LAW OF CONTRACTS EXAM 2 QUESTIONS WITH CORRECT ANSWERS

Why do we need contract law? - anso Contracts define what we mean by a society based on the market and individual choice o Contracts provide enforcement mechanism for agreements that are performed in the future o Contracts provide a mechanism for working out problems that arise during or after performance How do you make a contract? - anso Reasonable Person Standard: Look to see whether a reasonable person would be justified in assuming tha ta person has mad a promise o Two Elements: commitment and future action o The test to contract formation is not whether someone actually intended to make a promise but whether their words and conduct as reasonably understood by the person to whom they were directed were sufficient to make a contract Express or Implied Consent - anso Express contract is an exchange of promises in which the terms by which the parties agree to be bound are declared either orally or in writing, or a combination of both, at the time is is made. o Implied Contract: is exhibited by the actions of the parties even though an agreement is not explicitly made (i.e., accepted the doctors services without protest). Unilateral vs. Bilateral Contract - anso Bilateral: if the original promisors offer is seeking a return promise for acceptance o Unilateral: if acceptance is in the form of requested action (i.e., I promise to pay you $100 if you ship the goods). Common Law v. Uniform Commercial Code - anso Common law rules apply to contracts involving: o Services (personnel/employees, professional services, construction, etc.) o Intangibles (investment securities, accounts receivable, legal claims, money)