REG 1 - R6 Contracts

Question 1

Contracts are void when

Answer 1

Contracts are entered into by someone who has been adjudicated (pronounced by judicial sentence) incompetent.

Question 2

What action will discharge the non-breaching party?

Answer 2

Material breach of the contract

Question 3

Delay in Performance

Answer 3

May cause a discharge, but only in a contract stating that time is of the essence (UCC Sales contract), or if the delay otherwise materially breaches the contract.

Question 4

What happens if a party tenders performance in a contract?

Answer 4

The other party will also have to perform. Tender of performance does not discharge the other party.

Question 5

Novation

Answer 5

The agreement is unchanged but one of the original parties is released and a new party is substituted into their place.

Question 6

Substituted Contract

Answer 6

The original parties are both released from the original agreement but are BOTH bound by a new agreement.

Question 7

Foreseeability of Damages

Answer 7

If a contract is breached, the foreseeable damages:
1. Should arise naturally from the breach OR
2. Both parties should agree these damages are
the probable result of the contract breach

Question 8

Mitigation of Damages

Answer 8

In every case, the non-breaching party has a duty to make reasonable efforts to cut down on losses resulting from a breach. If they don’t, there’s a chance they won’t collect damages that might have been avoided.

Question 9

How do you make out an action for negligent misrepresentation?

Answer 9

The plaintiff must show both actual and justifiable reliance on the misrepresentation.

Question 10

Unilateral mistake

Answer 10

A defense to a contract if the non-mistaken party knew or should have known of the mistake.

Question 11

Condition Precedent

Answer 11

A condition that must occur BEFORE the other party must perform.
Example: Qualify for a mortgage

Question 12

Condition Concurrent

Answer 12

Conditions that must occur SIMULTANEOUSLY.

Example: Transactions at stores.

Question 13

Condition Subsequent

Answer 13

A condition that will occur after a party’s duty to perform has arisen and will cut off that duty.
Example: Engagement ring

Question 14

Valid Consideration

Answer 14

Exists if there is a bargained for exchange of something of legal value. If the act promised has already been performed, the bargain element fails.
“PAST consideration is NO consideration.”

Question 15

Assignable contract rights

Answer 15

All contract rights are assignable unless the assignment would result in a change in the obligor’s risk.
Rights to malpractice insurance are not assignable because the insurer’s risk varies based on the identity (and characteristics) of the insured.

Question 16

Which actions will result in the discharge of a party to a contract?

Answer 16

• Prevention of performance

- Accord and satisfaction

Question 17

Accord and Satisfaction

Answer 17

Accord- the agreement to discharge the obligation Satisfaction- the legal consideration which binds the parties to the agreement

Question 18

Undue Influence

Answer 18

When a person in a position of trust or confidence takes unfair advantage of the relationship such that the other party’s free will to contract is overcome.

Question 19

Anticipatory Repudiation

Answer 19

When it makes it very unlikely that the person receiving the services will be able to pay.

Question 20

Statute of limitations on breached contract

Answer 20

Begins from the time the contract was breached, not from the time the contract was entered.