Contracts 1L

Question 1

To what type of contract does the UCC apply?

Answer 1

UCC 2-102. Scope. The UCC applies to transactions for the sale of goods.

Question 2

How does the UCC define GOODS?

Answer 2

UCC 2-105(1). Definition of Goods. Goods are all things “movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities and things in action.”

Question 3

How does the UCC distinguish between goods and minerals?

Answer 3

UCC 2-107(1). Distinguishing Between Goods and Real Property. Minerals. A contract for the sale of minerals or the like (including oil and gas) or a structure or its materials to be removed from realty is a contract for sale of goods if they are to be severed by the seller.

Question 4

How does the UCC distinguish between goods and growing crops?

Answer 4

UCC 2-107(2). Distinguishing Between Goods and Real Property. Growing Crops. A contract for the sale of growing crops or timber is a contract for sale of goods if they are to be severed by the buyer or the seller.

Question 5

How does the UCC define MERCHANTS?

Answer 5

UCC 2-104(1). Definition of Merchant. A merchant is a person who deals in goods of the kind or holds himself out as having knowledge or skill peculiar to the practice of goods involved.

Question 6

How do you determine whether common law or the UCC apply to a “mixed contract?”

Answer 6

The majority of jurisdictions apply the “Bonebrake Predominant Purpose” test: Is the objective of the buyer mainly for goods with labor incidentally involved (UCC), or a rendition of service with goods incidentally involved (common law)?

Question 7

What is required for the formation of a contract?

Answer 7

Any contact requires mutual assent. This ordinarily appears as an offer from a party followed by and acceptance from another (OFFER, ACCEPTANCE and CONSIDERATION).

Question 8

§1: Contract Defined.

Answer 8

A contract is a promise or set of promises for the breach of which the law gives a remedy, or for the performance of which the law in some way recognizes a duty.

Question 9

OFFER

Answer 9

An offer is a manifestation of willingness to enter into a bargain, so made as to justify another in understanding that his assent is invited and, if given, will conclude the bargain.

Question 10

UCC 2-204. Formation in General

Answer 10

A contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract, even though the moment of its making is undetermined.

Question 11

UCC 1-203. Obligation of Good Faith

Answer 11

Every contract or duty imposes an obligation of good faith in its performance or enforcement.
*Note: This is regardless of whether it is explicitly or implicitly implied. Any breach of this “covenant of good faith dealing” is a breach of contract.

Question 12

How is it determined whether an OFFER was intended?

Answer 12

Objective Standard: Would a reasonable person in the offeree’s position believe an offer to enter into a contract has been made?

Question 13

Under the common law what is necessary to satisfy “sufficient certainty?”

Answer 13

The terms of the contract must provide a basis for determining the existence of a breach and for giving and appropriate remedy.

Question 14

Under the UCC what is necessary to satisfy “sufficient certainty?”

Answer 14

In a contract for the sale of goods, an offer must expressly or impliedly identify, at minimum, the parties, the goods, and the quantity.

Question 15

Gap Fillers

Answer 15

When terms are not expressed in a contract for goods, they provide terms through various UCC rules.

Question 16

Gap Filler: UCC 2-305. Open Price Term.

Answer 16

If price is left out, it is a reasonable price set by some standard on delivery.

Question 17

Gap Filler: UCC 2-307. Delivery in Single Lot or Several Lots.

Answer 17

Unless otherwise agreed all goods must be tendered in a single delivery and payment is due on such tender.

Question 18

Gap Filler: UCC 2-308. Place of Delivery.

Answer 18

If not specified, then no delivery; purchaser must pick up at place of business.

Question 19

Gap Filler: UCC 2-309. Time of Delivery.

Answer 19

If not stated, then any reasonable time.

Question 20

Gap Filler: UCC 2-309. Absent of Time Provisions.

Answer 20

Due at time and place when goods are received.

Question 21

§4: How a Promise May Be Made.

Answer 21

A promise may be stated in words, either oral or written, or may be inferred wholly or party from conduct.

Question 22

Calculation of Damages: Buyer’s remedy

-Presumption is SELLER’s breach when prices are rising.

Answer 22

§ 2-713:
Market Price (MP) - Contract Price (KP) = Damages
ex. $8.00(mp) - $6.00(kp) = $2.00(d)
multiply damages by total number of units

Question 23

Calculation of Damages: Buyer’s Remedy

                                 COVER

-Presumption is SELLER’s breach when prices are rising.

Answer 23

§ 2-712:
Cover Price (CP) - Contract Price (KP) = Damages
ex. $9.00(cp) - $3.00(kp) = $3.00(d)
multiply damages by total number of units

• In exams, you must discuss both remedies in either Buyer or Seller. Meaning if given a “cover” case talk about the contract price just in case “cover” is wrong. Same with “resell”.

Question 24

Calculation of Damages: Seller’s Remedy

-Presumption is BUYER’s breach when prices are falling

Answer 24

§ 2-708
Contract Price - Market Price = damages
ex. $6.00(kp) - $4.00(mp) = $2.00(d)
multiply damages by total number of units

Question 25

Calculation of Damages: Seller’s Remedy

                               RESALE

• Presumption is BUYER’s breach when prices are falling

Answer 25

§ 2-706
Contract Price - Resale Price = Damages
ex. $6.00(kp) - $3.50(rp) = $2.50(d)
multiply damages by total number of units

• In exams, you must discuss both remedies in either Buyer or Seller. Meaning if given a “cover” case talk about the contract price just in case “cover” is wrong. Same with “resell”.

Question 26

§2-715 Buyer’s Incidental Damages

Answer 26

Did it cost me extra; expenses reasonably incurred in inspection, receipt, transportation and storage of goods

Question 27

§2-710 Seller’s Incidental Damages

Answer 27

Did it cost me extra; expenses in storage, transportation, spoilage of goods.

Question 28

Peppercorn Theory

Answer 28

Any amount of consideration no matter how small, is sufficient consideration if it is freely bargained for.

 1) Has to be a bargain, a deal. Cannot be a gift!
2) Must be freely, cannot force someone into the deal.

Question 29

Option Contract

Answer 29

An options contract is an agreement between a buyer and seller that gives the purchaser of the option the right to buy or sell a particular asset at a later date at an agreed upon price.

Question 30

Promissory Estoppel

Answer 30

a legal principle that a promise is enforceable by law, even if made without formal consideration, when a promisor has made a promise to a promisee who then relies on that promise to his subsequent detriment.

Question 31

Illusionary Promise or Mutuality

Answer 31

• The promise to buy something if you “ wish”. Not a bidding contract.
• There is a difference between what you need and what you wish.

Question 32

§2-306 - Requirements Contract

Answer 32

A term which measures the quantity by the requirements of the buyer means such actual requirement as may occur in GOOD FAITH, except that no quantity unreasonably DISPROPORTIONATE to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior requirements may be demanded.

I buy from you all that I NEED/require.

1) You can look at manufacturing components and have a measurable means. ie. How many widgets I needed to build my….
2) “All I need” creates an exclusivity. It creates a contact.