Contracts

Question 1

What are the five elements required for a valid contract under Common law and UCC?

Answer 1

1. An offer
2. An acceptance that mirrors the offer
3. A meeting of the minds
4. Valid consideration
5. Capacity or authority of all parties

Consideration can be bargained for exchange or detrimental reliance.

Question 2

What is the Mailbox Rule?

Answer 2

An offer is considered accepted when the acceptance is communicated, regardless of the method used (mail, e-mail, text, etc.)

Question 3

What are illusory contracts?

Answer 3

Contracts that are void due to a lack of mutuality or where only one party promises to perform.

Question 4

What is the Merchant’s Firm Offer Rule?

Answer 4

A UCC rule stating that a merchant’s offer for the sale of goods is irrevocable for the time stated, or for a reasonable time up to three months. Both parties must be merchants.

Question 5

What is the Mirror Image Rule?

Answer 5

Acceptance must mirror the offer; any variation constitutes a counteroffer.

Question 6

What is the Battle of the Forms?

Answer 6

Under UCC Art 2, when both parties are merchants, new terms can become part of the final contract unless specific conditions are met.

Question 7

What is required for modification of contracts under Common Law?

Answer 7

New consideration is required; past performance or pre-existing duty cannot be used.

Question 8

What is required for modification of contracts under UCC?

Answer 8

No consideration is needed, only good faith.

Question 9

What happens to rights and duties in an assignment?

Answer 9

Rights and duties go to the assignee who stands in the shoes of the assignor unless there is a material change.

Question 10

What is delegation of duties?

Answer 10

The transfer of duties that may occur freely unless there is a material change in the duties.

Question 11

What is the effect of revocation before acceptance?

Answer 11

Revocation is permissible before acceptance and can occur through reasonable notice via a third party.

Question 12

What is accord and satisfaction?

Answer 12

An agreement to suspend rights until an alternate performance is completed.

Question 13

What is a unilateral contract?

Answer 13

A contract where one party promises to do something in return for the performance of a specific act by the other party.

Question 14

What damages does a builder receive if the owner breaches a construction contract?

Answer 14

Builder’s lost profits plus costs incurred, minus any costs saved.

Question 15

When does the risk of loss pass to the buyer under UCC?

Answer 15

Risk generally passes when the buyer receives the goods; specific conditions apply for shipment and destination contracts.

Question 16

What is the enforceability of a renewed promise to pay a preexisting debt?

Answer 16

Enforceable if renewed despite a technical defense and made in writing or partially performed.

Question 17

What is trade usage?

Answer 17

A practice or method of dealing observed regularly in the industry.

Question 18

Does the UCC parol evidence rule permit addmission of trade usage? If so, for what purpose?

Answer 18

Admission of evidence of trade usage to explain or supplement contract terms if consistent with the express language.

Question 19

What happens under the mirror-image rule if acceptance contains different terms?

Answer 19

It acts as a rejection and a counteroffer.

Question 20

What is the implied covenant of good faith and fair dealing?

Answer 20

An inescapable term of every agreement under common law.

Question 21

What are the types of damages in contract law?

Answer 21

• Expectancy
• Consequential
• Incidental

Question 22

Expectancy

Answer 22

benefits of the bargain. Puts the non-breaching party where they would have been but for the breach.

Question 23

Consequential

Answer 23

reasonably foreseeable and caused by a direct result of the breach.

Question 24

Incidential

Answer 24

commercially reasonable foreseeable based on trade (UCC Art. 2)

Question 25

What is rescission in equity?

Answer 25

Returning to the status quo by canceling the contract.

Question 26

What is reformation in equity?

Answer 26

Court rewrites the contract to reflect the true intent of the parties.

Question 27

What is specific performance?

Answer 27

Ordering a party to specifically perform their obligations under the contract.

Question 28

What is an injunction?

Answer 28

A court order based on a balance of equities, likelihood of success, irreparable harm, and public policy.

Question 29

What is liquidated damages?

Answer 29

Agreed upon in writing, reasonable, not punitive, and not excessive.

Question 30

What is the duty to mitigate?

Answer 30

Non-breaching parties must take reasonable steps to reduce their losses.

Question 31

What is the primary goal of compensatory damages?

Answer 31

To place the non-breaching party in the same position as if the contract had been performed.

Question 32

Can an injured party recover both reliance damages and expectation damages?

Answer 32

No, they cannot recover both.

Question 33

What defines a lost-volume seller?

Answer 33

* Has an inexhaustible inventory * Would have made two sales but for the breach.

Question 34

What is a condition precedent?

Answer 34

An explicit contract term requiring a future event to occur before a party is obligated to perform.

Question 35

What is a condition subsequent?

Answer 35

An uncertain future event that, if it occurs, excuses a party's existing duty to perform.

Question 36

What is a requirements contract under UCC?

Answer 36

An exclusive agreement for the sale of as many goods as the buyer requires during a specified period.

Question 37

Instances where the court will infer an implied-in-fact contract?

Answer 37

-Measurable benefit conferred (ex: emergency medical services)

Question 38

Repudation

Answer 38

Upon an unequivocal communication of inability to perform before performance id due - nonbreaching party must wait a "commerically reasonable time or seek damages based on loss (substantial impairment) and may suspend their own performance. Normally, the party has to wait for the breach to sue for damages.

Question 39

Retracting a repudiation

Answer 39

may retract before performance IF no material change by other party.

Question 40

Demand for Adaquate Assurance

Answer 40

Reasonable insecurity arises by commerical stds, a party may demand adequate assurances of performance in writing & until receieved, may suspend their performance if commerically reasonable. Other party must respond in a reasonable time not to exceed 30 days.