Unilateral and Types of Contracts

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Questions and Answers

What is required for a contract to have valid consideration?

Past promises made without compensation

Changes in contract terms after fulfillment

Promises made in return for future actions (correct)

Illusory promises that lack specifics

Which term describes a promise that lacks definite commitment and is therefore unenforceable?

Illusory promise (correct)

Covenant not to sue

Liquidated debt

Accord and satisfaction

In the context of settling claims, what does 'satisfaction' refer to?

An acknowledgment of debt amount

The initial agreement between parties

The performance or payment following an accord (correct)

A promise to not take legal action

Which of the following describes a liquidated debt?

A debt that has been fixed or determined Signup and view all the answers

Which option is NOT a way to settle a legal claim?

Settlement Agreement Signup and view all the answers

What characterizes a unilateral contract?

The offer can only be accepted through performance. Signup and view all the answers

Which of the following statements is true regarding formal contracts?

They require adherence to specific methods of creation. Signup and view all the answers

Which type of contract states terms explicitly in writing or verbally?

Express contract Signup and view all the answers

What is necessary for an implied contract to be recognized?

The conduct of the parties indicates agreement. Signup and view all the answers

Which of the following is an example of a formal contract?

A signed lease agreement requiring a specific format. Signup and view all the answers

What must a plaintiff demonstrate to support a claim of an implied contract?

The plaintiff expected to be paid and the defendant accepted the services. Signup and view all the answers

Which of the following is NOT a characteristic of an implied contract?

Clear verbal agreements between parties. Signup and view all the answers

In what way do implied contracts differ from express contracts?

Implied contracts are based on actions rather than stated terms. Signup and view all the answers

What does consideration in a contract refer to?

The value exchanged for a performance or promise Signup and view all the answers

Which part of consideration ensures that one party has legal value?

The promise to refrain from a lawful action Signup and view all the answers

In which situation does UETA NOT apply?

Wills and testamentary trusts Signup and view all the answers

What is a one-way contract characterized by?

Only one party making a promise in exchange for an action Signup and view all the answers

What constitutes a transaction under the defined terms?

An interaction related to business, commercial, or governmental activities Signup and view all the answers

Which of the following is NOT considered legally sufficient value?

Giving a gift without any condition Signup and view all the answers

What ensures that consideration involves a bargained-for exchange?

Something valuable must be promised or given by the offeror Signup and view all the answers

Which statement best defines UETA?

It applies only to electronic records and signatures in certain transactions. Signup and view all the answers

What does disaffirmance refer to in the context of minors and contracts?

The cancellation of a contract by a minor Signup and view all the answers

When can a contract entered into by an intoxicated person be considered enforceable?

If the person understood the legal consequences of the contract Signup and view all the answers

What is the role of the courts when determining the enforceability of a contract due to intoxication?

They look for objective indications of the person's condition Signup and view all the answers

In which situation are minors allowed to disaffirm a contract?

When they clearly indicate they do not wish to be bound Signup and view all the answers

What typically happens to contracts for basic necessities if a minor disaffirms?

The minor must pay a fair price for what they received Signup and view all the answers

What does it mean that minors generally lack the right of succession?

They cannot inherit property Signup and view all the answers

Why do courts rarely void contracts based on intoxication?

It is difficult to prove severe impairment of judgment Signup and view all the answers

What is the significance of a parent or guardian relinquishing control over a minor?

The minor is considered emancipated and has more responsibilities Signup and view all the answers

Under what circumstances is delegation prohibited in a contract?

When the contract specifies that delegation is not allowed. Signup and view all the answers

What defines a third party beneficiary in a contract?

A third person who is intended to benefit directly from the contract. Signup and view all the answers

Which of the following best explains why delegation might be prohibited?

When special trust is placed in the personal skill of the obligor. Signup and view all the answers

What right does a third party beneficiary have under a contract?

The right to sue for breach of contract. Signup and view all the answers

When is a third party beneficiary considered 'incidental'?

When the contract benefits them but is not intended to do so. Signup and view all the answers

In a scenario where Party A sells property to Party B and the proceeds go to Party C, what is Party C's role?

Party C is an intended third party beneficiary. Signup and view all the answers

Why would a party potentially be held liable even if they did not directly contract with a third party beneficiary?

Because the contract was designed to benefit them. Signup and view all the answers

What happens if a contract specifically prohibits delegation?

The obligation cannot be assigned to a third party. Signup and view all the answers

Study Notes

Unilateral Contracts

The offeree can accept the offer only by completing the performance requested in the contract.
Promise for an action: the contract begins when the offeree finishes the required action.
Example: "I will pay you $1K if you paint my house."

Types of Contracts

Formal contracts require a specific form or method of creation:
- The Uniform Commercial Code (UCC) requires written contracts.
- Example: A contract that requires a negotiable instrument such as a check, draft, promissory note or CD.
Informal contracts focus on the agreement's substance rather than its form.
- Lease agreement is an example of an expressed formal contract.
Implied contracts: terms are defined by the parties' conduct, not explicitly stated words.
- Requirements for an Implied Contract:
  - Plaintiff furnished a service or property.
  - Plaintiff expected to be paid and the defendant knew or should have known payment was expected.
  - Defendant had a chance to reject the service or property and did not.

Electronic Records and Signatures

"Record" is defined as information stored in any retrievable format, including tangible, electronic, or other mediums.
The Uniform Electronic Transactions Act (UETA) governs electronic records and signatures relating to a transaction.
"Transaction" is defined as interaction between two or more parties related to commercial, business, or governmental activities.
UETA does not apply to wills and testamentary trusts.

Consideration

Consideration is the value given in exchange for a performance (unilateral contract) or a promise (bilateral contract).
It is the price or motive that induces a party to enter into a contract.
Consideration has two elements:
- Legally sufficient value:
  - A promise to do something you have no prior duty to do.
  - Performing an action you are not obligated to undertake.
  - Refraining from an action you have the right to undertake (forbearance).
- Bargained-for-exchange:
  - The item of value must be given or promised in return for the offeree’s promise, performance, or promise of performance.
  - If a court determines that one party is simply fulfilling their existing duty, the new contract lacks consideration.
Past Consideration is not legal consideration. Promises made in exchange for actions or events that have already happened are unenforceable.
Illusory Promises are unenforceable due to a lack of consideration.
- The terms of a contract are so vague or uncertain that one party has not promised anything specific.

Settlement of Claims

Accord and Satisfaction:
- A debtor agrees to pay and a creditor agrees to accept less than the original amount owed.
  - The accord is the agreement to settle the claim.
  - Satisfaction is the performance (payment) that follows the accord.
- The original amount owed must be disputed.
Release: A legally binding agreement that releases a party from further legal liability.
Covenant not to sue: A legally binding agreement that promises not to sue on a specific claim, although the claim is still valid.

Minors' Contracts

Emancipation occurs when a parent/guardian relinquishes control of a minor.
Most minors can enter into contracts like adults, but the contracts are voidable by the minor.
Disaffirmance is the legal avoidance or setting aside of a contract obligation.
Minors generally do not have the right of succession.

Intoxication

Contracts entered by an intoxicated person can be voidable, depending on their level of understanding.
Courts look at objective indications of intoxication to determine capacity.
Contracts are rarely voided due to intoxication, as it is difficult to prove a person's judgement was impaired to the point of not comprehending the legal consequences.
When disaffirming a contract, the intoxicated person must return any benefits received.

Delegation of Duties

Delegation is prohibited when:
- Special trust has been placed in the obligor.
- Performance depends on the obligor's personal skill or talents.
- The contract expressly prohibits delegation.
The obligee generally can sue both the original party and the delegate.

Third-Party Beneficiaries

When parties agree that a contract's performance will directly benefit a third person, that person becomes an intended third-party beneficiary.
Third-party beneficiaries have legal rights to enforce the contract.
- Example: Party A sells property to Party B and the proceeds go to Party C. Party C can sue for breach of contract.

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Description

This quiz covers the essentials of unilateral contracts, focusing on how acceptance is based on performance. Additionally, it explores the differences between formal, informal, and implied contracts, including examples like lease agreements and the Uniform Commercial Code requirements.