MEE One Sheet

Question 1

Key principle #1: Article 2 of the Uniform Commercial Code (UCC) is tested about 1/2 the time there’s a
Contracts & Sales MEE question.

Answer 1

• State this if Article 2 is tested: “Article 2 of the Uniform Commercial Code (UCC) applies to transactions in goods.
• Goods are ‘things moveable’ at the time of identification to the K.
• A K under Article 2 may be made in ‘any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a K.’ ”

Question 2

Key principle #2: Contract formation is heavily tested. Know that offer, acceptance, and consideration are
needed to form a contract.

Answer 2

• Offer: A person makes an offer when the person communicates to another a statement of
  “willingness to enter into a bargain” so that the other understands that “his assent to the bargain is
  invited & will conclude it.”
• The terms of an offer need to be reasonably certain (as to parties, subject matter, price, etc.).
• Counteroffer: at CL, a statement is a counteroffer, rather than an acceptance, when the terms of the initial offer are changed (mirror-image rule).
• Promise to hold offer open: Generally, an offer may be revoked before acceptance.
• A promise to hold an offer open requires consideration in order to be binding (unless UCC firm offer exception applies)

Question 3

2:Acceptance:

Answer 3

• An acceptance is a manifestation of assent to the terms of an offer made in a manner invited by the offer. It is effective upon dispatch (the mailbox rule). (July 2007)
• Compare—rejection: A rejection is a manifestation of intent to not accept the offer. It terminates offeree’s power to accept an offer. It is effective when received by the offeror.
• Note: if a rejection is sent & then an acceptance is sent, whichever the recipient receives first is effective.

Question 4

2: Consideration

Answer 4

• Consideration: Consideration is a legal detriment/ bargained-for exchange. A promise to make a gift
  does not constitute consideration.
• Preexisting-duty rule: Under CL, promising to perform a legal duty already owed to a promisor is not valid consideration.
• Exceptions include if the duty is changed (even
  slightly), unforeseen circumstances, etc.
• Material benefit: some states recognize an exception to past consideration limitations in which a promise is made after receipt of a significant benefit (usually
  promise arises after a benefit received in an emergency).
• UCC: under the UCC, only good faith is needed to modify a K. (July 2014)
• Promissory estoppel is a substitute for consideration.
• If there is (1) a promise, (2) reliance
  that is foreseeable & justifiable, and (3) enforcement is necessary to avoid injustice, the promise will be enforced.

Question 5

2: Gap Fillers

Answer 5

• Gap fillers: A K for SOGs doesn’t fail b/c one/more terms are missing if parties intended to make a K & there is an appropriate remedy for breach.
• Gap fillers include course of performance, course of dealing, & trade usage

Question 6

Key principle #3: note the difference between performance obligations under common law and Article 2.

Answer 6

• Performance obligations: Under CL, a party must “substantially perform” its contractual obligations in order to demand performance (usually payment) from the other party.
• Cts will look at several factors to determine whether performance was substantial.
• Note that this is different from UCC Article 2, which requires perfect tender for one-shot deals.
• Exception—divisible Ks: A K is divisible so long as (1) it is apportionable & (2) parties would have contracted for each part separately.
• A party that performs one/more parts of the K may collect payment for those parts even if he does not substantially complete performance of his duties

Question 7

Key principle #4: note the difference between a buyer’s ability to reject goods vs. his revocation of
acceptance of goods.

Answer 7

• Rejection of goods: Buyer can generally reject goods for any reason under perfect-tender rule. (exceptions to this—ex. installment contracts.)
• Revocation of acceptance of goods: If buyer accepts goods, he can no longer reject them.
• But, buyer can revoke his acceptance of goods when:
  (1) the nonconformity substantially impairs the value to him;
  (2) he accepted goods b/c he had a reasonable belief the nonconformity would be cured (& it wasn’t), or he didn’t discover the nonconformity b/c nonconformity was difficult to discover, or b/c of seller’s assurances;
  (3) he revokes w/in a reasonable time after he discovers/should’ve discovered the nonconformity; and
  (4) he revokes b/f any substantial change in condition of goods which is not caused by their own defect.
• A buyer who revokes his acceptance may recover purchase price paid

Question 8

Key principle #5: know that the difference between anticipatory repudiation and prospective inability to
perform is truly one of degree.

Answer 8

• Anticipatory repudiation: This occurs when there is an unequivocal manifestation by one party to the other that the party cannot/will not perform its obligations under the K (a mere expression of doubt is not enough) & this statement is made b/g the repudiating party’s performance is due.
• The other party may wait for a reasonable time for performance/resort to any remedy for breach of K.

Question 9

5:Prospective inability to perform:

Answer 9

• This occurs when a party has reasonable grounds for insecurity that the other party is unable/unwilling to perform.
• This is merely doubt, it does not rise to the level of an anticipatory repudiation.
• Under the UCC, the party may then, in writing, demand adequate assurance of performance, & until she receives such assurance, may suspend her performance.
• If such assurance is not given w/in 30 days, the other party may treat it as a repudiation.

Question 10

5: Retracting a repudiation:

Answer 10

• Party who has repudiated can retract his repudiation unless the other party cancelled the K, materially changed his position in reliance on the repudiation, or indicated that she considers the repudiation to be final.

Question 11

Key principle #6: be familiar with the Statute of Frauds.

Answer 11

• State: “A K w/in SOFs satisfies that statute & is enforceable if it is evidenced by a writing signed by ‘the party to be charged,’ which:
  (1) reasonably identifies the subject matter of K,
  (2) is sufficient to indicate that K has been made, and
  (3) states w/ reasonable certainty essential terms of K.”
• Ks that are w/in the statute include (mnemonic=MYLEGS): Ks made in consideration of marriage, Ks that cannot be performed in a year, Ks for the sale of an interest in land, promises by an executor to pay a debt of an estate out of his personal funds, sale of goods for $500/more (subject to additional UCC rules, see next), & suretyship Ks

Question 12

6: UCC:

Answer 12

• A K for SOFs for a price of $500/more is not enforceable unless there’s a writing signed by the party against whom enforcement is sought that is sufficient to indicate that aK for SOGs has been made between the parties.
• The writing need not contain all terms of the K, but it’s not enforceable beyond the quantity of the goods shown.
• Exceptions to be aware of: merchant confirmatory memo, part performance, specially manufactured goods, & judicial admissions.

Question 13

Key principle #7: be familiar with duress, misrepresentation, and other contractual defenses.

Answer 13

• Duress: a contract is voidable when it is established that a party’s manifestation of assent is
  induced by an improper threat that leaves the party no reasonable alternative. (July 2014)
• Breach of express warranty: Under Article 2, affirmations of fact relating to the goods that are part
  of the basis of the bargain create express warranties that the goods will conform to those
  affirmations and descriptions. This warranty is breached if they do not conform

Question 14

Key principle #8: be familiar with general damage principles.

Answer 14

• General damages for breach of contract: State: “The normal measure of damages for breach of contract
  is expectation damages, which aim to give the nonbreaching party the benefit of his bargain.”
• Expectation damages must be foreseeable & proven w/ reasonable certainty. This is similar to the
  UCC rule, which puts the aggrieved party “in as good a position as if the other party had fully
  performed.”
• A buyer may recover difference between cost to “cover” by purchasing in good faith substitute goods & K price.
• Punitive damages: punitive damages are generally not recoverable in a breach of K action “unless conduct constituting the breach is also a tort for which punitive damages can be recovered.”
• Restitution (also called unjust enrichment/quantum meruit): a party may be able to recover restitution
  for any benefit conferred by way of part performance in excess of the loss that he caused by his own
  breach.
• Mitigation: as a general rule, a party cannot recover damages for a loss that the party could have avoided
  by reasonable efforts