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Contracts Flashcards

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1
Q

What is the first method of discharging contractual duties?

A

By Performance

This includes full performance and substantial performance.

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2
Q

What is full performance in the context of contract discharge?

A

All duties completed.

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3
Q

What does substantial performance mean?

A

Main purpose completed.

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4
Q

What is the second method of discharging contractual duties?

A

By Agreement

This includes several concepts like rescission, accord and satisfaction, novation, and release.

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5
Q

What is rescission?

A

Parties restored to original positions before contract.

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6
Q

What is accord and satisfaction?

A

Substituted duty.

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7
Q

What does novation involve?

A

Substituted 3rd party.

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8
Q

What is a release in contract law?

A

Parties cancel remaining contractual obligations.

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9
Q

What is the third method of discharging contractual duties?

A

By operation of law

This includes impossible performance, illegality, death or incapacity, and bankruptcy.

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10
Q

What does it mean if performance becomes impossible after contract formation?

A

Contract cannot be performed.

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11
Q

What happens if the subject matter of the contract becomes illegal after formation?

A

Contract is discharged.

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12
Q

What is the impact of death or incapacity on contractual duties?

A

Only specific personal services are discharged

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13
Q

What does bankruptcy imply in the context of discharging contracts?

A

Discharge by court ruling.

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14
Q

What type of breach of contract occurs when it doesn’t appear that one party to the contract will perform the contract.

A

Anticipatory breach
The other (wronged) party can request assurance of the other party’s ability to perform the contract.
If the other party fails or refuses to assure performance, the wronged party can cancel and sue for damages

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15
Q

What is promissory estoppel

A

It acts as a substitute for consideration and renders a promise enforceable

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16
Q

What is the seller required to do in a shipment contract?

A

Tender delivery of conforming goods to a carrier, usually at the seller’s loading dock

A shipment contract is a type of sales contract where the seller is responsible for delivering the goods to a carrier for transport to the buyer.

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17
Q

When does legal title and risk of loss pass from the seller to the buyer in a shipment contract?

A

At the time the seller tenders delivery of conforming goods to a carrier

This transfer occurs when the goods are handed over to the carrier for shipment.

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18
Q

What are the shipping terms in a destination contract?

A

FOB destination point

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19
Q

What is required of the seller in a destination contract?

A

Tender delivery of conforming goods at a specified destination

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20
Q

When does the title and risk of loss pass from the seller to the buyer?

A

When the buyer takes possession of the goods from the transportation carrier

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21
Q

When does the risk of loss pass to the buyer from a merchant seller?

A

When the buyer has actually received the goods and removed them from the seller’s control.

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22
Q

What is sufficient to transfer risk of loss from a nonmerchant seller?

A

Tender of the goods.

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23
Q

True or False: Risk of loss passes to the buyer when the seller has completed the sale.

A

False.

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24
Q

Fill in the blank(merchant seller): Risk of loss will pass to the buyer when they have actually received the goods and _______.

A

removed them from the seller’s control.

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25
What are compensatory damages?
Direct or actual losses ## Footnote Compensatory damages are intended to cover the actual loss incurred by the injured party as a result of the breach.
26
What are consequential damages?
Indirect and anticipated losses ## Footnote Consequential damages arise from the secondary effects of the breach, which were foreseeable at the time of contracting.
27
What are liquidated damages?
Predetermined loss amount (deposit forfeitures) agreed to by both parties ## Footnote Liquidated damages specify a fixed amount to be paid in the event of a breach, providing certainty to both parties.
28
What are nominal damages?
Trivial sum ($1) to vindicate the plaintiff's rights when no actual loss or damage occurs ## Footnote Nominal damages acknowledge that a breach occurred, even if no financial loss resulted.
29
What is specific performance?
Court ordering specific transfer of the contract's unique subject matter (patents, works of art) when a monetary award will not suffice ## Footnote Specific performance is an equitable remedy requiring a party to fulfill their contractual obligations rather than merely compensating the other party.
30
What are the exceptions to the Statute of Frauds writing requirement for sale of goods contracts?
SPAM: * Specifically manufactured goods at buyer's request * Performance of contract already occurred * Admitted in court by defendant * Merchant not objecting to written confirmation within 10 days
31
What does 'SPAM' stand for in the context of exceptions to the Statute of Frauds?
Specifically manufactured goods, Performance of contract, Admitted in court, Merchant not objecting
32
True or False: Specifically manufactured goods at buyer's request is an exception to the Statute of Frauds.
True
33
Fill in the blank: A contract is considered to have an exception to the Statute of Frauds if _______ has already occurred.
Performance of contract
34
What happens if a merchant does not object to a written confirmation within 10 days?
The silent merchant is bound by the silence
35
What does it mean when a defendant admits to a contract in court regarding the Statute of Frauds?
It serves as an exception to the writing requirement
36
What is the duty of the nonbreaching party after a contract is breached?
The nonbreaching party has a duty to mitigate (minimize) damages. ## Footnote Damages that could have been reasonably avoided are not recoverable.
37
What is the warranty of title?
An implied warranty that arises as a matter of law in every sale of goods. ## Footnote The warranty of title can be disclaimed if the disclaimer specifically states that it does not apply.
38
Under what circumstances will a personal services contract (PSC) be discharged?
A PSC will be discharged if the subject matter becomes illegal or if the party performing the services is unable to do so. ## Footnote A PSC is not discharged if the party receiving the services is unable to receive them or becomes bankrupt.
39
Can contract rights and duties be assigned to third parties ?
Any contract right and duty may be assigned to a third party, unless it materially changes the rights or duties of a party to the contract. ## Footnote This includes sales contracts.
40
What is a creditor beneficiary?
A third party to a contract who will receive a benefit from the contract as settlement of a debt. ## Footnote If the debt is not paid, the creditor beneficiary can sue either party for failure to provide the benefit.
41
What warranties does an assignor make when assigning a contract?
The assignor makes implied warranties that the assignment is allowed, there are no prior assignments, no known defenses the obligor may have, and the contract will not interfere with the assignee's rights.
42
What is a statute of limitations (SOL) in contract law?
A law that prevents a party from filing a lawsuit after a certain time period. ## Footnote The SOL period starts at the breach of contract event.
43
In a sale or return contract, who holds the title and risk of loss during the resale period?
The buyer holds the title and risk of loss during the resale period. ## Footnote If the buyer returns the goods, the same rules apply as in a normal sales contract.
44
When does the risk of loss pass to the buyer?
The risk of loss ordinarily passes upon tender of delivery; however, with a merchant seller, it does not pass until the buyer takes receipt of the goods.
45
What can a seller recover if the buyer breaches the contract?
The seller may recover the full purchase price of the goods identified to the contract plus incidental damages if unable to resell the goods at a reasonable price after making a reasonable effort.
46
What happens when one party to a contract materially breaches?
The other party generally no longer has any duty to perform its end of the contract.
47
Are punitive damages available under the UCC Sales Article?
No, punitive damages are not available under the UCC Sales Article.
48
What is a novation?
An agreement between three parties whereby a previous agreement is discharged by creating a new agreement that substitutes one contracting party for another.
49
Is specific performance available for breach of a personal service contract?
No, specific performance is not available for breach of a personal service contract due to constitutional prohibitions against involuntary servitude.
50
What rights does a seller have if they are the victim of a breach of contract?
The seller has the right to cancel the contract and to recover damages.
51
In strict liability cases, what must the plaintiff prove?
The plaintiff must prove that the defect in the product existed at the time it left the possession of the defendant.
52
Common law
Sale of non-goods. (Real Estate, Employer contracts, Services)
53
Uniform Commercial Code (UCC) Law
Sale of goods. (tangible, moveable, personal property, fixtures that can be easily detached). Special rules apply if goods are $500 + or if merchant
54
How to handle a mixed contract (UCC and Common Law)
Whichever one dominates the contract.
55
Is the Warranty of Title express or implied?
Implied. It is a matter of law in every sale of goods and does not need to be mentioned by seller in sales process
56
What 4 things does the Warranty of Title promise
1. The seller has rightful title to goods 2. Transfer (sale) is legal 3. No third-party claims exist on the goods (liens) 4. Goods do not violate rights of a third party (patent infringement)
57
Can a Warranty of Title be disclaimed?
Yes. An oral or written statement explicitly stating the warranty of title is being disclaimed. "As is" or "with all faults" is not an effective disclaimer for this warranty
58
What is Accord and Satisfaction?
Accord is when one party to a contract accepts a new duty in place of a duty that has yet to be performed by the other party. Satisfaction occurs when that substituted duty is performed.
59
What is a warranty of merchantability?
An implied warranty that arises as a matter of law and applies to sales by a merchant who ordinarily sells the goods purchased that the goods are fit for normal purpose and conform to the seller's general representations
60
How can a warranty of merchantability be disclaimed?
By a written or oral statement by the seller specifically mentioning "merchantability" in the disclaiming statement, or by selling the goods "as is" or "with all faults"
61
What are the 3 elements necessary for promissory estoppel?
1. detrimental reliance on a promise 2. Reliance on the promise is reasonable and foreseeable 3. Damage results (injustice) if the promise is not enforced
62
What is a quasi contract?
An implied-in-law rather than express agreement which results when one of the parties has been unjustly enriched at the expense of the other. The law creates such a contract when there is no binding agreement present to keep the unjust enrichment from occurring
63
Elements to prove fraud or gross negligence
Actual fraud or gross negligence (recklessly disregarded truth) RIMS R = Reliance I = Intent to deceive M = Material misstatement S = Suffered loss
64
Elements necessary to prove negligence
CAMPS C = causal relationship - plaintiff suffered harm A = Absence of due care M = Material misstatement P = Privity - CPA has a duty only to clients, intended/foreseen 3rd parties S = Suffered loss
65
Attachment
Attachment occurs after all 3 sections of PIG P = Property (collateral) "owned" by debtor (has rights) I = Interest in the collateral created by either : signed security agreement (that reasonably describes the collateral) or taking possession (writing not required) G = Giving value to debtor (present or past)
66
Perfection
Perfection occurs after any one of the 3 in FAT F = Filing a financing statement A = Automatic perfection (purchase money security interest (PMSI)) T = Taking possession of collateral (writing not required)
67
What parties are allowed to claim privity when suing a CPA for common law negligence in the majority rule vs minority rule
Majority rule allows the client, Intended third Parties, and Foreseen parties to sue for negligence based on privity. Minority rule (Ultramares) allows only the Client and Intended Third Parties to sue for negligence based on Privity
68
What Contracts are subject to the Statute of Frauds
GROSSE Goods sold worth $500 or more Real estate sales Over 1 year required to perform contract Suretyship (guarantee debts of others) Statements in consideration of marriage Executor (promise to pay estate's debts from executor's personal funds)
69
What are examples of voidable contracts?
Duress (social or economic) Undue influence Misrepresentation of a material fact unintentional misrepresentation fraud in the inducement Mistake Lack of capacity
70
What are examples of VOID contracts?
Extreme duress (physical threat) Fraud in the execution Illegal subject matter Incompetent party Unconscionability
71
What is the difference in requirements for a valid offer between common law and UCC article 2?
Common Law: offer must be exact for all necessary terms UCC: Can be vague as to price, qty, and delivery terms
72
What is the difference in requirements for a acceptance of an offer between common law and UCC article 2?
Common LAw: Must agree to exact terms offered (Mirror image rule) UCC: Minor variations allowed
73
What is the difference in requirements for a consideration with an offer between common law and UCC article 2?
Common Law: Required for both formation and changes UCC: Required for formation, but not for changes
74
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