MBE Contracts Flashcards
Buyer’s insurable interest in future goods?
At which time did the dairy acquire an insurable interest in the tank trailer?
A. When the contract was entered into.
B. When the retailer acquired the tank trailer from the manufacturer.
C. When the retailer had the dairy’s emblem painted on the tank trailer.
D. When the retailer delivered the tank trailer.
A buyer acquires an insurable interest in goods upon the identification of the goods. Where the contract is for future goods (i.e., goods that are not both existing and identified), the buyer does not acquire an insurable interest until the seller designates goods as those to which the contract refers, unless the parties have explicitly agreed otherwise. Since the dairy did not select a tank trailer from the retailer’s inventory or otherwise select a specific trailer, the contract was for the sale of future goods. By painting the dairy’s emblem on the tank trailer, the seller effectively designated that tank trailer as the dairy’s. Consequently, at that time, the dairy acquired an insurable interest in it. Although the trailer’s failure to conform to the contract does give the dairy rights against the retailer, the failure does not affect the identification of the trailer
BEWARE void/voidable
[just a reminder]
Auction rules (with or without reserve…. ie owner could scream - NO SALE I WANT IT, before the bid)
Is the collector entitled to keep the painting?
A. Yes, because, by default, the painting was sold with reserve and the auction had not concluded.
B. Yes, because the museum had not paid for the painting.
C. No, because the auctioneer had accepted the museum’s bid.
D. No, because, by default, the painting was sold without reserve.
The sale of goods by auction is complete when the auctioneer accepts the highest bid by the fall of the auctioneer’s hammer or in any other customary way. Here, because the auctioneer had gaveled the museum bid, the painting belongs to the museum (assuming, of course, that the museum does ultimately pay). Answer choice A is incorrect because the auctioneer had gaveled the bid. In the absence of language to the contrary, the auction of an item is with reserve, and the items may be withdrawn from sale any time before the completion of the sale is announced. In this case, however, the sale was completed upon the auctioneer gaveling the museum’s bid. The fact that the auction itself had not concluded is irrelevant.
Does a promise to pay part/all of a debt that is not enforeceable bc of SOL — does such a promise require consideration to be enforceable?
NO! a promise to pay a debt after the running of the statute of limitations, like the promise in this case, is enforceable without consideration. The enforcement of such a promise is a long-established exception to the requirement that there be consideration to support the enforcement of promises.
Defaulting buyer’s right to restitution
defaulting buyer’s right to restitution is governed by U.C.C. § 2-718. The buyer is entitled to a refund of any payments made on the contract less damages provable by the seller, and a penalty of “twenty percent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller.”
UCC gap filling in installment contracts
A company, in a signed writing, contracted with a mechanic, for the sale to the buyer of 70 identical sets of specified wrenches, 25 sets to be delivered on April 15, and the remaining 45 sets on May 15. The agreement did not specify the place of delivery, or the time or place of payment.
Which of the following statements is correct?
A. The company must tender 25 sets to the mechanic at the mechanic’s place of business on April 15, but does not have to turn them over to the mechanic until the mechanic pays the contract price for the 25 sets.
B. The company has no duty to deliver the 25 sets on April 15 at the company’s place of business unless the mechanic tenders the contract price for the 25 sets of wrenches on that date.
C. The company must deliver 25 sets on April 15, and the mechanic must pay the contract price for the 25 sets within a reasonable time after their delivery.
D. The company must deliver 25 sets on April 15, but the mechanic’s payment is due only upon the delivery of all 70 sets.
This agreement is for an installment contract because the goods are to be delivered in a number of shipments. When the contract is silent as to payment due date, the U.C.C. gap-filler provisions make payment due upon each delivery (unless the price cannot be apportioned).
Subject to SOF
Monsieur Sour!!!
Seller’s lack of knowledge of other side’s incompetency!
An individual who is the subject of a court-ordered guardianship over that individual’s property lacks the capacity to enter into a contract. Consequently, any contract purportedly entered into by such an individual is void. Since the father was under a court-ordered guardianship, his contract to purchase the furniture was void. (Note: If the furniture is a necessity, the store may be able to recover the furniture’s reasonable value in restitution under a quasi-contract action, but cannot enforce the contract of sale between the store and the father.) Answer choice A is incorrect because, although where a contract for the sale of goods exists the delivery of the goods by the seller to the buyer generally shifts the risk of loss to the buyer, here the purported contract entered into by the father for the purchase of the furniture was void. Answer choice B is incorrect because, where a guardianship over an individual’s property has been recognized by a court, the seller’s lack of actual knowledge of the guardianship or the individual’s inability to contract is irrelevant. Answer choice C is incorrect because, since the father’s contract with the store was void rather than merely voidable, the daughter’s lack of opportunity to contact the store is irrelevant.
Cross offers?
For three months, a wealthy, unemployed heiress to a hotel fortune and a yacht builder negotiated unsuccessfully over the purchase price of a custom built yacht, which, as the yacht builder knew, the heiress wanted her fiancé to have as a wedding gift. On February 27, the yacht builder sent the heiress a signed, dated memo saying, “If we can arrive at the same price within the next week, do we have a deal?” The heiress wrote “Yes” and her signature at the bottom of this memo and delivered it back to the yacht builder on February 28. On March 1, the heiress wrote the yacht builder a signed letter offering to buy “one new custom built yacht, with all specifications requested by me, for $12,000,000 cash on delivery not later than April 1.” By coincidence, the yacht builder wrote the heiress a signed letter on March 1 offering to sell her “one new custom built yacht, with all specifications requested by you, for $12,000,000 cash on delivery not later than April 1.” These letters crossed in the mail and were respectively received and read by the heiress and the yacht builder on March 2.
If the heiress subsequently asserts and the yacht builder denies that the parties had a binding contract on March 3, which of the following most persuasively supports the heiress’s position?
A. A sale-of-goods contract may be made in any manner sufficient to show agreement, even though the moment of its making is undetermined.
B. A sale-of-goods contract does not require that an acceptance be a mirror image of the offer.
C. With respect both to the making of an agreement and the requirement of consideration, identical cross-offers are functionally the same as an offer followed by a responsive acceptance.
D. Since the yacht builder was a merchant in the transaction and the heiress was not, the yacht builder is estopped to deny that the parties’ correspondence created a binding contract.
Answer choice C is incorrect, as generally with cross-offers, neither offer accepts the other, and there is no contract unless one of the parties accepts the offer he has received. In this case, though, the parties had previously agreed that if they could agree on the same price within a week, they would have a contract.
POINT: prior agreement, that K if there’s an agreement!!!! SO answer is “A. A sale-of-goods contract may be made in any manner sufficient to show agreement, even though the moment of its making is undetermined.”
Death of offeree
Terminates offer (but not K) . This includes unilateral K offer.
Merchant firm offer
Generally, unless consideration is given to keep an offer open, the offeror can withdraw an offer at any time prior to its acceptance by the offeror, even an offer that the offeror states is irrevocable. However, a firm offer made by the offeror in an authenticated writing is irrevocable for the stated time period, where such period is 90 days or less, provided that the offeror is a merchant. Here, the dealer’s attempt to revoke his offer was unsuccessful. By making the customer a firm offer in a signed writing, that offer was irrevocable and the customer could and did accept it within the 30-day period fixed by the offer.
Perfect Tender rule, exception re installment Ks
If installment, then installment MUST substantially impair value of that installment!
In general, the UCC requires perfect tender of goods, and substantial performance will not suffice. However, the UCC does permit substantial performance with regard to an installment contract. In addition, when there is a nonconforming tender or a tender of nonconforming goods under one segment of an installment contract, the buyer may cancel the contract only if the nonconformity substantially impairs the value of the entire contract to the buyer. Here, the farmer made a tender of three fewer bottles of syrup than called for under the contract. However, shipping 97 out of 100 bottles of maple syrup likely qualifies as substantial performance, and the grocery store was not entitled to reject the shipment. Further, the shortfall of three bottles likely does not substantially impair the value of the entire contract to the grocery store.
OUTLINE: c. Installment contracts:
In an installment contract, a buyer may not reject any nonconforming installment unless the nonconformity substantially impairs the value of that installment and cannot be cured. The entire contract may be breached if the nonconformity substantially impairs its value.
