Contracts

Question 1

What law governs the sale of goods?

Answer 1

UCC Article 2

Goods are defined as things that are moveable.

Question 2

What law governs all other contracts, including services?

Answer 2

Common Law

Question 3

What test is applied to determine which law applies in mixed contracts containing both services and goods?

Answer 3

Predominance Purpose Test

Question 4

What are the three elements required to form a valid contract?

Answer 4

• Mutual Assent (Offer and Acceptance)
• Consideration
• No Defenses to Formation

Question 5

Define ‘Mutual Assent’ in contract formation.

Answer 5

An offer and acceptance of that offer

Question 6

What constitutes an ‘Offer’?

Answer 6

• Manifestation of present intent to contract by one party
• With reasonably certain terms
• Communicated to the offeree

Question 7

How is ‘Acceptance’ defined in contract law?

Answer 7

A manifestation of assent to the terms of the offer, indicating intent to be bound.

Question 8

What distinguishes a Bilateral Contract from a Unilateral Contract?

Answer 8

• Bilateral: Start of performance manifests acceptance
• Unilateral: Start of performance makes the offer irrevocable

Question 9

What is ‘Consideration’ in contract law?

Answer 9

A bargained-for exchange of a promise that benefits the promisor or causes detriment to the promisee.

Question 10

What is the effect of incapacity on contract validity?

Answer 10

Contracts entered into by a person lacking capacity are voidable.

Question 11

What is ‘Unconscionability’ in contract law?

Answer 11

Occurs when a contract shocks the conscience of the court due to substantive and procedural unfairness.

Question 12

What is ‘Substantive Unconscionability’?

Answer 12

Occurs when the contract contains terms that are obviously unfair and one-sided.

Question 13

What is ‘Procedural Unconscionability’?

Answer 13

Occurs when one party has superior bargaining power and uses it to their advantage.

Question 14

What is a ‘Mutual Mistake’?

Answer 14

A mistake shared by both parties that is material to the contract, making it voidable.

Question 15

What defines a ‘Unilateral Mistake’?

Answer 15

A mistake made by one party that is unknown to the other and concerns a basic assumption with a material effect.

Question 16

True or False: A unilateral mistake regarding price is generally a valid defense to formation of a contract.

Answer 16

False

Question 17

What does the Statute of Frauds require?

Answer 17

Certain contracts must be in writing and signed by the party to be charged.

Question 18

List the requirements for a writing to satisfy the Statute of Frauds.

Answer 18

• Signed by the party to be charged
• Reasonably identify the subject matter
• Indicate a contract has been made
• State essential terms

Question 19

What are the exceptions to the Statute of Frauds under Common Law?

Answer 19

• Full Performance
• Partial Performance in Land Contracts
• Judicial Acknowledgment
• Estoppel

Question 20

What are the exceptions to the Statute of Frauds under UCC?

Answer 20

• Merchant’s Confirmatory Memorandum
• Goods Accepted or Paid For
• Custom Made Goods
• Admission During Judicial Proceeding

Question 21

What is required for contract modifications under Common Law?

Answer 21

Modifications must be supported by consideration.

Question 22

Under what conditions may a contract modification be made without consideration under UCC?

Answer 22

When made in good faith.

Question 23

What does the Parol Evidence Rule state?

Answer 23

A fully integrated agreement discharges prior agreements inconsistent with it.

Question 24

What is a ‘Partially Integrated Writing’?

Answer 24

A writing that does not contain complete statements of all terms, allowing proof of additional terms.

Question 25

What does 'Risk of Loss' refer to in contract law?

Answer 25

Determines which party is responsible for goods that are lost or damaged during delivery.

Question 26

What happens to the risk of loss if a breach occurs?

Answer 26

Risk of loss remains with the breaching party.

Question 27

What is a 'Condition Precedent' in a contract?

Answer 27

A condition that makes performance conditional upon the completion of that condition.

Question 28

What is the 'Frustration of Purpose' doctrine?

Answer 28

Discharges performance if the purpose of the contract no longer exists due to an unforeseeable event.

Question 29

What is the difference between 'Impossibility' and 'Impracticability'?

Answer 29

* Impossibility: Performance is objectively impossible * Impracticability: Performance is unreasonably difficult and expensive

Question 30

What is 'Accord and Satisfaction'?

Answer 30

An agreement to accept a different performance in satisfaction of an existing obligation.

Question 31

Define 'Material Breach'.

Answer 31

A breach that excuses the non-breaching party from performance.

Question 32

What is the UCC Perfect Tender Rule?

Answer 32

A seller must deliver conforming goods; even the smallest non-conformity is a breach.

Question 33

What are the conditions under which a buyer may revoke acceptance of goods?

Answer 33

* Nonconformity substantially impairs the value * Difficulty in discovering defect * Acceptance based on seller's assurances * Assumption defect would be cured

Question 34

What is 'Anticipatory Repudiation'?

Answer 34

When a party unequivocally communicates they are unable or unwilling to perform.

Question 35

What can a party do in response to anticipatory repudiation?

Answer 35

Demand adequate assurances in writing.

Question 36

Under what conditions may an IC REP retract their REP and restore the K?

Answer 36

The aggrieved party has canceled the K, materially changed their position, or indicated they consider the REP was final.

Question 37

What should a party do if they have reasonable grounds for being insecure about the other party's performance?

Answer 37

They may demand in writing adequate assurances from the other party that they will perform in accordance with the contract.

Question 38

What happens if adequate assurances are not given within a reasonable time?

Answer 38

The requesting party may treat that as an anticipatory repudiation.

Question 39

What is the maximum time given to respond to a request for adequate assurances under UCC?

Answer 39

30 days.

Question 40

What is the implied obligation of good faith dealing in contracts?

Answer 40

Every contract contains an implied obligation of good faith and fair dealing, requiring parties to act honestly and fairly.

Question 41

What constitutes an express warranty under UCC?

Answer 41

An affirmation of fact, promise, description, or provision of a sample that relates to the goods and becomes the basis of the bargain.

Question 42

Does an opinion create an express warranty?

Answer 42

No.

Question 43

What is the implied warranty of merchantability under UCC?

Answer 43

It requires all goods sold by a merchant to be fit for their ordinary purpose.

Question 44

How can a merchant disclaim the implied warranty of merchantability?

Answer 44

Via a disclaimer in expressed conspicuous language (oral or written) such as 'AS IS'.

Question 45

What conditions create an implied warranty of fitness for a particular purpose under UCC?

Answer 45

The seller knows of the buyer’s particular purpose and the buyer relies on the seller’s skill or judgment.

Question 46

What is the general rule regarding third-party enforcement rights in contracts?

Answer 46

A party who is not in privity of contract with another party cannot assert a claim for breach against that party.

Question 47

What rights does an intended third-party beneficiary have?

Answer 47

The same rights as those in privity of the contract.

Question 48

What distinguishes an intended third-party beneficiary from an incidental third-party beneficiary?

Answer 48

An intended third-party beneficiary has rights under the contract, while an incidental third-party beneficiary does not.

Question 49

What must happen for an intended third-party beneficiary to enforce rights under a contract?

Answer 49

The rights must have vested, which occurs when the beneficiary manifests assent to the promise, detrimentally relies on the contract, or brings suit to enforce.

Question 50

What are the conditions under which duties in contracts are delegable?

Answer 50

All contracts are delegable unless the contract prohibits delegations, delegation is against public policy, or the contract is intended for personal services requiring special skill.

Question 51

What is the typical liability of an assignor after an assignment?

Answer 51

The assignor/obligor remains liable for nonperformance unless the parties agree otherwise (known as a novation).

Question 52

What are the requirements for a valid assignment of rights and benefits to a third party?

Answer 52

The assignor must manifest intent to transfer rights, and the assignee must assent to the assignment.

Question 53

Is consideration required for an assignment to be valid?

Answer 53

No, but if present, the assignment becomes irrevocable.

Question 54

What are the exceptions that make an assignment invalid?

Answer 54

* Public policy prohibits it * The contract forbids it * It materially alters what is expected under the contract.

Question 55

What is novation in the context of contracts?

Answer 55

All parties to a contract agree to discharge the original party and substitute a third party in the original's place.