Contract Law

Question 1

Uniform Commercial Code (UCC)

Answer 1

Originally drafted by the National Conference of Commissioners on Uniform State Law, it governs commercial transactions and has been adopted by all state, entirely or in part.

Question 2

Requirements contract

Answer 2

A contract in which one party agrees to buy all its requirements for a particular product from the other party.

Question 3

Output contract

Answer 3

A contract in which one party agrees to deliver it entire output of a particular product to the other party.

Question 4

Option contract

Answer 4

A contract in which the buyer gives the seller consideration to keep the offer open for a stated period of time.

Question 5

Merchant’s firm offer

Answer 5

An offer made by a merchant in a signed writing that assures the buyer the offer will remain open for a specific period of time. It does not require consideration to be binding.

Question 6

Mirror image rule

Answer 6

The requirement that the acceptance exactly mirror the offer or the acceptance will ne viewed as a counter-offer.

Question 7

Quasi-contract

Answer 7

Although no contract was formed, the courts will fashion an equitable remedy to avoid unjust enrichment.

Question 8

Consideration

Answer 8

Anything of value; it must be present for a valid contract to exist, and each side must give consideration.

Question 9

Unconscionable contract

Answer 9

A contact formed between parties of very unequal bargaining power where the terms are so unfair as to “shock the conscience.”

Question 10

Promissory estoppel

Answer 10

Occurs when the courts allow detrimental reliance to substitute for consideration.

Question 11

Voidable

Answer 11

A valid contract that can be set aside at the option of one of the parties.

Question 12

Disaffirm

Answer 12

The ability to take back one’s contractual obligations.

Question 13

Necessaries

Answer 13

Normally food, clothing, shelter, and medical treatment.

Question 14

Void

Answer 14

A contract that is invalid even if it is not repudiated by either party.

Question 15

Covenant not to compete

Answer 15

A promise not to compete within a given geographic area for a specific period of time.

Question 16

Adhesion contract

Answer 16

A contract formed where the weaker party has no realistic bargaining power. Typically a form contract is offered on a “take it or leave it” basis.

Question 17

Rescission

Answer 17

The act of cancelling the contract and returning the parties to the positions they were in prior to the contract having been formed.

Question 18

Warranty

Answer 18

A guarantee, made by the seller or implied by law, regarding the character, quality, or title of the goods being sold.

Question 19

Implied warranty of merchantability

Answer 19

An implied promise that the goods being sold will be usable for the purpose for which they were sold.

Question 20

Implied warranty of fitness

Answer 20

An implied promise that the goods being sold will satisfy a special purpose.

Question 21

Parole evidence rule

Answer 21

An evidentiary rule that a written contract cannot be modified or changed by prior b=verbal agreements.

Question 22

Substantial performance

Answer 22

Although a breach of contract, performance of all the essential terms of the contract will entitle the breaching party to the contractual price minus any damages caused by the breach.

Question 23

Material breach

Answer 23

Such a grave failure to fulfill the contractual terms that the other party is relieved of all contractual obligations.

Question 24

Perfect tender rule

Answer 24

The requirement that the goods delivered exactly meet the contractual specifications.

Question 25

Rescission

Answer 25

The act of canceling the contract and returning the parties to the positions they were in prior to the contract having been formed.

Question 26

Novation

Answer 26

When a third party is substituted for one of the original parties.

Question 27

Accord and satisfaction

Answer 27

The agreement and then the performance of something different than originally promised.

Question 28

Assignment

Answer 28

The transfer by one of the original parties to the contract of part or all of his or her interest to a third party.

Question 29

Delegation

Answer 29

The transfer by one of the original parties to the contract of his or her obligations to a third party.

Question 30

Special performance

Answer 30

When money damages are inadequate, a court may use this equitable remedy and order the breaching party to perform his or her contractual obligations.

Question 31

Mitigation of damages

Answer 31

The requirement that the nonbreaching party take reasonable steps to limit his or her damages.

Question 32

Cover

Answer 32

Finding substitute goods.

Question 33

Consequential damages

Answer 33

Indirect damages that must be foreseeable to be recovered.

Question 34

Liquidated damages clause

Answer 34

A contract provision that specifies what will happen in case of breach.

Question 35

Contract reformation

Answer 35

An equitable remedy that allows the courts to “rewrite” contract provisions.