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Contracts 1L Mod 5-6

Contracts 1L Mod 5-6 Things to know

Termination of an offer prior to acceptance An offer may be terminated at any time prior to acceptance by: rejection, counter-offer, impossibility (death, incapacity, destruction of subject matter, supervening illegality), lapse of time, revocation
Rule for calculating days when there is a lapse of time In measuring days, the day from which the time is reckoned should be excluded.
Delays in the delivery of the offer under lapse of time aware of the delay,offer is as if received on anticipated day; If duration of acceptance is not stated, it is open for a reasonable time; offer may say terminate upon certain event; so long as conversation is going it terminates when finished.
Majority view of death or lack capacity of the offeror or offeree Offer is terminated even if the offeree is unaware of the offeror's death.
Minority view of death or lack capacity of the offeror or offeree Rule is logical if the offeree is aware of the offeror's death, because knowledge of death would be tantamount to a revocation, but if the offeree is not aware, there does not seem a ny good reason to hold that the offer is terminated.
Revocation The offeror's withdrawal of its offer, communicated either directly or indirectly to the offeree, at any time prior to acceptance.
Under revocation - A written communication is received When the writing comes into the possession of the person addressed, or of some person authorized by him to receive it for him; when it is deposited in some place which he has authorized as the place for this or similar communications to be deposited.
Rejection A rejection terminates the offeree's power of acceptance.
Counter-offer Restatement (Second)- This result also carries out the usual understanding that a new proposal supercedes an earlier proposal; counter offer includes a purported acceptance that adds qualifications or requires performances not contained in the offer.
Difference between a counter-offer and a rejection From a counter-inquiry; a comment on the terms; a request for a modification of the offer; an acceptance coupled w/a request for modification of contract; acceptance plus separate offer; a grumbling assent.
Supervening death, destruction, or illegality Terminated by death or destruction, prior to acceptance, of a person or thing essential to performance of the contract.; also terminated by illegality supervening between the making of an offer and its acceptance.
Effect of a late acceptance If an offer lapses before an acceptance becomes effective, the classical view holds that the late acceptance is an offer that in turn can be accepted only by a communicated acceptance.
Additional terms become part of the contract unless The offer expressly limits acceptance to the terms of the offer; they materially alter it; notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
Different terms between merchants Should be treated as additional terms; cancel out & gap fillers of the code should fill the void; never become part of the contract unless the different terms are accepted by the offeror.
If the records do not create a contract A contract can be created by conduct; if the parties behave like a contract has been formed, then a contract exists.
Confirmations Where an agreement has been reached either orally or by informal correspondence between the parties and is followed by 1 or both parties sending formal acknowledgements with the terms both agreed and additional terms not discussed; or they conflict.
Rolling contracts A contract that continues automatically unless someone decides to end it.
Documents that DO NOT follow the lead of the UCC CISG; UNIDROIT; UCITA
CISG A trivial variation in the acceptance from the terms of the offer does not prevent a contract from being formed unless the offeror objects to the variation.
UNIDROIT Distinguish between agreed terms and standard terms.
UCITA Does not validate oral contracts.
Parties at a distance Revocable offer to a bilateral contract may be revoked at any time prior to its acceptance; parties in the presence of one another.
Mailbox rule The offeror's revocation is not effective until it is actually, physically received by the offeree; an acceptance is effectively communicated when it is put out of the possession of the offeree.
Parties in presence of one another When this happens another acceptance is operative only if the offeror hears it or is at fault in not hearing.
Mistake in transmission by an intermediary Telegraph company or publisher is A's agent; results in better business conveinence; 1st party toutilize the telegraph company should bear the risk of loss because the use of the telegraph company makes the 1st party more responsible for the error.
Majority view of mistake in transmission by an intermediary The message as transmitted is operative unless the other party knows or has reason to know of the mistake.
Minority view of mistake in transmission by an intermediary Holds that no contract will arise.
What makes an offer irrevocable By offeror's acceptance of a consideration in exchange for a promise to keep the offer open; under the doctrine of promissory estoppel.
Nature of an option contract Option contract is a hybrid; it is a contract and an offer; once it is determined that an option contract exists, the ordinary rule of offer and acceptance often apply.
Termination of irrevocable offers Lapse of time; death, destruction, legal prohibition; revocation & rejection; Supervening death or incapacity of the offeror
Consideration compensation
Elements of consideration The promisee must suffer legal detriment; The detriment must induce the promise; The promise must induce the detriment
Detrimental Cost
What happens with a gratuitous promise A party gratuitously agrees to raise or lower the contract price to reflect changing market conditions.
Donative promise A promise to make a gift.
Doctrine of consideration writs covenant; debt; assumpsit
A covenant was used to A covenant was used to enforce promises made under seal.
Debt was used to Debt was used to sue for a definite sum owing as a result of performance by the promisee.
Assumpsit grew out of cases where Assumpsit grew out of cases where a promisor had undertaken to do something and had done it carelessly (misfeance) to the detriment of the promisee.
What does the notion of the writ of debt require There must be a benefit to the promisor.
What does the notion of the writ of assumpsit require That there must be detriment on the part of the promisee.
Elements needed before a promise is supported by consideration Promisee must suffer legal detriment; detriment must induce the promise; promise must induce the detriment.
The promisee must suffer legal detriment means That is do or promise to do what the promisee was not legally obligated to do; or refrain or promise to regrain from doing what the promisee is legally privileged to do.
The detriment must induce the promise means The promisor must have made the promise because the promisor wishes to exchange it, at least in part, for the detriment to be incurred by the promisee.
The promise must induce the detriment means The promisee must know of the offered promise and manifest an intent to accept.
The promisee incurs legal detriment what happens The promisor obtains a legal benefit
The promise must induce the promisee to exchange the promisee's conduct for the promise which means The offeree must know of the offer and manifest an intent to accept; the offeree must actually or apparently be induced to act by the promise.
Bargained-for exchange In plain English, if the unread but agreed-to terms objectively contain the appearance of "a bargained-for exchange," consideration is present.
Past consideration Consideration is essentially an exchange and parties cannot bargain for or exchange something that has already occurred.
What is the one kind of contract where the courts will review the balance between the value of consideration and the price charged for it. Lawyer-client retainer
Conditions to gift distinguished Adequacy of detriment is relevant in determining whether the promisor manifests a gift-making state of mind; smallness of the detriment; the happening of the contingency would be a benefit to the promisor.
An offer is binding as an option contract If it is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes and exchange on fair terms within a reasonable time.
With respect to a guaranty it reads... A promise to be a surety for the performance of a contractual obligation made to the obligee is binding if the promise is in writing and signed by the promisor and recites a purported consideration.
Modern view of surrender of an invalid claim as detriment The surrender of an invalid claim serves as consideration if the claimant has asserted it in good faith and a reasonable person could believe that the claim is well founded.
Pre-existing duty rule When a person performs or promises to perform a legal obligation, or promises to refrain from doing or refrains from doing what the person is not legally privileged to do, the person has not incurred detriment.
Duties imposed by law Applies not only to a modification of an existing contract but to a duty imposed by law. If the promise was supported by consideration, it should be enforceable; the parties should have rights both under the statute and under the contract.
Contract Duties There is the initial agreement of recission by which each party gave up something, and finally the subsequent employment agreement.
Contract duties exception Exception recognized by some jurisdictions is that a modification will be upheld even if it is without consideration if the modification is made after unforeseen difficulties have arisen in the performance of the prior agreement.
Cardinal change doctrine Where major changes are demanded and performed; for these cardinal changes a contractor is entitled to the contract price plus compensation for the reasonable value of the changes.
Best theory adopted to defeat the pre-existing duty rule Based on the idea that a person incurs legal detriment in giving up the legal right to breach the contract.
Classical view of three-party cases If a person is merely promising to perform a contractual obligation, the agreement is void. Result is different if the third party bargains for it causes the original contracting parties to refrain from rescinding their previous agreement.
Part payment cannot satisfy a debt Part payment by a debtor of an amount here and now undisputedly due is not consideration to support a promise by the creditor to discharge the entire amount due.
3 parts when there is a question of accord and satisfaction Have the parties gone through a process of offer & acceptance (accord); has the accord been carried out (satisfaction); whether the offer & acceptance is supported by consideration.
IF the offer & acceptance is supported by consideration. If yes, there is a binding accord & satisfaction; if no, there is no accord & satisfaction.
Intent of the creditor under the holdings that an accord and satisfaction is formed The creditor must either refuse the check, even though it is in an amount conceededly due, or cash it & forgo the balance of the claim.
Payment in full on a check that isn't the full amount...Creditors try to avoid this result by Striking out the words "payment in full" or by notifying the debtor that the check will be accepted in part payment.
If the check is inadvertently cashed the UCC provides Article 3 of the UCC provides detailed rules by which creditors can guard against full payment checks by preemptive notice & by tendering the return of the funds represented by the checks.
Discuss the STATUTES OF FRAUDS. The requirement that certain kinds of contract be memorialized in a signed writing with sufficient content to evidence the contract. (i.e. Marriage prenuptial agr., Wills)
Define MIRROR IMAGE RULE. The rule states that an offer must be accepted exactly as written/stated without modifications.
Name the 3 ELEMENTS OF COMMON LAW ACCEPTANCE. Has to be a committment; has to be communicated the "rigth way"; and, effective upon dispatch.
Name the 4 EXCEPTIONS TO THE MAIBOX RULE. Can't use MAILBOX RULE: If the offer says you can't; Can't use is OPTION CONTRACTS to stradle the end of the option; if the rejection is received first by the OFFEROR and acted upon; and, based on what is read first-the rejection or acceptance.
Define SHRINKWRAP. Where shrinkwrap packaging indicates "if you unwrap the product you consent to the terms herein." (i.e. software disks)
Define a ROLLING CONTRACT. Where payment before the revelation of the full terms. (i,e. Insurance policies or airline tickets).
Define BROWSEWRAP. Situations where the computer user is merely told that the terms and conditions that apply are available elsewhere other than on the page currently being examined.
Ehat 3 things must the OFFEREE do in order to accept an offer? Must know of the offer; Must exchange a requested performance or promise for the OFFEROR'S promise; and Must manifest and intent to accept the offer.
Discuss the PAROL EVIDENCE RULE. Prevents a party to a contract fro introducing any oral or written amendments or terms that contradicts the final written agreement.
List the 3 elements of the CONSIDERATION DOCTRINE. The promisee must suffer legal detriment; The detriment must induce the promise; and, The promise must induce the detriment.
Define LEGAL DETRIMENT. An assumption of duties or liabilities not already imposed on the person.
Define the PEPPERCORN THEORY. The theory that the smallest detriment can serve as onsideration-may have very little economic value but will have significant legal value.
Created by: Rochelle28nm
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