Contract Law Quiz: Zehmer Case & U.C.C. Article 2

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What constitutes an enforceable contract in the Zehmer case?

Verbal offers are insufficient for enforceability.

A reasonable person must believe the offer was made in good faith. (correct)

A joke claim is always enforceable.

All parties must understand the financial implications.

In the context of offers, what is an invitation for an offer?

A binding agreement subject to negotiation.

A potential expression of interest that does not create obligations. (correct)

An informal discussion about possible terms.

A clear proposal to enter a contract.

According to U.C.C. Article 2, how can a contract be formed?

Through explicit written agreements only.

Via any manner of assent, regardless of form. (correct)

Only when both parties meet face-to-face.

With notarized documents to validate the agreement.

What must advertisements contain to be considered legally binding offers?

Explicit clarity indicating an intention to make an offer. Signup and view all the answers

In the case of Morales v. Sun Constructors, Inc., what was the court's decision regarding the arbitration clause?

The plaintiff was required to go to arbitration as the clause was not concealed. Signup and view all the answers

What happens to an offer once it is expressly rejected by the offeree?

It is immediately and permanently destroyed. Signup and view all the answers

What defines mutual assent in contract law?

A reasonable person inferring agreement from outward acts and circumstances. Signup and view all the answers

How does the law view preliminary negotiations in forming a contract?

They do not constitute an offer if one party does not intend to conclude until further assent is given. Signup and view all the answers

What does RST 2d of Contracts § 20 state regarding the existence of a contract?

There is no contract if both parties attach materially different meanings and neither knows the other's meaning. Signup and view all the answers

In the context of misunderstanding, which scenario does NOT lead to a contract under RST 2d of Contracts § 20?

Each party attaches a different meaning but is aware of it. Signup and view all the answers

What is a key requirement for terms of a contract according to RST 2d of Contracts § 33?

They must be reasonably certain to provide a basis for breach determination. Signup and view all the answers

In Varney v. Ditmars, what made the contract invalid?

The term 'fair share of profits' was too vague. Signup and view all the answers

Which statement best reflects the traditional law regarding contract clarity?

Parties' intentions must be clear to validate a contract. Signup and view all the answers

Which of the following scenarios can lead to a contract despite differing meanings?

Both parties are aware of the meanings but agree on a common interpretation. Signup and view all the answers

What is true regarding indefinite and incomplete terms in contracts?

They invalidate the contract if they are too open or uncertain. Signup and view all the answers

Under RST 2d of Contracts, when is it determined that there is a contract despite differing meanings?

One party knows of the other's meaning. Signup and view all the answers

What principle do courts consider when determining if a contract is unenforceable due to lack of certainty?

Whether the complaining party conferred a benefit upon the party in breach Signup and view all the answers

Which of the following describes relational contracts?

Contracts that set forth standards to govern ongoing relationships Signup and view all the answers

Under U.C.C.§ 2-204, what condition allows gaps in a contract to be filled?

There is intent to create a contract and a reasonable basis for awarding remedy Signup and view all the answers

What does the default rule in U.C.C.§ 2-306 state regarding quantity?

There are no default rules for quantity but parties can agree without specific numbers Signup and view all the answers

What does a postponed agreement imply?

Key terms are deliberately left open to be determined in the future Signup and view all the answers

In the case of Walker v. Keith, what was the primary legal issue?

The lack of a clear rent price in the lease renewal offer Signup and view all the answers

What type of agreements does U.C.C.§ 2-305 address?

Agreements with no price established Signup and view all the answers

What is a common characteristic of long-term agreements?

They involve adjustments due to changing circumstances over time Signup and view all the answers

What action may a court take if it finds a contract to be unconscionable?

Refuse to enforce the contract entirely Signup and view all the answers

Which type of unconscionability involves difficult-to-interpret terms hidden in fine print?

Substantive Unconscionability Signup and view all the answers

In the context of mutual mistake, which criterion must be met for a contract to be deemed voidable?

Both parties must share a mistaken assumption that materially affects the agreement Signup and view all the answers

What is considered procedural unconscionability in a contract context?

The circumstances surrounding the negotiation of the contract Signup and view all the answers

According to the Restatement of Contracts, when can a contract be voided for mistake?

If the item delivered is distinctly different from what was bargained for Signup and view all the answers

What scenario exemplifies substantive unconscionability based on high-interest payday loans?

Having no reasonable alternative to obtain necessary funds Signup and view all the answers

Which aspect of a contract does not typically lead to finding unconscionability?

Standard industry practices being followed Signup and view all the answers

In the case of Williams v. Walker-Thomas Furniture Company, which type of unconscionability was primarily involved?

Both procedural and substantive unconscionability Signup and view all the answers

What type of damages was Baseball awarded due to their inability to prove substantial certainty regarding the amount owed?

Nominal damages Signup and view all the answers

What must liquidated damages be in order to be enforceable according to RST 2d of Contracts § 356?

A reasonable estimate of anticipated or actual loss Signup and view all the answers

In Dobson Bay Club v. La Sonrisa, what did the court decide regarding the late fee claimed by the defendant?

The late fee was deemed a penalty and unenforceable Signup and view all the answers

Under U.C.C. § 2-718, when can damages for breach be liquidated?

If the amount is reasonable based on expected or actual harm Signup and view all the answers

What is the primary restriction placed on liquidated damages agreements according to the content?

They cannot be set as a penalty and must be reasonable Signup and view all the answers

What is the formula for calculating a buyer's damages if the seller fails to deliver?

Market Price - Contract Price + Incidental Damages - Saved Expenses Signup and view all the answers

Where is the market price determined when calculating damages?

Based on the tender location or arrival location if rejected Signup and view all the answers

What is the basis for assessing damages for breach of warranty?

The difference between the value of accepted goods and warranted expected value Signup and view all the answers

What remedy can a seller NOT take if the buyer improperly rejects the goods?

Demand a higher price for the goods Signup and view all the answers

What are the seller's damages calculated from in the event of a breach by the buyer according to the U.C.C. § 2-706?

Contract Price - Resale Price + Incidental Damages - Expenses Saved Signup and view all the answers

If a buyer fails to pay on time, which of the following actions may NOT be taken by the seller?

Require immediate payment Signup and view all the answers

In cases where special circumstances are present, what can influence the measure of damages for a breach of warranty?

The intended use of the goods Signup and view all the answers

What may the seller do in the case of a complete breach of the contract by the buyer?

Cancel the entire contract Signup and view all the answers

Study Notes

Contracts Outline Fall 2024

Offer + Acceptance + Definiteness + Consideration = Contract
Steps to Follow:
- Determine Applicable Law (UCC or Common Law)
- Mutual Assent (Offer & Acceptance)
  - Was the mode of acceptance appropriate?
- Consideration
  - Contract formed?
  - Was there Promissory Estoppel?
- Terms of Agreement (Interpretation & Performance)
Breach of Contract
- Defenses for Breach: Duress, Undue Influence, Mistake, Capacity, Public Policy, Statute
- Ambiguity in Written Agreement (Parol Evidence, Industry Customs, Good Faith)
- Excuse for Breach: Impracticability/Impossibility, Condition Precedent, Frustration of Purpose, Anticipatory Repudiation
Remedies for Aggrieved Party
- Specific Performance
- Liquidated Damages
Mutual Assent:
- Objective Theory: A reasonable person would believe there was an offer and acceptance based on outward acts.
- Subjective Theory: The parties' actual intent matters in situations where reasonable person would differ.
  - Lucy v. Zehmer: A court can enforce a contract even if one party subjectively intended it as a joke.
Offer:
- A proposal showing intent for a contract to form if accepted by another.
- An invitation to an offer is not an offer itself.
Rejection:
- Express Rejection: Offeree explicitly rejects the offer
- Implied Rejection: Offeree proposes a counteroffer
Revocation:
- An offeror can revoke an offer anytime before acceptance
- Direct or indirect revocation
Lapse:
- Offer lapses after a reasonable period of time without acceptance
Death (or Incapacity):
- Terminates the offeree's power to accept the offer
Preserving the Offer:
- Option Contract: A promise to keep an offer open for a specified time in exchange for consideration
- Firm Offer (UCC): A written and signed offer by a merchant to keep an offer open for a time, binding without consideration.
Acceptance:
- Offeree's assent to the offeror's terms in the prescribed or implied manner.
- Offeror dictates the manner of acceptance
- Bilateral Contract: Exchange of promises (mutual assent)
- Unilateral Contract: Acceptance through performance
- Acceptance by Silence: It usually does not constitute acceptance unless specifically agreed upon or other circumstances.
Effectiveness of Acceptance:
- Mailbox rule: Acceptance is effective upon dispatch (not receipt).
- Acceptance by performance or notification
Imperfect Acceptances:
- Mirror image rule: Acceptance must mirror the offer exactly.
- Immateriality exception: Minor changes to the acceptance won't invalidate it
- Modification exception: Modification in acceptance permitted by reasonable person
Deficient Agreements:
- Lack of complete agreement on all material terms
- Mistakes, misunderstanding, and ambiguities
Consideration:
- Something of value exchanged between parties in a contract; essential to differentiate from gifts or gratuitous promises.
- Bargained for exchange: Both parties exchange something
- Illusory Promise: One party's promise to do something that isn't really a commitment (conditional or optional)
Modifications:
- Requirement of consideration for modifications for contracts
Unconscionability:
- Procedural Unconscionability: Unfair contract formation process, lack of choice or understanding.
- Substantive Unconscionability: Unfair terms in a contract that are excessively one-sided.
Statute of Frauds:
- Some contracts must be in writing to be enforceable (e.g., contracts for sale of land, contracts that by its terms cannot possibly be performed within one year.)
Public Policy:
- Agreements enforceable only if they don't contradict public policies.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on key concepts of contract law, including enforceable contracts, offers, and mutual assent as illustrated in landmark cases such as Zehmer and Morales v. Sun Constructors. This quiz will help clarify the essential elements and requirements for forming a binding contract.