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Contracts Flashcards

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1
Q

What is the Statute of Frauds?

A

barrier that some contracts must meet to become legally binding
prevent false assertions about a contract that was never really created

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2
Q

what is an output contract?

A

seller is offering to sell 100% of whatever amount is produced to teh buyer

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3
Q

what is a requirements contract?

A

buyer is offering to buy 100% of whatever amount is needed from seller

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4
Q

how do you accept a bilateral contract?

A

promise OR starting performance

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5
Q

remedies for breach

under the UCC, what is the recourse for anticipatory repudiation?

A

you can demand an adequate assurance
if party fails to respond within a reasonable time, treat this as repudiation

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6
Q

what is the difference between novation and delegation?

A

novation - BOTH parties agree someone else will take over the contractual obligation

delegation - one party decides to outsource their duties under the contract

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7
Q

what are the four main elements of contract formation?

A

ACDS - all contracts don’t sink
A - agreement (offer + acceptance)
C - consideration
D - defenses to formation
S - statute of frauds (enforceability)

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8
Q

what is a bilateral contract?

A

contract in which parties exchange promises

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9
Q

what is a unilateral contract?

A

contract in which offer makes a promise and offerree must perform

ex. rewards and contests

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10
Q

For frustration of purpose to serve as an excuse for performance, an event must occur that ____________________ the reason for the contract. The event ____________________ performance of the contract impossible.

PQs Set 1

A

Undermines, does not make

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11
Q

What two questions should you ask about Statute of Frauds?

A
  1. Does the SOF apply to this transaction?
  2. If so, has the SOF been satisifed?
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12
Q

remedies for breach

with anticipatory repudiation, can a party retract its repudiation?

A

yes as long as the other side has not commenced a lawsuit OR acted in reliance on the repudiation

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13
Q

how do you accept a unilateral contract?

A

only complete performance

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14
Q

how do you form a unilateral contract?

A

offerree must (1) know about the offer and (2) intend to accept the offer by completing performance

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15
Q

What happens if there is valid novation?

A

the original promisor will be excused from performance

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16
Q

what is required for an offer under the UCC?

A

quantity is the only essential term
price does NOT need to be mentioned

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17
Q

what is novation?

A

BOTH parties agree that a substitute person will take over hte contractual obligations

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18
Q

When must a contract that is modified satisfy the Statute of Frauds?

A

Whenever the contract as modified is subject to the Statute of Frauds

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19
Q

when does the common law apply?

A

services or real estate

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20
Q

Ways to discharge contractual obligations (8)

A

FIRM SCAN

  • Full performance of contractual obligations
  • Impossibility, impracticability, or frustration of purpose
  • Release (in writing only)
  • Mutual rescission
  • Substituted contract
  • Contract or covenant not to sue
  • Accord & satisfaction
  • Novation
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21
Q

tip

Three main questions to ask for a Contracts question

A
  1. Has an enforceable contract been formed?
  2. Has the contract been performed (or, has the performance been excused)?
  3. What are the remedies for breach?
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22
Q

what are the ways to terminate an offer?

A
  1. revocation of offer - express communication to the offeree
  2. constructive revocation - offeror takes action that is absolutely inconsistent with their continuing ability to contract
  3. rejection by offeree
  4. counteroffer by offeree (rejection + new offer)
  5. death of offeror
  6. reasonable amount of time passes
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23
Q

remedies for breach

with anticipatory repudiation, what are your two options as the nonbreaching party?

A
  1. treat repudiation as a breach + sue for damages now
    BUT if you completed entire performance and are just waiting to be paid, can’t sue early
  2. ignore repudiation, demand performance, and see what happens
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24
Q

What is the parol evidence rule for a sale of goods?

A

Evidence of an additional promise made before the written contract was entered into that does not contradict the contract may be considered unless the parties would certainly have included the term in the contract.

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25
Q

An acceptance is a(n) ________________ manifestation of a willingness to enter into the agreement by the offeree. The offeree _______________ accept a unilateral offer with a promise to perform.

PQs Set 1

A

objective, may not

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26
Q

remedies for breach

What is anticipatory repudiation?

A

when the other side says they aren’t going to perform on the contract before performance is due

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27
Q

how do you determine if a mixed contract (goods and services) is under the UCC or common law?

A
  1. predominate purpose test
  2. all or nothing rule
    exception: divisible contracts
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28
Q

what is required for an offer under the common law?

A

all essential terms must be provided (parties, subj, price, quantity)

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29
Q

what do you need to have a valid contract?

A

offer, acceptance, consideration

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30
Q

when is impractability a defense?

A

if
* an unforeseeable event has occurred
* the contract was formed under the basic assumption that the event would not occur AND
* the party seeking discharge of performance is not at fault.

But if a party assumed the risk of an event happening that made performance impracticable, then the party’s performance will not be discharged by impracticability.

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31
Q

when does the UCC (Article II) apply?

A

goods

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32
Q

when does the Statute of Frauds apply?

A

M. SOUR

  • Marriage
  • Suretyship
  • One year (no possible way it can be performed in one year)
  • UCC (goods $500+)
  • Real property (interest in it)
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33
Q

what is a substitute for consideration?

A

promissory estoppel

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34
Q

what are the defenses to contract formation?

A
  1. misunderstanding
  2. incapacity
  3. mistake
  4. fraud / misrepresentation / nondisclosure
  5. duress
  6. illegality
  7. unconscionability
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35
Q

what are the major topics under whether a contract has been performed?

A

Pizza with crawling escargot
P - Parol evidence rule
W - warranties
C - conditions
E - excuse of performance obligations

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36
Q

what is the parol evidence rule?

A

prevents a party to a written contract from presenting extrinsic evidence of a prior or contemporaneous agreement that contradicts the terms of the contract as written

whether any of the earlier oral or written terms are part of the parties’ contract, even though they are absent from the parties’ written agreement

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37
Q

if there is not a signed writing, what rule should I think about?

A

Statute of Frauds

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38
Q

if there is a signed writing + earlier discussion of the deal, what rule should I think about?

A

Parol Evidence Rule

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39
Q

what are the parts of an agreement in contract formation?

A

offer + acceptance

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40
Q

what is the test for offer and acceptance?

A

objective test - whether the offeror displays an objectively serious intent to be bound
outward appearance of words and actions

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41
Q

who does an offer have to be directed at?

A

the specific offeree

EXCEPTION: contest offers or reward offers

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42
Q

what is needed to have a valid offer?

A

must convey the power of acceptance to the side

NOTE:
invitations to deal (doesn’t convey power of acceptance)
advertisement (understood as invitation to deal EXCEPT reward ads, ads that are very specific and leave nothing open to negotiation)

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43
Q

what is a counteroffer?

A

rejection + new offer

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44
Q

normally, when can an offeror revoke an offer?

A

offeror is normally free to revoke at any time prior to acceptance

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45
Q

what are the four ways an irrevocable offer can arise?

A
  1. option
  2. firm offer
  3. unilateral contract
  4. detrimental reliance
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46
Q

irrevocable offers

what is a firm offer?

A

merchant (UCC) can make a firm offer to buy/sell goods –> binding, free option

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47
Q

irrevocable offers

what are the requirements for a firm offer?

A

firm offer must be (1) written (2) signed by the offeror and (3) contain an explicit promise not to revoke

offeror has to be a merchant (Essay 4281)

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48
Q

irrevocable offers

what is the time perod for a firm offer?

A

either (1) as long as stated in the offer OR (2) reasonable time period not to exceed 90 days (UCC 2-205)

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49
Q

what is a merchant (UCC)?

A

someone who regularly deals in the type of goods at issue

businessperson or someone holding themselves out as having knowlege or skills particular to the goods

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50
Q

what is a unilateral contract?

A

arises from a promise that requests acceptance by an action of the promise

only accepted by performance

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51
Q

what is a bilateral contract?

A

request for a return promise

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52
Q

irrevocable offers

when can an unilateral offer be revoked?

A

can’t be revoked if offeror has started to perform

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53
Q

is the offeree required to complete performance if a unilteral contract is revoked?

A

they have the right to finish, but not required to

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54
Q

irrevocable offers

when does detrimental reliance arise?

A

offeree reasonably and determinetally relies on te offer in some forseeable manner

look for contractor/subcontractor
part of reliance theory (promisorry estoppel)

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55
Q

what is acceptance?

A

manifestation of a willingness to enter into the agreement by the offeree

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56
Q

what is the test for acceptance?

A

objective test

offeror is master of the offer

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57
Q

who decides if an offer is unilateral or bilateral?

A

offeror

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58
Q

modern approach

what happens if there is ambiguity about whether an offer is unilateral or bilateral?

A

acceptance can be by performance or return promise

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59
Q

what if the seller tries to acept by shipping the wrong goods?

A

UCC treats as acceptance + breach

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60
Q

how do you accept an offer that is open-to-all?

A

you must know about that offer to accept it

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61
Q

do you have to communicate your acceptance to the other party for it to be effective?

A

yes

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62
Q

acceptance

what is the mailbox rule?

A

acceptance sent by mail is effective when the letter is sent

determines when acceptance has been legally communicated when there is a delay between sending and receiving

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63
Q

acceptance

what are the exceptions to the mailbox rule?

A
  • offeree sends something else first (like counteroffer or rejection)
  • other types of communications (revocations, rejections)
  • options contracts
  • unclear whether it applies to other media like email, fax, text
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64
Q

acceptance

can you accept an offer without comunicaton?

A

yes, by silence

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65
Q

acceptance

when can acceptance happen without communication (by silence)?

A
  • unilateral reward offers or contests
  • unilateral offers in which the parties are geographically close
  • past history of silence serving as acceptance
  • offer says taht accpetance must come by silence and offeree intends to accept by silence
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66
Q

how do you accept an implied in fact contract?

A

without writing or speaking
communcation by gestures or actions

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67
Q

what is the rule for counteroffers under the common law?

A

mirror image rule

terms in the acceptance must match the offer exactly or it is a counteroffer (not acceptance)

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68
Q

common law

what is a conditonal acceptance?

A

form of counteroffer

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69
Q

UCC / Counteroffers

what is the rule for counteroffers under the UCC?

A

(1) definite and seasonable expression of acceptance (2) sent within reasonable time is an acceptance (3) even though additional or different terms (4) unless acceptance is expressly made conditional on the additional/different terms

more forgiving of accpetnaces that don’t match exactly
doens’t matter whether parties are merchants

UCC 2-207

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70
Q

UCC / Counteroffers

when does an additional term in a counteroffer control?

A

only if
1. both parties are merchants
2. new term doesn’t materially alter the deal
3. initial offer didn’t expressly limit acceptance to its terms AND
4. offeror doesn’t reject/object the new term within a reasonable time

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71
Q

UCC / Counteroffers

when does a different term in a counteroffer control?
(accpetance has a different term from the initial offer)

A

knock-out rule (majority) - neither term governs, UCC gap-filling rules apply

minority states - intial offer controls

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72
Q

UCC / Counteroffers

when can you accept based on conduct?

A

parties fail to make a contract but act as though there is an agreement
only terms in both writing agree are part of the contract, other terms are supplied through UCC default rules

UCC 2-207(3)

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73
Q

when does a confirming memo arise under UCC?

A

parties have a contract (normally verbally) and one party sends a confirming memo with additional terms

UCC 2-207

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74
Q

what are the requirements for confirming memos under UCC?

A

(1) written confirmation (2) sent within reasonable time (3) operates as an acceptance

UCC 2-207(1)

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75
Q

when should I look out for confirming memos under UCC?

A

early agreement + written confirmation with new terms

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76
Q

what is bargained-for consideration?

A

consideration is a deal in which the parties exchange promises involving a legal detriment or benefit

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77
Q

what is the test for consideration?

A
  1. who is making the promise that needs to be supported by law?
  2. is there a benefit to the promisor OR a detriment to the promisee?
  3. was this bargained for / quid pro quo?
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78
Q

what is a legal detriment?

A

not doing something you are legally entitled to do

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79
Q

do gift promises and conditional gifts count as bargained-for consideration?

A

nope

think about whether I would sue you if I didn’t do this

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80
Q

consideration

what is nominal consideration?

A

pretense of consideration

insufficient

as long as there is enough value, even subjective value ot the person receiving it, consdieration will be adequate

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81
Q

consideration

what is an illusory promise?

A

promisor must clearly commit to the deal or there is no consideration

there has to be a way for the promisor to breach

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82
Q

consideration

are satisfication contracts illusory?

performance has to be done to my satisifcation

A

Nope, real contracts

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83
Q

consideration

are output and reqirements contracts illusory?

A

nope, they’re real
there’s a way for a party to breach –> requiring the product and purchasing from others or making the product and selling to others

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84
Q

consideration

is past consideration valid consideration?

A

nope

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85
Q

consideration

is settling a legal claim sufficient consideration?

promising not to sue

A

yes only if (1) plaintiff has a good faith beleif in the validity of the claim
OR
(2) reason to doubt the validity of the claim due to uncertain law

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86
Q

does contract modification require new consideration under common law?

A

preexisting duty rule - promise to do something that you are already legally obligated to do is NOT consideration

but exceptions

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87
Q

common law / contract modification

what are the exceptions to the preexisting duty rule?

A
  • change in performance
  • 3p promising to pay
  • unforseen difficuties that would excuse performance
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88
Q

common law / contract modification

is a modification binding that promises partial payment for release from a debt obligation?

A

ask whether the debt is currenlty due and undisputed
if so, modification is NOT binding

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89
Q

what is the rule for contract modification under the UCC?

A

ask whether the modification is made in good faith
if so, is it IS binding even without new consideartion

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90
Q

what is a subtitute to consideration?

A

promissory liability

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91
Q

what are the categories of promissory liability?

A
  • promissory estoppel / reliance
  • quasi-contract
  • moral obligation + subsequent promise
  • seal
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92
Q

consideration substitute

when does promissory estoppel arise?

A

one party makes a promise and the other party relies on that promise to take some action

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93
Q

consideration substitute

what are the elements of promissory estoppel / reliance?

A
  1. promise is made that would be reasonably expected to induce reliance
  2. promsie does indeed take detrminental action in reliance on the promise AND
  3. injustice can only be avoided by enforcement of the promise

don’t need to prove #2 for charitable gift promise

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94
Q

consideration substitute

what is a quasi-contract / contract implied in law?

A

when you would have made a contract if you could have, but you could not, OR when one party conferred a benefit on another party, and it would be fair to pay for that benefit

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95
Q

consideration substitute

what are the elements of a quasi-contract?

A
  1. plaintiff confers a measurable benefit on the defendant
  2. plaintiff reasonably expected to get paid AND
  3. it woud be unfair to let the defendant keep the benefit without paying
    look for oppy to decline or a good reason why there wasn’t an oppy to decline
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96
Q

when should a flag go up for a quasi-contract?

A

situation doesn’t satisfy normal requirements for a contract but still seems unfair

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97
Q

consideration substitute

is a moral obligation and subsequent promise binding?

A

yes in some jurisidictions
normally past consideration (not binding)

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98
Q

consideration substitute

does a seal on a doc act as a consideration substitute in most jurisidctions?

A

nope

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99
Q

defenses to contract formation

what are the elements of misunderstanding?

A

each party attaches a different meaning to the same words
1. parties use a material term that is open to 2+ reasonable interpretations (objective test doesn’t apply)
2. each side attaches a diff meaning to the term
3. neither party knows or should know of the confusion

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100
Q

defenses to contract formation

who lacks capacity to make a contract?

A
  1. minors (< 18 years old)
  2. people who are mentally ill –> can’t understand the nature and conseuqneces of their actions OR can’t act in a reasonable manner in relation to the transaction and the other side knows/has reason to know this
  3. very intoxicated person (if other side knows or has reason to know this)
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101
Q

defenses to contract formation

what happens if you make a contract with a person who lacks capacity?

A

contract is voidable - incapacitated party can disaffirm
party without capacity can ratify the deal by keeping the benefits of the contract after capacity is obtained

contract for necessities - party without capcity must still pay fair value

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102
Q

defenses to contract formation

what is a mistake? what are the types?

A

belief that is not in accord with a present fact

mutual mistake (affecting both parties) + unilateral mistake (one party)

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103
Q

defenses to contract formation

what are the elements of a mutual mistake?

A

allows the adversly affected party to rescind if
1. there is a mistake of fact at the time the deal was made
2. mistake relates to a basic assumption of the contract + has material impact on the deal
3. impacted party didn’t bear the risk of mistake

104
Q

defenses to contract formation

what are the elements of a unilateral mistake?

A

allows the adversly affected party to rescind if
1. can prove all the elements of mutual mistake AND
2. either (a) mistake would make the contract unconsciousable OR (b) other side knew of/has reason to know of or caused the mistake

105
Q

defenses to contract formation

with mutual and unilateral mistakes, who can claim these defenses?

A

only the adversly affected party

106
Q

defenses to contract formation

what are the elements of misrepresentation?

A

statement at time of contracting that is not true
can be intentional (fraudulent) or accidental

party must show
1. misrepesentation of a present fact (not opinion)
2. that is material OR fraudlent (intentional)
3. made under the circumstances in which it is justificable to rely on the misrepresentation

107
Q

defenses to contract formation

what is fraud in the execution?

A

you trick someone into signing something that they don’t even know is a contract

108
Q

defenses to contract formation

what is nondisclosure?

A

other party doesn’t learn the truth about something, but now you just remain quiet

EXCEPTION: special (fiduicary) relationship or active concealment

normally you don’t need to tell the other side about all material facts

109
Q

defenses to contract formation

what is duress?

A

improper threat that deprives a party from making a meaningful choice to contract

economic duress - one party makes threats to induce another party to contract/modify a contract

110
Q

defenses to contract formation

what is undue influence?

A

undue influence - party puts v intense sales pressure on another party, who often seems weak-minded or susceptible to high pressure sales tactics

I think this is kinda a subcategory of duress, but it seems like the questions treat it as a separate defense

111
Q

defenses to contract formation

what is illegality? when is an illegal contract enforceable?

A

unenforceable

contract entered in furtherance of an illegal act (that is not itself illegal) can be enforced

112
Q

are the defenses of illegality, contracts against PBPL, and unconsciousability enforcement or formation defenses?

A

enforcement b/c don’t impact the requirement that contracting parties have a meeting of the minds
don’t prevent formation, but impact enforcement

113
Q

defenses to contract formation

are contracts against PBPL enforceable?

A

not enforced

contracting situations that are not formally illegal but present some other policy concern

114
Q

defenses to contract formation

what is unconscionability?

A

everything seems fine but ct says it’s unconsciosable

ultimate contract defense

115
Q

defenses to contract formation

what are the two types of unconscionability?

A
  • procedural unconscionability - defect in bargaining process like hidden term or absense of meaningful choice
  • sustantive unconscionability - rip-off in some term of the contract

some juris require both before a deal is struck down, others allow just one

116
Q

statute of frauds

what is the goal of the statute of frauds?

A

barrier that some contracts must meet in order to become legall binding
prevent false assertions about a contract that was never really created

117
Q

statute of frauds

what is the main purpose exception?

A

if the main purpose in agreeing to pay the debt of another is the surety’s own econ advantage, then we are NOT in SOF world

118
Q

statute of frauds

are contracts invovling real property in SOF world?

A

only those transfering an interest in the property

119
Q

statute of frauds

what are the two main ways to satisify the SOF?

A

performance or writing

120
Q

statute of frauds

what are the four categories for how to satisify the SOF?

A
  1. service contracts that can’t be performed within one year
  2. writing signed by the party against whom the contract is asserted
  3. real estate
  4. goods (UCC)
121
Q

statute of frauds

how do you satisify the SOF for service contracts that can’t be performed within one year?

A

full performance by either side satisifies SOF

part performance doesn’t

122
Q

statute of frauds

how do you satisify the SOF for a writing signed by the party against whom the contract is asserted?

A

both signatures are NOT required
the writing does NOT have to be a formal contract
must cover the fundamental facts
1. contract has been made
2. ID the parties
3. contain the essential elements of the deal

123
Q

statute of frauds

how do you satisify the SOF for real estate?

A

signed writing will satisify
part performance can satisify if 2/3 apply
1. possession
2. payment
3. improvements to the land

124
Q

statute of frauds

how do you satisify the SOF for goods?

A

UCC world!

  • signed writing satisifes - need quantity, price not required
  • part performance satisifies but only for the quantity delivered and accepted
  • custom-made goods are EXEMPTED from SOF, can satisify SOF as soon as maker makes a substnatial beginning towards manufacturing
  • judicial admission (incl. statement during testimony or a pleading) satisifies
  • confirming memo - failure to object to a confirming memo within 10 days will satisify SOF if both parties are merchants
125
Q

statute of frauds

do you need a signed writing to authorize an agent to form a contract that is in teh SOF world?

A

yes, equal dignity rule

126
Q

statute of frauds

if you have a deal in SOF world and requirements are met. the parties want to modify the deal.

does the modification have to satisify the SOF?

A

not automatically
if the deal with the alleged modification would be in the SOF world
if so, SOF must be met for the modification
if not, no SOF requirement

127
Q

parol evidence rule

does the PER apply to later written or verbal statemetns about the deal?

A

nope

128
Q

parol evidence rule

does the PER apply to earlier written docs?

A

yes

129
Q

parol evidence rule

what are the two types of integrated writings?

A

complete integration - contract expresses all terms of the agreement
partial integration - final writing, but some terms aren’t included

130
Q

parol evidence rule

how do you tell if an agreement is integrated partially or completely?

A

merger clause is evidnce of complete integration
cts might also ask whether an extrinsic term of the agreement would “naturally be omitted from the writing”

131
Q

parol evidence rule

what steps should I follow for PER?

A
  1. look at what the agreement entails - have the parties reduced their contract to a comprehensive writing? if so, earlier statemetns are not part of the deal
  2. have the parties created an integrated writing?
132
Q

parol evidence rule

what are exceptions to the PER? situations where the PER doesn’t bar earlier evidence

A
  1. will not bar evidence relevant to a defense against contract formation
  2. even if a writing is completely integrated, a party can intro evidence of a second separate deal
  3. even if a writing is completly integrated, party might be able to intro evidence of a prior comm that is designed to interpret an ambiguous term in the final agreement
133
Q

what is a warranty?

A

promise about a term of the contract that explicitly shifts risks to the party making the promise
you can disclaim all warranties

134
Q

what is the UCC rule for integrated agreements?

A

presumes that a writing is a partial integration at most unless the parties would have certainly included a disputed term in the writing

135
Q

warranties

what are the three types of warranties?

A
  1. express warranty
  2. implied warranty of merchantability
  3. implied warranty of fitness for a particular purpose
136
Q

warranties

what is an express warranty (incl the test)?

A

promise that affirms or describes goods + is part of the basis of the bargain unless it is merely the seller’s opinion
use of a sample or model creates an express warranty

137
Q

warranties

what is an implied warranty of merchantability?

A

triggered only when the seller is a merchant dealing in the goods at issue
warrants that the goods are fit for ordinary commercial purposes
can be disclaimed by using “as if” if (1) disclaimer uses the term “merchantability” and (2) must be conspicuous if in writing
can be disclaimed orally

138
Q

warranties

what is an implied warranty of fitness for a particular purpose?

A

triggered when buyer relies on a seller’s expertise to select a special type of good that will be used for a special purpose
warrants that the goods will satisfy this special purpose
can be disclaimed if (1) conspicuous and (2) disclaimer is in writing
non merchant can extend this warranty if the buyer relies on any seller’s expertise

139
Q

warranty

what type of warranty does a sample or model create?

A

express warranty

140
Q

conditions

what are the two types of conditions?

A

express or implied

141
Q

conditions

what is the most important implied condition?

A

constructive condition of exchange - one party’s performance is condition on the other side’s performance

142
Q

conditions

how must express conditions be satisfied?

A

must be strictly satisfied unless the condition is somehow excused

143
Q

conditions

what are the two main buckets of express conditions?

A

satisfaction conditions and waivers

144
Q

conditions

how are satisfaction conditions met?

A

depends on nature of performance

preferred - use an objective standard of satisfaction
subjective standard sometimes

145
Q

conditions

can a party breach for a satisfaction condition?

A

yes if they claim dissatisfaction in bad faith

146
Q

conditions

what is the rule for waivers?

A

party receiving the protection of the condition may waive the condition by words or conduct

condition will be waived if the other party wrongfully interferes with or hinders the occurrence of the condition

good faith standard

147
Q

conditions

what is the standard for implied conditions in the common law?

A

substantial performance if there is not a material breach

only satisfied constructive condition of exchange if failure is not willful

divisible contracts

148
Q

conditions

what is the standard for implied conditions in the UCC?

A

perfect tender: (1) perfect goods and (2) perfect delivery

exceptions: contract explicitly changes default rule, installment contracts

149
Q

implied conditions / common law

if payment must be made (b/c only minor problem), can non breaching party recover damages for the deficiency?

A

yes
typically measured as cost to complete the performance

150
Q

implied conditions / common law

can a breaching party who fails to satisfy the Constructive Condition of Exchange due to a material breach get paid anything?

A

not under teh contract but maybe under a quasi-contract

151
Q

implied conditions / UCC

can a buyer revoke acceptance?

A

yes if the goods seem okay when delivered but a defect is discovered within a reasonable time

152
Q

implied conditions / UCC

does the seller have a right to cure?

A

if the seller fails to tender perfect goods and time is left on the contract or seller had reasonable grounds to believe that the buyer would accept a replacement, then the buyer must give the seller a chance to cure

153
Q

implied conditions / UCC

does the UCC allow installment contracts? what happens?

A

yes

buyer can reject a specific delivery that is not perfect only when there is substantial impairment

154
Q

implied conditions / UCC

what is the default method of delivery?

A

one delivery of the goods

155
Q

implied conditions / UCC / method of tender/delivery

what are the three methods of tender / delivery?

A
  • tender at seller’s place of biz
  • shipment contract (FOB seller’s place of biz)
  • destination contract (FOB buyer’s place of biz)

FOB = free on board

156
Q

implied conditions / UCC / method of tender/delivery

what happens if the tender is at the seller’s place of business?

A

seller just needs to give the goods to the buyer

157
Q

implied conditions / UCC / method of tender/delivery

what happens for shipment contracts?

A

seller must take three actions to satisfy perfect delivery
1. get goods to a common carrier
2. make arrangements for delivery
3. notify the buyer

158
Q

implied conditions / UCC / method of tender/delivery

what happens for destination contracts?

A

seller must (1) get the goods to the buyer’s business and (2) notify the buyer

159
Q

implied conditions / UCC

when do risk of loss problem arise?

A

goods contract followed by damage or destruction of the goods before buyer receives them

160
Q

implied conditions / UCC

who bears the risk of loss? (give the full test)

A
  1. does the contract already deal wtih this problem? if so, that controls.
  2. has either party breached? (typically part of contract)
    if so, breaching party bears risk (even if breach is totally unrelated to delivery damage)
  3. if no breach and goods are being shipped, what type of delivery contract is it?
    shipment - buyer bears risk
    destination - seller
  4. all other cases: is the seller a merchant?
    yes, risk of loss is with seller until buyer receives the goods
    no, risk of loss moves to the buyer when seller tenders the goods
161
Q

what are the major types of excuses?

A
  • impossibility and impracticability
  • death after a contract
  • frustration of purpose
  • performance is excused b/c initial contract has been modified or canceled
162
Q

excuses

what is the test for impossibility and impracticability?

A

performance becomes illegal after contract is formed
subj matter of contract is destroyed
services contract with key person, performing party dies or becomes incapacitated
hinders the ability to perform, not just the cost to perform
unforeseen event in which non-occurrence of the event was a basic assumption of the contract and party seeking discharge was not at fault

163
Q

excuses

what happens if there is death after a contract?

A

normally does NOT excuse liability on a contract that has been made, estate is on teh hook

ask whether there is something special about teh person performing such that it makes no sense to continue if they die

164
Q

excuses

what is frustration of purpose?

A

performance can still occur, but something has happened to undermine the entire reason for the creation of the contract

165
Q

excuses

what happens if performance is excused b/c the initial contract has been modified or canceled?

A

both parties can agree to just walk away as long as there is some performance remaining on both sides
if not, no consideration for this modification –> recession / cancelation by mutual agreement

166
Q

what are accord and satisfaction?

A

parties to an earlier contract agree that performance will be satisfied instead by the completion of a different performance
the new performance is the accord
excusal of the initial performance obligation is the satsification

167
Q

if the accord is not performed, what happens?

A

other side can sue on either the original obligation or new promise

168
Q

what is the difference b/t a modification and accord + satisfaction?

A

if party to perform has an option to perform by doing something else, it’s accord and satisfaction

if parties have changed the performance obligation, it’s modification

169
Q

what is the constructive condition of exchange under common law?

basically what is the standard for completion

A

failure to substantially perform means the other side may withhold their perofrmance
can’t withold paymetn if other side has subtantially peformed, but may be entitled to recover for the breach

170
Q

what is the constructive condition of exchange under UCC?

basically what is the standard for completion

A

perfect tender - seller must strictly perform all obligations or be in breach

material breach applies to installment sales

171
Q

remedies for breach

what are the main categories of remedies for a breach?

A
  • anticipatory repudiation
  • money damages - expectation, reliance, restitution, liquidate, punitive damages
  • specific performance / injunction
172
Q

remedies for breach

what is the typical remedy in contract law?

A

money damages

173
Q

remedies for breach / money damages

what are the types of money damages?

A
  • expectation damages
  • reliance damages
  • restitution damages
  • liquidated damages
  • punitive damages
174
Q

remedies for breach / money damages

what are expectation damages? how are they measured?

A

put a party in teh same economic position it would be in if the contract had been performed as promised
measured by comparing value of the performance w/o breach vs. value of performance w/ breach

175
Q

remedies for breach / money damages

how are expectation damages measured under UCC?

A

Expectation Damages = loss in value + other loss – cost avoided – loss avoided

**CK low confidence

176
Q

remedies for breach / money damages

what are the 3 major limits on the calc of expectation damages?

A
  1. expectation damages must be proven with reasonable certainty
  2. unforeseeable consequential damages
  3. mitigation
177
Q

remedies for breach / money damages

under expectation damages, what are thef two categories of unforeseeable consequential damages?

A

not recoverable unless breaching party had some reason to know about the possibility of these special damages at time of contracting

  1. general damages - type of loss almost anyone would incur from a breach, incl. incidental damages
  2. consequential damages - losses that are unique or special to this plaintiff
178
Q

remedies for breach / money damages

under expectation damages, what are the requirements for mitigation?

A

breached-against party must take reasonable steps to reduce damages from breach

if party refuses to mitigate, law will calc damages as if they did mitigate

defendant bears burden of proving a mitigation failure

mitigation efforts must be reasonably similar to the original contract

179
Q

remedies for breach / money damages

what is loss volume profits?

A

if the paying party breaches, then normally the selling party needs to mitigate by reselling the goods or services to another person
BUT if the seller is a retailer who sells this type of product all the time, seller might try to argue for loss volume profits

180
Q

remedies for breach / money damages

what happens if there is incomplete performance?

A

if paying party breaches in a partially completed building, builder can’t continue working

expectation damages = contract price - amount already paid - amount that would be needed to finish the job

181
Q

remedies for breach / money damages / expectation damages

what is the normal measure of expectation damages?

A

cost to complete the job

182
Q

remedies for breach / money damages

what is diminution of market value? when does it apply?

A

how much lower is the mkt value of what you got vs. what you wanted

breaching party normally must have acted in an innocent and unintentional manner for these damages

183
Q

remedies for breach / money damages

what are reliance damages?

A

put the party in teh same econ position if the contract had never been created in teh first place

184
Q

remedies for breach / money damages

can a party recover both expectation and reliance damages?

A

generally no, need to pick one

185
Q

remedies for breach / money damages

what are restitution damages?

A

give the plaintiff an amount equal to the econ benefit that the plaintiff conferred on the defendant
sometimes equal to reliance damages, but not always

186
Q

remedies for breach / money damages

what are liquidated damages?

A

stated in contract as explicitly neogtatied amount due upon breach

187
Q

remedies for breach / money damages

when will a ct award punitive liquidated damages?

A

only if
1. amount of liquidated damages was reasonable at time of contracting
2. actual damages from breach would be uncertain in amount and difficult to prove

188
Q

remedies for breach / money damages

when are punitive damages allowed?

A

rarely in contract law
more of a tort thing

189
Q

remedies for breach / equitable

what type of transactions is specific performance presumptively available?

A

real estate
NOT personal service

190
Q

remedies for breach / equitable

when is specific performance available under the UCC?

A

only unique goods like art or custom made items

191
Q

remedies for breach / equitable

what is the right of reclamation?

A

arises when an unpaid seller tries to reclaim goods that were sold on credit when buyer is insolvent

192
Q

remedies for breach / equitable

when does the right of reclamation apply?

A
  1. buyer is insolvent at time of receipt of the goods
  2. seller must demand return of goods w/in 10 days of receipt (or reasonable time if buyer misrepresented his solvency within 3 mo before delivery)
  3. buyer still has the goods
193
Q

3p beneficiary contracts

what is a 3p beneficiary contracts?

A

whether a 3p can sue to enforce a contract made by two other people

194
Q

3p beneficiary contracts

what are the two buckets of 3p?

A

intended and incidental beneficiaries

195
Q

3p beneficiary contracts

do intended beneficiaries have the right to sue?

A

yep

196
Q

3p beneficiary contracts

do incidental beneficiaries have the right to sue?

A

nope

197
Q

3p beneficiary contracts

what type of beneficiaries are creditors?

A

intended beneficiary

198
Q

3p beneficiary contracts

when does a donee beneficiary arise?

A

when there is no preexisting obligation but the promisee clearly intends to confer a gift of enforcement on a 3p

199
Q

3p beneficiary contracts

when can 3p rights be revoked?

A

ask whether the 3p knows abut the promise and has changed position in reasonable reliance on the promise
if so, 3p may be able to make a claim under promissory estoppel

200
Q

3p beneficiary contracts

when will a 3p NOT lose enforcement rights?

A

if any one of the following is true
1. beneficiary determinately relies on the rights
2. beneficiary manifests assent to the contract
3. beneficiary field a lawsuit to enforce the contract

201
Q

3p beneficiary contracts

what rights can a promisor assert as a defense against a 3p, if any?

A

any contract defense that they would be able to assert against the promisee

202
Q

what is assignment?

A

transfer of rights under a contract

203
Q

what is delegation?

A

transfer of duties under a contract

204
Q

what is the difference between assignment and delegation?

A

delegation - transfer of duties (outsourcing)
assignment - transfer of rights

205
Q

how do you distinguish 3p beneficiary contract from assignment?

A

assignment has two steps
1. formation of contract
2. transfer of benefits from OG counterparty to 3p

206
Q

when can contracts be assigned?

A

almost always in whole or part unless contract explicitly prohibits

207
Q

what happens if a contract states that rights are not assignable?

A

determine whether contract prohibits assignments or invalidates assignments

208
Q

assignment

what happens if a contract prohibits assignments? can 3p recover?

A

assigning party has breached when they make the assignment, but 3p can still recover from guarantor

power to assign persists even if right to assign doesn’t

209
Q

assignment

what happens if a contract invalidates assignments? can 3p recover?

A

3p can’t recover b/c there is no power or right to assign

210
Q

assignment

what happens if someone assigns the same rights twice?

A

if rights are assigned w/o consideration (no payment) –> assignment is removable and last assignment controls

if assigned w/ consideration –> first assignment for consideration is irrevocable and holds

211
Q

when is delegation allowed?

A

generally allowed as long as contract doesn’t prohibit delegation and as long as other party doesn’t have some special interest in having a specific idv perform

212
Q

is a delegatee liable for breach (in general)?

A

not liable unless they receive consideration from the delegating party

213
Q

types of compensatory damages?

PQs Set 2

A

expectation damages
incidental damages
consequential damages

214
Q

is the other party’s consent required for delegation?

PQs Set 2

A

no (unless otherwise stated)

a lack of objection from other party does not excuse a breach by the other party

215
Q

when does acceptance need to happen for a firm or irrevocable offer?

PQs Set 2

A

effecitve only when the offeror receives the acceptance before the offer expires

216
Q

UCC

What is required for the quantity term under the UCC?

MBE PQs Set 3

A

contract must therefore specify a quantity that is certain or determinable by reference to objective facts, such as the buyer’s actual requirements or the seller’s actual output in a requirements or output contract.

217
Q

for a contract specifying an assortment of goods, what happens if the assortment is not timely selected?

MBE PQs Set 3

A
  • did the delay materially impact the seller’s performance?
  • if so, seller can (1) proceed in a reasonable manner or (2) treat the nonselection as breach
  • if not, seller must follow selection
218
Q

when is a delegator released from liability?

MBE PQs Set 3

A

only if the other party to the contract expressly or impliedly agrees to a novation

219
Q

UCC / default rule

when is payment due for an installment contract?

MBE PQs Set 3

A

Payment is due upon each delivery unless the price cannot be apportioned

each shipment is to be separately accepted by the buyer

220
Q

UCC / auction

can a good sold at auction be withdrawn once the auctioneer calls for bids?

MBE PQs Set 3

A

depends on type of auction

reserve auction - may withdraw goods prior to completion of sale

no-reserve auction - goods cannot be withdrawn after auctioneer calls for bids

221
Q

UCC / auction

what is the default type of auction?

MBE PQs Set 3

A

reserve auction

no-reserve auction has to be specifically announced

222
Q

common law

what is a minor breach?

Practice Essays

A

breaching party substantially performed

223
Q

common law

what happens if there is a minor breach?

Practice Essays

A

non-breaching party must still perform under the contract
breaching party still recovers (contract price - cost to other party to obtain full performance)

224
Q

common law

what is a material breach?

Practice Essay

A

non-breaching party doesn’t receive the substantial benefit of the bargain
breaching party can’t recover contract damages (maybe restitution)

225
Q

UCC

when does a shipment of nonconforming goods serve as a rejection + counteroffer?

UWorld

A

if seller (1) made no prior promise to ship conforming goods AND
(2) notifies buyer that nonconforming shipment is merely an accommodation

226
Q

UCC

if buyer wrongfully disposes of rejected goods, what can the seller do?

UWorld

A

seller can sue for conversion to recover FMV the converted property at time of the conversion

227
Q

up until what point can the contracting parties modify or rescind the contract when there is an intended beneficiary?

Themis PQs #4

A

until the intended beneficiary’s rights are vested

228
Q

when does vesting occur for an intended beneficiary?

Themis PQs #4

A

when the beneficiary:
(1) materially changes position in justifiable reliance on the rights created
(2) manifests assets to the contract at a party’s request
OR
(3) files a lawsuit to enforce the contract

229
Q

when is the implied warranty of merchantability disclaimed for defects?

Themis PQs #4

A

this warranty is disclaimed (waived) for defects that an examination would have revealed if the buyer
(1) examined the goods as fully s desired before entering the contract OR
(2) refused to examine the goods before entering the contract

230
Q

what is the hierarchy of evidence under the UCC?

Themis PQs #4

A

express terms > course of performance (current transaction) > course of dealing (prev transactions) > trade usage

231
Q

can a party to an illegal contract recover damages?

Themis PQs #4

A

yes, restitution damages if that party conferred a benefit on the other party and (1) was justifiably ignorant of the facts that made the contract illegal, (2) was less culpable than the other party, or (3) withdrew before the contract’s illegal purpose was achieved and did not engage in serious misconduct

232
Q

statute of frauds

when is a suretyship enforceable without a writing?

Themis PQs #4

A

if it was made mainly for the surety’s economic advantage (not the principal’s benefit) or to indemnify the creditor

note this is outside the SOF

233
Q

does consent to a delegation create a notation?

Themis PQs #4

A

NO, mere consent to a delegation does NOT create a novation

234
Q

in a real estate contract that requires delivery of possession, what is the recourse for late delivery?

Themis PQs #4

A

it’s a breach that entitles the nonbreaching party to compensatory damages for actual economic losses

235
Q

is consideration required for assignment? what happens if there is consideration vs. no consideration?

Themis PQs #4

A

not required to have consideration

without consideration –> revocable by signer unless (1) obligor already performed (2) doc symbolizing the assigned right has been delivered to the assignee, (3) written assigns signed by the assignor has been delivered to the assignee OR (4) the assignee has determinately relied on the assignment

236
Q

in an auction, when can a bidder withdraw their bid?

Themis PQs #4

A

bidder has right to withdraw a bid until the auctioneer announces completion of the sale

under reserve OR no-reserve auction

237
Q

damages

what is the goal of compensatory damages? what comprises compensatory damages?

Essay 5318 / Outline

A

put the nonbreaching party in as good a position as performance would have done (expectation damages) + consequential and incidental damages, if any, - possible mitigation of damages

238
Q

damages

how are expectation damages calculated?

Essay 5318 / Outline

A

must be calculated with reasonable certainty
if too speculative, can seek reliance damages

compare value of performance w/o breach vs. value of performance w/ breach

239
Q

damages

how do you calculate expectation damages in construction if owner fails to pay?

Essay 5318 / Outline

A

profits builder would have earned + any costs incurred by building - any payments made to owner - any materials purchased by contractor that can be used on another job

240
Q

damages

how do you calculate expectation damages in construction if contractor failed to begin or complete the project?

Essay 5318 / Outline

A

contract price - cost of construction by another builder + any progress payments to breaching building + compensation for delay in completion

241
Q

damages / common law

what are the types of actual damages?

Essay 5318 / Outline

A

direct or consequential

direct - necessary and usual result of D’s wrongful act

consequential - result naturally from the breach, but don’t have to be the result of breaching party’s conduct; need to be reasonably foreseeable result of the breach

242
Q

damages / common law

what type of damages have to be reasonably foreseeable?

Essay 5318 / Outline

A

consequential damages

reasonably foreseeable by the breaching party

243
Q

damages

what type of damages are allowed when the nonbreaching party has partially performed a below-market-price contract?

PQs Set 5

A

restitution damages

how much the breaching party would have to pay someone else to do the job

prevents breaching party from profiting from its breach

244
Q

what is the definition / rule for unconscionability?

PQs Set 5

A

when it is so unfair to one party that no reasonable person in the position of the parties would have agreed to it

must have been offensive at the time the contract was made

245
Q

Fact pattern:

  • contract prohibits assignments without permission
  • contract assigns benefit to child of original party
  • child assigns rights to charity without permission
  • no payment given for the service
  • charity filed suit

will charity win against original party in suit?

PQs Set 5

A

charity will win b/c assignee of child’s contractual rights

other party fully performed their obligation so the right to receive payment can be assigned and enforced by charity through breach of contract

not a donee beneficiary b/c contract was not for the purpose of benefitting the charity

246
Q

when is a revocation effective?

PQs Set 5

A

upon receipt

247
Q

what is the implied duty in all contracts (UCC + common law)?

PQs Set 5

A

duty of good faith and fair dealing

248
Q

remedies

what is the remedy when a buyer breaches or repudiates a contract for the sale of goods?

Essay 3566

A

seller may resell the goods and sue for the contract price – the resale price

for a private sale –> seller must first give the buyer reasonable notice of his intent to resell

If the resale is made in good faith + commercially reasonable manner –> the seller can recover the difference between the contract price and the resale price plus incidental and consequential damages

249
Q

Parol Evidence Rule

what type of evidence is allowed under this Rule?

Evidence Lecture Handout

A

allows evidence that might add to the terms
but EXCLUDES evidence that would contradict the terms of the agreement

250
Q

Parol Evidence Rule

what type of extrinsic evidence can be admitted (these are exceptions to Rule)?

Evidence Lecture Handout

A
  • clarify an ambiguity
  • prove a custom of trade or course of dealing
  • show fraud, duress, mistake, illegal purpose
  • show whether consideration has/hasn’t been paid
251
Q

is a promise to make a gift enforceable?

UWorld

A

generally no (lacks bargained-for exchange) but may be enforceable under promissory estoppel

252
Q

what is an intended beneficiary?

UWorld

A

they receive a direct benefit from the contract b/c contracting parties intended that the payment will go to the 3p

253
Q

what type of damages are available for a material breach vs. minor breach?

Practice Exam #1, Q33

A
  • material breach –> restitution damages; can’t recover under contract
  • minor breach –> expectation or reliance damages
254
Q

when does a party have to respond to a demand for adequate assurance?

NCBE Simulated MBE 1

A

only if the demand is reasonable and justified –>
which means that the party has reasonable grounds for the insecurity

255
Q

under parol evidence rule, what can evidence of a prior or contemporaneous communication be used for if there’s a fully integrated written contract?

UWorld

A

can be admissible to determine remedies for breach –> prove foreseeability of consequential damages

256
Q

damages available for failing to perform a real estate sales contract

MBE Mixed Set #1

A

difference between contract price and FMV on date of breach

rocking the bar exam (15 decks)

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