Contracts - MBE Flashcards
UCC Warranties:
What is the implied warranty of merchantability?
What has to be true about the parties/transaction in order to find that the warranty applies?
- Warrants that the goods are fit for ordinary purposes
- Sale of goods (UCC)
- Merchant seller
- Seller is a merchant who deals in goods of the kind
UCC Warranties:
What is the implied warranty of fitness for a particular purpose?
When does it arise?
- Warrants that the goods are fit for the Buyer’s particular purpose
- ANY seller (not just a merchant)
- Seller has reason to know of B’s purpose
- Seller has reason to know B is relying on S’s skill and judgment
- B actually relies
Under UCC, when may a buyer revoke acceptance?
- Defect substantially impairs the value, AND EITHER:
- B reasonably believed the defect would be cured, OR
- B accepted the goods because the defect was difficult to discover, or because S assured B that the goods conformed to the contract
A is purchasing real property. Does Article 2 apply?
No
A is hiring a baby sitter. Does Article 2 apply?
No
For a mixed K, how do you determine whether Article 2 applies or not?
Predominant purpose test
A is leasing an apartment. Does Article 2 apply?
No—Article 2A applies, in TX
When does a plaintiff have a right to recover under restitution?
- There’s no actual K
- D has been unjustly enriched
- This is the P’s last resort for a remedy—no other means of recovery applies, but equity favors recovery.
A promises to paint B’s house for $500 (it’s a bilateral contract). How can B accept?
Any reasonable way (he could pay the money, he could make a return promise to pay the money, etc.)
A promises to paint B’s house if B takes A’s dog out every day this month (unilateral K). How can B accept?
A offers a $500 reward to anyone who returns his dog (unilateral K). How can B accept?
Only by COMPLETE PERFORMANCE
- take the dog out every day for a month (this would not include just taking the dog out for a week)
- find the dog
Advertisement: “Sony TV’s for $100 each!”
- What add’l terms would make this a valid offer?
- Needs a QUANTITY is specified, e.g. “Sony TV’s for $100, first 10 purchasers”)
- If an unlimited number of people could potentially accept, then it’s not an offer.
Indefiniteness: what if the offer does not include a price term?
- If it’s real property, it’s not a valid offer.
- Anything else, courts will read in a “reasonable price” and consider the offer valid.
How soon will an offer expire, assuming there’s no specified time limit, and the offeror doesn’t revoke?
After a reasonable time
A makes an offer to B.
- A can directly revoke by saying so directly to B.
- What would constitute an indirect revocation?
- Conduct by A that indicates revocation
- B is AWARE of that conduct
How does one make:
- An option contract offer
- A firm offer
- Promise to keep the offer open
- Consideration
- Merchant
- Signed writing
- Promise to keep the offer open
A promises to sell his used table to his neighbor for $100, says the neighbor can accept any time before the end of the month.
Can A revoke before the end of the month?
- Yes, unless the neighbor gave consideration
- Since this is a sale of goods, it would have to be a FIRM OFFER, which can only be made by a merchant in a signed writing.
A makes a firm offer, promises to keep it open for 6 months. How long does B have to accept?
3 months, no matter how long the offeror promised to keep the offer open
Subcontractor S submits a bid to do the electrical work on a hotel project for $250,000. Contractor C relies on S’s bid in computing its own bid on the project, but hasn’t accepted S’s bid yet because C doesn’t know if it has been awarded the project. Can S still revoke its offer?
No, foreseeable reliance
A offers B a unilateral contract. What is the legal effect of B beginning performance? (more than mere preparation)
- B has NOT accepted
- But A can no longer revoke
- And B is not bound to finish performance
Landlord sends Tenant a signed lease that says nothing about pets. Tenant adds, “Tenant may keep
a pet,” signs the lease and returns it to Landlord. Has Tenant accepted Landlord’s offer?
No, violates mirror image rule
UCC:
If the offeree’s acceptance does not match the terms of the offer, what has to be true in order for the terms to be included in the contract?
- BOTH parties are MERCHANTS
- No material change
- No objection within reasonable time (this would include the offer expressly limits acceptance to the terms of the offer)
When does the mailbox rule not apply?
- Option K
- Offeree sent a rejection, then an acceptance
- The offer specifically doesn’t allow it
A agrees to sell B his motorcycle for $15k. B is a minor.
- If B (the minor) receives the motorcycle but refuses to pay, will A be able to enforce the contract?
- If B pays but A refuses to deliver the motorcycle, will B be able to enforce the contract?
- No. B is a minor, lacks capacity. A can enforce the contract ONLY IF B affirms the contract after he turns 18, e.g. by keeping the motorcycle and riding it after he turns 18.
- Yes. Don’t care about the PLAINTIFF’s capacity.
B and S contract for the delivery of cotton on the “Peerless.” B means the one sailing in May. S means the one sailing in July. Is there a contract?
No—there is a mutual mistake about a material fact—UNLESS one of the parties knew or had reason to know of the other party’s meaning. In that case, the innocent party’s meaning controls.
Madonna agrees to sell Justice Scalia a painting for $100,000. Both believe it’s by Andy Warhol.
What if the painting is by Warhol, but is worth only $60,000, not $100,000, as both believed? Can Scalia avoid the contract on the grounds of mutual mistake?
No—a mutual mistake re VALUE is not a MATERIAL mutual mistake.
Madonna agrees to sell Justice Scalia a painting for $100,000. At the time of their agreement, Justice Scalia believed Andy Warhol was the artist, but Madonna knew Warhol wasn’t the artist. Later, Scalia learns he was wrong. Is Justice Scalia still bound to buy the painting?
Yes—this is only a unilateral mistake— UNLESS one of the parties knew or had reason to know of the other party’s meaning. In that case, the innocent party’s meaning controls.
What are the rules for contract modification under the common law, and UCC?
COMMON LAW:
- Need new consideration
- UNLESS there has been an unanticipated change in circumstances, and the change is fair in light of the circumstances
UCC:
- Don’t need consideration
- Must be made in good faith
You owe Visa $2,500. The debt is due and you don’t dispute that you owe them $2,500. You and Visa orally agree that if you pay $2,000, Visa will forgive the $500 balance. Is Visa bound by that promise?
NO. Need new consideration to modify the contract.
E.g., you could agree to pay early
What are the elements of promissory estoppel?
- Not a K
- Promise
- Foreseeable reliance
SOF:
When does the statute of frauds apply?
MYLEGS
- (M)arriage contracts
- Can’t be performed within one (Y)ear
- (L)and-related contracts
- (E)xecutor or administrator
- (G)oods, over $500
- (S)uretyship
- Contract modification, if the new contract falls into one of the above categories
SOF: What constitutes a satisfactory writing? - All contracts, generally - Sale of goods - Sale of real property
GENERAL CONTRACTS:
- All material terms
- Signed by D
SALE OF GOODS:
- Quantity
- Signed by D
SALE OF REAL PROPERTY:
- Description of the land
- Names of the parties
- Price
- Signed by both parties
SOF: What are the exceptions to the SOF? - Real property - 1+ year contracts - Sale of goods - Suretyship
REAL PROPERTY:
- Part performance: 2 of these three are met—payment, possession, improvements
1+ YEAR CONTRACTS:
- Full performance, the party has fully performed beyond one year
SALE OF GOODS:
- Buyer has accepted or paid for the goods—applies only to the ones actually accepted / paid for, not the entire order
- Custom-made goods
- Merchant’s confirmatory memo: both parties are merchants, the memo has a quantity term, no written objection within 10 days
SURETYSHIP
- Selfish surety exception: surety’s agreement to sign as guarantor helps move forward a deal that benefits the surety
What are the exceptions for the parol evidence rule?
- Correct a clerical error
- Establish a defense against formation
- Interpret a vague, ambiguous term
- To add to a partially integrated writing
UCC warranties:
What are the default warranties included in a sale of goods?
Express warranties Warranty of title Warranty against infringement Implied warranties: - Merchantability - Fitness for a particular purpose
UCC Warranties:
What’s the effect of these disclaimers (assuming they are conspicuous)?
- “all warranties are disclaimed” (but the contract includes some express warranties)
- “as is” or “with all faults”
- “no warranty of merchantability or fitness”
- Does not disclaim the express warranties, or the implied warranties
- Disclaims all implied warranties
- Disclaims all implied warranties
UCC Warranties:
What constitutes an express warranty?
Statement, model, etc. that is part of the BASIS OF THE BARGAIN and was communicated to the buyer at such a time that the buyer could have relied upon the warranty when entering into the contract
UCC Warranties:
Can a seller include a written disclaimer of warranties or limitation on remedies in the box with shipped goods? What about a “clickwrap” disclaimer with software (“Agree to these terms before completing installation”)?
- NO. The disclaimer must be agreed to during the bargaining process.
- YES. Buyer can return the software before installing if he doesn’t like the disclaimer.
UCC:
Is a limitation on remedies valid?
General rule: Yes
EXCEPTIONC:
- Unconscionable
- Limits remedies for personal injury in the case of CONSUMER goods
ROL:
If the parties aren’t relying on a common carrier for delivery, when does the ROL pass to the buyer?
IF seller is a MERCHANT:
- When buyer takes physical possession
IF seller is NOT A MERCHANT:
- When seller tenders delivery
ROL:
If the parties are using a common carrier for delivery, when does the ROL pass to the buyer?
What if it’s an “F.O.B.” contract?
- When the goods are delivered to the carrier
- When the goods reach the specified destination, e.g. “F.O.B. Dallas”—buyer bears ROL once the goods reach Dallas.
