Ch. 9 BLAW

T/F: The courts will presume that the parties intended to form a bilateral contract when it is unclear whether a unilateral or a bilateral contract has been formed.

True

T/F: Where general contract law has not been specifically modified by the UCC, the common law of contracts continues to apply.

True

Contract

binging agreement that the courts will enforce

To avoid breaching UCC a party must:

make a "perfect tender" of goods -any deviation is considered to be a material breach

Usage of trade

not considering the history of these parties, but how does this industry in general interpret such clauses or handle such transactions

T/F: In certain circumstances, non contractual promises are enforced under the doctrine of promissory estoppel in order to avoid injustice.

True

T/F: Most contracts are primarily governed by state common law.

True

T/F: Nearly every business transaction is based on contract, and even the most common transactions may involve multiple contracts.

True

Valid

-Contract meets all requirements of a binding contract -enforceable agreement

Void

-Has no legal force or binding effect -more so just an agreement -no contract and no legal effect

Restatement of Contracts

-Summary of the cases involving a certain area of contract law. "Law Finder" -not a law itself -short outline that summarizes other court cases

UNLIKE COMMON LAW, _____________ is not necessary to modify a contract under the UCC

-consideration -as long as parties are acting in good faith and voluntarily

Common Law

-developed by COURT SYSTEM/States -used for Services, employment, real estate, patents, copyrights, ect. -default law for if there is no provision in the UCC for a contract issue

Mirror Image Rule (Common Law)

-the acceptance's terms must exactly match the offer's terms, or else the acceptance is deemed a counteroffer -If the offeree seeks to vary the offer either by addition, deletion or substitution of even the smallest change there is no acceptance, but a counteroffer/rejection

Elements of recovery in quasi contract

1. BENEFIT conferred upon by a defendant by a plaintiff 2. KNOWLEDGE of the benefit by the defendant 3. ACCEPTANCE OR RETENTION of the benefit, where it should be unfair for the defendant to keep the benefit without paying for its value ex.) Pizza delivered in error to your apartment, not neighbors. If you keep it, you can be required to pay reasonable value for it

For requirements of a contract

1. Mutual Assent 2. Consideration 3. Legality 4. Capacity

2 Situations where the courts might still give a legal remedy, despite not meeting the requirements of a contract

1. Promissory Estoppel 2. Quasi Contract

When do contracts need to be in writing?

1. Real estate 2. services over a year 3. UCC $500

Promissory Estoppel consists of:

1. promise made 2. the other part justifiably relied upon 3. acted to his detriment 4. and made a material change in position bc of it ex.) you promised a large donation to charity and they started a major construction project bc of your promise. If you back out, court MIGHT make you pay

How long can you sue for breach of a contract?

4 years

Firm offer rule

A UCC rule that says that a merchant who (1) makes an offer to buy, sell, or lease goods and (2) assures the other party in a separate writing that the offer will be held open cannot revoke the offer for the time stated or, if no time is stated, for a reasonable time. (but cannot exceed 3 months)

Distinguish between a contract and a gift and explain why one is enforceable and the other is not.

A contract has the element of consideration associated with it. The duties associated with a contract have been bargained for, whereas the making of a gift is a gratuitous situation and thus not enforceable.

Executory Contract

A contract that has NOT yet been fully performed.

T/F: A contract may be formed orally or by a writing, but it may not be inferred merely from the conduct of the parties.

False; Implied Contract is inferred by conduct of the parties

UCC Article 2

Applies to contracts for the sale of goods -STATE STATUTE adopted by most states -has a GAP FILLER

T/F: A voidable contract is an agreement that does not meet all of the requirements of a binding contract; thus, it is no contract at all and has no legal effect.

False; Void contract

Bilateral Contract

BOTH parties make a PROMISE -promise in return for another promise ex.) promising money for promising to provide a service

T/F: Thomas says to Steve, "If you will paint my garage, I will pay you $75." Steve replies, "Would you make it $85?" Under these facts, Thomas and Steve are both promisors and promisees.

False

T/F: A bilateral contract results from the exchange of a promise for an act, whereas a unilateral contract results from the exchange of a promise for a return promise.

False; bilateral is promise for a promise and unilateral is promise for an act

T/F: A contract to provide legal services for a fee is governed by Article 2 of the UCC.

False; governed by Common Law

T/F: As defined by the UCC, goods are movable, tangible and intangible personal property.

False; tangible personal property

Gap Fillers

In contracts governed by the Uniform Commercial Code (UCC), terms that can be inserted into a contract when those terms are not definite and certain (price, delivery and when payment is due)

Example of exception where courts presume you would have made contract but were unable to do so:

Injured in car wreck and unconscious. If you get medical care, will have to pay reasonable value even though you did not make a contractual offer which was accepted.

Which state has not adopted UCC?

Louisiana

Unilateral Contract

PROMISE in exchange for PERFORMANCE of an act -performing without promise to perform ex.) reward for a lost dog

Course of dealing

Prior conduct between parties to a contract that establishes a common basis for their understanding.

What must be provided in UCC?

Quantity

Arthur Accountant orally agrees to serve as an accountant for Clem Client in exchange for Clem's promise to pay Arthur an annual salary of $15,000. Describe this contract in terms of the following classifications: (a) express and implied; (b) unilateral and bilateral; (c) valid, void, voidable, and unenforceable; and (d) executory and executed.

The contract to provide accounting services to Clem for $15,000 involves an oral manifestation of willingness by both parties to enter into a contract. Therefore the contract is express, even though not in writing. The contract also involves an exchange of promises. Arthur promised to provide accounting services for one year in exchange for Clem's promise to pay $15,000 to Arthur. Therefore the contract is bilateral. There is no evidence that the contract is void, voidable, or otherwise unenforceable. Therefore it is valid. Finally, since, at its inception, neither party has performed any of its duties, the contract is executory.

T/F: A quasi contract is not a contract, but rather is an obligation imposed regardless of the intention of the parties in order to assure a just and equitable result.

True

T/F: An executory contract is one in which there are one or more unperformed promises by any party to the contract.

True

T/F: As defined by the UCC, a sale is the transfer of title to goods from seller to buyer for a price.

True

T/F: In a "quasi-contract" situation, the remedy granted will be similar to a breach of contract remedy.

True

Breach

The failure to perform a contractual obligation

Discuss how state common law, the Restatements of the Law of Contracts, and Article 2 of the UCC combine to form the law of contracts.

The law of contracts is governed primarily by state common law. An often-cited source of this law is found in the Restatements of the Law of Contracts promulgated by the American Law Institute. In all states except Louisiana, however, Article 2 of the UCC governs sales. A sale is a contract involving the transfer of title to goods from seller to buyer for a price. In all transactions to which Article 2 does not apply, and in all those governed by Article 2 but where general contract law has not been specifically modified by the Code, contract common law continues to apply.

Unenforceable Contract

a contract for the breach of which the law provides no remedy -cannot take the contract to court to enforce, such as if statute of limitations has run out (time in which to file lawsuit has lapsed)

Implied contract

a contract when agreement of the parties is inferred by their conduct

Voidable

a valid contract that can be set aside ("avoid") at the option of one of the parties -bc of how it was formed or a lack of capacity, law permits one or more parties to avoid the legal duties created by the contract -enforceable until that happens

A manifestation of the intention to act or refrain from acting in a specified way is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.

a. a promise.

An executed contract is one in which: a. all duties under it have been performed by all parties to the contract. b. at least one party has performed all of its duties under the contract. c. there are one or more unperformed promises by any party to the contract. d. the contract is wholly unperformed by one or more of the parties.

a. all duties under it have been performed by all parties to the contract.

All of the following are relevant to defining the principles of contract law EXCEPT: a. federal common law. b. state common law. c. Restatements of the Law of Contracts. d. Uniform Commercial Code.

a. federal common law.

Contract law: a. has more relaxed requirements today than in the nineteenth century. b. has more rigid requirements today than in the nineteenth century. c. has remained static throughout the nineteenth and twentieth centuries. d. is governed primarily by the Uniform Commercial Code.

a. has more relaxed requirements today than in the nineteenth century. b. has more rigid requirements today than in the nineteenth century.

A contract in which one party seeks an act in exchange for a promise is a(n): a. quasi contract. b. unilateral contract. c. implied in fact contract. d. bilateral contract.

b. unilateral contract.

CPA: Kay, an art collector, promised Hammer, an art student, that if Hammer could obtain certain rare artifacts within two weeks, Kay would pay for Hammer's post-graduate education. At considerable effort and expense, Hammer obtained the specified artifacts within the two-week period. When Hammer requested payment, Kay refused. Kay claimed that there was no consideration for the promise. Hammer would prevail against Kay based on: a. unilateral contract. b. unjust enrichment. c. public policy. d. quasi contract.

a. unilateral contract.

Personal Property

any property other than land and anything attached to it

The Uniform Commercial Code defines goods as: a. tangible and intangible personal property. b. tangible personal property. c. land and anything attached to it. d. none of the above.

b. tangible personal property.

UCC Article 2 applies to contracts involving which of the following? a. The services of an accountant b. An employment relationship c. The sale of a television set d. The sale of a private residence

c. The sale of a television set

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, is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.

c. a contract.

A contract in which the parties indicate their assent in words is a(n): a. quasi-contract. b. implied contract. c. express contract. d. unlawful contract.

c. express contract.

Two sources of contract law

common law and uniform commercial code

Legality of Object

contract must be for a lawful purpose and not otherwise against public policy -purpose of contract is not criminal, tort or against public policy

Executed Contract

contract that has been fully performed by both parties

Classification of Contracts

contracts can be classified by their method of formation, content and legal effect

Quasi Contract

court-imposed obligation to prevent injustice -parties did not agree to contract

The remedies provided for breach of contract include: a. compensatory damages. b. punitive damages. c. reliance damages. d. (a) and (c), but not (b).

d. (a) and (c), but not (b).

Bill Businessman places an ad in the local newspaper saying, "Reward: $50 for return of my golden retriever named Fido." The ad lists his address and telephone number. If Tim Teenager finds Fido and returns him to Bill, there will be: a. an executed contract requiring that Bill pay Tim $50. b. a bilateral contract, because two people are involved. c. an implied in fact contract requiring that Bill pay Tim $50. d. a unilateral contract, because Bill has promised to pay $50 but Tim hasn't promised anything.

d. a unilateral contract, because Bill has promised to pay $50 but Tim hasn't promised anything.

Each of the following is an essential element of a binding promise EXCEPT: a. mutual assent. b. consideration. c. capacity. d. a writing signed by the parties.

d. a writing signed by the parties.

A contract in which both parties exchange promises is a(n): a. formal contract. b. quasi contract. c. implied in fact contract. d. bilateral contract.

d. bilateral contract.

A contract which fails to satisfy the requirements of the statute of frauds is: a. valid. b. void. c. voidable. d. unenforceable.

d. unenforceable.

Promissory Estoppel

doctrine enforcing non-contractual promises for which there has been justifiable reliance on the promise and justice requires enforcement -do NOT have a contract, but courts MIGHT enforce a promise bc 'justice requires enforcement -strongly disliked by courts, not many cases

UCC SoF requirements

does not have to be a complete contract as long as it (1) indicates a contract for sale has been made, (2) signed by the party against whom enforcement is sought, and (3) specifies quantity

Consideration

each party must intentionally exchange a LEGAL BENEFIT or incur a LEGAL DETRIMENT as an inducement to the other party to make a return exchange ex.) Pizza for money

Option contract

paid money to hold an offer to make a contract open for a fixed period of time

Common Law writings must include:

parties subject matter essential terms signed by the party trying to avoid the contract

What does the UCC presume?

parties are acting in "good faith" and in a "commercially reasonable manner" -doing what a normal person would do in a contract

Common Law modification

requires new or different consideration

To avoid breaching COMMON LAW a party must:

substantially perform

Goods

tangible personal property

Express Contract

terms of the agreement are fully and explicitly stated in words, oral or written

Mutual Assent

the parties must manifest by words or conduct that they have agreed to enter into a contract -offer and acceptance must be shown by words or conduct that show intent to enter -"meeting of the minds" ex.) "I want a cheese pizza" "Okay."

Capacity

the parties to a contract must have contractual capacity -parties must be able to understand the meaning of the contract and that is binding

Sale

the transfer of title from the seller to the buyer for a price