Black Letter Law

Question 1

In a shipment contract, the risk of loss passes to the buyer when ____, unless the goods are ____.

Answer 1

the goods are delivered to the carrier; defective

Question 2

A debtor’s payment of a smaller sum than due on an undisputed debt ____ be considered sufficient consideration for a promise by the creditor to discharge the debt.

Answer 2

will not

Question 3

A contract to ____ can be delegated.

Answer 3

manufacture and deliver limited edition plates

Question 4

Exceptions to the general rule that all duties may be delegated are:

Answer 4

1. involving personal judgment and skill
2. special trust has been placed in the delegator
3. delegation will materially change the obligee’s expectancy
4. delegation of which is restricted in the contract

Question 5

When goods covered by a sales contract are defective, the risk of loss is on the buyer despite the defects ____.

Answer 5

once the defects are cured

If goods are defective, the risk of loss does not pass to the buyer until the defects are cured or the buyer accepts the goods despite their defects.

Question 6

For a writing to be considered an “integration” of an agreement between two parties, the parties must intend that the writing ____.

Answer 6

embody the final expression of their bargain

Question 7

It is not necessary that an integration include ____ of a contract.

Answer 7

all relevant terms

Question 8

A waiver of a condition severs the right to treat the failure of the condition as a ____.

Answer 8

total breach excusing counterperformance

Question 9

In the case of a sale of goods contract, if the standard measure of damages does not adequately compensate a seller for the buyer’s breach because the seller can manufacture or obtain as many goods as he can sell, he may recover damages based on ____.

Answer 9

lost profits

Generally, the lost profit is measured by the contract price with the breaching buyer minus the cost to the seller.

Question 10

Under Article 2, if the buyer has a right to reject the goods, risk of loss does not pass to the buyer until ____

Answer 10

the defects are cured or the buyer accepts the goods despite the defects

Question 11

Implied warranties may be disclaimed by specific or general disclaimers.

General disclaimers may include:

Answer 11

(a) language such as “as is” “with all faults”
(b) examination of goods by the buyer
(c) a refusal to examine when the defects would be revealed by examination
(d) course of dealing, course of performance, or usage of trade

Question 12

A conspicuous writing and a disclaimer mentioning merchantability are both ____.

Answer 12

specific disclaimer methods

Question 13

Under a UCC Article 2 shipment contract, the seller’s obligation of tender and delivery is fulfilled when the seller puts the goods in the hands of a reasonable carrier, obtains and tenders any documents necessary to enable the buyer to take possession, and ____.

Answer 13

promptly notifies the buyer of the shipment

Question 14

What does it mean if a term is “collateral” to a written agreement?

Answer 14

The term is related to the subject matter of the agreement but is not part of the primary promise.

Question 15

In an auction without reserve, once the auctioneer calls for bids on an article or lot, that article or lot cannot be ____.

Answer 15

withdrawn unless no bid is made within a reasonable time

Question 16

If the auction is with reserve, the auctioneer may ____.

Answer 16

withdraw the goods at any time until he announces completion of the sale

Question 17

In an auction with and without reserve, a bidder may ____ until the auctioneer announces completion of the sale, but a bidder’s retraction ____.

Answer 17

retract his bid; does not revive any previous bid

Question 18

The subsequent physical incapacity of a person necessary to effectuate a personal services contract serves to discharge the contract by:

Answer 18

impossibility

Question 19

____ occurs when the purpose of the contract has become valueless by virtue of a supervening event.

Answer 19

frustration

Question 20

Unless the contract provides otherwise, in a shipment contract, payment is due ____.

Answer 20

when the goods are put in the hands of the carrier

Question 21

In a destination contract, which also involves a carrier, the price is due when ____.

Answer 21

the goods reach the named destination

Question 22

In a noncarrier case, one in which it appears that the parties did not intend that the goods be moved by carrier, unless the contract provides otherwise, the sale is for cash and the price is due ____.

Answer 22

concurrently with tender of delivery

Question 23

An oral assignment of rights under an insurance contract is ____.

Answer 23

effective

Question 24

The mere fulfillment of a condition to receive a gift is ____ consideration.

Answer 24

not adequate

Question 25

____ or ____ may be sufficient to establish bargained-for consideration.

Answer 25

peace of mind; the gratification of influencing the mind of another

Question 26

If a watch owner leaves her watch for repairs at the store where it was purchased and the store then borrows money from a bank, giving the bank the owner’s watch as pledged collateral, ____.

Answer 26

the watch owner can recover the watch from the bank immediately The store had no right or power to use the watch as collateral, and title to the watch remained with the watch owner at all times. The watch owner is under no duty to pay the bank the debt owed before recovering the watch. The watch owner was not a party to the contract between the store and the bank.

Question 27

A suretyship contract is supported by proper consideration:

Answer 27

If the surety is compensated or makes the suretyship promise before (or at the same time as) the creditor performs or promises to perform.

Question 28

Under the UCC, what is required to cure a defective delivery in a single delivery contract?

Answer 28

Reasonable notice of the intention to cure and a new tender of delivery of conforming goods within the time for performance.

Question 29

Under the warranty of ____, goods are warranted to be fit for the ordinary purpose for which such goods are used.

Answer 29

merchantability

Question 30

The ____ for a particular purpose arises when a seller has reason to know the particular purpose for which the goods are to be used and that the buyer was relying on the seller’s skill and judgment to select suitable goods when the buyer bought the goods.

Answer 30

implied warranty of fitness

Question 31

In a case of anticipatory repudiation, how long does the repudiating party have to retract the repudiation?

Answer 31

Until performance is due, unless the other party has materially changed position in reliance on the repudiation.

Question 32

Under the doctrine of substantial performance, can one party recover damages for the other party’s incomplete performance?

Answer 32

Yes, that party will be able to deduct any damages suffered due to the incomplete performance.

Question 33

Mutual mistake can be a defense to the formation of a contract if:

Answer 33

The mistake concerns a basic assumption on which the contract is made.

Question 34

A ____ occurs when one party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due.

Answer 34

prospective inability or unwillingness to perform An example of this would be when a buyer declares bankruptcy prior to the time set for performance of the contract.

Question 35

As a general rule, delay in performance in ____ contract is more likely to be deemed a material breach than delay in performance in ____ contract.

Answer 35

a mercantile; a land In mercantile contracts, timely performance as agreed is important, and unjustified delay is considered material. In contrast, more delay is usually required in a land contract for a finding of materiality.

Question 36

“Benefit of the bargain” damages are also known as:

Answer 36

expectation damages

Question 37

____ damages put the plaintiff in the position she would have been in had the contract never been formed.

Answer 37

reliance

Question 38

____ damages are special damages and reflect losses over and above standard expectation damages.

Answer 38

consequential These damages result from the nonbreaching party’s particular circumstances. Usually, consequential damages are lost profits resulting from the breach.

Question 39

____ damages may be granted for breaches of contracts for the sale of goods for expenses reasonably incurred by the buyer in inspection, receipt, transportation, care, and custody of goods rightfully rejected and other expenses reasonably incident to the seller’s breach, and by the seller in storing, shipping, returning, and reselling the goods as a result of the buyer’s breach.

Answer 39

incidental

Question 40

____ will not terminate the offer when it is consistent with the idea that the offeree is still keeping the original proposal under consideration.

Answer 40

an inquiry into changing the terms of the offer

Question 41

In an installment contract situation, an installment can be rejected by the buyer ____.

Answer 41

if there is a nonconformity that substantially impairs the value of that installment and cannot be cured

Question 42

____ might be considered valuable consideration.

Answer 42

a promise with no economic value

Question 43

A ____ is not considered valuable consideration as no bargained-for exchange is present.

Answer 43

promise to make a gift

Question 44

Which of the following types of evidence may be outside the scope of the parol evidence rule?

Answer 44

evidence of a condition precedent

Question 45

The parol evidence rule prohibits admissibility of ____ that seeks to ____.

Answer 45

extrinsic evidence; vary, contradict, or add to an integration

Question 46

Courts will look primarily at the ____ of the surety’s promise in determining whether a gratuitous suretyship contract is supported by proper consideration.

Answer 46

timing

Question 47

A writing is required for an assignment ____.

Answer 47

of wages

Question 48

Will a binding promise to perform serve to discharge a party’s duty to perform?

Answer 48

No, because the tendering party must offer to perform and possess the present ability to perform.

Question 49

A contract entered into between an infant and an adult is ____.

Answer 49

voidable by the infant but binding on the adult

Question 50

In the case of an anticipatory repudiation, the nonrepudiating party ____.

Answer 50

may sue immediately or wait until the date performance is due to sue

Question 51

A promise that the promisor will choose one out of several means of performance, most of which involve a legal detriment to the promisor is an example of what?

Answer 51

an illusory promise

Question 52

What is the effect of the destruction of the subject matter of an offer prior to acceptance?

Answer 52

The offeree’s power of acceptance is terminated.

Question 53

Homeowner enters into a contract with Paver for Paver to pave Homeowner’s driveway for $500. Paver dies immediately after beginning the project. Paver’s contractual duties will:

Answer 53

not be discharged The death of a person necessary to effectuate the contract serves to discharge it for impossibility. However, personal service contracts are discharged in this manner only if the services involved are unique. If the services are the kind that can be delegated, the contract is not discharged by the death of the person who was to perform them.

Question 54

Under the UCC, when a thief attempts to sell the goods he has stolen, the title he passes to the purchaser is ____.

Answer 54

always void A seller can transfer only the title he has or has power to transfer. Therefore, even a good faith purchaser for value generally cannot cut off the rights of the true owner if the seller’s title was void.

Question 55

A and B enter into a contract under which A will service B’s car for $500. If, despite a clause prohibiting assignment of “the contract” by the parties, A assigns the contract to C, what is the result?

Answer 55

C has the right to the $500, but A has the obligation to service B’s car. Absent circumstances suggesting otherwise, a clause prohibiting assignment of “the contract” is construed as barring only the delegation of the assignor’s duties.

Question 56

If a person leaves an item of jewelry with a jeweler for repair, and the jeweler sells the item to an unsuspecting purchaser, ____.

Answer 56

the purchaser has title to the item and the true owner cannot recover it Entrusting goods to a merchant who deals in goods of that kind gives him the power (but not the right) to transfer all of the rights of the entruster to a buyer in the ordinary course of business.

Question 57

So long as the time for performance has not yet passed, a repudiating party may withdraw his repudiation ____.

Answer 57

unless the other party has indicated that she considers the repudiation final

Question 58

At common law, ____ will excuse a contract condition.

Answer 58

an estoppel waiver Whenever a party indicates that he is waiving a condition before it is to happen and the person addressed detrimentally relies on the waiver, courts will find a binding estoppel waiver.

Question 59

If an assignee for value discovers that the assignor had previously assigned the same contract rights to another party for value, the assignee may ____.

Answer 59

sue the assignor for breach of warranty

Question 60

Under the doctrine of ____, risk of fortuitous loss between the time the sales contract is signed and the closing is placed on the buyer.

Answer 60

equitable conversion

Question 61

A misrepresentation is a ____.

Answer 61

false assertion of fact

Question 62

A misrepresentation is fraudulent if it is intended to ____ and the maker ____.

Answer 62

induce a party to enter into a contract; (a) knows or believes the assertion is false (b) knows that he does not have a basis for what he states (c) implies with the assertion

Question 63

When contract language is ambiguous, and has at least two possible meanings, if neither party is aware of the ambiguity at the time of the contracting there is ____ unless ____.

Answer 63

no contract formed; both parties happened to have intended the same meaning

Question 64

Reformation is the remedy whereby the ____ so that it ____, typically in the case of mutual mistake.

Answer 64

writing setting forth the agreement between the parties is changed; conforms to the original intent of the parties

Question 65

Reformation is also available when the writing is ____.

Answer 65

incorrect because of innocent or fraudulent misrepresentation

Question 66

Restitution is a ____ remedy designed to ____.

Answer 66

monetary; prevent unjust enrichment

Question 67

A novation ____.

Answer 67

substitutes another party for one of the original parties to the contract

Question 68

When a contract for the sale of goods is missing the price term, the price will be ____.

Answer 68

a reasonable price at the time of delivery

Question 69

An important difference between the rights of a donee beneficiary and is that ____.

Answer 69

a creditor beneficiary can sue the promisee on the underlying obligation, but a donee beneficiary cannot

Question 70

If the parties to an otherwise valid contract have included a term that is too vague, ____.

Answer 70

the contract will be unenforceable unless the vagueness can be cured

Question 71

The failure of a condition:

Answer 71

discharges the liability of the promisor whose obligations on the conditional promise never mature

Question 72

A vague term in a contract can be cured by ____.

Answer 72

part performance

Question 73

Reservation of an unqualified right to cancel or withdraw at any time would be considered an ____.

Answer 73

illusory promise

Question 74

For breach of a sale of goods contract, the buyer’s damages are measured as of the ____, while the seller’s damages are measured as of the ____.

Answer 74

time he learns of the breach; time for delivery

Question 75

In a contract for the sale of goods, ____ may recover consequential damages.

Answer 75

only the buyer

Question 76

An agreement that a contract will not become binding until a certain condition has occurred is a ____.

Answer 76

condition precedent to the contract's effectiveness

Question 77

For an assignment to be effective, there must be ____.

Answer 77

an adequate description of the right being assigned and present words of assignment

Question 78

An assignment for value is ____.

Answer 78

irrevocable

Question 79

An assignment is for value if it is done for ____.

Answer 79

(a) consideration (b) taken as security for (c) payment of a preexisting debt

Question 80

If it reasonably appears that the parties intended to make a valid contract, a court may apply the presumption that the parties’ intent was to include a reasonable term to rectify any ____ term.

Answer 80

missing

Question 81

At common law, a modification of a contract required ____ because the parties were ____.

Answer 81

consideration; under a preexisting legal duty to perform

Question 82

A ____ is one the occurrence of which cuts off an already existing duty of performance.

Answer 82

condition subsequent

Question 83

A ____ is one that must occur before an absolute duty of immediate performance arises in the other party.

Answer 83

condition precedent

Question 84

Most states hold that a minor is bound to pay the reasonable value of ____.

Answer 84

necessities

Question 85

In a unilateral contract, acceptance of an offer is possible only by ____.

Answer 85

performing a stipulated act

Question 86

In a bilateral contract, acceptance of an offer is accomplished by ____.

Answer 86

promising to do the stipulated act

Question 87

The assignee is subject to the ____.

Answer 87

same defenses that the obligor has against the assignor

Question 88

If the man had a reasonable (good faith) belief in the enforceability of his claim, his surrender of the claim is ____.

Answer 88

valid consideration

Question 89

Consideration will be considered adequate, provided that there is ____.

Answer 89

some possibility of future value in the bargained-for act (even if the bargained-for act never actually becomes valuable)

Question 90

____ can serve as a substitute for consideration.

Answer 90

promissory estoppel

Question 91

Under the doctrine of promissory estoppel, a promise is enforceable even without consideration if ____

Answer 91

necessary to prevent injustice if the promisor should reasonably expect to induce action or forbearance, and such action or forbearance is in fact induced

Question 92

The concept of ____ is the refusal of a court to enforce a contract provision or an entire contract to avoid “unfair” terms.

Answer 92

unconscionability

Question 93

An offer creates a power of ____.

Answer 93

acceptance in the offeree and a corresponding liability on the part of the offeror

Question 94

An acceptance is a ____.

Answer 94

manifestation of assent to the terms of an offer