Contract Law: Key Concepts Quiz

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Questions and Answers

What governs a contract primarily for the sale of goods?

Common Law

Predominant Purpose Test

Restatement (Second) of Contracts

Uniform Commercial Code (UCC) (correct)

Which of the following factors is NOT considered in the Predominant Purpose Test?

The economic conditions at the time of the contract (correct)

The language of the contract

The nature of the supplier's business

The value of goods versus services provided

What must an offer include to be valid?

Definite and certain essential terms (correct)

A subjective manifestation of intent to be bound

A promise of future performance

Communication through written consent

Which condition allows for an event to extenguish an existing duty of performance?

Condition subsequent Signup and view all the answers

Under the Parol Evidence Rule, what type of integration allows for extrinsic evidence to supplement but not contradict terms?

Partially integrated Signup and view all the answers

What is required for an acceptance to be deemed timely according to the Mailbox Rule?

It must be posted or communicated while the offer is still valid Signup and view all the answers

What is a characteristic of a fully integrated contract?

It includes a complete and exclusive statement of terms Signup and view all the answers

Which of the following constitutes consideration in a contract?

A detriment to the promisee or benefit to the promisor Signup and view all the answers

What does the Parol Evidence Rule primarily prohibit?

Alteration of terms in a fully integrated written contract using extrinsic evidence. Signup and view all the answers

Under which circumstance can extrinsic evidence be allowed to clarify a written contract?

To interpret ambiguous terms within the contract. Signup and view all the answers

What determines whether a breach is classified as material?

If it prevents the other party from receiving the benefits of the contract. Signup and view all the answers

Which of the following situations could indicate a mutual mistake?

Both parties are unaware of the actual condition of the subject matter. Signup and view all the answers

What does the statute of frauds require for enforceability?

Contracts for goods valued at over $500 must be in writing. Signup and view all the answers

What is a key characteristic of unconscionability in contracts?

There is a significant imbalance of bargaining power. Signup and view all the answers

When is performance considered impossible under contract law?

When destruction of the subject matter occurs. Signup and view all the answers

Which remedy aims to restore the aggrieved party to the position they would have been in had the contract been fulfilled?

Expectation Damages Signup and view all the answers

Study Notes

Contract Law: Key Concepts

Governing Law: Contracts are governed by either common law (Restatement (Second) of Contracts) or the Uniform Commercial Code (UCC). The "predominant purpose test" determines which applies when a contract involves both goods and services. Factors include the contract language, the supplier's business, and the value of goods versus services.

Contract Formation

Offer: A valid offer requires an objective manifestation of intent, definite and certain terms (subject matter, price, quantity, time, and parties), and communication to the offeree.
Acceptance: Acceptance must be communicated in the required manner, be unequivocal, and be on time (consider the mailbox rule).
Consideration: A valid contract requires a bargained-for exchange of legally sufficient value. This involves a promise involving a detriment to the promisee or a benefit to the promisor, excluding illusory promises, past consideration, or pre-existing duty. A substitute, like promissory estoppel, can sometimes suffice.

Contract Performance

Contract Terms: Clear and unambiguous terms are crucial. Express and implied conditions exist.
- Conditions Precedent: An event must occur before a party's duty arises.
- Concurrent Conditions: Events must happen simultaneously for obligations.
- Conditions Subsequent: An event that ends a pre-existing obligation.
Integration and Parol Evidence:
- Fully Integrated: The written contract is complete and exclusive, with no outside evidence admissible.
- Partially Integrated: Some terms are included in the written contract, and outside evidence may supplement but not contradict terms.
- Not Integrated: The writing isn't final, allowing outside evidence. The Parol Evidence Rule generally prohibits using outside evidence to alter or contradict a fully integrated contract, except in specific cases, like clarifications, defenses to formation, establishing conditions, modifications, or collateral agreements.
Performance and Breach: Parties' obligations should be fulfilled. Determine if a breach is material, minor, or total.

Defenses to Contract Formation/Enforcement

Mistake: Mutual mistakes about material facts or unilateral mistakes (where the other party knew) can invalidate a contract.
Duress and Undue Influence: Improper pressure or exploiting trust/dominance can be defenses.
Illegality: Contracts with illegal subject matter are unenforceable.
Statute of Frauds: Certain contracts require a written form for enforcement (e.g., sale of land, contracts not performable within a year, sale of goods over $500).
Unconscionability: Shockingly unfair or oppressive contracts are voidable.
Impossibility, Impracticability, or Frustration of Purpose: Unforeseen events may excuse performance if it becomes impossible, impractical, or renders the purpose futile.

Remedies

Legal Remedies:
- Expectation Damages: Putting the aggrieved party in the pre-breach position.
- Reliance Damages: Reimbursement for expenses incurred relying on the contract.
- Restitution Damages: Returning benefits conferred to the breaching party.
- Liquidated Damages: Enforced pre-agreed damages, if reasonable and not punitive.
Equitable Remedies:
- Specific Performance: Enforcing performance, if monetary damages are insufficient.
- Injunction: Preventing actions that breach the contract.
Limitations on Remedies:
Duty to Mitigate: The aggrieved party must minimize losses.
Foreseeability: Damages must have been foreseeable at the time of contracting.

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Description

Test your understanding of key concepts in contract law, including offer, acceptance, consideration, and the governing laws that apply. This quiz will help you grasp the essential principles that form the foundation of contract formation. Dive into the nuances that differentiate common law from UCC regulations.