Contracts & Sales: Final Review

Question 1

What types of contracts are governed by the UCC?

Answer 1

Any contract involving the sale of goods

Question 2

When is a revocation of an offer, sent by mail, effective?

Answer 2

Upon receipt.

Question 3

How is a unilateral offer accepted?

Answer 3

Complete performance.

Once performance has begun, the offer is irrevocable for a reasonable period of time to allow for complete performance unless there’s a manifestation of a contrary intent.

Question 4

When a preexisting duty is at issue, what 2 options does a promisor have to create valid consideration?

Answer 4

(1) Give something in addition to what is already owed

(2) Vary the preexisting duty in some way

Question 5

State the common-law mirror-image rule.

Answer 5

Acceptance must mirror the terms of the offer.

Any change to the terms or addition of new terms = rejection of original offer + proposal of counteroffer

Question 6

Define fraud in the inducement, and state its effect on a contract.

Answer 6

Fraudulent misrepresentation is used to induce another to enter into a contract.

Effect: contract voidable by adversely affected party if they justifiably relied on the misrepresentation in entering the agreement.

Question 7

Define consideration.

Answer 7

Evidenced by bargained-for change in legal position b/w parties. Most courts will find consideration exists if there’s a detriment to promisee, irrespective of benefit to promisor.

Question 8

Define acceptance.

Answer 8

Objective manifestation by offeree to be bound by terms of offer.

Question 9

What’s an output contract?

Answer 9

Contract under which a seller agrees to sell all that they manufacture of a product to the buyer.

Consideration exists b/c promisor suffers legal detriment.

Question 10

What’s the difference b/w git and valid consideration?

Answer 10

Whether offeree could’ve reasonably believed that the intent of offeror was to induce action.

Question 11

What’s the main difference b/w contract modification under the common law and contract modification under the UCC?

Answer 11

Common law: modifications require consideration

UCC: modifications require good faith

Question 12

What’s an illusory promise?

Answer 12

Essentially pledges nothing b/c it’s vague or b/c the promisor can choose whether to honor it.

Question 13

Under the common law, what terms must be covered in order for a contract to be formed?

Answer 13

All essential terms: parties, subject matter, price, quantity

Question 14

Define the common-law four-corners rule.

Answer 14

Courts may only look to the writing itself for evidence of intent, regardless of any integration.

Question 15

What are the 3 requirements for a promise to be binding under promissory estoppel?

Answer 15

(1) Promisor should reasonably expect it to induce action or forbearance on the part of the promisee or a 3P
(2) Promise does induce such action or forbearance
(3) Injustice can be avoided only by enforcement of the promise

Question 16

Define condition subsequent.

Answer 16

Excuses the duty to perform after a particular event occurs.

Question 17

What requirements must be met to allow an adversely affected party to void a contract based on mutual mistake?

Answer 17

(1) Mistake of fact existing at time of contract formation
(2) Mistake relates to basic assumption of contract
(3) Mistake has material impact on transaction
(4) Adversely affected party did not assume the risk of the mistake

Question 18

What’s an implied-in-fact contract?

Answer 18

Results when person’s assent to offer is inferred solely from person’s conduct. Must intend the conduct and know or have reason to know the conduct may cause the offeror to believe the offer was accepted.

Question 19

When is the implied warranty of merchantability implied, and how is it disclaimed?

Answer 19

Whenever the seller is a merchant.

Disclaimer can be oral, but it must use the term “merchantability.” Must be conspicuous if in writing. Language indicating there is no implied warranty is sufficient (e.g., “for instance” or “with all faults”).

Question 20

What are the rights of the assignee?

Answer 20

All of the rights of the assignor as the contract stands at the time of the assignment. Assignee takes subject to any defenses that could be raised against the assignor.

Question 21

What are the 3 events that would cause the rights of an intended beneficiary to vest?

Answer 21

(1) Beneficiary materially changes position in justifiable reliance on the rights created
(2) Beneficiary manifests assent to the contract at one party’s request
(3) Beneficiary files a lawsuit to enforce the contract

Question 22

What 3 conditions must be met for the defense of impracticability to be available?

Answer 22

(1) Unforeseeable event occurred
(2) Non-occurrence of the event was a basic assumption on which the contract was made
(3) Party seeking discharge is not at fault

Question 23

When may a non-breaching party pursue specific performance as a remedy?

Answer 23

When damages are an inadequate remedy

Note: legal remedies are often inadequate in contracts for land or other unique goods.

Question 24

Define constructive condition of exchange.

Answer 24

When a party’s performance can be rendered at the same time as the other party’s performance, each performance is conditioned on the other’s performance; both performances are due simultaneously, unless the language or circumstances indicate otherwise.

Question 25

Define intended beneficiary,

Answer 25

One to whom the promisor will pay directly to relieve the promisee from a debt or whom the promisee intends to give the benefit of the promised performance.

Question 26

Name the types of contracts that fall within the Statute of Frauds.

Answer 26

Marraige
Suretyship
One year
UCC
Real property

Question 27

Under the UCC, even if the terms of a written contract for the sale of goods appear to be ambiguous, what evidence can be presented to explain or supplement the contract?

Answer 27

Course of performance, course of dealing, and trade usage

Note: if express terms are inconsistent w/course of performance or trade usage, priority is given to the express terms. Then course of performance, course of dealing, and trade usage.

Question 28

Under the UCC, what is required by the “perfect tender rule”?

Answer 28

Perfect goods and perfect delivery. “Perfect” means in accordance w/contract provisions or in accordance w/UCC if the contract is silent on tender.

Question 29

When is the doctrine of anticipatory repudiation applicable, and in what manner must the repudiation be made?

Answer 29

Applicable when a promisor repudiates a promise BEFORE the time for performance is due. Repudiation must be clear and unequivocal, may be by conduct or words, and, if a statement, must be made to the promisee or a 3P beneficiary or assignee of the promise.

Question 30

What’s the formula for expectation damages?

Answer 30

Loss in value + other loss - cost avoided - loss avoided