Contracts

Question 1

Applicable Contract Law?

Answer 1

1. UCC Article 2 = Goods (movable tangible things) with special rules for Merchants (deals in goods of the kind or holding out as having special skills/knowledge)
2. Common Law = Everthing else

If contract has both goods and other things, predominance test (what is predominate purpose of contract) determines which governs the whole contract.

Question 2

Contract Formation Requirements?

Answer 2

1. Offer
2. Acceptance
3. Consideration

Question 3

Three Common Law Offer Requirements?

Answer 3

1. Intent
2. Definite Terms (QTIPS - Quantity, Time of performance, Identity of parties, Price, Subject matter)
3. Communicated to Offeree

Question 4

Termination of Offer?

Answer 4

• Rejection
• Counteroffer
• Revocation (any time before acceptance) (direct or indirect, unambigious words or conduct, of which offeree is aware)
• Lapse of Time (if stated or otherwise reasonable)
• Death or Incapacity of either party (unless option with consideration)

Question 5

UCC Offer Requirements?

Answer 5

Inviting acceptance in any manner and by any medium reasonable in circumstances. Purchase order is typically an offer under UCC.

Question 6

Irrevocable Offers?

Answer 6

1. UCC Firm Offers: (a) by a merchant (b) signed writing (c) three month max
2. Option Contract
3. Detrimental reliance (reasonably relied or started performance)

Question 7

Acceptance?

Answer 7

• Bilateral (both promise) v. Unilateral (offeror promises and offeree actual performs)
• Must be within reasonable time
• Only by offeree and only in response an offer
• In manner required by offer; if none, then reasonable means
• Common law Mirror Image Rule - acceptance terms mist mirror offer exactly

Question 8

Mailbox Rule?

Answer 8

Acceptance is effective upon proper dispatch (i.e., no longer has control of the acceptance)

Question 9

Mailbox Rule Exceptions?

Answer 9

• Offer says otherwise
• Option Contract (upon receipt)
• If both acceptance and rejection sent: if acceptance sent first, then on dispatch; if rejection sent first, acceptance if received first.

Question 10

Acceptance Varying From Offer (Common Law)?

Answer 10

Mirror Image Rule - Acceptance terms must mirror exactly offer, otherwise rejection and counteroffer.

Question 11

Acceptance Varing From Offer (UCC)?

Answer 11

Additional Terms:
* If one not a merchant, then proposal only
* Both merchants, then add terms unless (1) offer limited to terms expressly, (2) material alteration; or (3) objection in reasonable time.

Conflicting Terms:
* Knock Out Rule (Majority): Conflicting terms cancel each other out and applies UCC gap fillers
* Treat As Additional Terms (Minority): Apply additional term test above
* Fall Out Rule (Minority)

Question 12

Acceptance by Shipping (UCC)?

Answer 12

• Shipping conforming goods = acceptance
• Shipping non-conforming w/o acknowledging = acceptance and breach
• Shipping non-conforming w/ acknowledgement = no acceptance but counteroffer

Question 13

Consideration?

Answer 13

• Illusory Promise - not supported by consideration; not enforceable
• Requirements contract - seller will be exclusive source of all buyer’s requirements; enforceable
• Output contract - buyer agrees to buy all seller’s output; enforceable
• Past/pre-exsting duty - not consideration; not enforceable
• Promissory estoppel - promise that foreseeably (to the promisor) induces reliance and is relied upon; enforceable.
• Gifts - not consideration; not enforceable

Question 14

Five Categories for Statute of Frauds (MR DOG)?

Answer 14

MR. DOG
2. Marriage
2. Real property
3. Debt of another
4. One year (incapable of performance within year)
5. Goods $500 or more

Exceptions exist for all.

Question 15

Two SOF Writing Requirements?

Answer 15

1. Essential terms
2. Signed by party to be charged

Question 16

Three SOF Writing Requirement Exceptions?

Answer 16

1. Merchant’s confirming memo - requires two merchants, one receives signed confirmation, no objection in 10 days
2. Judicial admission in pleadings/testimony that there was agreement
3. Promissory estoppel - party relied to her detriment (recovery limited to prevent injustice)

Question 17

Contract Formation Defenses?

Answer 17

• Statute of Frauds
• Misrepresentation
• Fraud
• Unconscionability
• Mistake (mutual and unilateral)

Question 18

Two Mistakes in Contract Formation?

Answer 18

Mutual: (1) Basic assumption; (2) Material effect; and (3) Risk not assumed by party affected
Unilateral: Same as above plus must show other party knew or should have known.

Question 19

Two Conditions in Contracts?

Answer 19

1. Express = strict compliance
2. Constructive = substantial compliance

Question 20

Two Waivers of Conditions?

Answer 20

1. Keeping the benefit on contract
2. Failure to insist on compliance

Can retract waiver unless reliance.

Question 21

Parole Evidence Rule?

Answer 21

Limits the extent to which evidence of things prior to or contemporaneous with signed contract can considered part of contract.

Question 22

Parole Evidence Rule - Partial Integration?

Answer 22

• Intended to be final express of agreement but not all details.
• PER cannot contradict
• PER allowed to supplement

Question 23

Parole Evidence Rule - Total Integration?

Answer 23

• Intended to be final expression of agreement and include all details.
• Not allowed to contradict or supplement

Question 24

Parole Evidence Rule Exceptions/Does Not Bar?

Answer 24

1. Subsequent communications
2. Contract formation defect evidence (evidence of fraud, duress, mistake, etc.)
3. Condition precedent to contract effectiveness
4. Interpret ambigous terms (course of performance, course of dealing, usage of trade)

Question 25

Two Requirements for Contract Modification (Common Law)?

Answer 25

1. Mutual assent 2. Consideration

Question 26

Two Requirements for Contract Modification (UCC)?

Answer 26

1. Mutual assent 2. Good faith Consideration NOT required.

Question 27

Suit by Third Party Beneficiaries?

Answer 27

Intended Beneficiary: Can sue to enforce contract Incidental Beneficiary: Cannot sue to enforce contract

Question 28

Assignment of Contract Rights?

Answer 28

* No consideration required * Gratuitous assignment (gift) allowed * Assignee stands in shoes * Can't assign if material change * Generally, all rights assignable; if contract says no, may still assign but then in breach.

Question 29

Delegation of Contract Duties?

Answer 29

* Delegator remains liable * Cannot delegate if duty of skill * Generally, all duties delegable

Question 30

Novation?

Answer 30

* Substitution of third party into contract (often deligee) * Obligee must accept * Releases and terminates deligator's liabilty

Question 31

Breach - Anticipatory Repudiation?

Answer 31

* Unequivical expression * That party will not perform * Before performance due.

Question 32

Breach - Anticipatory Repudiation Responses?

Answer 32

* Sue immediately * Suspend performance * Treat contract as discharged * Urge performance

Question 33

Right to Demand Adequate Assurances?

Answer 33

If party has not unequivically expressed it will not perform, but something less, may ask for adequate assurances if: 2. Reasonable grounds for insecurity 2. In writing 3. Allowed to suspend performance pending assurances

Question 34

Material v. Minor Breach Factors (Common Law)?

Answer 34

* Still received substantial benefit of bargain? * Extent of part performance * Willfullness of breach * Time not of the essence unless contracted for * Divisible contract = each agreed equivalant separate K for breach only

Question 35

UCC: Perfect Tender Rule?

Answer 35

* Reject the whole * Accept the whole * Accept a commercial unit Does not apply to installment contract.

Question 36

UCC: Seller's Right to Cure Two Requirements?

Answer 36

1. Notice to buyer 2. Timely new tender

Question 37

Four Types of Possible Warranties?

Answer 37

1. Express 2. Implied Waranty of Merchantability (goods fit for ordinary purpose) 3. Fitness for Particular Purpose (only where buyer relies on seller's judgment) 4. Implied good faith and fair dealing (all contracts)

Question 38

Accord?

Answer 38

* Agreement to substitute perfomance * Consideration required * Does not discharge original contract

Question 39

Satisfaction?

Answer 39

* Perfomance of the accord * Discharges both contracts (original and accord)

Question 40

Contract Defenses?

Answer 40

* No mutual assent * No consideration * No writing and was required * Misrepresentation/fraud/duress/undue influence * Unconscionability * Lack of capacity * Illegality of conduct * Condition precedent not met

Question 41

Impossibility, Impractiability, and Frustration of Purpose?

Answer 41

Impossibility: supervening, unforseeable event makes permformance impossibe and neither assumed risk Impractiability: event the parties assumed would not occur does, makes performance extremely and unreasonably difficult; concerns basic assumption of K Frustration of Purpose: party's purpose for entering contract destoryed; both must know purpose of contract, even not reasonably forseeable, and total frustration.

Question 42

Contract Damages Limitations?

Answer 42

* Foreseeability * Duty to mitigate * Certainty * Causation

Question 43

Expectation Damages?

Answer 43

As if contract was performed.

Question 44

Consequential Damages?

Answer 44

* Direct, foreseeable consequences * Unique to plaintiff

Question 45

Incidental Damages?

Answer 45

* Expenses reasonably incurred

Question 46

Reliance Damages?

Answer 46

As if contract was never made.

Question 47

Liquidated Damages?

Answer 47

* Appropriate when damages difficult to calculate * Must be reasonable approximation of damages * Cannot be punitive * If used, no other damages allowed

Question 48

Nominal Damages?

Answer 48

Rights violated but no financial loss suffered.

Question 49

Quasi-Contract/Restitution?

Answer 49

1. D derived a benefit 2. Unfair to allow D to keep

Question 50

Replevin?

Answer 50

Return personal property

Question 51

Ejectment?

Answer 51

Return of real property

Question 52

Recission?

Answer 52

Undo a contract

Question 53

Reformation?

Answer 53

Rewrite contract

Question 54

Remedy - Specific Perfomance Requirements?

Answer 54

1. Valid contract 2. Conditions satisified 3. Inadequate legal remedy 4. Mutuality of performance 5. Feasibility of enforcement 6. No defense (laches, unclean hands, etc.)