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Bar Exam Contracts Outline

Bar Exam Contracts Outline

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Published by Quiana Montgomery

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Published by: Quiana Montgomery on Nov 18, 2010
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CONTRACTS6 BASIC ISSUES FOR TESTING:1.Did the parties form an agreement?
a.
OFFER and ACCPETANCE
- mutual objective assent to be bound by terms b.
Potential preclusion of formation:
1.Ambiguity of language2.Mistake of parties
2.If so, is their agreement a K?
a.
Valuable Consideration
- bargained for legal detriment on bothsides of exchange b.
Absence of Defenses which preclude formation
(i)Personal defenses which render obligations of a party voidablec.
Substitute for Consideration- Promissory Estoppel
3.
Do the terms or subsequent actions of the parties confer and rights orimpose any duties on 3
rd
parties?
a.
3
rd
party beneficiaries
- persons whose rights are defined by thevery terms of the K  b.
Assignees of Rights and Delegates of Duties
- people who enter the picture subsequent to formation in consequence to an actiontaken by 1 of the parties4.
Have the performance obligations created by the K matured (becomepresent duties of performance)?
a.Fix a time and order for performance of the obligations that weremerely promised at the formation stage-use the
Law of Conditions
1.
Express
(arise from terms used by parties in forming bargain) or 
Implied by fact
(though unspoken of by the parties they arise by necessary physical
 
inference of whatthe parties obviously assumed) or 
Implied at Law orConstructive conditions
(arise by operation of law and area last dash measure used to fix a time and order for  performance if the parties have not settled the matter usingexpress conditions).
2.Classified by their affect on the promise:
(i)
Condition Precedent
:
 
Condition that inserts acontingency that must be satisfied before liabilityon the modified promise becomes absolute.(ii)
Condition Concurrent
: Condition that inserts acontingency that must be satisfied simultaneouslywith maturing liability
 
on the modified promise.(iii)
Condition Subsequent
: Always express, never implied. They insert a contingency, the happeningof which, will discharge and extinguish what upuntil that moment had been a present liability to1
 
 perform the promise.
 Now that you have set a time and order for performancecheck to see if performance took place in that order and atthat time.
5.If obligations have matured, has performance been excused?
3 areas of excusable non performance:
a.Performance has become
objectively impossible
{i.e. no one onEarth could carry out performance} b.Performance has become
commercially impracticable
{performance can’t be accomplished except by an expenditure of funds grossly disproportionate to what the parties had assumed atformation}c.
Frustration of purpose
(subsequent to formation of K circumstances have so dramatically altered that the performanceof the other party no longer has any value to this party)
6.If performance has not been excused and performance has not beentendered, you are in BREACH so discuss REMEDIES.
a.
Material breach
 b.
Breach by Anticipatory Repudiation
c.
Breach by voluntary disablement
d.
Damages-
the benefit of your bargain as approximated bymonetary compensatione.
Restitution and Reimbursement
(put the party back in positionshe was in before K formation)f.If party can’t recover a loss of bargain recovery there is
noadequate remedy at law
to make him whole for the material breach of K such an aggrieved party has standing to sue in
Equity
:1.Declaratory judgment2.Specific performance3.Injunctive Relie
II.WHAT IS A CONTRACT?A.General Definition
A contract is a promise or set of promises, for breach of which the law gives aremedy, or the performance of which the law in some way recognizes as a duty.
B. Law of Governing Contracts
Generally, contracts are governed by the common law. Contracts for the sale of goods (movable, tangible property) {not services} are governed by Article 2 of the UCC as well as common law. In such contracts, when Article 2 conflicts withthe common law, Article 2 prevails.
If 
mixed k 
w/ sale of goods and sale of services:
o
If the value of each can be determine bc k divides up and lists payment for each then
apply UCC to sale of goods part andcommon law to sale of services part
.
o
If no value listed for both parts of k then the
general rule
is to2
 
determine which is the basis for the
most important part
of the k and use the law applicable to the most important part.
C. Types of Contracts
Contracts are classified by how they are formed and how they can be accepted.
1.Classified by formation
Contracts may be express (formed by language oral or written) or implied(formed by manifestations of assent other than oral or written language,i.e. conduct)a.Quasi-Contract or Implied in Law K  Not a k, but a way to avoid unjust enrichment by allowing ¶ to bring an action in restitution to recover the benefit she hasconferred to the other party. K price is not recoverable- so k priceis the ceiling for remedy.
2.Classified by Acceptance
Contracts are either 
bilateral 
or 
unilateral 
. Bilateral k requires andexchange of promises. Unilateral k requires acceptance by performance.
Modern view
: most contracts are bilateral even if acceptance is by performance. Unilateral k is limited to 2 circumstances: (i) where offeror clearly indicates that performance is the
only manner of acceptance
; or (ii)where there is an
offer to the public
clearly contemplating acceptance by performance (e.g. a reward offer).
3.Void, Voidable, and Unenforceable Contracts
Certain contracts may not be enforceable:a.A void contract is one without any legal effect from the beginning (e.g. an agreement to commit a crime) b.A voidable k is one that a party may elect to avoid or ratify (e.g.a k by a minor)c.An unenforceable k is one otherwise valid but for which somedefense exists extraneous to formation (e.g. the Statute of Frauds)
Exam Tip
: The distinction bwt void and voidable contracts issometimes important to an exam question. The key thing toremember is that
void contracts cannot be enforced
, but a party
may elect to enforce a voidable contract
.
D
.
Creation of a K 
Three elements are required to create a K:1.Mutual assent (offer and acceptance)2.Consideration or a substitute; and3.No defenses to formation.
Exam Tip
: K formation is a major topic on the exam. For any contractquestion,
be sure that there really is an enforceable contract
; i.e
allthree
of the above elements must be present.
 Fact patterns sometimes greatly emphasize some elements (e.g. offer and acceptance) to try to fool  you into thinking that a contract has been formed, but on closer examination, you find that another element (e.g. consideration) is missing.
3

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