Contracts & Sales PQs Flashcards
What is a novation? What is required for a novation to occur?
A novation is the substitution of a new K for an old one when the original obligor is released from his promises under the original agreement.
It may be express or implied after delegation if (1) the original obligor (delegating party) repudiates liability to the original promisee and (2) the obligee (recipient of services) subsequently accepts performance of the original agreement from the delagatee (person with new duties) without reserving rights against the obligor.
What is conversion and what is its proper remedy?
Conversion = selling a person’s goods when they weren’t yours to sell, i.e., you did not accept them, but still sold them off.
The proper damages in the case of conversion are the fair market value of the goods at the time of the conversion (a.k.a. sale).
What terms are required in an offer for a sale of goods, and are there any exceptions?
Only essential term is quantity.
Exception for requirements Ks and output Ks, only good faith is required (since the whole point is they’re not naming a number, just how much they need!).
What is required for the firm offer rule to limit revocation of an offer? If the firm offer rule applies, how long?
Under the UCC, an offer is irrevocable if:
1) offeror is a merchant (or any business person)
2) assurances are made in writing that
3) the offer will remain open
No consideration is necessary.
The offer is irrevocable for a reasonable time (no more than three months).
How can a general offer be revoked?
Revocable only by notice given at least same level of publicity as offer.
Can an offer be accepted via shipment of goods? What if the goods are nonconforming?
Yes.
If goods are nonconforming, the shipment constitutes an acceptance and a breach.
However, it’s not acceptance and breach if the seller notifies the buyer that goods are an accomodation, it is then a counter offer, and the buyer may accept or reject the nonconforming goods.
How should one analyze an acceptance in the mail? A rejection following acceptance? An acceptance following rejection?
Mailbox rule: Acceptances are effective when sent (not upon receipt), unless offer provides otherwise.
Rejection following acceptance: acceptance will control, regardless of order of receipt (unless detrimental reliance on rejection).
Acceptance following rejection: mailbox rule doesn’t apply, first one received wins.
Is fulfillment of a preexisting duty adequate for consideration purposes?
No. Under the common law, it’s not consideration unless promisor gives something in addition to what is owed, or varies the preexisting duty in some way.
How can two parties modify a contract?
Under the common law: must be supported by consideration. Agreements to modify the contract are enforceable if:
1) rescission of existing K and entering into of new K, or
2) unanticipated difficulties arise and modification is fair and equitable, or
3) new obligations arise on both sides.
Under UCC:
1) good faith is all that’s required.
2) No consideration necessary
How does an accord and satisfaction work? Can disputed claims be discharged via accords?
Accord: one party agrees to accept a different performance from other party to satisfy other party’s existing duty.
Satisfaction: performance of accord will discharge both original K and accord K
An unliquidated or disputed claim may be discharged by a check, it must have the note “payment in full” on it and must be accepted.
Are there any rules regarding requirements and output Ks?
Obviously. These satisfy consideration.
Quantities may not be unreasonably disproportionate to estimates.
What are the elements of the impracticability defense?
1) unforeseeable event has occurred;
2) Nonoccurrence of the event was a basic assumption on which K was made, and
3) Party seeking discharge is not at fault
4) Impracticability defense not available to party who assumes the risk of an event happening
What does it take for a third-party beneficiary’s rights to vest?
Rights of a third party vest when one of these happens:
1) detrimentally relies on rights created;
2) manifests assent to K at one of the party’s request; or
3) files lawsuit to enforce K
What happens to the liability of a person when he delegates his obligations under a K?
The delegator is not released from liability when he delegates his obligations, so he is still liable if delegatee does not perform (unless there is a novation, where the whole party is subbed).
What does the statute of frauds require under the UCC for a sale of goods of $500 or more? Are there exceptions?
Requiree: parties, quantity, and signed BY THE CHARGED PARTY.
Main exception (i.e., requirements not required): failure to object to memo within 10 days of receipt, when both parties are merchants. I.e., if both merchants, and no objection in 10 days, can’t argue SOF.
How are conditions determined to be satisfied? Aesthetic taste?
Examined against objective, reasonable person standard, UNLESS aesthetic taste is involved, then subjective standard. Party must use good faith in assessing satisfaction. Dissatisfaction may be unreasonable, must be honest.
What happens if a party wrongfully prevents the occurrence of a condition to which its duty is subject?
A party wrongfully preventing the occurrence of a condition that would trigger their duty causes their duty to be excused, and interfering party has absolute duty to perform.
When can a party get consequential damages?
Party can get consequential damages (arising out of special circumstances stemming from breach) when
1) reasonably foreseeable to breaching party (but need not be usual result of conduct)
2) caused by breach, and
3) reasonably certain in value
NB: can be expressly limited.
What’s the difference between a shipment K and a destination K, and who bears the risk in each?
Shipment: using a common carrier. Risk of loss passes to buyer when seller gives goods to carrier and makes proper contract for shipment.
Destination: goods are to be delivered to buyer. “To the florist”, even with shipping company, = destination. Risk passes to buyer when seller tenders goods at specified place.
What is required for promissory estoppel to act as a sub for consideration?
Promise is binding if:
1) Promisor should reasonably expect it to induce action on the part of the promisee or a third person
2) Promise does induce such action; and
3) Injustice can only be avoided by enforcement of promise
When can the promise of a gift, preceded by the conferring of a material benefit by the promisee unto the promisor, be enforced?
When a party performs an unrequested service for another, the modern trend permits the performing party to enforce the promise of payment for material benefits received (1) to extent necessary to prevent injustice (not entire promise, necessarily), UNLESS (2) the promisee intended to donate the service, and didn’t expect a payment.
How can a party anticipatorily repudiate a contract?
Under the CL:
1) clear and unequivocal repudiation through words
2) clear and unequivocal repudiation through acts
Under UCC:
1) Unequivocal refusal of buyer/seller to perform
2) reasonable grounds for insecurity arise, worried party inquires IN WRITING, and other party fails to provide adequate assurances within a reasonable time (not to exceed 30 days)
