Contracts MEE Rule Statements

Question 1

Common law applies to

Answer 1

contracts for services or real estate

Question 2

Article 2 of UCC applies to

Answer 2

contracts for the sale of goods

Question 3

If a transaction includes both goods and services, what test is applied?

Answer 3

The predominant purpose test is applied to resolve whether the common law or the UCC applies to the entire transaction

Question 4

Under common law, if the breach is minor

Answer 4

the breaching party has substantially performed and the non-breaching party must still perform under the contract.

Question 5

Under common law minor breach, who can recover on the contract?

Answer 5

A party who substantially performs can recover on the contract even though they have not rendered full performance.

Question 6

What can the substantially performing party recover under common law if it’s a minor breach?

Answer 6

Contract price minus cost to the other party of obtaining promised full performance.

Question 7

A material breach occurs

Answer 7

when the non-breaching party does not receive the substantial benefit of the bargain

Question 8

A material breach allows the non-breaching party to

Answer 8

withhold any promised performance and pursue remedies for the breach, including damages.

Question 9

Under material breach, the breaching party who failed to substantially perform generally cannot:

Answer 9

recover damages, but may be able to recover through restitution.

Question 10

Recovery in restitution is generally only available if

Answer 10

the breach was not will full

Question 11

A party who intentionally furnishes services that are materially different than what was promised cannot

Answer 11

recover anything in restitution unless the non-breaching party has accepted or agreed to accept the substitute performance

Question 12

in construction contracts, the general measure of damages for a contractor’s failure is

Answer 12

the difference between the contract price and the cost of construction by another builder, plus any progress payments made to the breaching builder and compensation for delay in completion of the construction.

Question 13

When a breach 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, the court may

Answer 13

award damages equal to the diminution in the market price caused by the breach

Question 14

Economic waste occurs

Answer 14

when the cost to fix or complete the construction is clearly disproportional to any economic benefit or utility gained as a result

Question 15

compensatory damages are meant to

Answer 15

compensate the non-breaching party for actual economic losses

Question 16

expectation damages are intended to

Answer 16

put the non-breaching party in the same position as if the contract had been performed.

Question 17

expectation damages must be calculated with

Answer 17

reasonable certainty

Question 18

In construction contracts, the general measure of damages for a contractor’s failure to begin or complete a building project is the

Answer 18

difference between the contract price and the cost of construction by another builder, plus any progress payments made to the breaching builder and compensation for the delay in completing the construction.

Question 19

Actual damages can be either

Answer 19

direct or consequential

Question 20

Consequential damages are

Answer 20

a direct result of the breach but need not be the usual result of the breaching party’s conduct

Question 21

Consequential damages must be

Answer 21

reasonably foreseeable result of the breach given the parties’ specific circumstances

Question 22

damages are foreseeable if they were

Answer 22

a natural and probable consequence of breach, if they were in the contemplation of the parties at the time the contract was made, or if they were otherwise foreseeable.

Question 23

there must be a causal link between the breach and the

Answer 23

consequential damages for them to be recoverable.

Question 24

the plaintiff must prove the dollar amount of consequential damages

Answer 24

with reasonable certainty

Question 25

a party to a contract must avoid or

Answer 25

mitigate damages to the extent possible by taking steps that do not involve undue risk, expense, or inconvenience.

Question 26

A non-breaching party is held to what standard in preventing loss?

Answer 26

a standard of reasonable conduct

Question 27

the non-breaching party’s failure to mitigate does not

Answer 27

give the breaching party a right to sue the non-breaching party for such failure, it only reduces the non-breaching party’s damage recovery.

Question 28

A contract for the sale of goods is governed

Answer 28

by Article 2 of the UCC

Question 29

Under the UCC, a contract for the sale of goods of $500 or more falls within the…

Answer 29

statute of frauds and is generally unenforceable unless evidenced by a writing.

Question 30

Under the SOF, the writing does not need to be formal, but it must:

Answer 30

be signed by the party to be charged and contain the essential elements of the deal.

Question 31

Under the SOF and UCC, the writing must identify

Answer 31

the parties and subject matters of the contract, and quantity. The UCC gap fills for any other missing terms.

Question 32

Under the SOF, a writing is not required for:

Answer 32

1) specially manufactured goods
2) to the extend that payment has been made and accepted for goods
3) to the extend that goods are received and accepted OR
4) when a merchant fails to object to a memorandum from another merchant within 10 days of receipt of the memorandum.

Question 33

The doctrine of anticipatory repudiation applies when

Answer 33

a promisor repudiates a promise before the time for performance is due.

Question 34

A repudiation must be

Answer 34

clear and unequivocal

Question 35

What can the promisee do with a clear and unequivocal repudiation?

Answer 35

they can treat the repudiation as a breach OR ignore it and demand performance.

Question 36

A repudiating party may not retract the repudiation after the other party

Answer 36

1) acts in reliance on the repudiation
2) signifies acceptance of the repudiation OR
3) commences an action for breach of contract

Question 37

compensatory damages are meant to

Answer 37

put the nonbreaching party in as good a position as performance would have done by compensating the nonbreaching party for actual economic loss, plus any incidental and consequential damages, less damages that might have been mitigated.

Question 38

when a buyer breaches or repudiates a contract for the sale of goods, the seller may…

Answer 38

resell the goods and sue for the contract price minus the resale price.

Question 39

A seller intending to resell the goods in a private sell must first:

Answer 39

give the buyer reasonable notice of his intent to resell the goods.