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Bar Exam > Contracts > Flashcards

Contracts Flashcards

1
Q

Requirements of a Firm Offer

A
  • Merchant involved
  • Written
  • Signed by the offeror
  • Contains explicity promise not to revoke
    • DOES NOT need consideration
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2
Q

Under the UCC can the buyer revoke acceptance of the goods?

A

Yes! If the goods seemed ok when delivered but a defect is later discovered within a reasonable time

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3
Q

What are the situations statue of frauds applies to?

A

Monsieur Sour

  1. Marriage (ex: prenup)
  2. Surretyship: Guaranteeing debt of other NOT for your own econmic benefit (ex: covering loan someone else took for renovations to your house)
  3. One-year: There is no possible way for contract to be performed within one year of contract formation (interpreted narrowly)
  4. UCC: goods contracts for $500 or more
  5. Real Property: Sale of interest
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4
Q

When can you accept by silence?

A
  • Unilateral rewards or contests
  • Unilateral and parties are geographically close
  • Past history of silence being acceptance
  • Offer says acceptance by silence and offeree intends to accept by silence
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5
Q

What is the effect of seller’s shipment of nonconforming goods with a notice of accommodation?

A

It is a counter offer that the buyer can accept or reject

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6
Q

If you have a contract with someone and they send you nonconforming goods, what are your options?

A
  1. Accept everything
  2. Reject everything
  3. Accept some, and reject the rest
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7
Q

Unconscionability Defense (2 varities)

A

Two Varieties:

  1. Procedural - defect in the bargaining process (ex: hidden term)
  2. Substantive - a rip-off

Split jurisdiction: some require one variety others require both

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8
Q

Impossibility and Impracticability Defenses

A

Look for an unforseen extreme event that hinders the ability to perform, not just something that increases the cost to perform

Examples: Performance becomes illegal (prohibition 2), subject of contract destroyed, picasso dies or is incapacitated

Impracticable vs. Impossible: I ask you to paint my house. Impracticable is it burns down because you would need to build another house. Impossible is it became illegal to paint houses.

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9
Q

IS a contract for $500 of goods in SOF?

A

Yes

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10
Q

Real estate satisfying of SOF

A

Signed writing

OR

two of the following three are met

  1. Possession
  2. Payment
  3. Improvements to the Land
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11
Q

Is material harm needed for a breach of contract claim?

A

No, but it may be needed for damages

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12
Q

Quasi-Contracts Requirements

A
  1. Plaintiff confers measurable benefit on defendants
  2. Plaintiff reasonably expects to be paid
  3. It would be unfair to let the defendant keep the benefit without paying (look for opportunity to decline or good reason why there is no opportunity)

Note: Damages often limited to fair value of benefit

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13
Q

What happens if a contract has a clause requiring all modifications to be in writing?

A

Unless the modification puts the contract in SOF terriroty, the court will not enforce the clase (Under common law)

EXCEPTION: Under UCC, these provisions are enforceable

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14
Q

When is an express condition waived?

A
  • The party receiving the protection of the condition can waive by:
    • Words
    • Conduct
  • A party can waive through:
    • Wrongfully interefering with condition
    • Hindering occurence of condition

Judged on a good faith standard

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15
Q

Three types of UCC warranties

A
  1. Express Warranty
  2. Implied Warranty of Merchantability
  3. Implied warranty of fitness for a particular purpose
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16
Q

Main types of intented third party beneficiaries

A
  • Creditor: Promisee striikes deal with promisor in order to repay some earlier debt to the third party
  • Donee Beneficiary: No preexisiting obligation, but the promisee clearly intends to confer a gift of enforcement on a third party (ex: life isnurance receiver)
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17
Q

Two requirements to accept an offer

A

You must know about the offer to accept it

You must communicate acceptance to the offeror for it to be effective

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18
Q

Defenses to contract formation

A
  1. Misunderstanding
  2. Incapacity
  3. Mistake
  4. Fraud/Misrepresentation/Nondisclosure
  5. Duress
  6. Illegality
  7. Unconscionability
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19
Q

Performance Topics to Look at

A

Pizza With Crawling Escargot

  • Parol Evidence Rule
  • Warranties
  • Conditions
  • Excuse of performance obligations
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20
Q

What happens if a contract fails to specify the assortment of goods?

A

The duty to select is on the buyer, and the seller may treat the failure to select as a breach only if the failure materially impact’s the seller’s ability to perform

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21
Q

What should a buyer do when they reject nonconforming goods?

A

They must retain possession of the goods for a reasonable period of time to allow the seller to reclaim them.

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22
Q

When is the delegating party not liable to the obligee?

A

When there has been a novation

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23
Q

What contract universe are you in when the contract is for goods and services?

A

Both rules are important

Rule 1: All or nothing - Can only be in one universe

EXCEPTION: Divisible/Mini contracts

Rule 2: Predominant purpose - does the good or service play a bigger rule

What is the main thing you are getting?

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24
Q

Misunderstanding Defense

A

“Sitcom Defense” i.e. we were on a break

Requirements:

  1. Parties use a material term that is open to 2+ reasonable interpretations
  2. Each side attaches a different meaning to term
  3. Neither party knows, or should know, of confusion
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25
Q

6 ways to terminate an offer

A
  1. Communicated revocation
  2. Constructive revocation: Offeree learns offeror has taken inconsistent action
  3. Rejection by offeror (can be revived)
  4. Counter-Offer by offeror (rejection + new offer)
  5. Death
  6. Reasonable amount of time has passed (context matters but look for weeks and months)
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26
Q

Do initials count as a signature?

A

Yes

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27
Q

Three limits on expectation damages

A
  • Damages must be proven with reasonable certainty (ex: unproven business venture lost profits)
  • Unforeseeable consequential damages are not recoverable unless the breaching party had some reason to know about
    • consequential damages: losses unique or special to this plaintiff
  • A breached against party must take reasonable steps to reduce damages from breach
    • Breaching party bears burden of proving failure to mitigate
      • Mitigation must be reasonably similar to contract (ex: replacing movie from romance to western is not reasonable mitigation)
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28
Q

When can a repudiation be revoked?

A

At any time as long as the other party has not:

  • Commenced a lawsuit OR
  • Acted in reliance on the repudiation by materially changing its position
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29
Q

When can a seller get lost volume profits under expectation damages?

A

General Rule = If paying party breaches, selling party needs to mitigate by reselling goods/services

EXCEPTION = If the seller is a retailer who sell this product all of the time they may be able to get LVP (arguing they should have had both sales)

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30
Q

What happens upon death to a gratuitous assignment of contract rights?

A

the assignment terminates

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31
Q

Determining counter-offer under common law and UCC

A

common law = mirror image rule: terms of acceptance must match terms of offer exactly, otherwise counteroffer

UCC = a definite and seasonable expression of acceptance (or written communication) is acceptance even if it states additional or differnt terms from offer (unless acceptance is expressly conditional on assent to new/changed terms)

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32
Q

The two questions of statute of frauds

A
  1. Does the statute of frauds apply to this transaction?
  2. Has the statute of frauds been satisfied?
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33
Q

How can you repudiate under the UCC?

A

If one side has reasonable grounds for insecurity about the other side’s performance, they may demand an adequate assurance of performance.

IF the other side fails to respond in a reasonable time OR responds with inadequate assurance THEN can treat it as repudiation

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34
Q

Four ways to have an irrevocable offer

A
  1. Option
  2. Firm offer (merchant buying/selling goods & meets requirements)
  3. Offeree has stated performance on a unilateral contract (right to finish)
  4. Detrimental reliance: Offeree reasonably and detrimentally relies on offer in foreseeable manner (sub-contractor/contractor bidding)
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35
Q

Liquidated Damages

A

Come from a contract clause as a negotiated amount due upon breach

Courts will only award them if:

  • The amount of damages was reasonable at the time of contracting AND
  • Actual damages from breach would be uncertain in amount and difficult to prove
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36
Q

Obligations of Perfect Tender

A
  • Perfect goods
  • Perfect Delivery
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37
Q

Is there a breach when a condition is not met?

A

No, it just means that whatever the condition triggers does not happen.

Ex: You promise me to deliver a package. I promise to pay you if it is delivered by 5pm. You deliver it at 6 pm. You have not breached, but you don’t get paid.

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38
Q

Consideration

A

A deal in which the parties exchange promises involving a legal detriment or benefit

Questions

  • Who is making the promise?
  • Is there a beenfit to promisor or a detriment to promisee?
  • Was this bargained for?
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39
Q

What if there is a material breach under CCE under common law?

A

Breaching party does not get paid under the contract

BUT: they may be able to get some money under quasi-contract theory

EXCEPTION: if the breach was in regards to an express condition

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40
Q

Do you need to tell the other side all of the material facts?

A

No

exception: special fiduciary relationship or active concealment

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41
Q

Under the UCC does a seller have the right to cure?

A

Yes,

if they failed to tender perfect goods AND time is left on the contract OR seller had reasonable grounds to believe buyer would accept alternative, THEN buyer MUST give seller chance to cure

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42
Q

Illegality defense to contract formation

A

Illegal contracts are unenforceable

Courts will just let parties remain where they stand

EXCEPTION: contract entered in furtherance of illegal act is fine (eg taxi driver to a crime)

NOTE: contracts against public policy are also uneforceable

Ex: I will give you money if you divorce your wife –> technically legal, but not great policy to allow

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43
Q

When does the mailbox rule not apply?

A
  • If offeree sends something back first (ex: rejection)
  • Mailing a non-acceptance
  • It is an option
  • Unclear about application to other media
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44
Q

How are express conditions created?

A

By language in the contract

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45
Q

Implied Warranty of Merchantability

A

Requires seller to be a merchant that deals with the goods at issue

Warranty = Goods are fit for ordinary commercial purposes

Can be disclaimed if clearly and conspicuously done

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46
Q

Right of reclamation

A

When unpaid seller tries to reclaim goods that were sold on credit when buyer is insolvent

Requirements​

  1. The buyer was insolvent when they received the goods
  2. Must demand the return of goods within 10 days of receipt (or longer is buyer earlier misrepresented solvency in writing)
  3. The buyer still has the goods
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47
Q

Effect of death on a contract

A

General rule = estate is on the hook (liability continues to exist after death)

EXCEPTION: If there is something special about the person performing the contract (ex: Mick Jagger dies, you and Rolling Stones are excused)

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48
Q

Unilateral Mistake Requirements

A

more difficult to get out of than mutual mistake

Party can rescind if:

  1. They can prove all elements of mutual mistake (mistake of fact, basic assumption, material impact, did not bear risk)
  2. EITHER a) mistake would make contract unconsionable OR b) other side knew of, had reason to know of, or caused the mistake (eg clearly mistaken price quote)
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49
Q

Delivery Requirements (Shipment vs Destination)

A
  • Shipment Contract Requirements
    • Get goods to common carrier
    • Make arrangements for delivery AND
    • Notify the buyer
  • Destination Contract
    • Get goods to buyer’s business
    • Notify the buyer
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50
Q

What standard applies to a satisfaction condition?

A

Use objective test unless the contract involves aesthetic taste

Objective: If most reasonable people would be satisifed then condition is met

Subjective: Buyer must be in good faith satisfied or disatisfied, but it is a personal thing

-Only used for aesthetic things, like art, tutoring, etc.

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51
Q

Can both parties just agree to walk away from a contract?

A

Yes, if there is some performance remaining from each side to the conract.

Called recission by mutual agreement

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52
Q

Do you need to have warranties for an agreement?

A

No, you can disclaim all warranties

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53
Q

Who can use an incapacity defense?

A
  1. minors (aka under 18)
  2. People who are mentally ill
    1. If they cannot understand actions OR
    2. They cannot act in reasonable manner in relation to the transaction and the other side knows or should know this
  3. Very intoxicated people that the other side knows about
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54
Q

What are the terms under UCC contract when parties accept by conduct/act as if there is a contract when there isn’t

A

Terms are only the terms both parties agree to

All other terms are UCC default rules

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55
Q

When can a seller withdraw their item from an auction?

A

Always before the gavel is hit unless the item is announced to be without reserve

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56
Q

Reliance Damages

A

Goal = put parties in same economic position as if contract never happened (rewind the time)

NOTE: cannot recover expectation and reliance damages, must choose one

57
Q

Modification & SOF

A

Would the deal with the modification be in SOF?

Yes –> must meet SOF requirements

No –> don’t need to meet SOF requirements

Applies whether or not original contract was in SOF world

58
Q

How are installment contracts paid?

A

Payment is per delivery, unless payment cannot be apportioned

59
Q

Requirement and Outpout Contracts

A

Requirement: Buyer gets everything they need from this supplier

Output: Supplier sells everything they make to buyer

*Both are valid quantity under UCC*

60
Q

When must a person satisfy the Construction Condition of Exchange under Common Law?

A

A party must satisfy CCE if there is not a material breach (doctrine of substantial performance) –> Aka if one party does not substantially perform, other party can withhold performance

BUT: The party that did not fully perform can still recover damages for any deficiency

Usually cost to complete performance

EXCEPTION: If there is a immaterial breach but the failure was willful than other party can withold performance

61
Q

Is an expression of doubt anticipatory repudiation?

Ex: I may not be able to deliver you the goods in time, but will do my very best to do so

A

No

62
Q

Requirements for doing an accord and satisfaction through a negotiable instrument

A

(1) the obligation must be unliquidated (i.e., uncertain in amount) or otherwise in dispute;
(2) the obligor must, in good faith, tender the negotiable instrument with a conspicuous statement that the instrument is tendered as full satisfaction of the obligation;
(3) the obligee must obtain payment of the instrument (e.g., by cashing the check).

63
Q

When can you delegate?

A

Generally always, unles:

  • the contract prohibits delegation
  • the other party has a special interest in having a specific individual perform
64
Q

What is an offer?

A

A manifestation of a willingness to enter into an agreeemnt (by the offeror) that creates a power of acceptance (in the offeree)

Offeror should have an intent to be bound

65
Q

What happens if you make a contract with a person who lacks capacity?

A

The contract is voidable (incapacitated party can disaffirm)

BUT: If the party obtains capacity and keeps the benefits, they ratify the contract

ANOTHER BUT: If the contract is for a necessity (food, shelter, etc.), the incapacitated party must still pay fair vule

66
Q

What is the typical way to calculate damages in contracts?

A

Expectation damages

67
Q

Four excuses to performance

A
  1. Impossibility and Impracticability
  2. Death after a contract
  3. Frustration of purpose
  4. Initial contract has been modified or canceled
68
Q

How must you meet a condition?

A

You must strictly saitsfy it

UNLESS the condition is excused

69
Q

Mutual Mistake Elements

A

Party can rescind if:

  1. There is a mistake of fact that exists at the time the contract is made
  2. The mistake reltates to a basic assumption of contract and has material impact on deal
  3. The impacted party did not bear the risk of the mistake (no one knows what the type the rock is, and you are willing to pay a lot anyway)
70
Q

Express Warranites

A

A promise that describes the goods and is part of the basis of the bargian

  • NOT an opinion
  • Use of sample creates one that the goods sold will be like it
71
Q

Under UCC when does a new term in acceptance control?

(4 requirements must be met)

A

*applies to confirming memos*

  1. Both parties are merchants
  2. The new term does not materially alter the deal
  3. Inital offer did not expressly limit acceptance to its terms
  4. Offeror does not object to new term within a reasonable amount of time
72
Q

Course of dealing vs. Course of performance

A

Course of dealing = Conduct of companies in regards to other contracts

Course of performance = Conduct of companies in regards to this contract

73
Q

Confirming Memo & SOF

A

The failure to object to a confirming memo withing 10 days satisfies SOF if both parties are mechants

74
Q

Restitution Damages

A

Goal = Give plaintiff an amount equal to the economic benefit that the plaintiff conferred on the defendant

75
Q

Do you need a signed writing to authorize an agent to form a contract that is in SOF?

A

Yes (equal dignity rule)

76
Q

When must a person satisfy the Construction Condition of Exchange under UCC?

A

UCC requires perfect tender (only need to pay if goods are perfect)

Exceptions: Contract changes default rule OR it is an installment contract

77
Q

Calculating Expectation Damages

A

Goal = put people in same economic position as if contract has been performed

You compare the value of the performance without the breach to the value of the performance with the breach

AKA What is the situation they are in compared to where they would have been if breaching party preformed

AKA what is the cost to complete?

78
Q

Two general ways to satisfy statute of frauds

A
  1. Performance
  2. Writing
79
Q

Punitive Damages

A

Not typically allowed in contract law

80
Q

Novation

A

Both parties agree that a substitute person will take over the contractual obligations (original promisor excused)

81
Q

What contract benefits/rights can be assigned?

A

Almost all (in whole or in part) UNLESS the contract prohibits or invalidates assignments

If it prohibits –> assigning party has breached BUT rights have been transfered and third party can recover (power to assign persists, but right to assign does not)

If it invalidates –> assigning party has breach AND third party cannot recover

82
Q

What four things do you need for a contract?

A

All contracts don’t stink

  1. Agreement (offer + acceptance)
  2. Consideration
  3. Defenses to formation
  4. Statute of frauds
83
Q

Can a party breach a subjective satisfaction condition?

A

YES! If they claim dissatisfaction in bad faith they breach

84
Q

Does letterhead count as a signature?

A

Yes

85
Q

Diminution in Market Value

A

Used when the cost to complete will dramatically overcompensate the plaintiff (Ex: You built skyskraper and used the wrong permanent marble)

DMV Expectations = Market value of what you wanted - market value of what you got

Not normally used when breaching party acted in an intentional manner

86
Q

What is the remedy for conversion?

A

The fair market value of the goods at the time of the conversion

87
Q

UCC Goods Contract SOF Requirements

A

EITHER

  1. Signed writing that needs quantity but not price

Note: contract is only enforceable for that quantity, even if mistake was made

OR

  1. Part Performance for the quantity delivered and accepted

OR

  1. Custom Goods Exception: SOF is satisfied as soon as maker make a substantial beginning towards the manufacturing of the goods

OR

  1. Judicial Admission
88
Q

Who is liable for breach when you delegate?

A

The delegator is liable

The delegatee is ONLY liable if they receive consideration from the delegating party.

89
Q

When can an offeror revoke?

A

Anytime before acceptance

EXCEPTION: Irrevocable offer

90
Q

Assignment vs delegation

A

Assignment = The transfer of rights

Delegation = the transfer of duties

91
Q

Parol Evidence Rule

A

If the parties have reduced their contract to a comprehensive writing, then earlier statements related to this agreement are not part of the deal

Ex: Hugh Grant getting Malibu home while working on movie, but no mention in contract

  • Applies to earlier written documents
  • Does not apply to later documents/communications, that would be whether there was a modification
92
Q

Common Law Specific Performance

A
  • It is the exception used only when monetary damages are inadequate
  • Typically used for real estate transactions (if land has not already been transferred to other bona fide purchaser)
  • Almost never available for contract of personal service BUT might get injunction prohibiting performance of similar services for a competitor for reasonable period of time
93
Q

Ways to have an enforceable agreement without consideration

A
  1. Promissory estoppel
  2. Quasi-Contract
  3. Moral obligation plus subsequent promise
    1. Not used by many jurisdictions

Note: Seal is not consideration in most jurisdictions

94
Q

What does a third party beneficiary have the right to sue?

A

When they are an intended beneficiary

Incidential beneficiaries do not have a right to sue

Difference between two: Did the initial counterparites intend to convey enforcement rights to the third party in the event of a breach?

Ex: A pays B to mow C’s lawn. C is intended, the neighbor who gets weed from no mowing is incidential.

​

95
Q

What happens if someone assigns the same rights twice?

A

If the rights are assigned without consideration –> assignment is revokable and last assignment controls

If the rights are assigned for consideration –> first assignment for consideration is irrevocable and controls

EXCEPTION: Later assignment controls if later assignee does not know of initial assignment AND is first to obtain payment/judgment

96
Q

Requirements of the writing for SOF

A

You only need the signature of whoever the contract is being enforced against

The writing does not need to be a formal contract

It must contain the fundamental facts:

  • Shows contract has been made
  • Identifies the parties
  • Contains the essential elements of the deal
97
Q

When can a delivery under an installment contract be rejected?

A

Only when there is a substantial impairment that cannot be cured

98
Q

How specific must an offer be?

A

Split universe rule

Common Law: Need all essential terms

-At least parties, subject, price, and quantity

UCC: Need parties, subject, and quantity (not price)

-Anything missing will be filled in

99
Q

Accord and Satisfaction

A

The parties to earlier contract agree that performance will be satisfied by different performance

accord = new performance

satisfaction = the excusal of the initial performance obligation

If the accord is not performed, can sue under either the old or new promise

Different from modification, because can still perform under old obligation

100
Q

How long does a firm offer last?

A

as stated in the offer OR a reasonable time period not to exceed 3 months

101
Q

Modifying a UCC contract

A

No consideration needed, modification just needs to be made in good fatih

102
Q

When can the rights of third parties be revoked?

A

Whenever as long as the third party has not changed their position

Third Party Rights Vest When:

  1. TP detrimentally relies on the rights
  2. TP manifests assent to the contract
  3. TP has filed a lawsuit to enforce the contract
103
Q

Duress Defense

A

Gun to the head defense

An improper threat that deprives a party from making a meaningful choice to contract

104
Q

Satisying statute of frauds for a service contract that cannot be performed in one year

A

Either writing OR full performance by one side

Note: Part performance will not satisfy statue of frauds

105
Q

Incomplete Performance Formula

A

Used when paying party breaches, but performing party keeps performing

Damages = contract price - amount already paid - amount needed to finish job

106
Q

UCC and the Parol Evidence Rule

A

Parol evidence rule does not apply in UCC world

Presumes that a writing is at most a partial integration, unless the parties have certainly disputed a term in the writing

Easier to get prior infromation in

107
Q

Knock out rule

A

applies under ucc when terms are different in offer and acceptance

Majority: Both terms are knocked out and UCC Provision applies

Minority: Inital offer term controls

108
Q

How to determine if parol evidence rule applies

A

Have the parties created an integrated writing/final expression of agreement

  • Complete Integration: contract expresses all terms of the agreement
    • Look for merger clause
  • Partial Integraton: There is a final writing, but not all terms are included

May also ask: would this extrinsic term naturally be omitted from the writing?

109
Q

Delivery Responsibility

A

go down the list, and stop when you get to one that applies

  1. If mentioned in agreement, it controls
  2. If either party has breached any part of the contract, they bear the risk of loss
  3. If it was a shipping contract, what type?
    1. Shipment –> Buyer bears risk
    2. Destination –> Seller bears risk
  4. Was seller a merchant?
    1. Yes –> Risk remains with seller until Buyer receives
    2. No –> Risk moves to buyer when seller tenders the goods
110
Q

When do you not need consideration for contract modification?

A
  • There is a change in performance of both parites
  • Third party is promising to pay
  • Unforeseen difficulties that excuse performance
  • Partial payment for release from debt when debt is disputed or not currently due
111
Q

Misrepresentation Defense

A

A fradulent of accidental statement at the time of contracting that is not true

Defense Requirements:

  1. Misrepresentation of a present fact (NOT opinion)
  2. Misrepresentation is material OR fraudulent
  3. it is reasonable to rely on the misrepresentation
112
Q

Mistake Defense

A

Mistake: a belief that is not in accord with present factMutual

Two Types

  1. Mutual
  2. Unilateral
113
Q

What is a warranty?

A

A risk shifting tool

It is a term of the contract that explicitly shifts the risk to the party making the promise

114
Q

Types of non-expectation damages/remedies

A
  • Reliance damages
  • Restitution damages
  • Liquidated damages
  • Punitive Damages
  • Specific Perfomance/injunction
115
Q

Implied Warranty of Fitness for a Particular Purpose

A

Think special situation

When a buyer relies on a seller’s expertise to select a special type of good that will be used for a special purpose

Warranty = The good will satisfy this special purpose

DOES NOT ONLY APPLY TO MERCHANTS - can be any seller

Can be disclaimed, but must be in writing and conspicuous

116
Q

Frustration of Purpose Excuse

A

Peformance can occur, but something has happened to undermine the entire reason for the creation of the contract

RARE

Ex: You rent apartment for one day to view king parade. King dies so no parade.

117
Q

Under common law, if other side immaterially breached can you withhold payment?

A

No, but you may be able to recover for the breach

118
Q

Anticipatory Repudation

  1. When does it happen?
  2. What are your options?
A

The party must clearly and unequivocally reupdiate (say they will not be performing)

Two Options

  1. Treat the repudiation as a breach and sue immediately for damages

EXCEPTION: If only payment is left, cannot sue early (must wait for payment to come due)

  1. Ignore repudiation, demand performance, see what happens
119
Q

What is a contract?

A

A legally enforceable agreement

120
Q

UCC specific performance

A

ONLY availble for unique goods (art, custom made items, etc.)

121
Q

Constructive Condition of Exchange (CCE)

A

When one party’s performance is conditioned on the other side’s performance

Ex: You and I contract for you to buy my jeep for 5k. If day of I refuse to sign pink slip, you don’t have to pay 5k.

Note: for determining substantial performance, if the contract is divisible, then it will be broken into mini contracts

122
Q

Consideration Rules

A
  • Must be more than nominal
    • but difference in econ value is ok
  • There must be a way for promisor to breach, otherwise illusory
  • Past consideration cannot be consideration
    • Ex: boat rescue
  • Promising not to sue is consideration if:
    • Plaintiff has good faith beleif in validity of claim
    • There is reason to doubt validity of claim (uncertain law)
123
Q

When will PER not bar evidence?

A
  • Evidence related to a defense against contract formation
  • Evidence of a second seperate deal
  • Evidence to interpret an ambiguous term in the final agreement
124
Q

Does the parol evidence rule apply to the UCC

A

Yes, but it assumes that the agreement is partial and will let in any evidence of terms that are not inconsistent with the writing

125
Q

Does statute of frauds apply to contracts for someone’s lifetime?

A

No, the person could dies within the first year making it possible to perform within one year

126
Q

Promissory Estoppel Elements

A
  1. Promise is made that would be reasonably expected to reduce alliance
  2. The promisee takes detrimental action in reliance on the promise
    1. Exception of this element for charities
  3. Injustice can only be avoided by enforcement of the promise
127
Q

When is there no implied warranty of merchantability

A

If the warranty is expressly disclaimed

OR

if the buyer was able to fully examine the goods and the defect is one that would have been noticed during inspection

128
Q

Priority order of interpreting UCC contracts

A
  1. Course of performance
  2. Course of dealing
  3. Trade usage
129
Q

How long does a firm offer last?

A

Three months, even if it is stated otherwise (although if it is stated otherwise the offer remains open for that time, but it is now revocable)

130
Q

What happens if you enter into an illegal contract

A

The contract is not enforceable/not a contract under the law

BUT if the party does not actually engage in the promised legal act they are due restitution

131
Q

When will a court reform a writing for a mistake?

A
  • there was a prior agreement (either oral or written) between the parties
  • there was an agreement by the parties to put that prior agreement into writing
  • as a result of a mistake, there is a difference between the prior agreement and the writing.
132
Q

Does an assignment of rights need consideration

A

No, but it is revocable if there is no consideration

EXCEPTION: If, like third party rights, the assignee detrimentally relies on the assignment

133
Q

When may a bidder withdraw their bid in an auction?

A

At any time before the completion of of the sale is announced by the auctioneer

134
Q

Three requirements for consequential damages

A
  1. Foreseeability: Damages are natural and probably consequences of the breach or contemplated by the parties at the time the contract was formed
  2. Causation: Damages were caused by the defendant’s breach
  3. Certainty: The dollar amount must be proven with reasonable certainty
135
Q

If an auction seller announces no reserve, can they still withdraw?

A

Yes, they can withdraw until bids are open for that item –> Each item/lot is treated as a separate sale

136
Q

Two requirements for consideration to exist

A

(1) there must be a bargained-for exchange of promises or performance

AND

(2) the promised or provided performance must have legal value

137
Q

When can a buyer reject goods in an installment contract?

A

only if the nonconformity of the goods substantially impairs the value of that shipment to the buyer and cannot be cured.

138
Q

What are the damages for failing to perform a real estate contract?

A

the difference between the contract price and the market value on the date of the breach

Bar Exam (4 decks)

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