CONTRACTS

Question 1

The doctrine of anticipatory repudiation applies to:

Answer 1

Only bilateral contracts with executory duties on both sides

Question 2

A prospective inability or unwillingness to perform occurs when

Answer 2

one party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due. An example of this would be when a buyer declares bankruptcy prior to the time set for performance of the contract

Question 3

In some cases, the condition of complete performance may be excused if a party has rendered

Answer 3

Substantial performance

Question 4

At common law, ______________ will excuse a contract condition.

Answer 4

An estoppel waiver

Question 5

Courts will find binding estoppel waiver when

Answer 5

Whenever a party indicates that he is waiving a condition before it is to happen and the person addressed detrimentally relies on the waiver, courts will find a binding estoppel waiver.

Question 6

A condition precedent

Answer 6

is one that must occur before the duty of performance will arise

Question 7

A condition subsequent

Answer 7

will cut off an already existing duty of performance

Question 8

The failure of a condition:

Answer 8

Discharges the liability of the promisor whose obligations on the conditional promise never mature

Question 9

When a party having the benefit of an ancillary condition under a contract indicates by words or conduct (and without receiving any additional consideration) that she will not insist on that condition being met, this is called __________.

Answer 9

Waiver

Question 10

Can a repudiating party retract his anticipatory repudiation before his performance is due?

Answer 10

Yes, unless the other party has materially changed her position in reliance on the repudiation.

Question 11

A promise

Answer 11

binds a party to perform under a contract

Question 12

a condition

Answer 12

creates or extinguishes a duty to perform under the contract.

Question 13

In the case of an anticipatory repudiation, the nonrepudiating party __________.

Answer 13

may sue immediately or wait until the date performance is due to sue. Can also suspend his own performance at any point.

Question 14

So long as the time for performance has not yet passed, a repudiating party may withdraw his repudiation __________.

Answer 14

unless the other party has indicated that she considers the repudiation final

Question 15

What is a “constructive” condition?

Answer 15

A condition that is implied by a court even though it is not explicitly stated in the contract

Question 16

The failure of a condition:

Answer 16

Discharges the liability of the promisor whose obligations on the conditional promise never mature

Question 17

When a party indicates that she is “waiving” a condition before it is to happen, and the person addressed detrimentally relies on the waiver, a court will hold this to be __________.

Answer 17

An estoppel waiver

Question 18

An anticipatory repudiation __________.

Answer 18

Must be unequivocal

Question 19

Material breach, waiver, or substantial performance are all:

Answer 19

things that would legally excuse a condition.

Question 20

A condition that must occur before an absolute duty of immediate performance arises in the other party is a __________.

Answer 20

condition precedent

Question 21

Nonfulfillment of a condition __________.

Answer 21

will excuse a duty to perform that was subject to the condition. (no breach of contract yet).

Question 22

A court will apply the doctrine of “substantial performance” to excuse the condition of complete performance in the case of:

Answer 22

A constructive condition and a minor breach

Question 23

A condition read into a contract by the court is also known as:

Answer 23

a constructive conditon. (an implied condition).

Question 24

Anticipatory repudiation occurs when:

Answer 24

A party to a contract, prior to the time set for performance, indicates that he will not perform when performance is due

Question 25

The nonrepudiating party can demand assurances when

Answer 25

1. a repudiating party seeks to withdraw repudiation
2. prospective unwillingness or inability to perform
   NOT: anticipatory repudiation–a.r. is an unequivocal indication that the repudiating party will not perform when the time comes, demanding assurances would be fruitless.

Question 26

If, prior to the time set for performance, the promisor indicates that he will not perform when the time comes, this is known as:

Answer 26

anticipatory repudiation

Question 27

In the case of an anticipatory repudiation, the nonrepudiating party __________.

Answer 27

may sue immediately or wait until the date performance is due to sue

Question 28

In a case of anticipatory repudiation, how long does the repudiating party have to retract the repudiation?

Answer 28

Until performance is due, unless the other party has materially changed position in reliance on the repudiation

Question 29

Does a minor breach of contract excuse a condition at common law?

Answer 29

No, a minor breach may suspend a duty, but not excuse it.

Question 30

At common law, which of the following would legally excuse a condition?

Answer 30

material breach, waiver, or substantial performance.

Question 31

Under Article 2 of the U.C.C., a buyer cannot reject a shipment of nonconforming goods if:

Answer 31

The nonconforming shipment is part of an installment contract and the defect can be cured

Question 32

UCC Article 2 Perfect Tender Rule

Answer 32

If the goods fail to conform to the contract in any way, the buyer generally may reject tender.
EXCEPTION: a defective shipment in an installment contract cannot be rejected if the defect can be cured.

Question 33

In an installment contract situation, an installment can be rejected by the buyer __________.

Answer 33

if there is a nonconformity that substantially impairs the value of that installment and cannot be cured

Question 34

In __________, timely performance as agreed is important, and any unjustified delay is material.

Answer 34

Mercantile contracts

Question 35

After rejecting goods in her physical possession, a buyer has an obligation to hold them with reasonable care at the seller’s disposition for a time sufficient to permit the seller to remove them; thus, the buyer should not

Answer 35

destroy the goods.

Question 36

Under the U.C.C., in the case of a single delivery contract, if the buyer finds that the goods are defective at the time of delivery:

Answer 36

The buyer can reject the goods, but the seller then has a right to cure within the original time for performance of the contract

Question 37

After a buyer rejects a tender of nonconforming goods, the seller has a right to cure beyond the original contract time:

Answer 37

if the seller reasonably believed that the nonconforming goods would be acceptable to the buyer with or without a money allowance.

Question 38

In a destination contract, the seller must:

Answer 38

Tender delivery of the goods at a particular destination

Question 39

As a general rule, delay in performance in __________ contract is more likely to be deemed a material breach than delay in performance in __________ contract.

Answer 39

A mercantile; a land

Question 40

Unless the contract provides otherwise, in a destination contract, payment is due __________.

Answer 40

When the goods reach their destination

Question 41

Under Article 2, unless the contract provides otherwise, a buyer has a right to inspect the goods __________.

Answer 41

at the buyer’s own expense before she pays for the goods

Question 42

Under an Article 2 shipment contract, when the parties have agreed that a carrier will be used to move the goods, the seller has an obligation to:

Answer 42

1. put the goods into the hands of a reasonable carrier and make a reasonable contract for their transportation.
2. obtain and promptly tender any documents required by the contract or usage of trade or otherwise necessary to enable the buyer to take possession
3. promptly notify the buyer of the shipment.

Question 43

When a seller has agreed to tender goods at a particular location, this is also known as a:

Answer 43

Destination contract

Question 44

A breach of contract where the obligee gains the substantial benefit of her bargain despite the obligor’s defective performance is commonly known as:

Answer 44

a minor breach

Question 45

Under Article 2, a buyer’s right to reject is cut off by __________.

Answer 45

Acceptance of the goods, even if the goods are nonconforming

Question 46

In an installment contract situation, the contract can be canceled by the buyer if:

Answer 46

There is a nonconformity in a shipment that substantially impairs the value of the contract and cannot be cured

(installment can be rejected if the nonconformity

Question 47

When should the nonbreaching party treat an otherwise minor breach as a material breach?

Answer 47

When the breach is coupled with an anticipatory repudiation

Question 48

Under U.C.C. Article 2, unless the contract provides otherwise, any expenses for inspection of the goods sold will be borne by:

Answer 48

The buyer, but may be recovered from the seller if the goods do not conform and are rejected

Question 49

Unless the contract provides otherwise, in a noncarrier case, payment is due __________.

Answer 49

In cash upon tender of delivery

Question 50

A noncarrier case is

Answer 50

one in which it appears that the parties did not intend that the goods be moved by carrier

Question 51

A destination contract __________.

Answer 51

requires the seller to tender the goods to the buyer at a particular destination

Question 52

Under the U.C.C., in a single delivery contract, a seller may always cure a shipment that the buyer has rejected because of defects by delivering conforming goods within:

Answer 52

The time originally provided for performance

Question 53

Under U.C.C. Article 2, unless the contract provides otherwise, any expenses for inspection of the goods sold will be borne by:

Answer 53

The buyer, but may be recovered from the seller if the goods do not conform and are rejected

Question 54

Under the U.C.C., in a single delivery contract, if a seller delivers nonconforming goods to the buyer under the mistaken, but reasonable, belief that the goods would be acceptable to the buyer, and the buyer rejects the goods, the best characterization of the time the seller has to cure is:

Answer 54

Within a reasonable time beyond the time originally provided for performance

Question 55

A buyer orders 600 widgets to be delivered on the 10th of each month in lots of 100. The second month’s shipment arrived on the 8th of the month and contains only 95 widgets.
The buyer ____________________.

Answer 55

Cannot reject the shipment. Under an isntallment contract, the buyer cannot reject the installment unless she can show that the shortfall substantially impairs the the value of the installment and cannot be cured. Quantity can always be cured. Here, there are 2 days left to perform.

Question 56

In a noncarrier case, for proper tender of delivery, the seller must:

Answer 56

Put and hold the goods at the buyer’s disposition for a time sufficient for the buyer to take possession and give the buyer reasonable notice to enable the buyer to take possession of the goods

Question 57

What is the buyer’s right of rejection under Article 2 of the UCC for a defective shipment?

Answer 57

A buyer can always reject a defective shipment in a single delivery contract but cannot reject a defective shipment in an installment contract if the defect can be cured

Question 58

Under the U.C.C., what is required to cure a defective delivery in a single delivery contract?

Answer 58

Reasonable notice of the intention to cure and a new tender of delivery of conforming goods within the time for performance

Question 59

In a shipment contract, the price is due when

Answer 59

the goods are put in the hands of the carrier

Question 60

In a destination contract, the price is due when

Answer 60

the goods reach the named destination.

Question 61

In a single delivery contract, when a buyer rejects goods due to defects, the seller may cure within the time originally provided for performance in the contract:

Answer 61

by giving reasonable notice to the buyer and making a new tender of conforming goods, which the buyer must then accept.

Question 62

The U.C.C. gives a seller the right to cure a defective shipment within a reasonable time beyond the original time for performance in the contract if:

Answer 62

Prior dealings with the buyer led the seller to reasonably believe that the defective shipment would be acceptable

Question 63

If a seller gives no instructions within a reasonable time after notification of rejection, the buyer may _________________ the goods.

Answer 63

Reship, store, or resell. (no destroying).

Question 64

In a single delivery contract, when a buyer rejects goods due to defects, the seller may cure within the time originally provided for performance in the contract:

Answer 64

by giving reasonable notice to the buyer and making a new tender of conforming goods, which the buyer must then accept.

Question 65

A unilateral contract

Answer 65

results from an offer that expressly requires performance as the
only possible method of acceptance

Question 66

Under the UCC, the firm offer rule states

Answer 66

an offer cannot be revoked for up to 3 months if

1. offer to buy or sell goods
2. signed, written promise to keep offer open
3. party is a merchant

Question 67

Option (contract)

Answer 67

Offer + promise not to revoke in exchange for consideration.

Question 68

4 Ways offers become irrevocable

Answer 68

1. option
2. firm offer rule (ucc)
3. reliance
4. unilateral contract/ performance

Question 69

3 Methods of Indirect Rejection

Answer 69

1. counteroffers
2. conditional acceptance
3. additional terms (mirror image rule common law)

Question 70

A discharge by __________ will occur if the purpose of the contract has become valueless by virtue of some supervening event not the fault of the party seeking discharge.

Answer 70

frustration

Question 71

A contractor is hired to remodel a restaurant. After the contractor completes 90% of the work, the restaurant is destroyed in an earthquake.
The destruction of the restaurant :

Answer 71

Will discharge the contractor’s duty to perform

Question 72

When a debtor breaches an accord agreement by failing to make an immediate satisfaction, the creditor:

Answer 72

May sue on either the original contract or the accord agreement

Question 73

A contract may be discharged by a new contract that substitutes a new party to receive benefits and assume duties that had originally belonged to one of the original parties under the terms of the original contract. This is known as a discharge by:

Answer 73

Novation

Question 74

A discharge by________ occurs when the parties manifest an intent to have an act of destruction or surrender of the written contract serve as a discharge, and consideration or one of its alternatives is present.

Answer 74

cancellation

Question 75

A discharge by ______ is an agreement by the contracting parties not to sue on the contract.

Answer 75

Release

Question 76

A discharge by ________ __________ occurs when the same parties to a contract enter into a second contract that immediately revokes the first contract.

Answer 76

substituted contract

Question 77

__________ is an agreement in which one party to an existing contract agrees to accept, in lieu of the performance that she is supposed to receive from the other party to the existing contract, some other, different performance.

Answer 77

An accord

Question 78

________ is the performance of the accord agreement. Its effect is to discharge not only the original contract but also the accord contract as well.

Answer 78

Satisfaction

Question 79

A ______ occurs when a new contract substitutes a new party to receive benefits and assume duties that had originally belonged to one of the original parties under the terms of the old contract. The original contract will be discharged by the novation.

Answer 79

novation

Question 80

The absolute duty to perform can be discharged by:

Answer 80

Full performance or a good faith tender of performance

Question 81

Student enters into a contract with Violinist under which Violinist agrees to give Student violin lessons once a week for one year for $50 per week. Violinist subsequently has a stroke and is unable to teach.
Violinist’s duties under the contract will:

Answer 81

be discharged by impossibility

Question 82

An executive hires a personal trainer for six months at $100 per week to ready the executive for an upcoming triathlon. One month into the contract, the executive suffers an accident that leaves her paralyzed and unable to compete in the triathlon. When the executive fails to pay the trainer, the trainer sues for breach of contract.
The trainer will ______________ because ___________.

Answer 82

Not prevail; the purpose of the contract was frustrated.

Question 83

Homeowner enters into a contract with Paver for Paver to pave Homeowner’s driveway for $500. Paver dies immediately after beginning the project.
Paver’s contractual duties will:

Answer 83

Not be discharged.

Question 84

Owner enters into a contract with Builder under which Builder agrees to renovate Owner’s 100-year-old mansion for $400,000. When the renovation is 80% complete, the mansion is washed away in a flood.
Builder’s duties under the contract will:

Answer 84

Be discharged by impossibility

Question 85

Will a binding promise to perform serve to discharge a party’s duty to perform?

Answer 85

No, because the tendering party must offer to perform and possess the present ability to perform.

Question 86

Once construction of a building has begun, an act of nature destroying the work in progress will have what effect on the contract?

Answer 86

It will often serve to extend the time for the builder’s performance in finishing the construction project

Question 87

A and B enter into a contract. A, B, and C subsequently enter into a new contract that states that C will receive all benefits and assume all duties that had originally belonged to A in the initial A-B contract.
This is an example of:

Answer 87

A novation.

Question 88

A borrowed $5,000 from B and agreed to repay it by May 1. On May 15, A, strapped for cash, offers to pay B $4,500 on May 16, and B agrees to accept that amount.
This agreement is __________.

Answer 88

Unenforceable.

Question 89

Is consideration necessary for a valid mutual rescission of a contract?

Answer 89

Yes, each party giving up her right to counterperformance from the other party serves as consideration for the agreement to rescind the contract.

Question 90

Will a binding promise to perform serve to discharge a party’s duty to perform?

Answer 90

No, because the tendering party must offer to perform and possess the present ability to perform.

Question 91

The death of a party to a contract:

Answer 91

Discharges the contract only if that party was necessary to effectuate the contract

Question 92

What is a novation?

Answer 92

A new contract that substitutes a new party to receive benefits and assume duties under the terms of an old contract

Question 93

__________ exists if the purpose of the contract has become valueless by virtue of an unforeseeable supervening event.

Answer 93

Frustration

Question 94

A building that is the subject of a contract between its owner and a contractor is completely destroyed by an act of nature.
If the contractor was working on a renovation, the destruction _____________; if the contractor was constructing the building, the destruction ________________.

Answer 94

Discharges the contractor’s duties by impossibility; does not discharge the contractor’s duties

Question 95

A mutual agreement between two parties to a contract that each will give up her respective rights to performance from the other is known as:

Answer 95

A mutual rescission

Question 96

Which one of the following elements is needed for a discharge of a contract due to frustration?

Answer 96

An unforeseen act or event has completely or almost completely destroyed the purpose of the contract

Question 97

The defense of __________ applies when a party seeking specific performance is guilty of some wrongdoing in the transaction begin sued upon.

Answer 97

Unclean Hands

Question 98

In the case of a sale of goods contract, if the standard measure of damages does not adequately compensate a seller for the buyer’s breach because the seller can manufacture or obtain as many goods as he can sell, he may recover damages based on ____________.

Answer 98

Lost profits.

Question 99

When a party that offers a rare or unique service has breached a service contract, the court may grant __________ to the nonbreaching party.

Answer 99

Injunctive relief

Question 100

_____________ is not available for breach of a contract to provide services, even if the services are rare or unique because it is difficult to supervise and most courts find that it is tantamount to involuntary servitude.

Answer 100

Specific peformance

Question 101

_______ are generally not awarded in contract cases.

Answer 101

Punitive damages

Question 102

A liquidated damages clause may be enforced even if:

Answer 102

No actual money damages have been suffered.

Question 103

In a construction contract, if the property owner breaches the contract after construction has started but before it is completed, the builder is entitled to:

Answer 103

The profits he would have derived from the contract, plus any costs he has incurred

Question 104

A court will grant an order of specific performance to enforce a contract not to compete if __________; and __________.

Answer 104

the services to be provided are unique; the covenant is reasonable.

To be reasonable, the covenant must be reasonably necessary to protect a legitimate interest of the person benefited by the covenant, it must be reasonable as to its geographic scope and duration, and it must not harm the public.

Question 105

In a contract for the sale of goods, __________ may recover consequential damages.

Answer 105

Only the buyer

Question 106

____________ conist of losses resulting from the breach that any reasonable person would have foreseen would occur from a breach at the time of entry into the contract.

Answer 106

Consequential Damages.

In contracts for the sale of goods, only the buyer may recover consequential damages.

Question 107

A seller agrees to sell Blueacre to a buyer for $100,000. When the seller’s assistant types the contract, it states that it is for the sale of Blackacre, another of the seller’s properties. Neither the buyer nor the seller noticed the reference to the different parcel before signing.

Answer 107

Reformation

Question 108

A court order requiring a breaching party to perform under the contract or face contempt of court charges is also known as:

Answer 108

Specific Peformance

Question 109

Expectation damages are also known as:

Answer 109

Benefit of the bargain damages.

Question 110

In a construction contract, if the property owner breaches the contract __________.

Answer 110

before construction has started, the builder is entitled to the profits he would have derived from the contract

Question 111

Under Article 2, when a buyer refuses to accept goods or repudiates the contract, a seller ________, but is not required to do so.

Answer 111

may resell the goods

A seller always has the option of seeking either the difference in the contract price and the market price or the difference between the contract price and the resale price, plus incidental damages.

Question 112

If an employer breaches a contract, the employee ___________________.

Answer 112

must use reasonable care in finding a position of the same kind, rank, and grade in the same locale.

Question 113

Unless it will increase the damages, when an owner breaches, a builder is _____________.

Answer 113

under a duty to cease work on a project.

Question 114

Unless it will increase, rather than decrease damages, a manufacturer is under a duty _________________.

Answer 114

to cease work when the party for whom the goods are being manufactured breaches the contract.

Question 115

In the case of a breach of an employment contract by the employee, the employer may recover:

Answer 115

The cost to replace the employee regardless of whether the breach was intentional or unintentional.

The employer is entitled to the standard measure of damages computed according to what it costs to replace the employee (i.e., the difference between the cost incurred to get a second employee to do the work and the cost to the employer had the first breaching employee done the work)

Question 116

Reliance damages are appropriately awarded when:

Answer 116

Expectation damages are too speculative to calculate.

Question 117

In the event of a breach in a sale of goods contract, the buyer’s damages are measured as of ____________, while the seller’s damages are measured as of _____________.

Answer 117

the time she learns of the breach; the time for delivery.

Question 118

Incidental damages ______________.

Answer 118

Include a buyer’s reasonable expenses in care of goods rightfully rejected and a seller’s expenses of reselling goods as a result of the buyer’s breach

Question 119

To be reasonable a covenant must:

Answer 119

1. Must be reasonably necessary to protect a legitimate interest of the person benefited by the covenant,
2. Must be reasonable as to its geographic scope and duration, and
3. Must not harm the public.

Question 120

A liquidated damages clause will be enforceable only if:

Answer 120

Damages were difficult to estimate at the time the contract was formed and the amount agreed upon was a reasonable forecast of compensatory damages in the case of breach

Question 121

__________ damages consist of losses resulting from the breach that any reasonable person would have foreseen would occur from a breach at the time of entry into the contract.

Answer 121

Consequential

Question 122

_________damages are the standard measure of compensatory damages. .

Answer 122

Expectation

Expectation damages are based on an “expectation” measure or what is sufficient for the nonbreaching party to buy a substitute performance. This type of damages is also known as “benefit of the bargain” damages.

Question 123

_________ damages award the plaintiff the cost of her performance. They are designed to put the plaintiff in the position she would have been in had the contract never been formed.

Answer 123

Reliance

A plaintiff may elect to recover damages based on a reliance measure rather than an expectation measure when expectation damages will be too speculative to measure.

Question 124

___________ damages include expenses reasonably incurred by the buyer in inspection, receipt, transportation, care, and custody of goods rightfully rejected and other expenses reasonably incident to the seller’s breach, and by the seller in storing, shipping, returning, and reselling the goods as a result of the buyer’s breach.

Answer 124

Incidental

Question 125

Specific Peformance is not a valid remedy for ________ contracts.

Answer 125

service.

too much like slavery

Question 126

Specific performance is ____________.

Answer 126

A court order directing the breaching party to perform as promised under the contract

Question 127

In the event of a breach by the buyer in a sale of goods contract, possible measures of damages that may be recovered by the seller include:

Answer 127

The difference between the contract price and the market price, the difference between the contract price and the resale price, and lost profits

Question 128

The remedy of restitution is based on ______________ and is measured by ____________.

Answer 128

Preventing unjust enrichment; the value of the benefit conferred

Question 129

When, pursuant to a contract for a sale of goods, a buyer accepts nonconforming goods, he may not recover __________.

Answer 129

the difference between the contract price and the market price

Question 130

If a buyer accepts nonconforming goods, the buyer may recovery warranty damages for the breach of the seller’s warranties. The basic measure of damages for breach of warranty is:

Answer 130

1. The difference between the value of the goods as delivered and the value they would have had if they had been according to the contract, plus
2. Incidental damages, plus
3. Consequential damages.

Question 131

In the case of a breach of an employment contract by the employer, the measure of the employee’s damages is:

Answer 131

The full contract price regardless of when the breach occurs

Question 132

Under U.C.C. Article 2, if a seller refuses to deliver goods under a contract, the buyer may replevy the goods if:

Answer 132

The goods have been identified to the contract and the buyer is unable to cover

The U.C.C. authorizes the buyer to seek replevin (i.e., an action to recover the goods) of goods identified to the contract when the buyer is unable to cover (i.e., unable to secure substitute goods after reasonable effort).

Question 133

In the case of a sale of goods contract, if the standard measure of damages does not adequately compensate a seller for the buyer’s breach because the seller can manufacture or obtain as many goods as he can sell, he may recover damages based on ____________.

Answer 133

Lost profits.

Question 134

Specific performance is generally available as a remedy for breach of a contract for ___________ but not for breach of a contract for ________.

Answer 134

Rare goods; unique services

Question 135

As a general rule, if the property owner in a construction contract breaches, the builder has a duty to:

Answer 135

Cease work after the breach

Question 136

Under Article 2, when a seller breaches a contract by refusing to deliver identified goods to the buyer, the buyer may replevy the goods if:

Answer 136

the buyer, after reasonable effort, is unable to secure adequate substitute goods.

Question 137

A remedy whereby a writing setting forth the agreement between the parties is changed by the court so that it conforms to the original intent of the parties is known as:

Answer 137

reformation

A reformation action is available to remedy a mutual mistake, such as when unbeknownst to either party, the written contract fails to reflect the agreed upon terms. It is also possible to seek reformation in the case of unilateral mistake or fraudulent misrepresentation.

Question 138

__________ is a remedy whereby the original contract is considered voidable and rescinded. The parties are left as though a contract had never been made.

Answer 138

Recission

Question 139

__________ is a remedy based on preventing unjust enrichment in cases of breach of contract, unenforceable contracts, and sometimes when there is no contract at all (quasi-contract).

Answer 139

Restitution.

Question 140

The right to specific performance in a land sale contract is cut off if the subject matter of the contract has already been sold to another who purchased for value and in good faith.
This is known as the equitable defense of:

Answer 140

Sale to a bona fide purchaser.

Question 141

The equitable defense of _______ arises when a party delays in bringing an equitable action and the delay prejudices the defendant. Note that mere delay itself is not a ground for this defense.

Answer 141

Laches.

Question 142

The _________________ defense arises when the party seeking specific performance is guilty of some wrongdoing in the transaction being sued upon. Note that the wrongdoing must be related to the transaction being sued upon; it is not sufficient that the plaintiff has defrauded other persons in similar transactions.

Answer 142

unclean hands

Question 143

_______ is a nonmonetary remedy found in Article 2 of the U.C.C. If a buyer has made at least part payment of the purchase price of goods that have been identified under a contract and the seller has not delivered the goods, the buyer may replevy (or recover) the goods from the seller if the seller becomes insolvent within 10 days after receiving the buyer’s first payment or the goods were purchased for personal, family, or household purposes. In either case, the buyer must tender any unpaid portion of the purchase price to the seller.

Answer 143

Replevy

Question 144

Under Article 2, how does a buyer’s right to replevy differ from a buyer’s right to specific performance?

Answer 144

Replevin will lie only for identified goods, while specific performance may be decreed even though the goods have not previously been identified

Question 145

Liquidated damages must be in an amount that is reasonable in view of the actual or anticipated harm caused by the breach. Therefore, courts have found liquidated damages clauses are enforceable if:

Answer 145

1. Damages for contractual breach are difficult to estimate or ascertain at the time the contract was formed; and
2. The amount agreed on was a reasonable forecast of compensatory damages in the case of a breach.

Question 146

Parol Evidence is

Answer 146

1. Words by a party or both parties
2. Before integration (before k was put in written form)
3. Oral or Written

Question 147

Perfect Tender Rule

Answer 147

1. Only applies to sale of goods
2. Perfect tender means everything (goods & delivery) must be perfectly in line with contract.
3. A less than perfect tender gives a buyer an option of rejecting.

Question 148

Rejection of goods

Answer 148

1. Distinguish rejection of an offer & rejection of the goods.
2. If seller does not meet perfect tender, buyer has option to retain and sue, or reject.
3. Rejection alternative is limited by cure, installment, contract, and acceptance
4. Buyer has obligation to use reasonable care with respect to rejected goods.

Question 149

S can cure when

Answer 149

1. reasonable grounds to believe would have been acceptable

2. time for performance has not yet expired.

Question 150

A buyer has a right to reject an installment only when

Answer 150

there is a substantial impairment in the installment that can’t be cured.

Question 151

If an assignee for value discovers that the assignor had previously assigned the same contract rights to another party for value, the assignee may _________.

Answer 151

sue the assignor for breach of warranty

Question 152

Under a warranty against infringement, a merchant seller regularly dealing in goods of the kind sold warrants that the goods are ________.

Answer 152

delivered free of any patent, trademark, copyright, or similar claims.

Question 153

List implied warranties given by an assignor to assigness for value.

Answer 153

The assignor warrants that he will do nothing in the future to defeat the assigned right; i.e., he will not wrongfully exercise his power to revoke.

The assignor also warrants that the assigned right is not subject to any valid defenses of the obligor against the assignor.

The assignor warrants that the assignor has the right to assign the right; i.e., that he has made no prior assignment of the same right.

Question 154

For a valid assignment, the assignor must manifest an intent to transfer his rights under the contract __________________ to the assignee

Answer 154

completely and immediately

Question 155

A and B enter into a contract under which A will service B’s car for $500. If, despite a clause prohibiting assignment of “the contract” by the parties, A assigns the contract to C, what is the result?

Answer 155

C has the right to the $500, but A has the obligation to service B’s car

Question 156

An effective assignment generally need not be in writing, though there are exceptions. They are:

Answer 156

Situations where an assignment must be in writing include

1. wage assignments;
2. assignments of an interest in land;
3. assignments of choses in action worth more than $5,000; and
4. assignments intended as security interests under Article 9 of the U.C.C.

Question 157

If a person leaves an item of jewelry with a jeweler for repair, and the jeweler sells the item to an unsuspecting purchaser, __________.

Answer 157

the purchaser has title to the item and the true owner cannot recover it

Question 158

As a general rule, all contractual duties may be delegated to a third person.
What are the exceptions to the rule?

Answer 158

1. If a duty involves personal judgment and skill, it may not be delegated. An actor’s performance would be an example of a duty involving personal judgment and skill.
2. A duty involving a special trust between the parties may also not be delegated. For example, the duties of an attorney to her client, or a physician to his patient, may not be delegated.
3. In addition to the above, the parties may agree to a contractual restriction on delegation. A provision that states that any certain duty is restricted from delegation will be given strict effect.

Question 159

The general rule is that when the assignor makes two assignments of the same right, if the first assignment is ____________, the ____________ assignee has priority.

Answer 159

irrevocable; first

Question 160

A writing is required for an assignment __________.

Answer 160

of wages.

Question 161

If a sale of goods is induced by fraud, the seller can rescind the contract and recover the goods unless __________.

Answer 161

the goods are resold to a buyer who was unaware of the fraud

Question 162

As a general rule, if the promisor fails to perform under a contract, a third-party beneficiary whose rights have vested may sue the promisee if the third-party beneficiary is _____________.

Answer 162

a creditor beneficiary

Question 163

If the promisee’s purpose in extracting the promise was to discharge an obligation owed to the third party, the third party is a ______ _________.

Answer 163

creditor beneficiary

Question 164

If the promisee’s purpose in extracting the promise was to confer a gift on the third party, the third party is a _______ __________.

Answer 164

donee beneficiary.

Question 165

An assignment is for value if it is:

Answer 165

(i) done for consideration or (ii) taken as security for or a payment of a preexisting debt.

Question 166

If a person leaves an item of jewelry with a jeweler for repair, and the jeweler sells the item to an unsuspecting purchaser, __________.

Answer 166

the purchaser has title to the item and the true owner cannot recover it

Question 167

Under a requirements contract, an order that is _________ __________ to previous orders or a stated estimate will not be enforceable.

Answer 167

unreasonably disproportionate.

E.g. a microbrewery agreed to buy all barley from a farmer. Over two years, each month the microbrewery ordered 4 barrels of barley. The microbrewery becomes more popular and suddenly needs 20 barrels. If the farm can’t provide the 20, the microbrewery can’t sue for breach of contract.

Question 168

A suretyship promise must ____________.

Answer 168

be in writing under the Statute of Frauds.

Question 169

A gratuitous promise to a creditor, can be enforced by the creditor if the creditor

Answer 169

reasonably and foreseeably relied on the promise in declining to sue the debtor within the statute of limitations period.

Question 170

Where one party makes a unilateral mistake about a basic assmption on which the contract is based, and theother party knew or had reason to know of the mistake, the mistaken party will be allowed to _________.

Answer 170

Rescind the contract.

Question 171

Under UCC 2-209, consideration is not required for ___________; however, any _______ will be subject to the general Code requirement of _____________.

Answer 171

an enforceable modification; modification; good faith and fair dealing.

Question 172

Good faith and fair dealing under the UCC requires ______.

Answer 172

honesty in fact and conforming with reasonable commercial standards.

Question 173

When both parties are merchants, a memorandum of the terms of the sale sent by one party to the other satisfies the __________ unless________________.

Answer 173

the statute of frauds; the retailer objects within 10 days.

Question 174

Under UCC 2-206(b)(1), an order for “prompt shipment” may be accepted by shipment of either _____ or _______ goods and a contract is created upon such shipment.

Answer 174

conforming or nonconforming.

• This alters traditional rule that shipment of nonconforming goods was a counteroffer which the buyer accepted upon taking delivery.
• Party may still reject the nonconforming shipment and sue for damages.

Question 175

Until a third party’s rights have vested, a _______ can take place without the consent of the third party.

Answer 175

modification of the contract

Question 176

If there is an anticipatory repudiation, then the nonbreaching party can

Answer 176

i. sue for damages
ii. contract with a third party, or
iii. do nothing

Question 177

If fact pattern language amounts to a prospective inability to perform, the innocent party may
(not for sale of goods)

Answer 177

suspend performance until he receives adequate assurances that performance will be forthcoming.

Question 178

Prosepective inability to perform rather than anticipatory repudiation will be found when

Answer 178

language constitutes an expression of doubt as to one’s ability to perform under the contract without being an outright refusal.

Question 179

______ assignment is generally revocable.

Answer 179

gratuitous

Question 180

Which one of the following contracts is considered void, rather than voidable?

Answer 180

A contract involving illegal consideration

Question 181

The confirmatory memo rule applies __________.

Answer 181

Only if both parties to the agreement are merchants

Question 182

The concept of __________ is the refusal of a court to enforce a contract provision or an entire contract to avoid “unfair” terms.

Answer 182

unconscionability

Question 183

In a contract for a sale of goods priced at $500 or more, if the goods are _________ or __________, the contract will be enforced even if there is no writing.

Answer 183

Received and accepted; paid for

Question 184

Mutual mistake can be a defense to the formation of a contract if:

Answer 184

The mistake concerns a basic assumption on which the contract is made

Question 185

What would be sufficient to allow enforcement of an oral contract for the sale of real property?

Answer 185

Conveyance of the property from the seller to the purchaser.

Question 186

Under the confirmatory memo rule, in contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if:

Answer 186

The recipient has reason to know of the confirmation’s contents and does not object to it in writing within 10 days of receipt

Question 187

A writing is not required to enforce a contract that would otherwise be covered by the Statute of Frauds if:

Answer 187

The party against whom enforcement is sought admits to the contract in court

Question 188

A contract __________ is considered void, rather than voidable.

Answer 188

illegal consideration

Question 189

In a contract between a minor and an adult, the contract is ____________ as to the adult and ___________ as to the minor.

Answer 189

Binding; voidable

Question 190

When a court refuses to enforce a provision of a contract to avoid “unfair” terms, it is applying the concept of:

Answer 190

unconscionability.

Question 191

At common law, the Statute of Frauds requires _____________ signed by ____________.

Answer 191

A writing or writings reflecting the material terms of the contract; the party to be held liable

Question 192

With respect to a completely integrated written agreement, parol evidence can be received to aid a fact-finder when there is a dispute as to __________.

Answer 192

the meaning of an ambiguous term within the agreement

Question 193

Despite the parol evidence rule, a party to a fully integrated written contract can always offer evidence __________.

Answer 193

Attacking the agreement’s validity at the time of formation

Question 194

Under the common law, as summarized by the Restatement of Contracts, evidence of additional terms is generally admissible even if the written contract appears to be completely integrated if the alleged terms __________.

Answer 194

are of a type that would naturally be omitted from a written agreement

Question 195

When the parties to a contract express their agreement in a writing with the intent that the writing embody the final expression of their bargain, this is known as __________.

Answer 195

integration

Question 196

When the parties to a contract have expressed their agreement in a completely integrated writing, a court will apply the __________ to determine whether any other expressions, made prior to or contemporaneous with the writing, are admissible to vary the terms of the writing.

Answer 196

parol evidence rule

Question 197

Under Article 2’s version of the parol evidence rule, a party __________.

Answer 197

May offer evidence explaining or supplementing the existing terms of an integrated writing, whether or not the writing appears to be ambiguous

Question 198

What does it mean if a term is “collateral” to a written agreement?

Answer 198

The term is related to the subject matter of the agreement, but not part of the primary promise

Question 199

Under the common law, as summarized by the Restatement of Contracts, evidence of additional terms is generally admissible even if the written contract appears to be completely integrated if the alleged terms __________.

Answer 199

are of a type that would naturally be omitted from a written agreement

Question 200

Which of the following is a condition precedent to effectiveness?

Answer 200

An agreement that a contract will not become binding until a certain condition has occurred.

Question 201

____ evidence may be outside the scope of the parol evidence rule?

Answer 201

Evidence of a condition precedent to effectiveness

Question 202

Under Article 2’s version of the parol evidence rule, a party may offer evidence of __________ to explain or supplement a fully integrated written contract’s terms.

Answer 202

A prior course of dealing, usage of trade, or course performance

Question 203

Despite the parol evidence rule, a party to a fully integrated written contract can always offer evidence __________.

Answer 203

Attacking the agreement’s validity at the time of formation

Question 204

The Restatement of Contracts allows a party to an agreement to introduce evidence of additional terms not included in a written integration of the agreement if the new terms do not conflict with the written integration and the terms concern a subject that similarly situated parties would not ordinarily be expected to include in a written instrument.
These terms are known as:

Answer 204

Naturally omitted terms

Question 205

Extrinsic evidence of a condition precedent to a fully integrated agreement is admissible, despite the parol evidence rule, because __________.

Answer 205

It is not altering the written agreement—the agreement comes into being only if the condition is met

Question 206

Was the offer terminated?

Answer 206

1. Lapse of time?
2. Death of a party prior to acceptance?
3. Words or conduct of offeror
   • Later unambiguous statement by offeror to offeree of unwillingness or inability to contract, or
   • Later unambiguous conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of.
4. Words or conduct of the offeree: Rejection
   Indirect rejection = counteroffer
   additional terms
   conditional acceptance
   1. CL: rejects &
   counteroffer
   2. UCC: rejects

Question 207

Which offers are irrevocable?

Answer 207

1. Options
2. Firm offer rule
   
   1. offer to buy or sell goods
   2. signed, written promise to keep the offer open, and
   3. party is a merchant.
3. Reliance: Can’t be revoked if:
   
   1. reliance that is
   2. reasoanbly foreseeable and
   3. detrimental
4. Unilateral contract + start of performance (not mere prep)

Question 208

T/F: Start of performance is treated as implied promise to perform and is acceptance even without any words of acceptance.

Answer 208

Yes, true in bilateral contracts, BUT in unilateral contracts, full performance = acceptance.

Question 209

What are the 4 rules associated with acceptance & the mailbox rule?

Answer 209

1. All communications other than acceptance are effective only when received.
2. Acceptance is generally effective when mailed.
3. If a rejection is mailed before an acceptance is mailed, then neither is effective until received.
4. You cannot use the mailbox rule to meet an option deadline.

Question 210

What are the 3 general acceptance fact patterns that will appear on the bar?

Answer 210

1. Offeree starts to perform (no words): acceptance in bilateral, not in unilateral.
2. Distance & delay in communications: mailbox rule for acceptance. Receipt for all other communications.
3. Seller sends the wrong goods: acceptance & breach.
   • Accommodation exception: Sends 100 blue instead of 100 red and says hope you can use blue instead. No contract, no breach.

Question 211

Generally an offer can be accepted only by:

Answer 211

1. a person who knows about the offer at the time she accepts (think rewards hypo)
2. who is the person to whom it was made.

*Offers cannot be assigned; options can be assigned unless the option otherwise provides.

Question 212

Legal reasons for not enforcing an agreement include:

Answer 212

1. lack of consideration or a consideration substitute
2. lack of capacity of the person who made the promise
3. statute of frauds
4. existing laws that prohibit the performance of the agreement (illegality)
5. public policy
6. misrepresentations
7. nondisclosure
8. duress
9. unconscionability
10. ambiguity in words of agreement
11. mistakes at the time of the agreement as to the material facts affecting the agreement.

Question 213

T/F: ARticle 2 doesn’t have a pre-existing legal duty rule.

Answer 213

True: New consideration is not required to modify a sale of goods contract.

E.g. Under common law if I already agreed to perform for $1000 and now I’m asking for $1500, need new consideration (unless 3rd party agrees ot pay extra). Under UCC, no new consideration is needed to make modification, just good faith. So I order 100 widgets and agree to pay $1000. Now seller says can’t do it for any less than $1300. No new consideration needed.

Question 214

What are the rules for part payment as consideration for release of balance of debt?

Answer 214

1. Part payment ($2000 instead of the $3000 I owe) is not enforceable because there is no new consideration.
2. But, if my debt was due Jan. 15 and I say I’ll pay the $2000 on Jan. 11, then new consideration in the earlier date, so that’s fine.

Question 215

What are consideration substitutes?

Answer 215

1. A written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration. (Statute of limitations is up on the $1000 I owe you, but I promise to pay you $600–that’s enforceable without consideration).
2. Promissory estoppel
   1. promise
   2. reliance that is reasonable, detrimental, and
      foreseeable
   3. enforcement necessary to avoid injustice

E.g you promise to re-rent to me for the same price but you increase the rent. No consideration, but I’ve painted the building relying on your promise.

• This type of situation will come up where people do stuff they were never asked to do, but the person should have known they were going to do it anyway.
  3. Seals (not on multi-state or CA essays).

Question 216

What are the 4 contracts within the SOF?

Answer 216

1. Promises to answer for the debts of another if they don’t pay (suretyship). (very narrow inclusion)
   • Must be a guarantee!
   •Main purpose exception: Store sells P paint on credit and C guarantees the debt if P doesn’t pay, but the paint is for P to paint C’s house. No SOF.
2. Service contract not capable of being performed within a year from the time of the contract.
   • Life exception: D hires P to work for the rest of P’s life. P is only 21. No SOF.
3. Transfers of interest in real estate (not for leases of a year or less).
   •Watch out for 1 year leases: no SOF.
4. Sale of goods for $500 or more.

Question 217

What are the 5 rules for satisfaction of the SOF by performance?

Answer 217

1. Part performance satisfies the SOF in transfers of real estate. Requires any 2 of the 3: (i) improvements of the land; (2) possession; (3) payment.
2. Full performance in a performance & service contract by either party satisfies the SOF.
3. Part performance of a services contract does not satisfy the SOF.
4. Part performance of a sale of goods contract satisfies the SOF but only to the extent of the part performance. (If deliver 600/2000, can sue to get paid for the 400, not the remaining 1400).
5. If the k is for the sale of goods that are to be specially manufactured, then the SOF is satisfied as soon as the seller makes a substantial beginning.

Question 218

What writing under common law satisfies the SOF?

Answer 218

Must pass the material terms test.

Can look at multiple writings.

Must be signed by person asserting the defense.

Question 219

What writing under UCC satisfies the SOF?

Answer 219

writing must indicate that there is a contract for the sale of goods and contain the quantity term. Look at contents & who signed.

*Common law = material terms test.

Question 220

What are the 4 ways the SOF can be satisfied?

Answer 220

1. performance
2. writing
3. judicial admission
4. estoppel (prob not on bar exam).

Question 221

What is the equal dignity doctrine?

Answer 221

Rules of law require that the authorization to execute a contract for someone else must be in writing only if the contract to be signed is within the SOF. (remember agency).

Question 222

When must a modification be in writing?

Answer 222

If the deal with the alleged change would be within the SOF.

Question 223

Under common law, contract provisions requiring that ll modifications be in writing are __________. Under UCC, contract provisions requiring written modifications are _____________.

Answer 223

not effective–ignore contract language.

effective unless waived.

Question 224

If the contract concerns an illegal subject matter, it is _______, but if the subject matter is legal and the P didn’t have reason to know of the D’s illegal purpose, then the k is __________.

Answer 224

unenforceable; enforceable

1. e.g. contract to kill
2. e.g. contract for plane ticket (D was taking drugs)

Question 225

What are the elements of misrepresentation?

Answer 225

1. statement of “fact” before the k
2. by one of the contracting parties or her agent,
3. that is false, and
4. induces the contract.

There are no termites.

*It doesn’t matter if the misrepresentation was innocent or made honestly.

Question 226

What is the rule for nondisclosure in contract formation?

Answer 226

Generally, nondisclosure is not enough to negate formation of a contract. More is needed, like concealment or fiduciary relationship.

E.g. E sells car to C, but not only doesn’t tell C about rust, but paints the car burnt orange to conceal rust.

Question 227

How is duress a reason for not enforcing an agreement?

Answer 227

1. physical duress–will be obvious
2. economic duress
   • bad guy: improper threat which is usually threat to breach existing contract and
   • vulnerable guy: no reasonable alternative.

E.g.

Question 228

What are the two parts of unconscionability to address?

Answer 228

1. procedural: unfair surprise: fine print, etc.

2. substantive: oppressive terms: favorable to one party

Question 229

What are the elements that need to be satisfied before a contract is unenforceable due to ambiguity?

Answer 229

1. parties use a material term that is open to at least 2 reasonable interpretations
2. each party attaches different meaning to the term, and
3. neither party knows or has reason to know the term is open to at least 2 reasonable interpretations.

Peerless.

Question 230

What are the rules for mistake of fact existing at the time of contract? Will it be enough to not enforce the agreement.

Answer 230

Generally, no.
1. Mutual, material mistake of existing fact: K will still be enforced unless person trying to get out of the deal did not assume the risk.

2. Unilateral mistake of material fact: Only if the other party had reason to know of the mistake.

Question 231

What are the exceptions to the parol evidence rule?

Answer 231

1. mistake in integration
2. subsequent writings/oral statements
3. defenses (not enforceable k)
4. ambiguity in written deal

Question 232

From where can the terms of the contract come?

Answer 232

1. words in the written contract
2. words of the parties not in the k (parol evidence)
3. conduct
4. UCC default terms

Question 233

On the bar, conduct takes one of 3 forms. Courts look first to _____, second to ____, third to ________ to explain words in contracts or to fill gaps in contracts.

Answer 233

1. course of performance
2. course of dealing
3. custom & usage
4. Course of performance: same people, same contract: S contracts to sell 1,000 chickens a month to B for 12 months. The
   first three shipments are boiling hens, and B does not complain.
5. Course of dealing: same people, different but similar contract: S contracts to sell 1,000 chickens a month to B for 12 months.
   Under prior chicken contracts, S sent B boiling hens, and B complained.
6. Custom and usage: different but similar people, different but
   similar contract:
   S contracts to sell 1,000 chickens a month to B for 12 months. It is customary in the chicken industry to use the word “chicken” when the deal covers chickens up to six pounds including boiling hens.

Question 234

What are the UCC gap fillers?

Answer 234

1. Delivery obligations of seller if goods delivered by common carrier.
2. risk of loss
3. warranties of quality
4. limitations on warranty liability

Question 235

In a shipment contract, the seller completes its delivery obligation when it

Answer 235

1. gets the goods to a common carrier
2. makes reasonable arrangements for delivery
3. notifies the buyer

Question 236

In a destination contract, the seller completes its delivery obligation

Answer 236

when the goods arrive at the destination.

Question 237

How do you know whether shipment v. destination contract?

Answer 237

Usually question will tell you. Assume shipment, but watch for use of FOB (city). If the city where the seller is or where goods are, then means shipment contract. If city where buyer is, then destination contract.

Question 238

What are the possible consequences in a risk of loss problem?

Answer 238

1. If the risk of loss is on the buyer, he has to pay the full price for the lost/damaged goods.
2. If on the seller, no obligation on the buyer and possible liability on the seller for nondelivery.

Question 239

What are the 4 risk of loss rules?

Answer 239

Try 1 first, if 1 doesn’t work go to 2, etc. .

1. Agreement of the parties controls. (real life, not bar exam).
2. Breach: breaching party is liable for any uninsured loss even though breach is unrelated to the problem.
3. Common carrier delivery: Risk of loss shifts from seller to buyer at the time the seller completes its delivery obligations
4. Catch-all: risk of loss shifts from a merchant-seller to the buyer on the buyer’s receipt of the goods; risk of loss shifts from a non-merchant seller when he or she tenders the goods.

Question 240

What are the types of warranties of quality?

Answer 240

1. express: words that promise, describe, compare, state facts. Not value/ opinion. Look for sample/ model.
2. Implied warranty of merchantabililty:
   • Seller must be a merchant who deals in goods
   of that kind.
   • Goods are fit for ordinary purpose.
3. Implied warranty of fitness for a particular purpose:
   • Buyer has a particular purpose
   • Buyer is relying on seller to select suitable goods
   • seller has reason to know of purpose and reliance
   • goods fit for particular purpose.

Question 241

What are the limitations on warranty liability?

Answer 241

1. statute of limitations: 4 yrs. from when tender of delivery is made
2. privity (not tested)
3. buyer’s examination of goods: no implied warranties as to defects that are obvious on exam.
4. Disclaimers
   • Express warranties generally can’t be disclaimed.
   • Implied can be disclaimed either:
   1. conspicuous language of disclaimer
   2. “As is” “with all faults”
5. Limitation of remedies:
   •Can limit remedies even for express warranties
   • general test is unconscionability
   • prima facie unconscionable if breach of warranty on consumer goods causes personal injury.

Question 242

T/F: Perfect tender only applies to sale of goods.

Answer 242

True.

Question 243

In what instances does a seller who failed to make perfect tender have the option to cure?

Answer 243

1. Seller’s reasonable ground to believe would be acceptable, perhaps with a money allowance. (look for course of performance/ course of dealing)
2. Time for performance has not yet expired.
3. Generally, seller has right to cure in installment contract. Buyer has right to reject only where ther is a substantial impairment and can’t be cured.

Question 244

T/F: Once the buyer accepts, the goods, it cannot later reject them.

Answer 244

True: buyer can only revoke acceptance later.

Question 245

T/F: Payment without opportunity for inspection is not acceptance.

Answer 245

True.

Question 246

Rejection must be timely. Failure to reject after the buyer has had reasonable time to reject is ___________.

Answer 246

acceptance.

Question 247

The effect of a buyer’s keeping the goods is implied _________.

Answer 247

acceptance. Look for the buyer’s keeping the goods without objection. Fact pattern that states when buyer first received the goods and when buyer first complained to seller.

Question 248

What are the requirements for revocation of acceptance?

Answer 248

1. nonconformity substantially impairs the value of the goods.
2. excusable ignorance of grounds for revocation or reasonable reliance on seller’s assurance of satisfaction, and
3. revocation within a reasonable time after discovery of nonconformity.

10degree sleeping bag example. Accepted, in summer then realized didn’t work in winter, revoked acceptance.

Question 249

What are the situations in which specific performance might be available?

Answer 249

1. contracts for sale of real estate

2. unique goods

Question 250

When can a seller get his/her goods back? seller’s reclamation of goods? When can buyer get goods from seller who becomes insolvent within 10 days?

Answer 250

1. Buyer must have been insolvent at the time that it received the goods.
2. seller demands return of goods within 10 days of receipt (reasonable time rule if, before delivery, there had been express rep of solvency by the buyer)
3. buyer still has goods at time of demand.

___________
The seller becomes insolvent within 10 days for the contract, B still has a legal right to obtain item by paying the balance of the purchase price if that was the deal.

Question 251

What are the 7 types of contract damages?

Answer 251

1. expectation
2. incidental
3. consequential
4. avoidable
5. certainty
6. reliance
7. liquidated

Question 252

What is the general approach to damages in a contracts case?

Answer 252

Expectation:

1. Look to facts for dollar value of performance w/out breach
2. look to facts for dollar value of performance with breach, and
3. compare the two to determine the amount of damages.

Question 253

What should the first 3 sentences of any money damages contracts question say?

Answer 253

1. The purpose of money damages is to compensate.
2. All of the various money damages rules are based on protection of the nonbreaching party’s expectation.
3. The purpose of money damages is to put the plaintiff in the same dollar position as if no breach.

Question 254

How are damages calculated for seller’s breach? (1. buyer keeps goods, 2. seller has goods).

Answer 254

1. Fair market value if perfect- fair market vlaue as delivered.
2. market price at time of discovery of the breach - contract price OR reasonable replacement price - contract price (whichever is higher)

Question 255

How are damages calculated for buyer’s breach? (1. buyer keeps goods, 2. seller has goods).

Answer 255

1. contract price
2. contract price- resale unless seller cannot resell in which case the seller can recover the contract price and in some cases provable lost profits.

Question 256

How does the provable lost profits rule affect damages?

Answer 256

S&M Leather contracts to sell leather
clothing to Conviser for $1,000. (Assume that C is buying goods that are part of S& M’s regualr inventory–off the rack). C breaches. S&M sells the very same items to Weiner for $1000.

S&M can recover damages from C because they would have sold to C and to W. 2 sales. bEcause of breach, there was just 1 sale.

Question 257

T/F: Incidental damages are always recoverable.

Answer 257

True: costs incurred in dealing with breach: storage of goods, etc.

Question 258

What are consequential damages?

Answer 258

limited to damages arising from P’s special circumstances and recovery is limited to situations in which D had reason to know of these special circumstances at the time of the contract.

Question 259

Contracts damages calculation should be:

Answer 259

expectation + incidental + consequential - avoidable - damages that can’t be established w/ reasonable certainty.

*incidental and consequential if applicable.

Question 260

What is the test for liquidated damages?

Answer 260

1. damages were too difficult to forecast at the time contract was made
2. provision is a reasonable forecast.

Question 261

What are the things that could happen after contract formation that could excuse performance?

Answer 261

1. other party’s material breach
2. other party’s anticipatory repudiation
3. nonoccurrence of express condition
4. later agreement
5. later occurrences that affect the ability to perform or mutually understood purpose of performance

Question 262

What is the absurd rule that changes when a non-repudiating party can sue when the other party anticipatorily repudiates?

Answer 262

Generally the non-repudiating party can sue either at the time of the repudiation or when performance was due.

If the non-repudiating party had completed performance before the repudiating party repudiated, then must wait for performance due date to sue.

Question 263

Before anticipatory repudiation, a party can suspend performance if it thinks the other guy won’t perform if:

Answer 263

1. reasonable grounds for insecurity
2. written demand for adequate assurance
3. commercially reasonable to stop performance.

Question 264

What type of improper performance excuses performance under common law?

Answer 264

1. Material breach
2. Whether breach is material is fact question.
3. if there is a substantial performance, then breach is not material.

*Damages can be recovered for any breach.

Look for material breach due to quality or quantity of performance.

Question 265

What is the standard for determining whether an express condition has occurred/been satisfied? What is the exception?

Answer 265

strict compliance. If ring needs to be appraised at $20,000, and gets appraised at $19,500, no good.

Exception: conditions of personal satisfaction of one of the contracting parties do not have to be strictly complied with. While the k language is “only if X is satisfied with the work,” courts simply look to whether a reasonable person would be satisfied.

Question 266

What are the 4 ways excuse because of a later agreement comes up?

Answer 266

1. Rescission (cancellation)
2. accord & satisfaction (substituted performance)
3. modification (substituted agreement)
4. novation

Question 267

When is rescission valid?

Answer 267

When there is performance still remaining from each of the contract parties (bilateral executory).

Question 268

What is an accord?

Answer 268

Agreement by the parties to an already existing obligation to accept a different performance in satisfaction of the existing obligation.

Question 269

What are the effects of accord (and satisfaction)?

Answer 269

1. If accord is performed (satisfaction), then performance of the original obligation is excused.
2. If accord is not performed, then the other party can recover on either the original obligation or on the accord.

Question 270

What is substituted agreement or modification?

Answer 270

an agreement by parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation.

Question 271

What is a novation?

Answer 271

agreement between BOTH parties to an existing contract to the substitution of a new party, same performance, different party.

Question 272

Who is liable after a novation?

Answer 272

Novation excuses the contracted for performance of the party who is substituted for or replaced.

Question 273

How is delegation different from novation?

Answer 273

Novation requires the agreement of BOTH parties to the originalcontract, and excuses the person replaced from any liability fornonperformance. Delegation does not require the agreement of
both parties and does not excuse.

Question 274

T/F: Death only excuses performance when person is “special”

Answer 274

true.

Question 275

If later, unanticipated event, ask yourself 3 questions to see whether performance is excused:

Answer 275

1. which party is arguing that her performance is excused?
2. what is her performance?
3. did post-contract occurrence affect her ability to perform or just cost of performance?

Question 276

Generally death does not make a person’s contract obligations disappear.

Answer 276

True

Question 277

When can you cancel or modify a contract with a 3rd party beneficiary?

Answer 277

If the third party knows of and has relied on or assented as requested, can’t cancel/modify. Once that happens, rights have vested and the contract cannot be cancelled or modified without her consent unless the k otherwise provides.

Question 278

What are the 4 rules for who can sue whom in a 3rd party beneficiary contract?

Answer 278

1. Beneficiary can recover from promisor.
2. Promisee can recover from promisor.
3. Beneficiary cannot recover from promisee.
4. Limited exception to #3: Creditor beneficiary can recover from promisee but only on pre-existing debt.

*#4: T can recover from B if B owed T $100 before B ordered the grits to satisfy that debt and the grits were never delivered.

Question 279

What is an assignment?

Answer 279

1. contract between only 2 parties

2. one of the parties later transfers rights under that contract to a third party.

Question 280

What is the difference between a third-party beneficiary contract and an assignment?

Answer 280

3rd party beneficiary: one contract, between two people, that mentions 3 people.

Assignment: 2 people make a contract with no mention of anyone else. Later one of them transfers to another person.

Question 281

What is the difference between a contract provision that prohibits assignments and one that invalidates assignments?

Answer 281

1. Prohibition: Language of prohibition takes away the right to assign but not the power to assign, which means that the assignor is liable for breach of contract, but an assignee who does not know of the prohibition can still enforce the assignment.
   • “rights hereunder are not assignable”
2. Language of invalidation takes away both the
   right to assign and the power to assign so that there is a breach by the assignor and no rights in the assignee.
   • “all assignments of rights under this contract are void.”

Question 282

Even if there is nothing in the contract that limits the right to assign, common law bars an assignment that ____________.

Answer 282

substantially changes the duties of the obligor.

• Assignment of right to payment is never a substantial change.
• Assignment of right to contract performance other than right to payment is usually a substantial change on the bar. (Batman has to defend Metropolis, not Gotham).

Question 283

General rule is that consideration is not required for assignments, but gratuitous assignments can be revoked. (& only gratuitous assignments).

Answer 283

True

Question 284

Who can sue whom in an assignment?

Answer 284

1. Assignee can recover from the obligor.
2. Assignor for consideration cannot recover from obligor.
3. Obligor has the same defenses against assignee as it would have against assignor.
4. payment by obligor to assignor is effective until obligor knows of assignment. Modification agreements between obligor and assignor are effective if the obligor did not know of the assignment.

Question 285

What are the implied warranties of assignor in an assignment for consideration?

Answer 285

1. right assigned actually exists
2. right assigned is not subject to any then existing defenses by the obligor
3. assignor will do nothing after the assignment to impair the value of the assignment.

*Assignor does not warrant what the obligor will do after the assignment.

Question 286

What are the rules for multiple assignments?

Answer 286

1. General rule for gratuitous assignments is that the last assignee wins.
2. For consideration:
   • General rule: first assignee for consideration wins.
   •Very limited exception: A subsequent assignee takes priority over an earlier assignee for value only if he both (i) does not know of the earlier assignment and (ii) is the first to obtain (1) payment, (2) a judgment, (3) a novation, OR (4) indicia of ownership. (4 Horsemen Rule).

Question 287

What is a delegation?

Answer 287

Party to a contract transferring work under that contract to third party. For example, P contracts to paint O's house for $1,000. P (delegating party)
and X (delegatee) agree that X will paint O's (obligee) house.

Question 288

Difference between assignment and delegation?

Answer 288

Rights v. Duties
Assignment is the transfer by a party to a contract of his rights or benefits under the contract to a third party who was not a party to the contract.

Delegation is the transfer by a party to a contract of his duties or burdens under the contract to a third party who was not a party to the contract.

Question 289

Delegations are permitted unless either:

Answer 289

1. contract prohibits delegations or prohibits assignments or
2. personal services contract that calls for very special skills.

Question 290

What if, after delegation, the 3rd party delegatee does not perform?

Answer 290

1. Delegating party always remains liable.

2. Delegatee is liable only if she receives consideration from delegating party.