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CA Bar Exam > Contracts > Flashcards

Contracts Flashcards

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1
Q

What does the UCC apply to?

A

Sale of goods

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2
Q

What does the common law apply to?

A

All other contracts (land, services, etc)

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3
Q

What are “goods?”

A

Movable, tangible property

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4
Q

What is a merchant?

A

Deals in goods of the kind, or holds himself out as having special skills/knowledge of goods

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5
Q

If a contract involves both goods and services, how do courts decide whether to apply UCC or common law?

A

Predominance Test - look to see whether goods or services is the predominant purpose (argue both on test)

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6
Q

Elements of contract

A

Offer, acceptance, consideration

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7
Q

Under the UCC does an offer need to be in any kind of form?

A

No, any manner or medium will suffice

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8
Q

If an acceptance varies from the offer’s terms, what happens at common law?

A

Mirror image rule: Acceptance must be mirror image of offer, otherwise it is a REJECTION and COUNTEROFFER.

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9
Q

If acceptance varies from offer under the UCC, what happens?

A

Any expression of acceptance will constitute acceptance even if terms are different or additional.

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10
Q

What is consideration?

A

Bargained-for exchange of legal detriment (promise to act or not to act)

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11
Q

What is an offer at common law and what are the requirements?

A

Manifestation of willingness to enter bargain.
1. Intent

2. Definite Terms (QTIPS)
A.Quantity
B.Time (can be missing)
C.Identity
D. Price
E. Subject Matter
  1. Communicated to Offeree.
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12
Q

Under the UCC, what happens with ADDITIONAL terms?

A

“Battle of the forms” 2-207

  1. If party is NOT a merchant - any additional term is a PROPOSAL and will not become part of K unless other party agrees.
  2. If BOTH parties are merchants: additional term becomes part of K UNLESS:
    A. Offer expressly limits acceptance to terms
    B. Material alteration
    C. If offeror objects in reasonable time
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13
Q

Under the UCC, what happens if acceptance includes DIFFERENT terms?

Majority v. Minority (x2) v. Common law

A

Majority (“Knock out”) - conflicting terms knock each other out, and court will gap-fill.

Minority (additional terms) - conflicting terms will be treated as additional terms

Minority 2 (fall out) - Offeror’s terms control

Common law - K is only agreed-upon terms, court can supply terms

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14
Q

What are the UCC gap-fillers?

A

Price - reasonable price at time of delivery
Place of Delivery - Buyer picks up from seller
Time for shipment - reasonable time
Time for payment - payment due upon receipt of goods

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15
Q

Under UCC, can acceptance be made by shipping goods? Conforming v. Non-conforming

A

Yes.
1. Shipping conforming = acceptance
2. Shipping non-conforming:
A. W/o acknowledgement: acceptance AND breach
B. W acknowledgement: rejection AND counteroffer

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16
Q

What is a contract without consideration called?

A

An illusory promise (not enforceable)

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17
Q

What are requirements and output contracts?

A

Can appear illusory but are not because of implied obligation of good faith to supply goods.

Requirements: Seller is exclusive source of ALL buyer’s requirements for certain goods for certain time.

Output: Buyer agrees to buy all of sellers output for certain good for certain time.

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18
Q

Do gifts have sufficient consideration?

A

No.

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19
Q

Can a contract be based on PAST consideration?

A

Generally no, except:
A. New promise to pay debt where statute of limitations has run
B. New promise to pay for benefits previously received

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20
Q

Will a preexisting legal obligation provide adequate consideration?

A

No.

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21
Q

What is promissory estoppel?

A

If a promise foreseeably induces reliance and is actually relied upon, it can be enforceable WITHOUT consideration:

  1. serves as substitute for consideration
  2. recovery limited to RELIANCE damages (i.e., no expectation damages)
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22
Q

What are the defenses to contract FORMATION?

A
  1. Statute of Frauds
  2. Misrepresentation
  3. Fraud
  4. Unconscionability
  5. Mistake
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23
Q

What type of contracts fall under Statute of Frauds?

A
  1. Marriage (prenups)
  2. Land
  3. Promise to pay another person’s debt
  4. One year (impossible to perform in one year)
  5. Sale of goods over $500
24
Q

What are the exceptions to contracts falling under Statute of Frauds?

A
  1. Marriage itself
  2. Land - if conveyance is made or performed in part, it will be enforceable
  3. Debt of another - if main purpose is for promisor’s own economic benefit
  4. One year - if full performance has occurred
  5. Goods over $500 - goods accepted/paid for, admission of K, or specially-manufactured good
25
Q

What does the Statute of Frauds require?

A

A writing with essential terms and signed by party to be charged.

Exceptions:

  1. Merchants - a memo between merchants, with sign confirmation and no objection within 10 days will suffice
  2. Judicial admission
  3. promissory estoppel
26
Q

What is misrepresentation?

A

Misrepresentation of material fact that was justifiably relied upon (no need to be intentional). MUST SUFFER $ DAMAGES.

27
Q

What is fraud?

A

Intentional misrepresentation that is justifiably relied upon. MUST HAVE $ DAMAGES.

28
Q

What is unconscionability?

A

If terms are so one-sided that no reasonable person would agree, court can refuse to enforce all or part of it.

NOTE: Assessed at time of FORMATION.

29
Q

What is mistake?

A
  1. Mutual - K is voidable
    A. Basic assumption
    B. Material effect on K
    C. Did not assume risk
  2. Unilateral - Party must show factors above AND that other party knew or should have known.
30
Q

What types of conditions are there?

A
  1. Express - in writing, strict compliance required

2. Constructive - supplied by court out of fairness, substantial compliance required

31
Q

How can a party waive conditions?

A
  1. Keeping benefit

2. Failing to insist on compliance

32
Q

What is the Parol Evidence Rule?

A

Limits evidence of writings/discussion made prior to, or contemporaneous with, written agreement.

33
Q

What is the Parol Evidence Rule dependent on?

A

Whether contract is PARTIAL or TOTAL integration.

34
Q

What is partial integration and how does PER apply?

A

Intended to be final expression of agreement, but NOT intended to include ALL terms.

Contradictory terms: Extrinsic evidence NOT allowed.
Supplemental terms: Extrinsic evidence allowed.

35
Q

What is total integration and how does PER apply?

A

Total integration is intended to be final expression of agreement AND include ALL terms.

Extrinsic evidence NOT allowed to supplement OR contradict.

36
Q

What are the exceptions to the PER (i.e., when is extrinsic evidence allowed)?

A
  1. to show K formation defects
  2. evidence of conditions precedent to K’s effectiveness
  3. Ambiguous terms (course of performance -> course of dealing -> trade usage)
37
Q

Is oral modification permitted?

A

Generally yes, unless it falls under Statute of Frauds.

38
Q

What are the modification requirements under the UCC vs common law?

A

Common law: NEW CONSIDERATION is required. Oral mods are permitted even if the K says otherwise.

UCC: GOOD FAITH required, but NOT consideration.

39
Q

What two types of beneficiaries are there?

A
  1. Intended - can sue to enforce (creditor, donee)

2. Incidental - cannot sue

40
Q

What happens if K is assigned even if K prohibits it?

A

Assignment is usually enforceable, but party who assigned will still be in breach.

41
Q

If a party to a K appoints someone else to perform duties, what is it called? Is this permitted? Any exceptions?

A

Delegation
Most duties can be delegated
Exception: No delegation of special skills/judgment

42
Q

What is a novation?

A

When party expressly agrees to accept performance of delegates and releases delegator from liability.

43
Q

What is the general rule with assignment?

A

All rights are assignable, unless it would cause material change in duties/risk

44
Q

What is it called if a party UNEQUIVOCALLY expresses before performance is due that they will not perform?

A

Anticipatory repudiation

45
Q

What responses are there for anticipatory repudiation?

A
  1. SUE for breach (unless for PAYMENT)
  2. SUSPEND performance
  3. Treat K as discharged and the repudiation as an offer to RESCIND
  4. Urge perfomance
46
Q

If the expression or conduct of a party indicates they won’t perform but it is NOT UNEQUIVOCAL, but causes reasonable grounds for uncertainty, what can other party do?

A

Demand ADEQUATE ASSURANCES in writing.

If no response in 30 days, it will be considered REPUDIATION.

(Note: party can suspend performance during this time)

47
Q

What is considered a material breach at common law?

A

If no SUBSTANTIAL PERFORMANCE

Note: timeliness will not be factor unless time is of the essence

48
Q

What is considered to be a material breach under the UCC?

A
  1. “Perfect Tender” Rule: if goods fail to conform in any respect.
    Buyer can: reject all, accept all and sue, accept any “unit” and reject rest.
  2. “Substantial conformity” for INSTALLMENT Ks.
49
Q

If a buyer rejects goods under UCC, can seller do anything?

A

He has a RIGHT TO CURE at any time BEFORE performance is due. Notice must be given.

NOTE: can cure after performance is due if reasonably believes buyer will accept.

50
Q

Is performance still due after minor breach?

A

Yes.

51
Q

What types of warranties are there?

A
  1. Express
  2. Implied warranty of merchantability
  3. Warranty of fitness for particular purpose
  4. Implied covenant of good faith and fair dealing (in every K)
52
Q

Accord and Satisfaction, what is it?

A

Accord - parties agree to substitute performance in discharge of existing duty

Satisfaction - performance of accord, both duties discharged.

53
Q

Does an accord require new consideration? If an accord is breached, what can other party do?

A

Yes.

Sue on original K or on the accord.

54
Q

What are the defenses to K enforcement?

A
  1. Defenses to K formation (no mutual assent, lack of consideration, SoF, misrepresentation/fraud, unconscionability, capacity, illegality, condition precedent)
  2. Impossibility
  3. Impracticability
  4. Frustration of Purpose: party’s purpose is destroyed by intervening events, frustration must be unforeseeable and total.
55
Q

What considerations are there when calculating damages (i.e., what will the breaching party argue)?

A
  1. Foreseeability
  2. Duty to mitigate
  3. Certainty - no speculative damages (if too speculative, reliance damages)
  4. Causation - damages must be caused by breach
56
Q

What are the requirements for specific performance?

A
  1. Valid K
  2. P Completed performance
  3. Inadequate legal remedy
  4. Mutuality of performance
  5. Feasibility of enforcement
  6. No applicable defenses

CA Bar Exam (11 decks)

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