Contracts

Question 1

Express contract

Answer 1

Promises are communicated by language.

Question 2

Express contract

Answer 2

Promises are communicated by language.

Question 3

Implied Contract

Answer 3

Parties conduct indicates that they assented to be bound.

Question 4

Quasi contract

Answer 4

One party is unjustly enriched at the expense of the other party, so that the enriched party must pay restitution to the other party equal to the unjust enrichment.

Question 5

Elements of a contract

Answer 5

• Mutual assent (offer + acceptance)
• Consideration (bargained for exchange OR substitute for consideration)
• No defenses.

Question 6

Substitute for consideration

Answer 6

Promissory estoppel, detrimental reliance, or good faith modification under the UCC

Question 7

Defenses to Contract Formation

Answer 7

Mistake
Lack of capacity
Duress
Illegality
Statute of Frauds

Question 8

Revocation by offeror:
1) when effective
2) methods
3) limitations on power to terminate

Answer 8

1) Effective when received
2) express revocation or implied (offered discovers offeror sold subject matter to someone else)
3) option contract, merchant firm offer, detrimental reliance, beginning performance on unilateral contract.

Question 9

Rejection by Offeree:
1) When effective
2) Methods
3) Limitations

Answer 9

1) Effective when received
2) Express rejection, counteroffer, or lapse of reasonable time
3) Generally cannot reject if already accepted

Question 10

Termination by Operation of Law

1) When effective
2) Methods

Answer 10

1) Effective upon the death or insanity of either party, the destruction of the subject matter, or the supervening illegality occurs
2) death or insanity of either party, destruction of subject matter, or supervening illegality.

Question 11

Mirror image rule UCC

Answer 11

Not adopted. The inclusion of different terms is effective as acceptance, unless acceptance is expressly made conditional on the assent of the additional or different terms. Whether or not the different/additional terms become part of the contract depends on if the parties are merchants.

Question 12

Mirror image rule common law

Answer 12

Adopted. Unless for the sale of goods, an acceptance with additional/different terms is a rejection and counteroffer.

Question 13

Additional terms in goods contracts between non-merchants

Answer 13

If ANY part to the contract is not a merchant, the additional terms are not adopted and considered to be mere proposals that must be expressly agreed to.

Question 14

Additional terms for goods contracts between merchants

Answer 14

If BOTH parties are merchants, additional terms will be included UNLESS:

1) they materially alter og K
2) party expressly limits acceptance to terms of the offer OR
3) the offeror has already object to the terms, or objects within a reasonable time.

Question 15

Exceptions to mailbox rule:

Answer 15

1) The offer stipulates that acceptance is not effective until received.

2) an option contract is involved (acceptance only effective upon receipt)

3) The offeree sends a rejection, and then sends an acceptance. Whoever arrives first is effective.

4) The offeree sends an acceptance and then a rejection, in which case the acceptance is effective unless the rejection arrives first and the offeror detrimentally relies on it.

Question 16

Exceptions to pre-existing duty rule for consideration:

Answer 16

1) new or different consideration is promised.

2) the promise is to ratify a voidable obligation (promise to ratify a minors contract after reaching majority)

3) pre-existing duty is owed to a third person

4) there is an honest dispute as to the duty OR

5) there are unforeseen circumstances sufficient to discharge a party.

6) modern view: modification is fair and equitable in view of circumstances not anticipated when contract was made.

Question 17

Legal capacity to contract defenses:

Answer 17

-Contracts of minors
- mental incapacity
- intoxication

Question 18

Elements of undue influence:

Answer 18

• undue susceptibility to pressure by one party and
• excess pressure by the other party.

Question 19

Elements of economic duress:

Answer 19

1) the party threatens to commit a wrongful act that would seriously threaten the other party’s property or finances
2) there are no adequate means available to prevent the threatened loss.

Question 20

Ambiguous contract language rules:

Answer 20

Neither party aware of ambiguity: no contract unless both intended same meaning

Both parities aware: no contract unless both parties intended the same meaning

One party aware: binding contract based on what the ignorant party reasonably believed to be the meaning of the ambiguous words.

Question 21

Statute of Frauds agreements covered

Answer 21

• Marriage (promises in consideration of marriage)
• Year (performance imposai able within one year)
• Land (interest in land)
• Executor (executor or administrator promises to personally pay estates debts)
• Goods (goods prices at $500 or more)
• Surety (promise to pay debt of another)

Question 22

When writing not required for Statute of Frauds:

Answer 22

• Specially manufactured goods
• Admissions or pleading in court (if party admits to contract in court)
• Merchants confirmatory memo (if one merchant sends the other written confirmation of understanding, sufficient. Article 2 allows merchant to use its own confirmation to satisfy SofF).
• Equitable and promissory estoppel
• Judicial Admission

Question 23

Warranty of title:
1) how it arises
2) by whom
3) Disclaimer

Answer 23

1) by sale of goods
2) any seller
3) by specific language or circumstances showing seller does not claim title

Question 24

Warranty of Merchantability
1) how it arises
2) by whom
3) disclaimer

Answer 24

1) by sale of goods regularly sold by the merchant
2) merchant only
3) by disclaimer mentioning “merchantability” (if written, must be conspicuous)

Question 25

Warranty of fitness for particular purpose:
1) How it arises
2) by Whom
3) Disclaimer

Answer 25

1) by sale of goods where seller has reason to know of particular purpose and of buyers reliance on seller to choose suitable goods.
2) Any seller
3) By specific WRITTEN disclaimer (“as is; by examination or failure to examine, or by course of dealing/usage of trade)

Question 26

Express Warranty:
1) how it arises
2) by whom
3) disclaimer

Answer 26

1) By affirmation of fact, promise, description, model or sample
2) any seller
3) extremely difficult to disclaim

Question 27

Non-carrier contract
1) place of delivery
2) time for payment
3) when does the risk of loss shift from seller to buyer?

Answer 27

1) sellers place of business
2) upon tender of delivery
3) if seller is merchant: when buyer takes possession. If not, when seller tenders delivery

Question 28

Carrier Contract

Answer 28

1) - Shipment contract ( FOB sellers city) : seller must deliver to the shipper
- Destination contract: seller must tender delivery to the buyer at destination.
2) when buyer receives goods
3) - shipment k: when goods are delivered to the shipper, destination K: when seller tenders delivery to the buyer at destination.

Question 29

Performance at common law:

Answer 29

Must substantially perform

Question 30

Performance under article 2

Answer 30

Perfect tender

Question 31

Condition Precedent
1) definition
2) effect of occurrence of condition
3) example

Answer 31

1) condition must occur before performance is due to
2) performance due to
3) agreement to pay 10k if “my house is sold by April 1.” No payment u less house sold by April 1st.

Question 32

Conditions Concurrent
1) definition
2) effect if occurrence of condition
3) example

Answer 32

1) conditions to occur at the same time.
2) if one condition has occurred, performance of the other is due
3) Agreement to pay 100k for Blackacre. Money and deed exchange in the same transaction.

Question 33

Condition subsequent
1) Definition
2) Effective if Occurence of Condition
3) Example

Answer 33

1) condition cuts off already existing duty
2) duty to perform is excused
3) agreement to buy Blackacre for 100k unless zoning is changed. If zoning is changed, no duty to pay 100k or transfer deed.

Question 34

Condition Subsequent
1) definition
2) effect of occurrence of condition
3) example

Answer 34

1) condition cuts off already existing duty
2) duty to perform is excused
3) Agreement to buy Blackacre for 100k unless zoning is changed. If zoning is changed, no duty to pay 100k or transfer deed.

Question 35

Ways to be discharged from contract:

Answer 35

1) Performance
2) Impossibility
3) Impracticality
4) Frustration of purpose
5) Mutual Rescission
6) Release
7) Modification
8) Accord and Satisfaction
9) Novation
10) Lapse

Question 36

Mirror imagine rule merchants

Answer 36

Inclusion of additional terms or not a rejection or counteroffer, UNLESS the acceptance is expressly made conditional on assent to the different or additional terms.