MBE Incorrect: Contracts

Question 1

Accord and Satisfaction

Answer 1

This is considered an “accord and satisfaction,” which discharges both the original contract and the accord contract. Under an accord agreement, a party to a contract agrees to accept a performance from the other party that differs from the performance that was promised in the existing contract, in satisfaction of the other party’s existing duty. Generally, consideration is required for an accord to be valid. By compromising, each party surrenders its respective claim as to how much is owed. If a claim is subject to dispute, it can be discharged if the person against whom the claim is asserted in good faith tenders a negotiable instrument (e.g., a check) that (i) is accompanied by a conspicuous statement indicating that the instrument was tendered as full satisfaction of the claim (e.g., “payment in full”), and (ii) the claimant obtains payment of the instrument

Question 2

Novation

Answer 2

A novation is the substitution of a new contract for an old one when the original obligor is released from his promises under the original agreement and a new obligor becomes liable.

Question 3

Third Party Beneficiary

Answer 3

Might have to know about being a beneficiary to stop a modification away from that k?

Question 4

confirming memo exception to SOF

Answer 4

if both parties are merchants and a memorandum sufficient against one party is sent to the other party, who has reason to know its contents, and the receiving party does not object in writing within 10 days, then the contract is enforceable against the receiving party even though he has not signed it.

Question 5

Doctrine of Prevention

Answer 5

requires that a party refrain from conduct that wrongfully prevents or interferes with the occurrence of a condition

Question 6

Anticipatory Repudiation

Answer 6

Under the doctrine of anticipatory repudiation, which is applicable when a promisor repudiates a promise before the time for performance is due, the promisee may treat the repudiation as a breach of the contract and sue immediately. However, in a situation in which the date of performance has not passed and the only performance left is payment, the aggrieved party must wait until performance is due before filing suit.

Question 7

Destination K

Answer 7

When the goods are required to be delivered to a specific place (e.g., the buyer’s place of business) and delivery is to be made by a third-party carrier (i.e., a destination contract), the risk of loss does not pass to the buyer until the goods are tendered to the buyer at the designated place.

The language “to the florist” indicates a specific location, thereby creating a destination contract.

Question 8

Conversion

Answer 8

The store’s rejection of the collection was proper under the perfect tender rule, but the store’s selling the collection to the theater company constituted conversion. The remedy for conversion is the fair market value of the goods at the time of the conversion of the collection.

Question 9

Assignment and Death

Answer 9

A gratuitous assignment of contract rights automatically terminates upon the death of the assignor

Question 10

Price Issues

Answer 10

such an agreement may be enforceable despite an unresolved price at the time that the agreement is entered into, as long as the price is arrived at in the manner agreed to by the parties.

Question 11

Unconscionability

Answer 11

The student’s best chance of canceling the contract is that the rancher took advantage of the student’s inexperience in order to knowingly negotiate an unfair deal for the property. A contract is unconscionable when it is so unfair to one party that no reasonable person would agree to it.

Question 12

Learn more about accords

Answer 12

don’t get them

Question 13

Conditions

Answer 13

Performance of a duty that is subject to a condition precedent is not required unless the condition occurs or its non-occurrence is excused. Unless excused, the non-occurrence of a condition precedent discharges the duty when the condition can no longer occur. Here, the manufacturer’s duty to pay the trucker was conditioned on the trucker delivering the farm implement directly to the farmer. The trucker failed to satisfy this condition by going 100 miles out of his way to pick up another item from a third party before delivering the implement to the farmer. Because the trucker can no longer satisfy this condition, the manufacturer’s contractual duty to pay the trucker has been discharged. Consequently, the manufacturer’s failure to pay the trucker does not constitute a breach, even though the manufacturer was not aware of the trucker’s failure. Non-occurrence of a condition is not a breach by a party unless the party is under a duty that the condition occur.

Question 14

Good Faith Purchaser

Answer 14

A good faith purchaser of goods in the ordinary course of business from a merchant takes good title to the goods if the goods have been entrusted by the owner to the merchant and the merchant deals in the same kind of goods.

Question 15

Mistake

Answer 15

However, not every contract based on a mistaken belief will be rescinded because of that mistake. If the adversely affected party assumed the risk of mistake, he will be unable to rescind

Question 16

Assignment

Answer 16

An assignment of a contract that is not limited to contractual rights is typically treated as both an assignment of rights and a delegation of duties. Generally, obligations under a contract can be delegated unless the other party to the contract has a substantial interest in having the delegating individual perform (for example, in a personal services contract involving taste or a special skill) or the delegation is prohibited by the contract.

Question 17

UCC Sof and Waiver

Answer 17

Under the UCC, the requirements of the Statute of Frauds must be satisfied if the contract as modified is within its provisions. Although an attempt at modification does not satisfy the requirements of the Statute of Frauds, it can operate as a waiver. A party who has made a waiver affecting an executory portion of the contract may retract the waiver by notifying the other party that strict performance will be required of the waived term, unless the retraction would be unjust due to a material change of position in reliance on the waiver.

Question 18

UCC PER

Answer 18

Under the UCC, even if the terms of a written contract for the sale of goods appear to be unambiguous, a party may explain or supplement the terms by evidence of trade usage or course of dealings or performance. Trade usage is any practice or method of dealing in the particular business or industry that is practiced with such regularity so as to justify an expectation that it will be practiced in the instant case.

Question 19

UCC Confirming Memo

Answer 19

if both parties to a transaction governed by the Statute of Frauds are merchants, a memorandum sufficient against one party is sent to the other party, and the receiving party does not object in writing within 10 days, then the contract is enforceable against the receiving party even though he has not signed it.

Question 20

Contract in Law

Answer 20

When a plaintiff confers a benefit on a defendant and the plaintiff has a reasonable expectation of compensation, allowing the defendant to retain the benefit without compensating the plaintiff would be unjust. In this case, the court can permit the contractor to recover the value of the benefit to prevent unjust enrichment. A court may allow restitutionary recovery if the plaintiff has conferred a measurable benefit on the defendant, the plaintiff acted without gratuitous intent, and it would be unfair to let the defendant retain the benefit because either (i) the defendant had an opportunity to decline the benefit but knowingly accepted it, or (ii) the plaintiff had a reasonable excuse for not giving the defendant such opportunity.

Question 21

Condition Precedent and PER

Answer 21

Parol evidence may be admitted to prove a condition precedent to the existence of the contract. Therefore, the oral agreement between the buyer and seller made when they signed the contract is admissible.

Question 22

PER

Answer 22

Course-of-performance evidence is admissible under the UCC to explain or supplement a contract. A course of performance is a sequence of conduct that is relevant to understanding an agreement between the parties if: (i) the agreement involves repeated occasions for performance by a party, and (ii) the other party accepts performance without objection and with knowledge of the course of performance.

Question 23

Anticipatory Repudiation

Answer 23

Anticipatory repudiation occurs when there has been an unequivocal refusal of the buyer or seller to perform, or when reasonable grounds for insecurity arise with respect to the performance of either party, and the other party fails to provide adequate assurances within a reasonable time (not to exceed 30 days under the UCC). Mere expressions of doubt as to a party’s ability to perform do not constitute an anticipatory repudiation.

Question 24

Some Bullshit about Buyers

Answer 24

When a contract fails to specify the assortment of goods, the duty to select the assortment falls on the buyer. If the buyer fails to specify the assortment of goods, then the seller can treat the failure as a breach by failure to accept the contracted-for goods only if the buyer’s failure materially impacts the seller’s performance.

Question 25

UCC PER Again

Answer 25

The UCC (applicable to this contract) in essence presumes that a contract is a partial integration. However, if the writing completely expresses all of the terms of the parties’ agreement, then it is a total integration, and the parties cannot introduce any extrinsic evidence (oral or written) of prior or contemporaneous understandings or negotiations

Question 26

UCC Installment K

Answer 26

Under the UCC, an installment contract is defined as one in which the goods are to be delivered in multiple shipments, and each shipment is to be separately accepted by the buyer. Payment by the buyer is due upon each delivery, unless the price cannot be apportioned.

Question 27

UCC Certainly Included

Answer 27

The contract is for the sale of particular pieces of furniture, which are goods, and therefore it is governed by the Uniform Commercial Code (UCC). Under the UCC, a court, in determining whether a contract constitutes a total integration of the parties’ agreement, should generally treat a written agreement as only a partial integration of the parties’ agreement unless the court can conclude that the parties’ “certainly would” have included the term in the written agreement.

Question 28

Auctions

Answer 28

Unless specifically announced otherwise, an auction is with reserve, meaning that the seller has the right to withdraw an item from sale at any time before the auctioneer announces the completion of the sale.

Question 29

Accord and Satisfaction

Answer 29

Under an accord agreement, a party to a contract agrees to accept a performance from the other party that differs from the performance that was promised in the existing contract, in satisfaction of the other party’s existing duty. Although the original debt is not generally discharged immediately upon entering into an accord, once the creditor accepts the lesser amount offered by the accord, the original contract is discharged. Note, however, that agreeing to accept a different type of performance does not discharge the original contract.

Question 30

New Promise after SOL

Answer 30

A new promise to pay a debt after the statute of limitations has run is enforceable without any new consideration.

Question 31

UCC Acceptance that isn’t the same

Answer 31

For a sale of goods, an acceptance that contains a modification to the terms in the offer is nevertheless an acceptance. There is an exception if the acceptance is expressly conditioned on assent to the modified terms, in which case the acceptance would be a counteroffer, but that does not seem to have occurred here. In this case, the father did not say that he accepted IF the woodworker delivered the set in a week, but rather accepted and added an additional requirement. Here, there is a sale of a goods contract between nonmerchants (or at most, between a merchant and a nonmerchant), so the father’s acceptance was valid against the original offer. The new, week-long time period would be treated as a proposal for an addition to the contract that must be separately accepted to become a part of the contract.

Question 32

Economic Waste

Answer 32

Courts may refuse to enforce an award that is economically wasteful—for example, as in this case, where the cost of restoration ($500,000) greatly exceeds any diminution in value ($20,000). If a court finds that restoration will be wasteful, then the measure of damages may be the difference in value. Courts may refuse to use the diminution in value measure of damages, however, when the breach appears to be willful, and only completion of the contract will enable the nonbreaching party to use the land for its intended purposes.

Question 33

Expectation Damages Essay Sentence

Answer 33

The baseline damages in breach-of-contract suits are expectancy damages, which are intended to put the injured party in the same position as he would have been had the contract been performed.

Question 34

Damages or losses in K

Answer 34

Must be foreseeable and calculable, and lessened for any reason.

The issue is whether damages were foreseeable at the time the contract was created. Contract damages are recoverable only if they were in the contemplation of the parties at the time of contract formation or were otherwise foreseeable

Contract damages are recoverable only if they can be proven with reasonable certainty. To that end, courts are hesitant to award damages for lost profits—especially in the case of new businesses—because profits are often speculative.

If the nonbreaching party avoids specific costs because a breach has occurred, those costs are subtracted from any damage award.

Question 35

Warrant of Merchantability

Answer 35

Under UCC Article 2, a warranty of merchantability is implied whenever the seller of goods is a merchant. To be merchantable, goods must be fit for their ordinary purpose and pass without objection in the trade. A breach of this warranty must have been present at the time of the sale. However, if the buyer, before entering into the contract, has examined the goods as fully as the buyer desires, or has refused to examine the goods, there is no implied warranty with respect to defects that an examination would have revealed to the buyer.

Question 36

Illegal Contracts and Pulling Out of them? Trash

Answer 36

Although the friend is not entitled to enforce the illegal agreement between him and the organizer, the friend is entitled to restitution with regard to the $1,000 paid to the organizer since he withdrew from the transaction before the raffle was held and did not engage in serious misconduct.

Question 37

Reformation?

Answer 37

When a writing fails to express the agreement because of a mistake of both parties, the court may, at the request of a party, reform the writing to express the agreement. Reformation of a writing for mistake is available if there was a prior agreement (either oral or written) between the parties, there was an agreement by the parties to put that prior agreement into writing, and as a result of a mistake, there is a difference between the prior agreement and the writing.

Question 38

Forced Sale Auctions

Answer 38

When an auctioneer knowingly accepts a bid by the seller or on her behalf, or procures such a bid to drive up the price of the goods, the winning bidder may avoid the sale or, at her option, take the goods at the price of the last good-faith bid prior to the end of the auction. There are two exceptions to this rule, which are that (i) a seller may bid at a forced sale and (ii) a seller may bid if she specifically gives notice that she reserves the right to bid.

Question 39

Firm Offers

Answer 39

Under the UCC, an offer to buy or sell goods is irrevocable if the offeror is a merchant, there is an assurance that the offer is to remain open, and the assurance is contained in a signed writing from the offeror. The irrevocability of a firm offer cannot exceed three months unless the offeree gives consideration to validate it beyond the three-month period.

Question 40

Accords for the 5th time

Answer 40

Under an accord agreement, a party to a contract agrees to accept a performance from the other party that differs from the performance that was promised in the existing contract, in satisfaction of the other party’s existing duty. When a party agrees to accept a lesser amount in full satisfaction of its monetary claim, there must be consideration or a consideration substitute for the party’s promise to accept the lesser amount. Consideration can exist if the other party honestly disputes the claim or agrees to forego an asserted defense. Here, there was an “accord and satisfaction” that discharged both the original contract and the accord contract. There was a dispute about whether the undamaged food containers could be returned, and the manufacturer’s deposit of the cash (i.e., satisfaction) sent by the restaurant with the memo indicating payment in full discharges any duties of the restaurant.

Question 41

UCC Non-conforming Installment K

Answer 41

If the seller makes a nonconforming tender or tenders nonconforming goods under one segment of an installment contract, the buyer can reject only if the nonconformity substantially impairs the value of that shipment to the buyer and cannot be cured. If the seller makes adequate assurances that he can cure the nonconformity, then the buyer must accept the shipment.

Question 42

Novation Again

Answer 42

Generally, obligations under a contract can be delegated. When obligations are delegated, the delegator is not released from liability, and recovery can be had against the delegator if the delegate does not perform, unless the other party to the contract agrees to release that party and substitute a new one (a novation).

A novation may be express or implied after delegation if (i) the original obligor repudiates liability to the original promisee and (ii) the obligee subsequently accepts performance of the original agreement from the delegate without reserving rights against the obligor. Merely consenting to a delegation does not create a novation.