Contracts (1-2)

Question 1

If a person is liable on a personal services contract and then becomes physically incapable or dies - what result?

Answer 1

The death or physical incapacity of a person necessary to effectuate the contract serves to discharge the contract by impossibility.

*only if the services involved are unique

Question 2

What power is given to a merchant when an owner entrusts goods to a merchant who deals in goods of that kind?

Answer 2

When an owner entrusts goods to a merchant who deals in goods of that kind , that entrustment gives the merchant the power (but not the right) to transfer all rights of the entruster to a buyer in the ordinary course of business.

Question 3

If the buyer has a right to reject the goods, when does the risk of loss pass to the buyer?

Answer 3

If the buyer has a right to reject the goods, the risk of loss does not pass to the buyer until the defects are cured or the buyer accepts the goods in spite of their defects.

Question 4

What are Consequential damages?

Answer 4

Consequential damages are special damages over and above standard expectation damages. These damages result from the nonbreaching party’s particular circumstances and are recoverable only if a reasonable person would have foreseen them as a probable result of breach.

***Note that in contracts for the sale of goods, only a buyer may recover consequential damages.

Question 5

what are goods?

Answer 5

all things movable at the time they are identified to the contract

Question 6

what does contract formation require?

Answer 6

(1) mutual assent, (2) consideration, and (3) no defenses to creation or enforcement of the K

Question 7

What is an offer?

Answer 7

(1) an expression of willingness to enter into a K
(2) with certain and definite terms
(3) communicated to an offeree
(4) that creates a reasonable expectation on the part of the offeree that the offeror is willing to enter into a K based on the offered terms

Question 8

What term absolutely must be certain in a sale of goods K?

Answer 8

quantity term that is either certain or capable of being made certain

Question 9

what is an acceptance?
(and what is the UCC standard)

Answer 9

(1) a manifestation of assent to terms of an offer

UCC: an acceptance is valid even if it includes additional or different terms

Question 10

Additional terms if merchants

Answer 10

(1) additional terms in the acceptance are part of the K,
(2) UNLESS they materially alter the original terms of the offer, the offer expressly limits acceptance to the terms of the offer, or the offeror objects to the add’l terms w/in a reasonable time

Question 11

what is consideration?

Answer 11

bargained for exchange involving legal value
There must be consideration on both sides of the agreement to support a K

Question 12

statute of frauds

Answer 12

requires a writing signed by the party to be charged if the contract’s subject matter is:
MYLEGS (in consideration of Marriage, impossible to complete in under1 Year, Land, Executor agreeing to pay estate debts, Goods sales over $500, and Sureties

Question 13

What must the signed writing include to comply with statute of frauds?

Answer 13

subject matter, parties, states essential terms
*a written offer satisfies this purpose
*the only essential term in a sale of goods K is quantity

Question 14

Perfect tender rule UCC

Answer 14

a party has the right to reject goods if the goods or their delivery fail to conform to the K in any way - if that isn’t the case, rejection is a breach

Question 15

UCC damages when buyer wrongfully rejects goods?

Answer 15

Seller entitled to either:
(1) diff between K price and the market price OR
(2) diff between the K price and the resale price + incidental damages - any expenses saved as a result of the breach

Question 16

Lost profits measure for a lost volume seller

Answer 16

K price with breaching buyer minus cost to the seller

Question 17

Lost volume seller

Answer 17

one who can obtain or manufacture as many goods as they can sell

Question 18

risk of loss is determined by what?

Answer 18

the contract, stupid

Question 19

shipment K v. destination K (definitions and risk of loss)

Answer 19

Shipment: K requires seller to ship goods but does not require a particular destination ; Risk of loss shifts to buyer when goods are delivered to the carrier
Destination K: K requires seller to deliver goods to a specific location; risk of loss passes to the buyer when the goods are tendered to the buyer at destination

Question 20

Destruction of subject matter

Answer 20

If K’s subject matter is destroyed or the means for performing the contract are destroyed, K duties may be discharged for impracticability

Question 21

Discharge of K due to impracticability

Answer 21

(1) the nonoccurrence of the event was a basic assumption of the parties in making the K and
(2) neither party has expressly or impliedly assumed the risk of the event occuring

Question 22

What can party A recover against Party B if the subject matter of the K was destroyed when the risk of loss was on Party B?

Answer 22

the full contract price

Question 23

what are advertisements?

Answer 23

not usually offers; they are invitations to deal

Question 24

How may an acceptance to an offer be made?

Answer 24

an acceptance may be made by any means reasonable prior to the offer’s termination

Question 25

What are the UCC 2 exceptions to the statute of frauds?

Answer 25

(1) specifically manufactured goods or
(2) goods that have either been paid for or accepted

Question 26

mailbox rule

Answer 26

acceptance is effective at the moment of dispatch, provided that the mail is properly addressed and stamped; a valid K is formed on dispatch

Question 27

What is the effect of a party’s death in (1) sale of goods K VS. (2) services K

Answer 27

sale of goods = not discharged
services = discharged if services were specific to now dead party

Question 28

Specific Performance. When is it available?

Answer 28

when the legal remedy is inadequate
Legal remedy is inadequate when subject matter of K is rare or unique

Question 29

replevin - when is it available?

Answer 29

if a buyer is unable to secure adequate substitute goods, the buyer may recover the goods identified in the K from a seller who refuses to tender the goods

Question 30

Can a party get both replevin and specific performance?

Answer 30

no, the result would be the same under both, but specific performance is an equitable remedy and replevin is a legal remedy, and they require different levels of judicial discretion, so a plaintiff has to choose between them based on the case’s specific disposition

Question 31

what governs all contracts other than the sale of goods?

Answer 31

Common law

Question 32

condition precedent (definition)

Answer 32

a condition that must occur before an absolute duty of immediate performance arises in the other party

Question 33

How is a provision that performance is due “when” or “upon” an event occurs interpreted by courts?

Answer 33

as simply a statement of time for payment, not a condition precedent

Question 34

What term is required for EE and service contracts? and if the term is not present, what do courts do?

Answer 34

duration term; courts construe the contract as being terminable at will

Question 35

when may reliance damages be awarded?

Answer 35

Reliance damages may be awarded when expectation damages are too speculative to measure.

Question 36

What will a ct do if a sale involves both goods and services?

Answer 36

If a sale involves both goods and services (e.g., a contract to paint a portrait), a court will determine which aspect is dominant and apply the law governing that aspect to the whole contract. Thus, the other choices are wrong.

Note, however, if the contract divides payment between goods and services, then Article 2 will apply to the sale portion and the common law will apply to the services portion.

Question 37

what is The material benefit rule

Answer 37

The material benefit rule is a possible exception to the general rule against the use of past consideration as the basis for a contract. Under the rule, some courts will enforce a promise if:
(i) it is based on a material benefit that was previously conferred by the promisee on the promisor, and
(ii) the promisee did not intend to confer the benefit as a gift.

***This includes situations in which the promisee performed an act at the promisor’s request or performed an unrequested act during an emergency.

Question 38

measure of the employee’s damages in the case of a breach of an employment contract by the employer

Answer 38

In the case of a breach of an employment contract by the employer, the standard measure of the employee’s damages is the full contract price regardless of when the breach occurs.

Question 39

When must an assignment must be in writing?

Answer 39

Situations where an assignment must be in writing include wage assignments ; assignments of an interest in land; assignments of choses in action worth more than $5,000; and assignments intended as security interests under Article 9 of the U.C.C.