MBE Contracts (Correct Answers)
What is a Contract?Correct AnswersA promise or a set of promises for the breach of
which law gives a remedy of the performance of which the law recognizes as a duty
Common Law v. UCCCorrect AnswersUCC - Any goods, ie all things movable
MerchantCorrect AnswersA Merchant is one who regularly deals in goods of the kind
sold of who otherwise by profession holds himself out as having special knowledge or
skills as the practices or goods
Types of ContractsCorrect Answers1) Express contract - written or oral
2) Implied contracts - conduct
3) Quasi contracts - not contracts, used to avoid unjust enrichment
Bilateral v. UnilateralCorrect Answers-Most contracts are bilateral, exchange of
promises
-Unilateral contracts, acceptance by performance
Validity of ContractsCorrect Answers1) Void - K without any legal effect, no enforcement
(illegal)
2) Voidable - election to void K (infancy, mental illness)
3) Unenforceable contract - Otherwise valid, but may not be enforceable because of
defense (SOF)
Creation of a ContractCorrect Answers1) Mutual assent (offer and acceptance)
2) Consideration
3) Defenses to creation of contract
OfferCorrect AnswersMust create reasonable expectation in the offeree that offeror is
willing to enter into K on the basis of the offered terms
- Need to distinguish invitation to deal(advertisement) from offer
- Courts can look to circumstances and prior dealing
Terms of an OfferCorrect Answers1) Identify the offerree or class
2) Subject Matter be definite
- Real estate contracts must identify land and price
- Sale of goods must identify the quantity (except in requirement and output contracts)
3) Offeree must know of offer
Terms in a UCC K OfferCorrect AnswersMissing terms do not prevent the formation -
courts apply reasonable terms
1) Must identify the quantity
2) Price need not be identified
3) Vague terms can be supplied
4) Terms can be agreed to later (unless material)
Requirements and Output ContractsCorrect AnswersNeed not set quantity, but may not
be tender or demand of unreasonably disproportionate to any of the stated estimate or
normal output or requirements
Revocation of an OfferCorrect Answers1) Directly communicate (through same means)
2) Indirect means if offeree receives:
i) correct information
ii) from a reliable source
, iii) acts that would indicate to a reasonable person that offeror no longer wishes to
make offer
3) Effective when received
Limitations of RevocationCorrect Answers1) Option Contract
2) Firm offer of merchant
3) detrimental reliance
4) part performance for a
i) true unilateral contract has reasonable time to perform once begin (not prep to
perform)
ii) bilateral contract unless otherwise noted, need to inform
Firm OfferCorrect Answers1) must be by a merchant
2) SIGNED WRITING
3) gives assurances held open
4) Up to 3 months (no need consideration)
Rejection of OfferCorrect Answers1) express
2) counteroffer (rejection and offer)
3) effective when received
4) Does not apply to option contracts, unless detrimentally rely on rejection
5) lapse of time
6) operation of law (death, insanity, destruction of subject matter, supervening illegality)
Who can accept?Correct Answers1) person or member of class offer is directed
towards
2) Cannot be assigned unless it is an option contract
Acceptance of offerCorrect Answers1) must know of offer, ie cannot make
simultaneousness offers and that be considered acceptance
2) Unilateral - completion of performance (kept open by beginning performance)
3) Bilateral Contract - must be communicated or beginning performance
Acceptance of Offer (methods, bilateral)Correct Answers1) Any reasonable manner
under the circumstances
2) Prompt shipment accepted by promise to ship or shipping goods, even non
conforming
3) Acceptance must be unequivocal
- CL uses mirror image rule
- UCC applies battle of forms
4) Effective when mailed (mailbox rule)
Mailbox RuleCorrect AnswersAcceptance is effective when mailed, except:
1) Offer stipulates acceptance is not effective until received
2) Option contract (only upon receipt)
3) Offeree sends rejection and then acceptance, whichever arrives first
4) Offeree sends acceptance and then rejection, acceptance is effective unless rejection
gets there first and then detrimentally relies upon it
ConsiderationCorrect Answers1) bargained for exchange between the parties
2) must be of legal value (benefit to promisor or detriment to promisee)
Special Types of ConsiderationCorrect Answers1) Gift is not consideration
2) Act of forebearance must be benefit to promisor
3) Past consideration unless
What is a Contract?Correct AnswersA promise or a set of promises for the breach of
which law gives a remedy of the performance of which the law recognizes as a duty
Common Law v. UCCCorrect AnswersUCC - Any goods, ie all things movable
MerchantCorrect AnswersA Merchant is one who regularly deals in goods of the kind
sold of who otherwise by profession holds himself out as having special knowledge or
skills as the practices or goods
Types of ContractsCorrect Answers1) Express contract - written or oral
2) Implied contracts - conduct
3) Quasi contracts - not contracts, used to avoid unjust enrichment
Bilateral v. UnilateralCorrect Answers-Most contracts are bilateral, exchange of
promises
-Unilateral contracts, acceptance by performance
Validity of ContractsCorrect Answers1) Void - K without any legal effect, no enforcement
(illegal)
2) Voidable - election to void K (infancy, mental illness)
3) Unenforceable contract - Otherwise valid, but may not be enforceable because of
defense (SOF)
Creation of a ContractCorrect Answers1) Mutual assent (offer and acceptance)
2) Consideration
3) Defenses to creation of contract
OfferCorrect AnswersMust create reasonable expectation in the offeree that offeror is
willing to enter into K on the basis of the offered terms
- Need to distinguish invitation to deal(advertisement) from offer
- Courts can look to circumstances and prior dealing
Terms of an OfferCorrect Answers1) Identify the offerree or class
2) Subject Matter be definite
- Real estate contracts must identify land and price
- Sale of goods must identify the quantity (except in requirement and output contracts)
3) Offeree must know of offer
Terms in a UCC K OfferCorrect AnswersMissing terms do not prevent the formation -
courts apply reasonable terms
1) Must identify the quantity
2) Price need not be identified
3) Vague terms can be supplied
4) Terms can be agreed to later (unless material)
Requirements and Output ContractsCorrect AnswersNeed not set quantity, but may not
be tender or demand of unreasonably disproportionate to any of the stated estimate or
normal output or requirements
Revocation of an OfferCorrect Answers1) Directly communicate (through same means)
2) Indirect means if offeree receives:
i) correct information
ii) from a reliable source
, iii) acts that would indicate to a reasonable person that offeror no longer wishes to
make offer
3) Effective when received
Limitations of RevocationCorrect Answers1) Option Contract
2) Firm offer of merchant
3) detrimental reliance
4) part performance for a
i) true unilateral contract has reasonable time to perform once begin (not prep to
perform)
ii) bilateral contract unless otherwise noted, need to inform
Firm OfferCorrect Answers1) must be by a merchant
2) SIGNED WRITING
3) gives assurances held open
4) Up to 3 months (no need consideration)
Rejection of OfferCorrect Answers1) express
2) counteroffer (rejection and offer)
3) effective when received
4) Does not apply to option contracts, unless detrimentally rely on rejection
5) lapse of time
6) operation of law (death, insanity, destruction of subject matter, supervening illegality)
Who can accept?Correct Answers1) person or member of class offer is directed
towards
2) Cannot be assigned unless it is an option contract
Acceptance of offerCorrect Answers1) must know of offer, ie cannot make
simultaneousness offers and that be considered acceptance
2) Unilateral - completion of performance (kept open by beginning performance)
3) Bilateral Contract - must be communicated or beginning performance
Acceptance of Offer (methods, bilateral)Correct Answers1) Any reasonable manner
under the circumstances
2) Prompt shipment accepted by promise to ship or shipping goods, even non
conforming
3) Acceptance must be unequivocal
- CL uses mirror image rule
- UCC applies battle of forms
4) Effective when mailed (mailbox rule)
Mailbox RuleCorrect AnswersAcceptance is effective when mailed, except:
1) Offer stipulates acceptance is not effective until received
2) Option contract (only upon receipt)
3) Offeree sends rejection and then acceptance, whichever arrives first
4) Offeree sends acceptance and then rejection, acceptance is effective unless rejection
gets there first and then detrimentally relies upon it
ConsiderationCorrect Answers1) bargained for exchange between the parties
2) must be of legal value (benefit to promisor or detriment to promisee)
Special Types of ConsiderationCorrect Answers1) Gift is not consideration
2) Act of forebearance must be benefit to promisor
3) Past consideration unless
