Contracts Short Answer Questions

Is an advertisement generally an offer?

An ad is generally not an offer, but is an invitation to an offer. For an ad to be a valid offer, is must 1. have a limited number of offerees and 2. have definite terms

3 elements of a valid offer

Communicated, Committed, Definite Terms

What are the 3 elements of a valid acceptance for a bilateral contract offer?

Communicated, absolute and unequivocal, responsive to offer (mirror of offer)

What is the only was to accept a unilateral contract?

Complete performance

What are two types of secondary damages?

Consequential and Incidental damages

If an offeree responds to an offer by saying he will only accept if another term is added, what is this response called?

Counter-offer

When do damages have to be foreseeable to parties of a contract to be recoverable upon breach?

Damages have to be forseable at the time the contract was created

Is a moral promise sufficient consideration?

General rule: It is not sufficient consideration, subsequent promise to pay a debt. Exceptions: statue of limitation, infancy, bankruptcy, material benefit

Under what circumstances might pain and suffering be recoverable under a contract action (rather than under a tort action)

If it flows naturally from the breach and even more likely if the breach also causes bodily harm, or the contract/breach was of the kind where pain and suffering was a particularly likely result

If a party received a benefit from a void/voidable contract that is not in compliance with S/F, what might the other party recover as damages?

Restitution

What are the "terminators" of an offer?

Revocation, Lapse of time, Rejection/ Counteroffer, Death/ Incapacity, Failure of a condiiton

What types of transactions does UCC 2-207 apply to?

Sales of goods as definited under the UCC

Can a breaching party ever received restitution for the value of his or her services?

Sometimes. However, even in jurisdictions where this is allowed, there must be a deduction for the harm caused by the breach, and the amount is capped by what the breaching Plaintiff would have received under the contract

Is specific performance typically granted in sales of land/real estate? I specific performance typically granted in sales of goods? Why or why not?

Specific performance IS typically granted in the sale of land/real estate. Real estate was thought to be unique, and not easy to purchase like land or easily sell to another buyer. Sales of goods, were NOT typically granted specific performance in the event of a breach. This is because most goods are thought to be easy to replace or sell

What are liquidated damages?

Specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract

What is the mirror image rule?

The acceptance should look exactly like the offer and not change it in any way

If a party has benefitted from the acts of another, and it would be unjust for the acting party NOT to receive compensation, what type of remedy is the acting party entitled to?

The acting party is entitled to an action in quasi-contract, or an implied-in-law contract remedy

What section of the UCC has rules for determining if proposed terms are a counter-offer or acceptance?

UCC 2-207

What is the standard for determining whether damages are proven with sufficient certainty?

With reasonable certainty you must hsow the breach caused the damages and show how much. (not mathematical certainty, just reasonable certainty)

Can an email constitiute a writing to satisify the S/F?

Yes

Are promises to donate money to charities considered enforceable? What needs to be present to enforce them?

Yes all the elements of promissory estoppel must be present, except the second element. A charitable subscription is binding without proof that the promise induced action or forbearance

If a non-breaching party would have has an expectation value that was negative (a loosing contract), can that party sue in restitution for the value of her services for a positive amount? If so, how would you measure the value of the restitution?

Yes, a non-breaching pary to a "losing" contract can sue in restitution; the measure of damages would be the value of the non-breaching party's performance, based on how much it would have cost the breaching party to obtain those services

Is an illusory promise valid consideration

No

What do you call the act of giving up one's legal rights (in exchange for something of value)?

Forbearance

What do we call damages that flow directly from the contract itself?

Primary damages

Bilateral contract

Promise for a promise

Unilateral Contract

Promise for performance

If there is no valid consideration, but someone has detrimentally relied on a promise, what might be available relief to a promisee?

Promissory Estoppel

Is the validity of an offer based on what the offeror internally intended, or what a reasonable person would believe was a valid offer considering all the facts and circumstances?

Reasonable person, objective standard

What is the difference between "want of consideration" and "failure of consideration"?

"Want of consideration" are all transactions where no inducement to a contract was intended to pass between the parties, and therefore no legally enforeceable contract is created. Want of consideration differs from failure of consideration, which refers to a situation wherein consideration was originally existing and valid but has since become valueless or ceased to exist

What are the elements of unjust enrichment (quantum meruit)?

1. Benefit conferred by plaintiff upon defendant 2. Defendant wanted benefit or appreciated the benefits in some objective manner (saving one's life) 3. Retaining the benefits without compensation would be unjust

What 3 questions do we ask to analyze a statue of frauds problem?

1. Does this type of contract fall within the statute of frauds? No- oral contract is enforceable Yes- go to #2 2. Is the writing requirement satisfied? Yes- contract is enforceable No- go to #3 3. Is there an exception to the statute of frauds that applies? Yes- contract is enforceable No- contract is not enforceable

Name and define the three types of interests contract damages are meant to protect

1. Expectation; goal is to put the plaintiff in as good a position as he would have been, had the defendant performed his promise. Putting them right back where they should have been 2. Reliance: goal is to put the plaintiff in as good a positon as he was before the promise was made 3. Restitution: goal is to allow one party to recover the value of a benefit conferred up on the other party (prevent unjust enrichment)

What are the elements of promissory estoppel?

1. Promise by promisor 2. Made with reasonable expectation that promisee (or third party) will rely on it 3. Reasonable reliance by promisee 4. Injustice can be avoided by enforcement of the promise 5. Remedy granted may be limited as justice requires

What are the writing requirements under the UCC for the S/F?

1. Quantity 2. An indication the contract has been made 3. Signed by the party to be charged

What four situation exist where moral obligation constitutes sufficient consideration?

1. Reaffirmation of debt barred by the statute of frauds 2. Reaffirmation of debt incurred by infants upon reaching age of majority 3. Reaffirmation of debt discharged by bankruptcy 4. Where the promisor has received a "material benefit"

Under common law (non-UCC cases), what must be in writing to satisify the S/F?

1. Signed by the party to be charged 2. Indicated that a contract has been made (or is being offered) 3. Identifies the parties to the contract 4. Reasonably describes the subject matter of the contract 5. States the essential terms of the contract

What are some examples of situations where a party might recover on a contract that should be covered by S/F but that is not in writing at all?

1. Specially manufactured good 2. Admission exception 3. Past performance exception

List the analysis you always go through to determine if valid consideration exists

1. What is the promsie to be enforced? 2. What is the act or promise sought in return? 3. Was the act or promise bargained for? 4. Does the act or promise have legal value?

If a party gives up a right to a legal claim, which later turns out to be invalid, what is the two-part test for determining whether this forbearance was sufficient consideration?

1. Whether it was an honest and reasonable belief that the claim is valid 2. If you know or think you have the right to something and give it up

What factors will a court consider in determining whether an oral contract is binding, or rather instead the parties did not intent to be bound until a written contract was signed?

1. Whether the contract is of a class usually found to be in writing 2. Whether it is aof a trype needing a formal writing for its full expression 3. Whether it has few or many details 4. Whether the amount is large or small 5. Whether the contract is common or unusual 6. Whether all details have been agreed upon or some remain unresolved 7. Whether the negotitations show a writing was discussed or contemplated

What is an illusory promise?

A promise whose fullfillment is optional or entirely discretionary on the part of the promisor

What is "cover" Which party, a buyer or seller can effectuate a "cover" under the UCC?

A remedy to a seller based on a breach by the buyer. Under the UCC, the buyer is permitted (but not required) to find another source of the same type of goods

What is the difference between adequate consideration and sufficient consideration?

Adequate consideration refers to the quantity of the amounts exchanged (compare this to that). Whereas, sufficient consideration must be something that has value in the eye of the law

What is an implied-in-fact contract?

An implied in fact contract is a contract that is created by inferring the terms based on the parties' conduct and surrounding circumstances

What is an implied-in-law contract? What is another name for it?

An implied-in-law contract are imposed upon the parties even though none of the terms are expressly agreed upon. This is also called Quasi-Contract

If an offeror does not specify how an acceptance is valid, how does someone determine whether an acceptance has occured?

By a reasonable person standard. If an outside party would assume that a offer has been accepted, then it has been accepted

What are some ways that an offer can be revoked indirectly?

By making it known to the offeree through other parties that the offer is no longer on the table, by taking an action inconsistent with the offer still being valid, and making that known before the offer is accepted

What are some ways to reject an offer indirectly?

By not responsing to an offer within a time frame set in an option contract, or a reasonable time depending on the facts and circumstances

What are some ways to reject an offer directly?

By saying " I do not accept your offer" or words to that effect; by making a counteroffer

What are some ways an offer can be revoked directly?

By saying "I am withdrawing my offer." ir "My offer is no longer on the table" Or words to that effect

What are the different ways a party can accept an offer?

By statement, by act, by silence

How is an action in quasi-contract measured?

By the value of the services rendered by the acting party

What three types of terms, if changed by an offeree, always result in the response being a counter-offer, and never an acceptance?

Dickered terms- price, quantity

What is consideration?

Exists when something of value is exchanged in a bargain, which in the eyes of the law, has "legal" value. I.E explicitly bargained for benefit to the promisor or explicitly bargained for detriment to the promisee

Under what circumstances might a non-breaching party successfully claim reliance damages incurred BEFORE the signing of a contract?

In lieu of lost profits; if you cannot prove with reasonable certainty what the lost profits would be, or there are no lost profits, then you sue in reliance. Trying to make you whole again

What are the major differences between consequentail and incidental damages?

Incidental damages are incurred trying to prevent a breach, whereas, consequential damages are damages a plaintiff would not have incurred but for the breach

What is an option contract?

It is created when the offeree gives something of value to the offeror in exchange for holding the offer for a set time

What is the two-part test to determine if a liquidated damages clause is enforceable?

Must reasonably estimate the damages likely to be caused by a breach, as understood at the time of contract, to be enforceable IS THIS RIGHT?

What does it mean to mitigate damages?

Must take reasonable steps to avoid further loss

Are lost profits recoverable a. for a new business or b. for an established business, if the lost profits are a secondary damages to my breach of contract with you?

Lost profits MAY be recoverable for a new business you must look at same or similar business in the area to find certainty. An established business is more likely to have lost profits be recoverable

Is "love and affection" considered sufficient consideration?

Love and affection has no legal value in the eyes of the law, therefore it is not sufficient consideration

What do we call the doctrine where an oral contract might be sufficient when someone acts as a surety?

Main purpose rule; where a person guarantees the debt of another person in order to satisify his own personal interest, that guarantee is enforceable even if it is not in writing

What are the types of contract that must be in writing to be valid under the Statute of Frauds?

Marriage/Modification of contract Year or more contract Land Executor contracts Goods $500 or more Surety contracts

If one party repudiates a contract, either before performance has begun or during performance (part performance), can the other party complete the contract and sue for the contract amount?

No, one notice of the breach is received, they must cease performance and sue for any losses sustained from the breach as well as profits that would have been realized upon performance

X promises to buy from Y "all the pens I want." Is this a valid contract? What do we call this?

No, unless shipment and acceptance of shipment. This is called a continuing offer

An offer is made, a counter-offer is made. If the counter-offer is NOT accepted, is the original offer still on the table?

No, unless the response of the original offeror indicated that the original offer still stands (in which case it serves as the original offeror's counter-offer to the origianl offeree's counter-offer)

Once a party has accepted a contract, can one of the parties change the terms of the contract?

No. Not unless both parties agree

3 parts of a valid contract

Offer, Acceptance, Consideration

In a breach of employment case, what type of job must a non-breaching party take to mitigate damages?

One that is substantially similar to the one you previously had

X offers to sell "all the oranges we produce" to Y. What do we call this kind of contract? Is it valid consideration?

Output contract. Yes, valid consideration

If K promises to do something for L that K has already done, what do we call that type of consideration? Is it legally valid?

Past consideration. Not valid consideration

What is mutual assent?

The intention of the parties to enter into a contract; or, each party agrees to the same terms and conditions, with the same meaning as the other

What are the components of a mailbox rule?

The mailbox rule only applies to acceptance, it does NOT apply to offers. The acceptance occurs when it is put in the mail (NOT when it is received) Must be properly stamped and addressed Only applies to US mail Only applies when the offer can be accepted by mail Cannot be unilaterally revoked before the acceptance is received by the offeror

Who determines how an offer is validly accepted?

The offeror is the "master of the offer" and can state an exclusive way or one of several ways an offer can be accepted

When a contract is NOT covered under the UCC, and the offeree responds to an offer with terms that are not a mirror image of the offer, is the response an acceptance or a counter-offer

The response is a counter-offer, not an acceptance

Does the statute of frauds require that contracts where two parties agree to marry must be in writing?

The standard "I agree to marry you, if you marry me" is not enforceable in any jurisdiction; a promise made in contemplation of marriage must be shown in writing

What requirements does a non-breaching party need to show to obtain specific performance?

To obtain specific performance, a non-breaching party must show that money damages are inadequate, that the subject of the contract was unique or not easily replaced or sold

X offers to buy "all the phones I need" from Y, who sells phones. Is this valid consideration? What type of contract is this

Yes, valid consideration. Requirements contract

If I might incure significant secondary losses as a result of a breach of my contract with you, what can I do to make it possible to recover those secondary losses if you breach?

You must "jump the big three" and meet them all; Certainty, Forseeability, and Avoidability (mitigate the damages)

In Wood v. Lucy, Lady Duff-Gordon, what implied duty did the court place on the defendant to reach a result of valid consideration?

a promise to use reasonable effects

What do we call damages that flow after a breach of contract, but not directly from the contract itself?

secondary damages