Contract

Question 1

Requirements of a legally enforceable contract

Answer 1

1. An agreement made up of an offer and an acceptance
2. An exchange of consideration
3. Lack of defenses

Note: Writing is not a general requirement of a contract.

Question 2

What governed by common law?

Answer 2

R- Real Easte
I - Insurance
S - Servives
E - Employment

Question 3

What governed by Uniformed Commercial Code (UCC)

Answer 3

UCC is statutory law, governs contracts for the sale of goods (moveable things)

Question 4

Elements to form a contract?

Answer 4

• Intention for contract
• Definiteness and certainty in the essential terms (identity of the offeree, Price to be paid, time of performance, quantity involved, nature of the work performed
• Communication to the offeree

Question 5

What is Option contract?

Answer 5

is a promise to keep an offer open in exchange for consideration from the promisee

Note: If no consideration given, it’s not an option.

Question 6

What’s the mailbox rule?

Answer 6

Acceptances are generally effective when they are dispatched (email, mailed, faxed..)

Offers, rejections, revocation and counteroffers effective when received

Offeror may opt-out of mailbox rule by stating acceptance must be received to be effective.

Question 7

5 elements of an actual fraud?

Answer 7

M- Material misrepresentation of material fact or deliberate concealment
A- Actual and reasonable reliance
I- Intent to induce reliance
D- Damages
S - Scienter - intent to deceive (Knowingly or intentionally)

Question 8

Statute of Frauds - what is the 6 contract types that require writing? MYLEGS

Answer 8

M- Marriage : contract where marriage is the consideration
Y- Year: contracts impossible to perform within a year
L- Land: involving interest in real estate
E- Executor: executor’s promise to be personally liable for the debt of an estate
G- Goods: Sale of goods of $500 or more (NOT service)
S- Surety: act as surety (to pay debt for other)

Question 9

Parol Evidence Rule (oral evidence rule)

Answer 9

• Subsequent modifications admissible : Oral or written modification made after the contract has been entered is OK
• Evidence admissible to explain ambiguous terms
• Evidence admissible to show fraud, duress or mistake

Question 10

Exception for the statute of Frauds ? SWAP (No need writing)

Answer 10

S - Specially manufactured goods
W- Written merchant’s confirmatory memo and no objection within 10 days
A- Admission in court
P- Performance: the contract has been performed to the extend accepted

Question 11

If a person is induced to enter into a contract by another person because of the close relationship btw parties, the contact may be voidable under which defenses?

Answer 11

Undue influence. Is when a person is in a position of trust or confidence takes unfair advantage of the relationship such that the other party’s free will to comedy is overcome

Question 12

When does statue of limitation start?

Answer 12

Generally statue of limitations runs from the time the contract was breached.
4 years

Question 13

What’s Rescission?

Answer 13

A rescission undoes a contract and restores the partie to the positions they would have been in if no contract was made

Question 14

What right does the non-breaching party have when there is a breach of anticipatory breach of contract?

Answer 14

On a anticipatory breach of contract, non breaching party has the right to demand assurance of performance or to cancel the contract.

There is no right to punitive damages under contract law in general with a breach of contract, even with anticipatory breach.

Question 15

What’s seller obligation to the buyer with the goods sold in absent of other agreement?

Answer 15

Hold conforming goods and give the buyer notification reasonably necessary to enable them to take delivery

Sellers have no duty to deliver goods.

Question 16

What do these Shipping terms mean?
FOB
ClF
Sale on Approval
Sale or Return
COD

Answer 16

FOB-“Free on board”; fixes the place where title and ROL will pass.

ClF-Price includes the cost of the goods, insurance, and freight.

Sale on Approval–ROL passes only after the buyer approves.

Sale or Return—ROL passes on delivery, but the buyer has the right to return the goods.

COD – Cash on delivery. Payment is due upon delivery. Buyers have reasonable time to inspect goods and reject nonconformity

Question 17

Strict Liability in tort?

Answer 17

• Sellers of defective products are strictly liable in tort actions.
• The plaintiff must show:
  + a defective product,
  + the defect caused personal injury,
  + the defect made the product unreasonably dangerous,
  + the seller was engaged in that business
  + the product reached the user without substantial changes.
• Privity and negligence are irrelevant in product liability lawsuits.

Question 18

who bare the risk of loss if seller is non-merchant ?

Answer 18

When the seller is not a merchant, risk of lost pass to buyer upon tender of delivery of the goods