Contracts and Sales Flashcards
When a bidder retracts their bid in an auction, is the prior highest bidder bound by their bid?
A bidder has the right to retract until the auctioneer announces the completion of the sale (e.g., at the fall of the auctioneer’s hammer). However, the bidder’s retraction will not revive any prior bids. That is because the auctioneer’s acknowledgment of a subsequent bid acts as a rejection of a prior bid.
How does the UCC firm offer rule affect the ability of a seller to revoke its offer?
Offers will remain open and cannot be revoked if:
The offeror is a merchant (supplier)
assurance that the offer will remain open and
the assurance is contained in a signed writing from the offeror
If the offeree prepares the written offer, the offer must be authenticated separately by the offeror.
When would intoxication serve as a lack of capacity defense to a valid contract?
When the person was too intoxicated to reasonably understand the nature or consequences of the contract and the other party had reason to know of the intoxication
Are UCC contract clauses that require modifications to be in writing enforceable?
Yes, if they are included in a written and signed contract. Any attempt to modify orally is unenforceable.
How does a promise to make a gift affect consideration?
Consideration is a bargained for exchange of promises or performance. Each party’s willingness to enter into the contract must have been induced by the other’s act or promise. The promise to make a gift is not induced.
When may a defense of duress properly prevent enforcement of a contract?
When the party’s assent was induced by an improper threat from another party. Then the contract is voidable if the threatened party has no reasonable alternative but to succumb to the improper threat.
When is an express warranty not created under a UCC sale of goods?
When a seller merely givesn an opinion or commendation about the quality or value of goods.
When can a third party beneficiary enforce a contract?
A third party beneficiary, or one for whome the contract is intended to benefit, may enforce the contract when the contracting parties intend the contract to benefit the nonparty.
When does an assignment of a contract occur?
When a contracting party transfers his rights under a contract to a third party. The assignee then steps into teh shoes of the assignor and assumes all of the assignor’s contractual rights to the obligor’s performance as the stand at the time of the assignment
What contracts are subject to the statute of frauds?
MY LEGS
Marriage, over one year, sale of land, executor, the sale of goods over $500, and suretyship.
This also applies to the TRANSFER of real property.
What is a minor breach and how may the breaching party recover under this theory?
A minor breach is when a party substantially but not fully performed their contractual obligations. The party can recover on the contract under either expectancy damages, which are designed to place the parties in the same position as if teh contract had been fully performed, or under reliance damages, which are designed to put the parties in the same position as if the contract had never been formed and are used when expectancy damages are too speculative.
When may prior or contemporaneous oral or written agreements be admissible that would otherwise be in violation of the parol evidence rule?
To establish:
Whether the writing is integrated
the meaning of an ambiguous term
as a defense to formation or enforcement
grounds for granting or denying a rememdy
subsequent contract modifications
conditions precedent to effectiveness
What may a party that commits a material breach recover?
Restitution damages only, which are designed to ensure that the nonbreaching party is not unjustly enriched by the breaching party’s work.
Define the doctrine of anticipatory repudiation and explain its effect on the performance in a contract.
A contracting party clearly and unequivocally repudiates a promise before performance is due. At that time, the non-repudiating party may either
ignore the repudiation and demand performance or
treat the repudiation as a breach and seek remedies.
When may a nonbreaching seller reclaim goods from a buyer in the UCC context?
When the seller
discovery that the buyer received the goods on credit while insolvent (could not pay debts when they became due) AND
demands the return of the goods within 10 days of the buyer’s receipt
Note: the limit does not apply when the buyer misrepresented its solvency in writing within three months prior to delivery.
