Contract Law & Commercial Transactions Flashcards

Which element is NOT required for promissory estoppel under Restatement (Second) §90?

Answer: Bargained-for consideration

Promissory estoppel takes the place of consideration, so a bargained-for exchange is not required.

A contractor agrees to build a house for $200,000. During construction, they refuse to continue unless the owner pays $20,000 more, and nothing unforeseen has happened. The owner agrees. Under the common law, the promise to pay more is:

Answer: Unenforceable under the pre-existing duty rule

At common law, a promise to do what one is already legally bound to do is not consideration for a modification.

An offeree mails an acceptance on Monday. The offeror gets it Thursday, and the offer said nothing about how to accept. When was the contract formed?

Answer: Monday, when the acceptance was dispatched

Under the mailbox rule, a properly dispatched acceptance is effective when sent.

An offeror promises $1,000 to anyone who paints their fence. The offeree starts painting, and halfway through the offeror tries to revoke. Under Restatement §45:

Answer: An option contract was created when performance began, so the offer cannot be revoked

Starting performance of a unilateral contract creates an option contract, which keeps the offer open for a reasonable time to finish.

Both parties believe a painting is a reproduction and agree on a price of $500. It turns out to be an original worth $500,000. The seller wants to avoid the contract. Which statement is most accurate?

Answer: The seller may avoid it if the mistake was about a basic assumption, had a material effect, and the seller did not bear the risk

A mutual mistake about a basic assumption that materially affects the exchange makes a contract voidable unless the adversely affected party bore the risk.

A 16-year-old signs a one-year gym membership contract. Which statement is correct?

Answer: The minor may disaffirm the contract

Contracts made by minors are generally voidable at the minor's option, except for liability for the reasonable value of necessaries.

A written contract is fully integrated. One party offers evidence that the other made fraudulent statements to induce them to sign. Under the parol evidence rule, the evidence is:

Answer: Admissible, because the rule does not bar evidence of fraud

The parol evidence rule does not keep out evidence offered to show fraud, duress, or mistake.