Final Study Guide

Question 1

Someone breaches a contract when…

Answer 1

He fails to perform a duty without a valid excuse

Question 2

Remedy

Answer 2

A courts compensation to the injured party

Question 3

Interest

Answer 3

A legal right in something

Question 4

Expectation interest

Answer 4

This interest is what the injured party reasonably thought she would get from the contract
Designed to put the injured party in the position she would have been in had both sides fully performed their obligations

Question 5

Reliance interest

Answer 5

Puts the injured party in the position he would have been in had the parties never entered into a contract

Question 6

Restitution interest

Answer 6

Designed to return to the injured party a benefit he has conferred on the other party

Question 7

Equitable interest

Answer 7

Money damages will not suffice to help the injured party, something more is needed, such as an order for the breaching party to perform (specific performance) or an order forcing it to stop doing something (an injunction). If a party who has promised to sell land ultimately refuses to do so, a court may order specific performance or may enjoin the defendant from selling the property to someone else

Question 8

Direct damages

Answer 8

Those that flow directly from the contract (most common monetary award for the expectation interest) These are the damages that inevitably result from the breach

Question 9

Consequential damages

Answer 9

Those resulting from the unique circumstances of the injured party (also known, “special damages”) only available if they are a foreseeable consequence of the breach

Question 10

The injured party may recover consequential damages only if…

Answer 10

The breaching party should have foreseen them when the two sides formed the contract (also if, the plaintiff provides enough information so that the fact finder can reasonably estimate a fair amount)

Question 11

Incidental damages

Answer 11

Relatively minor costs that the injured party suffers when responding to the breach

Question 12

UCC on Seller’s Remedies

Answer 12

If a buyer breaches a sale of goods contract:
She may resell the goods elsewhere.
If she acts in good faith, she will be awarded the difference between the original contract price and the price she was able to obtain in the open market.
*Most courts hold that the seller of goods is not entitled to consequential damages!

Question 13

Cover

Answer 13

To make a good-faith purchase of goods similar to those in the contract

Question 14

UCC on Buyer’s Remedies

Answer 14

First, the buyer can “cover” by purchasing substitute goods. The buyer may then obtain the difference between the original contract price and her cover price.
*the buyer is entitled to consequential damages, provided that the seller could reasonably have foreseen them!

Question 15

Promissory Estoppal cases with Remedies…

Answer 15

A court will generally award reliance damages

Question 16

Restitution in cases of contract breach or discharge:

Answer 16

When one party breaches a contract, the other may be entitled to recoup what he put in

Question 17

Restitution is cases of a voidable contract:

Answer 17

A common remedy in contracts involving fraud, misrepresentation, mistake, and duress.
Restitution often goes hand in hand with rescission, which means to undo a contract and put the parties where they were before they made the agreement

Question 18

Restitution in cases of a quasi-contract:

Answer 18

A court may award restitution, even in the absence of a contract, when one party has conferred a benefit on another and it would be unjust for the other party to retain the benefit.

Question 19

Specific performance

Answer 19

Forces both parties to complete the deal - ordering the parties to perform the contract, only in cases involving the sale of land or some other asset that is considered “unique”
always available in real estate contracts

Question 20

Injunction

Answer 20

A court order that requires someone to do something or refrain from doing something

Question 21

Preliminary injunction

Answer 21

An order issued early in a lawsuit prohibiting a party from doing something during the course of the lawsuit

Question 22

Permanent injunctions

Answer 22

If, after trial, it appears that the plaintiff has been injured and is entitled to an injunction, the trial court will make it this order

Question 23

Reformation

Answer 23

A court may partially rewrite a contract to fix a mistake or cure an unenforceable provision

Question 24

Mitigate

Answer 24

To keep damages as low as reasonable

Question 25

Mitigation of damages

Answer 25

A party injured by a breach of contract may not recover for damages that he could have avoided with reasonable efforts

Question 26

Nominal damages

Answer 26

A token sum, such as one dollar, given to a plaintiff who demonstrates a breach but no serious injury

Question 27

Liquidated damages clause

Answer 27

A clause stating in advance how much a party must pay if it breaches

Question 28

A court will generally enforce a liquidated damages clause if… these two things…

Answer 28

At the time of creating the contract, it was very difficult to estimate actual damages and
The liquidated amount is reasonable

Question 29

In which way can an offer be terminated?

Answer 29

Revocation, rejection, expiration, (operation of law)

Question 30

True or False
If an offer demands acceptance in a particular method or manner, the offeree must follow those requirements to effectively accept the offer

Answer 30

True

Question 31

What does not constitute as consideration for a contract?

Answer 31

A completed act

Question 32

True or False
A prospective buyer offers to purchase a prospective seller’s vehicle for $5000 if his mother approves. The prospective seller accepts. A contract has been formed.

Answer 32

False

Question 33

Under what circumstances will an exculpatory clause not be enforceable?

Answer 33

When it attempts to release a party of liability for intentional torts, when it is not clearly written or inconspicuous, where the parties have greatly uneven bargaining power

Question 34

Which types of contracts will generally be held unenforceable?

Answer 34

A gambling debt, a credit-card agreement with a 28% interest rate under NY law, a non-compete agreement unrelated to an employment agreement or the sale of a business

Question 35

True or False
A counteroffer constitutes a rejection of an offer

Answer 35

True

Question 36

Party A sues Party B for breach of contract and wins a judgement for $10,000. Party B sends Party A a check for $7500 along with a writing which states: “This payment constitutes full and complete payment of the judgement against me”. If Party A cashes the check, Party B is relieved from any further obligation

Answer 36

False

Question 37

Which proposals usually do not constitute offers which, if accepted, create a binding contract?

Answer 37

A letter of intent, an advertisement, the solicitation of bids at an auction (but not limited to)

Question 38

True or False
An output contract obligates the seller to sell all of his output to the buyer, who agrees to accept it

Answer 38

True

Question 39

In most states, non-compete agreements are enforceable but subject to varying limitations. In NY, a con-compete contract is less likely to be enforced it:

Answer 39

The non-compete agreement is unlimited in time

Question 40

True or False
The basic elements of consideration sufficient to support a contract are (1) value, and (2) bargained for exchange

Answer 40

True

Question 41

Pauly is the owner of a business and a big fan of life insurance. he takes out $10,000 life insurance policies on many of his professional and personal contacts and his family members. In which of the following situations will the insurance contract like not be enforced upon the death of the insured?

Answer 41

The chef at his favorite restaurant

Question 42

Under certain circumstances, the Uniform Commercial Code (UCC) allows contracts which would ordinarily not be definite enough to be enforceable. In such instances, the UCC supplies the missing terms. Such terms are called:

Answer 42

Gap-filler provisions

Question 43

True or False
If you are ordering an inexpensive product online and are given an opportunity to review the terms and conditions but decline to do so because of their inordinate length and complexity, you will still be obligated in accordance with those terms and conditions.

Answer 43

True

Question 44

True or False
A price quotation is not an offer

Answer 44

True

Question 45

The rule that, in general, the acceptance of an offer is effective upon its transmission, mailing or dispatch is referred to as:

Answer 45

The mailbox rule

Question 46

True or False
The courts generally avoid analyses of the terms of an exchange to determine whether the consideration exchanged was adequate

Answer 46

True

Question 47

True or False
A non-compete agreement between employer X and its former employee in NY cannot prohibit that former employee from doing business with clients or customers with whom he had a professional relationship before his employment with employer X

Answer 47

True

Question 48

In the case of A.Z. vs B.Z. from the chapter on Legality, the Court refused to enforce the contract allowing the wife to use the pre-embryos in the event she separated from her husband, for what reason?

Answer 48

Enforcement of that provision would violate public policy

Question 49

True or False
If an offer specifies no time within which the offer must be accepted, the offeree has only twenty four hours to accept

Answer 49

False

Question 50

Which type of contracts must usually be in writing to be enforceable under the Statute of Frauds:

Answer 50

Agreements of the sale of an interest in land, to answer for the debt of another, that cannot be performed with 1 year (but not limited to)

Question 51

True or False
In general, and incidental beneficiary cannot enforce the contract from which he or she benefits

Answer 51

True

Question 51

To rescind a contract for unilateral mistake, the mistaken party must demonstrate that he entered into the contract because of a fundamental factual error and that:

Answer 51

The non-mistaken party knew of and had reason to know of the error, the mistake is mechanical or mathematical alone, enforcing the contract would be unconscionable

Question 51

True or False
If a court determines that a contract is ambiguous or incomplete, it will permit the introduction of parol evidence

Answer 51

True

Question 51

A contractual right is generally assignable unless the assignment:

Answer 51

Would substantially change the obligor’s rights or duties, is forbidden by law or public policy, is prohibited by the contract itself

Question 52

True or False
A party seeking to rescind a contract based on fraud is not required to show that his reliance on the alleged false statement or misrepresentation was justifiable

Answer 52

False

Question 52

True or False
A purchaser of land may be able to enforce an oral contract to purchase real property if she paid part of the purchase price and either made improvements to the property or entered upon it

Answer 52

True

Question 53

Duties imposed upon a party to a contract may be delegated, unless:

Answer 53

Delegation would violate public policy, the contract itself prohibits delegation, the obligee has substantial interest in personal performance by the obligor

Question 54

An oral contract for a sale of goods may be enforceable, even without a written memorandum, if:

Answer 54

The defendant admits in court that there was a contract

Question 55

True or False
Under the doctrine of mutual mistake, the contract is voidable if it is based on a fundamental factual error by both parties

Answer 55

True

Question 56

True or False
A minor may disaffirm a contract any time before she reaches the age of eighteen

Answer 56

True

Question 57

True or False
A novation is a three way agreement in which the obligor transfers all rights and duties to a third party and the obligee looks only to that third party for performance

Answer 57

True

Question 58

The defense of mistake is not an escape hatch for all bad ideas. Under which of the following situations will rescission of a contract be denied:

Answer 58

Mistake of value

Question 59

True or False
If a person has not been adjudicated incompetent but, because of a mental disease or defect, is unable to understand the nature or consequences of the transaction, the contract is void, not voidable

Answer 59

False

Question 60

True or False
Pauly is hired to keep parts supplied to machinists at the local machine shop. His boss tells him that as long as he receives no complaints from that machinists that Pauly has failed to keep an adequate supply of parts flowing, he will pay Pauly a fifty-dollar bonus every week. This contract needs to be in writing to be enforceable

Answer 60

False

Question 61

Nondisclosure of a fact constitutes misrepresentation when

Answer 61

There is a relationship of trust between the two parties

Question 62

True or False
Promissory estoppel can serve as an exception to the Statute of Frauds

Answer 62

True

Question 63

When the law requires that there be writing in order to render a contract enforacble, what are the general requirements?

Answer 63

A signature or mark by the party to be charged
Reasonable certainty as to the material terms

Question 64

What is the term to describe the provision in a contract that precludes the use of parol evidence to vary, contradict or supplement the contract terms:

Answer 64

Integration clause

Question 65

When a party affirms an intention to be bound by a contract that may otherwise be deemed voidable, it is called:

Answer 65

Ratification

Question 66

True or False
Pauly is an investor and financier. He agrees to guarantee a loan to Barty from a third party so Barry can open up a cannibas dispensary. In exchange, Barry agrees to give Pauly 25% of the stock in his business. If Pauly defaults, the lender can sue Pauly even if the guarantee agreement is oral

Answer 66

True

Question 67

True or False
A gratuitous assignment is generally irrevocable if it is written

Answer 67

True