Ks

Question 1

Battle of Forms: New terms in acceptance may control if…

Answer 1

• Both parties are merchants;
• The new term does not materially alter the deal;
• The initial offer did not expressly limit acceptance to its terms; and
• Offeror does not object within a reasonable time to the new term.

Question 2

When can you use a preexisting duty under CL?

Answer 2

(1) change in performance,
(2) 3rd party promising to pay,
(3) unforeseen difficulties that would excuse performance

Question 3

(1) promissory estoppel:

Answer 3

(a) Promise made that would be reasonably expected to induce reliance
(b) Promisee takes detrimental action in reliance on promise
(c) Injustice can be avoided only by enforcement of the promise

Question 4

(2) Quasi-Contract (aka “K implied-in-law”)

Answer 4

(a) The plaintiff confers a measurable benefit on the defendant;
(b) The plaintiff reasonably expected to get paid; and
(c) It would be unfair to let the defendant keep the benefit without paying (look for an opportunity to decline or a good reason why there was no opportunity to decline).

Question 5

Mutual Mistake – adversely affected party can rescind if: (+ extra step for unilateral)

Answer 5

(a) mistake of fact existing when K made
(b) mistake relates to a basic assumption of the K and has material impact
(c) impacted party did not assume risk of mistake
extra step for unilateral: either…
• The mistake would make the K unconscionable; OR
• The other side knew of, had reason to know of, or caused the mistake

Question 6

Fraud/misrepresentation/nondisclosure

Answer 6

(1) Misrepresentation of a present fact (not opinion)
(2) Fact is material or fraudulent (intentional); and
(3) Misrepresentation made under circumstances in which it is justifiable to rely on the representation

nondisclosure only matters if:

(a) fiduciary duty OR
(b) active concealment

Question 7

Defenses to Formation

Answer 7

• misunderstanding
• incapacity
• mistake
• fraud/misrepresentation/nondisclosure
• duress
• illegality
• unconscionability

Question 8

Steps in K analysis

Answer 8

(0) UCC or CL?
(1) Was K formed? (All Contracts Don’t Stink)
- Agreement
- Consideration
- Defenses to Formation
- Statute of Frauds
(2) What was performance? (Pizza With Crawling Escargot)
- Parole Evidence Rule
- Warranties
- Conditions
- Excuse of Performance
(3) Damages?
- Expectation
- Restitution
- Reliance
- Liquidated
- (Punitive)

Question 9

reqs for defense of misunderstanding

Answer 9

(a) Parties use a material term that is open to two or more reasonable interpretations
(b) Each side attaches a different meaning to the term
(c) Neither party knows, or should know, of the confusion.

Question 10

What types of Ks does the Statute of Frauds apply to?

Answer 10

Mr. SOUR

• Marriage
• Suretyship
• One Year
• UCC (sale of goods over $500)
• Real Estate

Question 11

How to satisfy the SoF

Answer 11

(1) Full performance of a services contract by either side
(2) A writing signed by party whom K is asserted against that…
• (a) indicates that a contract has been made;
• (b) identifies the parties; and
• (c) contains the essential elements of the deal

Question 12

Exceptions to Parole Evidence Rule

Answer 12

•Evidence relevant to a defense against formation (duress, mistake, fraud, etc.)
o Maybe admitted to prove a condition precedent to the existence of K
• A second, separate deal
• A prior communication designed to interpret an ambiguous term in the final agreement

Question 13

Differences between the Implied Warranties of Merchantability and Fitness for a Particular Purpose

Answer 13

(1) Disclaimer
• Merchantability: can be disclaimed IF very clearly done. Look for VERY CONSPICUOUS language that mentions the warranty of merchantability or words like “as is.”
• Particular Purpose: cannot be disclaimed orally, unlike the implied warranty of merchantability; its disclaimer MUST be in writing

(2) Who can apply to:
• Merchantability: merchants only
• Particular Purpose: non-merchants too

Question 14

Reqs for Implied Warranty of Fitness for a Particular Purpose

Answer 14

(1) a buyer relies on a seller’s expertise to select a special type of good that will be used for a special purpose
(2) The seller makes an implied warranty (unless disclaimed) that the goods will satisfy this special purpose

Question 15

When can seller cure a failure to tender perfect goods?

Answer 15

(1) Time is left on K OR

(2) seller had reasonable grounds to believe that the buyer would accept a replacement

Question 16

When can a buyer reject an installment under an installment K?

Answer 16

ONLY when there is a substantial impairment in the installment that cannot be cured.

Question 17

What must a seller do under a shipping K (F.O.B. Seller’s place of business)

Answer 17

(i) Get the goods to a common carrier
(ii) Make arrangements for delivery; and
(iii) notify the buyer.

Question 18

Risk of Loss in Shipment Problem (Steps)

Answer 18

(1) Check whether parties already dealt with risk in the K. If so, their agreement will control.
(2) Ask whether either party has breached. If so, breaching party bears loss
(3) Ask what type of delivery K it was
o Shipment K → risk with buyer
o Destination K → risk with seller
(4) In all other cases, ask whether seller is a merchant
o merchant → risk stays with seller until buyer receives the goods
o not merchant → risk moves to buyer when the seller tenders the goods

When goods identified at the time the K was made are totally destroyed before the risk of their loss has passed to the buyer and w/o the fault of either party, the K is avoided and each party is relieved of its respective obligation to perform.

Question 19

Excuses for Performance

Answer 19

• impossibility / impracticability
• death after K
• frustration of purpose
• initial K has been modified or cancelled
• accord and satisfaction
• novation

Question 20

Reqs for Excuse of Impossibility / Impracticability

Answer 20

(1) unforeseeable event
(2) non-occurrence of the event was a basic assumption of the contract
(3) the party seeking discharge was not at fault

Question 21

Non-breaching party’s options w/r/t anticipatory repudiation + when can a party retract repudiation

Answer 21

(1) Treat the repudiation as a breach and sue immediately for damages
EXCEPTION: if completed entire performance and only waiting for payment, cannot sue early

(2) Ignore the repudiation, demand performance, and see what happens

Party can retract repudiation so long as other side hasn’t…

(a) Commenced lawsuit for breach
(b) Acted in reliance on repudiation (by materially changing its position)

Question 22

anticipatory repudiation under UCC

Answer 22

Reasonable grounds for insecurity about the other side’s performance allow you to demand adequate assurance of performance.

If the questionable party fails to respond within a reasonable time (30 days), then you can treat this as repudiation.

Question 23

Lost Volume Profits:

Answer 23

normally seller needs to mitigate by trying to sell to another party, but if seller is a retailer who sells this type of product all the time, the seller can try to argue for LVP (awarded profit of sale)

Question 24

3rd party beneficiaries: who can sue?

Answer 24

intended beneficiary can sue
incidental beneficiary can’t

Intended beneficiary = both promisor and promisee intended to convey enforcement rights to 3rd party in event of breach

Question 25

3rd Party does not lose enforcement rights (rights vest) if…

Answer 25

(1) beneficiary detrimentally relies on the rights
(2) beneficiary assents to the contract/rights, OR
(3) beneficiary files a lawsuit to enforce the K

Question 26

What happens if the same rights are assigned twice?

Answer 26

No consideration for assignment → last assignment controls
Consideration for assignment → first to pay gets it
o Limited exception: A later assignment will take priority if the second assignee does not know of the initial assignment and is first to obtain payment or a judgment

Question 27

When is a delegatee liable for breach?

Answer 27

A delegatee is generally not liable for breach unless she receives consideration from the delegating party. Then π can sue either original counterparty or delegatee.

(delegation = transfer of duties under K)