Contracts

Question 1

Misunderstanding

Answer 1

Neither party was aware of ambiguity - no K formed unless both parties intended the same meaning

One party aware of ambiguity - K formed and enforced according to the intention of the unaware party

Both parties aware of ambiguity - no K formed unless both parties intended the same meaning

Question 2

Mutual Mistake vs Unilateral Mistake

Answer 2

Mutual Mistake: K is voidable by an adversely affected party if both parties are mistaken concerning

Unilateral Mistake: Will not prevent K formation UNLESS non-mistaken party knew or should have known of the mistake

Question 3

Parole Evidence Rule (PER)

Answer 3

Under the PER, evidence that is extrinsic to a written K is inadmissible to supplement or contradict the K if it is a complete integration.

Extrinsic Evidence may be allowed if a) K was only partially integrated or b) additional terms would ordinarily be in a separate agreement

PER allows evidence of: mistake, misrepresentation, condition precedents, modifications, meanings of ambigious terms

Question 4

1. What is the ROL for shipment K?
2. What is the ROL for a destination K?
3. What is the ROL for non-carrier delivery by merchant seller?
4. What is the ROL for non-carrier, non-merchant seller?
5. What is FOB [location]?

Answer 4

1. Shipment K = ROL passes to buyer when seller delivers goods to carrier
2. Destination K = ROL passes to buyer only when buyer takes delivery
3. ROL passes to buyer when he takes physical possession
4. ROL passes to buyer upon tender of delivery
5. Seller bears the risk and expense of getting goods to the named location, at which point the ROL passes to buyer

Question 5

Warranties

Answer 5

UCC Ks have default implied warranties

Express warranty - promise about the quality or feature of a product

Implied Warranty of Merchantability - seller automatically warrants goods are fit for their ordinary purpose

Implied warranty of fitness for a particular purpose - seller automatically warrants that goods are fit for buyer’s purpose if: 1) buyer has particular purpose; 2) buyer relies on seller to select suitable goods; and 3) seller has reason to know of buyer’s purpose and reliance on seller

Question 6

Expectation damages

Answer 6

Puts the non-breaching party where it would have been had the promise been performed. Expectation damages must be reasonably foreseeable at K formation

Question 7

Reliance damages

Answer 7

If expectation damages too speculative, cost of performance made in reliance of K

Question 8

Consequential damages

Answer 8

Losses resulting from breach that a reasonable person would have foreseen

Question 9

Unconscionability

Answer 9

Unconscionability: The test is whether in light of the general commercial background and needs of the particular parties, K is so one sided as to be unconscionable under the circumstances at time of formation.