MBE Review_Contracts

Question 1

Merchant Firm Offer (UCC 2-205)

Answer 1

by Merchant
Signed Writing
Gives assurance that it will be held open
Irrevocable during time stated (90 days max) (not revocable for lack of consideration during the time stated)

Question 2

Unilateral Contract

Answer 2

Once performance begins, can’t revoke (even upon death of offeror)

Mere preparation is not enough

Question 3

Statute of Frauds - SOF

Answer 3

MY LEGS - K must be in writing
marriage
term of years
land
executory
goods 500 or more
surety - promises to answer for debt of another

Question 4

Main Purpose Exception to Surety in SOF

Answer 4

If main purpose of guarantor in promising to answer for debt of another, was to benefit themselves, takes the K out of SOF

Question 5

Unilateral Mistake

Answer 5

if party knows or has reason to know of mistake, then cannot take advantage of the bargain.

normally, one party’s mistake - cannot rescind K

Question 6

K Modification - CL

Answer 6

Old Law: Need new Consideration (no pre-existing duty)

Modern law: allow for modification w/o new consideration as long as fair, equitable & need for modification was unforeseeable at time of entering into K

Question 7

Modification - UCC

Answer 7

Allows for good faith modifications, no consideration needed

Question 8

SOF - Merchants Exception 10 day rule

Answer 8

Both parties must be Merchants
If within reasonable time, after entering into Oral agmt,
Merchant sends Written Confirmation of agmt,
It will bind that sending Merchant immediately

If recipient Merchant does not object to contents of that writing
w/in 10 days of receipt, then they are bound as well

Question 9

3rd Party Beneficiaries - Recission/Modification of K

Answer 9

1) K can be modified/canceled w/o consent of intended 3rd party beneficiary,
if their rights have not yet vested

2) If rights have vested, then cannot modify/cancel K,
Unless intended 3rd party beneficiary Consents

Question 10

When do 3rd Party Beneficiary Rights Vest?

Answer 10

When the 3rd party beneficiary learns of the K AND (one of the following):

1) Accepts it
2) Rely on it
3) Sue immediately to protect their rights

Question 11

3rd Party Beneficiary - Reliance (Promissory Estoppel) Elements:

Answer 11

Anticipate = Reliance

1) Promise
2) Reasonable expectation of reliance on promise
3) Reliance itself
4) The Interest of Justice requires enforcement of promise

Question 12

Gratuitous Assignments v Assignments for Value - Revocability

Answer 12

All K are assignable & delegable, except unique or long term
Oral or written

Gratuitous assignments - absent any evidence of reliance are Revocable

Assignment for Value - Irrevocable

Question 13

Accord & Satisfaction

Answer 13

Accord is a new agreement btw parties already under K to each other -

accord doesn’t discharge original agmt, but suspends performance until accord is satisfied

if Unsatisfied, can be sued either under original agmt or under the accord

Satisfaction is performance of that Accord

Question 14

Purpose of K Damages/Remedies

Answer 14

To place non-breaching party in the position he would have been in had K been performed

Question 15

Anticipatory Repudiation

Answer 15

Requires clear statement of Intent not to Perform - oral or written

Sue

Question 16

Nonmaterial Breach of K

Answer 16

Minor breach - can’t cancel K, but can sue for damages

delay of performance

Question 17

Material Breach of K

Answer 17

Can Cancel K & Sue

Question 18

Condition Precedent of K

Answer 18

An act or event that must occur first before a party is under a duty to perform

NOT a Breach of K

Question 19

Time is of the Essence Clause in K

Answer 19

Court will give it affect, if specifically negotiated in K, then Breach

If not negotiated in K, then Court will not uphold, No Breach

Question 20

Damages - Acceptance of non-conforming goods (UCC)

Answer 20

If Non-breaching buyer accepts non-conforming goods, may recover warranty damages (diff in value btw goods accepted & contracted goods plus any incidental & consequential damages)

Question 21

Damages Remedy - sale of goods (UCC)

Answer 21

cover = diff btw K price & cost of buying conforming goods

Question 22

Lost Profits Remedy (UCC)

Answer 22

compensates lost volume buyer/seller when there’s a breach (deal in Bulk)

buyer owes seller the Expected Profit

Question 23

Under Preexisting Legal Duty, any Modification to a K…

Answer 23

Requies new consideration

Question 24

Good Faith =

Answer 24

there must be a legitimate commercial reason for the modification

Question 24

Good Faith =

Answer 24

there must be a legitimate commercial reason for the modification

Question 25

A K can be voided based on Duress when a party’s assent to K is :

Answer 25

induced by an improper threat by the other party that leaves the victim no reasonable alternative

Question 26

Withholding something someone wants or needs will constitute economic duress if:

Answer 26

1) the party threatens to commit a wrongful act that would seriously threaten the other contracting party’s property or finances;
AND
2) there are no adequate means available to prevent the threatened law

Question 27

Merchant =

Answer 27

regularly deals in goods of the kind sold
OR
who otherwise by his occupation hold himself out as having knowledge or skill peculiar to the practices or goods involved

Question 28

Expectation damages =

Answer 28

intended to put the injured party in same position as if K had been performed

Question 29

Consequential damages =

Answer 29

consist of losses beyond thoses covered by the standard measure that a reasonable person would have foreseen would occur as a result of that breach

Question 30

Repudiation gives rise to several possible remedies for the nonrepudiating party, including:

Answer 30

1) treating it as a total breach and sue immediately,
2) suspending his own performance & waiting to sue until the performance date,
3) treating repudiation as an offer to rescind and treating K as discharged, OR
4) ignoring repudiation & urging promises to perform

Question 31

Repudiating party may not withdraw his repudiation if the other party has:

Answer 31

1) canceled K
2) materially changed his position in reliance on repudiation, OR
3) otherwise indicated that he considers the repudiation final

Question 32

Test for Impracticability, used to excuse an employee’s performance of K:

Answer 32

The test for a finding of impracticability is that the party to perform has encountered: (i) extreme and unreasonable difficulty and/or expense; and (ii) its nonoccurrence was a basic assumption of the parties.

(employee was allergic to a rare chemical in the mine)

Question 33

When can a third party beneficiary enforce a contract?

Answer 33

A third-party beneficiary can enforce a contract only after his rights have vested.

Rights vest when the beneficiary: (i) manifests assent to the promise in a manner invited or requested by the parties; (ii) brings suit to enforce the promise; or (iii) materially changes position in justifiable reliance on the promise. An agreement affecting a third-party beneficiary may be modified without the third party’s consent if his rights have not yet vested.