Contracts

Question 1

offer

Answer 1

communication indicating that the offeror is willing to enter into a contract on the basis of the offered terms

Question 2

are advertisements offers?

Answer 2

advertisements are NEVER offers on the MBE
they are invitations for offers
advertisement + response = offer

Question 3

what is always required in a contract for the sale of goods

Answer 3

quantity term -> only essential term required in a goods K

Question 4

revocation rule

Answer 4

an offer can be revoked by the offeror at any time prior to acceptance with notice to the offeree (direct or indirect notice)
even if the offeror promised not to revoke

Question 5

option contract

Answer 5

offeree pays consideration to have the offeror hold the option open for a period of time in which the offer cannot be revoked
can be for any duration

Question 6

in what fact patterns does detrimental reliance typically arise?

Answer 6

subcontractor/contractor
Subcontractor submits bid to gen contractor
Sub can’t revoke his bid after the gen submits his bid in reliance on the sub’s

Question 7

what is a bid in contracts context?

Answer 7

a bid is an offer

Question 8

what type of irrevocable offer is only available under the UCC

Answer 8

the firm offer
merchant’s firm offer rule

Question 9

elements of a merchant’s firm offer

Answer 9

1- a merchant
2- promises to hold the offer open
3- in a signed writing
4- that is enforceable for a period of time, up to three months

Question 10

Under the UCC, a buyer’s order to purchase goods is considered an offer and the seller may accept by:

Answer 10

1- a return promise to ship the goods
2- prompt shipment of the conforming goods
3- a shipment of nonconforming goods

Question 11

a shipment of nonconforming goods is considered a what by the seller if sent without an accommodation notice

Answer 11

Considered an acceptance and a breach

Question 12

when is a seller’s shipment of nonconforming goods NOT considered a breach

Answer 12

if the seller sends the nonconforming goods to the buyer with a notice that they couldn’t perfectly fill the order and nonconforming goods are sent in the hope that the buyer can use them instead of the conforming goods -> this is a COUNTEROFFER

Question 13

accommodation notice

Answer 13

seller sends the nonconforming goods to the buyer with a notice that they couldn’t perfectly fill the order and nonconforming goods are sent in the hope that the buyer can use them instead of the conforming goods -> not a breach but a COUNTEROFFER to the buyer

Question 14

what can a buyer do in response to receiving nonconforming goods

Answer 14

1- Accept the whole
2- reject the whole

Question 15

if the buyer accepts the nonconforming goods, what is the result

Answer 15

the buyer and seller have created a new contract with the nonconforming goods

Question 16

mirror image rule- UCC or common law

Answer 16

common law rule

Question 17

what is the mirror image rule

Answer 17

acceptance must be on exact same terms as the offer
any deviation results in a rejection and counteroffer

Question 18

battle of the forms- UCC or common law

Answer 18

UCC

Question 19

battle of the forms

Answer 19

rules that govern the sale of goods and the acceptance contains an additional or different term

Question 20

Both parties are merchants and the change is not material (battle of the forms)

Answer 20

the change is incorporated into the contract unless the offeror objects within a reasonable time then the change is eliminated

Question 21

if both parties are merchants and the change is material (battle of the forms)

Answer 21

this is an acceptance with a proposal to modify the terms

With no further action, the change is eliminated and there is a contract on the terms of the original offer

Question 22

if you’re dealing with the sale of goods and the acceptance contains an additional or different term, is this a valid acceptance?

Answer 22

YES! This functions as an acceptance under the UCC.
The issue is whether the additional/new term is part of the K with the battle of the forms

Question 23

material change to a K

Answer 23

the change is material if including it would result in a surprise or hardship if done without the other party’s knowledge

• any change that substantially affects the economic risks or benefits is material

examples:
- indemnification clauses
- disclaimers of warranties
- change that alters the usual remedy for breach of K

Question 24

consideration

Answer 24

a bargained-for exchange of something of legal value

There is valid consideration if someone:
- promises to do something that he has a legal right not to do
- promises not to do something that he has a legal right to do

no consideration for giving up something illegal
a promise to quit illegal drugs for a period of time is not valid consideration bc doing those drugs is illegal

Question 25

is there consideration:
P finds D’s lost dog with an address on the collar and returns the dog to D, hoping for a reward. On receipt of the dog, D says “I promise to give you $100 tomorrow for returning my dog”. Is there consideration for D’s promise?

Answer 25

No. Consideration is not valid for things you’ve already done- there’s no bargained-for exchange

Question 26

Contracts covered by the statute of frauds

Answer 26

Marriage (in consideration of - prenups)
Year (contracts that cannot be performed in one year)
Land contracts (real estate deals)
Executors of wills
Goods (contracts for the sale of goods priced at $500 or more)
Suretyship: contracts to answer for the debt of another

Question 27

requirements for a writing to satisfy the SoF

Answer 27

1. writing must contain:
   - identify of the parties
   - description of the subject matter
   - terms necessary to make the K definite
2. and be signed by the party to be charged

Question 28

essential terms needed in a writing for land sale Ks

Answer 28

description and price of land

Question 29

essential terms needed in a writing for an employment K

Answer 29

length of employment

Question 30

essential terms needed in a writing for the sale of goods

Answer 30

quantity

Question 31

when can a land sale contract satisfy the SoF without a writing

Answer 31

with part performance that unequivocally indicates that the contract was for a sale of land

Question 32

when can a services contract satisfy the SoF without a writing

Answer 32

with full performance by either party

Question 33

when can a sale of goods contract satisfy the SoF without a writing

Answer 33

two situations in which part performance will satisfy the statute:
1- the goods have been accepted or paid for by the buyer
2- the goods are to be specially manufactured and the seller has made a substantial start in doing so

Question 34

Partial acceptance example:
Seller orally agrees to deliver three trucks to buyer at $100k per truck. After the first truck is delivered and accepted, the seller cancels and the buyer sues for breach.
Seller raises the SoF as a defense.
What is the result?

Answer 34

The SoF is satisfied for the first truck but not for the other two.
The buyer can enforce the terms of the K for the first truck (demand payment) but the buyer cannot demand delivery of the other two trucks bc the seller has a valid SoF defense for the other two trucks

Question 34

parol evidence rule

Answer 34

if both parties intend a writing to be the final version of the deal, evidence of oral or written statements made prior to the writing or at the same time are inadmissible

if only one party reduces the agreement to writing –> no parol evidence rule

Question 35

when does the PER not apply?

Answer 35

anytime the validity of the K is in question, interpretation issues, reformation, and additional terms under UCC with course of performance, course of dealing, usage of trade etc

Question 36

shipment contracts

Answer 36

risk of loss passes to buyer once the seller delivers the goods to a common carrier

if not specified, shipment K presumed

Question 37

destination contract

Answer 37

risk of loss passes to the buyer after goods are tendered at their destination

Question 38

non carrier case- seller is a merchant

Answer 38

seller has the risk of loss until buyer takes physical possession of the goods

Question 39

non- carrier case- seller is not a merchant

Answer 39

risk passes to the buyer when the goods are tendered to the buyer

Question 40

what types of warranties can be disclaimed

Answer 40

express warranties only

Question 41

express warranties

Answer 41

seller makes a statement of fact or a promise describing the goods or providing samples or models

Question 42

common law contract modification requirements

Answer 42

consideration is required for modification to be enforceable

look for preexisting duty rule language in answer choice

Question 43

UCC contract modification requirements

Answer 43

consideration is NOT required but the parties must act in good faith in the modification
not acting with extortion

Question 44

what may the nonbreaching party do under common law if there was a material breach

Answer 44

nonbreaching party:
- no longer has to perform (duty to perform is discharged)
- has the right to all remedies for breach

Question 45

what may the nonbreaching party do under common law if there was a minor breach

Answer 45

nonbreaching party:
- gets the substantial benefit of the bargain
- still has to perform under the K
- must offset damages

Question 46

perfect tender rule under the UCC

Answer 46

both the goods and the delivery must perfectly conform to the terms of the contract. Any variation is a breach

Question 47

common situations where there is no anticipatory breach (other party still has to perform)

Answer 47

• expressions of doubt about whether you’ll be able to perform
• clear statement of repudiation but no reliance
• choices indicate that a writing is required (it is not)

Question 48

when can an anticipatory repudiation NOT be retracted?

Answer 48

once the nonbreaching party has acted in reliance on the repudiation

Question 49

substantial performance

Answer 49

only recognized under common law

defense when one party has substantially completed his contract obligations but not perfectly and the other party wants to sue for breach -> court won’t recognize this as a breach of K bc the other party substantially performed and the nonbreaching party received the benefit by the party ->

Question 50

compensatory damages

Answer 50

places the non-breaching party in the position that he would have been in had the contract been completed
two types:
- expectation
- consequential

this is the main goal of damages in contracts!!! write this on the test!!!

Question 51

expectation damages

Answer 51

• always available
• gives the non-breaching party the amount she would have gotten had the K been completed (benefit of the bargain)

Question 52

consequential damages

Answer 52

• special damages based on a particular situation
• damages that occur after the breach due to the particular situation of the non-breaching party

Question 53

when is specific performance available

Answer 53

real estate contracts
sale of goods if the good is unique

Question 54

when can a contract with a third party bene be modified or canceled without the consent of the third party bene?

Answer 54

Until the rights of the TPB have vested

Question 55

when have the rights of the TPB vested?

Answer 55

1- third party assents to the K
2- third party learns of the K and detrimentally relies on the K
3- third party brings a lawsuit to enforce the K