Multiple Choice Flashcards
Does the implied warranty of quality apply to COMMERCIAL buildings?
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.
When may IMPRACTICABILITY succeed as a defense?
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.
Is knowledge of an offer required for valid/formal acceptance of an offer?
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.
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?
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.
May certain unforeseen circumstances render a seller’s performance IMPOSSIBLE?
YES. For example, a fire that destroys the inventory a day before shipment was scheduled in the contract.
In contract law, what are the two types of IMPOSSIBILITY?
- Objective impossibility — a defense for failure to perform. Occurs when the goods are so unique that replacement by covering is NOT an option.
- 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.
When is a WAIVER effective?
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.
What three things are needed to create an enforceable bilateral K?
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.
What is a UNILATERAL offer? What is the modern rule for revocation?
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.
What is the exception to the principle past consideration is insufficient / barred by the statute of limitations?
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.
How long does an offer last when the offeror does not set a time limit for acceptance?
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.
Will ACCORD & SATISFACTION apply if neither party has completed performance yet?
NO.
What is an ACCORD?
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.
Once the disputed debt has been reduced to an ACCORD, what happens to the original contract claim?
The original contract claim is SUSPENDED.
When does a SATISFACTION occur in accord & satisfaction?
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.
