Exam Questions
3. Under the mirror image rule, an acceptance cannot impose any new terms or conditions that were not contained in the offer.
A. True
B. False
A
What are the exceptions for silence as acceptance?
1. prior dealing or trade custom
2. offeree states that silence will constitute acceptance
3. implied acceptance: offeree accepts offerors performance
Common Law requires all essential terms to be stated in the offer - what are they?
UCC only has one required term, what is it?
Common Law
who, what, how much, how many, when, where
UCC: only requires a set quantity
Name the 3 elements of a quasi contract
- extra 50 points if you can state when a quasi contract cannot be in use
1. one party confers a benefit on another (expecting to be paid)
2. the recipient knowingly accepts and retains the benefit
3. the recipient would be unjustly enriched by retaining the benefit without paying for it
- not available when a valid contract covering disputed subject exists
Create your own example of detrimental reliance -
give the example and then break it down to show all 4 elements
1. a promise
2. reliance
3. reliance is forseeable and reasonable
4. injustice results from reliance
8. Eleanor Coal signed a contract with Franklin Energy in which Franklin agreed to buy 100,000 tons of coal delivered in 10 equal shipments as long as Franklin approved of the quality of the coal. Franklin was free to reject any shipment it wished by simply stating it did not approve of the coal. Is the contract enforceable?
A. Yes, because the contract is for a sale of goods.
B. Yes, because the mirror image rule does not apply.
C. No, because the pre-existing duty rule applies.
D. No, because the contract is illusory.
D
Maybe an offer, maybe not - what is the exception on advertisements
ads that limit the class of people who can accept and terms of which are definite and binding, leaving nothing to negotiate
What is the mirror image rule and what type of contract does it apply to?
APPLIES TO COMMON LAW ONLY - Acceptance's terms must match the offers terms exactly or is considered a counteroffer - courts used to insist on a complete match of all terms, now only material terms must match
What are the 3 ways to communicate acceptance plus define them
1. stipulation: must accept in manner required by offer
2. express authorization: may not must accept accept in way suggested
3. implied authorization: can accept by any reasonable means
Give an example of a type of irrevocable offer
- after you give the example, define and show how it is an irrevocable offer
after the person answers - anyone else can give example of one not mentioned for 50 points (ex: if u use liquidated debt u can give an example of accord and satisfaction)
1. option contracts: offeror promises to hold offer open for a specified period in exchange for consideration
2. promissory estoppel/detrimental reliance: to prevent injustice, the offeror is estopped from revoking offer if offeree has relied to his or detriment on a promise that would keep the offer open - partial performance
3. unilateral offers: some courts hold that partial performance creates a bilateral contract
4. Firm offers: only for UCC, merchant promises in signed writing to keep an offer open
- irrevocable without consideration
- must stay open for specified period of time but not longer than 3 months
- must sign assurance term seperately
9. If a court invalidates a contract because of unconscionability, with what fundamental legal principle does it conflict?
A. Fahrvergnügen
B. Fairness and equity
C. Freedom of contract
D. Contracts embody an economically efficient allocation of risk
C
What are the 3 exceptions that allow for acceptances to be effective when received?
Double jeopardy if you can also name the difference between UCC and common law within the exceptions
1. Offer contains a deadline to accept
2. If acceptance is sent by unreasonable means then
- Common Law: effective when received no matter what
- UCC effective when sent if received within a reasonable time, if late then effective when received
3. Offeree sends rejection then acceptance
Remedies - fill in the blank (ucc or common law)
____ never requires an election of remedies
in ______ the plaintiff must elect between recission and damages - cannot seek both
1. UCC
2. common law
State and Define the two components of consideration
extra 15 points if you can explain past consideration
1. legal sufficiency: the consideration must be either a legal detriment to the promisee or a legal benefit to the promisor
- legal benefit: receiving something one did not have a legal right to receive
- legal detriment: giving something one had no prior obligation to give or not doing something one had a legal right to do
2. Bargain for Exchange - two requirements
- promisee's legal detriment or the promisors legal benefit must have induced the promisor to make his promise AND
- promisors promise must have induced the legal benefit given to the promisor
Past consideration is no consideration - have to promise up front not after the fact
Create an example of the mailbox rule and define
Create an example of when acceptance would be effective when received
if acceptance is sent by expressly or impliedly authorized means, then acceptance is effective when sent
- acceptance is effective even if lost or never received
Exception
1. offer contains deadline to accept
2. sent by unreasonable terms (common law - when received no matter what, UCC when sent if reasonable time)
3. sent rejection then acceptance
18. Funky Threads sent Carly an offer to be their exclusive model for their biker jacket line. The offer stated she had to accept by June 1. Carly mailed her acceptance on May 27. On May 28, Carly rejected an offer from Groovy Fits to be their exclusive model. On May 29, Congress outlawed wearing biker jackets because they are so hideously out of fashion. On May 30, Funky Threads received Carly’s acceptance but called her to say they were revoking the offer. Can Carly successfully sue Funky Threads for breach of contract?
A. Yes, because Carly detrimentally relied on their offer.
B. Yes, because Carly was implying acceptance of the offer by rejecting Groovy Fit’s offer.
C. Yes, because Carly accepted by the deadline.
D. No, because once biker jackets became illegal, the offer was terminated.
E. No, because Funky Threads revoked before June 1.
D
Misrepresentation by silence - generally no duty to volunteer information EXCEPT
1. if offered incomplete information
2. confidential relationship (for this class fiduciary duty) between parties
3. seller is aware of a hidden defect that the buyer cannot reasonably discover
What is a firm offer under the UCC
Hint: definition and 3 requirements
a merchant promises in signed writing to keep an offer open
- offer is irrevocable wihtout consideration
- offer must stay open for specified period or for a reasonable time, but no longer than 3 months
- if offeree includes firm offer in its forms, offeror merchant must sign assurance term seperately
What are the 5 elements of misrepresentation and fruad - specify which ones u need for misrep vs fraud
1. misrepresentation
2. of a material fact
3. made with the intent to deceive (fraud only)
4. on which another justifiably relied
5. reliance caused harm (fraud) - only need proof of harm if suing for damages
Give an example of either legal sufficiency or bargain for exchange - specify which one and define
extra 50 points if you give an example of both a unilateral and bilateral contract
Example: after jenn weeds sallys flower bed, sally will pay jen $15
promise: 15 dollars
Legal benefit/detriment: giving up time and effort
Inducement:
Steps to see if there is legal detriment or benefit
1. stand in shoes of promisor - what motivated them to make the promise? the answer should be want detriment
2. stand in promisee's shoes - why is the promise suffering this detriment? answer should be induced by promise
15. Lucy was having trouble selling her house. Her friend Susan advised her to repaint the house and stage the furniture differently before showings. Susan even helped Lucy with the painting and redecorating. As a result, Lucy received a fantastic offer after the next open house, which she accepted. She told Susan gratefully that she would pay her 5% of the sales price in recognition of her help in selling the house. However, they had a fight and Lucy ultimately did not pay Susan anything. Can Susan receive the 5%?
A. Yes, she could sue in quasi contract as Lucy was unjustly enriched by her services
B. Yes, she suffered legal detriment by giving up her time when she didn’t have to
C. No, past consideration is no consideration
D. No, Lucy’s offer was ambiguous
C
Exceptions to Pre-existing duty rule
DOUBLE JEOPARDY if you name the UCC exception
1. unforseen difficulties - modifications without new consideration will be enforced if due to unforseeable problems
2. sometimes courts hold that modification created new contract that terminated old contract - then no pre-existing duty
UCC exception: contract modifications made in good faith do NOT need new consideration to be valid
Ambiguous offers for the UCC
- double jeopardy if you can name the exception on ambig. offers
- non conforming goods act as implied counteroffer
- if buyer accepts the goods, its implied acceptance of a counteroffer and the buyer must pay
- if a buyer rejects, shipper would not be in breach as counteroffer rejected original offer
UCC addresses this by providing that shipment of any goods (conforming or non-conforming) acts as acceptance of buyers offer - non conforming is therefore a breach
EXCEPTION: if shipper notifies buyer that goods are intended as an accomodation, then shipment is counteroffer than can be accepted or rejected
Name the 6 ways you can terminate an offer and define
25 extra points if you can specify when revocation is effective and how things can be revoked
1. expiration of offers term
2. lapse of time: expires after a reasonable time if no period specified
3. death or insanity of either party: automatically terminates revocable offers
4. destruction of the subject matter: automatic termination
5. intervening illegality: offer automatically terminated if subject matter becomes illegal
6. revocation by offerer: offerer can revoke at any time before offeree accepts, even if offer promised to keep the offer open
- revocation can be expressed or implied, and is effective when received
- revocation of offer to the public must be communicated the same way as the offer
Give an example of the pre-existing duty rule AND give an example of an exception to the pre-existing duty rule
DOUBLE JEOPARDY if you can also give an example of 1/5 ways the pre-existing duty rule exists for agreements to settle debts
after the person answers - anyone else can give example of one not mentioned for 50 points (ex: if u use detrimental reliance u can give an example of option contract)
- public duties
- contractual duties/modifications
Exceptions
- unforseen difficulties or new consideration
Pre-existing for settling debts
1. liquidated debts: creditors promise to accept less than an undisputed amount is unenforceable
2. unliquidated debts: if there is a good faith dispute over how much is owed, then promise is to accept less than creditor believes is owed is enforceable
3. accord and satisfaction - agreements to accept less is the accord and performance (payment) is the satisfaction
4. composition agreement: debtor and two or more creditors agree to settle liquidated claims; creditors mutual agreement is consideration
5. forbearance to sue - releasing legal claim is legal detriment as long as claim has a good faith basis