Blaw Exam 2
People who have limited capacity
(1) minors (sometimes called infants in legal documents), (2) those suffering from a mental deficiency that renders them incapable of understanding the nature and obligations of contracts, (3) those who have a legal guardian (4) those who are intoxicated.
Auction Sales
- NOT an offer. Only a request for offers. - With Reserve: Auctioneer won't sell anything below its minimum price. - Without Reserve: Can only withdraw item if no bids. - The law assumes every auction is with reserve unless auctioneer says otherwise
Annabel calls Jim and says, "I'll sell you my bicycle for $325. Interested?" Jim says, "I'll look at it tonight in the bike rack. If I like what I see, I'll pay you $325 in the morning." The next morning Jim comes walking towards Annabel. Before Jim says anything, Annabel says, "never mind, I don't want to sell the bike." Jim says, "We had an agreement, you have to sell me the bike." Is Jim correct? Why?
There is no contract since Jim gave himself an out earlier by saying he will look at it and see. This was an illusory promise.
Suppose a major accounting firm calls and offer you a job, starting at $100,000 a year, beginning June 1. You respond by saying, "Nah, I'm going to work on my surfing this summer." The next day you come to your senses and call back, accepting the offer. Is there a contract?
There is no contract since you rejected the offer at the beginning.
On August 1, Carol promises to give her son $10,000 if he earns an "A" in his business law course. The son earns an "A," but she refuses to pay him, stating she was just trying to teach him a lesson. If he sues, claiming there was a valid contract, will he win his claim?
There was mutual assent and consideration.
Buy Haiku but past owner opens up a new Sushi place right next door.
This is a restraint on trade and is illegal.
Phil says to the auto dealer, "Deliver the car to my son, and I'll pay for it."
This is an original promise, therefore, the SOF does not apply and there does not have to be anything in writing.
Mo and Holmes enter into an oral contract by which Mo promises to sell and Holmes promises to buy Blackacre (a piece of land) for $10,000. Mo repudiates the contract by writing and signing a letter to Holmes in which she states accurately the terms of the bargain, but adds "our agreement was oral. It, therefore, is not binding upon me, and I shall not carry it out." Thereafter, Holmes sues Mo for specific performance of the contract. Mo interposes the defense of the statute of frauds, arguing that the contract is within the statute and, hence, unenforceable. What result? Discuss.
This is enforceable because Mos specifies the parties, states the terms of the bargain, and then signs it.
Sally calls Bob and says, "I will sell my 1966 Mustang convertible to you for $3,000." Bob replies, "Would that include the trunk-mounted spare tire?" At this moment, is the original offer now off the table and unable to be accepted? Why?
This was just an inquiry. Offer is still on the table.
Steve tells Barbie, "Unless you sign this agreement, I will tell your husband that we're having an affair." Barbie, believing Steve to be serious, signs the agreement.
This would not be a contract. There was duress.
"Will you buy my automobile for $3000?" Contract?
This would qualify as intent
I make an oral contract with nike for $500 shoes. I don't go through with it. In court, I say "our oral contract was not in writing and is not enforceable"
This would then be enforced because of the admission in legal proceedings.
Hannah orally agrees to sell her house to Brett for $175,000. If she delivers the deed to Brett with the expectation of payment in two weeks and he fails to pay, most courts will not enforce the contract since it was not in writing. T/F?
True
Rest Well Hotel orally ordered 1,000 blankets monogrammed with its initials, RWH, from TriColor Textiles. TriColor had just finished monogramming the blankets when Rest Well called and canceled the order. TriColor will be able to enforce the agreement even though there was no writing. T/F?
True
Suppose that 17-year-old Betsy signs a contract to buy a $400 stereo. The following week she picks up the stereo and pays for it in full. Four months later she turns 18, and two weeks after that she disaffirms the contract by returning the stereo and demanding her money back. Is her disaffirmance effective?
Two week is a reasonable amount of time so she will get her money back.
Timmy takes bday gift and buys $1000 card. Can he return it?
Yes, since he is a minor they will have to give back his consideration of $1000.
Exculpatory Clauses
You enter into this contract, you will not sue us. This clause can not be ambiguous.
Physical Compulsion
a party compels another to agree to a contract through actual physical force. Courts would treat this as a void contract (no contract at all)
Output Contract
a producer agrees to sell its entire production to the buyer, who in turn agrees to purchase the entire output Ex: an almond grower enters into an output contract with an almond packer: thus the producer has a "home" for output of nuts, and the packer of nuts is happy to have a sure-fire supply, even though it may have to store away a glut.
Illusory Promise
a statement that is in the form of a promise but imposes no obligation on the maker of the statement, it may contain words such as "desire" or "want" or "wish to buy," making performance entirely optional.
Acceptance following Prior Rejection
acceptance sent after the rejection is sent is not effective unless the acceptance is somehow received first by the offeror
Intoxicated Persons
contracts of an intoxicated person are voidable by the intoxicated person only if the other party had reason to know that because of the intoxicated person's condition, that person was unable to understand the nature and consequences of the transaction. If they disaffirm, they must give back whatever they received in SAME condition.
Death or Incompetency
death or incompetency of either the offeror or the offeree terminates an offer because a dead person or an incompetent person cannot legally accept an offer or enter into a contract.
Past Consideration
does not constitute the consideration necessary to form a contract
Willis and Leslie orally agree to the sale of a parcel of land for $50,000: one-half payable now as a down payment; one-half payable in 30 days at the time of closing when the title will be transferred. The buyer, Willis, is to have possession immediately. Willis pays Leslie $25,000, takes possession of the land, and starts building a house. At the time of closing, Willis has made a substantial beginning on the house. However, Leslie refuses to transfer the title, claiming the oral contract is not enforceable. This contract is:
enforceable, because Willis has partially performed the oral contract and made improvements on the land.
Rules of Thumb for Lapse of Time for a Contract
if the offer concerns a speculative item, like commodities futures or stock in a company, the offer will be open VERY briefly, if the parties are bargaining face to face, any offer made will normally be valid only during that discussion
16 year old Tommy buys $50 jeans. She wants it back. Abercrombie says it is reasonable to have jeans. What will court say?
judge will make her pay $25 for the jeans.
Non-fraudulent Misrepresentation
material, false statement by one party (usually the seller) that induces the other party to rely justifiably on the statement will generally allow the "victim" party to rescind the agreement (voidable) Ex: You have nice stereo but haven't used it in 1 year. Isaac comes wanting to buy the stereo. I say it works and Isaac takes it to use at a DJ event. Stereo doesn't work. Isaac has ability to rescind contract. - Key part is "material" nature of of false statement
Unilateral Mistake
one of the parties is mistaken about a material fact, the general rule is that the contract is still binding. Ex: Wife doesn't go to buy car, she makes certain demands. Dude doesn't get car with all demands, takes car back, can't get out of it since only one person was mistaken.
Excusable Ignorance
one of the parties to the agreement is relatively innocent (had no reason to know the agreement was illegal) the courts may allow that party to receive their consideratio
Duress
one party threatens to do some wrongful or unlawful act unless the other party enters into a contract.
Undue Influence
one person (the dominant party) takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person (the servient party) to enter into a contract Ex: Neugebauer vs. Neugebauer case.
Subsequent Illegality
performance or subject matter of an offer becomes illegal after the offer is made, but before it is accepted, the offer is terminated.
Statute of Frauds
rule of statutory law requiring certain types of contract to have a writing in order to be enforceable.
Requirements Contract
seller agrees to supply the buyer with as much of a good or service as the buyer wants, in exchange for the buyer's agreement not to buy that good or service elsewhere. Ex: Dominoes pizza offers to supply the Drake CBPA with all of its pizza needs for the year, at $5 a pizza.
Contracts within SOF
1. Promises to answer for the duty of another (suretyship provision) "if he doesn't pay, I will" 2. Promises of an executor or administrator to answer personally for a duty of the decedent whose funds he is administering (executor-administrator provision) 3. Agreements upon consideration of marriage (marriage provision) 4. Agreements for the sale of interest in land (land contract provision) 5. Agreements that cannot be performed within one year from the date of their making, (one-year provision) 6. Finally, the UCC requires that contracts for the sale of all other personal property for $500 or more must be in writing.
If within SOF, Note must have:
1. specify the parties to the contract; 2. specify with reasonable certainty the subject matter and the essential terms of the unperformed promises; and 3. be signed by the party to be charged or by her agent ("signature" can be initials or name, typed or printed, anywhere on the page).
Exceptions to Unilateral Mistake
1.) 1 party made mistake about material fact and other party knew or had reason to know 2.) Mistake was caused by clerical error that other party should have known was a mistake 3.) Mistake was so serious that it was unconscionable
Elements of Fraud in the Inducement
1.) A false representation of the facts (Ex: Cereal box ring. Tell someone it's real gold.) 2.) That is material (likely to induce a reasonable person to manifest his/her assent or the maker knows it would be likely to induce the recipient to do so.) Ex: Say that stereo works, I tried it. 3.) Made with falsity and the intention to deceive (can consist of actual knowledge, lack of belief in the statement or reckless indifference to truthfulness) Ex: Brooke claims cereal box ring is gold 4.) Which representation is justifiably relied on
Elements of Undue Influence
1.) Susceptible to Undue Influence (old person, "slipping", etc.) 2.) Opportunity to Exert Undue influence (confidential relationship, often people close to you) 3.) Disposition to exert undue influence ("don't tell anyone about this contract") 4.) Result that exerts undue influence (someone clearly taking advantage of other party)
Counteroffer
A counteroffer terminates the original offer. If it is a mere inquiry about possibility of new terms, then this is not a counteroffer. "Mirror Image" Rule: acceptance must be a mirror image of the offer. Ex: "I wish to still consider your original offer, but would you be willing to take this instead?" - not a counteroffer
Fraud in the Execution
A misrepresentation that deceives the other party as to the nature of a document evidencing the contract; renders the agreement void (extremely rare). Ex: Make contract saying Peyton Manning will give you his Porsche and then ask him for his signature
Sixteen year old Jaden Smith buys a fancy moped from Slick Willy's Moped Shop for $5000 by signing a contract where he agrees to pay $155 a month (at 7 percent interest) for three years. He drives the moped off the lot and uses it for a week. A. Before he even makes his first payment, he changes his mind and decides he doesn't want the moped. What happens to the moped? B. What if he wrecks the moped and the moped is reduced to smithereens. Then he decides he wants to disaffirm the contract. Under the majority rule, what happens?
A. Since he is a minor, he can disaffirm. B. In most states, he can still return it.
Al is a merchant buyer in Cleveland. He contracts over the telephone to purchase $6000 worth of spare aircraft parts from Goldstein, a merchant-seller in New York City. Two days later, Goldstein sends a written confirmation detailing the terms of the oral contract, and Al receives the written confirmation. If Al does not give Goldstein written notice of objection to the contents of the written confirmation within 10 days of receipt, can Al raise the SOF as a defense against enforcement of the contract?
Al cannot raise the SOF as a defense since he didn't object within 10 days.
Quasi Contract
- the defendant did not make any promise, but did receive a benefit from the plaintiff and it would be grossly unfair to let him benefit without compensating the plaintiff. - A quasi contract is not actually a contract because it is based neither on an express nor on an implied promise. - (1) a benefit given to the defendant by the plaintiff; (2) an appreciation or knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances which make it unfair for him to keep the benefit without compensating the plaintiff. Ex: You watch someone accidentally fix your driveway instead of neighbors. It is unfair for you to take driveway without payment.
Advertisements
-Generally not considered as offers -Exception: Lefkowitz vs. Great Minneapolis
Contracts related to an interest in land
All promises to transfer, buy, or pay for an interest in land must be in writing Exception 1: If the seller completely performs her side of a contract for an interest in land, a court is likely to enforce the agreement even if it was just an oral agreement. Exception 2: The buyer of land may be able to enforce an oral contract if the buyer (1) paid part of the purchase price and (2) either entered upon the land (moved in) or made improvements to it
Effective Moment of Acceptance
An acceptance is usually effective when it is sent, or upon dispatch true unless (1) the offer specifically states otherwise (the offer states that the acceptance must be received by a certain date) or (2) the offeree responds by some unauthorized means Ex: Person sends acceptance on a pigeon If sent by unauthorized means, acceptance only occurs when it is received by offeror
Essentials of an Offer
An offer is a definite proposal made by one person (the offeror) to another (the offeree) indicating a willingness to enter into a contract. 1.) Offeree must know about offer to accept it 2.) Offer must be communicated to offeree in intentional manner 3.) Offer must be made by offeror
Oral Settlement of Undisputed Debt
An oral settlement to accept a lesser amount of money than the full matured debt is not sufficient consideration.
Prof and wife get married when 22. They had very little in assets. Married 18 years now, what will happen if they get a divorce?
Assets will be split 50/50.
Mutual Mistake
Both parties are mistaken as to the same set of facts. If the mistake relates to a basic assumption on which the contract is made and has a material effect on the agreed exchange, then it is voidable by the adversely affected party
Fraud in the Inducement
Constitutes a material, but false, factual representation that the maker either knows is false or asserts recklessly without knowing the truth. The maker must intend for the other party to rely on the misrepresentation and the other party must reasonably rely and suffer damages
Unilateral Contract
-a promise is exchanged for an act. -the offeror wants a performance to form the contract—the offeror wants the offeree to actually do something, not just to promise to do something. -Because the offeree is under no obligation to actually do the act called for by the offeror, the offeror can revoke the offer at any time before performance UNLESS the offeree has begun to perform, then the offeror must hold the offer open for a reasonable time to allow the offeree to complete the performance -Ex: Will pay $50 to whoever will mow my lawn
Bilateral Contract
-two promises are exchanged and each party is both a promisor and a promisee -If the contract is not clearly bilateral or unilateral, the courts presume that the parties entered into a bilateral contract. -With a bilateral contract, the offeror wants someone to enter into a contract of promises "I agree to do this if you agree to do that"
Contract
1) Mutual assent - a valid acceptance of a valid offer. 2) Consideration 3) Illegality 4) Capacity
Fred and Fich enter into contract. Fred builds him shed and Fich pays $100,000. Fich has lots of debt, shed burns down, Fich has nothing. He goes bankrupt. Court determines he doesn't owe Fred anymore. 1 year later, Fich promises Fred he will pay him. What happens?
Court will now enforce Fich to pay Fred.
J.T. Tidwell entered into an oral contract with Robert Anthony for the purchase of 100 head of cattle at a price of $500 each. When the oral contract was made, Tidwell gave Anthony a check for $1000 as "earnest money or good faith money towards the purchase of the cattle." Anthony sold the cattle to someone else. Tidwell sued, asking the court to either compel Anthony to perform the contract or to pay damages that Tidwell suffered from the alleged breach of contract. Was there an enforceable contract? If so, for what? If not, why not?
Courts will enforce this deal up to $1000. Tidwell will get 2 cows.
Before class starts, Liz announces to the class that she will pay $10 to rent someone's pencil for the class period. Nobody gives her a pencil, so she starts to cry. While she is crying, Jackie walks into the classroom and sits down. Jackie asks her why she is crying. Liz explains how she forgot her pencil so now she is going to fail the exam. Jackie feels bad for her and loans her a pencil. Liz doesn't say anything about the $10. Later, Jackie finds out about the $10 offer and wants her money, does she get it?
LIZ DOES NOT OWE HER $10 BECAUSE JACKIE DID NOT KNOW OF THE OFFER
Barney says "Lisa marry me and I will give you a Picaso." Lisa marries and doesn't get picture. She sues.
Lisa will not win because there was nothing in writing.
Jim's daughter, Abbey, is about to start college. Jim calls "Lofts R Us" and tells them to deliver a $100 bunk bed to Abbey's dorm room. Jim says, "I will pay you the $100 for the bunk bed." Neither Jim nor Abbey pays for the bunk bed. If Lofts R Us sues Jim for the $100, will it recover even though it was an oral contract? Why?
Lofts R Us will recover because this was an original promise, therfore, it was not in the SOF and does not need a written note to be enforced.
Minors
Minors must return any consideration they received regardless of its condition
Matilda has a veritable wonderland of lawn ornaments in her front yard. Sandy, passing by one day, asks Matilda, "Would you consider selling that lawn ornament which is the big pink flamingo wearing the sombrero for $150." Matilda replies, "I accept." Has a contract been formed?
NOT AN OFFER SINCE SANDY SAID "WOULD YOU CONSIDER"
IN 2021, Sue Peter for $500. Win?
No, court will say that you waited too long. If I tell Fich after that I feel bad and will pay, court will reenforce debt again.
Aaron offers to sell Ted his TV and tells Ted that he has 10 days to accept the offer. One week later, Ted observes the TV in Celia's house and is informed that Celia purchased it from Aaron. The next day, Ted sends to Aaron an acceptance of the offer. Contract?
There is NO contract because Aaron's offer was revoked when Ted learned of Aaron's inability to sell the TV to Ted because he sold it to Celia.
Promissory Estoppel
the defendant makes a promise that the plaintiff relied on. A plaintiff who has reasonably relied on the defendant's promise can sometimes obtain some type of recovery 1. There must be a clear and definite promise 2. The promisor reasonably should have expected the promisee to rely on the promise, 3. The promisee did rely on the promise in a reasonable way 4. And injustice can be avoided only by enforcing the promise Ex: Buffet promises to give Drake a gift, Drake spends money improving campus, Buffet never shows BAD Ex: Megan tells David she will give him $1 million tomorrow. David goes and spends a ton of money, Megan doesn't pay. THERE WAS NO REASONABLE RELIANCE
Capacity
the legal ability to enter into a contract.
Option Contract
the offeror is bound to hold open an offer for a specified period of time. Ex: "If I buy you lunch today, will you promise to keep offer open for 1 week?"
Kurt was a recent college graduate who wanted to build a housing development in Ankeny. He needed $25,000 to complete the project he was working on, so he went to his old college professor, Crabtree, for help. Crabtree said he would see what he could do about getting Kurt a loan. Crabtree spoke with his good friend Travis, telling him that Kurt was a highly responsible person and that he would be certain to repay any money loaned. Travis trusted Crabtree, but wanted to be sure of his money. Crabtree assured Travis that if for any reason Kurt did not repay the loan, he (Crabtree) would repay it in full. With that assurance, Travis loaned Kurt the money. Kurt never repaid the loan and disappeared. Travis approached Crabtree and asked for the money. Crabtree refused to pay, so Travis sued. What result?
Crabtree is not liable because there is nothing in writing. This is an example of Suretyship, which is within the SOF and requires something written to be enforced.
Danielle overhears Frank offer to sell Greg a boat for $1,000. Greg declines the offer, but Danielle immediately says "I accept." Frank does not want to sell the boat to Danielle because he thinks Danielle is a complainer and will find something to complain about regarding the sale.
DANIELLE CAN'T ACCEPT BECAUSE OFFER WAS NOT INTENDED FOR HER.
Destruction of Subject Matter
Destruction terminates the offer Ex: Car which has been totaled after an offer cannot be sold under original offer
Eloise sues Grover to enforce an alleged oral contract to sell a parcel of land in Marshall County. She claims they struck a bargain in January. Grover defends based on the statute of frauds, saying that even if the two did reach an oral agreement, it is unenforceable. Eloise proves she paid Grover 10% of the purchase price and that in February she began excavating on the lot to build a house.
Eloise has established part performance and will be allowed to enforce her contract in a court of law. The fact that Eloise entered upon the land and begin building on it is compelling evidence that the two parties had reached an agreement.
Diane orally agrees to buy 1000 bags of Hedgehog flavored potato chips from Bob for $1000. Bob delivers 600 bags of potato chips to Diane, who accepts them.
Even though the contract was not in writing, it is enforceable to the extent of 600 bags of chips ($600)—those received and accepted—but it is unenforceable to the extent of the remaining 400 bags of chips ($400)
Contract for the sale of GOODS $500 or more MUST be in writing to be enforced
Exception 1) Admission in legal proceeding 2)Specially manufactured goods - goods not suitable for sale to others OR seller has substantially begun the manufacture of the goods 3)Partial Performance - Payment has been made and accepted OR goods have been delivered and accepted 4)UCC Written confirmation rule - both parties are merchants, existing oral agreement, one party sends written agreement to the other party with reasonable time, other party does not object within 10 days
Ratification
Express: former minor states, either orally or in writing, that he or she intends to be bound by the contract entered into while a minor. Implied: former minor takes action, after reaching the age of majority, consistent with an intent to ratify the contract.
In order to be enforceable, any lease involving real property must be in writing. T/F?
False
Mike hires Stephen to paint his house. The contract stipulates that Mike will provide the paint and equipment and Stephen will provide the labor for which he will be paid $1,000. This contract must be in writing according to the Statute of Frauds. T/F?
False
Sara and Holly discuss a large order for cases of cream cheese that Holly is considering buying from Sara's company. During the meeting they come to an agreement and Holly writes on a sheet of paper "I, Holly Hutchinson, agree to purchase 10,000 cases of cream cheese from Sara at $99.99 each for delivery June 8, 2014." She then hands it over to Sara. If Holly fails to honor this agreement, will a court find that writing is sufficient to bind her to the agreement under the statute of frauds? Why?
Holly will be binded to the agreement. Sara will not because she didn't sign anything.
Your friend, Felicity, owes you $90,000, but she refuses to pay. She should have paid you last week, but she didn't. Finally, when you are desperate, Felicity offers you a cashier's check for $60,000, so long as you accept it as full settlement of the debt. To get your hands on some money, you orally agree and cash the check. The next day you sue Felicity for $30,000. Who wins?
I win because oral agreements are not binding. She would have to sign something.
Intent
If a communication creates in the mind of a reasonable person in the position of the offeree an expectation that his acceptance will create a contract, then the communication is an offer. If there is no immediate power of acceptance, then there is no offer Ex: "if you paint my house I will pay you $3000" suggests that the offeror intends to and is making an offer. Bad Example: "Would you pay ____ for this item?" or "I'm going to sell my car for $400" do not suggest that an outright offer is being made.
Lapse of Time
If the offer states that it will only be open a certain length of time, the offer will terminate when that time expires. If the offeror does not indicate how long the offer will remain open, the offer will remain open for a reasonable amount of time.
Sammy tells Bernie, "If you sign this contract, I won't tell everyone that you have AIDS." Bernie, who has AIDS and wants to keep the information private, signs the agreement.
Improper threat
Improper Threat
Improper threat, leaving party with no option. Ex: One party threatens to instigate criminal lawsuit
Derrick bets $100 on Drake fball gamme. B4 game he goes and asks for money back. What happens?
In some states, courts can help get him his money back. Normally gambling is illegal and courts will not help enforce anything for either party for anything illegal.
Fichner pays janitor $20 to clean white board.
Janitor was already required to do that work, so this is a pre-existing obligation and does not work as consideration.
Harry puts knife on Troys throat, forces him to give yacht for $. Next day Troy sues since no contract. Who wins?
No. In order to have a contract there must be mutual assent and consideration. The simplest way to show consideration is to explain how both parties to the contract are exchanging a legal detriment to induce the other party to agree to the deal. This is satisfied in this situation because Harry is suffering a legal detriment of giving up cash in exchange for Troy's legal detriment of giving up his yacht. In order for there to be mutual assent we need to find a valid acceptance of a valid offer. In this case it looks like there is an acceptance when Troy says "Yes" to the offer of "I want to buy your yacht for only ten dollars, do you accept?" However, the law says that using physical compulsion to sign a contract makes that contract void. Because there was physical compulsion this was not a valid contract.
Marge telephones Vick and leaves a message on his answering machine: "I'll pay $50 for your business law textbook from last semester. I'm desperate to get a copy, so I will assume you agree unless I hear from you by 6:00 p.m. tonight." Once 6:00 p.m. passes, is there a valid contract? Why or why not?
No. Vick must approve the offer.
Kerry offers to give his skis to Beth at the end of the Ski season. Beth says, "I accept." At the end of the ski season, he gives his skis to someone else. Based on these facts, can Beth successfully sue him for breach of contract? Would Beth win a claim for Promissory Estoppel? Would Beth win a claim for Quasi Contract.
Not a contract because no consideration. Promissory Estoppel: Promise? Yes Promisor expected promise to rely? Yes Promisee relied on them? Yes Injustice? No Quasi: Benefit given to defendant? No
Jim offers to sell his baseball card collection to Joe for $1000. Joe says, "I will give you $500 for them." At common law, is Jim's offer still valid?
Not valid since Joe made a counteroffer.
Revocation of an Offer
Offeror can revoke their offer anytime before it has been accepted, even he has already stated it would remain open for a certain amount of time. Revocation is effective when received by offeree
Rejection
Once the offeror receives the rejection, the offer terminates, and the offeree cannot change his mind and accept. The offeree does not have to formally reject the offer, but may simply let the offer lapse without taking action.
Phil says to the auto dealer, "Deliver the car to my son. If he does not pay for it, then I promise to pay."
Phil is secondarily liable, and his promise must be in writing to be enforceable.
Agreements that cannot be performed fully in 1 year
Possibility Test: if it can possibly be completed within one year, than it does not need to be in writing.
Unconscionable Contracts
Procedual Unconscionability - negotion process was not fair Substantive Unconscionability - relates to actual terms of the contract. Oppressive or unfair provisions.
Prof asks RJ to sing at new years in 2017. Prof will pay $100,000. B4 2017, RJ calls prof and the prof says no, not anymore. RJ sues.
RJ will not recover because there was no agreement in writing.
Susan, when trying to sell her land, tells the potential buyer that the property is 5.5 acres. In reality, Susan has no idea how many acres her land is, but she made this assertion to try to induce the potential buyer to buy her land
Reckless Inducement
Sam hires Chris to drive him to Chicago on Saturday for $100. Just before they leave, Sam says "I'll give you an extra $50 if you go through with this." Chris drives Sam to Chicago. Once they get there, Sam pays him $100. If Chris sues Sam for the extra $50, will he be successful? Why or why not?
Sam gives up extra $50, but Chris has no NEW legal detriment since the previous contract stated he drive to chicago on that day. Chris will not be successful.
Silence as Acceptance
Silence does not work as acceptance
Imagine that Alexandra promises to give Rasputin $1000 if he stops drinking alcohol for one week. If Rasputin does so, can he enforce Alexandra's promise?
Since both parties give up a legal detriment, then this would qualify as consideration and the promise can be enforced.
Conscious Ignorance: Pick up random cool rock. Sell it to Lauren for $1. Lauren goes to jewelry store, finds out it is a diamond and has worth of $100,000. I find out, I want rock back and will give her $1 back.
Since neither person knew of risk of mistake, the contract cannot be avoided.
I give Megan $1000 to buy her farm for $1 million. What happens if Megan later declines contract?
Sof contracts with land require everything to be in writing so the contract will not be enforceable. I should get a restitution of $1000, however.
Stipulated Provisions in an Offer
Sometimes an offer may specify what method of communication is to be used. The acceptance must be by this method to be valid.
Conditional Acceptance - "I accept your offer, but only if you agree to add this additional or different term."
Terminates the contract
a person with a substantial financial interest in a corporation may promise orally to pay a debt of the corporation if the corporation cannot pay.
The law does not extend the protection of the SOF to this type of guarantor, because he is intending primarily to benefit himself, not the debtor corporation.
Walker purchased a cow (named Rose) for $850, with the intent that he could breed the cow and sell her offspring. Unfortunately, after a few years, Rose never got pregnant and never produced any calves. Because Rose was worth much less as a barren cow and was not serving Walker's purpose, he entered into an agreement to sell Rose for only $80 to Sherwood, who knew that Rose was barren. A few days later, when Sherwood came to pick up the cow, the two men discovered that she was pregnant. Walker refused to depart with Rose, and Sherwood sued to enforce the deal. Walker defended by claiming that both parties had made a mistake and that the contract was voidable. Who is correct? Why?
The mistaken set of facts has a material effect, therefore, Walker can void the contract.