1. Contract Law

Contract Law

Playlist: 39 Videos: 115 Minutes


Topic Material

Contract Law (Intro)

Characteristics of a Contract

What is a Contract Offer, Acceptance, and Consideration?

When a Contract Must be in Writing – Statute of Frauds

Third Parties to a Contract

Contract Performance, Breach, and Damages

How to Read the Contract


Topics: Learning Material

Introduction to Contract Law
Contract law concerns the legal principles governing the exchange of goods or services between individuals or businesses. This chapter will explore the sources of contract law applicable to the sale or exchange of goods or services. It will lay out the elements necessary to form a contract and each party’s duty of performance under the contract. It will examine key contract principles, such as performance, breach, enforceability, voidability, etc. It will lay out the generally applicable rules that courts employ when interpreting contracts. This includes rules about what terms or communications are considered to be part of the contract. Lastly, it explores the remedies available to parties who suffer harm as a result of another party’s breach. For further written and video explanation, discussion and practice questions, see Contract Law (Intro)

What is a “Contract”?
  • Legally enforceable promise or an exchange of promises.
  • Offer, acceptance of that offer, and consideration
  • Must demonstrate a “meeting of the minds”

For further written and video explanation, discussion and practice questions, see What is a "Contract"?

Restatement of Contracts and Uniform Commercial Code
  • State law (limited federal law)
  • Statutes and common law.
  • Model Laws

Restatement of Contract

Article 2 of the Uniform Commercial Code

For further written and video explanation, discussion and practice questions, see What are the sources of contract law?

Unilateral Contract vs Bilateral Contract
  • Bilateral Contract - Two promises
  • Unilateral Contract - Only one promise, exchange for action.

For further written and video explanation, discussion and practice questions, see What is a "unilateral contract" vs. a "bilateral contract"?

Express Contract vs Implied Contract
  • Express Contract
  • Implied-in-Fact Contract
  • Implied-in-Law or Quasi-Contracts

For further written and video explanation, discussion and practice questions, see What is an "express contract" vs. an "implied contract"?

Enforceable Contract vs Valid Contract
  • Valid all of the elements essential to forming a legal contract are present.
  • Elements - (offer, acceptance, consideration, and a meeting of the minds)
  • Enforceable Contract - Can be enforced in court of law.

For further written and video explanation, discussion and practice questions, see What is an "enforceable contract" vs. a "valid contract"?

Void Contract vs Voidable Contract
  • Void Contract - Deemed to be invalid and unenforceable
  • Voidable Contracts - One or both parties can void.

For further written and video explanation, discussion and practice questions, see What is a "void contract" vs. a "voidable contract"?

Elements of a Contract
  • Offer - Promise of action
  • Acceptance - Agree to terms of offer.
  • Consideration - Promise to exchange (or exchange) value demanded by each party.

For further written and video explanation, discussion and practice questions, see What are the requirements to form a Contract (Offer, Acceptance, Consideration)?

What is a “Offer” to Contract?
  • Offeror and Offeree
  • Intent to Make an Offer
  • Definite Terms

For further written and video explanation, discussion and practice questions, see What is an "Offer"?

When does an Offer terminate?
  • Specific Provision in Contract
  • Lapse of Time
  • Offeree’s Rejection
  • Counter Offer
  • Revocation by Offeror
  • Destroy Subject Matter of Contract
  • Death or Mental Incapacity
  • Illegality

To learn more about these conditions and for further written and video explanation, discussion and practice questions, see When does an offer to contact terminate?

What is the Mirror Image Rule”?
  • Contracts other than sale of goods.
  • Common Law - Restatement of Contracts
  • Acceptance must be mirror image of offer.
  • Changing terms is rejection and counter offer

For further written and video explanation, discussion and practice questions, see Mirror Image Rule?

What is the “Battle of the Forms?”
  • Rule for Sale of Goods (UCC)
  • Non-merchants - Additional terms are suggestions
  • Merchants - Additional Terms part of contract, except:
    • Express condition upon original terms
    • Rejection of additional terms
    • Additional terms material change agreement

For further written and video explanation, discussion and practice questions, see Rule for Sale of Goods

Silence is not acceptance of an Offer
  • Silence with Regard to Offer - Not Acceptance of Offer
  • Merchant Rule (Goods) - Silence is acceptance unless merchant rejects goods.

For further written and video explanation, discussion and practice questions, see Silence is Not Acceptance?

What is the “Mailbox Rule”?
  • dropping the acceptance in the mail = binding contract.

For further written and video explanation, discussion and practice questions, see Mailbox Rule

What is Contract “Consideration”?
  • Anything of value.
  • Types of Consideration

Agreement to Refrain

Agreement not to Sue

Prior Consideration

For further written and video explanation, discussion and practice questions, see What is Consideration?

What is “Promissory Estoppel?”
  • Exception to Consideration Requirement
  • Reasonable Reliance on Promise
  • Will result in substantial harm

For further written and video explanation, discussion and practice questions, see What is promissory Estoppel?

What is a “Other Exceptions to Consideration Requirement” for a Contract?
  • Option Contracts
  • Firm Offers

For further written and video explanation, discussion and practice questions, see What is the requirement of a "lawful purpose"?

What is Mental Capacity to Contract?
  • Minors
  • Intoxicated Person
  • Mentally Incompetent Person

For further written and video explanation, discussion and practice questions, see What is "mental capacity" to contract?

What is a “Lawful Purpose” for a Contract?
  • Crimes and Torts
  • Unconscionable Contracts - “shock the conscience”.
  • Contracts that Restrain Trade

For further written and video explanation, discussion and practice questions, see What is the requirement of a "lawful purpose"?

Types of “Voidable Contract”
  • Fraud
  • Misrepresentation
  • Duress
  • Undue Influence
  • Mutual Mistake
  • Unilateral Mistake

To learn about the scenarios and for further written and video explanation, discussion and practice questions, see What are common types of "voidable contract"?

Contracts in Writing – Statute of Frauds
  • “Statute of Frauds”.
  • Sale of an Interest in Land
  • Collateral Promise to Pay Another’s Debt
  • Cannot Be Performed within One Year
  • Sale of Goods of $500 or More

For further written and video explanation, discussion and practice questions, see When is a contract required to be in writing - Statute of Frauds?

What type of writing is required?
  • Demonstrate terms of agreement
  • Identify Party against whom enforced
  • Signature, Stamp, Seal, Handwriting, etc.

For further written and video explanation, discussion and practice questions, see What type of writing satisfies the statute of frauds?

Exceptions to the Statute of Frauds requirement
  • Admission Under Oath
  • Part Performance
  • Promissory Estoppel
  • Rules Involving Goods

Specialty Goods

Partial or Complete Performance

Contract Between Merchants

To learn more about these exceptions and for further written and video explanation, discussion and practice questions, see Exceptions to the Statute of Fraud

Who are 3rd-party beneficiaries to a contract?
  • Primary beneficiaries - Parties
  • Third-party beneficiary - Intend to benefit and name in agreement.
  • Donee Beneficiary - gift from the promisee.
  • Creditor Beneficiary - receives contractual rights from the promisee as satisfaction of a debt.

For further written and video explanation, discussion and practice questions, see Who are third-party beneficiaries to a contract?

What are “Assignment” and “Delegation” of a contract?
  • Assignment
  • Delegation
  • Methods of Assignment or Delegation
  • Writing Requirement
  • Non-Assignable/Delegable Contracts:

Material Changes of Responsibility

Increases Burden or Risk

Special Skills

  • Multiple Assignments

Purchaser in Good Faith for Value

Court Action

Novations

Written Assignment

  • Revoking an Assignment
  • Modification after Assignment
  • Continued Delegator Responsibilities

To learn more about these rules and for further written and video explanation, discussion and practice questions, see What is "assignment" and "delegation" of a contract?

What is a party’s Duty of Performance?
  • Perform
  • Release from Contract
  • Breach

For further written and video explanation, discussion and practice questions, see When is a partys "duty of performance"?

“Executed Contract” vs “Executory Contract”
  • Executed contract - Completed
  • Executory contract - Not yet completed

For further written and video explanation, discussion and practice questions, see What is an "executed contract" vs an "executory contract"?

Performance, Substantial Performance, and Breach of Contract
  • Complete Performance
  • Substantial Performance
  • Breach of Contract

For further written and video explanation, discussion and practice questions, see What is "Performance", "Substantial Performance", and "Breach" of a contract?

“Divisible Contracts”
  • Has multiple parts or is divided up into segments.
  • Duties or obligations for each segment.
  • Each segment like mini-contact.

For further written and video explanation, discussion and practice questions, see What is performance of a "Divisible Contract"?

Discharge from Contract Duties

Conditions Precedent and Subsequent
  • Condition Precedent - must take place or a situation must arise prior to or before a party has a duty to perform.
  • Condition Subsequent - A condition subsequent excuses contractual performance if some future event takes place or situation arises.

For further written and video explanation, discussion and practice questions, see What are conditions to Contract (Precedent & Subsequent)?

Tendering Performance
  • Tendering performance
  • UCC Condition of Performance - Payment before duty to Delivery Good.
  • Restatement Condition of Performance - Perform before payment.

For further written and video explanation, discussion and practice questions, see What is "tendering performance" of a contract?

Impossibility vs Impracticability
  • Impossibility of Performance

⁃ Illegality of the subject matter;

⁃ The subject of the contract (property) is destroyed;

⁃ One of the parties to the contract dies or becomes physically or mentally disabled;

⁃ Natural forces interrupt the contract;

⁃ Performance would cause substantial risk of physical harm to one party.

  • Cannot be fault of performing party
  • Commercial Impracticability

For further written and video explanation, discussion and practice questions, see What are "Impossibility" and "Impracticability"

Frustration of Purpose
  • Circumstances frustrate a party’s reason or purpose for entering a contract.
  • The party cannot have assumed the risk of the circumstance
  • Cannot be at fault for the occurrence or the non-occurrence of the event or circumstance.

For further written and video explanation, discussion and practice questions, see What is "Frustration of Purpose"?

“Waiver” and “Release” from a Contract”
  • Waiver - When a party intentionally relinquishes a right to enforce the contract.
  • Release - When one party is relieved from her promise of performance.

For further written and video explanation, discussion and practice questions, see Waiver or Release from Contract

What is “Breach of Contract”?
  • Failure to perform material obligations
  • Does not meet complete or substantial performance

For further written and video explanation, discussion and practice questions, see What is a Breach of Contract?

Resolving a Breach of Contract
  • Negotiated Settlement
  • Arbitration
  • Litigation

For further written and video explanation, discussion and practice questions, see What methods exist for resolving a breach?

Remedies for Breach of Contract
  • Compensatory Damages
  • Consequential Damages
  • Liquidated Damages
  • Nominal Damages
  • Specific Performance
  • Rescission

For more information on these remedies, and for further written and video explanation, discussion and practice questions, see What remedies exist for a breach of contract?

What is Efficient Breach?
  • Intentional breach
  • Benefits of breach outweigh negative consequences

For further written and video explanation, discussion and practice questions, see What is "efficient breach"?

Rules for Interpreting a Contract
  • Plain Meaning
  • Reasonable Person
  • Subjective Intent
  • Express Terms
  • Implied Terms
  • Specific Terms
  • Actively Negotiated Terms
  • Totality of Circumstances
  • Contract Purpose
  • All Writings
  • Context
  • Trade Terms & Course of Dealing
  • Interpret Against Drafter

For further written and video explanation, discussion and practice questions, see What rules does a court follow in interpreting a contract?

What is the “Parol Evidence Rule”?
  • Rule for Court interpreting contract
  • Will not consider Prior Communications
  • The contract must be the Final Agreement of parties

    • Integration Clause - Signals document is final agreement

For further written and video explanation, discussion and practice questions, see What is the "Parole Evidence Rule"?

“Complete Integration” vs “Partial Integration”
  • Complete Integration - contract contains all of the facts or information regarding the parties’ agreement.
  • Partial Integration - contract contains only part of the information constituting the agreement between the parties.

For further written and video explanation, discussion and practice questions, see What is a "complete integration" vs a "partial integration"?

Exceptions to the Parol Evidence Rule
  • Reasons for allowing extrinsic evidence to interpret contract.
  • to aid in the interpretation of existing terms (for example, when an ambiguity exists),
  • to show that a writing is or is not an integration,
  • to establish that an integration is complete or partial,
  • to establish subsequent agreements or modifications between the parties, or
  • to show that the terms of the contract were the product of illegality, fraud, duress, mistake, lack of consideration or other invalidating cause.

For further written and video explanation, discussion and practice questions, see Exceptions to the Parol Evidence Rule

Patent and Latent Ambiguities in a Contract
  • Patent ambiguity - Obvious on the face of the document.
  • Latent ambiguity - Ambiguous term is not obvious on the face of the contract.

For further written and video explanation, discussion and practice questions, see Patent and Latent Ambiguity in a Contract


Flashcard: Study Practice

Q1
A legally enforceable promise or an exchange of promises is a ___________.

Q2
To be enforceable, the contract must meet certain elements ____________.

A2
Offer; Acceptance of an offer; An exchange of value between the parties

Resource Video: https://thebusinessprofessor.com/what-is-a-contract/

Q3
A _____________ is a common understanding between the parties that is required for a valid contract.

A3
meeting of the minds, total agreement, common intent

Resource Video: https://thebusinessprofessor.com/what-is-a-contract/

Q4
A contract must be a formal, written document. True or False

Q5
A contract can arise through the conduct of the parties without any verbal exchange. True or False

Q6
A party a contract must recognize that they have made a legally enforceable promise. True or False

Q7
Contract law is primarily state law and each state develops its own contract law. True or False

Q8
State contract law consists of _________.

Q9
The model laws that legislators and judges rely upon in developing statutory and common law are known as _____________.

A9
The Restatement of Contracts; The Uniform Commercial Code

Resource Video: https://thebusinessprofessor.com/influential-sources-contract-law/

Q10
_______________ is a model law that deals primarily with contracts that do not involve the sale of goods or when goods are not the primary subject of the contract.

A10
The Restatement of Contracts (Restatement); The Uniform Commercial Code (UCC)

Resource Video: https://thebusinessprofessor.com/influential-sources-contract-law/

Q11
____________ is a model law governing contracts for the sale of goods.

A11
Uniform Commercial Code (UCC))

Resource Video: https://thebusinessprofessor.com/influential-sources-contract-law/

Q12
To be subject to the provision of the UCC, goods must be ____________.

A12
the primary purpose of the contract

Resource Video: https://thebusinessprofessor.com/influential-sources-contract-law/

Q13
A _____________ consists of two promises between individuals that form a contract.

Q14
A ______________ is an agreement with only one promise.

Q15
An ______________ arises from interactions in which parties actually discuss the agreement and the promised terms.

Q16
A contract requires a meeting of the minds. True or False

Q17
An ____________ contract arises from the conduct of the parties, rather than from words.

A17

Q18
An ____________ is a contractual relationship ordered by the court because it deems the interactions between parties to to avoid an unjust result, such as when one party is unjustly enriched at the expense of another.

A18

Q19
A ___________ is a contract that contains all of the elements essential to forming a legal contract.

Q20
A(n) ___________ is a contract that can be enforced in court of law.

Q21
A ___________ is an agreement where either one or both parties has the right to make the contract void.

Q22
The required elements to form a contract include _____________.

A22
Offer, Acceptance, Consideration

Resource Video: https://thebusinessprofessor.com/requirements-to-form-a-contract/

Q23
An offer to contract must contains a ___________ from the the person making the promise (offeror) and a ___________ of the individual receiving the offer (offeree).

A23
specific promise, specific demand

Resource Video: https://thebusinessprofessor.com/what-is-a-valid-offer/

Q24
To form a contract, the offeror must intend to make the offer. True or False

Q25
Whether there is intent to make an offer is judged as whether _______________ would believe the offeror’s words or actions constitute an offer.

A25
a reasonable person in the position of the offeree

Resource Video: https://thebusinessprofessor.com/what-is-a-valid-offer/

Q26
An offer to contract must be sufficiently ________________. That is, the terms of the offer must be sufficiently specific to allow the offeree to understand and accept the offer.

Q27
The parties do not have to realize that their words or actions constitute a valid contract. It only matters how would a reasonable person perceive the actions potentially constituting an offer. True or False

Q28
An offer to enter into a contract generally remains open an capable of acceptance by the offeree until it terminates. If it has not been accepted, an offer to contract terminates based upon any one of several occurrences. Which of the following will not terminate an offer prior to acceptance.

A28
The offeree asks for time to think it over

Resource Video: https://thebusinessprofessor.com/terminating-an-offer/

Q29
______________ of a contract is the assent of the offeree to the demands contained in the offeror’s offer.

Q30
The method of accepting a contract varies depending upon whether the contract is unilateral or bilateral. True or False

Q31
An offeree accepts a _____________ by making the return promise demanded by the offeror.

A31
bilateral contract

Resource Video: https://thebusinessprofessor.com/mirror-image-rule/

Q32
An offeree accepts a ______________ by undertaking the performance demanded by the offeror.

A32
unilateral contract

Resource Video: https://thebusinessprofessor.com/mirror-image-rule/

Q33
Contracts that are not primarily for the sale of goods may be governed by rules derived from the __________________.

A33
Restatement of Contracts

Resource Video: https://thebusinessprofessor.com/mirror-image-rule/

Q34
The Restatement proposes the _________________ for acceptance of an offer.

A34
mirror-image rule

Resource Video: https://thebusinessprofessor.com/mirror-image-rule/

Q35
The ___________ states that the acceptance of an offer must be exactly as demanded by the offeror. If the offeree adds new terms to the acceptance, it is not really an acceptance. Acceptance with different or additional terms constitutes a counteroffer.

A35
mirror-image rule

Resource Video: https://thebusinessprofessor.com/mirror-image-rule/

Q36
The mirror-image rule does NOT apply to sales of goods under the UCC. True or False

Q37
The UCC recognizes that a contract is formed if the acceptance of the offer is _____________.

Q38
If it is obvious the parties agree on the primary or material terms of the agreement, an acceptance that changes or adds additional terms is a valid acceptance. True or False

Q39
If either offeror or offeree to a potential contract for the sale of goods is NOT a merchant, any additional or different terms are deemed suggestions for addition and do not become part of the contract. True or False

Q40
If either offeror or offeree to a potential contract for the sale of goods IS a merchant, any additional or different terms are deemed suggestions for addition and do not become part of the contract. True or False

Q41
If the offeror and offeree to a proposed contract are merchants, any additional terms added by the offeree become a part of the contract, unless:

A41
they materially alter the contract; acceptance is conditioned on the specific terms of the offer; the offeror specifically rejects the additional or different terms.

Resource Video: https://thebusinessprofessor.com/battle-of-forms-ucc-acceptance-of-contract/

Q42
If either party is not a merchant, an offeree failing to reply to an offer to contract not acceptance in most cases - even if the offer says silence will be considered acceptance. True or False

Q43
What are the exceptions to the rule that an offeree’s failure to respond to an offer is not acceptance of the offer?

A43
The relationship between the parties is such that it is not expected that the offeree reply; The offeree readily understands that silence or a failure to respond means acceptance of the offer; . In the case of contracts between merchants under the UCC, silence may constitute acceptance of an offer if the merchant fails to expressly reject goods that are delivered.

Resource Video: https://thebusinessprofessor.com/silence-is-not-acceptance-of-an-offer/

Q44
_____________ is a default rule that applies when the offeror does not place specific requirements on the manner of acceptance.

Q45
Under _______________, the offeree accepts the offer at the point in time when she sends notice of acceptance to the offeror.

Q46
Which of the following methods of providing notice of acceptance of an offer could constitute acceptance under the mailbox rule?

A46
dropping it in the mail; ending it with a courier; email or other electronic communication

Resource Video: https://thebusinessprofessor.com/mailbox-rule-for-contracts/

Q47
Pursuant to _____________, if an offer is made to multiple offerees, the first offeree to accept the offer in any permissible manner has a binding contract.

A47
The mailbox rule; Acceptor rule; First offeree rule

Resource Video: https://thebusinessprofessor.com/mailbox-rule-for-contracts/

Q48
______________ is anything of value exchanged pursuant to a contract. Recall that a valid contract must include an exchange of value between the offeror and offeree.

Q49
____________ is the value and the inducement or incentive for the other party entering into the agreement.

Q50
A promise to make a gift is not binding because the party receiving the gift gives no value (consideration) in return for the promise. True or False

Q51
The amount or value of the consideration in a contract does not matter. It need not be money or goods. True or False

Q52
Agreement to refrain from doing something that you have the right to do, such as suing someone, is a form of consideration. True or False

Q53
Generally, consideration in a prior agreement is not valid consideration in a new agreement, except in very limited circumstances. True or False

Q54
Under the UCC, a preexisting obligation can constitute valid consideration if the offeror is a purchaser of $500 or more in goods, and she offers to pay more than an additional $500 for the same goods. True or False

Q55
A doctrine known as “promissory estoppel” may serve as a substitute for consideration to make an agreement into a valid contract. True or False

Q56
_______________ states that, if the offeree reasonably relies on the offeror’s promise to her detriment, it may make the contract valid despite the absence of consideration.

A56
Promissory estoppel

Resource Video: https://thebusinessprofessor.com/promissory-estoppel/

Q57
The key element(s) for the doctrine of promissory estoppel to apply is/are:

A57
the offeree rely upon the promise or assurances of the offeror in accepting the offer; the reliance must be reasonable in light of the situation; the relying party must suffer a tangible detriment

Resource Video: https://thebusinessprofessor.com/promissory-estoppel/

Q58
A broad, common exceptions to the requirement that a contract be supported by consideration applies to this/these types of contract:

Q59
To enter into a contract, a person must have ___________ sufficient to understand the nature and consequences of her actions.

Q60
If a person lacks mental capacity at the time s/he enters into a contract, the contract is voidable by him or her. True or False

Q61
Which of the following is/are a class or classes of persons commonly understood to lack capacity to be bound by contractual promises:

A61
Minors, Intoxicated Person, Mentally Incompetent Person

Resource Video: https://thebusinessprofessor.com/mental-capacity-to-contract/

Q62
To be enforceable, a contract cannot violate or cause others to violate the law or public policy. True or False

Q63
Which of the following characteristics of a contract may may them void for lack of a lawful purpose?

A63
Contract requiring Crimes and Torts, Unconscionable Contracts, Contracts that Restrain Trade

Resource Video: https://thebusinessprofessor.com/lawful-purpose-for-contracts/

Q64
Which of the following situations leads to a contract being voidable by one party?

A64
Fraud, Misrepresentation, Duress, Undue Influence

Resource Video: https://thebusinessprofessor.com/voidable-contract-scenarios/

Q65
Which of the following situations leads to a contract being voidable by both parties?

A65
Mutual Mistake about Material Term

Resource Video: https://thebusinessprofessor.com/voidable-contract-scenarios/

Q66
Generally, unilateral mistake about a material provision of a contract by one party does not make the contract voidable, except when:

A66
the non-mistaken party knew or had reason to know of the other party’s mistake

Resource Video: https://thebusinessprofessor.com/voidable-contract-scenarios/

Q67
The requirement that some contracts be in writing to be enforceable is generally dependent upon the subject matter of the agreement. True or False

Q68
The legal rule requiring that a contract be in writing is known as the ___________.

Q69
Which of the following is/are a type of contract generally required to be in writing:

A69
Sale of an Interest in Land; Collateral Promise to Pay Another’s Debt; Cannot Be Performed within One Year; Sale of Goods of $500 or More

Resource Videos: https://thebusinessprofessor.com/statute-of-frauds-explained/

Q70
To meet the requirements of the statute of frauds, the writing can be _________.

A70

Q71
The agreement must generally be signed by ____________ (whom)?

A71
the party against whom it is being enforced

Resource Videos: https://thebusinessprofessor.com/types-of-writing-to-satisfy-statute-of-frauds/

Q72
A signature on a contract may be in what form?

A72
mark, seal, stamp, electronic signature, or a handwritten agreement.

Resource Videos: https://thebusinessprofessor.com/types-of-writing-to-satisfy-statute-of-frauds/

Q73
A common law exceptions to the requirement that a contract subject to the statute of frauds be in writing include:

A73
Admission about the contract under oath; Part performance of the contract; Promissory Estoppel

Resource Video: https://thebusinessprofessor.com/exceptions-to-statute-of-frauds/

Q74
Exceptions to the requirement that a contract subject to the UCC statute of frauds be in writing include:

A74
Orders for specialty goods; Partial or complete performance of the contract; Contracts between merchants

Resource Video: https://thebusinessprofessor.com/exceptions-to-statute-of-frauds/

Q75
The parties to the contract are the ________ beneficiaries.

A75
Primary, Secondary, Incidental, Third-Party

Resource Video: https://thebusinessprofessor.com/third-party-beneficiaries/

Q76
In general, individuals who are not parties to a contract have no rights to sue to enforce the contract or to get damages for a breach of contract. True or False

A76
True, except when the benefits of the contract have been assigned to a third party.

Resource Video: https://thebusinessprofessor.com/third-party-beneficiaries/

Q77
A third-party beneficiary may have rights under a contract if the original parties to the contract:

A77
intend for the agreement to benefit the third party; identify third parties in the agreement

Resource Video: https://thebusinessprofessor.com/third-party-beneficiaries/

Q78
A _________ beneficiary is a third party who receives contractual rights as a gift from the promisee.

Q79
If a promisee makes a contract for the benefit of a donee beneficiary and the promisor fails to perform, the third-party may bring a legal action against:

A79
The promisor (individual obligated under the contract)

Resource Video: https://thebusinessprofessor.com/third-party-beneficiaries/

Q80
A __________ beneficiary is a third party who receives contractual rights from the promisee as satisfaction of a debt.

Q81
When a promisor fails to perform under the subject contract, the creditor beneficiary can bring an action against:

A81
the promisee, as the value of the consideration transferred is gone; the promisor, as her rights have been harmed by the promisor’s failure to perform.

Resource Video: https://thebusinessprofessor.com/third-party-beneficiaries/

Q82
________ is the transfer by one party of her right to receive performance from the other party to the contract.

Q83
____________ is the transfer by one party of her duties to perform under a contract.

Q84
The rights under a contract can be assigned or the duties delegated through agreement between the assignor and assignee. True or False

Q85
Assignments/delegations can be a gift or an exchange for other value. True or False

Q86
In general, unless the contract deems otherwise, obligees may assign their rights or delegate their duties under the contract to third parties. True of False

Q87
Assignments and delegations of common law contracts do not have to be in writing. But, assignments of contracts for the sale of goods, however, must be in writing if:

A87
the original contract was subject to the statute of frauds

Resource Video: https://thebusinessprofessor.com/assignment-of-a-contract/

Q88
The following contracts are NOT capable of delegation:

A88
They cause material changes of responsibility; They materially increase the burden or risk; They require special skills to complete

Resource Video: https://thebusinessprofessor.com/assignment-of-a-contract/

Q89
Different jurisdictions follow different rules regarding the priority of the assignees. True or False

Q90
A gratuitous (gift) assignment cannot be revoked if the assignment is made pursuant to a written document signed by the assignor. If no writing exists, revoking a gratuitous assignment that has not been performed is extremely easy (because no physical transfer has taken place). It can be revoked by:

A90
an assignor later assigning the same right (the last assignment controls); the death or incapacity of the assignor; the delivery of notification of revocation to the assignee or obligor

Resource Video: https://thebusinessprofessor.com/assignment-of-a-contract/

Q91
The party delegating the contract is still potentially liable under the contract if __________.

A91
the delegatee fails to perform

Resource Video: https://thebusinessprofessor.com/assignment-of-a-contract/

Q92
If the delegatee and the obligee under the contract enter into a ____________, the delegator is relieved of responsibility.

Q93
Under what conditions is a party relieved from her obligations under a contract?

A93
Perform the contract; Either or both parties are released from the contract; Either or both parties breach the contract

Resource Video: https://thebusinessprofessor.com/duty-of-performance/

Q94
An _________ contract is one in which the parties have performed their duties under the contract.

Q95
An _________ contract is one in which the parties have not yet performed their obligations under the agreement.

Q96
__________ by a party means that the performing party has fulfilled every duty required by the contract.

Q97
__________ of a contract means less than complete performance; but, the level of performance is sufficient to avoid a claim of breach of contract.

Q98
__________ of a contract entails performance at a level below what is reasonably acceptable.

Q99
A _________ contract is one that has multiple parts or is divided up into segments.

Q100
In a divisible contract:

A100
Each installment has duties or obligations that must be completed; Performance of one segment does not relieve a party from the obligation to perform the other segments; Breach of one segment does not excuse performance of the other segments by the parties.

Resource Video: https://thebusinessprofessor.com/what-is-a-divisible-contract/

Q101
An individual is NOT relieved from her duty to perform a contract in which of the following scenarios:

A101
A party gets a better offer

Resource Video: https://thebusinessprofessor.com/discharge-from-contract/

Q102
______________ are facts or situations that must materialize (or fail to materialize) for either or both parties to have the duty to perform a contract.

Q103
A ____________ is where something must take place or a situation must arise prior to or before a party to a contract has a duty to perform.

Q104
A _____________ excuses contractual performance if some future event takes place or situation arises.

Q105
______________ means to offer or attempt to perform the agreement.

Q106
A party can avoid her obligation under the contract by failing to accept the other party’s tender of performance. True or False

Q107
The ___________ states the buyer tendering payment to the seller of a good is a condition that must be satisfied before the seller has the duty to deliver the good.

Q108
The ___________ requires that a service provider must tender performance before the other party has a duty to pay for those services.

A108

Q109
A party may be excused from her duty to perform under a contract if performance becomes impossible (impossibility of performance) through no fault of her own. Which of the following is not an events that makes a contract impossible:

A109
A party is too busy to perform her obligations

Resource Video: https://thebusinessprofessor.com/impossibility-and-impracticability/

Q110
_____________________ excuses a party from her duty to perform when performance of a contract by a party has become unfeasibly difficult or costly to perform.

A110

Q111
Impracticability will only excuse a party from performing a contract where the excused party did NOT have control over (or was not at fault for) the condition that made performance impracticable. True or False

Q112
__________ may excuse a part from a contract when circumstances arise that fundamentally frustrate the party’s reason or purpose for entering a contract.

Q113
The requirement(s) for a frustrating circumstance to relieve or excuse an obligation under a contract is/are as follows:

A113
the party cannot have assumed the risk of the circumstance (in the contract); The party cannot be at fault for the occurrence or the non-occurrence of the event or circumstance; The occurrence or non-occurrence must have been a basic assumption on which the contract was made.

Resource Video: https://thebusinessprofessor.com/frustrating-purpose-in-a-contract/

Q114
_________ Is when a party intentionally relinquishes a right to enforce the contract. It is generally employed after a party fails to perform.

Q115
_________ Is when one party is relieved from her promise of performance. It generally occurs before a contracting party has to perform.

Q116
___________ entails a failure to perform material duties in accordance with the agreement, including a complete lack of performance, partial performance of the material duties, or performance that fails to meet the demanded standard.

Q117
Remedies or solutions available for a breach of contract include:

A117
Negotiated Settlement, Arbitration, Litigation

Q118
____________ are court-awarded damages to put the plaintiff in the same position as if the contract had been performed. It includes lost profits on the contract and the cost of substitute performance.

Q119
____________ are party’s lost profits from the other party’s breach of contract are the expected gains from performance of the contract. This would generally mean the value received minus the costs incurred in performing.

Q120
____________ are court-awarded damages arising from unusual losses which the parties knew would result from breach of the contract

Q121
____________ are damages specified in the contract in the event of non-performance by either party. They are appropriate where real damages for breach of contract are likely to be uncertain.

Q122
____________ include a small amount awarded by the court to the plaintiff for a breach of contract, which causes no financial injury to the plaintiff.

Q123
____________ is a court-ordered, equitable remedy available when the subject matter of the contract is unique. This court order directs a party to perform her duties under the contract. The court will only apply this remedy when the subject matter of the agreement is truly unique and irreplaceable.

Q124
___________ occurs when a party makes a conscious decision to breach a contract after balancing the costs of complying against fulfilling the contractual obligation. This normally arises in situations where a party will incur fewer losses or make more money by breaching the contract than the party would suffer in compensatory or consequential damages if sued.

Q125
This rule or doctrine concerns the evidence that parties may introduce to the court interpreting the disputed contract. Specifically, it addresses the introduction into court of any evidence of the parties’ agreement that arose prior to the execution of the final agreement and is not included within the written document.

A125
Parol evidence rule

Resource Video: https://thebusinessprofessor.com/parole-evidence-rule/

Q126
This rule either allows or disallows a party from introducing that evidence to the court to modify or add terms to a contract. The purpose of this rule is to prevent confusion in the interpretation of the contract and fraud by any party against another.

A126
Parol Evidence Rule

Resource Video: https://thebusinessprofessor.com/parole-evidence-rule/

Q127
____________ primarily serves to exclude any evidence of prior negotiations (either before or contemporaneous with the signing of the contract) that has the effect of altering the express terms of the agreement.

A127
Parol Evidence Rule

Resource Video: https://thebusinessprofessor.com/parole-evidence-rule/

Q128
Pursuant to the Parol Evidence Rule, information or communications contemporaneous with execution of the contract may be admissible in interpreting the contract, but are not admissible if they _____________.

A128
expressly contradict unambiguous, contract terms

Resource Video: https://thebusinessprofessor.com/parole-evidence-rule/

Q129
For the parol evidence rule to apply, the contract must be _____________.

A129
Fully integrated - the final and complete agreement between the parties

Resource Video: https://thebusinessprofessor.com/parole-evidence-rule/

Q130
A(n) _____________ is a provision in a contract that says that the contract is a complete and final understanding of all the terms of the agreement. Some of these clauses will specifically state that any outside information or communications contemporaneous with the execution of the contract or prior thereto should not be considered a part of the contract.

A130
integration clause (also known as a “merger clause”)

Resource Video: https://thebusinessprofessor.com/parole-evidence-rule/

Q131
_____________ is when the contract contains all of the facts or information regarding the parties’ agreement.

Q132
_____________ is when the written document may contain only part of the information constituting the agreement between the parties.

Q133
Extrinsic evidence or information prior to or contemporaneous with the formation of the contract cannot be introduced to contradict the contract. Nonetheless, it may be necessary to employ extrinsic evidence or information from outside of the contract for the following reason(s):

A133
to aid in the interpretation of existing terms (for example, when an ambiguity exists); to show that a writing is or is not an integration; to establish that an integration is complete or partial; to establish subsequent agreements or modifications between the parties (i.e., those arising after the contract is completed); to show that the terms of the contract were the product of illegality, fraud, duress, mistake, lack of consideration or other invalidating cause.

Resource Video: https://thebusinessprofessor.com/exceptions-to-the-parol-evidence-rule/

Q134
Generally, outside (parol) evidence may be introduced to clear up an ambiguity that is obvious on the face of the document. This is known as a ____________.

Q135
If a party claims that the contract contains an ambiguous term, but it is not obvious on the face of the contract, the party is claiming that a _____________ exists.

Q136
If the court determines that an ambiguity exists, it may consider extrinsic evidence to resolve the ambiguity. True or False


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