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Kira's Bar Exam Cards > Contracts > Flashcards

Contracts Flashcards

1
Q

What is procedural unconscionability?

A

A defect in the bargaining process.

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2
Q

What is substantive unconscionability?

A

An unfair contract term, such as stating the remedy for a breach is indentured servitude.

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3
Q

What contracts are subject to the Statute of Frauds?

A
  1. Marriage
  2. Year or more to complete
  3. Land
  4. Executor
  5. Guarantor
  6. Sale of goods over $500

(Think M.Y. L.E.G.S.)

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4
Q

What are the types of implied warranties?

A
  1. Implied warranty of merchantability

2. Implied warranty for fitness of a particular purpose

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5
Q

What is an express warranty?

A

Can be…

  1. A promise that the item will act a certain way
  2. Using a sample or a model
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6
Q

How do you comply with the Statute of Frauds?

A
  1. Complete performance by one side
  2. Satisfying the writing requirement, OR
  3. Part performance when delivering goods
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7
Q

How do you satisfy the writing requirement for the Statute of Frauds?

A
  1. A writing
  2. Signed by the party who denies the contract
  3. Identifies the parties
  4. Contains the essential terms
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8
Q

Can confirming memos satisfy the writing requirement for the Statute of Frauds?

A

Yes, but only if…

  1. Both parties are merchants, and
  2. The receiving party does not object within 10 days
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9
Q

What is the implied warranty of merchantability?

A

Only applies to a merchants. When a merchant sells an item, this warranty automatically applies and it warrants that goods are fit for their ordinary purpose.

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10
Q

How can you disclaim the implied warranty of merchantability?

A

Orally or in writing.

If orally, it must be clear and you must say the phrase “merchantability.”

If in writing, it must be clear/conspicuous and you can use language like “as is” or “with all faults.”

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11
Q

What is the implied warranty for fitness of a particular purpose?

A

A promise that the goods will be suitable for the buyer’s intended purpose.

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12
Q

When does the implied warranty of fitness for a particular purpose apply?

A
  1. Buyer tells the seller they want the good for a particular or special purpose,
  2. Seller says the good will work for that purpose, and
  3. The buyer relies on the seller’s word
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13
Q

How do you disclaim the implied warranty of fitness for a particular purpose?

A

Can only be disclaimed by a clear and conspicuous writing.

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14
Q

What is an express condition?

A

A condition that must be strictly satisfied for the contract to be fulfilled. Think of terms like “only if” or “on the condition that.”

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15
Q

Can an express condition be waived?

A

Yes, but only by the party that created the condition.

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16
Q

When is a contract impracticable?

A

When the contract becomes very very difficult (although not impossible) to perform. Must be due to something unforeseeable and cannot be caused by the party seeking discharge.

EX: A homeowner contracts with an artist to build a sculpture out of number 2 pencils. The government then imposes an incredibly high tax on number 2 pencils in an attempt to encourage Americans to use pens instead. If this substantially increases the cost of the project, the artist could be excused due to impracticability.

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17
Q

When is a contract impossible?

A

When it is no longer possible to complete the contract. The party seeking discharge must not be at fault.

EX: A homeowner contracts with a remodel team to remodel her master bathroom. The house burns in a fire. It would be impossible for the remodel team to remodel the bathroom.

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18
Q

When may a party’s contract performance be excused due to frustration of purpose?

A

When something unforeseeable occurs and defeats the purpose of the contract.

EX: You rent a room with a view of 7th Street to watch the president give a speech on 7th Street. The president dies and the event is cancelled.

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19
Q

What does “accord and satisfaction” mean?

A

When parties agree a contract can be satisfied with different performance.

“Accord” - the new performance
“Satisfaction” - excusal of the original promise

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20
Q

When an accord and satisfaction is created, what happens if the accord is not satisfied?

A

The non-breaching party may sue for the original promise OR the new promise.

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21
Q

What are the remedies when one party anticipatorily repudiates the contract?

A
  • Sue immediately (only if non-breaching party hasn’t completed performance)
  • Demand performance and see what happens
  • Wait for contract to expire and then sue
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22
Q

Can a buyer waive the implied warranty of merchantability?

A

Yes, if…

  1. The buyer examined the goods prior to purchase, or
  2. The buyer refused to examine the goods prior to purchase
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23
Q

At an auction, when can a bidder withdraw their bid?

A

Before completion of the sale (regardless of what type of auction).

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24
Q

When is payment due for installment contracts?

A

Payment is due at each delivery.

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25
Q

Can you collect a debt after the statute of limitations has applied.

A

Generally, no. But if the debtor makes a new promise to pay the debt, then yes.

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26
Q

What is an offer?

A

A manifestation of a willingness to enter into an agreement. This creates a power of acceptance in the offeree.

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27
Q

Can you accept an offer that you overhear?

A

No, you may only accept an offer that is directed at you.

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28
Q

What terms need to be included in a common law contract?

A

ALL ESSENTIAL TERMS.

  1. Parties
  2. Subject
  3. Price
  4. Quantity
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29
Q

What terms need to be included in a UCC contract?

A

Only the quantity of goods (the UCC will gap-fill the rest).

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30
Q

What is a requirements contract?

A

When someone offers to buy 100% of the goods they need from someone.

Exact number is not necessary. “100%” can serve as the quantity term.

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31
Q

What is an output contract?

A

When someone offers to sell 100% of their goods to someone.

Exact number is not necessary. “100%” can serve as the quantity term.

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32
Q

When can an advertisement be an offer?

A
  • Reward advertisements

- Advertisements that are so specific and leaves nothing open for negotiation. Includes how acceptance can occur

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33
Q

How can a standard offer be terminated?

A
  1. Express revocation
  2. Offeree rejects
  3. Counteroffer is made
  4. Time lapses (a reasonable amount of time)
  5. Death by offeror
  6. Constructive revocation

(Think: Every Offer Can Terminate, Duh Calvin)

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34
Q

What is a constructive revocation?

A

When the offeree learns the offeror has acted inconsistently with making a contract.

EX: Tommy offers to sell me his jeep for 10k. I take a few days to think about it. I later learn Tami has purchased Tommy’s jeep.

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35
Q

What are the types of irrevocable offers?

A
  1. Detrimental reliance
  2. Part performance (unilateral contract)
  3. Options
  4. Firm offers

(Think: Dummies Promise Offers Forever)

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36
Q

What is an option contract?

A

When the offeree pays to keep the offer open for a certain period of time. The offeror may not revoke the offer during that time.

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37
Q

How is a firm offer created?

A
  1. Offer is made by a merchant
  2. In writing
  3. Signed by offeror
  4. Promises not to revoke for a certain amount of time
38
Q

How long can a firm offer stay open?

A

Either as long as the offer states, or no later than 90 days.

39
Q

What is acceptance?

A

A manifestation of a willingness to enter into an agreement.

40
Q

Under the mailbox rule, when is acceptance effective?

A

Acceptance is effective once the acceptance is placed in the mail (even if it never reaches the other party).

41
Q

Under the mailbox rule, when are rejections or counteroffers effective?

A

Rejections and counteroffers are effective once they reach the other side.

42
Q

Under the mailbox rule, if I mail a rejection on day 1, but mail an acceptance on day 3, does my rejection control or does the acceptance control?

A

It depends. Whichever letter is opened first by the other side will control.

43
Q

What is the common law mirror image rule?

A

This rule states that acceptance must match the exact terms of the offer. Does not apply to UCC.

44
Q

Under the UCC, what happens when an acceptance contains opposite terms than what was contained in the offer?

A

Majority rule: Both terms are knocked out and replaced with gap-filler language

Minority rule: The terms of the offer will control

45
Q

Under the UCC, when acceptance contains an extra term that wasn’t included in the offer, when does the extra term become part of the contract?

A
  1. Both parties are merchants
  2. Extra terms does not materially alter the deal
  3. Offer didn’t expressly limit acceptance to the terms of the offer
  4. Offeror does not object or reject the extra term within a reasonable amount of time
46
Q

What is consideration?

A

An exchange involving a legal detriment and/or a legal benefit.

47
Q

What is a conditional gift?

A

A gift with a condition attached. This is NOT a contract with consideration.

EX: “I’ll give you my jeep if you agree to come to my house and pick it up.”

48
Q

What is an illusory promise?

A

A promise that cannot be enforced due to uncertainty.

EX: “I’ll sell you my jeep if I feel like it.”

49
Q

What is a satisfaction contract?

A

A valid contract that subjectively depends on one party’s satisfaction.

EX: “I’ll pay you $100 if you paint my portrait and I like it.”

50
Q

When can a promise not to sue someone be a valid form of consideration?

A

When the plaintiff has a good faith belief in the validity of their claim.

51
Q

What is required to modify a contract?

A

Under the UCC: Good faith

Under common law: Additional consideration

52
Q

Tommy owes Kira $10,000 due today. Kira promises to release Tommy from the debt if he pays $1,000 today. If Tommy pays $1,000, can Kira still sue for the remaining $9,000?

A

Yes, because the debt is currently due and undisputed. This modification is not binding.

53
Q

Tommy owes Kira $10,000 due in three months. Kira promises to release Tommy from the debt if he pays $1,000 today. If Tommy pays $1,000, can Kira still sue for the remaining $9,000?

A

No, because the debt wasn’t due. The modification was binding.

54
Q

What are the elements of promissory estoppel?

A
  1. A promise made that would reasonably induce reliance
  2. The Promisee takes detrimental action in reliance on the promise
  3. Injustice can only be avoided by enforcing the promise
55
Q

Do charities or churches need to prove they took a “detrimental action” to establish promissory estoppel?

A

No, these organizations do not need to prove they took detrimental action in reliance on the promise.

56
Q

What is a quasi-contract / implied-in-law contract?

A
  1. Plaintiff confers a measurable benefit on the defendant
  2. Plaintiff reasonably expected to be paid
  3. It would be unfair to let the defendant keep the benefit without paying
57
Q

If Party A is feeling unsure that Party B will be able to perform the contractual duties and Party A wants to request adequate assurance, must this be in writing?

A

Yes - A request for adequate assurance must be in writing.

58
Q

Who lacks capacity to contract?

A
  1. Minors (under 18)
  2. People who are mentally ill
  3. Very intoxicated people (if the other side knows or has reason to know)
59
Q

What happens if a contract is made with a party who lacks the capacity to contract?

A

The contract is voidable by the incapacitated party only. If they don’t want to void the contract, it is valid.

60
Q

If a party anticipatorily repudiates the contract, can they retract their repudiation?

A

Yes, if…

  1. The time for contract has not expired
  2. The other side has not commenced a lawsuit, and
  3. The other side has not acted in reliance on the repudiation (by contracting with someone else)
61
Q

Under the UCC, what can a party do if they are reasonably nervous that the other side won’t fulfill their contractual obligations?

A

They may demand adequate assurance (in writing).

If the other side fails to respond within 30 days, they have repudiated.

If they reply within 30 days but does not provide adequate assurance, they have repudiated.

62
Q

What is the goal of expectation damages?

A

To put the party in the same economic position it would be had the contract been performed.

63
Q

How do you calculate expectation damages?

A

Compare the value of performance with the breach to the value of performance without the breach.

64
Q

What are consequential damages?

A

Damages that do not naturally arise from the breach. They are only recoverable if both parties are aware of the potential damages when they contact.

65
Q

What are lost volume profits?

A

When a seller has a bunch of the same goods and someone breaches, the seller can recover the profit they would’ve made from the breaching party, even if they sell the same good to someone else.

66
Q

What is the goal of reliance damages?

A

To put a party in the same economic position they would have been in had the contract never been formed.

67
Q

How do you calculate reliance damages?

A

Look at what the non-breaching party has spent to fulfill their obligations. These damages will generally pay that amount back & any additional damages resulting from the breach.

68
Q

Can a party recover both reliance and expectation damages?

A

No.

69
Q

What is restitution damages?

A

Damages that give the plaintiff the money they already spent for the contract.

70
Q

What is the difference between reliance damages and restitution damages?

A

Both will pay the plaintiff for the money they spent, but reliance will also cover additional damages from a breach (like a hospital stay).

71
Q

What are liquidated damages?

A

Damages explicitly set forth in a contract and decided before a breach even occurs.

72
Q

Do courts enforce liquidated damages?

A

Courts will enforce these damages as long as they are resonable.

73
Q

Are punitive damages generally allowed in contract law?

A

No, these types of damages are generally not allowed in contract law.

74
Q

What is the right of reclamation?

A

When a seller of goods takes back the items sold to a buyer on credit.

75
Q

What are the elements for the right of reclamation?

A
  1. Buyer was insolvent when they received the goods
  2. Seller demands return of goods within 10 days (or later if buyer misrepresented their solvency)
  3. Buyer still has goods
76
Q

Who is an intended beneficiary of a contract?

A

A person that the parties agree will benefit from the contract.

EX: I contract with Tommy for Tommy to paint Tami’s house. Tami is the intended beneficiary.

77
Q

Can an intended beneficiary sue on the contract?

A

Yes.

78
Q

What is an incidental beneficiary to a contract?

A

A person who just so happens to benefit from a contract. Contracting parties did not contract for the purpose of benefitting this person.

EX: I contract with a landscaper to cut down some trees in my yard. By cutting down these trees, my neighbor will have a better view of the skyline.

79
Q

Can an incidental beneficiary sue on the contract?

A

No

80
Q

What is a donee beneficiary?

A

A type of intended beneficiary. Usually the recipient of a life insurance policy.

81
Q

What is a creditor beneficiary?

A

A type of intended beneficiary who receives repayment of a debt from some other contract.

82
Q

What is an assignment of a contract?

A

Transferring the rights under the contract to someone else.

83
Q

Does an assignment need consideration to be valid?

A

No, this does not need consideration to be valid. However, if there is not consideration, it can be revoked by the assognor.

84
Q

Can contract benefits always be assigned?

A

Yes, unless the contract explicitly states otherwise.

85
Q

What happens if someone assigns the same contract benefits to two different people?

A

If there was no consideration, rights go to the most recent assignment.

If there was consideration, rights go to the first person to give consideration.

86
Q

What is a delegation?

A

Transferring the duties under a contract.

87
Q

Are delegations generally allowed?

A

Yes, this is generally allowed unless…

  1. The contract states otherwise, or
  2. The purpose of the contract is to have that exact person be part of the contract (think hiring the Beetles to play at your birthday party)
88
Q

When is a delegatee liable for breach of contract?

A

Only when the delegating party gave consideration for the delegatee to perform.

89
Q

What is a novation?

A

When both parties to the contract agree a substitute person will take over the contractual duties.

90
Q

If a novation occurs, who is liable for a breach of contract?

A

The new party, not the original party.

91
Q

What is an “implied in fact” contract?

A

A valid contract that is formed through actions rather than writing or words.

EX: Getting a haircut. You sit in the chair and get your haircut. You don’t discuss price ahead of time. But your actions have made you a party to this type of contract.

Kira's Bar Exam Cards (13 decks)

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