Contracts

Question 1

How does the UCC “battle of the forms” rule work in a contract with CONFLICTING terms between merchants?

Answer 1

Acceptance is still effective even if it contains conflicting terms different from terms of the offer

Conflicting terms are cancelled out by the knock-out rule and the UCC’s gap-filling provisions will be used

Question 2

Under the UCC, what 2 ways can a seller accept an offer (eg purchase order) from a buyer?

Answer 2

(1) by shipping the goods; acceptance is effective immediately and creates contract w/ terms of offer

(2) by promising to ship the ordered goods; acceptance is effective when the oral promise is made or when written promise is sent

Question 3

How does the UCC “battle of the forms” rule work in a contract with NEW terms between merchants?

Answer 3

Acceptance of offer is effective even if acceptance contains new terms

When parties are both merchants, new terms will become part of contract unless:
(1) offer requires offeror’s assent to new terms
(2) offeror objects w/in reasonable time
OR
(3) new terms materially alter contract

Question 4

What 3 types of evidence does the UCC parol evidence rule permit to be used to explain or supplement terms of a final written agreement?

Answer 4

(1) course of performance (highest preference): sequence of conduct relevant to understanding agreement if (a) agreement involves repeated occasions for performance by a party and (b) other party accepts performance w/o objection

(2) course of dealing: sequence of conduct concerning previous transactions b/w parties to establish common basis of understanding

(3) trade usage (lowest preference): practices or methods in the parties’ industry/business practiced w/ enough regularity to justify expectation of practice

Question 5

Under the UCC, the impracticability doctrine will excuse a seller’s non-performance if what 3 elements are met?

Answer 5

(1) unanticipated/extraordinary event made it impossible or impracticable for seller to perform as agreed
(3) nonoccurrence of event was basic assumption of K
AND
(3) seller did not assume the risk of the event’s occurrence

Question 6

How can an implied-in-fact contract be created?

Answer 6

Created by party’s conduct or failure to act if the party:
(1) intentionally engages or fails to engage in conduct
AND
(2) knows or has reason to know that asset can be inferred from their conduct

Question 7

When an owner breaches a construction contract during construction, what may the builder recover?

Answer 7

Lost profits + costs incurred

MINUS loss avoided (such as by resale or using materials for another job)

Question 8

Under the UCC, when may a buyer reject a shipment under an installment contract?

Answer 8

(1) shipment substantially impairs value of installment
(2) cannot be cured

Question 9

Under the UCC, when must a buyer accept a shipment under an installment contract?

Answer 9

(1) conforming shipment
(2) nonconforming shipment IF seller promises to cure

Question 10

Under the UCC, when can a buyer cancel future installments under an installment contract?

Answer 10

Can cancel future installments if one or more nonconforming shipment substantially impairs value of the whole contract

Question 11

Under the UCC, when can a buyer NOT cancel future installments under an installment contract?

Answer 11

(1) accepts nonconforming shipment without notice of cancellation

(2) brings action only for past installments

(3) demands performance of future installments

Question 12

What are 5 ways an offer may be terminated?

Answer 12

(1) revocation & constructive revocation (offeree learns information inconsistent w/ offer)

(2) rejection

(3) counteroffer

(4) offeror dies or becomes incapacitated

(5) reasonable amount of time has passed with no acceptance

Question 13

When a promise lacks consideration, what does the promissory estoppel doctrine state?

Answer 13

Promise may still be enforced if:

(1) promisor should reasonably expect promise to induce action or forbearance from promisee

(2) promise does induce to the promisee’s detriment

(3) injustice can be avoided only by enforcing the promise

Question 14

What are the 3 elements of a quasi-contract/implied-in-law contract?

Answer 14

When a contract lacks consideration, it may be considered a quasi-contract and may be enforced if:

(1) P confers a measurable benefit on D

(2) P reasonably expected to get paid

(3) would be unfair to let D keep benefit without paying

Question 15

How can SOF be satisfied by writing?

Answer 15

When it is determined that K falls within SOF, must determine if it has been satisfied. Writing will satisfy SOF if the writing:

(1) signed by the party against whom
enforcement is sought

(2) shows contract was formed

(3) includes the requisite terms
(a) UCC = parties, subject, quantity
(b) CL = parties, subject, quantity and price

Question 16

Regardless of whether there is a writing, how can a service contract under the 1 year provision satisfy SOF?

Answer 16

Under common law, FULL performance of service contract by either side satisfies SOF

Part performance will not

Question 17

Regardless of whether there is a writing, how can a real estate contract satisfy SOF?

Answer 17

Can satisfy SOF if the buyer performs at least 2 of the following:

(1) takes possession of property

(2) makes payment in full or in part

(3) makes substantial improvements to land

Question 18

What are the 4 ways that a UCC contract for $500 or more satisfy SOF?

Answer 18

(1) performance: satisfied for quantity of goods for which payment has been made and accepted or which have been received and accepted

(2) admission in court: satisfied if party against whom enforcement is sought admits in court that contract was made

(3) written confirmation b/w merchants: satisfied if (a) after oral agreement b/w merchants (b) either party sends signed, written confirmation of oral contract AND (c) written confirmation is received by the other merchant (d) UNLESS party receiving confirmation gives written notice of objection within 10 days

(4) specially manufactured goods: satisfied when seller makes “substantial beginning” toward manufacture of custom goods that are to be specially made for buyer and not suitable for sale to others in ordinary course of seller’s business that reasonably indicate goods are for buyer

Question 19

What 2 elements are required for a court to enforce a liquidated damages clause?

Answer 19

(1) amount was reasonable at the time of contracting

(2) actual damages from the breach would be uncertain in amount and difficult to prove

Question 20

What 2 elements must be present for a delegation to be permitted?

Answer 20

(1) contract does not prohibit delegation

(2) the other party does not have some special interest in having the specific individual perform

Question 21

What are the 2 types of third-party beneficiaries?

Answer 21

(1) intended: receives a direct benefit from the contract b/c the parties intended

(2) incidental: receives an indirect benefit from contract even though there was no contractual intent to benefit them

Question 22

What is a divisible contract?

What is recovery upon breach for both parties?

Answer 22

Divisible K = contains multiple bargained-for exchanges that can be separately enforced

Recovery for breaching party = entitled to return performance for any completed or substantially performed promise

Recovery for non-breaching party = entitled to damages stemming from breach

Question 23

Under the UCC, what restitution damages may a buyer recover if a seller fails to deliver the promised goods or buyer rightfully rejects the goods?

Answer 23

Buyer is entitled to the return of any payment made on the goods as restitution