Contracts

Question 1

Termination by Offeror

Answer 1

An offeror may terminate their offer by communicating a revocation of the offer to the offeree before the offeree accepts.

Question 2

Option Contracts

Answer 2

An option contract is a contract ancillary to an offer promising to keep the offer open.

Question 3

How long can an option contract be left open?

Answer 3

• If within a writing, the option contract is open for the stated time.
• If no time is stated, it is a reasonable amount of time, not to exceed three months.

Question 4

Revocation by Indirect Communication

Answer 4

If an offeree learns from a reliable source that the subject matter of the offer has been disposed of by the offeror, the offer is revoked.

Question 5

Ambiguity

Answer 5

• Ambiguities in the contract construed against the party who prepared the contract.

Question 6

Rules of Construction under Article 2

Answer 6

Course of Dealing = how parties performed under previous contracts between them
Usage of Trade = meaning of terms within the industry
Course of Performance
Terms Missing (Other then Quantity) = insert reasonable term

Question 7

Warranty of Title

Question 7

Warranty of Merchantability

Answer 7

• seller of goods is a merchant who deals in goods of the kind sold
• the goods will be fit for their ordinary purposes

Question 8

warranty of fitness for particular purpose

Question 9

Express contracts are formed by…

Answer 9

language, orally or writing.

Question 10

Implied contracts are formed by _______.

Answer 10

conduct

Question 11

A bilateral contract is one consisting of…

Answer 11

the exchange of mutual promises- a promise for a promise.

Question 12

Unilateral contracts an only be accepted by __________.

Answer 12

performance

Question 13

Goods Defined

Answer 13

All things movable at the time they are identified as the items to be sold under the contract.

Question 14

Goods does not refer to…

Answer 14

real estate, services, or intangibles (such as a patent), or to construction contracts.

Question 15

For “merchant rules” to apply…

Answer 15

a merchant must be acting in a way that relates to their business.

Question 16

Merchant Defined

Answer 16

One who regularly deals in goods of the kind sold or who otherwise, by their profession, holds themselves out as having special knowledge or skills as to the practices or goods involved.

Question 17

If a sale involves both goods and services, you will…

Answer 17

determine which aspect is dominant and apply the law governing that aspect to the whole contract

Question 18

If the contract divides payment between goods and services…

Answer 18

Article 2 will apply to the sale portion and the common law will apply to the services portion.

Question 19

Good Faith & Fair Dealing- UCC

Answer 19

“Good faith” is honesty in fact and the observance of reasonable commercial standards.

Question 20

Requirements for a Real Estate Contract

Answer 20

must include price terms and identify the land with some particularity (but a deed description isn’t required) ex: my house in Bryan, Texas

Question 21

Requirements for a Sale of Goods Contract

Answer 21

must include quantity

Question 22

Required for Requirements & Outputs Contracts

Answer 22

there cannot be a tender or demand for a quantity unreasonably disproportionate to
1) any stated estimate or
2) (in the absence of a stated estimate) any normal or otherwise comparable prior output or requirements

Question 23

Requirements Contract Defined

Answer 23

a buyer promises to buy from a certain seller all of the goods the buyer requires, and the seller agrees to sell that amount to the buyer

Question 24

Outputs Contract Defined

Answer 24

a seller promises to sell to a certain buyer all of the goods that the seller produces, and the buyer agrees to buy that amount from the seller

Question 25

Merchant's Firm Offer

Answer 25

Arises when a merchant offers to buy or sell goods in a signed writing that gives assurances that the offer will be held open. ***If no specific time frame is stated in the offer, a merchant's firm offer will remain open for a reasonable time not to exceed 3 months***

Question 26

The Mailbox Rule does not apply to...

Answer 26

option contracts

Question 27

A letter of revocation becomes effective when...

Answer 27

it is received by the offeree, regardless if they read it.

Question 28

MYLEGS

Answer 28

Marriage-Year-Land Sales-Executors-Goods $500+-Surety

Question 29

Specific Performance Defined

Answer 29

an order from the court to the breaching party to perform or face contempt of court charges

Question 30

Specific performance is only available if...

Answer 30

...the legal remedy (that is, money damages) is inadequate.

Question 31

Specific performance is never available for _________ contracts.

Answer 31

services contracts

Question 32

Doctrine of Prevention (re Conditions)

Answer 32

requires that a party refrain from conduct that prevents or hinders the occurrence of a condition

Question 33

The Mailbox Rule does not apply to _________ contracts.

Answer 33

Option contracts- Acceptance is effective when received, not when sent.

Question 34

10 Day Exception to SOF

Answer 34

If one merchant within a reasonable time after entering into an oral agreement, sends a written confirmation to the other merchant of that oral agreement, it binds the sending party immediately. If the recipient merchant does not object to the terms of that writing within 10 days after receipt, the recipient merchant is bound as well. Note: both parties must be merchants

Question 35

Lack of capacity as an affirmative defense should be included in an _______, not a _______.

Answer 35

answer, not a motion to dismiss

Question 36

Unilateral Mistake

Answer 36

if the non-mistaken party knew or had reason to know of the mistake made by the other party, the contract is voidable by the mistaken party- the mistake must have a material effect on the agreed-upon exchange, and the mistaken party must not have borne the risk of the mistake.