Contracts Law Quiz: Consideration Concepts
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Questions and Answers

What concept does Cardozo enforce in Wood v. Lucy, Lady Duff-Gordon despite the lack of mutuality?

  • Fraudulent inducement
  • Good faith obligation (correct)
  • Illusory promise
  • Implied duty of performance

In the context of consideration, when may an agreement be deemed insuffcient?

  • When there is no designated timeframe
  • When it is a disguised gift (correct)
  • When it involves mutual promises
  • When both parties agree to its terms

Which case illustrates the concept of donative intent in relation to consideration?

  • Schnell v. Nell
  • Fischer v. Union Trust Co. (correct)
  • Alaska Packers v. Domenico
  • Wood v. Lucy, Lady Duff-Gordon

What is the primary purpose of the Pre-Existing Duty Rule?

<p>To prevent extortion of modifications (D)</p> Signup and view all the answers

Under the Pre-Existing Duty Rule, what must be true for a promise to incur consideration?

<p>It must offer a new detriment (A)</p> Signup and view all the answers

What did the court decide in Schnell v. Nell regarding past consideration?

<p>It cannot constitute valid consideration (D)</p> Signup and view all the answers

What principle is represented by Fuller/Formalism regarding consideration?

<p>Focus on formality and freedom of contract (C)</p> Signup and view all the answers

What is a potential outcome of erroneously classifying a promise as enforceable?

<p>Legal enforcement of non-commercial promises (C)</p> Signup and view all the answers

What type of damages were awarded to Dicker in the case involving ‘dealer franchise’?

<p>Reliance damages (C)</p> Signup and view all the answers

What is one argument in favor of enforcing promises without consideration?

<p>It protects a party's reliance. (C)</p> Signup and view all the answers

Which argument against promissory estoppel (PE) emphasizes the necessity of a bargain for exchange?

<p>The economic argument. (A)</p> Signup and view all the answers

What must be established to determine if enrichment is unjust in terms of unjust enrichment?

<p>There must be no humanitarian intent or implied benefit. (B)</p> Signup and view all the answers

What is a primary objective of enforcing promises even in the absence of consideration?

<p>To prevent unjust enrichment. (C)</p> Signup and view all the answers

In cases of non-promissory restitution, what is a determining factor for the benefit received?

<p>The benefit must have been offered as a gift. (B)</p> Signup and view all the answers

Which case exemplifies a situation where a benefit cannot be recovered due to lack of discussion about payment?

<p>Martin v. Little, Brown &amp; Co (C)</p> Signup and view all the answers

What can be argued in the context of receiving unordered merchandise?

<p>The recipient may keep or return the merchandise under certain statutes. (B)</p> Signup and view all the answers

What happens to the terms if parties do not agree in writing?

<p>The terms are replaced with UCC gap fillers. (B)</p> Signup and view all the answers

In Klocek v. Gateway, what was the key issue regarding the enforceability of the arbitration provision?

<p>The added term was a material term that was never agreed to. (D)</p> Signup and view all the answers

Under § 2-207(1), which of the following indicates definite and seasonable acceptance?

<p>A written confirmation sent after an oral agreement. (A)</p> Signup and view all the answers

If a transaction does not involve merchants, what happens to additional terms proposed?

<p>They become unenforceable without assent. (A)</p> Signup and view all the answers

What defines a merchant under § 2-104 Cmt 2?

<p>Someone with requisite business knowledge. (B)</p> Signup and view all the answers

What must happen for different terms to become proposals when parties are not merchants?

<p>The offeror must agree to the different terms. (A)</p> Signup and view all the answers

Which statement is true regarding the interpretation of additional terms under § 2-207(2)?

<p>Additional terms do not include different terms, according to Cmt 6. (C)</p> Signup and view all the answers

What occurs if an offer expressly limits acceptance?

<p>Acceptance is only valid if the original terms are followed. (C)</p> Signup and view all the answers

What factors determine if a detriment has been bargained for in a promise?

<p>The promisor must seek the promisee's forbearance in exchange for the promise. (C)</p> Signup and view all the answers

In the case of Whitten v. Greeley-Shaw, why was forbearance not considered valid consideration?

<p>There was no evidence the promisor requested the forbearance. (D)</p> Signup and view all the answers

Which characteristic distinguishes a gratuitous promise from a bargained-for exchange?

<p>A lack of benefit to the promisor in the exchange. (A)</p> Signup and view all the answers

In Sharon v. Sharon, what was established regarding forbearance?

<p>Sufficient consideration can arise even if the forbearance is not induced by a promise. (A)</p> Signup and view all the answers

What does R 2D § 81(1) state regarding the inducement of a promise?

<p>A promise does not need to be induced by the bargain. (C)</p> Signup and view all the answers

What was the implication of donative intent in Kirksey v. Kirksey?

<p>Donative intent indicated that there was no exchange for consideration. (C)</p> Signup and view all the answers

What is a key requirement to identify a promise as a bargain versus a gift?

<p>The promisor must receive something of value in return. (C)</p> Signup and view all the answers

What does the term 'forbearance' imply in the context of legal agreements?

<p>The promisee refrains from exercising a legal right. (C)</p> Signup and view all the answers

What is a necessary condition for a contract to be enforceable under the Statute of Frauds?

<p>A written memorandum signed by the party to be charged (D)</p> Signup and view all the answers

Which of the following is NOT listed as a valid defense to the enforcement of a contract?

<p>Mutual agreement (C)</p> Signup and view all the answers

How can the obligation of good faith be demonstrated before treating a contract as breached?

<p>By giving reasonable notification before the contract is considered breached (B)</p> Signup and view all the answers

What is a consequence of a contract being indefinite in duration?

<p>It is valid for a reasonable time and may be terminated at any time by either party (B)</p> Signup and view all the answers

Which of the following best describes the purpose of the Statute of Frauds?

<p>To encourage parties to memorialize certain agreements by putting them in writing (B)</p> Signup and view all the answers

What must options regarding contract performance be based on according to UCC § 2-311?

<p>Good faith and commercial reasonableness (C)</p> Signup and view all the answers

What could the consequence be of the Statute of Frauds being improperly applied?

<p>Facilitation of fraud and perjury regarding true contracts (C)</p> Signup and view all the answers

Which condition would render a contract to answer for a duty of a decedent enforceable under the Statute of Frauds?

<p>Written memorandum signed by the party to be charged (D)</p> Signup and view all the answers

What does the knockout rule refer to in contract terms?

<p>Different terms cancel each other out. (A)</p> Signup and view all the answers

Under what condition is an addition to a contract not considered valid?

<p>If it materially alters the contract. (A)</p> Signup and view all the answers

What is required for additional terms to be added into a contract?

<p>Notification of objection within reasonable time. (C)</p> Signup and view all the answers

What does the term 'clickwrap' imply in the context of agreements?

<p>A contract is enforceable through affirmative actions. (A)</p> Signup and view all the answers

Which statement correctly describes shrink-wrap agreements?

<p>They require opening the product to accept the terms. (C)</p> Signup and view all the answers

What is the legal implication of conspicuous notice in contract formation?

<p>It ensures users cannot claim ignorance. (C)</p> Signup and view all the answers

Under UCC, how is software classified?

<p>As a good. (A)</p> Signup and view all the answers

What distinguishes browsewrap agreements from clickwrap agreements?

<p>Browsewrap does not need to show terms directly. (C)</p> Signup and view all the answers

Flashcards

Bargained-for Exchange

A legally enforceable agreement where both parties exchange something of value. A detriment is exchanged for a promise, and vice versa.

Gratuitous Promise

A promise made without anything of value being exchanged in return. Generally unenforceable in law.

Consideration for a promise

Anything of value given by a party in exchange for a promise.

Detriment

A loss or sacrifice incurred by a party in a contract as part of consideration for the agreement.

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Bargained-for Detriment: Sought by Promisor

The promisee's detriment must have been sought by the promisor as the exchange for the promise. The promisor must have wanted the detriment.

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Bargained-for Promise: Sought by Promisee

The promisor's promise must be wanted by the promisee as the exchange for the detriment, creating a mutual exchange. Must want the promise.

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Donative Intent

The intent to give a gift or something without receiving anything in return.

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Bargaining Intent

The intent to make a legally-binding contract where both parties expect to receive something of value in exchange for their promises.

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Consideration - Insufficient

Consideration is insufficient when a transaction's appearance of a bargained-for exchange masks a donative intent.

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Fischer v. Union Trust Co.

A case where a father's promise of land to a daughter, despite mimicking a bargain, was deemed a gift due to his donative intent, not a contractual obligation.

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Schnell v. Nell

A case where past consideration (like love) and a small payment were deemed insufficient for a contract due to camouflage.

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Pre-Existing Duty Rule

Modifying a pre-existing duty (non-goods contract) is not new consideration and thus unenforceable.

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Alaska Packers v. Domenico

A case illustrating the Pre-Existing Duty Rule—sailors coerced a pay raise for a pre-agreed task, which was not enforceable.

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Wood v. Lucy, Lady Duff-Gordon

A case where a seemingly one-sided contract was enforced by courts imposing a duty of good faith on contracts.

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Instrumental Objective

The purpose behind a contract; either fairness or economic gain.

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Mutuality

A principle to determine enforceable contracts; implies obligation of good faith.

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Promissory Estoppel

A legal doctrine that allows a court to enforce a promise, even without consideration, if the promisee reasonably relied on the promise to their detriment.

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Economic Argument for PE

The argument supporting promissory estoppel based on improving societal gains.

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Liberal Autonomy

Principle that a promissor has the free will to make their own decisions, and breaking their promises is their prerogative.

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Unjust Enrichment

A legal principle that prevents a party from benefiting unfairly at another’s expense.

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Material Benefit

A substantial advantage that a party received, either economically or otherwise.

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Non-Promissory Restitution

Recovery for a benefit received without a promise, but where it would be unfair to retain the benefit.

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Gratuitous/Voluntary Intent

Intention to give something without any expectation of payment or compensation.

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Consideration

Something of value exchanged between parties to a contract, which is crucial for its enforceability.

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Material Alteration

An addition to the contract that significantly changes its terms, causing hardship for one party.

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Knockout Rule

When conflicting terms in an agreement are cancelled out, leaving the remaining terms to stand.

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Offer Limits Acceptance

When the original offer explicitly forbids any additional terms in the acceptance.

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Clickwrap Agreement

A contract where users explicitly agree to terms by clicking a button on a website.

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Browsewrap Agreement

A contract where acceptance is assumed by browsing a website with terms linked elsewhere.

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Conspicuous Notice

The terms of an agreement are easily and clearly visible to a reasonable person.

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Unambiguous Manifestation of Assent

A clear and decisive action demonstrating intent to agree to the terms of a contract.

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Reasonably Prudent Person

A hypothetical individual exercising common sense and caution in evaluating terms of a contract.

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UCC Gap Fillers

The Uniform Commercial Code (UCC) provides default rules that fill in missing terms in a contract for the sale of goods when the parties haven't explicitly addressed them.

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Battle of the Forms

This situation occurs when parties exchange conflicting forms with different terms and conditions, leading to uncertainty about the final agreement.

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Section 2-207(1)

This section of the UCC governs acceptance of an offer when the parties exchange forms with conflicting terms. It establishes different scenarios for determining whether a contract exists and the terms that apply.

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Additional Terms

These are terms proposed by one party that are not part of the original offer but are added to the contract.

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Different Terms

These are terms proposed by one party that directly conflict with the terms stated in the original offer.

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Merchants

Under the UCC, merchants are individuals or businesses that have specialized knowledge and experience in the type of goods being traded.

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Section 2-207(2)

This section of the UCC applies when both parties are merchants. It determines how additional or different terms included in a confirming form might become part of the agreement.

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Offer Expressly Limits Acceptance

If the original offer clearly states that acceptance is only possible on the exact terms presented, no additional or different terms are allowed, even if the parties are merchants.

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Statute of Frauds

A legal rule that requires certain contracts to be in writing and signed by the party to be charged to be enforceable. It doesn't determine if a contract exists, only if it can be enforced.

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Purpose of Statute of Frauds

To promote fairness and prevent fraud by requiring written evidence of important agreements. It encourages careful consideration of commitments.

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Test for Enforceability of a Contract under Statute of Frauds

To determine if a contract falls within the scope of the Statute of Frauds. If it doesn't, an oral contract is enforceable.

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UCC § 2-309: Termination of a Contract

A contract with indefinite duration can be terminated by either party at any reasonable time, unless they agree otherwise.

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UCC § 2-309: Good Faith

Contracts require reasonable notice before termination, especially if a reasonable time for delivery or demand has passed. This ensures fairness.

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UCC § 2-310: Time for Payment

The buyer must pay when they receive the goods, but they can inspect them first

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UCC § 2-311: Options and Cooperation

Both parties must act in good faith and within reasonable limits when performing their obligations under a contract.

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Sun Printing Case

A case where a contract with an indefinite price duration was deemed unenforceable because it lacked certainty.

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Study Notes

I. Overview

  • Contract law creates legally binding promises, with remedies for breach.
  • Contracts can be written or oral/verbal.
  • The society determines the rules used to enforce contracts.

II. Enforceability

  • Promises supported by consideration are enforceable.
    • Consideration involves a bargained-for exchange; one party giving something up and the other party doing something in return.
    • Pre-existing duty rule: existing legal duty doesn't constitute consideration in a new separate contract.
  • Promissory estoppel: reliance on a promise, even without consideration, can be enforceable.
    • Requirement of reasonable reliance by promisee.
    • Detriment suffered by promisee.
  • Unjust enrichment: party unjustly benefitted at another's expense must make restitution.
    • Determining if enrichment is unjust.
    • No gratuitous assumption the benefit was given.

III. Mutual Assent

  • Evidence of intent to be bound by contract from both parties.
  • Common law:
    • Offer must be definite, clear, and communicated.
    • Acceptance must mirror the offer exactly.
  • UCC (Uniform Commercial Code):
    • Allows modifications in contract terms.
    • Addresses battle of forms. (Fluid Acceptance).

IV. Defenses

  • Statute of Frauds: Certain contracts require written evidence to be enforceable.
  • Misconduct: Fraud, duress, or misrepresentation can void a contract.
  • Mistakes: Mistakes about material facts can make a contract voidable.
  • Changed circumstances: impossibility or frustration of purpose may discharge a party's duty.
  • Unconscionability: terms of a contract so unfair they are unenforceable as a matter of law.
  • Illegality: contract violates public policy or a law and is therefore unenforceable.

V. Performance – Terms of Contract and Interpretation

  • Parol evidence rule: bars extrinsic evidence (oral or written) that contradicts the final written agreement.
  • Consistent and additional terms of the contract are usually allowed.
  • Ambiguity: if contract terms are unclear, extrinsic evidence may be used to clarify.

VI. Remedies

  • Expectation damages: put non-breaching party in the position they would have been in if contract had been performed.
    • Measure the difference in value.
    • Include incidental damages.
    • Include consequential damages (only if foreseeable).
  • Reliance damages: compensate for expenses reasonably related to performance in reliance on the contract.
  • Restitution damages: return any benefit conferred to the breaching party when unjust enrichment.

VII. UCC Requirements

  • Applies to contracts for the sale of goods.
  • Provisions for:
    • Output requirements
    • Delivery times
    • Payment schedules
  • Addresses issues unique to goods contracts, such as the "perfect tender" rule.

VIII. Additional Topics

  • Clickwrap agreements: assent to terms of use upon clicking "I agree."
  • Contracts of adhesion: standardized terms offered on a take-it-or-leave-it basis.
  • Partial agreements (open/indefinite terms): contracts with missing details, but legally enforceable if intent is clear.

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Contracts Outline Fall 2022 PDF

Description

Test your knowledge on key concepts in contracts law, focusing on consideration. This quiz covers essential cases and principles such as mutuality, donative intent, and the Pre-Existing Duty Rule. Boost your understanding of how these elements affect enforceability in legal agreements.

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