Contracts

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Questions and Answers

What are the essential elements required for a contract to be valid and enforceable?

Offer, legality, mutual assent

Offer, acceptance, consideration (correct)

Legality, consent, performance

Mutual assent, capacity, writing

In which situation is a contract considered voidable?

When the contract terms are unclear

When one party is a minor (correct)

When both parties agree to cancel

When both parties have fully performed

What is the burden of proof in a contract dispute?

Substantial evidence

Clear and convincing evidence

Preponderance of the evidence (correct)

Beyond a reasonable doubt

Which type of law primarily governs contracts for the sale of goods?

Uniform Commercial Code Signup and view all the answers

What happens if a minor enters into a contract and then wants to disaffirm it within a specified period?

The contract is voidable and can be disaffirmed. Signup and view all the answers

Which of the following is NOT a common excuse for breach of contract?

Intention to breach Signup and view all the answers

What does 'mutual assent' in contracts refer to?

Agreement on contract terms by both parties Signup and view all the answers

If one party in a contract has the option to terminate, what is the status of that contract?

Voidable Signup and view all the answers

What must a party demonstrate to obtain an injunction?

Some type of irreparable harm Signup and view all the answers

Which of the following remedies allows a court to void a contract in its entirety?

Rescission Signup and view all the answers

Mitigation of damages refers to which of the following obligations?

To minimize damages and keep them as low as possible Signup and view all the answers

What type of damages are usually awarded when there is a breach of contract without proof of injury?

Nominal Damages Signup and view all the answers

Under the UCC, what can a seller do if a buyer breaches a contract?

Inspect the goods and reject them for being non-conforming Signup and view all the answers

Under what condition can the casino in Morongo potentially collect on the contract?

If it invokes a choice of law provision for Nevada Signup and view all the answers

What does a 'time of the essence' clause in a contract specify?

Performance must occur on a specific date. Signup and view all the answers

Which of the following is a requirement for a non-competition agreement to be enforceable?

It must be reasonable in scope Signup and view all the answers

What grounds does Bill the builder have to claim payment after completing only 10% of the townhouse?

Claiming unjust enrichment. Signup and view all the answers

What is the consequence for an unlicensed home contractor under contract law?

They cannot sue their clients due to lack of license Signup and view all the answers

If Bill the builder completes 90% of the work and then stops, what legal principle supports his claim for full payment?

Substantial performance. Signup and view all the answers

What is the primary reason courts might not enforce a non-competition provision?

The terms are deemed unconscionable or unfair Signup and view all the answers

A contract made with a minor is considered:

Voidable. Signup and view all the answers

What does UCC §2-207 primarily address?

The addition or change of terms in a contract Signup and view all the answers

Why might Pinky be unable to disaffirm a contract if he misrepresents his age?

His misrepresentation acts as a waiver. Signup and view all the answers

What can make an exculpatory clause unenforceable?

If it releases liability for injuries resulting from gross negligence Signup and view all the answers

In the context of contracts, what does 'Condition Precedent' mean?

An event that must occur for the contract duty to exist Signup and view all the answers

What is the main characteristic of fraud in contracts?

One party relied on false statements. Signup and view all the answers

What type of mistake occurs when both parties to a contract share a misunderstanding?

Mutual mistake. Signup and view all the answers

What is the outcome of Jim's case based on his non-competition agreement with Bill?

Jim will win because he opened a non-similar business Signup and view all the answers

In the event of a breach of contract, which term describes an agreement that is unenforceable due to illegal subject matter?

Void. Signup and view all the answers

What is required for the validity of a contract modification under contract law?

No additional signed agreement is necessary for UCC contracts Signup and view all the answers

What determines whether a contract's ambiguous term favors one party?

Interpretation favors the party who did not draft it Signup and view all the answers

When a party is intoxicated, what must be proven for a contract to be voidable based on intoxication?

The intoxicated party must have been unable to understand the transaction. Signup and view all the answers

What happens if a seller fails to disclose a material defect such as a haunted house?

The buyer can rescind the purchase based on fraud. Signup and view all the answers

In the context of business contracts, what does a 'warranty' refer to?

A promise regarding the truth of certain conditions Signup and view all the answers

What is the status of a contract if a party lacks mental capacity at the time of signing?

The contract is voidable. Signup and view all the answers

What is substantive unconscionability?

Terms of the contract that are considered unfairly one-sided Signup and view all the answers

How did the 'pay or play' vs. 'pay and play' dispute conclude?

Both parties reached a settlement involving $45M Signup and view all the answers

What does the principle of good faith and fair dealing require from the contracting parties?

To act in a commercially reasonable manner. Signup and view all the answers

If a contractor makes a typographical error in their bid, under which principle might they be excused from the contract?

Unilateral mistake. Signup and view all the answers

What type of contract is formed when one party promises to pay in exchange for a specific performance from the other party?

Unilateral Contract Signup and view all the answers

Which factor is NOT typically considered when determining whether an offer should be considered enforceable?

Presence of an invitation to bargain Signup and view all the answers

According to the Mirror Image Rule, when must an acceptance match the terms of an offer?

Always, regardless of the situation Signup and view all the answers

What is a characteristic of an implied contract?

Terms are inferred from conduct Signup and view all the answers

Which situation would likely invoke the doctrine of promissory estoppel?

A party investing money based on a promise that was not fulfilled Signup and view all the answers

When is an acceptance considered effective under the Mailbox Rule?

When sent by the offeree Signup and view all the answers

In which of the following situations does the Uniform Commercial Code (UCC) apply?

Sale of electronics Signup and view all the answers

What is one of the requirements for a contract to be enforceable in terms of mutual assent?

Voluntary acceptance by both parties Signup and view all the answers

What happens if an offer is revoked before it is accepted?

The offer is no longer valid after revocation Signup and view all the answers

Which of the following scenarios would be classified as unjust enrichment?

A painter not being paid for their work after completing the job Signup and view all the answers

A party pays to keep an offer open for a set period. This type of contract is called what?

Option Contract Signup and view all the answers

What must an agreement contain to be considered an express contract?

A clear and explicit statement of all material terms Signup and view all the answers

What is the essential term required for the formation of a UCC contract?

Quantity Signup and view all the answers

If an offer has a specified time limit for acceptance, how is it treated if the time limit expires?

The offer is automatically terminated Signup and view all the answers

In the context of contract formation, which of the following statements is true?

Contracts generally require both an offer and an acceptance Signup and view all the answers

In the case of oral agreements, under what condition can these be enforceable even if not in writing?

If goods were specially manufactured Signup and view all the answers

Which of the following is considered a type of non-monetary remedy?

Specific performance Signup and view all the answers

Under the UCC, if a buyer orders 12 eggs but later changes the order to 24 eggs, what is required to form a new contract?

No additional consideration Signup and view all the answers

What is the main purpose of expectation interest in contract remedies?

To place the plaintiff in the position had the injury never occurred Signup and view all the answers

What scenario allows a party to pursue an equitable remedy?

When damages are unquantifiable Signup and view all the answers

What is a significant characteristic of reliance interest in contract law?

It considers the time and expenses incurred due to reliance on the contract Signup and view all the answers

What does the term 'gap filler' refer to in UCC contracts?

Provisions established by law to replace conflicting terms Signup and view all the answers

Under what condition can a contract be rescinded based on mutual mistake?

If both parties believe in an incorrect fact Signup and view all the answers

What is expected from incidental damages in a breach of contract scenario?

They can include minor costs associated with the contract Signup and view all the answers

What is the remedy when a seller has to sell goods at a lower price after a buyer breaches a contract?

Compensatory damages Signup and view all the answers

Which of the following best describes the duty imposed by the UCC regarding good faith and fair dealing?

It demands honesty and fair practices in transactions Signup and view all the answers

What argument could Bryan use to support his claim for the $100?

Adam has no right to revoke the offer after performance. Signup and view all the answers

What is a key factor in determining whether to grant specific performance as a remedy?

The uniqueness of the subject matter in the contract Signup and view all the answers

Which theory of contract formation should Pete's Potatoes use to argue that an enforceable contract was formed?

Promissory Estoppel / Reliance Signup and view all the answers

Which is NOT an essential element of consideration in a contract?

Written Agreement Signup and view all the answers

Which case exemplifies a valid consideration due to forbearance?

Hamer v. Sidway Signup and view all the answers

What is a characteristic of an illusory promise?

It allows one party to opt-out of the agreement. Signup and view all the answers

In a liquidated debt situation, what happens if a creditor agrees to accept less than the full amount owed?

The agreement is not binding. Signup and view all the answers

What must typically occur for an accord and satisfaction to be considered valid?

There must be a dispute about the amount owed. Signup and view all the answers

What is a valid exception to the rule of consideration?

Preexisting Duty Signup and view all the answers

Under which condition can a promise to make a donation to a nonprofit organization be enforceable?

If the nonprofit proves reliance on the promise. Signup and view all the answers

What distinguishes an unliquidated debt from a liquidated debt?

There is a dispute over the debt itself. Signup and view all the answers

Which of the following is an example of past consideration?

A promise to pay for a service rendered last year. Signup and view all the answers

What makes a gambling contract illegal in California?

It is not authorized by statute. Signup and view all the answers

What is the outcome if a worker demands higher pay for work they are already contracted to do?

The employer can enforce the original payment amount. Signup and view all the answers

Which of the following types of contracts must always be in writing to be enforceable?

Promissory notes from executors Signup and view all the answers

What does 'substantial performance' refer to in a contract?

Performing most obligations to warrant payment Signup and view all the answers

What is required for a modification of a contract to be valid?

It must be in a separate writing signed by each party Signup and view all the answers

What is the purpose of a 'cure' provision in a contract?

To provide time for a party to meet a material breach Signup and view all the answers

Which of the following is true regarding the governing law in a contract?

It identifies which State’s law applies Signup and view all the answers

In what situation would a contract likely be deemed void?

If it involves a minor child without parental consent Signup and view all the answers

Which statement best describes an anticipatory breach of contract?

A party indicates they will not fulfill their obligations before the performance is due Signup and view all the answers

What does the term 'force majeure' refer to in contract law?

An unforeseen event that prevents performance Signup and view all the answers

How are ambiguities in a contract generally treated during joint drafting?

Ambiguities are resolved in favor of the drafting party Signup and view all the answers

What is a merger/integration clause in a contract?

A clause that states the contract represents the entire agreement between the parties Signup and view all the answers

In a contract for the sale of goods, which of the following is a necessary term?

The quantity of goods being sold Signup and view all the answers

Which of the following is NOT typically a non-material term in a contract?

Consideration Signup and view all the answers

What defines a breach of contract?

Any failure in performance or partial performance Signup and view all the answers

What does 'severability' ensure in a contract?

The contract remains valid if one provision is unenforceable Signup and view all the answers

What is undue influence in the context of contract law?

Using one party's vulnerability to gain an advantage. Signup and view all the answers

What defines a condition precedent in a contract?

A happening that must occur before a party's obligations begin. Signup and view all the answers

Which of the following best describes an implied condition in a contract?

A condition inferred from the conduct of the parties. Signup and view all the answers

What is an example of impracticability in contract performance?

A significant increase in costs due to material shortages. Signup and view all the answers

What does frustration of purpose mean in contract law?

An unforeseen event renders the contract worthless to one party. Signup and view all the answers

What is the statute of limitations for filing a breach of contract lawsuit in California?

4 years from the date of injury. Signup and view all the answers

Who is classified as an incidental beneficiary?

A party who may benefit unintentionally from a contract. Signup and view all the answers

What is a requirement for a third party beneficiary to enforce a contract?

The parties intended for the third party to benefit. Signup and view all the answers

What are the grounds on which an assignment of rights can be prohibited?

If the assignment changes existing legal relationships. Signup and view all the answers

When can obligations under a contract not be delegated?

When the contract involves personal service professionals. Signup and view all the answers

What is the primary purpose of the Uniform Commercial Code (UCC)?

To provide consistent laws for the sale of goods. Signup and view all the answers

How is impossibility different from impracticability in contract law?

Impossibility occurs due to unforeseen events, while impracticability is related to unexpected difficulties. Signup and view all the answers

What occurs if a concurrent condition is not met in a contract?

The other party is excused from their obligations. Signup and view all the answers

Study Notes

Contracts I

Contract Definition: A legally enforceable agreement setting forth rights and duties of parties.
Burden of Proof: Plaintiff must prove case by preponderance of evidence (51%).
Valid Contract Elements: Offer, acceptance, and consideration.
Secondary Contract Issues: Legality, capacity, consent, and writing.

Contracts: "The Big 6" Questions

Big Picture Q1: Applicable Law: Common Law (CL) governs services, Uniform Commercial Code (UCC) governs the sale of goods.
Big Picture Q2: Contract Existence: All contracts require mutual assent (offer & acceptance) and consideration.
Big Picture Q3: Contract Meaning (Terms): Contract terms, modifications, interpretation.
Big Picture Q4: Performance or Breach? Full performance, substantial performance, partial performance, poor performance, no performance.
Big Picture Q5: Breach Excuse? Impossibility, impracticability, frustration of purpose, mistake, force majeure.
Big Picture Q6: Remedies: Monetary (legal) damages, non-monetary (equitable) damages.

Validity of Contracts

Voidable Contract: One party can terminate.
Minor's Contract: Voidable. A minor can disaffirm a contract except for necessities; damages may apply for things not necessities.
Void Contract: Neither party can enforce. Ex: Contracts for illegal activities or selling something you don't own.

Promises

Bilateral Contract: Both parties promise to do something.
Unilateral Contract: One party promises something in exchange for another's performance.

Contract Formation Theories

Express Contract: Parties state all material terms. (Merger/Integration Clause: Prior negotiations are void if not written in contract)
Implied Contract: Court forms agreement based on the parties' actions.
Reliance/Promissory Estoppel: Plaintiff relied on a promise, incurring detriment.
Unjust Enrichment: Defendant benefits at Plaintiff's expense; no agreement but implied obligation of payment.
Option Contract: Party pays to keep an offer open for a set time.

Big Picture Q1: Which Law Applies?

UCC Applies: Sale of goods (movable items excluding money and securities).
Common Law: Contracts for services.
Mixed Contracts: Primary purpose dictates applicable law.

Big Picture Q2: Is There a Contract?

Mutual Assent (MA): Offer and acceptance.
Consideration: Inducement for entering into a contract. (Each party must provide value to the other.)

The Offer

Definition: Manifestation of willingness to enter a bargain.
Elements: Intention to enter; definite terms.
Not Offers: Invitations to bargain, price quotes, ads, auctions.
Definite Terms: Important for enforceability; UCC relaxes the requirement for sale of goods.

Acceptance

Methods: Words, signature, or conduct.
Mirror Image Rule: Acceptance must match the offer exactly; otherwise, it's a rejection/counteroffer.
Mailbox Rule: Acceptance is effective upon dispatch.
Rejection Effectiveness: Rejection effective upon receipt (after acceptance is dispatched).

Termination of Offers

Revocation: Offeror takes back the offer.
Rejection: Offeree refuses or makes a counteroffer.
Expiration: Offeror sets expiration date; unreasonable lapse of time.
Operation of Law: Death, destruction of subject matter.

Consideration

Definition: Inducement, price, or promise causing a party to enter the contract, forms the basis for the exhange.
Elements: Value and bargained-for exchange.
Value: Legal benefit to promisor, legal detriment to promisee.
Bargained Exchange: Parties actually exchange promises.
Exceptions: Illusory promises, preexisting duties, past consideration.

Special Consideration Cases

Liquidated Debt: No dispute about debt amount; settling for less isn't binding.
Unliquidated Debt: Parties dispute amount or existence of debt; settling for less is binding, accord and satisfaction.

Legality of Contracts

Statutory Violations: Certain contracts (e.g., gambling, usury) are illegal.
Public Policy Issues: Non-competition agreements must be reasonable.
Exculpatory Clauses (Waivers): Releases a party from liability; unenforceable in some circumstances (e.g.) intentional torts, gross negligence, and unequal bargaining).
Bailment cases: Exculpatory clauses can be enforced for personal property.
Interpretation of Terms: Ambiguity construed against the drafter.

UCC 2-207 Rules

Adding/Changing terms: different terms are cancelled out, and new terms are added to the deal.

Contracts II, III, and IV (Additional Notes)

Written Contracts: "MY LEGS" (Marriage, Year, Land, Executor, Guaranty, Sale of Goods > $500)
Performance and Breach: Full performance isn't breach.
Breach: Breach of contract. Partial, poor, or no performance are considered breaches.
Excuses: Impossibility, impracticability, frustration of purpose, and conditions.
Conditions: Conditions precedent, subsequent, and concurrent.
Warranties: Implied warranties (merchantability, fitness for a particular purpose).
Third-Party Beneficiaries: Intended beneficiaries (creditor or donee) can enforce; incidental beneficiaries cannot.
Assignments and Delegations: Transfer rights/benefits (assignments) or obligations (delegations).
UCC Rules: Primarly governed by the sale of goods.
Remedies: Monetary damages (compensatory, consequential, incidental), reliance damages, restitution damages, equitable remedies (specific performance, injunction, reformation, rescission).
Mitigation of Damages: Injured party must take reasonable steps to lessen damages
General Policy in contract law: Courts want to make sure that the parties honor their promises.

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Test your understanding of the essential concepts of contract law with this quiz on Contracts I. Topics include definitions, burden of proof, valid elements, and key questions related to contracts and their enforceability. Perfect for law students looking to solidify their knowledge.