Contracts Flashcards
Wendy wholesaler sold to roberta retailer. A dispute has arisen between the parties and Roberta is trying to prove that Wendy is a “merchant” as opposed to a casual party. The least important factor in determining whether Wendy is a “merchant” under UCC Art. 2 is that she:
a) is a wholesaler rather than a retailer
b) deals in the goods sold to Roberta
c) holds herself out as an expert in the goods sold to Roberta
d) Sells under 10 units a year to Roberta
a) this is the least important factor - either a wholesaler or a retailer could be classified as a merchant or as a casual seller depending on if she regularly dealt in the goods. (note that the amount of goods sold a year - e.g. only 10 units) would be relevant to determine whether they regularly deal in the goods for purposes of being a merchant
Where a client accepts the services of an attorney without an agreement concerning the amount of the fee, there is:
a) an implied-in-fact contract
b) an implied in-law contract
c) an express contract
d) no contract
a) the contract for the payment of fees would be implied by the fact that the client accepts the services of the attorney.
Sarah Student was a third year law student staying in the library when her book was taken when she left on a bathroom break. She ran into the student lounge and announced “I will pay $20 to anyone who identifies the dirty bum who took my book!” Donna saw the theft take the book but did not believe Sarah would actually pay her the $20. So Donna went up to Sarah and said, “I know the identity of the thief and promise to tell you, but I want the $20 in advance.” The effect of Donna’s statement is to:
a) create a unilateral contract
b) create a bilateral contract
c) create no contract
d) create a contract which is defeasible unless Donna makes the required disclosure within a reasonable period of time
c). The offeror was bargaining for a unilateral contract, but Donna is making a rejection and counter-offer with her words
Jack and Jill began to negotiate for the transfer of a business. Their negotiations continued for some time. Jack is asserting that Jill made a promise containing an offer which he accepted with a return promise. Jill asserts that the agreement was not what she intended. In determining whether a contract has been created, the courts will look primarily at:
a) the fairness to the parties
b) the objective intent of the parties
c) the subjective intent of the parties
d) the subjective intent of the offeror
b). The courts will look at the objective intent of the parties
Which of the following offers for the sale of widgets is not enforceable if the seller changes her mind prior to acceptance?
a) a merchant tells buyer in writing she will sell the widgets for $35,000 and that the offer will be irrevocable for ten days
b) a merchant writes buyer offering to sell the widgets for $35,000
c) a merchant telegraphs buyer offering to sell the widgets for $35,000 and promises to hold the offer open for ten days
d) A merchant writes buyer offering to sell the widgets for $35,000 and stating that the offers ill be irrevocable for ten days if buyer will pay $1.00. Buyer pays
b) A merchant seller’s mere offer to sell without any promise that the offer is to be held open is revocable at the will of the seller.
How does the “firm offer rule” function (e.g. what is required for it to apply)?
A firm offer is signed in writing by a merchant and provides explicit assurances that the offer will be held open. The merchant has to sign even if the other party provides the form.
A merchant’s irrevocable written offer (firm offer) under article 2 of the UCC to sell goods:
a) must be separately signed by the offeror if the offeree supplies a form contract containing the offer
b) is always valid for three months
c) is nonassignable
d) cannot exceed a three month duration even if consideration is given
a) the offeror still has to sign the form even if the other party provides it. The firm offer can be valid for a stated period less than three months. The exchange of consideration would convert it into an option contract.
Base electric co has entered into an agreement to buy its actual requirements of copper wiring for six months from the Seymour Metal Wire Company. Seymour Metal has agreed to sell all the copper wiring Base will require for six months. The agreement between the two companies is:
a) unenforceable because it is too indefinite as to quantity
b) unenforceable because it lacks mutuality of obligation
c) unenforceable because of lack of consideration
d) valid an enforceable
D) requirement contracts are valid and enforceable without specifying quantity a along as there is a reasonable basis for giving an appropriate remedy. A reasonable quantity would be imposed.
Which of the following will be legally binding despite a lack of consideration?
a) an employer’s promise to make a cash payment to a deceased employee’s family in recognition of the employee’s many years of service
b) a promise to donate money to a charity on which the charity relied in incurring large expenditures
c) a modification of a signed contract to purchase a parcel of land
d) a merchant’s oral promise to keep an offer open for 60 days.
b). The doctrine of promissory estoppel applies to eliminate the necessity that the donor of a charitable pledge receive consideration to support the promise. The law implies the necessary consideration.
In which of the following situations would an oral agreement without any consideration be binding under UCC Art. 2?
a) A renunciation of a claim or right arising out of an alleged breach
b) a merchant’s firm offer to sell or buy goods which gives assurance that the offer will be held open
c) an agreement comprising a large requirements contract
d) an agreement that modifies an existing sales contract
d). The UCC says that a modifications made in good faith to a sale of goods contract require no consideration!
Duval Manufacturing Industries, Inc. orally engaged Harris as one of its district sales managers for an 18-month period commencing April 1. Harris commenced work on that date and performed his duties in a highly competent manner for several months. On October 1, the company gave Harris a notice of termination as of November 1, citing a downturn in the market for its products. Harris sues seeking either specific performance or damages for breach of contract. Duval pleads the Statute of Frauds and/or a justified dismissal due to the economic situation. What is the probable outcome of the lawsuit?
a) Harris will prevail because he has partially performed under the terms of the contract
b) Harris will lose because his termination was justified by unforeseeable economic factor beyond Duval’s control
c) Harris will lose because such a contract must be in writing and signed by a proper agent of Duval
d) Harris will prevail because the Statue of Frauds does not apply to contracts such as his
c). The SOF requires that contracts for over one year be in writing to be enforceable!
Doral, Inc. wished to obtain an adequate supply of lumber for its factory extension, which was to be constructed in the spring. It contacted Ace Lumber Co. and obtained a 75-day written option (firm offer) to buy its estimated needs for the building. Doral supplied a form contract which included the option. The price of lumber has since risen drastically and Ace wishes to avoid its obligation. Which of the following is Ace’s (seller’s) best defense against Doral’s assertion that Ace is legally bound by the option contract?
a) Such an option is invalid if its duration is for more than two months
b) The option is not supported by any consideration on Doral’s part
c) Doral is not a merchant
d) the promise of irrevocability was contained in a form supplied by Doral and was not separately signed by Ace.
d) The seller merchant has to sign the form in order for the firm offer to be in place - note that because Ace is a merchant (the relevant merchant party), no consideration is needed for the firm offer rule to apply. But SOF compliance is still needed including the seller’s signature.
A and B both sign a memo stating that A agrees to sell - and B agrees to buy - a tract of land. The K specified that the transaction should be closed and conveyance made and accepted by “tender of general warranty deed conveying a good and marketable title” on a date specified. The memo signed by the parties contains all of the elements deemed essential and necessary to satisfy the SOF applicable to the transaction, except there was an omission of the agreed-upon price in the memo.
A has refused to perform and in an action by B for specific performance, A relies upon the SOF as a defense. If B offers evidence, in addition to the written memo, that the parties discussed and agreed upon a purchase price of $35,000 B should:
a) succeed, because the law implies that the parties contracted for the reasonable market value of the land, although the price to be paid may not necessarily be that orally agreed upon
b) fail, because the evidence does not show that the price agreed upon is in fact the reasonable market value of the land
c) succeed, because A is estopped from denying that such agreed price is a fair and equitable one, which will be implied by law as a term of the written memorandum
d) fail, because the price agreed upon is an essential element of the contract and must be in writing
d) a contract for the sale/purchase of land falls under common law and so the price and a sufficient description of the property must be in writing!
What does it mean to be in SOF compliance?
Has to be in writing and signed by the parties to be bound. It must also identify the parties, describe land (if land is at issue), and usually recite a price term. Emails and other designations can create a “signature” and comply.
To what types of contracts does the SOF apply?
MYLEGS: Marriage, Year+, Land, Executor - in specific situations, Goods over $500, Sureties
Sarah Sailor owned 2 sailboard a 32-footer and a 37-footer. Bill Buyer has seen the 37-footer and doesn’t know there is another one. Sarah offered in writing to sell “my sailboat” to Bill for $15,000. Bill accepted and paid $15,000 cash.
The next day, Sarah delivers the 32-footer and Bill rejects it because it is not the boat he thought he was buying. Sarah refuses to give him his $ back and insists he take the boat. Bill’s best argument for relief is:
a) express fraud by Sarah
b) a latent ambiguity was known by Sarah but not Bill
c) there was a mutual mistake
d) Bill’s subjective intent should control, requiring reformation of the contract subject
B. If one party is aware of a latent ambiguity and does not inform the other party, the K is usually enforced against the aware party.
Which of the following factors result(s) in a UCC Article 2 express warranty with respect to a sale of goods?
a) The seller’s description of the goods as a part of the basis of the bargain
b) the seller selects goods knowing the buyer’s intended use
c) both A and B
d) neither A nor B
a). all affirmations of fact that become a part of the basis of a bargain are express warranties… including a seller’s description of the goods. B is incorrect because fitness for a particular purse is generally an implied warranty!
The UCC Art. 2 implies a warranty of merchantability to protect buyers of goods. To b subject to this warranty, the goods need not be:
a) fit for all the purposes for which the buyer intends to use the goods
b) adequately packaged and labeled
c) sold by a merchant
d) in conformity with any promises or affirmations of fact made on the container of label
a) the UCC only requires that the goods be fit for their ordinary purpose!
The UCC Art. 2 provides for a warranty of title and against infringement. The primary purpose of this warranty is to protect the buyer of goods from infringement upon the rights of third parties. This warranty:
a) only applies if the sale is between merchants
b) must be expressly stated in the contract or the SOF will prevent its enforceability
c) Does not apply to the seller if the buyer furnishes specifications which result in an infringement
d) cannot be disclaimed
C. If the buyer’s specifications are what create an infringement upon the rights of third parties, the seller is not liable to the buyer. *the implied warranty of title applies even to casual sellers, need not be in writing. The warranty means GUT: Good title, free from Undisclosed security interests, and Transfer rights exist with the seller. Also means that it doesn’t infringe on any 3rd parties’ patents/copyrights.
Kent construction Co. is hired to build dwellings for Magnum, Inc. To save money, Kent construction deliberately used cheaper panels than that required by the plan (plan required 2 x 6 and they used 2 x 4). Magnum discovered this variance and so is withholding payment. Final payment would have been $25,000 and damages are estimated to be $15,000. In a lawsuit for the last payment, Kent Const. Co will:
a) prevail on the contract less damages of $15K because it substantially performed
b) prevail because the damages were not substantial in relation to the overall contract price
c) lose because the law unqualifiedly requires literal performance of such contracts
d) lose all rights under the K because it intentionally breached
d). Even though this is a common law and not a UCC contract - meaning the “perfect tender rule” doesn’t apply, a breaching party cannot recover in quantum meruit for an intentional/deliberate breach such as this.
A vineyard had existing contracts both with H Winery (for 200 tons o’ grapes due Jan 15) and with S Winery (for 100 tons o’ grapes due Feb 15). There was a field fire in the vineyard and all but 30 tons of grape were destroyed.
The vineyard owner then contacted H and S Wineries and offered to replace with a different type of grapes at a reduced price. He also offered to give H 20 tons of the original grape and S 10 tons of the original grape. H winery demanded all 30 tons because they purchased first. The vineyard owner gave H winery the 20 tons of grapes and so H winery bought the other 180 tons from someone else at a price $24,000 higher than the price he had with the original vineyard. If H Winery brings suit, the vineyard’s worst defense is:
a) the cause of the shortage was beyond his control
b) his pro-rata allocation between H and S was reasonable
c) he should not be held liable because he offered a substitute grape at no extra price
d) neither he nor H foresaw that a fire would occur in the grape fields
C is the worst defense. It assumes that the vineyard assumes liability but in actuality, the UCC considers failure of a presupposed condition (such as the existence of the grapes) is not even a breach. All of the other options are valid defenses.
Pacific Gas Co was a retailer of natural gas for homeowners and businesses. In 2003, Pacific signed a 5-year requirements contract with Mega Gas Producers, a company which piped natural gas from the plains of Canada. In early 2005, Mega informed Pacific that, due to a significant price increase it was experiencing from the drillers, it could no longer afford to supply gas to Pacific unless they paid a surcharge of 20%. There were other suppliers that then offered to sell gas to Pacific. Pacific responded to Mega’s repudiation by filing a lawsuit against Mega seeking an order of specific performance. Concerning the order of specific performance, the court will likely decide for:
a) Pacific unless they are able to cover their requirement from another source
b) Mega because the gas was available on the open market and therefore the goods are not unique
c) Mega unless replacement was not commercially feasible for Pacific
d) Pacific if the supply cut-off satisfied the “other proper circumstances” test for specific performance
D. The UCC says that “specific performance may be decreed where the goods are unique or in other proper circumstances.”
Under the UCC, does specific performance require the goods be unique and thus unable to be found on the market?
Not exactly. The uniqueness of the goods is one way to mandate specific performance. But specific performance may also be mandated in “other proper circumstances.” (whatever that means)
D promised P that he would install sprinklers at her home. D overbooked himself and so doesn’t install the sprinklers at P’s house. P finds out that D was planning to install sprinklers at N’s house. Can P get:
a) specific performance
b) punitive damages
c) an injunction preventing D from working on N’s house
C. You can get an injunction/restraining order in a personal services contract to prevent the defendant from working for anyone other than you! And specific performance in personal services? Erm, slavery? Punitive damages are pretty rare w/out egregious circumstances
When can an illegal contract still be enforced?
If the law was meant to protect people like the plaintiff (e.g. unauthorized practice of law statute meant to protect people swindled by fake lawyers. The fake lawyer cannot then argue illegality as a grounds for not being bound by the K).
A common law duty is delegable even though the:
a) contract provides that the duty is nondelegable
b) duty delegated is the payment of money and the delegates is less creditworthy than the delegator
c) Delegation will result in a material variance in performance by the delegate
d) duty to be performed involves the personal skill of the delegator
B) the obligee is still owed payment even by a less creditworthy debtor. The others all prohibit delegation (particular skill of the original contracting party, material variance, or specific language saying its nondelegable)
Megabank U.S. has historically made a year-to-year loan to Fred and Sally who operate a convenience store. A competitor store opening up has caused F & S to lose business and make loan repayments late. Megabank has requested that the borrowers obtain a guarantee if they’d like to renew the loan again. As a favor, Sally’s father orally promised Fred and Sally to be jointly-liable and pay 1/3 of the loan if they defaulted again. If Megabank sues Sally’s father on his guarantee, the strongest legal defense that the father can assert is:
a) the promise was oral and is thus invalidated by the SOF
b) there was no consideration to support the father’s promise
c) the requirements of promissory estoppel are not met
d) the bank did not first pursue Fred and Sally
B. Consideration is necessary to render the promise enforceable. Note that the SOF has an exception for sureties meant to benefit oneself - arguable Sally’s dad gets gain knowing his daughter is financially okay… just makes B the “best” argument.
Linda Landlord owned a small rental house that was in need of repairs. She entered into an oral contract with Robert Rental to sell him the house for $59,000 cash. Robert relied upon this representation and borrowed the purchase money from his parents. Robert paid the $59,000 to Linda, moved into the house, began to make improvements, and paid the property taxes. Linda developed seller’s remorse 6 months later, refunded the money, and demanded Robert leave. If Robert sues Linda for specific performance of the house transfer. Linda’s best defense is:
a) The SOF requires a writing signed by the seller
b) whatever improvements Robert made was not substantial
c) She returned the $59,000 to Robert
d) The house was a rental unit and Robert was just a tenant
B). In order for specific performance to be triggered, the improvement made by the land possessor must be substantial enough to clearly show that the claiming party is more than a mere tenant. (SOF has an exception for oral conveyances where the land possessor makes a substantial payment, moves in, and begins to make substantial improvements… in other words, this hinges on whether improvements were substantial!)
Mary Manufacturer and Tony Trucker entered into a written contract on Jan 1 in which Mary agreed to build 100 trucks for Tony over the next 10 months. The price was to be $100K per truck and the manufacturing schedule dictated that 10 trucks/month were to be completed. The K state in part, "it is expressly agreed that Tony will be under no payment obligation unless 10 trucks are completed no later than June 30th." 5 tucks meeting the K specifications were completed and tendered to Tony on June 30th. The remaining 5 trucks were tendered September 1. The above contract is: a) entire b) divisible c) neither divisible nor entire d) partially divisible and partly entire
D. The UCC rule is that goods must be delivered in one lot unless the terms or circumstances indicate to the contrary. In this case, the K was for 100 trucks in ten lots of ten. Thus the K is partially divisible and partially entire.
Client hired Lawyer to prepare an estate plan, will, and trust for his family. The agreement specified that Lawyer would not be liable if she failed to exercise due care or complete the engagement. After Lawyer began to draft the documents, she and Client got into a dispute about the operations of the trust and the identity and powers of the trustee. Lawyer decided to assign the engagement to another lawyer, and without informing Client gave the rest of the assignment to Newbie. Newbie eventually completed the will but it was late and he charged a higher fee than Client expected to pay. In addition, the IRS audited the plan and disallowed it. If Client brings suit against Newbie:
a) Client will prevail on a third party beneficiary theory
b) Client will prevail only if he has privity of contract with Newbie
c) Newbie will prevail over Client because he is sheltered under the clause relieving Lawyer of liability
d) Newbie will prevail over Client because Client did not pay him
A. Client was a 3rd party beneficiary of the delegation between Lawyer and Newbie. This means he can bring suit for professional malpractice. Even without privity, 3rd party beneficiary status provides standing to sue.
In the event of a buyer’s breach, what is the seller’s remedy?
the contract price minus any deposit given by the buyer. However, the UCC authorizes sellers to keep the lesser of 20% or $500 of a buyer’s deposit but the contract price may be the bigger remedy.
In order to prevail on the theory of implied warranty for a particular purpose, what must the buyer show that the seller knew?
The seller has to have known of the buyer’s particular purpose and his/her reliance on the seller’s expertise that the good will work for that particular purpose. This applies to merchants and non-merchant sellers
Contractor agreed to build a custom garden for Homeowner for a flat fee: $5,000. Contractor began work on the project, but Homeowner wanted an “active” role in the project and kept changing the plans. Contractor became more and more discouraged and told Homeowner to make a final decision and leave her and her workers alone. Homeowner refused, Contractor became so emotionally distraught that she could not complete the work and left. She had no substantially performed yet but according to an appraiser, her work was worth $4,000. H had paid C $2,500 already and then hired another contractor of finish the garden for $2,000 more.
If H sues C for breach of contract, the likely outcome is that H will:
a) prevail because C breached the contract when she walked off the job
b) not prevail because his involvement was the cause of the incapacity of the personal service contractor
c) not prevail because he breached an implied condition of cooperation
d) prevail because the total job cost him more than the $5,000 contractual amount
c).the breach was caused in large part by H - normally there would be a “cost to complete” remedy but not this time!
In deciding a controversy involving the question of who has the risk of loss in goods, the court will look primarily to:
a) the intent of the parties manifested in the contract
b) the shipping terms used by the parties
c) whether title has passed
d) the insurance coverage of the parties
a) the parties’ intent controls in UCC Art. 2 questions.
A wholesaler wants to provide his retailer with inventory on credit but has learned that the retailer is in financial trouble. One of his salesmen reported that the retailer may have lien creditors and judgment creditors who could levy on the inventory. Under the circumstances, the wholesaler might be best advised to:
a) ship the goods on a “sale or return” basis
b) make sure the retailer signs an agreement that he will not give the inventory to 3rd parties until he has paid for the goods
c) ship the goods on a “Sale on approval” basis
d) files a financing statement w/in 20 days of the retailer receiving the goods
c. “Sale on approval” retains title and risk of loss in the seller so the buyer’s creditors can not levy on the inventory.
If a seller asks a buyer for assurances that the buyer will be able to pay on time, and the buyer doesn’t write back in a month, what happens?
The seller may assume anticipatory repudiation, but if the buyer pays in cash the seller cannot refuse. Goods in transit may be stopped.
Under UCC Art. 2, which of the following statements is correct concerning a contract involving a merchant seller and a non-merchant buyer?
a) Whether the UCC sales article 2 is applicable does not depend on the price of the goods involved
b) only the seller is obligated to perform the contract in good faith
c) the contract will either be a sale or return, or sale on approval contract
d) the contract may not involve the sale of personal property with a price of more than $500
a. All personal property, regardless of price, is covered under the UCC Art. 2. (all parties must perform in good faith, $500 or more triggers the SOF but the UCC still applies)
Seller repudiates a contract to buyer, essentially saying, “I’m not going to deliver your widgets.” Buyer waits a while and eventually “covers” by getting substitute widgets a while later. How (And based on the market price at what time) are the buyer’s damages measured?
The buyer’s damage can generally be measured by the difference between contract price and market cover price at the tie the buyer knew of the breach. (in other words, assume the buyer could cover their damages as soon as they know of the breach and calculate from there).
Under the UCC, how much of a buyer’s deposit can a seller retain?
The smaller of 20% of the contract price or $500.
In a sale of goods contract, can the buyer easily get an injunction to prevent seller from selling to someone else?
No. This is different from a personal services contract. Here the buyer can typically “cover” his/her damages on the market.
Charlie Supplier operated a hardware store and also a small contracting operation. He entered into a contract with Henry Homeowner to build a garage and with Betty Buyer to sell her enough lumber so she could build a second garden shed identical to the one she built last year. Charlie’s form specified prices of $5,000 and $800 for the two contracts, respectively. Henry’s purchase order specified $4,000 and betty’s purchase order specified $600. All the parties would like the contract to be enforced at their price. The industry average price for the garden shed lumber was $650. Betty Buyer had paid $625 for the same lumber from Charlie last year. Charlie completed Henry’s garage and delivered the lumber for the garden shed to Betty. Both buyers were satisfied with the quality but still disagree with Charlie on the prices they have to pay. What price would a court likely assign to the two contracts?
a) Henry: $5,000 Betty $625
b) Henry: $5,000 Betty $800
c) Henry: $4000 Betty $600
d) Henry: $4,000 Betty $650
A). Henry’s contract is for services, but Betty’s is for the sale of goods - UCC. Henry’s common law contract makes the offeror the “master of the bargain” and so Henry’s offer sticks. Betty’s UCC contract is subject to “gap-filling” rules because of the conflict. The UCC gap filling has 3 steps in order of priority: (1) prior course of dealings in this contract, (2) prior course of dealings of these parties, (3) usage of trade. The $625 is the prior course of dealings between these parties and is the best answer.
Seller and Buyer entered into a $1,000 contract for the sale of a large color TV. The agreement called for shipment terms of “ex-ship” and stated that “assignment of this contract is prohibited unless both parties consent in writing.” Seller also asked Buyer if she knew a good shipper and she reported a local common carrier, Speedy Shipping, had done a good job for her in the past.
Without informing Seller, Buyer then gratuitously assigned “all my rights and obligations under the contract” to Assignee. the TV was loaded onto a vessel owned by Speedy and Seller paid $100 for shipment charges. The Speedy vessel was then destroyed in an explosion during an unexpected massive traffic accident, through no fault of Speedy. Delivery to Buyer of the TV was thus not made.
If Buyer brings a breach of contract suit against Seller, the court should hold for:
a) Seller because Buyer designated the vessel to transport the goods
b) Seller, because the TV had been delivered to Speedy in good working order
c) Buyer, because the carrier is deemed to be the agent of the seller if the shipment terms are “ex-ship”
d) Buyer because the goods were not delivered to her!
d). Shipment terms “ex-ship” require the seller to deliver the goods to the buyer at a named port and pay for unloading. Risk of loss THEN transfers to the buyer. Seller retained the risk of loss in this situation because the TV did not make the destination port.
Can a merchant revoke an offer made under the firm offer rule?
Nope! If there is a firm offer in writing by a merchant giving assurances that an offer will be kept open, it cannot be effectively revoked. If the “firm offer” imposes no time period, a reasonable one will be construed by the court.
Ace Co entered into a contract with Jennifer to manufacture and deliver 1,000 computers in 20 days. Jennifer paid $25,000 and immediately added the computers to her insurance policy. Ace began production the next week. However, two weeks later a fire destroyed the warehouse in which the computers were stored. Jennifer:
a) must sue Ace to recover the $25,000
b) lacked an insurable interest in the computers, as she did not have possession
c) had an insurable interest in the computers on the day she signed the sales contract and paid $25,000
d) cannot prohibit the insurance company from pursuing Ace after it pays the loss through subrogation
d). The insurance company has rights against Ace because it steps into the shoes of the insured. Jennifer’s right against Ace would then be available to the company. Note that Jennifer’s insurable interest arose when the goods were designated as hers.
Does the UCC Perfect tender rule apply to installment shipments?
No. The buyer is not entitled to the same “perfect tender” but can reject goods that are a “substantial impairment” of the contract.
Does a party need a reason to make a request for assurances?
A request for assurances need only be responded to if the request was based on reasonable grounds for insecurity with respect to the other party’s performance. If such grounds exist and the requesting party receives no such assurances, then the K can be considered anticipatory repudiated. BUT a groundless request for assurances requires no such response.
What is the difference between acceptance method under the mailbox rule in a common law v UCC contract?
Under the common law, the offeree must use the same or faster method of communicating acceptance as the offer was conveyed (e.g. letter to e-mail, letter to letter). Under the UCC, acceptance method need only be “reasonable.”
How long is a subcontractor’s bid to a general contractor irrevocable?
A subcontractor’s bid to a general is irrevocable until the general contractor is awarded the prime contract.
What is the maximum length of time an offer can be kept open under the UCC firm offer rule?
3 months - and only the seller has to be a merchant for the F.O.R. to apply.
Who has to sign an offer for it to qualify for the UCC “firm offer” rule?
The merchant who gives assurances of the offer must sign - even if the offer is stated in a form provided by the other party. Note that both parties need not be merchants, only the offeror need be!
Regardless of the shipping terms (FOB, etc.), if a party breaches the contract, do they bear the risk of loss?
Sure as fuck do!
A buyer makes a unilateral offer to a seller asking them to ship 300 widgets by a set date. When the seller ships non-conforming goods, does that constitute acceptance of the buyer’s offer?
The shipment IS acceptance of the offer, creating a contract. However, typically the shipment of nonconforming goods is a breach for violation of the perfect tender rule (unless the seller has the opportunity to cure like in an installment sale context), or if the seller makes it clear that the shipment is a mere accommodation (then it is NOT acceptance).
When a buyer takes a partially non-conforming shipment and finds that some of the goods are non-conforming after acceptance, can they accept only part of the shipment (the good part)?
Sure! If the buyer goes on to use a portion of the shipment, she will be deemed to have legally accepted the portion that she uses. The buyer has a right to inspect goods before payment or acceptance. If the buyer discovers a hidden defect later on, they can revoke within a “reasonable period of time” (before the goods have substantially changed condition) by notifying the seller.
What are the two types of “implied contracts” and how do they work?
i. Implied in fact: circumstantial implication shows mutual intention (e.g. patient accepts doctor’s services)
ii. Implied in law: benefit conferred + prevent unjust enrichment … recover in quantum meruit
What is the difference between a bilateral and unilateral contract?
A bilateral contract is accepted by the exchange of promises (“I promise to pay you $1,000 if you promise to write my will”) and is mutually binding. A unilateral contract the offeree may accept by performance - but need not accept.
If a contract is ambiguous as to its method of valid acceptance (promise or performance), what is the general rule?
If it is unclear whether a bilateral or unilateral contract is being proposed, it is likely going to be interpreted as a unilateral contract. However, once the offeree accepts by beginning performance, she is bound to complete it.
What is an executory contract?
Where full performance of contract duties has not yet been rendered.
What is a wholly executory contract?
No performance at all has been rendered yet - only promises have been given.
What does it mean for a contract to be partially executed?
Some performance has begun by at least one party.
