Contracts

Question 1

What is the test to determine what governs a mixed contract?

Answer 1

Predominant purpose test

Question 2

What are the essential terms of a common law contract?

Answer 2

Parties, subject matter, price, quantity

Question 3

What is the essential term of a UCC contract?

Answer 3

Quantity (gap fillers are allowed for everything else)

Question 4

What happens when both an acceptance and rejection are mailed?

Answer 4

• Oferee accepts and then rejects: acceptance controls unless offeror has relied
• Offeree rejects then accepts: first received by offeror controls

Question 5

What are the three warranties and when can they be disclaimed?

Answer 5

• Express warranty –> has to be specific, general disclaimer isn’t valid
• Implied warranty of merchantability –> must use term “merchantability” and, if in writing, disclaimer must be CONSPICUOUS (“as is” works)
• Implied warranty of fitness for a particular purpose –> must be in writing and CONSPICUOUS (“as is” works)

Question 6

When does the statute of frauds apply?

Answer 6

Mr. SOUR (Marriage, Suretyship, One year, UCC $500+, Real property)

Question 7

What are the exceptions to the statute of frauds?

Answer 7

• Full or partial performance
• Unique/specifically manufactured goods
• Merchant’s confirmatory memo

Question 8

When can a contract with an intended 3P beneficiary be modified or rescinded?

Answer 8

Before the 3P rights vest (detrimental reliance, manifests assent, sues to enforce K)

Question 9

When does donee vs creditor 3PB status matter?

Answer 9

• Donee 3PB: Generally may only sue promisor (unless promisee tells 3PB about K and there’s detrimental reliance)
• Credtor 3PB: May sue either promisor or promisee

Question 10

When does the UCC perfect tender rule not apply?

Answer 10

• Installment Ks (apply substantial performance standard)

Question 11

What are expectation damages?

Answer 11

Put the nonbreaching party in as good a position as performance would have done

Question 12

What are reliance damages?

Answer 12

Put nonbreaching party in the position as if the contract were never formed

Question 13

What are the knock out/knock in rules?

Answer 13

• If one or both parties are not merchants: An acceptance from the offeree with changes or additions will be a valid acceptance, but w/o the changes or additions (knock out)
• If both parties are merchants, changes and additions comes in UNLESS a) materially alter terms, b) offer limits acceptance to terms of offer or c) offeror objects
• Warranty disclaimers or severe limitations on remedies are material changes

Question 14

What is moral/past consideration?

Answer 14

Under the modern trend, a promise not supported by consideration may be enforceable if it is made in recognition of a significant benefit previously received by the promisor from the promisee.

Question 15

What is promissory estoppel?

Answer 15

Substitute for consideration under a contract. The promise will be binding in the absence of consideration if:
* The promisor should reasonably expect the promise to induce action or forbearance;
* The promise actually induces action or forbearance; and
* Injustice can be avoided only by enforcement of the promise

Question 16

When is a unilateral contract voidable for mistake?

Answer 16

The mistaken party can void (rescind) the contract if:
* The mistake would make enforcement of the contract unconscionable; or
* Non-mistaken party failed to disclose the mistake or caused the mistake
Plus: Absence of serious prejudice to non-mistaken party

Question 17

What is the parol evidence rule?

Answer 17

Under the PER, extrinsic evidence of oral or written communications prior or contemperanous to the written contract (e.g., contract negotiations) are generally inadmissible for contradicting the terms of the contract.

Question 18

What is a condition?

Answer 18

A condition is a future event that must occur before a party’s contractual rights or obligations are created, destroyed, or enlarged.

Question 19

What can a nonbreaching party do in the face of an anticipatory repudiation?

Answer 19

The nonbreaching party can:
* Treat the repudiation as a breach of contract and sue immediately;
* Suspend its own performance and demand performance from the promisor;
* Cancel the contract; or
* Wait for the date of performance, and then sue for breach.