Exam III Flashcards
Distinguish between contracts that are covered by the Uniform Commercial Code and those covered by the common law.
- UCC: Covers anything to do with the sale of goods
* CLCL: Covers everything else (services, and real estate)
List the four essential elements of a contract.
1) Mutual assent: The parties to a contract must manifest by words or conduct that they have agreed to enter into a contract. The usual method of showing mutual assent is by offer and acceptance.
2) Consideration: Each party to a contract must intentionally exchange a legal benefit or incur a legal detriment as an inducement to the other party to make a return exchange.
3) Legality of object: The purpose of a contract must not be criminal, tortious, or otherwise against public policy.
4) Capacity: The parties to a contract must have contractual capacity. Certain persons, such as adjudicated incompetents, have no legal capacity to contract, whereas others, such as minors, incompetent persons, and intoxicated persons, have limited capacity to contract. All others have full contractual capacity.
Distinguish among the following:
- Express and implied contracts
- Unilateral and bilateral contracts
- Valid, void, voidable, and unenforceable agreements
- Executed and executory contracts
- Express and implied contracts
- -Express: in words
- -Implied in fact: formed by conduct, taken from facts and circumstances (manifest assent)
- Unilateral and bilateral contracts
- -Unilateral: when a contract is formed by the exchange of promises, and each party is under a duty to the other
- -Bilateral: each party is both a promisor (a person making a promise) and a promisee (the person to whom a promise is made)
- Valid, void, voidable, and unenforceable agreements
- -Valid: one that meets all of the requirements of a binding contract
- -Void: an agreement that does not meet all of the requirements of a binding contract
- -Voidable: though defective, is not wholly lacking in legal effect
- -Unenforceable: one for the breach of which the law provides no remedy
- Executed and executory contracts
- -Executed: a contract that has been fully carried out by all of the parties
- -Executory: contracts that are still partially or entirely unperformed by one or more of the parties
Identify the three elements of enforceable quasi contract and explain how it differs from a contract.
1) A benefit conferred upon the defendant by the plaintiff
2) The defendant’s appreciation or knowledge of the benefit
3) Acceptance or retention of the benefit by the defendant under circumstances making it inequitable for him to retain the benefit without compensating the plaintiff for its value
- How does it differ from a contract?
- -Based neither on an express nor on an implied promise
- -Independent basis of liability, in addition to contract or tort liability
Identify and explain the four fundamental principles of Article 2 and Article 2A of the Uniform Commercial Code (UCC).
- Good faith
- Unconscionability
- Expansion of cultural practices
- Sales by and between merchants
What is the definition of a merchant?
- A person who:
- -Is a dealer in a particular type of goods
- -By his occupation holds himself out as having knowledge or skill peculiar to certain goods or practices
- -Employs an agent or broker whom he holds out as having such knowledge or skill
Compare and contrast the manifestation of mutual assent under the common law and under Article 2.
- The UCC assesses intent, whereas CLCL assesses the validity of a contract
Describe the UCC’s approach to requiring that certain contracts be in writing and identify the alternative methods of compliance under the Code.
- The Code requires merely some writing or record
- -Sufficient to indicate that a contract has been made between the parties
- -Signed by the party against whom enforcement is sought or by her authorized agent or broker
- -Including a term specifying the quantity of goods to be exchanged
Explain the requirements of tender of delivery with respect to time, manner, and place of delivery.
- Time
- -If the contract terms set no definite time for delivery, the seller is allowed a reasonable time after entering into the contract within which to tender the goods to the buyer
- Place
- -If the contract does not specify the place for delivery of the goods, the place for delivery is the seller’s place of business or, if he has no place of business, his residence
Explain the perfect tender rule and the three limitations on it.
- Rule
- -Imposes on the seller the obligation to conform her tender of goods exactly to the terms of the contract
- Limitations
- -If there is any violation of this rule, then the buyer may
1) Reject the whole lot
2) Accept the whole lot
3) Accept any commercial unit or units and reject the rest
Explain when the buyer has the right to reject the goods and what obligations the buyer has upon rejection.
- The buyer’s rejection of nonconforming goods or tender is rightful
- Obligations:
- -After the buyer has rejected the goods, the Code allows her to exercise no ownership of them.
- -If the buyer possesses the rejected goods but has no security interest in them, she is obliged to hold them with reasonable care for a time sufficient to permit the seller to remove them.
- -The buyer who is not a merchant is under no further obligation with regard to goods rightfully rejected.
Explain what constitutes acceptance by the buyer and the buyer’s right to revoke acceptance.
- Acceptance occurs when the buyer, after a reasonable opportunity to inspect the goods, signifies to the seller that the goods conform to the contract, or that (s)he will take the goods or retain them in spite of their nonconformity to the contract, or when the buyer
fails to make an effective rejection of the goods - Right to revoke:
- -The buyer may revoke acceptance of goods that do not conform to the contract if the nonconformity substantially impairs the value of the goods to him.
Identify and explain the seven remedies of the seller.
1) Withhold delivery of the goods
2) Stop delivery of the goods
3) Resell the goods and recover damages (in good faith, and in a reasonable manner)
- -The seller may recover damages from the buyer measured by the difference between the unpaid contract price and the market price at the time and place of tender of the goods, plus incidental damages, minus expenses saved
4) Recover damage for nonacceptance or repudiation
5) Recover the price
6) Recover incidental damages
- -Incidental damages: include any commercially reasonable charges, expenses, or commissions incurred in stopping delivery; in the transportation, care, and custody of goods after the buyer’s breach; in connection with return or resale of the goods; or otherwise resulting from the breach
7) Cancel the contract
Identify and explain the eight remedies of the buyer.
1) Cancel the contract
2) Recover payments made
3) Cover: the buyer may in good faith and without unreasonable delay proceed to purchase needed goods or make a contract to purchase such goods in substitution for those due under the contract from the seller (specific to the buyer)
4) Recover damages for nondelivery or repudiation (damages=$)
- -The damages are equal to the difference between the market price at the time the buyer learned of the breach and the contract price, together with incidental and consequential damages, minus expenses saved because of the seller’s breach
5) Sue for specific performance (addressed in Ch. 18, too)
6) Recover damages for breach in regard to accepted goods
7) Recover incidental damages
8) Recover consequential damages
- -Why does the buyer receive these, and not the seller?
- -Lost profit is built into the price of the good, so this is to combat that (the seller could sue for the price marked up for profit)
Identify the types of duress and describe the legal effect of each.
- Emotional duress
* Physical duress
