Contracts

Question 1

When can a buyer of goods may obtain specific performance

Answer 1

When the seller refuses to deliver goods if:
- the good are unique, or circumstances are otherwise proper

Question 2

Buyer receives non conforming goods

Answer 2

Buyer can accept all, reject all, or reject some and accept some

If buyer rejects, buyer must do so within a reasonable time after delivery or notify the seller of the rejection

Question 3

When a builder in a construction contract breaches during construction

Answer 3

The non breaching party is entitled to the cost of completion plus compensation for any damages caused by the delay in completing the building

Question 4

If a buyer has rejected goods because of defects

Answer 4

The seller may “cure” within the time originally provided for performance

Question 5

An intended 3rd Party beneficiary can enforce a contract when?

Answer 5

After their rights have vested :
1. Manifests assent to the promise in a manner invited or requested by the parties
2. Brings suit to enforce the promise or
3. Materially changes position in justifiable reliance on the promise

Remember: they know about their interest AND they do something about it

Question 6

Who is liable when a contract is assigned?

Answer 6

Both the original promisor on the contract and the party who is assigned and now assumes the contract

Question 7

What makes an enforceable requirement contract?

Answer 7

A buyer promises to buy all the goods the buyer needs from a certain seller,

And the seller agrees to sell that amount to the buyer.

(I) quantity is certain by reference to objective, intrinsic facts
(II) consideration is present as promisor is suffering a legal detriment by not buying goods from another

Question 8

Surety contracts

Answer 8

Contracts to pay the debt of another must be in writing to be enforceable

Question 9

Defenses to contract formation

Answer 9

Mistake
Illegality
Lack of capacity
Statute of frauds

Question 10

Elements for contract formation

Answer 10

1. Mutual assent
2. Consideration
3. No defenses apply

Question 11

Mutual assent

Answer 11

One party accepts the others offer, by word or conduct that manifests a present intention to enter into a contract

Question 12

Consideration

Answer 12

Bargained for exchange of something of legal value OR a substitute for consideration such as promissory estoppel, detrimental reliance, or good faith modifications under the UCC

Question 13

Effect of lack of capacity to contract

Answer 13

Makes contract void or voidable

Question 14

Illegality of K

Answer 14

Makes k void

Question 15

When parol evidence is argued so as to keep testimony of oral negotiations out, the best argument against this is:

Answer 15

The memorandum signed is not a complete integration of the agreement

Question 16

Shipment Contracts

Answer 16

The presumed contract under the UCC unless there is a contrary agreement

It requires seller to ship goods by carrier and the risk of loss generally passes to the buyer once delivered to the Carrier

Exception: Nonconforming goods
- if seller ships nonconforming goods this constituted a breach by seller
- breach by seller gives buyer the right to reject good
- when buyer has the right to reject, the seller bears the risk of loss until the goods are accepted or defects are cured

Question 17

Express warranty

Answer 17

Arises from any statement of fact or promise

Question 18

Implied warranty of merchantability

Answer 18

The goods must be fit for ordinary purposes

The implied warranty will arise in every sale by a merchant unless disclaimed

Question 19

Offer by merchant to hold open

Answer 19

1) Under the UCC offer by a merchant
2) to buy or sell goods in a signed writing
3) terms give assurances it will be held open
4) not revocable for lack of consideration during the time stated.

Question 20

If an offer is prepared by the offered

Answer 20

It must be separately signed by the offeror. If it is not he can revoke.

Question 21

Revocation is effective when

Answer 21

“Received”:
• it comes into the persons attention, or
• it is delivered at a place of business through which the contract was made

Question 22

Anticipatory Repudiation

Answer 22

Where a promisor, prior to the performance time, unequivocally indicates that he cannot or will not timely perform.

This allows the nonrepudiator the option of suspending performance and waiting to sue until the performance date OR to sue immediately.

Question 23

Option contract

Answer 23

Contract in which the offered gives consideration for a promise by the offeror not to revoke

Neither can terminate before the end date (last day of time period)

Question 24

Recovery for Substantial Performance

Answer 24

Can recover contract price minus damages for the minor breach

Question 25

Factors for substantial performance

Answer 25

Courts look at:
1. Amount of benefit received
2. Adequacy of damages
3. Extent of performance
4. Hardships to breaching party
5. If breach was negligent or willful

If material breach there will never be substantial performance
Ex. If time is of the essence, breach is material

Question 26

Divisible contract

Answer 26

If a contract was divisible, party who performed partly is entitled to collect contract price for the individual parts

Requires:
• performance of each must be divided into two or more parts
• number of parts due from each must be the same
• performance of each part by one is agreed equivalent of corresponding part

Courts will decide based on fairness

Question 27

Restitution

Answer 27

Can be granted when the other party was unjustly enriched

Part performance would cause party to be unjustly enriched if gets work for free

Can recover value of services minus the damages

Question 28

Contract bids - best argument in support of why a general contractor is obligated to award the subcontract to the lowest bidder?

Answer 28

Subcontractors bid is consideration
General contractors making a promise to award the contract to lowest bid
Contract is formed

Question 29

Builders recovery when homeowner tells him to stop after builder has partly performed

Answer 29

Builder gets back the costs already spent + his expected profit from the project - any loss avoided by resale of unused materials