Contracts

Question 1

True or False: an incidental beneficiary has the right to enforce a contract?

Answer 1

FALSE!!!

Question 2

Define Intended Beneficiary

Answer 2

He is an intended beneficiary if the contracting parties clearly intended for him to benefit from the contract

Question 3

Can an intended beneficiary enforce a contract?

Answer 3

Yes, an intended beneficiaries can enforce once there rights have vested.

Question 4

When do intended beneficiaries rights vest?

Answer 4

rights vest 1) when the beneficiary reasonably and detrimentally relies on the rights created, 2) consents to the contract at a parties request, or 3) sues to enforce the contract.

Question 5

Define Earnest Money

Answer 5

A deposit paid by a buyer to show a good faith intent to complete the transaction

Once accepted the seller cannot recover other damages for breach

Question 6

Define Earnest Money

Answer 6

A deposit paid by a buyer to show a good faith intent to complete the transaction

Once accepted the seller cannot recover other damages for breach

Question 7

Does earnest money constitute liquidated damages? 

Answer 7

Yes

Question 8

Define liquidated damages

Answer 8

Liquidated damages is an amount agreed-upon during good faith negotiations to reasonably compensate the injured party. These damages are recoverable unless they constitute a penalty then the seller can only recover actual damages.

Question 9

True or false a contract entered into by someone under the age of 18 is voidable by the minor but not voidable by the other contracting party

Answer 9

True

Question 10

Once a minor has reached the age of 18 they can ratify the contract by

Answer 10

Ratify the contract by failing to timely void the contract or otherwise agreeing to be bound

Question 11

An intended beneficiary will not be able to recover under a contract when the original contracting parties each make a promise to each other because

Answer 11

Each parties performance of its own promise is a constructive condition precedent to the original parties duty to perform, and if either party fails to substantially, perform the other parties duty as excused.

NOTE: in contrast - express conditions (ones appearing in the contract) require strict compliance

Question 12

Is a difference in economic value between the items exchanged grounds for finding that a contract did not exist due to inadequate consideration?

Answer 12

No

Question 13

A contract is divisible if

Answer 13

1) the parties’ duties can be broken down into at least two corresponding pairs of performance
AND
2) those pairs of performances can fairly be regarded as agreed equivalents (bargained-for)

NOTE: Although courts prefer to interpret contracts as divisible for fairness reasons, they will not do so in contradiction of the express terms of the contract

Question 14

Consequential damages are appropriate against the breaching party if

Answer 14

1) the breaching party KNEW about the special circumstances
OR
2) could have reasonably foreseen the harm, in light of the special circumstances, that would result from from a breach

Question 15

When is acceptance by mail permitted?

Answer 15

1) permitted if mail is reasonable method of communicating acceptance (offer was communicated by mail)
and
2) would be effective upon dispatch (when the acceptance is properly addressed and placed with the postal service with paid postage)

Question 16

Contracts for exclusive dealing (output and requirement contracts) carry with them an implied obligation. What is the obligation?

Answer 16

Contracts for exclusive dealing in the types of goods concerned carry with them an implied obligation by the SELLER to use its best efforts to supply the good and by the BUYER to promote their sale.

Question 17

True or False: Letterhead or Logos on a written offer can count as a signature.

Answer 17

True.

Question 18

Generally, a contract for the comission of a tort is unenforceable as against public policy. When can a party to the contract for the tort still recover under the contract?

Answer 18

when the party was unaware of the facts that make the performance of the contract tortious.

(Example: landowner contracts with tree service to cut down tree on neighbors yard. Tree service did not know the tree was not landowners property. Tree service can recover)

Question 19

Can parol evidence be used to prove a condition precedent?

Answer 19

Yup, as long is it does not contradict the terms of the contract.

Question 20

Must expectation damages be foreseeable?

Answer 20

Yes

Question 21

Under the UCC, a buyer of goods obtains an insurable interest in the goods as soon as

Answer 21

the goods are identified to the contract

Question 22

When are good indentified if not explicitly stated in the agreement?

Answer 22

Indentification occurs:
1) for goods already existing and identified, when the contract is made, or
2) for goods that are not already existing and identified, at the earliest of when the good are shipped, marked, or otherwise designated by the seller

Question 23

What are the eight ways to discharge contractual obligations?

Answer 23

Mnemonic: FIRM SCAN
Full performance of contractual obligations
Impossibility, Impracticability, or frustration of purpose
Release (In writing)
Mutual recission

Substituted Contract
Contract or covenant not to sue
Acord and Satisfaction
Novation

Question 24

If a contractual duty is discharged due to impracticability and a party have partially performed may the party seek damages?

Answer 24

Yes, the party may seek restitution damages

Question 25

The one-year provision of the statute of frauds applies to a contract whose terms make it impossible for any party to fully perform within one year. When does the one year period start?

Answer 25

the day after the offer is accepted

Question 26

Are construction contracts typically divisible contracts?

Answer 26

NO

Question 27

Can you recovery expectancy damages if you materially breach a contract?

Answer 27

NO

Question 28

A party who substantially but not fully performed his/her contraction obligations can recovery what kind of damages?

Answer 28

expectancy or reliance ## Footnote Cannot recover expectancy damages if you breach the contract

Question 29

If someone partially performs and then breaches a contract what kind of damages can they recover?

Answer 29

restitution damages ## Footnote Can recover the reasonable value of the benefit conferred less any damages suffered by the nonbreaching party due to the breach.

Question 30

Generally a surety agreement to pay debt of a principal must be in writing, unless

Answer 30

the surety has their own economic advantage rather than the principal's benefit

Question 31

If a breach of contract is willful - will the Court award diminution or the total cost of reconstruction?

Answer 31

The total cost of reconstruction

Question 32

T/F: The mailbox rule does not apply if the offer requires receipt of acceptence by a certain date. (Does example implicate the mailbox rule) | Example: Offer says "acceptence must be received by June 25th."

Answer 32

True. | No, this does not implicate the mailbox rule.

Question 33

Define Accord and Satisfaction

Answer 33

**Accord** is when one party agrees to accept *a different performance* from the other party *to satisfy the other party's existing duty* **Satisfaction** is performance of the accord agreement will *dischange both the original contract and the accord contract*

Question 34

Define Promissory Estoppel

Answer 34

when an offeree reasonably and detrimentally relies on an offier it may become irrevocable

Question 35

# Define Promisory Estoppel Doctrine

Answer 35

a promise is binding if (1) the promisor should reasonably expect it to induce action or forbearance on the part of the promisee or third person, (2) the promise does induce such action or forbearance, and (3) injustice can be avoided only by enforcement of the promise ## Footnote This is literally just detrimental reliance

Question 36

When a nonbreaching party has partially performed a contract at a below-market-price - what form of damages are they entitled too?

Answer 36

restitution damages

Question 37

Under UCC section 2-509(1), a contract that requires the seller to ship goods to the buyer by a third-party carrier is either a shipment or a destination contract. If the contract does not specify which or there is not trade usage, what is the presumption?

Answer 37

That there is a shipment contract when the the contract requires shipment by a third-party carrier

Question 38

When one party to a contract knows or has reason to know that the other party attaches a different meaning to a material term, whose interpretation controls?

Answer 38

the *unknowing party's* meaning of the term will control

Question 39

Is a party's promis to pay money recieved pursuant to a contract to a third party an assignment?

Answer 39

No, it is a future promise | that means it is not an intended beneficiary with ability to enforce

Question 40

# Define a release

Answer 40

is a ***writing that manifests an intent to discharge*** another party from an existing duty **Under the UCC**, a release **must** also be **signed** but new consideration is not required **Under common law**, the release **must be supported by consideration** or a consideration substitute (detrimental reliance)

Question 41

Under the UCC, for an installment contract, if the shipment is nonconforming when must the buyer accept the nonconforming tender?

Answer 41

if the seller gives adequate assurance that they will cure the nonconformity

Question 42

Under an installment contract, can a buyer cancel a contract if one of the installments was nonconforming?

Answer 42

No, unless the nonconforming shipment substantially impairs the value of the whole contract

Question 43

When does a party who benefits from a condition waive the nonoccurence of the condition?

Answer 43

can be indicated by words or condcut that the condition is no longer needs to occur

Question 44

Is Promissory estoppel for reasonable and detrimental reliance before or after acceptance?

Answer 44

BEFORE

Question 45

A misunderstanding arises when the parties to a contract assign different meanings to the same term. When the misunderstanding is a material term and neither party new or had reason to know of the misunderstanding there is ordinarily no contract. Can the parties waive the misunderstanding?

Answer 45

yes, either party can waive the misunderstanding and choose to enforce the contract as to the other party's understanding