1. Briefly define and discuss the following terms:  express contract, implied contract and quasi-contra ct

·        An express contract is an agreement whereby the terms of the contract are illustrated in
either written or spoken word format that exists in a written or recorded form.  This is a partys deliberate promise that is designed to allocate risk.

·        An implied contract represents an agreement in which the conditions of the contract are comprehensively or partially inferred by the conduct or behavior of two or more mutually assenting parties or from their surrounding circumstances.

·        A quasi-implied contract in law is a legally enforceable instrument by common law recognized by the courts seeking to avoid an unjust enrichment of any party who has received, retained and benefited from valuable goods and services where it is socially reasonable to expect payment for those goods and services.  A person finding a wallet would have an obligation to return it to its owner thereby creating a contractual obligation to perform by common law.

2.      Identify and discuss the essential elements of contract formation

The formal requisites of a contract include:

1.                  A real unilateral or bilateral mutual assent consisting of a offer and acceptance of two or more

2.                  competent parties (an infant or a mentally challenged person is not eligible) , in a

3.                  form required by law (e.g.,  written or recorded document), supported by

4.                  a valid consideration or benefit of the bargain in return for performance of legally binding obligations, and having a

5.                  valid purpose and a legitimate subject matter.

1.                  Mutual Assent

The formation of a contract occurs when two or more parties create an agreement by simultaneous compliance.  This process is consummated through the affirmation of one partys offer and another partys acceptance.  Upon the occurrence of an offer and acceptance, the parties have affirmed their mutual assent and have created a legally binding contract.

The Offer

The inclination to enter into a bargain agreement represents the offer.  This offer must provide a reasonable person an incentive whereby the offeree understands that their assent to any bargain proposed by the offeror creates a legally binding contract and that their acceptance of that bargain will necessitate performance.

The Acceptance

Acceptance represents the offerees assent to the terms of the original offer communicated to the offeror at a time prior to revocation or termination of the offer.  Acceptance of an offer represents the genuine manifestation by the offeree of her assent to consummate a contractual relationship based upon the conditions and terms made by the offeror in the initial offer.  The manifestation of mutual assent of the parties occurs upon acceptance of an offer.  The offerors assent is illustrated by her offer and the offerees by his acceptance, henceforth, a contract comes into formation.

Effective acceptance

In order to determine whether an offerees communication constitutes a formal acceptance, it is necessary to examine whether the terms of the offer have been performed in the proscribed manner, at the proper location, correct time and by a specifically designated party.

If the offer is made available to the public, generally, it may be accepted by any public person or member of a group cognizant of its existence.

When offers are directed towards a specific person, only that person may accept it and this acceptance may consist of:

a.             the making of a promise

b.            the performance of an act

c.             a forbearance, or

d.            silence.

A.              The Making of a Promise

This form of acceptance consists of the offeree making a promise to perform in compliance with the terms and conditions of an offer initiated by the offeror.

B.               Performance of an Act

In a bilateral agreement, offer and acceptance each contain a promise of performance that is favored by law.  The courts have held that acceptance under this type of agreement must consist of the complete performance of the obligation requested.  Revocation of the offer prior to the completion of the requested contractual directive being performed does not result in a completely enforceable contract.  A reciprocal exchange of promises and valid acceptance requies the offeree to possess the competent capacity to accept the unequivocal terms of acceptance and communicate that acceptance to offeror. 

Under the mailbox rule, acceptance can undergo a timeline from the time an acceptance was mailed to the time acceptance is actually received by the offeror.  Bilateral contracts can experience a timeline whereby a contract is formed only upon acceptance received by the offeror.  If offerors acceptance is rejected by the offeree, no contract is formed.  This rule only applies to acceptances whereas other acts, such as rejection, are only effective upon receipt.

A unilateral contract acknowledges formal acceptance by performance or non-performance of an act.  Upon the initiation of specific performance, the offeror may not revoke the offer.  The offeree must be cognizant of the offer and the offer that manifests acceptance obligations is to take the form of some act or forbearance. 

C.              Forbearance

An offerees acceptance by forbearance or refraining to perform a specific act during a fixed or reasonable period of time constitutes a legitimate form of acceptance when they satisfy the contractual obligation to forbear in accordance with the terms stipulated in the offer.

D.              Silence

In numerous instances, the courts have held that in specific contractual relationships, an offerees silence may imply the acceptance of an offer and have a recent history deciding many cases on the theory that the offeree was obligated to either communicate to the offeror in particular circumstances or that the offeree was a beneficiary of offerors transaction, or the offeree exercised dominion over the subject matter of the original offer.

1.                  A person must be an offeree to accept agency who represents another or a party must know the principals and the agency relationship or else there is no legitimate offer made.

2.                  A mistake in the identity of the offeree may invalidate the offer.

3.                  The offeror must accept agreement with the terms of the offer and these terms must be expressed in certain terms.

Communication of Acceptance

When the contract conditions express that an offerees acceptance must take the form of a promise, the offerees promise is not  considered an acceptance until it is communicated to the offeror in the proper manner, time and place requested in the offer.  When oral proposals are made, oral acceptance is legally recognized when communicated by the offeree to the offeror.  A contract

Acceptance in Accordance to Offer

The acceptance must comprehensively conform to every term and condition stipulated in the offer.  An acceptance must be in accord to the conditions of the offer, must be definite and certain, offeree cannot misinterpret the stipulations of the offer and the formation of the agreement must be followed by formal writing. 

2.         Capacity of the Parties

Lacking the contractual capacity to form a contract doesnt necessarily preclude the formation of the contract  but it does result in the offeree having an election to avoid his or her obligations by raising the lack of capacity defense.

1.            minors under the age of 18 may form contracts but their obligations are voidable.

2.            mental incompetents such as insane, mentally challenged or intoxicated persons lack the capacity to enter into enforceable contracts.

3.            Form Required by Law

Evidence of the existence of a contract must be manifested in an acceptable form that is required by law.  The statute of frauds identifies the requisite acceptable forms that an agreement must take in order for the courts to recognize a breached partys legal remedies.

4.            Consideration

Consideration is a bargained-for medium of exchange that has quantifiable legal value.  Only when a contract is supported by consideration will it be enforced.  The elements of valid consideration occur under the following conditions:

a.                   Reciprocally bargained-for exchange where a) parties must exchange something, b) forbearance is sufficient if it benefits the promisor, c) gifts do not qualify as consideration because they are not bargained for, and  d) past or moral consideration is invalid.

b.                  A party must bear a legal detriment where a pre-existing legal obligation is not consideration.

c.                   Promissory estoppel, detrimental reliance and modification under the UCC are adequate substitutes for consideration.

5.            Valid Purpose and Subject Matter

Conspiracy to commit a crime by engaging in the sale of an illegal subject matter creates a voidable contract.  When an illegal subject matter or participation of one of the parties is illegal, a) the offer is immediately revoked; and b) when either of the two is declared illegal after the formation, but before performance, the obligations of both parties are immediately discharged under the doctrine of impossibility.

3. Briefly discuss the concept of promissory estoppel.

Promissory estoppel is a rule or doctrine of law that prohibits or estops a promisors capacity to avoid liability for failing to fulfill the obligations of an agreement upon which a promisee has justifiably relied upon in the acceptance through their complete performance of the offer and anticipation of receipt of promisors promise.  This rule of law is sometimes referred to as the doctrine of justifiable reliance). 

Section 90(1) of the Restatement of Contracts illustrates the necessary elements of the doctrine of promissory estoppel:

• There must exist a previously agreed upon promise whereby the promissor reasonably anticipates inducing a beneficial reaction or forbearance on the part of promisee.
• The promise must infer or induce such action or forbearance; and
• The situation or condition must irrefutably illustrate an expectation of an inequitable injustice than can only be avoided through the vigorous enforcement by the courts of the land of the initial promise.

This rule is important in the enforcement of commercial promises.   However, in Hoffman v. Red Owl Stores, Inc., 133 N.W.2d 267 (Wis. 1965), even though defendants representatives failed to meet the necessary formal requirements that constitute a legitimate contractual offer, the court affirmed plaintiffs successful invocation of the doctrine of promissory estoppel to recover damages where plaintiff justifiably relied upon the promise of defendants future proprietorship in his store.

4. What are the requirements of the Statute of Frauds?  What types of agreements are affected?

There are four requirements regarding the writing of a contract to be enforced under the Statute of Frauds:

• The content of the contract must identify the subject matter of the contract and the parties to it.  This agreement must illustrate that a contract exists between two parties with respect to a particular subject matter.  The contract must contain the conditions of the unperformed promises.
• The contract must be in a legitimately recognized form recognizable by a court of law in the form of a letter, memo, receipt, invoice, check or entered as an entry in a diary.
• A signature must consist of the signers thumbprint or initials.
• A memorandum may be signed any time before a lawsuit is instituted.

This statute was created in order to verify that an alleged contract was indeed entered into.  This statute requires certain types of contracts be in writing in order to be enforced.  If the subject matter of that agreement falls into any of the following categories, then this contract, whether express, implied or quasi-implied, must be in writing in order to be enforced.

1. One Year Provision - A unilateral or bilateral contract impossible to perform within a period of one year.  Such an agreement, by its terms, is not to be performed within one year from the date of formation and must be in writing in order for the courts to enforce.
2. Executor-Administrator Provision - A contract obligates an estate administrator or executor, through the instrument of a will, to answer for a duty obligated via the last testament of a decedent.
3. Suretyship Provision - A promise to answer for the debt, default or miscarriage of another must be evidenced by a written document. Under this statute guarantor who cosigns a mortgage loan agreement with another party is an agreement covered under this section of the statute.  There can be no suretyship agreement unless there exists a primary obligation and secondary (collateral) provision.
4. Marriage Provision a contract created upon consideration of marriage.
5. Land-contract Provision contracts representing an interest in land to sell or buy or lease land, real estate mortgages and easements. 
6. The Uniform Commercial Code covers contracts that are created for the sale of goods exceeding the value of $500 or more.  This is governed by the UCC under Article II Sales of Goods and Article IX Secured Transactions (collateral) of the UCC.

5. What is the purpose of a merger clause?

The purpose of incorporating a merger clause in a contract is to prevent the enforcement of the parole evidence rule from excluding extrinsic evidence that a prior or contemporaneous oral agreement  existed and possesses the power to alter the obligations of a wholly integrated written contract.  This clause contains the entire understanding of the parties and merges the written consent and the parol agreement as one merged agreement.

The merger clause provides an exclusion to the parol evidence rule whereby a written instrument must contain this provision to the effect that this contract cannot be changed by an executory or extrinsic agreement unless such executory or extrinsic agreement is in writing and signed by the party against whom enforcement of the change is sought.

Incorporating a merger clause in a contract precludes the parol evidence rule from denying the existence or evidence of an outside agreement from altering the terms of a pre-existing agreement.  A merger clause affirms the entire agreement between the parties and acknowledges that any partially integrated agreements will be merged to all previous agreements and negotiations are formally integrated in this hybrid amalgamated agreement and that any future additions or alterations to this contract are applicable under the parole evidence rule.  Under this rule, the entire meaning of the parties and the content of their relationship is now illustrated in this wholly integrated agreement.

With the inclusion of a merger clause, any written contract may be changed, modified or waived in whole or in part by a subsequent one, express, written, oral or implied.  Accordingly, extrinsic or parol evidence may be relied upon to establish that the parties had modified their agreement after its execution. Allied Chemical Corporation. V Alpha Portland Industries, Inc. (4^th Dept) 58 App. Div.2d  975, 397 N.YS.2d 480

The merger clause allows a parol modification of a contract agreed to by parties where the original contract was by parol.  The parol evidence rule will not apply to contracts containing this clause.   This clause affirms the existence of a extrinsic object identifying an external agreement that is an independent partially integrated agreement that has the capacity to be integrated with a wholly integrated agreement.

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The parol evidence rule prevents the use of extrinsic evidence in altering the terms of an unambiguous and integrated agreement.  By including a merger clause in a contract, this rule no longer applies because this clause identifies the existence another agreement partially integrated parol agreement having  the power to alter or become merged with an already existing written contract.

6. Compare and contrast the concepts of malum in se and malum prohibitum. 

Malum in se refers to a parties behavior that is prohibited by nature of its act (drug deal), while malum prohibitum makes a reference to conduct that is prohibited by statute.  Courts do not enforce any contractual obligations alleged to arise out of an illegal transaction or agreement.  Although this rule applies to both malum in se and malum prohibitum contracts, the courts tend to generally enforce violations of the statutory provisions as long as the malum prohibitum offense is not criminal in nature. 

The courts have provided recovery remedies for plaintiffs to an illegal contract provided that the plaintiffs conduct was malum prohibitum and not malum in se.  If a contract is malum in se, there is no exception to the rule that no action can be based on such an illegal agreement.

If the subject matter of a bargain or the participation of one or both competent parties creating an illegal contract is illegal then the law has created clear distinctions in identifying the nature of the offenses they are committing through a partys performance of an illegal agreement. 

Malum in se and malum prohibitum definitions represent the different distinctions of illegal acts that are based on time and the intrinsic evil nature of any offense committed during the performance of an agreement.

A good test to conduct is whether any reasonable person could detect the intrinsic wrongfulness by merely consulting their personal consciousness.

7. Are the following statements sufficient to form a valid contract between the parties?

Mr. Jones:  In view of your hard work and loyal service over the past 11 years, I promise to double your bonus this year.

Ms. OBrien:  Thank you.  Im very honored and accept your  offer.

Mr. Jones statement is insufficient to form a valid contract between himself and Ms. OBrien because it lacks the bargained-for  element of consideration.  Past consideration does not legally bind a party to confer a benefit to another party for a present day contract to become enforceable.