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Flashcards in Contracts Deck (33):

At common law, no contract is formed unless the acceptance...

“mirrors” the offer. This is the so-called “mirror-image rule.” Any deviation by the offeree, either with additional or different terms, is a counter-offer, not an acceptance.


The rule for acceptance in Article 2 is different than the common law and is commonly known as...

the “Battle of the Forms.” When both parties are merchants, then acceptance does include the additional terms unless they (1) materially alter the original contract, (2) the original offer expressly limits acceptance to the terms of the offer, or (3) the offeror has already objected to the additional terms or does so within a reasonable time after notice of them was received. If any one of the conditions is met, a contract is formed but the contract will not include the additional terms.


Under the UCC's Battle of the Forms doctrine, if the offer and acceptance differ to such a degree that there is no contract, but the parties have begun to perform anyway, Article 2 provides...

that there will be a contract to the extent to which the writings of the parties agree, together with any supplementary terms filled in by the provisions of the UCC.


An express warranty is...

any affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods conform to that affirmation or promise.


A warranty that the goods are merchantable is...

implied in a contract for their sale whenever the seller is a merchant with respect to goods of that kind. The seller is strictly liable, and therefore the implied warranty of merchantability will be enforced regardless of whether the seller was aware of any breach of the warranty.


The implied warranty of merchantability can be disclaimed...

by use of “as is,” “without faults,” or similar language that makes plain that there is no implied warranty. The disclaimer may be oral, but must use the term “merchantability,” and must be conspicuous if in writing.


Under the UCC, when the seller, at the time of contracting....

has reason to know of any particular purpose for which the goods are required, and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is an implied warranty that the goods shall be fit for such purpose.


An implied warranty of fitness for a particular purpose...

can be disclaimed by general terms, but the disclaimer must be in writing and be conspicuous.


Once a duty to perform exists, nonperformance is a...

breach of contract unless the duty is discharged.


Under common law, a material breach of contract allows the...

non-breaching party to withhold any promised performance and pursue remedies. The goal of compensatory damages is to put the non-breaching party in as good a position as performance would have done, plus consequential and incidental damages, if any, less possible mitigation of damages.


Consequential damages are...

reasonably foreseeable losses to a non-breaching party, such as lost profits. To recover, the plaintiff must prove the dollar amount of the damages with reasonable certainty.


Parties may seek to rescind a contract for a variety of reasons, including

mutual mistake or unilateral mistake. However, the grounds for rescission must have existed at the time the contract was made.


Mutual mistake lets parties rescind if:

(1) Mistake of time existing at time deal was made, (2) Mistake relates to basic assumption of deal (3) Mistake has material impact (4) Impacted party did not assume the risk


Unilateral mistake lets parties rescind if:

(1) Mistake of time existing at time deal was made, (2) Mistake relates to basic assumption of deal (3) Mistake has material impact (4) Impacted party did not assume the risk (5) Either (a) Mistake makes contract unconscionable, OR (b) Other side knew or had reason to know, or causes, mistake


The doctrine of frustration of purpose applies when...

unexpected events arise that destroy one party’s purpose in entering into the contract, even if performance of the contract is not rendered impossible. The event that arises must not be the fault of the frustrated party, and its nonoccurrence must have been a basic assumption of the contract.


The doctrine of anticipatory repudiation is applicable when...

a promisor clearly and unequivocally repudiates a promise before the time for performance arises or elapses. However, Massachusetts does not recognize anticipatory repudiation for common-law contracts, such as contracts for personal services. Instead, upon repudiation, the non-breaching party may treat the repudiation as an offer to cancel the contract or withhold performance until the repudiating party’s performance occurs.


A party’s contractual obligations may be excused by an...

unforeseen circumstance.


A partially performing party can generally recover for...

work performed, plus expectancy damages for the work not yet performed.


 The parol evidence rule bars...

extrinsic evidence of prior or contemporaneous statements from being part of the contract when the contract is totally integrated, and bars extrinsic evidence that is contradictory when the agreement is partially integrated.  Courts will look to the intent of the parties to determine whether there is total, partial, or no integration.


A contract requires an...

offer, acceptance, and consideration.  An offer is a manifestation of a willingness to enter into an agreement that creates the power of acceptance in the offeree.  An acceptance is an objective manifestation by the offeree to be bound by the terms of the offer. Consideration is a bargained for legal detriment or benefit.


A condition precedent is an...

event that must occur, unless its non-occurrence is excused, before performance under a contract becomes due.  Evidence of the existence of a condition precedent is not barred by the parol evidence rule.


To modify a contract under the common law, there needs to be...

consideration or an unforeseeable circumstance that made performance impracticable.  


Under common law, a material breach of contract allows the...

non-breaching party to withhold any promise of performance and to pursue remedies for the breach, including damages.  


In construction contracts, the general measure of damages for a contractor’s failure to begin or to complete the project is the...

difference between the contract price and the cost of construction by another builder, plus compensation for the delay in completion of the construction.


Under Article 2, a contract for the sale of goods can be made in...

any manner that is sufficient to show agreement between the parties.


Under the UCC, when a buyer breaches or repudiates, the seller may choose to...

take the difference between the contract and resale prices.  A seller who chooses this route must exercise good faith and conduct a commercially reasonable sale. 


Incidental damages to an aggrieved seller include any...

commercially reasonable charges, expenses, or commissions incurred in connection with the resale of the goods resulting from the breach or repudiation by the buyer.


After the seller has tendered delivery of the goods, responsibility shifts to the buyer to either accept or reject them.  If the goods or tender of delivery fail in any respect to conform to the contract, the buyer may...

reject the goods or choose to accept the goods despite the nonconformity.  To properly reject the goods, the buyer must timely notify the seller of the rejection and the particular defect. 


When any tender or delivery by the seller is rejected because it is nonconforming and the time for performance has not yet expired, the seller may...

seasonably notify the buyer of his intention to cure and may then, within the contract time, make a conforming delivery. 


When there has been proper rejection, the buyer is entitled to either (a) benefit-of-the-bargain damages OR (b) cover, as well as any incidental and consequential damages that may be applicable.  

(a) The benefit of the bargain remedy provides the buyer with the difference between the contract price and the market price.  

(b) Cover provides the buyer with the difference between the cost of replacing the goods and the contract price. The buyer’s cover must be reasonable, made in good faith, and without unreasonable delay.


In the sales of goods context, consequential damages are...

any loss resulting from general or particular requirements and needs of which the seller, at the time of contracting, had reason to know and which could not be reasonably prevented by purchasing substitute goods or otherwise.


Under the UCC, an offer to buy or sell goods is irrevocable if...

the offeror is a merchant, there is an assurance that the offer is to remain open, and the assurance is contained in a signed writing from the offeror. However, the irrevocability of a firm offer cannot exceed 90 days unless the offeree gives consideration to validate it beyond the 90-day period. 


A unilateral mistake allows an affected party to be excused from a contract if the party can show: 

(1) wrong about a fact that is basic assumption of contract,

(2) they did not assume the risk of that mistake,

(3) other party knew or should have known OR breached a legal duty to disclose a fact.