Contracts

Question 1

Required term for sale of property

Answer 1

Price

Question 2

Indirect revocation

Answer 2

Offeror engages in conduct indicating revocation (e.g., selling to someone else) AND the offeree is aware of the conduct

Question 3

Option Contract

Answer 3

Under common law, a signed, written promise not to revoke is not valid if not supported by consideration but IN NEW YORK THIS DOES CREATE A VALID OPTION CONTRACT IF SIGNED WRITTEN PROMISE.

Question 4

UNILATERAL CONTRACT: STARTING PERFORMANCE

Answer 4

MBE - once performance begins, cannot be revoked.

NY: can be revoked until performance completed.

Question 5

Merchant’s Firm Offer

Answer 5

If merchant promises in signed writing to keep offer open, it is irrevocable for the stated period or, if none, a reasonable amount of time not to exceed 3 months.

Question 6

Revocation effective?

Answer 6

upon RECEIPT not sending

Question 7

mailbox rule

Answer 7

generally: acceptance effective when MAILED (unless offer states otherwise; irrevocable offer is accepted when received, or if rejection is sent first, then whichever gets to the offeror first controls. If acceptance is sent, then rejection, the offer is accepted.

Question 8

voiding contract due to incapacity

Answer 8

cannot if

• implied affirmation (once capacity is gained/regained)
• necessities (food, shelter, clothing, med care, etc.) but only liable for reasonable value
• NY: cannot void Ks that are: life ins (14.5+); educational loans (16+); 18yr-old Ks; Ks related to marital home; and Ks involving artistic/athletic servs

Question 9

Past Consideration

Answer 9

MBE - not consideration. NY - consideration if expressly stated in signed writing and can be proven.

Question 10

Contract Modification

Answer 10

Need consideration at common law, but not in NY, if mod is in signed writing. UCC –> good faith mod OK

Question 11

partial payment of debt that is due

Answer 11

not consideration for agreement to relieve of liability for entire debt, at common law, if the debt is presently due and undisputed. In NY: no consideration needed if in signed writing.

Question 12

Time-barred debt

Answer 12

promise to pay must be in writing to be enforceable

Question 13

public policy - exculpatory clauses

Answer 13

can eliminate liability for negligence but not for gross negligence or intentional torts

Question 14

Statute of Frauds

Answer 14

MY LEGS
Marriage (consideration of)
Year (contracts that cannot be performed within one year of date of agreement; MBE lifetime agreement not within this; NY lifetime agreement IS within this)
Land (contracts for the sale of land but NOT leases for less than a year)
Executor (promises by executor of estate to pay an estate’s debts with his own money)
Goods >$500
Suretyship (promise to pay debt of another, except where promisor gets material benefit from paying that debt).

Question 15

Oral modification prohibitions

Answer 15

permissible under UCC but not common law

Question 16

Add’l contracts requiring writing in NY

Answer 16

• assignment of ins policy
• lease of goods $1000 or more (yearly price – convert monthly price into year)
• promise to pay discharged debt
• agreement to pay a finder’s fee or broker’s commission, except to an attorney, auctioneer, or licensed real estate agent

Question 17

Satisfactory writing

Answer 17

• signed by party against whom being offered
• leases must state its a lease and have quantity term, payment, and duration (NY)
• goods must have quantity term
• land must have price term

Question 18

Doctrine of part performance

Answer 18

IF 2 of 3, then part performance will render land sale contract enforceable despite absence of a writing: (1) possession by buyer; (2) part payment by buyer; (3) buyer made some improvements to property.

Question 19

Sale of goods exceptions to SOF

Answer 19

• goods accepted or pad for (only as to goods accepted or paid for not the whole contract if less than)
• custom made goods where substantial start has been made and not suitable for sale in ordinary course to others
• merchant’s confirmatory memo (quantity term, no written obj in 10 days, both merchants)
• judicial admission by opposing party

Question 20

Suretyship “main purpose” exception

Answer 20

Not recognized in NY. But on MBE, if suretyship’s main purpose was to benefit the guarantor, then no writing required tosatisfy SOF

Question 21

Parol Evidence Rule Not Applicable For:

Answer 21

• clerical errors (typos)
• defenses against formation
• interpreting vague/ambiguous term
• supplement/add to partially integrated writing if not complete on its face
• subsequent developments/modifications

Question 22

express warranties under Art 2

Answer 22

• statements of fact
• promises
• descriptions of the goods
• use of sample or model

Question 23

implied warranty of fitness for particular purpose

Answer 23

seller knows buyer has special use and relies on seller’s expertise. NO merchant requirement.

Question 24

Lessor’s warranties in lease of goods (NY only)

Answer 24

Same as under Art. 2, express, implied, except that a finance lease has no warranties with respect to the bank.

Question 25

limitation of buyer’s remedies

Answer 25

generally can do unless unconscionable, but limitation of remedies for personal injury in consumer goods presumed unconscionable.

Question 26

non-carrier cases; picking up goods

Answer 26

Merchants: seller bears ROL until buyer has possession.

Non-merchants: ROL passes to buyer once seller makes goods available to buyer.

Question 27

ROL in lease of goods (NY only)

Answer 27

ROL is on lessor except in finance lease (lessor = bank), where ROL is on lessee.

Question 28

Impossibility in UCC

Answer 28

A SELLER who bore ROL when goods damaged/destroyed is excused by impracticability, only if the goods were “identified” to the contract. Only applies to seller.

Question 29

Increased cost of seller’s performance

Answer 29

MBE - never excuses seller

NY - might depending on monetary and percentage increase

Question 30

frustration of purpose

Answer 30

only an excuse if both parties knew what the purpose of the contract was at time of contracting

Question 31

excuses for occurrence of a condition precedent

Answer 31

• waiver (voluntarily agreeing that it’s ok the condition not met waives insistence on condition)
• failure to cooperate

Question 32

specific performance

Answer 32

remedy for real property, unique goods (art, antiques, custom made goods). Injunctive relief may be available for service contracts (can’t require you to work for me but can require you not work for someone else).

Question 33

Unpaid seller’s right to reclaim goods

Answer 33

Generally, not available under Art. 2 unless: B was insolvent when it received goods and seller makes a demand within 10 days of buyer’s receipt. No right to reclaim from innocent third party. Seller can reclaim goods at any time if buyer misrepresented insolvency in writing within three months before delivery. However, if buyer promises to pay CASH on delivery, seller must still tender.

Question 34

Covering - sale of goods (damages)

Answer 34

Buyer is not required to cover under the UCC; seller not required to resell

Question 35

Covering - common law

Answer 35

requirement to mitigate damages but not if it would be futile

Question 36

Donee v creditor beneficiary

Answer 36

A creditor beneficiary can sue both the promisor and the promisee, but the beneficiary can not recover against both. If the suit is successful against one party to the contract, the other party will be dismissed. Because the creditor beneficiary is receiving the performance of the promisor in order to fulfill the promisee’s debt, the failure of the promisor to perform means that the beneficiary can still sue the promisee to recover the preexisting debt. The failure of performance simply means that the debt has never been paid.

A donee beneficiary can not sue the promisee, because the promisee’s act is gratuitous. Courts simply will not allow a party who has been promised a gift to sue to compel delivery of the gift. However, if the beneficiary has relied to his detriment on the promisee’s assertion that the promisor would perform, the beneficiary may sue the promisee under a promissory estoppel theory.

Question 37

vesting of creditor or donee beneficiary’s rights

Answer 37

1) learns and relies
2) learns and agrees
3) learns and brings suit