BULE EXAM #3 questions with
complete solutions passed
example 11.22 compensatory damages - correct answer ✔✔Janet Murley was the vice
president of marketing at Hallmark Cards, Inc., until Hallmark eliminated her position as part of
a corporate restructuring. Murley and Hallmark entered into a separation agreement under
which she agreed not to work in the greeting card industry for eighteen months and not to
disclose or use any of Hallmark's confidential information. In exchange, Hallmark gave Murley a
$735,000 severance payment.
After eighteen months, Murley took a job with Recycled Paper Greetings (RPG) for $125,000
and disclosed confidential Hallmark information to RPG. Hallmark sued for breach of contract
and won, and the jury awarded $860,000 in damages (the $735,000 severance payment and
$125,000 that Murley received from RPG). Murley appealed. The appellate court held that
Hallmark was only entitled to the return of the $735,000 severance payment. Hallmark was not
entitled to the other $125,000 because that amount would leave Hallmark better off than it
would have been if Murley had not breached the contract.
browse-wrap terms - correct answer ✔✔A term or condition of use when an online buyer
downloads a product but that does not require the buyer's explicit agreement.
click-on agreement - correct answer ✔✔An agreement that arises when an online buyer clicks
on "I agree," or otherwise indicates their assent to be bound by the terms of an offer.
contractual capacity - correct answer ✔✔- The legal ability to enter into contracts
- minors (must accept or disaffirm when turned legal age)
- intoxication (must accept or disaffirm when they become sober)
,- mental incompetence
Disaffirmance - correct answer ✔✔The legal avoidance, or setting aside, of a contractual
obligation.
exculpatory clause - correct answer ✔✔A clause that releases a contractual party from liability
in the event of monetary or physical injury, no matter who is at fault.
Executed vs Executory Contract - correct answer ✔✔Executed:
- a contract that has been fully performed by both parties
Executory:
- A contract that has not yet been fully performed.
Express vs Implied Contract - correct answer ✔✔Express:
- A contract in which the terms of the agreement are fully and explicitly stated in words, oral or
written.
Implied:
- A contract formed in whole or in part from the conduct of the parties.
forbearance - correct answer ✔✔the act of refraining from an action that one has a legal right
to undertake
formal contract vs informal contract - correct answer ✔✔Formal: An agreement that by law
requires a specific form for its validity. Informal Contract: A contract that does not require a
specific form or method of creation to be valid
,forum-selection clause - correct answer ✔✔A provision in a contract designating the court,
jurisdiction, or tribunal that will decide any disputes arising under the contract.
informal contract - correct answer ✔✔A contract that does not require a specified form or
method of creation to be valid.
Mailbox Rule - correct answer ✔✔- acceptance occurs when dispatched by an authorized
method
Mirror Image Rule - correct answer ✔✔A common law rule that requires that the terms of the
offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be
formed.
- must be unequivocal
objective theory of contracts - correct answer ✔✔The view that contracting parties shall only
be bound by terms that can objectively be inferred from promises made.
offer - correct answer ✔✔- promise to do or not to do something
- requirements: intent, terms, communication (was offer communicated to offeree)
Past Consideration - correct answer ✔✔An act that has already taken place at the time a
contract is made and that ordinarily, by itself, cannot be consideration for a later promise to pay
for the act.
Reformation - correct answer ✔✔A court-ordered correction of a written contract so that it
reflects the true intentions of the parties.
, rescission - correct answer ✔✔A remedy whereby a contract is canceled and the parties are
returned to the positions they occupied before the contract was made.
requirements of a valid contract - correct answer ✔✔1. Agreement (offer and acceptance)
2. Consideration each party is giving something up of legally sufficient value ( bargained for
exchange)
3. Contractual Capacity (compotent)
4. Legality (purpose of contract must be legal at time of execution)
contractual legality - correct answer ✔✔- contracts contrary to statute
- contracts contrary to public policy (includes unconscionable contracts)
unconscionable contracts - correct answer ✔✔- manifestly unfair in procedure or substance to
one party
- procedural: small font, legal jargon, not enough time to read
- substantive: provsion in contracts is manifestly unfair
formation and revocation of bilateral contracts - correct answer ✔✔formed:
- promise for a promise
- formed when offere accepts offer
revocation:
By action of offeror or offeree
complete solutions passed
example 11.22 compensatory damages - correct answer ✔✔Janet Murley was the vice
president of marketing at Hallmark Cards, Inc., until Hallmark eliminated her position as part of
a corporate restructuring. Murley and Hallmark entered into a separation agreement under
which she agreed not to work in the greeting card industry for eighteen months and not to
disclose or use any of Hallmark's confidential information. In exchange, Hallmark gave Murley a
$735,000 severance payment.
After eighteen months, Murley took a job with Recycled Paper Greetings (RPG) for $125,000
and disclosed confidential Hallmark information to RPG. Hallmark sued for breach of contract
and won, and the jury awarded $860,000 in damages (the $735,000 severance payment and
$125,000 that Murley received from RPG). Murley appealed. The appellate court held that
Hallmark was only entitled to the return of the $735,000 severance payment. Hallmark was not
entitled to the other $125,000 because that amount would leave Hallmark better off than it
would have been if Murley had not breached the contract.
browse-wrap terms - correct answer ✔✔A term or condition of use when an online buyer
downloads a product but that does not require the buyer's explicit agreement.
click-on agreement - correct answer ✔✔An agreement that arises when an online buyer clicks
on "I agree," or otherwise indicates their assent to be bound by the terms of an offer.
contractual capacity - correct answer ✔✔- The legal ability to enter into contracts
- minors (must accept or disaffirm when turned legal age)
- intoxication (must accept or disaffirm when they become sober)
,- mental incompetence
Disaffirmance - correct answer ✔✔The legal avoidance, or setting aside, of a contractual
obligation.
exculpatory clause - correct answer ✔✔A clause that releases a contractual party from liability
in the event of monetary or physical injury, no matter who is at fault.
Executed vs Executory Contract - correct answer ✔✔Executed:
- a contract that has been fully performed by both parties
Executory:
- A contract that has not yet been fully performed.
Express vs Implied Contract - correct answer ✔✔Express:
- A contract in which the terms of the agreement are fully and explicitly stated in words, oral or
written.
Implied:
- A contract formed in whole or in part from the conduct of the parties.
forbearance - correct answer ✔✔the act of refraining from an action that one has a legal right
to undertake
formal contract vs informal contract - correct answer ✔✔Formal: An agreement that by law
requires a specific form for its validity. Informal Contract: A contract that does not require a
specific form or method of creation to be valid
,forum-selection clause - correct answer ✔✔A provision in a contract designating the court,
jurisdiction, or tribunal that will decide any disputes arising under the contract.
informal contract - correct answer ✔✔A contract that does not require a specified form or
method of creation to be valid.
Mailbox Rule - correct answer ✔✔- acceptance occurs when dispatched by an authorized
method
Mirror Image Rule - correct answer ✔✔A common law rule that requires that the terms of the
offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be
formed.
- must be unequivocal
objective theory of contracts - correct answer ✔✔The view that contracting parties shall only
be bound by terms that can objectively be inferred from promises made.
offer - correct answer ✔✔- promise to do or not to do something
- requirements: intent, terms, communication (was offer communicated to offeree)
Past Consideration - correct answer ✔✔An act that has already taken place at the time a
contract is made and that ordinarily, by itself, cannot be consideration for a later promise to pay
for the act.
Reformation - correct answer ✔✔A court-ordered correction of a written contract so that it
reflects the true intentions of the parties.
, rescission - correct answer ✔✔A remedy whereby a contract is canceled and the parties are
returned to the positions they occupied before the contract was made.
requirements of a valid contract - correct answer ✔✔1. Agreement (offer and acceptance)
2. Consideration each party is giving something up of legally sufficient value ( bargained for
exchange)
3. Contractual Capacity (compotent)
4. Legality (purpose of contract must be legal at time of execution)
contractual legality - correct answer ✔✔- contracts contrary to statute
- contracts contrary to public policy (includes unconscionable contracts)
unconscionable contracts - correct answer ✔✔- manifestly unfair in procedure or substance to
one party
- procedural: small font, legal jargon, not enough time to read
- substantive: provsion in contracts is manifestly unfair
formation and revocation of bilateral contracts - correct answer ✔✔formed:
- promise for a promise
- formed when offere accepts offer
revocation:
By action of offeror or offeree
