3 - Contract Formation - Consideration, Defenses, And SoF Flashcards

1
Q

How does the UCC treat the pre-existing duty rule?

A

It rejects this rule

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2
Q

How do you know if a contract modification is binding?

A

Ask whether the modification was made in good faith - if so, it is binding without new consideration

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3
Q

What are the seven defenses to contract formation?

A

1) Misunderstanding
2) Incapacity
3) Mistake
4) Fraud, misrepresentation, and nondisclosure
5) Duress
6) Illegality
7) Unconscionability

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4
Q

When is a contract or term unconscionable?

A

No reasonable person in the position of the party would have agreed to it

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5
Q

What are the two types of unconscionability?

A

1) Procedural Unconscionability - a defect in the bargaining process such that a hidden term surprises a party, or they had an absence of meaningful choice
2) Substantive Unconscionability - is there a “rip-off” in the contract or term

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6
Q

What is the reason for the Statute of Frauds?

A

To prevent false assertions about a contract that was never formed

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7
Q

What two questions should you ask if you are in SOF world?

A

A - Does the Statute of Frauds apply to this transaction?

B - If so, has the SOF been satisfied?

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8
Q

What satisfies the Statute of Frauds?

A

Requires a writing signed by the other side, or some performance made on the purported deal

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9
Q

What UCC contracts are in SOF world?

A

A goods contract with a price of $500 or more

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10
Q

What terms or elements must be in a SOF writing?

A

It must be signed and include the quantity sold, but does NOT need to mention the price

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11
Q

What if you list the wrong quantity?

A

The contract is only enforceable under SOF for the quantity mentioned in writing

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12
Q

When will part performance satisfy SOF?

A

It will only be good for the quantity that has been delivered and accepted

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13
Q

Are custom-made or specialty goods covered by SOF?

A

They are exempt from SOF

-A maker can satisfy the SOF as soon as it makes a substantial beginning toward manufacturing the goods

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14
Q

What is a judicial admission?

A

A statement in a pleading or during testimony that says a contract was created

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15
Q

Does a judicial admission satisfy the SOF?

A

It satisfies the SOF under the UCC

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16
Q

What is a merchant’s confirming memo?

A

A writing sent from one party to another claiming prior oral agreement that is signed and contains quantity
-Both parties must be merchants

17
Q

Does a merchant’s confirming memo satisfy SOF?

A

Failure to object to a conforming memo within 10 days will satisfy the SOF, but only if both parties are merchants

18
Q

If a contract under SOF is modified, must that modification also satisfy SOF?

A

Not Automaticallyy

19
Q

How do you know when a contract modification must meet the SOF?

A

Ask whether the deal with the modification would be in SOF world

  • If YES, SOF requirements must be met for the modification
  • If NO, there is no SOF requirement, even though the initial deal was under SOF