Reg 6

Question 1

Which defenses make a contract VOID (as opposed to Voidable)?

Answer 1

Fraud in the execution
Duress relating to PHYSICAL harm
Mutual mistake–nonexistence of subject matter
illegality
Failure to have a license required to “protect the public”
Adjudicated incompetent

Question 2

To cancel a contract and to restore the parties to their original positions before the contract, the parties should execute a:

Answer 2

rescission

Question 3

Which of the following types of mistake will generally make a contract unenforceable and allow it to be rescinded?
	a.	
A mutual mistake of value.
	b.	
A mutual mistake of fact.
	c.	
A unilateral mistake of fact.
	d.	
A unilateral mistake of value.

Answer 3

A mutual mistake of fact

Question 4

What is a fungible good?

Answer 4

A good that is easily replaced

Question 5

In a novation…

Answer 5

In a novation, a new contract substitutes a new party for an old party in an existing contract and all of the parties agree to release the party who was substituted out. That is what happened here.

Question 6

Fraud in the inducement?

Answer 6

voidable

Question 7

Fraud in the execution?

Answer 7

void

Question 8

In which circumstances must a contract be in writing under the statute of frauds (MYLEGS)?

Answer 8

Marriage
Cannot be performed within a year
Land
Executors or similar reperestatives
Goods over $500
Surety

Question 9

What 3 things are required to qualify as a Merchant’s Firm Offer?

Answer 9

1. The seller must be a merchant)
2. The offer must be in writing and signed by the merchant.
3. The offer must give assurances that it will be kept open for a certain time.

Question 10

There are four exceptions to the Statute of Frauds ( situations regarding the sale of goods for $500 or more than are not required to be in writing). What are they? (SWAP)

Answer 10

1. Specially manufactured goods
2. Written confirmation between merchants that is sufficient to bind the sender (bind if not rejected within 10 days)
3. Admitted in court
4. Contracts that have been performed.

Question 11

Which common shipping terms keep the risk of loss with the buyer?

Answer 11

FAS, CIF, FOB.

Question 12

Is risk of loss determined by who has title?

Answer 12

No

Question 13

In a noncarrier case, describe the passage of the risk of loss for both merchants and non-merchants?

Answer 13

merchants–the buyer must receive physical possession.

non-merchants–risk of loss passes upon seller’s tender of deliver.

Question 14

In a carrier case, describe the passage of the risk of loss for both merchants and non-merchants?

Answer 14

FOB shipment or FOB receipt. When the goods are nonconforming, risk of loss is ALWAYS on the seller regardless of the shipping terms.

Question 15

What are the four big warranties?

Answer 15

Express Warranties
Implied warranty of title
Implied warranty of merchantability
Implied warranty of fitness for a particular purpose

Question 16

What is the key point to know regarding the warranty of title?

Answer 16

The warranty of title cannot be disclaimed by a general disclaimer such as “as is” or “with all faults”

Question 17

In an auction without reserve, the goods must be sold if…

Answer 17

the offer is made

Question 18

Under Article 2, Shipment of Non-conforming goods represents…

Answer 18

acceptance AND breach (NOT counteroffer unless it is accompanied by a notice of accommodation)

Question 19

What is a shipment contract?

Answer 19

A contract where risk of loss passes when SHIPPED