BL3335

Test #2 Review Sheet

Contracts
Be able to analyze cases regarding the contract concepts using IRA analytical methodology.

What are the primary objectives of contract law?

Enforce agreement between parties through offer and acceptance

What are the sources of contract law and when are they applicable?

What are the elements required for a valid contract?

What is a void contract?

What causes a valid contract to be unenforceable?

 Agreement

§ What two elements comprise the agreement?

§ What is required for the existence of an agreement?

§ Explain the objective theory of contracts.

§ How can an offer be terminated by operation of law?

§ How can an offer be terminated by an act of the parties?

§ What does it mean to say that an offer has been revoked?

§ Must the revocation of an offer be expressed?

§ What is required for an effective revocation of an offer?

§ Generally, when can an offeror revoke an offer?

§ Under what circumstances is an offer not revocable?

§ Define an option contract.

§ Define a merchant’s firm offer.

§ What is the effect of an offeree rejecting an offer?

§ Must a rejection be expressed?

§ What is a counteroffer and what is its effect?

§ What is required for an acceptance to be valid?

§ How does a plaintiff establish an implied agreement?

§ Define and discuss the enforceability of a browse wrap agreement.

§ Define and discuss the enforceability of a click-on agreement.

 Equitable Remedy: Quasi Contract

§ What is the theory or rationale behind the equitable remedy of quasi contract?

§ What are the elements of quasi contract?

§ Be sure you understand the difference between an implied agreement and quasi contract.

§ Practically, when will a plaintiff employ the theory of quasi contract?

§ What are the limitations on quasi contracts?

§ What is the measure of damages if a plaintiff establishes quasi contract?

 Consideration

§ Generally, what is consideration? Understand what the word refers to generally. The following

question requires a more specific definition.

§ What is required for consideration to be valid?

§ Is a contract void for inadequate consideration?

§ Define illusory consideration aka illusory promises.

§ What is the effect of illusory consideration?

 Equitable Remedy – Promissory Estoppel

§ What is the theory or rationale behind the equitable remedy of promissory estoppel?

§ What are the applications of promissory estoppel? In other words, to what end may it be argued?

For example, in the Frost Crush Stone and Mann cases, why do no contracts exist?

§ What are the elements of promissory estoppel?

 Capacity

§ What three categories of people lack contractual capacity and why, generally?

§ What does it mean to disaffirm a contract?

§ Generally, when can a minor disaffirm a contract?

§ Define ratification.

§ Give examples of how one might ratify a contract entered into while he was a minor.

§ Define restitution.

§ When a minor disaffirms a contract, does he have to pay restitution?

§ What is the effect of misrepresentation of age on a minor’s right to disaffirm a contract?

§ What are the exceptions to a minor’s right to disaffirm a contract?

§ What risk does a minor’s right to disaffirm a contract pose for businesses?

§ Give examples of businesses that do business with minors and for which a minor’s right to
disaffirm a contract might by relevant.

§ What can a business do to mitigate the risk that a minor will disaffirm a contract?
 Legality

§ Contracts that violate statutes may be void. List some examples per the text.

§ Contracts that violate public policy may be void. List some examples per the text.

§ Generally, what is the purpose of an exculpatory clause?

§ With regard to negligence, what is required for an exculpatory clause to be valid?

§ What is the effect if a contract is for an illegal purpose?

§ What are the possible effects if a provision of a contract is illegal?

§ What is a severability clause in a contract?

 Statute of Frauds

§ What types of contracts must be in writing per the statute of frauds?

§ What must the writing include to satisfy the statute of frauds?

 Third Party Rights

§ What is an assignment?

§ What does it mean to say that an assignment is valid?

§ What is the rule for assessing the validity of an assignment?

§ In what form i.e., written or oral, must an assignment be made?

§ Is consideration required for a valid assignment?

§ What is the effect of consideration given in exchange for an assignment?

§ What is the effect of notice of the assignment?

§ What are the rights of the assignor after the assignment?

§ What are the rights of the assignee after the assignment?

§ What is the effect of a waiver of defenses clause and what is its purpose?

§ What is a delegation?

§ What duties can be delegated?

§ What duties cannot be delegated?

§ What is the difference between a delegation and a novation?

§ What is required for a transfer of contractual duties to be a novation?

 Fraud and Negligent Misrepresentation

§ What are the elements of fraud? Be sure you understand each of the elements.

§ Can the failure to disclose information be a misrepresentation of fact?

§ Can an opinion be a misrepresentation of fact?

§ To establish fraud, a misrepresentation of fact must be material. Define materiality.

§ Can the failure to fulfill a promise be a misrepresentation of fact?

§ What degree of culpability is required for negligent misrepresentation versus for fraud?

§ Can one waive his right to rely on the representations of another? If so, how?
§ Are waivers of reliance clauses in contracts enforceable?

§ When must a plaintiff prove harm to establish fraud?

§ Understand the different measures of damages in fraud cases.

 Performance and Discharge of Contractual Obligations

§ Explain how conditions are used in contracts to mitigate risks.

§ How does one party’s performance effect the other’s obligation to perform? Contrast complete
performance, substantial performance, and material breach.

§ What factors are used to determine whether a party has substantially performed his contractual
obligations?

§ What is the effect of material breach on the non-breaching party?

§ What must a party establish in order to avoid his contractual obligations due to commercial
impracticality?