KX PART 1

Question 1

express kx

Answer 1

formed by lang, oral or written

Question 2

implied kx

Answer 2

formed by conduct

(i) X fills her car with gas at Y’s gas station. There is a contract for purchase and sale of the gas.

Question 3

are quasi kx kx

Answer 3

no. just unenforceable kx resulting in unjust enrichment.
D can bring restitution action for the amount of the benefit conferred on D

Question 4

bilateral k

Answer 4

promise for promise. can be accepted in any reasonable way (prom or perf). presumption is bilat kx.

Question 5

unilat kx

Answer 5

acceptance by COMPLETED performance only

occurs in only 2 situations: (1) when offeror clearly (unambiguously) indicates that completion of performance is the only manner of acceptance; and (2) where there is an offer to the public, such as a reward offer.

Question 6

Void v. voidable v. unenforceable

Answer 6

VOID - one without any legal effect. cannot be enforced by either party. (e.g., kx to commit crime)
VOIDABLE - kx where one or both parties can elect to avoid, such as by raising a defense that makes it voidable like minor mental illness. [could still enforce tho]
UNENFORCEABLE - otherwise valid but isn’t enforceable due to a defense like SoL or SoF

Question 7

how are goods defined under Art 2

Answer 7

all things movable (includes most tangibles)

doesnt apply to sale of real estate, services, intangibles, or construction kx

Question 8

merchant def under Art 2

Answer 8

one who regularly deals in the goods of the kind sold or who otherwise by their profession holds themselves out as having special knowledge or skills as to the practices or goods involved

Question 9

what if kx includes goods and nongoods

Answer 9

see which dominant. but if kx divides payment between goods and services, art 2 applies to goods portion only

Question 10

good faith and fair dealing

Answer 10

every kx under UCC imposes good faith obligation in performance and enforcmenet.

good faith = honesty in fact and observance of reasonable commercial standards

Question 11

reqs for kx

Answer 11

consideration, mutual assent (offer and acceptance), no defenses

Question 12

offer req

Answer 12

creates a reasonable expectation in offeree that offerror is willing to enter into a kx based on the offered terms

LOOK FOR:
-promise (need intent; not merely invite to begin negot.)
-certainty and definiteness in essential terms
-communication of above to offeree

Question 13

are price quotes offers

Answer 13

generally no. but they can be if given in response to an inquiry containing a quantity term

Question 14

invitation v offer

Answer 14

-use of very broad communicating media generally indicates its an invitation for an offer
-ads, catalogs, circ letters generally invitations

BUT MORE INFO IN THESE THE MORE LIKELY AN OFFER. if ad has quantity in it, may be offer

Question 15

exceptions to ad rule

Answer 15

-promise
-certain/definite terms
-offeree clearly identified

Question 16

what is req by certain and definite terms for an offer

Answer 16

basic inquiry is to ensure kx is capable of being enforced

-need identification of offeree
-definite SJ

certain kx have specific req
-real estate transac need LAND and PRICE identified
-sale of goods needs QUANTITY [see output/req kx]
-employment kx - neeeds duration of employment (otherwise creates at will kx) AND nature of work to be performed

Question 17

requirements kx

Answer 17

where a buyer promises to buy from a certain seller all of the goods the buyer requires, and the seller agrees to sell that amount to the buyer.

cant be tender or demand for unreasonably dispropoirtionate quantity

Question 18

terms suggesting output or req kx

Answer 18

In addition to the words “require,” “need,” and “produce,” certain other terms are clues that the contract is a requirements or outputs contract. On the exam, watch for the following words: “all,” “only,” “exclusively,” and “solely.”

Question 19

output kx

Answer 19

seller promises to sell a certain buyer all of the goods that seller produces and buyer agrees

can’t be tender of or demand for quantity unreasonably disproportionate to normal or prior output or reqs

Question 20

terms - missing terms

Answer 20

fact that one or more terms not includes does not necessarily prevent formation of kx if it appears parties intended to make a kx and there is a reasoably certain basis for remedy.

in such cases, the majority of jdx and Art 2 allow the court to supply reasonable terms for those that are missing

PRICE = reasonable price at time of delivery (Art. 2)
TIME = within a reasonable time

Question 21

terms - vague terms

Answer 21

can substitute for MISSING but NOT vague terms!!

however, uncertainty can be cured by part performance that clarifies the vague term or by acceptance of full performance

If a material term is vague or ambiguous, it is not an offer at common law or under the UCC. Watch for terms such as “appropriate,” “fair,” and “reasonable,” which signal a possible vagueness problem.

Question 22

terms - to be agreed upon later

Answer 22

if the term is a mateiral term, the offer is too uncertain

Question 23

termination of offer

Answer 23

-can’t be accepted after terminated
-can be terminated by act of either party or operation of law

Term. by party:
-lapse of time (reasonable if not specified)
-Express rejection
-Counteroffer as rejection (same SJ but diff terms)
-Conditional acceptance (essentially a new offer)

EFFECTIVE WHEN RECEIVED.

Question 24

distinguish between counteroffer and mere inquiry

Answer 24

counteroffer that kills usually ends with a period. bargaining usually ends w question mark. test is whether a reasonable person would believe the original offer was rejected.

Question 25

does rejection of an options kx close the options kx window?

Answer 25

nope. doesnt constitute termination of offer. could accept later unless the offeror detrimentally relied on the offeree’s rejection

Question 26

Disney sends Barack Obama an offer to appear in the film, “The Man in the Tan Suit.” Obama agrees on the condition that he gets
top billing. Is there a contract?

Answer 26

No. just bc it says “agree” doesnt mean kx formed. this is an ex of conditional acceptance which is a rejection plus new offer.

Question 27

Revocation of offer

Answer 27

Can be done by:
-direct communication to offerree
-comparable publication
-indirectly if offeree receives: (1) correct info; (2) from a reliable source; (3) acts of the offeror that would indicate to a reaonsable person the offeror no longer wishes to make the offer.

effective when received or published

Question 28

when is something “received”?

Answer 28

when delivered to appropriate location.

doesnt matter if recipient actually reads.

same for phone messages

Question 29

options lx

Answer 29

where offeree gives consideration for promise by offeror not to revoke

Question 30

merchants firm offer under Art 2

Answer 30

-offeror must be merchant [offerree doesnt need to be]
-offeror offers to buy or sell GOODs in SIGNED WRITING
-writing gives ASSURANCES offer will be held open

-3 months max even if expressly states longer. if want to hold open longer, must be options kx. if no time stated, for reasonable time not to exceed 3 months

Question 31

detrimental reliance in option kx

Answer 31

When the offeror could reasonably expect that the offere would rely to their detriment on the offer, and the offeree does so rely, the offer will be held irrevocable as an option contract for a reasonable length of time.

Question 32

revocation under a uniltateral kx

Answer 32

even tho no full ACCEPTANCE until performance completed, offer becomes IRREVOCABLE once performance has begun.

offeror must give offeree reasonable time to complete performance

but offeree not bound to complete performance. can withdraw whenever.

substantial PREP to perform does not make the offer irrevocable but may constitute detrimental relaince sufficne tto make promise binding to detr reliance extent.

Question 33

termination of offer by operation of law

Answer 33

Effective when the death or insanity of either party, the destruction of the subject matter, or the supervening illegality occurs
Death or insanity of either party, destruction of subject matter, or supervening illegality

Question 34

who can accept an offer

Answer 34

Generally, only the person to whom an offer is addressed has the power of acceptance. A member of a class to which an offer has been directed also has the power to accept. Generally, an offeree’s power of acceptance cannot be assigned. But, if the offeree paid consideration to keep the offer open (an option contract), the right to accept is transferable.

Question 35

acceptance of bilat kx

Answer 35

cane be done by BEGINNING performance or promise

must be communicated to offeror
silence generally not acceptance cus no meeting of the minds

Under Article 2, an offer to buy goods for current or prompt shipment is construed as inviting acceptance either by a promise to ship or by current or prompt shipment of conforming or nonconforming goods

Question 36

mirror image rule

Answer 36

at common law, any different or addtl terms make the response a rejection and counteroffer

for non goods

Question 37

notice of acceptance for unilateral kx

Answer 37

Generally, the offeree is not required to give the offeror notice that he has begun the requested performance but is required to notify the offeror within a reasonable time after performance has been completed. However, no notice is required if: (1) the offeror waived notice; or (2) the offeree’s performance would normally come to the
offeror’s attention within a reasonable time.

Question 38

shipment of nonconforming goods under Art 2

Answer 38

shipment of nonconforming goods is an acceptance creating a bilateral contract as well as a breach of the contract unless seller reasonably notifies the buyer that a shipment of nonconforming goods is offered only as an accommodation.

The buyer is not required to accept accommodation goods and may reject them. If the buyer rejects, the shipper isn’t in breach and may reclaim the accommodation goods, because the tender does not constitute an acceptance of the buyer’s original offer.

Question 39

battle of the forms Art 2

Answer 39

no mirror image rule

inclusion of addtl or diff terms is not a rejection and counteroffer, but rather is effective AS ACCEPTANCE unless the acceptance is made expressly conditional on assent to the addtl or diff terms

whether the diff terms actually become PART of the kx depends on whether both parties r merchants!!

if both arent merchants, terms of offer govern

Question 40

battle of the forms w merchants

Answer 40

additional terms accepted UNLESS

–materially alter the orig terms, like by changing a party’s risk or remedies available
–offer expressly limits acceptance to terms of offer OR
–offeror has already objected to the particular terms or objects within a reasonable time after notice of them is received

Question 41

merchants confirmatory memo

Answer 41

A merchant’s memo confirming an oral agreement that contains different or additional terms is also subject to the battle of the forms provisions

Question 42

mailbox rule

Answer 42

acceptance effective at moment of dispatch provided it is properly addressed and stamped UNLESS

–offer stipulates that acceptance is not effective until received
–optionk x involved
–offeree sends rjeection and then sends acceptance, in which case whichever arrives first is effective

Question 43

basic consideration reqs

Answer 43

1. a bargained-for exchange 2. w legal value [doesnt necessarily need to be economic]

no past or moral consideration generally. no gifts

a mere peppercorn is enough. courts won’t inquire into the adequacy or fairness of the specific consideration.

Question 44

how to get around past consdieration issue

Answer 44

make new promiose in writing or partially perform

could also change payment method, etc. just change it someway

Question 45

preexisting legal duty

Answer 45

Traditionally, performing or promising to perform an existing legal duty is insufficient consideration.

EXCEPTIONS:
-new or diff consideration promised (diff payment type, payment earlier, bla bla)
-promise is to ratify a voidable obligation
-preexisting duty is owed to a 3d person rather than the promisor
-there is an honest DISPUTE as to the duty
-there are unforeseen circumsatcnes sufficient to discharge and it is fair and equitable

Question 46

does the UCC follow the preexisting duty rule

Answer 46

no. kx under UCC needs no consideration for modification to be binding.

Question 47

You owe MasterCard $3,000. You and MasterCard orally agree that if you pay $2,000, MasterCard will forgive the rest of the debt. If you pay $2,000, can MasterCard recover the $1,000 balance?

Answer 47

YES. Bc no consideration for release of extra debt. You owed 3k and there was no honest/good faith dispute about it!!!!

this will be on exam.

Question 48

illusory promise

Answer 48

if only one party has to perform, not mutual consideration. will not be enforced

Closely analyze the wording of contract terms; language can make a big difference here. For example, a valid requirements or output contract term will say, “all the
widgets I require” or “all that you produce,” but a term such as “all the widgets I want” or “all you want to sell me” is illusory.

Question 49

Promissory estoppel

Answer 49

Consideration is not necessary if the facts indicate that the promisor should be estopped from not performing. A promise is enforceable if necessary to prevent injustice if:
a. The promisor should reasonably expect to induce action or forbearance, and
b. Such action or forbearance is in fact induced.

If the elements for promissory estoppel are present, some jurisdictions will award expectation damages (that is, what was promised under the contract), but the Second Restatement provides that the remedy “may be limited as justice requires.”

Question 50

rules on minors in kx

Answer 50

-voidable
-binding on adult
-if minor doesnt disaffirm b4 18, can’t void
-if disaffirm, must retain all stuff
-however, no obligation to return any part of consideration that has been squandered, wasted, or negligently destroyed
-exception for NECESSARIES where minor can disaffirm but will be L for restitution for value of benefits received

Question 51

other infirm defenses

Answer 51

-mental incapacity (must be so deficient incapable of understanding)
-intoxicated persons (must be hella drunk; necessaries exception)

Question 52

duress elements

Answer 52

-gen econ duress tested
-voidable unless affirmed
-econ duress if: (1) threat of wrongful act that would seriously threaten prop or finances; and (2) no adequate means available to prevent the threatened loss

Question 53

undue influence elements

Answer 53

(1) undue susceptibility to pressure by one party, and (2) excessive pressure by the other party

often arise when the dominant party is in a confidential or caregiver relationship w the influenced party

Question 54

defenses - ambiguous kx language

Answer 54

when term has at least 2 possible meanings, consider…

if neither party aware - no kx unless both parties intended same meaning
if both parties aware - no kx unless both parties intended same meaning
one party aware - binding kx based on what the ignorant party reasonably believed to be the meaning of ambiguous words [held against bad party]

Question 55

defense - mutual mistake as to existing facts

Answer 55

-if both parties in a kx are mistaken about EXISTING FACTS (not future happenings) relating to agrmt, kx may be voidable by adversely affected party if:
-mistake concerns BASIC ASSUMPTION
-mistake has MATERIAL EFFECT on agreed-upon exchange [cubic zirconia - diamond] AND
-party seeking avoidance did not ASSUME THE RISK of the mistake [was in a better position to know; e.g., kxor should know better than homeowner; OR where party had doubts about facts]

mistake about value w/o mistake about underlying facts does NOT raise a defense.

Question 56

defense - unilat mistake

Answer 56

If only one party is mistaken about facts re the agreement, the mistake will not prevent formation of kx. But, if the nonmistaken party knew or had reason to know of the mistake by the other party, the kx is VOIDABLE by the mistaken party.

but mistkae must have had MATERIAL EFFECT and mistaken party must not have borne the risk

unilat mistake msot commonly arises in computation error like w kxor bid.

Question 57

mistake by intermediary

Answer 57

message transmitted is operative unless other party knew or should have known about mistake

Question 58

defense - misrepresentation

Answer 58

-voidable if innocent party justifiably relied on the misrepresentation [fraud in the inducement] and the rep was MATERIAL

material if: (1) would induce a reaosnable person to agree; or (2) the maker knows that for some reason it is likely to induce this particular person, even if it would not do so for a reasonabel person.

misrep can be inferred from conduct

Question 59

illegality - defense

Answer 59

void if P unaware of illegality and purpose doesnt involve moral turpitude

Question 60

unconscionability defense

Answer 60

unfair surprise + oppressive terms [usually big difference in bargaining power]
determined at time kx formed
rarely a good answer on MBE

exs:
-some risk-shifting clauses
-certain “take it or leave it”clauses for necessary goods
-some exculpatory clauses [for intentional acts]
-but limitation on remedies generally ok

Question 61

effect if court finds unconscionability

Answer 61

If a court finds as a matter of law that a contract or any clause of the contract was unconscionable when made, the court may: (1) refuse to enforce the contract; (2) enforce the remainder of the contract without the unconscionable clause; or (3) limit the application of any clause so as to avoid an unconscionable result.

Question 62

SoF

Answer 62

MYLEGS
M- marriage [with promise of considration]
Y- cannot at all be performed within 1 yr [lifetime ok; could die tomorrow]
L- Land [real prop, mortgage, fixtures, minerals - can avoid thru full performance]
E - Executor or Admin Promise to Personally Pay Estate Debts
G - Goods 500 or more [must be signed by party being charged unless both parties merchants and there is a confirm memo]
S - Promises to pay debts of another (suretyship promises)

noncompliance means UNENFORCEABLE at option of party to be charged

Question 63

When is a signed writing for party to be charged not needed for goods 500 or more

Answer 63

SWAP: Specially made goods,
Written confirmation by a merchant, Admission in court, or Performance [paid for or accepted].
These facts take the contract out of the Statute of Frauds.

Question 64

How to remove kx from SoF

Answer 64

• goods modify to less than 500
• full performance in land sale [full conveyance] OR at least 2 of following [payment (in whole or part), possession, and/or valuable improvements] - can only get specific performance tho here

Question 65

merchant confirmation rule

Answer 65

In kx between merchants, if one party, within a reasonable time after an oral agreement made, sends to the other party a written confirmation of the understanding that is
sufficient under the SoF to bind the sender, it will also bind the recipient if: (1) they have reason to know of the confirmation’s contents; and (2) they do not object to it in writing within 10 days of receipt.

usually confirm over phone and one sends to another after

Question 66

SoF writing req

Answer 66

-need not be formal written kx
-can be recepit, letter, check w memo line, written offer accepted orally, napkin

could be several pieces of correspondence

essential terms

Question 67

SoF signature req

Answer 67

electronic ok
letterhead or initials ok
symbol ok

generally only party to be charged need sign

Question 68

SoF remedies

Answer 68

reasonable value of services or part performance rendered or restitution for any other benefit conferred

Question 69

when r goods over 500 not needed to be in writing

Answer 69

if (1) received and accepted or (2) paid for

Question 70

general info re impracticability

Answer 70

-includes impossibility and impracticability
-where nonoccurence of the event was a basic assumption of the parties in making the kx and neither expressly or impliedly assumed the risk of the event occurring

Question 71

impossibility

Answer 71

-must be “objective” (could not be performed by anyone)
-impossibility must arise AFTER kx entered into
-each party is then excused from duties yet to be fulfilled. can sue for recission and receive restitution on any goods delivered, payments made, etc.

Question 72

partial impossibility

Answer 72

if only part of the kx becomes impossible, it will be discharged only to that extent. this is so even if there is added difficulty or expense for the other portion.

Question 73

temporary impossibility

Answer 73

suspends kxual duties but does not discharge them. when performance becomes more possible, duty “springs back” unless the buden on either party to kx would be substantially increased or different from that originally contemplated

Question 74

death as impossibility

Answer 74

A contract is not discharged by the death or incapacity of the person who was to perform the services if the services are of a kind that can be delegated (see 9.3.2). Thus, if the contract was for personal services of a unique kind (for example, the painting of a portrait by a famous artist), the death or incapacity of that person could make performance impossible, but if the services are not unique (such as the painting of a farmer’s barn), the death or incapacity of that person would not make performance impossible.

Question 75

ex of impossibility

Answer 75

-death if unique services
-supervening illegality
-subsequent destruction of kx’s SJ or means of perfromance [special rules for construction kx]

Question 76

construction kx impossibility

Answer 76

-contractor’s duty to construct a building is not discharged by destruction of the work in progress [cus can still rebuild] [ALSO is not entitled to anything other than the kx price]
-HOWEVER, kx to repair or remodel a building that is destroyed DOES discharge and the kxor is entitled to restitution for value of work done prior to destruction

Question 77

does the UCC differ between unilat and bilat

Answer 77

no

Question 78

major differences between UCC and common law

Answer 78

-mirror image rule
-unilat/bilat differences in CL
-modifications (need new consid for CL; dont need anything but good faith for UCC) [note that sometimes modern courts for CL will allow modification in the event that there is: (1) an unforeseen circumstance and (2) the modification is fair and equitable in light of the circumstance.