Chapter 11-Introduction to Contracts

Four Theories of Recovery

1. Express Contract 2. Implied Contract 3. Promissory Estoppel 4. Quasi-Contract

Plaintiff request of remedy of quasi-contracts from a court, plaintiff must show:

1. The plaintiff provided the defendant with some benefits. 2. The plaintiff reasonably expected to be paid for that benefit and the defendant knew about that expectation. 3. The defendant would be unjustly enriched if he or she did not pay.

express contract

A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written. the two parties explicitly state all the important terms of their agreement

Implied Contract

A contract that comes about simply from actions of the parties. (i.e. you pay the bus fare, the driver fullfills his duty to take you to you In an implied contract, the words and conduct of the parties indicate that they intended an agreement.

Unilateral Contract

A contract that results when an offer can be accepted only by the offeree's performance. In a unilateral contract, the offeree can only accept the offer by completing their end of the deal. The contract is formed and performed by the offeree at the same moment. Only then does the offeror become bound. In a unilateral contract, only one party makes a promise, and the other must take some action—his return promise is insufficient to form a contract. ex:For instance, when someone posts a reward for their lost pet, wallet, cellphone, etc. By offering the reward, the offeror sets up a unilateral contract that stipulates that the reward will be issued once the lost pet or item is found.

Remedies

A court will award money or other relief to a party injured by a breach of contract.

Bilateral Contract

A type of contract that arises when a promise is given in exchange for a return promise.

Nadia needs help running her bakery. Nadia contacts her friend Zoey, who has baking experience but lives in another state, and offers Zoey a job. Nadia orally promises Zoey that she will employ Zoey for at least two years. Zoey quits her job in the other state, moves her family, and begins to work for Nadia. After three months, Nadia terminates Zoey's employment. Zoey sues Nadia, claiming they had a contract for two years. If Nadia defends the lawsuit by claiming the contract could not be enforced because it violates the statute of frauds, the court will likely hold in favor of:

A. Nadia, because enforcement of the promise is necessary to avoid injustice. B. Zoey, because the agreement violated the statute of frauds. C. Zoey, under the theory of promissory estoppel. D. Nadia, under the theory of promissory estoppel. Correct Answer: C

What elements are required for courts to apply the doctrine of promissory estoppel? Choose 3 answers.

A. There must have been consideration given with the promise. B. Enforcement of the promise is necessary to avoid injustice to the promisee. C. There was a detrimental result from reliance on the promise. D. The promise must be definite and relied upon.

UCC (Uniform Commercial Code)

Body of laws governing commercial transactions in the United States.

Third Party Interests

If Jerome and Tara have a contract, and if the deal falls apart, can Kevin sue to enforce the agreement? It depends.

Relating to promises

Is it certain that the defendant promised to do something? If she did promise, is it fair to make her honor her word? If she did not promise, are there unusual reasons to hold her liable anyway?

Res Ispa Loquitur means?

The principle that the occurence of an accident implies neglect

ENFORCEABILITY

Valid contracts are fully enforceable. An unenforceable agreement is one with a legal defect. A voidable contract occurs when one party has an option to cancel the agreement. A void agreement means that the law will ignore the deal regardless of what the parties want.

If an individual shopping for groceries opens a bottle of water from their cart and drinks it before they have paid for their items:

a bilateral contract has been created. a unilateral contract has been created. a quasi-contract has been created. a voidable contract has been created. a quasi-contract has been created

contract

a binding agreement between two or more persons that is enforceable by law

implied-in-fact contract

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

noncompetition agreement

a contract in which one party agrees not to compete with another

Common Law

a system of law based on precedent and customs

What factors make an agreement enforceable under the principle of quasi-contract? Choose 2 answers.

a. The courts determine that an enforceable contract exists. b. One party is being enriched at the expense of the other. c. The enriched party knows about the benefit and keeps it. d. The enriching party is negligent. B and C

Don and Kim have entered into a contract for the purchase of a car. Don has paid money for the car, but Kim has not yet delivered it. This is an:

a. implied contract b.illusory contract c.executed contract d.executory contract D. Executory contract

executory contract

contract not fully performed on both sides If one of the parties has fully performed and the other has not, it is still an executory contract overall.

UCC (Uniform Commercial Code)

contracts for sale of goods, tangible items of personal property of over $500 must be in writing

Carol and Al enter into a contract for the sale of a painting. Carol pays Al the asking price and Al delivers to Carol the painting. This contract is an:

executed contract

What is the term for a contract agreement in which an offeror promises to pay after the occurrence of a specified act, and the offeree is not required to respond in words?

executed contract bilateral contract open contract unilateral contract unilateral contract

unconsciable contract

grossly unfair contract for the sale of goods

Performance and Discharge

if a party fully accomplishes what the contract requires, his duties are discharged

When party A and B form a contract and both parties fully perform, the contract is considered:

invalid. valid. executed. executory. executed

Quasi Contract

is not an actual contract created by two parties, but one imposed by law. Courts impose these to address situations in which there is no contract, but a party received a benefit from another and retaining that benefit is considered to be unfair. A court can use the legal theory of quasi-contracts to prevent unjust enrichment by one of the parties.

void agreement

is one that neither party can enforce, usually because the purpose of the deal is illegal or because one of the parties had no legal authority to make a contract.

Valid contract

is one that satisfies all of the law's requirements.

What is the term for the legal ability to enter into a binding contract?

mental competence legal capability emancipation contractual capacity answer: contractual capacity

Contests, lotteries, and competitions with prizes are common examples of:

unilateral contracts. bilateral contracts. void contracts. implied in law contracts. unilateral contracts

Maryanne offers to sell her 2015 Mustang convertible to April for $15,000, and April agrees to those terms. April brings the $15,000 to Maryanne, and Maryanne promises to deliver the Mustang to April the next day after she has it detailed. At this point, Maryanne and April have:

A. a unilateral contract. B. no contract. C. an executory contract. D. an executed contract. C

Brindley has an old shed on her property that needs to be removed. She posts the following ad on Facebook: "Shed needs to be gone. You take down and haul away. (Much of the wood is reusable.) $100 to the first person to show up and haul this away." This is an example of a(n):

A. bilateral contract. B. unilateral contract. C. unconscionable contract. D. illegal contract. B

Zayn boards the Big Rock Metro to ride downtown to his job. Zayn gives his money to the driver and takes his seat. Neither the driver nor Zayn says anything. Zayn and the bus driver:

A. have a formal contract. B. have an express contract. C. have an implied contract. D. have no contract. Correct Answer: C

voidable contract

occurs when the law permits one party to terminate the agreement. This happens, for example, when an agreement is signed under duress or a party commits fraud

illegal contract

A contract that has an illegal object. Such contracts are void.

In a unilateral contract:

A. substantially undertaking performance prevents the offeror from revoking the offer. B. acceptance may occur through a promise or an act. C.the parties exchange a promise for a promise. D.the offeror may revoke the offer at any time before performance has been completed. Correct answer: A

In a contract where the payment is broken down such that 80 percent of the cost is for materials and 20 percent is for installation of those materials, the contract will be governed by:

A. the UCC. B.neither the common law nor the UCC. C. both the common law and the UCC. D. the common law. the UCC

unforceable agreement

occurs when the parties intend to form a valid bargain, but a court declares that some rule of law prevents enforcing it.

Seven characteristics for a contract to be enforceable

1. Offer. All contracts begin when a person or a company proposes a deal. It might involve buying something, selling something, doing a job, or anything else. But only proposals made in certain ways amount to a legally recognized offer. 2. Acceptance. Once a party receives an offer, he must respond to it in a certain way. We examine the requirements of both offers and acceptances in Chapter 12. 3. Consideration. There has to be bargaining that leads to an exchange between the parties. Contracts cannot be a one-way street; both sides must receive some measurable benefit . 4. Legality. The contract must be for a lawful purpose. Courts will not enforce agreements to sell cocaine, for example. 5. Capacity. The parties must be adults of sound mind. 6. Consent. Certain kinds of trickery and force can prevent the formation of a contract. 7. Writing. While verbal agreements are often contracts, some types of contracts must be in writing to be enforceable.

Executed Contract

A contract that has been completely performed by both parties.

Upon graduating, you interview for several jobs. Although you are currently living in Iowa, you receive an offer from a company in New York. You agree to take the job which is supposed to start in one month. You move all of your belongings to New York and get settled into an apartment, and decline all other job offers you receive. However, three days before the job is supposed to start, the company tells you that they no longer need you. Even though you never signed any contract, do you have any legal recourse against the company?

A. No, because you had not started work yet. B.No, unless you had a written contract. C. Yes, because you had costs in moving and gave up other job offers to take their offer. D. No, because companies are not liable for your costs in life. C. Yes, because you had costs in moving and gave up other job offers to take their offer.

Jones Construction Company is building a series of new subdivisions in Newtown over the next two years. Jones enters into a verbal agreement with Harley Concrete Inc. to construct all the driveways and sidewalks in the subdivisions that Jones will be building. Jones and Harley agree on a price of $130 per cubic yard and that Jones will pay Harley at the end of each project. Harley completes the first project, which is four sidewalks and sixteen driveways, and bills Jones for the project. Jones decides that the price is too high and refuses to pay, claiming that they have no obligation to pay because the parties did not have a valid contract. If Harley sues Jones for payment the court would probably:

A. hold that Harley is entitled to nothing because the contract violates the Statute of Frauds. B. apply quasi contract theory and award the fair market value of the work that Harley completed. C. hold that Harley is entitled to nothing because parties are free to terminate contracts if they so choose. D. apply quasi contract theory and award $130 per cubic feet, the contract price, to Harley. B

Which of the following creates a bilateral contract? (Select all that apply)

A. lottery tickets B.competition with prices C.Reward posters D.a sale of goods with payment at delivery D

Upon graduating, you interview for several jobs. Although you are currently living in Iowa, you receive an offer from a company in New York. You agree to take the job which is supposed to start in one month. You move all of your belongings to New York and get settled into an apartment, and decline all other job offers you receive. However, three days before the job is supposed to start, the company tells you that they no longer need you. Even though you never signed any contract, do you have any legal recourse against the company?

A.No, because you had not started work yet. B.No, unless you had a written contract. C.Yes, because you had costs in moving and gave up other job offers to take their offer. D.No, because companies are not liable for your costs in life. C.Yes, because you had costs in moving and gave up other job offers to take their offer.

What must a plaintiff show to be awarded a quasi-contract in a lawsuit?

A.The defendant was unjustly enriched. B.The defendant expected to be paid. C.The plaintiff received some benefit. D.The defendant agreed to compensate the plaintiff for the benefit received.

In what situations would a court be likely to award a quasi-contract? Choose 2 answer choices.

A.When the unjust enrichment is a relatively insignificant amount of money B.If the defendant was unjustly enriched and played a part in deceiving the plaintiff C.If the defendant did not know the plaintiff would expect to be paid for the services D.When the party provided the services for unwilling recipients Answer A & B

Quon and Bert have signed a contract for Bert to mow Quon's grass every week in June, July, and August for a price of $40 per week. They have agreed to all the necessary terms, but Bert has not yet mowed because it is still May. What type of contract do they have?

A.executory B. executed C. void D. unilateral A

Sal has ordered 100 pounds of shrimp for his restaurant from Sam every Friday for 5 years and has always paid that week's market price. One Friday, Sal decides to take a vacation but doesn't tell Sam. Sam claims they have a contract, even though it was never written down. What kind of contract do they have?

A.implied-in-fact B.implied-in-law C. quasi D. express A

implied-in-law contract

An obligation that is not an actual contract but that is imposed by law because of the parties' conduct or some special relationship between them or because one of them would otherwise be unjustly enriched

Quasi-contracts are unavailable for:

The remedy of quasi-contracts is not available to those who provide services for unwilling recipients. These parties chose to do the unrequested work hoping to be paid, and cannot then recover under the quasi-contract remedy. For example, sometimes parties will wash the windshields of stopped cars or paint address numbers on curbs and then ask the recipients for compensation after doing the work. No court will support that kind of activity with compensation through a quasi-contract.

Promisory Estoppel

There is no contract, but the defendant makes a promise that they can foresee will induce reliance, the plaintiff relies on it and it would be unjust not to enforce the promise.