Contracts for Bar

Question 1

In order to qualify as an Offer to buy or sell real estate, a communication must include:

1. __________
2. _________

Answer 1

In order to qualify as an Offer to buy or sell real estate, a communication must include:

1. Price
2. Land description

Question 2

Under the UCC, Article 2, party A and party B agree to purchase 200 widgets. The parties do not include a price in their agreement.

Is there a valid offer and acceptance without a price agreement in the UCC?

Answer 2

Yes, per Article 2 of the UCC, a communication may be an offer, even without a price term, if the parties so intend.

Question 3

S tells B that S will sell B a car for a fair price.

Under the UCC, is this an offer?

Answer 3

No, under the UCC, a vague or ambiguous material term is not an offer.

Question 4

S tells B that S will sell B a house for a reasonable price.

At Common Law, is this an offer?

Answer 4

No, under Common Law, a vague or ambiguous material term is not an offer.

Question 5

Buyer and Seller form a Requirements contract. B is to buy 1000 widgets from S every month.

Buyer is authorized to increase the requirements amount to an amount higher than 1000 widgets, if B’s increase is ____________________.

Answer 5

A Buyer can increase requirements so long as the increase is in line with prior demands.

An unreasonably disproportionate increase however, would not be permitted.

Question 6

If a potential Buyer dies before accepting an offer, that offer is:

A. Acceptable by the Buyer’s heirs
B. Terminated

Answer 6

B. Terminated.

Death or incapacity of either party after the offer, and before acceptance, terminates the offer.

Question 7

An offer is revoked by either:

1. A later ___________ statement by offeror to offeree of unwillingness/inability to contract; OR
2. Later ___________ conduct by offeror indicating unwillingness/inability to contract, that ______________________.

Answer 7

An offer is revoked by either:

1. A later unambiguous statement by offeror to offeree of unwillingness/inability to contract; OR
2. Later unambiguous conduct by offeror indicating unwillingness/inability to contract, that offeree is aware of.

Question 8

Four kinds of Irrevocable Contract are:

1. __________________
2. __________________
3. __________________
4. __________________

Answer 8

1. Option
2. Firm Offer Rule
3. Reliance
4. Unilateral Contract (Start of Performance)

Question 9

An offer may be considered an irrevocable Option offer if the offeror has made an offer and:

1. __________________
2. __________________

Answer 9

An offer may be considered an irrevocable Option offer if the offeror has made an offer and:

1. The offeror promises not to revoke (or keep the offer ‘open’)
2. This promise is supported by payment/consideration from the offeree.

Question 10

The UCC ‘Firm Offer Rule’ provides than an offer cannot be revoked for up to three months if there is:

1. __________________
2. __________________
3. __________________

Answer 10

The UCC ‘Firm Offer Rule’ provides than an offer cannot be revoked for up to three months if:

1. The offer is to buy or sell goods
2. With a signed, written promise to keep the offer open
3. The offeror is a merchant

Question 11

Does the ‘Firm Offer’ rule apply to Common Law exchanges as well as UCC exchanges?

Answer 11

No.

The Firm Offer Rule applies only to the UCC and does not apply to Common Law exchanges.

Question 12

Per the principle of Reliance, an offer cannot be revoked if there has been:

1. __________________
2. __________________
3. __________________

Answer 12

Per the principle of Reliance, an offer cannot be revoked if there has been:

1. Reliance that is
2. Reasonably foreseeable and
3. Detrimental

Question 13

Generally, a counteroffer terminates an offer, and creates a new offer.

What is the effect if a potential Buyer sends a counteroffer in response to an Option Offer?

Answer 13

If a counteroffer does not terminate an Option.

A Buyer may send a counteroffer in response to an Option, and then the Buyer may subsequently accept the Option.

Question 14

At Common Law, a ‘Conditional Acceptance’ is treated as a Rejection and a Counteroffer that may be accepted by conduct.

Per UCC, Conditional Acceptance is treated as only a ________________.

Answer 14

Rejection.

The UCC treats conditional acceptances as only Rejections.

Question 15

The Mirror Image Rule provides that a response to an offer that adds new terms will be treated as a _________, rather than an acceptance.

Answer 15

Counteroffer.

The Mirror Image Rule provides that a response to an offer that adds new terms will be treated as a Counteroffer, rather than an acceptance.

Question 16

The Mirror Image Rule applies to:

A. Common Law Only
B. UCC
C. Both Common Law and UCC
D. Only in Equity

Answer 16

A. Common Law Only

The Mirror Image Rule is only applicable to Common Law.

Question 17

If the offeree starts to perform in response to an offer, the general rule is the contract has been accepted.

As a general rule, this is because beginning to perform is treated as ______________.

Answer 17

As a general rule, this is because beginning to perform is treated as an implied promise to perform.

Question 18

The exception to Acceptance by Starting Performance is when the offeror would not know that the offeree has begun performance.

In such instances, acceptance is not Starting Performance, but _______________.

Answer 18

Notice of Performance.

The Offeree must provide the offeror Notice that the Offeree has started performance, in order for Offeree’s performance to be considered Acceptance.

Question 19

The “Mailbox Rule” provides that:

Offers are effective when they are ___________.
Acceptances are effective when they are ___________.
Communications other than offers or acceptances are effective when they are ___________.

Answer 19

Per the “Mailbox Rule”:

Offers are effective when they are RECEIVED.
Acceptances are effective when they are SENT (placed in the mailbox).
All other communications are effective when RECEIVED.

Question 20

Consideration is defined as _________ __ _____ ____________.

Answer 20

Consideration is defined as Bargained For Legal Detriment.

Question 21

May forbearance from a legally allowable activity be consideration?

Answer 21

Yes, forbearance from activity may be consideration, if that forbearance is bargained for.

Question 22

At Common Law, which of the following is consideration?

A. A promise to perform later.
B. An agreement to perform an activity already required by an existing contract.
C. A service that was previously performed.

Answer 22

A. A promise to perform

Promises to perform are valid consideration for other promises, at Common Law.

However, agreements to perform that are already legally obligated is not new consideration. Generally, any new contract modification will require additional consideration.

Further, if a service was already performed, it may not be consideration in a later contract.

Question 23

Per the UCC, what is required to modify or make changes to a sale of goods contract?

A. New consideration alone
B. Good faith alone
C. Good faith and new consideration

Answer 23

B. Good Faith alone

Under the UCC, there is no requirement for new consideration in order to modify a sale of goods.

The only requirement is good faith.

Question 24

What are the elements of Promissory Estoppel?

1. _________
2. _________
3. _________

Answer 24

The elements of Promissory Estoppel are:

1. Promise
2. Reliance that is reasonable, detrimental, and foreseeable
3. Enforcement of the promissory is necessary to avoid injustice

Question 25

What 3 categories of person does the law characterize as ‘lacking capacity to contract?’

1. _________
2. _________
3. _________

Answer 25

The three categories of individuals who lack capacity to contract are:

1. Infants (under 18)
2. Mental incompetents (must lack ability to understand agreement)
3. Intoxicated persons (only if other party has reason to know that person is intoxicated)

Question 26

Under ___________, a person who lacks capacity is nonetheless obligated to pay for things that are __________.

Answer 26

Under quasi-contract, a person who does not have capacity is legally obligated to pay for things that are necessary.

This includes food, clothing, medical care, shelter, etc.

Question 27

A contract will not be enforced by a Court if the court finds a party was under Duress.

Duress may be physical or economic.

Economic duress has two elements.

1. _________
2. _________

Answer 27

Two elements of Economic Duress:

1. Improper Threat (often threat to breach an existing contract)
2. No Reasonable Alternative (the party under duress is vulnerable and lacks a reasonable alternative)

Question 28

A contract will not be enforced by a Court if the court finds a presence of Undue Influence.

Undue Influence has two elements:

1. _________
2. _________

Answer 28

Undue Influence has two elements:

1. Special Relationship between the parties
2. Improper Persuasion of the weaker party by the stronger party

Question 29

Courts will void a contract for Unconscionability if the Court finds:

1. ___________ unconscionability; and
2. ___________ unconscionability
3. ___________

Answer 29

Courts will void a contract for Unconscionability if the Court finds:

1. Procedural unconscionability; and
2. Substantive unconscionability
3. At the time the agreement was made

Question 30

Relief for a Mutual Mistake will be granted only when:

1. Both parties _______________ (not just _____)
2. About _______________
3. The party seeking relief __________

Answer 30

Relief for a Mutual Mistake will be granted only when:

1. Both parties are mistaken (not just uncertain)
2. About existing facts
3. The party seeking relief did not bear the risk of mistake in forming the contract

Question 31

Courts will grant relief on the basis of a Unilateral Mistake (only one party is mistaken) only if __________________________________. (also known as __________________)

Answer 31

Courts will grant relief on the basis of a Unilateral Mistake (only one party is mistaken) only if the other party had reason to know of the mistake. (known as Palpable mistake)

Question 32

To examine whether Misrepresentation has occurred, Courts will examine if there has been:

1. Statement of “fact” ______ the contract
2. By _______________________ or _____
3. That is ________
4. That is _________ or ______
5. _____________ the ________

Answer 32

To examine whether Misrepresentation has occurred, Courts will examine if there has been:

1. Statement of “fact” before the contract
2. By one of the contracting parties or her agent
3. That is false
4. That is fraudulent or material
5. Induces the contract

Question 33

When considering if a Contract is void on the basis of Misrepresentation, what weight does the Court give to the below factors:

1. Party seeking relief’s Reliance on the misrepresentation
2. The Party that made the misrepresentation’s Honest belief that the misrepresentation was correct

Answer 33

1. Reliance is a crucial component in whether a Court will find a contract void for Misrepresentation.
2. Courts do not require that misrepresentation be intentional. Honest Misrepresentations are still considered Misrepresentations by the Court.

Question 34

What Four kinds of contracts are within the Statute of Frauds?

1. _________
2. _________
3. _________
4. _________

*** Statute of Frauds

Answer 34

The below four kinds of contracts fall within the statute of frauds:

1. Promises to Answer for the Debts of Another (Suretyship)
2. Service Contracts not capable of being performed in under a year (from the time of the contract)
3. Transfers of Interests in Real Estate
   (Exception: lease of 1 year or less)
4. Sales of Goods for over $500

*** Statute of Frauds

Question 35

Very generally, how may the Statute of Frauds be satisfied?

1. __________
2. __________
3. __________ (UCC Specific)
4. __________ (UCC Specific)

*** Statute of Frauds

Answer 35

The Statute of Frauds may be satisfied by:

1. Part Performance
2. Writing
3. Delay in Responding by Merchant (UCC Specific)
4. Judicial Admission (UCC Specific)

*** Statute of Frauds

Question 36

What is the Common Law test to examine whether a writing satisfies the Statute of Frauds?

__________________

*** Statute of Frauds

Answer 36

The Material Terms Test: All material terms must be included in the writing, and the writing must have been signed by the party asserting the Statute of Frauds defense.

*** Statute of Frauds

Question 37

What is the basic premise of the Parol Evidence Rule?

Answer 37

Under the Parole Evidence Rule, the final written version of a deal replaces earlier agreements, negotiations, and conversations.

Question 38

The Implied Warranty of Merchantability applies to any goods that are __________________, and warrants that the goods ________________________________.

Answer 38

The Implied Warranty of Merchantability applies to any goods that are bought from a merchant, and warrants that the goods are fit for the ordinary purpose for which such goods are used.

Question 39

An Implied Warranty of Fitness for a Particular Purpose is triggered when:

1. ___________
2. ___________
3. ___________

Answer 39

An Implied Warranty of Fitness for a Particular Purpose is triggered when:

1. Buyer has a particular purpose
2. Buyer is relying on seller to select suitable goods
3. Seller has reason to know of the buyer’s purpose and reliance on seller

Question 40

The term for statute of limitations on Warranties is __________.

The statute begins to run when ___________.

Answer 40

The term for statute of limitations on Warranties is four years.

The statute begins to run when the tender of delivery is made.

Question 41

_________ warranties generally cannot be disclaimed.

Answer 41

Express warranties generally cannot be disclaimed.

Question 42

Implied warranties of merchantability/fitness may be disclaimed in either of the below two ways:

1. ___________; OR
2. ___________

Answer 42

Implied warranties may be disclaimed in either of the below two ways:

1. Conspicuous language of disclaimer, mentioning merchantability; OR
2. “As is” or “with all faults”
   (these terms function as ‘magic words’)

Question 43

Although express warranties may not be disclaimed, a seller may limit the possible ___________.

Answer 43

Although express warranties may not be disclaimed, a seller may limit the possible remedies.

Question 44

The Statute of Frauds requires that in some instances, an agreement must be evidenced by a _______________________________.

Answer 44

The Statute of Frauds requires that in some instances, an agreement must be evidenced by a writing signed by the party the agreement is to be enforced against.

Question 45

The Statute of Frauds does not require a formal contract. Only that the writing/memorialization:

1. ___________
2. ___________
3. ___________

Answer 45

The Statute of Frauds does not require a formal contract. Only that the writing/memorialization:

1. Reasonably identifies the subject matter of the contract
2. Indicates that a contract has been made between the parties
3. States the essential terms, with reasonable certainty

Question 46

Delivery obligations under the UCC – In a Shipment contract, the Seller completes delivery when the Seller:

1. ___________
2. ___________
3. ___________

Answer 46

In a shipment contract, the Seller completes delivery when the Seller:

1. Gets the goods to a common carrier
2. Makes reasonable arrangements for delivery
3. Notifies the buyer

Question 47

What kind of contract is implied under the UCC if the terms are “F.O.B. “?

Answer 47

Under the UCC, this is a Shipment contract.

In a Shipment contract, the Seller completes delivery upon tender to a common carrier, after making proper delivery arrangements and notifying the buyer.

Question 48

If the legal remedy is ______________, the non-breaching party may seek Specific Performance.

Answer 48

If the legal remedy is inadequate, the non-breaching party may seek Specific Performance.

Question 49

Courts will grant an order of specific performance to enforce a contract to ‘not compete’ if:

1. ___________
2. ___________

Answer 49

Courts will grant an order of specific performance to enforce a contract to ‘not compete’ if:

1. The services to be performed are unique
2. The covenant is reasonable

Question 50

If a buyer breaches, a seller may force goods on a buyer only if ________________________.

Answer 50

If a buyer breaches, a seller may force goods on a buyer only if the seller is unable to re-sell the goods at a reasonable price.

Question 51

The right to demand assurances arises when ________________________.

Answer 51

The right to demand assurances arises when there are reasonable grounds for insecurity.

Question 52

The right to Anticipatory Repudiation requires more than nervousness.

The right to Anticipatory Repudiation requires a _______ __________ that the other party is unwilling/unable to perform.

Answer 52

Clear Indication

The right to Anticipatory Repudiation requires a Clear Indication that the other party is unwilling/unable to perform.

Question 53

The goal of damages in a breach of contract claim is to _________________________________________.

Answer 53

The goal of damages in a breach of contract claim is to put the non-breaching party in the position she would have been in if the promise had been performed.

Question 54

The Standard measure of damages is based on “Expectation Damages” in Contract, which means, sufficient damages to allow for the plaintiff __________________________________________.

Answer 54

Substitute Performance.

The Standard measure of damages is based on “Expectation Damages” in Contract, which means, sufficient damages to allow for the plaintiff to buy a substitute performance. Also known as ‘Benefit of the Bargain’ damages.

Question 55

Contract damages also include Incidental Damages, which are _________________________________________.

Answer 55

Incidental Damages are typically expenses reasonably incurred by or incident to the breach.

Question 56

The Certainty Rule provides that losses must be _______________.

Answer 56

The Certainty Rule provides that losses must be non-speculative.

Question 57

In a suit for restitution, the measure of recovery is __________.

Answer 57

In a suit for restitution, the measure of recovery is the value of the benefit conferred.

Question 58

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:

A. The profits he would have derived from the contract
B. The profits he would have derived from the contract, plus any costs he has incurred
C. The contract price plus any costs he has incurred
D. The contract price

Answer 58

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

If the property owner breaches a construction contract during construction, the builder is entitled to any profit he would have derived from the contract plus any costs he has incurred to date by starting construction. The formula is also stated as the contract price minus the cost of completion.

Question 59

To recover full damages when an employer breaches an employment contract, the employee must:

1. ___________
2. ___________
3. ___________

Answer 59

To recover full damages when an employer breaches an employment contract, the employee must:

1. Make reasonable efforts
2. To find a new position of the same kind
3. In the same locale

A nonbreaching party cannot recover avoidable damages.

To avoid incurring additional damages, a nonbreaching employee must try to find a comparable position in the same locale.

If the breaching employer can prove that a comparable job in the same locale was available, then contract damages against that breaching employer for lost wages will be reduced by the wages that the plaintiff would have received from that comparable job.

Question 60

__________ damages consist of losses resulting from the plaintiff’s particular circumstances that any reasonable person would have foreseen as a probable result of breach.

Answer 60

Consequential

Consequential damages consist of losses resulting from the plaintiff’s particular circumstances that any reasonable person would have foreseen as a probable result of breach.

Question 61

If a plaintiff’s expectation damages will be too speculative to measure, the plaintiff may elect to recover __________ instead, to put the plaintiff in the position she would have been in had the contract never been formed.

Answer 61

Reliance Damages

If a plaintiff’s expectation damages will be too speculative to measure, the plaintiff may elect to recover Reliance Damages instead, to put the plaintiff in the position she would have been in had the contract never been formed.

Question 62

What is an option contract?

Answer 62

An option contract is a distinct contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer.

Question 63

If it reasonably appears that the parties intended to make a valid contract, a court may apply the presumption that the parties’ intent was to include a reasonable term to rectify any __________ term.

Answer 63

Missing

If it reasonably appears that the parties intended to make a valid contract, a court may apply the presumption that the parties’ intent was to include a reasonable term to rectify any Missing term.

Question 64

When can an offeror properly revoke an offer for a unilateral contract?

A) Anytime before the offeree has completed performance
B) Anytime before the offeree has begun performance
C) Anytime before the offeree has promised performance

Answer 64

B) Anytime before the offeree has begun performance

An offer for a true unilateral contract becomes irrevocable once performance has begun. Thus, an offeror can properly revoke an offer for a unilateral contract at any time before the offeree has begun performance.

Question 65

For breach of a sale of goods contract, the buyer’s damages are measured as of _____________, while the seller’s damages are measured as of ______________.

Answer 65

For breach of a sale of goods contract, the buyer’s damages are measured as of the time he learns of the breach, while the seller’s damages are measured as of the time for delivery.

Question 66

The U.C.C. authorizes the buyer to seek replevin of goods identified to the contract when the buyer is unable to ______________.

Answer 66

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 67

____________ damages may be awarded when expectation damages are too speculative to measure, and award the plaintiff the cost of her performance, putting the plaintiff in the position she would have been in had the contract never been formed.

Answer 67

Reliance damages may be awarded when expectation damages are too speculative to measure.

Reliance damages award the plaintiff the cost of her performance, putting the plaintiff in the position she would have been in had the contract never been formed.

Reliance damages are not the standard measure of damages.

Question 68

Under Article 2, a defective shipment in an installment contract cannot be rejected if ____________.

Answer 68

Under Article 2, a defective shipment in an installment contract cannot be rejected if the defect can be cured..

Question 69

Under Article 2, in a noncarrier case, in the absence of an agreement otherwise, the place of delivery is generally the ________’s place of business.

Answer 69

Seller’s

Under Article 2, in a noncarrier case, in the absence of an agreement otherwise, the place of delivery is generally the seller’s place of business, or if he has none, his residence.

Question 70

Under Article 2, when an offeree proposes additional or different terms during acceptance, the court will apply __________ to determine whether the additional or different terms become part of the contract.

Answer 70

The Battle of the Forms

The battle of the forms provision of Article 2 lists specific rules for determining what terms are included in a contract when the terms of acceptance do not match the terms of the offer.

Question 71

Under the Article 2 battle of the forms provision, whether additional or different terms proposed by the offeree during acceptance ultimately become part of a contract depends on whether or not __________.

A) The offeree is a merchant
B) Both parties are merchants
C) The offeror is a merchant
D) One of the parties is a merchant

Answer 71

B) Both parties are merchants

Whether the additional or different terms become part of the contract depends on whether or not both parties are merchants.

If both parties are merchants, additional terms in the acceptance become part of the contract unless they materially alter the terms of the offer, the offer expressly limits acceptance to the terms of the offer, or the offeror has already objected to the terms (or objects within a reasonable time after notice of them is received).

Question 72

Under the knockout rule, __________ terms are knocked out of the contract and gaps are filled by the UCC gap-filler provisions.

Answer 72

Conflicting

Under the knockout rule, conflicting terms are knocked out of the contract and gaps are filled by the UCC gap-filler provisions.

Conflicting terms are subject to the knockout rule; additional terms are never subject to the knockout rule.

Question 73

Exception to Statute of Frauds

A writing is not required where:

1) A contract is for “_______ ___________” goods not _____________ in the ordinary course of the seller’s business; and
2) The seller _____________________________

Answer 73

A writing is not required where:

1) The contract is for “specially manufactured” goods not suitable for resale in the ordinary course of the seller’s business; and
2) The seller has made a substantial beginning of their manufacture or commitments for their procurement.

Question 74

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

A
The buyer must accept the defective goods, but must allow the seller to cure the defects within the original time for performance of the contract

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

C
The buyer must accept the defective goods, but may recover from the seller whatever damages she has suffered as a result of the defects

D
The buyer can reject the goods outright, thus placing the seller in immediate breach with no right to cure

Answer 74

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

In a single delivery contract, a buyer can reject defective goods, but the UCC grants the seller the right to cure the defective shipment within the original time for performance of the contract.

A seller cures by giving reasonable notice of his intention to do so and making a new tender of conforming goods within the time originally provided for performance in the contract.

Question 75

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

A
The buyer would suffer no damages by allowing the seller to cure

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

C
The buyer agrees to extend the terms of the contract to allow for late delivery without additional consideration

D
The seller notifies the buyer of his desire to cure before the time for performance in the original contract

Answer 75

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

The UCC provides that in cases where a buyer rejects a tender of nonconforming goods that the seller reasonably believed would be acceptable “with or without money allowance,” the seller, upon a reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender.

A seller will probably be found to have had reasonable cause to believe that the tender would be acceptable if the seller can show that trade practices or prior dealings with the buyer led the seller to believe that the goods would be acceptable, or the seller could not have known of the defect despite proper business conduct.

Question 76

In an installment contract, an installment can be rejected only if _______________________________________.

Answer 76

In an installment contract, an installment can be rejected only if the nonconformity substantially impairs the value of that installment.

Moreover, the installment contract as a whole is deemed to be breached only if the nonconformity substantially impairs the value of the entire contract.

Question 77

An order for _____________ is an order from the court directing the breaching party to perform as promised under the contract or face contempt of court charges.

Answer 77

An order for specific performance is essentially an order from the court directing the breaching party to perform as promised under the contract or face contempt of court charges.

Question 78

Definitions:

_______________ is usually a court order prohibiting someone from doing a specified act.

Answer 78

Injunction

An injunction is usually a court order prohibiting someone from doing a specified act.

Although a mandatory injunction may order a party to perform a particular act, an order requiring a party to perform under the contract or face contempt is an order for specific performance, not an injunction.

Question 79

Definitions:

___________ is a buyer’s right to recover undelivered, identified goods from a seller under certain circumstances.

Answer 79

Replevin is a buyer’s right to recover (replevy) undelivered, identified goods from a seller under certain circumstances.

Replevin will lie only in cases with identified goods.

Question 80

Definitions:

____________ is an equitable defense involving an unreasonable lapse of time in asserting a right that prejudices the defendant.

Answer 80

Laches is an equitable defense involving an unreasonable lapse of time in asserting a right that prejudices the defendant.

It can be raised to defend an action for specific performance; the breaching party would argue that the other party delayed too long in bringing the specific performance action, and the delay caused prejudice against the breaching party.

Question 81

When a buyer repudiates/refuses to accept goods, the usual measure of the seller’s damages is….

1. ____________;or
2. ____________

Unless the seller is a Lost Volume Seller, in which case the seller’s damages will be:

3. _____________________

Answer 81

1. The difference between the contract price and the market price; or
2. The difference between the contract price and the re-sale price
3. Lost Volume Seller: Contract price minus the cost to the seller (seller’s profit)

Question 82

Whether a party has Accepted an offer is analyzed by ______________.

A. An objective standard
B. A subjective standard

Answer 82

A. An objective standard

Whether a party has Accepted an offer is analyzed by an objective standard.

Question 83

_______________ is an agreement in which one party to an existing contract agrees to accept, instead of the originally promised performance, some other different performance.

Answer 83

An accord.

An accord is an agreement in which one party to an existing contract agrees to accept, instead of the originally promised performance, some other different performance.

Question 84

A valid accord does NOT discharge the prior contract, instead, the accord _______________.

Only ___________ discharges the accord agreement as well as the original contract term.

Answer 84

A valid accord does NOT discharge the prior contract, instead, the accord suspends the right to enforce the prior contract, in accordance with the terms of the contract.

Only Satisfaction discharges the accord agreement as well as the original contract term.

Question 85

What is required to make a Modification to an existing valid contract at Common Law?

Answer 85

The prevailing common law view is that a modification to a contract requires consideration to be valid.

Without additional consideration, an oral or written modification to an existing legal contract is not enforceable.

Question 86

When a seller induces a buyer’s consent to a contract by means of a material misrepresentation, the resulting contract is _______________.

Answer 86

Voidable at the election of the buyer.

When a seller induces a buyer’s consent to a contract by means of a material misrepresentation, the resulting contract is voidable at the election of the buyer.

Question 87

Modifications

An assignee succeeds to a contract as the contract…

A. Stood when originally formed
B. Stands at time of the assignment

Answer 87

Modifications

B. Stands at time of the assignment

An assignee succeeds to a contract as the contract stands at the time of the assignment.

Question 88

The characterization of employment as “permanent” creates an employment-at-will relationship.

What is the result when an employee chooses to terminate an ‘employment-at-will’ position?

Answer 88

In an employment-at-will relationship, either party can terminate the agreement at any time, without the termination being considered a breach.

Question 89

A and B have a contract, where A will pay B money, in exchange for B’s performance.

Instead, B wishes to have C perform, and A would then pay C.

Which parties would need to agree to a Novation to this effect?

Answer 89

A, B, and C will all need to agree to this novation.

A novation is a three-party agreement in which one party is substituted for another, the other being released from obligation.

Without agreement of all three parties, there is no binding novation created.

Question 90

Per the UCC, which of the below will control, if all three are in contradiction (or at least different)?

A. Valid, signed, written contract
B. Broadly practiced trade norms
C. Party’s course of dealings with each other

Answer 90

C. Party’s course of dealings with each other

The UCC embodiment of the parol evidence rule explicitly provides that, while a final written expression of agreement may not be contradicted by any prior agreement, it may be explained or supplemented “by course of dealing or usage of trade or by course of performance.”

A course of dealing, when inconsistent with a usage of trade, controls. Therefore, the agreement in this case should be interpreted to embody the course of dealing of the parties,

Question 91

Between merchants, additional terms proposed by the offeree in an acceptance automatically become part of the contract unless:

1. ___________
2. ___________
3. ___________

Answer 91

Answer:

1) They materially alter the original terms of the offer
2) The offer expressly limits acceptance to the terms of the offer
3) The offeror objects to the additional terms within reasonable time

Question 92

Anticipatory Repudiation requires:

1. ___________; or
2. ___________

Answer 92

Anticipatory Repudiation requires:

1. The promisor unequivocally indicate that the promisor cannot/will not perform when the time comes
2. The promisor unequivocally act in a manner rendering him unable to perform

Question 93

When a Promisor commits an Anticipatory Repudiation, the non-repudiating party may ______________________.

Answer 93

Treat the anticipatory repudiation as a total breach and sue immediately.

When a Promisor commits an Anticipatory Repudiation, the non-repudiating party may treat the anticipatory repudiation as a total breach and sue immediately.

Question 94

When there is a personal service contract for a Promisor to perform, and the Promisor becomes permanently physically unable to perform, the result is that ______________________.

If the promisor is temporarily physically unable to perform, the result is that ______________________.

Answer 94

The contract will be discharged.

When there is a personal service contract for a Promisor to perform, and the Promisor becomes permanently physically unable to perform, the result is that the contract will be discharged.

The duty will be suspended, but the duty will spring back when performance is once again possible.

If the promisor is temporarily physically unable to perform, the result is that the duty will be suspended, but the duty will spring back when performance is once again possible.

Question 95

True or False:

Merely providing a date will make ‘time of the essence’ in a contract for performance.

Answer 95

False.

Merely providing a date does NOT make ‘time of the essence’ in a contract, for performance or otherwise.

Question 96

True or False:

A gratuitous assignment is generally revokable by the assignor.

Answer 96

True.

A gratuitous assignment is generally revokable by the assignor.

Exceptions are when the obligor has already performed, or when the assignor is Estopped from revocation in the interest of justice.

Question 97

In a construction contract, if the builder breaches after only partially performing, the owner is entitled to ______________________.

Answer 97

The cost of completion + reasonable compensation for any delay in performance.

In a construction contract, if the builder breaches after only partially performing, the owner is entitled to the Cost of Completion + Reasonable Compensation for any Delay in performance.

Question 98

A ___________ arises where either one or both of the parties to a contract is replaced by a third party.

Answer 98

Novation.

A novation arises where either one or both of the parties to a contract is replaced by a third party.

Question 99

A and B form a contract on July 1. A will sell 10 widgets to B for $1,000, and A will deliver the widgets on August 1. The widgets are currently stored in C’s warehouse.

C’s warehouse burns down in a fire on July 15. A and B sue each other for performance.

What is the result?

Answer 99

Neither party is liable to the other.

Where goods, identified at the time the contract was made, are totally destroyed before the risk of their loss has passed to the buyer and without the fault of either party, the contract is avoided and each party is relieved of its respective obligation to perform.

Question 100

What is the result if an offeror seeks to revoke a unilateral contract offer?

Answer 100

Where an offer invites acceptance by performance, the offeree’s beginning of performance creates an option contract which precludes the offeror from revoking its offer.

If the offeror has not yet begun performance, however, the offeror may revoke.

Question 101

What is the result if a seller ships non-conforming goods and a notice of accommodation to a buyer, in response to an earlier valid contract between seller and buyer?

Answer 101

A seller’s shipment of non-conforming goods with a notice of accommodation does not constitute an acceptance and breach, but rather a counteroffer, which the buyer is free to either accept or reject.

Question 102

A debtor’s liquidated and undisputed $1,000 debt to a creditor was due on March 1. On March 15, the creditor told the debtor that if the debtor promised to pay the $1,000 on or before December 1, then the creditor wouldn’t sue to collect the debt. The debtor orally agreed. On April 1, the creditor sued the debtor to collect the debt that had become due on March 1. The debtor moved to dismiss the creditor’s complaint.

Should the court grant the debtor’s motion?

Answer 102

No, because there was no consideration to support the creditor’s promise not to sue.

Consideration is required for a settlement to be enforceable. Under the pre-existing duty rule, the creditor’s promise to forbear from suing to collect was not supported by consideration from the debtor since the amount due was liquidated and the debtor promised to do nothing more than he was already obligated to do.

The creditor’s promise here was not supported by consideration from the debtor since it allowed for payment of an undisputed amount, $1,000, after the time for payment of the debt had passed.

Question 103

What is the “Condition Exception” to the parol evidence rule?

Answer 103

The “Condition Exception” to the parol evidence rule permits the admission of extrinsic evidence to establish an oral condition to the parties’ performance under the contract.

Question 104

Under the terms of a written contract, a builder agreed to construct a garage for a homeowner for $10,000. Nothing was stated in the parties’ negotiations or in the contract about progress payments during the course of the work.

After completing 25 percent of the garage according to the homeowner’s specifications, the builder demanded $2,000 as a reasonable progress payment. The homeowner refused, and the builder abandoned the job.

If each party sues the other for breach of contract, which of the following will the court decide?

Answer 104

The court will find the builder is in breach and liable for the homeowner’s damages, if any.

Where one party’s performance requires a period of time, that party must complete its performance before the other party is required to perform unless the language or circumstances indicate otherwise.

Here the parties did not provide for progress payments.

Therefore the builder was required to complete performance before the homeowner was obligated to pay for any of the work the builder had performed. The builder’s abandonment of the job constituted a wrongful repudiation giving the homeowner an action for breach.

Question 105

When does a breach occur at Common Law?

Answer 105

A breach occurs when:

1) The promisor is under a duty to perform
2) The duty to perform has not been discharged
3) There is failure to perform in accordance with the contractual terms

Question 106

A breach of contract is minor if the obligee gains the _______________________________.

*at Common Law

Answer 106

substantial benefit of the bargain.

A breach of contract is minor if the obligee gains the substantial benefit of her bargain, despite the obligors’s defective promise.

Question 107

What remedy may an aggrieved party receive if the other party in a contract performs a Minor Breach?

*at Common Law

Answer 107

The aggrieved/non-breaching party is entitled to a right of damages (set off) for the minor breach.

A minor breach does not relieve the aggrieved party of their own duty of performance, as the aggrieved party has still received their substantial benefit of the bargain.

Question 108

A breach is a Material Breach if…

*at Common Law

Answer 108

A breach is material if the aggrieved party does not receive their substantial benefit of the bargain.

Question 109

What remedy may an aggrieved party receive if the other party in a contract performs a Material Breach?

*at Common Law

Answer 109

The aggrieved/non-breaching party is entitled to:

1) Treat the contract as at an end. Any duty owed by the non-breaching party will be discharged; and
2) The non-breaching party has an immediate right to all remedies for breach of the entire contract. This right includes total damages.

Question 110

In determining whether a breach is material or minor, courts look at factors including:

1. ___________
2. ___________
3. ___________
4. ___________
5. ___________
6. ___________

*at Common Law

Answer 110

In determining whether a breach is material or minor, courts look at factors including:

1. Amount of benefit received by non-breaching party
2. Adequacy of compensation for damages to non-breaching party
3. Extent of part performance by the breaching party
4. Hardship to the breaching party
5. Negligent/willful behavior by the breaching behavior
6. The likelihood the breaching party will perform the remainder of the contract

Question 111

Per the UCC, under the Perfect Tender Rule, a Buyer may reject a tender by the seller if ….

Answer 111

Buyer may reject a tender by the seller if the goods or their delivery fail to conform to the contract in any way, per the Perfect Tender Rule of the UCC.