Contract BLL

Question 1

How may theories are there for discharging the duties?

Answer 1

Three. Impracticability, impossibility, and frustration of purpose

Discharge of duties in unforeseen events: Even with an absolute duty, promisor may be not liable for nonperformance only if nonoccurrence of the unforeseen event was a basic assumption of the K.
NO duty to provide a substitute just a release from the duty

Question 2

Discharge of duties - Impossibility

Answer 2

No one would be able to perform for the promisor to perform excuses promisors from performance, e.g., illegality, death of necessary person, destruction of subject matter

Temporary impossibility merely suspends performance for that period (3달)

Question 3

Discharge of duties - Impracticability

Answer 3

A severe burden, cost, or risk to the promisor excuses performance. Examples: shortages caused by war, local crop failure, unforeseen disasters. BUT, mere fluctuation in price is not acceptable
Still can do it but it’s extreme as unforseen

Question 4

Discharge of duties - Frustration of Purpose

Answer 4

contingency occurs that principal purpose in entering the K is substantially/totally frustrated

Question 5

Legal Remedies - common law

Answer 5

compensatory damages in the form of money
i. Expectation damages put the non-breaching party where it would have been had the promise been performed. Expectation damages must be reasonably certain
ii. Reliance damages: If expectation dmgs too speculative, cost of performance made in reliance of K
iii. Consequential damages: Losses resulting from breach that a reasonable person can foreseeable; thus knew or should have known is important
iv. Incidental damages: out of pocket expenses
v. Duty to mitigate: Non-breaching party can’t recover avoidable damages, has a duty to mitigate damages
b. Restitutionary damages: partial contract, to avoid unjust enrichment (calculation - how much benefit was conferred)
c. Quantum Meruit: The breaching party requires the damages, for his service in that period.

Question 6

When the offeree’s response to offer proposes adding/deleting/changing terms…

Answer 6

Common law
Each and every term of offer must be accepted unequivocally (mirror image rule). Any additional/different terms in the acceptance makes the response a rejection and counteroffer

UCC § 2-207 (battle of the forms): A contract can be formed between merchants even though terms of acceptance do not match terms of offer. (SOME EXCEPTIONS)

• Either party not a merchant? § 2-207 is not applicable. Additional/different terms are mere proposals and not part of K unless offeror agrees to the modified terms
• Both merchants + additional terms? Additional terms become part of K, UNLESS…
  i. Acceptance is made conditional on offeror’s assent to additional or different terms
  ii. Original offer expressly limits acceptance to offer terms
  iii. New terms materially alter original terms, e.g., arbitration clause, disclaimer, materially shorten deadline, change usage of trade or past method of dealing
  iv. Offeror objects to the change within reasonable time
• Both merchants + different terms?
  1.Knockout rule (majority): Conflicting terms are omitted from K and gaps filled by UCC default terms (see § V-a-v)

Question 7

UCC perfect tender rule - (non conforming goods)

Answer 7

Terms for sale of goods are enforced exactly. If goods or delivery fail to conform to K in any way, buyer have three options
1) reject goods within reasonable time of delivery,
2) accept goods (you have to pay the original contract price)
3) accept some units and reject some units

i. Buyer’s right to reject is cut off by acceptance or failure to reject w/in reasonable time
ii. Seller has right to cure:
Seller may cure if the seller had reasonable grounds to believe that the shipment would be accepted
Seller may cure any defects by (1) notice and (2) make conforming delivery

The perfect tender rule does not apply to the installment K (3 scenarios)
- Delivering the goods in several different shipments
- Defective shipment CANNOT be rejected
(1) if the non-conforming shipment/goods can be cured
you have to give the seller the right to cure
(2) if the non-conforming shipments/goods cannot be cured and it significantly impairs the entire K&raquo_space; total breach of the K
(3) if the non-conforming shipments/goods cannot be cured but it does not significantly impairs the K&raquo_space; buyer can only reject that shipment

Question 8

UCC perfect tender rule - Installment K & non-conforming installment goods

Answer 8

The perfect tender rule does not apply to the installment K (3 scenarios)
- Delivering the goods in several different shipments
- Defective shipment cannot be rejected if the defect can be cured
(1) if the non-conforming shipment/goods can be cured
you have to give the seller the right to cure
(2) if the non-conforming shipments/goods cannot be cured and it significantly impairs the entire K&raquo_space; total breach of the K
(3) if the non-conforming shipments/goods cannot be cured but it does not significantly impairs the K&raquo_space; buyer can only reject that shipment

Question 9

Modification of K

Answer 9

Modification: Request for modification (after K) must be supported by new consideration (Common law) or good faith (UCC)
i. Common law: Preexisting duty rule—if one already owes a duty to perform, that performance cannot be used as consideration for another promise.
EXCEPTIONS:
1. Duty owed to 3P: a duty is preexisting only if it is owed directly to a promisee. Promise to perform a duty is valid consideration as long as the duty is given to other party
2. Unforeseen burdens: Promise of increased compensation is given in exchange for a promised performance substantially more burdensome than reasonably anticipated at formation. the consideration required for modification will be considered satisfied by the party’s promise to complete their pre-existing contractual duty.
3. Mutual modification: Parties agree to a different performance, fair and reasonable
ii. UCC: Only good faith (usually there) needed to modify. Modification must be in writing if regarding sale > $500
iii. Cf. novation: All parties expressly agree to release and substitute a party. No writing required

Question 10

Third-party beneficiary (Intended beneficiary)

Answer 10

Original parties intend to benefit a third party
May have rights under K (when it’s vested), if not vested, cannot sue
Intended beneficiary d not need to be named (for all Jets Fan)

Rights vest when
(1) Third party is informed of rights and accepts it
(2) Third party learn of rights and relies upon

If rights vested,
Third party beneficiary has same rights and defenses as original parties

Question 11

Accord & satisfaction

Answer 11

New agreement (accord suspends duty) where obligee promises to accept substituted performance in satisfaction of obligor’s original, existing duty

Three scenarios
(1) debt amount is undisputed, and marked paid in full, and you accept and cash out the amount
- just partial payment, because the amount is not disputed

(2) debt amount is a bona fide dispute made in good faith. payment of a lesser amount than is due on a valid claim constitutes valid consideration.

When parties are in a dispute over the proper amount of debt, if the debtor sends the creditor a check for an amount with the notation that the check represents payment in full, and the creditor cashes the check, under the common-law view, the debtor is discharged. Under modern law, the creditor who cashes a check marked “in full settlement” will lose under UCC § 3-311, as long as (i) the check contained a conspicuous statement that it was tendered as full satisfaction of the claim; (ii) the claim was subjected to bona fide dispute; and (iii) the debtor acted in good faith.

Question 12

Mirror Image Rule

Answer 12

Common law mirror image rule
- Acceptance must be exactly same as an offer
Acceptance is effective on dispatch

Exception
(1) if a rejection is sent first, then an acceptance is sent, which every arrives first wins
(2) When exercising option K, effective when received

Question 13

Acceptance by performance

Answer 13

Where one party’s performance is to take place over a period of time as an acceptance, that party must complete its performance before the other party is required to perform, unless the language or circumstances indicate otherwise

Question 14

Unilateral K and Bilateral K

Answer 14

Reward offers are offers to enter into a unilateral K,

K is formed only when performance completed
offeree is not obligated to complete performance merely because he has begun performance, as only complete performance constitutes an acceptance of the offer. Once offeree begins performing, offeror may not revoke

Mere preparation does not trigger irrevocability

Question 15

Shifting risk of loss - Non carrier case and carrier case

Answer 15

Non carrier case
(1) seller is a merchant: risk shifts when buyer takes possession
(2) seller is a non-merchant : risk shifts when goods are tendered to the buyer

Carrier case
(1) Shipment contract (FOB Seller) - Default
Risk of loss shifts when goods delivered to the carrier
(2) Destination contract (FOB anything else)
Risk of loss shifts when goods delivered to the Destination

Question 16

Cross offer

Answer 16

A cross offer is made when two parties make the same offer to one another without knowing the other party has made an offer, and the terms of both offers are identical. In this situation, there will not be a contract because it cannot be construed that one party’s offer is accepted by the other party.

Question 17

Assignment and delegation

Answer 17

2 ppl have a valid K
One party transfer the obligation to the other party
Generally, assignments and delegations are valid
현재시점, not intent to transfer in the future
You can sue (1) the original contractor (2) new contractor

Terms
- new party cannot change or add k terms
- new party only gets the original k rights and duties

exception
-not valid if it would materially alter the risk of performance…(bankruptcy)
-unique or personal service (only you)

novation
- new K is needed

Question 18

Anti assignment clause

Answer 18

can make the assignment unenforceable

BUT you cand it anyway…

-the assignment is valid (because it’s right)
-the original party is also liable

Anti-delegation clause
(1) valid (because it’s duty)
(2) you cannot transfer your duty or right anyway

Question 19

Conditions

Answer 19

Condition precedent
Condition Concurrent
Condition Subsequent
- you are discharged unless the condition met or excused

Waiver: I am wavering my right of the condition (니가 waive할순 없어 요구하는 주체가 나임)
Bad faith: your condition is excused because your condition is based on bad faith
Avoiding forfeiture: when someone suffers a great loss, then the condition can be discharged

Question 20

UCC open quantity rule

Answer 20

Open quantity term (not specifying quantity) typically fatal to a K. EXCEPTIONS under UCC:
a. Output K: Buyer agrees to purchase all of a supplier’s output
b. Requirements K: Supplier agrees to supply all of the goods required by buyer
i. Quantity demanded may not be unreasonably disproportionate (higher/lower) to a stated estimate or comparable prior numbers
ii. Actual “requirement” may be zero (e.g., if company out of business)

Question 21

Assignment

Answer 21

A valid assignment requires the assignor to manifest an intent to transfer his rights under the contract completely and immediately to the assignee. This intent may be determined by examining the terms or language used to effectuate the assignment. Using the word “assign” is not necessary,

Question 22

confirmation by memo

Answer 22

Under the Uniform Commercial Code (UCC), a contract for the sale of goods for $500 or more must be evidenced by a writing that is signed by the person against whom enforcement is sought. As an exception to the rule, a signed writing will not be required between merchants where a written confirmation of a contract of sale has been sent and the recipient fails to give notice of objection to the confirmation within 10 days of its receipt.

Question 23

Under the UCC, where the buyer has repudiated a contract the seller may, if resale is done in accordance with UCC rules
recover the difference between the contract price and the resale price, plus any incidental damages.
In the alternative, the seller may recover the difference between the contract price and the market price

Answer 23

Where the market formula of damages is inadequate, the seller may recover its lost profit on the sale (plus incidental damages), if the seller can demonstrate that it could have profitably made the extra sale had the contract gone forward (i.e., that it is a “lost volume” seller).

if a T-shirt maker has 100 T-shirts, and a customer agrees to buy a shirt from the seller and then breaches that agreement (i.e. refuses to take delivery and pay), the seller will likely be able sell the shirt at the same price to the next customer who walks in. Such a seller has no damages by the usual measure.

However, if the seller has the ability to sell a shirt to any customer who walks in, the customer who breaches the agreement to buy has prevented the seller from earning profit that the seller would have earned if the agreement had been honored. The initial buyer’s breach has caused the seller to receive the profit from only one sale (the sale to the second buyer), instead of the profit from two sales (the sale to the second buyer, plus the sale for which the breaching buyer contracted).

Question 24

A party may avoid a contract if their assent was induced by either a fraudulent or material misrepresentation. Here, the misrepresentation about the car’s mileage was not fraudulent, since the woman made it innocently, but it was material, which would be sufficient to avoid the contract.

Question 25

A contract that violates a state statute may be declared unenforceable on grounds of public policy. Where, however, the contract violates a policy that was intended for the benefit of a contracting party seeking relief, the contract may be enforceable in order to avoid frustrating the policy behind the statute. Accordingly, public policy would not prevent the enforcement of the contract by those within the class of persons, including the homeowner, that the statute was intended to protect

Question 26

Trade usage is used to fill in gaps or interpret ambiguous language. Such evidence can trump in conflict:

express terms in K > course of dealing (pattern of previous transactions between pts) > trade usage (regular industry practice)

Answer 26

여름 시즌에 대한 interpretation이 다르다면 trade usuage에서 사용되는 기간으로 contract이 지켜져야함. They still owe a contractual duty, the duty is not waived

Question 27

Even if a court finds a written agreement to be completely integrated, outside evidence may be allowed to clarify terms in a contract when a term’s meaning is ambiguous. The parol evidence rule does not bar extrinsic evidence offered to aid in the interpretation of existing terms.

contract terms that are intended by the parties to be the final expression of their agreement can’t be contradicted by evidence of any previous agreement or contemporaneous oral agreement but may be explained or supplemented by evidence of “consistent additional terms.

Question 28

If libel involves a public figure or a matter of public concern, the plaintiff must also prove two additional elements: falsity and fault.

The standard for fault differs depending on if the plaintiff is a public figure or a private person involved in a matter of public concern.

To determine if a matter is of public concern, the court will look at the content, form, and context of the publication. Here, the content was about the closing of a popular local restaurant, the form was a printed newspaper article, and the context was a communication to the entire readership of the newspaper. Therefore, because this would likely be a matter of public concern, the plaintiff is required to prove fault.

For a matter of public concern involving a private person, the plaintiff must show that the defendant published the statement with at least negligence as to its truth or falsity. Therefore, if the general manager cannot prove that the newspaper was negligent as to the truth or falsity of the statements published, the newspaper’s motion for a directed verdict will be granted.

Answer 28

. This is an incorrect standard, which would only be required if the plaintiff was a public official or figure. A person may become a public figure either by achieving great fame or notoriety, as in the case of movie stars and famous athletes or by voluntarily entering a particular area of public interest or controversy. Here, the general manager of restaurant would not amount to the status of a public figure just being he is known in this area. The plaintiff is only required to prove at least negligence in this situation.

Question 29

When contract rights are assigned, the assignee stands in the shoes of the assignor, meaning he has the same rights the assignor had, and he may be subjected to the same defenses. Specifically, if an obligor has a claim against the assignor based on the same contract that was assigned to the assignee, the obligor may “recoup” losses

Question 30

When a subcontractor submits a bid to the general contractor, who then relies upon it in figuring out his own overall bid, the subcontractor’s bid is usually held irrevocable for at least the time necessary for the general contractor to obtain the job and then accept the subcontractor’s bid.