Contracts

Question 1

Applicable law

Answer 1

Article 2 of the Uniform Commercial Code (UCC) governs contracts for sale of goods. Goods are defined as movable things. Otherwise, Common Law dictates, unless it’s a mixed contract, where the predominant purpose of the contract will determine the appropriate law.

Question 2

formation

Answer 2

a contract is formed when there is an offer, acceptance, and consideration and there exists no defenses for formation

Question 3

Offer

Answer 3

manifestation of intent to be bound, there are reasonable and definte terms, and it is communicated to an identifiable oferee

Question 4

Merchant firm offer

Answer 4

an offer is not revocable if it is made by a merchant, signed in writting, that gives assurances that it will be held open for a period stated in the writting. If no time is stated, a reasonable time is to not exceed 90 days

Question 5

acceptance

Answer 5

Acceptance requires a manifestation of assent for the terms of the offer by the offeree

Question 6

Bilateral contracts acceptance

Answer 6

the start of performance manifests acceptance

Question 7

Unilateral contracts

Answer 7

Starting preformance only renders a contract irrevocable, where acceptance exists only when performance is complete. If beginning performance, an offeree must inform the offeror of completion within a reasonable time of completion of preformance

Question 8

Retraction of a unilateral offer can happen when

Answer 8

either by lapse by a reasonable time or earlier by revocation

Question 9

revocation

Answer 9

retraction of an offer by the offeror and is only valid if communicated to the oferree before acceptance

Question 10

counter-offer

Answer 10

response made by the oferree to the offeror that contains the same subject matter as the orginal offer but differs in terms. It operates as a rejection of the orginal offer as well as the new offer

Question 11

consideration

Answer 11

bargined for exchange of something for legal value. Courts will not question the adequacy of consideration - a mere peppercorn may suffice

Question 12

Illusory contract

Answer 12

attempt to contract however is not legally binding

Question 13

If the contract says a party can cancel before a certain date the contract is

Answer 13

illusory until that date, and binding after that

Question 14

Implied in fact K

Answer 14

A contact based on a tacit promise, inferred when conduct creates a contract, a benefit was received that could have been refused, and it would be fair to presume payment was expected.

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Question 15

Option K

Answer 15

An offer is not revocable if the offeree gives consideration for a promise by the offeror to refrain from revoking an offer for either a stated period of time or reasonable time if no time is specified. Option K are an exception to the mailbox rule, and are accepted upon return not upon mailing

Question 16

Mutual mistake

Answer 16

A contract is voidable when both partis are msitaken as to a basic assumption on which the contract is made, the mistake is material to the K and the party asserting the mistake did not bear the risk of mistake

Question 17

Voidable K means that when you void, you can either

Answer 17

rescind or reformed

Question 18

Unilateral mistake

Answer 18

A mistake by one party that is unknown to the other party concerning a basic assumption that has a material effect. A unilateral mistake is generally not a valid defense to formation of a K but can be if one party knew or had reason to believe the other party was mistaken, or the non-mistaken party had a duty to disclose

Question 19

conditions

Answer 19

makes preformance obligatory only when the condition occurs.

Question 20

Concurrent conditions

Answer 20

occur simultaneously but each function as a condition precedent to the other

Question 21

Satisifcation co ndition

Answer 21

can be viewed subjectively but good faith. Even if objectively satisifactory by reasonable persons, client decides his own subject satisfaction

Question 22

Breach

Answer 22

Occurs when a party fails to perform when

1) condition precedents are satisfied
2) time to perform arrives
3) performance is not discharged

Question 23

material breach- if a party does not receive the substantial benefit of their bargain, the breach is material, and what can they do damage wise

Answer 23

1) they are no longer obligated to continue performance under terms of the contract, and 2) they will have an immediate right to all remedies for breach of the entire contract, including total damages.

Question 24

Minor breach

Answer 24

A breach of a contract is minor if a party gains the substantial benefit of their bargain despite defective performance. A minor breach does not relieve the aggrieved party of performance under the contract; it merely gives them a right to damages for the minor breach.

Question 25

Which contracts need to be in writting in order to be valid

Answer 25

Marriage, a contract that cannot be performed within a year, land sale or land leases for over a year in length, executor guarantees to pay, contracts for goods valued over $500 and suretyships.

Question 26

For a writing to be valid under SOF, it must included

Answer 26

Writings must be signed by the party charged, reasonably identify the subject matter, indicate there is a contract and state the essential terms.

Question 27

Where there is part performance that unequivocally indicates acceptance and there is no writing,

Answer 27

a party will be estopped from claiming there was no contract based on a lack of a writing.

Question 28

Writings for SOF can be

Answer 28

a number of writings, no need for only one signed document. E-mail messages suffice, including signature or not.

Question 29

Partial performance

Answer 29

Requires two of three: 1) payment in whole or in part; 2) possession; and or 3) valuable improvements.

Question 30

SOF exception where you cant claim SOF

Answer 30

1) full performance; 2) judicial acknowledgement of the agreement; 3) estoppel 4) when the purpose of making the guarntee was to benefit the person making the promise

Question 31

SOF exceptions - UCC Version

Answer 31

– 1) Merchant’s confirmatory memorandum (the other party does not object in a reasonable time); 2) goods accepted and paid for; 3) custom made goods; or 4) party admission of contract formation.

Question 32

Common law and modifications

Answer 32

Contract modification must be supported by considerations Exceptions include if there is a change in preformance or promise, if it is fair and equitable modification is due to a changed circumstance and the K is not fully preformed by either party

Question 33

UCC and modifications

Answer 33

consideration is not required if done in good faith

Question 34

Parol evidence rule

Answer 34

a party cannot introduce evidence of a prior or contemporaneous agreement that contradicts a later integrated writing

Question 35

Exceptions to parol evidence rule

Answer 35

proof of a condition clerical error to establish a defense of formation interpert vague terms supplement a K that is only partially intergrated

Question 36

When should you assume a K is partially intergrated

Answer 36

when there is no time or date of compleition or merger clause

Question 37

Condition precedent

Answer 37

renders preformance condition upon the compleition of the condition

Question 38

Exceptions to condition precedent

Answer 38

When the protected party fails to cooperate in good faith or they voluntarily excuses the condition

Question 39

Frustration of purpose

Answer 39

discharges performance under a K if the purpose of the K no longer exists.

Question 40

Frustration of purpose - frustration of purpose discharges performance under a contract if the purpose of the K no longer exists. Performance is excused if

Answer 40

1) principal purpose if substantially frustrated 2) by an unforeseeable supervening event 3) both parties knew about the purpose at formation

Question 41

Impossibility

Answer 41

discharges preformance if it would be objectively impossible to preform due to unforeseen circumstances

Question 42

Duress

Answer 42

wrongful pressure exerted upon a person in order to coerce that person into a K that they ordinarily woulnt enter. This will invalidate the K

Question 43

Impracticability

Answer 43

Available when an event occurs after K formation that is unanticipated by both parties makes the performance unreasonably difficult or expensive

Question 44

Unconscionability

Answer 44

K may be avoided where the provisions r so one sided that they are unconscionable at the time of formation. Applies where one party has unequal bargaining power

Question 45

Time is of the essence

Answer 45

failure to preform by a specified date is generally not deemed a material breach unless the K contains a speific time of the essence clause. This is a term of art whereas a normal K can be completed within a reasonable time, even if there is a compleition date listed

Question 46

UCC Perfect tender rule

Answer 46

A seller must deliver conforming goods. The smallest non-conformity is a breach, where the buyer may reject all or a portitn of the goods. This includes timely manner, perfect quality and correct quanity.

Question 47

exceptions to Perfect tender rule

Answer 47

if the seller has a right to cure (time of performance has not expired) installment K where the installment must be so defective it substantially impairs the value of the entire K

Question 48

Nonconforming goods- Upon receiving non-conforming goods, the buyer may

Answer 48

sell the goods in public or private sale but must notify the seller beforehand

Question 49

mirror image rule

Answer 49

under the common law, an acceptance must mirror the offer and additional terms is a counteroffer that revokes the inital offer

Question 50

Merchant

Answer 50

one who regularly deals in goods of the kind sold in the K or who holds themselves out as a merchant. Special rules apply to K's between merchants.

Question 51

Battle of the forms

Answer 51

UCC article 2 states: acceptance does not need to mirror the offer, and can include different or additional terms. Oferees additional terms are deemed included only if 1) both parties are merchants 2) terms are not a material change 2) offer does not limit acceptance to exact terms 4) no objection was made within reasonable time

Question 52

Promissory estoppel will allow a P to pursue damages when

Answer 52

1) P reasonably and foreseeably relied to their detriment on the promise 2) promisor should have reasonably expected a change in position in reliance on that promise 3) enforcement of the promise is necessary to avoid injustice even without consideration

Question 53

Adequate assurance

Answer 53

A party with reasonable grounds for insecurity regarding preformance may request adequate assurance via writting. If the other party does not provide these assurance within reasonable time, the asking partty may treat that as an anticipatory repuidation

Question 54

Anticipatory reputation

Answer 54

Occurs when a party communicates that they are unable or unwilling to preform before preformance is due

Question 55

What happens when a party communicates that they are unable or unwilling to preform before preformance is due

Answer 55

Aggrieved party may 1) treate the anticipatory repudiation as a breach and sue immediately 2) suspend preformance and wait to sue when preformance is due 3) treat the repudiation as an offer to rescind/contract as discharged 4) ignore and urge preformance

Question 56

Anticipatory repudiation retraction

Answer 56

A repudiation can be retracted unless the aggrieved party has 1) cancelled the K 2) materially changed the position 3) indicated repudiation as final

Question 57

Expectation damages include all

Answer 57

Damages include all expected profits that would have been realized if the K was fully preformed by breaching party

Question 58

Reliance Damages

Answer 58

If P's expectation damages r too speculative to measure, they may elect to recover based on their reasonable reliance on the K. Reliance damages are awarded to p the cost of preformance and r designed to place the P in the position had they K never been formed

Question 59

Misrepresentation

Answer 59

D makes a misrepresentation of material fact for the purpose of inducing the P to rely on misrepresentation to their detriment. Nominal damages r not available

Question 60

Gratuitous Promise

Answer 60

if consideration is provided for past services, the promise is invalid

Question 61

Assignment of rights

Answer 61

A transferor of rights where an obligor contracts with an assignor and the assignor assigns their right to be the obligors performance to the assignee.

Question 62

Generally all contractual rights may be assigned other than the ones that

Answer 62

substanitally change the obligors duty or risk assign future rights to arise from future K Prohibited by law

Question 63

Assignments clauses

Answer 63

prohibts the assignment of the K will be construed as barring only the delegation of assignor duties. A clause prohibiting the assignment of rights, like the right to payment, generally will not bar the assignment of those rights.  The assignor has the power but not the right to assign, so if an assignment is made, the obligor has the right to sue for the breach.

Question 64

Delegation of duties

Answer 64

A delegation is a transfer of duties.  It generally consists of a situation where the obligor/delegator promises to perform for the obligee but then delegates their duty to the delegatee.

Question 65

Generally duties may be delegated except

Answer 65

1) those that involve personal judgment and skill, 2) the delegation would change the obligee’s expectancy, 3) a special trust was created in the delegator by the other party to the contract, and 4) where there is a contractual restriction on the delegation.

Question 66

Enforcement of expired debt

Answer 66

An exception to the pre-existing duty rule, no consideration is required to contract to receive pre-existing defaulted debt.

Question 67

Quasi-k

Answer 67

When there is a failed contract, the defendant is required to make restitution to the plaintiff.  Requires 1) plaintiff confers a non-gratuitous benefit to defendant, 2) the defendant knows the plaintiff’s expectation because they knew of the benefit and did not decline, and 3) the defendant would be unjustly enriched if they retain the benefit.

Question 68

Illegal K

Answer 68

A statute to raise revenue will not prevent contract enforcement if the contractor has not obtained a statutorily required license.  Typically occurs when a client refuses to pay an unlicensed contractor, and claims the contract was illegal, therefore unenforceable.

Question 69

Novation

Answer 69

When all parties to a contract agree to release a party to a contract and substitute a third party in their place.

Question 70

express warranties

Answer 70

created by seller’s affirmation/promise, description of good

Question 71

What is not an express warranty

Answer 71

Mere puffery or exaggerations or opinions regarding the product

Question 72

Implied warranty of merchantability

Answer 72

implied in every sales contract is a warranty of merchantability or that the goods subject to the K are of a suitable quality or condition appropriate for the sale of goods in a given market

Question 73

An implied warranty of merchantability need not to be stated in the K to be valid however

Answer 73

the disclaimers of wattanty must be explicit and conspicuous

Question 74

An implied warranty of merchantability need not to be stated in the K to be valid however

Answer 74

the disclaimers of wattanty must be explicit and conspicuous

Question 75

FOB Buyers location

Answer 75

seller bears the risk of loss until the goods arrive at the buyers location

Question 76

FOB Seller's location

Answer 76

Buyer bears the risk of loss upon shipment of the goods by the seller

Question 77

Incidental damages

Answer 77

damages awarded for costs and losses that naturally flow from the breach

Question 78

Duty to mitigate

Answer 78

Nonbreaching parties have a duty to mitigate damages. If a party prematurely incurs additional expenses absence a breach, they will not be able to recover.

Question 79

Force Majeure events

Answer 79

force majeure events or acts of god can excuse for performance when not the cause of either party

Question 80

UCC Knock out rule

Answer 80

Conflicting terms cancel each other out and neither enter the K. The K then consists of agreed-upon terms and the court will supply missing terms if needed

Question 81

Acceptance in the case of UCC

Answer 81

does not need to mirror the offer like CL an

Question 82

When are you not able to use the doctrine of anticipatory repudiation

Answer 82

does not apply when the date of performance has not passed and the nonrepudiating party has fully performed. Under those circumstances, the nonrepudiating party must wait until the repudiating party's performance is due before filing suit.

Question 83

Mailbox rule

Answer 83

provides that an acceptance is effective upon proper dispatch.

Question 84

Proper dispatch for Mailbox rule

Answer 84

requires that the offeree no longer has control or possession of the acceptance, such as with a properly mailed letter.

Question 85

What happens if the mailbox letter sent to the offeror the offeror dies before picked up

Answer 85

Offer is not accepted

Question 86

Capcity

Answer 86

must be 18 years and older and not mentally incomptent at the time of the K.