Contract Rules

Question 1

Common Law K Performance (substantial performance/breach/factors)

Answer 1

In contracts not involving the sale of goods, the condition of complete performance may be excused if the party has rendered substantial performance. The rules for determining substantial performance are the same as whether a breach is minor or material: if minor, then performance is substantial; if it’s a major breach then performance is not substantial. Courts determine materiality by looking at (1) amount of benefit received (2) adequacy of damages (3) extent of performance (4) hardship to breaching party (5) and whether the breach was negligent or willful

Question 2

Time of the Essence

Answer 2

If time is of the essence, any delay will be a material breach. To determine whether time is of the essence, consider whether the instrument itself and the surrounding circumstances.

Question 3

Divisible Ks

Answer 3

If a K is divisible, then a party who has performed one or more parts is entitled to collect the K price for those parts even if it breaches other parts. For a K to be divisible, (1) the performance of each party must be divided into two or more parts under the K (2) the number of parts due from each party must be the same and (3) the performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party.

Question 4

Pre-Existing Legal Duty Rule

Answer 4

the promise to perform a legal duty already owed to a promisor is not consideration. under the common law, every K requires consideration to be enforceable and an modification to a K requires new consideration

Question 5

Consideration

Answer 5

a bargained for exchange of something of legal value

Question 6

Common Law Modern View for Modification

Answer 6

permits modification without consideration if (1) modification is due to circumstances unanticipated by the parties when the K was made and (2) it was fair and equitable

Question 7

UCC K Modification

Answer 7

Under Article 2, contract modifications sought in good faith are binding without consideration. only those modifications that are extorted from the other party in bad faith are unenforceable

Question 8

Good Faith Definition in Modification

Answer 8

good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing. there must be a legitimate commercial reason for the modification.

Question 9

UCC Definition of Goods

Answer 9

goods are all things moveable at the time they are identified to the contract.

Question 10

Offer

Answer 10

to form a K there must be an offer and an acceptance. an offer is a promise, undertaking, or commitment to enter into a K

Question 11

Revocation of Offer

Answer 11

an offeror is entitlted to revoke an offer at will any time before acceptance even if he has promised not to revoke for a certain time

Question 12

Merchant Firm Offer

Answer 12

if a merchant offers to sell goods in a signed writing and the writing gives assurances that it will be held open, the offer is not revocable for lack of consideration during the time stated

Question 13

Merchant Definition

Answer 13

a merchant is one who regularly deals in goods of the kind sold or who otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved

Question 14

Restitution

Answer 14

party can recover in quasi-contract the value of the services performed minus any damages incurred as a result of the breach

Question 15

Expectation Damages

Answer 15

intended to put the injured party in the same position as if the contract had been performed

Question 16

Consequential Damages

Answer 16

losses beyond those covered by standard measure that a reasonable person would’ve foreseen would occur as a result of the breach. availability of consequential damages turns on the breaching party’s awareness of the other party’s circumstances.

Question 17

Foreseeable K Damages

Answer 17

damages are foreseeable if a reasonable person in the position of the breaching party would’ve known at the time the K was made that the damages were likely to occur as a result of the breach