LEGS Exam 2

What is the age of majority most states?

18

ratification

Acceptance of terms of contract (entered into as a minor) after reaching age of majority

Examples of Consideration

Benefit to promisor Detriment to promisee Promise to do something Promise to refrain from doing something

Circumstances Resulting in Discharge of Contract

Performance Happening of condition or its failure to occur Material breach by one/both parties Mutual Agreement Operation of law

Oliver is a sixteen-year old who would like to disaffirm his automobile purchase contract with Henry's Used Cars, LLC (Henry's). What must Oliver do to disaffirm?

He must manifest an intention to rescind the contract wither by words or actions

Which of the following describes a false statement about a fact material to an agreement that the person who made the statement believed to be true?

innocent misrepresentation

A promise to do something that you already obligated to do is _______ consideration

insufficient

Discharge by Operation of Law

-Alteration of Contract -Bankruptcy -Tolling of Statute of Limitations -Impossibility of Performance -Commercial Impracticability -Frustration of Purpose

Unenforceable Contract

Against public policy- societies best interest Also addresses unconscionable contracts (so unfair that it is "void of conscious"

Sources of Contract Law

Common Law Uniform Commercial Code (UCC)

Legal Remedies for Breach of Contract

Damages: 1) Compensatory - direct loss from breach of contract 2) Consequential - indirect foreseeable consequences 3) Liquidated - Damages agreed to in advance in case of breach 4) Punitive - the purpose is to punish

Rules for consideration

For a promise to be enforced legally, there must be consideration. exception: promissory estoppel: substitute for consideration - one party makes promise knowing other party will rely on it and the other party actually relies on it -justice also dictates enforcement of promise, even thought it is not supported by consideration

Partial payment of debt

Liquidated Debt: no dispute as to amount of money owed Unliquidated Debt: parties either (in good faith) dispute fact money owed or dispute amount of money owed

Frank works as a cellphone salesman. He has worked at the same company for the past two years, and one day his boss approaches him with good news. He says because Frank has sold so many phones lately, he is going to give Frank $500 bonus. Three weeks later, Frank has still not received the bonus. Can Frank sue his boss to enforce this promise?

No, this is an example of past consideration

Discharge by Material Breach

Occurs when party unjustifiably fails to substantially perform his/her contractual obligations Discharges non-breaching party from his/her contractual obligations

Termination of Offer

Revocation by Offeror Rejection by Offeree Death/Incapacity of Offeror Destruction/Subsequent Illegality of Subject Matter of Offer Lapse of Time/Failure of Condition(s) Specified in Offer

If the subject matter of the offer is destroyed or becomes illegal, the offer immediately terminates.

True

Which of the following is not generally an obstacle to genuine assent in a contract

Unilateral mistake

Legal assent

Voluntary, willing promise to transact the law will require contracting parties to obey without assent, contract may be avoided/rescinded

Accord and Satisfaction

an agreement made and executed in satisfaction of the rights one has from a previous contract discharges previous contract only when terms are completely satisfied

Indiviaduals with only limited capacity to contract

minors incapacitated (mentally) people intoxicated people (includes drugs)

A contract where the powerful party dictates the terms of the agreement and eliminates the other party's free will are considered:

unconscionable

Taking advantage of one's dominant position in a relationship to unduly persuade the other party is known as:

undue influnece

This type of contract is not a contract because either its object is illegal or it has a serious defect

void conctract

consideration

what a person will receive in return for performing a contract obligation

Illegal Contracts

-Contracts with no legal purpose and/or subject matter -Contracts violating statute(s) and/or "public policy"

Duty to Mitigate Damages

-Non breaching party is obligated to use reasonable efforts to minimize damage resulting from defendants breach of contract -Failure to do so may limit the non-breaching party's recover of legal remedies

Required Contractual Elements

1. Agreement (offer and acceptance) 2. Consideration (bargained-for exchange) 3. Capacity (legal ability to enter into a binding contract) 4. Legal Object (legal reality of purpose)

How to classify contracts

1. How it was created (express or implied) 2. What the offeror wants (bilateral vs unilateral) 3. Do we have a good contract? (valid, void, or voidable) 4. How much has been done? (executed or executory)

Which article of the UCC governs contracts for the sale of goods

2

adhesion contract

A contract created by a party to an agreement that is presented to the other party on a take-it-or-leave-it basis. Such contracts are legal but are sometimes rescinded on the grounds of unconscionability and the absence of one party's free will to enter a contract.

covenant not to compete

A contractual promise of one party to refrain from conducting business similar to that of another party for a certain period of time and within a specified geographical area.

Bilateral contract

A promise made in exchange for another promise

Mailbox Rule

A rule providing that an acceptance of an offer becomes effective on dispatch. but, revocation of offer is effective only when received by offeree

Illusory Promise

A situation in which a party appears to commit to something but really has not committed to anything. It is not a promise and thus not consideration.

Statute of Frauds

A state statute under which certain types of contracts must be in writing to be enforceable.

Which of the following is an exception to the preexisting duty rule?

Additional work

Exceptions to SOF

Admission partial performance promissory estoppel

Fraudulent Misrepresentation

Any misrepresentation, either by misstatement or by omission of a material fact, knowingly made with the intention of deceiving another and on which a reasonable person would and does rely to his or her detriment.

Uniform Commercial Code (UCC)

Article 2: governs the sales of goods Article 2(A): governs the lease of goods

on the streets of New York, a man sells you a pocket watch for $20. He says all the watch needs is a new battery and it will be just like new and work perfectly. You buy a new battery for the watch, but the watch still does not work. The man selling the watch knew that the watch would not work, even with a new battery, but he told you it would anyway. the above scenario is an example of what?

Fraudulent misrepresentation

Suppose Joey and Mikey enter into a contract together. Joey says he will pay Mikey $100,000 to kill one of Joey's enemies. Both parties know this contract involves the undertaking of an illegal act. Under which element of a contract is this contract not enforceable?

Legal object

Exceptions to a Minor's Right to Disaffirm

Misrepresentation of age and contracts for necessaries

Sufficiency of the Writing- Common Law

Names of parties subject matter consideration essential terms signature of part against whom action brought (different under UCC)

Suppose an operator of a weight scale certifies the weight of a good that is for sale. However, the accuracy of the scale used to weigh the good has not been checked in more than four years, even though the weight scale operator could have easily checked the accuracy of the scale. The scale gave an improper weight measurement that resulted in many problems with the shipping and sale of the product. The above scenario is an example of what?

Negligent misrepresentation

Anticipatory Repudiation

Party decides, before the actual time of performance, not to complete contract obligations Often occurs when market conditions change and one party realizes it will not be profitable to fulfill terms of contract.

Undue Influence

Persuasive efforts of dominant party, who uses special relationship to interfere with other's free choice of terms

Elements necessary to recognize Quasi-Contractual Recovery

Plaintiff conferred benefit on defendant Plaintiff reasonably expected to be compensated for benefit conferred on defendant defendant would be unjustly enriched from receiving benefit without compensating plaintiff

Equitable remedies for breach of contract

Rescission: termination Restitution: return of any transferred property Specific Performance: breaching party must fulfill obligations Injunction: force of prohibit someone from doing somethings Reformation: contract rewritten Quasi-Contract: contract like obligation to prevent unjust enrichment

Hillary and Dillon enter into a contract whereby Hillary, 17 years old, purchases a computer and printer from Dillon. Dillon agrees ti finance the contract and allows Hillary to pay $100 per month. When Hillary turns 18 years old, what must she do to ratify the contract?

She can ratify the contract by continuing to pay $100 per month with no other requirement

Which of the following conditions does not generally exist for a mutual mistake to interfere with legal consent?

The mutual mistake is a mistake of value

For a mutual mistake to interfere with legal consent, it must involve:

a basic assumption about the subject matter of the contract, a material effect on the agreement, and an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement

Which of the following describes a quasi-contract?

a contractual obligation imposed by court to prevent unjust enrichment

Bob's promise to paint Mary's house if he has time is an illustration of

an illusory promise

Tender

an offer of performance; making an offer to perform and being ready, willing and able to perform

A substantive unconscionable contract contains conditions that:

are one-sided

For a court to enforce a promise, who must offer consideration?

both sides

Types of Performance

complete performance and substantial performance

Types of Conditions

conditions precedent: particular event that must occur for a party's duty to arise conditions subsequent: future event that terminates obligations of parties when it occurs concurrent conditions: each party's performance conditioned on simultaneous performance of the other

Procedural Unconscionability

conditions that impair one party's understanding of a contract, as well as the integration of terms into a contract example: adhesion contract

Quasi Contract

court-imposed obligation to prevent unjust enrichment in the absence of a contract

Bob is hired to do computer sales for an electronics store. He agrees that if he leaves his employment, he will not work for another computer store within 25 miles for a period of two years. That type of agreement is called a[n] ______.

covenant not to comepete

What exists if one party threatens the other party with physical harm to gain consent to a contract

duress

executed or executory contracts

executed: all terms of contracts fully performed executory: some duties under contract not performed by one/both parties

Once all the terms of the contract have been fully performed, the contract has been _________. As long as some of the terms have not yet been performed, the contract is ___________

executed; executory

The terms of __________ contracts are all clearly set forth in either written or spoken words.

express

What degree of trust generally exists when a party is able to unduly influence another party.

high

supposed Markus offers to sell zara his surfboard for $200. Zara responds, "ill look at it on the weekend and if I like it, ill pay you." at this point, zara has not committed yo doing anything. The laws considers this a(n)

illusory promise

Adeuquacy of consideration

in general, courts do not look at whether consideration is adequate or fair a bad bargain will be enforced, absent fraud or some other defense

is the possession of a mental or physical defect that prevents a natural person from being able to enter into a legally binding contractq

incapacity

Which of the following is an element of a fraudulent misrepresentation ?

justifiable reliance on the false statement by the innocent party a false statement about a material fact of the contract intent to deceive

Defenses to the Enforceability of a Contract

lack of genuine assent (fraud, duress, undue influence, misrepresentation) lack of proper form requirements (statute of frauds writing requirement)

An offer immediately terminates in all of the following situations, except:

manifestation of intent to be bound

Elements of a Valid Offer

manifestation of offeror's intent to be bound, definite and certain terms, communication of offer to offeree

A misrepresentation is an untruthful assertion by one of the parties about a:

material fact

Negligent Misrepresentation

misrepresentation made without due care in ascertaining its truthfulness; renders agreement voidable

Which if the following will not emancipate a minor?

moving out of the house but still getting support from parents

If a contract is deemed unenforceable, what remedy is available to the parties?

none

Under an adhesion contract, negotiations are:

nonexisitent

duress

occurs when one party uses an improper threat or act to obtain an expression of agreement

Substantive Unconscionability

overly harsh or lopsided agreement

A pool lifeguard demands money after saving Bob from drowning in the pool. Bob need not pay the lifeguard because this is an instance of _____.

preexisting duty

Unilateral Contract

promise in exchange for an act

In which of the following instances can be injustice be avoided by carrying out the promise?

promissory estoppel

Which of the following is not an element of a contract

proper form

If the offer is for a unilateral contract, the offeree can accept only by __________________.

providing the requested performance

Acceptance

represents offer's intent to be bound by terms of offer and resulting contract terms of acceptance must be identical to terms of offer (mirror-image rule) effective when communicated by offeree to offeror

How often do courts weigh whether or not you made a good bargain?

seldom

contract

set of legally enforceable promises

Promissory Estoppel

substitute for consideration when another acts in reliance on a promisor's promise

Contractual Capacity

the mental ability to enter into a contractual relationship and understand the rights

Consideration must be:

the product of a bargained for exchange