Broker Contract Law: Questions & Answers
What is a Contract? - ANSWER:A contract is a legally enforceable agreement composed of a promise or
promises that have been agreed on and that create both rights and duties for the parties to the
agreement.
What does a Contract Require? - ANSWER:Requires:
Mutual Assent, Consideration, aka "Bargained-for Exchange of promises", and No Defenses to
Formation.
What are unliquidated damages? - ANSWER:Damages that cannot be determined by a fixed formula and
must be established by a judge or jury. Debt where there is a legitimate dispute over the amount of the
debt or the liability for the debt.
What law applies to:
Services
Land
Goods - ANSWER:• Common law (state case law) for services;
• Common law (state case law) for land sales; and
• Uniform Commercial Code for goods
(UCC Article 2).
.
What are the key three elements of a contract? - ANSWER:• Mutual assent
• Consideration
• No defenses to formation .
What three forms do contracts take? - ANSWER:• express contracts: formed by written or spoken
language
• implied contracts: formed by conduct
.
• quasi-contracts: a legal fiction, they are formed by law as a consideration substitute to avoid unjust
enrichment ; not formed by mutual agreement of the parties.
How are the three forms of contracts classified? - ANSWER:classifications are:
• bilateral
,• unilateral.
What is the preemption doctrine? - ANSWER:Federal substantive law supplants state law, but, both state
and federal courts have concurrent jurisdiction of actions arising under that law.
Will not be on test.
What is mutual assent (or consent)? - ANSWER:Meeting of the minds wherein the parties manifest their
intention to enter into a contract. This manifestation consists of a valid offer and a valid acceptance.
Merged and edited agreement, approval, permission; especially, verbal or nonverbal conduct reasonably
interpreted as willingness.
The requirement of assent; which is fundamental to the formation of a binding contract, implies in a
general way that both parties to an exchange shall have a reasonably clear conception of what they are
getting and what they are giving up.
What is an offer and how is it made? - ANSWER:The beginning of a contract where the offeror indicates
his intention to enter into an agreement in a way that the offeree can accept by simply assenting to the
stated intention.
A promise to perform conditional on receiving acceptance.
.
Must be accepted while alive.
What comprises a valid offer? - ANSWER:A valid Offer composed of:
a) a promise to enter into a contract is expressed
b) in clear and certain terms
c) communicated to the offeree
What is an offer for a bilateral contract? - ANSWER:A promise (offer) is offered in exchange for a promise
(acceptance).
The initial offer is composed of:
a) the expression of a promise to enter into a contract
b) in clear and certain terms
c) communicated to the offeree
What is an offer for a unilateral contract? - ANSWER:A promise (offer) is offered in exchange for
performance (acceptance).
,The initial offer is composed of:
a) the expression of a promise to enter into a contract
b) in clear and certain terms
c) communicated to the offeree acceptance is by performance, that is, by completion of the requested
act.
Offeror cannot revoke the offer once it has been relied upon by the offeree.
Offeror must allow completion; otherwise, subject to restitution damages.
What is a quasi-contract? - ANSWER:a legal fiction formed by law to avoid unjust enrichment exemplified
by promissory estoppel, aka detrimental reliance. The court imposes this contract as a remedy whereby
detrimental reliance becomes a consideration substitute. Unjust enrichment is mandatory for the
imposition of this quasi-contract
.
quasi-contract: implied-in-law contract: an obligation created by law for the sake of justice; specifically,
an obligation imposed by law because of some special relationship between the parties or because one
of them would otherwise be unjustly enriched. An implied-in-law contract is not actually a contract, but
instead is a remedy that allows the plaintiff to recover a benefit conferred on the defendant. Also termed
contract implied-in-law, quasi-contract, constructive contract (Black's).
.
How are offers terminated? - ANSWER:1. revocation by the offeror;
2. rejection by the offeree;
3. termination by law
.
Who can accept offers? - ANSWER:A person can accept an offer if the offeror has created a power of
acceptance in them. This means that any person can accept an offer if he knows of the offer and he is
the party to whom the offer was made.
.
Who can revoke an offer? - ANSWER:The offeror.
Who can reject an offer? - ANSWER:the offeree.
What is an acceptance and what are the methods of acceptance? - ANSWER:when an offeree assents to
or agrees to an offer, which creates an agreement.
, Can be by:
• performance,
• promise, and,
• in limited cases, by silence.
What is a valid acceptance for a bilateral contract? - ANSWER:composed of:
a) an offeree who has the power of acceptance;
b) his acceptance is unequivocal [and identical to the offer], and
c) his acceptance is communicated to the offeror
acceptance in a bilateral contract occurs when the offeree makes a promise to perform the requested
act.
What is a valid acceptance for a unilateral contract? - ANSWER:By a completion of an act:
when the offeree performs--that is, completes--the requested act.
When can an offer be accepted or not accepted? - ANSWER:While alive or pending and not when the
offer has been:
1. revoked by the offeror;
2. rejected by the offeree; or
3. terminated by law due to
a) death of a party;
b) destruction of the subject matter; or
c) illegality
What is the mailbox rule? - ANSWER:An acceptance is effective or valid upon posting, that is, when it is
dispatched or mailed.
acceptance is valid on dispatch (Beckman, lecture 8/1/2013)
.
What are the exceptions to the mailbox rule? - ANSWER:1. the offer states otherwise--the offer governs;
2. rejection by offeree, then acceptance--whichever arrives first governs;
3. acceptance by offeree, then rejection--whichever arrives first governs but rejection requires
detrimental reliance by offeror;
4. option contract deadlines (#1, p. 17).
What is a Contract? - ANSWER:A contract is a legally enforceable agreement composed of a promise or
promises that have been agreed on and that create both rights and duties for the parties to the
agreement.
What does a Contract Require? - ANSWER:Requires:
Mutual Assent, Consideration, aka "Bargained-for Exchange of promises", and No Defenses to
Formation.
What are unliquidated damages? - ANSWER:Damages that cannot be determined by a fixed formula and
must be established by a judge or jury. Debt where there is a legitimate dispute over the amount of the
debt or the liability for the debt.
What law applies to:
Services
Land
Goods - ANSWER:• Common law (state case law) for services;
• Common law (state case law) for land sales; and
• Uniform Commercial Code for goods
(UCC Article 2).
.
What are the key three elements of a contract? - ANSWER:• Mutual assent
• Consideration
• No defenses to formation .
What three forms do contracts take? - ANSWER:• express contracts: formed by written or spoken
language
• implied contracts: formed by conduct
.
• quasi-contracts: a legal fiction, they are formed by law as a consideration substitute to avoid unjust
enrichment ; not formed by mutual agreement of the parties.
How are the three forms of contracts classified? - ANSWER:classifications are:
• bilateral
,• unilateral.
What is the preemption doctrine? - ANSWER:Federal substantive law supplants state law, but, both state
and federal courts have concurrent jurisdiction of actions arising under that law.
Will not be on test.
What is mutual assent (or consent)? - ANSWER:Meeting of the minds wherein the parties manifest their
intention to enter into a contract. This manifestation consists of a valid offer and a valid acceptance.
Merged and edited agreement, approval, permission; especially, verbal or nonverbal conduct reasonably
interpreted as willingness.
The requirement of assent; which is fundamental to the formation of a binding contract, implies in a
general way that both parties to an exchange shall have a reasonably clear conception of what they are
getting and what they are giving up.
What is an offer and how is it made? - ANSWER:The beginning of a contract where the offeror indicates
his intention to enter into an agreement in a way that the offeree can accept by simply assenting to the
stated intention.
A promise to perform conditional on receiving acceptance.
.
Must be accepted while alive.
What comprises a valid offer? - ANSWER:A valid Offer composed of:
a) a promise to enter into a contract is expressed
b) in clear and certain terms
c) communicated to the offeree
What is an offer for a bilateral contract? - ANSWER:A promise (offer) is offered in exchange for a promise
(acceptance).
The initial offer is composed of:
a) the expression of a promise to enter into a contract
b) in clear and certain terms
c) communicated to the offeree
What is an offer for a unilateral contract? - ANSWER:A promise (offer) is offered in exchange for
performance (acceptance).
,The initial offer is composed of:
a) the expression of a promise to enter into a contract
b) in clear and certain terms
c) communicated to the offeree acceptance is by performance, that is, by completion of the requested
act.
Offeror cannot revoke the offer once it has been relied upon by the offeree.
Offeror must allow completion; otherwise, subject to restitution damages.
What is a quasi-contract? - ANSWER:a legal fiction formed by law to avoid unjust enrichment exemplified
by promissory estoppel, aka detrimental reliance. The court imposes this contract as a remedy whereby
detrimental reliance becomes a consideration substitute. Unjust enrichment is mandatory for the
imposition of this quasi-contract
.
quasi-contract: implied-in-law contract: an obligation created by law for the sake of justice; specifically,
an obligation imposed by law because of some special relationship between the parties or because one
of them would otherwise be unjustly enriched. An implied-in-law contract is not actually a contract, but
instead is a remedy that allows the plaintiff to recover a benefit conferred on the defendant. Also termed
contract implied-in-law, quasi-contract, constructive contract (Black's).
.
How are offers terminated? - ANSWER:1. revocation by the offeror;
2. rejection by the offeree;
3. termination by law
.
Who can accept offers? - ANSWER:A person can accept an offer if the offeror has created a power of
acceptance in them. This means that any person can accept an offer if he knows of the offer and he is
the party to whom the offer was made.
.
Who can revoke an offer? - ANSWER:The offeror.
Who can reject an offer? - ANSWER:the offeree.
What is an acceptance and what are the methods of acceptance? - ANSWER:when an offeree assents to
or agrees to an offer, which creates an agreement.
, Can be by:
• performance,
• promise, and,
• in limited cases, by silence.
What is a valid acceptance for a bilateral contract? - ANSWER:composed of:
a) an offeree who has the power of acceptance;
b) his acceptance is unequivocal [and identical to the offer], and
c) his acceptance is communicated to the offeror
acceptance in a bilateral contract occurs when the offeree makes a promise to perform the requested
act.
What is a valid acceptance for a unilateral contract? - ANSWER:By a completion of an act:
when the offeree performs--that is, completes--the requested act.
When can an offer be accepted or not accepted? - ANSWER:While alive or pending and not when the
offer has been:
1. revoked by the offeror;
2. rejected by the offeree; or
3. terminated by law due to
a) death of a party;
b) destruction of the subject matter; or
c) illegality
What is the mailbox rule? - ANSWER:An acceptance is effective or valid upon posting, that is, when it is
dispatched or mailed.
acceptance is valid on dispatch (Beckman, lecture 8/1/2013)
.
What are the exceptions to the mailbox rule? - ANSWER:1. the offer states otherwise--the offer governs;
2. rejection by offeree, then acceptance--whichever arrives first governs;
3. acceptance by offeree, then rejection--whichever arrives first governs but rejection requires
detrimental reliance by offeror;
4. option contract deadlines (#1, p. 17).
