Contracts

Question 1

Governing Law

Answer 1

Ks for the sale of goods are governed by Art 2 of the UCC. Goods are defined as movable things. All other Ks are governed by the CL.

If a sale involves both goods and services, the applicable law governing will be the dominant aspect of the k. However, if k divides payment between goods/services, UCC applies to goods and CL applies to services portion.

Question 2

Merchant

Answer 2

A merchant is one who deals in goods of the kind sold or who by his occupation, holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction.

Question 3

K Formation

Answer 3

A K reqs mutual assent, which consists of an offer and acceptance, and consideration and there must be no appropriate defenses to formation.

Question 4

Offer

Answer 4

An offer is an expression of a promise to enter into a k, w/ definite and certain terms, communicated to an OE.
Offers in jest, prelim negos, ads and catalogs, are not offers unless the ad contains words of commitment and where the OE can be ID’d w/ specificity.

Question 5

Merchant’s Firm Offer

Answer 5

Is irrevocable when made by a merchant, in a signed writing, and gives assurances that the offer will be open for a stated period. It can be revokable for up to 3 months. Firm offers w/o date open for only 3 months.

Question 6

Option k

Answer 6

One where the OR grants the OE an option to enter into a k for a specified period of time and promises the offer will be held open during that time. Consideration is req’d for option and will be irrevo for that time

Question 7

Methods of Termination of Offer

Answer 7

(1) express rejection;
(2) counteroffer (not mere inquiry);
(3) revocation before acceptance - either direct or indirect through unambiguous words/conduct that is inconsistent w/ intent to k or OE aware that k was revoked;
(4) lapse in time, OE’s failure to accept w/in reas time;
(5) conditional acceptance.

Question 8

Acceptance

Answer 8

Acceptance is the manifestation of assent to terms of the offer. Acceptance mb w/in reas time and only by the OE. The OE must know of the offer before accepting and in the manner req’d by the OR.

Question 9

Mailbox Rule

Answer 9

MBR provides an acceptance is effective upon proper dispatch. Proper dispatch reqs the OE no longer has control or possession of the acceptance, such as w/ a properly mailed letter.

Question 10

Mirror Image Rule

Answer 10

Under CL mirror image rule, acceptance mb precise mirror image of the offer. If conflicts at all then is a rejection and counter.

Question 11

Consideration

Answer 11

Consideration is bargained for exchange of legal detriment and can be a promise to do an act, or refrain from doing an act one is entitled to do. To have a bargained-for exchange, the promise must induce the detriment, and the detriment must induce the promise. It’s not enough that the promise incurs detriment; the detriment mb the price of the exchange and not merely a fulfillment of conditions for a gift. If either of the parties intended to make a gift, there’s not bargaining, and there’s no consideration.

Question 12

Requirements K

Answer 12

In reqs k, the parties agree that the S will be the exclusive source of all of the B’s requirements for a particular item for a specified period of time.
Presumed parties act in GF, so cant demand for quantity unreas disproportionate to stated estimates or any normal circumstance.

Question 13

Output k

Answer 13

B agrees to buy all of the S’s output of a particular item for a specified period of time.

Question 14

Promissory Estoppel

Answer 14

Under promissory estoppel, a promise that foreseeably induces reliance, and is actually relied upon, may be enforceable to prevent injustice, even w/o consideration

Question 15

Defenses to K formation

Answer 15

SOF
Misrepresentation 
Fraud
Unconscionability
Mutual Mistake
Unilateral Mistake

Question 16

Third Party Beneficiary

Answer 16

A person whom the promisor intends to benefit by the k but who is not already a party to the k.
TPB can enforce a k only if their rights have vested:
(1) manifest assent to a promise in the manner requested by the parties;
(2) bring a suit to enforce the promise; or
(3) materially change position in justifiable reliance on the promise

Question 17

Intended Beneficiary

Answer 17

One intended by the promisor to benefit from the k. An intended TPB can sue to enforce the k.

Question 18

Incidental Beneficiary

Answer 18

One who indirectly benefits from the k, but that result is not the intent of the promisor, An incidental TPB cannot sue to enforce a k.

Question 19

Assignment

Answer 19

Assignment is when a party to an existing k transfers her rights under the k to a 3rd party, the gen rule is that all rights are assignable. The assignor assigns to the assignee (3rd party) the performance due under the k from the obligor.

Cts treat a nonassignment provision in k as prohibition against delegation.

Question 20

Delegation

Answer 20

Delegation is when a party to an existing k appoints to a 3rd party the duties owed under the k. The delegator appoints the delegatee the perf due under the k to the obligee (party rec perf), the gen rule is that most duties can be delegated, however, the delegator remains lia and cannot delegate duties of special skill/judgment.

Question 21

Novation

Answer 21

Novation occurs a new k substitutes a new party to rec benefits and assume duties that had OG belonged to one of the OG parties under the terms of the old k. Elements:

(1) previous valid k;
(2) agt among all parties, including the new party;
(3) the immediate extinguishment of contractual duties as between the OG contracting parties; and
(4) valid and enforceable new k.

Question 22

Anticipatory repudiation

Answer 22

Anticipatory repudiation is an unequivocal expression by a party, occurring before the time for perf is due, that she will not perf under the k. Once party has anticipatorily repudiated, party can sue immediately for breach, suspend perf and wait until perf is due to sue, treat k as discharged and as offer to rescind, or urge perf under k and sue later.

Question 23

Demand for Adequate Assurances

Answer 23

Where conduct of a party isn’t unequivocal enough to rise to the level of antici repudiation, but does cause reas grounds for insecurity about their perf, a party can demand adequate assurances of due perf.

Party must make adequate assurances w/in reas time, gen 30 days.

Question 24

Impossibility

Answer 24

Impossibility occurs when a supervening, unforeseeable event makes perf impossible and thus discharges perf, the event mb one that neither party assumed the risk of and perf mb literally impossible

Question 25

Impracticability

Answer 25

Impracticability occurs when the occurrence of an event the parties assumed would not occur makes perf extremely and unreas diff. Event must concern a basic assumption of the k and the parties must not have allocated the risk of that event to the party seeking to use this defense.

Question 26

Frustration of Purpose

Answer 26

Frustration of purpose occurs when a party’s purpose for entering the k is destroyed by supervening events. Both parties must know the purpose of the k, event must not be reas foreseeable and frustration must be total.  

Question 27

Defenses to Enforcement

Answer 27

(1) K defenses;
(2) Impossibility;
(3) Impracticability;
(4) Frustration of purpose.

Question 28

Offer to Buy for Current/Prompt Shipment

Answer 28

Offer to buy goods for current or prompt shipment may be accepted by either a promise to ship or by a shipment of conforming or nonconforming goods.

The shipment of nonconforming goods is an acceptance creating a bilateral k as well as a breach of the k.

Question 29

Battle of the Forms

Answer 29

If both parties are merchants, addtl terms in the acceptance will be included in k unless:

(1) they materially alter the OG terms of the offer, such as changing a party’s risk;
(2) the offer expressly limits acceptance to the terms of the offer; or
(3) the OR has already objected to the particular terms, or objects w/in a reas time after notice of them is req’d.

Question 30

Mailbox Rule Exceptions

Answer 30

(1) offer stipulates that acceptance not effective until received;
(2) Option k;
(3) OE sends a rejection and then sends an acceptance, whichever arises first controls;
(4) OE sends an acceptance and then a rejection, in which case the acceptance is effective unless the rejection arises first and the OR detrimentally relies on it.

Question 31

Statute of Frauds

Answer 31

Under the SOF, certain agts mb evidenced by a writing signed by the party tb charged.

Question 32

SOF Exceptions

Answer 32

(1) Sale of goods 500 where goods are accepted and paid for, admission in ct, and specially manufactured goods
(2) Admissions in pleadings or court;
(3) Merch’s confirmatory memo;
(4) Land - partial performance: payment, improvement, and/or possession;
(5) suretyship where the main purpose of agt is promisor’s own econ interest.

Question 33

Implied Warranty of Fitness for a Particular Purpose

Answer 33

Breached when (1) S knows or has reason to know of the B’s particular purpose for which the goods are needed; and (2) B relies on the S’s skill or judgment to select or furnish suitable goods.

Question 34

Warranty of Merchantability

Answer 34

Implied in every k for sale by merchant who deals in goods of the kinds sold, that the goods are merchantable. To be merchantable, goods must at least be fit for the ordinary purpose for which such goods are used.

Question 35

Accord & Satisfaction

Answer 35

Accord is an agt in which one party to an existing k agrees to accept, in lieu of the performance that they are supposed to rec from the other party, some other, different future performance.

Satisfaction is the performance of the accord agt.

Question 36

Parol Evidence Rule

Answer 36

PER limits the extent to which evidence of discussions or writings made prior to, or contemporaneous w/, the signed written k can be admitted and considered as part of the agt.

Whe an integration is complete/partial depends on the intent of the parties and will be decided by the judge, not jury. All relevant evidence is admissible for this purpose. One of the factors considered is inclusion of a merger clause.

Question 37

Total Integration

Answer 37

One that is the final expression of the agt and intended to include all details of the parties’ agt.

Parol evidence is not allowed to contradict or supplement a term in the total integration.

Question 38

Partial Integration

Answer 38

One intended tb the final expression of the agt, but not intended to include all details of the parties’ agt.

PER is not allowed to contradict a term in the partial integration.

PER is allowed to supplement a term in the partial integration.

Question 39

Condition Precedent

Answer 39

A condition Precedent to performance is an event that must occur before an absolute duty of immediate performance arises.

PER doesnt bar evi of conditions precedent to the K’s effectiveness.

Question 40

Breach

Answer 40

A breach occurs when the promisor is under an absolute duty to perform and fails to do so.

Question 41

Material Breach CL

Answer 41

Where there was not subst perf on the k. Material breach will excuse the perf of the non-breaching party. Every breach gives the non breaching party a right to provable money damages, but only a material breach excuses the non breaching party from performing.

Factors:

(1) party didnt receive subst benefit of the bargain;
(2) extent of any partial or full perf;
(3) willfulness of breach;
(4) time is not of the essence in a k unless specifically agreed to;
(5) divisible k, one where parties have divided up their perf into agreed equivalents

Question 42

Perfect Tender UCC

Answer 42

Applies to ks for a single delivery and provides that if the goods tendered fail to conform to the k in any respect, the B has 3 choices:

(1) Reject the whole w/in reas time; or
(2) Accept the whole; or
(3) Accept any commercial unit and reject the rest.

Question 43

UCC Installment Ks Perfect Tender Rule

Answer 43

Perfect tender rule doesnt apply to installment ks where the parties have contracted for more than one delivery.

Question 44

Merger Clause

Answer 44

States the writing represents the complete agt of the parties.