Contracts

Question 1

When does a revocable assignment terminate?

Answer 1

Death, incapacity or bankruptcy of the assignor

Question 2

When is a gratuitous assignment NOT revocable?

Answer 2

1: Obligor already paid
2: Document symbolizing assigned right delivered (e.g. stock certificate)
3: Written and signed assignment delivered
4: Promissory Estoppel Applies

Question 3

What is procedural unconscionability?

Answer 3

Party induced to enter into contract w/o meaningful choice due to deception, compulsion, or significantly uneven bargaining power.

Examples:
- boilerplate contract provisions that are inconspicuous, hidden, or difficult to understand.
- contract of adhesion (ie, take-it-or-leave-it contract) when parties have greatly unequal bargaining power

Question 4

What is substantive unconscionability?

Answer 4

Substance of contract itself is duly unfair—eg:

• one-sided terms
• gross disparity in value of consideration exchanged

Question 5

Accord Agreement

Answer 5

when a party agrees to accept different performance in satisfactionof (i.e., in place of) the original promise; after breach, the party can sue under either the original contract or the accord agreement.

Question 6

Substitute Contract

Answer 6

when the parties form a second agreement that immediately discharges the original contract; after breach, a party can sue under the substitute contract only.

Question 7

Anticipatory Repudiation

Answer 7

a contracting party clearly and unequivocally repudiates (i.e., indicates an unwillingness to perform) a promise before performance is due

Question 8

When can a repudiation be retracted?

Answer 8

If the nonrepudiating party receives notice of the retraction before:

• canceling the contract
• materially changing position in reliance on the repudiation or
• indicating that he/she considers the repudiation to be final.

Question 9

Condition Precedent

Answer 9

If the parties expressly agree to a condition precedent, then the condition precedent will be strictly enforced. This means that a contracting party must fully comply with the condition before the other party’s performance is due.

Question 10

Entrustment of Goods

Answer 10

Gives a merchant the power to convey good title. Good title can be conveyed to a buyer in the ordinary course of business—i.e., someone who buys goods:

1) in good faith
2) without knowledge that the sale violates the owner’s rights to the goods and
3) from a merchant in the business of selling goods of that kind.

Question 11

When is acceptance of a firm offer occur?

Answer 11

Upon receipt (not sending e.g. mailbox rule)

Question 12

When will SOF not prevent enforcement of an oral modification

Answer 12

1) the promisor should have reasonably expected to—and did—induce action or forbearance on the modification and
2) ** injustice **can be avoided only by enforcing the modification.

Question 13

Is consideration needed to modify the sale of goods under the UCC?

Answer 13

NO

Question 14

When may the nonoccurence of a condition be excused?

Answer 14

if the party who would benefit from the condition waives it by words or conduct.

And the waiving party cannot retract the waiver once the other party has detrimentally relied on it.

Question 15

When is a buyer required to sell non-conforming goods in its possession?

Answer 15

• The buyer is a merchant—i.e., one who regularly deals in goods of the kind involved or who, by occupation, holds him/herself out as having knowledge or skills unique to the goods involved
• the goods involved are perishable or threaten to speedily decline in value and
• the seller has no local agent to whom the goods can be returned.

Question 16

What factors are used to determine material breach?

Answer 16

• Extent to which nonbreaching party will suffer loss
• Extent to which nonbreaching party can be adequately compensated for loss
• Extent to which breaching party will suffer forfeiture
• Likelihood of cure by breaching party
• Absence of good faith or fair dealing by breaching party

Question 17

Do option contracts require separate consideration?

Answer 17

YES (unless you are a merchant)

See Firm Offer Rule

Question 18

Under the PER, when can course of performance explain or supplement contract terms?

Answer 18

the agreement involved repeated occasions for performance by a party and

the other party accepted performance without objection and with knowledge of the course of performance.

Question 19

Partial Integration

Answer 19

PER evidence inadmissible to contradict contract.

Question 20

Complete Integration

Answer 20

PER evidence inadmissible to contradict OR supplement contract.

Question 21

Do option contracts terminate on death?

Answer 21

NO

Question 22

When does SOF not apply to UCC sale of goods over $500?

Answer 22

when payment for the goods has been made and accepted

Question 23

Exceptions to PER

Answer 23

• whether writing is integrated and, if so, completely or partially.
• meaning of ambiguous term.
• defense to formation or enforcement (eg, fraud, duress, mistake).
• ground for granting or denying remedy (eg, rescission, reformation).
• subsequent contract modifications.
• condition precedent to effectiveness.

Question 24

Condition Precedent

Answer 24

duty to perform **arises **upon the occurrence or nonoccurrence of an uncertain future event

Question 25

Condition Subsequent

Answer 25

duty to perform is **released **upon the occurrence or nonoccurrence of an uncertain future

Question 26

What can a breaching party receive restitution damages for?

Answer 26

1) the reasonable value of the work performed before the breach
2)less any damages suffered by the nonbreaching party due to the breach.

Prevents unjust enrichment

Question 27

When is a gift promise enforceable?

Answer 27

1) the promisor should reasonably expect the promisee to rely on the promise
2) the promisee detrimentally relies on the promise and
3) injustice can be avoided only by enforcement of the promise.

Question 28

Under the UCC, is a contract presumed to be partially or fully integrated?

Answer 28

Partially

Question 29

When is a contract not divisible?

Answer 29

When it is expressely stated that payment is due upon completion of the entire contract.

Question 30

Reserve Auction

Answer 30

UCC goods can be withdrawn anytime prior to completion of sale.

IS the presumption under UCC

Question 31

No-Reserve Auction

Answer 31

Goods cannot be withdrawn unless no bids received within a reasonable time.

Requires Special Announcment

Question 32

When can a conscipicuous “full and final payment” notation on a check constitute a proper accord and satisfication?

Answer 32

Only when the payment amount is in dispute (otherwise the attempted accord is not in good faith).

Question 33

Ways to discharge a contractual obligation?

FIRMSCAN

Answer 33

Full Performance
Impossibility, impracticality, or frustration
Release (in writing)
Mutual Recission
Substituted Contract
Contract/Covenant not to sue
Accord and Satisfaction
Novation

Question 34

When will less consideration be accepted in an accord and satisfication?

Answer 34

1: Good faith dispute over the payment amount.
2: Consideration is of a different type than original.

Accord constitutes a new contract that needs new consideration.

Question 35

Is a new promise to pay and existing debt after the Statute of Limitations has run enforcable?

Answer 35

YES

Generally must be signed and in writing.

Question 36

Under the UCC, does an acceptance with new/revised terms include those terms?

Answer 36

NO, if one of the parties is a non-merchant.

Treated as proposed additions.

Question 37

Under Common Law, what does a material breach entitle the non-breacher?

Answer 37

Witholding of remaining performance AND damages.

Question 38

Economic Waste

Answer 38

when the cost to fix or complete the construction is clearly disproportional to any economic benefit or utility gained as a result.

Question 39

When is a material breacher not entitled to restitution?

Answer 39

When the breach was willful