CH 11: NATURE & TERMINOLOGY

IMPLIED CONTRACT

A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract)

VOIDABLE CONTRACT

A contract that may be legally avoided (cancelled) at the option of one of the parties

What must a plaintiff show to be awarded a quasi-contract in a lawsuit? A) The plaintiff received some benefit B) The defendant expected to be paid C) The defendant was unjustly enriched D) The defendant agreed to compensate the plaintiff for the benefit received

C) The defendant was unjustly enriched

EXTRINSIC EVIDENCE

Evidence that relates to a contract but is not contained within the document itself, including the testimony of the parties, the testimony of witnesses, and additional agreements and communications. A court may consider extrinsic evidence only when a contract term is ambiguous and the evidence does not contradict the express terms of the contract

PROMISEE

A person to whom a promise is made

OFFEREE

A person to whom an offer is made

PROMISOR

A person who makes a promise

OFFEROR

A person who makes an offer

PROMISE

A person's assurance that he or she will or will not do something

VOID CONTRACT

A contract having no legal force or binding effect

BILATERAL CONTRACT

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

UNENFORCEABLE CONTRACT

A valid contract rendered unenforceable by some statue or law

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) a bilateral contract has been created B) a quasi-contract has been created C) a voidable contract has been created D) a unilateral contract has been created

B) a quasi-contract has been created

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-law B) express C) implied-in-fact D) quasi

C) implied-in-fact

What type of contract exists when at least one party has the option of canceling it? A) bilateral B) unenforceable C) void D) voidable

D) voidable

EXPRESS CONTRACT

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

FORMAL CONTRACTS

A contract that by law requires a specific form, such as being executed under seal, to be valid

INFORMAL CONTRACTS

A contract that does not require a specified form or formality in order to be valid

EXECUTED CONTRACT

A contract that has been completely performed by both parties

EXECUTORY CONTRACT

A contract that has not yet been fully performed

UNILATERAL CONTRACT

A contract that results when an offer can be accepted only by the offeree's performance

VALID CONTRACT

A contract that results when the elements necessary for contract formation (agreement, consideration, contractural capacity, and legality) are present

QUASI CONTRACTS

A fictional contract imposed on parties by a court in the interests of fairness and justice; usually, quasi contracts are imposed to avoid the unjust enrichment of one party at the expense of another

OBJECTIVE THEORY OF CONTRACTS

A theory under which the intent to form a contract will be judged by outward, objective facts as interpreted by a reasonable person, rather than by the party's own secret, subjective intentions. Objective facts might include what a party said when entering into the contract, how a party acted or appeared, and the circumstances surrounding the transaction

What factors make an agreement enforceable under the principle of quasi-contract? Choose 2 answers. A) The enriched party knows about the benefit and keeps it B) The courts determine that an enforceable contract exists C) The enriching party is negligent D) One party is being enriched at the expense of the other

A) The enriched party knows about the benefit and keeps it D) One party is being enriched at the expense of the other

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) When the party provided the services for unwilling recipients D) If the defendant did not know the plaintiff would expect to be paid for the services

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

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) unilateral C) executed D) void

A) executory

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) executory contract B) implied contract C) illusory contract D) executed contract

A) executory contract

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) unilateral contract B) unconscionable contract C) illegal contract D) bilateral contract

A) unilateral contract

CONTRACT

An agreement that can be enforced in court; formed by two or more parties, each of whom agrees to perform or to refrain from performing some act now or in the future

You decide to get a credit card in order to begin building your credit history. It is your first credit card and when you receive the agreement with the credit card company filled with legally complex boilerplate language, you sign it knowing that if you do not, you will not be able to get the card. Buried deep within the terms, however, a discrepancy existed that the credit card company never caught before sending the agreement to customers. One section allowed for the credit card company to raise interest rates as long as it provided users a 30 day notice, but another section stated that interest rates could only be changed once per year. The company has increased your interest rate four times already this year and you decide you have had enough and take them to court. In whose favor will the court interpret the terms of the contract? A) The court will rewrite the terms of the agreement so that a fair outcome is reached B) The court will interpret it in your favor because you did not draft the agreement C) The court will interpret it in favor of neither party and will use its own judgement for what is fair D) The court will interpret it in favor of the credit card company because they drafted the document

B) The court will interpret it in your favor because you did not draft the agreement

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: A) implied contract B) executed contract C) executory contract D) illusory contract

B) executed contract

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 no contract B) have an implied contract C) have an express contract D) have a formal contract

B) have an implied contract

When ambiguity in a contract's language exists, a court will: (Select all that apply) A) consider extrinsic evidence of the language B) interpret the terms against the drafting party C) apply the most common meaning of the term regardless of the parties' intent D) only use the language of the contract to figure out its meaning

B) interpret the terms against the drafting party

Which of the following creates a bilateral contract? A) lottery tickets B) reward posters C) a sale of goods with payment at delivery D) a competition with prizes

C) a sale of goods with payment at delivery

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

C) apply quasi contract theory and award the fair market value of the work that Harley completed

When party A and B form a contract and both parties fully perform, the contract is considered: A) valid B) invalid C) executed D) executory

C) executed

Mia contracted with Greencare Lawn Service for a pest treatment on Mia's lawn for $1,000. Pat lives next door to Mia. Greencare mistakenly treats Pat's lawn instead of Mia's. Pat watched them perform the treatment while looking through the window of his living room, but did not go outside and stop them. When Greencare seeks payment from Pat, Greencare can probably receive: A) $1,000 from Pat, because Pat received the full value of the service B) nothing, because Greencare's contract was with Mia, not Pat C) from Pat an amount less than the contract amount that will reimburse Greencare for expenses incurred, in order to avoid unjust enrichment D) $1,000 from Mia, because there was a contract

C) from Pat an amount less than the contract amount that will reimburse Greencare for expenses incurred, in order to avoid unjust enrichment

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

C) substantially undertaking performance prevents the offeror from revoking the offer

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? A) open contract B) executed contract C) unilateral contract D) bilateral contract

C) unilateral contract

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) no contract B) an executed contract C) a unilateral contract D) an executory contract

D) an executory contract

When an agreement fails to qualify as an enforceable contract, but one of the parties breaches the agreement, the non-breaching party: A) may sue for specific performance B) may sue for reformation C) has no remedy D) may sue for unjust enrichment

D) may sue for unjust enrichment

Contests, lotteries, and competitions with prizes are common examples of: A) implied in law contracts B) void contracts C) bilateral contracts D) unilateral contracts

D) unilateral contracts

Apply It: Interpretation of Contracts

Identifying the Facts and Issues This case primarily involves an express contract . When a contract's writing is clear and unequivocal, the court will enforce the contract according to its obvious terms. Interpreting a contract's terms from the written document alone is sometimes referred to as the plain meaning rule . If a contract term is ambiguous, a court may consider extrinsic evidence to interpret the contract. Assessment question In this case, the meaning of the word "chicken" is ambiguous . Therefore, a court can use extrinsic evidence to interpret the contract between Freight and L.D.T. The extrinsic evidence shows that the term "chicken" was given a broader interpretation by the parties. Therefore, the extrinsic evidence of the contract favors the interpretation of L.D.T. . Assessment question In this case, seller L.D.T. could satisfy the terms of the contract by delivering both older stewing and younger broiling chickens to Freight. Assessment question A court in this case likely would find that L.D.T. did not breach the contract when it delivered both older stewing and younger broiling chickens to Freight. As a result, L.D.T. would likely win the case. Assessment question What If the Facts Were Different? What if the written contract between Freight and L.D.T. stated that L.D.T. was obligated to deliver "chicken broilers and chicken fryers" instead of simply "chicken"? In this case, seller L.D.T. could not satisfy the terms of the contract by delivering both older stewing and younger broiling and frying chickens to Freight. A court would not need to use extrinsic evidence in order to interpret the term "chicken" in the contract between Freight and L.D.T. because the meaning of the word "chicken" in this contract would be obvious . As a result, Freight would then win the case.