blaw concepts exam 2

Why is contract law important?

it makes business agreements enforceable and prevents chaos.

How does contract law relate to justice?

It ensures fairness in exchange (commutative justice).

What kind of intent matters in contracts?

Objective intent (what a reasonable person would believe).

What makes a contract fair?

You know the terms, have options, and aren’t forced.

Why are some contracts unenforceable?

they involve illegal acts, minors, or forced work.

What is privity of contract?

Only the people in the contract can enforce or challenge it.

Do all contracts have to be formal?

No, most don’t need special formalities to be valid.

What is consideration in a contract?

Both sides must give something of value.

How do courts handle contract disputes?

They check if a contract existed and decide on remedies.

What does "valid but unenforceable" mean?

A contract that requires a written record (e.g., real estate sales) but lacks one.

What is the difference between executed and executory contracts?

Executed = fully performed; Executory = duties remain unfulfilled.

What is the difference between bilateral and unilateral contracts?

Bilateral = promise for a promise; Unilateral = promise for an action.

What is the main purpose of an option contract?

To keep an offer open for a certain period, preventing others from accepting it.

How is the right of first refusal different from an option contract?

the right of first refusal lets you buy something before it’s sold to someone else, but you don’t have to commit to buying it.

Why is equity important in contract law?

It ensures fairness when there is no clear contract but a situation needs to be resolved.

when would equity be used instead of regular contract law?

When there's no formal contract, but a party still deserves compensation or fairness.

How does Roman law influence modern contract law?

Roman law introduced the idea of equity and fairness in legal matters, which influences contract law today.

How does an implied-in-fact contract work in everyday situations?

It happens when someone's actions (like eating food) show an agreement to pay, even if nothing was formally said.

What’s the difference between law and equity in legal disputes?

Law focuses on strict rules and outcomes, while equity focuses on fairness and situations where the law might not apply perfectly.

How does equity help resolve legal disputes that don’t fit perfectly into a contract?

Equity steps in when a strict contract rule doesn’t apply but fairness still demands compensation or resolution.

What forms an agreement in contract law?

An agreement is formed when an offer is made and accepted.

What are the requirements for a valid offer?

A valid offer must have contractual intent, be legal, contain definite terms, and be communicated.

How is contractual intent determined?

Contractual intent is determined by what a reasonable person would interpret from the offer, not by the offeror’s subjective thoughts.

What does "meeting of the minds" mean in contract law?

"Meeting of the minds" means both parties agree to the contract terms. The law focuses on objective evidence (what was said or done), not the parties' private thoughts.

How are advertisements treated in contract law?

Advertisements are generally treated as invitations to negotiate, not offers.

What is required for an offer to be accepted?

The terms of the offer must be clear and specific enough to allow the offeree to accept without further negotiation.

Are output and requirement contracts enforceable?

Yes, output and requirement contracts are enforceable if they follow good faith and fair dealing standards.

What is the primary purpose of an option contract?

This type of agreement allows one party to reserve the right to accept or reject an offer within a set timeframe in exchange for something of value.

How does consideration impact this type of agreement?

The exchange of value ensures that the promise to keep the proposal open is enforceable for a designated duration.

What occurs if the person offering the deal passes away during the term of this agreement?

The arrangement may still stand if value has been exchanged, making the offer unchangeable despite the death of the person who made it.

How does a firm offer differ from an agreement requiring payment to keep the offer open?

The former doesn’t need a payment but is limited to specific business transactions, and remains binding for a set period without requiring any compensation from the recipient.

What defines an agreement that is considered binding under specific trade laws, and does not need compensation?

This type of proposal comes from someone regularly engaged in selling products, is documented in writing, and clearly states it cannot be retracted for a specific time frame.

Under what conditions can a deal remain open for a set period without any payment?

It must be in writing, come from someone regularly involved in the sale of the product, and specify that it will not be changed for a predetermined time.

How does the rule about sending responses via mail impact decision-making?

When replying through post, the acceptance is considered valid as soon as it is mailed, while a retraction only takes effect once the other party receives it.

What happens when a new proposal is made after one has already been sent?

The original proposition is voided by the new offer, and it becomes the starting point for further negotiations.

What causes an agreement to be invalidated due to timing concerns?

If goods have a limited shelf life, such as produce, the window for making a decision is short, and an offer may expire if not acted upon swiftly.

Who can make a decision on a proposal if it’s intended for a specific individual?

Only the person to whom the proposition was originally directed can give their consent, not a third party.

How does a cognitive limitation affect contract formation?

A person who cannot fully comprehend the agreement's terms might have their contract declared invalid.

: How does a developmental condition influence contract validity?

Individuals who cannot recognize the full implications of their actions may see their agreements considered void.

Mike, who has Down syndrome, agrees to sell his bike to Larry for $300. Mike doesn't understand the concept of a sale.

The agreement would likely be void because Mike does not comprehend the nature, purpose, and effect of the transaction.

A person with a low IQ makes a large investment in a complex financial contract without understanding the risks involved.

The individual may still be held responsible for the contract, as most people are expected to recognize when they don't fully understand something and avoid it.

An elderly person diagnosed with Alzheimer’s can no longer make decisions about their finances, so a guardian is appointed.

The guardian will be responsible for entering contracts on behalf of the elderly person due to their legal incompetence

A person in a coma can't manage their own affairs, so their family is given guardianship to handle their financial matters.

The person would be legally unable to enter contracts until their legal incompetence is removed by a court order.

A young person with a developmental disability agrees to sell a valuable item but doesn’t know the value or consequences of the sale.

The contract might be voided, as the individual lacked the mental capacity to understand the transaction's terms.

What is an equitable remedy in contract law?

It involves providing fair value rather than legal damages, often used when no contract exists.

Can a minor contract for non-essential items?

No, contracts for non-necessaries like luxury goods can generally be voided by the minor.

What does “reasonable value” mean in the context of contracts with minors?

It refers to the market value of goods or services provided to a minor, rather than the agreed contract price.

How does mutual agreement affect contract formation?`

This is a fundamental aspect, as it ensures both parties are in agreement on the terms, preventing one-sided obligations. Without this understanding, an arrangement is not legally binding.

What happens when a party is coerced into an agreement?

In such cases, the validity of the arrangement is compromised, as the party did not freely choose to participate. This undermines fairness, and the agreement could be deemed unenforceable.

What impact do different types of breaches have on an agreement?

Significant breaches disrupt the core purpose of the deal, often allowing for termination, while smaller breaches may only require compensation or adjustments without dissolving the arrangement.

What’s the difference between a promise made for action versus a mutual exchange?

The first type involves a single party making a promise contingent on the other’s performance, whereas the second involves a reciprocal exchange of promises. This distinction defines how each party’s responsibility is structured.

why must something of value be exchanged in an agreement?

This condition ensures fairness, as it guarantees that both parties are providing something in return for the benefits they’ll receive, preventing one-sided agreements.

How does dishonesty affect the agreement process?

If one party intentionally deceives the other, the foundation of trust is broken, and the deceived party might be allowed to annul the arrangement or seek compensation for damages.

When might a court enforce exact performance of the terms?

This is generally done in situations where monetary compensation would not be sufficient, often involving unique items or assets, thus requiring the obligated party to fulfill the agreement as initially outlined.

How is an agreement interpreted when only the written terms are considered?

The rule ensures that the written record is the final reference point, preventing other external factors or statements from altering the established terms between the parties involved.

What happens when one party gives up their rights under the terms?

When rights are voluntarily relinquished, they are no longer enforceable, affecting how the contract is later executed or held to account, even though the original agreement still stands.

What occurs when one party changes the terms they originally proposed?

This essentially voids the original terms, forcing the other party to accept the new conditions for the agreement to continue. If they don’t, it becomes a negotiation point rather than a simple acceptance.

How does alignment of acceptance with the offer affect the agreement?

The acceptance must be identical to the proposal. Any change in terms can be seen as a new offer, which cancels the original one, requiring both parties to renegotiate.`

How is a shared misunderstanding between parties treated legally?

If both sides are mistaken about a key fact, it might invalidate the contract, as it means neither entered into the arrangement with the proper understanding of its core aspects.

What happens when a contract is rescinded?

The legal process restores both parties to their positions before the deal was made, essentially voiding the agreement as though it never existed, often due to fraud, misrepresentation, or mutual consent.

What happens if a party in a contract fails to disclose essential information?

This can lead to a breach of trust. The other party may be entitled to rescind the contract or seek compensation if important facts were hidden.

What’s the difference between exaggeration and a false statement in contract law?

Exaggeration may not invalidate a contract, but false statements can. Misleading statements, even if not fraudulent, can lead to negotiations or price adjustments.

What are the consequences if significant transactions are based on false information?

the party misled by the false information may seek to cancel the contract, demand a refund, or renegotiate the terms.

What happens when monetary compensation doesn’t suffice in fulfilling a contract?

The harmed party can request specific performance, requiring the other party to fulfill the contract as agreed, especially when the subject is unique or irreplaceable.

What’s the role of an "if" in a contract agreement?

It introduces a condition that must be fulfilled before the agreement becomes binding, often making one party’s action dependent on the other’s.

What makes a promise legally enforceable?

It’s when both parties are bound to obligations that are part of a mutual exchange, not simply a one-sided commitment or gesture.

: How can we determine if a contract has consideration?

One method involves evaluating whether each party gains something or sacrifices something of value as part of the agreement.

Can you enforce a contract based on a past action?

No, because legal obligations must be tied to actions or promises made at the time the agreement is formed, not on things already done.

What does it mean for consideration to be legal?

It means that the exchange involved must comply with the law; anything involving illegal acts cannot be part of a contract.

Is it possible for a contract to be binding with a low value exchange?

Yes, contracts can still be enforceable even when the exchange seems unequal, although this could raise concerns about the fairness of the transaction.

What happens if one party refrains from doing something they have the legal right to do?

this forbearance can constitute valid consideration when one party gives up their legal right in exchange for something else of value.

Can a promise to give something without a condition be enforced?

No, a promise without a condition or reciprocal action doesn’t meet the requirements for a legally binding contract.

Are charitable pledges legally enforceable?

Yes, even if a pledge doesn’t have a specific condition attached, it can be enforced if it’s made with the expectation of fulfillment, especially when a charity relies on it.

How do cancellation clauses work in modern contracts?

These clauses are enforceable when the party invoking them does so in good faith, ensuring the cancellation is not used as an unfair loophole to avoid obligations.

When can a promise to fulfill an existing obligation be considered valid consideration?

typically, a promise to do something you're already legally obligated to do doesn't count as new consideration unless there's an unexpected change or additional conditions involved.

What could happen if a contract is modified due to unforeseen circumstances during its execution?

If both parties agree to adjust the terms, especially when conditions change unexpectedly, it might be enforceable as a good faith adjustment, particularly in real estate or construction contracts.

Under what circumstances can the Uniform Commercial Code allow contract adjustments for goods?

the UCC permits price changes in certain commercial contracts if unexpected events, like supply chain issues, occur and both parties mutually agree to the adjustment.

What is a composition of creditors in bankruptcy scenarios?

Creditors may agree to accept a portion of what they're owed if a debtor cannot pay in full, ensuring that they receive something rather than nothing by avoiding costly litigation.

How do past actions factor into the enforceability of a promise?

Past actions or gifts cannot be used as consideration in a contract. A promise made after a service has already been performed, like helping someone out of a ditch, doesn’t hold up legally unless it's agreed upon beforehand.

How can the law treat moral obligations in relation to contracts?

While there might be a moral obligation to fulfill certain promises, such as helping an elderly family member, the law doesn’t enforce these actions as binding contracts unless there is legal consideration involved.

Can a contract be adjusted if unexpected costs arise during its performance?

Yes, in some cases, especially when neither party could have anticipated the additional expenses, the law allows for contract renegotiation to reflect the new situation.

When does part payment of a debt release the remaining balance in a dispute?

If a debt is contested, agreeing to accept a lower payment as settlement can effectively release the remaining amount owed, particularly if it's made under good faith in resolving the dispute.

How does consideration need to be structured for it to support a valid contract?

Consideration must be legal and reciprocal; promises based on moral obligations or previous actions without a new exchange aren’t enforceable under contract law.

What does the UCC say about situations where no new consideration is required?

There are circumstances, such as firm offers or contract modifications, where the UCC allows exceptions to the traditional requirement for new consideration.

How does a promise without formal consideration sometimes lead to legal consequences?

If a promise leads someone to rely on it and suffer harm, the law may enforce it through the principle of promissory estoppel, even without traditional contract elements.

What does reliance mean in the context of a promise?

Reliance refers to when someone takes action or makes decisions based on another's promise, which can create an obligation even if the promise wasn’t part of a formal contract.

Why might a promise that lacks traditional contract elements still have legal significance?

The promise can carry weight in court if it leads the promisee to take significant actions based on it, resulting in harm if it’s not honored.

How is fairness ensured in cases involving reliance on non-contractual promises?

through promissory estoppel, the law helps ensure fairness by enforcing promises that induce reliance, even when no formal contract or consideration is present.

What’s the central concern when relying on a promise in contract law?

The core concern is whether the reliance was reasonable and whether harm resulted from the promise not being kept, even if the promise was informal.

Why would the law sometimes prioritize reliance over formal contract rules?

the law may prioritize reliance to avoid unfair outcomes where someone is hurt after acting on a promise, even if the formal elements of contract law are not met.

How does promissory estoppel help correct situations where promises are made but not kept?

It corrects those situations by allowing the injured party to claim damages for reliance on a promise, even without a formal contract, to prevent injustice.

How does the Portman Lamborghini case illustrate the principle of promissory estoppel?

The case shows how a dealership’s investment based on a promise from Chrysler led to harm when the promised vehicle was never produced, and how promissory estoppel was used to address the resulting losses.

Why do we distinguish between businesses that contribute positively to society and those that don't?

Society benefits from businesses that improve material conditions, but businesses that harm public welfare or encourage illegal actions can't be justified just by their profit.

How do the nature of an agreement and its legal purpose impact its validity?

Agreements that promote illegal or immoral actions undermine the integrity of the contract system, as they go against the core idea that contracts should foster lawful and just conduct.

What does the void ab initio principle suggest about illegal contracts?

When a contract starts with an illegal purpose, it can’t be salvaged or enforced, because its foundation is inherently flawed, violating the law and public policy.

How do public duty and legality shape the enforceability of an agreement?

When a contract encourages crime, it disrupts societal order and public duty, leaving no room for legal enforcement—because the law can’t protect wrongdoers, even if both parties agree.

What happens when both parties are involved in an illegal agreement?

the law refuses to step in if both parties are equally at fault because it would endorse illegal behavior, even if one party suffers from the deal, as both have chosen to break the law.

Why is the relative fault of parties significant in the context of illegal agreements?

If one party is significantly less culpable, the law might offer them a path to fairness, recognizing that while both are at fault, one shouldn't be entirely deprived of legal remedies due to the other's greater wrongdoing.

How does the idea of severability offer flexibility in addressing illegal contracts?

When a contract contains a problematic or illegal clause, severability allows us to focus on the valid parts of the agreement, ensuring that minor issues don’t render the entire contract unenforceable.

How do courts approach contracts with illegal elements that aren't central to the deal?

Courts assess whether the illegal part of a contract goes to its core; if it doesn’t, they may remove it, but if it does, they’ll likely invalidate the whole contract to protect public policy.