Contracts review

Question 1

Revoking offer

Answer 1

Offeror can revoke by manifesting intent not to enter proposed contract either
- expressly: when the offeror communicates the revocation directly to the offeree
- constructively: when the offeree acquires reliable information that the offeror has taken definite action inconsistent with the offer

Question 2

Substantial performance

Answer 2

Substantial performance is less than full performance that, while imperfect, does not defeat the contract’s main purpose

Question 3

Common law damages if only one party substantially performs

Answer 3

Under common law (contracts for services/RP), a party that has substantially performed can recover damages based on the contract if the other party fails to perform.

Those damages are generally equal to contract price minus cost to remedy and defects in performance

Question 4

Damages for breach of employment contract

Answer 4

Because the purpose of compensatory damages is to give them the benefit of the bargain, when an employer breaches an employment agreement, the employee can recover unpaid salary

BUT they need to also mitigate their loss by securing comparable employment. Note that recovery will not be reduced if the employee made reasonable but unsccessful efforts to secure comparable employment

Question 5

UCC parol evidence rule and trade usage

Answer 5

Evidence of trade usage can be used to explain or supplement the express terms of a final written contract, so long as it is not negated by those terms.

Question 6

Trade usage

Answer 6

Trade usage is a practice or method of dealing that is observed with such regularity in the industry that the parties would be expected to observe it

Question 7

UCC firm offer rule

Answer 7

Merchant’s written and signed assurance that an offer will remain open is roreovcable for the time stated in the offer.

Question 8

What happens if an offer states acceptance is only effective upon receipt

Answer 8

The mailbox rule does not apply if it is inconsistent with the offer’s terms, such as when the offer states that acceptance is effective only upon receipt

Question 9

When is acceptance by performance effective

for bilateral Ks/offers that dont specify manner of acceptance

Answer 9

Acceptance by performance is effective as soon as the offeree begins to perform

Question 10

How can an offer that doesn’t specify manner of acceptance be accepted

Answer 10

Can be accepted by either
1. Promising to perform the requested act; or
2. Performing the requested act

Acceptance by performance is effective as soon as the offeree begins to perform

Question 11

Examples of reasonable time for acceptance

Answer 11

• face to face/phone offers: lapses when convo ends
• mailed/faxed offers: lapses after time required to transmit offer and acceptance
• Speculative offers: lapses quickly so offeree cannot speculate at offeror’s expense
• reward for capture offers: lapses when SOL expires

Question 12

What happens if the item of the offer is destroyed

Answer 12

If the item of the offer is destroyed, the offer is destroyed too

Question 13

Terms that materially alter a K

Answer 13

Include warranty disclaimers or severe limits on the parties’ remedies.

Question 14

What is a release?

Answer 14

A release is a writing that manifests intent to discharge another party from existing duty

Question 15

Shipment contract

Answer 15

“FOB [seller’s place of business]”

seller must deliver goods to carrier and make K for their shipment. Shipment contracts are implied when K requires shipment by third party carrier

Question 16

Applicable law

Answer 16

UCC governs contracts involving the sale of goods

Common law governs contracts involving services and real estate

Question 17

Mixed contracts

Answer 17

When a contract has both goods and services aspects, whichever one predominates will determine the governing law.

Question 18

Who is a merchant?

Answer 18

Someone who regularly deals in the kinds of goods in the transaction

Someone who by occupation holds themselves out as having knowledge or skill peculiar to the goods in the transaction

In some instances, any business person when the transaction is a commercial nature

Question 19

Offer

Answer 19

Objective manifestation of present intent to enter into an agreement which creates the power of acceptance in the offeree

Question 20

What terms need to be in an offer under CL

Answer 20

All essential terms required (parties, subject matter, price, quantity)

Question 21

What terms need to be in an offer under the UCC

Answer 21

Parties, subject matter, quantity.

The UCC will gap fill the rest of the remaining terms. Both parties must intend to form a contract and there must be a reasonably certain basis for giving recovery

Question 22

What if UCC contract is silent to delivery

Answer 22

Default is seller’s place of business

Question 23

What can breaching party recover?

Answer 23

Breaching party can recover restitutionary damages for the reasonable value of the work performed before the breach, minus any damages suffered by the nonbreaching party

Question 24

What happens if, during a contstruction K, builder breaches during construction?

Answer 24

Nonbreaching party can generally recover the cost of completion over the contract price*

*if cost of completion is excessive compared to the loss in value caused by the breach, recovery is based on the value of promised contruction minus value of nonconforming construction

Question 25

Restitutionary damages

Answer 25

Awarded to restore to a contracting party the value of any benefit conferred on the other party.

Question 26

Restitutionary damages and the UCC

Answer 26

Under the UCC, where the seller fails to deliver the promised goods or the buyer rightfully rejects the goods, the buyer is entitled to the return of any payment made on the goods as restitution

Question 27

Partial payment and UCC SOF

Answer 27

A contract is excepted from the UCC SOF when some amount of payment was accepted.

A partial payment for seperable goods renders the K enforceable up to the quantity paid for in full, while a partial payment for an indivisible good renders the entire contract enforceable