Contracts

Question 1

What is the first step in analyzing a contract?

Answer 1

Determine what law applies

Question 2

What is required for a valid contract?

Answer 2

Mutual assent, an offer and acceptance, and consideration

Question 3

What defines an offer?

Answer 3

A promise with certain and definite terms communicated to the offeree

Question 4

What are the ways an offer can be terminated?

Answer 4

• Lapse
• Revocation
• Rejection

Question 5

What constitutes acceptance of an offer?

Answer 5

An unqualified assent to the terms of the offer

Question 6

What is the mailbox rule?

Answer 6

Acceptance is effective upon dispatch and rejection is effective upon receipt.

Question 7

What is the implied covenant of good faith and fair dealing?

Answer 7

Both parties must not prevent the other party from performing

Question 8

What is consideration in contract law?

Answer 8

A bargained-for exchange for a return promise or performance

Question 9

What is the Statute of Frauds?

Answer 9

A requirement that certain contracts be in writing to be enforceable

Question 10

What is the predominant purpose test?

Answer 10

A test to determine if UCC or common law governs a contract with goods and non-goods

Question 11

What are expectation damages?

Answer 11

Damages that aim to give the nonbreaching party the benefit of the bargain

Question 12

What is the parol evidence rule?

Answer 12

Determines if prior oral agreements are part of a written contract

Question 13

What defines a material breach?

Answer 13

A breach that excuses the other party’s performance

Question 14

What is a valid excuse for non-performance?

Answer 14

Material breach, performance condition, or anticipatory repudiation

Question 15

What is the difference between novation and delegation?

Answer 15

Novation substitutes a new party, while delegation does not excuse the old party

Question 16

What is the definition of implied warranty of fitness for a particular purpose?

Answer 16

A warranty that goods are fit for a specific purpose known to the seller

Question 17

Fill in the blank: A contract for the sale of goods is governed by _______.

Answer 17

Article 2 of the UCC

Question 18

True or False: Punitive damages are generally recoverable in breach of contract actions.

Answer 18

False

Question 19

What is substantial performance?

Answer 19

A doctrine allowing recovery if a party has not materially breached the contract

Question 20

What is the effect of a rejection of goods under the UCC?

Answer 20

Rejection must occur before acceptance; buyer can reject nonconforming goods

Question 21

What must a buyer demonstrate to revoke acceptance of goods?

Answer 21

Nonconformity that substantially impairs value and revocation within a reasonable time

Question 22

What is the material benefit rule?

Answer 22

An exception allowing enforceability of a promise made after receipt of a significant benefit

Question 23

What are the types of warranties under the UCC?

Answer 23

• Express warranty
• Implied warranty of merchantability
• Implied warranty for fitness for particular purpose

Question 24

What is a breach of a construction contract typically measured by?

Answer 24

The reasonable cost of replacement or completion

Question 25

What conditions must be met for a modification to be binding under the Second Restatement?

Answer 25

Modification must be fair and equitable due to unanticipated circumstances

Question 26

What is the effect of an anticipatory repudiation?

Answer 26

The other party is excused from performance

Question 27

What is the definition of duress in contract law?

Answer 27

A contract is voidable if assent is induced by an improper threat

Question 28

What does the term 'perfect tender' refer to?

Answer 28

The seller's obligation to deliver goods that conform perfectly to the contract

Question 29

What is the role of the implied warranty of merchantability?

Answer 29

Goods must be fit for ordinary purposes and must be from a merchant

Question 30

What is the effect of a willful breach on a party's performance?

Answer 30

A party’s performance cannot be substantial if the breach is willful ## Footnote Some courts hold that willful breaches negate the right to enforce obligations, while others consider it among factors for performance assessment.

Question 31

Define substantial performance in contract law.

Answer 31

Substantial performance occurs when a party completes its obligations with no uncured material failure.

Question 32

What factors determine whether a failure to perform is material?

Answer 32

* Extent of deprivation of expected benefit * Adequacy of compensation for the deprived benefit * Forfeiture suffered by the non-performing party * Likelihood of curing the failure * Conduct of the failing party regarding good faith and fair dealing

Question 33

What happens if a party fails to substantially perform its contractual obligations?

Answer 33

The other party is excused from its obligation to pay on the contract.

Question 34

What is promissory estoppel?

Answer 34

A doctrine allowing recovery for damages if a party detrimentally relied on a promise.

Question 35

List the requirements for promissory estoppel.

Answer 35

* Promisor should expect reliance * Promisee changes position in reliance * Change is to promisee’s detriment and injustice can be avoided only by enforcing the promise

Question 36

What defines a divisible contract?

Answer 36

A contract is divisible if performances can be paired and treated as equivalents.

Question 37

Under common law, what is required for a contract modification?

Answer 37

An agreement modifying a contract must generally be supported by consideration.

Question 38

What is the exception to the consideration requirement for contract modification under the Restatement (Second)?

Answer 38

Consideration is not required if the modification is fair and equitable due to unforeseen circumstances.

Question 39

Under the UCC, what is required for a contract modification?

Answer 39

No consideration is needed, but modifications must be made in good faith.

Question 40

What is an intended third party beneficiary?

Answer 40

A beneficiary who can enforce the contract if they are expressly designated, identifiable, and expected to benefit.

Question 41

What are the conditions under which a contract assignment is not allowed?

Answer 41

* Materially changes the obligor's duty * Increases burden or risk on the obligor * Impairs obligor’s chance of obtaining return performance * Forbidden by statute or public policy * Validly precluded by contract

Question 42

What is required for an effective assignment?

Answer 42

* Intent to transfer rights by the assignor * Assent to the assignment by the assignee

Question 43

What is a delegation in contract law?

Answer 43

A transfer of duties.

Question 44

What duties cannot be delegated?

Answer 44

* Duties involving personal judgment and skill * Duties involving special trust * Duties that change the obligee’s expectancy * Duties restricted by contract

Question 45

Who remains liable after a delegation of duties?

Answer 45

The delegator remains liable even if the delegatee assumes the duties.

Question 46

True or False: A non-delegating party can compel the delegatee to perform without a promise.

Answer 46

False