Contracts

Q: What is a contract?
A: A contract is a set of promises for which the law provides a remedy, constituting a legally enforceable agreement.
Q: What are the two main requirements of a contract?
A: 1) Consideration, and 2) Mutual Assent.
Q: What is a legally enforceable promise?
A: A promise that imposes a duty or obligation on the party.
Q: Are general expressions of opinion considered promises?
A: No, general expressions of opinion or predictions are not promises (e.g., Hawkins v. McGee).

Q: What constitutes consideration in a contract?
A: A bargained-for exchange where mutual promises induce each other, assessed objectively.
Q: Can moral obligations create consideration?
A: No, moral obligations or gratuitous promises do not create consideration.
Q: When is nominal consideration not valid?
A: When it is unreasonable or symbolic without real value.
Q: What does the case Wood v. Lady Duff-Gordon teach about implied promises?
A: Contracts may include implied promises based on context, even if imperfectly expressed.

Q: What is required for a valid contract modification?
A: New and independent consideration to impose new obligations, unless under UCC rules (good faith is sufficient).
Q: Can a promise to do what the promisor is already obligated to do serve as consideration for a modification?
A: No, it is not real consideration (Levine v. Blumenthal).

Q: What is mutual assent?
A: The manifestation of agreement to an exchange, usually through an offer and acceptance.
Q: Is internal mental state relevant to mutual assent?
A: No, mutual assent is assessed based on the actions and words of the parties, not their internal mental state.

Q: What is an offer?
A: A proposal that requires only acceptance to form a contract.
Q: Who is the master of the offer?
A: The offeror, who sets the terms of the offer and acceptance.
Q: What is required for acceptance to create a binding agreement?
A: Acceptance must reflect the terms of the offer (Mirror Image Rule).
Q: Can silence constitute acceptance?
A: Generally no, unless specific conditions apply (e.g., prior dealings or retention of benefits).

Q: What makes a contract void?
A: It never existed due to illegality or lack of essential elements.
Q: What is duress, and how does it affect contracts?
A: Duress occurs when a contract is entered involuntarily due to improper threats, rendering it voidable.
Q: What is misrepresentation?
A: A false statement or concealment of fact that induces a party into the contract.

Q: What is the purpose of the Statute of Frauds?
A: To require certain contracts to be in writing to be enforceable.
Q: Name an example of a contract covered by the Statute of Frauds.
A: Contracts for the sale of goods over $500, interest in land, or agreements that cannot be performed within one year.

Q: What is a material breach?
A: A breach so significant that it excuses the non-breaching party from performance.
Q: What are expectation damages?
A: Damages that put the non-breaching party in the position they would have been in had the contract been performed.
Q: What is mitigation of damages?
A: The requirement that the non-breaching party take reasonable steps to reduce harm caused by the breach.

Q: What is a unilateral contract?
A: A contract accepted through performance rather than a promise.
Q: What is a bilateral contract?
A: A contract formed through the exchange of promises.
Q: What is an output contract?
A: A contract where one party agrees to purchase all that the other party can produce.
Q: What is a requirements contract?
A: A contract where one party agrees to supply all of the other party’s needs.

Q: What is the "Four Corners Rule"?
A: A principle stating that interpretation should rely only on the written document unless ambiguity exists.
Q: What happens when ambiguity exists in a contract?
A: Courts may look to extrinsic evidence, including negotiations, trade usage, and course of performance.
Q: What is the rule against the draftsman?
A: Ambiguities are construed against the party that drafted the contract.

Q: What is a condition precedent?
A: An event that must occur before a contractual duty arises.
Q: What is substantial performance?
A: Performance that meets the essential purpose of the contract, allowing for recovery despite minor breaches.
Q: What is a constructive condition?
A: A condition imposed by law, not explicitly stated in the contract.

Q: What is promissory estoppel?
A: A doctrine allowing enforcement of a promise when reliance has occurred, and injustice can only be avoided by enforcement.
Q: What is a quasi-contract?
A: An obligation imposed by law to prevent unjust enrichment, even without an actual contract.

Q: What does UCC Article 2 govern?
A: Contracts for the sale of goods.
Q: What is required for modification under the UCC?
A: Good faith, with no need for new consideration.
Q: What is the Battle of the Forms under UCC 2-207?
A: A rule governing conflicting terms in written forms exchanged by parties to a sale of goods.

Q: What is impossibility?
A: A defense where unforeseen events make performance objectively impossible.
Q: What is frustration of purpose?
A: A defense where the contract's principal purpose is substantially frustrated by an unexpected event.

Q: What are liquidated damages?
A: Pre-agreed damages written into the contract to be paid in case of breach.
Q: When are punitive damages awarded in contract law?
A: Rarely, unless an independent tort accompanies the breach.
Q: What are reliance damages?
A: Damages that put the injured party in the position they were in before the contract was formed.

Q: What is the mailbox rule?
A: Acceptance is effective upon dispatch, even if it is lost in the mail.
Q: Can silence be stipulated as acceptance in a contract?
A: Only in rare circumstances, such as a course of dealing.
Q: What is an adhesion contract?
A: A "take-it-or-leave-it" contract, often scrutinized for fairness.
Q: What is the difference between latent and patent defects?
A: Latent defects are hidden and not discoverable by inspection, while patent defects are visible.
Q: What does the UCC require for contracts over $500?
A: A written agreement to be enforceable under the Statute of Frauds.
Q: What is an implied warranty under UCC?
A: A guarantee that goods are fit for their ordinary purpose unless explicitly disclaimed.