3 - Contract Formation - Consideration, Defenses, And SoF

Question 1

How does the UCC treat the pre-existing duty rule?

Answer 1

It rejects this rule

Question 2

How do you know if a contract modification is binding?

Answer 2

Ask whether the modification was made in good faith - if so, it is binding without new consideration

Question 3

What are the seven defenses to contract formation?

Answer 3

1) Misunderstanding
2) Incapacity
3) Mistake
4) Fraud, misrepresentation, and nondisclosure
5) Duress
6) Illegality
7) Unconscionability

Question 4

When is a contract or term unconscionable?

Answer 4

No reasonable person in the position of the party would have agreed to it

Question 5

What are the two types of unconscionability?

Answer 5

1) Procedural Unconscionability - a defect in the bargaining process such that a hidden term surprises a party, or they had an absence of meaningful choice
2) Substantive Unconscionability - is there a “rip-off” in the contract or term

Question 6

What is the reason for the Statute of Frauds?

Answer 6

To prevent false assertions about a contract that was never formed

Question 7

What two questions should you ask if you are in SOF world?

Answer 7

A - Does the Statute of Frauds apply to this transaction?

B - If so, has the SOF been satisfied?

Question 8

What satisfies the Statute of Frauds?

Answer 8

Requires a writing signed by the other side, or some performance made on the purported deal

Question 9

What UCC contracts are in SOF world?

Answer 9

A goods contract with a price of $500 or more

Question 10

What terms or elements must be in a SOF writing?

Answer 10

It must be signed and include the quantity sold, but does NOT need to mention the price

Question 11

What if you list the wrong quantity?

Answer 11

The contract is only enforceable under SOF for the quantity mentioned in writing

Question 12

When will part performance satisfy SOF?

Answer 12

It will only be good for the quantity that has been delivered and accepted

Question 13

Are custom-made or specialty goods covered by SOF?

Answer 13

They are exempt from SOF

-A maker can satisfy the SOF as soon as it makes a substantial beginning toward manufacturing the goods

Question 14

What is a judicial admission?

Answer 14

A statement in a pleading or during testimony that says a contract was created

Question 15

Does a judicial admission satisfy the SOF?

Answer 15

It satisfies the SOF under the UCC

Question 16

What is a merchant’s confirming memo?

Answer 16

A writing sent from one party to another claiming prior oral agreement that is signed and contains quantity
-Both parties must be merchants

Question 17

Does a merchant’s confirming memo satisfy SOF?

Answer 17

Failure to object to a conforming memo within 10 days will satisfy the SOF, but only if both parties are merchants

Question 18

If a contract under SOF is modified, must that modification also satisfy SOF?

Answer 18

Not Automaticallyy

Question 19

How do you know when a contract modification must meet the SOF?

Answer 19

Ask whether the deal with the modification would be in SOF world

• If YES, SOF requirements must be met for the modification
• If NO, there is no SOF requirement, even though the initial deal was under SOF