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NY Bar 2014 > Contracts > Flashcards

Contracts Flashcards

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MBE flashcards
0
Q

Offer - define

A

Manifestation of intention to be bound.

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1
Q

Applicable law?

A

Sale of goods: UCC Art 2

Lease of goods:
MBE: CL
NY UCC Art 2A

Other (real property etc): CL

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2
Q

Ad - offer?

A

Only if quantity specified.

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3
Q

No price stated - indefinite or offer?

A

Reasonable price applied EXC real property.

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4
Q

Quantity specified as “buyer’s requirement”?

A

OK. Minor fluctuations OK, not surprising/major fluctuations.

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5
Q

Offer termination - 2 forms

A

Lapse - reasonable time or stated time

Revocation - direct when received by offeree, or indirect via conduct when offeree aware of conduct.

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6
Q

Irrevocability of offer - 4 types

A

Option
Firm offer
Foreseeable reliance on offer (eg. Subcontractor)
Performance of unilateral

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8
Q

Option - requirements?

A

Promise + payment
(No need for merchant)
MBE: Payment always required
NY Payment not required if signed writing

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9
Q

Firm offer - requirements?

A 
Merchant + signed writing
Max period - 3 months (even if agreement states longer period)
(No consideration needed)
(Fallback position)
[Art.2]
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10
Q

Foreseeable reliance on offer

A

Eg. subcontractor’s offer as basis of contractor’s bid

Rare because reliance is usually after acceptance

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11
Q

Performance of unilateral contract

A

Only MBE - cannot revoke once performance has started (not incl “mere preparation”
NY - can revoke until performance is complete (=acceptance)

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12
Q

Rejection of offer - 3 types

A 
Counteroffer (not incl mere bargaining)
Conditional acceptance (=counteroffer)
Acceptance varying offer
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13
Q

Acceptance varying offer - Cl/SoG?

A

CL: Mirror image rule

SoG: 3 conditions for acceptance:

  1. Both merchants
  2. No material change
  3. No objection w/in reasonable time
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14
Q

Acceptance varying offer - when not applied to agr?

A

Change causes hardship/surprise to offeror.

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15
Q

Improper performance - result?

A

Simultaneous acceptance and breach.

EXC Sog - goods sent as accommodation (not acceptance yet)

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16
Q

Mailbox rule?

A

Acceptance - when mailed (even if rejected verbally later.
EXC:
- offer states otherwise
- irrevocable offer - acceptance when received
- if rejection mailed then acceptance mailed - race whichever arrives first

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17
Q

Defenses against formation - 8 types

A 
Lack of capacity
Economic duress
Mis-rep / nondisclosure material fact
Ambiguity / misunderstanding
Mistake re material fact
No consideration
Public policy
Unconscionability
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18
Q

Lack of capacity - power to disaffirm/enforce

A

May disaffirm. (EXC: necessities to live - reasonable value).
May enforce.
Silence after capacity restored = implied affirmation

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19
Q

Economic duress

A

Rare.
Threat to breach existing contract if 2nd offer not accepted.
and
No reasonable alternative

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20
Q

Misrep

A

Material fact only.

Even honest.

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21
Q

Mistake re material fact - mutual/uni?

A

Mutual only!
EXC: Mistake re value.

Uni - no defense, EXC other party knew of mistake.

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22
Q

Consideration - past consideration defense?

A

MBE: No
NY Yes if signed writing and can be proven
(promise to pay for something already done)

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23
Q

Must consideration reflect value?

A

No.

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24
Q

Illusory promise?

A

“I will if I want…”

Unenforceable

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25
Q

Consideration for contract modification?

A

Art. 2: Not required if good faith reason exists.

CL: Required. EXC if 3rd party agrees to pay.

NY No consideration needed if signed writing

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26
Q

Agr to make partial payment and waive remainder

A

Due and undisputed:
MBE: Invalid.
NY: Valid if signed writing.
(reasoning: creditor waiving w/o consideration)

EXC: Time-barred (collection barred by state limits): written promise enforceable

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27
Q

Fallback when unenforceable due to lack of consideration?

A

Promissory estoppel (reliance)

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28
Q

Public policy defenses?

A

Non-compete (scope, need/uniqeness)

Exculpatory: For negligence OK, for gross negligence of intentional - invalid

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29
Q

Unconscionability - 2 types

A

Substantive - unfair

Procedural - eg. small print

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30
Q

Statute of frauds - 6 transactions requiring writing

A

Real property transfer of interest
Performance cannot be completed in 1y.
SoG $500 or more
LoG for $1000 or more (yearly) (Art.2A)
Suretyship (even when not needed for orig debt)
Contract modification (when “as modified” required)
When marriage is part of the transaction.

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31
Q

NY writing requirements

A

Assignment of insurance policy
Promise to pay discharged debt
Finders fee, broker commission (EXC attorney, auctioneer, licensed realty agent)

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32
Q

Agr cannot be completed in 1y - EXC; when does clock start?

A

Irrelevant how long it took

Agreement to work for >1y - always needed.
Agreement to work forever:
MBE - no writing. NY writing!

Clock starts when agr made, not when work starts

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33
Q

For “as modified” - EXC?

A

Agr specifies amendments are only in writing.

CL: not enforceable [applies only to LoG on MBE]

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34
Q

Satisfactory writing - Sale of goods (Art.2)

A

Quantity term

Signed by defendant

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35
Q

Satisfactory writing - Lease of goods (Art.2A) NY

A

State it is a lease
Quantity + Duration + Rental payments
Signed by defendant

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36
Q

Satisfactory writing - other contracts

A

All material terms

Signed by defendant

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37
Q

Exceptions to writing requirement in real property

A 
Short term lease
and
Part performance - 2 of 3:
* buyer in possession
* buyer made some payment
* buyer made improvements
38
Q

Exception to writing requirement in 1y performance contract

A

Performance completed.

Fallback: restitution

39
Q

Exceptions to writing requirement in SoG $500+: Goods accepted and paid for

A

If divisible: only those goods paid for, not entire contract.
If indivisible: entire contract exempted.

40
Q

Other exceptions to writing requirement in SoG $500+:

A

Custom-made

Judicial admission

Mechant’s (plaintiff’s!!) confirmatory memo, if:
Both are merchants
Writing claims agreement or names quantity
No written objection within 10 days

41
Q

Exception to writing requirement for suretyship (assume another’s debt)

A

Main purpose of surety is to benefit promisor’s econimic purpose. (“main purpose rule”) (eg. to get a transaction done)
MBE ONLY
NY no exception!

42
Q

Parol Evidence Rule?

A

Excludes prior or contemporaneous agreements that contradict “later writing”.
(If later oral - check Statute of Frauds)
(Does not relate to post-signing events, which can be admitted)

43
Q

Exclusions to Parol Evidence Rule?

A

Correct typos
Defense against formation (mistake/duress)
Interpretation of vague/ambiguous term
Supplement “partially integrated writing”
EXC: “merger clause” - limited to terms herein…

44
Q

Conduct as evidence of contractual terms

A

[In descending importance:]
Course of performance
Course of dealing (prev. engagements)
Usage of trade (others in similar circumstances)

45
Q

Express warranties - what constitutes?

A

Statements, samples, models.
Must be “basis of the bargain”
Not mere expression of opinion.
Cannot be disclaimed

46
Q

Implied warranty - 2 types

A

.. of merchantability

.. for particular purpose

47
Q

Implied warranty of mechantability

A

Only by merchant dealing in goods of kind.

Fit for ordinary purpose.

48
Q

Implies warranty for particular purpose

A

By anyone (not just merchant)
For buyer’s particular purpose
When seller knows about special use
and about reliance on seller to select suitable goods

49
Q

Warranty by lessor of goods

A

NY only!
Same as SoG.
EXC: finance lease - any lease by bank

50
Q

Limitation on implies warranty - form

A

“as is” “with all faults”
Conspicuous typeface
Use the word “merchantability”

(No disclaimer for express w!)

51
Q

Limitation of remedies for breach of warranty - when permissible?

A

“Not unconscionable”
Personal injury limitation is assumed unconscionable.

“Does not fail its essential purpose”

52
Q

Risk of loss - hierarchy?

A

Agreement (incoterms?)
Breach (breaching party liable even for unrelated loss)
Delivery by common carrier
Non-carrier / pickup

53
Q

Risk of loss - delivery by common carrier

A

Seller’s risk until he completes his delivery obligation:

  • Shipment contract (FOB seller location): gets goods to carrier, makes arrangements, notifies buyer
  • Destination contract (FOB buyer location): when carrier delivers to buyer
54
Q

Risk of loss - non-carrier / pickup

A

Mechant seller: until buyer takes possession

Non-merchant: when tendered to buyer (made available)

55
Q

Risk of loss in LoG NY

A

On lessor

EXC: finance lease - on lessee

56
Q

Imperfect performance - option to cure?

A

When time for performance has not expired.
EXC: In prior dealings accepted imperfect.
EXC: Installment contract - only substantial impairment (in order - reject order; in entire agr - revoke)

CL: Perfection not required

57
Q

Implied acceptance of goods

A

Buyer keeps goods after having opportunity to inspect.

Consequence: Cannot reject, can claim damages

58
Q

Later revocation of acceptance?

A

No.

EXC: Substantially impairs value AND difficult to discover

59
Q

Consequence of rejection / revocation:

A 
Return
or
Refund
or 
Damages
60
Q

Payment obligation - if seller refuses check

A

Buyer given reasonable time to obtain cash.

61
Q

CL: Imperfection?

A

Only substantial performance, not perfection.
Lateness usually not material unless “of essence”

[Applies to: real property everywhere, LoG on MBE)

62
Q

Anticipatory repudiation / retraction

A

Only when terminating party is “ready, willing, able to perform”
Can retract repudiation if breaching party decides to perform, EXC reliance on repudiation.
[unlike termination for breach which is permanent]

63
Q

Right to adequate assurance

A

Can be demanded if:
Reasonable grounds
for being insecure
about performance.

No adequate reply w/in reasonable time up to 30d –> anticipatory repudiation.

64
Q

Later agreement to rescind

A

Only when both have some performance remaining!

Otherwise - no consideration and void.

65
Q

Modification

A

Immediately replaces prev agreement which is voided.

Check Statute of Frauds

66
Q

Accord & satisfaction

A

Agree to accept performance
as future satisfaction
of existing duty.

OK if prev/existing is unpaid.

67
Q

Novation

A

Substitute new party.

Old party is no longer liable.

68
Q

Impossibility (=impracticality Art2)

6 examples

A 
Destruction of necessary object
Death/incapacitation
Supervening gov regulation
Increase in cost of performance
Frustration of buyer's primary purpose - when known
Failure of express condition
69
Q

Impossibility:

Destruction of necessary object - CL/SoG

A

CL: Good excuse.

SoG: 2 conditions:
Seller bore RoL when destroyed + goods ID’d in contract.

70
Q

Impossibility:

Increase in performance costs - MBE/NY

A

MBE: Usually unavailable, seller assumes risk.

NY - more flexible

71
Q

Impossibility:

Failure of express condition

A

Strict compliance - “if” “when” “provided that”.
“Satisfaction” requirement interpreted broadly - reasonable/objective.
EXC: protected party frustrates fulfillment

72
Q

Impossibility:

Failure of express condition - voluntary waiver of term

A

Waiver can be retracted.

EXC relied upon

73
Q

Remedies - non-monetary - when?

A

When monetary inadequate:
Real Property: usual remedy
SoG: when goods “unique”
Service contracts: No (only injunction against working for 3rd party)

74
Q

Remedies - non-monetary - right of seller to reclaim goods

A

Art 2 - No.
EXC: Buyer insolvent when goods received + seller demand w/in 10d
EXC: buyer misrep’d solvency + seller demand w/in 3m

75
Q

Remedies - liq.damages

A

Conditions:
Damages difficult to estimate
Liq. are reasonable forecast of probable damages
Not penalty

76
Q

Remedies - liq.damages - if wasn’t reasonably probably when contract signed, but becomes actual

A

Art 2: Either/or is OK

CL: Must be reasonably probable when contract signed.

77
Q

Expectation damages - CL

A

ACTUAL COST/PROFIT less CONTRACT COST/PROFIT

78
Q

Buyer’s expectation damages - Art.2

A

Cover damages - good faith purchase of alternative:
COST (cover price) less CONTRACTUAL

Market damages - no good faith or no purchase at all:
MARKET PRICE less CONTRACTUAL

Loss in value - buyer keeps defective goods:
VALUE PROMISED less VALUE DELIVERED

79
Q

Seller’s expectation damages - Art 2

A

Resale damages - good faith sale:
CONTRACTUAL less RESALE

Market damages - no good faith or no sale:
CONTRACTUAL less MARKET PRICE

Lost profit - when seller is volume dealer:
PROFIT ON SALE (regardless whether sold to someone else)

Contract price - when goods are not resaleable (custom made) - FULL CONTRACT PRICE.

80
Q

Incidental damages are?

A

Costs of transporting, insuring, caring for goods.

Arranging for substitute transaction

81
Q

Consequential damages are?

A

Damages special to P
Foreseeable by D at time of contract

Art 2 - No.
CL - Yes

82
Q

Avoidable damages

A

No recovery if P could mitigate with reasonable effort.

83
Q

Punitive damages in remedy for breach?

A

Nope.

84
Q

Right to take back from bona fide purchaser?

תקנת שוק

A

Entrustment of goods to merchant dealing with goods of same kind –> no right to take back.

85
Q

3rd party beneficiary - rescission requires TPB consent?

A

Only after “vested” = known or relied on by TPB

86
Q

TPB - liabilities

A

Promisor to TPB: always.
Promisee to TPB for default: only to creditor beneficiary
Promisor to Promisee: always for all types of creditor (but small damages for donee TPB)

87
Q

Consent for delegation of duties?

[Obligor appoints delegate to perform for Obligeei

A

Not needed.
EXC: contrary language.
EXC: special skill / reputation
EXC: [MBE] if assignment prohibited

Delegate liable - only if he received consideration (then obligee = TPB).

88
Q

Assignment of rights - different from TPB?

Obligor’s debt to Assignor assigned to Assignee

A

TPB exists in orig. agreement.

Assigneee enters picture later.

89
Q

Assignment of rights - future transfer?

A

No, only present transfer.

No “promise to transfer later”

90
Q

Assignment of rights - Consideration required?

A

No.

But without consideration the assignment is a revocable gift.

91
Q

Assignment of rights - contractual limitation?

A

“Not assignable” - Ineffective?

“Assignments are void” - Effective!

92
Q

Multiple assignments - who prevails?

A

Gratuitous - last one (since revocable).
EXC NY - signed writing irrevocable

W/consideration - first (since irrevocable)
EXC - later who doesn’t know of earlier AND first to get consideration or judgment against Obligor

NY Bar 2014 (18 decks)

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