Contracts Flashcards

Question

What offers are irrevocable?

Answer 1

1. Option 2. UCC "Firm Offer Rule" 3. Reliance 4. Unilateral Contract

Answer 2

An offer cannot be revoked if the offeror has not only made an offer but also: 1. promised not to revoke or keep open AND 2. This promise is supported by payment or other consideration (option). * *An option is an offer + 2 * *No ceiling of time Common Law Rule

Answer 3

An offer cannot be revoked for up to three months IF: 1. Offer to buy or sell goods 2. Signed, written promise to keep the offer open AND 3. Promising Party is a merchant. * *Only for sale of goods * *Maximum time of 3 months

Answer 4

A person in business. Exception: COME BACK TO THIS

Answer 5

``` An offer cannot be revoked if there has been: 1. Reliance that is 2. Reasonably foreseeable AND 3. Detrimental ``` * *Usually a construction problem. * *When you see BID, you can almost take it as a given as an OFFER. * *When the supplies cannot be returned.

Answer 6

The start of performance pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete perfomance. - Unilateral/Performance - starting makes irrevocable - Unilateral/Mere Preparation - does not make irrevocable. ANY DOUBT GO WITH THIS ONE. * *Red Flag - "O's offer states that it can be accepted only by performance" - Offer -> Only By

Answer 7

Three ways 1. Counter offer 2. Conditional Acceptance 3. Additional terms to a common law contract.

Answer 8

Generally terminates the offer and creates a new offer. Where a counteroffer has been made there is no express contract unless that counteroffer has itself been accepted. Counteroffers need to be distinguished from bargaining. Bargaining does not terminate the offer. (Will you accept?) (if a question response) Counteroffers do not terminate options.

Answer 9

A conditional acceptance terminate the offer. Common Law: rejects and becomes a counteroffer that can be accepted by conduct. UCC: Reject ``` Look for: "I accept _______" - if - only if - provided - so long as - but - on condition that. ```

Answer 10

Rule: Can't add or change anything. Mirror Image Under a Common Law: a response to an offer that adds new terms is treated like a counteroffer rather than an acceptance. UCC Article 2 (No Mirror Image Rule): Seasonal expression of acceptance: A fact pattern in which terms is: 1. Offer to buy or sell goods AND 2. A response with additional or different terms.

Answer 11

1. Is there a contract? | 2. Is the additional term a part of the contract?

Answer 12

A response to an offer that adds additional or different terms, but does not make the new terms a condition of acceptance, is generally treated as an acceptance. Seasonal expression of acceptance. **Whether or not merchants does not matter here.

Answer 13

The additional term is not a part of the contract UNLESS both parties are merchants. EVEN IF, the additional term is not a party of the contract if the additional term is "material" or if the additional term is objected to by original offeror.

Answer 14

Look at the offer for information about how the offer was accepted and who accepted. 1. Method of Acceptance 2. Accepting Party

Answer 15

Offeror can control: 1. the method of acceptance. OR 2. the time that a distance acceptance is effective OR 3. Whether the offeree must give notice that it has been accepted by performance.

Answer 16

1. The offeree starts to perform. 2. Distance and delay in communications (Mailbox Rule) 3. The seller of goods sends the "wrong" goods.

Answer 17

Three characteristics. First, verbal offer, Second, no words in response, and Third, start of performance. General Rule: The start of performance is acceptance. Implied promise to perform and so there is a bilateral contract. Exception: Start of performance is not acceptance of unilateral contract offers. Completion of performance is required and that is the only way to accept

Answer 18

Four Rules: 1. All communications OTHER THAN ACCEPTANCE are effective only when received. - revocation, etc. 2. Acceptance is generally effective when mailed (mailbox rule) 3. If a rejection is mailed before an acceptance is mailed, then neither is effective until received. 4. You cannot use the mailbox rule to meet an option deadline. ``` Facts to look for: 1. People dealing from different cities. 2. They are not up to date on technology (Mail) 3. Differing Communications - when effective (Apply four rules) 4. ```

Answer 19

General Rule: Acceptance and breach Exception: Accommodation (i.e., explanation), counter off and no breach. - "Will this do"

Answer 20

1. A person who knows about the offer at the time she accepts. 2. Who is the person to whom it was made. Exception: Options being assigned.

Answer 21

Yes unless otherwise provided in the option.

Answer 22

1. Lack of consideration or a consideration substitute for the promise at issue 2. Lack of capacity of the person who made that promise; 3. Statute of Frauds; 4. Existing laws that prohibit the performance of the agreement; 5. Public Policy 6. Misrepresentations 7. Nondisclosure; 8. Duress; 9. Unconscionability; 10. Ambiguity of words of agreement; 11. Mistakes at the time of the agreement.

Answer 23

Legal Reason for Not Enforcing Agreement: Lack of Consideration or a Consideration Substitute Consideration is the terms of the agreement Bar Exam Strategy: 1. Identify the promise breaker. 2. Ask whether that person asked for something in return for her promise. - No consideration if not in exchange for something. 3. Look at the person who is trying to enforce the promise and ask what requested legal detriment that person sustained.

Answer 24

1. Bargain for 2. Legal Detriment 3. Promise as consideration 4. Adequacy of Conseration Most Likely: 1. Past Consideration 2. Pre-existing contractual or statutory duty rule (Common Law) 3. Part Payment as consideration for release, i.e., promise to forgive balance of debt.

Answer 25

Asked for by the promisor IN EXCHANGE for her promises. Consideration fact patterns have people doing stuff that they were asked to do.

Answer 26

Did the person have legal detriment.. Relied on money

Answer 27

Promise for Promise General Rule: Promise can be consideration for another Promise Exception: Illusory Promise - you reserve the right to terminate without commitment. LOOK UP THIS SHIT - almost always the wrong answer. Any kind of detriment it is not illusory.

Answer 28

Not relevant in contract law

Answer 29

General Rule: NOT consideration Exception: Expressly requested by promisor and exception of payment by promisee.

Answer 30

1. Common Law Approach | 2. UCC Approach

Answer 31

General Rule: Doing what you are already legally obligated to do is not new consideration for a new promise to pay you more to do merely that. The new consideration is required for contract modification. Exceptions: 1. Addition to or change in performance 2. Unforeseen difficulty so severe as to excuse performance. 3. Third Party Promise to pay.

Answer 32

Does not have a pre-existing legal duty rule. New consideration is not required to modify a sale of goods contract. Good faith is the test for changes to an existing sale of goods contract.

Answer 33

Key is whether debt is due and undisputed. If debt is due and undisputed, then part payment is NOT consideration for release.

Answer 34

Due - time to pay or past time to pay Undisputed - no disagreement to the terms.

Answer 35

A promise is legally enforceable even though there is no consideration if there is one of the following consideration substitutes: 1. A written promise to satisfy an obligation for which there is a legal defense (SoL) is enforceable without consideration. 2. Promissory Estoppel (detrimental reliance) 3. Seals

Answer 36

Elements: 1. Promise 2. Reliance that is reasonable, detrimental, and foreseeable, AND 3. Enforcement necessary to avoid injustice.

Answer 37

Consideration is where they were expressly requested to or not to do. Promissory Estoppel are about people doing stuff they were not asked to do.

Answer 38

If your state still recognizes seals as a consideration substitute, you state supplement will so state. Wax emblem, fixed to the parchment. Not on MBE.

Answer 39

Legal Reason for Not Enforcing Agreement: Lack of Promissor's Lack of Capacity

Answer 40

1. Infant 2. Mental incompetents (doesn't understand) 3. Intoxicated persons if other party has reason to know.

Answer 41

1. Right to disaffirm by person without capacity; 2. Implied affirmation by retaining benefits after gaining capacity (ratification) 3. Quasi-Contract Liability for Necessaries

Answer 42

The Defendant who lacks capacity can disaffirm. The Plaintiff's capacity is not in question.

Answer 43

Person retains the benefit from the time of infancy into the time of having capacity.

Answer 44

A person who does not have capacity is legally obligated to pay for things that are necessary such as food, clothing, medical care or shelter, but that liability is based on quasi-contract law, not contract law.

Answer 45

DEFINE THIS

Answer 46

COME BACK HERE so heavily tested. Very objective and you need objective proof ``` To satisfy you need: 1. Performance OR 2. A writing signed by the defendant. OR 3. Judicial Admission OR 4. Estoppel ```

Answer 47

1. Promises to Answer for the Debts of Another (surety) 2. Service Contract not "capable" of being performed within a year from the time of the contract. 3. Transfers of Interest in Real Estate (with exception of leases of year or less) 4. Sale of goods for $500 or more.

Answer 48

Proof other than just testimony that a contract exists.

Answer 49

"Answer for" is not merely a promise to pay someone else's debts, but rather a promise to pay another person's debts only if that person does not herself pay. **Look for a GUARANTEE Exception: "Main Purpose" - if the main purpose of the obligation allegedly guaranteed was to benefit the guarantor, then not even that guarantee is within the Statute of Frauds.

Answer 50

Statute of Frauds applies to: 1. Specific time period, more than a year 2. Specific time, more than a year from the date of contract. Statute of Frauds does not apply to: 1. Task (nothing said about time) 2. Life (work for rest of life) **Termination option is irrelevant. Because the test is whether it could be PERFORMED WITHIN A YEAR

Answer 51

Theoretically possible with unlimited resources; Ignore what actually happens; Key is what might have happened with unlimited resources

Answer 52

"Transfers of" - must be an transfer of an interest. Can be an easement, any interest of property. Lease must be more than 1 year.

Answer 53

Only thing you need to look for is $500.

Answer 54

Objective Proof: 1. Performance AND 2. Writing

Answer 55

- > An agreement within the Statute of Frauds - > Defendant files a motion to dismiss or a motion for Summary Judgment based on the Statute of Fraud Defense - > The Plaintiff can still get her day in court by providing objective evidence to quell the concern of Fraud.

Answer 56

1. Part performance satisfies the Statute of Frauds in transfers of real estate. 2. Full Performance in service contracts by either party satisfies the Statute of Frauds. 3. Part performance of a services contract does not satisfy the Statute of Frauds. **ALWAYS ON BAR 4. Seller's part performance of sales of goods contracts satisfy the Statute of Frauds to the extent of the part performance. 5. Seller's part performance of a contract for specially manufactured goods satisfies the Statute of Frauds as soon as the seller makes a "substantial beginning"

Answer 57

Requires two of the three: 1. Improvements to the land; 2. Payment 3. Possession

Answer 58

Look to see if question is about delivered goods or undelivered goods. Part performance satisfies Statute of Frauds to extent of part performance.

Answer 59

If the contract is for the sale of goods that are to be specially manufactured, then the Statute of Frauds is satisfied as soon as the seller makes a "substantial beginning"

Answer 60

The seller has done enough work that it is clear that what she is working on is specially manufactured, i.e., custom made or made to order.

Answer 61

TYPE THAT SHIT

Answer 62

Not every writings count. Anything other than a Sale of Goods, it must meet the All material term test. You need to look at who signed the agreement, IT MUST BE SIGNED BY THE DEFENDANT.

Answer 63

All material term test. The writing must be signed by the defendant with a limited exception for transactions between two merchants where there is a delay in responding

Answer 64

1. Who the people are? | 2. What they have agreed to do?

Answer 65

1. Indicate that there is a contract for the sale of goods. 2. Quantity term. 3. In writing. The writing must be signed by the defendant with a limited exception for transactions between two merchants where there is a delay in responding

Answer 66

1. Written proof of authorization to enter into contract for someone else; 2. Written proof of contract modification; 3. Contract Provisions requiring written modification.

Answer 67

Written authorization is required: 1. The Equal Dignity doctrine - Rules of Law require that the authorization must be in writing only if the contract to be signed is within the Statute of Frauds. - If contract has a legal requirement to be in writing, the authorization must be in writing.

Answer 68

Two Steps: 1. Look at the agreement with the alleged change AND 2. Determine whether the deal with the alleged change would be within the Statute of Frauds. If the deal with the alleged change would be within the Statute of Frauds, then the alleged modification agreement must be in writing.

Answer 69

Common Law: contract provisions requiring that all modification be in writing are not effective - ignore contract language. Under UCC: contract provisions requiring written modification are effective unless waived.

Answer 70

If the subject matter is illegal, the agreement is not enforceable. If the subject matter is legal, the agreement is enforceable if the plaintiff did not have reason to know of the Defendant's illegal purpose.

Answer 71

Courts can refuse to enforce because public policy. Look for an exculpatory agreement that exempts intentional or reckless conduct from liability or a covenant not to compete without a reasonable need or reasonable time and place limits.

Answer 72

Look for: 1. A statement of "fact" before the contract, 2. By one of the contracting parties or her agent; 3. That is false AND 4. Induces the contract. No wrongdoing required for material misrepresentations. Not enforceable * *Every word matters, * *you'll see "innocent or honestly", don't let it mislead you these matter.

Answer 73

Generally, a person making a contract has no duty to disclose what she knows. Wrongdoing requirement for nondisclosure as a defense. Look for fiduciary-like relationship or concealment.

Answer 74

1. Physical duress 2. Economic duress 3. Undue influence

Answer 75

- "bad guy" - improper threat which is usually threat to breach existing contract; AND - "vulnerable guy" - no reasonable alternative.

Answer 76

D has a contract to supply 1000 pounds of kosher grits to P for Chanukah sales in 2013. D refuses to perform this contract until P agrees to buy 4000 pounds of cheese grits in 2014. P has not other source of kosher grits and so agrees. D delivers the kosher grits. Can P get out of the agreement to buy 4000 pounds of cheese grits in 2014? Yes it is duress

Answer 77

To basic tests: 1. Unfair surprise and oppressive terms are 2. tested as of the time the agreement was made 3. by the Court

Answer 78

There will be no contract IF: 1. Parties use a material term that is open to a least two reasonable interpretations, AND 2. Each party attaches different meaning to the term, AND 3. Neither party knows or has reason to know the term is open to at least two reasonable interpretations. **There is likely are boats with the same name.

Answer 79

1. Mutual, Material Mistake of Existing Fact; | 2. Unilateral Mistake of Material Fact;

Answer 80

Relief for mutual mistake only if both parties are mistaken (not just uncertain) about existing facts (mistake is different from uncertainty). Even then, no relief for mistake if the person seeking relief bears the "risk of mistake". LOOK FOR THIS LANGUAGE IN AN ANSWER - The person who asserts that defense bore that risk of mistake. Contract Law: MISTAKES DONT MATTER, MIS-REPRESENTATIONS DO

Answer 81

A mistake is where both parties understand a wrong idea on their own. A misrepresentation is made by someone with knowledge

Answer 82

Generally, courts have been even more reluctant to allow a party to avoid a contract for a mistake by only one party. There will be relief for situations in which the other party had reason to know of the mistake, i.e., PALPABLE MISTAKE.

Answer 83

Risk of the mistake. Bearer of risk can void the agreement.

Answer 84

Third Issue: Terms of the Contract

Answer 85

Parole Evidence is used.

Answer 86

1. Final Written Contract | 2. Earlier Words of One or Both Parties

Answer 87

The underlying premise is that the final written version of a deal is replaces earlier agreements, negotiations and conversations.

Answer 88

Think as if they are evidence questions: 1. The issue is whether evidence is admissible AND 2. Admissibility often depends on the purpose for which the evidence is to be introduced.

Answer 89

1. Integration - do we have a written final agreement 2. Partial Integration - written and final but not complete - if term appears in a multiple choice answer it is probably wrong 3. Complete Integrations - written, final, complete - if term appears in a multiple choice answer it is probably wrong 4. Merger Clause - Persuasive but not inclusive 5. Parol Evidence

Answer 90

1. Words of the party (or parties) 2. Before integration, i.e. before agreement was put in written form 3. Oral or written

Answer 91

1. Changing/contradicting terms in the written deal; 2. Mistake in integration, i.e., clerical mistake; 3. Defenses, i.e., getting out of a written deal; 4. Ambiguity, i.e., explaining term in the written in the deal; 5. Adding to the Written Deal;

Answer 92

Evidence of earlier agreements cannot be considered for the purpose of contradicting the terms in the written contract. Not admissible.

Answer 93

A court may, however, consider evidence of such terms for the limited purpose of determining whether there was a mistake in integration, i.e. a mistake in reducing the agreement.

Answer 94

The parol evidence rule does not prevent a court form considering evidence of earlier words of the parties for the limited purpose of determining whether there is a defense to the enforcement of the agreement, such as misrepresentation, fraud, or duress.

Answer 95

The parol evidence rule does not prevent a court from considering evidence of earlier agreements to resolve ambiguities in the written contract.

Answer 96

The parol evidence rule prevents a court from considering evidence of earlier agreements as a source of consistent, additional terms unless the court finds; 1. That the written agreement was only a partial integration; OR 2. That the additional terms would ordinarily be in a separate agreement. **Only place where integration matters.

Answer 97

Random shit like the day of the week that contracts are entered into.. Be looking for these because it makes it wrong.

Answer 98

Conduct can also be a source of contract terms. Don't ignore

Answer 99

1. Course of Performance 2. Course of Dealing 3. Custom and Usage

Answer 100

1. Delivery obligation of seller of goods if delivery by common carrier. 2. Risk of Loss 3. Warranties of Quality

Answer 101

1. Shipment Contracts 2. Destination Contracts 3. Determining whether contract is a shipment or destination contract;

Answer 102

1. Get the goods to a common carrier 2. Makes reasonable arrangement for delivery AND 3. Notifies the buyer. In a shipment contract, the seller completes its delivery obligations before delivery is complete

Answer 103

The other possibility is that the contract is a destination contract, which means that the seller does not complete its delivery obligation until the goods arrive at the destination.

Answer 104

Most contracts with delivery obligations are shipment contracts. If you see FOB (free on board) followed by the name of a city - if city is not where seller is - Shipment Contract - other city - Destination Contract.

Answer 105

1. After the contract has been formed, but before the buyer receives the goods, 2. The goods are damaged or destroyed AND 3. Neither the buyer nor the seller is to blame.

Answer 106

If the risk is on the buyer, he has to pay the full contract price for the lost of damaged goods. If the seller has the risk of loss, no obligation on the buyer and possible liability on the seller for nondelivery.

Answer 107

Do rule #1, if it does not apply, then #2 and if it does not apply, then #3 and so forth Four Rules: 1. Agreement: agreement of the parties controls. 2. Breach: breaching party is liable for any UNINSURED loss even though breach is UNRELATED to problem. 3. Common Carrier Delivery: risk of loss shifts from the seller to buyer at the time the seller completes its delivery obligation. **FAVORITE TESTED 4. "Catch-all" **TITLE is irrelevant. If in a sale of goods question, an answer has "TITLE", treat this at a wrong answer.

Answer 108

The determining factor is whether the seller is a merchant. Risk of loss shifts from a merchant-seller to the buyer on the buyer's "receipt" of the goods; Risk of loss shifts from a non-merchant seller when he or she "tenders" the goods. BUYER BEING A MERCHANT IS IRRELEVANT

Answer 109

Possession of the article or goods.

Answer 110

Seller makes goods available

Answer 111

1. Express 2. Implied Warranty of Merchantability 3. Implied Warranty of Fitness for a Particular Purpose Three facts to look for: 1. Sale of goods 2. Buyer has the goods 3. Buyer is unhappy with the quality of the goods

Answer 112

Look for words that promise, describe or state facts. Distinguish from sales talk which is more general, an option. Or, look for sample or model. **Not an opinion.

Answer 113

When any person buys any goods from any merchant, a term is automatically added to the contract by operation of law - that the goods are fit for the ordinary purpose for which such goods are used. Merchant means a person who sells goods of that kind.

Answer 114

Seller is a merchant WHICH HERE MEANS IT DEALS IN GOODS OF THAT KIND

Answer 115

Goods are fit for ordinary purposes.

Answer 116

Buyer has particular purpose; (MOST IMPORTANT) - when told this, be aware of warranties Buyer is relying on seller to select suitable goods; Seller has reason to know of purpose and reliance

Answer 117

Goods fit for particular purpose

Answer 118

1. Statue of Limitations; 2. Privity; 3. Buyer's Examination of the Goods; 4. Disclaimer e.g., there are no warranties. 5. Limitation of Remedies

Answer 119

There is a four-year statute of limitations AND Generally the statute starts running on possible warranty actions when the "tender of deliver is made," not when the buyer learns that the product is defective

Answer 120

Plaintiff made a contract with the Defendant

Answer 121

Look for a fact pattern that tells you that the buyer has examined the goods. There are no implied warranties as to defects which would be obvious on examination.

Answer 122

Contract language that eliminates warranties: 1. Express Warranties generally cannot be dislciamed. 2. Implied Warranties of Merchantibility and Fitness can be disclaimed in EITHER of the following ways; TESTED ON THIS ONE - Conspicuous langues of disclaimer, mentioned merchantibility OR - "AS IS" OR "WITH ALL FAULTS" **bar exam certainty **Does not have to be conspicuous **Only effects implied warranties

Answer 123

Does not eliminate warranties, simply limits or sets recovery for for any breach of warranty; 1. Possible to limit remedies even for express warranties; 2. General Test is unconscionability 3. Prima Facie unconscionable if breach of warranty on consumer goods causes

Answer 124

Fourth Issue: Performance of Article 2 Contract

Answer 125

1. Perfect Tender 2. Rejection of the Goods 3. Cure 4. Installment Contracts 5. Acceptance of Goods (Important) 6. Revocation of Acceptance of the goods

Answer 126

Need to know three things: 1. Only applies to sales of goods; (Article 2) 2. Does not mean that the seller's performance must be perfect; rather, the goods and the delivery must conform to the contract terms; 3. A less than "perfect tender" by the seller generally gives the buyer the option of rejection of the delivered goods, so long as the buyer acts in good faith. **Triggers possibility of Rejection of the Goods

Answer 127

Need to know Four things: 1. You need to be able to distinguish rejection of an offer from rejection of the goods; 2. If the seller does not meet the perfect tender standard, the buyer has the option to retain and sue for damages OR reject "all or any commercial unit" and sue for damages; 3. The buyer must take reasonable care of the rejected goods and should not continue to use rejected goods. 4. This rejection alternative is limited by cure, installment contracts and acceptance.

Answer 128

In some instances, a seller who fails to make a a perfect tender will be given a "second chance," an option of curing. 1. Seller's reasonable ground to believe would be acceptable, perhaps with a money allowance - Look for information in the question about prior deals between that buyer and seller 2. Time for performance has not yet expired **Note that a seller does not always have the opportunity to 'cure', and that the buyer cannot compel the seller to cure.

Answer 129

One were the agreement requires or authorizes: 1. delivery of the goods in separate lots 1. to be separately accepted The buyer has the right to reject an installment only where there is a substantial impairment in that installment that can't be cured. **Be sure to know the difference between 1. entering into an installment salkes contract that provided for multiple deliveries and acceptances AND 2. Buying something on credit and paying for it monthly

Answer 130

If the buyer accepts the goods, it cannot later reject them. One way street.

Answer 131

Payment without opportunity for inspection is not acceptance.

Answer 132

Rejection must be timely. Failure to reject after the buyer had reasonable time to reject is acceptance.

Answer 133

Effect of buyer's keeping goods is implied acceptance **Look for Buyer's keeping the goods without objection; more specifically look for a fact patter that states when buyer first received goods and when buyer first complained to seller.

Answer 134

In limited instances we allow this.

Answer 135

1. Non-conformity substantially impairs the value of the goods, AND 2. Excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction AND 3. Revocation within a reasonable time after discovery of nonconformity.

Answer 136

Rejection: 1. Timing - early, before acceptance 2. Standard - Generally, perfect tender Revocation: 1. Timing - later, after acceptance 2. Standard - Substantial impairment (really bad wrong) Both: Other Requirements - 1. seasonably notify seller 2. hold the goods for seller 3. follow reasonable seller instructions Consequences - 1. Goods back to seller 2. No buyer payment obligation.

Answer 137

Non-Monetary Remedies (In Rem) 1. Specific performance/injuction 2. Seller's Reclamation from an insolvent buyer of goods; 3. Entrustment

Answer 138

Generally going to be the wrong answer on the bar. Equitable Remedy: look for adequacy of remedy at law or unclean hands, or other parties' equities. 1. Contracts for sale of real estate 2. Contracts for sale of goods: UNIQUE Goods: - antiques, art, custom-made, or other circumstances. - Not the same thing as expensive. 3. Contract for Services: - No specific performance, possible injunctive relief.

Answer 139

No general right of an unpaid seller to get its goods back. Key Facts: 1. The buyer must have been insolvent at the time that it received the goods, AND 2. The seller demands return of goods within 10 days of receipt (reasonable time rule if, before delivery, there had been an express representation of solvency by the buyer; AND 3. The buyer still has goods at time of demand.

Answer 140

Multiple dates will be given. Make sure you go 10 days from receipt.

Answer 141

The owner makes the choice to entrust the person who stores or repairs. They end up selling it. The person gets the article and the Owner has to go after the person the entrusted.

Answer 142

Policy: Compensate Plaintiff, not punish defendant

Answer 143

1. Expectation 2. Incidental 3. Consequential 4. Avoidable 5. Certainty 6. Reliance 7. Liquidated

Answer 144

1. General Approach | 2. Damages Rules for Sales of Goods

Answer 145

Money damages are based on protection of the expectation bases. People who contract expect no breach. What to look for? 1. Look to facts for dollar value of performance without breach 2. Look to facts for dollar value of performance with breach; AND 3. Compare the two to determine the amount of damages.

Answer 146

First word is COMPENSATE. The purpose of contract damages is to compensate the Plaintiff. Second word is EXPECTATION. The various money damages rules compensate the non-breaching party but protecting her expectation. Third word is SAME DOLLAR POSITION AS IF NO BREACH. This means our goal is to put the Plaintiff in the same dollar position as if there has been no breach.

Answer 147

GO BACK AND LOOK UP. They are expectation damages.

Answer 148

Part 7 Article 2: puts the innocent party where it would have been had been had the contract been performed. Expectation ``` Three Relevant Facts: 1. Who breached? 2. Who has the goods, AND 3. Was there a later "replacement" deal ```

Answer 149

1. Seller breaches, buyer keeps the goods (FMV if perfect) -- (fair market value as delivered OR cost of repair) = damages 2. Seller breaches, seller has the goods: (Market Price at time of DISCOVERY of breach -- contract price) OR (Reasonable replacement price -- contract price) **Whichever is greater "--" -> Minus

Answer 150

1. Buyer breaches, buyer keeps the goods: (contract price) 2. Buyer Breaches, seller has the goods: (Contract Price - Resale unless seller cannot resell in which case the seller can recover the contract price and in some situations provable lost profits.

Answer 151

LOOK AT HYPO 150 ON PAGE 50

Answer 152

1. Am I doing 149 where the answer is 0 OR 2. Am I doing 150 where the answer is provable lost profits **Look for regular inventory "off the rack"

Answer 153

1. Incidental 2. Consequential 3. Less Avoidable Damages

Answer 154

Cost incurred in dealing with the breach such as costs of storing rejected goods in a sale of goods or finding a replacement in a service contract ALWAYS RECOVERABLE

Answer 155

Damages limited to damages arising from Plaintiff's special circumstances and recovery of consequential damages is limited to sitatuations in which the Defendant had reason to know of these special circumstances. SPECIAL CIRCUMSTANCES is the KEY

Answer 156

No recovery for damages that could have been avoided without under burden on Plaintiff. Burdens of pleading and proof on Defendant. UNLIKELY ANSWER ON BAR EXAM

Answer 157

Look for a pattern involving a services contract and plaintiff engaged in new business or a new business activity. - something that hasn't been done. Consider reliance recovery as an alternative to expectation.

Answer 158

Contract provisions regarding damages as a fixed AMOUNT or METHOD. Tests: 1. Damages were difficult to forecast at time contract was made. AND 2. Provision is a reasonable forecast. If there is a range it will probably

Answer 159

Sixth Issue: Excuse of Non-Performance of Contract Because of Something That Happened After Contract Was Made

Answer 160

Look for information in a fact patter about: 1. Nonperformance of contract AND 2. Something happened after the Contract

Answer 161

P contracts to paint O's house on Saturday for $1000. P does not paint the house. Obviously, O does not have to pay P O is excused from performing because of P's nonperformance

Answer 162

1. Unambiguous 2. Excuse 3. Time of Recovery 4. Retraction of Anticipatory Repudiation (ALWAYS ON BAR)

Answer 163

An unambigous statement or conduct: 1. that the repudiating party will not perform 2. made prior to the time that performance was due. Causes Excuse

Answer 164

General Rule: Early breach gives rise to an IMMEDIATE claim for damages for breach unless the claimant has already finished her performance. Exception: If you've finished work before breach, you have to wait until you're paid.

Answer 165

It can be withdrawn so long as there has not been a material change in position by the other party. If the repudiation is timely retracted, the duty to perform is reimposed but performance can be delayed until adequate assurance is provided.

Answer 166

UCC only! Sale of goods Insecurity caused by uncertainty If the words or conduct of one party gives: 1. Reasonable grounds for insecurity of performance; AND 2. Written demand for adequate assurance; AND 3. Commercially reasonable to stop performance.

Answer 167

1. Article 2 and Perfect Tender Rule | 2. Common Law and Material Breach Rule

Answer 168

REVIEW THIS RULE

Answer 169

1. First, damages can be recovered for any breach; 2. Second, only a material breach by one guys excuses the other guy from performing a contract governed by Common Law; 3. Third, whether a breach is material is a fact question; 4. Fourth, if there is a substantial performance then the breach is not material. IF the breach is material, THEN the performance was not substantial

Answer 170

Opposite of material breach.

Answer 171

1. Material breach because of the quality of performance; - Major screw up 2. Material breach because of the quantity of performance; - Common Law Contract - Person breaches after doing only a part (less than HALF) 3. Divisible Contract Corollary Exception

Answer 172

In a "divisible contract" there can be a contract law recovery for substantial performance of a divisible part even though there has been a material breach of entire contract. ON THE BAR, look at whether price is stated as a lump sum or on a per performance basis.

Answer 173

LOOK AT 169 IS ON EXAM

Answer 174

1. What is an express condition; 2. How can you identify an express condition; 3. How can an express condition be satisfied; AND 4. How can an express condition be excused.

Answer 175

1. Language in the CONTRACT; 2. Limits obligations created by other contract language Triggering words: - IF - PROVIDED THAT - SO LONG AS - SUBJECT TO - IN THE EVENT THAT - UNLESS - WHEN - UNTIL - ON CONDITION THAT

Answer 176

General Rule: Strict compliance is required for "satisfaction" of a condition. Exception: Condition of personal satisfaction of one of the parties - honest and good faith dissatisfaction. - Reasonable person standard

Answer 177

Conditional Acceptance is words from one party responding to an offer. Express Condition is LANGUAGE IN THE CONTRACT.

Answer 178

1. Waiver | 2. Prevention

Answer 179

Identify the person who benefits from or is protected by the express condition. Then look for a statement by that person giving up the benefits and protection of the express condition.

Answer 180

Look for the person protected by the express condition hindering or preventing the occurrence of the express condition.

Answer 181

Different Facts: PAGE 59 Same Law:

Answer 182

1. Rescission 2. Accord and Satisfaction (substituted performance) 3. Modification (substituted agreement) 4. Novation

Answer 183

The key is whether performance is still remaining from each of the contract parties (executory).

Answer 184

Things to know 1. What an accord and what a satisfaction is? - Accord questions will have an agreement by the parties to an already existing obligation to accept a different performance in satisfaction of the existing obligation. AND 2. The effect of making of the accord AND 3. The effect of getting no satisfaction - If the new agreement (the accord) is performed (satisfaction), then performance of the original obligation is excused. - If the accord is not performed, then the other party can recover on either the the original OR the accord. ******LOOK FOR NEW AGREEMENT THAT SAYS "IF" AND "THEN"

Answer 185

An agreement by parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation. Mere making of a substituted agreement excuses.

Answer 186

An agreement between BOTH parties to an existing contract to the substitution of a new party, i.e., same performance, different party. Three parties

Answer 187

Novation excuses the contracted for performance of the party who is substituted for OR replaced.

Answer 188

Novation requires the agreement of BOTH parties to the original contract, and excuses the person replaced from any liability for nonperformance. Delegation does not require the agreement of both parties and does not excuse.

Answer 189

Bar Exam Analysis on this point: 1. Which party is arguing that her performance is excused; 2. What her performance is; 3. Whether post-contract occurrence affected her ABILITY to perform, not just the COST of her performance. **More often than not, the answer will be that the occurrence does not effect the ABILITY but just the COST.

Answer 190

1. Damage or destruction of subject matter of contract; 2. Death AFTER contract; 3. Subsequent Law or Regulation

Answer 191

Common Law: Follow the bar analysis to see if the ABILITY is effected by the occurrence. - Look at what the performance is. Article 2: If sale of goods do risk of loss first. - Risk of loss on the buyer - buyer pays - Risk of loss on seller - buyer does not have to pay and for seller to be excused it must a SPECIFIC GOOD not a generic good that can still be acquired.

Answer 192

General Rule: Effect of death does NOT make a person's contract obligations disappear. Exception: Death of a party to contract who is "special" person excuses performance.

Answer 193

1. Later law makes performance of contract illegal - excuse by impossibility. - still physically possible 2. Later law makes mutually understood purpose of contract illegal - excuse by frustration of purpose. ***Both parties need to know.

Answer 194

Where the law gets in the way of the general purpose of the contract.

Answer 195

Seventh Issue: Third Party Problems Those situations where people who did not contract has rights or duties under contracts they did not make. Look for two parties contracting with the common intent of benefit to a third party. **Life insurance

Answer 196

1. ID a problem as a third-party beneficiary problem; 2. Use the vocabulary of third-party beneficiary law, 3. Deal with efforts to cancel or modify a third-party beneficiary contract; 4. Figure out who can sue whom; 5. Assert any available defenses.

Answer 197

Two parties contracting with the common intent of benefit to a third party.

Answer 198

1. Third-Party Beneficiary 2. Promisor 3. Promisee 4. Intended/Incidental 5. Creditor/Donee

Answer 199

Not a party to the contract. Able to enforce contract others made for her benefit.

Answer 200

Look for person who is making the promise that benefits the third party

Answer 201

Look for person who obtains the promise that benefits the third party

Answer 202

Only intended beneficiaries have contract law rights. Intent of the two parties to contract determines whether intended or incidental. **Named in the Contract on MC questions

Answer 203

Creditor must be a creditor before becoming beneficiary. Donee is when there is nothing like that.

Answer 204

1. Beneficiary can recover from promisor 2. Promissee can recover from promisor; 3. General Rule: Beneficiary cannot recover from promisee 4. Limited Exception: Creditor beneficiary can recover from promisee BUT ONLY on pre-existing debt.

Answer 205

The test is whether the third party knows of AND has relied on or assented as requested. If so, her rights have vested and the contract cannot be canceled or modified without her consent unless the contract otherwise provides.

Answer 206

If the Third Party beneficiary sues the promisor, the promisor can assert any defense that he would have had if sued by the promisee.

Answer 207

1. What an assignment of a contract is; 2. The vocabulary of assignment; 3. The limitations on assignment; 4. The requirements for assignments; 5. The rights of assignee; 6. How to deal with multiple assignments.

Answer 208

A transfer of rights UNDER A CONTRACT. Two Separate Steps; 1. Contract between only two parties; AND 2. One of the parties later transfers rights under that contract to a third party.

Answer 209

1. Assignor 2. Assignee 3. Obligor

Answer 210

Party to the contract who later transfers rights under the contract to another.

Answer 211

Not a party to the contract. Able to enforce the contract because of the assignment.

Answer 212

Other party to the contract.

Answer 213

1. If there is a contract provision regarding assignment; | 1. If there is nothing in fact patter about contract language regarding assignability

Answer 214

If the fact pattern includes language of contract regarding assignability, determine whether the contract; 1. prohibits assignments OR 2. Invalidates assignments

Answer 215

Language of prohibition takes away the right to assign but not the power to assign, which means that the assignor is liable for breach of contract, BUT an assignee who does not know of the prohibition can still enforce the assignment. **"rights hereunder are not assignable""did not know"

Answer 216

Language of invalidation takes away both the right to assign and the power to assign so that there is a breach by the assignor and no rights in the assignee. **"all assignment of rights under this contract are void"

Answer 217

Even if a contract does not in any way limit the right to assign, common law bars an assignment that SUBSTANTIALLY CHANGES the duties of the obligor; 1. Assignment of right to payment (never substantial) 2. Assignment of right to contract performance other than right to payment (usually substantial change on bar)

Answer 218

General Rule: Consideration is NOT required, but gratuitous assignment can be revoked. Exception: If consideration is given to assignor for assignment, cannot be revoked.

Answer 219

1. Assignee can recover from the obligor; 2. Assignor for consideration CANNOT recover from obligor; (MOST LIKELY ASKED) 3. Obligor has same defenses against assignee as it would 4. Payment by obligor to assignor is effective until obligor knows of assignment. Similarly, modification agreements between obligor and assignor are effective if the obligor did not know of the assignment. 5. Implied Warranties of Assignor in an Assignment for Consideration.

Answer 220

In an assignment for consideration, the assignor warrants: 1. The right assigned actually exists; 2. The right assigned is not subject to any then existing defense by the obligor; AND 3. The assignor will do nothing after the assignment to impair the value of the assignment.

Answer 221

1. ALL gratuitous assignments - General Rule: Last assignee generally wins. 2. Multiple Assignments for Consideration - General - First assignee for consideration wins - VERY Exception - Subsequent takes IF 1. He does not know of the earlier assignment; AND 2. He is the first to obtain: - Payment - A judgment - A novation OR - Indicia of ownership (Four horsement rule)

Answer 222

1. What is a delegation? 2. Relationship of assignment and delegation; 3. Which duties are delegable AND 4. What are the consequences of delegation? **Deals with the burden of the performance.

Answer 223

Party to a contract transfers work under that contract to a third party.

Answer 224

Page 73. Assignment is a transfer of rights. Delegation is a transfer of duty.

Answer 225

General Rule: Contractual duties are delegable. Limitations: No permitted IF 1. Contract prohibits delegations OR prohibits assignments OR 2. "Personal services contract" that call for VERY SPECIAL skills.

Answer 226

1. Delegating party ALWAYS REMAINS liable. | 2. Delegatee liable only if she receives consideration from delegating party.

Contracts Flashcards

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