Contracts Questions and Answers PDF

# Contracts A contract is a legal **agreement** made between parties, by which rights are acquired by one or more to act on the part of the other party or another. The agreement referred to means a meeting of minds called in **English Law** *consensus in idem*. ## Elements of a Valid Agreement An a...

# Contracts A contract is a legal **agreement** made between parties, by which rights are acquired by one or more to act on the part of the other party or another. The agreement referred to means a meeting of minds called in **English Law** *consensus in idem*. ## Elements of a Valid Agreement An agreement, to be valid, needs the following elements: offer and acceptance (intent of creating legal relations), capacity of the parties, a valid consent without fraud or duress, a consideration, and the legality of **the subject-matter** or object. ## Void Contracts Neither party can recover from the other on a **void** contract, but goods delivered may be recovered by an action in restitution. ## Voidable Contracts A voidable contract may be made void at the instance of **one of** the parties. ## Formal Contracts Contracts by **deed** are the only formal contract in the law: it must be signed, sealed, and delivered. ## Simple Contracts Simple contracts might be oral, or by writing or **implied by conduct**. ## American Contract Law Unlike the civil law ‘Droit des obligations", the American Contract Law **does not encompass** torts. American Contract law has its origin in English Common Law and continues to be common law in nature and methodology, but the US **fifty-one** individual states had passed specific legislation. ## Types of Contracts An **implied** contract is one where the terms are stated words. ## Uniform Commercial Code (UCC) The National Conference, together with the American Law Institute, therefore, began work in 1942 on the project of a Uniform **Commercial** Code (UCC). ## Scope of UCC The sales provisions of the Code apply to all sales of goods, not only to those between **merchants**. ## Offer The party tendering the offer, the **offeror**, manifests his intention to enter into a contractual obligation according to an objective (addressee-oriented) view of the circumstances. ## Valid Offer In order to know if a valid offer has been made, the following question must be asked: **Would** a reasonable person, in the position of the recipient of the utterance, consider it as conferring on him the power to create a valid contract by means of acceptance? ## Advertisements Advertisements or **ads** do not constitute offers in American law but are instead viewed as invitations to the addressee to make an offer. ## Certainty The offer must be sufficiently clear and certain and must contain the essential elements of the **deal** proposed. ## Termination of the Offer The most important way of termination of the offer includes lapse of time (such as when the offer had a specified time limit or when a "**reasonable** time," under the circumstances, has expired). ## Other Ways to Terminate an Offer Other important ways of termination of the offer include **revocation** by the offeror, or rejection by the offeree. ## Revocation As a rule, an offer can be revoked any time before its acceptance. The rule is somewhat different in the case of **unilateral** contracts. If the seller is a merchant and declares in writing that the offer is open for a specified time (otherwise for a reasonable time), the declaration will be considered a "**firm** offer" and cannot be revoked. ## Interpretation of Contracts Contracts are presumptively enforceable and valid (validation principle), with **gaps** addressed and filled through interpretation. ## Promissory Estoppel When an offeree relies on the offer and does expenses in a way that must have been foreseeable to the offeror, the Equity developed the doctrine of "**promissory estoppel**" to avoid the harshness of the consideration doctrine. Originally, promissory estoppel facilitated the enforceability of gift promises, especially **interfamily** promises, based on altruistic motives. ## Quasi-Contracts Promissory estoppel will also be applied to "contracts" that have the outward characteristics of a bargain, but may be unenforceable because of other defects, such as non-compliance with **born** requirements. ## Acceptance In addition to an express rejection, an acceptance introducing new terms or accepting under different conditions also constitutes a **rejection**. The acceptance, at common law, must agree in all respects with the offer ("**mirror image rule**") or else no contract will come about. If there is a variation in the "acceptance", it is a rejection of the initial offer, constituting a new offer in its own right (**counteroffer**). ## Last Shot Rule When offer and response differ but one party and accepted by the other nonetheless delivers goods, a contract will have been formed. Its terms are those of the last communication: the "**last word**" rule. ## Mailbox Rule The **mailbox rule** is difficult to apply in cases of parallel and inconsistent communications by the offeree. ## Termination of an Offer An offer terminates, in contrast to some civil law legal systems, with the **death or incapacity** of the offeror or offeree prior to effective acceptance.