Contracts Law Overview

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Questions and Answers

Are all promises considered legal contracts?

Yes, all promises are enforceable by law.

Most promises can be enforceable under specific conditions.

Only verbal promises can be considered contracts.

No, not all promises meet the criteria of a legal contract. (correct)

Which of the following statements about contracts is true?

Only commercial contracts are legally binding.

Contracts must always be formally written.

Contracts can exist without formal documentation. (correct)

Oral agreements are never enforceable.

What is one source of contract law?

Social norms and customs.

Business practices and policies.

Personal agreements between individuals.

Legislation and common law. (correct)

Which type of contract requires a promise in exchange for a return promise?

Bilateral contract Signup and view all the answers

Which classification of contracts involves one party making a promise that does not require a return promise?

Unilateral contract Signup and view all the answers

What is a quasi-contract?

An obligation that the law creates to prevent unjust enrichment. Signup and view all the answers

Which of the following statements about implied-in-fact contracts is accurate?

They are inferred from the conduct of the parties. Signup and view all the answers

What is the primary purpose of contract law in private enterprise?

To create a flexible framework for business agreements. Signup and view all the answers

What must be present for a valid offer to contract?

A clear commitment from the offeror Signup and view all the answers

Which of the following can terminate an offer?

Counteroffer from the offeree Signup and view all the answers

What is a necessary condition for acceptance to create a valid contract?

Acceptance must match the offer exactly Signup and view all the answers

What does the mailbox rule state regarding acceptance of an offer?

Acceptance becomes legally binding when dispatched by the offeree Signup and view all the answers

Which of the following statements about silence as a response to an offer is correct?

Silence does not imply acceptance of the offer Signup and view all the answers

In a bilateral contract, when is it accepted?

When the offeree has made the required promise Signup and view all the answers

Under which circumstance may an offer be deemed terminated due to illegality?

If the subject matter is illegal Signup and view all the answers

What must occur for an acceptance to be considered valid in accordance with the UCC?

A written confirmation can act as acceptance Signup and view all the answers

What characterizes an express contract?

Involves discussions of promised terms between parties Signup and view all the answers

Which example best illustrates an implied-in-fact contract?

A customer sitting in a salon chair for a haircut Signup and view all the answers

What is the main purpose of a quasi-contract?

To allow for unjust enrichment claims Signup and view all the answers

In which situation would an implied-in-law contract apply?

Emergency medical services provided to an unconscious patient Signup and view all the answers

What distinguishes an executed contract from an executory contract?

Executed contracts have been fully performed Signup and view all the answers

Which of the following describes a void contract?

A legally binding agreement that is not enforceable Signup and view all the answers

Which of the following is true about a voidable contract?

It can be enforced if both parties agree Signup and view all the answers

How is an unenforceable contract defined?

A contract that cannot be executed due to issues with law Signup and view all the answers

What constitutes consideration in a legal agreement?

The receipt of a legal benefit or the suffering of a legal detriment Signup and view all the answers

What is the purpose of an agreement not to sue?

To support a promise when there are reasonable grounds for a lawsuit Signup and view all the answers

What is 'accord and satisfaction' in a legal context?

An enforceable agreement to resolve a dispute over an owed amount Signup and view all the answers

Why does a preexisting obligation not count as consideration?

Because it's already a legal duty that must be fulfilled Signup and view all the answers

What does 'prior consideration' refer to?

Consideration given before the agreement discussion, which is not valid Signup and view all the answers

What is the doctrine of promissory estoppel designed to protect?

A promisee from economic injury based on reliance on a promise Signup and view all the answers

In the case of Vassilkovska v. Woodfield Nissan, what was the central legal issue?

The validity of the arbitration agreement instead of going to court Signup and view all the answers

Which option is NOT considered valid consideration?

A promise to complete an existing duty Signup and view all the answers

Which group of individuals cannot be legally bound to contractual promises?

Minors Signup and view all the answers

Under what condition are contracts considered void for intoxicated or mentally incompetent persons?

If the person understands the contract’s nature and purpose Signup and view all the answers

What type of contracts are deemed void due to unlawful purpose?

Contracts requiring the commission of a crime Signup and view all the answers

Which of the following best describes fraud in the context of contracts?

An intentional misstatement of fact Signup and view all the answers

Which situation qualifies as undue influence in a contract?

Taking unfair advantage of another person Signup and view all the answers

What is a characteristic of oral contracts?

They are generally as enforceable as written agreements Signup and view all the answers

What term is used for contracts that restrain trade and are considered illegal?

Covenants not to compete Signup and view all the answers

Which concept describes a situation where one party is threatened to coerce a contract?

Duress Signup and view all the answers

Study Notes

Contracts

All promises are not legal contracts.
Contract law enables private agreements to be legally enforceable.
Contract law provides flexibility and precision in business dealings.

Sources of Contract Law

Contract law comes from either legislation or common law.
Legislation involves the Uniform Commercial Code (UCC) - Contracts for goods.
Common law involves judges' decisions - Contracts for things other than goods.

Classification of Contracts

Contracts can be classified as Bilateral or Unilateral.
Contracts can be classified as Express and Implied-in-fact.
Contracts can be classified as Implied in law or Quasi-contracts.

Bilateral Contract

A bilateral contract is an agreement where both parties make promises to each other.
An example of a bilateral contract is a sale of goods, a buyer and seller agree to a sale for a specific price and promise to fulfill their end of the agreement.

Unilateral Contract

A unilateral contract is an agreement where one party makes a promise and the other party accepts by performing an action.
An example of a unilateral contract is a reward for finding a lost pet.

Express Contract

An express contract is an agreement where the terms are explicitly stated, either verbally or in writing.
Example: A buyer and a seller agree on a sale of a car for $10,000 and agree on clear terms on the condition of the vehicle and payment.

Implied-in-Fact Contract

An implied-in-fact contract is an agreement where the terms are not explicitly stated but are implied by the conduct of the involved parties.
Example: When a customer goes to a hair salon and sits in the chair for a haircut, there is an implied agreement that the customer will pay for the service rendered.

Implied-in-Law or Quasi-Contracts

An implied-in-law or quasi-contract is a legal fiction created by courts to prevent unjust enrichment.
An example of an implied-in-law contract is when a person receives emergency medical treatment whilst unconscious, the hospital may seek payment for services rendered.

Contractual Enforcement Terminology

Enforceable contracts are valid and legally binding.
Unenforceable contracts are not valid and cannot be enforced by the court.
Void contracts are agreements that are not legally recognized because they are against the law or lack essential elements.
Voidable contracts are agreements that are valid but can potentially be voided by one or both parties due to things like fraud, duress, or lack of capacity.

Contractual Performance Terminology

Executed contract is a contract where both parties have performed their promises.
Executory contract is a contract where one or both parties have not yet performed their promises.

Requirements for an Enforceable Contract

Offer and Acceptance
Consideration
Capacity
Legality

Defenses to Contract Enforcement

Fraud
Mistake
Duress
Undue Influence

Offer to Contract

An offer must contain a specific promise and a specific demand.
The offeror must intend to make the offer.
Contractual terms must be definite and specific.

Offer Termination

An offer can be terminated by:
- Revocation by offeror
- Rejection by offeree
- Counteroffer by offeree
- Lapse of time
- Destruction of subject matter
- Offeror death or insanity
- Subject matter illegality

Acceptance of Offer

Acceptance is necessary to create a valid and enforceable contract.
Bilateral contracts are accepted when the offeree has made the required promise.
Unilateral contracts are accepted by performing the requested act.
Acceptance must match the offer exactly. (Mirror Image Rule)

Acceptance of Offer II

An expression of acceptance or a written confirmation can be treated as an acceptance. (UCC)
Silence does not imply acceptance.
The mailbox rule states that acceptance becomes legally binding when the offeree dispatches it.

Consideration

Consideration is the receipt of a legal benefit or the suffering of a legal detriment.
An agreement not to sue can be valid consideration if there are reasonable grounds for a lawsuit.
Accord and Satisfaction is the resolution of a dispute over an amount owed by reaching a compromise.
A preexisting obligation does not constitute consideration.

Consideration II

Prior consideration, which is performance made before discussion of the agreement, does not count.
A promise to make a gift generally does not constitute consideration.
An option is an agreement not to revoke an offer for a period of time, supported by consideration from the offeree.
Promissory estoppel can be invoked when a promisee relies on a promisor’s promise to their economic injury.

Capacity of Parties

Minors cannot be legally bound to contractual promises, with exceptions for necessaries of life.
Contracts entered into by minors are voidable at the election of the minor.
Contracts entered into by intoxicated or mentally incompetent persons are voidable depending on their capability to understand the contract's nature and purpose.

Lawful Purpose

Contracts that require the commission of a crime or tort or violate accepted standards of behavior are void.
Contracts that restrain trade are illegal and void.

Contracts Lacking Mutual Understanding

Fraud is an intentional misstatement of fact that induces another to enter into a contract.
A mistake can be mutual or unilateral.
Duress is the threat of force, which can be physical or economic.
Undue influence occurs when one party takes advantage of another unfairly through a contract.

Oral Contracts

Oral contracts are generally as enforceable as written agreements.
Oral contracts are informal and are common in everyday life.

Case 8.3 - Agreement Not to Sue

Vassilkovska v. Woodfield Nissan, Inc. involved a used car purchase and a separate arbitration agreement.
The case involved a question regarding whether the arbitration agreement was valid and if it required the plaintiff to arbitrate the claim rather than go to court.

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Description

Explore the key concepts of contract law, including the nature of legal contracts and their classifications. This quiz covers bilateral and unilateral contracts as well as sources from legislation and common law. Test your understanding of how agreements are enforced legally.