LSTD 2106 Exam 2 QUESTIONS &
ANSWERS(RATED A+)
Define offer - ANSWER-a promise or commitment to do or refrain from doing a
specified activity
-the expression of a willingness to enter into a contract by the offeror's promising an
offeree that she will perform certain obligations in exchange for the offeree's
counterpromise to perform.
mailbox rule - ANSWER-provides that the acceptance of an offer is generally
effective upon dispatch of the acceptance when sent in a commerciallyreasonable
manner and not when the acceptance is received by the offeror
-governs common law contracts
mutual mistake - ANSWER-both parties hold erroneous belief
-may be the basis for canceling a contract
-also called avoiding the contract
Consideration - ANSWER-the mutual exchange of benefits and detriments
-each party receives something of value from the other and each party gives up
something of value, called legal detriment, to the other
-results in a bargained-for exchange
undue influence - ANSWERAllows the influenced party to avoid a contract when the
court determines that the terms of the contract are unfair and the parties had some
type of relationship that involved a fiduciary duty or some duty to care for the
influenced party.
-Improper pressure of a trusted relationship
Statute of Frauds - ANSWERthe law governing which contracts must be in writing in
order to be enforceable.
•The statute's purpose is to prevent fraud by requiring that certain contracts have
written evidence of their existence and terms in order to be enforceable.
condition subsequent - ANSWERan event that occurs after the performance under
the contract and discharges the parties' obligations
Parties agree on terms and the parties perform the contractual obligations in good
faith in order to complete the contract.
•This completion is known as discharge, because both parties have now
"discharged" their obligation to the other by performing the agreed-upon duties.
rescission - ANSWERneither party has fully performed, the parties may agree to
cancel the contract
-each party gives up rights under the contract in exchange for the release by the
other party from performing their obligations
, substitute agreement - ANSWERgenerally used to compromise when two parties
have a dispute as to performance of the contract and wish to amend its terms.
-immediately discharges any obligations under the original contract.
novation - ANSWERa kind of substitute agreement that involves a substitute third
party rather than a substitute promise
-revokes and discharges all of the replaced party's obligations under the old contract.
Impossibility
•Impracticability
•Frustration of purpose
Impossibility - ANSWERAfter the parties have entered an agreement, the
contemplated performance of the obligations may become impossible and, therefore,
may be subject to discharge.
-must be objective
Frustration of Purpose - ANSWERmay be used to discharge an obligation if, after the
parties enter into an agreement
-a party's principal purpose is substantially frustrated without her fault
-some event occurs, when the nonoccurrence of the event was a central assumption
of both parties when entering into the contract
-the parties have not otherwise agreed on who bears the risk of such an occurrence.
Compensatory Damages - ANSWERAttempt to put the non-breaching party in the
same position she would have been in if the other party had performed as agreed
-Out-of-pocket damages, Profits
Liquidated Damages - ANSWERDamages that the parties agree to ahead of time.
-Damages cannot be excessive so as to penalize the breaching party.
Specific damages - ANSWERRemedy whereby a court orders the breaching party to
render the promised performance by ordering the party to take a specific action.
-Available only when the subject matter of the contract is sufficiently unique so that
money damages are inadequate.
Reformation - ANSWERWhen the parties have imperfectly expressed their
agreement and this imperfection results in a dispute, a court may change the
contract by rewriting it to conform to the parties' actual intentions.
Delegation - ANSWERis a transfer of current duties owed by one party under a
contract to a third party.
-In an assignment or delegation, the third party's rights occur after the formation of
the contract.
third-party beneficiary - ANSWERSometimes a party may form a contract to benefit
not herself, but a third person.
•In this case, that person, called the __________ becomes a party to the contract
and certain rights arise to protect the third party.
•Intended, incidental beneficiaries
ANSWERS(RATED A+)
Define offer - ANSWER-a promise or commitment to do or refrain from doing a
specified activity
-the expression of a willingness to enter into a contract by the offeror's promising an
offeree that she will perform certain obligations in exchange for the offeree's
counterpromise to perform.
mailbox rule - ANSWER-provides that the acceptance of an offer is generally
effective upon dispatch of the acceptance when sent in a commerciallyreasonable
manner and not when the acceptance is received by the offeror
-governs common law contracts
mutual mistake - ANSWER-both parties hold erroneous belief
-may be the basis for canceling a contract
-also called avoiding the contract
Consideration - ANSWER-the mutual exchange of benefits and detriments
-each party receives something of value from the other and each party gives up
something of value, called legal detriment, to the other
-results in a bargained-for exchange
undue influence - ANSWERAllows the influenced party to avoid a contract when the
court determines that the terms of the contract are unfair and the parties had some
type of relationship that involved a fiduciary duty or some duty to care for the
influenced party.
-Improper pressure of a trusted relationship
Statute of Frauds - ANSWERthe law governing which contracts must be in writing in
order to be enforceable.
•The statute's purpose is to prevent fraud by requiring that certain contracts have
written evidence of their existence and terms in order to be enforceable.
condition subsequent - ANSWERan event that occurs after the performance under
the contract and discharges the parties' obligations
Parties agree on terms and the parties perform the contractual obligations in good
faith in order to complete the contract.
•This completion is known as discharge, because both parties have now
"discharged" their obligation to the other by performing the agreed-upon duties.
rescission - ANSWERneither party has fully performed, the parties may agree to
cancel the contract
-each party gives up rights under the contract in exchange for the release by the
other party from performing their obligations
, substitute agreement - ANSWERgenerally used to compromise when two parties
have a dispute as to performance of the contract and wish to amend its terms.
-immediately discharges any obligations under the original contract.
novation - ANSWERa kind of substitute agreement that involves a substitute third
party rather than a substitute promise
-revokes and discharges all of the replaced party's obligations under the old contract.
Impossibility
•Impracticability
•Frustration of purpose
Impossibility - ANSWERAfter the parties have entered an agreement, the
contemplated performance of the obligations may become impossible and, therefore,
may be subject to discharge.
-must be objective
Frustration of Purpose - ANSWERmay be used to discharge an obligation if, after the
parties enter into an agreement
-a party's principal purpose is substantially frustrated without her fault
-some event occurs, when the nonoccurrence of the event was a central assumption
of both parties when entering into the contract
-the parties have not otherwise agreed on who bears the risk of such an occurrence.
Compensatory Damages - ANSWERAttempt to put the non-breaching party in the
same position she would have been in if the other party had performed as agreed
-Out-of-pocket damages, Profits
Liquidated Damages - ANSWERDamages that the parties agree to ahead of time.
-Damages cannot be excessive so as to penalize the breaching party.
Specific damages - ANSWERRemedy whereby a court orders the breaching party to
render the promised performance by ordering the party to take a specific action.
-Available only when the subject matter of the contract is sufficiently unique so that
money damages are inadequate.
Reformation - ANSWERWhen the parties have imperfectly expressed their
agreement and this imperfection results in a dispute, a court may change the
contract by rewriting it to conform to the parties' actual intentions.
Delegation - ANSWERis a transfer of current duties owed by one party under a
contract to a third party.
-In an assignment or delegation, the third party's rights occur after the formation of
the contract.
third-party beneficiary - ANSWERSometimes a party may form a contract to benefit
not herself, but a third person.
•In this case, that person, called the __________ becomes a party to the contract
and certain rights arise to protect the third party.
•Intended, incidental beneficiaries
