Problem Questions

Question 1

There are 2 types of loss that a breaching party does have reason to foresee as the probable result of breach:

Answer 1

1. Loss that follows from the breach “in the ordinary course of events” and
2. Loss that follows from the breach “as a result of special circumstances, beyond the ordinary course of events, that the party in breach has reason to know.”

Question 2

Public Policy and contract:

Answer 2

Contrary to what you may think, there is no general doctrine to the effect that where performance of a contract would violate law INSTEAD, the only relevant doctrine is that certain agreements will be “unenforceable on grounds of public policy.”

Question 3

Intended vs. incidental beneficiary:

Answer 3

Only an intended beneficiary – not an incidental beneficiary – may sue the promisor

Question 4

Not named in the contract:

Answer 4

It simply is not correct to state that a party who is not named in the contract is automatically stripped of the right to sue. A person may be an intended beneficiary even though she is not specifically named in the contract.

Question 5

Undue Influence

Answer 5

Undue influence exists where one party to the contract is subject to unfair persuasion which can stem either from the domination of the victim by the persuader or from the fact that the victim is by virtue of the relation between the victim and the persuader justified in assuming that the persuader will not act in a manner inconsistent with the victims welfare.

Question 6

DIFFERENCE:

Modification

Answer 6

At common law, modifications require consideration. Under UCC, modification require only good faith.

Question 7

DIFFERENCE:

Irrevocable offers

Answer 7

At common law, an offer can be made irrevocable only with consideration; in general, the offeree must pay for the irrevocability and thus create an option contract.

Under the UCC, merchants can make irrevocable or firm offers without consideration so long as the offers are in writing and signed. A firm offer made under this rule cannot be made irrevocable for a period longer than three months.

Question 8

DIFFERENCE:

Delays

Answer 8

At common law, a reasonable delay is only a minor breach unless otherwise notes while in the UCC must be a perfect tender.

Question 9

Beneficiary vs. Assignee

Answer 9

A beneficiary is created in the contract; an assignee gains his right only later.

Thus, a person who doesn’t have rights created and arising in the contract can’t be a beneficiary.

Question 10

Accord and Satisfaction:

Answer 10

An accord is an agreement under which a party to a contract agrees to accept, as complete satisfaction of the contract, some performance different from that originally due under the contract.

Satisfaction is performance of the accord, and once satisfaction takes place, both the accord and the original contractual duty are discharged.

Question 11

PRICE and the Statute of Frauds:

Answer 11

COMMON LAW (LAND): Contracts for the sale of an interest is land require a writing in order to be enforceable. In order to suffice, the writing must specify with reasonable cetainty (1) contract's subject matter (2) parties identities (3) promises, by whom and to whom made, and essential terms and conditions and (4) the signature of the party to be charged. 
Price would be considered an essential term. 

UCC: considerably more liberal than the common law. Under the UCC, writing must (1) be evidence of a contract (2) be signed and (3) show quantity.
Thus, price; time and place of payment or delivery; warranties; and quality of goods may all be missing, leaving the contract enforceable nonetheless, although the more missing terms, the less likely it is the parties intended to be bound.

Question 12

Land Contracts and the UCC.

NOT!

Answer 12

Option contracts for the sale of real estate need consideration to be binding.

It’s true that UCC says that an offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable for lack of consideration during the time stated but the UCC applies only to contracts for the sale of goods, not real estate.

Question 13

Statute of Frauds and Modifications:

Answer 13

In general, contracts or modifications do not need to be in writing in order to be enforceable.

The exception is for contracts that fall within the Statute of Frauds. A modification must be in writing if as modified, the contract is within the statute of frauds.

Question 14

Repudiation:

Answer 14

Generally, when a party repudiates, that party may retract that repudiation at any time.

However, the right to retract the repudiation ends once the non-repudiating party has materially changed its position in reliance on the repudiation.

Question 15

Express Condition

Answer 15

While the general rule is that express conditions in a contract will be strictly enforced, there is an important exception for cases in which a condition is only intended to benefit one party to the contract.

In such cases, that party always has the power to waive the condition. The waiver need not be express, but rather may be inferred by the circumstances.

Question 16

Merger Clause:

Answer 16

A clause that recites that the written agreement constitutes the final and exclusive expression of all the terms of the parties agreement, and that there are no prior oral or written terms that are part of the agreement.

Question 17

UCC Parol Evidence

Answer 17

Prevents a final written agreement from being contradicted by evidence of any prior written or oral agreement.

Question 18

Attorney Fees

Answer 18

At common law, attorney fees incurred in suing for breach of contract are generally not recoverable in the absence of a contract provision allowing them, and at common-law prininciples are not displaced by the UCC unless there is a particular UCC provision that does so.

Question 19

Installment Contract (UCC)

Answer 19

The buyer may reject any installment which is non-conforming if the non-conformity substantially impairs the value of that installment and cannot be cured.

If the non-conformity of the installment does not substantially impair the value of the whole contract the if the seller gives adequate assurance of the cure the buyer must accept that installment.

Question 20

Right to demand assurance:

Answer 20

If reasonable grounds for insecurity concerning the performance of the other party have not yet arisen, the first party does not have a right to demand assurance.

Question 21

Trade Usage:

Answer 21

Even a total integration may be supplemented or explained by a trade usage.

A trade usage will be viewed as permissibly explaining or supplementing a term in a total integration as long as the usage doesn’t represent a total negation of the writing.

Question 22

Merchant Firm Offer:

Answer 22

An offer by a merchant may remain firm irrevocable only for three months, at a maximum. But after that time expires, a firm offer doesn’t automatically terminate, it merely becomes revocable.

Question 23

Shipping and risk of loss:

Answer 23

Unless a sales contract expressly provides otherwise, the risk of loss passes when the goods are shipped

Question 24

Waiver

Answer 24

Waiver is a party’s manifestation of willingness to forego the benefit of a condition that occurs after the contract is formed but before the condition fails to occur.

Question 25

UCC non-carrier rules for delivery and payment:

Answer 25

Under the UCC, non-carrier cases are those instances where the parties did not intend that the goods be moved by carrier.

In non-carrier cases, unless the contract provides otherwise, payment is due at the time and place at which the buyer is to receive the goods. Furthermore, the place for delivery was the seller’s place of business.

Question 26

prohibition against assigning

Answer 26

A prohibition against assigning the contract prevents only delegating duties not assigning rights.

Question 27

Bounty

Answer 27

If the reward were characterized as a government bounty, the detective’s knowledge of the reward after obtaining the confession and the earlier attempted revocation would not be determinative.

Generally, an offeree must perform in response to a reward offer in order to be able to collect it. If the offeree is without knowledge of the reward, then the offeror is not contractually bound to provide it.

Question 28

Unilateral Contract:

Answer 28

preform

Question 29

Termination based on Mistaken Fact:

Answer 29

Termination based on a mistaken fact is insufficient to negate the employer’s right to terminate an at-will relationship because there is no showing of bad faith.

Question 30

Failure to take reasonable steps to mitigate damages:

Answer 30

Failure to take reasonable steps to mitigate damages does not deprive the mother and son of the opportunity to claim damages measured by the difference between contract and market price.

Question 31

Statute of Frauds:

Answer 31

UCC provides that a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made.

However, there are some narrow exceptions to this general rule. Goods that have been specially manufactured do not need a signed writing because the sale of the specially designed goods to another customer is not suitable. A writing is also not required with respect to goods that have already been paid for or received.

Question 32

A buyer who rightfully rejects goods can sale to:

Answer 32

Private and Public buyers.

A sale to a private party requires notification to the owner of the goods

Question 33

Performance over time:

Answer 33

Where one party’s performance is to take place over a period of time, that party must complete its performance before the other party is required to perform, unless the language or circumstances indicate otherwise.

Question 34

Requirement and output contracts Assignment:

Answer 34

At common law, requirement and output contracts were not assignable. Under UCC, however, requirement and output contracts are assignable as long as the assignee does not disproportionately alter the contemplated quantity.

Question 35

Intentional breach and damages:

Answer 35

If breach was intentional, the court will not award a breaching P restitution damages.

Question 36

Shipment contract UCC:

Answer 36

Under the UCC, a contract that requires the seller to ship goods to the buyer by a 3rd party carrier is either a shipment or a destination contract

Where the contract is otherwise silent, a shipment contract is presumed where the contract requires shipment by a 3rd party carrier. Since this is a shipment contract, the risk of loss would pass from the seller to the buyer when the seller duly delivered the goods to the 3rd party carrier.

Question 37

Assignment:

Answer 37

An assignment is a transfer of rights under a contract.

Generally, all contractual rights may be assigned unless the contract provides otherwise. A contractual right may be assigned to another unless the other party to the contract has a substantial interest in having the original obligor perform.

Question 38

Inquiry vs. counteroffer

Answer 38

A reply to an offer that merely requests information regarding the offer is an inquiry rather than a counteroffer.

Question 39

Specific performance and people:

Answer 39

Courts have not enforced specific performance on people (just on things) because forcing a person to do something he does not want to do has been seen as prima facie unfair.

Question 40

Promissory Estoppel:

Answer 40

There are some promises which although the promisor makes them without bargaining for anything in return, nonetheless induce the promisee to rely upon them to his legal detriment.

This situation is known as promissory estoppel, which arises when a promise is made that the promisor should reasonably expect to induce action or forbearance on the part of the promisee.

(e.g. some gift promises)

Question 41

UCC: Past performance and statute of frauds

Answer 41

Past performance is sufficient to take a sale of goods contract out of the statute of frauds when the goods have been specially manufactured.

Question 42

Illusory Promise:

Answer 42

WHENEVER POSSIBLE, COURTS SHOULD CONSTRUE A PROMISE SO AS NOT TO BE ILLUSORY.

Statement that appears to be promising something but does not actually commit the promisor to anything at all.

One kind of illusory promise is when a promisor reserves the right to change his mind, which does not bind him to anything. Such an illusory promise is not supported by consideration.

Question 43

Accord and Satisfaction:

Answer 43

A debtor may make an offer to settle a dispute by offering a check marked “payment in full.” If the notation was sufficiently plain that the creditor should have understood it, and if the amount owed to the creditor is an unliquidated sum, then cashing the check without protest amounts to an acceptance of the offer of an accord and satisfaction of the debt.

Question 44

Course of dealing:

Answer 44

Although the parties did not abide by terms for two years and still performed, the course of dealing will not control over an express condition that was agreed-upon by the parties.