MIE 305 Final
Contract - answer a promise or set of promises supported by the exchange of
bargained-for consideration for the breach of which the law gives a remedy, or the
performance of which the law recognizes as an enforceable duty. "a promise or set of
promises that are enforceable in court." primarily state based common law
contract elements - answer-Agreement: the parties agree to the exchange of legal
detriment as to each other
-Bargained-for consideration: exchange of value, including their detriment, for purpose
of K
-Freely entered: the parties' volitionally (knowingly, with capacity) enter the K
-Legal purpose: the subject of the contract is legal, and doesn't violate public policy.
uniform commercial code (UCC) - answer-standardize commercial transactions in
goods across all states. limited in scope, but does change some important CL contract
rules. Falls back on CL when there isn't an answer to a problem. deals with all phases
which may ordinarily arise in the handling of a commercial transaction from start to
finish. rejects the mirror-image rule
-changes tend to reflect a preference toward less formal good faith dealings rather than
formality.
-purpose: to harmonize the law of contracts in sales of goods between states so that the
interstate market for goods is stable and predictable. all 50 states have adopted at least
part of the UCC. only applies in transactions for goods (not services, not realty), and
only where one or both parties to a K are merchants.
Bilateral contract - answertwo promises; each party is both a promisor and a promisee,
enforceable at the moment of exchange. ex) "My company will buy 10,000 widgets from
your firm at $6 each, deliverable within 30 days" "Agreed"
Unilateral contract - answera promise for an act; a promisor makes an enforceable
promise in exchange for an act, but the promise is not legally enforceable until/unless
the act is performed. it may be directed at any party of the promisor's choice, or
generally to any actor. ex) "I will give you $1000, Bob, if you'll paint my house within the
next 30 days." alternatively. "My kingdom for a horse!" (Richard III was making a
unilateral offer to anyone with a horse to spare)
Express - answerthe agreement is "spelled out" specifically, either in writing or orally
implied in fact - answer1- P furnished good/service
2- P expected payment, D knew or should have known this
3- D had an opportunity to pay and did not (doctor/dentist appt.)
,implied in Law (Quasi-K) - answernot true K! uses quantum meruit to avoid injustice at
equity. a term used to describe a factual situation involving a duty that does not arise
out of an actual contract and, in essence, is associated with a remedy designed to
promote justice and fairness.
enforceability - answerValid agreements: partially or completely enforceable agreement
Void agreements: not valid from the start; misnomer, because it is never a contract.
subjects are typically involve illegal acts or other acts statutorily declared "void as to
public policy"
Voidable agreements: valid from the start, but a party may declare an intent not to
perform and it is not a breach; may be honored by the parties at their discretion, but one
party may renounce the obligations. (ex. minors; K's involving fraud (incapacitated party
may void, other party must honor until so declared))
mental incapacity and intoxication - answernot automatic outs. second restatement of
contracts requires an understanding of the degree of incapacity of the promisor. with
intoxication, party must be so intoxicated as to not understand the nature of the
transactions and promisee must know or have reason to know of promisor's condition.
executed contract - answerthe term used to mean that the performances of a contract
have been completed
executory contract - answeruntil the performance required in a contract is completed, it
is said to be executory as to that part not performed.
objective theory of contracts - answermodern standard analytical tool for US courts.
a contract and its precise terms will be determined objectively by the words, acts,
behavior of the parties in case of dispute-no "meeting of the minds" stuff, because you
can also have a misunderstanding over whether minds actually met, and on what terms.
conditional promise - answerby a promisor (offeror) to a promisee (offeree). An offer! it
has no effect unless the duty to perform to receive the benefit of the promise is
ACCEPTED
offer - answermust manifest a present intent to be bound by the offeror in exchange for
the consideration of the offeree (action, forbearance, money, item) the terms must be
reasonably definite at least as the subject of the K, consideration and a quantity term
(UCC). must be communicated to the offeree, who must in turn have been an intended
or proper offeree. must not have expired or been revoked. may also terminate by
operation of law (death, insanity, bankruptcy, destruction of subject, supervening
illegality, "open offer" not accepted for extended time)
not generally offers - answeradvertisements, flyers, inquiries, quotes. ads can be
binding K if the language is such that it is clearly more than a solicitation to bargain.
"Fred's furniture going out of business! ten sofas left to the first ten buyers at ten
percent off original price at monday opening only!"
, mirror image rule (matching acceptance) - answerofferor is "master of the offer" offeree
must therefore provide a mirror-image acceptance of the terms of the original offer. any
variation immediately extinguishes the original offer and becomes a counteroffer back to
the original offeror (now the counterofferee) acceptance is usally a simple matter of
communicating consent, valid from the moment it is tendered. if the offeree imposes
conditions or terms on acceptance, however, they must be followed. offeree may also
reject outright without a counteroffer. Silence cannot be treated as acceptance even if in
terms of offer, although may be a rejection if the offer is limited as to duration (or by
operation of law if too much time goes by). the offeror has the power to revoke the offer,
but only prior to acceptance by the offeree.
mailbox (deposited acceptance) rule - answeracceptances are valid upon dispatch
(sending); revocations are valid upon receipt (as are rejections and counteroffers by
offeree) the application of this rule can be avoided by the offeror simply stating in the
offer that the acceptance is not effective until it is actually received
no mutuality - answer-illusory promises: gratuitous, don't really reflect an obligation. (ex.
if i buy an ipod, i promise to buy yours"
-promises to fulfill a pre-existing duty: the detriment already exists (ex. I know i owe you
$1000. if you will agree to give me an extension on the loan, i promise i'll pay you back.
-Promises based on past consideration given: lawyer provides friend with free legal
services; friend later says "I should give you something for that. i'll pay $1000." friend
doesn't pay. lawyer knows better than to sue.
The Peppercorn theory - answerof consideration holds that it is not generally the courts'
job to look into the adequacy of consideration if the parties are satisfied with the
exchange. Nominal consideration is acceptable; sham consideration, however, is not- a
nominal consideration provided or purported to be provided in exchange for something
of value for the purpose of the appearance of a valid contract.
court's four-part test: (1) was the consideration bargained-for? (2) was the consideration
induced by reciprocal consideration? (3) was the consideration actually paid or
exchanged? (4) were there any circumstances that suggest a fraudulent or bad faith
intent in this transaction?
expectation damages - answercompensatory damages; a wronged party is simply
entitled to the expected value of the bargain struck by the breached contract. we don't
see punitive damages in contract matters unless there is also a related tort in the case,
such as one of fraud.
types of damages specific to contracts - answer-Consequential damages (or "special
damages): are damages incurred by the nonbreaching party as a forseeable
consequence of the breaching party's breach. typically, they tend to be framed in terms
of lost profits, lost revenue or lost products/inventory. beyond the compensatory
damages. not presumed since they are caused by special circumstances beyond the
contract itself. evidence must be submitted that the breaching party knew or had reason
Contract - answer a promise or set of promises supported by the exchange of
bargained-for consideration for the breach of which the law gives a remedy, or the
performance of which the law recognizes as an enforceable duty. "a promise or set of
promises that are enforceable in court." primarily state based common law
contract elements - answer-Agreement: the parties agree to the exchange of legal
detriment as to each other
-Bargained-for consideration: exchange of value, including their detriment, for purpose
of K
-Freely entered: the parties' volitionally (knowingly, with capacity) enter the K
-Legal purpose: the subject of the contract is legal, and doesn't violate public policy.
uniform commercial code (UCC) - answer-standardize commercial transactions in
goods across all states. limited in scope, but does change some important CL contract
rules. Falls back on CL when there isn't an answer to a problem. deals with all phases
which may ordinarily arise in the handling of a commercial transaction from start to
finish. rejects the mirror-image rule
-changes tend to reflect a preference toward less formal good faith dealings rather than
formality.
-purpose: to harmonize the law of contracts in sales of goods between states so that the
interstate market for goods is stable and predictable. all 50 states have adopted at least
part of the UCC. only applies in transactions for goods (not services, not realty), and
only where one or both parties to a K are merchants.
Bilateral contract - answertwo promises; each party is both a promisor and a promisee,
enforceable at the moment of exchange. ex) "My company will buy 10,000 widgets from
your firm at $6 each, deliverable within 30 days" "Agreed"
Unilateral contract - answera promise for an act; a promisor makes an enforceable
promise in exchange for an act, but the promise is not legally enforceable until/unless
the act is performed. it may be directed at any party of the promisor's choice, or
generally to any actor. ex) "I will give you $1000, Bob, if you'll paint my house within the
next 30 days." alternatively. "My kingdom for a horse!" (Richard III was making a
unilateral offer to anyone with a horse to spare)
Express - answerthe agreement is "spelled out" specifically, either in writing or orally
implied in fact - answer1- P furnished good/service
2- P expected payment, D knew or should have known this
3- D had an opportunity to pay and did not (doctor/dentist appt.)
,implied in Law (Quasi-K) - answernot true K! uses quantum meruit to avoid injustice at
equity. a term used to describe a factual situation involving a duty that does not arise
out of an actual contract and, in essence, is associated with a remedy designed to
promote justice and fairness.
enforceability - answerValid agreements: partially or completely enforceable agreement
Void agreements: not valid from the start; misnomer, because it is never a contract.
subjects are typically involve illegal acts or other acts statutorily declared "void as to
public policy"
Voidable agreements: valid from the start, but a party may declare an intent not to
perform and it is not a breach; may be honored by the parties at their discretion, but one
party may renounce the obligations. (ex. minors; K's involving fraud (incapacitated party
may void, other party must honor until so declared))
mental incapacity and intoxication - answernot automatic outs. second restatement of
contracts requires an understanding of the degree of incapacity of the promisor. with
intoxication, party must be so intoxicated as to not understand the nature of the
transactions and promisee must know or have reason to know of promisor's condition.
executed contract - answerthe term used to mean that the performances of a contract
have been completed
executory contract - answeruntil the performance required in a contract is completed, it
is said to be executory as to that part not performed.
objective theory of contracts - answermodern standard analytical tool for US courts.
a contract and its precise terms will be determined objectively by the words, acts,
behavior of the parties in case of dispute-no "meeting of the minds" stuff, because you
can also have a misunderstanding over whether minds actually met, and on what terms.
conditional promise - answerby a promisor (offeror) to a promisee (offeree). An offer! it
has no effect unless the duty to perform to receive the benefit of the promise is
ACCEPTED
offer - answermust manifest a present intent to be bound by the offeror in exchange for
the consideration of the offeree (action, forbearance, money, item) the terms must be
reasonably definite at least as the subject of the K, consideration and a quantity term
(UCC). must be communicated to the offeree, who must in turn have been an intended
or proper offeree. must not have expired or been revoked. may also terminate by
operation of law (death, insanity, bankruptcy, destruction of subject, supervening
illegality, "open offer" not accepted for extended time)
not generally offers - answeradvertisements, flyers, inquiries, quotes. ads can be
binding K if the language is such that it is clearly more than a solicitation to bargain.
"Fred's furniture going out of business! ten sofas left to the first ten buyers at ten
percent off original price at monday opening only!"
, mirror image rule (matching acceptance) - answerofferor is "master of the offer" offeree
must therefore provide a mirror-image acceptance of the terms of the original offer. any
variation immediately extinguishes the original offer and becomes a counteroffer back to
the original offeror (now the counterofferee) acceptance is usally a simple matter of
communicating consent, valid from the moment it is tendered. if the offeree imposes
conditions or terms on acceptance, however, they must be followed. offeree may also
reject outright without a counteroffer. Silence cannot be treated as acceptance even if in
terms of offer, although may be a rejection if the offer is limited as to duration (or by
operation of law if too much time goes by). the offeror has the power to revoke the offer,
but only prior to acceptance by the offeree.
mailbox (deposited acceptance) rule - answeracceptances are valid upon dispatch
(sending); revocations are valid upon receipt (as are rejections and counteroffers by
offeree) the application of this rule can be avoided by the offeror simply stating in the
offer that the acceptance is not effective until it is actually received
no mutuality - answer-illusory promises: gratuitous, don't really reflect an obligation. (ex.
if i buy an ipod, i promise to buy yours"
-promises to fulfill a pre-existing duty: the detriment already exists (ex. I know i owe you
$1000. if you will agree to give me an extension on the loan, i promise i'll pay you back.
-Promises based on past consideration given: lawyer provides friend with free legal
services; friend later says "I should give you something for that. i'll pay $1000." friend
doesn't pay. lawyer knows better than to sue.
The Peppercorn theory - answerof consideration holds that it is not generally the courts'
job to look into the adequacy of consideration if the parties are satisfied with the
exchange. Nominal consideration is acceptable; sham consideration, however, is not- a
nominal consideration provided or purported to be provided in exchange for something
of value for the purpose of the appearance of a valid contract.
court's four-part test: (1) was the consideration bargained-for? (2) was the consideration
induced by reciprocal consideration? (3) was the consideration actually paid or
exchanged? (4) were there any circumstances that suggest a fraudulent or bad faith
intent in this transaction?
expectation damages - answercompensatory damages; a wronged party is simply
entitled to the expected value of the bargain struck by the breached contract. we don't
see punitive damages in contract matters unless there is also a related tort in the case,
such as one of fraud.
types of damages specific to contracts - answer-Consequential damages (or "special
damages): are damages incurred by the nonbreaching party as a forseeable
consequence of the breaching party's breach. typically, they tend to be framed in terms
of lost profits, lost revenue or lost products/inventory. beyond the compensatory
damages. not presumed since they are caused by special circumstances beyond the
contract itself. evidence must be submitted that the breaching party knew or had reason
