Definitions
The manifestation of intent to enter into a bargain that another person would understand they are invited to assent to
What is an offer?
Components of a legally enforceable contract:
Offer, acceptance, consideration, and intent
This governs the sale of goods.
What is the UCC (Uniform Commercial Code)?
When one of the parties of a contract may legally reject it, the contract is said to be:
A) voidable
B) void
C) unenforceable
D) valid
A) Voidable
(Quizlet)
This case addressed whether an agreement written on the back of a bar receipt (which both parties discussed for 40 minutes AND neither party verbally said they were joking AND the parties made edits) demonstrated a mutual assent to be bound.
What is Lucy v. Zehmer?
This is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
What is a contract?
Sheila offers to give Bart $500 if he finishes the Chicago marathon. On the day of the marathon, 3/4 through the race, Sheila tells Bart that she revokes her offer. Bart finishes the race. You advise Bart:
1)Sheila may revoke her offer at any time before acceptance.
2) Because this is an offer for a bilateral contract, Sheila may not revoke her offer once Bart has begun performance.
3) Because this is an offer for an unilateral contract, Sheila may not revoke her offer once Bart has begun performance, but she is not bound until Bart finishes the race.
3) Because this is an offer for an unilateral contract, Sheila may not revoke her offer once Bart has begun performance, but she is not bound until Bart finishes the race. (Quizlet)
A common defense to a claim that a salesperson has made an express warranty about the quality of the goods they are selling.
What is puffery/exaggeration?
The two-prong test that must be fulfilled to void a contract based on unconscionability.
What is procedural unconscionability (absence of a meaningful choice) and substantive unconscionability (terms of the contract are unreasonably favorable to one party)?
Rule: A party’s agreement to incur a detriment constitutes adequate consideration.
Issue: Does a party's agreement to incur a detriment constitute adequate consideration?
Holding: Adequate consideration sufficient to form a valid and enforceable contract may consist of either a right, interest, profit, or benefit accrued to one party, or some forbearance, detriment, loss, or responsibility given, suffered, or undertaken by the other.
Facts: Uncle said if nephew abstained from “drinking, using tobaccos, swearing, and playing cards or billiards for money” until he reached 21 years of age, he would be paid $5,000.
What is Hamer v. Sidway?
An absence of meaningful choice on the part of one of the parties, together with contract terms which are unreasonably favorable to the other party.
What is unconscionability?
A farmer in a small town suffering a severe drought contacted a scientist in another county who claimed to have perfected a rainmaking machine. The farmer and the scientist entered into an agreement providing that the scientist would be paid if he made it rain. The agreement did not specify an amount of payment or any deadline by which it must rain. After several days of trying without success, the scientist said that the machine might work better at a higher elevation. A neighbor who lived on higher ground agreed to let the scientist place the rainmaking machine on his land and further told the scientist that if he made it rain before the end of the following day, he would pay him $20,000. The scientist placed the machine on the neighbor’s land. By nightfall of the same day, clouds had begun to gather over the town, and the next morning it was pouring rain.
If the neighbor refuses to pay the $20,000 to the scientist, can the latter enforce the promise to pay?
A) Yes, because the neighbor’s promise was supported by the consideration that the scientist make it rain by the next night.
B) Yes, but only in the amount of the reasonable value of his services.
C) No, because the scientist had a preexisting duty to make it rain as a result of the agreement with the farmer.
D) No, because the neighbor’s promise constituted no legal detriment to him.
A) Yes, because the neighbor’s promise was supported by the consideration that the scientist make it rain by the next night.
The scientist can enforce the contract with the neighbor because it was supported by consideration. For a contract to be enforceable, there must be an offer, an acceptance, and consideration. Here, there was an offer made by the neighbor (i.e., if the scientist made it rain before the end of the following day, he would pay the scientist $20,000), the scientist accepted the offer by performing, and the performance was valid consideration because the scientist was not under a preexisting duty to make it rain by the next evening (the scientist agreed with the farmer to try to make it rain, but there was no time limitation and no specified consideration). Thus, the neighbor’s condition that the scientist had to make it rain by the following day was new consideration and not a preexisting duty. Therefore, the contract is enforceable. (BarBri)
Phrase to describe when preliminary documents have become a binding contract.
What is a "mere memorial" of an agreement/contract?
Circumstances that describe when a party has assumed the risk of her mistake.
R2-154: A party assumes the risk of her mistake when:
a) the risk is allocated to him by agreement of the parties, or
b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
c) the risk allocated to him by the court on the ground that it is reasonable in the circumstances to do so
The issue and holding in Kansas v. Nebraska.
Issue: May the Supreme Court exercise remedial authority, including disgorgement, to enforce and ensure compliance with a compact between states?
Holding: Yes. The Supreme Court may exercise remedial authority, including disgorgement, to ensure compliance with a compact between states. The Court has broad authority to enforce contracts between states and to deter future breaches.
Facts: Kansas (plaintiff) and Nebraska (defendant) signed a contract agreeing to allocate water resources from the Republican River Basin. The water was more valuable on Nebraska farmland than it was on Kansas farmland. Nebraska over-consumed water from the basin by 17 percent.
A(n) ____ is when the offeror keeps the offer open for limited amount of time in exchange for offeree's consideration (offeror can't revoke offer til end of time period)
What is an option contract?
On April 10, the owner of a small farm mailed a letter to a new resident of the area who had expressed an interest in buying the farm. In this letter, the farm owner offered to sell the farm to the resident for $100,000. The offer expressly stated that the offer expires on June 1, "if acceptance by the offeree has not been received by the offeror on or before that date."
On the morning of June 1, the resident sent a written acceptance to the farm owner by messenger. However, through negligence of the messenger company, the acceptance was not delivered to the farm owner until June 2. On June 4, the farm owner entered into a contract to sell the farm to another buyer for more money but did not inform the resident of the transaction. When the resident followed up by phone on June 10, the farm owner told him that he had sold the farm to another buyer.
a) No contract between the farm owner and the resident arose on June 2.
b) An enforceable contract arose on June 1.
c) The farm owner's silence constituted an acceptance of the resident's message on June 2.
d) A voidable contract arose on June 1.
a) No contract between the farm owner and the resident arose on June 2.
EXPLANATION: No contract arose on June 2 because the farm owner's offer expired on June 1, when the farm owner did not receive the resident's acceptance. If a period of acceptance is stated in an offer, the offeree must accept within that period to create a contract. Failure to timely accept terminates the power of acceptance in the offeree (i.e., a late acceptance will not be effective and will not create a contract). Under the mailbox rule, an acceptance generally is effective upon dispatch (i.e., the acceptance creates a contract at the moment it is mailed or given to the delivery company). However, the mailbox rule does not apply where the offer states that acceptance will not be effective until received. In the latter case, acceptance is effective only upon receipt. Here, the farm owner's offer specifically stated that the acceptance must be received by June 1 to be effective. Thus, the farm owner opted out of the mailbox rule, and no contract was created by delivery of the acceptance on June 2. Note that the resident will not be able to successfully argue that the acceptance was valid because the late delivery was the messenger company's fault. This would be a valid argument if the mailbox rule applied here, because the acceptance would have been effective on June 1, when the message was given to the messenger company. However, by opting out of the mailbox rule, the farm owner put the burden of any negligence in delivery on the resident. Thus, there was no valid acceptance. (BarBri)
A student enrolled at a private college. After she finished her first year, her uncle told her that he was so proud of her attending college that he would pay for her remaining three years. After the student finished her second year of college, her uncle told her that he had suffered financial setbacks and would not honor his promise to pay for her tuition. The student completed two more years of college and graduated.
If the student sues her uncle seeking to recover on a theory of promissory estoppel, how much is she likely to recover?
A. The cost of all four years of college.
B. The cost of her last three years of college.
C. The cost of her second year of college.
D. Nothing.
D. Nothing.
Explanation: Section 90 of the Restatement of Contracts (promissory estoppel). Under this doctrine, a promise may be partially or fully enforced, even if it is not supported by consideration. Here, there is no evidence that the uncle made the promise as an inducement for the student to continue college or that the student relied on her uncle’s promise in any way. She already was enrolled at the college and had completed a year when her uncle made the promise, and nothing indicates that she planned on transferring or dropping out had her uncle not made the promise. Furthermore, she continued attending the college for two years after he withdrew his promise. Because the uncle’s promise did not induce any action or forbearance on the part of the student, she is unlikely to be able to recover based on promissory estoppel. Answer options A, B, and C are necessarily incorrect for the stated reasons.
It is said that a valid contract must have legality of object. Which of the following best describes 'legality of object'?
A) An agreement between competent parties that is legally enforceable.
B) All parties are of legal age and agree upon the legal consideration to be paid.
C) Either party has the legal right to cancel the contract, provided legal notice is given.
D) The contract must not be for an illegal purpose or against public policy.
D) The contract must not be for an illegal purpose or against public policy.
This case held that in a 2-207 scenario where both parties are merchants, there are three different approaches to handling different terms:
1) Treat them as additional terms, so they get in unless 2-207(2) a, b, or c
2) Kick out different terms so original offer controls
3) Knock-out rule: keep terms parties do agree on, kick out any terms not agreed on, and UCC gap fillers for any gaps
What is Gardner Zemke?
This is any agreement that is not contained within the written contract. Under this rule, these agreements made outside of the contract are inadmissible in court unless there is evidence of fraud, duress, or a mutual mistake. (Cornell LII)
What is "parol evidence"?
Prior to her death, a celebrity commissioned an artist to paint a portrait of her. The celebrity hired this particular artist because he only painted using an old-fashioned and rarely used style that required two months of daily appointments during which the subject would sit for the painting over a few hours each day. The contract between the parties specified that this live-model method be used, and that the celebrity would deliver increasing payments throughout the process, with the first payment occurring after two weeks of painting. One week into the process, after the painting had begun, the celebrity died. Her family demanded that the artist continue with the painting, using photographs as a substitute for the daily sessions.
Is the artist required to complete a painting of the celebrity?
A. Yes, because he can complete it by relying on pictures of the celebrity.
B. Yes, because he had begun painting the celebrity.
C. No, because the celebrity died after only one week.
D. No, because no payment had yet occurred.
C) No, because the celebrity died after only one week.
The relevant rule: contracting party can be discharged if (1) unexpected event makes performance impracticable, (2) contract was formed under basic assumption that the event would not occur, and (3) party seeking discharge wasn't at fault for the event. (MBE)
A contract with one or more terms left open will:
A. Fail for indefiniteness
B. Not fail for indefiniteness if one of the parties intended to make a contract
C. Not fail for indefiniteness if the parties intended to make a contract and there is a reasonable basis for giving an appropriate remedy
D. Not fail for indefiniteness if there is a basis for giving an appropriate remedy
C. Not fail for indefiniteness if the parties intended to make a contract and there is a reasonable basis for giving an appropriate remedy (Quizlet)
A writer sent a four-page synopsis of an idea for a new television series to a Hollywood producer. He sent it in response to an ad for new ideas in an industry publication. He discussed it with the producer's assistant in a phone call, and mentioned his expectation of compensation. She said, "Well, of course, we always pay for a writer's work." She said she would go over it with her boss to see if he liked it.
Several months later, the writer saw a casting call for a new series. The plot and characters were nearly identical to those described in his synopsis. He sued the producer for breach of contract. The producer defended by arguing that there was no contract. What is the likely ruling of the court?
A) The court will rule that there is an express contract because there was a meeting of the mind and mutual assent to the basic terms.
B) The court will rule that there was an implied in fact contract between the parties based on the conduct that they manifested.
C) The court will rule that there was no consideration specifically mentioned and under those circumstances, the law viewed the synopsis as a gift to the producer.
D) There were too many terms left out for this to be a contract, and it was too indefinite for the court to imply what the terms might have been.
B) The court will rule that there was an implied in fact contract between the parties based on the conduct that they manifested.
An implied contract and its terms are manifested by conduct and interpretation of the surrounding circumstances. A voluntary acceptance of the benefit of a transaction is the same as an assent to all the obligations arising from it. (MBE Practice Question)
Rule: If parties enter a new agreement under which one party agrees to do no more than he was already obligated to do under an existing contract, the new agreement is unenforceable for lack of consideration.
Issue: If parties enter a new agreement under which one party agrees to do no more than he was already obligated to do under an existing contract, is the new agreement enforceable?
Holding: No. A contract that obligates a party to perform what he or she has a prior existing duty to perform under an earlier agreement is not enforceable, because it lacks consideration. A party cannot benefit from his or her own bad faith by refusing to perform a contract in order to coerce another party relying on that performance into a new agreement that requires no additional performance in exchange for more beneficial terms.
Facts: Salmon packers suddenly demand more wages or threaten to leave, but they ask someone who can't approve the contract
Choices:
A) Alaska Packers’ Association v. Domenico (1902)
B) Washington Packers' Union 207 v. Domenico (1902)
C) Sanguino v. Alaska Packers' Association (1903)
D) North Atlantic Salmon Association v. Brent (1903)
What is Alaska Packers’ Association v. Domenico (1902)?