CONTRACTS

Question 1

When does UCC article 2 apply?

Answer 1

Article 2 of the Uniform Commercial Code applies to transactions of goods. Goods are “things movable” at the time of the identification of the contract.

Question 2

What is an offer?

Answer 2

To form an offer an offeror must manifest:
1- A willingness to enter into an agreement. and;
2-Create the power of acceptance in the offeree.

Question 3

What is a counter-offer?

Answer 3

Under common law, a statement is a counteroffer rather than an acceptance when the terms of the initial offer are changed.

Question 4

Promise to hold an offer open

Answer 4

Generally, an offer may be revoked before acceptance. a promise to hold an offer open requires consideration to be binding unless the UCC firm offer exception applies.

Question 5

What is acceptance?

Answer 5

Acceptance is a manifestation of assent to the terms of an offer made in a manner invited by the offer. An acceptance if effective upon dispatch (mailbox rule)

Question 6

What is rejection?

Answer 6

Rejection is a manifestation of intent to not accept the offer. A Rejection terminates the offeree’s power to accept the offer. Rejection is effective upon receipt.

Question 7

What is condideration?

Answer 7

Consideration is a legal detriment or bargain for exchange. A promise to make a gift is not consideration.

Question 8

What is the preexisting duty rule?

Answer 8

Under common law, a promise to perform a legal duty already owed is not valid consideration unless the duty is changed or unforeseen circumstances arise.

Question 9

What is needed to modify a UCC contract?

Answer 9

Under the UCC only good faith is needed to modify a contract.

Question 10

Promissory Estoppel

Answer 10

Promissory estoppel is a substitute for consideration if there is (1) a promise; (2) justifiable reliance; (3) enforcement is necessary to avoid injustice.

Question 11

Performance Obligation-Common Law

Answer 11

Under common law, a party must substantially perform his contractual obligations in order to demand performance (usually payment) from the other party )

Question 12

What are Divisible contracts?

Answer 12

A contract is divisible so long as it is apportionable and the parties would have contracted for each part separately. A party that performs one or more parts of a contract may collect payment for those parts.

Question 13

Explain Rejection of goods - Perfect tender rule

Answer 13

A party can reject goods for any reason under the perfect tender rule.

Question 14

Revocation of acceptance of goods

Answer 14

If a buyer accepts the goods, he can no longer reject them. In certain circumstances, the buyer can revoke his acceptance of the goods if (1) the non-conformity substantially impairs the value of the good (2) the buyer accepted the goods because he had a reasonable belief that the defect would be cured or the defect was difficult to discover (3) he revokes within a reasonable time (4) he revokes before any substantial change in the condition of the goods.

Question 15

What is anticipatory repudiation?

Answer 15

Anticipatory repudiation occurs when there is an unequivocal manifestation by one party to the other that the party cannot or will not perform his contractual obligations under the contract (mare expression of doubt is not enough) and this statement is made before performance is due. The other party may wait a reasonable time for performance or sue immediately for breach of contract.

Question 16

Prospective Inability to Perform

Answer 16

When a party has reasonable grounds for insecurity that the other party is unable or unwilling to perform, under the UCC that party may in writing demand adequate assurance of performance, and until assurance is given she may suspend performance. If assurance is not giving within a reasonable time (30 days) the party may treat it as repudiation.

Question 17

Retracting repudiaton

Answer 17

The party who has repudiated can retract his repudiation unless the other party, cancelled the contract, materially changed his position in reliance on the reputation, or indicated that she considers the repudiation to be final

Question 18

Common-Law Statute of Frauds

Answer 18

A contract within the statute of frauds needs to be in writing signed by the party to be charged (1)reasonably identify the subject matter of the contract;(2)shows that a contract has been made; and (3) contains all the essential terms of the deal

Question 19

UCC Statute of Frauds

Answer 19

A contract for the sale of goods for $500 or more must be in writing signed by the party for whom performance is sought. The writing need not to contain all the terms of the contract but it is not enforceable beyond the quantity shown. Exceptions to be aware of: Merchant’s confirmatory memo exception, part performance exception, and specially manufactured goods exception.

Question 20

Duress

Answer 20

A contract is voidable if it is established that a party’s manifestation of assent is induced by improper threats
that leave the party no reasonable alternatives.

Question 21

Breach of the Express Warranty

Answer 21

Under article 2, affirmations of facts relating to the goods that are part of the basis of the bargain create express warranties that the goods will conform to those affirmations and descriptions. This warranty is breached if they do not conform.

Question 22

Expectation Damages

Answer 22

The normal measure of damages is expectation damages which aim to give the non-breaching party the benefit of his bargain. Expectation damages must be foreseeable and proved with reasonable certainty.

Question 23

Punitive Damages

Answer 23

Punitive damages are not generally recoverable in breach of contract actions unless the breach is also a tort for which punitive damages can be recovered.

Question 24

Restitution

Answer 24

A party may be able to recover restitution for any benefit conferred by part performance in excess of the loss that he caused by his own breach.

Question 25

Mitigation

Answer 25

As a general rule, a party can not recover damages for loss that the party could have avoided by reasonable efforts.