Ch. 4.8-4.12 Contracts

Question 1

The overarching purpose of rules of ____________ is to determine the parties’ intent. Courts will refer to the following factors, in order of importance:

a. Express words and conduct of the party
b. Course of ___________ - how the partied conducted themselves in the course of performing the contract
c. Course of _______ - how the parties conducted themselves during prior transactions with one another
d. Trade _____ - how words are used customarily or in the market applicable to the parties

Answer 1

interpretation; performance; dealing; usage

Question 2

Courts will also use a variety of Rules of ____________ when trying to determine how a contract should be construed.

Answer 2

Construction

Question 3

In addition to interpretation and construction rules, courts will imply certain terms in order to clarify a contract’s meaning - these implied terms are called ___ ________. Courts impose an implied ____________ of good faith and when a contract does not indicate a level of performance, courts will imply and obligation to use ___________ efforts.

Answer 3

gap fillers.obligation; reasonable

Question 4

The _____ __________ Rule is a rule regarding the kinds of evidence admissible when a party seeks to offer evidence designed to explain an agreement that is in writing. It’s designed to exclude written or oral evidence of commitments made _____ to the actual written agreement b/c it tends to be unreliable.

Answer 4

Parol Evidence; prior

Question 5

A __________ is an event that is not certain to occur. In a contract, it’s when parties agree that performance is contingent on the occurrence of that uncertain event. There are 3 forms of conditions:

a. condition __________ - a condition that must occur before a duty to perform arises.
b. a condition _____________ - a condition that occurs at the same time as performance
c. condition ___________ - a condition that cuts off a pre-existing duty.

Answer 5

condition; precedent; concurrent; subsequent

Question 6

When a _________ is excused, a party has an immediate obligation to perform. An excuse can occur by:

a. ___________ - when a party prevents a condition from occurring or fails to cooperate in order to ensure the occurrence of a condition.
b. _______ breach - the breaching party’s obligation is absolute.
c. _____________ repudiation - will excuse a condition such that the repudiating party’s duty to perform becomes absolute.
d. substantial ___________ of a condition will excuse the lack of complete performance of the condition.
e. if the party for who the condition was designed to benefit agrees to a ________

Answer 6

condition; hindrance; material; anticipatory; performance; waiver

Question 7

When a promisor is under an absolute duty to perform (all conditions have been met or excused), the promisor’s failure to perform represents a ______.

Answer 7

breach

Question 8

A breach is considered _______ or trivial if the promisor substantially performs under the contract.

Answer 8

partial

Question 9

A breach is considered _________ when it is so central to the contract that is significantly impairs the contract’s value to the promisee.

Answer 9

material

Question 10

It’s a _____ breach if:

a. there is likelihood of cure
b. further delay will prevent the promisee from making _________ arrangements
c. prompt performance is critical element to the contract.

Answer 10

total; alternative

Question 11

True/False: All total breachers are material breaches.

Answer 11

True

Question 12

A _____ breach discharges the promisee’s obligation, allowing them to withhold performance, terminate the contract, and bring suit to recover damages related to the full value of the contract. They are also allowed to seek alternative arrangement s for the fulfillment of the contact.

Answer 12

total

Question 13

If a party unlawfully indicates they they will not perform when performance is due, then they have committed an ____________ __________ of the contract.

Answer 13

anticipatory repudiation

Question 14

A party can ______ their repudiation by indicating a willingness to perform under the contract. A retraction is not valid if the non-repudiating party has:

a. materially changed her position in reliance on the repudiation or
b. indicated her willingness to treat the repudiation as a _____ breach.

Answer 14

retract; total

Question 15

A party may ________ assurance when they have reasonable grounds for insecurity regarding another party’s performance. It is a ________ request for reasonable assurances for a party’s intention to perform.

Answer 15

demand; written

Question 16

____________ damages are designed to approximate the amount necessary to compensate the part if the breach had not occurred and the contract had been fully performed. These are sometimes called the benefit of the _________.

Answer 16

expectation; bargain

Question 17

expectation damages are comprised of _______ damages plus ______________ damages, and are then reduced by any costs or loss avoided.

Answer 17

direct; consequential

Question 18

______ damages constitute the difference b/w the value of the performance a party should have received and the value of the performance the party actually received.

Answer 18

direct

Question 19

_________ damages represent losses that result from other transactions that are dependent upon the breached contract.

Answer 19

consequential

Question 20

A party’s _________ damages are calculated as follows:

Direct Damages + Consequential Damages - Costs Avoided - Loss Avoided (mitigated)

Answer 20

expectation

Question 21

_____________ in value refers to the difference b/w the value of the property as substantially complete and the value of the property upon full performance.

Answer 21

Diminution

Question 22

If expectation damages are too speculative, they can be awarded ________ damages. These represent the amount of money a party has spent in justifiable reliance on the contract.

Answer 22

reliance

Question 23

__________ reflects the amount of benefit one party conferred on the other, ex. the amount of damages reflecting unjust enrichment. It is not limited to the contract price and unlike reliance damages, it does not get reduced by the amount of money a party would have lost on a contract.

Answer 23

restitution

Question 24

__________ and ___________ refer to the parties’ ability to terminate the contract and then seek damages for unjust enrichment.

Answer 24

rescission and restitution

Question 25

_________ __________ reflects an order from the court to perform the contract pursuant to its terms.

Answer 25

Specific performance

Question 26

________ __________ is awarded when:

a. the damage remedy is inadequate and
b. the equitable need for such performance outweighs the burden of supervision and harm to the defendant.

Answer 26

Specific performance

Question 27

Courts can also issue an _________, which represents an order prohibiting a party from engaging in certain conduct. This can be issues when:

a. the damage remedy is inadequate and
b. it is necessary to prevent irreparable harm to the non-breaching party.

Answer 27

injunction

Question 28

Under some contracts, parties will stipulate the amount of damages to be awarded upon a breach. Courts will only use this amount if:
a. damages were difficult to determine or estimate at the time the contract was formed AND
b. the stipulated amount represents a reasonable forecast of the amount necessary to compensate a non-breaching party.
If these are met, the stipulated amount will be upheld and enforced as a valid ___________ damage clause.
If they are unreasonable, the stipulated amount will be construed as a ________ and not enforced.

Answer 28

liquidated; penalty

Question 29

Non-recoverable damages include:
1.
2.
3.

Answer 29

1. punitive damages
2. non-economic damages
3. attorney fees

Question 30

______ represents an improper threat that leaves the victim no reasonable alternative but to comply with an agreement. In this case, the contract is ________.

Answer 30

duress; voidable

Question 31

______ influence represents those situations where one party takes unfair advantage of another to persuade her into a contract.

Answer 31

undue

Question 32

______ _________ involves two factors:

1. a relationship of dominance pursuant to which one party has strong influence over another because there is a fiduciary or relationship of trust or the part is in a weakened state
2. the dominant party unfairly persuades the other party to enter into a relationship

Answer 32

undue influence

Question 33

true/false: a contract entered into by mistake is not voidable.

Answer 33

false

Question 34

two forms of mistakes:

_______ mistake or unilateral mistake

Answer 34

mutual

Question 35

________________ is an assertion that is not in accord with the facts.

Answer 35

misrepresentation

Question 36

For a misrepresentation to give basis to avoid a contract, it must shown that:
A. a misrepresentation was made
B. it was ________ AND
c. the party seeking avoidance reasonably relied on it.

Answer 36

material

Question 37

_____ is a form of misrepresentation that is made with intent.

Answer 37

fraud

Question 38

________ refers to a misrepresentation made with knowledge of its inaccuracy.

Answer 38

scienter

Question 39

A contract will be voidables based on ________________when a court believes that a contract is so one-sided and unfair that it would be unconscionable to enforce it.

Answer 39

unconscionability

Question 40

___________ unconscionability exists when the terms of the agreement are grossly unfair or unduly favorable to one side, particularly when the terms are incomprehensible to a party of the average person.

Answer 40

substantive

Question 41

_____________ unconscionability focuses on the relationship b/w the contracting parties, and exists when one party lacks choice regarding whether to enter into a contract, or when there are otherwise gross inequities in the bargaining positions between the two parties.

Answer 41

procedural

Question 42

a “take it or leave it” basis on a contract is known as a contract of ________.

Answer 42

adhesion

Question 43

The statue of limitations vary by state but is typically ___ years. Under the UCC it is ___ years.

Answer 43

6; 4

Question 44

Changed circumstances entail three doctrines:

___________, _____________ and __________ of ________

Answer 44

impossibility; impracticability; frustration of purpose

Question 45

___________ - occurs when an event occurs after the contract is executed, the nonoccurrence of which was a basic assumption of the contract or the event makes contract performance impossible and the party seeking discharge did not assume the risk of the nonoccurrence.

Answer 45

impossibility

Question 46

____________ - occurs when an event occurs after the contract is executed, the nonoccurence of which was a basic assumption of the contract, the event makes contract impractical, and the party seeking discharge did not assume the risk of nonoccurence.

Answer 46

impracticability

Question 47

________ of _______ - occurs when an event occurs after the contract is executed, the nonoccurrence of which was a basic assumption of the contract, the event frustrates the material purpose of the contract AND
d. the party seeking discharge did no assume the risk of the nonoccurrence.

Answer 47

frustration of purpose

Question 48

Rescission can be ________ or unilateral.

Answer 48

Mutual

Question 49

_______ rescission occurs when both parties agree to rescind the contract.

Answer 49

mutual

Question 50

________ rescission occurs when only on party desires to rescind the contract, and requires the legal grounds to avoid enforcement such as undue influence, fraud, or duress.

Answer 50

unilateral

Question 51

A _________ occurs when a new party assumes the obligations and benefits of a contract. It requires a previous valid contract, agreement by all parties to the new contract, and a new contract that is valid and enforceable. It __________ the rights and liabilities of the parts to the previous contract.

Answer 51

Novation; extinguishes

Question 52

An _______ represents an agreement pursuant to which the original promisee agrees to accept different performance from the original promisor, in exchange for a release of the original agreement.

Answer 52

accord

Question 53

_____________ refers to actual performance of the accord agreement.

Answer 53

satisfaction

Question 54

True/False: Only accord or satisfaction are needed to discharge a contract.

Answer 54

False, both are needed to discharge a contract.

Question 55

An ________ contract is a contract that violates the law or a statute. It will be void and unenforceable. Courts tend to apply this rule when both parties are equally guilty or when the party seeking restitution is more at fault than the other party. The rule is applied based on a principle known as “in ____ delicto.”

Answer 55

illegal; pari

Question 56

Courts will use their discretion to determine if restitution should be awarded for contracts that violate a particular ______ policy.

Answer 56

public