Multiple Choice Flashcards

1
Q

Does the implied warranty of quality apply to COMMERCIAL buildings?

A

NO — this implied warranty generally covers the sale of new or remodeled homes. It does NOT APPLY to commercial structures, but it imposed on contractors, developers, and other commercial property vendors.

NOTE: It would NOT be applied for a franchise owner purchasing a commercial building to run their business in.

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2
Q

When may IMPRACTICABILITY succeed as a defense?

A

IMPRACTICABILITY may succeed as a defense in cases where something more than increased cost is involved. The UCC usually looks at severe shortages of raw materials caused by something like an embargo or a war an it is the shortage that causes the seller to be unable to get the materials, or only at an extremely increased price. Just one expense will NOT support a defense of IMPRACTICABILITY.

THINK LIKE A LAWYER: Unless the contract specifically called for parts from China, the unavailability of parts from China will NOT be an excuse.

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3
Q

Is knowledge of an offer required for valid/formal acceptance of an offer?

A

YES — so if A mails an offer letter to B but B gets the letter after sending their own offer letter, B’s letter is NOT acceptance because B did not have knowledge of A’s offer until after B sent their offer.

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4
Q

A entered into a written agreement to buy B’s ice cream business for $300k. The amount was payable in 30 monthly installments of $10k each. Before the first payment was made, A assigned the entire agreement to C, who did not object to the obligation of payments to B. After five payments to B, C stopped paying B. Who can B sue?

A

B can sue both A and C. Where a delegatee (C) fails to perform the obligation due to the non-assigning party (B, the obligee), the obligee can sue the delegatee if there has been an assumption of the delegator’s (A’s) duties, and sue the delegator (A). Here, the obligee, B, is a third-party beneficiary of the A-C agreement. Thus, B can sue both A and C, but will only be entitled to one satisfaction of the obligation owed to him. An assumption of the duties is implied where the delegatee accepts an assignment of rights under an executory K without indicating that he refuses to accept the delegator’s duties, for example by taking “subject to” the underlying agreement.

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5
Q

May certain unforeseen circumstances render a seller’s performance IMPOSSIBLE?

A

YES. For example, a fire that destroys the inventory a day before shipment was scheduled in the contract.

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6
Q

In contract law, what are the two types of IMPOSSIBILITY?

A
  1. Objective impossibility — a defense for failure to perform. Occurs when the goods are so unique that replacement by covering is NOT an option.
  2. Subjective impossibility — not a defense for failure to perform. Occurs when the good involved can be located elsewhere, thus allowing the seller to “cover” for her shortfall in a timely manner.
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7
Q

When is a WAIVER effective?

A

A waiver occurs when a party implicitly or explicitly forgives a prospective term or condition to be performed by the other party to the K. A waiver can be retracted BEFORE the other party has CHANGED their position in RELIANCE on the waiver and where a REASONABLE extension of time is given to perform the term or condition in question.

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8
Q

What three things are needed to create an enforceable bilateral K?

A

Offer, acceptance, and consideration.

EXAMPLE: W offers money to A in exchange for his agreeing to perform a service in 2 weeks; A begins prepping for an buying materials for the performance of the service. Once A agreed to the offer, an enforceable agreement was made between W and A. Even if A did not begin the performance, and merely engaged in preparations for it, it is NOT required for performance to begin before the contract is binding on the parties. All that is needed is for there to be an offer, acceptance, and consideration.

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9
Q

What is a UNILATERAL offer? What is the modern rule for revocation?

A

Under the modern rule, a unilateral offer, or an offer that invites performance of an act as acceptance rather than a return promise, becomes irrevocable as soon as the offerree has started to perform the act. This rule is essential to prevent hardship to the offerree where his part performance does not benefit the of offeror, and thus would give him no recovery in quasi-contract.

NOTE: Although some of the older decisions have applied the logical view that a unilateral offer may be revoked any time prior to full completion of the act bargained for, by the modern rule, such an offer becomes irrevocable as soon as the offerree has started to perform the act requested. Part of the actual performance requested must have been given in order to render the offer irrevocable. Mere preparation for performance, no matter how detrimental to the offerree, will not affect the offeror’s power and privilege to revoke a unilateral offer.

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10
Q

What is the exception to the principle past consideration is insufficient / barred by the statute of limitations?

A

There is an exception to the principle that past consideration is insufficient where there is a WRITTEN promise to repay a debt barred by the statute of limitations.

NOTE: It does not apply to ORAL promises to repay a debt barred by the statute of limitations.

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11
Q

How long does an offer last when the offeror does not set a time limit for acceptance?

A

The duration of an offer that states no time limit is a REASONABLE time. The factors determining reasonable time are: (1) the subject matter of the offer; (2) its rate of price fluctuation; (3) the period within which the offeror’s known purpose in inducing the contract can be effectuated; and, of lesser importance, (4) the mode of communication of the offer.

NOTE: Certain offers, such as those involving stock purchases, have a short life expectancy (a few minutes), due to ever-changing market fluctuations. Similarly, under the FACE TO FACE CONVERSATION RULE, an offer expires (AKA lapses) at the conclusion of a face-to-face conversation, unless there is an acceptance.

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12
Q

Will ACCORD & SATISFACTION apply if neither party has completed performance yet?

A

NO.

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13
Q

What is an ACCORD?

A

Accord = a K to settle a claim that is the subject of a good faith dispute between a Creditor and Debtor.

NOTE: The debtor’s position does NOT NEED TO BE A FOR SURE WINNER in litigation; it is sufficient if the Debtor holds his position in good faith, and a reasonable person would consider the issue debatable.

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14
Q

Once the disputed debt has been reduced to an ACCORD, what happens to the original contract claim?

A

The original contract claim is SUSPENDED.

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15
Q

When does a SATISFACTION occur in accord & satisfaction?

A

A satisfaction occurs when once the duties of the accord are satisfied. If a satisfaction is accomplished, then the original breach of contract claim is discharged.

NOTE: However, if the Debtor BREACHES the ACCORD by refusing to honor its terms (e.g., pay $7,000 w/in the next 10 days), the aggrieved Creditor may elect between the causes of action. Both claims are viable; none is “stronger” than the other.

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16
Q

What is an INTENDED third party beneficiary?

A

A third party to a K whom the K is designed to BENEFIT.

17
Q

For an INTENDED third party beneficiary, does it matter whether the third party has privity with both of the other parties?

A

NO, not under the modern/majority rule. Under the common law, it was required.

NOTE: Under this circumstance, the intended third party beneficiary may sue either of the other two parties involved, but can only recover ONCE.

18
Q

D publishes that they would pay $250k to any individual who could produce a process to reduce machine-tool friction by 25 percent or more. What does D’s announcement constitute?

A) An offer by D to enter into negotiations
B) A preliminary invitation by D to deal with them
C) A promise by D to make a conditional future monetary grant
D) A contractual offer by D, requiring only an acceptance by the second party

A

D — A contractual offer by D, requiring only an acceptance by the second party

NOTE: This is a unilateral contract where only performance will constitute valid acceptance.

19
Q

Can a party attempting to enforce an ORAL AGREEMENT for services (that applies to but fails the statute of frauds) get the court to enforce the terms of the agreement for pay if that party had partially performed?

A

NO. Only FULL PERFORMANCE of an oral K for services by the party performing the services will make the K enforceable against the paying party.

NOTE: However, for part performance, the party performing the services may be able to recover for the reasonable value of the services actually rendered via QUANTUM MERUIT.

20
Q

In the event that a a promisor (e.g., a house buyer who agrees to take on a house owner/promissee’s $10k loan debt to a bank in exchange for a lower price on the house) fails to deliver the promised performance (e.g., fails to pay the promissee’s $10k loan off to the bank), who can the creditor beneficiary (the bank) sue?

A

The Creditor Beneficiary can sue EITHER the Promisee on the prior obligation (original loan) OR the CB can sue the Promisor on the third-party beneficiary K.

NOTE: Satisfaction of the claim by one operates as a release of the other’s obligation.

21
Q

Can parties of a K with a third party beneficiary provision modify or rescind that provision without the beneficiary’s consent?

A

Yes, UNLESS and UNTIL the beneficiary’s rights under the K have VESTED.

22
Q

When do an intended third party beneficiary’s rights in a K vest?

A

When the beneficiary ASSENTS to the K **at the request of either the promissee or promisor.

NOTE: Once the 3PB has assented, the contracting parties can no longer rescind.

23
Q

If the subject matter of a K is considered rare or unique in value, and the parties have a mutual mistake (e.g., both believe that is Babe Ruth’s signature on a baseball but it’s actually fake and both have no idea), is that K voidable?

A

YES. It ALWAYS is voidable when the K is based on mutual mistake and the subject matter is considered rare or unique in value.

24
Q

Where there has been a DELEGATION of a contract (A asks B to take over A’s contract with C), does the Delegator (A) remain liable as a surety for the performance of the Delegatee (B)?

A

YES. Thus, if the Delegatee (B) breaches, the Delegator (A) is liable to the original Promisee (C).

25
Q

Where there has been a DELEGATION of a contract (A asks B to take over A’s contract with C, B agrees), what can the Delegator (A) do if the Delegatee (B) breaches?

A

If the Delegatee (B) breaches, the Delegator (A) is liable to the original Promisee (C). Thus, the Delegator (A) may perform the obligation if the Delegatee (B) fails to do so and then seek redress against the defaulting Delegatee for breaching the promise to perform.

EXAMPLE: After B fails to perform the obligation to C that B agreed to “take over,” for A — A finds D to perform it at a higher cost. As the Promisee to B, A may sue B for the difference of the cost.

26
Q

Is a WRITTEN promise to pay a debt barred by the statute of limitations binding?

A

YES. This is an exception to the past consideration rule.

NOTE: It is only a minority rule that a past benefit conferred will make a promise enforceable where the benefit conferred was a material one, so this is almost never the best answer on the MBE.

27
Q

When does specific performance NOT apply?

A

SP is typically not available in two situations: (1) personal services; (2) long-term relationships

NOTE: It typically DOES APPLY to unique goods under the UCC (where the seller or buyer is unable to resell or cover the goods) and also to the sale of land, because land is considered unique.

28
Q

A K does not include a merger clause. The K also contemplates the issuance of subsequent task orders representing additional or supplementary obligations of the parties.

What do these facts indicate about the K?

A

The K is not completely integrated, meaning under the parol evidence rule, extrinsic evidence from prior to forming the K or contemporaneous with forming the K introduced to supplement the terms of the K is admissible.