Contracts 2.0

Question 1

Seller is required to tender delivery of confirming goods at a specified destination

Answer 1

FOB destination = Specified destination
FOB shipping point = Delivery to carrier

Question 2

Sale or return contract, title and risk of loss rest with buyer until goods are returned to the seller

On sale of approval contracts, title/risk passes to buyer once buyer accepts good or approve periods passes

Answer 2

Sale or return contract, title and risk of loss rest with buyer until goods are returned to the seller

On sale of approval contracts, title/risk passes to buyer once buyer accepts good or approve periods passes

Question 3

Under UCC, it is possible for buyer to have title to goods while the risk of loss still remains with seller while shipped FOB Destination.

Answer 3

Under UCC, it is possible for buyer to have title to goods while the risk of loss still remains with seller while shipped FOB Destination.

Question 4

Voidable contract – Valid until a party cancels; caused by fraud in the inducement (misled about terms).
Fraud in the inducement – Knows it’s a contract but is misled about terms → voidable.

Answer 4

Voidable contract – Valid until a party cancels; caused by fraud in the inducement (misled about terms).
Fraud in the inducement – Knows it’s a contract but is misled about terms → voidable.

Question 5

Void contract – Never valid; caused by fraud in the execution, extreme duress, illegal subject matter, or contracting with someone under guardianship.

Fraud in the execution – Doesn’t know a contract is being signed → void.

Answer 5

Void contract – Never valid; caused by fraud in the execution, extreme duress, illegal subject matter, or contracting with someone under guardianship.

Fraud in the execution – Doesn’t know a contract is being signed → void.

Question 6

The Parol evidence rule (PAR) bars prior/contemporaneous evidence that contradicts the final contract.

Answer 6

The Parol evidence rule (PAR) bars prior/contemporaneous evidence that contradicts the final contract.

Question 7

Generally a contract is not cancelled because of a daeth in the party, but an offer typically terminates upon death.

Answer 7

Generally a contract is not cancelled because of a daeth in the party, but an offer typically terminates upon death.

Question 8

Even if other warranties are disclaimed by a seller, if the buyer relied on the sellers opinion on product selection, the impliaed warranty for fitness for particular purpose applies

Answer 8

Even if other warranties are disclaimed by a seller, if the buyer relied on the sellers opinion on product selection, the impliaed warranty for fitness for particular purpose applies

Question 9

An obvious mistake like incorrectly writing the wrong price on ie a peice of equipment worth 100k but written for 10k, is voidable

Answer 9

An obvious mistake like incorrectly writing the wrong price on ie a peice of equipment worth 100k but written for 10k, is voidable

Question 10

if an oral contract is below 500, even if theres a deposit, the contract is not enforcable

On May 1, Dix and Wilk entered into an oral contract in which Dix agreed to purchase a small parcel of Wilk’s land for $450 and paid a $100 deposit. The next day, Wilk received a $650 offer, reflecting the property’s fair market value, and promptly informed Dix that he would not sell the land for $450. If Dix sues Wilk for specific performance, what is the likely outcome?

Answer 10

if an oral contract is below 500, even if theres a deposit, the contract is not enforcable

Lose, because the agreement was not in writing and signed by Wilk

Question 11

Though oral agreements to sell goods for more than $500 is normally unenforcable, an exception applies to custum manufactured goods requested by the buyer

Gray Fabricating Co. and Pine Corp. orally agreed that Pine would custom manufacture a processor for Gray at a price of $80,000. Pine completed the processor at a cost of $60,000, but before delivery Gray informed Pine that the processor was no longer needed. Pine, unable to resell the processor and incurring $1,000 in storage fees, requested payment from Gray. If Gray refuses to pay and Pine sues, what is the maximum amount Pine can recover?

Answer 11

Though oral agreements to sell goods for more than $500 is normally unenforcable, an exception applies to custum manufactured goods requested by the buyer

Pine can recover 81k for contract price and extra costs caused by the buyer

Question 12

Tender of delivery = the seller has the goods ready and notifies the buyer they can take them.

For a merchant seller, tender alone does not shift the risk of loss. The buyer must actually receive the goods before risk passes.

Answer 12

Tender of delivery = the seller has the goods ready and notifies the buyer they can take them.

For a merchant seller, tender alone does not shift the risk of loss. The buyer must actually receive the goods before risk passes.

Question 13

The SOL (Statute of Limitations) is a legal rule that prevents a party from filing a lawsuit after a certain period has passed.

For contract law, once the SOL expires, the injured party can no longer sue the breaching party for damages

Answer 13

The SOL (Statute of Limitations) is a legal rule that prevents a party from filing a lawsuit after a certain period has passed.

For contract law, once the SOL expires, the injured party can no longer sue the breaching party for damages

Question 14

Oral modifications are unenforcable if no new consideration is given. But proof is otherwise admissible evidence.

Answer 14

Oral modifications are unenforcable if no new consideration is given. But proof is otherwise admissible evidence.

Unenforcable, because Dunne failed to give consideration, but proof of it is otherwise admissible into evidence

Question 15

Novation releases the original party to the contract and ends its relationship, while a substituted contract releases the original party from the first contract, but bounds the original party to a new contract, keeping the relationship.

Answer 15

Which of the following will release all the original parties of a contract yet maintain a contractual relationship among those original parties?

Novation: No
Substituted contract: Yes

Question 16

Duress = agreement forced by threats or unlawful pressure (fear of harm).

Undue influence = agreement induced by manipulating trust or dependence (over-persuasion, taking advantage of a close relationship).

Contracts signed under ordinary duress are voidable, not automatically void.
The pressured party can cancel (void) the contract, but if they choose not to, it remains valid.

Answer 16

Duress = agreement forced by threats or unlawful pressure (fear of harm).

Undue influence = agreement induced by manipulating trust or dependence (over-persuasion, taking advantage of a close relationship).

Contracts signed under ordinary duress are voidable, not automatically void.
The pressured party can cancel (void) the contract, but if they choose not to, it remains valid.

Question 17

A general partner may be a creditor of the limited partnership.

but: A general partner may not be a limited partner
: A limited partner may not conduct business with the limited partnership
: A limited partnship cannot be formed with limited liability for all parnters.

Answer 17

A general partner may be a creditor of the limited partnership.

but: A general partner may not be a limited partner
: A limited partner may not conduct business with the limited partnership
: A limited partnship cannot be formed with limited liability for all parnters.

Question 18

Purchase of land subject to a mortgage : Buyer takes title but seller stays primarily liable for the mortgage.

Assignment and delegation: Duties and rights are transferred, but the original party remains liable unless released.

Third-party beneficiary contract: A contract made to benefit someone who is not an original party, giving that person enforceable rights.

Novation: A new agreement substitutes a new party and releases the original party from all liability.

Answer 18

Purchase of land subject to a mortgage : Buyer takes title but seller stays primarily liable for the mortgage.

Assignment and delegation: Duties and rights are transferred, but the original party remains liable unless released.

Third-party beneficiary contract: A contract made to benefit someone who is not an original party, giving that person enforceable rights.

Novation: A new agreement substitutes a new party and releases the original party from all liability.

Question 19

If there’s no shipping terms or agreement, Risk of loss will ordinarily pass on tender of delivery. BUT if the seller is a Merchant, then risk of loss passes when buyer receives goods

Answer 19

If there’s no shipping terms or agreement, Risk of loss will ordinarily pass on tender of delivery. BUT if the seller is a Merchant, then risk of loss passes when buyer receives goods

Question 20

If the buyer rejects a nonconforming tender and time still remains on the contract, the seller may seasonably notify the buyer of the intent to cure and make a conforming tender by the contract deadline.

Answer 20

Kirk sent wrong refrigerator, nix said dont send another one, but Kirk can resend if it gives notice and does before due date

Question 21

Unconscionability is when there is a great disparity in the barganing powers of the two parties. One party exploiting the other with their leverage.

Answer 21

Unconscionability is when there is a great disparity in the barganing powers of the two parties. One party exploiting the other with their leverage.

Question 22

Substantial performance lets a contractor recover only when defects are minor and the contractor acted in good faith (willing to accept a price reduction). Kent intentionally used inferior lumber, so the breach is willful/material, not a good-faith deviation. Result: Kent forfeits contract rights (can’t recover the price) and is liable for damages.

Answer 22

Substantial performance lets a contractor recover only when defects are minor and the contractor acted in good faith (willing to accept a price reduction). Kent intentionally used inferior lumber, so the breach is willful/material, not a good-faith deviation. Result: Kent forfeits contract rights (can’t recover the price) and is liable for damages.

Question 23

On sale on approval contracts, titel and risk of loss remain with seller until buyer accepts the goods.

Answer 23

On sale on approval contracts, titel and risk of loss remain with seller until buyer accepts the goods.

Question 24

When performance of a contrat becomes objectively impossible (ie boat destroyed by arson after contract signed but before service begins) both parties are discharged from the contract.

Answer 24

When performance of a contrat becomes objectively impossible (ie boat destroyed by arson after contract signed but before service begins) both parties are discharged from the contract.

Question 25

For contracts to sell unique real estate, **the buyer can demand specific performance (court forces the sale) or seek compensatory damages** if the seller refuses to convey title. The buyer may choose one remedy, not both, because damages are meant to make the buyer whole, not provide a double recovery.

Answer 25

For contracts to sell unique real estate, **the buyer can demand specific performance (court forces the sale) or seek compensatory damages** if the seller refuses to convey title. The buyer may choose one remedy, not both, because damages are meant to make the buyer whole, not provide a double recovery.

Question 26

If someone is adjudicated incompetant, all contracts formed thereafter are void

Answer 26

If someone is adjudicated incompetant, all contracts formed thereafter are void

Question 27

A **novation** is a three party agreement between contracting parties and a third partry, whereby one of the contracting parties is discharged from their duty and the third party is substituted.

Answer 27

A **novation** is a three party agreement between contracting parties and a third partry, whereby one of the contracting parties is discharged from their duty and the third party is substituted.

Question 28

A **requirements** contract is a supply agreement in which the **seller promises to provide all of the buyer’s actual needs for certain goods during a set period, and the buyer agrees to purchase exclusively from that selle**r.

Answer 28

A **requirements** contract is a supply agreement in which the **seller promises to provide all of the buyer’s actual needs for certain goods during a set period, and the buyer agrees to purchase exclusively from that seller.**

Question 29

In a **requirements** contract, the seller must supply the buyer’s actual needs but not amounts that are unreasonably disproportionate to the buyer’s normal or stated requirements. **A sudden, excessive increase (like tripling an order) can be treated as a breach, allowing the seller to refuse performance.**

Answer 29

In a **requirements** contract, the seller must supply the buyer’s actual needs but not amounts that are unreasonably disproportionate to the buyer’s normal or stated requirements. **A sudden, excessive increase (like tripling an order) can be treated as a breach, allowing the seller to refuse performance.**

Question 30

**Strict liability** means a party can be held legally responsible for harm even without negligence or intent to harm. A seller automatically gives implied warranties of title, merchantability, and sometimes fitness for a particular purpose, unless disclaimed. **Strict liability is a tort concept, not an implied warranty** in a sale of goods.

Answer 30

**Strict liability** means a party can be held legally responsible for harm even without negligence or intent to harm. A seller automatically gives implied warranties of title, merchantability, and sometimes fitness for a particular purpose, unless disclaimed. **Strict liability is a tort concept, not an implied warranty** in a sale of goods.

Question 31

A liquidated damages clause in a real estate contract (e.g., forfeiture of the purchaser’s down payment) is enforceable only if the amount is a reasonable estimate of the probable loss.

Answer 31

A liquidated damages clause in a real estate contract (e.g., forfeiture of the purchaser’s down payment) is enforceable only if the amount is a reasonable estimate of the probable loss.

Question 32

If someone agrees to sell a one-of-a-kind item (like a rare coin) and then backs out, money alone won’t fix it—you can’t just buy the same thing elsewhere. The court can order the seller to go through with the deal and hand over the item. That court order is called specific performance.

Answer 32

Specific performance is used when money can’t replace what was lost. In this case the coin is unique, so cash damages wouldn’t let the buyer get an identical coin. Courts will order the seller to deliver the exact item promised instead of just paying money.

Question 33

For goods stored in a warehouse, the risk of loss transfers to the buyer when a negotiable document of title is signed by the buyer

Answer 33

Bell negotiated warehouse receipt to Shark

Question 34

If someone is too intoxicated, the contract they sign is voidable by them, provided the other party knew they were drunk

Answer 34

If someone is too intoxicated, the contract they sign is voidable by them, provided the other party knew they were drunk

Question 35

A promise can still be enforced even without consideration when promissory estoppel applies. If someone reasonably relies on the promise and spends or commits resources because of it,and they would suffer a loss if it’s not kept, then a court can enforce the promise to prevent unfairness.

Answer 35

Example: a charity spends money after relying on a donor’s pledge—the donor’s promise is binding despite no consideration.

Question 36

A buyer in a fixed-quantity contract must take and pay for the full amount. Falling demand or market shifts don’t qualify as commercial impracticability, which **excuses performance only for unforesee**n events that make performance impossible, not merely unprofitable.

Answer 36

A buyer in a fixed-quantity contract must take and pay for the full amount. Falling demand or market shifts don’t qualify as commercial impracticability, which **excuses performance only for unforesee**n events that make performance impossible, not merely unprofitable.

Question 37

Courts do not order **specific performance of personal services.** **Specific performance is limited to unique goods or real estate.** A service contract breach is remedied by money damages, not forcing the person to finish the work.

Answer 37

A tree-removal contractor quits after cutting the trees; the owner can’t compel completion—specific performance is barred.

Question 38

An **accountant’s client can sue for ordinary negligence (failure to exercise due professional care) and breach of contract (failure to perform the engagement as agreed).** To **win on gross negligence or fraud**, the client must prove **reckless disregard or intent to deceive**—higher standards not met here.

Answer 38

An **accountant’s client can sue for ordinary negligence (failure to exercise due professional care) and breach of contract (failure to perform the engagement as agreed).** To **win on gross negligence or fraud**, the client must prove **reckless disregard or intent to deceive**—higher standards not met here.

Question 39

A contract forms when an offer is accepted within the stated time, even if the seller has already sold to someone else. If the property has passed to a good-faith buyer, **the original offeree’s remedy is damages only**, not specific performance.

Answer 39

A contract forms when an offer is accepted within the stated time, even if the seller has already sold to someone else. If the property has passed to a good-faith buyer, the **original offeree’s remedy is damages only**, not specific performance.

Question 40

**Anticipatory repudiation applies even if the agreement is oral, for personal services, or for a short duration, as long as the contract is otherwise valid.** The non-breaching party **can sue right away** once the other side clearly states they won’t perform.

Answer 40

**Anticipatory repudiation applies even if the agreement is oral, for personal services, or for a short duration, as long as the contract is otherwise valid.** The non-breaching party **can sue right away** once the other side clearly states they won’t perform.

Question 41

If the **subject of a contract is destroyed** without fault, the duty to perform is discharged. The **contract is not void** (it was valid when made).

Answer 41

If the **subject of a contract is destroyed** without fault, the duty to perform is discharged. The **contract is not void** (it was valid when made).