Contracts

Question 1

goods

Answer 1

all things moveable at the time they are identified as the items to be sold under the contract

Question 2

merchant

Answer 2

one who regularly deals in goods of the kind sold or who otherwise by his profession holds himself out as having special knowledge or skills as to the practices or goods involved

REMEMBER: merchant must be acting in his mercantile capacity or rules to apply

Question 3

unilateral contract

Answer 3

one in which offeror requests perforamcne rather than a promise.

promisor promises to pay upon completion of the requested act by promisee. once act is completed –> K is formed

Question 4

offer

Answer 4

for a communication to be an offer, it must create a reasonable expectation in offeree that offeror is willing to enter into a K

need 3 things for reasonable expectation:

1. expression of promise, undertaking, or commitment to enter into K
2. certainty + definiteness
3. communication to the offeree

Question 5

requirements contracts limits

Answer 5

there may not be tender of or demand for a quantity that is unreasonably disproportionate to any stated estimate or any normal or otherwise comparable prior output or requirements

Question 6

are advertisements offers?

Answer 6

ads are usually invitations for offers

the more definite the language, the more likely it is to be an offer

Question 7

missing price term

Answer 7

generally, failure to state price does not prevent formation of a K if the parties intended to form a K without price being settled

Exception: a land K must state the price

Article 2: A2 provides that the price will be a reasonable price @ time of delivery

Question 8

missing time term

Answer 8

law will imply performance within reasonable time

Question 9

indirect revocation

Answer 9

an offer can be revoked indirectly if offeree receives:

1. correct information
2. from a reliable source
3. of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer

Question 10

effectiveness of revocation

Answer 10

revocation is effective when received by offeree

receipt does not require that the recipient actually read the communication; it just has to have been delivered

Question 11

requirements for a merchant’s firm offer

Answer 11

under article 2, there is a merchant’s firm offer if:

1. a merchant
2. offers to buy or sell goods in a signed writing
3. the writing gives assurances that it will be held open

in this case, the offer is not revocable during time stated (or during reasonable time if no time stated, but no longer than 3 months)

Question 12

detrimental reliance and revocation

Answer 12

when an offeror could reasonably expect that the offeree would rely to her detriment on the offer, and the offeree does so rely, the offer will be held irrevocable as an option contract for a reasonable length of time

Question 13

revocability of unilateral contract

Answer 13

an offer for a unilateral contract becomes irrevocable once performance has begun. offeree must give reasonable time to complete performance, but offeree isn’t bound to complete performance; only the offeror is bound to keep the offer open

Remember: substantial preparation to perform doesn’t make an offer irrevocable; but, it might be enough to show detrimental reliance

Question 14

counteroffer vs. mere inquiry

Answer 14

a counteroffer (which constitutes a rejection) goes beyond a mere inquiry. test is whether a reasonable person would believe the original offer had been rejected

Question 15

rejection of an option

Answer 15

rejection of or counteroffer to an option does not constitute termination of the offer. offeree is still free to accept the original offer unless the offeror has detrimentally relied on the offeree’s rejection

Question 16

battle of the forms

Answer 16

under A2, the proposal of additional or different terms by offeree does not constitute rejection + counteroffer. it is effective as an acceptance unless the acceptance is expressly made conditional on asset to additional or different terms

Two Merchants: if both parties are merchants, additional terms are included unless terms materially alter original terms OR offer limits acceptance to terms of offer OR offeror objected to those terms/does object within reasonable time

One Non Merchant (or 2): if any party to K is not a merchant, additional/different terms do NOT become part of K unless offeror expressly agrees

Question 17

conditional acceptance

Answer 17

acceptance that’s made conditional on acceptance of new terms is a rejection of the offer (not a battle of the forms situation)

Question 18

modification

Answer 18

usually, the modification of a contract requires consideration.

however, modern rule allows for modification without consideration if modification is fair and equitable in view of unanticipated circumstances (and modification was unforeseeable when the contract was entered into)

Question 19

F.O.B.

Answer 19

“F.O.B.” is a delivery term under the UCC, which governs contracts for the sale of goods. That term means “free on board,” and it obligates the seller to get the goods to the location indicated after the term.

Question 20

breach of installmnt contract

Answer 20

Under Article 2, a buyer may declare a total breach of an installment contract only if the defect substantially impairs the value of the entire contract

Question 21

main purpose exception to SOF in suretyships

Answer 21

where the main purpose or leading object of the promisor is to secure an advantage or pecuniary benefit for himself, a surety contract is not within the Statute of Frauds, even if the effect is still to pay the debt of another

Question 22

modification of K with intended third-party beneficiary

Answer 22

a K can be modified or cancelled without consent of TPB if their rights haven’t yet vested

after a TPB’s rights have vested, cannot modify without TPB’s consent

TBP rights vest in 1 of 3 ways:

1. when TPB learns of contract and assent to it
2. when TPB learns of contract and relies on it
3. when TPB learns of contract and brings immediate lawsuit to protect their rights

Question 23

assignments and delegations

Answer 23

all Ks are assignable, except unique personal service Ks and long term requirement Ks

can be gratuitous or for value (but gratuitous assignments are usually deemed revocable)

can be oral or in writing

Question 24

late performance (vs. time is of the essence)

Answer 24

unless the nature of the contract is such as to make performance on the exact day agreed upon of vital importance (e.g., contract for use of a wedding chapel), or the contract by its terms provides that time is of the essence, failure by a promisor to perform at the stated time will not be material

so, breach of the date of performance is a minor breach that entitles you to damages but doesn’t relieve you of obligation to perform

Question 25

damages in case of acceptance of nonconforming goods

Answer 25

if a buyer accepts nonconforming goods, the buyer may recover warranty damages

warranty damages = the difference between the value of the goods delivered and the value they would have had if they had been as warranted in the contract, plus incidental and consequential damages.