Contracts and Sales

Question 1

Does the UCC apply to warranties of goods?

Answer 1

Why yes, yes it does

Question 2

What are goods?

Answer 2

Goods are all things moveable at the time they are identified under the contract

Question 3

When is a warrant of merchantability implied?

Answer 3

Under the UCC, whenever the seller is a merchant with respect to goods of that kind.

Question 4

What does it mean for goods to be merchantable?

Answer 4

Goods must be fit for their ordinary purpose and pass without objection in the trade under the contract description.

Question 5

How can you establish a breach of the implied warranty of merchantability?

Answer 5

Establish, by a PREPONDERANCE of the evidence:
1: the seller SOLD the goods
2: the buyer was a person reasonably expected to USE the goods
3: the seller was a merchant of the TYPE of goods sold
4: the goods were not of merchantable QUALITY at the time they were sold
5: the breach of warranty cause buyer’s DAMAGES, and
6: the buyer notified the seller of the breach in a reasonable amount of time after buyer DISCOVERED (or should have discovered) the breach.

Question 6

When does the implied merchantability of fitness for a particular purpose apply to goods?

Answer 6

When the seller at time of contracting has reason to KNOW of (from any source)
1) any particular purpose the goods are required for, and
2) that the buyer is relying on seller’s SKILL or EXPERTISE to select/furnish suitable goods

Buyer must also establish they RELIED on seller’s expertise.

(Must also show all elements of warrant of merchantability: seller ID, buyer used, seller impliedly warranted, breach caused damages, buyer notified seller w/i reasonable time of knowledge

Question 7

Any affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes part of the basis of the bargain creates __________________ that the goods conform to that affirmation or promise.

Answer 7

an express warranty

Question 8

Under the UCC, what is the statute of limitations for breach of contract?

Answer 8

4 years after breach. In the case of a warranty, 4 years when the breach was (or should have been) discovered

Question 9

How can a buyer waive the implied warranty of merchantability?

Answer 9

The implied warranty of merchantability requires a merchant-seller to provide a buyer with merchantable goods. This warranty may be disclaimed for defects that an examination would have revealed if, before entering the contract, the buyer EXAMINED the goods as fully as desired or REFUSED to examine them

Question 10

Under the UCC, how long does a firm offer last for?

Answer 10

NO MORE than 3 months without consideration.

Under the UCC firm-offer rule,* an offer to buy or sell goods is irrevocable if the offeror is a merchant and provides a signed writing containing assurances that the offer will remain open. However, the period of irrevocability cannot exceed three months unless the offeree gives consideration.

Question 11

Can a party to an illegal contract ever recover damages?

Answer 11

Yes, a party to an illegal contract may recover restitution damages if that party conferred a benefit on the other party and (1) was justifiably ignorant of the facts that made the contract illegal, (2) was less culpable than the other party, or (3) withdrew before the contract’s illegal purpose was achieved and did not engage in serious misconduct.

Question 12

Can a seller modify a contract to allow a debtor to delay paying their debt if there is no consideration?

Answer 12

No. Under the preexisting-duty rule, a promise to perform a duty that a party is already legally bound to perform is not consideration.

Question 13

When may a winning bidder avoid an auction sale?

Answer 13

A winning bidder may avoid an auction sale or pay the price of the last good-faith bid if the auctioneer (1) knowingly accepted a bid by the seller or on the seller’s behalf or (2) procured the seller’s bid to drive up the price. However, the winning bidder may not do so if the seller bid at a forced sale or gave notice reserving the right to bid.

Question 14

What damages can a buyer of real-estate recover when there is late delivery?

Answer 14

Compensatory damages consist of expectation, consequential, and incidental damages. In real-estate contracts requiring delivery of possession, late delivery is a breach that entitles the buyer to EXPECTATION DAMAGES measured by the fair market rental value of the property for the time the buyer was denied possession.

Question 15

When can an assignor revoke an assignment of rights?

Answer 15

An assignment of rights made without consideration is a gratuitous assignment and can be revoked by the assignor unless (1) the obligor has already performed, (2) a document symbolizing the assigned right has been delivered, (3) a written assignment signed by the assignor has been delivered, or (4) the assignee has detrimentally relied on it.

Question 16

When does an illusory offer become binding?

Answer 16

An offer that is illusory will become legally binding if (1) circumstances change such that the offer imposes obligations on both parties and (2) the offer is accepted after the change in circumstances.

Note: this includes a contract that says, I order 100 jellybeans to be delivered after Jan 15, but I can revoked until Dec 15. If there’s no revocation before Dec 15, and jelly beans are delivered after Jan 15th, there’s a valid enforceable contract. (Before Dec 15 it was just an illusory offer)

Question 17

When is a promise or a charitable donation enforceable?

Answer 17

When it is in writing.

A promise of a charitable donation may be enforceable under the doctrine of promissory estoppel (i.e., detrimental reliance), and the Second Restatement provides that any charitable subscriptions promised in writing are enforceable under promissory estoppel even if the elements of reliance are not shown.

Question 18

When does the count start ticking for the one-year requirement under Statute of Frauds for a contract to be in writing?

Answer 18

The day the contract is ACCEPTED, not the day performance starts.

Question 19

In a breach of a construction contract, when might a court reward damages despite the result of economic waste?

Answer 19

If the breach was wilful.

When breach of a construction contract results in a defective or unfinished construction, if the award of damages based on the cost to fix or complete the construction would result in economic waste, then a court has the discretion to award damages equal to the diminution in the market price of the property caused by the breach. Economic waste occurs when the cost to fix or complete the construction is clearly disproportional to any economic benefit or utility gained as a result. However, if the breach is willful, and only completion of the contract will give the nonbreaching party the benefit of its bargain, then a court may award damages based on the cost to fix or complete the construction, even if that award would result in economic waste.

Question 20

What are the three elements necessary for promissory estoppel?

Answer 20

Under the doctrine of promissory estoppel, a promise is binding if (i) the promisor should reasonably expect it to induce action or forbearance on the part of the promisee or a third person, (ii) the promise does induce such action or forbearance, and (iii) injustice can be avoided only by enforcement of the promise.

Question 21

At common law, when can a contract modification NOT be supported by new consideration?

Answer 21

When parties destroy the original contract.

At common law, modification of an existing contract must be supported by consideration. Agreements to modify a contract may still be enforced if there is a rescission of the existing contract by destroying the contract, or some other outward sign, and then entering into a new contract, whereby one of the parties must perform more than required under the original contract.

Question 22

When is an acceptance effective?

Answer 22

An acceptance that is mailed within the allotted response time is effective when sent rather than upon receipt, unless the offer provides otherwise. The mailing must be properly addressed and include correct postage.

Question 23

May a buyer reject the balance of an installment contract if one installment is nonconforming in a minor issue and can be cured?

Answer 23

NO.
If the seller makes a nonconforming tender or tenders nonconforming goods under one segment of an installment contract, the buyer can reject only if the nonconformity substantially impairs the value of that shipment to the buyer and cannot be cured. If the seller makes adequate assurances that he can cure the nonconformity, then the buyer must accept the shipment.

Question 24

Are settlement agreements subject to the Statue of Frauds?

Answer 24

Noooooooo they are NOT

Question 25

If a party to a contract waives a condition, can they later retract the waiver?

Answer 25

Not if the other party detrimentally relied on it.

Nonoccurrence of a condition may be excused if the party who would benefit from the condition waives it by words or conduct. That waiver cannot be retracted if the other party has detrimentally relied on it.

Question 26

When can a court impose a quasi-contract?

Answer 26

Courts may impose a quasi-contract if the plaintiff conferred a measurable benefit on the defendant without gratuitous intent and it would be unfair to let the defendant retain that benefit.

Question 27

Can a UCC firm offer be made over the phone?

Answer 27

NO. has to be in writing, signed, from a merchant.

Question 28

If you accidentally make a serious offer–accept within 24 hours!–while drunk and buyer accepts it, are you bound?

Answer 28

Yup. Unless the other party had reason to know seller was drunk.

Question 29

If you threaten someone with criminal prosecution unless they sign a contract–even if they are guilty–have they signed under duress?

Answer 29

Yes, and the contract will be voidable. Threatening criminal prosecution is duress, even if you think/know the guy did it.

Question 30

Can a person who has materially breached a contract ever recover damages?

Answer 30

Yes, but only restitution damages. They cannot recover expectancy or reliance damages.

Question 31

Does calling up the other party in a contract and saying “I’m not going to perform!” count as anticipatory repudiation?

Answer 31

Yup. In that case, the other party can: ignore the repudiation and demand performance; or treat it as a breach and seek damages.

Question 32

If you deliver the goods but then find out the other party is insolvent, can you reclaim the goods?

Answer 32

Only within 10 days. A nonbreaching seller may reclaim goods from a buyer when the seller (1) discovers the buyer received the goods on credit while insolvent and (2) demands the goods be returned within 10 days after their receipt. But this 10-day limitation does not apply if the buyer misrepresented its solvency in writing within three months before delivery.

Question 33

What happens if a buyer repudiates a contract to buy a famous baseball card and it is then destroyed? How much does buyer have to pay?

Answer 33

Purchase price - seller’s insurance coverage.

Under the UCC, which governs contracts for the sale of goods, the risk of loss generally remains with the seller until the buyer receives the goods. But the risk of loss immediately passes from the seller to the buyer when the buyer repudiates or breaches a contract that deals with identified goods (e.g., the sports legend’s memorabilia). When this occurs, the seller can recover any deficiency between the seller’s insurance coverage and the contract price within a commercially reasonable time.

Question 34

What are the 3 UCC warranties?

Answer 34

1-an express warranty
2-implied warranty of merchantability
3-implied warranty of fitness for a particular purpose

Question 35

What is an express warranty?

Answer 35

Any promise, affirmation, description, or sample that is part of the basis of the bargain is an express warranty, unless it is merely the seller’s opinion or commendation of the value of the goods.

Question 36

What happens if a buyer does not examine the goods but defects would’ve been obvious if he had?

Answer 36

If the buyer, before entering into the contract, has examined the goods or a sample or model as fully as the buyer desired, or has refused to examine the goods, there is no implied warranty with respect to defects that an examination ought to have revealed to the buyer. S

Question 37

Mnemonic for Statute of Frauds:

Answer 37

Ms. Lou
marriage
suretyship
land
one year
UCC

Question 38

In VA, can a partner force a partnership to share profits at a specific time?

Answer 38

No. Unless a partnership agreement provides otherwise, a partner cannot compel a distribution of partnership profits. There’s no default annual requirement or anything

Question 39

What’s a quantum meruit claim in VA?

Answer 39

In Virginia, a claim for quantum meruit arises when one party requests a service be performed by the other, but there was insufficient discussion of the terms to create an express contract. In this scenario, the law implies the existence of a contract, and the performing party can seek reasonable compensation for the services provided. (Think: niece was promised house in will if took care of aged aunt; did so for 20 years; aunt never changed will. Niece can recover uner quantum meruit.)

Question 40

Can a contract limit consequential damages for breach of warranty?

Answer 40

Yes. Generally consequential damages for breach of warranty may be limited or excluded unless the limitation or exclusion is unconscionable. Although limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, a limitation of damages when the loss is commercial is not.

Question 41

In VA, what’s the SOL for breach of warranty claims?

Answer 41

For contract for the sale of goods, the default statute of limitations is four years. The statute permits the parties to agree to reduce the four-year period to no less than one year, but they cannot agree to extend it to more than four years. For UCC contracts, the statute of limitations begins to run when the breach occurs. For a breach of warranty claim, the breach generally occurs when tender of delivery is made.