Contracts

Question 1

Performance of Article 2 Contracts

6 Concepts

Answer 1

1. perfect tender
2. rejection of the goods
3. Cure
4. Installment contracts
5. Acceptance
6. Revocation of Acceptance

Question 2

perfect Tender

Answer 2

1. only applies to sale of Goods UCC
2. it means only the goods and the deliver must conform to the contract terms
3. less than perfect ender by the seller gives the buyer the option of rejection of the goods, so long as the buyer acts in good faith

Question 3

Rejection of the Goods

Answer 3

1. Distinguish rejection from an offer, from rejection of goods
2. Buyer has option to reject if seller fails to meet perfect tender; buyer can retain goods and sue for damages or reject any and all commercial units and sue for damages
   Buyer must take reasonable care of rejected goods
3. Right to reject is limited by cure, installment contracts, and accepteance

Question 4

Right to cure

Answer 4

in some instances, a seller who fails to make perfect tender will be given the option to cure:

1. seller reasonably believed the nonperfect tender would be acceptable (here, seller can cure even after deliver date)
2. time for performance not yet expired

Question 5

Right to reject installment

Answer 5

Only when there is a substantial impairment in the installment that cannot be cured

Question 6

Acceptance of Goods

Answer 6

1. if buyer accepts the goods, he cannot later reject them
2. payment without the opportunity to inspect is not acceptanct
3. failure to timely reject is acceptance (retention of the goods is implied acceptance)

Question 7

Revocation of acceptance of Goods

Answer 7

Once the buyer accepts the goods, he cannot reject them; he may, however be able to revoke the acceptance which has the same effect as rejection
Requirements
1. nonconformity substantially impairs the value of the goods
2. exusable ignorance of the grounds for revocation and reasonable reliance on seller’s assurance of satisfaction
3. revocation within a reasonable time after discovery of the nonconformity

Question 8

When is specific performance available

Answer 8

contracts for sale of real estate
contracts for sale of unique goods
not for service contracts

Question 9

Seller’s reclamation from an Insolvent Buyer

Answer 9

Right of an unpaid seller to get its good back, if:

1. buyer was insolvent at the time it received the goods;
2. seller demands return of goods within 10 days of receipt;
3. buyer still has goods in his possession.

The critical date is delivery date

Question 10

Money Damages (boilerplate)

Answer 10

The purpose of monetary damages in a contract case is to compensate the non-breaching party by protecting his expectation interst. this is done by placing the non-breaching party in the same monetary position it would have been in if there had been no breach.

Question 11

Money Damages Formula

Answer 11

Damages= expectation damages + incidental damages + freseeable consequential damages - avoidable damages - unreasonably uncertain damages

Question 12

Nonperformance of Common Law Contract

Answer 12

Material Breach rule:

1. damages can be recoverd for any breach
2. only material breach excuses nonperformance
3. materiality of breach is a fact question
4. if there is substantial performance the breach is not material

Question 13

Excuse of Non performance

because of something happening after contract was made

Answer 13

1. other side’s nonperformance
2. other side’s anticipatory repudiation
3. insecurity about whether other side will perform
4. breach
5. nonocurance of an express condition
6. rescission
7. accord and satisfaction
8. modification
9. novation
10. impossibility or impracticality

Question 14

Excuse by Insecurity

Answer 14

1. reasonable ground for insecurity
2. written demand for adequatte assurance
3. commercially reasonable to stop performance

Question 15

Excuse by Nonoccurance of an Express condition

Answer 15

Express Condition must be strictly satsified unless it is based on personal satisfaction then it must be honest and in good faith

Express condition can be waived
Performance not excused if person protected by condition prevents the occurence of the condition

Question 16

Accord and Satisfaction

Answer 16

Substituted Performance
Parties agree to accept a diff performance in satisfaction of the existing agrement
nonbreaching party can recover on the accord or original agreement

Question 17

Novation

Answer 17

substituted party
Parties agree to replace one of parties witha third party- replaced party no longer liable
Compare w/ delegation- does not require all parties to agree and does not exclude liability

Question 18

Third Party Contract issues (3)

Answer 18

Third party beneficiares
Assignment of Contract Rights
Delegations of Contract Duties

Question 19

Third Party Beneficiary

Answer 19

Third party beneficiary (must be intended)
Promissor: person who will benefit the TPB
Promisee: Person obtaining the promise that benefits TPB
Creditor/Donee

Can’t cancel contract once TPB knows of and has relied on contract
Either TPB or promissee can recomver from promissor

promissor can assert any defense it could have asserted against the promissee against the tpb

Question 20

Assignment of Rights

Answer 20

Assignment is a transfer of rights under a contract; two steps

1. contract between 2 parties
2. 1 party transfers rights to third party

Question 21

Limitations on Assignment of Cotnract Rights

Answer 21

Prohibition: of assignment (assignee who does not know of prohibition may sill enforce
Invalidation: all assignments involved

Question 22

Requirements for Assignment of Contract

Answer 22

Generally consideration not required, but gratuitous assignments can be revoked

if multiple assignments, last gratuitous assignment wins, but first assignement for consideration wins

Question 23

UCC firm offer rule

Answer 23

Offer cannot be revoked for up to 3 months if:
1. it is in writing
2 signed promise to keep open
3. party is a merchant

Question 24

Mirror Image Rule

Answer 24

Acceptance must mirror offer to be a valid acceptance (common law)

Question 25

Additional Terms in Acceptance of Sale of Goods Contract

Answer 25

There is an acceptance
ARe the new terms part of contract?

only if both parties are merchants and the term is not material or objected to

Question 26

Misrepresentation (defense to formation)

Answer 26

1. statement of fact
2. by one of contraccting parties
3. that is false
4. and induces the contract

Question 27

Unconscionability (efense to contract formation)

Answer 27

Procedural - manner timing sequence
Substantive- terms

Tested by the court as of the time the agreement was made

Question 28

Ambiguity (defense to contract formation)

Answer 28

There will be no contract if:

1. parties use a material term open to at least two reasonable interpretations and
2. each party attaches a diff meaning to term and
3. neither paryt knows or has reason to know of the ambiguity (if one party knows, the contract is construed against them)

Question 29

Mistake of FAct (possible defense to contract formation)

Answer 29

Mutual Mistake: relief only if both parties are mistake about existing facts- but no relief for mistake if the prson seeking relief bears the risk of mistake)

Unilateral Mistake- no relief unless other pary knew or had reason to know of mistake

Question 30

Risk of Loss in non-common carrier cases (ucc)

Answer 30

merchant: RoL on seller until buyer picks up goods
nonmercant: on buyer once seller tenders goods for delivery

Question 31

Offer (boilerplate)

Answer 31

1. expressiong of a promise, undertaking, or commitment to enter into a contract
2. with certain and definite terms
3. communicated to offeree