Contract Performance

Question 1

What is the parol evidence rule?

Answer 1

The PER bars the introduction of evidence regarding extrinsic terms to a fully integrated contract, unless such term would “naturally be omitted” from the contract

Question 2

What types of extrinsic evidence is not barred by the parol evidence rule?

Answer 2

1) Evidence relevant to a defense against contract formation
2) Evidence of a separate agreement
3) Evidence of a prior agreement to interpret an ambiguity

Question 3

What are the three types of UCC Warranties?

Answer 3

1) Express Warranties
2) Implied Warranties of Merchantability
3) Implied Warranties of fitness for a particular purpose

Question 4

What triggers the implied warranty of fitness for a particular purpose?

Answer 4

When a buyer relies on a seller’s expertise to select a special type of good that will be used for a special purpose. (Can be disclaimed, applies to non-merchants as well as merchants)

Question 5

What is a condition?

Answer 5

A condition is a contractual method of shifting risk by stating that one party’s contractual obligation will kick in only if some future event takes place. May be express or implied.

Question 6

What is the constructive condition of exchange?

Answer 6

The constructive condition of exchange is a rule that says that one party’s performance is conditioned on the other party’s performance.

Question 7

How does application of the constructive condition of exchange differ between the common law and the UCC

Answer 7

Under the common law, the CCE need not be satisfied perfectly, the standard is material breach.

Under the UCC unless parties explicitly contract otherwise perfect tender is required.

Question 8

What are the components of perfect tender in a UCC contract?

Answer 8

Perfect tender has two components:

1) Perfect delivery
2) Perfect goods

Question 9

What are the four steps to analyzing a “risk of loss” problem?

Answer 9

1) Have the parties contracted for this risk already?
2) If not has either party breached? (if so they are liable)
3) If no breach, and the goods are being shipped is it a shipment contract or a delivery contract? - Buyer bears transit risk on a shipment contract, seller on a delivery contract.

4) In all other cases ask if the seller is a merchant:
If so - risk of loss stays with the seller until receipt, if not - risk of loss moves to buyer upon tender.

Question 10

What are the six excuses to contract performance?

Answer 10

1. Impossibility/Impracticability
2. Death
3. Frustration of Purpose
4. Modification/Cancellation
5. Accord & Satisfaction
6. Novation