Contracts

Question 1

valid formation of K

Answer 1

offer, acceptance (mutual assent), consideration

Question 1

applicable law of contracts

Answer 1

UCC applies to sale of goods
Common law applies to everything else (including land)

Question 2

What does anticipatory repudiation require, and what can non repudiating party do?

Answer 2

unequivocal expression
before time for performance is due that they will not perform

nonrepuditating party can sue immediately, suspend performance, treat K as discharged, or urge performance

Question 3

Factors to consider for material breach

Answer 3

party did not receive substantial benefit of the bargain
extent of performance and cost
willfulness
was time of the essence?

Question 4

expectation damages

Answer 4

put party in the position he would have been in had the K been performed

limitations?
foreseeable
unavoidable
certain
causation

Question 5

discharge of duty to perform under a contract, not resulting from beach

Answer 5

IIF

impossibility: supervening unforeseen event makes performance impossible

impracticability: makes performance extremely and unreasonably difficult. UNLESS risk assumed by a party

frustration of purpose: purpose for entering the K is destroyed by supervening events

Question 6

When is a contract voidable due to a mistake?

Answer 6

K voidable for mutual mistake if: BAM
(1) mistake was to a basic assumption at the time K formed
(2) material effect on K
(3) adversely affected party did not assume risk

Unilateral mistake requries that the other party knew of the mistake

Question 7

right to demand adequate reassurances, time limit

Answer 7

if reasonable grounds for insecurity exists about forthcoming performance, the insecure party can demand adequate assurances of due performance IN WRITING

Insecure party may suspend performance until receiving adequate reassurances

Reasonable response time: 30 days or else breach

Question 8

perfect tender rule

Answer 8

UCC also requires perfect tender such that all goods must be delivered per K specifications or the buyer can reject the goods

Question 9

consequential damages

Answer 9

direct and foreseeable consequences of the K non performance

Question 10

incidental damges

Answer 10

ordinary expenses incurred in responding to the breach

Question 11

valid offer

Answer 11

ITO

present Intent to be bound
definite and certain Terms
identified Offeree

Question 12

consideration

Answer 12

bargained for exchange

That which is bargained for must be of legal value

“a mere peppercorn will suffice”

Peace of mind or personal satisfaction is sufficient

Consider unconscionability defense (see below) for excessively one-sided bargain

Question 13

a court may award spefici performance if

Answer 13

valid K
conditions met
inadequate legal remedy
mutuality: both can perform
feasibility: court can supervise/enforce
no defenses (laches/unclean hands

Question 14

Outline the five issues for contracts essay

Answer 14

1. governing law: common law or UCC. If UCC, identify merchant/non merchant
2. Valid K? formation, SoF
3. Modifications, etc.
4. Defenses (impossibility, impracticality, frustration, mistake)
5. Damages

Question 15

UCC 2207

Answer 15

UCC § 2-207 (battle of the forms):
A contract can be formed between merchants even though terms of acceptance do not match terms of offer.

Additional/different terms are effective as an
acceptance, unless acceptance is expressly made conditional on acceptance of proposed terms

b. Both merchants + additional terms: Additional terms become part of K, UNLESS

i. Acceptance is made conditional on offeror’s assent to additional or different
terms

ii. Original offer expressly limits acceptance to offer terms

iii. New terms materially alter original terms, e.g., arbitration clause, disclaimer,
materially shorten deadline, change usage of trade or past method of dealing

iv. Offeror objects to the change within reasonable time

c. Both merchants + different terms? Knockout rule (majority): Conflicting terms are omitted from K; gaps left are filled by UCC default terms (see § V-a-v)
i. Minority rule: Alternatively, analyze as if additional terms (see (b) above)
d. No acceptance but parties perform anyway? Use knockout rule

Question 16

Who bears the risk of loss in sale of goods contracts?

Answer 16

FOB [city] means ROL passes from shipper to shippee at that city. FOB [city] means it is delivered by common carrier, the the person located in [city] is free of liability until it reaches that city.

If non common carrier delivery, and If seller is a merchant, ROL passes to buyer when in buyer’s possession (if buyer never takes possession, seller still has ROL). If non-merchant, ROL is on buyer upon delivery