Contracts

Question 1

Parol Evidence Rule Is COMPLETELY Inapplicable to: (regardless of complete integration):

Answer 1

(a) agreements made after the writing (b) defenses (c) condition precedent (d) ambiguity (e) trade usage/course of performance/dealing (f) remedies for breach (consequential damages)

Question 2

The rights of an intended beneficiary vest when:

Answer 2

the beneficiary (a) detrimentally or materially relies on the rights created (b) manifests assent to the contract at one of the party’s request or (c) files a lawsuit

Question 3

Accommodation

Answer 3

When a merchant ships goods in response to an order placed by a buyer, but says they are an “accommodation,” that is NOT acceptance.

Question 4

Statute of Frauds applies in Ks for: (5)

Answer 4

Marriage; suretyship (paying off the debt of another); one year; UCC $500 or more; real property

Question 5

Knock out rule

Answer 5

UCC merchants. Different terms in the offer and acceptance nullify each other and are “knocked out” of the contract. Court may use gap-filling.

Question 6

UCC, merchants. Acceptance includes different terms. When will these add’l terms NOT be automatically included? (3)

Answer 6

(a) terms materially alter the original K; (b) offer expressly limits acceptance to terms of the offer (c) offeror seasonably objects within a reasonable time.

Question 7

Implied in fact Ks

Answer 7

Assent is inferred solely from offeree’s conduct

Question 8

Implied in law Ks

Answer 8

Benefit is conferred, and the party has a reasonable expectation of compensation because they acted without gratuitous intent. D would be unjustly enriched if there was no K. Remedy = restitution.

Question 9

Disclaimers of implied warranties of (a) merchantability and (b) fitness for a particular purpose

Answer 9

Both must be conspicuous. Merchantability can be orally; fitness for a particular purpose must be in writing

Question 10

When may the defense of impracticability be used? (4)

Answer 10

Due to an UNEXPECTED event, performance becomes impracticable; “special person” in a services K dies/incapacitated; performance becomes illegal AFTER K is entered into; subject matter of the K is completely destroyed

Question 11

For UCC sale of goods for over $500, when mustn’t it be in writing?

Answer 11

(a) custom goods not suitable for sale to others where the seller has already begun manufacturing, (b) a portion of purchase price has already been paid, (c) receipt & acceptance of goods, (d) merchants’ failure to respond to confirming memo w/in 10 days

Question 12

Remedy for failure to satisfy a condition precedent?

Answer 12

Trick question! No remedy, just excuses performance.

Question 13

Frustration of Purpose (3) and Remedy

Answer 13

(a) Unexpected event (b) destroys one party’s purpose for entering the K (c) event is not at the fault of the frustrated party. Note, performance mustn’t be impossible. Remedy = rescission.

Question 14

Constructive Revocation (2)

Answer 14

Offeror takes definite action inconsistent with the offer, and offeree knows about it. Does NOT apply with firm offers or options.

Question 15

A debtor’s promise to pay all or part of a pre-existing debt is enforceable if: (2)

Answer 15

The debtor renewed their promise despite SOL being over, and the promise is made in writing or partially performed

Question 16

Performance of K becomes illegal - when to apply mutual mistake, and when to apply impracticability?

Answer 16

Mutual mistake - illegal before K is entered into (and neither parties knows performance would be illegal). Impracticability - illegal after K is entered into

Question 17

Irrevocable waiver of condition

Answer 17

When the party waives a condition precedent/subsequent, the waiving party cannot change their mind if the other party relies detrimentally on it

Question 18

Which remedial doctrine applies in the absence of a valid contract?

Answer 18

Unjust enrichment

Question 19

Does the mailbox rule apply to irrevocable offers?

Answer 19

NO. Acceptance must be received by the specified deadline.

Question 20

Test for whether a gift is consideration

Answer 20

Whether the offeree could reasonably believe that the offeror intended to induce action

Question 21

Third party exception to pre-existing duty rule

Answer 21

A promise to perform something that is a pre-existing duty to a different person is adequate consideration

Question 22

Mutual mistake elements

Answer 22

Mistake existed when K was formed; relates to basic assumption; material impact on transaction; adversely did not assume the risk. Reformation the preferred remedy.

Question 23

Unilateral mistake elements

Answer 23

Mistaken party did not bear the risk; mistake would make K unconscionable OR other party at least should have known other party was mistaken

Question 23

Unilateral mistake elements

Question 24

Fraudulent Misrepresentation (K)

Answer 24

False assertion; intent to mislead; induced assent; justifiable reliance

Question 25

Rescission Requirements

Answer 25

Grounds for rescission must’ve existed at the time K was made;

Question 26

When are the parties NOT allowed to rescind a contract via mutual agreement?

Answer 26

Third party beneficiary contract where rights have already vested

Question 27

Can delegation of duties under a K be grounds for reasonable insecurity?

Answer 27

Yes

Question 28

Installment K for goods: when can buyer cancel the K?

Answer 28

When seller’s failure to comply substantially impairs the value of the ENTIRE K, not just that individual installment

Question 29

What are the two remedies for defective performance with construction K?

Answer 29

Cost to correct the defect, but if that would result in economic waste, and it was NOT a willful breach, diminution in market price

Question 30

Foreseeability of K consequential damages is evaluated at what point in time?

Answer 30

K creation, not time of breach

Question 31

When does a breaching party under a goods K have the right to cure?

Answer 31

If performance it not yet due under the K, OR seller has reasonable grounds to believe buyer would accept despite the nonconformity

Question 32

If impracticability rescinds a K, but a party has partially performed, what remedy do they have for this partial performance?

Answer 32

Quasi-contract - implied in law (unjust enrichment)

Question 33

Installment Ks: when is something a material breach, not just a partial breach?

Answer 33

When non breaching party fails to obtain substantial benefit of the K. It doesn’t matter that the party repudiated the rest of the K–you have to wait!