Chapter 15 Business Law, business law test bank 15, BLaw Exam 2 12-16, Offers and Counteroffers, BLAW quiz 4, Exam 2 Terms, Bus Law - Chap 13., Exam 2

Which of the following is a way in which an offeree can manifest intent to enter into a bilateral contract? A. By performance only. B. By a return promise only. C. By performance or by a return promise. D. By performance, by a return promise, or by a counteroffer. E. By a signed writing only.

C. By performance or by a return promise.

Which of the following references the requirement that a contract not be either illegal or against public policy? A. Consideration B. Capacity C. Legal object D. Illegal prohibition E. Ethical requirement

C. Legal object

In a _____________ contract, the offeror wants a performance to form the contract. A. Trilateral B. Bilateral C. Unilateral D. Complete E. Anticipatory

C. Unilateral

Federal Law on E-Signatures and E-Documents—E- SIGN - EXCLSUIONS

CERTAIN DOCUMENTS ARE EXCLUDED FROM E-SIGN: Court Papers Divorce Decrees Evictions Foreclosures Health Insurance Terminations Pre-Nuptual Agreements Wills (UCC contains additional limitations)

Example of Browse-Wrap Agreement: Craigslist

Can search, find info , contsct people Don't make you specifically agree before using ( have terms and conditions at bottom of web page)

Which of the following is generally true if no means of communicating an acceptance is specified in an offer? A. The acceptance must be in writing. B. The acceptance must be made verbally either by telephone or in person. C. No valid contract may be entered into because the offer must specify a means by which to accept. D. Acceptance may be made by any reasonable means. E. Acceptance must be made orally or in writing within twenty-four hours.

D. Acceptance may be made by any reasonable means.

Which of the following are examples of people who do not have the capacity to enter into legally binding contracts? A. Those under the age of majority. B. People suffering from mental illness. C. Intoxicated persons. D. All of the above. E. None of the above. Anyone can enter into a legally binding contract.

D. All of the above.

If a person wishes to ensure that an offer will be held open for a set period of time, the person may do so by entering into a[n] ______________ contract with the offeror. A. Clear B. Explicit C. Unrevokable D. Option E. None of the above

D. Option

Business Tip: Avoid Accidentally being Bound

DRAFT CAREFULLY!! 1. Include points of disagreement in your drafts; and/or 2. Add a disclaimer --> IN BODY OF LETTER - NOT JUST ON SIGNATURE LINE Preventing legal disputes: one ay to avoid being bound its to include in the writing the points of disagreement, as well as those points on which you and the other party agree - you could also add a disclaimer into the memo stating that although you anticipate entering a contract in the future, neither party intends tobe legally bound to the terms that were discussed

Darryl is jaywalking in a jurisdiction that applies contributory negligence. Slick sees Darryl in the street, notices that he is not in the crosswalk, and proceeds to hit Darryl with his vehicle because he believes that Darryl should be taught a lesson about how to cross the street. Slick does slow down somewhat and only causes Darryl some significant bruising, but Darryl is angry and sues. Which of the following is most likely to happen in a contributory negligence jurisdiction?

Darryl will be able to recover despite proof of contributory negligence on his part because Slick had a final clear opportunity to avoid the action that injured Darryl.

Concurrent Condition

Exists when the parties are to perform their obligations for each other simultaneously. Ex.) Sale of Goods - Buyer paying upon delivery and seller delivering goods and expecting payment at that time

Mary has a pet shop and orders 50 packages of dog food for puppies from a supplier for a total cost of $1,000. Later she calls the supplier and changes the order to food for adult dogs. When 50 packages of puppy food arrive, Mary complains. The supplier tells her that the modification was not valid because nothing was put in writing. Mary says there was never an agreement that a writing was necessary for a modification. Which of the following is the correct resolution of the dispute?

Mary is correct because under the circumstances, there was no requirement of a writing to modify the agreement

Consequential Damages

Losses suffered by the non-breaching party which are foreseeable at the time the contract was entered into by the parties -Not liable for damages that were not foreseeable

Unequivocal Acceptance

Mirror Image Rule To exercise the power of acceptance effectively the offeree must accept unequivocally - this is the mirror image rule When an offer is rejected, it is terminated

Liquidated Damages

Monetary compensation for a loss, detriment, or injury to a person or a person's rights or property, awarded by a court judgment or by a contract stipulation regarding breach of contract.

An illusory promise is not a consideration True False

TRUE

QUESTION: Most advertisements are treated as "invitations to negotiate" and, as such, are NOT considered "offers." True False

TRUE

Which of the following is the majority rule regarding a minor's misrepresentation of his or her age?

That misrepresentation does not affect the minor's right to disaffirm the contract.

Which of the following was the result in the case Mast Long Term Care v. Forest Hills Rest Home, covered in the Case Nugget, in which the defendant's rest home claimed it was not bound by an agreement to buy all its drugs not commonly stocked from the plaintiff?

The agreement contained sufficient consideration on the part of the plaintiff and defendant.

Exception to Preexisting Duty Rule:

UNFORESEEN DIFFICULTIES (But assumption of risk may invalidate the exception) The preexisting duty rule is intended to prevent extortion and the so called hold up game. Nonetheless if during performance of a contract extraordinary diffivulites arise that were totally unforeseen at the time the contract was formed a court may allow an exception to the rule The difficulties must be trueyl unforeseen and not be the types of risks ordinarily assumed in business

COMMUNICATION OF ACCEPTANCEP

Unilateral offer has different rules In a bialateral contract - communication of acceptanc is necessary because acceptance is in the form of a promise ( not performance), and the contract is formed when the promise is made ( rather than when the act is performced Because a unilateral contract calls for the full performance of some act, acceptance is usually evident and notification is unnecessary. Nevertheless, exceptions do exist such as when the offeror requests notice of acceptance or has no way of determining whether the requested act has been performed

In a[n] _____________ contract, the offeror wants a performance to form the contract.

Unilateral. In a unilateral contract, the offeror wants the offeree to do something, not to promise to do something.

The UCC permits requirement, but not output, contracts for the sale of goods.

false

Agreement: Communication of the Offer

- Offer MUST be communicated to the offeree - 3RD REQUIREMENT OF VALID OFFER EX: tolson advertises a reward for the return of her lost cat. Dirk not knowing of the reward finds the cat and returns it to tolson. Ordinarily dirk cannot recover the reward b/c an esstial element of a reward contract is that the one who claims the reward must have known it was offered - dirk would sometime be able to recover on the basis that it would be unfair to deny him the reward just because he didn't know about it

Rejection or counter offer by offeree

- Once an offer is rejected it terminates the offer and cannot subsequently be accepted. - A Counter-Offer is a rejection of the original offer with a proposal for different terms Ex.) Thank you for your offer of $75,000 annual salary however I want $80,000 plus an allowance for a car.

Why are contracts important?

- Predictability & stability - CONTRACT LAW ADD DETERANT EFFECT SO THAT MANY PEOPLE DON'T BREACH - cost ben analysis if do breach Predictibility and stability for for the buyer and the seller Contract law ensures the parties to private agreements that the promises they make twill be enforceable

Examples of consideration

1) A benefit to the promise (receiving payment, goods, services, etc 2) A detriment to the promisor (refraining from doing something which the promisor has the right to do) 3) A promise to do something 4) A promise to refrain from doing something

Types of contracts subject to the Statute of Frauds

1) Contracts which cannot be possible to be performed in 1 year 2) Contracts made in consideration of marriage 3) Contracts for one party to pay the debt of another party 4) contracts related to an interest in land 5) contracts for the sale of goods in excess of $500.

3 Elements of the Offer

1) Serious intent on the part of the Offeror to be bound by an agreement 2) Reasonably definitive terms 3) Communication of the offer to the Offeree.

Equitable Remedies

1) rescission and restitution 2) specific performance 3) injunctive relief

Which of the following is the reason the Uniform Commercial Code was drafted? A. Different states had different laws governing contracts which did not result in a smooth flow of interstate commerce. B. Some states had no law governing contracts. C. Federal law governing contracts was difficult to apply. D. The Uniform State Act on laws was not working. E. The Restatement of the Law Second, Contracts was not being evenly and fairly applied.

A. Different states had different laws governing contracts which did not result in a smooth flow of interstate commerce.

If the subject matter of an offer is destroyed, the offer _______. A. Immediately terminates B. Is extended for seven days C. Is extended for fourteen days D. Is extended for twenty-one days E. Is extended for thirty days

A. Immediately terminates

In which of the following does a contract arise not from words but from the conduct of the parties? A. Implied contracts B. Express contracts C. Liquidated contracts D. Bilateral contracts E. Unilateral contracts

A. Implied contracts

If a _____________ misunderstanding between the parties exists, and as a result of that misunderstanding the parties do not really come to a meeting of the minds, there is no contract. A. Mutual B. Unilateral C. Comprehensive D. Subjective E. Reasonable

A. Mutual

Classification of Contracts Contract Performance

"Executed" Contract - A contract that has been fully performed by both parties. "Executory" Contract - A contract that has NOT yet been fully performed by one or both parties.

Extrinsic evidence

- if a contract term is abigous a court may consider extrinsic evidence - outside evidence - or it may interpret the ambiguity against the party who drafted the contract term. Extrensic evidence is any evidence not contained in the document itself, ad may include the testimony of the parties, additional agreements or communications ot other information relevant to determining thr parties intent

SUBSTITUTE METHOD OF ACCPETANCE

- if the offeror authorizes a particular method of acceptance but the offeree accepts by a different means, the acceptance may still be effective if the substituted method serves the same purpose as the authrozied means. The use of a substitute method of acceptance is not effective on dispatch though and no contract will be formed until the acceptance is received by the offeror

Objective theory of contracts

- the view that contracting parties shall only be bound by terms that can be objectively inferred from promises made In contract law intent is determined by what is referred to as the objective theory f contracts , not by the personal or subjective intent or belief of a party --> the theory is that a party intention to enter into a contract is judged by outward, objective facts s interpreted by a REASONABLE PERSON rather than by the partys secret subjective intentions

QUESTION: Are "Browse-Wrap" terms usually enforceable or unenforceable against the buyer/user of a website as binding contract terms? Enforceable Unenforceable

--> On exam pretend youre a company choose terms best for you UNEFORCEABLE

Mailbox Rule

-Acceptance is valid when it leaves the offeree's control -Revocation is valid only when actually received by offeree

Exceptions to Parol Evidence Rule

-Contracts which have been substantially modified -Contracts conditioned upon orally agreed terms -Contract which is 'non-finalized' in that some of the agreement is in writing and some is oral. -Contract contains ambiguous terms that significantly affect interpretation or rights -Contract that is incomplete or missing critical information -Contract with obvious typographical errors

Additional Information on Implied Contracts:

. Conditions Required for Recognition of an "Implied Contract" 1. Plaintiff furnished a good or service; 2. Plaintiff expected payment; 3. Defendant had an opportunity to reject the services or property, but he did not

Recovery under quasi-contract may be obtained when:

1) A benefit is conferred upon the Plaintiff by the defendant 2) The Defendant has knowledge of the benefit bestowed 3) The defendant retains the benefit bestowed under conditions where it would be unjust to do so without payment.

Exceptions to the Statutes of Frauds

1) Admission 2) Partial Performance 3) Promissory Estoppel

Common Types of "Online" Acceptances:

1. Click-On Agreements; 2. Shrink Wrap Agreements (not technically "online"; applies to many hard copy software purchases); 3. Browse Wrap Terms The restatement (second) of cntracts - a complication of common law contract principles - states that parties may agree to a contract written or spoken by words or by action or by failure to act

Contract Law flows from 2 different areas

1. Common Law 2. Uniform Commercial Code

The purpose of reviewing a contract offer with the purchaser (the offeror) is to ensure that:

1. his/her wishes are expressed in the contract 2. he/she understands the financial obligations

Details of a written counteroffer can be presented in which of the following ways?

1. on a preprinted form specifically used for counteroffers 2. on an addendum attached to the original contract 3. by striking through changes and signing and dating the changes

2 Types of legal damages a person can recover

1.) Compensatory 2.) Consequential

Carrie promises Tim she will clean his house and in exchange, Tim promises to pay Carrie $50. This is an example of what type of contract?

A bilateral contract

Which of the following is true of an accord and satisfaction?

A debtor must pay the amount they have agreed upon in satisfaction

What is a contract?

A legally enforceable promise.

Which of the following would not be considered an example of consideration?

A promise to pay your employees as required by law.

Which of the following can be considered an example for a detriment to the promisee?

A promise to your football coach to refrain from riding your motorcycle during football season even though you love riding it.

Promissory Estoppel

A promise without consideration for which a party is liable. Ex) Girl's uncle promises to pay her $1000 next week if she buys the jewelry, a week later he changes his mind on that promise. -The court can force the Uncle to pay girl based on promissory estoppel

In a bilateral contract, the consideration for each promise is ______.

A return promise

Contracts

A set of promises which create a legally binding obligation. Legally enforceable agreements.

When an accord and satisfaction is at issue, the ______ is the new agreement to pay less than the creditor claims is owed.

Accord

In a unilateral contract, the consideration for a promise is ______.

Action

In a unilateral contract, the consideration for a promise is a[n] ____.

Action

Contracts: Adequacy of Consideration

Adequacy of Consideration: 1.) Courts USUALLY do not question adequacy of consideration —parties are free to bargain

The first element of any valid contract is the

Agreement -Consists of the offer and acceptance

Lapse of time or failure of other conditions stated in the offer

All offers will expire 'after a reasonable period of time" (unless a specific time frame is listed or provided with the offer).

Covenants not to Compete

An agreement in which one party agrees not to work for the other party's direct competition in a specified area for a certain amount of time

E - Signatures

An electronic sound, symbol, or process attached to or logically associated with a record and adopted by a person with the intent to sign the record. Examples: - E- Signatures (digitized—graphical image of handwritten signature) - Encrypted Digital Signatures - Names at end of E-Mail messages - A webpage "click" that includes the name of the person For an e signature to be enforceable the contracting parties must have agreed to use electronic signatures. For an electronic document to be valid it must be in a form that can be retained and accurately reproduced

Agreement:

An essential element for contract formation Definition of Agreement A mutual understanding or "meeting of the minds" between two or more individuals regarding the terms of the contract. Agreement is required to form a contract, regardless of whether it is formed in the tradional way by exchanging paper documents or created online by exchanging elecontroic messages or documents as many contracts are formed today An essential elemenet for contract formation is agreement - the parties must agree on the terms of the contract - agreement is evidenced by 2 events: an offer and an acceptance The law of contracts generally adhreres to the objective theory of contracts - the parties words and conduct are held to mean whatever a reasonable person in the offerees posotion would think they meant

Yolanda agrees to bathe and groom Wendy's dog, Fluffy Puff, for $30. Yolanda agreed to the price before seeing Fluffy Puff who is a chubby dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy Puff, the price will be $40. Wendy reluctantly agrees but tells Yolanda that she should not have been surprised that a dog named Fluffy Puff had lots of hair. Yolanda bathes and grooms Fluffy Puff, but Wendy will only pay $30. Which of the following is correct regarding Yolanda's entitlement to the extra $10?

Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory.

ATTRIBUTION AND THE EFFECT OF ERRORS

Attribution - under the UETA if an electronic record or signature is the act of a particular person the record or signature may be attributed to that person. If a person types her or his name at the bttom of an email purchase order the name will qualify as a "signature"and be attributed to the person whose name appears - EX letter head sometimes can be considered a signature Effect of errors - UETA encourages but doesn't require the use of security procedures ( such as encryption) to verify changes to electronic documents and to correct errors - parties cant avoid a transaction if they have benefited

QUESTION: Sally is building a house. She has asked contractors to submit bids for the work. Which of the following statements is correct? A - Sally's invitation to contractors to submit bids is valid offer, and the first contractor to submit a bid will be deemed to have accepted her offer; B- The bids each contractor submits are offers, and Sally can bind a contractor to a bid by accepting a contractor's offer

B- The bids each contractor submits are offers, and Sally can bind a contractor to a bid by accepting a contractor's offer

Why has the contributory negligence defense been replaced with a comparative negligence theory in most states?

Because of situations in which a plaintiff is barred from recovery due to minimal contributory negligence.

Which of the following are examples of consideration?

Both a benefit to the promisor and a promise to do something.

Which of the following damages are intended to reimburse a plaintiff for his or her losses?

Compensatory

Which of the following is what a person will receive in return for performing a contractual obligation?

Consideration

_____ is what a person will receive in return for performing a contract obligation.

Consideration

Value

Consideration requires legal benefit to the promisor or legal detriment to the promise. Legal benefit means receiving something of measurable value. That thing can be money, groceries, insurance, a promise not to sue, or anything else of value to the promise.

Sam promises his uncle, Bob, that he will lose 10 pounds and exercise every day during the spring semester in exchange for having his tuition paid for the fall semester. The uncle agrees; but after Sam has lost 10 pounds and exercised all semester, Bob refuses to pay saying that no contract existed. Which of the following is true?

Consideration was present, there was an enforceable contract, and Bob has wrongfully refused to pay.

Sameer promises his uncle, Farouk, that he will study every day and earn straight A's during the spring semester in exchange for having his tuition paid for the fall semester. Farouk agrees, but after Sameer studies all semester and receives straight A's, Farouk refuses to pay, saying that no such contract ever existed. Which of the following is true?

Consideration was present, there was an enforceable contract, and Farouk has wrongfully refused to pay.

Valid

Contract has agreement, consideration, legal object and contracting capacity

Legality

Contract's purpose must be LEGAL and not contrary to public policy

Which of the following contracts are usually voidable? -Contracts entered into as a result of fraud, duress, or undue influence. -Contracts entered into as a result of duress or undue influence, but not fraud. -Contracts entered into as a result of fraud or duress, but not undue influence. -Contracts entered into as a result of fraud, but not duress or undue influence. -Contracts entered into as a result of undue influence or fraud, but not duress.

Contracts entered into as a result of fraud, duress, or undue influence.

Conditional Contracts

Contracts which contain provisions which condition the party's performance are referred to as

Which of the following is true regarding the adequacy of consideration?

Courts seldom consider the adequacy of consideration but will do so if fraud is involved.

Contracts: Consideration 2. Bargained-For Exchange

Definition of Bargain-For Exchange: The item of value must be given or promised by the promisor (offeror) in return for the promisee's (offeree's) promise, performance, or promise of performance. --> Understanding does not necessarily mean agreement

OFFER

Definition of Offer A promise or commitment made by the offeror to perform or refrain from performing some specified act now or in the future.

Contracts: Consideration

Definition: VALUE exchanged in return for a promise or for performance in a contractual agreement

Types of Online Acceptances: Browse-Wrap Terms

Definition: A term or condition of use that is presented when an online buyer downloads a product but does NOT HAVE TO AGREE BEFORE INSTALLING OR USING THE PRODUCT - Terms and conditions are usually presented as a hyperlink to "Terms of Use," "Terms of Service," or "Terms & Conditions." --> User must click the hyperlink to read the terms/conditions, and does NOT have to expressly agree. Click on take affirmative step to click and agree Browase - never forced to expressly agree to use site Can also be done over the internet They are also unenforceable because they do not satisfy the agreement requirement of contract formation

In the absence of a time condition in an offer, the offer will expire _________. A. In forty-eight hours B. In seven days C. In thirty days D. In forty-five days E. After a reasonable amount of time

E. After a reasonable amount of time

Assent

Entering into a contract with the correct understanding and without force or threat. _______ is absent where there is a mistake, a misrepresentation, undue influence or duress

Contracts: Quick Preview Defenses to Contract Enforceability

Even if elements on previous slide are met, contract may be void IF: 1. A party did not voluntarily consent to enter the contract; OR 2. the form of the contract is improper

Silence IS NOT Acceptance (in MOST circumstances)

Even if the offer states "by your silence and in action you will be deemed to have accepted this offer In some instances hwever the offeree does have a duty to speak. If so his or her silence or inaction will operate as an acceptance. Silence may be an acceptance when an offeree takes the benefit of offered services even though he or she had an opportunity to reject them

A liquidated debt may be the subject of an accord and satisfaction True False

FALSE

A promise to do something that you are already obligated to do is generally a valid consideration. True False

FALSE

As a general rule, past consideration qualifies as consideration. True False

FALSE

Consideration is optional in every contract. True False

FALSE

One consideration in determining whether consideration is sufficient to support a contract for the sale of goods under the UCC is whether both parties received a good deal under UCC rules and principles. True False

FALSE

Bilateral contracts are a promise plus a requested action.

False. Bilateral contracts are a promise for a promise.

In relation to contracts, the term "consideration" pertains to parties acting in an ethical manner.

False. Consideration is the bargained-for exchange or what each party gets in exchange for his or her promise under the contract.

Quasi-Contracts

Forces the unjustly enriched party to make restitution for the products or services received, even in the absence of a written contract

Contract Classification

Formal contract vs informal contract

Which of the following is true under the UCC regarding checks marked "paid-in-full"?

If a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction.

Rescission and New Contract:

If the parties agree to rescind (cancel) the original contract and form a new contract, the new contract must be supported by consideration that is independent from the consideration in the old contract. Rescission = cancel The law recognizes that 2 parties can mutually agree to recind or cancel their contract at least to the extent that is executory - that is not yet performed by both parites Recision is the unmaking of a contract so as to return the parties to the positions they occupied before the contract was made

illusory vs enforceable option to cancel clause ex

Illusory "Option-to-Cancel" Clauses: I will hire you for 1 year at $5,000/month, I reserve the option to cancel AT ANY TIME. (I can cancel at ANY TIME without liability until you start performance.) Enforceable "Option-to-Cancel" Clauses: I will hire you for 1 year at $5,000/month, and I reserve the right to cancel at any time AFTER you have begun performance by giving you 30 days notice. --> enforceable - these are option to cancel clause

Which of the following is true regarding illusory promises?

Illusory promises are not consideration.

Partial Performance

In land agreements where one party has partially performed (paid a portion of the purchase price), has begun to improve the land or taken possession of it and assumed the obligation for care and control then courts will hold that the buyer has partially performed and will hold that the contract is valid even if not in writing.

Online offers: Display the Offer

Include a hypertext link to the complete terms of the offer The contract generallt must be displayed online in a readable format such as in 12 point typeface

Which of the following is true of a requirement contract under common law?

It is not valid because of the lack of consideration.

Which of the following is true of an output contract under common law?

It is not valid because of the lack of consideration.

Which of the following is true of an output contract under the UCC?

It is valid so long as the output is made in good faith.

Which of the following is true of a requirement contract under the UCC?

It is valid so long as the requirement is made in good faith.

When a counteroffer is made, what happens to the original offer?

It terminates.

Jasmine offers $100 to anyone who can return her lost dog, Champ. Kayla returns the dog and requests the money. Jasmine says that there is no binding contract. Which of the following is true regarding Jasmine's statement?

Jasmine is incorrect because there is a binding unilateral contract which Kayla accepted by performing.

WINDOW CLEANER EXAMPLE

Juan earns extra income by washing store windows. Juan taps on the window od a store catches the attention of the store manager and points to the window and raises his cleaner, signaling that he will be washing the window. The manager does nothing to stop him. Here the store managers silence constitutes as acceptance and an implied contract is created. The store is bound to pay a reasonable value for juans work

Contracts: Consideration 1. Legally Sufficient Value

Legally Sufficient Value consists of ANY of the following: A promise to do something that one has no prior legal duty to do; Seller promises to SHIP goods; buyer promises to PAY --> Exchange promises: legally sufficient value

In a[n] ______ debt, there is no dispute about the fact that money is owed and the amount of money owed.

Liquidated

Definitions: Liquidated v. Unliquidated Debt:

Liquidated Debt: A debt whose amount has been ascertained, fixed, agreed on, settled, or exactly determined. Accord and satisfaction is _not available __. In MOST states, acceptance of (accord) an amount less than the total amount of liquidated debt owed is NOT satisfaction: debtor remains obligated to pay the balance of the debt. (No consideration exists because the debtor has a preexisting obligation to pay.) Unliquidated Debt: A debt whose amount has NOT been ascertained, fixed, agreed on, settled, or exactly determined. Accord and satisfaction IS available. In MOST states, acceptance of (accord) an amount less than the total amount owed is satisfaction (discharge of debt): (Consideration exists because parties gave up legal rights to contest the amount in dispute.) Amount og the debt is not settled, fixed, agreed on, ascertained or determined and reasonable persons may differ over the amount owed

Agreements: Preliminary Agreements

MOST courts will consider preliminary agreements binding IF Parties agree on all _ESSENTIAL _ terms; No dispute remains _UNRESOLVED __. Example: Basis Tech v. Amazon Case 10.2

Contracts: Freedom of Contract

Make any contract you want as long as its for a legal purpose --> not bound by control unless you cant to be The law recognizes everyones ability to enter freely into contractual arrangements. This recognition is called freedom of contract, a freedom proeteced in the article above Certain contracts and clauses may not be enforceable if they are contrary

ILLUSORY PROMISE EXAMPLE:

Management "promises" bonuses IF profits remain high and IF they like your performance. Too many conditions that are uncertain have to be met

Acceptance

Manifestation of Intent to be bound

Question: See Example 11.9 Kara's car is damaged in an accident caused by Raoul's negligence. Raoul offers to give Kara $3000 IF she will release him from all further liability. Kara accepts the $3000 and signs a release, but later learns that her repairs will cost $4200. In most states, can Kara collect the additional $12oo from Raoul? Yes No

NO

Question: See Example 11.2 Father states to his son, " In consideration of the fact that your 18th birthday is next week, I will buy you a car." Have the father and son entered into an enforceable contract? (Has valid consideration been given?) Yes No

NO Because son has to promise/ do /refrain from do something he has right to do

If someone is overly fearful, is that person assaulted every time he experiences apprehension?

No, because assault requires reasonable apprehension.

A promise to do something that you are already obligated to do is ______.

Not valid consideration

New Offers (post offeree's initial rejection)

OFFER 1 sept 15th: lucy made offer - she is the offeror oct 1: jim rejected lucys offer ( jim is the offeree - this is termination of lucys offer OFFER 2: oct 4: jim attempts to accept lucys original offer NEW OFFERER: (jim is now the offeror) oct 6 LUCY accpets jims offer ( lucy is not the offeree) - VALID CONTRACT FORMED

Communication of Acceptance - I. Bilateral Contract:

Oral or Written Communication of acceptance is necessary UNLESS A. Offer itself STATES communication of acceptance is not necessary OR B. If offer can be accepted by silence (Example: Prior Dealings)

Communication of Acceptance - II. Unilateral Contract:

Oral or Written Communication of acceptance is usually NOT necessary because completion of ACT signals acceptance Exceptions: - Offeror's offer demands notice of acceptance; - Offeror has no way of knowing that act has been performed

Interpretation of Contracts

Plain Meaning Rules: Court will enforce the written language of the contract; BUT IF terms of contract are ambiguous (vague, unclear), court may admit extrinsic evidence OR may construe term against the party who drafted the contract.

Additional situations when Silence can be Acceptance:

Prior Dealings Offeree solicits an offer from offeror AND specifies terms that would be acceptable. Offeror communicates an offer that meets offeree's exact specifications

A party who claims that he or she could not understand contractual terms because of tiny, hard-to-read print on the back of an agreement and the excessive use of legalese is referring to which of the following?

Procedural unconscionability.

Unjustly Enriched

Profited at the expense of another without making an effort to make restitution

Which of the following is an exception to the rule requiring consideration?

Promissory estoppel

Question: When you pay for and download an iTunes song or a software program you are (choose the correct answer): 1. Purchasing a good 2. Purchasing a service 3. Purchasing a license to use the product

Purchasing a license to use the product Diff sunce intellectual property Different than purchasing a care

A(n) ______contract is an agreement whereby the buyer agrees to purchase all goods from one seller.

Requirement

Definition of Counter-Offer

SIMULTANEOUS 1) rejection of current offer AND 2) making of a NEW offer.

When an accord and satisfaction is at issue, the ______ is the payment, by the debtor, of the reduced amount.

Satisfaction

Which of the following terms best describes a debtor's payment of the reduced amount during the legal settlement of a disputed claim?

Satisfaction

Rare Circumstance when Silence can be Acceptance:

Silence CAN be acceptance IF offeree had a duty to speak (to accept or reject) but failed. This duty arises IF the offeree: 1. Received a valuable benefit from offeror AND 2. KNEW offeror expected payment

Two requirements of Consideration:

Something of Legally Sufficient value; Bargained-for exchange

Statute of Frauds

State based law which requires that certain contracts be in writing to be enforceable

Offer Seriousness Non-Offers (Case Example 10.3)

Statement of an intention to do something in the future is not an "offer": Example: Sam says "I plan to sell my insurance company for $500,000." John says he accepts and gives Sam a check for $500,000 (without Sam's saying anything else). QUESTION: Would a "reasonable person" believe a contract been formed? YES OR NO? NO Intention in future DOESN'T mean now - non offer "think about"="want to" = "plan"

An exception to the rule requiring consideration is promissory estoppel. True False

TRUE

Accord and Satisfaction

The accord is the agreement to discharge the obligation and the satisfaction is the legal "consideration" which binds the parties to the agreement.

Gabrielle is three months behind on her mortgage, and her lender filed negative information affecting her credit rating. Gabrielle mailed one monthly payment to the lender along with a letter stating that she was making the payment on the condition that the lender remove negative material sent to credit reporting agencies affecting her credit rating. The lender cashed the check but did not remove the negative information. Gabrielle sues the bank for breach of contract. Which of the following is the most likely result?

The bank will win because under the preexisting duty rule, Gabrielle was already legally obligated to make the payment, and there was no consideration to support the contract.

Which of the following was the result in the Case Opener in which the attorney sued to recover the value of 3 percent of the defendant's stock based on the fact that he provided a loan to the defending company, and the directors later promised the stock to him?

The court ruled that the attorney was not entitled to the value of the stock because it was offered as a gift.

Plain language rule:

The federal government and a majority of the states have enacted the plain language laws to regulate writing and eliminate "legalese" - have been extended to rulemaking as well

Which statement is true regarding the intent required for an intentional tort?

The intent at issue is not intent to harm but, rather, is intent to engage in a specific act, which ultimately results in a physical or economic injury to another.

Adequacy of Consideration

The law rarely, if ever, looks to the adequacy of the consideration. As such a court will not 'undo' a bad deal.

Plain meaning rule:

The meaning of the terms must be determuined from the face of the instrument - from the written document alone. A court is bound to give effect to the contract according to this intent - no one can avoid contractual obligations by claiming that she or he did not read the contract. A contract inormally is interpreted as if each party read every word carefully

Offeror

The party, who generally, has sole control of such offer

Incapacity

The possession of a mental or physical defect that prevents a natural person from being able to enter into a legally binding contract.

Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sally decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to pay the extra amount. What is the likely result in a dispute between Sally and the stylist and why?

The stylist will win because she did additional work in exchange for the extra payment; and, therefore, Sally's promise was supported by valid consideration.

Camila, wanting to sell a used business law book, calls Jada and tells her that if she does not hear from her within twenty-four hours, she will assume that Jada wishes to purchase the book for $50. Which of the following is correct regarding the status of the proposed book sale?

There is no contract because in this situation silence cannot be used to form a contract.

Disaffirmance

There is no formality required to void the contract. The Minor need only show an intention to disaffirm the contract by conduct or words.

Duress

Threats, violence, constraints, or other action brought to bear on someone to do something against their will or better judgment.

Highlights of the UETA

Timing: E-Document is "sent" when it 1) leaves the control of the sender AND 2) is properly directed to the recipient's system and 3) is in a form readable by the recipient's system; E-Document is "received" when it 1) Enters the recipient's processing system 2) in a readable form. IMPORTANT: If 1 and 2 are satisfied, then the document is "received" even if the recipient is not aware of the document's receipt.

Unilateral Contracts: Promise for an Act -- When can revocation occur?

Traditionally, revocation can occur at ANY TIME before COMPLETION of the act. ** TIMING BUT what happens in a unilateral contract if offeree has BEGUN but not COMPLETED performance? Example: 9.3: Sailboat delivery case

A detriment to a promisor is a type of consideration.

True

If a quasi-contract is imposed, the amount of damages for a breach is based upon the fair market value of any service provided to the defendant.

True

Minors can disaffirm contracts for necessaries, but they will still be held liable for the reasonable value of the necessary.

True

Promissory estoppel is an exception to the rule requiring consideration.

True

Proving that consent occurred is a defense to battery.

True

The response that the offeror expects from the offeree determines whether a contract is bilateral or unilateral.

True. If the offeror wants a promise from the offeree to form a binding contract, the contract is a bilateral contract, commonly defined as a promise in exchange for a promise. In a unilateral contract, the offeror wants the offeree to do something, not to promise to do something.

Today, courts hold that once an offeree begins performance on a unilateral contract, the offeror must hold the offer open for a reasonable time to allow the offeree to complete the performance.

True. Today, the courts hold that once an offeree begins performance, the offeror must hold the offer open for a reasonable time to allow the offeree to complete it.

Hamer vs Sidway

Uncle promises to pay nephew $5,000 if nephew refrains from smoking, drinking. Promise to and subsequent refraining from his legal right to use of alcohol and tobacco is adequate consideration for contract.

Which of the following are exceptions to the preexisting duty rule?

Unforeseen circumstances and additional work, but not past consideration

Voidable

Valid contract in which one or both parties have the right to withdraw

Which of the following represents an accord and satisfaction?

When a dispute over an unliquidated debt is settled and paid for less than the full amount.

Illusory Promise

When a party fails to actually commit to any obligation no consideration is present Ex.) Sally might buy your car if she likes it

Which of the following is true regarding an accord and satisfaction?

When amounts agreed upon are paid, the debt is fully discharged.

Patrick and Britt are in agreement that Patrick will pay Britt $2,000 for a used vehicle. At what point is there a binding contract?

When the agreement is made.

Patrick and Britt are in agreement that Patrick will pay Britt $2,000 for a used vehicle. At what point is there a binding contract?

When the agreement is made. As soon as the promises are exchanged, a contract is formed, and the parties' legal obligations arise.

Specific Performance

Where the court requires that the party actually perform their obligations under the contract.

Question: Seller promises to ship 1000 plastic cups. Buyer promises to pay $200. Does "consideration" exist to support a contract between buyer and seller? Yes No

YES

Lucy v. Zehmer: Serious Intention-- Classic Case 10.1

Zehmer sold farm drunk and wrote an offer on napkin Zehmer said it wasn't valid - lucy sued - did zehmer have serious attempt to sell? - court ruled based on RPS he knew what he was doing - was in fact a serious offer

Which of the following is true regarding the rating the World Bank gives China in relation to the ease of doing business there? A. China is rated in the top 10. B. China is ranked near the middle. C. China is ranked in the bottom 25. D. China is ranked in the bottom 10. E. China is ranked last.

a

Which of the following is what a person will receive in return for performing a contract obligation? A. Consideration B. Acknowledgement C. Approval D. Accord E. Accession

a

A promise to stay in a job until a particular project is complete is an example of:

a benefit to the promisor

The ____ is the new agreement to pay less than the creditor claims is owed.

accord

When presenting an offer to a seller and the seller has legal questions about the contract, you should

advise him/her to consult a lawyer

Brian offers to sell Rachel his skis for $500. Rachel responds, "I'll look at them in the morning, and if I like them, I'll pay you." At this point, she has not committed to doing anything. This is an example of:

an illusory promise

Destruction or death:

an offer is automatically terminated if the specific subject matter of the offer - such as an ipad or house - is destroyed before the offer is accepted . An offerees power to cceptance is also terminated when the offerror or oferee dies or becomes legally incapacitated UNLESS THE OFFER IS RREVOCABLE

Christen graduates from college, receives a job offer across the country, and moves there giving up her apartment and cancelling all the other job interviews. After she gets there, she is told that there is no job. What may she recover in most states? A. Nothing B. Reliance damages C. Liquidated damages D. Acknowledged damages E. Approved damages

b

Sam offers Betty his bicycle for $75. Which of the following is an example of an illusory promise on the part of Betty? A. "I'll take it." B. "I'll take it if I decide to do so." C. "I won't pay $75, but I will pay $50." D. "I'll take it if you will let me try it out first and the brakes work well." E. "I'll take it if you will buy new tires."

b

Which of the following was the judge's ruling in Jamil Blackmon v. Allen Iverson, the case in the text in which the plaintiff alleged that the defendant, a professional athlete, wrongfully failed to pay him a percentage of proceeds received from using the nickname "The Answer" in merchandising although the defendant agreed to do so after the plaintiff suggested the use of the nickname? A. That consideration was lacking because the defendant was not bound to use the nickname. B. That the defendant's promise to pay was past consideration insufficient to create a binding contract. C. That consideration was present and that the defendant was liable to the plaintiff. D. That the issue of consideration was irrelevant because consideration was not required in this type of contract. E. That the defendant was required to pay the plaintiff only half of the percentage initially offered because a gift situation was involved.

b

If a seller has already accepted one offer and later accepts another offer on a continent basis, this contract is called a

back-up contract

For a court to enforce a promise, ______ must offer consideration.

both sides

When writing in special stipulations on a sales contract, licensees should consult their

broker and or legal counsel

As discussed in the case of Double AA Builders Ltd., v. Grand State Construction L.L.C., which of the following may be used to necessitate that a subcontractor perform according to the terms of its bid because the contractor has relied on the subcontractor's bid? A. Consideration B. Primary consideration C. Promissory estoppel D. Reality estoppel E. Secondary consideration

c

On a co-op sale, the sellers response is communicated to the buyer by the

co-oping agent

On a co-op sale, when the seller accepts the buyers offer, the person responsible for giving a copy of the contact to the buyer is the

co-oping agent

If a seller wants to prepare more than one counteroffer on offers received simultaneously, you, as the listing agent, should

consult your broker

If a seller receives two offers simultaneously and wants to make a counteroffer on both, it is acceptable if one contract the seller signs is

contingent on the other not being accepted

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is a dispute over the amount of the debt, and the creditor agrees? A. A liquidated debt is involved, and there is an accord and satisfaction. B. A liquidated debt is involved, and there is an accord but no satisfaction. C. A liquidated debt is involved, and there is neither a satisfaction nor an accord. D. An unliquidated debt is involved, and there is an accord and satisfaction. E. An unliquidated debt is involved, and there is an accord but not satisfaction.

d

Which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt when the debt itself, in its entirety, is in dispute, and the creditor agrees? A. A liquidated debt is involved, and there is an accord and satisfaction. B. A liquidated debt is involved, and there is an accord but no satisfaction. C. A liquidated debt is involved, and there is neither a satisfaction nor an accord. D. An unliquidated debt is involved, and there is an accord and satisfaction. E. An unliquidated debt is involved, and there is an accord but not satisfaction.

d

A promise to do something that you are already obligated to do is ____. A. Valid consideration because it is illusory consideration B. Valid consideration only in the employment context C. Valid consideration because it is past consideration D. Valid consideration only if a sale of goods is involved E. Not valid consideration

e

For a court to enforce a promise, ______ must offer consideration. A. The offeror but not the offeree B. The offeree but not the offeror C. The acceptee but not the acceptor D. The acceptor but not the acceptee E. Each side to the contract

e

Breach of Contract

failure of a party to perform duties imposed under the contract BREACHING PARTY CAN BE SUED FAILURE= BREACHING

A liquidated debt may be the subject of an accord and satisfaction.

false

A promise to do something that you are already obligated to do is generally a valid consideration

false

As a rule, past consideration qualifies as consideration.

false

Consideration is optional in every contract

false

In a bilateral contract, the consideration for a promise is a completed act.

false

If a seller signs an offer made by a purchaser, the first thing you should do is

give a copy to the seller

If you are a co-oping agent on the sale of a property, you should be present when the listing agent present the offer to the seller

if given permission by the listing broker

An unliquidated debt is a debt that:

involves an honest dispute about the existence or amount of the debt.

If a seller has already accepted one offer and wants to make a counteroffer on another offer that comes in later, it can be done if

it is contingent on the first not closing

If a seller signs an offer made by a purchaser and you give a copy to the seller, the next thing you should do is

notify the buyer immediately

Discharge by Operation of Law

o Bankruptcy o Impossibility of Performance A) Subject Matter is Destroyed -Produce B) One party whose personal services are required dies or becomes incapacitated C) Law Changes making contract illegal -Supplements - FDA

Mutual Agreement

o Mutual Recession o Substitution of Collateral o Accord & Satisfaction o Novation - Substitution of one party

Agreement:

offer acceptance

Which of the following are among the common causes found in counteroffers?

purchase price, possession date, and loan terms and financing conditions

A(n) _____ contract is an agreement whereby the buyer agrees to purchase all his or her goods from one seller.

requirement

After reviewing a contract offer with the purchaser and having him/her sign it, the next step is to

review it with the broker and turn over the earnest money

If a seller has already accepted one offer and another offer cones in, you, as the listing agent should

submit the new offer

If a seller is considering one offer and another offer comes in, you, as the listing agent, should

submit the new offer

If a seller makes a counteroffer, the original offer is

terminated

On a co-op sale, the offer is usually presented to the seller by

the listing agent

Promissory estoppel occurs when:

the only way to avoid injustice is to enforce the promise

Mostly, in a liquidated debt:

there is no dispute that money is owed or how much.

An exception to the rule requiring consideration is promissory estoppel.

true

An illusory promise is not a consideration.

true

In some cases, if past consideration was given with expectation of future payment, the court may enforce the promise.

true

Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated.

true

Under Article ______ of the UCC, an agreement modifying a contract needs no consideration to be binding.

two

If a seller wants to accept an offer that comes in after he/she has made a counteroffer on an earlier offer, he/she should

withdraw the counteroffer

2. Past Consideration

"Past consideration is no consideration."

2 Elements of Consideration

1. Value 2. Bargained for Exchange

Matt intends to throw a baseball at Jamal and hit Jamal in the head with the ball because he missed an easy fly ball hit to him in the field. Jamal is standing directly next to Sally in the dugout. Matt throws the baseball but hits Sally in the head instead of Jamal. What type of tort did Matt commit against Sally?

An intentional tort because even though Matt meant to hit Jamal, he still caused harm by hitting Sally.

Misrepresentation

An untruthful assertion by one of the parties as to a material fact.

In which of the following ways may an offeree accept a unilateral contract? A. By making a counteroffer. B. By signed writing only. C. By either verbal acceptance or a signed writing. D. By performance. E. By performance, by a verbal acceptance, or by a signed writing.

D. By performance.

How can an offeror revoke an offer?

EXPRESS REVOCATION IMPLIED REVOCATION (Inquiries about an offere: merly inquiring about an offer doesn't consititee rejection - the way in which a response to an offer is phrased can determine whether the offer is accepted or rejected Counteroffers - rejection of the orginial offer and the simultaneous making of a new offer)

Today's law of contracts originated from judicial decisions in ______.

England

When a contract is overturned because it is deemed to have illegal subject matter or is illegal to perform, it is generally considered voidable.

False

In a[n] ______ debt, the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount.

Unliquidated

Unenforceable

Valid contract which some law prevents enforcement

When an accord and satisfaction is at issue, the ______ is the payment, by the debtor, of the reduced amount. A. Satisfaction B. Accord C. Seal D. Written compromise E. Written acknowledgement

a

Sources of Contract Law (2 most important)

- Common Law: restatement of the Law Second, Contracts - Uniform Commercial Code (UCC): governs contracts for the sale of goods

Contract: Elements Required for Valid Acceptance

To "accept" an offer, the offeree: 1. Must COMMUNICATE unequivocal assent; 2. through words or conduct; 3. to offeror or offeror's agent.

Sam offers Betty his bicycle for $75. Which of the following is an example of an illusory promise on the part of Betty?

"I'll take it if I decide to do so."

Bilateral Contracts

- Most common - Promise in exchange for another promise

Unilateral Contracts

- Only one party who makes a promise - The other party engages in a requested action for the benefit of the one who made the promise Ex) Rewards or contests

Consideration: Settlement of Claims

1. Accord and Satisfaction 2. Unliquidated Debts 3. Covenant not to Sue Claims are commonly settled through an accord and satisfaction, in which a debtor offers to pay a lesser amount than the creditor says is owed. Claims may also be settled by the signing of a release or a covenant not to sue

Discharge

1. Material Breach 2. Anticipatory Repudiation 3. Mutual Agreement 4. Discharge by Operation of Law

Injunction

A court order forcing a person to do something or refraining from doing something.

Contractual Capacity

Both parties have characteristics that qualify them as COMPETENT to enter into a contract CANT ENTER INTO A CONTRACT THAT DOESN'T UNDERSTAND THE COUNDS OF THE CONTRACT

Promissory Estoppel

Definition of Promissory Estoppel (a.k.a. "detrimental reliance"): Used when the "the contract" is not enforceable. Under this doctrine, a court may, in its discretion, enforce the promise EVEN IF no consideration existed. (A person who has reasonably and substantially relied on the promise of another can obtain some measure of recovery)

Today's law of contracts originated from judicial decisions in ______.

England. Today's law of contracts actually originated in judicial decisions in England, later modified by early courts in the United States.

Rules for Accord and Satisfaction:

There can be no "satisfaction" without an "accord." The amount of debt must be in _dispute__. Only _unliquidated __ debts can be settled through accord and satisfaction

If a quasi-contract is imposed, the amount of damages for a breach is based upon the fair market value of any service provided to the defendant.

True. When the court imposes a quasi-contract, the defendant is required to pay the fair market value of the benefit bestowed.

Requirements for Agreement:Offer and Acceptance

Two events that courts use as evidence to prove "agreement" to form a contract existed between the parties: Offer and Acceptance Each have their own set of rules for each An offer is a promise or commitment to perform or refrain from performing some specified act in the future. The party making the offer is called the offeror and the party whom the offer is made is called the offeree

Example of contracts NOT governed by the common law: UCC

Uniform Commercial Code (UCC) To the extent the UCC modifies general common law, provisions of the UCC govern all sales and leases of goods.

Question: sept 15th: sally made offer oct 1: sally mailed revocation (through UPS) oct 2: joe accepts sallys sept 15th offer oct 4 joe receives sallys revocation On Oct. 4th, do Sally and Joe have a valid contract? Yes B. No

YES *EQ and on rules

The person who agrees to the terms of an offer by another a party is called the _________. A. Offeree B. Offeror C. Agreeor D. Agree E. Inquiror

A. Offeree

Contracts: Requirements/Elements of a Valid Contract

Agreement Consideration Contractual Capacity Legality

Promissory Estoppel POLICY

FAIRNESS Promisee has justifiably relied on promisor's promise, and justice will be better served by enforcing the promise.

Defense of property cannot be a defense to a claim of battery.

False

Good Samaritan statutes impose liability upon people for refusing to stop at accident scenes.

False

Consideration is optional in every unilateral contract.

False; Consideration is in every contract

Instantaneous Communications:

Offeree's acceptance is valid when received Caveat: UETA—e-mail valid when sent IF parties have agreed to conduct business electronically let voicemail today - then valid today

In some cases, if past consideration was given with expectation of future payment, the court may enforce the promise True False

TRUE

Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated. True False

TRUE

Consideration

What a person will receive in return for performing a contractual obligation

Question: Example 9.4 Oleg needs an accountant to complete his tax return. He visits the office of an accountant, explains his situation, and asks her fee. He does not ask her to complete his return, but he returns the next day, says nothing, but drops a large stack of tax related documents and receipts on the accountant's desk. Oleg then leaves. Has Oleg entered into an implied contract to pay the accountant her usual fee if she completes the tax return? A. Yes B. No

YES

Material Breach

(a failure to perform the contract) that strikes so deeply at the heart of the contract that it renders the agreement "irreparably broken" and defeats the purpose of making the contract in the first place

Elements required for contract formation?

- Agreement (offer and acceptance) - Consideration (value given by both parties) - Contractual Capacity (legal ability to enter into binding agreement) - Legal Object (contract cannot be illegal or against public policy)

Defenses to Contract Enforcement

- Lack of genuine assent (fraud, duress, undue influence, misrepresentation) - Lack of proper form requirements (some contracts that lack writing unenforceable)

Classifications of Contracts: Valid, Void, Voidable, Unenforceable

- Valid Contract: all elements of contract formation satisfied - Void Contract: illegal object or serious defect - Voidable: parties can w/draw from or enforce contract - Unenforceable: valid, but courts cannot legally enforce contract

Authorized means of communication

- a means of communicating acceptance can be expressly authorized by the offereor or impliedly authorized by the facts and circumstances of the situation. An acceptance sent by means not expressly or impliedly authorized normally is not effective until it is received by the offeror. When an offeror specifies how acccptance should be made, such as overnight delivery, the contract is not formed unless the oferee use that mode of acceptance If the offeror doesn't expresslt authorize a certai mode of acceptance, then acceptance can be made by any reasonable means Usually the offerors choice of a particular means in making the offer implies that the oferee can use the same ora faster means for acceptance

Contract

- contracts are legally binding contracts - Contract - an agreement that can be enforced in court - 2 or more parties agree to perform or to refrain from performing some act now ot in the future - generally contract disputes arise when there is a promise of future performance

Express Conditions

Expressed in the contract itself Ex.) Insurance Contract - Duty to Cooperate with Insurance Contract

Parents are always responsible for the torts committed by their minor children in all states except Hawaii and Alaska.

False

Which of the following is true regarding whether an accepted offer to pay part of a debt is consideration?

Partial payment is consideration if an unliquidated debt is involved.

Which of the following is true regarding the termination of an offer based on a rejection?

Regardless of how long an offeror states that an offer will be held open, once the offeree rejects it, the offer is terminated.

ONLINE OFFERS

TIPS TO HELP PROTECT YOUR COMPANY 1. Display/post all terms our your site in an easy-to-view, conspicuous location. 2. Carefully draft online "offers" in terms that are easily understandable, precise, and include all important provisions.

In a[n] ______ debt, there is no dispute about the fact that money is owed and the amount of money owed. A. Actual B. Acknowledged C. Certain D. Liquidated E. Unliquidated

d

Unliquidated Debt

Is one where the existence of the debt or the amount of the debt owed is in dispute.

Anticipatory Repudiation

A law that gives the innocent party to a contract the right to bring a lawsuit against the breaching party before the actual breach even occurs

Condition Precedent

A particular event or condition which must occur in order for a party's duty to perform will arise Ex.) Real Estate Purchase -Contract -Appraisal -Financing -Sale of other property

Condition Subsequent

A particular event which occurs after the contract is executed which relieves the party from the obligation to perform. Ex.) Lease Agreement - Induction into military

Admission

A statement made in court, under oath, or at some other stage during a legal proceeding (deposition) in which a party admits that an oral contract existed, even though it was required to be in writing.

Which of the following is an unforeseeable event which interrupts the causal chain between the defendant's breach of duty and the damages the plaintiff suffered?

A superseding cause

Destruction or subsequent illegality of the subject matter of the offer

Ex) Computer was infected with a virus which rendered it unusable

Revocation by the offerer

Ex. ) I had offered you the job, but, before you accepted, I offered the job to someone else. As such I am revoking and withdrawing the offer of employment

Classifications of Contracts: Express or Implied

- Express Contract: based on written or spoken words - Implied Contract: based on conduct or actions - Quasi-Contract (implied-in-law contract): not actually contracts, but imposed in certain cases to avoid unjust enrichment

Classifications of Contracts: Formal and Informal

- Formal: have special former created in specific manner (ex. contracts under seal, recognizances, letters of credit, and negotiable instruments) - Informal: no formalities required in making; a simple contract

Interpretation of Contracts

- Contract interpreted to give effect to parties' intentions at time they entered into contract. - If multiple interpretations possible, adopt interpretation that would make contract lawful, operative, definite, reasonable, and capable of being effected. - If contract contains ambiguity, judge should interpret it against interests of drafter. - Handwritten provisions prevail over preprinted terms. - Numbers written in words prevail over numerals. - Specific terms prevail over general terms. - Technical words are generally interpreted in accordance with industry standard.

Consideration—Settlement: 1. Accord and Satisfaction

* Accord and Satisfaction: A means of settling a disputed claim, whereby a debtor offers to pay a lesser amount than the creditor is owed, and the creditor accepts. The accord is the agreement under which one of the parties promises to give or perform, and the other to accept Satisfaction is the performance (usually the payment) which takes place after the accord is executed If a debt is liquidated, accord and satisfaction cannot take place. A liquidated debt is one whose amount has been ascertained, fixed , agrred on or exactly determined A. Accord: "THE AGREEMENT" 1. under which one party promises to give or perform 2. something other than that on which both parties originally agreed 3. And the other party agrees to accept this promise/performance in satisfaction of the claim B. Satisfaction: "THE PERFORMANCE" 1. A payment (or an act) that takes place after the accord is executed.

Classifications of Contracts: Bilateral or Unilateral

- Bilateral Contract: exchange of promises - Unilateral Contract: promise in return for performance of act

Formal contract

- CHECK IS A TYPE OF A CONTRACT - Require a special form or method of creation ( formation) to be enforceable - ex: negoation instruments whch include checks, drafs, promissory notes and certificates of deposit are formal contracts because under UCC a special form and language are required to create

Classifications of Contracts: Executed or Executory

- Executed: all terms of contract fully performed - Executory: some duties under contract not performed by on/both parties

Objective Theory of Contracts

- Existence and interpretation of contract based on outward manifestations of intent by parties (objective, reasonable person standard of contract formation and interpretation) - Subjective (individual) intent generally irrelevant

Element 2 of an Offer: "DEFINITENESS"

- Terms of a valid offer must be reasonably definite - Generally a contract must include the following terms either expressed in the contract or capable of being reasonably inferred from it(Although terms may vary, to be considered to have "definite" terms, most courts require the following): 1. Identification of the parties; 2. Identification of object/subject matter of the contract, including the work to be performed with special identification of goods, services, and land; 3. Consideration to be paid; 4. Time of payment/delivery/performance See Example 10.6.

Ambiguity

- a court will find a contract to be ambiguous in the following situations When the intent of the parties cannot be determined from its language When it lacks a provision on a disputed isse When a term is susceptibile to more than one interpretation When there is uncertainty about a provision

Promise

- a declaration by a person (the promisor) to do or not do a certain act 1. moral obligations - such as a promise to take a friend to lunch 2. contracts that are legally binding -such as a promise to pay for a merchandise purchase

Revocation AND IF the offeree rejects the offer

- the withdrawal of a contract offer by the offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability - general rule followed by most states is that a revocation becomes effective when the offeree or the oferees agent actually receives it If the oferee rejects the offer - by words or by conduct - the offer is terminated Like revocation - a rejection of an offer is effective only when it is actuall received by the offeror or the offerors agent

Sufficiency of "Writing"

-Identification of the parties to the contract -The subject matter of the contract -The consideration -Any pertinent terms -The signature of at least one party -Not necessarily the full signature and not necessarily at the end. -Merely need to demonstrate intent of mark to be signature. - Only party against whom the agreement is sought to be enforced need sign.

informal contract

-MOST CONTRACTS ARE INFROMAL - Simple contracts - include all other contracts - no special form is required (except for certain types of contracts that must be in writing) as the contracts are usally based on their substance rather than their form

Irrevocable Offers (examples)

1. A court may refuse to allow an offeror to revoke an offer IF an offeree has "justifiably relied" on the offer; -- This doesn't happen too much 2. "Firm offers" made by merchants (UCC only—not common law); -- UCC not on exam 3. Option Contracts Although most are revocable - some can be made irrevocable "firm offers"made by merhcnats may also be considered irrevocable Option contract - a contract under which the offeror cannot revoke the offer for a stipulated timer period ( because the oferee has given consideration for the offer to remain open) - if no time specified then a reasonable time is implied - often used in the conjunction with the sale of real estate

Legally Sufficient Value consists of ANY of the following:

1. A promise to do something that one has no prior legal duty to do; - Seller promises to SHIP goods; buyer promises to PAY. 2. Performance of an action that one is otherwise not obligated to undertake; - If you perform x service/act, then I will pay --> (the service/act is the consideration) 3. Forbearance: Refraining from an action that one has a legal right to undertake See Hamer v. Sidway, "Landmark in the Law" p. 283--> kid made valid contract - estate had to pay Giving up your right to do something

Offer Seriousness Non-Offers

1. A request or invitation to negotiate is NOT an offer. Ex ads, commercials Limited situations it creates a definite offer 2. A request or invitation to negotiate is not an offer. Example: "Will you sell your necklace?" --> "I wouldn't sell my guitar for less than $1000." --> CAREFUL WITH RESPECT TO PHRASING

Sources of Contract Law

1. Common Law (main) - GOVERNS ALL CONTRACTS with some exceptions (modiefied or replaced by statutory law, or by adminstrattve agency regulations) 2. Legislation (statutes)-- EX UCC SALES TRANSACTIONS

Interpretation of Contracts: Rules of Contractual Interpretation- See p. 252

1. Court will give effective meaning to all contract terms if possible, reasonable, and lawful; 2. Contract will be interpreted as a whole; 3. Standardized terms given less weight than specially negotiating terms; 4. Court will interpret words in accord with their common meaning; technical words in accord with their technical meanings; 5. Specific and exact wording given greater weight than general language; 6. Written or individually typed wording given greater weight than "preprinted" form language; 7. Ambiguities will be interpreted against the party that drafted the contract; 8. Course of performance, prior dealing, and custom/usage in trade can be admitted to help clarify ambiguity. (Listed here in descending order of importance.) Generally a court will interpret th language to give effect to the parties intent as expressed in their contract Primary prupose of rule interpretation - to determine the parties intent from the language used in their agreement and to give effect to that intent

Contracts which violates statutes

1. Gambling 2. Insurance -States limit insurance contracts to parties who have an "insurable interest' 3. Licensing Statutes

Elements of An Offer (What a valid offer has to include)

1. Intention: Offeror must have a serious, objective intention; 2. Definiteness: The offer must be reasonably certain/definite 3. Communication: The offeror must communicate the offer to the offeree.

A Release is generally binding IF:

1. It is given in good faith; 2. Stated in a signed writing; 3. Accompanied by consideration

Termination of Offer by Operation of Law

1. Lapse of Time; a. Specified in the contract OR b. A "reasonable period" of time -- Ex: lettuce vs sneakers is different 2. Destruction of the specific subject matter of the offer; 3. Death or incompetence of the offeror or offeree; a. Unless the contract is irrevocable 4. Supervening illegality of the proposed contract.

For Contracts to be enforceable you need these 7 characteristics

1. Offer 2. Acceptance 3. Consideration 4. Legality 5. Capacity 6. Consent 7. Writing (some instances)

Agreements that LACK Consideration

1. Preexisting Duty; 2. Past Consideration; 3. Illusory Promises

Termination of a contract can occur in 5 ways:

1. Revocation by the offerer 2. Rejection or counter offer by offeree 3. Death or incapacity of the offerer 4. Destruction or subsequent illegality of the subject matter of the offer 5. Lapse of time or failure of other conditions stated in the offer

Material Terms

1. Subject Matter 2. Price 3. Quality 4. Quantity 5. Parties

When preparing an offer to submit to a seller, you should pay special attention to reviewing the following sections:

1. the legal description 2. the method of payment 3.special stimpulations

Exceptions to Minor's Right to Disavow Contract

1.) Contracts exempted by state statutes 2.) Contracts for state necessities

Partial Payment of a Debt; Accord and Satisfaction

1.) Liquidated Debt 2.) Unliquidated Debt 3 Requirements: The debt must be unliquidated (either or both the existence of the debt or the amount of the debt is in dispute); 2) the creditor agrees to take less than the creditor believes is owed; and 3) the debtor actually pays the amount agreed.

3 situations where a unilateral mistake can allow a party to terminate the contract:

1.) One party made a mistake about a material fact and the other party knew of the mistake. 2.) The mistake was the result of a clerical error that was accidental and did not result from gross negligence 3.) The mistake was so serious that it would be unconscionable to enforce the contract

QUESTION: Mary offered to babysit for Ron's children for 2 hours at a rate a $10 per hour. Ron stated he wanted Mary to babysit for 2 hours, but would pay her $12 an hour. Ron's statement is an example of a 1. Acceptance; 2. Counteroffer

2. Counteroffer

Licensing (both traditional and e-contracts)

A "license" gives the licensee permission to USE OR DO something. Licensor retains "ownership," but permits the licensee to USE the interest.

"Mirror Image Rule"

A binding contract is only formed if the offeree's acceptance EXACTLY MATCHES (or mirrors) the offeror's offer. change offer in any way - they no longer mirror - it's a counter offer hich isn't bnding unless its accepted A BINDING CONTRACT = EXACT MATCH between offer and acceptance

QUESTION: On Oct. 1, Max offered to sell Jonas 25 guitar lessons for $400. Max's offer stated Jonas should accept by written letter in the mail. Jonas, however, telephoned Max and accepted on Oct. 15. To be safe, Jonas also placed a written acceptance in the mail on Oct. 17, and Max received the written acceptance on Oct. 20. As of which date was the contract valid? A. Oct. 15 when Jonas telephoned; or B. Oct. 17 when Jonas mailed the letter; or C. Oct. 20 when Max RECEIVED the letter?

A. Oct. 15 when Jonas telephoned; or Didn't matter if manner changed because no way was specified

Which of the following is true regarding the termination of an offer based on a rejection? A. Regardless of how long an offeror states that an offer will be held open, once the offeree rejects it, the offer is terminated. B. Even on rejection, an offer is not terminated until the expiration of the time period for which it was originally to remain open. C. An offer must remain open for at least two days before it is terminated following a rejection by an offeree. D. An offer must remain open for at least three days before it is terminated following a rejection by an offeree. E. An offer must remain open for at least four days before it is terminated following a rejection by an offeree.

A. Regardless of how long an offeror states that an offer will be held open, once the offeree rejects it, the offer is terminated.

What if offer does NOT specify a particular method of communication of acceptance?

ANSWER: Any "_reasonable means " of communication is ok under the circumstances -business tip: Offeror can override mailbox rule by drafting the offer to specify that acceptance must be RECEIVED by x date.

COUNTER OFFERS QUESTION: What if the offeree response to the offeror's offer CHANGES A MATERIAL TERM of the original offer?

ANSWER: The offeree's change will be deemed a _COUNTER-OFFER, NOT AN ACCEPTANCE. (happens in same transaction)

Termination of the Offer: Revocation/Termination by Offeror or Offeree: Timing WHEN does revocation/termination of an offer become effective?

ANSWER: upon receipt

New Offers

After an offeree rejects an offer, any subsequent attempt by the offeree to accept will be construed as a "new" offer.

Contracts: Parties to a Contract

All contracts require at least 2 parties: Offeror: Person who makes an offer Offeree: Person to whom an offer is made (Receives offer)

TERMINATION of an Offer:

An offer can be terminated by A) Action of the Parties - Offeror REVOKES offer OR - Offeree Rejects/Terminates the offer - Offeree makes a Counteroffer B) Operation of Law

Which of the following is an agreement whereby the seller guarantees to sell everything he or she produces to one buyer?

An output contract

How can an offeree terminate an offer?

Answer: by rejecting the offer

Example of Software Product that contains Shrink-Wrap Agreement

Arial order a new mac book from big dog electronic which it ships to her. Along with the mac book the box contains an agreement setting forth the terms of sale, includes what remedies are available. The document also states that arials rention of themac book for longer than 30 days will be construed as an acceptance of the terms

Implied Contracts

Arise from the behavior of the parties -Party must have provided some property or service to the other party -The party performing the service or providing the property must have expected to be paid and a reasonable person would have expected to have been paid -Party receiving the property or service had the opportunity to reject it but did not reject it. Ex) Neighbor shows up to mow the lawn 3 times without being asked and presents the owner with a bill after 3 weeks

Express Contracts

Arise from the writings or discussions between the parties

Online offers: Provisions to Include

At MINIMUM, an online offer should include: 1. Acceptance of terms: clause indicating what action constitutes buyer's acceptance; -- Example: "Click-On" box next to language "I accept." 2. Payment provision; -- Specifying how payment for the goods 3. Return policy; 4. Disclaimer; -- Disclaim liability for certain uses of goods if you do not intend the goods be used in that manner 5. Limitation on Remedies: A) If goods are defective or B) if offeror breaches the contract, specify remedies buyer/offeree is entitled to 6. Privacy Policy - How will your company handle private information? 7. Dispute Settlement Provisions: A. Dispute Resolution -- Mediation, Arbitration, or Court? -- Example: "Validity of E-Signatures on Agreements with Online Colleges..."p. 269 B.Forum Selection Clause (WHERE_?) C.Choice of Law (WHAT LAW TO APPLY?) Forum slection clause - indicating the forum or location such as a court or jurisdiction for the resulotion of any dispute arising under the contract Choice of law - speficfying that any dispute arising out of the contract will be settled in accordance with the law of a particular jurisdiction such as a state or country

Bilateral Contracts

Example of Bilateral Contracts: "Promise for a Promise" FORMED AND ENFORABLE AT POINT PROMISE IS EXCHANGED CONTRACT FORMED WHEN PROMISES INSTALLED OR PAID --> ONCE PROMISES EXCHNAGED CONTRACT ENFORCEABLE TODAY

Question: Wagner v. Columbia Pictures: Rights to Profits from Charlie's Angels (See Case 9.3) Wagner signed a contract with SGP that entitled him to 50% of all profits from all "ancillary and subsidiary" rights in connection with the Charlie's Angels tv series. SGP never purchase movie rights from writers. SGP later sold tv rights to the TV series to Columbia pictures (NOT an "ancillary or subsidiary" arrangement). Columbia also purchased movie rights from writers and made two Charlie's Angels movies, but did not pay Wagner 50% of the profits from the movies. Should the court determine that the original contract terms were vague and consider extrinsic evidence to determine whether Wagner is entitled to 50% of the profits from the two movies? A. Yes B. No

B. No PLAIN MEETING RULE TV series - movies made as he didn't get money from them used plain meaning rule The state intermiedate appeallate court affirmed the lower courts judgement - REASON - wagner offered evidence to show that a previous contract with AGP involving a property titled LOVE ONG had been intened to give him half of the net profits that SGP received from the property wfrom all sources without limitation as to source or time. Wagner argued that because the profits provsions in the charlies angels agreement used identical language, the provision should be interpreted to give him the same share. The court stated that an agreement is the writing itself. Extrenic evidence is not admissible to shoud the intention idenpendent of an unambigious witten intrsument. The court reasonrf that even if th parties intended wagner to share in the profits from all sources they did not say so in their contract. Under the language of the contract wagner was not entitled to share in the profits from the exercise of the movie rights to charlies angels if those rights were acquired separetly. SGP didn't acquire the movie rights to charlies angels by excerising this right within the five year period. Columbia obtained those rights separetly more than five years later.

Contract law is said to be based on a[n] ___________ theory, meaning that the existence and interpretation of the contract is based on the outward manifestations of intent by the parties. A. Subjective B. Objective C. Interpretive D. Appearing E. Unilateral

B. Objective

The person who makes an offer is called an ___________. A. Offeree B. Offeror C. Agreeor D. Agree E. Inquiror

B. Offeror

QUESTION: Janine is brought into the hospital unconscious. The hospital ordered 24 hour nursing care from Nursing Services, Inc. Janine remained unconscious and under nursing care for 10 days. When she awoke, Janine stated that she would not pay the bill for her nursing care. Which of the following is the court likely to determine exists: A. Implied Contract B. Quasi-Contract

B. Quasi-Contract Quest - court said mt the buyer beward negligent on your part Implied contraxt - means conduct of arties incedented to be bound Quasi contract - form of implied contract but lacks a meeting of the minds that implied has

QUESTION: Kevin sells Roman coins. He knows Jen is a coin collector, and he sends Jen a letter stating that says he has a Julius Caesar coin he is willing to sell for $2500. Jen signs and returns the letter, but adds nothing more than her signature. Kevin mails the coin to Jen and requests payment, but Jen sends the coin back claiming they do not have a contract. What standard will the court use to determine whether they have a contract? A. Subjective standard B. Reasonable person standard

B. Reasonable person standard

As a general rule, when is revocation effective? A. When it is mailed by the offeror. B. When it is received by the offeree. C. One day after it is made. D. Two days after it is made. E. Three days after it is made.

B. When it is received by the offeree.

Examples of non-offers

Examples of non-serious, non-objective offers: Any offer made in: a) Obvious anger; b) Jest; or c) Undue Excitement Ex: rescue kid for 500k - don't have to pay because of this

Homeowner and builder case example

Builder built bay window after hoewoner asked but then homeowner assumed the old cost of the home would stay the same - didn't pay new price - owner is wrong Oleg - A small business owner, needs an accountant to complete his tax return. He drops by a local accountants office, explains the situation to be counted, and learns what fees she charges. The next day, he returns and gives the receptionist all of the necessary documents to complete his return. He then walked out without saying anything further to be counted. And the situation, oleg has entered into an implied contract to pay the accountant the usual fees for her services. The contract is implied because of olegs conduct and hers. She expects to be paid for completing the tax return, and by bringing in the records she will need to do the job, Oleg has an implied intent to pay her.

CONTRACT LAW WE STUDY IN THIS COURSE

In this course, we are learning basic COMMON LAW contract principles.

QUEST WIRELESS CASE

Case 9.7 - quest wireless provides wirless phone servicesin Arizona and 13 other states. Quest marketed and sold handset insurance to its wireless customers although it didn't have a liscense to sell insurance in arizon or in any other state. The vanzanen sued quest in a federal court for unjust enrichment based on its receipt of sales commissions for the insurance. The court agreed tjat qwest has violated the insurance liscening statue, but found that the sales commsisions didn't constitute unjust enrichment because the customers has in fact received the handset insurance. Also qwest had not retained a benefit ( the commissions) without paying for it ( providing insurance). Therefore the vanzanens and other customers didn't uffer unfair detriment

Agreements to Agree: Binding IF both parties showed INTENT to be bound

Case Example 10.5: A customer at a Six Flags amusement park nearly drowned on a water ride. Six Flags believe the ride had a design defect and wanted the ride manufacturer's insurance company to defend Six Flags in court against the customer's personal injury suit. Although Six Flags and the ride manufacturer had never entered a formal contract for ride construction, they HAD engaged in preliminary negotiations, faxed ride specifications, began construction, and handwrote notes on the fax. WHAT DID THE COURT HOLD? ANSWER: Court held evidence showed parties _INTENT____ to be bound by their initial agreements.

Exculpatory Clauses

Contract provision that relieves one party of liability if damages are caused during the execution of the contract. The party that issues the _________ clause is typically the one seeking to be relieved of the potential liability.

Quasi Contracts: "Implied in law" by Court

Court IMPOSES a contract on the parties as if parties agreed; An equitable remedy imposed by the court most often to prevent unjust enrichment of one party at the expense of the other. Quasi contract is usually NOT AVAILABLE if an actual contract exists. See Case 9.2 -- Court imposed a quasi contract where couple knowingly received water from water company, but refused to pay the company for the water. Wholly differnet from actual contracts they aren't true contracts because they do not arise from any agreement, express or implied between the parties themselves "as if" = quasi When the court imposes a quasi contract, a plaintiff may recover in quantum meruit - meaning as much as he or she deserves - it eseictally describes the extent of compenstation owed under a quasi contract Usually quasi contracts are imposed to avoid unjust enrichment of one party at the expense of another CASE 9.2 Seawest Services Association V Copenhaver Facts: sea west services Association braided water distribution system that serve Tom's both inside and outside the housing development. Sea West had two classes of members. Full members owned property the housing development and limited members received water services for homes outside to the development. Both full and limited members paid water bills as necessary assements for work perfirmed on the water system. I 2001 the copenhavers purchased a home outside the housing development. They did not have an express contract with seawest, but they paid water bills for 8 years and paid one $3950 assement for water system upgrades. In 2009 a dispute arose between the parties and the copenhavers refused to pay their biulls. Seawest sued the coperhavers - the trail court found that the copenhavers were limited members of seawest and thus were liable for the unpaid water bills and assessments. liable for the breach for thre quasi contract REASON: the court explained that a quasi contract exists when a person knowlingly receives a benefit from another party and it would be "inequitable for the person to retain the benfit without the payment of its value". The copenhavers enjoyed the benefits of seawests water services and even paid them befor their dispute rose. The copenhavers were unjustly enenriched if they could retain benefits provided by seawest wthout paying for them

Implied Conditions

Inferred by law in accordance with the language of the contract Ex.) Window Installer access to home

Contract: Settlement of Claims Covenant Not To Sue

Definition of Covenant Not to Sue: An agreement to substitute a contractual obligation for some other type of legal action based on a valid claim. Unlike a release, further recovery may be possible. Example of Covenant Not to Sue: Example: Kara's car is damaged in an accident caused by Raoul's negligence. The initial damage estimate was $3000, but after completion of all repairs the total costs were $4200. Kara and Raoul did not sign a release. Instead, Kara ONLY agrees not to sue Raoul under a tort claim for damages to her car IF Raoul pays for all damage to her car (This is an example of a covenant not to sue). If Raoul fails to pay for all damages, Kara may sue Raoul in an action for breach of contract (the "covenant not to sue" is a type of contract).

3. Illusory Promises

Definition of Illusory Promises: Promises are illusory when the terms of the contract express such uncertainty of performance that the promisor _has not definitely promised__to do anything. When a contract includes "illusory promises," the contract lacks consideration and is unenforceable. If the terms of the contract express such uncertainty of performance that the promisor has not definitely promised to do anything, the promise is said to be illusory - without consideration and unenforceable Ex: the president of a company says to his employees "all of you have worked hard, and if profits remain high, a 10 % bonus at the end of the year will be given - if management thinks it is warranted"- performance depends soley on the discretion of the president - no bargained for consdieration

Contract: Settlement of Claims RELEASE

Definition of Release: A contractual agreement by which one party gives up _the right to pursue a legal claim __ against another party.

Partnering Agreements

Definition: An agreement between a seller and a buyer who frequently do business with each other concerning the terms and conditions that will apply to ALL subsequently framed contracts. Where to litigate disputes? E sigs acceptable? Set up of contracts? Simplifies subsequent contracrs One way that online sellers and buyers can prevent disputes over signature in the e contract as well as disputes over the terms and conditions of those contracts, is to form partnering agreements. In a partnering agreement, a seller and a buyer who frequently do business with each other agree in advance on the terms and condtions that will apply to al transactions subsequently conducted electronically Partnering agreement reduces the likelihood that disputes will arise under the contract because the byer and the seller have agreed in advance to the terms and conditions that will accompany each sale

Types of Acceptances: Shrink-Wrap Agreements/Licenses

Definition: An agreement whose terms are expressed in a document located inside a box in which good are packaged. (Shrink Wrap refers to plastic wrap that covers the box.) A. Customer is told he agrees to the terms by keeping the item in the box; B. For Software, the customer who opens the package and keeps/uses the software for a certain period of time agrees to the terms of the license agreement. Want agreement to bind customer should include set number of days where user becomes bound Usually the party who opens the box is told that she or he agrees to the terms by keeping whatever is in the box In most instance a shrink wrap agreement is not between a retailer and a buer but between the manufacturer of the hardware or software and the ultimate buyer/ user of the product

Contract: Acceptance

Definition: Voluntary act by offeree that shows assent to the terms of an offer. ACCEPTANCE -a voluntary act by the offere that shows assent, or agreement to the terms of an offer - the offerees act may consist of words or conduct. The acceptance must be unequivocal and must be communicated to the offeror.

Compensatory Damages

Designed to compensate and make the non-breaching party whole from the contract

Promissory Estoppel: Examples

Dick agrees to pay Mary $1000/week so she won't have to work. Mary quits her job; Alice promised to give $5000 per year to the American Red Cross (charity). See Example 11.10 See Case 11.1 Harvey (daughter) v. Dow (parents) PROMISSORY ESTOPPEL WAS ORGINALLY APPLIED TO SITUATIONS INVOLVING GIFTS Gifts unenforceable There was actual evidence for Harvey v dow Courts prefer straight contract remedies courts would need a lot of evidence to do

Enforceability of Shrink-Wrap Agreements

Different courts have taken different approaches: Some courts enforce ALL shrink-wrap TERMS (just like any other contract); Other courts enforce ONLY terms that were included in the OFFER the buyer accepted: Customer only bound by terms of use at time of purchase to protest self, get salespeople to go over terms and conditions - make sure these people are well trained so they don't miss T&C up

Unilateral Contracts: Substantial Performance

Doctrine of "Substantial Performance": Used in Unilateral Contracts to determine acceptance DETERMINE ACCEPTANCE WHEN MAKER HAS PERFORMCED SUBSTAINTIAL AMOUNT OF CONTRACT FOR BUYER TO BE BOUND

Unilateral Contracts

Example of Unilateral Contracts: "Promise for an Act" ANY contract that requires the offeree to complete an ACT to accept the contract. Completion of ACT = Contract Acceptance (formation complete) Contests, Lotteries, Competitions offering Prizes Unilateral - "if then clause" Offerir if you drive my car from NY TO LA by X date the I will pay you 1500 - traditional ules - contract not formed until it is completed

Federal Law on E-Signatures and E-Documents—E- SIGN

E-SIGN "Electronic Signatures in Global and National Commerce Act" (Federal Act Passed by U.S. Congress in 2000) Content: "Normal" contract principles apply to e-signatures and e-documents (with a number of caveats and exclusions) 1. Electronic signatures are as valid as "traditional" Caveat: PARTIES MUST HAVE AGREED TO USE ELECTRONIC SIGNATURES 2. Electronic documents are as enforceable as "traditional" Caveat: ELECTRONIC DOCUMENT FORM MUST BE ABLE TO BE ACCURATELY RETAINED AND REPRODUCED Fed act: use of signature ok as long as partie agree to use e-sgns in advance

Which of the following terms would be considered material terms? A. Subject matter B. Price C. Quantity D. Subject matter and price but not quantity E. Subject matter, price, and quantity

E. Subject matter, price, and quantity

Which of the following is true regarding the situation that occurs when a party has made a unilateral offer and another party has begun performance? A. The offeror has the right to revoke the offer at any time before performance has been completed. B. The offeror cannot revoke if at least one-third of the performance has been completed. C. The offeror cannot revoke if at least one-half of the performance has been completed. D. The offeror cannot revoke if at least three-fourths of the performance has been completed. E. The offeror must give the offeree a reasonable time in which to complete the performance.

E. The offeror must give the offeree a reasonable time in which to complete the performance.

A contract is ______________ if one or both of the parties have the ability to either withdraw from the contract or enforce it. A. Voidable B. Executory C. Implied D. Executed E. Void

E. Void

If a contract is disaffirmed due of intoxication, which of the following statements is true?

Each party to the contract must return the other to the condition he or she was in at the time the contract was entered into.

Contract Classification: Express v. Implied

Express Contracts: - Terms are FULLY STATED in WORDS: written or oral; - Example: Apartment lease, - the terms of the agreement are fully and expilcity stated in words, oral or written form Implied Contracts: CONDUCT of the parties creates and defines either A.) all contract terms (Example: ANY contract that is not "express" and which is not required to be in writing)- See Example 9.4: Accountant) ACTUALLY SPELLED OUT ORALLY OR INWRITTING OR B.) part of the contract terms (some terms may be in words, others understood through conduct) (Case Example 9.5: Construction of home) - THIS IS NOT FORCED ON ANYONE AND BOTH PARTIES UNDERSTAND THAT THERE WILL BE PAYMENT FOR THE SERVICE - contract that is implied from the conduct of the parties - differs from an express contract in that the conduct of the parties rather than their words creates and defines ar least some of the terms of the contract - note that a contract can be a mixture of an express contract and an implied contract

Offer Seriousness Non-Offers (Case Example 10.2)

Expressions of Opinion ARE NOT "offers": Example: "Hey Doc, how long will it take my hand to heal?"

in a bilateral contract, the consideration for a promise is a completed act. True False

FALSE

EX: FACEBOOK - CLICK ON AGREEMENT

Facebook disable someones and they sueed in new York for discrimination - hwoeer in the click on agreement they hd agree to reolve all disputes with facebook in santa clara county california "By clicking Sign Up, you agree to our Terms and that you have read our Data Use Policy, including our Cookie Use" All hyperlinked: Terms -data use -cookie use Samll font - questionable AMAZON - "by creating account you agree to amazons conditions of use and privacy notice"

Basis Tech v. Amazon Case 10.2

Facts: basis tech corporaton created csoftware and provided technical services for a Japanese - language website operate by amazon. The agreement between the two companies allowed for separetly negogiated contracts for additional service that Basis might provide to Amazon. At the end of 1999 Basis and amazon entered into stock purchase agreements. Later maazon objected to certain actions related to the securities Basis sold.. Basis sued Amazon for various claims involving these securities and forfailing to pay for services performed by Basis that were not included in the original agreement . The two seemed t reach an agreement via email out of court - amazon reneged. Decision: amazon intended to be bound by the terms of the email exchnages Reason: the court exaimined the evidence consistiting of emails beyween the 2 parties. It pointed out that in open court and on the record, counsel reported the result of the settle ement without speicification of the terms. Amazon claimed that the email terms were incomplete and were not definite enough to form an agreemen. The court noted however that provisions are not ambgious simply because the parties have developed different interpreations of them. In the exchange of emails, the esstianl business terms were indeed resolved. Afterward the parties were simply proceeding to record the settlement terms not to create them. The emails consistuted a complete and unambgious statement of the parties desire to be bound by the settlement terms

Undue Influence

Involves one person taking advantage of a position of power over another person.

Liquidated Debt

Is one where the existence and amount of the debt is not in dispute. Ex.) if your friend owes you $3,000 and offers you his car in exchange for the debt, the car (as payment other than cash) will constitute valid consideration for the agreement to take payment on the debt.

HARVEY V. DOW

Facts: the dows oned 125 acres of land in maine. They regarded the land as their childerns heritage and the subject of the childerns living on the land was often discussed within the family. With the dows permission their daughter, Teresa installed a mobile home and built a garage on the land. After tersa married jarrod Harvey the dows agreed to finance the construction of a house on the land for the couple. When jarrod died in a accident however Teresa financed the house with life insurance proceeds. The construction cost about 200,000. the dad performed a substainal amount of work on the house doing general carpentry and much of the doundation work Teresa then asked her parents for a deed to the property so that should could obtain a mprtgage. They refused. Teresa filed a suit in a main court they rejected the claim that she was entitled to a judgement on a theory of promissory estoppel Decision - held that the dows showed a present commitment to transfer land to their daughter or to forgo a challenge to her ownership of it - REASON: the court reasoned tat the dows support and encouragement of their daughters conrtuction of a house on the land "conclusively demonstrated"their intent. For years they had made general promises and the dad had approved the site of the house, obtained a building permit and built much of the house himself Statements or conduct representing a present commitment to do or refrain from doing something in the future reasonably can be expected to induce reliance and the promiseees reliance on such statements is reasonable

Past consideration generally qualifies as consideration.

False

Reasonable reliance on a promise is the only requirement for promissory estoppel to apply.

False

Subjective opinions are subject to an action for defamation in the same way as statements of alleged fact.

False

When negligence per se applies, the plaintiff is required to show that a reasonable person would exercise a heightened duty of care toward the plaintiff.

False

Bilateral contracts are a promise plus a requested action.Bilateral contracts are a promise plus a requested action.

False Promise made for another promise.

There is no requirement that enrichment be unjust in order to recover under quasi-contract.

False. There are limits to the quasi contract doctrine; specifically, the enrichment must be unjust.

Intent to be bound

Focus is made to distinguish an invitation to negotiate with an intent to enter into a contract. - Preliminary negotiations.

Mode and Timeliness of Acceptance

General Principle: Acceptance in bilateral contracts must be timely. Reasonable amt of time When not face to face - oferee should use an authorized mode of communication

Luann voluntarily stops to render aid to a biker on the side of the road who had been hit by a car. As Luann pulls over she partially blocks the view of oncoming cars. A car driven by Kellip hits Luann's car, further injuring the biker. If the biker sues Luann for their additional injuries, what statute might be a defense for Luann?

Good Samaritan statute.

Offers Agreements to Agree

In most courts, "agreements to agree" to material contract terms at some date in the future CAN BE binding contracts IF a party can prove that both parties INTENDED to be bound.

E -Contracts

Must meet SAME requirements as other contracts: Agreement Consideration Contractual Capacity Legality Disputes concerning econtracts tend to center on contract terms and whether the parties voluntarily agreed to those terms Econtracts not just on the sale of goods and service but also lisnces - the "sale" of software generallt involves a license, or a right to use the software, rather than the passage of title from the seller to the buyer Although we typically refer to the offeror and the oferee as seller and a buyer, in many online transactions these parties woulb be more accrutely described as licensor and a licensee

QUESTION: Ironman Inc. sponsors a triathlon race and advertises a prize of $50,000 to the winner. *The rules also state that Ironman Inc. reserves the right to change the terms of the race at any time.* Bruce enters the competition and wins, but Ironman Inc. only pays him $10,000. Did Ironman breach a valid contract with Bruce? A. Yes B. No

NO

QUESTION: Ann makes water heaters. Bill owns a water heater delivery and installation service. Bill forms a contract with Ann to purchase a water heater. Bill picks up the water heater from Ann's water heater store and delivers and installs the water heater in a building owned by Cindy. Bill never pays Ann for the water heater. Cindy has been unjustly enriched. Can Ann sue Cindy (will the court impose a quasi-contract on the parties so Ann can recover against Cindy under a theory of unjust enrichment)? A. Yes B. No

NO Ann and bill legit contract --> ann should sue under breach of contract with ann (bill) --> court doesn't care about cindy

QUESTION: Bill sent Mary a written offer via the USPS. Mary "accepted" by scanning the document and adding a digitized version of her signature. Mary and Bill had not discussed exchange of electronic signatures. Under E-SIGN, if Bill fails to fulfill his promises under the offer, can Mary sue Bill for breach of contract? (ie. Have Bill and Mary entered into a valid contract?) Yes No

NO Hadnt discussed use of esignatures so not enforceable

QUESTION: Norman rented an apartment from Ted. Ted gave Norman a written lease, and Norman signed the lease. However, Norman never read the lease before he signed it. The lease states Norman must pay rent by the first of each month; and if he fails to do so, Ted is immediately entitle to the value of ALL rent remaining under the lease. Norman missed a payment and Ted has sued for immediate payment of the remaining months' rent. Can Norman claim that he did not read the lease as a defense to the lawsuit? A. No B. Yes

NO Ignorance is defense to law Express terms usually given more weight - express terms ( terms expressly sated in the contract) are given the greatest weght followed by course of performance, course of dealing and custom and usage of trade - in that order

QUESTION: Jerry offers to provide lawncare services to Kate for $50 per mow from May through October. Mary calls Jerry and says, "I accept, IF you send a written contract." Has Mary accepted the contract? Yes No

NO NOW NO PERIOD AND THE IF IMPLIES COUNTEROFFER PUNCTUATION AND ADDITIONAL WORDS MAKE A BIG DIFFERENCE

What type of tort occurs when the defendant is careless and acts in a way that subjects other people to an unreasonable risk of harm?

Negligent

A teenager plays Grand Theft Auto and runs over people in the game. The teen decides to recreate the game in real life, driving his vehicle up onto the sidewalk and running over two people. The victims pursue a claim against the maker of Grand Theft Auto for negligence, arguing the game makers had a duty of care. Are the victims likely to prevail?

No, because courts have consistently found it is not foreseeable that playing certain video games or viewing certain websites would result in users committing murder.

Peter brings in a baseball bat to hit Mary because he is mad at her. When he arrives, Mary is sleeping. He lines up the baseball bat with her head and whispers that he is about to take a swing. She does not wake up, and before he hits her, he changes his mind and quietly leaves before Mary realizes he has arrived. Mary later finds out and sues for assault. Is she successful?

No, because she was sleeping and thus not in fear or apprehension of an immediate, offensive bodily contact.

Emily and Sasha are having pizza and talking about cars. Emily asks Sasha if Sasha would consider selling her car for $2,000. Is this a valid offer?

No, there is no valid offer.

Kyla is working at her office one day when her very upset roommate Katrina calls. Katrina tells Kyla that she knows that Kyla stole her money and is sending her boyfriend Jacob to get the money back. Kyla locks herself in her office because she is fearful of Jacob. What torts did Katrina commit? -Battery only. -None of the above specific torts occurred. -Assault and battery. -Battery and defamation. -Assault only

None of the above

Void

Object of contract is illegal or has material and serious defect Ex) Contract for assassination, Sale of fireworks, Sale of specific asset which is destroyed

In order for a court to evaluate whether or not there is a valid contract, what standard does a court use to interpret a contract?

Objective

QUESTION: On Oct. 1, Max offered to sell Jonas 25 guitar lessons for $400. Max did not specify the method by which Jonas should accept the offer. Jonas placed a written acceptance in the mail on Oct. 17. Max received the acceptance on Oct. 20. As of which date was the contract valid? 1. Oct. 17 when Max SENT the letter; 2. Oct. 20 when Jason RECEIVED the letter?

Oct. 17 when Max SENT the letter;

Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

Persons suffering from a mental illness may have full, limited, or no legal capacity to enter into a binding contract depending on the nature and extent of their mental deficiency.

The Mailbox Rule: Applies to Non-Instantaneous Communications

Offeree's acceptance is valued when sent Page 267 or 269 **** EQ's on these rules Noninstaneous: letter in the mail: even if you don't know until a latter date Instaneous - phone call, text Acceptance takes effect and thus completeness formation of the contract at the time the oferee sends or delivers the acceptance via the mode of communication expressly or impliedly authorized by the offeror. This is the so called mailbox rue or deposited acceptance rule if the authorized mode of communication is the mail and then an acceptance becomes valid when it is dispatched ( placed in the control of the US postal service) - not when it is received by the offeror - the mailbox rule does not apply to instanteous forms of communication such as when the parties are dealing face to face, by phone by fax and usually by email under the uniform electronic transctions act

Termination of the Offer: Revocation by Offeror

Offeror can REVOKE offer at any time before offeree accepts the offer; 1ST TIMING RULE Caveat: SOME offers are IRREVOCABLE and offeror cannot revoke

Element 1 of an Offer: "Intention"

Offeror must have a serious, objective intention What standard is used to determine the offeror's objective intention? Reasonable Person Standard = RPS Intent is not determined by the subjective intentions, beliefs aor assumptions of the offero. Rather it is determined by what a reasonable person in the oferees psotion would conclude the offerors words and actions meant Ex:you ride to school each day with julio in his new car which has a market value of 20k. One morning in anger ill sell this car to anyone for $500. you drop that money in his lap, but under RPS after taking into consdieratio his frustration the obvious difference in value between the cars serious and objective intent and that you do not have an agreement Expressions of opinion - expression of opinion is not an offer and not a contract term. Goods and services can be "perfect" in one partys opinion and "poor" in anothers Statement of future intent - it isn't an offer - only thinking about selling it not prmosiong to sell it Prelimindary neogiations - a request or invitation to negotiate is not an offer. It only expresses a willingness to discuss the possibility of entering into a contract - the invation to submit bids isn't an offer -can bind the contractor by accepting the bid Advertisements, catalogues and circulars - trated as inviations to negotiate, not as offers to form a contract same goes for price lists it merly invites the buyer to buy at that price not for the seller to sell at that price - on some occasions courts have constructed advertisments to be offers because the ads contined definite terms that invited acceptance ( such as offering a reward for the retur of a lost dog) Agreements to agree - agreements to agree to the material terms of a contract at some future date were not condered to be binding contracts. The modern view however is that agreements to agree may be enforceable agreements (contracts) if it is clear that the parties intended to be bound by the agreements -EMPHASIS IS ON THE PARTIES INTENT RATHER THAN ON FORM Preliminary agreements - increasingly the courts are holding a preliminary agreement consitutues a binding contract if the parties have agreed on all aessential terms and no disputed issues remain to be resolved. If the contrast if the parties agree on certain ajor terms but leave other terms open for further negotiation, a preliminary agreement is binding only in the sense that the parties have committeed themselves to negotiate the undecided terms in good faith in an effort to reach a final agreement

Parol Evidence Rule

Once a fully integrated agreement has been written, no oral evidence of any prior or contemporaneous agreement can be admitted in court to change the terms of the written agreement.

A(n) ______contract is an agreement whereby the seller guarantees to sell everything he or she produces to one buyer.

Output

Bargained for Exchange

Parties to a contract must have bargained for the exchange. It is not enough that one party provides a benefit to the other party

Limitations on Quasi-Contractual Recovery

Party A who has received a benefit is not liable if Party B (who conferred the benefit) did so unnecessarily, negligently, or through misconduct. In this instance, the enrichment to Party A is NOT considered "unjust," so A gets to keep the benefit without paying.

Which of the following indicates a promisee's performance rendered before the promisor's promise was made?

Past consideration

What does the preexisting duty rule mean?

Performance of a duty one is obligated to do under the law is not good consideration, and performance of an existing contractual duty is not good consideration.

Which of the following is true of preexisting duty?

Performance of a duty one is obligated to do under the law is not good consideration.

Pre-Existing Duty

Performing a ________ does not constitute consideration. Flows from 1.) Duties you are required to do by law 2.) Pre-Existing duties required by contract

Case Example 11.4: Philadelphia 76ers basketball star Allen Iverson and friend's claim to share of profits on "The Answer" merchandising

Philadelphia 76ers basketball star Allen Iverson and friend's claim to share of profits on "The Answer" merchandising since he suggested inverson use that nickname in high school. Later inverson said hed give james blackman 25% of any proceeds from the merchanding of products that used "the answer"as a logo or slogan - inversion stated his intention to give blackman a gift - the promise was made in return for past consdieration --> Offer to pay the friend is 25% - friend didn't do anything today Past consideration is no consideration --> promises made in return for actions or events that have already taken place are uneforaceable. These promises lack consideration in the element of bargained for exchanged is missing

Agreements that LACK Consideration 1. Preexisting Duty

Preexisting Duty: A promise to do what one already has a legal or prior contractual obligation to do/perform does not constitute legally sufficient consideration: Adeqaucy of consideration involves "how much" consideration is given Parties are usually free to bargin as they wish - a consumers signature on a contract does not always garanuteee that the contract will be enforced. The contract must also comply with the state and federal protection laws Under most circumstances a promise to do what one alreadt has a legal duty to do doesn't constitute legall sufficient consideration EX: a company began construction on a 7 story building and 3 months in demdnaded 75,00 more on its contract and if it wasn't paid the firm will stop working. The owner of the land having no one else to finish the contruction agrees and pays. The agreement isn't enforceable because it is not supported by legally sufficient consideration - the cntruction company had a preexisiting contractual duty to complete the building

As discussed in the case of Double AA builders, Ltd. v. Grand State Construction L.L.C., which of the following may be used to necessitate that a subcontractor perform according to the terms of its bid because the contractor has relied on the subcontractor's bid?

Promissory estoppel

Which of the following occurs when three conditions are met: one party makes a promise knowing the other party will rely on it; the other party does rely on it; the only way to avoid injustice is to enforce the promise?

Promissory estoppel

Contracts: How do courts determine the parties' intent to form a contract?

Pyramid: TOP - Intent MIDDLE - Objective Theory of Contracts: Reasonable Person Test BOTTOM - Objective Facts Courts may consider: 1) Spoken or written communications 2) Conduct, 3) Circumstances surrounding transaction

Promissory Estoppel: "Detrimental Reliance"

Requirements/Elements to Establish Promissory Estoppel: 1. There must be a clear and definite promise; 2. The promisor should have expected that the promisee would rely on the promise; 3. The promisee reasonably relied on the promise by acting or refraining from some act; 4. The promisee's reliance was definite and resulted in substantial detriment; 5. Enforcement of the promise is necessary to avoid injustice. If these requirements are met a promise may be enforced even though it is not supported by consideration. In essence the promisor (the offeror) will be estopped (barred or prevented) from asserting lack of consideration as a defense -- similar in some ways to the doctorine of a quasi contract If all the requirements/elements on the previous slide are met, the promisor (offeror) will be _estopped_ (prevented) from asserting lack of consideration as a defense.

Mitigation of Damages

Requires that a victim in a contract dispute to minimize the damages that result from a breach of the contract.

Which of the following aids plaintiffs in establishing negligence claims?

Res ipsa loquitur and negligence per se

Rescission and Restitution

Rescission terminates the contract between the parties. Restitution returns the parties to the condition which they were in prior to the contract and any performance thereon

Under the ______, promises based on past consideration may be enforceable to the extent necessary to avoid injustice.

Restatement (Second) of Contracts

UETA: Scope

SCOPE: Electronic signatures and electronic documents relating to a transaction (Business, Commercial or Governmental activities only) UETA SPECIFICALLY DOES NOT APPLY TO: wills, testamentary trusts, some transactions governed by the UCC (DOES apply to sale of GOODS), or to any areas of law a particular state chooses to exclude. The UETA doesn't create new rules for electronic contracts but rather establishes tat records, signature and contracts may not be denied enforceability soley due to their electronic form UETA will not apply to a transaction unless each of the parties has previousy agreed to conduct transactions by electronic means - it doesn't need to be explicit it can be implied A person who has previously agreed to an electronic transaction can also withdraw his or her consent and refuse to conduct futher business electronically

Subject Matter of E-Contracts

Sale of Goods Sale of Services Licensing

Sam, who has a retail clothing store, orders 50 white shirts from XYZ manufacturer. He later calls a representative of XYZ and requests that blue shirts be sent instead. The representative agrees and sends a confirmation. Sam gets white shirts and complains. The XYZ representative says there was no consideration for the contract. Which of the following is the correct resolution of the dispute?

Sam is correct because under the UCC, no additional consideration was needed.

Samantha creates photos featuring an unflattering photograph of the president of the college she attends and sells them outside of class for extra money. She did not obtain permission to use the photograph. Which of the following is true?

Samantha has appropriated the photograph for commercial gain, which constitutes an invasion of privacy.

While out for a bike ride, Huifen sees a child playing alone and unsupervised near the road. Which of the following is true?

She has no duty to render assistance to the child.

Consideration

Something of VALUE must be exchanged to support the promise/convince party to agree to be bound to the contract Consideration must be legally sufficient and bargained for

Generally, when determining whether a contract exists the ________ intent of the parties is not relevant; rather, what matters is how they represented their intent through their actions and words.

Subjective. The subjective intent of the parties is not usually relevant; what matters is how they represented their intent through their actions and words.

Hamer v. Sidway

The issue before the court arose from a contract created in 1869 between willam story sir and his nephew William story II . The uncle promise his nephew that if he refrained from drinking alcohol, using tobacco and playing billard and cards for money until he reached the age of 21 the uncle would pay him 5,000. the nephew agreed to do so and did for the next 6 years - the uncle wrote to him saying he could have this money and interest - the nephew left the money in the care of his uncle for the next 12 years when the unlce died the executor of the estate refused to give the nephew the money- hamer a 3rd party to whom the promise had been assigned and the executor sidway contended that the contract was invalid because there was insuffient consideration to upport it. The uncle had received nothing and the nephew had actually benefited therefore no contract existed - for a contract to be valid and binding, consideration must be given and that consideration must be something of legally sufficient value - ended up giving him that money

Capacity

The mental ability to understand and appreciate a person's rights, duties and obligations under a contract and, therefore comply with its terms.

Someone who has been adjudicated insane has no capacity to enter into contracts, and any contract he attempts to enter into is void, even if he has an appointed guardian.

True

The purpose of a covenant not to compete, in the employer/employee context, is to restrict what an employee may do after leaving a company.

True

The response that the offeror expects from the offeree determines whether a contract is bilateral or unilateral.

True

Under the mailbox rule, a valid contract is formed if a rejection is dispatched, but before the rejection is received, the acceptance has already been mailed (sent) to the offeror.

True

UETA: The Uniform Electronic Transactions Act (State Laws)

UETA (adopted, at least in part, by 48 states): What is it? A uniform act (set of laws) designed to harmonize state regulation of electronic transactions. Purpose: Remove barriers to e-commerce by recognizing validity and enforceability of e-signatures and e-documents Parties must AGREE in advance to transact business using electronic means Record is information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable [visual] form

Which of the following was involved when the government, in attempting to help AIG, agreed with AIG to lend AIG up to $85 billion in exchange for nearly 80 percent of AIG's stock? A. An accord and satisfaction B. An accord but not a satisfaction C. A unilateral contract D. A bilateral contract E. An unliquidated contract

d

Types of Online Acceptances: Click-On Agreements

User who "CLICKS ON" phrase/box "I Agree" (or similar) is deemed to have READ, UNDERSTOOD & AGREED to the terms of the agreement Makes certain language in click on agreement hyperlinks to text so the terms and conditions are easy to find Act of clicking box by user is more evidence in company's favor BINDING AND ENFORCEABLE!! --> Click on contracts enforceable regardless of the fact that nobody reads All who click "I agree" are bound to all reasonable terms -- absurd conditions nt binding if courts deem them absurd Default set to I do NOT accept - forces user to "accept"

If one or both of the parties have the ability to either withdraw from the contract or enforce it, without breaching the contract, the contract is _____________.

Voidable

Bilateral Contracts: Promise for a Promise. When does revocation occur?

WHEN can revocation occur? An offeror can revoke an offer at any time up until an offeree accepts the offer

CAVEAT TO MAILBOX RULE:

What happens if offeror SPECIFIED a particular method of acceptance, but offeree sent acceptance in a different manner? ANSWER to Question on Previous Slide: Offeree sends acceptance by means SLOWER than specified, offeror MAY treat acceptance as _invalid; Offeree sends acceptance by means that accomplish the same PURPOSE as that specified, then acceptance is effective BUT ONLY AT _time offeror receives __ the acceptance Change manner but same purpose --> change mailbox rule from when sent to valid when received - ex fed ex vs ups

Past Consideration

When a party has already performed work or provided services, such acts cannot be consideration for future promises Ex.) You work for an employer for 3 years and your boss says to you that, due to all of your hard work, he will give you a 5% interest in the company. Since the work had already been done such 'past consideration' cannot create a valid contract for the 500 shares of stock and you have no claim for the shares of stock.

Mutual Mistake

When both parties are mistaken about a current or past material fact either party can rescind the contract

QUESTION: Ironman Inc. sponsors a triathlon race and advertises a prize of $50,000 to the winner. Bruce enters the competition and wins, but Ironman Inc. only pays him $10,000. Did Ironman breach a valid contract with Bruce? A. Yes B. No

YES

Question: Jerry offers to provide lawncare services to Mary for $50 per mow from May through October. Mary calls Jerry and says, "I accept. Please send a written contract." Has Mary accepted the contract? Yes No

YES THE PERIOD AFTER I ACCEPT IS KEY. NOW THAT I HAVE ACCEPTED DO THIS

Kai offers to sell a rare book to Penny for $1,000. Penny wants to do more research first, but gives Kai $10 to hold the book for her for a week so she can buy it at the end of the week if her research shows the book is worth it. Kai takes Penny's $10 but dies the next day. Penny notifies Kai's widow that she wants to buy the book anyway. Does Penny have the right to buy the book for $1,000?

Yes, as long as she acted to buy the book within a week of the original agreement.

In a unilateral contract, the consideration for a promise is a[n] ____. A. Action B. Return promise C. Acknowledgement D. Consideration E. Agreement

a

Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sally decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to pay the extra amount. What is the likely result in a dispute between Sally and the stylist and why? A. The stylist will win because she did additional work in exchange for the extra payment; and, therefore, Sally's promise was supported by valid consideration. B. The stylist will win because she did additional work in exchange for the extra payment; and, therefore, a valid unilateral contract existed. C. The stylist will win unless Sally can show that she had previously received both a trim and highlights for $40. If she can prove that she previously received both for $40, then the past expectations rule applies. D. Sally will win because the stylist had a preexisting duty to have Sally's hair look as good as possible. E. Sally will win because there was no valid consideration in exchange for the highlighting.

a

Sam promises his uncle, Bob, that he will lose 10 pounds and exercise every day during the spring semester in exchange for having his tuition paid for the fall semester. The uncle agrees; but after Sam has lost 10 pounds and exercised all semester, Bob refuses to pay saying that no contract existed. Which of the following is true? A. Consideration was present, there was an enforceable contract, and Bob has wrongfully refused to pay. B. There was no consideration present, and Bob has no obligation to pay. C. There was no consideration present, but Bob must pay under principles of promissory estoppels. D. There was consideration present, but Bob is not required to pay because the contract was illusory. E. There was consideration present, but Bob is not required to pay because Bob did not receive a benefit personally.

a

Sue is three months behind on her mortgage, and her lender filed negative information affecting her credit rating. Sue mailed one monthly payment to the lender along with a letter providing that she was making the payment on condition that the lender removes negative material sent to credit reporting agencies affecting her credit rating. The lender cashed the check but did not remove the negative information. Sue sues the bank for breach of contract. Which of the following is the most likely result? A. The bank will win because under the preexisting duty rule, Sue was already legally obligated to make the payment, and there was no consideration to support the contract. B. The bank will win because under federal law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful. C. The bank will win because under state law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful. D. Sue will win because the bank's cashing the check constituted acceptance of her offer, and a valid contract existed. E. Sue will win because the bank had an obligation to notify her that it was not accepting her offer before cashing the check.

a

Which of the following is true regarding an accord and satisfaction? A. When amounts agreed upon are paid, the debt is fully discharged. B. When amounts agreed upon are paid, the debt is fully discharged except for any late charges due on the initial indebtedness. C. When amounts agreed upon are paid, the debt is fully discharged except for any interest due on the initial indebtedness. D. When amounts agreed upon are paid, the debt is fully discharged except for any late charges and for any interest due on the initial indebtedness. E. When amounts agreed upon are paid, the debt is fully discharged except for any late charges or interest due on the initial indebtedness, or attorney fees of the creditor that are due.

a

Which of the following is true regarding illusory promises? A. Illusory promises are not consideration. B. Illusory promises are consideration. C. Illusory promises qualify as consideration only when past consideration is at issue. D. Illusory promises qualify as consideration only when promissory estoppel is at issue. E. Illusory promises are consideration only when a sale of goods is involved.

a

Which of the following is true regarding the effect of a debtor offering to pay a different type of payment, for example, goods instead of money, on a debt for which there is not a dispute over the amount or existence of the debt, and the creditor agrees? A. A liquidated debt is involved, and there is an accord and satisfaction. B. A liquidated debt is involved, and there is an accord but no satisfaction. C. A liquidated debt is involved, and there is not a satisfaction or an accord. D. An unliquidated debt is involved, and there is an accord and satisfaction. E. An unliquidated debt is involved, and there is an accord but not satisfaction.

a

Joseph agrees to purchase Mary's car for $1,000. For Mary, Joseph's payment of $1,000 is:

a consideration.

A seller rejects a written offer made by a buyer, alters the terms of the odder, and has the new offer delivered to the buyer, this situation describes

a counteroffer

Lapse of time:

an offer terminates automatically by law when the period of time specified in the offer has passed. If the offer states that it will be left open until a particular date, then the offer will terminate at midnight that day. If the offer states that it will be left open for a number of days, this time period normally beings to run when the offer is actually received by the offeree, not when it is formed or sent If the offer doesn't specify a tie for acceptance - the offer terminates at the end of a reasonable period of time. A reasonable period of time is determined by the subject matter of the contract

If you try to induce a seller to break one contract in order to accept a different contract, this is

an unfair trade practice under the license law

If a salesperson fails to give a copy of a contract offer to the purchaser after he/she signs it, it is

an unfair trade practice violation

When more than one offer is received, the seller may accept or make a counteroffer on

any offer received

Which of the following is true regarding whether an accepted offer to pay part of a debt is consideration? A. Partial payment is consideration under all circumstances. B. Partial payment is not consideration under any circumstances. C. Partial payment is consideration if a liquidated debt is involved. D. Partial payment is consideration if an unliquidated debt is involved. E. Partial payment is consideration if an exception applies to the general rule that partial payment is not consideration for an unliquidated debt.

d

In return for his oral promise to pay her $100, Penny promises her uncle that she will not violate laws against speeding for one year. Penny abides by her promise, but her uncle refuses to pay. Which of the following is true regarding whether Penny is entitled to the money? A. Penny is entitled to the money because she upheld her part of the bargain. B. Penny is not entitled to recover because she had a preexisting duty to obey laws against speeding. C. Penny is not entitled to recover because obeying traffic laws was actually good for her, not something that would constitute a detriment. D. Penny is not entitled to recover unless the agreement was put under seal. E. Penny is entitled to recover, but only ½ of the amount, because a family member is involved and the agreement was not in writing.

b

When an accord and satisfaction is at issue, the ______ is the new agreement to pay less than the creditor claims is owed. A. Satisfaction B. Accord C. Seal D. Compromise E. Acknowledgement

b

Which of the following is an exception to the rule requiring consideration? A. Promissory agreement B. Promissory estoppel C. Quasi estoppel D. Quasi agreement E. Promissory performance

b

Which of the following occurs when three conditions are met: one party makes a promise knowing the other party will rely on it; the other party does rely on it; the only way to avoid injustice is to enforce the promise? A. Promissory agreement B. Promissory estoppel C. Quasi estoppel D. Quasi agreement E. Promissory performance

b

Which of the following was the result on appeal in Thelma Agnes Smith v. David Phillip Riley, the case in the text in which the plaintiff who had lived with the defendant out of wedlock for several years sought after they broke up to enforce two agreements regarding the sale and assignment of property to her? A. The court ruled in favor of the defendant on the basis that a recitation of nominal consideration of $1 along with love and affection was insufficient consideration to support a conveyance. B. The court ruled in favor of the plaintiff on the basis that a recitation of nominal consideration of $1 along with consideration of love and affection was adequate consideration to support the agreements. C. The court ruled in favor of the defendant on the basis that the plaintiff's previous deposit of funds into a joint checking account was insufficient consideration for the later agreements. D. The court ruled in favor of the plaintiff on the basis that the plaintiff's previous deposit of funds into a joint checking account was sufficient consideration for the later agreements. E. The court ordered the parties to divide on a 50/50 basis the assets in question based on their domestic partnership.

b

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is no dispute over the amount or existence of the debt, and the creditor agrees? A. A liquidated debt is involved, and there is an accord and satisfaction. B. A liquidated debt is involved, and there is an accord but no satisfaction. C. A liquidated debt is involved, and there is neither a satisfaction nor an accord. D. An unliquidated debt is involved, and there is an accord and satisfaction. E. An unliquidated debt is involved, and there is an accord but not satisfaction.

c

Tina, an experienced pool contractor, and Bruce agree on a price for Tina to build a pool in Bruce's backyard. While the area is not known for rocks, unfortunately Tina unexpectedly encounters a significant problem with solid rock in the backyard when she starts to dig. She tells Bruce that unless she receives an extra $5,000, she cannot complete the job. Bruce agrees thinking to himself that he has a way out. When Tina finishes the pool, Bruce refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute? A. Bruce will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain. B. Bruce will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain. C. Bruce will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule. D. Bruce will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies. E. Bruce will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.

c

Which of the following is true regarding the preexisting duty rule? A. Unforeseen circumstances is an exception, but additional work and past consideration are not exceptions. B. Additional work is an exception, but unforeseen circumstances and past consideration are not exceptions. C. Past consideration is an exception, but unforeseen circumstances and additional work are not exceptions. D. Unforeseen circumstances and additional work are exceptions, but past consideration is not an exception. E. Unforeseen circumstances and past consideration are exceptions, but additional work is not an exception.

d

Which of the following is true under the UCC regarding checks marked "paid-in-full"? A. If a business inadvertently cashes such a check, the business has 30 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. B. If a business inadvertently cashes such a check, the business has 60 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. C. If a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. D. If a business inadvertently cashes such a check, the business has 120 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction. E. The business has no recourse, and the debt is deemed discharged and satisfied.

c

Yolanda agrees to bathe and groom Wendy's dog, Fluffy Puff, for $30. Yolanda agreed to the price before seeing Fluffy Puff who is a chubby dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy Puff, the price will be $40. Wendy reluctantly agrees but tells Yolanda that she should not have been surprised that a dog named Fluffy Puff would have lots of hair. Yolanda bathes and grooms Fluffy Puff, but Wendy will only pay $30. Which of the following is correct regarding Yolanda's entitlement to the extra $10? A. Yolanda is entitled to the extra $10 because a valid bilateral contract existed. B. Yolanda is entitled to the extra $10 because a valid unilateral contract existed. C. Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy Puff for $30. D. Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because Wendy's promise to pay $30 was illusory. E. Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because past consideration was involved.

c

In a bilateral contract, the consideration for each promise is ____. A. A completed act B. The beginning of action in acceptance, even if it is not complete C. An acknowledgement D. A return promise E. An agreement

d

Tina, an experienced pool contractor, and Bruce agree on a price for Tina to build a pool in Bruce's backyard. Tina discovers that she did not initially figure in enough of a charge for labor. She tells Bruce that unless she receives an extra $5,000 with which to hire workers, she cannot complete the job. Bruce agrees thinking to himself that he has a way out. When Tina finishes the pool, Bruce refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute? A. Bruce will be required to pay because a typical, unilateral contract is involved, and he got the benefit of his bargain. B. Bruce will be required to pay because a typical, bilateral contract is involved, and he got the benefit of his bargain. C. Bruce will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule. D. Bruce will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies. E. Bruce will only be required to pay ½ of the agreed upon amounts because of the calculations involved under the preexisting duty rule.

d

Which of the following is not an example of consideration? A. A promise to stay in a job until a particular project is complete. B. A promise to your football coach to refrain from riding your motorcycle during football season even though you love riding it. C. A promise to cook dinner for your roommate for the next six months. D. A promise to buy skis for $300 if you like them. E. A promise to stop staying out late at night during exam week.

d

Which of the following was the result in the case in the text Hamer v. Sidway, in which, after performance by his nephew, an uncle reneged on a promise to the nephew to pay him $5,000 if the nephew refrained from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he was 21 years of age? A. That because refraining from the conduct at issue benefited his character and health, the nephew could not recover. B. That no consideration was involved, and the nephew could not recover because the consideration from him did not consist of money or goods. C. That no consideration was involved, and the nephew could not recover because the proof established that the nephew had no interest in engaging in the items at issue, and avoiding them was no detriment to him. D. That the nephew could recover because he supplied consideration. E. That the nephew could recover, but only under promissory estoppel an amount compensating him for his reliance on the promise.

d

Which of the following was the result on appeal in the Case Opener involving the alleged breach of an oral contract based on the plaintiff lawyer loaning a corporate client funds and the client later reneging on a promise, made in gratitude, to give the lawyer 3 percent of the company's stock? A. That the promise to transfer the stock flowed from the loan transaction and was enforceable by the plaintiff. B. That the promise was unenforceable because lawyers may not loan clients money. C. That the promise was enforceable only if the total the plaintiff received in funds did not violate state usury laws involving maximum interest rates. D. That the promise was not enforceable because it was a gift. E. That the promise was enforceable as a gift.

d

In a[n] ______ debt, the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount. A. Disputed B. Unacknowledged C. Uncertain D. Liquidated E. Unliquidated

e

Which of the following is true regarding the adequacy of consideration? A. Courts generally consider the adequacy of consideration in determining whether to enforce a contract. B. Courts consider the adequacy of consideration only if something is sold for less than 90% of its market value. C. Courts consider the adequacy of consideration only if something is sold for less than 80% of its market value. D. Courts consider the adequacy of consideration only if something is sold for less than 70% of its market value. E. Courts seldom consider the adequacy of consideration but will do so if fraud is involved.

e

Which of the following would not be considered an example of consideration? A. A promise to be on time for class all semester. B. A promise to stop drinking sports drinks. C. A promise to walk the neighbor's dog. D. A promise to call the police if the neighbor's alarm system should go off while they are on vacation. E. A promise to pay your employees as required by law.

e