contracts

Question 1

contracts

applicable law

Answer 1

Contracts for the sale of goods are governed by Article 2 of the Uniform Commercial Code. All other contracts are governed by general common-law contract principles.

Question 2

contracts

offer

Answer 2

An offer is an objective manifestation of a willingness by the offeror to enter into an agreement that creates the power of acceptance in the offeree. In other words, it is a communication that gives power to the recipient to conclude a contract by acceptance.

Question 3

contracts

acceptance

Answer 3

An acceptance is an objective manifestation by the offeree to be bound by the terms of the offer. An offeree must know of the offer upon acceptance for it to be valid. In addition, the offeree must communicate the acceptance to the offeror.

Question 4

contracts

acceptance by silence

Answer 4

Generally, silence does not operate as an acceptance of an offer, even if the offer states that silence qualifies as acceptance, unless: (i) the offeree has reason to believe that the offer could be accepted by silence, was silent, and intended to accept the offer by silence; or (ii) because of previous dealings or pattern of behavior, it is reasonable to believe that the offeree must notify the offeror if the offeree intends not to accept.

Question 5

contracts

consideration

Answer 5

In addition to offer and acceptance, most courts require valuable consideration for an agreement to be enforceable. If either party has not given consideration, the agreement is not enforceable upon formation. Valuable consideration is evidenced by a bargained-for exchange in the legal position between the parties.

Question 6

contracts

expectation damages

Answer 6

Expectation damages are intended to put the injured party in the same position as if the contract had been performed. They are those damages that arise naturally and obviously from the breach and are normally measured by the market value of the promised performance less the consideration promised by the non-breaching party. Expectation damages must be foreseeable and the non-breaching party must be able to prove them with reasonable certainty.

Question 7

contracts

quasi-contract

Answer 7

When a plaintiff confers a benefit on a defendant and the plaintiff has a reasonable expectation of compensation, allowing the defendant to retain the benefit without compensating the plaintiff would be unjust. When this happens, the court can permit the plaintiff to recover the value of the benefit in order to prevent the unjust enrichment. [restitution]

Question 8

contracts

Restitution

Answer 8

A court may allow restitutionary recovery if: i) the plaintiff has conferred a measurable benefit on the defendant; ii) the plaintiff acted without gratuitous intent; and iii) it would be unfair to let the defendant retain the benefit because either (a) the defendant had an opportunity to decline the benefit but knowingly accepted it, or (b) the plaintiff had a reasonable excuse for not giving the defendant such opportunity.

Question 9

contracts

accord and satisfaction

Answer 9

Under an accord agreement, one party to the contract agrees to accept different performance from the other party than what was promised in the existing contract. Generally, consideration is required for an accord to be valid. By compromising, each party surrenders its respective claim as to how much is owed. [distinguish accord from substitute agreement. Once promisor completes alternate performance, promisee can’t go back and ask for previous performance.]

Question 10

contracts

revocation

Answer 10

In general, an offer may be revoked at any time by the offeror, but a revocation is not effective until communicated. A revocation may be made in any reasonable manner and by any reasonable means.

Question 11

contracts

Merchants

Answer 11

A merchant includes not only a person who regularly deals in the type of goods involved in the transaction, but also any business person when the transaction is of a commercial nature.

Question 12

contracts

Mailbox Rule

Answer 12

An acceptance that is mailed within the allotted response time is effective upon posting (not upon receipt), unless the offer provides otherwise.

Question 13

contracts

UCC Firm Offer Rule

Answer 13

Under the UCC, an offer to buy or sell goods is irrevocable if: (i) the offeror is a merchant; (ii) there are assurances that the offer is to remain open; and (iii) the assurance is contained in an authenticated writing from the offeror. No consideration by the offeree is needed to keep the offer open under the UCC firm offer rule. If the time period during which the option is to be held open is not stated, a reasonable term is implied. However, irrevocability cannot exceed 90 days, regardless of whether a time period is stated or implied, unless the offeree gives consideration to validate it beyond the 90-day period.

Question 14

contracts

Option

Answer 14

An option is an independent promise to keep an offer open for a specified period of time. Such promise limits the offeror’s power to revoke the offer until after the period has expired, while also preserving the offeree’s power to accept.

Question 15

contracts

advertisement as offer

Answer 15

Advertisements are generally considered invitations to receive offers from the public, unless associated with a stated reward. An advertisement that is sufficiently specific and limiting as to who may accept may also qualify as an offer.

Question 16

contracts

counteroffers and mirror-image rule

Answer 16

Acceptance must mirror the terms of the offer. Any modification of the terms of the offer, or the addition of another term not found in the offer, acts as a rejection of the original offer and as a new counteroffer. Mere suggestions or inquiries, including requests for clarification or statements of intent, made in a response by the offeree do not constitute a counteroffer.

Question 17

contracts

anticipatory repudiation (UCC)

Answer 17

According to the UCC, anticipatory repudiation occurs when there has been an unequivocal refusal of the buyer or seller to perform, or when a party creating reasonable grounds for insecurity fails to provide adequate assurances within 30 days of demand for assurances. Repudiation allows the nonrepudiating party to resort to any remedy given by the contract or code.

Question 18

contracts

breach under UCC

Answer 18

Under the UCC, the seller generally must strictly perform all obligations under the contract or be in breach. The doctrine of material breach applies only in the context of installment contracts or when the parties so provide in their contract.

Question 19

contracts

modification

Answer 19

At common law, modification of an existing contract must be supported by consideration. Agreements to modify a contract may still be enforced if there are new obligations on both sides.

Question 20

contracts

anticipatory repudiation

Answer 20

The doctrine of anticipatory repudiation is applicable when a promisor repudiates a promise before the time for performance arises or elapses. The repudiation must be clear and unequivocal (as opposed to mere insecurity) and may be by acts or words. Upon repudiation, the promisee can treat the repudiation as a breach or ignore it and demand performance.

Question 21

contracts

condition precedent

Answer 21

A condition is a future and uncertain event that must take place before a party’s contractual rights or obligations are created, destroyed, or enlarged. Performance by one or both of the parties may be made expressly conditional in the contract, and the conditions may precede the obligation to perform.

Question 22

contracts

impracticability

Answer 22

A party’s duty to perform can be dismissed by impracticability. For the defense of impracticability to be available, the following conditions must also be met: (i) An unforeseeable event has occurred; (ii) Non-occurrence of the event was a basic assumption on which the contract was made; and (iii) The party seeking discharge is not at fault.

Question 23

contracts

frustration of purpose

Answer 23

The doctrine of frustration of purpose applies when unexpected events arise that destroy one party’s purpose in entering into the contract, even if performance of the contract is not rendered impossible. The frustrated party is entitled to rescind the contract without paying damages. The event that arises must not be the fault of the frustrated party, and its nonoccurrence must have been a basic assumption of the contract. If this is the case, the party’s duty to render performance is discharged, unless the language of the agreement or the circumstances otherwise indicate. The occurrence need not be completely unforeseeable to the parties. It must, however, be unexpected and not a realistic prospect. For the doctrine of frustration of purpose to be applicable, the frustration must be so severe that it is not within the assumed risks inherent under the contract.

Question 24

contracts

consequential damages

Answer 24

Consequential damages are reasonably foreseeable losses to a nonbreaching party that go beyond expectation damages.

Question 25

contracts

incidental damages

Answer 25

Incidental damages may be awarded to the non-breaching party as compensation for commercially reasonable expenses incurred as a result of the other party’s breach.

Question 26

contracts

delegation

Answer 26

Generally, obligations under a contract can be delegated. However, delegation is not permitted when the other party to the contract has a substantial interest in having the delegating individual perform (for example, in a personal services contract involving taste or a special skill), or the delegation is prohibited by the contract.

Question 27

contracts

contracts unenforceable on grounds of public policy

Answer 27

A contract that violates a state statute may be declared unenforceable on grounds of public policy. However, when the contract violates a policy that was intended for the benefit of a contracting party seeking relief, the contract may be enforceable in order to avoid frustrating the policy behind the statute.

Question 28

contracts

risk of loss- identified goods

Answer 28

When goods identified at the time the contract was made are totally destroyed before the risk of their loss has passed to the buyer and without the fault of either party, the contract is avoided and each party is relieved of its respective obligation to perform.

Question 29

contracts

mutual mistake

Answer 29

Mutual mistake occurs when both parties are mistaken as to an essential element of the contract. In such a situation, the contract may be voidable by the adversely affected party upon proof of the following:
(i) mistake of fact existing at the time the contract was formed; (ii) the mistake relates to a basic assumption of the contract; (iii) the mistake has a material impact on the transaction; and (iv) the adversely affected party did not assume the risk of the mistake.

Question 30

contracts

material benefit rule

Answer 30

Under the material benefit rule, when a party performs an unrequested service for another party that constitutes a material benefit, the performing party can enforce a promise of payment made by a party who benefits from the service rendered. However, the material benefit rule is not enforced when the performing party rendered the services without the expectation of compensation.

Question 31

contracts

retraction of bids

Answer 31

A bidder may retract his bid until the auctioneer announces the completion of the sale, regardless of whether the seller does or does not retain the right to withdraw an item from sale at the auction (with reserve).

Question 32

contracts

new promise to pay a debt after sl has run

Answer 32

A new promise to pay a debt after the statute of limitations has run is enforceable without any new consideration.

Question 33

contracts

K formation under UCC

Answer 33

Under the UCC, a contract is formed if parties intend to contract, and there is a reasonably certain basis for giving a remedy. A sale-of-goods contract may be made in any manner sufficient to show agreement, even though the moment of its making is undetermined.

Question 34

contracts

contracts in consideration of marriage

Answer 34

if promise is in consideration for marriage, need SOF.

If promise is merely conditioned on marriage, don’t need SOF.

Question 35

contracts

Part performance exception to SOF under UCC

Answer 35

applies to delivery of goods rather than payment.

Question 36

contracts

when specific performance applies

Answer 36

specific performance only applies when there has been a breach of contract through nonperformance or repudiation

Question 37

contracts

SOF exceptions under UCC

Answer 37

1) part payment- no SOF to extent of pmt
2) to the extent goods are received and accepted
3) judicial admission (quantity admitted)

Question 38

contracts

SOF (UCC)

Answer 38

i) Indicate that a contract has been made;
ii) Identify the parties;
iii) Contain a quantity term; and
iv) Be signed by the party to be charged.

Question 39

contracts

specific performance: unfairness

Answer 39

shartp practices (unconscionability, misrep, duress, undue influence); mistake, hardship, inadequate consideration; D’s defenses.

Question 40

contracts

no oral modification clauses (UCC)

Answer 40

Under the Uniform Commercial Code (UCC), a clause in a written contract that prohibits oral modification of the contract is enforceable.

Question 41

contracts

reinstatement of a lower bid

Answer 41

The auctioneer’s acknowledgement of a bid does not constitute acceptance of that bid. Instead, a bid is treated as having been rejected by the auctioneer’s acknowledgement of a higher bid. Consequently, the withdrawal of a higher bid does not automatically reinstate the next lower bid.

Question 42

contracts

acceptance then rejection

Answer 42

If the offeree sends an acceptance and later sends a communication rejecting the offer, then the acceptance will generally control even if the offeror receives the rejection first. If, however, the offeror receives the rejection first and detrimentally relies on the rejection, then the offeree will be estopped from enforcing the contract. In this case, the athlete mailed his acceptance and then mailed a rejection of the president’s offer.

Question 43

contracts

time is of the essence clauses

Answer 43

Unlike the common law, which generally treats a party’s minor delay in performance as not giving the other party grounds for rejecting that performance unless the contract contains a “time is of the essence” clause, the UCC requires that the seller of goods make a “perfect tender” of the goods to the buyer. This includes, among other requirements, strict adherence to the time for delivery of the goods specified in the contract.