Contracts

Question 1

K formation requirements

Answer 1

A binding K requires manifestation of mutual assent (offer and acceptance), consideration, and a lack of defenses to K formation

Question 2

Offer

Answer 2

Offer is an objective manifestation of the offeror’s willingness to enter into an agreement that creates the power of acceptance in the offeree.

Question 3

Advertisements

Answer 3

Ads are generally invitations to deal or receive offers unless the ad is very specific and leaves nothing open to negotiation.

Question 4

Required terms under CL

Answer 4

Under the CL, all essential terms must be included in the offer (parties, subject, price, quantity).

Question 5

Required terms under UCC

Answer 5

Under the UCC, the only essential term that must be included in the offer is quantity.

Question 6

Ways that an offer may terminate

Answer 6

express revocation, constructive revocation, offeree rejects, offeree makes a counteroffer, offeror dies, or reasonable lapse of time

Question 7

UCC firm offer

Answer 7

Under the UCC firm offer rule, an offer is irrevocable (up to 3 months max even if stated otherwise) if the Offeror is a merchant and the offer is in writing signed by the Offeror with an explicit promise not to revoke.

Question 8

Who is a merchant for UCC purposes

Answer 8

A merchant is someone who regularly deals in the type of good at issue.

Question 9

Option K

Answer 9

Offers kept open based on option Ks (separate valid consideration is needed to keep the option open) are irrevocable.

Question 10

Acceptance

Answer 10

Acceptance is an objective manifestation by Offeree to be bound by the terms of the K. Unless the Offeror specifies, an Offeree can accept in any reasonable manner.

Question 11

Mailbox rule

Answer 11

Under the CL mailbox rule, an acceptance sent by mail is effective when sent not received. A revocation is effective upon receipt.

Question 12

Silent acceptance

Answer 12

Silence is usually not an acceptance unless the Offeree has a reason to believe silence could be an acceptance under the circumstances or previous dealings between the parties suggest silence can constitute an acceptance.

Question 13

How does a UCC shipment of goods invite acceptance

Answer 13

Under the UCC, a buyer’s request that goods be shipped invites acceptance either by the seller’s return promise to ship or by prompt shipment of the goods.

Question 14

Treatment of nonconforming goods

Answer 14

Under the UCC, a seller’s shipment of nonconforming goods operates as both an acceptance and a breach. However, if seller notifies the buyer that the goods are an accommodation (which constitutes a counteroffer), the buyer may then accept or reject the nonconforming goods.

Question 15

Implied in fact K

Answer 15

Acceptance may be communicated based on a party’s conduct, in which a K exists based on implied in fact.

Question 16

CL Mirror image rule

Answer 16

Under the CL mirror image rule, terms in the acceptance must exactly match the terms of the offer, otherwise it’s a counteroffer.

Question 17

UCC 2-207, at least one party is a non-merchant

Answer 17

Under the UCC, an acceptance containing additional or different terms is generally treated as a valid acceptance depending on whether the parties are merchants or not. If at least one of the parties is not a merchant, then acceptance that states new terms is valid unless acceptance is expressly made conditional upon assent to the new terms.

Question 18

UCC 2-207, both parties are merchants

Answer 18

If both parties are merchants, then under the battle of forms rule the new terms are included in the K so long as the new terms don’t materially alter the deal and the original offer was not limited to its own terms.

Question 19

UCC 2-207 knockout rule

Answer 19

If the new terms between the offer and acceptance contradict each other, neither will govern under the UCC knockout rule and the UCC will fill in the gaps.

Question 20

UCC 2-207 acceptance based on conduct

Answer 20

If the new terms differ too much to create a K but parties perform anyway, then only the terms that both writings agree on become part of the K, everything else is supplemented by the UCC.

Question 21

Consideration

Answer 21

Consideration means that the parties to the K promise to incur a legal detriment or benefit.

Question 22

Modification under CL

Answer 22

Under the CL preexisting duty rule, a promise to do something that one is already legally obligated to do is not valid consideration. There must be either a 1) change in performance, 2) 3rd party promising to pay, OR 3) unforeseen difficulties that would excuse performance

Question 23

Modification under UCC

Answer 23

Under the UCC, a modification is binding w/o new consideration so long as the modification was made in good faith.

Question 24

What are the two consideration substitutes

Answer 24

Promissory estoppel
Quasi-K

Question 25

Promissory estoppel

Answer 25

A promisor is estopped if 1) their promise is reasonably expected to induce reliance, 2) promisee takes detrimental action in reliance on the promise, AND 3) injustice can only be avoided through enforcement of the promise.

Question 26

Charity exception to promissory estoppel

Answer 26

A promise to a charity is enforceable so long as the promise is reasonably expected to induce reliance.

Question 27

Quasi-K

Answer 27

A quasi-K exists where 1) P confers a measurable benefit on D, 2) P reasonably expected to be compensated, AND 3) it would be unfair to let D keep the benefit w/o compensation.

Question 28

Defense to K formation means that…

Answer 28

Valid K never existed b/c there was no meeting of the minds.

Question 29

Misunderstanding

Answer 29

There is a misunderstanding if 1) the parties use a term that can be interpreted in 2+ ways, 2) each side attaches a different meaning to the term, AND 3) neither party knew or should’ve known of the confusion.

Question 30

Incapacity

Answer 30

A K can be voided by the incapacitated party, which includes minors, mentally ill, or very intoxicated persons.

Question 31

Mutual mistake

Answer 31

A mutual mistake exists if 1) there was a mistake of fact existing at the time of the deal, 2) which materially impacts the K, AND 3) the impacted party didn’t bear the risk of mistake.

Question 32

Unilateral mistake

Answer 32

A unilateral mistake exists if all elements of mutual mistake are met and either 1) the mistake would make the K unconscionable, or 2) the non-mistaken party knew of the mistake or caused it.

Question 33

Fraud

Answer 33

Fraud occurs when D made a 1) misrepresentation of fact (not opinion), 2) that is material or fraudulent, AND 3) circumstances justify reliance on the misrepresentation.

Question 34

Nondisclosure

Answer 34

There is normally no duty to disclose all material facts unless a fiduciary relationship exists between the contracting parties.

Question 35

Duress

Answer 35

Duress involves an improper threat that deprives one from making a meaningful choice to contract.

Question 36

Undue influence

Answer 36

Undue influence is when a party puts intense pressure on the other party who may be weak-minded or susceptible to pressure.

Question 37

Defenses to K enforcement

Answer 37

Valid K may have existed but its provisions are unenforceable.

Question 38

Illegality

Answer 38

Illegal Ks are unenforceable.

Question 39

Unconscionability

Answer 39

A K is unconscionable when it is so unfair to one party that no reasonable party would have agreed to it.

Question 40

Procedural unconscionability

Answer 40

Procedural unconscionability is when there is a defect in the bargaining process

Question 41

Substantive unconscionability

Answer 41

Substantive unconscionability is when the K terms are a rip-off.

Question 42

Ks against public policy

Answer 42

Ks against significant public policy are unenforceable.

Question 43

Statute of Frauds applies to

Answer 43

Marriage Suretyship One year UCC sale of goods $500+ Real property

Question 44

S/F suretyship

Answer 44

S/F is required for suretyship, which is a K promising to guarantee the debt of another.

Question 45

S/F one-year rule

Answer 45

S/F is required when a K cannot possibly be performed within one year of its making. Part performance of services K that fall under the one year rule do not satisfy S/F.

Question 46

S/F sale of goods $500+ essential terms

Answer 46

A sale of goods at least $500+ requires a writing that identifies the parties, the quantity, and is signed by the party being charged.

Question 47

Exception to S/F sale of goods $500+

Answer 47

part performance can satisfy the S/F for the quantity delivered and accepted, and custom-made goods satisfy the S/F once manufacturing substantially begins.

Question 48

S/F real property

Answer 48

Any sale of an interest in real property requires S/F satisfaction.

Question 49

Exception to S/F real property

Answer 49

part performance can satisfy S/F if at least 2 of 3 elements are met: 1) possession, 2) part or full payment, or 3) substantial improvement to the land.

Question 50

Does a modification of an S/F have to satisfy S/F requirements too?

Answer 50

S/F requirements only need to be satisfied if the newly modified K would trigger the S/F.

Question 51

Parol evidence rule (PER)

Answer 51

PER prevents the introduction of prior extrinsic evidence depending on K integration. For completely integrated Ks (as evident by merger clauses), the PER mostly bars all prior extrinsic evidence. For partially integrated Ks, parties are permitted to introduce prior extrinsic evidence of other terms so long as they are consistent with the writing.

Question 52

PER does not apply to

Answer 52

1) evidence relevant to a defense against K formation or condition precedents, 2) evidence of a separate deal, or 3) evidence of prior communications of trade usage/local customs.

Question 53

UCC assumption under PER

Answer 53

UCC governed Ks are always presumed to be partially integrated.

Question 54

Warranties

Answer 54

A warranty is a promise about a K term that explicitly shifts the risk to the party making the promise; they are different from mere opinions.

Question 55

Types of warranties

Answer 55

Express warranties Implied warranty of merchantability Implied warranty of fitness for a particular purpose

Question 56

Disclaimer of express warranties

Answer 56

Express warranties cannot be disclaimed if it’s already been made.

Question 57

Implied warranty of merchantability

Answer 57

When the seller is a merchant dealing in the goods at issue, there is an implied warranty that the goods are fit for ordinary commercial purposes

Question 58

Disclaimer of implied warranty of merchantability

Answer 58

Merchants can disclaim an implied warranty of merchantability orally or in writing, but it must be conspicuous. Buyers can also disclaim if they examined the goods fully or refused to examine.

Question 59

Implied warranty of fitness for a particular purpose

Answer 59

When a buyer relies on a seller’s expertise to select a special type of good used for a particular purpose, there is an implied warranty that the good will satisfy that purpose.

Question 60

Disclaimer of implied warranty of fitness for a particular purpose

Answer 60

Merchants can disclaim an implied warranty of fitness for a particular purpose only if it is in writing and is conspicuous.

Question 61

Conditions

Answer 61

A condition is an event that must occur before a party’s contractual right or obligation is impacted. Conditions can be express or implied.

Question 62

Waiver of express condition

Answer 62

An express condition can be waived by the party receiving protection of the condition. An express condition can also be waived if the party receiving protection of the condition wrongfully interferes w/ the occurrence of the condition.

Question 63

Constructive condition of exchange (CCE)

Answer 63

An implied condition means that one party’s performance is conditioned on the other side’s performance under constructive condition of exchange.

Question 64

CCE under CL

Answer 64

Under the CL doctrine of substantial performance, a party satisfies the CCE if there is not a material breach.

Question 65

CCE under UCC

Answer 65

Under the UCC perfect tender rule, a party only satisfies CCE through perfect goods and perfect delivery.

Question 66

Excuse

Answer 66

An excuse is when something has happened that excuses a party from performance.

Question 67

Types of excuses

Answer 67

Impossibility Impracticability Frustration of purpose

Question 68

Impossibility

Answer 68

Impossibility is when an unforeseen event occurs that renders performance impossible.

Question 69

Impracticability

Answer 69

Impracticability is when an unforeseen event occurs that makes performance still possible, but impracticable.

Question 70

Frustration of purpose

Answer 70

Frustration of purpose is when something has happened that undermines the entire reason for the creation of the K, though performance is still possible.

Question 71

CL Material breach

Answer 71

Under the CL, a material breach occurs when the nonbreaching party did not receive the substantial benefit of the bargain.

Question 72

UCC Perfect tender rule

Answer 72

The UCC perfect tender rule requires perfect goods and perfect delivery to avoid breach.

Question 73

Revocation after acceptance under the UCC perfect tender rule

Answer 73

A buyer may revoke acceptance of goods due to defect if the defect is discovered within a reasonable time after receipt.

Question 74

Buyer treatment of nonconforming tender under the UCC perfect tender rule

Answer 74

If the goods are nonconforming, buyer can either accept or reject all or part of the goods. The seller has a right to cure, so if the buyer rejects the goods as nonconforming then the buyer must give the seller a chance to cure if there’s still time left on the K.

Question 75

Anticipatory repudiation

Answer 75

Anticipatory repudiation is when a party indicates that they will not perform their K obligations. Under both the CL and UCC, the nonbreaching party can either 1) treat the repudiation as a breach and sue immediately, or 2) ignore repudiation and demand performance.

Question 76

UCC assurance of performance

Answer 76

Under the UCC, if a party has reasonable grounds for insecurity about the other party’s performance, the party can demand, in writing, an adequate assurance of performance. The other party’s nonresponse to this assurance can be treated as repudiation.

Question 77

Compensatory damages formula

Answer 77

Compensatory damages can be represented by the formula Expectation damages + Incidental damages + Consequential damages (if applicable) - Duty to mitigate - Costs avoided due to breach

Question 78

Expectation damages

Answer 78

The goal of expectation damages is to put the nonbreaching party in the position they would be in had the K been performed as promised.

Question 79

Incidental damages

Answer 79

Incidental damages are those incurred by the nonbreaching party in remedying the breach.

Question 80

Consequential damages

Answer 80

Consequential damages are only available if they are 1) reasonably foreseeable or contemplated by the parties, 2) caused by breach, and 3) can be proven with reasonable certainty.

Question 81

Duty to mitigate

Answer 81

The nonbreaching party has a duty to mitigate their damages and the damages calculation will treat them as if they did mitigate.

Question 82

Reliance damages

Answer 82

The goal of reliance damages is to put the party in the same economic position that it would be in had the K never been created. A plaintiff can only recover either compensatory damages or reliance damages, not both.

Question 83

Restitution damages

Answer 83

The goal of restitution damages it to give the plaintiff an amount equal to the economic benefit they conferred on the defendant. A plaintiff can only recover either compensatory damages or restitution damages, not both.

Question 84

Liquidated damages

Answer 84

Liquidated damages are those explicitly stated in the K in the event of breach. If they appear punitive, then courts will only enforce them if 1) the amount of liquidated damages was reasonable at the time of contracting, and 2) actual damages from breach cannot be proven with reasonable certainty.

Question 85

Punitive damages

Answer 85

Punitive damages are meant to punish a D’s willful or reckless misconduct. Punitive damages are typically not available in breach of K actions unless D’s conduct rises to the level of tort (e.g., fraud). If punitive damages are imposed, they are also constitutionally limited to a single-digit ratio of non-punitive damages.

Question 86

When is equitable relief available for K breach

Answer 86

Equitable relief may be awarded only when monetary damages are inadequate, usually for land sale Ks or the sale of unique goods.

Question 87

Specific performance elements

Answer 87

Specific performance may be awarded if P can demonstrate that 1) a valid K exists, 2) the K terms are clear, 3) condition precedents are satisfied, 4) monetary damages are inadequate, 5) it is feasible for the court to enforce, and 6) no defenses to equitable relief.

Question 88

Rescission

Answer 88

Rescission is the unmaking of a K by the court, usually followed by restitution damages.

Question 89

Reformation

Answer 89

Reformation is the judicial rewriting of a K by the court to reflect the parties’ true intent, typically applicable in cases of mutual mistake.

Question 90

Equitable defenses include

Answer 90

laches and unclean hands

Question 91

Laches

Answer 91

Laches means that the plaintiff waited too unreasonably long to bring their suit and the delay prejudiced the D.

Question 92

Unclean hands

Answer 92

Unclean hands means that the plaintiff engaged in unethical or immoral acts relating to the K.

Question 93

When is time of the essence on a K?

Answer 93

when 1) K specifically says so, 2) circumstances indicate such intention, or 3) one party gives the other party notice within reasonable time before closing.

Question 94

When is nondisclosure treated as a misrepresentation?

Answer 94

Nondisclosure of a known fact is treated as a misrepresentation if the nondisclosing party knows that disclosure is necessary to prevent a previous assertion from being a misrepresentation.

Question 95

Does anticipatory repudiation apply to lease agreements?

Answer 95

Not in most jxs. When a tenant breaches the duty to pay rent, LL is only entitled to rental payments as they become due, not all future rents that would've been due under the lease.

Question 96

Nonbreaching seller may reclaim goods from insolvent buyer when? And exception?

Answer 96

1) Seller discovers buyer receives goods on credit while insolvent, and 2) Seller demands return of goods within 10 days of receipt Except: 10-day limitation doesn't apply if buyer misrepresented its solvency in writing

Question 97

Essential terms of a land sale K

Answer 97

Identity of parties Words of intent to buy/sell Description of property Sales price (set price or per-acre price)

Question 98

When does an offer lapse in a face to face negotiation?

Answer 98

In a face to face negotiation, an offer lapses if it is not accepted before the face to face conversation ends.

Question 99

Does the S/F require a writing to rescind a K for the sale of land?

Answer 99

NO, oral rescission is valid

Question 100

At-will Employment K

Answer 100

An at-will K allows the employer or employee to terminate employment at any time, w/o termination being considered a breach of the K.

Question 101

Term Employment K & termination

Answer 101

Term employment K is an employment K for a specified period of time. An employee has a property right in the job and may not be terminated w/o cause.

Question 102

When a debt is disputed in good faith, the debtor can attempt to settle the debt by giving the creditor a check conspicuously marked "payment in full." The creditor can then?

Answer 102

Either 1) deposit the check, in which case the debtor's duty to pay is discharged, OR 2) reject the check, in which case the debtor' duty to pay is NOT discharged.

Question 103

Requirements K and breach

Answer 103

A requirements K is an exclusive agreement between the buyer and seller for the sale of as many goods as the buyer requires during a specified period. The buyer's failure to purchase the goods from the seller violates the implied duty of good faith and fair dealing and constitutes a breach of K.

Question 104

A party who anticipatorily repudiates a K may retract the repudiation if?

Answer 104

If the nonrepudiating party is notified of the retraction BEFORE: 1) canceling the K, 2) materially changing position in reliance on the repudiation, OR 3) indicating that they consider the repudiation to be final.

Question 105

What is an output K

Answer 105

An output K is where a buyer agrees to buy the seller's entire output of some good for a specified period.

Question 106

Default formula for UCC seller's damages based on buyer's nonacceptance/repudiation

Answer 106

K price - Market/Resale price + Incidental damages

Question 107

Lost-volume seller formula for UCC seller's damages based on buyer's nonacceptance/repudiation

Answer 107

Lost profit + Incidental damages

Question 108

For S/F compliance of a K for sale of goods $500+, S/F is satisfied even if K is not signed by the party to be charged if?

Answer 108

K satisfies S/F for BOTH parties if: 1) both parties are merchants, 2) one party sends a written confirmation, and 3) recipient doesn't object in writing within 10 days.