Legal Studies
Unconscionable K
"shock the conscious of the court" they make sure that people are not taken advantage of because remember the courts don't necessarily care if we make a bad bargain; what they do care is how the contract might be forced upon the person or that the K has so much legal ease or lawyer speak ..... then the court might find if the K is so one-sided in nature, that the K is rescinded
Quasi Contract
'looks like a contract' happens when there has been something that has happen that should be allowed to compensated for. (House builder example)
Problem with Consideration
(Moral obligation, preexisting duty, past consideration, illusory promises) all seem valid, but they lack the true intent to K or you are under some pre-existing duty to perform (Hamer vs Sideway)
Illegal K
(pari delicito) Void!!
exculpatory clause
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault.
Define contract
A promise for another promise that if breached or broken allows a remedy
When all aspects of the parties' duties under the contract are executed perfectly, which of the following occurs? A) Complete performance B) Substantial performance C) Significant performance D) Ratified performance E) Equitable performance
A) Complete performance Complete performance occurs when all aspects of the parties' duties under the contract are carried out perfectly.
When Philip and Cynthia entered their contract, it was legal under state statute. Subsequently, however, the state passed a new statute making the subject matter of the contract illegal. Which of the following is correct regarding the contract between Philip and Cynthia? A) It is discharged. B) It is still enforceable. C) It is an executed contract. D) It is ratified. E) It qualifies for the private party exemption.
A) It is discharged. Should a legal contract be formed and its subject later becomes illegal under a new statute, the contract is discharged by law.
Which of the following are ways in which an offer can be terminated? A) Revocation, rejection, counteroffer, illegality, death, incapacity, and lapse of time B) Rejection, counteroffer, illegality, acceptance, adhesion, lapse of time, and bilateral termination C) Revocation, adhesion, unilateral termination, and bilateral termination D) Revocation, acceptance, counteroffer, illegality, and lapse of time E) Unilateral termination, bilateral termination, illegality, incapacity, and acceptance
A) Revocation, rejection, counteroffer, illegality, death, incapacity, and lapse of time All ways in which a K offer can be terminated, by the parties and by law. (Chapter 14)
When the party making the statement would have known the truth about the fact had they used reasonable care to discover or reveal it, ________ results. A) negligent misrepresentation B) innocent misrepresentation C) duress comment D) undue influence E) mistake of law
A) negligent misrepresentation Negligence because when a party makes a representation through carelessness, or recklessness, there is no scienter, but there is still the fact that a person knew or could have easily found out the answer - this is a 'non fraud' (Chapter 17)
Studying for their legal studies exam, Martin explains the difference between a unilateral and bilateral contract to Shaun. The difference in these two types of contracts is ________ A) the type of consideration in the contract. B) a bilateral contract requires consideration and a unilateral does not. C) a unilateral contract requires consideration and a bilateral does not. D) the adequacy of consideration. E) promissory estoppel must be present in a unilateral contract.
A) the type of consideration in the contract. In a bilateral K the K is formed when the parties make their agreement (promise for a promise) and in a unilateral K the consideration is when the work or thing begins (promise for an action - you rake my leaves I'll pay you $50 - no K until you begin to rake my leaves)
How to Seattle Claims
Accord satisfaction settling on something different than the original offer and acceptance.
4 valid elements to a K
Agreement - offer and acceptance Consideration - bargain for exchange (both parties have to receive something) Capacity - mutual assent Legality - must be for legal purpose
Paula includes a clause in her contract with Raul that says if he fails to pay rent in the future, he must move out of her apartment immediately. This is an example of which of the following? A) A condition precedent B) A condition subsequent C) A concurrent condition D) A nominal condition e) A unilateral condition
B) A condition subsequent A condition subsequent is a future event that terminates the obligations of the parties when it occurs. Here, if Raul fails to pay rent, he must move out of Paula's apartment
Which of the following is the most likely measure of recovery when a quasi-contract is involved? A) The amount set forth in the contract. B) The fair market value of the matter involved. C) The wholesale price of any good involved. D) The amount sought by the plaintiff in the Complaint. E) Damages will be computed the same way as they are computed for any other contract.
B) The fair market value of the matter involved. "as much as he deserves" which as we discussed with limited exceptions - the fair market value of something. Chapter 13 -
Kelly and David have entered into a voidable contract. This means that the contract may be ________ A) illegal B) rescinded C) unallowed D) assigned E) rewritten
B) rescinded Rescinded or undone based on putting the parties back whole as if the K never happened (16 and 17)
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. A) objective B) subjective C) unilateral D) comprehensive E) manifested
B) subjective We use an objective theory of contracts NOT a subjective theory of content, the subjective thoughts (its all a joke on Lucy don't worry about it) are not looked at by a court. (Chapter 13)
What are the elements of consideration
Bargained for exchange, sides have to give something up or receive a benefit (no gifts)
Executed K
Both sides have fulfilled their promise
Bertrand sends an email to Lowell asking him if he would like to co-author a book. Lowell agrees and requests a $10,000 advance for the first three chapters. Bertrand sends him the money. What are the characteristics of the contract? A) The contract is voidable, express, and executed. B) The contract is void, implied, and executory. C) The contract is express, bilateral, and executory. D) The contract is implied, executed, and valid. E) There is not a valid contract.
C) The contract is express, bilateral, and executory. The contract is express because the terms are clearly set forth in a writing, bilateral as it is a promise for a promise and it is executory because one party has performed their obligation (Bertrand sent the money) but Lowell has not supplied the chapters yet.
Thomas tells Larry he will pay him $400 if he will let all the air out of his teacher's tires and smash in all the headlights. This contract is ________ A) void and voidable B) voidable C) void D) unenforceable e) legal
C) void The contract is illegal
Contractual Capacity
Capacity is presumed (unless one of the exceptions)
Damages
Compensate - damages designed to compensate Consequential - damages designed to compensate for the lost profit of the K Punitive - will be given to someone who was frauded in case
In the Lucy v. Zehmer case referenced in the text, involving whether there was assent to a contract or whether allegations of joking prevented the formation of the contract, what did the court determine? A) The court ruled that the contract would be enforced because of what the parties verbally said, regardless of whether an objective person would have thought joking was involved. B) The court ruled that the contract would not be enforced because one of the parties was joking, and a reasonable person should have known that. C) The court ruled that the contract would not be enforced because the parties had been drinking and although they were not intoxicated, there was still no mutual assent. D) The court ruled that the agreement would be enforced because under the applicable standard, the words and acts, judged by a reasonable standard, manifested an intention to be bound. E) The court ruled that the contract would not be enforced because one of the parties was subjectively joking and that both the Zehmers testified they were joking.
D) The court ruled that the agreement would be enforced because under the applicable standard, the words and acts, judged by a reasonable standard, manifested an intention to be bound. In Lucy v. Zehmer, the court ruled that, "whether the writing signed by the defendants and now sought to be enforced by the complainants was the result of a serious offer by Lucy and a serious acceptance by the defendants, or was a serious offer by Lucy and an acceptance in secret jest by the defendants, in either event it constituted a binding contract of sale between the parties." The court ruled that the parties did have mutual assent.
Because their contracts are ________, minors have the right, until a reasonable time after reaching the age of majority, to ________ or void their contracts. A) Voidable; affirm B) Void; affirm C) Void; resist D) Voidable; disaffirm E) Void; disaffirm
D) Voidable; disaffirm K's with minors are voidable at the minor's option and can be disaffirmed at the age of majority or a short time thereafter. (Chapter 16)
Under ______________________________________, if a writing or term in question appears to be plain and unambiguous on its face, its meaning must be determined from the four corners of the instrument without resorting to outside evidence, with the words being given their ordinary meaning. A) the interpretation rule B) the Uniform Commercial Code C) the complete contract rule D) the plain-meaning rule E) the rule of reason
D) the plain-meaning rule What are the plain meanings of the words in the K. 200 units means 200 units not 150 units. Courts always give words their ordinary and common usage. (Chapter 13)
disaffirming and ratification?
Disaffirm mean to undo while ratification mean to accept
Marco threatens to file a criminal lawsuit against Nadine unless she agrees to the terms of a contract that Nadine knows to be ethically and morally against the company's policy. This is a situation involving _____________
Duress Occurs when one of the parties is FORCED into an agreement by threats or force (Chapter 16)
Based on our discussions in class about Usury laws and the legal amount allowed, which of the following is the maximum interest rate in the United States? A) 29.99% B) 19.99% C) 18.5% D) 18% E) It varies depending on the state involved.
E) It varies depending on the state involved. Usury statutes vary by state per our discussions in class and are illegal if you charge more than the usury rate (Rent to own example in class discussions).(Chapter 16)
Lance contracts with Herman to fix the motor on his boat. The agreed upon amount is $750. When Herman is fixing the motor, he notices that a steering mechanism is totally broken which does not allow the boat to steer properly. When Lance picks up his boat the bill is $1,200. Lance says he will not pay this amount but the agreed upon $750. This is considered a(n) ______ debt. A) disputed B) unacknowledged C) unaccepted D) liquidated E) unliquidated
E) Unliquidated In an unliquidated debt, the parties either disagree about whether money is owed or dispute the amount. Here, the two are disputing whether or not the amount is owed.
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 False
False Agreement not to engage in same business activity after you leave the employ of another - Must be reasonable time frame (< 2 years) - Must be reasonable geographic area (75 mile radius) - Should be ancillary (secondary) to valid contract
An invitation to negotiate is an offer because it expresses a willingness to be bound by acceptance. True False
False An invitation to negotiate is just that - an invitation to negotiate and not a binding offer because BOTH parties have to have the intent to be bound. (Chapter 14 and 16)
For fraudulent misrepresentation to be the basis for a contract rescission, the statement of fact must be in writing. True False
False Can be by the conduct of a person (turning back the odometer on the car) or state as a fact (not an opinion) (Chapter 17)
The active hiding of the truth about a material fact in a contract is called nondisclosure. True False
False Concealment - nondisclosure is a type of contractual obligation to not discloser private information. Concealment is the active hiding of the truth of a material fact necessary for fraud. (Chapter 17)
As we discussed in class and is highlighted in your readings, in Great Britain, a legally binding contract cannot be entered into by a young person until the age of 21. True False
False Great Britain does not have an age limit and simply looks at the maturity of the parties involved. (Chapter 16)
If the offeror dies, the offer terminates after notice of the offeree's death or after 7 calendar days, whichever comes first. True False
False The offer terminates at the death of the offeror, no time needed (Exception to the rule an option's K) (Chapter 14)
A promise to do something that you are already obligated to do is generally a valid consideration. True False
False This is the pre=existing duty rule. (Chapter 15)
Consideration is optional in every unilateral contract. True False
False To be a valid K - you must have all 4 elements of a valid K (chapter 13)
Undue Duress
Forcing someone to do something against their will (black mail)
Adequency of Consideration
Generally courts don't care what we contract, unless there is fraud or something similar. You should know what your contracting for
Great Pumpkin agrees with Pumpkins R Us to land in Linus' pumpkin patch on October 31st at 8:00 p.m. Pumpkins R Us agrees to the price of $2,000 for this appearance and Great Pumpkin confirms the agreement via Ghostmail (the same as email). Identify this contract. (The first one is done for you.) Valid - all 4 elements are there, agreement, consideration, capacity, legality.
Informal - there is no specific form required Express - the terms of the K are expressly written and agreed upon Bilateral - promise for a promise is made Executory - not completed yet.
disaffirming and ratification? When can these be done? (Intoxication)
Intoxication have to prove that they were to drunk to know what they were doing and depending on whether or not there was an adjudication (the person has to look at what the person knew when they were making the K)
Unenforceable K
K was valid when it began but something has happened such as a new law has changed the ability to enforce the law
What are the capacity exceptions
Minors, Intoxication, Capacity
disaffirming and ratification? When can these be done? (Minors)
Minors, can disaffirm anytime before 18 and a reasonable time after
Requirement of offer?
Must be definite terms, identifiable offeree, communicated to the offeree
If Veronica and Paul enter into a contract, but the facts surrounding their contract constitute a mistake on both of their parts, ________________ _____________ is missing from this contract.
Mutual assent There is not a meeting of the minds. (Chapter 17)
Glenda just purchased a brand-new Nimbus 2000 broom for $500. When she got home and tried to use it, it would not fly. She became angry and stated, "I'd sell this thing stupid thing for $50." Her ghostly neighbor BooBoo overhears her and says I'll take it...and hands her $50 - is there a K? Why or why not?
NO - there is no intent to be bound as the 'offer' was not an offer and was not reasonable to believe she was making an offer. (Those made in anger or joking are not valid K's)
Frankenstein is missing a few nuts and bolts. His wife decides to have him adjudicated insane(court order to determine he has no capacity). If Dracula makes a contract with Frankenstein the K would be considered what?
No - contracts made with those adjudicated insane are void- period.
Dracula reads a sign that says "Giving is receiving- give blood today - come on in and take advantage" He goes in and requests a withdrawal and is refused - (assume it is legal to buy/sell/trade blood). Does he have a breach of K claim? Why or why not?
No - there is no offer - this an advertisement or an invitation to come in and make an offer.
Werewolf and Witchypoo are having drinks at a local bar and Werewolf says to Witchypoo, will you sell me your new 2021 Cackling Calldroun for $1,000? Witchypoo said that she paid $1500 for it and would take nothing less to which Werewolf replies - Ok, and hands her $1,500. Is there a contract and if so why or why not?
No there was no true intention to be bound and would be considered negotiations at this point.
If a ghost says to a goblin "If you scare 10 children out of their Halloween candy, I'll consider making you my ghostly accomplice" Is this a valid offer? Why or why not?
No, this is an example of a(n) Illusory promise. One side has the opportunity not to perform if the choose not to.
Are expression, preliminary negation, and statement of intent; offers?
No. they are NOT offers because there is not intent to be bound
Executory K
One side has not fulfilled its promise yet
John told Michelle that his boss told him "Because you have worked so hard this year, I will give you a $2,500 Christmas bonus". John said this is consideration, but Michelle said it is not. This would be considered ____________
Past consideration You have already done the work and already been paid for it.
Detrimental Reliance/Promissory Estoppel
Relying to your detriment on someone's promise - look at it in employment law and also with unjust enrichment
Termination of Offer
Revoke - pull back offer (as long as not accepted before) Reject - say no (offeree) Counter Offer - reject first offer, make new offer; offeree becomes offeror
Mummy and Grim Reaper are negotiating for a new coffin for Mummy's apartment. Reaper tells Mummy that the new surround sound system in the coffin is state of the art with all of the appropriate certifications required by state law. Reaper knew that the surround sound system did not have the appropriate state certifications but really wanted to make the sale to meet his monthly quota. What is this an example of? Explain.
Scienter - the "guilty knowledge" of knowing that you are giving false/fack information - the second element of fraud - If Mummy purchases the coffin then fraud would have occurred because the injury would have been economic. Different than negligent misrepresentation because he states it as a fact, not carelessly or recklessly. Therefore it is Fraud in the Inducement.
If a witch says to a warlock, "I'll pay you $500 in spiders to go with me to the witches dance" and the warlock says "I'll see if I can" What type of K is this if any and when are the parties bound?
This is a unilateral K contract if Warlock goes with witch. He is bound when he performs the action because Witch wants an acceptance by doing the action.
Why do we have contract law?
To keep consistency and reliability in the business world
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 or has a lucid interval. True False
True Adjudicated -a court says No K allowed for this person - the Guardian can make a K, but not the person adjudicated (Chapter 16).
The statement of fact need not be an actual assertion for fraudulent misrepresentation to be the basis for a contract rescission. True False
True Could be by the conduct of the parties and not anything actual said - Fraud by Conduct for example (turning back the odometer on my car for example). Chapter 17
If a contract contains an illegal clause or section in the contract, courts will generally sever the illegal clause or section and enforce only the legal portions of the contract. True False
True This is the severability of K clauses. We don't want to totally void an otherwise legal contract but just those parts that may make it illegal. (Chapter 16)
contract contrary to public policy
Unconscionable, made under duress etc. look to see who has the bigger/better bargaining power
Jimmy was purchasing a new computer system that he thought had two monitors. The new system did not have two monitors and the mistake was that Jimmy did not read the system's part's list properly. This is considered a _____________ mistake.
Unilateral He is mistaken and only he is mistaken so it is unilateral. Bilateral mistakes are when BOTH parties are mistaken as to what they are contracting for. (Chapter 17)
Undue Influence
Uses power over you to get you to do something that you might otherwise not do in a K
Definiteness of terms
You have to know what the thing you're contracting for. (If you contract for a car, and the person has 4 cars)
Valid K
all four elements have been met
How can acceptance be recognized under the law
by action of the parties or mutual promises
Implied K
by the conduct (getting you hair cut)
mistake of facts
can be undone
Bilateral Mistakes
can undo contract
mistake of value
cannot be undone
Unilateral Mistake
cannot undo unless mistake was known y both sides
Implied in fact K
conduct creates and defines the terms of the contract
Legality
contract must be legal
Which of the following may represent a lack of genuine assent? a) Acceptance secured through fraud, duress, or misrepresentation, but not acceptance through undue influence. b) Acceptance secured through undue influence, misrepresentation, or duress, but not through fraud. c) Acceptance secured through fraud or duress, but not through misrepresentation or undue influence. d) Acceptance secured through fraud, dress, or undue influence, but not through misrepresentation. e) Acceptance secured through fraud, duress, undue influence, or misrepresentation.
e) Acceptance secured through fraud, duress, undue influence, or misrepresentation. Here there is no genuine assent because in these four situations there is no meeting of the minds, one side is the one benefitting from the bargain. (Chapter 17)
Fraud (types)
fraud in the inception (will to dying relative) fraud in the inducement (invest but steal) fraud by law (property law/restrictions) fraud by silence (repaired damages to car)
Void K
illegal to begin and no K can result
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invitation to come negotiate, unless terms are so definite
Implied in law K
judge made K (Quasi contract)
Fraud (elements)
misrepresentation of facts wrongdoer intends to deceive innocents party Innocents justifiably relied on misrepresentation Innocents party inquired
Voidable K
one party has the option to VOID or RATIFY the K (ex: minors, mentally incompetent, Intoxicated)
Who can accept the K
only the offeree or authorized representative
Bilateral K
promise for a promise
Unilateral k
promise for an act
Ambiguous Terms in a K
the contract goes through a hierarchy of steps to asses terms (written terms looked at over typed terms)
Plain Meaning Rule
the court will look at the plain meaning of the word and will not change the meaning of the word ( K say teal, that mean teal; not blue, light blue, or midnight blue)
Termination of Offer by Law
time - if a time is set with an option K subject destroyed by some act of God, insanity/death of person)
Express K
written or oral said