contracts themis

Question 1

Define the parol evidence rule.

Answer 1

The parol evidence rule generally prevents a party to a written contract from presenting extrinsic evidence of a prior or contemporaneous agreement that contradicts the terms of the contract as written.

Question 2

[UCC Firm Offer Rule] Under the UCC, what three requirements must be met for an offer to buy or sell goods to be an irrevocable firm offer?

Answer 2

(i) The offeror is a merchant;
(ii) There is an assurance that the offer is to remain open; and
(iii) The assurance is contained in a signed writing from the offeror.

Question 3

How is a unilateral offer accepted?

Answer 3

Acceptance of an offer for a unilateral contract requires complete performance.

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

Question 4

If a destination contract authorizes the seller to ship the goods by carrier, when does the risk of loss shift from the seller to the buyer?

Answer 4

Once the goods are delivered to a particular place (specified in the contract)

Question 5

What are four forms of consideration?

Answer 5

Consideration can take the form of:

1. A return promise to do something
2. A return promise to refrain from doing something legally permitted
3. The actual performance of some act
4. Refraining from doing some act

Question 6

If a shipment contract authorizes the seller to ship the goods by carrier, when does the risk of loss shift from the seller to the buyer?

Answer 6

Once the goods are delivered to the carrier

Question 7

When may a nonbreaching party pursue specific performance as a remedy?

Answer 7

When damages are an inadequate remedy, the nonbreaching party can pursue specific performance.

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

Question 8

Under the UCC, what essential term(s) are required for a contract to be formed?

Answer 8

Quantity

Note: The UCC “fills the gap” if other terms are missing.

Question 9

Define accord and satisfaction.

Answer 9

Under an accord agreement, a party to a contract agrees to accept a performance from the other party that differs from the performance that was promised in the existing contract, in satisfaction of the other party’s existing duty.

A “satisfaction” is the performance of the accord agreement; it will discharge both the original contract and the accord contract.

Question 10

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

Answer 10

The implied warranty of merchantability is implied whenever the seller is a merchant.

The disclaimer can be oral, but must use the term “merchantability” and must be conspicuous if in writing. Language that indicates there is no implied warranty is sufficient (e.g., “as is” or “with all faults”).

Question 11

What doctrine comes into play when an unexpected event arises that destroys one party’s purpose in entering into the contract, but performance of the contract is not rendered impossible?

Answer 11

The doctrine of frustration of purpose.

The frustrated party is entitled to rescind the contract without paying damages.

Note: The event that arises must not be the fault of the frustrated party, and its nonoccurrence must have been a basic assumption of the contract.

Question 12

What is the basic concept of legal detriment?

Answer 12

There must be something of substance, either an act or a promise, which is given in exchange for the promise that is to be enforced.

Question 13

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

Answer 13

Marriage - a contract made upon the consideration of marriage;

Suretyship - a contract to answer for the debt or duty of another;

One year - a contract that cannot be performed within one year from its making;

UCC - under the UCC, a contract for the sale of goods for a price of $500 or more; and

Real Property contract - a contract for the sale of an interest in real property.

Question 14

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

Answer 14

(i) Mistake of fact existing at the time the contract was formed;
(ii) The mistake relates to a basic assumption of the contract;
(iii) The mistake has a material impact on the transaction; and
(iv) The adversely affected party did not assume the risk of the mistake.

Question 15

What is the main difference between contract modification under the common law and contract modification under the UCC?

Answer 15

At common law, modifications require consideration; under the UCC, they require only good faith.

Question 16

When is a plaintiff entitled to restitutionary recovery, and how is it measured?

Answer 16

When a defendant is unjustly enriched by the plaintiff, restitution generally allows the plaintiff to recover on the benefit conferred by the plaintiff upon the defendant. Generally, the benefit is measured by either (i) the reasonable value of the defendant obtaining that benefit from another source, or (ii) the increase in the defendant’s wealth from having received that benefit.

Question 17

Define constructive condition of exchange.

Answer 17

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

Question 18

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

Answer 18

Course of performance, course of dealing, and trade usage.

Note: If the express contract terms are inconsistent with the course of performance, or trade usage, priority is given to the express terms, followed by course of performance, course of dealing and trade usage.

Question 19

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

Answer 19

Upon receipt. (Example: On day 1, A mails an offer to B. On day 2, A mails a revocation to B. If B receives the offer and accepts before receiving the revocation, a contract is formed.)

Question 20

Who lacks the capacity to make a contract?

Answer 20

(i) Minors (under the age of 18);
(ii) People who are mentally ill;
(iii) People who are intoxicated; and
(iv) People whose property is under guardianship by reason of adjudication.

Question 21

Define intended beneficiary.

Answer 21

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