Wrong Answer Rules Flashcards
What is consideration?
To constitute consideration, a performance or a return promise must be bargained-for.
Consideration can consist of forbearing from doing something, or doing something one is not already required to do.
A performance or return promise is bargained-for if
- it is sought by the promisor in exchange for his promise
AND - and is given by the promisee in exchange for that promise.
With respect to the requirement for consideration, the performance may consist of:
- an act other than the promise;
- a forbearance; or
- the creation, modification, or destruction of a legal relation.
What is a delegation?
A delegation occurs when a third party agrees to satisfy a performance obligation owed by one of the parties to the contract.
True or False: A delegation does not relieve the delegator from their obligations under the contract.
True. Despite the delegator’s delegation to the delegatee of the performance obligation owed to the obligee, the delegator remains liable for the performance, UNLESS there is a novation.
Liability of the Delegatee
When is a delegatee liable to a delegator?
When the delegatee has agreed to perform the delegator’s contract obligations and does not fulfill those obligations.
Liability of the Delegatee
When is a delegatee liable to a obligee?
Under the third-party beneficiary theory, the delegate is also liable to the obligee, because the obligee is an intended beneficiary of the promise made to the delegator.
Can a Delegatee recover from obligor?
Yes. for unjust enrichment if they fail to pay delegatee.
If the obligor pays the assignor, this defense can be raised against the assignee, provided that payment was made ___________
before notice of the assignment was given to the obligor.
Once notice of the assignment is given, payment to the assignor is no defense.
What is UCC 2-207
a definite and seasonable expression of acceptance operates an an acceptance ven though it states terms additional to or different from those offered..unless acceptable is made expressly conditional on assent to the additional or different terms.
Between merchants, additional terms are to be construed as proposals for addition to the contract. They become part of the contract UNLESS:
- The offer expressly limits acceptance to the terms of the offer;
- they materially alter it; or
- notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
True or False: Modification or recission of a third-party contract is possible up to the time the third-party’s rights vest.
True.
A third-party beneficiary’s rights vest when he learns of the contract and:
(1) manifests assents to it at the request of one of the parties;
(2) materially changes position in reliance on the contract; or
(3) files suit to enforce rights under the contract.
What is the pre-existing duty rule?
a duty already obligated to be performed on the basis of the original contract CANNOT serve as consideration for a new promise, as it lacks the novelty required for valid consideration.
under the pre-existing duty rule, if parties to an existing contract agree to modify the contract for the sole benefit of one of them, the modification will usually be
unenforceable at common law for lack of consideration.
True or False: Employment contracts are regarded as divisible for the purpose of permitting the employee to recover the agreed price for the number of months of service he has put in.
True.
If a buyer repudiates a contract for unfinished goods, the seller may in the exercise of reasonable commercial judgment proceed in any reasonable manner, including finishing the goods for resale.
The seller’s damages in this situation are:
the difference between the contract price and the resale price RATHER THAN seeking costs and anticipated profit.
True or False: An intended beneficiary can enforce a contract to which it is not a party because the parties intended the contract to benefit that beneficiary.
True.
Divisible Contract
When performance under a contract can be divided into multiple tasks, each with a corresponding price that the other party must pay when the task is completed, one party’s performance of a task triggers:
the other party’s duty to pay for it, even if the performing party breaches another part of the contract.
When a seller’s demand for a modification is a repudiation, and the buyer refuses the modification and purchases goods elsewhere, the remedy for the seller’s breach is:
the difference between the cost of cover and the contract price.
What is the principle of reasonable expectations?
This applies to insurance law. It posits that parties should not be bound by term that they would not expect to find a contract unless those terms were called to their attention and that ambiguities are to be resolved in favor of the insured.
True or False: A party may avoid a contract if their asent was induced by either a FRAUDULENT or MATERIAL misrepresentation.
True.
Under UCC 2-501, Goods are identified to the contract when the seller:
ships, marks, or otherwise designates them as goods to which the contract refers.
What is a constructive condition precedent?
Where the contract contains no provision relating to the order of the respective performance, and performance on one side will necessarily take time, while the other can be performed in an instant, the former is a constructive condition precedent to the latter.
In other words, the performance that takes time must be substantially completed bore the other party needs to render his performance.
True or False: Damages are not recoverable for loss that the party in breach did not have reason to forsee as a probable result of the breach when the contract was made.
True.
What is the doctrine of promissory estoppel?
a promise which the promisor should reasonably expect to induce action OR forbearance on the part of the promissee or a third person, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcing the promise.
True or False: even if a surety arrangement existed between a promisor, creditor, and third party, it would be voidable due to lack of consideration to support the promisor’s promise.
True.
True or False: when an event occurs that dramatically reduces the value of the transaction to a party, frustration of purpose allows the party to be excused from performance.
True.
Unjust enrichment
occurs when a party to an agreement receives a benefit without incurring any detriment.
What is a self-limiting reward?
Rewards that can only be awarded for a single task.
What is an open-field award?
claimed by multiple people for a given task.
The doctrine of impossibility excuses both parties from their obligations under a contract if the performance has been rendered impossible by events occurring AFTER the contract was formed.
It requires:
- objectively impossible performance; and
- that the occurrence of the contingency was not known to the parties at the time of contracting.
The doctrine of impossibility does not apply if:
the parties have allocated the risk of the contingency.
True or false: In the absence of language as to risk sharing, the builder assumed the risk because it was new construction.
True.
Under the UCC, a modification to a contract for the sale of goods needs no additional consideration to be binding if:
the modification was made in good faith.
True or False: Even if parties have two totally separate
and unrelated contracts with one another, the insecure party can still be subject to demands for adequate assurance on either contract.
True.
Damages to an injured buyer in a contract for the sale of real estate, especially when land has been already sold to someone, are usually measured by:
difference in the contract price and the market value of the property as of the time that the buyer learned of the breach, plus any incidental or consequential damages.
Counter-offer Under UCC 2-207
If the acceptance is expressly conditional on the offeror’s agreement to the new or different terms, it operates as a counter-offer, not an acceptance.
What happens if neither party is aware of an ambiguity with the terms of a contract?
a mutual mistake has occurred and there is no contract.
Seller’s action to recover contract price from buyer:
(1) where the buyer has accepted the goods;
(2) where the goods are lost or damaged within a commercially reasonable time after the risk of loss has passed to the buyer; or
(3) where the buyer has returned or rejected the goods and the seller is unable after reasonable efforts to resell the goods.
Implied-In-Fact Contracts are formed by manifestations of assent through:
Conduct, rather than oral or written language.
Look at previous contractual relationship.
A unilateral or mutual Modification without consideration is permitted if:
(i) The modification is due to circumstances that were unanticipated by the parties when the contract was made;
and
(ii) it is fair and equitable.
forfeiture
the denial of compensation that results when the obligee loses his right to the agreed exchange after he has relied substantially, as by preparation or performance, on the expectation of that exchange
True or False: A common application of the pre-existing duty rule involves a creditor’s agreement to accept payment by his debtor of
lesser sum in satisfaction of the full debt. Since the debtor owes the full amount, paying a partial amount is not anything that he was not already legally obligated to do.
Therefore, most courts hold that the creditor’s promise not to
require payment of the full amount is not binding for lack of consideration.
True.
A modification to a contract must have new consideration unless:
The modification is in writing and explicitly waives consideration (if allowed by law).
It falls under an exception, such as under the Uniform Commercial Code (UCC) for goods contracts, which does not apply here (this is a construction contract, not a sale of goods).
Under the UCC, requirement and output contracts are assignable as long as the assignee does not dispropotionately alter the contemplated quantity.
True.
Under the UCC, general language of assignment of a contract will be construed as a delegation of performance as well as an assignment of rights.
True.
