Contracts & Sales

Question 1

Suing on Unpaid Installments

Answer 1

Where a party to a contract breaches the contract and the only remaining duty with respect to the contract is the payment of money in installments, this breach does not give the other party a claim to damages for total breach. Consequently, the dealer is only entitled to damages based on the payments that are currently due and owing.

Question 2

Revocation of Unilateral Ks

Answer 2

NY: Offeror may revoke at any time before completion.

MBE: Beginning performance will make offer irrevocable for reasonable time nec’y to complete performance.

Question 3

Promise of Reward

Answer 3

NY: Promise to pay reward is enforceable if it was in writing OR promisor otherwise caused its publication.

Question 4

Option Ks - NY

Answer 4

Signed, written offer to enter into K that states the offer is irrevocable IS thus for stated (or, if no statement, then reasonable) time period. No consideration needed. Doesn’t apply to merchants, who remain governed by UCC’s firm offer rule.

Question 5

UCC Firm Offer Rule

Answer 5

UCC modifies CL rule: when merchant states in signed writing that offer will be held open, it is so for stated period or reasonable period if not specified. No consideration req’d.

Question 6

Past Consideration - NY

Answer 6

Written, signed promise is not invalid b/c of past consideration iff past consideration is proved and would have been valid consideration at time of performance.

Question 7

Infancy in NY

Answer 7

No defense for:

1) K by 18+
2) K involving “marital home”
3) K for artistic/athletic services (If judicially approved)
4) K for student loans by 16+
5) K for life insurance by 14.5+

Question 8

Exculpatory Clauses

Answer 8

NY: General rule is that clauses limiting liability are enforceable re neg, but NOT gross neg or willful acts.

BUT such clauses in construction Ks or by owners of recreational facilities receiving a fee for public access are void as against public policy.

Question 9

“Part Performance Doctrine” - NY

Answer 9

Oral K for interest in real property is enforceable despite lack of signed writing IFF 2/3:

1. partial/full payment
2. substantial improvements to property
3. possession by buyer

Question 10

SoF - NY Details

Answer 10

Besides Mr.SOUR, also applies in NY to:

1. later promise to pay debt discharged in bankruptcy
2. assignment of insurance policy
3. K to pay for services arranging/negotiating real estate K [BUT licensed brokers are express exception]
4. agreement to modify or discharge K involving real or personal property

Question 11

“Merchant”

Answer 11

One who deals regularly in that type of good Or holds himself out as having special knowledge re the good.

Question 12

Unconscionability

Answer 12

UCC = “No reasonable person would agree to it.” Look for both procedural and substantive probs.

Question 13

SoF Exceptions - UCC

Answer 13

1. Merchant’s Confirmatory Memo - oral agreement b/w 2 merchants is binding if one sends confirm. memo & other merchant a) has reason to know of contents, and b) doesn’t object w/in 10 days.
2. Specially Mfr’d Goods: No writing nec’y if “substantial beginnings” made in mfr of special goods that are “unsuitable” to other buyers.
3. Judicial Admission: that K was made, makes it enforceable.
4. By Performance: if goods are received and accepted OR paid for, K is enforceable up to quantity of goods exchanged.

Question 14

Right to Cure

Answer 14

UCC Rule: when any delivery is rejected as nonconforming and time for performance hasn’t yet expired, seller can inform buyer of intent to cure and, w/in K time, make conforming delivery.

R2: If seller reasonably thought nonconforming goods would be acceptable to buyer, he has extra time to cure (reasonable time past date of K time).

Question 15

Revocation of Acceptance

Answer 15

UCC: Buyer can revoke acceptance of goods if they have a defect that substantially impairs their value AND buyer accepted b/c of reasonable belief seller would cure or accepted b/c reasonable inspection didn’t reveal the defect.

Can then seek damages for breach if there’s been no “substantial change” in the goods.

Question 16

Method of Delivery

Answer 16

1. Shipment K: default form of delivery. Seller must give to carrier, send shipping docs to buyer, and inform buyer.
2. Destination K: reqs seller tender delivery at specific location
3. Non-carrier Ks: sellers tenders at his place of biz.

Question 17

Risk of Loss - UCC

Answer 17

1) Does K control?
2) If not, did someone breach? Loss is on them.
3) If not, what kind of K was it? Shipment K - risk on buyer when given to carrier; destination K - risk on seller until goods reach destination.
4) If neither, if seller is a merchant, risk stays on them until buyer takes possession. If not a merchant, passes to buyer when seller tenders.

Question 18

Warranties

Answer 18

1. Express:
2. Implied W of merchantability: implied whenever seller is merchant of that good (including food/drink). If buyer has chance to inspect or refused to, and would have found defect, then no implied W. Can be disclaimed orally or in conspicuous writing; also with “as is”-type language.
3. Imp. W. for Partic. Purpose: when seller has reason to know of partic. purpose and buyer is relying on his skill/knowledge. Can be disclaimed a) in writing, b) by conspicuous language.

Question 19

Voidable Title

Answer 19

Buyer who obtains title (not just possession) unlawfully possess voidable title. UCC allows transfer to good-faith purchaser for value; they then have good title.

Buying from thief doesn’t get good title UNLESS a) buyer makes improvements to the goods, OR b) true owner has indicated thief had good title.

Question 20

Installment Ks & Perfect Tender

Answer 20

UCC’s perfect tender rule does not apply to installment Ks, where buyer can only reject nonconforming installment if it “substantially impairs” the value of that instal. & can’t be cured. K may only be breached if nonconformite “sub impairs” its value.

Question 21

Modification of Ks

Answer 21

@CL - invalid w/out consideration except: 1) rescission of 1st K and entering into new K, OR 2) unforeseen difficulties would make performance impracticable and other party agrees to compensate for them.

UCC - good faith is all that’s req’d.

& SoF –> must meet reqs if K as modified would fall under covered categories.

Question 22

Parole Evidence Rule

Answer 22

If doc is a full integration, no outside evidence.

If partial integ., supplementary extrinsic evidence is permissible as long as it’s consistent w/ terms of K.

But PER doesn’t apply when party is raising excuse/defense to K formation, or when evidence is of a separate deal, or to show condition precedent to existence of K, or to show subsequent agreement b/w parties.

Question 23

Delegation

Answer 23

Not allowed when other party has “substantial interest” in delegating individual perform (e.g., personal services K), or delegation prohibited by K.

Delegator is not released from liability unless there’s a novation.

Question 24

Assignment

Answer 24

Not allowed when it materially increases the duty/risk to obligor OR materially reduces his chance of obtaining performance.

Assignment is irrevocable if made for consideration

Question 25

3rd Party Beneficiaries

Answer 25

Intended Bs = K’ing parties have direct intent to benefit them. Otherwise, incidental B w/ no rights to enforce K.

Once B’s rights have VESTED, original parties are bound to perform K and can’t void or modify it unless 3rd party agrees. Vesting = B reasonably relies, or manifests assent at parties’ request, or files suit to enforce K.

Question 26

Battle of Forms

Answer 26

2-207(1): definite & timely acceptance forms K even if it adds new/diff terms, unless acceptance is made expressly conditional on accepting new terms.

2-207(2): New terms only control if: 1) both parties merchants, 2) terms don’t materially alter deal, 3) offer isn’t expressly limited to its terms, AND 4) offeror doesn’t object w/in reasonable time.

-If not merchants, additional terms treated as proposals that must be separately accepted to become part of deal.

Question 27

Accord & Satisfaction

Answer 27

Accord = agreement to settle disputed obligation. 
Satisfaction = performance of accord agreement.

Reqs: real dispute over amount owed or its validity OR when payment is of diff type than in original K.

BUT original K not discharged until satisfaction is complete. So, if accord is breached by debtor, creditor can sue on either original K OR accord agreement.

Question 28

Anticipatory Repudiation

Answer 28

Must be clear & unambiguous.

Other party has option to treat as breach OR wait until K deadline. Promisee can retract repudiation until promisee relies on it, signals assent to it, or sues.

BUT if only performance remaining is payment, can’t sue until due date has arrived.