Contract

Question 1

• Anticipatory Repudiation: Provide an excuse for non-performance. Before the performance is due (Breach: when performance is due)
• • AR can be retracted while breach of contract cannot because the time for performance is gone.
• A party with reasonable grounds for being insecure
  about the other party’s performance may, in writing,
  request adequate assurance that the other party will
  perform in accordance with the contract.
• • But a party cannot use this provision to rewrite contract or particular kind of assurance. (pays on credits, missing payments -> demand to pay cash)

Answer 1

• A Recission to be valid: there must be some performance remaining.
• A modification takes effect immediately.
• An accord is an agreement to accept performance
  in future satisfaction of an existing duty. The duty is
  suspended by the accord, but is not excused until the
  accord is satisfied (performed).
• Novation: An agreement to substitute a new party for an existing one. (needs consent from all parties involved)
• Under Common law, needs consideration to modify contract

Question 2

• Condition Precedent
  An event that must occur before performance is due
  (e.g., I will cut your hair for $25 if it rains on July 4)
  [usually tested].
• Condition Subsequent
  An event that cuts off an existing duty (e.g., I will cut
  your hair for $25 until the Texans win the Super
  Bowl).

Answer 2

• Specific Performance is generally available to Real Estate but not Sale of Goods (but generally available to unique goods)
• Specific Performance for a service contract generally not available, but can get an injunction for a service contract.
• Seller may only reclaim goods if Buyer is insolvent when received the goods within 10 days of receiving, but don’t assume insolvent if there is financial difficulty. (Only to original buyer but not third party)
• Uphold liquidated damages when damages were difficult to estimate at the time of contract and is a good forecast of probable damage (100/ days for delay is reasonable, lump sum is probably not reasonable)
• Under Article 2, if liquidated damage is reasonable at either time (time of contract or at the time of breach), it is valid.

Question 3

• Article 2 governs sales of goods, not service, not real property. (For mix contract, look at which element is more important)
• Ad is usually not an offer unless there is a quantity (Not specific number, but on buyer’s needs)
• Firm offer only good for 3 months (for more than 3 months, use option) , option is not limited on time (Letterhead works as a signed writing
• • Has to have a promise to keep offer open and by merchant

Answer 3

• Reliance before acceptance will not be protected. But if known by other party, it’s different
• Revocation is effective only when received.
• Unilateral contract: not acceptance when starting, only acceptance when finish but offeror may no longer revoke.
• Seller sends “as an accommodation” language -> Not acceptance, No breach.

Question 4

• Mailbox Rule Exception:
• • Offer is conditional on time; Irrevocable offer (with option)
• • Acceptance is effective only when received.
• • When rejection is sent first, whichever get there first is effective (which got read first does not matter)
• Mailbox rule does not apply to option contracts.

Answer 4

• Incapacitated party needs to pay necessaries (Food, shelter, clothing, or medical care) for reasonable value
• Mistake as to value is not material, unilateral mistake is not material unless the other party know or should have known
• Third party cannot use preexisting duty rule to make a defense
• Extra consideration for the sale of goods, as long as having good faith
• Written Promise to pay debt is enforceable without consideration.

Question 5

• Real Property interest transfer within Statute of Fraud (requires written) does not limit to sell, lease, easement and mortgages are included too.
• Agent’s authority regarding real property has to be in writing
• As long as full performance within a year was theoretically possible, no writing is required.
• Life contract not within meaning of SOF (Duration of performance is irrelevant, but look at whether if it take more than 1 year for performance to occur)

Answer 5

• Under Common law, clauses that prohibit oral modification are not enforceable
• Sale of Goods to enforce under SOF: Quantity + Signed by Defendant.
• SOF exception: 1. Real Property (a. Lease for 1 year and less - 2/3 of same payment, possession, improvement) 2. Full Performance
• • Sale s of Good ($500: 1. Goods accepted or paid by buyer (deposit works) 2. Custom-make goods 3. Merchants’ confirmatory memo: use own signed writing to satisfy the SOF against other party if: both parties are merchants, writing claims agreement/has quantity: no written objection within 10 days. 4. Suretyship: When main purpose is to benefit himself.

Question 6

• Buyer’s Damages - Three options:
• -1. Cover Damages: Cover Price – Contract Price
  If buyer covers in good faith (usual)
• • -B contracts to buy carpeting for $2,500. S does
    not deliver. The market price for similar carpeting is
    $2,700. What are B’s damages if B pays $2,800 for
    the same carpeting? ($300)
• • 2. Market Damages: Market Price – Contract Price. If buyer doesn’t cover in good faith or doesn’t cover at all.
• • • If no market to recover -> then specific performance
• -3. Loss in Value: Value as Promised – Value Delivered
  If buyer keeps non-conforming goods
• • • B contracts to buy an antique rug for $4,000. B later
      discovers it’s not antique. B keeps it anyway. The
      rug is worth $2,000. Had it been antique, it would
      be worth $5,000. What are B’s damages? ($3000 - also expectation).

Answer 6

• Seller’s Damages - Four options
• • 1. Resale Damages: Contract Price – Resale price
       If seller resells in good faith [usual measure].
• -2. 2. Market Damages: Contract Price – Market Price
  If seller does not resell in good faith or does not resell
  at all.
• • 3. Contract Price: If Seller Cannot Resell the Goods
• -4. Lost Profit: If Seller Is a Lost Volume Dealer*** (Watch resell of exact same thing for exact same price)
• • • Lost volume: if he could actual made two sales rather that one (reselling one) if the buyer did not breach.

Question 7

• Entrustment: An owner who entrusts goods to a merchant who deals in goods of the kind (i.e., a dealer) has no rights against a bona fide purchaser (Look for repairs that also sells)
• An intended beneficiary can sue promisor even if there is no privity. (can be sued as well)
• • But if promisee breaches, then intended beneficiary cannot cannot sue.

Answer 7

• Delegation can be prohibitted with langauge in contract.
• Delegating Party Remains Liable (Compare
  Novation)***
• • Delegated party will be liable too if he receives consideration for the work.
• • Novation, delegating party gives up the rights

Question 8

• Assignment Must Have Language of Present Transfer***, (Must be I assign, not I promise to assign, I will assign)
• • Consideration is not required. And Assignment Cannot Substantially Change Duties of Obligor***
• • Gift Assignment are valid but can be easily revoked.
• • eg. The Batman-Gotham City contract provides, “Rights under this contract are not assignable.” Batman
    assigns the right to payment to Robin anyway. Can
    Robin collect from Gotham City? (Batman is liable for breach but assignment is valid [ if language is “assignment is void”, then assignment is invalid)

Answer 8

• The last gratuitous assignee prevails over earlier
  gratuitous assignees because a later gift assignment
  revokes an earlier one. But The first assignee for consideration prevails over all subsequent assignees as well as prior gratuitous assignees.
• -Exception - A later assignee for consideration prevails if he does not know of the earlier assignments and is the first to get payment from or a judgment against the obligor.

Question 9

• A merchant’s firm offer does not apply to any offer by a merchant; it applies only to an offer under the UCC for the sale of goods where a signed writing gives assurances that the offer will be held open.
• Generally, offers can be revoked at will by the offeror, even if she has promised not to revoke for a certain period of time.
• The mailbox rule does not apply to the exercise of options in option contract. Effective when received.
• A contractor’s duty to construct a building is not discharged by destruction of the work in progress. However, if the destruction was not caused by the contractor, such as by an act of nature, most courts will extend the date of performance beyond the original deadline.

Answer 9

• This is not a case for discharge by impracticability. The test for a finding of impracticability is that the party to perform has encountered extreme and unreasonable difficulty and/or expense, and its nonoccurrence was a basic assumption of the parties. As discussed above, due to painter’s death, his unique performance is now impossible, not merely more difficult or more expensive.
• The general rule is that a contractor is responsible for destruction of the premises under construction prior to completion. Once the residence is completed, risk of loss shifts to the owner.
• If the nonoccurrence of the event was a basic assumption of the parties in making the contract, and neither party has assumed the risk of the event’s occurrence, duties under the contract may be discharged. If there is impossibility, each party is excused from duties that are yet to be performed. If either party has partially performed prior to the existence of facts resulting in impossibility, that party has a right to recover in quasi-contract for the reasonable value of his performance.
• A contractual duty to perform may be discharged by objective impossibility (i.e., no one could have performed), but subjective impossibility (defendant could not perform) is insufficient.

Question 10

Qestion:
1.a writing is not required where the contract is for “specially manufactured” goods not suitable for resale in the ordinary course of the seller’s business and the seller has made a substantial beginning of their manufacture or commitments for their procurement. - Entitle to full damage

2. If the buyer has rejected goods because of defects, the seller may, within the time originally provided for performance, “cure” by giving reasonable notice of her intention to do so and making a new tender of conforming goods which the buyer must then accept.
   Ordinarily, the seller has no right to cure beyond the original contract time. However, in cases where the buyer rejects a tender of nonconforming goods that the seller reasonably believed would be acceptable “with or without money allowance,” the seller, on reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender.
3. In an installment contract, an installment can be rejected only if the nonconformity substantially impairs the value of that installment. Moreover, the installment contract as a whole is deemed to be breached only if the nonconformity substantially impairs the value of the entire contract. Here, the contract is an installment contract because the deliveries are to be made in separate lots at different times. The delivery of melted chocolate chips was the first of 12 deliveries that were to be made, and there is nothing in the facts to indicate that the manufacturer could not cure the problem with this delivery and with the rest of the deliveries for the year.
4. Full payment for oral agreement makes vliad even though there is no writing
5. If the seller fails to deliver goods under a valid contract, the buyer has a number of remedies available, including the right to cover and the right to obtain specific performance if appropriate. A buyer may obtain specific performance of a contract for the sale of goods if the goods are unique or in short supply

Answer 10

Qestion:
1. absent unanticipated circumstances, a modification solely for the benefit of one of the parties is generally unenforceable in contracts not governed by the UCC.

2. a promise to perform a duty is valid consideration as long as the duty of performance is not already owed to the promisee. In other words, if the duty is owed to a third party, a promise to perform given to another is valid consideration as long as it was bargained for.
3. the modern view permits modification without consideration if it is fair and equitable in view of unanticipated circumstances (increasing cost).
4. a promise creating an interest in land must be evidenced by a writing.
5. The UCC requires only that the memorandum contain (i) quantity, (ii) the signature of the party to be charged, and (iii) a writing sufficient to indicate that a contract was formed.
6. Under the Statute of Frauds, to be enforceable a contract for the sale of land must be evidenced by a writing signed by the party sought to be charged.
7. Under the Statute of Frauds, contracts for the sale of land must be in writing. The writing must contain all essential terms, and the price is considered an essential term.
8. In a finance lease, the lessor makes no implied warranties. Any warranties, express or implied, made by the supplier to the lessor are passed on to the lessee.
9. Contract reformation is not an available remedy to a lessee in the case of default by the lessor./

Question 11

Question:

10. one must know the offer to accept it. Reward offer can be an offer for a unilateral contract.
11. When the counteroffer is received by the original offeror, the original contract terminated.
12. Under UCC, if you have an option from merchant in signed writing, that doesn’t require consideration and the merchant cannot revoke it, if no time specified, should not exceeds 90 days.
13. Requirement contract and output contract does not needs quantity terms under UCC.
14. Mailbox rule does not apply to option, the offeror needs to receive acceptance before it expires.
15. MYLEGS - Marriage contract, Year of terms contract, Land sale contract, Excutory contract, Goods of 500 or more contract, Surety contracts.
16. Modification common law: needs new consideration because of preexisiting duty; Under UCC, modification is allowed if in good faith.
17. Under UCC, confirmation sent binds binding party after accepted oral contracts, if the other party do not object within 10 days, it binds him as well.
18. After third party benficariy’s right vest, the original party cannot modify the terms without consent from third party. Vesting: 1. when they learn the contract and assent to it. 2. learns the contract and rely on it. 3. learns the contract and bring suits to enforce right
19. Party can terminate the contract and sue for breach in case of antipatory breach ( raise money after contract forms, with intend not to perform)
20. gratuitous assignment is revokable and doesn’t require consideration at all.

Answer 11

Question:

1. For lost profit, the facts pattern will tell you they have high-volume, or unlimited supplies.