1L 2SEM Contracts Final

Question 1

Implied Terms

Implied-in-fact

Answer 1

Term is implicit based on the parties’ agreement and conduct.

Question 2

Implied-by-law

Answer 2

Term is added by the court regardless of the parties’ actual agreement, usually to promote fairness or public policy.

Question 3

What is the rationale for implied terms?

Answer 3

1. To reflect probable intent of parties.
2. To promote fairness.
3. To uphold public policy.
4. To ensure economic efficiency.

Question 4

Wood v. Lucy – Rule and Reasoning?

Answer 4

A contract can have binding obligations even if certain promises are not explicitly stated but are instinct with an obligation imperfectly expressed (Cardozo’s famous phrase).

Question 5

What does Cardozo mean by “instinct with an obligation imperfectly expressed”? What was the rationale?

Answer 5

1. The agreement impliedly obligated Wood to work for mutual benefit.
2. Without reasonable efforts, the contract would be meaningless.
3. The court sought to effectuate the parties’ intentions.

Question 6

What factors did the court rely on to support implying the reasonable efforts term?

Answer 6

1. Mutual intent: Parties’ purpose would be defeated without the term.
2. Consideration: Wood’s exclusive rights implied a duty to act.
3. Fairness and avoiding illusory promises.

Question 7

Difference between “reasonable efforts” and “best efforts”?

Answer 7

1. Common Law (Wood): Only reasonable efforts required.
2. UCC § 2-306(2): Requires best efforts unless otherwise agreed.

Question 8

Was Cardozo’s implied promise in Wood implied in fact or implied in law?

Answer 8

• Implied in fact.
• Based on the nature and purpose of the parties’ agreement.

Question 9

Why does it matter if a term is implied in fact vs. implied in law?

Answer 9

• Implied-in-fact requires showing the parties’ actual or probable intent.
• Implied-by-law requires showing a term is necessary for fairness, public policy, or efficiency, even absent intent.

Question 10

When does UCC §2-306(2) apply?

Answer 10

• Applies to exclusive dealing contracts for goods governed by the UCC.
• Imposes obligation of best efforts by both seller and buyer.

Question 11

Would UCC §2-306(2) have applied to Wood v. Lucy if it existed in 1917?

Answer 11

• Probably yes.
• Wood’s marketing efforts and Lady’s exclusivity fit UCC’s exclusive dealing concept.

Question 12

Leibel v. Raynor – Holding?

Answer 12

The UCC implied a term requiring reasonable notice before termination of an exclusive distributorship.

Question 13

Leibel v. Raynor – Rule and Reasoning?

Answer 13

• Courts will gap-fill under UCC when agreements are silent on essential terms (like termination notice).
• Kentucky had adopted the UCC, making it applicable.