Contracts

Question 1

When is revocation effective?

Answer 1

Upon receipt or publication.

Question 2

When is promissory estoppel/detrimental reliance applicable?

Answer 2

1. Promisor should reasonably expect to induce action or forbearance, and
2. such action or forbearance is in fact induced.

NOTE: no consideration necessary.

Question 3

UCC Article 2 Merchant’s Firm Offer requirements?

Answer 3

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

Valid for up to three months. If offered to hold open for more than 3 months without consideration, will be valid up to 3 months. OR if no time stated, reasonable as interpreted by the court.

Question 4

What is the mirror image rule and when is it applied?

Answer 4

At common law, the “mirror image rule” states that any difference or additional terms in the acceptance make the response a rejection and counteroffer.

Does NOT apply to UCC Art. 2 sale of good Ks.

Question 5

What is the perfect tender rule?

Answer 5

Article 2 does NOT follow common law substantial performance, it follows the perfect tender rule – if goods or their delivery fail to conform to the contract in any way, the buyer generally may:
1. reject all;
2. accept all; or
3. accept any commercial units and reject the rest.

Question 6

What is the parol evidence rule?

Answer 6

When the parties to a K express their agreement in a writing with the intent that it embody the final expression of their bargain, the writing is an “integration.”

Any other expressions – written or oral – made prior to the writing, as well as any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing.

Question 7

What will a court use to determine whether a writing is an integration?

Answer 7

1: whether the writing was intended as the final expression of the agreement; and

2. whether the integration was intended to be complete or partial.

Evidence is admissible to show the parties’ intent.

Question 8

What is a partial integration, its effect, and the associated UCC presumption?

Answer 8

Not a complete integration.

If partial integration, the writing may not be contradicted but may be supplemented by proving consistent additional terms.

The UCC presumes all writings are partial integrations.

Question 9

Two types of carrier cases and their risk of loss?

Answer 9

1. Shipment K: authorizes seller to ship goods via common carrier but not to a particular destination:
   - ROL passes to buyer when goods delivered to carrier.
2. Destination K: requires seller to deliver goods to particular destination, ROL passes to buyer when goods tendered to buyer at the destination.

Question 10

Definition of noncarrier case and associated risk of loss?

Answer 10

Sale in which it appears the parties did not intend the goods be moved by common carrier.

If seller is merchant, ROL passes to buyer when buyer takes physical possession.

If seller is NOT a merchant, ROL passes to buyer upon tender of delivery.

Question 11

What is the implied warranty of merchantability?

Answer 11

Implied in every K for sale by a merchant who deals in goods of the kind sold. Goods must be “fit for the ordinary purpose for which such goods are used.”

Question 12

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

Answer 12

1. any seller, merchant or not, has reason to know the particular purpose for which the goods will be used and that buyer is relying on seller’s skill and judgment to select suitable goods; and
2. buyer in fact relies.

Question 13

What is anticipatory repudiation?

Answer 13

Anticipatory repudiation occurs where a promisor, prior to the performance time, unequivocally indicates that he cannot or will not timely perform, allowing the nonrepudiator the option of suspending performance and waiting to sue until the performance date, or to sue immediately.

Question 14

When do a third-party beneficiary’s rights vest?

Answer 14

Vesting occurs when the beneficiary:
(i) manifests assent to the promise in a manner invited or requested by the parties;
(ii) brings suit to enforce the promise; or
(iii) materially changes position in justifiable reliance on the promise.

Question 15

When is a third party to a contract an intended beneficiary such that they may enforce K rights?

Answer 15

When:
1. 3p specifically identified in K; OR
2. are to receive performance directly from the promisor; OR
3. are in some relationship with the promisee to indicate intent to benefit.