Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

MBE > Contracts > Flashcards

Contracts Flashcards

1
Q

when is parol evidence admissible?

A

Partially integrated contract - terms supplementing/explaining/not contradicting existing terms

Partially or fully integrated contract -
Evidence of fraud/duress/mistake
Evidence of condition precedent
Evidence of course of dealing in sale of goods contract
Evidence clarifying ambiguity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

what is parol evidence

A

Extrinsic evidence of terms discussed prior to or at the time of entering into contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a contract?

A

A legally enforceable agreement made up of an offer, an acceptance, and consideration.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is an offer?

A

An outward manifestation of present intent to contract communicated to an offeree (creating a reasonable expectation in the offeree of offeror’s willingness to contract) plus specific terms as to quantity, price, and description

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Are ads offers?

A

Generally no, they’re too general; they are an invitation to offer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How can you terminate an offer?

A

Death, destruction of subject matter, supervening illegality (by operation of law)
Lapse of time
Rejection (by offeree)
Counter-offer (by offeree, acts as rejection)
Revocation (by offeror)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What offers are irrevocable?

A

Option contract
Firm offer
Unilateral offer once performance has begun

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How can you accept an offer?

A

Silence (sometimes)
Unilateral - performance/payment
Bilateral - promise or performance
Mailbox rule
UCC - reasonable means

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the mirror image rule?

A

At common law, an acceptance must mirror the offer in every aspect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the mailbox rule?

A

A mailed acceptance is valid as soon as it’s dropped in the mailbox; if offeree mailed an acceptance then a rejection, the acceptance is valid regardless of which arrives first; if she mails a rejection then acceptance, whichever arrives first applies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the mailbox rule exception?

A

If a rejection is mailed before an acceptance, whichever arrives first takes effect

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Does the mirror image rule apply to the sale of goods?

A

No, acceptance under the UCC is construed liberally and changed terms will generally become part of the contract (if the parties are merchants)save a few exceptions. If the parties are not merchants, a contract is still formed but the new terms are not included

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

When may an acceptance be invalid under the UCC?

A

If changed terms materially alter the contract

If offeror objects to changed terms within a reasonable time

If acceptance deviates from any limitation on acceptance in the offer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is consideration?

A

A bargained-for exchange + a legal detriment to promisee or legal benefit to promisor (legal value)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What types of consideration are invalid?

A

Illusory promise such that offeror retains control (modern trend towards being valid)
Promise to give a gift
Offer made in response to something past
Offer made without being asked (moral)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What types of consideration are valid?

A

Money
Promise to pay debt barred by SoL
Promise to pay debt discharged in bankruptcy
Forbearance to sue
Promise to perform

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a substitute for consideration?

A

Where one party detrimentally relied on an unenforceable contract, promisorry estoppel allows them to recover

Accord and satisfaction allows parties to agree to accept alternate performance (paying another amount than originally agreed upon)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are defenses to enforceability?

A

Age
Incapacity
Duress
Undue influence
Unconscionability
Bilateral mistake
Unilateral mistake where other party knew of the mistake
Intentional misrepresentation
Negligent representation
Reasonable noncompete clause
Statute of Frauds for MYLEGS contracts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

When is parol evidence inadmissible?

A

If the contract is a complete/full integration (merger clause)

If the evidence contradicts an existing term of a partially integrated contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

When does the risk of loss shift from seller to buyer?

A

Non-carrier if seller is a merchant, when the buyer takes possession of the goods; if not a merchant, when goods are made available to the buyer

Carrier shipment contract, when goods are given to carrier; carrier destination contract, when goods arrive at their location

Requirements contract, so long as seller acted in good faith

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What effect does a modification have on common law contracts?

A

Additional consideration is needed

Modern view permits modification without additional consideration if due to circumstances unanticipated by the parties when contract was made, and the modification is fair and reasonable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the effect of conditions on performance?

A

If the condition doesn’t occur when proscribed, performance is not required, unless conditions waived

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

How may a buyer respond to non-conforming goods?

A

A buyer may reject within a reasonable time, accept with payment of original contract price, or accept in part and reject in part.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

When may a seller cure a defect?

A

UCC grants seller the right to cure a defective shipment within original time for performance of the contract, by giving reasonable notice of intention to cure and making new tender of conforming goods within time originally provided for performance.

UCC grants seller right to cure beyond time set forth in original contract where seller reasonably believed buyer would accept NC goods

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

How do non-conforming goods affect an installment contract?

A

If only one installment is NC and seller can’t cure, buyer may reject that installment.

If one installment NC and seller can fix, buyer must allow.

If NC installment materially impairs value of entire contract, seller in breach and buyer may cancel order.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

When may impracticability discharge performance?

A

If unforeseen circumstances make performance so difficult as to render it impracticable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

When may impossibility discharge performance?

A

Under the UCC, when goods are destroyed

If performance becomes illegal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

When is impossibility not a defense?

A

If the “impossibility” is temporary

If the parties contemplated the circumstances or they were foreseeable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Frustration of purpose

A

If the core reason for the contract’s existence no longer exists, parties are discharged from performance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

What may a party do in the face of anticipatory repudiation?

A

If intent to repudiate is unequivocal, a party may

Sue immediately
Wait to see if repudiator performs
Look for another buyer/seller

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

When may a party demand assurances?

A

If the other party indicates, but not unequivocally, an intent not to perform. If repudiating party responds in a reasonable time, the other party must then wait for performance.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Can a party retract their repudiation?

A

Yes, unless the other party has

Already sued
Accepted the repudiation
Relied on the repudiation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

What are legal remedies?

A

Money in the form of

Expectation damages
Reliance damages
Restitution
Consequential damages
Liquidated damages
Quantum meruit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

What are equitable remedies?

A

Applicable where remedy at law would be insufficient

Specific performance
Injunction
Recission

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

What are buyers’ remedies under the UCC?

A

If buyer has bought replacement goods, they recover the contract price less payment for new goods

If buyer has not bought replacement goods, they recover the contract price less the market price of goods at time buyer learns of breach

Can always get incidental/consequential damages

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

What are a seller’s remedies under the UCC?

A

If goods delivered and accepted, seller gets contract price

If some/no goods were delivered and seller hasn’t yet resold, seller gets contract price less market price

If some/no goods delivered and seller has resold, seller gets contract price less resale price

Seller can always get incidental/consequential damages

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

When does a third party beneficiary have rights?

A

The rights of the third-party beneficiary do not vest until: (i) it manifests assent in a manner invited or requested by the parties; (ii) it learns of the contract and detrimentally relies on it; OR (iii) it brings a lawsuit to enforce its rights.
- Until a third party’s rights have vested, a modification of the contract can take place without the consent of the third party
- If one party breaches, non-breaching party may raise any defense against the beneficiary as they could against the breaching party.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

When is an assignment/delegation valid?

A

Generally valid if a present intent to transfer and assignee retains original rights/obligations

Even despite prohibition clause (but considered a breach)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

When is an assignment/delegation invalid?

A

If clause saying such is void

If delegation in spite of non-delegation clause

If assignment would materially alter the other party’s risk/obligation

If unique/personal service contract

If transferring money without notice

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

Gratuitous assignment of right to receive money

A

Valid without a writing/consideration, and revocable (by assignor accepting money directly from obligor) unless reasonably foreseeable that assignee will change his position in reliance on assignment and such detrimental reliance occurs, estopping assignor from revoking.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

Who may revoke an offer?

A

The offeror

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

Who may reject an offer?

A

The offeree

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

When is an offer indirectly revoked?

A

The offeree learns somehow other than from offeror that the offer is off the table

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

When can an offer be revoked?

A

Before the offeree has responded

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

What is an option contract?

A

An offeror promises to keep the offer open for x time, plus additional consideration

Mailbox rule N/A, acceptance effective upon receipt by offeror.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

What is a firm offer?

A

For the sale of goods when a merchant offers to keep the offer open for x time and the merchant has signed a writing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

What is a unilateral offer?

A

An offer in exchange for performance

48
Q

What is a bilateral offer?

A

A promise exchanged for a promise

49
Q

Defense of age

A

A contract entered into with a minor is voidable at the option of the minor; once of age, they can ratify the contract themselves per the terms agreed upon after of age

50
Q

Defense of Incapacity

A

A contract entered into with someone mentally incapacitated is void

51
Q

Duress

A

Wrongful/improper threat leaving the victim no reasonable alternative

52
Q

Undue influence

A

Uneven bargaining position such as power, status - based on relationship of parties (not to be confused with no reasonable alternative)

53
Q

Unconscionability

A

Enforcing the contract will lead to a substantially unfair result

54
Q

Bilaterial mistake

A

Where both parties are mistaken, the parties may rescind the contract

55
Q

Unilateral mistake

A

Only a defense to enforceability where one party was mistaken and the other knew that, or where there was a clerical mistake

56
Q

Intentional misrepresentation

A

Where one party knowingly misrepresented a material fact with the intent to induce the other’s reliance

57
Q

Negligent misrepresentation

A

Where one party to a special relationship (fiduciary) unintentionally omitted a material fact

58
Q

Which contracts are subject to the Statute of Frauds?

A

Marriage
Land
Contracts that can’t be performed within a year
A contract to become an executor/administrator
Guarantor/Assurety contract
Sale of goods for $500 or more

59
Q

What constitutes a sufficient legal writing?

A

Parties, subject matter, basic material terms, signed by party to be charged

60
Q

What are exceptions to the Statute of Frauds?

A

Part-performance of sale of land contract where party has paid something and either taken possession or made improvements

Guarantor contracts where purpose or motive is self-benefitting

Partial payment/delivery of goods for $500+

Merchant contracts where one merchant has sent the other a written and signed confirmation of the order inc. quantity and the other doesn’t object within 10 days

61
Q

When will an oral contract for the sale of land be enforceable?

A

Upon the seller’s conveyance of the property to the purchaser, or if conduct unequivocally indicates parties have contracted for the sale of land which requires 2/3: payment (in whole or in part), possession, and/or valuable improvements.

62
Q

When is a writing not required to enforce a contract subject to the Statute of Frauds?

A

If the party against whom enforcement is sought admits in pleadings/testimony/in court that the contract was made (contract not enforced beyond quantity of goods admitted)

63
Q

When is a contract for the sale of goods of $500+ enforceable without a writing?

A

If the goods are either received and accepted, or paid for, but the contract is enforceable only for the quantity of goods accepted/paid for.

For specially manufactured goods where seller has reasonably indicated the goods are for buyer and made a substantial beginning in manufacture or committed for their purchase before notice of repudiation was received

64
Q

Expectation damages

A

Put you in the position had the contract been performed (default rule!); but a party is expected to take reasonable measures to mitigate the damages by the breaching party

Damages must have been foreseeable with reasonable certainty.

N/A if parties not in breach (aka impracticability)

Contract price less money already received/saved plus any costs

65
Q

Reliance damages

A

Unreimbursed costs spent due to reliance on contract where expectation damages are too uncertain, to put you in the position you were in prior to the contract

66
Q

Restitution

A

Where contract partially performed, to get back the value already given

Market value of services

67
Q

Consequential damages

A

Foreseeable costs incurred as a result of the breach; breaching party must have had reason to know of any special circumstances at the time of the contract

68
Q

Liquidated damages

A

Damages determined at the time of the contract, available if damages are reasonable and don’t act as a penalty (10% of contract or less)

69
Q

Quantum meruit

A

Breaching party may recover reasonable value of services already rendered less damages caused

70
Q

Specific performance

A

Available where item in contract is unique such as land

71
Q

Injunction

A

To prevent irreparable harm, such as employment contract, trade secrets

72
Q

Recission

A

When no meeting of the minds, mistake, misrepresentation, fraud, duress, incapacity

73
Q

When is it not required that a guarantor contract be in writing?

A

If the third party guaranteeing the debt does so for his own benefit; if it is for the benefit of another, including the original debtor, their guarantee must be in writing.

74
Q

What is a requirement contract?

A

A promise by the seller to sell the buyer as much of an item as the buyer requires.

Consideration exists in the buyer’s surrendering its option to buy the supplies elsewhere and in the good faith of both parties

75
Q

Can you recover lost profit damages?

A

Yes, if you can prove the losses suffered were substantially certain/not speculative

76
Q

What is the battle of the forms?

A

Under the UCC, when the terms of acceptance do not match the terms of the offer -

Between merchants (UCC), additional terms become part of the contract unless they materially alter the contract, the offeror objects, or the offer is limited to its terms.

If not merchants, modification/counter-offer still results in contract with original terms, new terms not added; but if offeree expressly makes their acceptance conditional on assent by offeror to additional terms (conditional acceptance) it’s a rejection/brand new offer which requires acceptance.

77
Q

What is the pre-existing duty rule?

A

The promise to perform, or the performance of, a pre-existing duty is not valid consideration

78
Q

When does the pre-existing duty rule not apply?

A

When the existing duty is owed to a third party

79
Q

What are UCC gap fillers?

A

price - reasonable at time of delivery
place of delivery - seller’s business
time of shipment - reasonable
time for payment - receipt of goods
assortment - buyer’s option

80
Q

What is the implied warranty of merchantability?

A

Warrants that goods are fit for their ordinary purpose; implied in every contract by merchant of goods of kind sold
- Beware of tricks where conditional acceptance/counteroffer by buyer just asks for this already implied warranty

81
Q

What is the implied warranty of fitness for particular purpose?

A

Implied whenever any seller has reason to know particular purpose for which goods are to be used and that the buyer is relying on seller’s skills/judgment to select goods, and buyer does in fact rely

82
Q

What are the effects of modification on sale of goods contracts?

A

No consideration needed if modification made in good faith (legitimate commercial reason); new terms will become part of contract, unless contract included a clause prohibiting modifications

83
Q

What makes a buyer’s acceptance a counter-offer?

A

When the buyer/offeree’s acceptance is conditional on offeror’s assent to an additional/different term from the offer

84
Q

What are “goods?”

A

Goods are all things moveable at the time they are identified as items to be sold under the contract (most tangible things)

85
Q

What is the difference between a void and voidable contract?

A

A void contract is unenforceable and is without any legal effect from the beginning (no contract exists), whereas a voidable contract is one that one or both parties may elect to avoid, and an aggrieved party may elect to enforce

86
Q

What is a “merchant?”

A

A merchant is one who regularly deals in goods of the kind sold or who otherwise by their profession hold themselves out as having special skills/knowledge as to the practices/goods involved

87
Q

What is a bargained-for exchange?

A

The promise must induce the detriment and the detriment must induce the promise (no consideration when one party gives a gift to another)

88
Q

Is forbearance valid consideration?

A

A promisee’s act or forbearance is valid consideration if it benefits the promisor

89
Q

What is performance at common law?

A

substantial performance of all that is called for in the contract

90
Q

What is performance under the UCC?

A

The UCC requires a perfect tender, that the delivery and condition of the goods are exactly as promised in the contract

91
Q

What is the obligation of good faith?

A

Under the UCC, both parties are required to act in good faith, which is honesty in fact and the observance of reasonable commercial standards of fair dealing

92
Q

Unconditional promise to perform

A

Failure to perform constitutes a breach of contract

93
Q

Conditional promise to perform

A

A condition is a promise modifier such that a condition must occur/fail to occur before a party has a duty to perform, or the occurrence/nonoccurrence of said condition will release a party from their duty to perform

94
Q

When does a party have an absolute duty to perform?

A

If there is no condition to a party’s performance, or if the condition has been excused or satisfied

95
Q

When is an absolute duty to perform discharged?

A

By performance/tender of performance
By occurrence of condition subsequent
By illegality
By rescission
By modification of contract
By cancellation
By release
By substituted contract
By accord and satisfaction
By novation
By impossibility/impracticability/frustration
By account stated

96
Q

Damages in employment contracts

A

Breach by employee = cost of replacing employee less amounts owed to employee for work done

Breach by employer = contract price less amount employee would have made taking similar position (mitigating loss)

97
Q

Damages in construction contracts

A

Breach by owner
Before completion = Expected profit plus costs expended
After completion = contract price

Breach by builder = cost of completion plus damages from delay less benefit conferred by builder

98
Q

Damages in land sale contracts

A

Difference b/n contract price and fair market value

99
Q

What is the knockout rule?

A

In some jurisdictions under the UCC, conflicting terms are knocked out of the contract and gaps are filled by the UCC gap-filler provisions; applies when the offeree’s acceptance includes different (vs. additional) terms

100
Q

When is a revocation effective?

A

When it’s received (not necessarily read) by the offeree

101
Q

Discharge by impracticability

A

Performance is still possible, but not without extreme and unreasonable difficulty/expense

102
Q

Contractor’s duty to perform - destruction

A

If renovation - discharged by impossibility
If new build, and at no fault of contractor, not discharged but deadline extended

103
Q

Does modification of a contract require additional consideration?

A

Generally, there must be consideration for modification of a contract, and a promise to perform an act that a party is already obliged to do is not sufficient consideration (the “preexisting legal duty” rule).

The modern view permits modification without consideration if it is fair and equitable in view of unanticipated circumstances.

104
Q

What is the Statute of Frauds?

A

A statute requiring certain contracts to be in writing (reflecting material terms of contract) and signed by the party sought to be held liable/to be charged.

105
Q

Confirmatory Memo Rule

A

In contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if: (i) he has reason to know of the confirmation’s contents; and (ii) he does not object to it in writing within 10 days of receipt (used by UCC to confirm oral agreements)

106
Q

What writing will satisfy the Statute of Frauds?

A

A writing specifying the material terms of the contract and signed by the party sought to be held liable.

The UCC requires that the writing indicate that a contract has been made and specify the quantity term.

107
Q

What constitutes economic duress?

A

Witholding something someone wants/needs is economic duress if (1) the party threatens to commit a wrongful act that would seriously threaten the other party’s property/finances, and (2) there are no adequate means available to prevent the threatened loss

108
Q

When may a party seek specific performance?

A

Only when the legal remedy is inadequate, such as when the subject matter of the contract is rare or unique (all land is considered unique).

N/A for breach of service contract due to difficulty in supervising performance, and courts feel it tantamount to involuntary servitude

109
Q

When is restitution an available remedy?

A

Restitution is an alternative to contract damages in a non-contract situation to prevent unjust enrichment

110
Q

What is the proper remedy for breach of a unique/rare service contract?

A

Injunctive relief to enjoin a breaching party from working for a competitor throughout the duration of the contract

111
Q

What is the equitable defense of sale to bona fide purchaser?

A

In land sale contract/sale of goods contract, if the subject matter of a goods or land contract has already been sold to another who purchased for value and in good faith, the right to specific performance is cut off

112
Q

What is the equitable defense of laches?

A

Arises when a party delays in bringing an equitable action and the delay prejudices the defendant (mere delay itself is not a ground for this defense)

113
Q

What is the equitable defense of unclean hands?

A

arises when the party seeking specific performance is guilty of some wrongdoing in the transaction being sued upon (wrongdoing must be related to the transaction being sued upon; not sufficient that plaintiff has defrauded other persons in similar transactions)

114
Q

What is the remedy of replevy?

A

Nonmonetary remedy under UCC - if buyer has made at least part payment of the purchase price of goods and seller has not delivered, buyer may recover goods from seller if seller becomes insolvent within 10 days after receiving buyer’s first payment or goods were purchased for personal/family/household purposes.

buyer must tender any unpaid portion of the purchase price to the seller.

115
Q

How may an order for “prompt” shipment be accepted?

A

By shipment of either conforming or nonconforming goods, and a contract is created upon such shipment.

If NC goods shipped, buyer may reject/sue for damages, or accept, notify seller of breach, pay contract price, and sue for damages

116
Q

When may a breaching party recover under restitution?

A

Only if the nonbreaching party seeks to keep the value of the benefit conferred without paying and, therefore, is unjustly enriched.

MBE (4 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions