Contracts

Question 1

How a security interest is created and enforced = Attachment: P.I.G.

Answer 1

P = party (debtor possesses rights in the goods)

I = interest (created by security agreement)

G = gave value (creditor gave value to debtor)

Question 2

Perfection = perfection of a security interest is required to provide protection to the secured party: F.A.T.

Answer 2

F = filing financing statement with the local Secretary of State

A = automatic perfection in consumer goods PSMI

T = taking possession of goods

Question 3

What is a P.M.S.I.?

Answer 3

PMSI = purchase-money security interest

A PMSI is a security interest held by the seller of goods to secure payment or a security interest that gives value to a debtor to acquire rights/use of goods

Question 4

Contracts subject to the statute of frauds: M.Y.L.E.G.S.

Answer 4

M = marriage
Y = year (contacts that can’t be performed within one year)
L = land
E = executor
G = goods ($500+)*
S = suretyship

*UCC applies to ALL goods, SoF only applies to goods $500+

Question 5

Satisfaction of UCC SoF requirements/exceptions: S.I.M.P.S.

Answer 5

S = signed writing
I = in-court admission that contact was formed
M = merchant’s confirmation (oral agreement + followed up writing)
P = part-performance
S = substantial reliance by the seller of specially manufactured goods

Question 6

Multiple offerees in a contract for two or more persons: C.A.R.

Answer 6

C = commercial ads
A = auctions
R = reward offers

Question 7

Defenses to enforceability: D.A.I.U.U.U.M.M.M.N. (damn)

Answer 7

D = duress
A = age
I = incompetency
U = undue influence
U = unconscionable
U = unilateral mistake
M = mutual mistake
M = misrepresentation (intentional)
M = misrepresentation (negligent)
N = non-compete clauses

Question 8

Process to assess whether contact was formed: “Love For Dogs, Treat Every Rover Terrifically” L.F.D.T.E.R.T.

Answer 8

L = law (what law governs - UCC or common law?)

F = formation (offer, acceptance, consideration? + What type of contract - unilateral, output, etc?)

D = defenses and execptions (DAIUUUMMMN)

T = terms (modification, parol evidence, warranties)

E = excuse (excuse performance, conditions, discharge duty, anticipatory repudiation, breach, perfect tender, warranty)

R = remedies (expectation, reliance, restitution, recission, replevin, performance)

T = third party rights (delegation, assignment, beneficary)

Question 9

Ways to discharge contractual obligations: F.I.R.M. S.C.A.N.

Answer 9

F = full performance or frustration
I = impossibility or impracticality
R = release (in writing only)
M = mutual rescission

S = substituted contract
C = covenant not to sue
A = accord & satisfaction
N = novation

Question 10

Sec. Trans: for attachment & perfection = P.I.G. F.A.T

Answer 10

Attachment:
P - party has rights in goods
I - interest created by security agreement
G - gives value

Perfection:
F - filing financial statement
A - automatic perfection
T - takes possession