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Exam 2


The one who makes the offer or poses the offer


The party to whom the offer has been made


The one who creates or makes the promise


The one to whom the promise has been made


In order to create a valid ___, one must have offer, acceptance and consideration


In order to create a valid ___, one must have mutual assent and consideration

Mutual Assent

Offer and acceptance


Breach of contract


Nullify the contract


The outward manifestation of present contractual intent to be bound by certain and definite terms communicated to the ___ee

Outward Manifestation and Present Contractual Intent

The intent or desire to deal

Option Contract

Designed to keep an offer open for a stated period of time or a reasonable period of time

Certain and definite terms



Q: Quantity terms
T: Time for performance term
I: Interested parties
P: Price term
S: Subject matter

Ways to destroy an offer

RRDLDS and Insanity


R: Rejection
R: Revocation
D: Death of the parties
L: Lapse of time
D: Destruction of the subject matter
S: Sanity


The offeree can reject the offer

Pure Rejection

Not interested in the offer, "no"

Varying of the terms

Could give rise to a counter-offer - a whole new offer


The offeror can take back the offer, prior to acceptance or expiration

Death of the parties

When the offeror or offeree dies, the offer dies, unless otherwise stated in the contract

Lapse of time

Once the specified time has passed, the offer is no longer avaliable

Destruction of the subject matter

The matter in the contract has been destroy, prior to acceptance, through an act of god or a 3rd party


Inappropriate mental state of the offeror or offeree at the time which the offer was made

Ways to keep an offer open

1. Extend an offer past the original expiration date
2. Common Law Jurisdiction: Option Contract
3. UCC: Firm Offer Rule


The unqualified, unequivocal assent (agreement) to the terms of the offer

Mirror Image Rule

The absolute mirror image of what the offeror offered to the offeree

Mailbox Rule

Acceptance is valid on dispatch and rejection is valid on receipt


Mailing a letter, dropping off a letter at a mail receptacle, etc.

Grumbling Acceptance

1. Buzz words: Hope, wish, desired
2. Not a concrete rejection


The bargain for exchange of a legal detriment

Past Consideration

Past consideration is no consideration - the contract must be established before the action/event

Pre-existing Duty Rule

Where there is pre-existing duty, there is no consideration - Gives rise to a situation where one is already under a prior obligation to act, before the contract was made

Promissory Estoppel (Detrimental Reliance)

Where the promisor makes a promise to the promisee, and the promise has been detrimentally relied upon, it would create an undue burden not to fulfill such a promise

Detrimental Reliance

The promisee performed specific acts, based on the existing promise

Implied Contract

Prior history of repetitious contracts flowing between parties

Expressed Contract

Oral or written mode (Contract)

Valid Contract

Offer, acceptance, and consideration

Void Contract

A contract that by its very terms is illegal, depending on the laws of the moment

Voidable Contract

Contracts that fall within the statute of frauds

Unilateral Contract

Contracts where there is a promise in exchange for an act

Bilateral Contract

A promise in exchange for a promise

Quasi Contract

Where a court will create a contract to prevent an unjust enrichment

Executed Contract

Fully performed on both sides

Executory Contract

The contract has only been fulfilled by one party


1. A minor cannot validly contract, unless an emancipated minor
2. The contract can be considered valid or not valid at the option of the minor


If ___ at the time of negotiations, the contract is considered invalid

Mental State of Mind

Suffer from some sort of mental defect, either brought on by genetic or environmental influence


1. Minors
2. Intoxication
3. Mental state of mind


1. Of law
2. Of fact

Mistake of Law

Where a defendant is under the mistake and belief by someone under a position that would be expected to know the law, such as a lawyer, police officer, or judge

Mistake of Fact

1. Unilateral mistake
2. Bilateral (mutual) mistake

Unilateral Mistake

If the non-mistaken party knew or should have known as a reasonable, prudent person of the mistake, then ___ is a valid defense

Bilateral (Mutual) Mistake

Both parties are mutually mistaken as to the basis of the bargain - there is no meeting of the minds, so the contract is disaffirmed and no one is held responsible


The misrepresentation of fact known to be false by the wrongdoer for purposes of inducing action or inaction, and in fact induces the action or inaction desired

Undue Influence

Where a party's influence or power causes another to believe or do an action that they might not otherwise do


Where one would do an action that they would not otherwise do, because of the situation at hand

Unconscionable Contracts

A contract that substantially prefers one party over the other

Statute of Frauds

Certain contracts (MRDOG) need to be in writing in order to be deemed valid - they are invalid if done in the verbal mode


M: Marriage
R: Realty
D: Debt of Another
O: Contracts that by their very terms cannot be completed within 1 year
G: Goods of $500 or more


Hold people accountable for contracts based on the belief that marriage was going to take place


The sale or purchase of realty or real estate must be in writing

Goods of $500 or more

Only goods, not services

Rebuttal Against the Statute of Frauds

The plaintiff can rebut MRDOG if MRDOG SPMFR


S: Sufficient Memorandum
P: Partial Performance
M: Main Purpose Doctrine
F:Full Performance
R: Receipt of the Goods or Funds

Sufficient Memorandum

Receipts, cards, bank statements, text messages, etc. - APPLIES TO ALL STATUTES OF FRAUD

Partial Performance

1. Improvements on the land
2. Partly perform through money or the transfer of funds

Main Purpose Doctrine

The party answering for the debt of another must benefit from that answering - without the benefit, such action is seen as a gift or donation

Full Performance

Rebuttal only stands if brought up after the fact that performance was fully finished

Receipt of the Goods or Funds

Full or partial receipt/delivery of either money or the goods themselves

Auction with Reserve

The auctioneer reserves the right to remove or take back the item at any time prior to acceptance

Auction Without Reserve

The auctioneer must accept any offer they receive

Performance Excused or Discharged

1. Impossibility
2. (Commercial) Impracticability
3. Waiver
4. Modification
5. Substituted Performance
6. Novation
7. Rescission
8. Completed Performance
9. Substantial Performance


1. An act of God, such as a natural disaster
2. The initial contract was created when it was lawful material issue, but now it is unlawful

(Commercial) Impracticability

It would be commercially impracticable for the breaching party to do the obligation that they are required to do under the contract


One relinquishes a known right

Equal Dignities Rule

Whatever you had to do to address the validity of the underlying contract, you must also do for future changes (waiver, modification, etc.)


A change in terms post-contracting

Substituted Performance

There are 2 original contracting parties, and one party's performance has been substituted for someone of equal or better value - the original party is still held responsible


The consent of all three parties - the two original parties and the substituting party - the substitute is held responsible


Where both parties agree to disaffirm the original contract

Completed Performance

Full performance; discharged of obligations

Substantial Performance

Should be excused; compare the quality of the original performance and the actual performance for quality and intentional harm or negligence


The 3rd party or person

Intended Beneficiary

Known beneficiaries, such as spouse and children

Vesting Rights

Whatever the original party can bring forth against the other party, the 3rd party beneficiaries can also bring forth

Incidental Beneficiary

Unintended beneficiaries, who do not have vesting rights


One may freely assign any known right that he/she is entitled to


Only delegable duties are valid, which cannot be personal in nature or too unique in nature


1. Precedent
2. Concurrent
3. Subsequent
4. Presumption

Time for Performance

Gives rise to whose time for performance is due; look to the terms of the contract for who is to perform and when




Same time




If not stated clearly in the contract, work is before pay and delivery is before payment

Risk of Loss

Who owns title and when does title transfer?


Free along side/Free along vessel

Common Carriers

Anything that can transport something from point A to point B


Cost of insurance and freight

Free along side/Free along vessel

1. Pertains to any common carriers, as well as buildings and residences
2. It is as if the title was transferred, at the moment of delivery

Cost of Insurance and Freight

Whoever takes out cost for insurance coverage and freight expense pays for the damage done to the item


Free on board

Free on Board

Once the good is "on board" the particular vessel, it is if the title has been transferred, at the moment of delivery

Sale on approval

The buyer must approve the goods prior to the sale being had and valid - silence or failure to act is validation of the sale


Uniform Commercial Code

Article II (UCC)

The sale of goods
1. Goods
2. Good faith
3. Merchant
4. Offer
5. Acceptance
6. Consideration
7. Defenses
8. Warranties

Goods (UCC)

Any tangible, personal property capable of being moved at the identification for sale, not including realty or anything annxed to the structure

Good faith (UCC)

Presumption of good faith, including honesty and fact

Merchant (UCC)

Determine merchant status or non-merchant status

Merchant Status

A person or entity that deals in goods of a kind, and has specialized skill and knowledge in those goods (not services)

Non-merchant Status

Does not fit the merchant status

Offer (UCC)

Only needs quantity terms (not full QTIPS)

Defenses (UCC)

1. Statutes of Fraud
2. Discharged Performance (waiver, modification, etc.)

Warranties (UCC)

1. Expressed
2. Implied

Expressed Warranties

Verbally or in writing

Implied Warranties

1. Fitness for a Particular Purpose (FFPP)
2. Merchantability

Fitness for a Particular Purpose (FFPP)

Where one relies on the specialized skill and knowledge of the merchant, and that good fails to act or operate as desired


The good is what the good is expected to be

Firm Offer (UCC)

A merchant offers another to keep an offer open for a state period of time, not to exceed 3 months or 90 days, and no consideration is needed

Lucy v. Zehmer

I: Did Zehmer make a serious offer to Lucy with valid intent?
R: We must look to the outward expression of a person as manifesting his intention rather than to his secret and unexpressed intention
A: The signed writing constituted a binding contract of sale
C: The writing was an enforceable contract, based on the history between the two parties. The conversations had started well before the consumption of alcohol

Alexander v. Lafayette

I: Did a valid contract exist between parties?
R: Acceptance is received when it comes into the possession of a person authorized by the offeror to receive it, or when it is deposited in a place the offeror has indicated as the place where communications of that kind are to be deposited
A: Alexander did not contact Crime Stoppers before the deadline and there was no valid acceptance of the reward
C: The summary judgment was affirmed, as a valid contract never existed between the parties

Jacob & Youngs v. Kent

I: Did the plaintiff substantially perform to fulfill the contract?
R: Substantial Performance: Compare the quality of the original performance and the actual performance for quality and intentional harm or negligence
A:The wrong piping was of better quality and caliber, compared to the correct brand
C: Jacobs and Young performed a minor breach, with no malicious intent or substantial damage. The homeowner had to make good on the outstanding balance

Merry Homes, Inc. v. Chi Hung Luu

I: Was the contract still deemed valid and/or voidable?
R: Performance: Impossibility: The initial contract was created when it was lawful material issue, but now it is unlawful & Void Contract: A contract that by its very terms is illegal, depending on the laws of the moment
A: Mr. Luu could not possibly do what he had desired
C: The contract is deemed void, due to legality

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