LEGL 2700 ROESSING EXAM 2 QUESTIONS AND ANSWERS

LEGL 2700 ROESSING EXAM 2 QUESTIONS AND ANSWERS “Promise - CORRECT ANSWER A commitment or willingness to be bound to a contract obligation" "Express Contracts - CORRECT ANSWER A contract in which parties show their agreement in words" "Assignment - CORRECT ANSWER A transfer of contractual rights" "Assignor - CORRECT ANSWER An original contracting party who assigns or transfers contractual rights to a third party" "Assignee - CORRECT ANSWER A third party, who is not an original contracting party, to whom contractual rights are transferred May enforce the original contract" "Delegate - CORRECT ANSWER A transfer of contractual duties" "Delegator - CORRECT ANSWER An original contracting party who delegates or transfers contractual duties to a third party" "Delegatee - CORRECT ANSWER A third party, who is not an original contracting party, to whom contractual duties are transferred Will perform under the original contract" "Anti-assignment Clause - CORRECT ANSWER A contractual provision that prevents a party from assigning rights or delegating duties without the permission of the other party" "Novation - CORRECT ANSWER The substitution of a new contract in place of an old one" "Contract Law - CORRECT ANSWER Tension between freedom of contract and consumer/public protection" "Elements of a Contract - CORRECT ANSWER Agreement (offer and acceptance), capacity and genuine assent, consideration, lawful purpose, lawful form" "Exceptions for Contracts without Capacity - CORRECT ANSWER Contracts for necessaries, ratified contracts, emancipated minors, under certain state laws" "Coogan's Law - CORRECT ANSWER CA Child Actor's Bill Exception of contracts without capacity" "Equity - CORRECT ANSWER Given by judge Provides exception called promissory estoppel: - Gratuitous promise - Reasonable reliance - Unfair result" - What are the anticompetitive effects of the practice? - Are there procompetitive effects that balance the anticompetitive ones? - Is there a less restrictive practice that still would achieve the procompetitive effects?" "Red Pencil Rule - CORRECT ANSWER If non-competitive agreement restrictions are unreasonable, whole agreement is void" "Blue Pencil Rule - CORRECT ANSWER If non-competitive agreement restrictions are unreasonable, judge can revise them to reasonable restrictions" "Statute of Frauds - CORRECT ANSWER Requires written evidence of evidence of certain contracts" "Implied-in-fact Contracts - CORRECT ANSWER A legally enforceable agreement inferred from the circumstances and conduct of the parties" "Implied-in-law Contract - CORRECT ANSWER A quasi-contract; not a true contract Legal fiction that the courts use to prevent unjust enrichment and wrongdoing Courts permit the person who conferred a benefit to recover the reasonable value of that benefit Nonetheless, the elements of a true contract are not present" "Quasi-contract - CORRECT ANSWER An implied-in-law contract; not a true contract Legal fiction that the courts use to prevent unjust enrichment and wrongdoing Courts permit the person who conferred a benefit to recover the reasonable value of that benefit Nonetheless, the elements of a true contract are not present" "Enforceable Contract - CORRECT ANSWER A contract that can be enforced in court" "Unenforceable Contract - CORRECT ANSWER A contract that cannot be enforced in court" "Valid Contract - CORRECT ANSWER A contract that contains all of the proper elements of a contract" "Void Contract - CORRECT ANSWER A contract that is empty, having no legal force; ineffectual, unenforceable Ex) drug sale, killer-for-hire" "In Pari Delicto - CORRECT ANSWER The parties to an illegal contract are equally at fault" "Voidable Contract - CORRECT ANSWER Capable of being declared a nullity, though otherwise valid Party taken advantage of can avoid contract; other party cannot" "Executed Contract - CORRECT ANSWER A contract that is fully accomplished or performed, leaving nothing unfulfilled" "Executory Contract - CORRECT ANSWER An agreement that is not completed Remains this state until the performance required in a contract is completed" "Counteroffer - CORRECT ANSWER An offer made in response to another's offer Acceptance must be for as it is Usually made in place of an acceptance Usually terminates an offer" "Lapse of Time - CORRECT ANSWER When the offeree fails to accept by a deadline defined in the offer or after a reasonable period of time" "Subject Matter Destruction - CORRECT ANSWER When the object of the contract is destroyed or legally eliminated" "Offeror Death or Insanity - CORRECT ANSWER When the offeror no longer has the capacity to make the offer" "Subject Matter Illegality - CORRECT ANSWER Offer is automatically revoked if illegal Also Subsequent Illegality" "Acceptance - CORRECT ANSWER The contractual communication of agreeing to another's offer Creates a contract" "Mailbox Rule - CORRECT ANSWER The rule that an acceptance is effective once it is sent" "Deposited Acceptance Rule - CORRECT ANSWER The contractual doctrine that a binding acceptance of an offer occurs when a mailed acceptance is irrevocably placed with the postal service" "Consideration - CORRECT ANSWER Contracts must be two-sided to be enforceable" "Accord and Satisfaction - CORRECT ANSWER Payment of money, or other thing of value, usually less than the amount demanded, in exchange for cancellation of a debt that is uncertain in amount" "Firm Offer - CORRECT ANSWER An offer in signed writing by a merchant to buy or sell goods; it gives assurance that the offer will be held open for acceptance under the Uniform Commercial Code (UCC)" "Option - CORRECT ANSWER A contractual arrangement under which one party has for a specified time the right to buy certain property from or sell certain property to the other party Essentially a contract to not revoke an offer" "Promissory Estoppel - CORRECT ANSWER Court enforcement of an otherwise unbinding promise if injustice can be avoided only by enforcement of the promise Substitute for consideration" "Capacity - CORRECT ANSWER Mental ability to make a rational decision that includes the ability to perceive and appreciate all relevant facts Required element of a contract" "Covenants Not to Compete - CORRECT ANSWER An agreement in which one party agrees not to compete directly with the business of the other party; may be limited by geography or length of time" "Misrepresentation - CORRECT ANSWER An untrue manifestation of fact by word or conduct; may be unintentional" "Mutual Mistake - CORRECT ANSWER A situation in which parties to a contract reach a bargain on the basis of an incorrect assumption common to both parties" "Rescission - CORRECT ANSWER A contractual remedy that cancels the agreement and returns the consideration exchanged to each party" "Unilateral Mistake - CORRECT ANSWER Arises when only one of the parties to a contract is wrong about a material fact Not usually a basis for rescinding a contract" "Undue Influence - CORRECT ANSWER A defense to contract enforcement available when one is taken advantage of unfairly by a party who misuses a position of relationship or legal confidence" "Leading Object Rule - CORRECT ANSWER An exception to the statute of frauds' writing requirement for collateral promises Occurs when the promisor's commitment is primarily intended to serve the promisor's own interests" "Leyden v. American Accreditation Healthcare Commission (2015) - CORRECT ANSWER - Enforcing implied-in-fact agreements is an important means of ensuring that two parties' intent to make binding promises is honored - Implied-in-fact agreements must contain the same elements as express contracts, including acceptance and consideration - Employers can weaken the presumption of an at-will employment relationship by making statements about employee rights and expectation in policies and manuals" "Gottlieb & Co., Inc. v. Alps South Corporation (2007) - CORRECT ANSWER - The court found that Gottlieb's term (consequential damages limitation) was included in the contract even though it appeared only on Gottlieb's forms and was not specifically discussed by the parties - Alps' failure to read Gottlieb's forms was irrelevant, according to the court. This is generally true as a contract law principle - If Alps foresaw the likelihood of certain outcomes, such as consequential damages from customer complaints, it should have addressed it with Gottlieb" "Vassilkovska v. Woodfield Nissan, Inc. (2005) - CORRECT ANSWER - Contracts require consideration for both promises. Care must be taken in limiting one's obligations, particularly if the result is no legal detriment at all - The amount of consideration is generally not an issue, but it must be more substantial than simply an acknowledgement or statement" "Parol Evidence Rule - CORRECT ANSWER When a written contract exists, it is very strong evidence Excludes the introduction of evidence of prior written or oral agreements that may vary, contradict, alter, or supplement the present written agreement Exception example: - When the parties to an agreement do not intend for that agreement to be final and complete, then parol evidence is admissible" "Duty of Performance - CORRECT ANSWER Legal obligation of a party to a contract" "Discharge - CORRECT ANSWER Act that forgives further performance of a contractual obligation" "Condition Precedent - CORRECT ANSWER Event that must occur before a duty of immediate performance of the promise arises Contracts often provide that one party must perform before there is a right to performance by the other party Ex) Completion of a job is needed for payment for that job. One contracting party's failure to perform this permits the other party to refuse to perform, cancel the contract, and sue for damages." "Condition Subsequent - CORRECT ANSWER A fact that will extinguish a duty to make compensation for breach of contract after the breach has occurred" "Express Conditions - CORRECT ANSWER Conditions that are explicitly set out in a contract" "Implied Conditions - CORRECT ANSWER Conditions to a contract that are implied by law rather than by contractual agreement" "Concurrent Condition - CORRECT ANSWER Mutual condition under which each party's contractual performance is triggered by the other party's tendering (offering) performance" "Delivery - CORRECT ANSWER The physical transfer of something In sale-of-goods transactions, transfer of goods from seller to buyer" "Tender Performance - CORRECT ANSWER The offer by one contracting party to perform a promise; usually associated with the offer to pay for or to ship items under the contract" "Complete Performance - CORRECT ANSWER A party performs all of its obligations under a contract" "Material Breach - CORRECT ANSWER Materially deficient or nonexistent performance of one's obligations under a contract" "Substantial Performance - CORRECT ANSWER Degree of performance recognizing that a contracting party has honestly attempted to perform but has fallen short Entitled to the price promised by the other less that party's damages" "Impossibility of Performance - CORRECT ANSWER A defense to contractual nonperformance based on special circumstances that render the performance illegal, physically impossible, or so difficult as to violate every reasonable expectation the parties have regarding performance" "Commercial Impracticability - CORRECT ANSWER A Uniform Commercial Code (UCC) defense to contractual nonperformance based on happenings that greatly increases the difficulty of performance and that violate the parties' reasonable commercial expectations" "Waiver - CORRECT ANSWER An express or implied relinquishment of a right" "Release - CORRECT ANSWER The relinquishment of a right or claim against another party" "Compensatory Damages - CORRECT ANSWER Usually awarded in breach-of-contract cases to pay for a party's losses that are a direct and foreseeable result of the other party's breach The award for these damages is designed to place the non-breaching party in the same position as if the contract had been performed" "Consequential Damages - CORRECT ANSWER The amount of money awarded in a breach-of-contract case to the non-breaching party to pay for the special damages that exceed the normal compensatory damages May be created by lost opportunities if the breaching party was aware of the special nature of this contract Can be unlimited Domino effect of damages" "Punitive Damages - CORRECT ANSWER Monetary damages in excess of a compensatory award, usually granted only in intentional tort cases where defendant's conduct involved some element deserving punishment" "Liquidated Damages - CORRECT ANSWER Simple compensation stated in contract" "Mitigate - CORRECT ANSWER To lessen the consequences of Usually used to refer to the contractual duty to lessen damages following breach of contract" "Equitable Remedy - CORRECT ANSWER A remedy fashioned by a court when money damages are not adequate (i.e., there is "no adequate remedy at law") Ex) Injunctions and rescission of a contract" "Restitution - CORRECT ANSWER A contractual remedy involving one party returning to another the value previously received" "Injunction - CORRECT ANSWER A court order directing a party to do or to refrain from doing some act" "Specific Performance - CORRECT ANSWER Equitable remedy that requires defendants in certain circumstances to do what they have contracted to do" "Third-party Beneficiaries - CORRECT ANSWER Persons who are recognized as having enforceable rights created for them by a contract to which they are not parties and for which they have given no consideration" "St. Louis Produce Market v. Hughes (2013) - CORRECT ANSWER - The failure of a condition precedent can excuse a party's performance, even if it is minor. Similarly, the existence of a minor condition subsequent can cut off a party's obligation to perform - Parties often use conditions to ensure that a transaction occurs under favorable and anticipated circumstances - Parties should carefully consider whether conditions are necessary and understand that they may, at times, provide hold-up power to one side" "East Capitol View Community Development Corp. v. Robinson (2008) - CORRECT ANSWER - Courts are reluctant to excuse performance due to impossibility or impracticability - The court specifically distinguishes between objective impossibility and personal impossibility. Only the former excuses performance - Contracting parties have the ability to allocate known risks in the contract. For that reason, impossibility must be an unexpected ocurrence" "Oliver v. Ball (2016) - CORRECT ANSWER - When a contract involves unique subject matter, courts may award specific performance because there is no amount of money that can make up for the failure of the contractual promise - Land is a common context for the award of specific performance because it is such a unique asset" "Leonard v. PepsiCo (2000) - CORRECT ANSWER Determined that the Harrier Fighter jet that was not on the catalog was NOT an offer" "Lack of Capacity - CORRECT ANSWER One party is too young or mentally incompetent to form a contract" "Lack of Genuine Assent - CORRECT ANSWER 1) One party was tricked (fraud) or forced (duress) 2) Both parties were confused about essential part of contract (mutual mistake)" "Lucy v. Zehmer (1954) - CORRECT ANSWER Zehmer's drunkenness when entering contract did not excuse him out of the contract" "Johnson v. Harmon (1876) - CORRECT ANSWER "Both minds must meet in such a transaction; and if one is so weak, unsound, and diseased that the party is incapable of understanding... he is incompetent"" "Sherwood v. Walker (1887) - CORRECT ANSWER Contract for selling of barren cow that wasn't actually barren was mistake of character Contract was void" "Wood v. Boynton (1885) - CORRECT ANSWER Selling of valuable stone that turned out to be a diamond is mistake of value Since diamonds are valuable stones, contract was NOT void" "Gratuitous Promise - CORRECT ANSWER Non-legally-binding promise" "Nominal Consideration - CORRECT ANSWER Token amount identified in a written contract when parties either cannot or do not wish to state the amount precisely Ex) The Freemasons of Lodge St. George, Bermuda - Price of yearly rent is one peppercorn" "Pre-existing Obligation - CORRECT ANSWER Can't use something you already are required to do as consideration UCC has exception for good-faith modifications to sales of goods" "Mills v. Wyman (1825) - CORRECT ANSWER Man tries to help sailor, but sailor dies Sailor's father promises compensation, but never pays Man is not entitled to award Mere verbal promise cannot be enforced by action" "Kirksey v. Kirksey (1845) - CORRECT ANSWER Man offers sister-in-law to live with him, but later kicks her out Gratuitous promise in effect; no legally binding contract No equity in effect" "Wright v. Newman (1996) - CORRECT ANSWER Man offers to take care of girlfriend and another man's child Man stops caring for the child Woman claims promissory estoppel: - Loss of opportunities - Man offered first Man responsible for full child support" "Unconscionability - CORRECT ANSWER Extremely unfair to one party Must show court both: - Procedural unfairness (surprise, important terms in fine print, "contract of adhesion") - Substantive unfairness (one-sided terms that favor the drafter)" "Sherman Act (1890) - CORRECT ANSWER Antitrust law that prohibited contracts that restrained trade and created monopolization" "Federal Trade Commission Act (1914) - CORRECT ANSWER Established FTC Antitrust law that prohibited unfair methods of competition and unfair or deceptive trade practices" "Clayton Act (1914) - CORRECT ANSWER Expanded Sherman Act Prohibits anti-competitive mergers and acquisition" "Rule of Reason - CORRECT ANSWER Questions that decides application of antitrust laws: "NCAA v. Board of Regents of the University of Oklahoma (1984) - CORRECT ANSWER NCAA restricted television contracts Court applied Rule of Reason" "O'Bannon v. NCAA (2014) - CORRECT ANSWER College players featured in EA Sports game NCAA got paid; players didn't 9th CIrcuit said players get up to full cost of attendance, no more" "Montz v. Pilgrim Films - CORRECT ANSWER Contracts do not typically need to be written Can be oral or even implied" "Macy's Inc. v. Martha Stewart Living Omnimedia - CORRECT ANSWER Stewart entered into contract with Macy's for exclusive selling of goods Stewart entered into another contract with JC Penny's" "Stambovsky v. Ackley (1991) - CORRECT ANSWER Man unknowingly buys haunted house Haunted aspect of house was advertised, but not told to man Restitution awarded" "Brooks v. Van Horn (2015) - CORRECT ANSWER Seller claimed no snakes in house, but snakes found Claimed punitive damages (intentional fraud) Received compensation" "Hadley v. Baxendale (1854) - CORRECT ANSWER Flour mill crank shaft broke, but fixed late Consequential damages not applied" "Perini Corporation v. Great Bay Hotel & Casino (1992) - CORRECT ANSWER Contract to build new casino Didn't complete by due date Perini (constructors) held responsible for 14 million dollars" "Uniform Commercial Code (UCC) - CORRECT ANSWER The most successful attempt to have states adopt a uniform law Purpose is to simplify, clarify, and modernize the laws governing commercial transactions" "Goods - CORRECT ANSWER Tangible (touchable), movable personal property" "Bilateral Contract - CORRECT ANSWER Promise in exchange for a promise Involves promisor and promisee Usually made to a specific person Acceptance, then performance later Binding even when promise hasn't been fulfilled yet Ex) work order to paint house" "Unilateral Contract - CORRECT ANSWER Promise in exchange for an action Made to the whole world Acceptance and performance happen at the same time Not binding until action has been done Ex) lost dog poster and reward" "Offer - CORRECT ANSWER A contractual communication that contains a specific promise and a specific demand Definite, present intent to be bound to a contract Initiates the process of making a contract" "Indefiniteness - CORRECT ANSWER When the terms of an agreement are not sufficiently specific, the agreement does not rise to the level of a contract" "Revocation - CORRECT ANSWER The contractual communication of withdrawing an offer Cannot be done upon completion of performance" "Rejection - CORRECT ANSWER The refusal of an offer Terminates an offer Cannot be reversed" "Mirror Image Rule - CORRECT ANSWER The common law rule that the terms of an acceptance offer must mirror exactly the terms of the offer Any variation of terms would make the attempted acceptance a counteroffer" "Fraud - CORRECT ANSWER A false representation of fact made with the intent to deceive another that is justifiably relied upon to the injury of that person" "Duress - CORRECT ANSWER Being under threat of physical harm or illegal economic harm A recognized defense to any act that must be voluntary in order to create liability in the actor"