MBE-Ks

Question 1

K – Req’ts of an Offer (3 Cs)

Answer 1

• Commitment to be bound; communicated to offeree; certain + definite terms
• Test = would rsnble person in offeree’s position interpret as offer, as opposed to invitation to deal

Question 2

K – Essential Terms

Answer 2

• CL: all essential terms must be covered (parties, subject matter, price + quantity)
• UCC: only essential term is Q (req’ts/output good enough b/c implied duty of good faith )

Question 3

Termination of Offer (K)

Answer 3

1. Lapse of time (if not stated, rsnble period, as judged by nature of K, course of dealings, + custom in trade)
2. Death or mental incapacity (unless option)
3. Destruction or illegality
4. Revocation (can occur constructively; effective upon receipt)
5. Rejection (including counter-offer, unless option)

Question 4

Contract Acceptance

Answer 4

• Objective manifestation of intent to be bound by terms of offer that is communicated to offeror
• Offeror can specify manner of acceptance

Question 5

Unilateral Ks

Answer 5

• No K until complete performance, but gets rsnble time to complete once performance begins + can get reliance damages if offer revoked before performance began, but after $ spent preparing
• Rewards and employee bonus offers

Question 6

Acceptance of K by Shipment of Goods

Answer 6

If seller ships nonconforming goods = acceptance + breach unless seller “seasonably” notifies buyer goods are tendered as accommodation, in which case, shipment = counteroffer

Question 7

Gift v. Bargained-For Consideration

Answer 7

• Could offeree have reasonably believed that intent of offeror was to induce action on part of offeree?
• If no, always consider promissory estoppel

Question 8

What Doesn’t Count as Consideration?

Answer 8

• Pre-existing duty; Past consideration; Illusory promise
• Modification at CL, unless unforeseen difficulties that would make performance impracticable (UCC only good faith)
• Lesser amt as full satisfaction of debt, unless there was dispute or payment is of different type/early

Question 9

Promises Binding Even Absent Consideration

Answer 9

1. Promise to pay debt barred by SOL or bankruptcy
2. Promise to perform voidable duty
3. Promise to pay benefits received where benefits material + not intended as gift, but only to extent necessary to avoid injustice
4. Promissory estoppel (P reasonably relied + reliance was foreseeable; only reliance)

Question 10

Unilateral Mistake as Defense to K

Answer 10

Only if mistake “essential element” and: 1. mistake would make enforcement of K unconscionable; or 2. non-mistaken party at fault (ie: acceptance of bid way lower than others)

Question 11

Mutual Mistake as Defense to K

Answer 11

K, voidable if: 1. mistake existed at time K formed, 2. basic assumption of K, 3. material impact, 4. voiding party dn assume risk of mistake + 5. K cn be reformed to cure

Question 12

Effect of Fraudulent Misrepresentation/ Nondisclosure on K

Answer 12

Fraud in factum: K void

Fraud in inducement: K voidable

Question 13

Non-fraudulent Misrepresentation as Defense to K

Answer 13

Innocent or negligent misrep can still render K voidable if: material, induced assent to K, and justifiable reliance

Question 14

Undue Influence as Defense to K

Answer 14

Question = whether influence has prevented party from exercising free + competent judgment

Question 15

Duress as Defense to K

Answer 15

• Subjective test: did an improper threat induce assent to K
• Void if physical threat; otherwise voidable

Question 16

Intoxication as Defense to K

Answer 16

Voidable if unable to understand nature + consequences of transaction + other party had reason to know; must be disaffirmed promptly, return any value received, + may be liable in quasi-K for benefit conferred

Question 17

Express Warranty under UCC Art. 2

Answer 17

• Any promise, affirmation, description, sample, model that is part of basis of bargain; but not seller’s opinion
• Disclaimers ignored; can only disclaim implied warranties

Question 18

Implied Warranty of Merchantability

Answer 18

• If seller is merchant, goods must be fit for ordinary purpose; can be disclaimed w/ conspicuous “as is” language
• DN apply if buyer examined goods or refused opp to do so prior to K and would have discovered

Question 19

Implied Warranty of Fitness for Particular Purpose

Answer 19

Seller must have reason to know buyer has particular use for goods + buyer is relying on seller’s skill to select; can be disclaimed *in writing only*

Question 20

Written Release from K: CL + UCC Rules

Answer 20

CL: consideration req’d

UCC: no consideration if written waiver

Question 21

SOF Exceptions for Sales of Goods $500 or More

Answer 21

• Specially manufactured, not suitable for sale to another + S has begun performance
• Part payment (but only for that portion of K)
• Receipt + acceptance of goods (but only for that portion of K)
• Failure to object to writing w/in 10 days if both parties merchants

Question 22

Effect of substantial performance on damages

Answer 22

If SP, can recover K price minus cost to obtain full performance

if no SP, breaching party may still recover through restitution

Question 23

UCC Perfect Tender Rule

Answer 23

• S has right to cure as long as time remains to perform under K or if reasonably thought B would accept non-conforming
• Installment K: can only cancel entire K if nonconformity *substantially impairs* value of entire K

Question 24

UCC: Request for Assurances

Answer 24

Reasonable grounds for insecurity >> written demand for adequate assurance of performance + suspend performance

-if not provided w/in rsnble time (30 days max), may pursue remedy, but breacher may retract if no detrimental reliance

Question 25

Buyer’s remedies under UCC in case of non-conforming goods

Answer 25

Reject: notice w/in reasonable time; notice of particular defect; store/return at cost to S or sell on S’s behalf

Revoke acceptance: only if defect substantially impairs + accepted on reasonable belief S would cure or dn discover b/c rsnbly induced or difficult; must give notice w/in reasonable time and no material change

Question 26

UCC: Seller’s Remedies: Buyer Unreasonably Rejects

Answer 26

1. collect damages (K price - FMV + incidental + lost profits if “lost volume” seller) and retain deposits in amt equal to lesser of 20%/$500
2. resell (if private sale, must give notice to buyer)

Question 27

Destruction of goods before risk of loss passes to buyer

Answer 27

1. total destruction: K avoided unless product fungible + easily replaced (hay)
2. partial destruction: K avoided unless B chooses to take goods at reduced price w/out any other claim v. S

Question 28

B’s options upon rejecting nonconforming goods

Answer 28

• If security interest (ie: has partially paid or incurred expenses inspecting), may sell in good faith but must acct to S for excess
• If no interest, hold w/ rsnble care + make effort to sell if perishable/rapidly decline in value (merchant only)

Question 29

Assignment of K Rights

Answer 29

• Gratuitous: last assignment controls + automatically terminates upon death of assignor
• If consideration, 1st assignment for consideration wins unless later assignee dn know of first + obtains judgment first

Question 30

Bailor’s sale of goods entrusted to bailor for care

Answer 30

BFP from merchant takes good title if goods entrusted by O to merchant + merchant deals in same kind of goods

Question 31

Wharton’s Rule

Answer 31

If crime impossible w/out agmt, no conspiracy unless more agree (bribery, adultery, drug sale, dueling)