CL and UCC 2

Question 1

Risk of Loss (UCC)

Answer 1

• Agreement controls
• Breach + damaged goods: breaching party is liable even if breach is unrelated to damage of goods
• Common carrier: shifts from S to B at time S completes delivery obligation (see shipment K vs destination K)
• Catch all (If no k, no breach, no shipment/destination K):
  1) If S is a Merchant: risk of loss passes when B receives
  2) If S is non-Merchant: risk passes when S tenders (makes available) to B
  If B is a merchant/non-merchant is IRRELEVANT

Question 2

K definition

Answer 2

An 1) agreement that is 2) legally enforceable

Question 3

Consideration

Answer 3

1) promise
2) bargained-for promise (asked for in exchange): a bargained-for change in legal position between the parties
3) bargained-for legal detriment (NO measurable loss is required): doing something w/no legal obligation to do OR refrain from doing something having a legal right to do
- Mutuality: BOTH parties MUST be bound (otherwise Illusory)

Exception: written promise to pay barred debts, or promisory estoppel ARE substitute considerations

Question 4

Not Offers

Answer 4

Ads not a K, UNLESS it’s:

• Unilateral K (1promise + 1performance) because of the nature of the reward
• Specifies Q and expressly indicates who can accept (e.g. “fur coat $100 - first come, first served”
• Price quotation send in response to inquiry

Question 5

Output and Requirement K

Answer 5

• Requirement = K states Q of goods B is required to buy
  Increase: B can increase as long as it’s in line w/prior demands (e.g. 100 widgets, then 1020 widgets, etc)
  Decrease: NOT in the exam because law is not settled
  Termination: ONLY by good faith (e.g. going into different business or out of business)
• Output = K states Q of goods S is required to produce/provide
  Termination: ONLY good faith

Question 6

Offer

Answer 6

Manifestation of willingness to enter into a bargain made in a way that another person understands their acceptance to the bargain will conclude the bargain

• Ads generally not offers unless 3 exceptions: uniK, Q and ID of who accepts, quote in response to inquiry. Otherwise need QTIPS for CL, Q for UCC, P land desc and signature of grantor for RP sales

Question 7

Defenses and limitations to Warranties (UCC)

Answer 7

• SOL ran out
• Privity: B did not buy from S, bought from TP
• B examines goods and defect is obvious on examination
• Disclaimer of W:
  CANNOT disclaim express W
  Implied W of merch or fitness can be disclaimed if disclaimer is conspicuous OR “as is” or “w/all faults” (NO NEED to be conspicuous)
• Limitation on W: limits recovery on express W
  NO limitations breach of W on good that cause Personal Injury (prima facie unconscionable)

Question 8

Quasi Contract

Answer 8

If no K is found and results in unjust result, P can still bring an action based on quasi-K

Question 9

Performance to discharge duty to perform

Answer 9

Duty to perform under K is discharged only by:

1) Full performance
OR
2) Tender of performance w/present ability to perform (good faith)

• Binding promise to perform DOES NOT discharge duty BUT it can server as consideration

Question 10

SoF under UCC

Answer 10

K for the sale of goods for $500 or more require writing, and signature of person the K is being enforced against (if both merchants: delay in response by merchant satisfies SoF thus enforceable)
Exception: Written confirmation to Oral agreement +$500 good is deemed accepted unless rejected w/in 10days

If terms are insufficient, K won’t be enforced beyond the Q in the writing
Between merchants (both), signature = eg: logo

If no writings (merchants or non-merchant) still enforceable if:
S: Specially manufactured goods and; seller made substantial beginning of their manufacture or procurement
E: Estoppel in judicial proceedings that there is a K but was not put in writing
A: Goods accepted or paid for by buyer

• IF w/in SoF and no writing, plaintiff can still present to Court objective evidence to prove the K:
  1) FULL performance (not part performance) in service K
  2) PART performance in RE purchase: improvements, payment, and possession
  3) PART performance in sale of goods: only to the extent of the part performance
  4) Writing signed by D (NOT testimony) BUT Def still has other defenses
  5) Promissory Estoppel: if inequitable to allow SoF to defeat a meritorious claim. D falsely and intentionally induces P OR D’s conduct foreseeably induces D to change position in reliance on oral K

Question 11

Rejection of an offer by Offeree and 2-207

Answer 11

Offer can be terminated by DRRILCS but:

• An Indirect rejection: counteroffer terminates the offer (does not terminate Option)
• Conditional acceptance (CL: rejects and becomes counter -vs- UCC: rejects)
• Additional terms:
  CL Mirror Image Rule: counter
  UCC: acceptance REGARDLESS if parties are merchants and not a rejection AND add terms are proposals if non-merchant, or become part of the K if merchants BUT terms that materially changes (remedies, liability, money) the offer are OUT (acceptance remains)

Question 12

Option (CL and UCC)

Answer 12

Offer can be terminated by DRRILCS but an offer is irrevocable if:

• Option (CL): Option is a promise to keep an Offer open for a period of time, AND requires consideration. Cannot be terminated by counteroffer
• Firm Offer (UCC): WRITTEN Offer by Merchant to keep open is irrevocable for time stated (NO consideration required). If no time stated: no longer than 3mos UNLESS consideration for +3mos
• Reliance: reliance, reasonably foreseeable to be relied upon, detriment
• Unilateral K (1promise + 1performance): start of performance responding to an offer for a unilateral-K (open ONLY for a reasonable time to complete) MERE preparation is NOT start of performance

Question 13

Goods

Answer 13

All things which are movable at the time of identification to the contract

Question 14

Divisible K

Answer 14

A K where:
1) Performance of each party must be divided
AND
2) Number of parts due from each party must be the same
AND
3) Performance of each part by one party is agreed on as the equivalent of the other party’s corresponding part

• Performance of one unit requires agreed-on equivalent for that unit from other party even if he fails to perform the other units.
• Not a condition precedent to the other party’s liability that the whole contract be performed

Question 15

SoF under CL

Answer 15

• Most oral K are enforceable.
• Certain K are REQUIRED to be in writing to be enforceable
  M: a K made in consideration of marriage except mutual promises to marry

O: K not capable (w/unlimited resources) of being performed w/in one yr FROM time of K (e.g. K on Jan start performance on March for 11 mos = more than 1yr)
Exception: life K

L: Any k for the conveyance of land

E: Executor or administrator K (wills)

S: Surety K: promise to answer for (not just promise to pay someone’s debt) debts of another ONLY if principal does not pay.
Except (main purpose rule): if main purpose by promisor/guarantor of debt of another is to benefit himself then not w/in SoF thus oral K can be enforced

• IF w/in SoF and no writing, plaintiff can still present to Court objective evidence to prove the K:
  1) FULL performance (not part performance) in service K
  2) PART performance in RE purchase: improvements, payment, and possession
  3) PART performance in sale of goods: only to the extent of the part performance
  4) writing signed by D (NOT testimony) BUT Def still has other defenses

Question 16

CL vs UCC2

Answer 16

CL applies to K for services AND sale of goods UNLESS UCC2 applies specificially

E.g. RE sale&raquo_space; CL, wash car&raquo_space; CL, sell cal&raquo_space; UCC2

Mixed K: UCC2 applies to ALL or NOTHING
e.g. K for sale of car and driving lessons, if dispute about either UCC applies because car > lessons
Exception: K expressly divides payment then UCC for goods and CL for rest
e.g. K for $10 yo-yo and $39K for lessons

Question 17

Acceptance

Answer 17

Offeror controls method of acceptance BUT if silent:

• CL Unilat-K (1promise + 1performance): ONLY by start of performance (implied promise to perform)
  K forms ONLY w/FULL performance
• CL Bilateral-K: ONLY by promise
• UCC: acceptance by promise to ship OR prompt shipment
• Mailbox Rule: 1) ALL comm except acceptance are effective when received, 2) acceptance is effective when sent, 3) if rejection send BEFORE acceptance NEITHER is effective until one is received, 4) Options: ONLY receipt of acceptance is effective
• Seller sends wrong goods (UCC): acceptance thus a K AND breach (defective performance: B can accept all and pay K price, B reject all and sue damages, B accept in-part and reject-in part)
  BUT if accommodation (S sends note explaining): counteroffer thus NO K and NO breach
• ONLY offeree can accept BUT must be aware of the offer. Offer CAN be assigned ONLY if it’s an Option

Question 18

SoF for other than K enforcement

Answer 18

Autho to execute K for TP: SoF applies if K is required to be under SoF

Mod of K:

• CL: CONSIDERATION required because of pre-existing duty and writing if w/in SoF to enforce the mod
• UCC: only good faith

Mod of K provisions:

• CL: provision requiring ALL provision in writing NOT effective - ingnore
• UCC: effective thus need writing if required undet the provision unless waived

Question 19

Unilateral K

Answer 19

Unilateral K (1promise + 1performance) results from an offer that expressly requires performance as the ONLY possible method of acceptance

• ONLY start of performance is acceptance
• ONLY full performance forms a K

Question 20

Definite Offers (CL and UCC)

Answer 20

Definite offers under CL need QTIPS: Quantity, Time for Performance, ID parties, Price, Subject Matter

Definite offers under UCC2 only need Q (for price follow intent of parties)

Definite offer for sale of RP (CL) only Price, Subject Matter (land description), Signature of Grantor

Ambiguous MATERIAL terms under CL or UCC is NOT an offer (e.g. “fair price, reasonable price, etc”)
Except: Output/Requirement K (e.g. purchase ALL widgets)

Question 21

Conduct as source of K terms

Answer 21

• Course of Performance (most persuasive): same people, same K
• Course of dealing: same people, prior dealings
• Course of Use (least persuasive): different but similar people, different but similar K (e.g. customary in the industry)

Question 22

K Outline

Answer 22

Armadillos From Texas Play Tennis Riding Elephants

Applicable law
Formation
Terms of the K
Performance
T-P problems
Remedies for unexcused nonperformance
Excuses of nonperformance

Question 23

Merchant

Answer 23

Person who deals in goods of a kind and by his occupation holds himself as having knowledge/skill peculiar to the practices or goods involved in the transaction

Question 24

Gift Promise

Answer 24

Promise to make a gift in the future is uneforceable EVEN if in writing

Question 25

Sale and shipment of goods

Answer 25

• Shipment K: S completes delivery obligation when goods are w/common carrier, makes reasonable arrangements for delivery, AND notifies B (FOB + city where seller/goods are: shipment K)
• Destination K: S completes delivery obligation when goods arrive at destination (FOB + any other city: destination K)

Question 26

Consideration issues: past performance, pre-existing duty, promise to forgive debts

Answer 26

• Past performance is NOT consideration
  Except: expressly requested by promisor AND promisee expects payment
• Pre-existing duty by K or statute: performing under K-duty or statute is NOT consideration
  Except:
  1) Mod of performance (CL: need NEW consideration because of pre-existing duty -vs- UCC: only good faith (no new consideration to mod)
  2) T-P promises to pay over pre-existing duty
• Payment for promise to forgive debt: if debt is due AND undisputed, part payment for promise to release is NOT consideration
  Except: debt is not yet due (e.g. payment due Jan15 and agreement to release if paid by Jan10)
• Substitute to Consideration:
  1) WRITTEN promise to pay debt which has a legal defense (barred by SOL) is enforceable W/O consideration
  2) Promissory Estoppel (detrimental reliance): Promise, Reliance that is: reasonable, foreseeable, Enforcement necessary to avoid injustice

Question 27

Installment K

Answer 27

K requires/authorizes delivery of goods in separate lots to be separately accepted.

B can ONLY reject substantially impaired installment that CANT be cured

Question 28

Warranties of Quality: express and implied K warranties (UCC)

Answer 28

• Express W: promise, description, statement of fact
• Implied W of Title: automatically in all K for sale of goods unless properly disclaimed
• Implied W of merchantability (buy/sell of goods): automatic implied W goods are fit for ORDINARY purposes. Merchant MUST deal in goods of that kind (e.g. jeweler sells auto -vs- shoemaker sells shoe)
• Implied W of Fitness (apply to ANY seller): goods are fit for particular purpose. B relies on S to select goods for a specific purpose, AND S has reasons to know of purpose

Question 29

Revocation of acceptance of goods (after acceptance)

Answer 29

Elements:
- Nonconformity substantially impairs value of goods
AND
- Excusable ignorance by B (no opportunity to inspect) OR reasonable reliance on S’s assurance
AND
- Revocation w/in reasonable time AFTER DISCOVERY of defect

Question 30

Termination of an Offer

Answer 30

DRRILCS

D: Death of the parties or destruction of the subject matter BEFORE acceptance (Formed K is NOT terminated by death)

R: Rejection (offeree):

• Direct: written/action
• Indirect: counteroffer (does not terminate Option), conditional acceptance (CL: rejects and becomes counter -vs- UCC: rejects), additional terms (CL Mirror Image Rule: counter -vs- UCC: acceptance REGARDLESS if parties are merchants and not a rejection AND add terms are proposals if non-merchant, or become part of the K if merchants BUT terms that materially changes (remedies, liability, money) the offer are OUT (acceptance remains))

R: Revocation (offeror): unambiguous statement/conduct made to Offeree indicating unwillingness/inability to K (offeree MUST be aware)
Exceptions (irrevocable offers):
- Option (CL): offer, promise to keep open, AND consideration. Cannot be terminated by counteroffer
- Firm Offer (UCC): Written Offer by Merchant to keep open is irrevocable for time stated (NO consideration required). If no time stated: no longer than 3mos UNLESS consideration for +3mos
- Reliance: reliance, reasonably foreseeable to be relied upon, detriment
- Unilateral K (1promise + 1performance): start of performance responding to an offer for a unilateral-K (open ONLY for a reasonable time to complete) MERE preparation is NOT start of performance

I: Incapacity (mental)

L: Lapse of time for the acceptance

C: Counter-offer (rejection thus new offer)

S: Supervening Illegality (change in law between offer to acceptance making it illegal)

Question 31

Acceptance of Goods

Answer 31

B accepts goods: CANNOT reject them

Payment w/o opportunity to inspect: NOT acceptance

Retention of goods: acceptance

Failure to reject: acceptance

Question 32

Parol Evidence Rule (PER)

Answer 32

PE: oral/written statements made BEFORE K is formed (NOT admitted evidence like FRE) or oral statements contemporaneous w/K formation used to interpret K terms
- Merger clauses: a factor to consider BUT not conclusive

• PE cannot contradict/modify terms if K is either partially (written and final K BUT not complete) OR fully integrated (written K that parties intend it to be final and complete)
• PE cannot contradict/modify BUT CAN supplement (e.g. missing terms) ONLY if K is partially integrated
  Merger clauses “agreement is complete”: often determinative
• PE allowed to determine if there was a mistake in integration (reducing agreement to writing)
• Exceptions: If evidence is NOT to contradict or supplement then it falls outside PER and IS ALLOWED
  E.g. Conditions Precedent, Formation Issues (I FILM MUD IN USA), Collateral Ks, Ambiguous Terms, Reformation, Subsequent Mods, Trade Use (Course of Perf, Course of Dealing, Course of Use)