Contracts Flashcards

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1
Q

When does an assignment arise?

A

When the holder of a right, an obligee, manifests intent to make a present transfer of that right to another, the assignee.

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2
Q

Can I present evidence about course of dealing if there is a complete and exclusive agreement of the parties?

A

under the UCC’s parol evidence rule, course-of-dealing evidence is admissible to explain or supplement a final written agreement even if the parties intended the agreement to be complete and exclusive.

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3
Q

What happens in a installment contract for the sale of goods if one of the deliveries is not perfect?

A

UCC § 2-612 adopts a “substantial impairment” standard for determining whether a buyer can reject a particular installment or cancel the entire contract.

A buyer can reject an installment if a nonconformity substantially impairs that installment and the nonconformity cannot be cured.

Here the mill’s tender of less than the contracted-for quantity did not amount to a nonconformity that substantially impaired either the value of the 16th installment or the whole contract.

The mill’s proposed cure, the delivery of the remaining 200 pounds on the following Monday, is sufficient given that the late delivery and the shortage will not significantly disrupt the bakery’s business.

Accordingly, the bakery must accept the delivery of the tendered 800 pounds of flour but may deduct from the price any damages for losses resulting from the late delivery.

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4
Q

When does a buyer acquire an insurable interest in goods?

A

Upon the identification of the goods.

Where the contract is for future goods (i.e., goods that are not both existing and identified), the buyer does not acquire an insurable interest until the seller designates goods as those to which the contract refers, unless the parties have explicitly agreed otherwise.

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5
Q

How much a buyer of non-conforming goods must pay for it?

A

UCC § 2-601 allows a buyer to accept the whole, reject the whole, or partially accept or reject commercial units. A buyer who accepts a tender of goods, whether conforming or nonconforming, becomes obligated to pay the seller the contract (list) price of the goods.

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6
Q

In a rewards case, will the offeror remain liable despite the fact that the object of the reward is no longer active?

A

Yes, even when another party accepts and performs a contractual duty, if the offer was made to multiple parties, that offer remains open until it is either terminated or revoked. Because the university did not effectively revoke the offer as discussed above, the offer remained outstanding and the student could still accept it after the rival college coach had returned the hog.

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7
Q

Does SOF re $500 applies to service contracts?

A

No, only to contracts.

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8
Q

How is SOF applicable to service contracts?

A

If service cannot be performed under a year (from the date of signature), SOF will apply.

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9
Q

How is SOF triggered?

A

SOF is triggered by Mr. Sour: M-arriage, S-urety, O-ne year longer service contracts, UCC goods, R-eal property.

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10
Q

Will a service provider be liable for warranty of merchantability or implied warranty of fitness when choosing and installing an appliance sold by a third party?

A

No, only if the service provider is also the seller of the applience.

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11
Q

Can a warranty of fitness be disclaimed by “as is” clauses?

A

Yes, it can. The implied warranty of fitness for a particular purpose can be disclaimed by use of language such as “as is,” which calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty.

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12
Q

Can express warranties be disclaimed by “as is” clauses?

A

No, it cannot. Any promise, affirmation, description, or sample that is part of the basis of the bargain is an express warranty, unless it is merely the seller’s opinion or commendation of the value of the goods.
Disclaimer clauses that conflict with express warranties are ignored

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13
Q

Who has the burden to prove a condition precedent?

A

If a defendant’s duty is subject to a condition precedent, then the plaintiff (here, the life coach) has the burden of proving that the condition occurred in order to recover.

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14
Q

How can an intended beneficiary be differentiated from a creditor beneficiary?

A

The creditor beneficiary should have a credit in his favor with the promisee while the intended beneficiary is basically receiving a gift.

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15
Q

Will disconnected (not offer/acceptance) letters sent by two negotiating parties be enforceable?

A

Yes, as long as they were signed by the party against whom enforcement is sought.

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16
Q

Will substantial performance overrides the need for a party to satisfy an express condition?

A

No, failure to satisfy an express condition is enough for the other party to refuse her performance.

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17
Q

Does a UCC sale of goods require consideration for a good faith contract change?

A

No.

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18
Q

When can a seller bid in an auction of his own good?

A

(i) a seller may bid at a forced sale, and
(ii) a seller may bid if she specifically gives notice that she reserves the right to bid.

Outside these two cases, when an auctioneer knowingly accepts a bid by the seller or on her behalf, or procures such a bid to drive up the price of the goods, the winning bidder may avoid the sale or, at her option, take the goods at the price of the last good-faith bid prior to the end of the auction.

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19
Q

How is the mailbox rule applied if the offeree mails a rejection and right afterwards an acceptance?

A

If a communication is sent rejecting the offer, and a later communication is sent accepting the contract, then the mailbox rule will not apply, and the first one to be received by the offeror will prevail.

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20
Q

When can an offer be irrevocable without consideration?

A

Under the UCC, an offer to buy or sell goods is irrevocable for up to THREE months if:
a) offeror is a merchant
b) there is an assurance that the offer is to remain open
c) assurance is contained in signed writing from the offeror.

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21
Q

What happens to an offer if the involving subject matter is destroyed?

A

An offer involving subject matter that is destroyed is terminated.

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22
Q

Does the actual intent (subjective) of the parties matter for contract formation?

A

No, subjective (actual) intent of the parties is not relevant.

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23
Q

How is contract formation determined from a objective theory perspective?

A

(a) whether reasonable people in the parties’ position,
(b) given the facts and circumstances,
(c) would conclude that a contract had been made based on objective manifestations of intent (regardless of actual subjective intent).

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24
Q

Will a promise with no consideration in exchange be found enforceable when a party has promised something in writing to a charity?

A

Yes, under promissory estoppel to enforce charitable subscriptions.

They presume that the charity detrimentally relied on the promised contribution.

25
Q

When is reformation of a contract allowed?

A

Reformation is only available if both parties are mistaken as to the contents or effect of the writing.

26
Q

When can a party who entered an illegal agreement be entitled to restitution?

A

When:
(a) withdrawing from the transaction before the illegal object of the agreement has maturated, and
(b) did not engage in serious misconduct.

BUT, never entitled to enforce an illegal agreement,

27
Q

What is the effect of a buyer who examines a good or refuse to examine regarding warranties?

A

(a) there is no implied warranty with respect to defects that an examination would have revealed to the buyer, and
(b) there is no warranty of merchantability that would have otherwise attached to the sale.

28
Q

Is a gratuitous assignment enforceable?

A

No, if no consideration supports an assignment of contractual rights (a gratuitous assignment), the assignment is generally revocable, unless the obligor has already performed or promissory estoppel applies

29
Q

When the other party consents to delegation is the delegator released from liability?

A

When obligations are delegated, the delegator is not released from liability, and recovery can be had against the delegator if the delegate does not perform, unless the other party to the contract agrees to release that party and substitute a new one. Merely consenting to a delegation does not create a novation.

30
Q

How can terms not expressed such interest rate be determined for a contract for the sale of goods?

A

Under the UCC, a party may explain or supplement the terms of the contract—even if the terms are unambiguous—by evidence of:
(1) course of performance,
(2) course of dealing, or
(3) Trade.

Evidence of the parties’ conduct with respect to the current contract at issue is accorded priority over evidence of the past course of dealings or trade usage.

31
Q

If a party performs incorrectly after the other party has failed to meet a condition in the contract, how is the performance by the party interpreted?

A

It will be interpreted as the party waived the condition missed by the other party.

In this case, because the party performed incorrectly, only the party will be liable per the contract.

32
Q

When can a party demand consequential damage (e.g.: storage for a property not delivered on time)?

A

When the other party becomes aware of the intended use / consequence of a delay.

33
Q

When will a contract reserving the right to cancel the contract be valid?

A

Only when this reservation is for a short period of time, and the deciding facts applicable to the case happened after this period has passed.

34
Q

Is there a time limit for a party to void a contract for misrepresentation?

A

Yes, but the time period within which a party may avoid a contract due to misrepresentation does not begin to run until that party either knows or has reason to know of the misrepresentation.

35
Q

Is an agreement induced by fraud void ab initio?

A

No, it is only voidable.

36
Q

Can I party void a contract for misrepresentation even if such party has suffered no economic losses?

A

Yes, differently from torts, the lack of economic losses in contracts does not preclude a party from avoiding a contract due to misrepresentation.

37
Q

How can a contract unenforceable due to public policy be enforced by the court?

A

When the contract violates a policy that was intended for the benefit of a contracting party seeking relief, the contract may be enforceable in order to avoid frustrating the policy behind the statute.

E.g.: insurance contract.

38
Q

How broad is the intended third-party beneficiary constructed?

A

Usually very narrowly. E.g.: a hospital patient is not an intended beneficiary of the janitorial service provided to the hospital, only incidental.

39
Q

What is the strongest basis of a consumer to sue a delegated provider after a contract is assigned or delegated without novation/release by the customer?

A

Consumer would be an intended beneficiary of the contract between the new service provider and the old one.

40
Q

Will course of dealing superseedes a written term of the contract?

A

No, course of dealing will be accepted to supplement or explain an unclear element of a contract.

41
Q

Does consequential damages mean that the breaching party will pay for all the consequences that flow from the breach?

A

No, the breaching party will be responsible for only the foreseeable losses resulting from the breach.

42
Q

Will quasi-contract be applied when service is rendered but no benefit is ultimately rendered at no fault of any of the parties?

A

No, quasi-contract is applied only when some benefit is rendered to one of the parties.

When a defendant is unjustly enriched by the plaintiff, restitution generally allows the plaintiff to recover on the benefit conferred by the plaintiff upon the defendant, rather than on the harm suffered by the plaintiff.

If no benefit is rendered despite efforts by a party, the other party won’t be liable to compensate the party.

E.g.: car destroyed in mechanic’s garage.

43
Q

Can a representation about the future performance of a company imply in an (unsaid) representation that this company has presently sounding financials?

A

Yes.

44
Q

Is a gratuitous assignment revocable despite the assignee already having enjoyed the benefits of the assignment for a long time?

A

Yes, a gratuitous assignment is generally a revocable assignment, unless it is supported by a document, and it does not appear that this one does.

45
Q

How notice applies to an assignment?

A

If a first assignment is irrevocable, then a subsequent assignee will only prevail if he had no notice of the prior assignment.

46
Q

Does parol evidence also apply to oral tratatives simultaneous to the signing of the agreement?

A

Yes. Oral tratatives at the time of signature of the agreement are usually barred by the parol evidence rule.

47
Q

When can a party reinstate a previously waived condition without consent from the other party?

A

The condition may be reinstated if the waiving party communicates a retraction of the waiver before the condition is due to occur, and the other party has not already suffered detrimental reliance.

48
Q

What are the requirements for proper assurance demand by a party under the UCC?

A

Under the UCC, the demand for assurances must be made in writing.

A party can demand assurances of performance if there are reasonable grounds for insecurity about the other party’s ability or willingness to perform.

Once such assurances are requested, performance may be suspended until they are provided.

Failure to give adequate assurances within a reasonable time can be treated as a repudiation.

49
Q

How do you know if a clause defining an amount is a penalty or liquidated damages?

A

Mostly per the language surrounding the problem:
1) reasonable -> liquidated damages (acceptable)
2) penalize -> penalty, unacceptable -> check actual damages instead.

50
Q

When impracticability may not be a valid defense for a service provider unable to perform due to a serious accident?

A

Although a party’s duty to perform can be dismissed by impracticability, if the contract is a contract to perform services that can be delegated, it is not discharged by the death or incapacity of the party who was to perform the services.

51
Q

What aspect of a calculation of the benefit of bargain, when there was misrepresentation by the seller, may be tricky?

A

Benefit of bargain as calculated by benefit promised less benefit received may be more than what buyer spent to fix the virtually worthless purchased item.

52
Q

How can an order offer be accepted in the UCC world?

A

By either shipment or by promissing to do so.

53
Q

When a contract is formed upon the offeror receiving a “yes” letter before the “no” letter because of a delay in the mail, should you say that the mailbox rule applies or not?

A

You should say that the contract was formed and that the “mailbox” rule does not apply.

54
Q

When can a seller make a curative tender even if the time for performance under the contract has already elapsed?

A

The seller has a right to cure a defective tender if (i) the time for performance under the contract has not yet elapsed
OR
(ii) the seller had reasonable grounds to believe that the buyer would accept despite the nonconformity. The seller must give notice of the intent to cure and make a new tender of conforming goods.

55
Q

When is moral obligation plus subsequent promise enough for a P to recover for the cost of his lost watch after saving the wife of a rich man from drowning?

A

In the jurisdictions where case law supports so. BUT, common law does NOT entitle recovery under this theory.

56
Q

How can a collection effort be used to qualify a contract as not formed because of duress?

A

While the lender’s threat of initiating a civil action to recover the debt was not improper since the debt was past due, the lender’s use of the attachment process was improper. The lender was using the process, not to ensure the recovery of the debt, but to force the wholesaler to sell the land to lender at an unfair price since the wholesaler had sufficient other assets that the lender could have attached in order to protect himself from the possibility of non-payment. The wholesaler lacked a reasonable alternative to succumbing to the threat.

57
Q

Will any reasonable belief that the buyer would accept nonconform goods allow seller some extra time after the original deadline for perfect tender?

A

Yes.

58
Q

Will a general disclaimer without specificities disclaim a Warranty of Merchanbility?

A

No, a general disclaimer is not sufficient to disclaim the warranty of merchantability unless it uses the term merchantability and is conspicuous if in writing.

59
Q

Is a product automatically covered by the Warranty of Merchanbility?

A

Yes, merchanbility is an assumption for goods.

Goods that are not fit for the ordinary purpose for which such goods are used are not merchantable.

As a merchant seller of the windows, the distributor can be liable for breach of the warranty of merchantability because the windows did not meet their ordinary purpose.