Contracts and Sales Flashcards
Does the UCC apply to warranties of goods?
Why yes, yes it does
What are goods?
Goods are all things moveable at the time they are identified under the contract
When is a warrant of merchantability implied?
Under the UCC, whenever the seller is a merchant with respect to goods of that kind.
What does it mean for goods to be merchantable?
Goods must be fit for their ordinary purpose and pass without objection in the trade under the contract description.
How can you establish a breach of the implied warranty of merchantability?
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.
When does the implied merchantability of fitness for a particular purpose apply to goods?
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
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.
an express warranty
Under the UCC, what is the statute of limitations for breach of contract?
4 years after breach. In the case of a warranty, 4 years when the breach was (or should have been) discovered
How can a buyer waive the implied warranty of merchantability?
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
Under the UCC, how long does a firm offer last for?
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.
Can a party to an illegal contract ever recover damages?
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.
Can a seller modify a contract to allow a debtor to delay paying their debt if there is no consideration?
No. Under the preexisting-duty rule, a promise to perform a duty that a party is already legally bound to perform is not consideration.
When may a winning bidder avoid an auction sale?
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.
What damages can a buyer of real-estate recover when there is late delivery?
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.
When can an assignor revoke an assignment of rights?
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.
When does an illusory offer become binding?
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)
When is a promise or a charitable donation enforceable?
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.
When does the count start ticking for the one-year requirement under Statute of Frauds for a contract to be in writing?
The day the contract is ACCEPTED, not the day performance starts.
In a breach of a construction contract, when might a court reward damages despite the result of economic waste?
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.
What are the three elements necessary for promissory estoppel?
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.
At common law, when can a contract modification NOT be supported by new consideration?
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.
When is an acceptance effective?
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.
May a buyer reject the balance of an installment contract if one installment is nonconforming in a minor issue and can be cured?
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.
Are settlement agreements subject to the Statue of Frauds?
Noooooooo they are NOT
