Formation of Contracts
Name three essential elements of a valid contract.
Offer, acceptance, consideration.
What is the “plain meaning rule” in contract interpretation?
Courts interpret terms using their ordinary meaning unless the parties clearly intended otherwise.
What defense applies when a party did not understand they were entering a contract due to intoxication or mental impairment?
Lack of capacity
What are liquidated damages?
A pre-agreed amount set in the contract to compensate for breach, enforceable if reasonable.
What federal act regulates credit reporting?
The Fair Credit Reporting Act (FCRA).
What makes an offer terminate?
Name one method.
Revocation, rejection, counteroffer, lapse, death
What is a “condition precedent,” and when is it triggered?
A condition that must occur before a party’s duty to perform arises.
What is undue influence?
Improper persuasion by someone in a position of trust or dominance.
What are expectation damages?
Damages that aim to put the injured party in the position they would have been in if the contract had been fully performed.
Name one act prohibited under the FDCPA.
Harassment, calling late at night, false statements, contacting third parties, etc.
What is consideration?
A bargained-for exchange of value.
What is an implied warranty of fitness for a particular purpose?
A warranty created when the seller knows the buyer’s special purpose and the buyer relies on the seller’s expertise.
When must a contract for the sale of goods must be in writing to satisfy the Statute of Frauds?
Contracts for the sale of goods over $500
What is mitigation of damages?
The duty of the nonbreaching party to reduce their damages when reasonably possible.
Under the FDCPA, when are debt collectors prohibited from calling consumers?
Before 8:00 AM or after 9:00 PM (consumer’s local time).
What is a void contract?
A contract with no legal effect from the beginning (e.g., illegal contracts).
What is a material breach, and what is its effect?
A serious breach that goes to the heart of the agreement and excuses the nonbreaching party’s performance.
What is mutual mistake?
When both parties share a mistaken belief about a basic assumption that materially affects the agreement.
What is equitable rescission?
Canceling the contract and returning parties to their pre-contract positions.
What is identity theft under the FCRA?
When someone uses another person’s personal information to obtain credit or services.
What is the UCC?
The Uniform Commercial Code — a standardized set of laws governing commercial transactions, including the sale of goods, adopted by all U.S. states (with some variations).
What is the duty of good faith in contract performance?
The obligation for parties to act honestly and fairly in carrying out their contractual obligations.
What is the defense of impossibility?
Performance becomes objectively impossible due to events outside the parties’ control.
What remedy orders a party to refrain from doing something?
An injunction
What is an “unfair or deceptive act or practice”
Conduct that misleads or harms consumers, prohibited under Washington’s CPA & similar laws.