Warranties and Express Conditions + Excuses Flashcards
What is a warranty?
A warranty is a promise about a term of the contract that explicitly shifts risk to the party making the promise
True or false: warranties may not be disclaimed
False. These are valid under the UCC.
Ex: I can sell this to an “as is” basis
What is an express warranty?
A promise that affirms or describes the goods and is part of the basis of the bargain is an express warranty unless it is merely the seller’s opinion.
True or false: The use of a sample model creates an express warranty
True. Shows that the goods sold will be like the one featured.
When are implied warranties of liability triggered?
triggered only when the seller is a merchant dealing in goods at issue
What does an implied warranty of merchantability protect?
Goods that are fit for commercial purposes
How can a merchant disclaim the warranty of merchantability?
Warranty can be disclaimed by use of “as is,” “with all faults,” or similar language that makes plain that there is no implied warranty.
The disclaimer may be oral, but it must use the term “merchantability” and must be conspicuous if in writing.
When is the warranty of fitness for a particular purpose triggered?
When a buyer relies on a seller’s expertise to select a special type of good that will be used for a special purpose.
When is the warranty of fitness for a particular purpose triggered?
When a buyer relies on a seller’s expertise to select a special type of good that will be used for a special purpose.
True or false: a merchant can imply warranty of fitness for a particular purpose
True. As long as the buyer relies on any seller’s expertise
Can a warranty of fitness for a particular purpose be disclaimed?
Yes. IF it is 1) Conspicuous and 2) In writing
What is the most important implied condition?
The most important implied condition is the “constructive condition of exchange.”
True or false: express conditions are created by the language in a contract
True. Look for magic words like “only if,” “provided that,” “on the condition that,” “only in the event that,” etc.
Must express conditions be strictly satisfied?
Yes, unless the condition is excused.
True or false: satisfaction conditions always use an objective measurement.
False. It depends on the nature of the performance.
Preferred approach—use an objective standard of satisfaction. If most reasonable people would be satisfied, then the condition is met.
Contracts involving aesthetic taste—such as art or tutoring services—use a subjective standard. The party can still breach if they claim dissatisfaction in bad faith.
Who can waive a condition?
The party receiving the protection of the condition may waive the condition by words or conduct. Or if the other party interferes or hinders the occurence of the condition
How are waived conditions measured?
Good faith standard.
What is the acronym for determining if a contract has been performed?
Pizza Crawling With Escargot
Parol Evidence
Warranties
Conditions
Excuse of performance
What are some common fact patterns for impossibility or impracticability (excuses)?
1) Performance becomes illegal after the contract is formed
2) The subject matter of the contract is destroyed; or
3) “special person” performing party dies or is incapacitated
True or false: something that makes a contract more expensive is a valid excuse for performance
False. Look for something that hinders the ability to perform, not just the cost to perform.
How can one spot an impracticable/impossible situation?
Look for an unforeseen event in which the non-occurrence of the event was a basic assumption of the contract, and the party seeking discharge was not at fault.
True or false: Death excuses liability on a contract
False. The estate will normally be on the hook for any contractual obligations that have already been formed.
BUT there is an exception when there is something special about the person performing on the contract, such that it makes no sense to continue if they die.
What is frustration of purpose? Is it common?
Performance can still occur, but something has happened to undermine the entire reason for creation of contract.
Relatively rare. The event must be extreme and not previously allocated to one of the parties.
Can both parties agree to walk away from a contract?
YES, as long as there is some performance remaining on each side. Otherwise, there is no consideration.
What is the purpose of accord and satisfaction?
The parties to an earlier contract agree that performance will be satisfied instead by the completion of a different performance.
New performance = accord
Excuse of initial performance obligation = satisfaction
True or false: If an accord (new performance) is not satisfied, the other party can sue on the original OR the new promise?
True.
How can one tell the difference b/t accord/satisfaction and modification?
Accord and satisfaction = If the party to perform has an option to satisfy a contract obligation by doing something else
Modification: The parties have changed the performance obligation.
What is Novation?
Novation = BOTH parties agree that a substitute person will take over the contractual obligations
Can one side decide to create a novation by asking someone else to do the work?
No, this is “delegation”
True or false: if there is a valid novation, the original promisor will be excused from performance.
True
When is the implied warranty of merchantability implied, and how is it disclaimed?
Whenever the seller is a merchant = implied
+ The disclaimer can be oral, but must use the term “merchantability”
+ Must be conspicuous if in writing
+ Language that indicates there is no implied warranty is sufficient (e.g., “as-is” or “with all faults”)
When is the warranty of fitness for a particular purpose implied, and how is it disclaimed?
whenever the seller has reason to know that:
(i) the buyer has a particular use for the goods, and
(ii) the buyer is relying upon the seller’s skill to select the goods
A disclaimer must be in writing and be conspicuous.
What is frustration of purpose and what is the result?
Frustration of purpose requires
(1) that the frustrated purpose must have been the principal purpose of the impacted party under the agreement without the fault of the impacted party;
(2) the non-occurrence of the event was a basic assumption of the contract when it was made; and
(3) the frustration was substantial.
Result: The frustrated party is entitled to rescind the contract without paying damages.
What is an implied in fact K?
when a person’s assent to an offer is inferred solely from the person’s conduct.
To be contractual bound, the person must not only intend the conduct but also know or have reason to know that the conduct may cause the offeror to believe the offer was accepted.
Under UCC, what can be used to clarify even the most unambiguous contract?
Course of performance, course of dealing, and trade usage.
Note: If the express contract terms are inconsistent with the course of performance, or trade usage, priority is given to the express terms, followed by course of performance, course of dealing and trade usage.
