Contracts Second Assessment

Consideration

100

What does consideration require based on Restatement 71

To be bargained for and something of value

200

What is an Illusory Promise.

Bonus 100: for an example

unenforceable due to indefiniteness or lack of mutuality, where only one side is bound to perform.

Promise that does not bind the promisor

EX. I will give you $5,000 at the end of the year if the business does well

300

What is the pre-existing duty rule

BONUS 200: For when pre-existing duty shifts

If you are under a legal duty to perform there is no consideration (Alaskan Packers).

With no additional consideration, a contract agreeing to pay more for the same amount of services is unenforceable 

Bonus- If it is fair for the promisee to be making more due to an increase in volume or etc. then that is the additional consideration

400

what is a gratuitous promise, an example, and how you would argue to enforce your example

A commitment made without receiving anything of legal value in return

500

Is moral obligation considered consideration? Why or why not?

Generally, moral obligation is not considered consideration. However, regarding statute-barred debts, bankruptcy-discharged debts, and the material benefit rule, moral obligation promises are enforceable

+200 For What is the Material Benefit Rule?

PER, Terms, Interpre.

100

Patent V. Latent Ambiguity

Patent: Ambiguous on face

Latent: Appears clear, but hidden external circumstances make the application uncertain

200

What are Fully and Partially Integrated Agreements and why do their differences matter?

Fully: all terms are agreed upon (typical to see merger clause)

Partially: a few terms are missing, but miniscule, still a final contract. 

The difference matters because in fully integrated contracts PER can only permit evidence to explain contract terms, while with partially integrated agreements, PER allows extrinsic evidence to explain or supplement. 

300

What is the hierarchy of terms the court will look at when interpreting a contract, and what do the terms mean. 

BONUS: what term has an exception regarding knowledge

Express- Clear

Course of Performance- Behavior on the specific contract, repeated behavior

Course of Dealing- Conduct on previous transactions regular enough to be common

Usage of Trade- Practice regularly observed in trade

(BONUS: UOT counts even if you do not know trade)

400

What levels are there to terms of the deal interpretation 

The writing: plain meaning if clear and unequivocable

Context: Surrounding circumstances (BONUS POINTS FOR: COP, COD, UOT)

The Courts: What the other courts have decideed about the text (fill in gaps)

Statute: Regulations that fill in or override

500

What is the effect of a collateral agreement in the Parol Evidence Rule.

Fully Integrated and Partially Integrated Agreements

Fully: If the collateral agreement is within the scope of the facts it is barred; however a collateral agreement outside of the scope will be allowed (something that would not have been talked about under the main contract). Can also come in to explain ambiguity, or prove fraud or duress

Partially: Collateral agreements can come is as supplements or explanations as long as there are NO CONTRADICTIONS

SOF and PE

100

In a statute of frauds case who must the writing be signed by

The party in which enforcement is sought

200

What contracts are required to be in writing due to the Statute of Frauds

M_arriage

Y_ear

L_and

E_xecutor

G_oods

S_urety

300

Maya, a nurse in Asheville, interviews with a Raleigh clinic. The clinic's director emails her: "We'd love to have you. The position is yours at $90,000 a year, starting June 1. Like all our staff, you'll be employed at will." Maya accepts by email, quits her Asheville job (where she earned $80,000), signs a one-year Raleigh lease, and pays movers $3,000. On May 25, the director calls to say the clinic has "decided to go another direction" and hired his nephew instead. Maya can't find nursing work for two months. She sues the clinic. Which is the best answer?

(a) The clinic wins. Because the job was at will, the clinic's promise was illusory, so there was no consideration and nothing to enforce.

(b) Maya wins under §90 and recovers $90,000, the salary she was promised for the year.

(c)The clinic wins. Because the clinic could have fired Maya on her first day, her reliance on the offer was unreasonable as a matter of law.

(d) Maya wins under §90, but her recovery is likely limited to her reliance losses, such as moving costs and the wages she lost by quitting.

(d) There was a promise, detrimental reliance, and financial harm; however, the statute only provides a remedy to the limits to prevent injustice, and all she lost was 3000

400

On March 1, Dana, owner of a Durham bakery, orally hires Eli as a marketing consultant for a fixed 18-month term starting April 1, at $4,000 per month. That evening Dana emails Eli: "So excited to have you on board for the 18-month engagement at $4k/month. Welcome to the team! – Dana." Eli never replies in writing. Three months into the job, Dana fires Eli without cause. Eli sues for breach, and Dana raises the statute of frauds as a defense. Which is the best answer?

(a)Eli wins, because the statute of frauds does not apply to employment contracts that start within one month.

(b)Dana wins, because the contract cannot be performed within one year and Eli never signed any writing.Incorrect

(c)Eli wins, because Dana's email is a writing showing the essential terms, signed by the party against whom enforcement is sought.Correct

(d)Dana wins, because an informal email can never satisfy the statute of frauds.

C

It was within the Statute of Frauds under the year category when Dana emailed Eli "So excited to have you on board for the 18-month engagement at $4k/month. Welcome to the team! – Dana." It was also signed by Dana (the party in which enforcement was being sought) 

Rosenfeld v. Zerneck (typed email counts as sig)

500

Restatement (Second) of Contracts  § 90:

promise which the promisor should reasonably expect to induce action or forbearance, does induce action or forbearance, is binding if injustice can be avoided only by enforcement. 

(1) Promise (2) Detrimental Reliance (3) Financial Harm (4) Prevent Injustice

Defenses and C-N-C

100

Can Lawyers Enter Covenants Not to Compete

NO

200

What are the different types of misrepresentation? And is it void or voidable

Fraudulent- intentional lie

Negligent- careless statement without checking facts

Innocent- believes statement is true but it is not

Void and Voidable- certain fraudulent misrepresentations are voidable

300

Non-Disclosure 2-Prong Test, and is it void or voidable

(1) Superior Knowledge (consider internet)

(2) Duty to Disclose

Necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material or would correct mistake, or if non-disclosure doesn't align with fair dealing. Fiduciary relationship duty

VOIDABLE

400

Undue Influence, and is it void or voidable

Unfair persuasion of parties, excessive pressure or vunerability

(1) vulnerable party

(2) position of trust and authority

(3) Unfair persuasion

(4) Inequitable result

VOIDABLE

500

What are the Questions for Covenants Not to Compete

(1) Reasonably Connected to Jobs/Services

(2)Does the employers restriction make sense?

(3) Reasonable time and territory restrictions

(4) Would restriction prevent promisee from making a living

(5) Special or Unique Skills?

(6) Blue Pencil Rule- can we take it out, it work, and be gramatically correct

Mixed Bag

100

What can Promissory Estopell be an exception for

Consideration, Gratuitous Promise, Statute of Frauds

200

What are the types of conditions 

300 BONUS POINTS FOR DEFINITIONS

Express- Very clear; has to happen first

Precedent- Before (if-then)

Subsequent- During (condition terminates duty)(hired subject to background check)

Concurrent- Simultaneous Transaction (handing over money and handing over item)

300

Duress, and is it void or voidable

Economic- Change of date or money and only one person can do it. Immense financial pressure to comply (voidable)

Physical- Extortion (void)

400

What are the types of mistakes 

And when do the parties bear the risk of mistake

Mutual- Both parties misunderstood 

Unilateral- One party makes a mistake 

(clerical in both)

Risk of Mistake

Allocated in the agreement

Conscious ignorance

Allocated by the courts

*To note: mistake needs to be of a basic assumption and have a material effect*

500

What is Risk of Forfeiture

Circumstances in which a party may lose certain rights, benefits, or property if a condition is not met (courts will read in a way that keeps one side from losing everything)