Restatements

Question 1

§21 Intention to be Legally Bound

Answer 1

Neither real nor apparent intention that a promise be legally binding is essential to the formation of a contract, but a manifestation of intention that a promise shall affect legal relations may present the formation of a contract.

Question 2

§24 Offer Defined

Answer 2

an offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

Question 3

§26 Preliminary Negotiations

Answer 3

a manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.

Question 4

§63 Time When Acceptance Takes Effect (Mailbox Rule)

Answer 4

unless the offer provides otherwise,

a. An acceptance made in a manner and by medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree’s possession, without regard to whether it ever reaches the offeror, but
b. An acceptance under an option contract is not operative until received by the offeror.
1. Acceptance is valid when it is dispatched or placed in the mail.

Question 5

§36 Method of Termination of the Power of Acceptance

Answer 5

1. An offeree’s power of acceptance may be terminated by
   a. Rejection or counter-offer by the offeree, or
   b. Lapse of time, or
   c. Revocation by the offeror, or
   d. Death or incapacity of the offeror or offeree
2. In addition, and offeree’s power of acceptance is terminated by the non-occurrence of any condition of acceptance under the terms of the offer.

Question 6

§39 Counter Offers

Answer 6

1. A counter-offer is an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer.
2. An offeree’s power of acceptance is terminated by his making of a counter-offer, unless the offeror has manifested a contrary intention or unless the counter-offer manifests a contrary intention of the offeree.

Question 7

§ 43: Indirect Communication of Revocation

Answer 7

an offeree’s power of acceptance is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed contract and the offeree acquires reliable information to that effect.

Question 8

§ 58: Necessity of Acceptance Complying with Terms of Offer

Answer 8

an acceptance must comply with the requirements of the offer as to the promise to be made or the performance to be rendered. Similar requirements to § 50(1)

Question 9

§ 45: Option Contract Created by Part Performance or Tender

Answer 9

1. Where an offer invites an offeree to accept by rendering performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders the beginning of it.
2. The offeror’s duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.

Question 10

§ 79: Adequacy of Consideration; Mutuality of Obligation

Answer 10

1. If the requirement of consideration is met, there is no additional requirement of
   a. A gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or
   b. Equivalence in the values exchanged; or
   c. “mutuality of obligation”

Question 11

§ 71: Requirement of Exchange; Types of Exchange

Answer 11

1. To constitute consideration, a performance or a return promise must be bargained for.
2. A performance or return promise is bargained for if it is sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.
3. The performance may consist of
   a. An act other than a promise, or
   b. A forbearance, or
   c. The creation, modification, or destruction of a legal relation
4. The performance or return promise may be given to the promisor or to some other person. It may be given by the promisee or by some other person.

Question 12

§77 Illusory & Alternative Promises

Answer 12

A promise or apparent promise is not consideration if by its terms the promisor or purported promisor reserves a choice of alternative performances unless.

a. Each of the alternative performances would have been consideration if it alone had been bargained for; or
b. One of the alternative performances would have been consideration and there is or appears to the parties to be a substantial possibility that before the promisor exercises his choice events may eliminate the alternatives which would not have been consideration.

Question 13

§ 2-105 Definitions: Transferability; “Goods”; “Future” Goods; “Lot”; “Commercial Unit”.

Answer 13

1. “Goods” means all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities (Article 8) and things in action. “Goods” also includes the unborn young of animals and growing crops and other identified things attached to realty as described in the section on goods to be severed from realty (Section 2-107)
2. Goods must be both existing and identified before any intent in them can pass. Goods which are not both existing and identified are “future” goods. A purported present sale of future goods or of any interest therein operates as a contract to sell.
3. There may be a sale of a part interest in existing identified goods.
4. An undivided share in an identified bulk of fungible goods is sufficiently identified to be sold although the quantity of the bulk is not determined. Any agreed proportion of such a bulk or any quantity thereof agreed upon by number, weight, or other measure may to the extent of the seller’s interest in the bulk be sold to the buyer who then becomes an owner in common.
5. “Lot” means a parcel or a single article which is the subject matter of a separate sale or delivery, whether or not it is sufficient to perform the contract.
6. “Commercial Unit” means such as unit of goods as by commercial usage is a single whole for purposes of sale and division of which materially impairs its character or value on the market or in use. A commercial unit may be a single article (as a machine) or a set of articles (as a suite of furniture or an assortment of sizes) or a quantity (as a bale, grass, or carload) or any other unit treated in use or in the relevant market as a single whole.

Question 14

§2-204 Formation in General

Answer 14

1. A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such as contract.
2. An agreement is sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined.
3. Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.

Question 15

§ 2-206 Offer and Acceptance in Formation of Contract

Answer 15

1. Unless otherwise unambiguously indicated by the language or circumstances
   a. An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances;
   b. An order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt promise to ship or by the prompt or current shipment of conforming or non-conforming goods does not constitute an acceptance if the seller seasonally notifies the buyer that the shipment is offered only as an accommodation to the buyer.
2. Where the beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.

Question 16

§ 59 Purported Acceptance Which Adds Qualifications

Answer 16

A reply to an offer which purports to accept it but is conditional on the offeror’s assent to terms additional to or different from those offered is not an acceptance but is a counter-offer

Question 17

UCC § 2-207 Additional Terms in Acceptance or Confirmation

Answer 17

1. A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
2. The additional terms are to be construed as proposals for addition to the contract. Between merchants such terms become part of the contract unless
   a. The offer expressly limits acceptance to the terms of the offer;
   b. They materially alter it; or
   c. Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
3. Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract. In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act

Question 18

UCC § 2-104 Definitions: “Merchants”. “Between Merchants”, “Financing Agency”

Answer 18

1. “Merchant” means a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction or to whom such knowledge or skill may be attributed by his employment or an agent or broker or other intermediary who by his occupation holds himself out as having such knowledge or skill.
2. “Financing Agency” means a bank, finance company or other person who in the ordinary course of business makes advances against goods or documents of title or who by arrangement with either the seller or the buyer intervenes in ordinary course to make or collect payment due or claimed under the contract for sale, as by purchasing or paying the seller’s draft or making advances against or by merely taking it for collection whether or not documents of title accompany the draft. “Financing Agency” includes also a bank or other person who similarly intervenes between persons who are in the position of seller and buyer in respect to the goods. (Section 2-707)
3. “Between Merchants” means in any transaction with respect to which both parties are chargeable with the knowledge or skill of merchants.

Question 19

§2: Promise; Promisor; Promisee; Beneficiary

Answer 19

1. A promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made
2. The person manifesting the intention is the promisor.
3. The person to whom the manifestation is addressed is the promisee
4. Where performance will benefit a person other than the promisee, that person is the beneficiary

Question 20

§90 Promise Reasonably Inducing Action or Forbearance “Promissory Estoppel”

Answer 20

1. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only be enforcement of the promise. The remedy granted for breach may be limited as justice requires.
2. A charitable subscription or a marriage settlement is binding under subsection 1 without proof that the promise induced action or forbearance.

Question 21

§ 25 Option Contracts

Answer 21

An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor’s power to revoke an offer

Question 22

§ 37 Termination of Power of Acceptance Under Option Contract

Answer 22

Notwithstanding §§38-49, the power of acceptance under an option contract is not terminated by rejection or counter-offer, by revocation, or by death or incapacity of the offeror, unless the requirements are met for the discharge of a contractual duty.

Question 23

§87 Option Contract

Answer 23

1. An offer is binding as an option contract if it
   a. Is in writing and signed by the offeror recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time; or
   b. Is made irrevocable by statute
2. An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.

Question 24

§ 86 Promise for Benefit Received

Answer 24

1. A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.
2. A promise is not binding under subsection (1)
   a. If the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or
   b. To the extent that its value is disproportionate to the benefit.

Question 25

§ 2-205 Firm Offers

Answer 25

An offer by a merchant to buy or sell goods in a signed writing which by its terms give assurance that it will be held open is not revocable, for lack of consideration, during the time stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror

Question 26

Rest. 3d of §20 Protection of Another’s Life or Health

Answer 26

1. A person who performs, supplies, or obtains professional services required for the protection of another’s life or health is entitled to restitution from the other as a necessary to prevent unjust enrichment, if the circumstances justify the decision to intervene without request.
2. Unjust enrichment under this section is measured by a reasonable charge for the services in question.

Question 27

§110 Classes of Contracts Covered

Answer 27

1. The following classes of contracts are subject to a statute, commonly called the statute for frauds, forbidding enforcement unless there is a written memorandum or an applicable exception;
   a. A contract of an executor or administrator to answer for a duty of his decedent (the executor-administrator provision)
   b. A contract to answer for the duty of another (the suretyship provision)
   c. A contract made upon consideration of marriage (the marriage provision)
   d. A contract for the sale of an interest in land (the land contract provision)
   e. A contract that is not to be performed within one year from the making thereof (the one year provision)
2. The following classes of contracts, which were traditionally subject to the statute of frauds, are now governed by the statute of frauds provision of the UCC;
   a. A contract for the sale of goods for the price of $500 or more (UCC 2-201)
   b. A contract for the sale of securities (UCC 8-319)
   c. A contract for the sale of personal property not otherwise covered, to the extent of enforcement by way of action or defense beyond $5,000 in amount or value of remedy (UCC 1-206)
3. In addition the UCC requires a writing signed by the debtor for an agreement which creates or provides for a security interest in personal property or fixtures not in the possession of the secured party.
4. Statutes in most states provide that no acknowledgement or promise is sufficient evidence of a new or continuing contract to take a case out of the operation of a statute of limitation unless made in some writing signed by the party to be charged, but that the statute does not alter the effect of any payment of principal or interest.
5. In many states other classes of contracts are subject to a requirement of a writing.

Question 28

§131 General Requisites of a Memorandum

Answer 28

Unless additional requirements are prescribed by the particular statute, a contract within the statute of frauds is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which

a. Reasonably identifies the subject matter of the contract
b. Is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signor to the other party, and
c. States with reasonable certainty the essential terms of the unperformed promises in the contract.

Question 29

§ 132 Several Writings

Answer 29

The memorandum may consist of several writings if one of the writings is signed and the writings in the circumstances clearly indicate that they relate to the same transaction.

Question 30

§133 Memorandum Not Made as Such

Answer 30

Except in the case if a writing evidencing a contract upon consideration of marriage, the statute may be satisfied by a signed writing not made as a memorandum of a contract

Question 31

§129 Action In Reliance; Specific Performance

Answer 31

A contract for the transfer of an intertest in land may be specifically enforced notwithstanding failure to comply with the statute of frauds if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement.

Question 32

§139 Enforcement By Virtue of Action in Reliance

Answer 32

1. A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the statute of frauds if injustice can be avoided only by the enforcement of the promise. The remedy granted for breach is to be limited as justice requires.
2. In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant;
   a. The availability and adequacy of other remedies, particularly cancellation and restitution;
   b. The definite and substantial character of the action or forbearance in relation to the remedy sought
   c. The extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence.
   d. The reasonableness of the action or forbearance
   e. The extent to which the action or forbearance was foreseeable by the promisor

Question 33

§201 Whose Meaning Prevails

Answer 33

1. Where the parties have attached the same meaning to a promise or agreement or a term thereof, it is interpreted in accordance with that meaning
2. Where the parties have attached different meanings to a promise or agreement or a term thereof, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made.
   a. That party did not know of any different meaning attached by the other, and the other knew the meaning attached by the first party; or
   b. That party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the first party
3. Except as stated in the section, neither party is bound by the meaning attached by the other, even though the result may be a failure of mutual assent.

Question 34

§202 Rules in Aid of Interpretation

Answer 34

1. Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight.
2. A writing is interpreted as a whole, and all writings are part of the same transaction are interpreted together.
3. Unless a different intention is manifested
   a. Where language has a generally prevailing meaning, it is interpreted in accordance with that meaning
   b. Technical terms and words of art are given their technical meaning when used in a transaction within their technical field.
4. Where an agreement involves repeated occasions for performance by either party with knowledge of the nature of the performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection is given great weight in the interpretation of the agreement.
5. Wherever reasonable, the manifestation of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade.

Question 35

§203 Standards of Preference in Interpretation

Answer 35

In the interpretation of a promise or argument or a term thereof, the following standards of preference are generally applicable;

a. An interpretation which gives a reasonable, lawful, and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable, unlawful, or of no effect.
b. Express terms are given greater weight than a course of performance, course of dealing, and usage of trade, course of performance is given greater weight than course of dealing or usage of trade, and course of dealing is given greater weight than usage of trade
c. Specific terms and exact terms are given greater weight than general language
d. Separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated.

Question 36

§213 Effect of Integrated Agreement on Prior Agreements (Parol Evidence Rule)

Answer 36

1. A binding integrated agreement discharges prior agreements to the extent that it is inconsistent with them
2. A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope
3. An integrated agreement that is not binding or that is voidable and avoided does not discharge a prior agreement. But an integrated agreement, even though not binding, may be effective to render inoperative a term which would have been part of the agreement if it had not been integrated.

Question 37

§214 Evidence of Prior or Contemporaneous Agreements and Negotiations

Answer 37

Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible is evidence to establish

a. That the writing is or is not an integrated agreement
b. That the integrated agreement, if any, is completely or partially integrated
c. The meaning of the writing, whether or not integrated
d. Illegality, fraud, duress, mistake, lack of consideration, or other invalidating cause
e. Ground for granting or denying rescission, reformation, specific performance, or other remedy

Question 38

§215 Contradiction of Integrated Terms

Answer 38

Except as stated in the preceding section (214), where there is a binding agreement, either completely or partially integrated, evidence of prior or contemporaneous agreements or negotiations is not admissible in evidence to contradict a term of the writing.

Question 39

§216 Consistent Additional Terms

Answer 39

1. Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the court finds that the agreement was completely integrated
2. An agreement is not completely integrated of the writing omits a consistent additional agreed term which is
   a. Agreed to for separate consideration, or
   b. Such a term as in the circumstances might naturally be omitted from the writing.

Question 40

§14 Infants

Answer 40

Unless a statute provides otherwise, a natural person has the capacity to incur only voidable contractual duties until the beginning of the day before the persons 18th birthday

Question 41

§15 Mental Illness or Defect

Answer 41

1. A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect
   a. He is unable to understand in a reasonable manner the nature and consequences of the transaction; or
   b. He is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition
2. Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect, the power of avoidance under subsection(1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. In such a case a court may grant relief as justice requires.

Question 42

§175 When Duress by Threat makes a Contract Voidable

Answer 42

1. If a party’s manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim
2. If a party’s manifestation of assent is induced by one who is nota a party to the transaction, the contract is voidable by the victim unless the other party to the transaction in good faith and without reason to know of the duress either gives values or relies materially on the transaction.

Question 43

§162 When a Misrepresentation is Fraudulent or Material

Answer 43

1. A misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker
   a. Knows or believes that the assertion is not in accord with the facts, or
   b. Does not have the confidence that he states or implies in the truth of the assertion, or
   c. Knows that he does not have the basis that he states or implies for the assertion
2. A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent, or of the maker knows that it would be likely to induce the recipient to do so.

Question 44

§164 When a Misrepresentation Makes a Contract Voidable

Answer 44

1. If a party’s manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient
2. If a party’s manifestation of assent is induced by either a fraudulent or a material misrepresentation by one who is not a party to the transaction upon which the recipient is justified in relying, the contract is voidable by the recipient, unless the other party to the transaction in good faith and without reason to know of the misrepresentation either gives value or relies materially on the transaction

Question 45

§169 When Reliance on an Assertion of Opinion Is not Justified

Answer 45

To the extent that an assertion is one of opinion only the recipient is not justified on it unless the recipient.

a. Stands in such a relation of trust and confidence to the person whose opinion is asserted that the recipient is reasonable in relying on it, or
b. Reasonably believes that, as compared with himself, the person whose opinion is asserted has special skill, judgement, or objectivity with respect to the subject matter, or
c. Is for some other special reason particularly susceptible to a misrepresentation of the type involved.

Question 46

§161 When Non-Disclosure is Equivalent to an Assertion

Answer 46

A person’s non-disclosure of a fact know to him is equivalent to an assertion that the fact does not exist in the following cases only;

a. Where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material
b. Where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amount to a failure to act in good faith and in accordance with reasonable standards of fair dealing.
c. Where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part.
d. Where the other person is entitled to know the fact because of a relation of trust and confidence between them.

Question 47

§166 When a Misrepresentation as to a Writing Justifies Reformation

Answer 47

If a party’s manifestation of assent is induced by the other party’s fraudulent misrepresentation as to the contents or effect of a writing evidencing or embodying in whole or in part an agreement, the court at the request of the recipient may reform the writing to express the terms of the agreement as asserted.

a. If the recipient was justified in relying on the misrepresentation, and
b. Except to the extent that rights of third parties such as good faith purchasers for value will be unfairly affected.

Question 48

§152 When Mistake of Both Parties Makes a Contract Voidable

Answer 48

1. Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in §154
2. In determining whether the mistake has a material effect on the agreed exchange of performance, account is taken of any relief by way of reformation, restitution, or otherwise.

Question 49

§153 When Mistake of One Party Makes a Contract Voidable

Answer 49

Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performance that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in §154 and,

a. The effect of the mistake is such that enforcement of the contract would be unconscionable, or
b. The other party had reason to know of the mistake or his fault caused the mistake.

Question 50

§154 When A Party Bears the Risk of a Mistake

Answer 50

A party bears the risk of a mistake when

a. The risk is allocated to him by agreement of the parties, or
b. He is aware, at the time the contract was made, that he has only limited knowledge with respect to the facts to which the mistake relates but, treats his knowledge as sufficient, or
c. The risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

Question 51

§157 Effect of Fault of Party Seeking Relief

Answer 51

A mistaken party’s fault is failing to know or discover the facts before making the contract does not bar him from avoidance or reformation under the rules stated in this chapter, unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.

Question 52

§261 Discharge by Supervening Impracticability

Answer 52

Where, after a contract is made, a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.

Question 53

§262 Death or Incapacity of Person Necessary for Performance

Answer 53

If the existence of a particular person is necessary for the performance of a duty, his death or such incapacity as makes performance impracticable is an event the non-occurrence of which was a basic assumption on which the contract was made.

Question 54

§263 Destruction, Deterioration, or Failure to Come into Existence of Thing Necessary for Performance

Answer 54

If the existence of a specific thing is necessary for the performance of a duty, its failure to come into existence, destruction, or such deterioration as makes performance impracticable is an event the non-occurrence of which was a basic assumption on which the contract was made.

Question 55

§264 Prevention by Governmental Regulation or Order

Answer 55

If thee performance of a duty is made impracticable by having to comply with a domestic or foreign governmental regulation or order, that regulation or order is an event the non-occurrence of which was a basic assumption on which the contract was made.

Question 56

§265 Discharge by Supervening Frustration

Answer 56

Where, after a contract is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contact was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.

Question 57

UCC 2-615 Excuse by Failure or Presupposed Conditions

Answer 57

Except so far as a seller may have assumed a greater obligation and subject to the proceeding section on substantial performance.

a. Delay in delivery or non-delivery in whole or in part by a seller who complies with paragraphs B & C is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
b. Where the causes mentioned in paragraph A affect only a part of the seller’s capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may also allocate in any manner which is fair and reasonable.
c. The seller must notify the buyer seasonably that there will be delay or non-delivery and , when allocation is required under paragraph B, of the estimated quota thus made available for the buyer.

Question 58

UCC 2-209(1) Modification, Rescission, Waiver

Answer 58

1. An agreement modifying a contract within this article needs no consideration to be binding.

Question 59

§73 Performance of Legal Duty

Answer 59

Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.

Question 60

§89 Modification of Executory Contract

Answer 60

A promise modifying a duty under a contact not fully performed on either side is binding

a. If the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made; or
b. To the extent provided by statute; or
c. To the extent that justice requires enforcement in view of material change of position in reliance on the promise.

Question 61

§224 Condition Defined

Answer 61

A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due

Question 62

§225 Effects of the Non-Occurrence of a Condition

Answer 62

1. Performance of a duty subject to a condition cannot become due unless the condition occurs or its non-occurrence is excused
2. Unless it has been excused , the non-occurrence of a condition discharges the duty when the condition can no longer occur.
3. Non-occurrence of a condition is not a breach by a party unless he is under a duty that the condition occur.

Question 63

§229 Excuse of a Condition to Avoid Forfeiture

Answer 63

To the extent that the non-occurrence of a condition would cause disproportionate forfeiture a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange.

Question 64

§245 Effect of a Breach by Non-Performance as Excusing the Non-Occurrence of a Condition

Answer 64

Where a party’s breach by non-performance contributes materially to the non-occurrence of a condition of one of his duties, the non-occurrence is excused.

Question 65

§271 Impracticability as Excuse for Non-Occurrence of a Condition

Answer 65

Impracticability excuses the non-occurrence of the condition is not a material part of the agreed exchange and forfeiture would otherwise result.

Question 66

§237 Effect on Other Party’s Duties of a Failure to Render Performance

Answer 66

Except as stated in §240m it is a condition of each party’s remaining duties to render performances to be exchanged under and exchange of promises that there be no uncured material failure by the other party to render such performance due to an earlier time.

Question 67

§241 Circumstances Significant in Determining Whether a Failure is Material

Answer 67

In determining whether a failure to render or to offer performance is material, the following circumstances are significant;

a. The extent to which the injured party will be deprived of the benefit which he reasonably expected
b. The extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived
c. The extent to which the party failing to perform or to offer to perform will suffer forfeiture
d. The likelihood that the party failing to prefer or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances
e. The extent to which the behavior of the part failing to perform or to offer to perform comports with standards of good faith and fair dealing.

Question 68

§250 When a Statement or an Act is a Repudiation

Answer 68

A repudiation is

a. A statement by the obligor to the oblige indicating that the obligor will commit a breach that would of itself give the oblige a claim for damages for total breach under §243, or
b. A voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach.

Question 69

§253 Effect of a Repudiation as a Breach and on Other Party’s Duties

Answer 69

1. Where an obligor repudiates a duty before he has committed a breach by non-performance and before he has received all of the agreed exchange for it, his repudiation alone gives rise to a claim for damages for total breach.
2. Where performances are to be exchanged under an exchange of promises, one party’s repudiation of a duty to render performance discharges the other party’s remaining duties to render performance.

Question 70

§256 Nullification or Repudiation or Basis for Repudiation

Answer 70

1. The effect of a statement as constituting a repudiation under §250 or the basis for a repudiation under §251 is nullified by a retraction of the statement if notification of the retraction comes to the attention of the injured party before he materially changes his position in reliance on the repudiation or indicates to the other party that he considers the repudiation to be final.
2. The effect of events other than a statement as constituting a repudiation under §250 or the basis for a repudiation under §251 is nullified if, to the knowledge of the injured party, those events have ceased to exist before he materially changes his position in reliance on the repudiation to indicates to the other party that he consider the repudiation to be final.

Question 71

§347 Measure of Damages in General

Answer 71

Subject to the limitations stated in §§350-353, the injured party has a right to damages based on his expectation interest as measured by

a. The loss in the value to him of the other party’s performance caused by its failure or deficiency, plus
b. Any other loss, including incidental or consequential loss, caused by the breach, less
c. Any cost or other loss that he has avoided by not having to perform

Question 72

§350 Avoidability as a Limitation on Damages

Answer 72

1. Except as stated in subsection (2), damages are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation.
2. The injured party is not precluded from recovery by the rule stated in subsection(1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss

Question 73

§348 Alternatives to Loss in Value of Performance

Answer 73

1. If a breach delays the use of property and the loss in value to the injured party is not proved with reasonable certainty, he may recover damages based on the rental value of the property or on interest on the value of the property.
2. If a breach results in defective or unfinished construction and the loss in value to the injured party is not proved with sufficient certainty, he may recover damages based on
   a. The diminution in the market price of the property caused by the breach, or
   b. The reasonable cost of completing performance or of remedying the defects if that cost is not clearly disproportionate to the probable loss in value to him
   c. If a breach is of a promise conditioned on a fortuitous event and it is uncertain whether the event would have occurred had there been no breach, the injured party may recover damages based on the value of the conditional right at the time of breach.

Question 74

§351 Unforeseeability and Related Limitation on Damages

Answer 74

1. Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made
2. Loss may be foreseeable as a probable result of a breach because it follows from the breach
   a. In the ordinary course of events, or
   b. As a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.

Question 75

§352 Uncertainty as a Limitation on Damages

Answer 75

Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.