Contracts

Question 1

When and how can revocation of an offer take place?

Answer 1

A revocation may be made in any reasonable manner and by any reasonable means. It is not effective until communicated.

Question 2

What are the two standards for incapacity (mental illness)

Answer 2

1. Person cannot understand nature/consequences of actions
2. Person cannot act in a reasonable manner related to transaction (other party has reason to know this)

Question 3

When is a party responsible for disclosing material facts related to the deal

Answer 3

Normally a party does not need to tell the other side about all material facts related to the deal EXCEPT:

1) active concealment
2) special fiduciary relationship

Question 4

Does substantial performance apply to express conditions (CL)?

Answer 4

No, for express conditions in a CL contract, it must be full performance because substantial performance is not enough.

Question 5

How are situations handled when a rejection is sent by mail and then later an acceptance is sent by mail?

Answer 5

The mailbox rule does not apply.

The first one to be received by the offeror prevails.

Question 6

What is a firm offer under the UCC?

Answer 6

Irrevocable offer for stated time period (3 months or less) provided
1) the offeror is a merchant
2) the offer is signed by the merchant
3) made in good faith

Question 7

Warranty of merchantability – what is it?

Answer 7

A warranty of merchantability is implied in every contract for the sale of a good by a seller who is a merchant with respect to goods of that kind.

Question 8

Is course of dealing evidence admissible under the UCC?

Answer 8

Course of dealing is admissible to explain or supplement a final written agreement, even if the agreement was intended to be exclusive. In other words, it can be used for parol evidence.

Question 9

Under the UCC, what are concurrent conditions of exchange between buyer and seller?

Answer 9

Seller’s tender of delivery of goods and a buyer’s tender of payment are concurrent conditions of exchange.

Question 10

When can a buyer privy to an installment contract reject nonconforming goods?

Answer 10

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

Question 11

Name the three conditions required for promissory estoppel

Answer 11

1. Promisor should reasonably expect the promise to induce action/forbearance on part of the promisee or third person
2. Promise does induce such action or forebearance
3. Injustice can be avoided by enforcement of the promise

Question 12

Who and when can a contract with a minor be disaffirmed?

Answer 12

A minor may either disaffirm (void) OR chose to hold the adult party to the contract. Disaffirming must take place before the infant reaches age of majority or within a reasonable time thereafter.

Question 13

Does the statute of frauds apply to suretyship agreements

Answer 13

Surety agreements: his/her own economic advantage. SOF doesn’t apply and oral promise for the suretyship is enforceable.

Question 14

Is full performance sufficient to take a contract out of SOF?

Answer 14

Yes, full performance by either party to the contract will generally take a contract out of SOF requirements.

Question 15

What acts (2/3) will take a contract for transfer of land contracts out of SOF requirements, deeming partial performance sufficient?

Answer 15

2/3 required for partial performance, out of SOF:
1. payment of all or part of purchase price
2. possession by purchaser
3. substantial improvements of the property

Question 16

Are there any exceptions to the rule that a contract formed via misrepresentation are voidable?

Answer 16

Exceptions to the violability due to misrepresentation

Following misrepresentation but before deceived party has avoided the contract, the misrepresentation is cured in accord with the facts initially represented

Question 17

Warranties only apply to whom?

Answer 17

Warranties only apply against sellers of goods

Question 18

Explain warranty of implied fitness for a particular purpose

Answer 18

Implied whenever the seller has reason to know (from any source, not just the buyer) that the buyer has a particular use for the goods and that the buyer is relying upon the seller’s skill to select the goods

Question 19

What is an express warranty?

Answer 19

Any promise, affirmation, description, or sample that is part of the basis of the bargain.

Question 20

Is a seller’s opinion or commendation of the value of goods enough to form an express warranty?

Answer 20

NO.

Also, “as is” is not enough.

Question 21

How does risk play into the excuse of impracticability?

Answer 21

If a party assumes the risk of an event happening that makes performance impracticable, then the defense of impracticability does not apply

Question 22

Does parole evidence apply to subsequent agreements?

Answer 22

No, Parol evidence rule applies only to evidence of a prior or concurrent agreement.

Question 23

What are the exceptions to the UCC’s perfect tender rule

Answer 23

UCC requires perfect tender and substantial performance will not suffice EXCEPT

1. Installment Ks
2. When parties agree

Question 24

When are contract rights not assignable?

Answer 24

1. Assignment materially increases duty or risk to obligor
2. Assignment materially reduces the obligor’s chance of obtaining performance

Question 25

Is a written promise not to revoke an offer for sale of land enforceable?

Answer 25

no, a writing signed by offeror containing a promise not to revoke an offer to sell land does not make an offer irrevocable

Question 26

What happens to assignments without consideration if a party dies?

Answer 26

Assignments without consideration are revokable upon death

Question 27

How do conditional terms affect UCC contracts?

Answer 27

A contract is formed under the UCC if both parties intend to contract AND there is reasonable certainty for remedy if there's a breach. When an agreement reflects an intent to be bound only if the price is subsequently sent, no contract is formed until the price is set.

Question 28

How are breaches handled when parties have formed a second agreement?

Answer 28

When parties form a second agreement that immediately discharges the original K, any subsequent breaches are governed by the substitute contract only

Question 29

What is the affect of a mutual mistake

Answer 29

A mutual mistake may render a contract voidable by the adversely affected party. BUT a party assumes the risk of mistake and cannot avoid the K if the party knew at the time of the K that s/he had limited knowledge of the facts and accepted this lack of knowledge as sufficient.

Question 30

What is required for a nonbreaching party to claim consequential damages?

Answer 30

1. Reasonably foreseeable 2. to the breaching party 3. when the K was formed

Question 31

How is a merchant defined under the UCC firm offer rule?

Answer 31

1. One who deals in goods of the kind 2. One who, by occupation, holds himself out as having knowledge or skill related to goods involved 3. Any businessperson when the transaction is commercial

Question 32

What is a buyer's responsibility to rejected goods under the perfect tender rule?

Answer 32

After rejection, a buyer has obligation to take reasonable care of any goods in its possession until the seller has a reasonable amount of time to retrieve the goods

Question 33

Does the UCC care if a breach was material or minor?

Answer 33

No! CL material breach = failure to perform that strikes so deeply at the heart of the contract that it renders the agreement "irreparably broken" and defeats the purpose of making the contract in the first place

Question 34

Under the UCC, how can an offer be revoked?

Answer 34

1. Expressly: communication directly to offeree 2. Constructively: offeree acquires reasonable information that the offeror has taken definite action inconsistent with the offer

Question 35

Does the UCC allow parol evidence for partially or fully integrated Ks?

Answer 35

UCC presumes contracts are partially integrated and will allow for parol evidence (trade usage, course of dealing, etc.) Contradictory terms ARE NOT admissible.

Question 36

Do option contracts terminate with the offeror's death?

Answer 36

Option contracts do not terminate with the offeror's death if there is separate consideration

Question 37

Define material breach (CL)

Answer 37

"material" breach of contract is a breach (a failure to perform the contract) that strikes so deeply at the heart of the contract that it renders the agreement "irreparably broken" and defeats the purpose of making the contract in the first place When the nonbreaching party does not receive a substantial benefit of the bargain

Question 38

Define substantial performance

Answer 38

Less than full performance that, while imperfect, does not defeat the contract's main purpose. Does not typically constitute a material breach.