Contracts Law Exam Review

Flashcards reviewing key contract law concepts based on condensed lecture notes.

What is the definition of a contract?

A legally enforceable promise.

Can a contract be oral or written?

Contracts can be oral or written unless a statute requires writing.

What are the five essential elements required to form a valid contract?

Offer, acceptance, consideration, capacity, and lawful purpose.

What is a bilateral contract?

A contract where both sides make a promise.

How is a unilateral contract accepted?

Unilateral contracts are accepted only by performance (e.g., a reward).

What defines a valid contract?

A valid contract is enforceable.

What is a voidable contract?

A contract that can be canceled due to fraud, mistake, duress, etc.

What is a void contract?

A contract that is illegal or has no legal effect.

How is an express contract created?

An express contract is created through words.

How is an implied contract created?

An implied contract is created through conduct.

What three requirements must an offer meet?

An offer must show intent, be definite, and be communicated.

Are advertisements generally considered offers?

No, advertisements are usually NOT offers; they are invitations to negotiate.

What type of contract offer is represented by a reward?

Rewards are offers for unilateral contracts.

What five events can result in the termination of an offer?

Revocation, rejection, lapse of time, death, and illegality.

What three requirements must an acceptance meet?

An acceptance must show intent, match terms, and be communicated.

What is the Mirror Image Rule under common law?

Acceptance must match the offer.

Which UCC provision allows a contract to form even with different terms?

UCC 2-207 (Battle of the Forms).

What does the Mailbox Rule state regarding acceptance?

Acceptance is effective upon dispatch.

Does silence generally constitute acceptance?

Silence does not equal acceptance unless circumstances imply intent.

What is consideration?

A bargained-for exchange of legal value.

Are gratuitous promises legally enforceable?

No, gratuitous promises are NOT enforceable.

When will courts examine the adequacy of consideration?

Courts don't examine adequacy unless nominal, a disguised gift, or unconscionable.

What is an example of legal value involving action?

Doing something you're not obligated to do.

Which court case established that giving up a legal right constitutes valid consideration?

Hamer v. Sidway.

Why are illusory promises not valid consideration?

Illusory promises carry no real obligation.

Are preexisting legal or contractual duties valid consideration?

No, preexisting duties (legal or contractual) are NOT consideration.

Is past consideration valid consideration for a new contract?

No, past consideration is NOT valid because the act was already done.

What is required to modify a contract under Common Law?

Need new consideration unless there is an unforeseen difficulty.

What is required to modify a contract under the UCC?

No new consideration is required (unless there is coercion).

What defines a liquidated debt?

A debt where the amount is undisputed.

Is part payment of a liquidated debt valid consideration?

No, part payment of a liquidated debt is not valid consideration.

How can an unliquidated (disputed) debt be settled validly?

Through an accord & satisfaction.

When is the doctrine of promissory estoppel used?

Promissory estoppel is used when there is no consideration.

What three elements are required for promissory estoppel?

1. Promise, 2. Reasonable reliance, 3. Injustice without enforcement.

What is misrepresentation?

A false statement (innocent or fraudulent).

What element is required for fraud beyond a false statement?

Fraud requires intent to deceive (scienter).

What two elements regarding facts and reliance are required for misrepresentation?

It must involve a material fact plus actual & justifiable reliance.

When is a contract voidable due to a mutual mistake?

When both parties are mistaken regarding a basic assumption, creating a material effect, and no risk was assumed.

When is a contract voidable due to a unilateral mistake?

Only if the other party knew or caused the mistake, and it would be unconscionable to enforce.

What is duress?

A wrongful threat leaving no reasonable choice.

Does duress include economic pressure?

Yes, duress includes economic duress.

What is the legal status of a contract entered into under duress?

The contract is voidable.

What is undue influence?

Wrongful persuasion exploiting a relationship or vulnerability.

What general power do minors have over contracts they sign?

Minors can disaffirm contracts.

What are minors required to pay for if they purchase them?

Minors must pay for necessaries (food, shelter, medical care).

When can a minor ratify a contract?

After turning 18.

How do state courts handle a minor's misrepresentation of age?

States vary, utilizing estoppel or tort liability.

What is the legal status of a contract formed by an adjudicated incompetent person?

Void.

What is the legal status of a contract formed by a person with an unadjudicated mental illness?

Voidable.

Under what standard does intoxication affect contractual capacity?

Only extreme intoxication counts; courts are rarely sympathetic.

What three general categories render a contract unenforceable for illegality?

If it violates a statute, violates public policy, or is unconscionable/a contract of adhesion.

What is the legal status of surrogate birth contracts in some states?

Void in some states.

How do courts enforce contracts that violate licensing laws designed to protect the public?

They are unenforceable.

How do courts enforce contracts that violate licensing laws designed solely to raise revenue?

They are enforceable.

What four types of agreements violate public policy?

Crimes, illegal purposes, unlicensed performance, and restraints of trade (noncompetes).

What four conditions must be met for a noncompete agreement to be enforceable?

Ancillary to employment, legitimate business purpose, reasonable time/geography/scope, and no undue hardship.

Can exculpatory clauses waive liability for ordinary negligence in many contexts?

No, exculpatory clauses cannot waive liability for ordinary negligence in many contexts.

In what situation are exculpatory clauses more likely to be enforceable?

For inherently risky activities.

Which UCC section addresses unconscionability?

UCC 2-302.

What is procedural unconscionability?

An unfair bargaining process.

What is substantive unconscionability?

Oppressive terms.

How may courts resolve an unconscionable contract under UCC 2-302?

Courts may refuse to enforce or modify the contract.

What is a contract of adhesion?

A take-it-or-leave-it contract.

Under what condition will a contract of adhesion be denied enforcement?

When it is harsh or oppressive.

How does excusable ignorance serve as an exception to illegality?

Courts may allow recovery when a party was excusably ignorant of the illegality.

Can a party recover in an illegal contract if the parties are not equally at fault?

Yes, courts may allow recovery when parties are not equally at fault.

Does rescission prior to an illegal act allow for judicial recovery?

Yes, rescission before the illegal act is an exception allowing recovery.

How does a contract being divisible affect recovery despite illegality?

Courts may enforce the legal portions if the contract is divisible.

Which case allowed plaintiffs restitution in an illegal context due to fraud?

Gamboa v. Alvarado.

What acronym lists the contracts required to be in writing under the Statute of Frauds?

MY LEGS.

In MY LEGS, what contract type does 'M' represent?

Marriage (prenuptial agreements).

In MY LEGS, what contract type does 'Y' represent?

Year — cannot be performed within 1 year.

In MY LEGS, what contract type does 'L' represent?

Land — real estate.

In MY LEGS, what contract type does 'E' represent?

Executor — paying estate debts personally.

In MY LEGS, what contract type does 'G' represent?

Goods — sale of goods >= $500 (UCC).

In MY LEGS, what contract type does 'S' represent?

Surety — guarantor promises.

What is a collateral (surety) contract?

A promise made by a guarantor to pay another's debt, which must be in writing.

What exception removes the writing requirement for collateral contracts?

Main Purpose Rule — if the guarantor benefits economically, a writing is not required.

What exceptions remove the writing requirement for land contracts?

Full performance or reasonable reliance.

What does the One-Year Rule mandate under the Statute of Frauds?

If performance cannot possibly be completed within 1 year, a writing is required.

Are contracts of indefinite duration covered under the One-Year Rule?

No, contracts of indefinite duration are NOT covered.

What two elements must a writing indicate under the UCC Statute of Frauds?

That a contract exists and the quantity.

Who must sign a writing under the UCC Statute of Frauds?

The party to be charged.

How does a confirmatory memo between merchants affect the UCC Statute of Frauds?

It acts as an exception to the writing requirement.

How does part payment or delivery affect the UCC Statute of Frauds writing requirement?

It acts as an exception to the writing requirement.

How does an admission in court affect the UCC Statute of Frauds writing requirement?

It acts as an exception to the writing requirement.

Are specially manufactured goods exempt from the UCC Statute of Frauds writing requirement?

Yes, specially manufactured goods are an exception to the writing requirement.

How can Promissory Estoppel affect an oral contract covered by the Statute of Frauds?

It may allow enforcement of oral contracts if reliance causes serious loss.

What is the Parol Evidence Rule?

If a written contract is final (complete integration), prior or contemporaneous statements cannot contradict it.

Does the Parol Evidence Rule apply to subsequent agreements?

No, the Parol Evidence Rule does NOT apply to subsequent agreements.

Does the Parol Evidence Rule apply to clear up contractual ambiguity?

No, it does NOT apply to ambiguity.

Does the Parol Evidence Rule apply to evidence of fraud, duress, or mistake?

No, it does NOT apply to fraud, duress, or mistake.

Does the Parol Evidence Rule apply to conditions precedent?

No, it does NOT apply to conditions precedent.

Does the Parol Evidence Rule apply to partially integrated agreements?

No, it does NOT apply to partially integrated agreements.

What is an assignment?

The transfer of rights under a contract.

Who is the assignor in an assignment?

The party who transfers contract rights.

Who is the assignee in an assignment?

The party receiving transferred contract rights.

What happens to the assignor's rights after an assignment is made?

Rights are extinguished for the assignor.

What legal role does the assignee assume following an assignment?

The assignee "steps into shoes" of the assignor.

Is a writing required to make an assignment legally valid?

No writing is required.