Contracts

Question 1

Mistake (makes K voidable)

Answer 1

Unilateral - One party’s mistake. Not defense to K formation unless other party knew, or should have known of mistake.
Mutual - voidable by adversely affected party by (1) mistake concerns basic assumption of K (2) material effect; (3) party seeking avoidance did not assume risk of mistake

Question 2

Perfect Tender Rule (UCC)

Answer 2

For the sale of goods, Buyer may reject goods if the goods or delivery fail to conform to the K.
Seller can cure defect w/ reasonable notice of intention to cure

Question 3

Delivery of Non-Conforming Goods (Buyer’s Right)

Answer 3

(1) Reject all and cancel K or sue;
(3) Accept all; or
(2) Accept commercial unit, reject the rest and sue

Question 4

Buyer’s Acceptance of Goods

Answer 4

Buyer (1) indicates he will accept after reasonable time to inspect;

(2) fails to reject w/in proper amount of time
(3) does any act inconsistent with Seller’s ownership

Question 5

UCC Battle of the Forms

Answer 5

If K b/t merchants, additional terms in acceptance included unless:

(1) materially alter K;
(2) offer expressly limits acceptance to its terms; or
(3) offer objects w/in a reasonable time

Question 6

Mailbox Rule

Answer 6

Acceptance effective upon dispatch (as long as properly stamped and addressed)
Revocation effective upon receipt (regardless of reading it)
If rejection sent prior to acceptance, whichever received first prevails

Question 7

Impossibility

Answer 7

Discharges contractual duty to perform if OBJECTIVE (no one could have performed [i.e. due to act of god])
Compared to subjective (defendant could not perform)
NOTE: Can recover reasonable value of performance

Question 8

Unconscionability

Answer 8

One party has substantially superior bargaining power and can dictate the terms of the terms of the K to the other party w/ inferior bargaining power

Question 9

Shipment of Conforming and Nonconforming goods

Answer 9

Constitutes an acceptance and breach by S

If shipment sent w/ accommodation letter, then acceptance and counteroffer

Question 10

Promissory Estoppel

Answer 10

(1) Promise
(2) Reasonable detrimental reliance that is foreseeable
(3) Enforcement necessary to avoid injustice

Question 11

3rd Party Ben Vesting

Answer 11

(1) Manifests Assent;
(2) Brings suit to enforce promise; or
(3) Justifiable reliance

Question 12

Irrevocable Offers (4)

Answer 12

(1) CL: (1) promise not to revoke/keep open and (2) consideration
(2) UCC Firm Offer: (1) Written offer; (2) signed by a merchant to leave open for REASONABLE time (no more than 90 days)
(3) Reliance: Reasonably foreseeable detrimental reliance
(4) Unilateral contract - once performance has begun (not mere preparation
* Note survives death of either party in option K

Question 13

Statute of Frauds (MYLEGS)

Answer 13

Marriage; Services that can’t be performed in less than 1 year; Leases of more than 1 year; Executory; Goods of $500 or more; Surety
EXCEPTION: Buyer accepts goods not evidenced by writing

Question 14

Divisible Contract

Answer 14

(1) Performance divided into 2 or more parts
(2) Numbers of parts for each party is same
(3) Performance of each part is equivalent on each side
Can recover for substantial performance

Question 15

Restitution - For Quasi-contract theory

Answer 15

Breaching party may recover where the other party conferred benefit resulting in unjust enrichment

Question 16

Contract Formation

Answer 16

Offer - willingness to enter into bargain (C/L need prices; UCC need quantity) *price quote in response to inquiry
Acceptance - Assent to the terms of the offer
Consideration - bargained for exchange of legal value

Question 17

Confirmatory Memo to Satisfy SOF

Answer 17

(1) between merchants
(2) after oral agreement sends written confirmation w/in reasonable time
(3) binds recipient if reason to know of the contents and does not object w/in 10 days

Question 18

Part Performance Exception to SOF

Answer 18

(1) Goods specially manufactured;
(2) goods either paid for or accepted
K only enforceable to extent of performance

Question 19

Offer Termination (4)

Answer 19

(1) lapse of time
(2) Death of a party prior to acceptance (except irrevocable offers and does not excuse performance)
(3) Words or conduct of revocation (learns that sold car = revoked vs. learns made offer to other = no revoked)
(4) Rejection by Offeree (Counteroffer, Conditional Acceptance [CL is rejection and counter; UCC is rejection], mirror image rule/UCC seasonable acceptance - additional terms of acceptance added if not material)

Question 20

Acceptance of an Offer

Answer 20

(1) Offeree starts to perform (unless unilateral K)
(2) Communication (MB rule)
(3) Shipment of wrong goods = acceptance and breach unless accommodation (counter and no breach)
* Only a person who knows about offer at time of acceptance or whom the offer was made to can accept

Question 21

Consideration

Answer 21

Bargained for exchange of legal detriment

(1) Past consideration = not consideration unless expressly requested
(2) Pre-existing duty rule (CL - need consideration unless addition to or change in performance or unforeseen difficulty; UCC only need good faith to modify
(3) Part payment of balance of not yet due or disputed = consideration

Question 22

Consideration Substitutes (2)

Answer 22

(1) Written promise to satisfy an obligation that has a legal defense
(2) promissory estoppel - promise the induces reasonably foreseeably detrimental reliance and enforcement necessary to avoid injusitice

Question 23

Statute of Frauds Satisfaction (4)

Answer 23

(1) Performance - Real estate (improve land, pay, possess); full perf of services k (not part); part perf of sale of goods [only to extent of perf] unless specially manufactured
(2) Writing - signed by the party to be charged (note confirmatory memo rule)
(3) Judicial Admission
(4) Estoppel - oral agreement asked to be put in writing, but D never does

Question 24

Contract Provisions Reqiuring Written Modification

Answer 24

CL - if K states modifications be in writing - NOT effective

UCC - K modification provisions effective unless waived

Question 25

Parol Evidence

Answer 25

Bars oral or written evidence prior to or contemporaneous with contract (note post k not barred)

(1) Changing terms - No PE
(2) Mistake in Integration (misspelling) PE
(3) Defenses (getting out of deal b/c fraud) PE
(4) Ambiguity - Explain term in the written deal (If one party aware of ambiguity, party unaware can enforce to their terms b/c unaware of ambiguity)
(5) Adding to written K - Only PE if partial integration if trade usage or course of dealing or performance

Question 26

Risk of Loss for Shipment/Destination Contracts

Answer 26

(1) Agreement - controls
(2) Breach - breaching party liable
(3) Common carrier delivery - ROL shifts from S to B at time seller completes delivery obligations
(4) If 1-3 don’t apply, if S is merchant - ROL shifts when B receives goods; if non-merchant then when S tenders (makes available)

Question 27

Implied Warranty of Merchantability

Answer 27

(1) Seller is a merchant that deals in goods of that kind

(2) Warrants that goods are fit for ordinary purpose

Question 28

Implied Warranty of fitness for a Particular Purpose

Answer 28

(1) B has particular purpose
(2) relying on S to select suitable goods
(3) S has reason to know of purpose and reliance
(4) warrants goods fit for particular purpose

Question 29

Money Damages

Answer 29

Expectation - look to value if breach and value if no breach
Incidental - costs incurred in dealing with the breach
Consequential - special damages for foreseeable damages that D had reason to know of
Liquidated - damages difficult to forecast and provision is reasonable forecast (usually can’t be for more than 10% of K price)
All less mitigating damages or less damages that cannot be established w/ reasonable certainty

Question 30

Anticipatory Repudiation

Answer 30

-Unambiguous statement or conduct that party will not perform made prior to the time performance was due
Gives rise to immediate claim unless performed already
- If insecurity about performance can get adequate assurance - must be made in writing and assurances received w/in reasonable time
Remedy: (1) sue immediately; (2) wait to sue; (3) offer to rescind and discharge; (4) urge performance
Repudation can be W/D unless reliance, cancellation or repudiation considered final

Question 31

Installment Contract

Answer 31

B may declare total breach only if defect substantially impairs the value of the entire contract

Question 32

Third Party Beneficiaries

Answer 32

3P Ben Rights Vest: (1) Assents (2) knows and relies or (3) sues to enforce - any mods after vest 3P ben must consent
General rule - Ben cannot recover from promisee except for creditor beneficiary only on pre-existing debt
Promisor can assert any defense he would have if sued by promisee

Question 33

Assignments

Answer 33

Transfer of rights under a K
Assignment cannot substantially change duties of obligor (i.e. right to contract performance)
*CONSIDERATION NOT REQUIRED but gratuitous assignment can be revoked
Assignor for consideration cannot recover from obligor
Obligor has same defenses against assignee as against assignor

Question 34

Delegation of Duties

Answer 34

Party to K transferring work under K to 3rd party
Cannot delegate if prohibited or personal services for very special skills
Delegatee liable only if she receives consideration from delegating party (delegating party always liable)

Question 35

Reformation

Answer 35

Remedy where the contract is changed to reflect the actual agreement between the parties (usually based on mutual mistake)

Question 36

Fixtures

Answer 36

Objective intention to annex based on nature of article, manner of attachment, amount of damage etc.
If personal property (custom made) may be fixture
Annexed chattels must be removed by the end of the lease term, or within a reasonable time after termination of an indefinite tenancy