Law+240+Short+Answer+-+Midterm+2

Midterm #2 Short Answer Examples Notes

Offer and Acceptance in Contract Law

• Scenario with John and Susan:

  • John offers to sell his car to Susan for $15,000.

  • Susan's response (requesting time for financing) is not an acceptance but a counter-offer.

  • Susan offers $100 to keep the offer open, which creates an option contract allowing her time to secure financing.

  • John’s acceptance of the $100 makes the offer binding for two weeks.

• Advice for John:

  • He should honor his agreement with Susan for the two weeks.

  • If Susan secures financing and accepts, John must sell. If not, he may sell to Roberta after the period ends.

Breach of Contract Scenario

• Cindy and the Dress:

  • Cindy claims breach of contract because she believes the catalog was an offer.

  • Key Point: The catalog is generally considered an invitation to treat, not a legal offer.

  • The proper definition of a contract requires mutual assent; Cindy's call to order was not a binding acceptance since the item was sold out.

UCC and Contractual Agreements

• XYZ, Inc. and ABC Corporation:

  • Written agreement for XYZ to sell a factory machine to ABC. Includes training personnel.

  • UCC Application: The Uniform Commercial Code (UCC) governs contracts for the sale of goods. Since the transaction involves a sale (machine), UCC applies, especially considering the training relates to the use of the sold equipment.

Characteristics of an Enforceable Contract

1. Offer:

   • A clear proposal made by one party that can be accepted by another.

2. Acceptance:

   • Unconditional agreement to the terms of the offer.

3. Mutual Assent:

   • Both parties must agree to the terms, leading to a 'meeting of the minds.'

4. Consideration:

   • Something of value exchanged between parties; can be a something tangible or intangible.

5. Capacity:

   • Parties must be competent and of legal age to enter into a contract.

6. Legality:

   • The contract’s purpose must be lawful; contracts for illegal acts are not enforceable.

7. Writing (if required):

   • Certain contracts, like those involving significant sums or real estate, must be in writing.

Consideration Requirement in US Law

• Peppercorn of Consideration:

  • The principle that any nominal value (even as low as a peppercorn) suffices for consideration, preventing dismissals based purely on inadequate value.

  • Ensures that both parties have a stake in the agreement.

• Enforcement of Bad Economic Deals:

  • Courts typically do not intervene in poor economic judgement unless a contract violates law or equity. The focus is on meeting legal obligations, not fairness or value.

Summary of Legal Principles

• Key legal principles govern the formation, enforcement, and interpretation of contracts.

• Understanding the context and nuances of each unique scenario is vital in providing sound legal advice.