UNIT 6
True or False? Past consideration is no consideration.
TRUE
Under Restatement (Second) of Contracts §45, when an offer invites acceptance only by performance, what legal effect is created when the offeree begins the invited performance?
An option contract is created once the offeree begins the invited performance. This option contract makes the offer irrevocable, meaning the offeror cannot revoke the offer for the time stated or for a reasonable time while the offeree completes performance.
If two parties wanted to have an irrevocable offer for the sale of goods that extended beyond three months, then they would merely have to enter an _____ _____ where consideration was given for the promise not to revoke the offer.
Option contract
What are the writing requirements for a contract within the Statute of Frauds?
Restatement (Second) of Contracts §131 sets out three criteria for the contents of a satisfactory writing: (1) Subject Matter, (2) Parties to a Contract, and (3) Essential Terms.
UCC 2-205 provides: An offer by a merchant to buy or sell goods in a signed record which by its terms gives assurances that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a _____ time, but in no event may such period of irrevocability exceed ____ months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror
Reasonable; three
Under Restatement (Second) of Contracts §90(1), which of the following best describes the conditions under which a promise becomes binding under the doctrine of promissory estoppel?
A. A promise is binding whenever it is made in writing and signed by the promisor, regardless of reliance.
B. A promise is binding if the promisor should reasonably expect it to induce action or forbearance, it does induce such action or forbearance, and enforcing the promise is necessary to avoid injustice.
C. A promise is binding only when both parties exchange consideration of equal value.
D. A promise is binding if the promisee subjectively believed the promisor intended to perform, even without any reliance
B. A promise is binding if the promisor should reasonably expect it to induce action or forbearance, it does induce such action or forbearance, and enforcing the promise is necessary to avoid injustice.
What is the difference between a contract that is implied in fact and one that is implied in law?
An implied in fact contract is an actual contract where there is consideration for the promise. A contract may be implied in fact when actions (and not just words) demonstrate there is a mutual exchange of promises.
Is a company’s letterhead sufficient for a signature?
Yes
Who has the power of acceptance in an option contract?
The optionee
Under the rule derived from Drennan v. Star Paving Co., which of the following best describes the relationship between a general contractor and a subcontractor after the general contractor has reasonably relied on the subcontractor’s bid?
A. The subcontractor is free to revoke its bid at any time before the general contractor formally accepts it, even if the contractor relied on it.
B. Both the subcontractor and the general contractor are bound: the subcontractor must honor its bid, and the general contractor must use that subcontractor for the work.
C. The subcontractor is bound to honor its bid once the general contractor reasonably relies on it, but the general contractor is not required to use the subcontractor’s bid.
D. Neither party is bound unless they both sign a written agreement specifying that the bid is irrevocable.
C. The subcontractor is bound to honor its bid once the general contractor reasonably relies on it, but the general contractor is not required to use the subcontractor’s bid.
What are the two elements of unjust enrichment?
(1) one party has been enriched by another, and (2) it would be unjust to allow the enriched party to keep the benefit without making compensation.
What term is the only requirement for writing according to UCC 2-201 official commentary?
Quantity term
True or False? Acceptance under an option contract is effective upon dispatch.
False
Under UCC 2-205, what qualifies as a writing?
A writing includes anything printed, typed, written, or in some way reduced to tangible form. Email and other electronic modes of communication are considered writings. An oral agreement without any written evidence does not satisfy the writing requirement.
True or False? A rebuttable presumption exists that services rendered by family members are meant to be gratuitous—i.e., a gift. Courts differ on the method needed to overcome the presumption. However, typically, there needs to be a strong set of facts showing that restitution is appropriate—i.e., a higher standard such as clear and convincing evidence.
True
If the writing is not sufficient, but the contract is within the statute, the contract could be enforceable under which exceptions?
Specially manufactured goods, admissions, and part performance
What type of contract is this? Seller offers to sell her house to Buyer for $100,000. Buyer wants to purchase the house but needs time to get a loan. Buyer doesn’t want Seller to revoke the offer, so on November 1, Seller and Buyer enter an agreement where Buyer promises to buy and Seller promises to sell Seller’s house provided that Buyer can secure financing from Bank by November 30.
Conditional contract
Seller is a food distributor. On January 1, Seller sends a signed email to Buyer, a grocery store chain, stating that Seller will sell up to 300 bushels of apples a month to Buyer at $75 a bushel. Seller states that this offer will remain open until May 1. After what date may Seller revoke his offer?
A. January 1, because offers are generally revocable before acceptance. B. February 15, because in a dispute, a reasonable time is the mid-date of the three-month time period. C. May 1, because that was the date stated.D. April 1.
D. April 1.
Which is not one of the subjects included in the statute of frauds? A. Over one-year provision. B. Sale of goods of $1000 or more. C. Land sale contract. D. Suretyship agreement.
B. Sale of goods of $1000 or more.
What are the requirements of the Specially Manufactured Goods exception to the statute of frauds?
(1) goods specially manufactured for the buyer, (2) not suitable for sale to others in the ordinary course of the seller’s business; and (3) the seller has made either a substantial beginning of their manufacture or commitments for their procurement.