Contracts

Question 1

What law applies?

Answer 1

Common law applies to Ks for services

UCC applies to Ks for the sale of goods

Question 2

UCC - Merchant

Answer 2

A buyer or seller who regularly deals in goods of the kind sold

Question 3

UCC - Goods

Answer 3

All things movable at the time they’re identified as the goods to be sold under the K

Question 4

Offer

Answer 4

An offer consists of 1) a promise, undertaking, or commitment to enter into a K; 2) with the essential terms certain & definite; & 3) communication of the promise & terms to the offeree

Question 5

Revocation

Answer 5

A revocation terminates the power to accept if directly communicated or if the offeree indirectly receives information from a reliable source of acts that would indicate to a reasonable person that the offer is terminated

Question 6

Revocation at Will Isn’t Permitted Where:

Answer 6

1) Consideration is given by offeree
2) Detrimental reliance by offeree
3) Merchant’s firm offer

Question 7

Mailbox Rule

Answer 7

Revocation is effective upon receipt, & acceptance is effective upon dispatch

Question 8

Acceptance

Answer 8

An unqualified assent to the terms of the offer

Question 9

Counter-Offer - Common Law

Answer 9

Acts as both a rejection of the original offer and a proposal of a new offer

Question 10

Counter-Offer - UCC - Different Terms

Answer 10

Knock-out rule

Question 11

Counter-Offer - UCC - Additional Terms

Answer 11

As between non-merchants, it’s a proposal that must be explicitly accepted to come in

As between merchants, the additional terms become part of the K unless: 1) offer expressly limits acceptance to the terms of the offer, 2) the new terms materially alter the offer, or 3) notification of objection to the new terms are given in a reasonable time

Question 12

Consideration

Answer 12

A valid K requires a bargained-for exchange

Question 13

Illusory Promise

Answer 13

Invalid consideration

Question 14

Promissory Estoppel

Answer 14

A promise is enforceable to the extent necessary to prevent injustice if 1) the promisor should reasonably expect to induce definite & substantial action, & 2) such action is in fact induced

Question 15

Statute of Frauds

Answer 15

The following Ks must be in writing:

1) Promise to pay the debt of another
2) Creation of any interest in land
3) K can’t possibly be performed within one year
4) Sale of goods more than $500

Question 16

Statute of Frauds Exception

Answer 16

1) Admission in court that the K exists
2) Full performance if the K is for the sale of goods/services
3) If K is for real property, any 2 of 3 - performance by payment (in whole or in part), possession, or making of valuable improvements

Question 17

3rd Party Beneficiary - Intended vs. Incidental

Answer 17

Incidental beneficiary can’t sue

Question 18

3rd Party Beneficiary - Rights Vest When

Answer 18

Manifests assent in a manner requested by the parties;
Materially changes in position in justifiable reliance on the promise; or
Sues to enforce the promise

Question 19

3rd Party Beneficiary - Promisor’s Defense

Answer 19

Promisor can raise any defense against paying the beneficiary the promisor could’ve raised against the promisee

Question 20

3rd Party Beneficiary - Creditor Beneficiary’s Defense

Answer 20

Creditor beneficiary can sue promisor who promised to pay & promisee who owes the money

Question 21

3rd Party Beneficiary - Donee’s Defense

Answer 21

Donee can sue the promisor but not the promisee unless donee detrimentally relied on the promise

Question 22

Assignment - Assignable Contracts

Answer 22

All K rights may be assigned except those that substantially change an obligor’s duty

Question 23

Assignment - No Writing Required Except For

Answer 23

Interest in land, wage assignment, security interests, choses in action >$5,000

Question 24

Assignment - Revocable Except

Answer 24

If given for consideration;
Obligor already performed;
Tangible claim delivered;
Written assignment of chose in action;
Foreseeable detrimental reliance

Question 25

Assignment - Obligor’s Defense

Answer 25

Can assert any defense against the assignee it had against the assignor, except personal defenses that arose after the obligor had notice of the assignment

Question 26

Delegation

Answer 26

Transfer of duties, rather than the entire K

Question 27

Delegation - Can’t Delegate

Answer 27

Duties involving personal skill/judgment, where there’s special trust in delegator, delegation would change obligee’s expectancy, or there’s a K restriction

Question 28

Delegation - Delegator’s Liability

Answer 28

Delegator is always liable to non-delegating party absent an express novation

Question 29

Delegation - Compelling Performance

Answer 29

Non-delegating party can’t compel delegate to perform unless delegate promises to perform (supported by consideration). In that case, or if delegate performs, delegate is liable to non-delegating party

Question 30

Construction - Parol Evidence Rule

Answer 30

Where the parties express their agreement in writing with the intent that it embody the full & final expression of their bargain, any other expressions made prior to the writing, & any oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing

Question 31

Parol Evidence Rule Exception

Answer 31

Any prior contemporaneous expressions that vary the terms can’t come in unless formation defects, facial ambiguity, true consideration, or condition precedent

Question 32

Modification - Common Law

Answer 32

Subsequent expressions or agreements that vary the terms of the K require additional consideration

Question 33

Modification - UCC

Answer 33

Subsequent expressions or agreements that vary the terms of the K don’t require additional consideration

Question 34

Conditions

Answer 34

Conditions that occur lead to a duty to perform, & failure to perform is a breach

Question 35

A breach occurs when

Answer 35

A party has a duty to perform and fails to do so

Question 36

Minor Breach

Answer 36

Where the nonbreaching party gains the substantial benefit of the bargain despite the defective performance, their duty to perform ins’t discharged

Question 37

Material Breach

Answer 37

Where the nonbreaching party doesn’t gain the substantial benefit of the bargain, he has the right to all remedies, & need not perform his duty

Question 38

Anticipatory Repudiation

Answer 38

If a party, in advance of a performance date, unequivocally refuses to perform, it’s an anticipatory repudiation, & the other party can treat it as a breach and immediately sue

Question 39

Implied Covenant of Good Faith & Fair Dealing

Answer 39

Requires that both parties do nothing to prevent the other party’s performance

Question 40

Discharging a Contract - Impossibility

Answer 40

Objective & arises after K is entered into

Question 41

Discharging a Contract - Impracticability

Answer 41

Party to perform encounters extreme/unreasonable difficulty &/or expense that was incapable of being anticipated

Question 42

Discharging a Contract - Frustration of Purpose

Answer 42

1) A supervening act 2) the parties didn’t reasonably foresee at the time of K, 3) the purpose of the K having been completely or almost completely destroyed by the act & 4) both parties realized the purpose when making the K

Both parties’ duties are discharged, but parties can recover in quasi-contract for work done

Question 43

Accord & Satisfaction

Answer 43

A valid accord & satisfaction requires a valid dispute, & a good faith tender & acceptance of a check that conspicuously states full satisfaction

Question 44

Waiver

Answer 44

A condition of a K may be waived by words or conduct indicating that the party won’t insist on the condition being met

Question 45

UCC Perfect Tender Rule

Answer 45

If all goods aren’t perfect, Buyer can accept all, reject all, or accept some & reject others

Damages are difference between K price & either the market price or the cost of replacement, measured at time Buyer learns of the breach

Question 46

UCC Lost Volume Seller

Answer 46

Seller’s damages are K price minus seller’s cost to get the item (i.e., the lost profit)