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contracts Flashcards

mbe + distinctions

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1
Q

replevin vs. right of reclamation

A

partial payment made by buyer + seller is insolvent within 10 days

vs.

buyer is insolvent at time of purchase + seller demands return of goods within 10 days of receipt (or reasonable time) (unless misrepresent solvency in writing within 3 months before delivery) + buyer still has the goods

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2
Q

elements of misunderstanding (3)

A

*have a material term open to two or more reasonable interpretations
*each side attached a different meaning to the term
*neither party knows or should know of the confusion

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3
Q

types of incapacity (3)

A

*minors: under 18
*mentally ill: if can’t understand the nature and consequences of their actions OR if can’t act in a reasonable manner for the transaction + other side knows or should know of this
*very intoxicated: other side knows or should know

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4
Q

elements of mutual (3) and unilateral mistake (2)

A

mutual:
*mistake of fact at time contracting
*relates to a basic assumption that has a material impact
*the impacted party didn’t bear the risk of mistake

unilateral:
*same as above +
*mistake would make the contract unconscionable OR other side knew of, should have known of, or cause the mistake

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5
Q

under UCC 2-207, what are the rules for an additional term or different term?

A

an additional term is controlling when,
*both parties are merchants
*new term doesn’t materially alter the deal (surprise/hardship vs. reasonably limiting remedies)
*initial offer didn’t limit acceptance to its terms
*offeror doesn’t reject the term within a reasonable time

when an acceptance contains a different term from the offer, neither term controls (knockout rule)

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6
Q

when acceptance by silence is ok (4)

A

*unilateral reward offer/contest
*unilateral offer if geographically close
*past history of silence as acceptance
*offer requires silence + intent to accept by silence

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7
Q

mailbox rule applicability (rejection + acceptance sent)

A

*rejection then acceptance: not applicable; first received controls
*acceptance then rejection: acceptance controls unless the rejection is detrimentally relied upon

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8
Q

kinds of irrevocable offers (4)

A

*option contract: need consideration
*firm offer: written doc signed by merchant offeror, contains explicit promise not to revoke, for period stated or reasonable time not to exceed 90 days
*unilateral contract where performance has begun
*detrimental reliance: must be reasonable, detrimental, and foreseeable

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9
Q

ways to kill an offer (5)

A

*actual or constructive revocation
*offeree rejects the offer
*counteroffer provided
*offeror dies
*a reasonable time passes

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10
Q

requirements vs. output contract

A

requirements: buyer agrees to buy 100% of their needed supply from single seller

vs.

outputs: seller agrees to sell 100% of produced good to single buyer

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11
Q

three questions in evaluating a contracts question and components

A

was a contract formed?
*agreement
*consideration
*defenses: mistake, misunderstanding, misrepresentation, duress, illegality, unconconsionability
*statute of frauds

was the contract performed or excused?
*parol evidence rule
*warranties: express, merchantability, title, fitness for particular purpose
*conditions: express, implied
*excuses: impossibility/impracticability, death, modification, accord and satisfaction, frustration of purpose

what are the remedies for breach?
*money damages
*specific performance

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12
Q

steps to reject imperfect goods (3)

A

*notify of rejection within a reasonable time
*notify of particular defect
*hold onto goods for a reasonable time

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13
Q

how to have a security interest

A

rightfully reject goods + pay some or all of price

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14
Q

options if a seller fails to provide reasonable instructions upon rejection of goods (3)

A

*store goods in reasonable manner
*ship goods back
*resell the goods

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15
Q

what doesn’t count as consideration? (4)

A

*conditional gift / gift promise
*illusory promise
*past consideration
*preexisting duty

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16
Q

what is the preexisting duty and its exceptions (3)?

A

a promise to do something the offeror is already legally obligated to do

exceptions: a change in performance, 3rd party promise to pay, unforeseen difficulties (unanticipated circumstances) where modification is fair and equitable

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17
Q

promissory estoppel elements (3)

A

*a promise that reasonable induces reliance
*the party actually relies on the promise
*injustice only avoided through enforcement

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18
Q

quasi-contract elements (3)

A

*the party confers a measurable benefit
*the party could reasonably expect to get paid
*it would be unfair to let the other party keep the benefit without paying (opportunity to decline? good reason for not opportunity?)

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19
Q

misrepresentation elements (3)

A

*misrepresentation of present fact
*that is fraudulent or material
*under circumstances where justifiable to rely on the fact

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20
Q

when does the statute of frauds apply (5)?

A

*marriage
*suretyship
*one year: contract couldn’t possibly be completed within one year from its making (day after acceptance)
*UCC: goods over $500
*real property interest

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21
Q

how to satisfy the statute of frauds under common law

A

*signed writing: parties + elements
*complete performance by one party
*real property: possession, payment, improvement (need two of three)

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22
Q

how to satisfy the statute of frauds under UCC

A

*signed writing with quantity
*partial performance
*substantial beginning on custom goods
*judicial admission
*confirming memo: failure to object within 10 days

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23
Q

exceptions to the parol evidence rule (3)

A

*related to second, separate deal
*supports contract defense
*related to proving a condition precedent existed
*interpreting ambiguous term
*proving extent of integration

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24
Q

description of warranties

A

*express warranties: affirms/describes goods as part of deal
*implied warranty of merchantability: merchant says the goods are fit for ordinary commercial purposes
*implied warranty of fitness for a particular purpose: the buyer relies on the seller’s expertise that goods are fit for a special purpose

25
Q

implied conditions under common law vs. UCC

A

common law: constructive condition of exchange, where doctrine of substantial performance says condition met as long as no material breach and any impairments not made willfully

vs.

UCC: perfect tender (perfect goods + delivery)

26
Q

when does a seller have the right to cure imperfect goods(2)?

A

*time left on the contract OR
*seller had reasonable grounds to believe the buyer would accept replacement

27
Q

methods of delivery (3)

A

*tendered at seller’s place of business
*shipment contract: ship to seller’s place of business
*destination contract: ship to buyer’s place of business

28
Q

who bears the risk of loss?

A

*does the contract speak to this issue?
*was the contract breached? if yes, the breaching party bears the risk (insurance coverage)
*is it a shipment or destination contract? shipment=buyer bears risk / destination=seller bears risk
*is the seller a merchant? if yes, seller bears risk until goods received / if no, buyer bears risk once goods tendered

29
Q

common fact patterns for impossibility/impracticability (3)

A

*special offeror dies
*performance becomes illegal
*subject matter is destroyed

30
Q

what are expectation damages?

A

*place party in same position as if the contract was fully performed
*look at the value of actual performance compared to the contract price, including incidental and consequential damages
*limits: mitigation, economic waste, unforeseen consequential damages

31
Q

what are reliance damages?

A

place party in same position as if the contract was never formed

32
Q

what are restitution damages?

A

provide damages equivalent to the benefit conferred on the other party

33
Q

what are liquidated damages?

A

*set by contract
*are actual damages uncertain? is the contracted amount reasonable?

34
Q

when is specific performance allowed?

A

*monetary damages are inadequate for some reason
*real estate
*unique goods

35
Q

what conditions prevent revocation of a beneficiary (3)?

A

*detrimental reliance
*manifest assent
*begin lawsuit

36
Q

what are the effects of prohibiting vs. invalidating an assignment?

A

prohibit: breach but can sue

vs.

invalidate: breach and can’t sue

37
Q

if multiple assignments are made, what controls?

A

*without consideration, last in time
*with consideration, first in time

38
Q

what is required for an accord and satisfaction if the new consideration is worth less than the original (2)?

A

*a good faith dispute over what is owed OR
*different type of consideration

39
Q

conditions for impracticability (3)

A

*unforeseen event
*its nonoccurrence was a basic assumption of the contract
*the event was not caused by party seeking discharge

39
Q

define installment contract

A

a contract that consists of multiple shipments with corresponding payments and requires substantial impairment of one installment for breach to occur (or nonreceipt of a substantial benefit)

40
Q

define implied-in-fact contract

A

where assent to an offer is inferred from conduct, with a required intent to act and knowledge of the conduct’s effect

41
Q

define accord and satisfaction

A

accord: agreement to accept performance other than contracted for in satisfaction of the contract

satisfaction: full performance

42
Q

what is the material benefit rule?

A

when one party performs an unrequested service that is a material benefit, the performing party can enforce a promise of payment after

43
Q

define constructive condition of exchange

A

each party’s performance is conditioned on the other’s performance, with each occurring concurrently

44
Q

expectation damages formula

A

(contract price - value with actual performance) + other losses (incidental/consequential) - cost/losses avoided

45
Q

when is anticipatory repudiation irrevocable?

A

after the non-breaching party’s
*reliance
*acceptance
*lawsuit

46
Q

what makes an assignment irrevocable?

A

*consideration provided by the assignee
*delivery of a representative document (e.g., insurance policy) of the assignment
*delivery of signed writing documenting the assignment

47
Q

when does a party have to wait to file suit for anticipatory repudiation?

A

*the other party’s performance is not yet due AND
*the party has fully performed

48
Q

when is a revocable assignment automatically revoked?

A

upon the death, incapacity, or bankruptcy of the assignor

48
Q

assignment of rights is not allowed when

A

the assignment
*materially increases the duty or risk of the obligor
*materially reduces the chance of the obligor obtaining performance
*is void

49
Q

delegation of duties is not allowed when

A

*the contracting party has a substantial interest in having the delegating party perform
*delegation is prohibited by contract

50
Q

what gaps may the UCC fill?

A

*time of payment
*price
*place of delivery
*time of delivery

51
Q

if a party is not a merchant, what happens when additional terms to a UCC contract are provided in an acceptance?

A

*treated as proposed terms if the acceptance is not conditioned on acceptance of the new terms (counteroffer)
*offer terms control

52
Q

essential terms per UCC

A

*identity of parties
*subject matter
*quantity

53
Q

essential terms per common law for services

A

*identity of parties
*description of service
*quantity
*price
*time of performance
*duration

54
Q

what may party who breaches a contract recover?

A

*minor breach: expectation or reliance damages
*material breach: restitution for the benefit conferred

55
Q

essential terms per common law for real property transfer

A

*identity of parties
*description of property
*price
*terms of payment

56
Q

how can a bilateral contract be accepted?

A

by promise or beginning performance, if the offer is silent on how to accept

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