MEE Essentials: Contracts

Question 1

Article 2. Rule Statement

Answer 1

Article 2 of the Uniform Commercial Code applies to transactions of goods, which are THINGS MOVEABLE at the time of contracting. A contract under Article 2 can be made in ANY MANNER SUFFICIENT to show agreement

Question 2

Offer rule statement

Answer 2

A person makes an offer when he COMMUNICATES a statement of WILLINGNESS to BARGAIN so that the other understands that his ASSENT is INVITED and will CONCLUDE it.

Question 3

What must terms of offer be (adjective)

Answer 3

REASONABLY CERTAIN

Question 4

Counteroffer rule statement: common law

Answer 4

At common law, a statement is COUNTEROFFER rather than acceptance when the TERMS of the initial offer are CHANGED

(MIRROR IMAGE RULE)

Question 5

Modified terms in UCC: between merchants

Answer 5

Between merchants, terms AUTOMATICALLY PART OF K unless they
1) materially change K
2) offeror objects
3) offer was explicitly limited

Question 6

Counteroffer in UCC: between non-merchants

Answer 6

Additional terms NOT incorporated, but acceptance still VALID

Question 7

Promise to hold an offer open

Answer 7

Generally, offer may be revoked before acceptance UNLESS there is 1) consideration (when for specific period–option K) or 2) or UCC firm offer exception (irrevocable if by merchant for max of 3 months)

Question 8

Acceptance rule statement

Answer 8

Acceptance is a manifestation of assent to terms of offer made in a a manner invited by offer. It is effective upon dispatch (mailbox rule)

Question 9

Rejection rule statement

Answer 9

A rejection is a manifestation of intent to NOT accept the offer, which terminates offeree’s power to accept an offer. It is effective when RECEIVED by offeror.

Question 10

Rejection v. acceptance: when rejection sent first, which is valid?

Answer 10

Whichever is RECEIVED first is effective

Question 11

Consideration rule statement

Answer 11

Consideration is a legal detriment or bargained-for exchange. A promise to make a gift does NOT constitute consideration

Question 12

Pre-existing duty rule

Answer 12

Under COMMON LAW, a promise to perform a legal duty ALREADY OWED to a promisor is not valid consideration UNLESS duty changes or there are UNFORESEEN circumstances

Question 13

Material benefit rule

Answer 13

Some jdx recognize exception to past consideration limitations when promise made after SIGNIFICANT BENEFIT (usually after emergency)

Question 14

What is needed to modify K under UCC?

Answer 14

ONLY GOOD FAITH

Question 15

Promissory estoppel rule statement

Answer 15

When there is 1) promise 2) reliance (foreseeable and justifiable) 3) enforcement necessary to AVOID INJUSTICE

Question 16

Gap fillers (UCC)

Answer 16

A contract for sale of goods does not fill if terms are missing if parties intended to make contract and there is APPROPRIATE REMEDY. Including course of performance, trade usage, course of dealing.

Only essential term is quantity

Question 17

Common law performance obligations

Answer 17

Under common law, party must SUBSTANTIALLY PERFORM its contractual obligations to demand performance/payment from other party. Courts will look at several factors to determine whether performance was substantial.

Question 18

UCC performance obligation rule

Answer 18

PERFECT TENDER RULE: perfect sale + perfect delivery

Question 19

Divisible contract rule statement

Answer 19

K is divisible if it is 1) apportionable and 2) parties would have contracted for each part separately. Party may collect for portions that he performed

Question 20

UCC rejection of goods

Answer 20

Buy can usually reject goods for any reason under perfect-tender rule

Question 21

Anticipatory repudiation rule statement

Answer 21

occurs when there is UNEQUIVOCAL MANIFESTATION by one party to other that it CANNOT OR WILL NOT PERFORM under K, made BEFORE repudiating party’s performance is due

Question 21

When may a buyer reject goods?

Answer 21

Generally cannot after accepting unless
1) nonconformity limits value
2) reasonable belief that nonconformity would be cured OR didn’t discover nonconformity
3) revokes within reasonable time
4) revokes before substantial change in goods not caused by their own defect

Question 22

Anticipatory repudiation: other party remedies

Answer 22

Other party may wait reasonable time for performance OR resort to remedy for breach of K

Question 23

Reasonable grounds for insecurity rule statement

Answer 23

When a party has reasonable grounds for insecurity that other party is unable or unwilling to perform (doubt alone insufficient), party may then demand IN WRITING adequate assurance of performance, and until she receives assurance, she may suspend performance. If assurance not given in reasonable time (30days or less) other party may treat as REPUDIATION

Question 24

Retracting repudiation

Answer 24

Party who has repudiated can retract his repudiation unless the other party CANCELS K, MATERIALLY RELIES on repudiation, or indicated that she BELIEVED REPUDIATION to be final

Question 25

Statute of Frauds Rule Statement

Answer 25

Statute of Frauds K must be evidenced by writing that 1) identifies SUBJECT MATTER of K 2) ESSENTIAL TERMS 3) SIGNED BY party to be charged

Question 26

Which types of Ks under statute of frauds?

Answer 26

Marriages
Surety Ks/executor debt Ks
One year or more to perform
UCC (over $500)
Real Estate/Land

Question 27

UCC Statute of Frauds rule Statement

Answer 27

A contract for sale of goods over $500 is not enforceable UNLESS there is K SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT + limited to QUANTITY of goods shown

Question 28

UCC Statute of Frauds exceptions (enforceable even if not written)

Answer 28

-merchant confirmatory memo
-part performance
-specially manufactured goods
-judicial admissions

Question 29

Duress defense rule statement

Answer 29

K is voidable when it is established that party’s manifestation of assent was induced by IMPROPER THREAT that leaves them no reasonable alternative

Question 30

Breach of express warranty defense rule statement

Answer 30

Under UCC, affirmations of fact relating to goods that are part of BASIS OF BARGAIN create EXPRESS WARRANTIES that goods will conform to these descriptions

Warranty breached if they do not conform

Question 31

General damages for breach of K: rule statement

Answer 31

Normal measure of damages for breach of contract is EXPECTATION DAMAGES, which aim to give NONBREACHING PARTY benefit of his bargain

Question 32

expectation damages rule statement

Answer 32

Must be FORESEEABLE and proven with REASONABLE CERTAINTY (similar to UCC which puts aggrieved party in ‘as good of a position as they had been if the other party had fully performed’)

Question 33

punitive damages rule statement

Answer 33

punitive damages are generally not recoverable in K action UNLESS conduct is also TORT for which punitive damages can be recovered

Question 34

Mitigation

Answer 34

As general rule, party cannot recover damages that party could have AVOIDED by reasonable efforts

Question 34

Restitution

Answer 34

ALSO unjust enrichment/quantum meriut

Party may be able to recover restitution for BENEFIT CONFERRED by PART PERFORMANCE in excess of loss caused by his breach