contracts practice q's

What is a contract?

A legally binding agreement.

The common law governs transactions involving:

Services, land, and anything else that is not the sale of goods.

UCC Article 2 governs:

Sales of goods.

Under UCC Article 2, a sale is:

Title passing from seller to buyer for a price.

Goods under UCC Article 2 are:

Movable things.

How is a common law contract formed?

Mutual assent and consideration.

Who controls the offer?

The offeror.

What is the typical way that parties manifest assent?

Offer and acceptance.

What happens if one party makes an offer and the other party accepts it?

Mutual assent.

What is the effect of a counteroffer on the original offer?

Rejection of the original offer.

What happens if one party makes an offer and the other party neither accepts nor rejects it?

Offer expires after a reasonable time or offer expires on day offeror specifies.

A communication is an offer instead of just negotiations if it’s:

Definite and has reasonably certain terms.

An offer is “definite” if it:

Expresses commitment.

An offer has reasonably certain terms if:

A court can determine breach and a remedy.

Advertisements generally are:

Invitations to make an offer.

True or false: every agreement is a contract

False.

An offer gives the offeree:

Power of acceptance.

An offeree can accept an offer:

In the manner specified in the offer or in any reasonable manner if offer does not specify manner.

How does rejection affect the power of acceptance?

Terminates it.

When the offereee says yes but changes a term in the offer, it’s:

Both rejection and counteroffer

An offer expires:

After a reasonable period of time if offer does not specify a time.

Revoking an offer…

Terminates the power of acceptance.

Revocation is possible up until:

Acceptance.

When is an acceptance effective?

When the offeree sends it.

What is the exception to the general rule that offers are revocable?

Irrevocable offers.

An option contract is:

An irrevocable offer.

A bilateral contract is:

An offer that can be accepted by return promise.

A unilateral contract is:

An offer accepted by performance.

The offeree accepts an offer for a unilateral contract by:

Completing performance.

Under the common law, a written confirmation that adds a contract term is:

Both a rejection and a counteroffer.

Under the UCC, a written confirmation that adds a contract term can be:

An acceptance.

Under the Battle of the Forms, if the exchange of writings does NOT create a contract, then:

A contract can be formed by conduct.

A seller can “contract around” Article 2’s Battle of the Forms rule only if the buyer agrees to the seller’s terms. True or false?

True.

Conduct by only one party can create a contract by conduct. True or false?

False.

Under the Battle of the Forms, the same method determines contract terms whether a contract is formed by writings or by conduct.

False.

Under the UCC, if both parties are merchants and an acceptance adds a term to the offer, then the new term is:

Part of the contract unless an exclusion keeps it out.

Exceptions that keep an additional term out of a contract formed by writings:

Conditional offer, material alteration, and offeror’s objection.

The UCC’s Battle of the Forms does not say how to determine the contract’s terms when the offer and acceptance contain DIFFERENT terms, as opposed to the acceptance ADDING a term. True or false?

True.

If one party to a Battle of the Forms contest is NOT a merchant, an additional term in the acceptance is:

A mere proposal.

If the parties form a contract by CONDUCT instead of by their writings, the terms are:

The terms on which the writings agree and the supplemental terms from Article 2.

Contract formation requires:

Mutual assent and consideration.

Consideration exists when:

An agreement is a bargained-for exchange.

“Bargained for” generally means:

Promises mutually induce each other.

What three things are NOT consideration?

A gift, a pre-existing duty, and an illusory promise.

Promises to give gifts lack consideration because:

Only one side gives, so no bargained for exchange.

Promises to perform pre-existing duties lack consideration because:

The promisor was already obliged to perform.

An illusory promise is NOT consideration because:

The promisor is not obligated to do anything.

A unilateral contract is created when an offer is accepted by performance. True or false?

False.

To be a contract, an agreement must be expressed in words. True or false?

False.

True or false? Common law and UCC modification rules are different.

True.

Common law contract modification requires:

Mutual assent and a new consideration

Substitutes for a new consideration under the common law are:

Changed conditions and detrimental reliance.

UCC modification requires:

Both mutual assent and good faith.

How is promissory estoppel different from a breach of contract claim?

Promissory estoppel requires detrimental reliance.

The elements of promissory estoppel are:

• A promise

• Promisor reasonably expected to induce reliance

• Promisee reasonably and detrimentally relied

For promissory estoppel, the promissor must ____ that the promisee would rely.

Reasonably expect

In promissory estoppel the promisee’s reliance must be:

Reasonable.

Common contexts for promissory estoppel claims include:

Family promises, bidding on construction contracts, and pre-contractual assurances.

A promise is necessary to recover under the doctrine of unjust enrichment. True or false?

False.

The goal of unjust enrichment is to:

Prevent a party from keeping a benefit where fairness requires paying for it.

The elements of unjust enrichment are:

A renders B a benefit AND B retains it where fairness requires that B pay A.

The Good Samaritan defense to unjust enrichment applies when:

The benefit was a gift with no payment expected.

Only some kinds of contracts must be in writing. True or false?

True.

Who must sign the writing in the Statute of Frauds?

The person against whom enforcement is sought.

A writing that satisfies the Statute of Frauds must include:

Signature, that contract made or offered, and essential terms.

When it comes to the Statute of Frauds, what can be substituted for a signed writing?

Detrimental reliance or admission in court that a contract was formed.

The Statute of Frauds is another route to contract formation. True or false?

False.

The UCC Statute of Frauds requires writings when the price is:

$500 or more.

A writing that satisfies the UCC statute of frauds contains:

• Evidence that the parties made a contract

• Signature by party against whom enforcement is sought

• A quantity term

UCC exceptions to statutes of frauds are:

• Confirming merchant memorandum

• Specially manufactured goods

• Admission

• Part performance

Part performance can take a contract out of the UCC statute of frauds when…

Buyer pays for the goods.

An admission of contract formation that takes a contract out of the UCC Statute of Frauds must be:

In court or pleadings.

The confirming merchant memorandum exception (three traits):

• Applies only between merchants

• Gives the recipient 10 days to object

• Is unique to the UCC

True or false: Courts sometimes look at oral side agreements even when the parties signed a formal written contract.

True.

Parties can intend their written agreement to be the _____ or ______ statement of their agreement.

Final or complete and exclusive.

The Parol Evidence Rule applies to statements made_____the parties signed the writing.

Before.

An oral side agreement CANNOT ______ the terms of a written agreement.

Contradict.

An oral side agreement MAY _____ or _____ the terms of a written contract.

Explain or supplement.

Types of evidence that can “explain or supplement” a FINAL written agreement include:

• Course of dealing

• Course of performance

• Consistent additional terms

• Trade usage

Evidence that a jury CAN look at to “explain or supplement” a COMPLETE AND EXCLUSIVE written agreement includes:

Course of dealing, course of performance, and trade usage.

A jury CANNOT look at _____ to “explain or supplement” a COMPLETE AND EXCLUSIVE written agreement:

Consistent additional terms.

Types of defenses include:

• Lack of capacity

• Bargaining process problems (i.e., mistake or duress)

• Substantive provlems (i.e. unconscionability)

• Changed conditions

True or False: Most people have the capacity to enter contracts.

True.

Conditions that deprive a person of contractual capacity:

Childhood, mental illness, or intoxication.

When do people generally acquire the capacity to enter a contract?

On their 18th birthday.

A child may still be legally bound if the contract is:

For a necessity.

Mental illness deprives people of contractual capacity if they cannot:

• Understand the nature and consequences of the transaction

• Control their behavior and the other party has reason to know

Intoxication deprives a person of contractual capacity if:

• The other party has reason to know of the intoxication; AND

• The intoxicated person cannot understand the transaction or cannot control their behavior

Mistake is:

A belief inconsistent with the facts.

Mistake can be either ____ or _____.

Mutual or unilateral.

Mutual mistake is ____ to prove than unilateral mistake.

Easier.

To avoid a contract for mutual mistake, parties must show that:

• The mistake goes to a basic assumption

• The mistake materially affects the exchange

• They did not bear the risk

To avoid a contract for unilateral mistake, a party must show:

Mutual mistake PLUS either unconscionability OR the other party’s reason to know or causing the mistake

Misrepresentation entitles a party to avoid a contract when the representation is either ___ or ___.

Fraudulent or material.

Fraudulent misrepresentations are statements that are:

Knowingly false and made to induce detrimental reliance.

Material misrepresentations induce ____ or _____.

A reasonable person’s assent or induce this person’s assent.

Duress entitles a party to avoid a contract when it is:

By physical forve OR by unlawful threat.

Duress by threat involves:

• A reasonable proposal

• The recipient has no reasonable choice but to accept

Undue influence is:

Over-persuasion of a vulnerable party by a powerful party.

True or false? Either party can assert the defense of misrepresentation, duress or undue influence.

False.