Ch. 9 Formation and Requirements of Contracts
Which of the following is an example of an informal contract?
a lease
What is a recognizance?
a party's agreement to pay a sum of money if another person does not pay it
The ________ rule states that acceptance is effective when it is dispatched, even if it is lost in transmission.
mailbox
The ________ rule states that the offeree must accept the terms of an offer as stated in the offer.
mirror-image
In terms of contractual capacity, what is the most commonly-recognized age of majority?
18
A contract that has been fully performed by both sides is called an executory contract.
F
What are the possible problems that can come up in a unilateral contract?
In a unilateral contract, problems arise if the offeror attempts to revoke an offer after the offeree has begun performance. Generally, an offer to create a unilateral contract can be revoked by the offeror any time prior to the offeree's performance of the requested act. However, the offer cannot be revoked if the offeree has begun or has substantially completed performance.
In terms of a contract's enforcement, which of the following is true?
Parties may voluntarily perform a contract that is unenforceable.
A contract is a bilateral contract if the offeror's promise is answered with the offeree's promise of acceptance.
T
An express contract can be stated orally.
T
An implied-in-fact contract is a contract in which agreement between parties has been inferred from their conduct.
T
An offer to create a unilateral contract can be revoked by the offeror any time prior to the offeree's performance of the requested act.
T
An offer to create a unilateral contract cannot be accepted by a promise to perform.
T
In a recognizance, a party agrees to pay a specified sum of money if another party does not pay it.
T
Provision of services qualifies as consideration for an enforceable contract.
T
Which of the following elements must be established to create an implied-in-fact contract?
The defendant was given an opportunity to reject the plaintiff's property or services but failed to do so.
Which of the following is true of an option contract?
The offer cannot be revoked during the option period.
Which of the following is true for an auction with reserve?
The seller retains the right to refuse the highest bid and withdraw the goods from sale.
The ________ establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses.
Uniform Computer Information Transactions Act (UCITA)
A contract is said to be ________ when one or both parties have the option to void the contractual obligations.
VOIDABLE
Which of the following would likely give rise to a quasi-contract?
an unconscious man being treated in a hospital emergency room
A(n) ________ is a response by an offeree that contains terms and conditions different from or in addition to those of the offer.
counteroffer
An offeror can ________ an offer by withdrawing the offer prior to its acceptance.
revoke
A(n) ________ is a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust.
unconscionable contract
If a contract is required to be in writing under the Statute of Frauds but is not, the contract is ________.
unenforceable
A contract is ________ if the offeror's offer can be accepted only by the performance of an act by the offeree.
unilateral
A(n) ________ contract is only valid once the offeree performs the requested act.
unilateral
To meet the mirror image rule, the offeree must accept the terms of the offer without modification.
f
Under the mailbox rule, an acceptance is only effective when it is received.
f
Unless otherwise expressly stated, an auction is considered an auction without reserve.
f
Which of the following is true of a gift promise?
A completed gift promise cannot be cancelled for lack of consideration.
Compare valid, void, voidable and unenforceable contracts.
1.Valid contract. A valid contract meets all the essential elements to establish a contract. In other words, it (1) consists of an agreement between the parties, (2) is supported by legally sufficient consideration, (3) is between parties with contractual capacity, and (4) accomplishes a lawful object. A valid contract is enforceable by at least one of the parties. Void contract. A void contract has no legal effect. It is as if no contract had ever been created. A contract to commit a crime is void. If a contract is void then neither party is obligated to perform the contract and neither party can enforce the contract. Voidable contract. A voidable contract is a contract in which at least one party has the option to void his or her contractual obligations. If the contract is voided, both parties are released from their obligations under the contract. If the party with the option chooses to ratify the contract, both parties must fully perform their obligations. Unenforceable contract. With an unenforceable contract, there is some legal defense to the enforcement of the contract. If a contract is required to be in writing under the Statute of Frauds but is not in writing, the contract is unenforceable.
Which of the following statements is true about a counteroffer?
A counteroffer terminates the existing offer.
In terms of the infancy doctrine, which of the following is true?
A minor can disaffirm a contract he or she entered into with an adult.
Give an account of termination of an offer due to a lapse of time.
An offer expires at the lapse of time of an offer. An offer may state that it is effective only until a certain date. Unless otherwise stated, the time period begins to run when the offer is actually received by the offeree and terminates when the stated time period expires. If no time is stated in an offer, the offer terminates after a "reasonable time," dictated by the circumstances.
________ is defined as something of legal value given in exchange for a promise.
Consideration
A unilateral contract can be accepted without the performance of an act by the offeree.
F
A voidable contract is also termed as an unenforceable contract.
F
An act of performance is necessary to create a bilateral contract.
F
To create an implied-in-fact contract, it must be established that the plaintiff provided the property or services gratuitously.
F
In terms of the doctrine of quasi-contract, which of the following statements is true?
It is an equitable doctrine intended to prevent unjust enrichment.
Which of the following is a necessary condition for a contract to be considered valid?
It is enforceable by at least one of the parties.
Martha contacts a bakery to get a cake for her son's birthday party. She tells the baker that she will pay him $150 for the cake if he delivers the cake on Friday evening. If the baker does not deliver the cake on Friday evening, which of the following is accurate?
Martha cannot sue the baker
A preexisting duty is sufficient consideration to support a new contract.
Past consideration is sufficient consideration to support a new contract.
Explain in brief the Uniform Computer Information Transactions Act (UCITA).
The National Conference of Commissioners on Uniform State Laws (a group of lawyers, judges, and legal scholars) drafted the Uniform Computer Information Transactions Act (UCITA). The UCITA establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses. The UCITA addresses most of the legal issues that are encountered while conducting e-commerce over the Internet. The UCITA is a model act that does not become law until a state legislature adopts it as a statute for the state. Although most states have not adopted the UCITA, the UCITA has served as a model for states that have enacted their own statutes that govern e-commerce. Because of the need for uniformity of e-commerce rules, states are attempting to adopt uniform laws to govern the creation and enforcement of cyberspace contracts and licenses.
Which of the following elements must be established for a contract to be deemed unconscionable?
The adhering party had no reasonable alternative.
Which of the following is true for an auction without reserve?
The auctioned item cannot be withdrawn from sale.
Which of the following is true of a contract with an adjudged insane person?
The contract is void.
Explain in brief the standards concerning contracts of mentally incompetent persons.
The law protects people suffering from substantial mental incapacity from enforcement of contracts against them because such persons may not understand the consequences of their actions in entering into a contract. The law has developed two standards concerning contracts of mentally incompetent persons: (1) adjudged insane and (2) insane but not adjudged insane. In certain cases, a relative, a loved one, or another interested party may institute a legal action to have someone declared legally (i.e., adjudged) insane. If, after evidence is presented at a formal judicial or administrative hearing, the person is adjudged insane, the court will make that person a ward of the court and appoint a guardian to act on that person's behalf. Any contract entered into by a person who has been adjudged insane is void. That is, no contract exists. The court-appointed guardian is the only one who has the legal authority to enter into contracts on behalf of the person who has been adjudged insane. If no formal ruling has been made about a person's sanity but the person suffers from a mental impairment that makes him or her legally insane-that is, the person is insane but not adjudged insane-any contract entered into by this person is voidable by the insane person. Unless the other party does not have contractual capacity, he or she does not have the option to void the contract. A person who has dealt with an insane person must place that insane person in status quo if the contract is either void or voided by the insane person.
Explain the basic requirements that must be met for a contract to be enforceable.
The requirements for a contract to be enforceable are: 1) Agreement. To have an enforceable contract, there must be an agreement between the parties. This requires an offer by the offeror and an acceptance of the offer by the offeree. There must be mutual assent by the parties. 2) Consideration. A promise must be supported by a bargained-for consideration that is legally sufficient. Money, personal property, real property, provision of services, and the like, qualify as consideration. 3) Contractual capacity. The parties to a contract must have contractual capacity for the contract to be enforceable against them. Contracts cannot be enforced against parties who lacked contractual capacity when they entered into the contracts. 4) Lawful object. The object of a contract must be lawful. Most contracts have a lawful object. However, contracts that have an illegal object are void and will not be enforced.
Why does an illusory contract lack consideration?
because one or both of the parties can choose not to perform their contractual obligations
A contract is a(n) ________ contract if the offeror's promise is answered with the offeree's promise of acceptance.
bilateral
A(n) ________ contract is a contract entered into by way of an exchange of promises between the parties.
bilateral
Windsor, the owner of Windsor's Sandwiches, contacts Gary, a new supplier. He promises Gary that he will pay him $375 if Gary delivers 20 pounds of cheese the following morning. Gary promises to make the delivery as requested by Windsor. This creates a(n) ________ contract between them.
bilateral
Alan tells Sherry that he will pay her $5,000 if she runs the Boston Marathon. Once Sherry starts running the marathon, Alan ________.
cannot revoke the contract
The infancy doctrine allows minors to ________ most contracts they have entered into with adults.
disaffirm/cancel
Under the mailbox rule, an acceptance is effective when ________.
dispatched/mailed
A(n) ________ is a contractual provision that relieves one or both of the parties to a contract from tort liability.
exculpatory clause
A contract that has been fully performed by one party but not by the other party is a(n) ________ contract.
executory
A(n) ________ contract is a contract that has not been fully performed by either or both sides.
executory
Elizabeth signs a contract to purchase a new car from Quickcash Motors. She has not yet paid for the car, and Quickcash Motors has not yet delivered the car to Elizabeth. This is an example of a(n) ________ contract.
executory
An oral agreement to purchase a neighbor's bicycle for $250 is a(n) ________ contract.
express
Kyle goes to a used automobile dealership to buy a truck. He signs an agreement with the dealership that includes a description of the truck, its price, and other details. This is an example of a(n) ________ contract.
express
A contract need not arise from a bargained-for exchange.
f
A person who disaffirms a contract based on intoxication is not legally obligated to return the consideration he or she received under the contract to the other party.
f
A person who has dealt with an insane person need not place that insane person in status quo if the contract is either void or voided by the insane person.
f
An option contract is terminated upon the death of the offeror.
f
Consideration is defined as something of legal value given in exchange for termination of an offer.
f
If an insane person who has not been adjudged insane enters into a contract, the contract is non-voidable by the insane person.
f
Illusory promises require both parties to perform their contractual obligations.
f
In auction without reserve, the seller is the offeree.
f
Past consideration is sufficient consideration to support a new contract.
f
The Uniform Computer Information Transactions Act (UCITA) is a law applicable to all states and does not require a state legislature to adopt it as a statute for the state.
f
The infancy doctrine gives adults the right to disaffirm contracts they have entered into with minors.
f
A contract into which parties enter but in which one or both of the parties can choose not to perform their contractual obligations is said to involve ________ promises.
illusory
A contract in which an agreement between the parties is inferred from their conduct is known as a(n) ________ contract.
implied-in-fact
Which of the following is acceptable consideration for a contract?
money
The ________ states that the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.
objective theory of contracts
A(n) ________ is a contract in which the original offeree pays consideration (usually money) in return for the original offeror giving consideration (time of the option period).
option contract
Stella is injured in a car accident and is transported to the local hospital by emergency personnel. She subsequently passes into a coma. The doctors and other staff perform the necessary medical procedures to save her life. Stella recovers after two months and is discharged from the hospital. Under the doctrine of ________ contract, Stella must pay the hospital for its services.
quasi-
A(n) ________ is an equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed.
quasi-contract
According to the objective theory of contracts, the intent to enter into a contract is judged by the ________.
reasonable person standard
A counteroffer is considered a rejection of the original offer.
t
A person who disaffirms a contract based on intoxication must be returned to the status quo.
t
A rejection of an offer is not effective until it is actually received by the offeror.
t
An exculpatory clause can relieve a party of liability for ordinary negligence
t
Any contract entered into by a person who has been adjudged insane is void
t
The infancy doctrine gives minors the right to disaffirm most contracts they have entered into with adults.
t
Unconscionable contracts are sometimes found where there is a consumer contract that takes advantage of uneducated, poor, or elderly people who have been persuaded to enter into unfair contracts.
t
A contract is said to have legal value if ________.
the promisee suffers a legal detriment
Yvonne finds a carpenter to do some repairs for her house and tells him that if he finishes the job by Saturday, she will pay him $1,000. Yvonne's offer creates a(n) ________ contract.
unilateral
Noelle uses blackmail to force Jeff to sign a contract for the sale of his home. This contract is ________.
voidable
Two brothers, Sam and Jim, were fighting over the division of their ancestral property. After ten years of legal battle, a frustrated Sam contacted a powerful politician who subjected Jim to extreme duress, forcing him to sign a contract in favor of Sam. When Sam takes this contract to court, the contract will be declared
voidable
While Harry was intoxicated, he sold his car to Ben for substantially less than its fair market value. This contract is considered ________.
voidable
