Chapter 2: Formation Issues, Part 2

Question 1

Merchant

Answer 1

Deals in goods of kind; or otherwise by occupation holds himself out as having knowledge or skill particular to the practices or goods involved in the transaction.

In NC a farmer is a merchant

Question 2

Good faith merchants v. non-merchants

Answer 2

It is the same standard: honesty in the tx and observance of reasonable commercial standards.

Question 3

UCC 2-207 - Battle of the Forms

Answer 3

A material alteration for the purposes of counteroffers

NC treat different terms the same as additional terms.

Question 4

Consideration

Answer 4

NC consideration is a benefit to the promisor OR a detriment to the promisee.

A K under seal can be a consideration substitute. If P is requesting a remedy at law ($) SC says it is a consideration substitute. Recent NC Appellate Ct state seal raises a rebuttable presumption for consideration.

For equity the presumption that the seal is consideration may be rebutted by evidence that there was no consideration.

Question 5

Covenants not to compete

Answer 5

When an employer and employee relationship is already established any subsequent covenant not to compete must be supported by consideration.

NC will enforce a covenant not to compete if: there is a writing that is made part of the employment K based on valuable consideration; reasonable as to time and territory, and not against public policy.

Blue pencil rule: courts can strike out unenforceable term, but will not rewrite K.

If the K is separable and 1 part is reasonable, they will enforce the reasonable party. If not separable they will not enforce the covenant.

Question 6

Moral obligations

Answer 6

NC doesn’t allow any exceptions based on moral obligations.