done

What is consideration?

A factor of a promise... Something of legal value must be traded in order to make a promise enforceable

How will the courts handle a mutual mistake in contract formation?

A mutual mistake of fact renders a contract voidable by the adversely affected party (worse off party)

What is an illusory promise? What are the exceptions?

A promise that is so uncertain as to what the terms of the promise is that the promisor has not definitely promised to do anything. such a promise is unenforceable because it does not constitute consideration. EX: If Exon Mobile promises to sell Kwik Trip how ever many barrels they want for $40 each, this is not a contract because there is no consideration Exceptions - the contract includes "Option-to-cancel" "Best-efforts"

Do all real estate contracts have to be in writing? explain the exception.

All contracts involving real estate have to be in writing. EXCEPT: real estate lease with a term of one year or less Side Note: (SOME leases might start May 1st and end May 2nd which would require them to be in writing because its over a year)

What is nonfraudulent misrepresentation?

All the elements of fraud except you do not show knowledge or intent to deceive. Can either be a negligent misrepresentation or a innocent misrepresentation

Explain Consideration during modification of an existing contract? UNDER BOTH FORMS OF LAW

COMMON LAW (real estate or services) -Consideration is required for modifications (EX: tenant agrees to change leases so he does snow removal, in order for the modification to by binding, the tenant must give something up (perhaps pay more rent)) UCC 2-209 (sale of goods) -Consideration is NOT required for modifications, however modification must be requested in good faith and not by coercion (EX: After a contract is entered, the parties agree that Party A includes an additional "widget", this is binding even though Party B did not give anything up)

Exceptions to UCC-2 rule that some things must be in writing?

Don't have to be in wiring if... 1) specially manufactured goods 2) both parties admit in court that a contract was made 3) Payment has been made and accepted

What are the exceptions for "illegal" contract subject matter

Exculpatory clause Non-competes

True or false. The jury decides if the consideration is a fair and adequate exchange.

False. The are to decide if the Offerer and Offeree had done this (which is called consideration)

What is fraud in the inducement?

Fraud that occurs when the party knows what he or she is signing but has been fraudulently induced to enter into the contract Elements 1) A false representation was made 2) ...of a fact 3) That is material 4) With knowledge ("scienter") of falsity and intention to deceive 5) and there is Justifiable reliance on the misrepresentation

How will the courts handle a unilateral mistake in contract formation?

If as to value of bargain ("bad deal") - no relief to the mistaken party Must determine if the other party knew of the mistake and if the contract made the mistaken party "unconscionable" (undue hardship)

Does The common law Statute of Frauds require that all the terms and provisions of the agreement of the parties be contained in a single document?

NO

What is the economic loss doctrine? (ELD)

Only applies with respect to an "economic loss" suffered by a party - generally, economic losses are damages arising because the product or real estate does not perform as expected or is not as represented. Can sue if the mileage of a car is misrepresented but could not sue on the basis of a car crash ELD prohibit parties from recovering in tort when the negligence of others results in purely economic loss

What is the parol evidence rule?

Only for written complete and final contract disputes This rule says that a court CANNOT consider any form of communication (done, said, or sent) before the contract is finalized and signed when deciding on the dispute of its terms

What is bargained-for exchange in consideration?

The parties agreed to exchange

What is Legal Sufficiency (legal value) in consideration?

The thing exchanged must have a benefit and a detriment to each party

In determining whether the consideration requirement has been satisfied to form a contract, the courts will be required to decide whether the consideration has what?

Was bargained for.

Debt and consideration: Accord and satisfaction

You agree to pay a painter $3,000 to paint your house, you pay $1,000 up front. After it is done you believe that the painter did a very poor job and the painter believes he had met his obligation. You decide to not pay the remaining 2K and only pay him a $500 check (total = $1,500 now) for his work. If he doesn't return the check in a reasonable time (effectively accepted) the painter has entered into accord and satisfaction and the painter cannot sue you for the rest. Does not work if the creditor returns money within 90 days. THIS DOES NOT WORK FOR CREDIT CARD DEBT OR ANYTHING WITH LARGE CORPORATIONS WHO HAVE LEGAL LANGUAGE IN PLACE

What is fraud in the execution? (Rare)

a misrepresentation that deceives the other party as to the very nature of the contract; renders the agreement void. "sign for this package"

What are non-compete clauses?

a provision that is intended to prohibit a person from being employed doing certain things or from investing in certain activities is effective if.... 1) Theres a good purpose for the provision (either for employee of purchase of a company) 2) Can't be overly broad with what is restricted 3) Geographical scope of restrictions must be reasonable 4) the duration of the restrictions must be reasonable (employment agreement = 9to18 months, sale = 5to20years) CONSIDERATION IS REQUIRED IF EMPLOYEE IS ASKED TO SIGN WHILE ALREADY HIRED what satisfies this requirement? Payment of a bonus, continued employment if the employee was an at- will employee and could otherwise be terminated without cause, promotion, etc.

What is the exculpatory clause?

a provision that is intended to relieve a party for liability for a tort (e.g., negligence) that the party committed Is effective if... 1) inconspicuous (clear/bolded text) 2) gives an opportunity to negotiate (can't say 'if you don't sign you can't participate') 3) must only cover unintentional negligence 4) Specifically reference NEGLIGENCE 5) Only addressed singular issues, CANT BE OVERLY BROAD AND ALL-INCLUSIVE 6) notice gives adequate idea of the significance of the waiver

What is undue influence?

occurs when we have a relationship between a strong party and a weak party. EX: lawyer/client (Elderly giving into stronger party)

Explain Guarantee/suretyship contracts (if he doesn't pay I will...)?

person who makes the second promise is primarily liable UNLESS they really can't do it then the first promiser is liable. MUST BE IN WRITING. EXCEPTION CAN BE ORAL "Main Purpose Doctrine" - does not have to be in writing MPD = where the object of the guarantor is to obtain an economic benefit that he or she did not previously have

What is a bilateral contract?

promise for a promise both sides promise

What is a unilateral contract?

promise for an act One way promise

What is duress?

the use of threats to force a party to enter into a contract

What is the parol evidence rule again?

under this rule, any statements, agreements or negotiations occurring prior to or contemporaneous with the execution of a written contract are not admissible to amend or contradict contract terms when the written contract was intended by the parties to be a complete and final expression of their agreement. The final written contract merges and incorporates all agreements among the contracting parties under the "integration clause." (#1, 45) . the common-law principle that a writing intended by the parties to be a final embodiment of their agreement cannot be modified by evidence of earlier or contemporaneous agreements that might add to, vary, or contradict the writing. This rule usually operates to prevent a party from introducing extrinsic evidence of negotiations that occurred before or while the agreement was being reduced to its final written form (Black's). .