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Bar Studying - MBE Subjects Only > Contracts - Interpretation, Performance, and Defenses to Performance > Flashcards

Contracts - Interpretation, Performance, and Defenses to Performance Flashcards

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1
Q

When construing terms of the contract, the general hierarchy of information is

A

(1) words in the last written version of the deal
(2) info about past or similar deals
(3)

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2
Q

“Integration” means

A

written agreement that a court finds is the final agreement, triggers the parol evidence rule

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3
Q

“Partial integration” means

A

written and final, but not complete

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4
Q

“Complete integration” means

A

written an final and complete

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5
Q

A “merger clause” is a

A

contract clause such as “this is the complete and final agreement”

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6
Q

Three Parol Evidence Rule bar tips:

A

(1) Parol evidence is limited to the words of the PARTIES(2) Parol evidence can be oral OR written(3) Parol evidence comes BEFORE the integration**If something happens after, that’s a possible modification.

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7
Q

The four parol evidence fact patterns are

A

(1) changing the written deal(2) establishing a defense to enforcement of the written deal (duress, misrepresentation)(3) resolve ambiguities in the written contract (explain a term)(4) adding to the written deal

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8
Q

Under the parol evidence rule, parol evidence cannot be used as a SOURCE of terms that are INCONSISTENT with the written contract, but can be used for the limited purpose of

A

determining whether there was a mistake in integration (i.e. reducing the agreement to writing, clerical error. etc.)

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9
Q

The parol evidence rule (does/does not) prevent a court form considering earlier words of the parties for the limited purpose of determining whether there is a defense to the enforcement of the agreement.

A

does NOT

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10
Q

The parol evidence rule prevents the court from considering earlier agreements as as source of consistent, ADDITIONAL terms unless

A

the court determines that the integration was not a complete integration (i.e. a partial integration).

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11
Q

“Course of performance” means

A

the conduct of the same parties under the same contract.

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12
Q

“Course of dealing” means

A

the conduct of the same parties but under a different but similar contract.

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13
Q

“Custom and usage” means

A

the conduct of different but similar people under different but similar contracts.

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14
Q

If terms of the contract do not come from the parties’ own words, the court can look to the following with the following heirarchy

A

(1) course of performance
(2) course of dealing
(3) custom and usage

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15
Q

Under the UCC, the delivery obligations of a seller of goods if no delivery has been agreed upon

A

the place of delivery is the SELLER’S place of business unless both parties know that the goods are someplace else then the place of the goods is the place of delivery

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16
Q

Under the UCC, a seller completes its delivery obligations under a shipment contract when it

A

(1) gets the goods to a common carrier (a third party in the transportation business;
(2) seller makes reasonable arrangements for delivery; and
(3) seller notifies buyer

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17
Q

Under the UCC, a seller completes its delivery obligations under a destination contract when

A

the goods arrive at the buyer’s address.

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18
Q

On the bar exam, assume that a delivery contract is a _______ contract.

A

shipment.

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19
Q

If a contract includes the words F.O.B. followed by the seller’s city, the type of contract is

A

a shipment contract.

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20
Q

If a contract includes the words FOB followed by any other city other than the seller’s, the type of contract is a

A

destination contract.

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21
Q

Under the UCC the four “risk of loss” rules for sales of goods are

A

(1) the agreement allocates risk (not going to be on the bar)
(2) breach
(3) delivery by common carrier other than seller
(4) if none of the above and**
(4a) seller is a merchant = risk shifts at buyer’s “receipt” of goods
(4b) seller is not a merchant = risk shifts when seller “tenders” the goods

**The buyer’s status as a merchant does not matter.

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22
Q

Under the UCC, the breaching party is liable for any uninsured risk of loss even if

A

the breach is unrelated to the problem

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23
Q

Under the UCC, if the contract calls for delivery by common carrier other than the seller, risk of loss shifts to the buyer at the time the seller

A

completes its delivery obligations based on the contract type (shipment or destination)

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24
Q

A seller “tenders” goods when he

A

informs the buyer that the goods are available and how to get them.

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25
Q

The types of warranties are

A

(1) express
(2) implied warranty of merchantability
(3) implied warranty of fitness for a particular purpose

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26
Q

When analyzing express warranties, be careful to distinguish express warranties from

A

mere puffery. Warranties promise, describe, or state facts. (e.g. “top quality” vs. “all steel” or “guaranteed to operate for two years”)

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27
Q

A seller showing a buyer a sample of the product counts as an _______ warranty.

A

express

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28
Q

When any person buys goods from a merchant that deals in goods of that kind, the sale contract includes an

A

implied warranty of merchantability.

29
Q

The difference between the merchant requirement for the Merchant Firm Offer Rule and the implied warranty of merchantability is that

A

the Merchant Firm Offer Rule requires only that the seller be a merchant of ANY kind whereas the implied warranty of merchantability requires that the merchant be a merchant that DEALS IN GOODS OF THAT KIND

30
Q

The implied warranty of merchantability warrants that the goods are fit for

A

ordinary purposes.

31
Q

The implied warranty of fitness for a particular purpose is triggered when

A

(1) buyer has a particular purpose;
(2) buyer is relying on seller to select suitable goods; and
(3) seller has reason to know of buyer’s purpose and reliance

32
Q

The implied warranty of fitness for a particular purpose warrants that the goods are fit for

A

a particular purpose of buyer’s.

33
Q

Sellers can contractually disclaim ______ warranties.

A

implied. Express warranties cannot be disclaimed.

34
Q

Implied warranties can be disclaimed using words like

A

(1) “as is”, “with all faults”; or

2) CONSPICUOUS language of disclaimer, mentioning merchantability (so written so a reasonable person would notice it

35
Q

Sellers can contractually ____ buyer’s remedies.

A

limit, even for breaches of express warranties.

**This is different than DISCLAIMER.

36
Q

The test for whether a contractual limitation of buyer’s remedies is valid is

A

unconscionability.

37
Q

A seller’s limitation of buyer’s remedy for _________ is prima facie unconscionable.

A

breach of warranty in consumer goods sales that causes personal injury

38
Q

The common law contract performance obligations are

A

the words of the contract.

39
Q

Under the UCC, the six sales of goods performance obligations implied in all sales of goods contracts are

A

(1) the perfect tender rule (compare to common law “substantial performance)
(2) rejection of goods
(3) cure
(4) installment sales contract
(5) acceptance of the goods
(6) revocation of the acceptance of goods

40
Q

Under the UCC, the buyer must reject the goods before

A

acceptance.

41
Q

If a seller’s tender is not perfect, the buyer has the option to

A

reject UNLESS cure applies or it is an installment sale contract.

42
Q

A seller who tenders improperly AFTER time for performance has expires can cure if

A

seller had reasonable grounds for believing that the improper tender would be acceptable

**Look for prior dealings where buyer accepts an imperfect tender or some money allowance in return for accepting the imperfect tender

43
Q

A seller who tenders improperly BEFORE time for performance has expired can cure by

A

tendering/delivering conforming goods within the time for performance.

44
Q

Under the UCC’s perfect tender rule, the buyer may reject the goods if

A

the goods fail to conform exactly to the description in the contract, whether as to quality, quantity, or manner of delivery**

**Subject to several exceptions (see cure and installment sales)

45
Q

Generally, once a buyer has accepted goods, it cannot

A

later reject those goods.**

**There are three exceptions (see later cards)

46
Q

The two ways a buyer can accept goods are

A

(1) express acceptance
(2) implied acceptance due to buyer’s retention of the goods after opportunity for inspection WITHOUT objection**

  • *Look for buyer’s keeping the goods w/o objection
  • **Payment w/o the opportunity to inspect is NOT acceptance.
47
Q

Payment without the buyer having an opportunity to inspect (is/is not) acceptance.

A

is NOT.

48
Q

An installment sales contract is one that requires or authorizes

A

(1) delivery in separate lots (2) to be separately accepted. In other words, there is no perfect tender rule for installment contracts.

49
Q

Under an installment sales contract, the buyer has the right to reject an installment only where

A

there is a SUBSTANTIAL IMPAIRMENT in that installment that CANNOT be cured.

50
Q

If buyer rejects the goods, it must give seller

A

timely notice and reasons for rejecting.

51
Q

A buyer can affect cancellation of the contract and revoke a previous acceptance of goods if the following three requirements are met:

A

(1) the goods have a nonconformity that SUBSTANTIALLY IMPAIRS the value of the goods (no longer perfect tender); and
(2) the buyer’s ignorance of the grounds for revocation was excusable OR the buyer reasonably relied on seller’s assurance of satisfaction; and
(3) the buyer revokes within a reasonable time after discovery of the nonconformity

52
Q

A buyer’s obligations after rejecting goods or revoking an acceptance are

A

(1) seasonably notify seller
(2) hold the goods for seller
(3) follow reasonable seller instructions

53
Q

The three rules for buyer’s payment under the UCC are

A

(1) cash unless otherwise agreed
(2) buyer can pay by check but
(3) seller does NOT have to take the check, but if seller insists on cash, buyer gets an additional reasonable time to get the cash

54
Q

The non monetary remedies are

A

(1) specific performance
(2) injunction
(3) reformation
(4) reclamation
(5) good faith purchaser in entrustment

55
Q

Specific performance is available as a remedy for

A

(1) contracts for sale of real estate (rule: ALL LAND IS UNIQUE)
(2) contracts for sale of UNIQUE goods like antiques, art, custom made goods (or other appropriate circumstances)

56
Q

Courts are generally reluctant to grant specific performance because SP is appropriate only if

A

the legal remedy (money damages) is inadequate (the adequacy test).

57
Q

An injunction might be available as a contract remedy for ______ contracts.

A

services.

**E.g. the Eagles could get an injunction preventing T.O. from playing for another team (but cannot get specific performance requiring T.O. to play for them).

58
Q

Under reformation, ______ will change the contract.

A

the court. On the bar, reformation is usually the wrong answer.

59
Q

Reformation might be an appropriate remedy where there is

A

(1) a mistake in writing the agreement, like a clerical error; or
(2) fraudulent misrepresentation as to what is in the agreement

60
Q

“Reclamation” is the

A

right of an unpaid seller to get his or her goods back.

61
Q

In order for an unpaid seller to recover her goods in reclamation, the

A

(1) buyer must have been insolvent at the time it received the goods
(2) seller demanded the return of the goods within 10 days of buyer’s receipt**
(3) buyer still has the goods at the time of demand

**If before delivery buyer makes an affirmative representation of solvency, the 10-day rule becomes a “reasonable time” rule.

62
Q

The good faith purchaser in entrustment rule applies where

A

an owner leaves her goods with a person who sells goods of that kind and that person wrongfully sells the goods to a good faith purchaser, the good faith purchaser’s purchase cuts off the rights of the original owner.**

**This is like the bonafide purchaser rule in property law.

63
Q

The types of money damages for breach of contract are

A

(1) expectation damages

2

64
Q

A buyer in an installment contract can only cancel the contract if

A

the nonconformity substantially impairs the value of the entire CONTRACT and cannot be cured.

65
Q

Evidence of a condition precedent to effectiveness falls __________ the parol evidence rule and is _________.

A

outside; admissible.

66
Q

How does the “battle of the forms” work?

A

Additional terms that do not materially alter the original terms of the offer will be included in the contract. In a contract between merchants for the sale of goods, additional terms in the acceptance will be included in the contract unless they materially alter the original terms, the offer expressly limits acceptance to the terms of the offer, or the offeror has already objected to the particular terms or objects within a reasonable time. Different terms may be knocked out of the contract.

There is a split of authority on different terms. Some states follow the same rules as for additional terms, but others employ the knockout rule. Under the knockout rule, conflicting terms are knocked out of the contract and gaps are filled by the U.C.C. gap-filler provisions. Conflicting terms are subject to the knockout rule; additional terms are never subject to the knockout rule.

67
Q

When one party makes an unambiguous anticipatory repudiation, the non-breaching party may

A

(1) immediately sue for breach of contract
(2) hire someone else
(3) do nothing

68
Q

For a warranty disclaimer to be effective, it must be part of the __________ process or agreed to by the buyer as a _______.

A

offer and acceptance; modification.

Bar Studying - MBE Subjects Only (15 decks)

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