MSU LAW 231 Chapter 12

What types of contracts violate public policy? Choose 3 answers.

- a candidate for public office paying his competitor to retire - conducting trade with a country that is an enemy to the United States - employment contracts that forbid membership in a union

What legal limitations are imposed on parties to assignments and delegations? Choose 3 answers.

- the assignee obtains only the rights that the assignor had under the contract - contracts are for a service that depends on a particular skill or talent may not be delegated - a contract cannot prevent an assignment of the right to receive funds

Samuel has mental competency issues. Samuel entered into a contract with Beth, but now Samuel is petitioning the court to terminate the contract. What options does the court have in ruling in the case? Choose 2 answer choices.

- the contract is void if Samuel has been previously determined to be mentally incompetent - The contract is voidable if Samuel was incompetent at the time the contract was formed

What is the result if parties agree to a contract orally, but it is a contract that must be in writing under the statute of frauds? Choose 2 answer choices.

- the contract is voidable - the parties can complete the contract

What is the test for whether a contract is governed by the Statute of Frauds because of the one-year rule?

- the contract must be objectively impossible to perform within one year

Which act or statement is a valid offer?

A detailed advertisement

Which of the following is a valid offer?

Eric offers to buy Arun's house for $775,000 with no contingencies because Eric's lease ends in two months. Arun wants to think about it and six days later has not yet responded.

Elvis agrees to provide guitar lessons to Angela's niece for three months for $600. Angela decides her niece really is not interested in guitar lessons, and assigns her rights under the contract to Jose, so Jose can use the lessons for his daughter. When Jose contacts Elvis to set up the first guitar lesson for his daughter:

Jose cannot enforce the contract against Elvis because the contract is for personal services

Which situation would be considered sufficient consideration for a contract to exist?

Pam agrees to pay Derek $500 if he does not sit next to her in class anymore

What type of acceptance requires an affirmative action for the offeree to accept that offer?

Unilateral contracts

A counteroffer is _______ of the original offer and _______ have to be accepted. If an original offeror does accept the terms of the counteroffer, a valid contract ______ created. Nolan received the terms of the counteroffer, but _______ accept the terms of the counteroffer. When Nolan was informed that "[y]ou snooze, you lose; the property has been sold," Kapoor had _______ her counteroffer.

a rejection, does not, is, did not, revoked

An offer _______ terminate automatically when the period of time specified in the offer has passed. In this case, ______ made an offer that automatically terminated at 5:00pm on August 5th. Before the offer automatically terminated, Kapoor replied to Nolan with changes in the terms of the offer. This constitutes a ________ of the original offer.

can, Nolan, counteroffer

Nolan's subsequent acceptance of Kapoor's counteroffer _______ create a valid contract. Therefore, Nolan is likely to _____ his lawsuit against Kapoor and _____ is likely the legitimate new owner of the property.

does not, lose, Segal

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:

have an implied contract

Ellen offers to sell her 1997 Mustang convertible to Fred for $2,000. Fred agrees to pay $2,000 for Ellen's Mustang. Before Fred picks up the Mustang, Ellen discovers that the Mustang is considered a classic car and is worth much more than $2,000. Ellen refuses to sell the Mustang to Fred, stating that the consideration is insufficient. If Fred tries to enforce the deal by taking Ellen to court:

the court would probably enforce the deal because there was valid consideration on both sides

What are the elements of consideration? Choose 2 answer choices.

- an exchange to which the parties agree - something of value from each party

A contract for a purpose that causes the parties to violate a law is:

illegal and void

Which of these types of contracts must be in writing under the requirements of the Statute of Frauds? Choose 3 answers.

- contracts for the sales of land - collateral promises to pay the debt of another person - promises made in consideration of marriage

What factors may cause a person to lack contractual capacity? Choose 3 answers.

- mental incompetence - severe intoxication - being under the age of majority (usually 18)

Lupita enters into a contract with Faith to purchase a used car. At the time they sign the contract, Lupita appears to be very intoxicated. Faith notices this but signs the contract anyway. If Lupita later decides she wants to get out of the contract:

Lupita can raise the defense of lack of contractual capacity due to intoxication

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

contractual capacity

What factors are used to judge if consideration is adequate to ensure a fair bargain? Choose 2 answers.

- promises exchanged may not be a preexisting duty - promises must be made with voluntary consent

Which type of lack of capacity is easiest to prove?

Minor status

How may a revocable offer effectively be revoked? Choose 2 answers.

- the offeror may take an action that contradicts the offer and make that known to the offeree - the offeror may withdraw the offer with a clear expression

Midwest Life Insurance sells a life insurance policy to Thiago. Under the terms of the contract between Thiago and Midwest Life, Thiago will pay $75 per month for the policy, and, upon Thiago's death, Midwest Life will pay $100,000 to Laurelei. Four years later, Thiago dies, and Midwest refuses to pay under the terms of the policy. The party entitled to sue Midwest for its failure to honor the terms of the contract is:

Laurelei, because she is a donee beneficiary

Lilly hired Harris Lawn Service to cut her grass one summer, and paid through automatic charges to her credit card. After taking three months off for winter weather, Harris staff cut Lilly's grass for four weeks in a row before charging the fees on Lilly's credit card. Lilly protested the charges, stating she did not hire the company to cut grass for the second summer. Harris sues Lilly. What law applies? Choose 2 answer choices.

- Lilly's silence is acceptance because of the parties' past dealings - Lilly's silence is acceptance because the offeree accepted the benefit offered

What elements are required for an offer to be effective under the common law? Choose 3 answers.

- the offeror must intend to be bound by the offer - the offer must be communicated to the offeree - the terms of the offer must be reasonably definite so that all parties understand them

What if, after receiving the counteroffer from Kapoor, Nolan signed the counteroffer, agreed to all of its terms, and returned it to Kapoor. In this case, Nolan would have ______ the counteroffer of Kapoor. Kapoor and Nolan would have entered into a ______ contract as a result. If Segal accepted Kapoor's offer after Kapoor and Nolan agreed upon contract terms, Segal and Kapoor _______ have a valid contract because the contract between Kapoor and Nolan to sell the property _________ been formed.

accepted, valid, would not, had already

When Segal was presented with the terms of the counteroffer made earlier to Nolan, Segal ______ accept the terms. Segal's acceptance of the terms offered by Kapoor causes _______ to be created.

did, a valid contract

What is an exception to the statute of frauds?

Promissory Estoppel

You go out drinking and playing cards with your buddies. After you have consumed a huge amount of alcohol, you agree to sell your motorcycle to your buddy. The next morning, after you sober up, your buddy tells you what you did. Do you think your buddy can legally hold you to the deal to sell him your motorcycle?

No, he can't, if you were so intoxicated that you could not form the mental capacity to enter into a contract, and your buddy knew you were intoxicated.