Contracts Flashcards

Question

A breaching party may seek restitution damages for _________ unless __________.

Answer 1

a. the fair value of any benefit conferred, the reasonable value of services providedb. there is an expressed condition that would reasonably be understood to provide for forfeiture of payment unless there is full performanceA landscaper entered into a written contract with a developer to landscape a 30-house subdi- vision at a price of $4,000 for each house. The contract provided for payment of the $120,000 only on completion of the landscaping for all the houses. After completing 20 houses, the landscaper demanded payment of $80,000. The developer refused. The landscaper then walked off the job without doing any landscaping on the other 10 houses.What may the landscaper recover from the developer?(C) The reasonable value of the landscaper’s services in landscaping the 20 houses, less the developer’s damages for the failure to landscape the other 10 houses.

Answer 2

Yes. Art. 2. Nothing said about price, but can still be an offer if parties still intend. Sale of goods – Article 2 – no price requirement

Answer 3

As a nonbreaching party, the developer has the choice of remedies. The developer may enforce the benefit of this bargain and elect to pay the landscaper the contract price ($120,000) minus the cost to have the last 10 houses landscaped. Alternately, the developer may rely on the material breach as a reason to set aside the bargain, in which case the developer need only pay the landscaper the net benefit received, i.e., the reasonable value of the landscaper’s services for the first 20 houses, less any damages incurred due to the landscaper’s failure to perform.

Answer 4

No. Another specific content problem to watch for: Vague or ambiguous material terms not an offer under either common law or UCC [Appropriate, fair, reasonable]

Answer 5

Yes. This is an offer. Not vague or ambig. Any time we see this fact pattern, almost always complimentary issue . . . increase in req . . . . Requirements or output contracts are not vague or ambiguous and are valid. Increase in requirements. Buyer can increase requirements so long as the increase is in line with prior demands. No unreasonably disproportionate limitation on increases.

Answer 6

This is a permissible increase b/c not unreasonably disproportionate. It's 20 compared to the base of 1000. If 10, 10, 10, but then wants to increase by 20-30, then not valid. (Note: law is clear on increases; law is unclear on decreases - where unclear, they don't ask the questions b/c want answers that can't be challenged) Increase in requirements. Buyer can increase requirements so long as the increase is in line with prior demands. No unreasonably disproportionate limitation on increases.

Answer 7

General rules: An advertisement or price quotation is not an Offer. Exceptions: (i) An advertisement can be a unilateral offer if it is in the nature of a reward. For example, Carbolic Smoke Ball Company promises 100 pound reward to anyone who catches the flu after using its smoke ball as directed. (ii) An advertisement can be an offer if it specifies quantity and expressly indicates who can accept. For example, Lefkowitz Department Store advertises “1 fur coat $10 – first come, first served.” (iii) Price quotation can be an offer if sent in response to an inquiry.

Answer 8

(kill the caterpillar) 1. lapse of time 2. death of a party prior to acceptance 3. words or conduct of offeror; i.e., revocation of an offer 4. rejection

Answer 9

No. Offers don't live forever after a reasonable time. NOTE: mindset going into the bar is that every fact in the fact pattern is there for a reason - no fact is filler; there to lead you or mislead you . . . ex. if they give you the date the offer was made and date of response.

Answer 10

(a) Later unambiguous statement by offeror to offeree of unwillingness or inability to contract, or (b) Later unambiguous conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of. (2 player game)

Answer 11

No. Not unless she's in the shower with him. SHARON STONE must be in the shower with Epstein.

Answer 12

No. Understand that she won't get the Cadi, but that's not what they are asking. They are asking about her contract law rights. Answer the question that is asked.

Answer 13

Yes. Offer is dead. We have the 2 steps: later unamb. and aware.

Answer 14

Multiple offers not revocation. No. Willing to sell the car to any of those people. Multiple offers not revocation.

Answer 15

1. Option: An offer cannot be revoked if the offeror has not only made an offer but also (i) promised to not revoke (or promised to keep the offer “open”) AND (ii) this promise is supported by payment or other consideration (“option”) 2. UCC “Firm Offer Rule”: An offer cannot be revoked for up to three months if (i) offer to buy or sell goods, (ii) signed, written promise to keep the offer open, and (iii) party is a merchant. (Merchant is GENERALLY a person in business.) 3. Reliance: An offer cannot be revoked if there has been (1) reliance that is (2) reasonably foreseeable and (3) detrimental. 4. Unilateral contract: The start of performance pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete performance.

Answer 16

UCC “Firm Offer Rule”: An offer cannot be revoked for up to three months if (i) offer to buy or sell goods, (ii) signed, written promise to keep the offer open, and (iii) party is a merchant. (Merchant is GENERALLY a person in business.)

Answer 17

Not for a week. It is an offer to sell goods, we have a signed written promise not to revoke, the person promising is a merchant. What is essential for an option, BUT NOT NECESSARY for merchant? No requirement that paid for. Firm Offer ONLY applies to Art 2 and only if a merchant. UCC “Firm Offer Rule”: An offer cannot be revoked for up to three months if (i) offer to buy or sell goods, (ii) signed, written promise to keep the offer open, and (iii) party is a merchant. (Merchant is GENERALLY a person in business.)

Answer 18

Firm offer rule requires that it must be in writing. Never have an oral triggering of firm offer rule. UCC “Firm Offer Rule”: An offer cannot be revoked for up to three months if (i) offer to buy or sell goods, (ii) signed, written promise to keep the offer open, and (iii) party is a merchant. (Merchant is GENERALLY a person in business.)

Answer 19

critical word: "six" - firm offer rule has an absolute cap of 3 months. It is irrevocable for 3 months. So if the parties agree on a time period that is longer than 3 months, then it gets to reduced to 3 months. UCC “Firm Offer Rule”: An offer cannot be revoked for up to three months if (i) offer to buy or sell goods, (ii) signed, written promise to keep the offer open, and (iii) party is a merchant. (Merchant is GENERALLY a person in business.)

Answer 20

No. Courts will supply a time period. Whatever reasonable under the 3 mths. Do not have to have a specific time period expressed. UCC “Firm Offer Rule”: An offer cannot be revoked for up to three months if (i) offer to buy or sell goods, (ii) signed, written promise to keep the offer open, and (iii) party is a merchant. (Merchant is GENERALLY a person in business.)

Answer 21

House = common law . . . therefore no Firm Offer Rule . . . therefore need paid for promise. Answer: Yes can revoke.

Answer 22

1. reasonably foreseeable and | 2. detrimental.

Answer 23

No, detrimental reliance. Reasonably foreseeable.

Answer 24

irrevocable for a reasonable time to complete performance.

Answer 25

This second sentence will appear at least 4 times. When see that = unilateral . . . if you see the word "offer" followed by the phrase "only by," it's unilateral contract. Answer: No. Can't still revoke b/c the start of performance pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete performance. Unilateral contract: The start of performance pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete performance. (i) Unilateral/performance.

Answer 26

No. Mere prep. That is not the start of performance. If any doubt b/w performance and prep, always go to prep. Tested far more often. Opens the can of paint and stirs it = prep. Could be reliance, but needs to be a detrimental reliance. So they need to give you a fact like: can't return the paint.

Answer 27

(1) counteroffer (2) conditional acceptance, OR (3) additional terms "mirror image rule" (NOT FOR CONTRACTS FOR SALE OF GOODS: CL ONLY) First two apply to all contracts; additional terms rule does not apply to contracts for sale of goods, i.e., common law only.

Answer 28

No. Counteroffer rejects = kills the offer. No born again offers.

Answer 29

Yes. The counteroffer exception for options. Generally counteroffers kill. Exception = options.

Answer 30

Yes. Bargaining not a counteroffer. If the response to | an offer is interrogative sentence, then bargaining.

Answer 31

Common law: rejects and becomes a counteroffer that can be accepted by conduct vs. UCC: rejects

Answer 32

a. Lease = common law. No. Joe Biden rule. b. Yes. There is a contract based on T's communication as the offer and L's conduct as the acceptance. Common law = conditional acceptance kills the offer and replaces it. Art. 2 = it's a rejection c. Yes.

Answer 33

a. No. Conditional acceptance is rejection in Art. 2. b. Yes. BUT, the contract is based solely on the conduct of both S and B. c. No. This where differs from common law. In common law, treat response as new offer. Under Art. 2, doesn't make it b/c looking at the conduct of both parties.

Answer 34

Mirror Image Rule: Under common law, a response to an offer that adds new terms is treated like a counteroffer rather than an acceptance. LIMITED TO CL

Answer 35

No. Not Joe Biden Rule; not saying word accept followed by language. Not acceptance. It is a rejection. It kills the offer. This is common law. No. Dead offer.

Answer 36

Additional or different terms not rejection under UCC Article 2 (2-207): Seasonable expression of acceptance

Answer 37

First question: Is there a contract? Under the UCC, a response to an offer that adds additional or different terms, but does not make the new terms a condition of acceptance, is generally treated as an acceptance – a “seasonable expression of acceptance.” Whether the parties are merchants is irrelevant in answering this first question. Second question: Is the additional term a part of the contract? The additional term is not a part of the contract unless both parties are merchants. Even If both parties are merchants, the additional term is not a part of the contract if the additional term is “material” [fact question] or if the additional term is objected to by original offeror.

Answer 38

Yes. The difference w/ 33 is that in 33 there is EXPRESS INSISTENCE. If the response merely sets out a new term, then acceptance.

Answer 39

a. No. Saturday delivery not a contract term. Even if both merchants, only part if not objected to later and not a material term. b. No. c. No. Not objected to later and not a material term. Material term is a question of fact. d. No. "Accept on the condition that" is indirect rejection.

Answer 40

Exception: Start of performance is not acceptance of unilateral contract offers. Completion of performance is required. Again, start of performance is an implied promise to perform. Offers to enter into unilateral contracts cannot be accepted by a promise. If offer requires “performance” for acceptance, then “performance” for purposes of acceptance of that offer means completion of performance.

Answer 41

offer + only by = unilateral No. In 27 we are looking at effect on offeror and here it's offeree. offer+no words+start of performance = general rule: bilateral = painter has opportunity not obligation.

Answer 42

First, all communications OTHER THAN ACCEPTANCE are effective only when received. Second, acceptance is GENERALLY effective when mailed (i.e., the “mailbox rule”). Third, if a rejection is mailed before an acceptance is mailed, then neither is effective until received. Fourth, you cannot use the mailbox rule to meet an option deadline.

Answer 43

Mailbox Rule Rule 1: most communications have no effect until received Rule 2: while most have no effect until received, an acceptance is effective when sent Yes. There is a contract.

Answer 44

Mailbox Rule Rule 3: if the rejection is the first thing sent, then nothing matters until it arrives (so Rule 3 replaces Rule 2).

Answer 45

Mailbox Rule No. Option contract. Rule 4: to meet an option deadline, must have been received b/f the deadline, not sent before the deadline. Rule 2 no effect on option deadlines.

Answer 46

a. Yes. Question is does he have legal rights. | b. Yes. Buyer doesn't have to keep wrong widgets and can recover damages.

Answer 47

Accommodation (i.e., explanation) exception: counteroffer and no breach. "explanation" - in 43 the seller sent the wrong goods, but here it's wrong + explanation - he's trying to be helpful and we don't want to impose. No contract. No breach of contract.

Answer 48

1) a person who knows about the offer at the time she accepts (2) who is the person to whom it was made. Offers cannot be assigned; options can be assigned unless the option otherwise provides.

Answer 49

Rewards and knowing of the offer who can accept?: person that knows about the offer. Not acceptance of the offer. NOTE: this will only be relevant to reward situations.

Answer 50

Nonassignability of offers No because . . . Offers are not assignable. But . . . options are.

Answer 51

Assignability of options Yes. Offers are not assignable, but options are.

Answer 52

(1) lack of consideration or a consideration substitute for the promise at issue; (2) lack of capacity of the person who made that promise; (3) Statute of Frauds; (4) existing laws that prohibit the performance of the agreement; (5) public policy; (6) misrepresentations; (7) nondisclosure; (8) duress; (9) unconscionability; (10) ambiguity in words of agreement; and (11) mistakes at the time of the agreement as to the material facts affecting the agreement.

Answer 53

First, identify the promise breaker, i.e., the person who is not doing what she promised to do. Second, ask whether that person asked for something in return for her promise, i.e., bargained for something. Third, look at the person who is trying to enforce the promise and ask what requested legal detriment that person sustained. In sum, look for bargained-for legal detriment.

Answer 54

Asked for by the promisor IN EXCHANGE for her promises. Consideration fact patterns have people doing stuff that they were asked to do.

Answer 55

No. L never asked T to paint the apartment which means there is no consideration. (later we'll talk about promissory estoppel) “Bargained for" means: Asked for by the promisor IN EXCHANGE for her promises. Consideration fact patterns have people doing stuff that they were asked to do.

Answer 56

Legal detriment Even though its not something that you are actually doing, its something you have a right to do. Therefore, yes. Legal consideration. Sidway case: drinking or smoking son

Answer 57

Promise as consideration Yes. S's promise to sell. Unless illusory. Yes. B's promise to buy. Unless illusory promise.

Answer 58

Illusory promise exception a. No. S's promise is illusory. We'll see work illusory promise. Rule of thumb: every time you see illusory promise in the answer, it's the wrong answer b/c they can't test it without being too obvious. Won't see illusory promise fact pattern. b. No longer illusory.

Answer 59

"Past consideration": (a) General rule: not consideration (b) Exception: expressly requested by promisor and expectation of payment by promisee: 1. promise maker/breaker: Homer 2. what bargaining for? nothing Stuff that happened before the promise cannot be consideration for the promise. No new consideration. Exception: expressly requested by promisor and expectation of payment. No.

Answer 60

"Past consideration": (a) General rule: not consideration (b) Exception: expressly requested by promisor and expectation of payment by promisee.

Answer 61

Yes. The expressly requested exception. "Past consideration": (a) General rule: not consideration (b) Exception: expressly requested by promisor and expectation of payment by promisee.

Answer 62

(a) Common law (i) General rule: doing what you are already legally obligated to do is not new consideration for a new promise to pay you more to do merely that. Under common law new consideration is required for contract modification. (ii) Exception: addition to or change in performance (iii) Exception: unforeseen difficulty so severe as to excuse performance (iv) Exception: third-party promise to pay vs. Article 2: Article 2 does not have a pre-existing legal duty rule. New consideration is not required to modify a sale of goods contract. Good faith is the test for changes to an existing sale of goods contract.

Answer 63

a. Doing what you are already obligated to do is not past consideration. No, not legally enforceable. No legal detriment. What Kinky did is what was already legally obligated to do. (sometimes called the preexisting duty rule) . . . Except if addition to or change in performance AND unforeseen difficulties AND third party promise. b. Yes. New consideration b/c change in performance therefore new detriment. Kinky gets the additional 5. c. Yes. Unforeseen difficulty. d. Yes. third party promise to pay exception. “Pre-existing contractual or statutory duty rule” [Common law different from Article 2]: (i) General rule: doing what you are already legally obligated to do is not new consideration for a new promise to pay you more to do merely that. Under common law new consideration is required for contract modification. (ii) Exception: addition to or change in performance (iii) Exception: unforeseen difficulty so severe as to excuse performance (iv) Exception: third-party promise to pay

Answer 64

Article 2: Article 2 does not have a pre-existing legal duty rule. New consideration is not required to modify a sale of goods contract. Good faith is the test for changes to an existing sale of goods contract. a. No. No new consideration. All S did is what he is legally obligated to do. b. Yes if in good faith. Art II does not require consideration but does require good faith.

Answer 65

Key is whether debt is due and undisputed. If debt is due and undisputed, then part payment is not consideration for release.

Answer 66

Part payment as consideration for release, i.e., promise to forgive balance of debt: Key is whether debt is due and undisputed. If debt is due and undisputed, then part payment is not consideration for release. (a) Due and undisputed: a. If debt is due and undisputed then part payment is NOT consideration for release. Undisputed = no disagree about existence or amount Answer: No. No new detriment. If you owe 3, then you pay 2, then that's no detriment to you. No new consideration. b. Yes. Not yet due (or disputed)

Answer 67

1. A written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration. 2. Promissory estoppel 3. Seal

Answer 68

A promise is legally enforceable even though there is no consideration if there is one of the following consideration substitutes: 1. A written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration. a. A written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration. No new consideration, b. but yes C can enforce the new $600 promise.

Answer 69

Elements: (i) Promise, (ii) Reliance that is reasonable, detrimental, and foreseeable, and (iii) Enforcement necessary to avoid injustice.

Answer 70

Comparison of consideration and promissory estoppels: a. No. Wasn't bargained for. Nothing in the fact pattern that says L asked T to paint. b. Yes. Any time get a fact pattern in which someone does some unrequested act, we don't analyze as consideration, we analyze as PE.

Answer 71

A. Who lacks capacity to contract? 1. infant – under 18, 2. mental incompetents – lacks ability to understand agreement, or 3. intoxicated persons if other party has reason to know. B. Consequences of incapacity: 1. Right to disaffirm by person without capacity 2. Implied affirmation by retaining benefits after gaining capacity (ratification): 3. Quasi-contract liability for necessaries: A person who does not have capacity is legally obligated to pay for things that are necessary such as food, clothing, medical care or shelter, but that liability is based on quasi-contract law, not contract law.

Answer 72

Implied affirmation by retaining benefits after gaining capacity (ratification): No capacity at time of agreement. Capacity today. No complaint or objection. Law says: when gained capacity, making agreement all over again. Yes. Now enforceable. Called: implied affirmation.

Answer 73

Quasi-contract liability for necessaries: A person who does not have capacity is legally obligated to pay for things that are necessary such as food, clothing, medical care or shelter, but that liability is based on quasi-contract law, not contract law. a. No. No contract L for necessaries. (Even if shelter) BUT instead there is quasi contract L. b. Yes. Quasi contract L.

Answer 74

(1) performance (2) or a writing signed by the defendant.

Answer 75

The Statute of Frauds is a statute designed to prevent fraudulent claims of the existence of a contract. Statute of Frauds makes it harder to make such a false or fraudulent claim by requiring the claimant to have objective proof – proof other than just testimony that a contract exists – before the claimant gets its day in court.

Answer 76

1. Promises to answer for the debts of another [suretyship] 2. Service contract not “capable” of being performed within a year from the time of the contract (i.e., more than one year): 3. Transfers of interest in real estate (with exception for leases of year or less) 4. Sale of goods for $500 or more:

Answer 77

Courts try to limit the use of the Statute of Frauds. Courts have construed “answer for” in a way that substantially limits its applicability. “Answer for” is not merely a promise to pay someone else’s debts, but rather a promise to pay another person’s debts only if that person does not herself pay. LOOK FOR A GUARANTEE. LOOK ALSO FOR THE MAIN PURPOSE EXCEPTION. Courts have also created a “main purpose” exception. If the “main purpose” of the obligation allegedly guaranteed was to benefit the guarantor, then not even that guarantee is within the Statute of Frauds.

Answer 78

SOF/Promises to answer for the debts of another No. FL and MBE, SOF limited to allegation that Conviser has promised to pay for debt of another. Not a guarantee. SOF does not apply. This is just an allegation. See 68.

Answer 79

SOF/Promises to answer for the debts of another a. This is a guarantee. Compare 67. 67 allegation that he promise to pay. 68 is promise to pay if the other guy didn't pay. Answer: Yes. Makes no sense; should be treated like 67 but not. b. Even if is guarantee like 68, then more limited by "main purpose exception." 68 is guarantee for paint being used on Epstein's house. 69, by compare, the allegation is that Conviser guranteed the payment being used on Convisor's house. That's a lot more credible. In that case, going to give them their day in court. This is because of the "main purpose exception." Main purpose benefit gurantor, then not within guarantor.

Answer 80

Service contract not “capable” of being performed within a year from the time of the contract (i.e., more than one year): (a) Specific time period, more than a year – S/F applies. a. More than a year from time of contract. Can't finish in one year, so yes within the SOF. b. Yes. Early termination is IRRELEVANT.

Answer 81

Specific time, more than a year from date of contract – S/F applies. Yes. Not capable of being performed in a year. The Kenny G problem: it is not how long the performance actually lasts. It's can the performance be completed with a year. Look for date contract entered in to and the date performance required.

Answer 82

Specific time, more than a year from date of contract – S/F applies. "Starting next month" - No.

Answer 83

Task (nothing said about time) – S/F does not apply. Recall the language of the Statute: “not capable of being performed” within a year. “Capable,” in essence, means theoretically possible with unlimited resources; ignore what actually happens; key is what might have happened with unlimited resources. No. If no time period specified, NEVER a SOF problem. Capable of being performed within a year. Capable = theoretically possible with unlimited resources. (move the pyramids to Coral Gables is capable)

Answer 84

Life – S/F does not apply. No. Theoretically possible of within a year. P could die tomorrow.

Answer 85

Transfers of interest in real estate (with exception for leases of year or less): No. No one is transferring interest in the land.

Answer 86

Transfers of interest in real estate (with exception for leases of year or less): a. Yes. Transfer of interest. b. Yes.

Answer 87

Yes. Does not have to be fee simple.

Answer 88

No. Your experience is that you sign a lease. They are trying to play on that. IF LEASE FOR ONE YEAR OR LESS IT IS NOT WITHIN THE SOF.

Answer 89

Sale of goods for $500 or more: a. Art 2 is old. $500 was big bucks. Yes. Its $500 or more. If it had been $400, not in SOF. b. No. To say that it is within the SOF, doesn't mean that the litigation is resolved. It means that one particular D is not available to him.

Answer 90

1. performance 2. writing 3. judicial admission 4. estoppel

Answer 91

Performance: The Statute of Frauds can be satisfied by performance. The five rules for satisfaction of the Statute of Frauds by performance vary depending on whether the contract is a real estate transfer contract, services contract, or a sale of goods contract. (a) Performance and transfer of real estate. (performance rule #1): Part performance satisfies the Statute of Frauds in transfers of real estate. Part performance requires any two of the three: (i) improvements to the land, (ii) payment, and (iii) possession. a. oral + land = SOF the objective evidence is possession of the land and makes improvement. No. No SOF defense. Requires 2 of the three. They have them. Improvement and possession. b. Yes. Doesn't have any of the 3 needed for performance.

Answer 92

1. part performance in transfer of real estate (need 2 of 3: (i) improvements to the land, (ii) payment, and (iii) possession) 2. full performance by either party in a services contract 3. part performance does NOT satisfy SOF in services contract 4. Seller’s part performance – ordinary goods General rule is that part performance of a contract for the sale of goods satisfies the Statute of Frauds, but only to the extent of the part performance. More specifically, look to see if question is about delivered goods or undelivered goods. 5. specially manufactured goods (custom)

Answer 93

CL = Look at the contents of the writing OR WRITINGS – all material terms test [who and what]. Look also at who signed the writing. The writing satisfies the Statute of Frauds so that there is no Statute of Frauds defense if the writing has been signed only by the defendant, i.e., person who is asserting the Statute of Frauds defense. UCC 2 = The Article 2 Statute of Frauds’ requirements for contents of a writing are different from the common law “material terms test.” The writing must simply indicate that there is a contract for the sale of goods and contain the quantity term [how many]. Generally, the writing must be signed by the defendant with a limited exception for transactions between two merchants where there is a delay in responding.

Answer 94

the authorization must be in writing only if the contract to be signed is within the Statute of Frauds, i.e., the authorization must be of “equal dignity” with the contract.

Answer 95

By (1) looking at the deal with the alleged change and (2) determining whether the deal with the alleged change would be within the Statute of Frauds. If the deal with the alleged change would be within the Statute of Frauds, then the alleged modification agreement must be in writing.

Answer 96

CL = ineffective; ignore them | UCC 2 = effective unless waived

Answer 97

1. if the subject matter is illegal (kill x) | 2. if there is an illegal purpose and P had reason to know of illegal purpose (Delta flies hitman)

Answer 98

1. exculpatory agreement that exempts intentional or reckless conduct from liability 2. a covenant not to compete without a reasonable need or reasonable time and place limits

Answer 99

(1) a statement of “fact” before the contract, (2) by one of the contracting parties or her agent, (3) that is false, and (4) induces the contract. NOTE: No wrongdoing required for material misrepresentations. Contract not enforced. **Misrep matters

Answer 100

Generally, a person making a contract has no duty to disclose what she knows. . Wrongdoing requirement for nondisclosure as a defense Look for fiduciary-like relationship or concealment.

Answer 101

The two basic tests, (i) unfair surprise (procedural) and oppressive terms (substantive) are, (ii) tested as of the time the agreement was made (iii) by the court. Court won't enforce contract. 2 critical phrases are the terms : unfair surprise to describe the agreement process (ex. undue time pressure or print too small) AND oppressive terms

Answer 102

There will be no contract if (i) parties use a material term that is open to at least two reasonable interpretations, and (ii) each party attaches different meaning to the term, and (iii) neither party knows or has reason to know the term is open to at least two reasonable interpretations.

Answer 103

Distinguish misrepresentation fact patterns from mistake fact patterns. Generally, relief for the former but not the latter. Relief for mutual mistake only if both parties are mistaken (not just uncertain) about existing facts (mistake is different from uncertainty). Even then, no relief for mistake if the person seeking relief bears the risk of mistake.

Answer 104

Generally, courts have been even more reluctant to allow a party to avoid a contract for a mistake made by only one party. There will be relief for situations in which the other party had reason to know of the mistake, i.e., palpable mistake.

Answer 105

Written agreement that court finds is the final agreement, triggers the parol evidence rule.

Answer 106

Contract clause such as, “This is the complete and final agreement.” Persuasive but not conclusive.

Answer 107

1. Evidence of earlier agreements cannot be considered for the purpose of contradicting the terms in the written contract BUT 2. A court may, however, consider evidence of such terms for the limited purpose of determining whether there was a mistake in integration, i.e., a mistake in reducing the agreement to writing. 3. The parol evidence rule does not prevent a court from considering evidence of earlier words of the parties for the limited purpose of determining whether there is a defense to the enforcement of the agreement, such as misrepresentation, fraud, or duress. 4. The parol evidence rule does not prevent a court from considering evidence of earlier agreements to resolve ambiguities in the written contract. 5. The parol evidence rule prevents a court from considering evidence of earlier agreements as a source of consistent, additional terms unless the court finds (i) that the written agreement was only a partial integration or (ii) that the additional terms would ordinarily be in a separate agreement.

Answer 108

IN THIS ORDER > > > 1. Course of performance – same people, same contract: S contracts to sell 1,000 chickens a month to B for 12 months. The first three shipments are boiling hens, and B does not complain. 2. Course of dealing – same people, different but similar contract: S contracts to sell 1,000 chickens a month to B for 12 months. Under prior chicken contracts, S sent B boiling hens, and B complained. 3. Custom and usage – different but similar people, different but similar contract: S contracts to sell 1,000 chickens a month to B for 12 months. It is customary in the chicken industry to use the word “chicken” when the deal covers chickens up to six pounds including boiling hens.

Answer 109

1. Shipment contracts: which means that the seller completes its delivery obligation when it (i) gets the goods to a common carrier, and (ii) makes reasonable arrangements for delivery, and (iii) notifies the buyer. In a shipment contract, the seller completes its delivery obligation before delivery is completed. 2. Destination contracts: The other possibility is that the contract is a destination contract, which means that the seller does not complete its delivery obligation until the goods arrive at the destination.

Answer 110

Most contracts with delivery obligations are shipment contracts. Watch for the use of FOB – free on board (city) – as source for determining whether the contract is a shipment contract or a destination contract. FOB followed by city where the seller is or where goods are means shipment contract; FOB followed by any other city means destination contract.

Answer 111

Risk of loss issues arise where (i) after the contract has been formed, but before the buyer receives the goods, (ii) the goods are damaged or destroyed, and (iii) neither the buyer nor the seller is to blame. For example, a grocer in New Ulm, Minnesota ordered coffee from a New York seller. Even though the coffee was shipped in the best available containers, rats "infiltrated" the coffee while it was in transit. The coffee was delivered; the grocer paid for the coffee. The grocer then opened the packages of coffee and wrote the following letter of complaint:

Answer 112

If the risk of loss is on the buyer, he has to pay the full contract price for the lost or damaged goods. If the seller has the risk of loss, no obligation on the buyer and possible liability on the seller for nondelivery.

Answer 113

``` #1 Agreement: agreement of the parties controls. #2 Breach: breaching party is liable for any uninsured loss even though breach is unrelated to problem. #3 Common carrier delivery: risk of loss shifts from seller to buyer at the time the seller completes its delivery obligations. #4 “Catch-all” (no agreement, no breach, no delivery by a carrier): the determining factor is whether the seller is a merchant. WHETHER THE BUYER IS A MERCHANT IS IRRELEVANT. Risk of loss shifts from a merchant-seller to the buyer on the buyer’s “receipt” of the goods; risk of loss shifts from a nonmerchant seller when he or she “tenders” (tender=make available) the goods. ```

Answer 114

1. Express: Look for words that promise, describe or state facts. Distinguish from sales talk which is more general, an opinion. Or, look for sample or model. 2. Implied warranty of merchantability: When any person buys any goods from any merchant, a term is automatically added to the contract by operation of law – that the goods are fit for the ordinary purpose for which such goods are used. (a) Triggering fact: seller is a merchant WHICH HERE MEANS IT DEALS IN GOODS OF THAT KIND. (b) Warranty: goods are fit for ordinary purposes. 3. Implied warranty of fitness for a particular purpose: (a) Triggering facts: buyer has particular purpose; buyer is relying on seller to select suitable goods; seller has reason to know of purpose and reliance. (b) Warranty: goods fit for particular purpose.

Answer 115

1. Statute of limitations: There is a four-year statute of limitations, and generally the statute starts running on possible warranty actions when the “tender of delivery is made,” not when the buyer learns that the product is defective. 2. Privity: Privity of contract means that the plaintiff contracted with the defendant. If the plaintiff did not buy the goods from the defendant, there is a possible lack of privity issue. There is a division among states as to how to resolve lack of privity issues. Your state materials will explain the privity law in your state if lack of privity is a possible state essay issue. 3. Buyer’s examination of the goods: Look for a fact pattern that tells you that the buyer has examined the goods. There are no implied warranties as to defects which would be obvious on examination. 4. Disclaimer – e.g., “there are no warranties:” (a) Express warranties generally cannot be disclaimed. (b) Implied warranties of merchantability and fitness can be disclaimed in EITHER of the following ways: (i) CONSPICUOUS language of disclaimer, mentioning merchantability, OR (ii) “as is” or “with all faults.” 5. Limitation of remedies: does not eliminate warranties, simply limits or sets recovery for any breach of warranty: (a) possible to limit remedies even for express warranties. (b) general test is unconscionability. (c) prima facie unconscionable if breach of warranty on consumer goods causes personal injury.

Answer 116

First, “perfect tender” only applies to sales of goods. Second, “perfect tender” does not mean that the seller’s performance must be perfect; rather, the goods and the delivery must conform to the contract terms. Third, a less than “perfect tender” by the seller generally gives the buyer the option of rejection of the delivered goods, so long as the buyer acts in good faith.

Answer 117

UCC2 only There are only four things you need to know about rejection of goods for the bar exam. First, you need to be able to distinguish rejection of an offer from rejection of the goods. Second, if the seller does not meet the perfect tender standard, the buyer has the option to retain and sue for damages or reject “all or any commercial unit” and sue for damages. Third, the buyer must take reasonable care of the rejected goods and should not continue to use rejected goods. Fourth, this rejection alternative is limited by cure, installment contracts and acceptance.

Answer 118

UCC2 only A. Seller’s reasonable ground to believe would be acceptable, perhaps with a money allowance. In very limited situations, a seller has the option of curing even after the contract delivery date. “Reasonable grounds” is the statutory test. Look for information in the question about prior deals between that buyer and seller. (ex. took green widgets on 20 prior deals) B. Time for performance has not yet expired

Answer 119

An installment contract REQUIRES or AUTHORIIZES (i) delivery of the goods in separate lots (ii) to be separately accepted. (ongoing relationship; not just one delivery) Be sure that you see the differences between (1) entering into an installment sales contract that provided for multiple deliveries and acceptances and (2) buying something on credit and paying for it in monthly installments.

Answer 120

The buyer has the right to reject an installment only where there is a substantial impairment in that installment that can't be cured. (not worried about minor stuff)

Answer 121

A. Importance of acceptance: If the buyer accepts the goods, it cannot later reject them. B. Payment and acceptance: Payment without opportunity for inspection is not acceptance. C. Failing to reject: Rejection must be timely. Failure to reject after the buyer had reasonable time to reject is acceptance. D. Retention as acceptance: Effect of buyer’s keeping goods is implied acceptance – LOOK FOR THE BUYER'S KEEPING THE GOODS WITHOUT OBJECTION: more specifically look for a fact pattern that states when buyer first received goods and when buyer first complained to seller.

Answer 122

Same as rejection of the goods: buyer returns the goods and the seller returns payments made. Remember that if a buyer accepts the goods, it can NOT later reject the goods. In limited circumstances, a buyer can effect a cancellation of the contract by revoking its acceptance of the goods.

Answer 123

1. nonconformity substantially impairs the value of the goods, and 2. excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction, and 3. revocation within a reasonable time after discovery of nonconformity. (ex. sleeping bag)

Answer 124

A. Specific performance/injunction B. Seller’s reclamation from an insolvent buyer of goods C. Entrustment ex. O takes her watch to J for repair. J both repairs watches and sells new and used watches. J wrongfully sells O’s watch to B, a bona fide purchaser. Can O recover her watch from B? No. The later bona fide purchaser is more deserving. Shouldn't have trusted the person you gave it to.

Answer 125

1. The various FL damages rules are all based on the principle of compensating the P by protecting its expectation interest. (not rewarding; not compensating 2. Expectation is simply expecting no breach. 3. Expectation damages should put P in same dollar position as no breach.

Answer 126

Part 7 UCC 2 (a) Damages for seller’s breach: (i) Seller breaches, buyer keeps the goods [Fair market value if perfect – fair market value as delivered] or [cost of repair]. (ii) Seller breaches, seller has the goods: [market price at time of discovery of the breach – contract price] or [reasonable replacement price – contract price] whichever is greater. (b) Damages for buyer’s breach: (i) Buyer breaches, buyer keeps the goods [contract price]. (ii) Buyer breaches, seller has the goods: [contract price – resale unless seller cannot resell in which case the seller can recover the contract price and in some situations provable lost profits]. (c) Volume Seller (look for regular inventory) Gets provable lost profit.

Answer 127

Costs incurred in dealing with the breach such as costs of storing rejected goods in a sale of goods or finding a replacement in a services contract

Answer 128

Consequential damages does not mean all damages caused as a consequence of the breach. Rather think of damages as being either (1) general damages, i.e., kind of loss that any person would sustain or (2) consequential damages, i.e., kind of loss that is special to this plaintiff. Consequential damages are limited to damages arising from P’s special circumstances and recovery of consequential damages is limited to situations in which D had reason to know of these special circumstances at the time of the contract. (Need special info about P).

Answer 129

1. avoidable damages (continuing to perform or turning down comparable opportunity) 2. damages that cannot be established w/ reasonable certainty (first time; but look for reliance damages)

Answer 130

Tests are (1) damages were difficult to forecast at time contract was made and (2) provision is a reasonable forecast.

Answer 131

(1) EXCUSE OF PERFORMANCE BECAUSE OF THE OTHER GUY’S NONPERFORMANCE E.g., P contracts to paint O’s house on Saturday for $1,000. P does not paint the house. Obviously, O does not have to pay P, i.e., O is excused from performing (paying) because of P’s nonperformance. (2) EXCUSE OF PERFORMANCE BECAUSE OF THE OTHER GUY’S SAYING IT IS NOT GOING TO PERFORM (ANTICIPATORY REPUDIATION) (4) EXCUSE BECAUSE OF INSECURITY ABOUT WHETHER THE OTHER GUY IS GOING TO PERFORM (5) EXCUSE BECAUSE OF IMPROPER PERFORMANCE (6) EXCUSE BECAUSE OF NONOCCURRENCE OF AN EXPRESS CONDITION (7) EXCUSE BY REASON OF A LATER CONTRACT (8) EXCUSE OF PERFORMANCE BY REASON OF A LATER, UNANTICIPATED EVENT

Answer 132

A. Unambiguous: Anticipatory repudiation is an unambiguous statement or conduct (i) that the repudiating party will not perform (ii) made prior to the time that performance was due. B. Excuse: Anticipatory repudiation by one party excuses the other party’s duty to perform. C. Time of recovery: Anticipatory repudiation generally gives rise to an immediate claim for damages for breach unless the claimant has already finished her performance. D. Unless anticipatory repudiation is retracted.

Answer 133

Anticipatory repudiation can be withdrawn (retracted) so long as there has not been a material change in position by the other party. If the repudiation is timely retracted, the duty to perform is reimposed but performance can be delayed until adequate assurance is provided.

Answer 134

f the words or conduct of one party give “reasonable grounds for insecurity,” then the other party can, in writing, demand adequate assurance and if it is “commercially reasonable,” can suspend performance until it gets adequate assurance. The three concepts again are (1) reasonable grounds for insecurity, and (2) written demand for adequate assurance, and (3) commercially reasonable to stop performance.

Answer 135

A. Article 2 and perfect tender rule: B. Common law and material breach rule: First, damages can be recovered for any breach. Second, only a material breach by one guy excuses the other guy from performing a contract governed by common law. Third, whether a breach is material is a fact question (and so whether a breach is material is not likely to be a bar exam question). Fourth, if there is substantial performance then the breach is not material. If the breach is material, then the performance was not substantial. see pg. 56

Answer 136

1. General rule – strict compliance is required for “satisfaction” of a condition Exception: Condition of personal satisfaction of one of the parties – honest and good faith dissatisfaction: A promise by X to pay Y for her work only if X is satisfied with the work is not an illusory promise. X is excused from paying Y only if X’s not being satisfied is honest and good faith. In other words, conditions of personal satisfaction of one of the contracting parties do not have to be strictly complied with. While the contract language is “only if X is satisfied with the work,” courts simply look to whether a reasonable person would be satisfied.

Answer 137

[Conditional acceptance]. S offers to sell B his house for $100,000. B responds that she accepts “on condition that a mortgage at no more than 4% can be obtained.” Is there a contract? No. Joe Biden story. [Express condition]. S and B enter into an agreement that states that B will buy and S will sell S’s house for $100,000 “on the condition that a mortgage at no more than 4% can be obtained.” Is there a contract? Yes. If it is simply the words of an offeree in response (one person), no agreement. But as here, both people consented, then yes we have a contact with an express condition. Same facts as (H172). If B is unable to obtain a mortgage for less than 5%, is B liable for breach of contract? No. Excuse b/c of the non-occurance of a condition. NOTE: Exception: Condition of personal satisfaction of one of the parties – honest and good faith dissatisfaction: A promise by X to pay Y for her work only if X is satisfied with the work is not an illusory promise. X is excused from paying Y only if X’s not being satisfied is honest and good faith. In other words, conditions of personal satisfaction of one of the contracting parties do not have to be strictly complied with. While the contract language is “only if X is satisfied with the work,” courts simply look to whether a reasonable person would be satisfied.

Answer 138

1. Waiver: Identify the person who benefits from or is protected by the express condition. Then look for a statement by that person giving up the benefits and protection of the express condition. 2. Prevention: Look for the person protected by the express condition hindering or preventing the occurrence of the express condition.

Answer 139

A. Rescission (cancellation): The key is whether performance is still remaining from each of the contract parties. (executory) - if performance is done; can't rescind. B. Accord and satisfaction (substituted performance): C. Modification (substituted agreement) D. Novation

Answer 140

The key is whether performance is still remaining from each of the contract parties. (executory) - if performance is done; can't rescind.

Answer 141

1. Meaning of “accord,” “satisfaction”: On bar exam, accord questions will have an agreement by the parties to an already existing obligation to accept a different performance in satisfaction of the existing obligation. 2. Effect of accord AND SATISFACTION: (a) If the new agreement (“the accord”) is performed (satisfaction), then performance of the original obligation is excused. DIFFERENT FROM MODIFICATION - agree to let you not pay for agreement to provide vs. actually having to perform (i.e. satisfaction)

Answer 142

A novation is an agreement between BOTH parties to an existing contract to the substitution of a new party, i.e., same performance, different party.

Answer 143

Novation excuses the contracted for performance of the party who is substituted for or replaced.

Answer 144

Novation requires the agreement of BOTH parties to the original contract, and excuses the person replaced from any liability for nonperformance. Delegation does not require the agreement of both parties and does not excuse.

Answer 145

A. Damage or destruction of subject matter of contract (CL vs. UCC2) B. Death AFTER contract: 1. General effect of death on contract obligations: Death does not make a person’s contract obligations disappear. 2. Exception: Death of party to contract who is “special” person excuses performance. C. Subsequent law or regulation: 1. Later law makes performance of contract illegal – excuse by impossibility. (ex. stripping outlawed) 2. Later law makes mutually understood purpose of contract illegal – excuse by frustration of purpose. (lypo to strip)

Answer 146

third-party beneficiaries, assignments of contract rights, and delegations of contract duties.

Answer 147

Only intended beneficiaries have contract law rights. Intent of the two parties to contract determines whether intended or incidental.

Answer 148

Creditor/donee: Intended beneficiaries are either donees or creditors. Usually donees. Look at whether third-party beneficiary was a creditor of the promisee before the contract.

Answer 149

The test is whether the third party knows of and has relied on or assented as requested. If so, her rights have vested and the contract cannot be canceled or modified without her consent unless the contract otherwise provides.

Answer 150

Who can sue whom? (Four bar exam important rules): 1. Beneficiary can recover from promisor 2. Promisee can recover from promisor 3. General rule: Beneficiary cannot recover from promisee 4. Limited exception: Creditor beneficiary can recover from promisee BUT ONLY on pre-existing debt

Answer 151

If the third-party beneficiary sues the promisor, the promisor can assert any defense that he would have had if sued by the promisee.

Answer 152

Assignment is a transfer of rights under a contract. Assignment involves two separate steps: first step – contract between only two parties; and second step – one of the parties later transfers rights under that contract to a third party. Need to see the difference between assignment of an offer and assignment of a contract. Need to see the difference between assignment of a contract and third-party beneficiary.

Answer 153

1. If there is a contract provision regarding assignment: If the fact pattern includes language of contract regarding assignability, determine whether the contract (a) prohibits assignments or (b) invalidates assignments. (a) Prohibition: Language of prohibition takes away the right to assign but not the power to assign, which means that the assignor is liable for breach of contract, but an assignee who does not know of the prohibition can still enforce the assignment. (b) Invalidation: Language of invalidation takes away both the right to assign and the power to assign so that there is a breach by the assignor and no rights in the assignee. 2. If there is nothing in fact pattern about contract language regarding assignability: Even if a contract does not in any way limit the right to assign, common law bars an assignment that substantially changes the duties of the obligor. (a) Assignment of right to payment (never substantial change) (ex. pay Robin instead of Batman) (b) Assignment of right to contract performance other than right to payment (usually substantial change on bar) (ex. Batman defend Miami instead of Gotham)

Answer 154

General rule is that consideration is not required, but gratuitous assignments (and only gratuitous assignments) can be revoked.

Answer 155

Who can sue whom? 1. Assignee can recover from the obligor. 2. Assignor for consideration cannot recover from obligor 3. Obligor has same defenses against assignee as it would have against assignor 4. Payment by obligor to assignor is effective until obligor knows of assignment. Similarly, modification agreements between obligor and assignor are effective if the obligor did not know of the assignment.

Answer 156

In an assignment FOR CONSIDERATION, the assignor warrants (1) the right assigned actually exists, and (2) the right assigned is not subject to any then existing defenses by the obligor, and (3) the assignor will do nothing after the assignment to impair the value of the assignment. Assignor, however, does not warrant what the obligor will do after the assignment.

Answer 157

1. All gratuitous assignments: General rule: Last assignee generally wins (LAST IN TIME) 2. Multiple assignments for consideration: (a) General rule: First assignee for consideration wins (FIRST IN TIME)

Answer 158

Party to a contract transferring work under that contract to third party. For example, P contracts to paint O's house for $1,000. P (delegating party) and X (delegatee) agree that X will paint O's (obligee) house.

Answer 159

Relationship of assignment and delegation: A contract creates both rights and duties. For example, if P contracts to paint O’s house for $1,000, then P has a duty to paint and a right to payment, and O has a duty to pay and a right to the painting of her house. Assignment is the transfer by a party to a contract of his rights or benefits under the contract to a third party who was not a party to the contract. Delegation is the transfer by a party to a contract of his duties or burdens under the contract to a third party who was not a party to the contract. Often a contracting party makes both an assignment and a delegation of his rights and duties under the contract to a third party. Often multistate examiners use the term “assignment” in a problem involving an assignment and a delegation and even in a problem involving only a delegation.

Answer 160

Which duties are delegable? Generally, contractual duties are delegable. The limitations on delegation are very limited. Delegations are permitted unless either (1) contract prohibits delegations or prohibits assignments or (2) “personal services contract” that calls for VERY SPECIAL skills.

Answer 161

1. Delegating party always remains liable. | 2. Delegatee liable only if she receives consideration from delegating party.

Answer 162

implied affirmation.

Answer 163

(a) Performance and transfer of real estate. (performance rule #1): Part performance satisfies the Statute of Frauds in transfers of real estate. Part performance requires any two of the three: (i) improvements to the land, (ii) payment, and (iii) possession. a. oral + land = SOF the objective evidence is possession of the land and makes improvement. No. No SOF defense. Requires 2 of the three. They have them. Improvement and possession. b. Yes. Doesn't have any of the 3 needed for performance.

Answer 164

(b) Performance and services contracts: (i) Full performance by either party satisfies the Statute of Frauds. (performance rule #2): 5 years. No way Conviser can perform in 1 year. So in SOF. Any objective evidence that there is such an agreement? Yes. Look judge, I wrote all this material. So yes, the SOF has been satisfied.

Answer 165

(ii) Part performance of a services contract does not satisfy the Statute of Frauds. (performance rule #3): a. No. b. No. In order to recover under contract law, there must be a contract. There is no legally enforceable agreement b/c of the SOF defense. c. Yes. MOST COMMON QUASI CONTRACT QUESTION ON BAR

Answer 166

(c) Part performance and sale of goods contracts: (i) Seller’s part performance – ordinary goods General rule is that part performance of a contract for the sale of goods satisfies the Statute of Frauds, but only to the extent of the part performance. More specifically, look to see if question is about delivered goods or undelivered goods. (performance rule #4): a. delivered goods . . . B/c its about delivered goods, no SOF defense. Sale of goods+part performance+suit about part performed, we have necessary objective proof. b. undelivered goods . . . If undelivered goods, no objective proof. No objective proof you are supposed to get 1400 more sacks. No defense.

Answer 167

Seller’s part performance – specially manufactured goods: If the contract is for the sale of goods that are to be specially manufactured, then the Statute of Frauds is satisfied as soon as the seller makes a “substantial beginning.” This means that the seller has done enough work that it is clear that what she is working on is specially manufactured, i.e., custom made or made to order. (performance rule #5): Assume that he has a size of 21E and are aqua, maroon, lime green, and Buba in bold. No.

Answer 168

(a) Statutes of Frauds other than Article 2: Look at the contents of the writing OR WRITINGS – all material terms test [who and what]. Look also at who signed the writing. The writing satisfies the Statute of Frauds so that there is no Statute of Frauds defense if the writing has been signed only by the defendant, i.e., person who is asserting the Statute of Frauds defense. No. Doesn't have all the material terms. Don't know who making agreement with or what she's agreed to do.

Answer 169

(a) Statutes of Frauds other than Article 2: Look at the contents of the writing OR WRITINGS – all material terms test [who and what]. Look also at who signed the writing. The writing satisfies the Statute of Frauds so that there is no Statute of Frauds defense if the writing has been signed only by the defendant, i.e., person who is asserting the Statute of Frauds defense. a. Yes. Meets all material terms test . . . who and what AND writing is signed by the D (NOTE: How tested on bar: s/Willie Robertson . . . doesn't say whether Jase signed. Any time they tell me one signed, it means the other didn't. b. No. Writing must be signed the defendant.

Answer 170

Article 2 Statute of Frauds: Again, look to the contents of the writing and who signed the writing. The Article 2 Statute of Frauds’ requirements for contents of a writing are different from the common law “material terms test.” The writing must simply indicate that there is a contract for the sale of goods and contain the quantity term [how many]. Generally, the writing must be signed by the defendant with a limited exception for transactions between two merchants where there is a delay in responding. Yes. Because 100 lbs only essential term for UCC 2 . . . no material terms test; qty. only. HOW THEY WILL TEST: Fact pattern that is similar and the answer they will try to get you to choose is "this writing does not satisfy b/c does not state that the price is $500 . . . IT DOESN'T HAVE TO SET OUT THE PRICE IN TEH WRITING.

Answer 171

Merchant to merchant delay in responding exception The writing must simply indicate that there is a contract for the sale of goods and contain the quantity term [how many]. Generally, the writing must be signed by the defendant with a limited exception for transactions between two merchants where there is a delay in responding. Both are merchants. 200 sacks of grits the essential term. We have a writing with a qty term. But who signed? The P. We usually need a writing signed by the D. Yes, SOF satisfied in this case. Thinking from 50's: if you send me a letter like that, I'm going to respond. So the objective proof is that you didn't respond. ONLY TIME SIGNED BY P WILL SUFFICE IS WHEN BOTH ARE MERCHANTS

Answer 172

Written proof of authorization to enter into contract for someone else: Issue is when do RULES OF LAW REQUIRE that a person have written authorization in order to execute a contract for someone else. RULES OF LAW REQUIRE that the authorization must be in writing only if the contract to be signed is within the Statute of Frauds, i.e., the authorization must be of “equal dignity” with the contract. No. Equal dignity rule. 1 year lease not w/in the SOF. Lease deal doesn't need to be in writing and neither does the authorization. NOTE: Not question about who wins or loses. Variation: if change facts to 3 year lease, SS would win.

Answer 173

Written proof of contract modification: Sometime there is no LEGAL requirement of written evidence of an alleged modification of a written contract. Resolve any LEGAL issue of whether such written evidence of the modification is needed by (1) looking at the deal with the alleged change and (2) determining whether the deal with the alleged change would be within the Statute of Frauds. If the deal with the alleged change would be within the Statute of Frauds, then the alleged modification agreement must be in writing. Yes. look at the deal with the alleged change. with the change its a 3 year lease.

Answer 174

Written proof of contract modification: Sometime there is no LEGAL requirement of written evidence of an alleged modification of a written contract. Resolve any LEGAL issue of whether such written evidence of the modification is needed by (1) looking at the deal with the alleged change and (2) determining whether the deal with the alleged change would be within the Statute of Frauds. If the deal with the alleged change would be within the Statute of Frauds, then the alleged modification agreement must be in writing. "to one year" - No, does not require written evidence. 1 year lease not w/in SOF. Is there any way T wins the lawsuit? No, but that's not what was asked.

Answer 175

Written proof of contract modification: Sometime there is no LEGAL requirement of written evidence of an alleged modification of a written contract. Resolve any LEGAL issue of whether such written evidence of the modification is needed by (1) looking at the deal with the alleged change and (2) determining whether the deal with the alleged change would be within the Statute of Frauds. If the deal with the alleged change would be within the Statute of Frauds, then the alleged modification agreement must be in writing. No.

Answer 176

Under common law, contract provisions requiring that all modifications be in writing are not effective – ignore contract language. a. No. Rule: In CL contracts, clauses that modifications must be in writing are ignored. b. Yes. Because the agreement as modified is within the SOF.

Answer 177

Under UCC, contract provisions requiring written modifications are effective unless waived. Yes, because such contract clauses are effective under UCC 2 - "all modifications must be in writing" (whereas in CL, it is ignored.)

Answer 178

If the subject matter is illegal, the agreement is not enforceable. a. No. Illegal subject matter. b. Illegal purpose: If the subject matter is legal, the agreement is enforceable if the plaintiff did have reason to know of the defendant’s illegal purpose. Yes. Subject matter is simply flying. As long as Delta didn't have reason to know of illegal purpose.

Answer 179

Look for (1) a statement of “fact” before the contract, (2) by one of the contracting parties or her agent, (3) that is false, and (4) induces the contract. No wrongdoing required for material misrepresentations. Yes. No wrong doing required. If contracts question will have rescind. If for damages, then it will be a torts problem.

Answer 180

No. misrep = matters failure to disclose = generally does not matter

Answer 181

Yes. Economic duress.

Answer 182

Look for (1) special relationship between the parties and (2) improper persuasion of the weaker by the stronger.

Answer 183

There will be no contract if (i) parties use a material term that is open to at least two reasonable interpretations, and (ii) each party attaches different meaning to the term, and (iii) neither party knows or has reason to know the term is open to at least two reasonable interpretations. a. No. Ambiguity. - - - not going to be on bar. b. We don't have element number 2, so answer is yes, there is a contract under the terms as understood by S.

Answer 184

Distinguish misrepresentation fact patterns from mistake fact patterns. Generally, relief for the former but not the latter. Relief for mutual mistake only if both parties are mistaken (not just uncertain) about existing facts (mistake is different from uncertainty). Even then, no relief for mistake if the person seeking relief bears the risk of mistake. No relief for mistake if person seeking the relief bears the risk. In virtually every situation, both bear the risk. Correct answer is (b)

Answer 185

B. Unilateral mistake of material fact: Generally, courts have been even more reluctant to allow a party to avoid a contract for a mistake made by only one party. There will be relief for situations in which the other party had reason to know of the mistake, i.e., palpable mistake. Yes. Palpable mistake.

Answer 186

Changing/contradicting terms in the written deal: Evidence of earlier agreements cannot be considered for the purpose of contradicting the terms in the written contract. a. No. b. Parol evidence rule is limited to stuff said or written before the contract. So no parol evidence rule affecting admissibility

Answer 187

Mistake in integration, i.e., clerical mistake: A court may, however, consider evidence of such terms for the limited purpose of determining whether there was a mistake in integration, i.e., a mistake in reducing the agreement to writing. It is admissible . . . mistake in integration.

Answer 188

Defenses, i.e., getting out of a written deal: The parol evidence rule does not prevent a court from considering evidence of earlier words of the parties for the limited purpose of determining whether there is a defense to the enforcement of the agreement, such as misrepresentation, fraud, or duress. Yes.

Answer 189

Yes. Ambiguity, i.e., explaining term in the written deal: The parol evidence rule does not prevent a court from considering evidence of earlier agreements to resolve ambiguities in the written contract.

Answer 190

Adding to the written deal: The parol evidence rule prevents a court from considering evidence of earlier agreements as a source of consistent, additional terms unless the court finds (i) that the written agreement was only a partial integration or (ii) that the additional terms would ordinarily be in a separate agreement. Yes, if the court concludes that it was only a partial integration. Whether complete or partial is a question of fact.

Answer 191

Shipment contracts: One possibility is that the contract is a shipment contract which means that the seller completes its delivery obligation when it (i) gets the goods to a common carrier, and (ii) makes reasonable arrangements for delivery, and (iii) notifies the buyer. In a shipment contract, the seller completes its delivery obligation before delivery is completed. Get the goods to a common carrier + make reasonable delivery arrangements+ notify the buyer (Greyhound bus full of armadillos; MOST IMPORTANT PART: bus is sitting in station in TX, and even though not started the trip, the seller completed its delivery obligation

Answer 192

Determining whether contract is a shipment or destination contract: Most contracts with delivery obligations are shipment contracts. Watch for the use of FOB – free on board (city) – as source for determining whether the contract is a shipment contract or a destination contract. FOB followed by city where the seller is or where goods are means shipment contract; FOB followed by any other city means destination contract. FOB Chicago - destination contract.

Answer 193

a. S has risk of loss for any uninsured loss. 2 weeks late is unrelated to rats in the coffee. ABCD: agreement, breach, common carrier, default rule b. Seller is NY. FOB (seller's city) = shipment contract

Answer 194

“Catch-all” (no agreement, no breach, no delivery by a carrier): the determining factor is whether the seller is a merchant. WHETHER THE BUYER IS A MERCHANT IS IRRELEVANT. Risk of loss shifts from a merchant-seller to the buyer on the buyer’s “receipt” of the goods; risk of loss shifts from a nonmerchant seller when he or she “tenders” the goods. No. Merchant seller.

Answer 195

“Catch-all” (no agreement, no breach, no delivery by a carrier): the determining factor is whether the seller is a merchant. WHETHER THE BUYER IS A MERCHANT IS IRRELEVANT. Risk of loss shifts from a merchant-seller to the buyer on the buyer’s “receipt” of the goods; risk of loss shifts from a nonmerchant seller when he or she “tenders” the goods. If not told S is a none merchant, don't assume he is. tender=make available Yes, has to pay for damaged stove b/c risk of loss in none merchant seller deal shifts on tender.

Answer 196

Implied warranty of merchantability: When any person buys any goods from any merchant, a term is automatically added to the contract by operation of law – that the goods are fit for the ordinary purpose for which such goods are used. (a) Triggering fact: seller is a merchant WHICH HERE MEANS IT DEALS IN GOODS OF THAT KIND. (b) Warranty: goods are fit for ordinary purposes. everywhere else on bar, merchant means you sell THIS kind of stuff; ANSWER: Yes. See (a) and (b) above. Policy: When you buy stuff from someone in the business of selling, you should have min expectation that fit for ordinary purposes.

Answer 197

No implied warranty b/c not in the business of selling cars.

Answer 198

Implied warranty of fitness for a particular purpose: (a) Triggering facts: buyer has particular purpose; buyer is relying on seller to select suitable goods; seller has reason to know of purpose and reliance. (b) Warranty: goods fit for particular purpose. a. We're told what the buyers purpose is. Yes. There is an implied warranty of fitness. b. Yes. c. Yes. d. No.

Answer 199

Disclaimer – e.g., “there are no warranties:” (a) Express warranties generally cannot be disclaimed. (b) Implied warranties of merchantability and fitness can be disclaimed in EITHER of the following ways: (i) CONSPICUOUS language of disclaimer, mentioning merchantability, OR (ii) “as is” or “with all faults.” No. It has been effectively disclaimed (see above (ii)) 2 THINGS THAT WILL BE ON: 1. "as is" DOES NOT HAVE TO BE CONSPICUOUS 2. "as is" ONLY eliminates implied warranty

Answer 200

Limitation of remedies: does not eliminate warranties, simply limits or sets recovery for any breach of warranty: a) possible to limit remedies even for express warranties. (b) general test is unconscionability. (c) prima facie unconscionable if breach of warranty on consumer goods causes personal injury. First clause: "All operating parts . . . " is an express warranty. Second clause: limitation of remedy Yes, but only the replacement part. See (a)

Answer 201

There are only four things you need to know about rejection of goods for the bar exam. First, you need to be able to distinguish rejection of an offer from rejection of the goods. Second, if the seller does not meet the perfect tender standard, the buyer has the option to retain and sue for damages or reject “all or any commercial unit” and sue for damages. Third, the buyer must take reasonable care of the rejected goods and should not continue to use rejected goods. Fourth, this rejection alternative is limited by cure, installment contracts and acceptance. No.

Answer 202

There are only four things you need to know about rejection of goods for the bar exam. First, you need to be able to distinguish rejection of an offer from rejection of the goods. Second, if the seller does not meet the perfect tender standard, the buyer has the option to retain and sue for damages or reject “all or any commercial unit” and sue for damages. Third, the buyer must take reasonable care of the rejected goods and should not continue to use rejected goods. Fourth, this rejection alternative is limited by cure, installment contracts and acceptance. Yes.

Answer 203

In very limited situations, a seller has the option of curing even after the contract delivery date. “Reasonable grounds” is the statutory test. Look for information in the question about prior deals between that buyer and seller. Yes.

Answer 204

Yes. Time for performance has not yet expired, but only by delivering the green widgets by the June 6 express deadline.

Answer 205

Payment without opportunity for inspection is not acceptance. Even though paid for them, didn't have opportunity to inspect.

Answer 206

Specific performance/injunction: Equitable remedy: Look for adequacy of remedy at law or unclean hands, or other parties’ equities. Yes

Answer 207

Specific performance/injunction: Equitable remedy: Look for adequacy of remedy at law or unclean hands, or other parties’ equities. No. X has equities as strong as B.

Answer 208

Yes. Contract for sale of goods: Unique goods: antiques, art, custom- made or other appropriate circumstances.

Answer 209

a. No. contracts for service = no specific performance Contract for services: No specific performance, possible injunctive relief. b. Yes. Does have the power to issue injunctive relief.

Answer 210

Seller’s reclamation from an insolvent buyer of goods: Right of an unpaid seller to get its goods back. Key facts are that (i) the buyer must have been insolvent at the time that it received the goods, and (ii) the seller demands return of goods within 10 days of receipt (this “10- day rule” becomes a “reasonable time rule” if, before delivery, there had been an express representation of solvency by the buyer), and (iii) the buyer still has goods at time of demand. Yes. NOTE: two issues bar exam likes to do. 1. Jan. 22nd is the essential date. Bar likes to tell you the buyer is insolvent at time of demand. You can't assume that he was insolvent earlier. 2. They like to play with the 10 day rule. 15-27 is fine, but the law is that the calendar starts turning from the time of the buyer receipt of the goods. (i.e. 22)

Answer 211

No. The later bona fide purchaser is more deserving. Shouldn't have trusted the person you gave it to.

Answer 212

ANSWER IS (C) -

Answer 213

Seller breaches, buyer keeps the goods [Fair market value if perfect – fair market value as delivered] or [cost of repair]. 14,000; doesn't matter that contract price was $30k . . . benefit of the bargain.

Answer 214

Seller breaches, seller has the goods: [market price at time of discovery of the breach – contract price] or [reasonable replacement price – contract price] whichever is greater. $2,000

Answer 215

Buyer breaches, buyer keeps the goods [contract price]. $800

Answer 216

Buyer breaches, seller has the goods: [contract price – resale unless seller cannot resell in which case the seller can recover the contract price and in some situations provable lost profits]. a. 200 b. 0

Answer 217

Lost profits for lost volume seller Yes. Expectation damages are about no breach. What would have happened if no breach? 1 set sold to Conviser on day 1 AND another to CC on day 2. LOOK FOR THE PHRASE: "regular inventory"

Answer 218

Plus INCIDENTAL damages: Costs incurred in dealing with the breach such as costs of storing rejected goods in a sale of goods or finding a replacement in a services contract – always recoverable. $20

Answer 219

Plus foreseeable CONSEQUENTIAL (special) damages: The term “consequential damages” is very important. And very confusing. Consequential damages does not mean all damages caused as a consequence of the breach. Rather think of damages as being either (1) general damages, i.e., kind of loss that any person would sustain or (2) consequential damages, i.e., kind of loss that is special to this plaintiff. Consequential damages are limited to damages arising from P’s special circumstances and recovery of consequential damages is limited to situations in which D had reason to know of these special circumstances at the time of the contract. a. No. Our non-breaching party is M. We don't know anything special about M. Need special facts for consequential damages. b. Expectation damages are $50. But $0 consequential. c. Consequential damages – not recoverable Yes. (but not recoverable) d. $50 of general expectation damages. e. Consequential damages – recoverable NOTE: "M told C before the contract"

Answer 220

Less AVOIDABLE damages: No recovery for damages that could have been avoided without undue burden on plaintiff. Burdens of pleading and proof on defendant. Continuing to perform after the other party’s breach $300

Answer 221

Turning down other, comparable opportunities Less AVOIDABLE damages: No recovery for damages that could have been avoided without undue burden on plaintiff. Burdens of pleading and proof on defendant.

Answer 222

Less damages that cannot be established with reasonable certainty: Look for fact pattern involving a services contract and plaintiff engaged in new business or a new business activity. Consider reliance recovery as an alternative to expectation. a. There's never been an activity like this so we don't know what the dollar consequences would be, so we can't award expectation. But if he spent $2000 in reliance, then can get recovery for that. b. Yes. In reliance.

Answer 223

D. Contract provisions regarding damages, i.e., LIQUIDATED damages: Look for contract provision fixing amount of damages. Issue will be validity: concern is whether provision is too high – a penalty. Tests are (1) damages were difficult to forecast at time contract was made and (2) provision is a reasonable forecast. a. Yes. Contract provision controlling amount of damages. b. No. When you see a contract provision that has a single number and not a range, it is probably not a reasonable forecast. In other words, $10,000 for 1 day late and for 2 mths late is not a forecast. The concern is whether it is to high so that it is a penalty. Apply 2 part test.

Answer 224

Excuse: Anticipatory repudiation by one party excuses the other party’s duty to perform. Yes. NOTE: "Time are tough, it's going to be hard to come up with the money to pay you." is NOT enough. Must be unambig.

Answer 225

Anticipatory repudiation generally gives rise to an immediate claim for damages for breach unless the claimant has already finished her performance. Yes.

Answer 226

Anticipatory repudiation generally gives rise to an immediate claim for damages for breach unless the claimant has already finished her performance. No.

Answer 227

Anticipatory repudiation can be withdrawn (retracted) so long as there has not been a material change in position by the other party. If the repudiation is timely retracted, the duty to perform is reimposed but performance can be delayed until adequate assurance is provided.

Answer 228

Look for this in sale of goods problems. If the words or conduct of one party give “reasonable grounds for insecurity,” then the other party can, in writing, demand adequate assurance and if it is “commercially reasonable,” can suspend performance until it gets adequate assurance. The three concepts again are (1) reasonable grounds for insecurity, and (2) written demand for adequate assurance, and (3) commercially reasonable to stop performance. reasonable grounds for insecurity; yes

Answer 229

Yes Yes Yes COMMON LAW ONLY!! Common law and material breach rule: First, damages can be recovered for any breach. Second, only a material breach by one guy excuses the other guy from performing a contract governed by common law. Third, whether a breach is material is a fact question (and so whether a breach is material is not likely to be a bar exam question). Fourth, if there is substantial performance then the breach is not material. If the breach is material, then the performance was not substantial.

Answer 230

COMMON LAW ONLY!! Common law and material breach rule: First, damages can be recovered for any breach. Second, only a material breach by one guy excuses the other guy from performing a contract governed by common law. Third, whether a breach is material is a fact question (and so whether a breach is material is not likely to be a bar exam question). Fourth, if there is substantial performance then the breach is not material. If the breach is material, then the performance was not substantial. No. No. Yes.

Answer 231

COMMON LAW ONLY!! Common law and material breach rule: First, damages can be recovered for any breach. Second, only a material breach by one guy excuses the other guy from performing a contract governed by common law. Third, whether a breach is material is a fact question (and so whether a breach is material is not likely to be a bar exam question). Fourth, if there is substantial performance then the breach is not material. If the breach is material, then the performance was not substantial. a. No b. Yes.

Answer 232

Material breach because of the quantity (amount) of performance: a. Less than half. Yes. Material breach. b. No. Because post-contract occurrence. Eating tacos. Any further performance is excused b/c of the material breach. c. Yes. Discretionary with the court. d. Divisible contract corollary: Divisible contract exception. In a “divisible contract” there can be a contract law recovery for substantial performance of a divisible part even though there has been a material breach of entire contract. On the bar, look at whether price is stated as a lump sum or on a per performance basis. Has a right to be paid for each apartment.

Answer 233

a. Conditional acceptance No. Joe Biden story. b. Express condition Yes. If it is simply the words of an offeree in response (one person), no agreement. But as here, both people consented, then yes we have a contact with an express condition. No. Excuse b/c of the non-occurance of a condition.

Answer 234

Surprisingly, yes. (compare with 168) . . . . the language of condition makes the difference flagging that it's really important to you.

Answer 235

Waiver: Identify the person who benefits from or is protected by the express condition. Then look for a statement by that person giving up the benefits and protection of the express condition. a. Yes. Because O was the one protected and is the one that can waive it. b. No

Answer 236

Rescission (cancellation): The key is whether performance is still remaining from each of the contract parties. (executory). a. Yes. Not even a contract obligation to pay for the work that has been done. b. No. (Reason: is about consideration. No gain to P to cancel the deal)

Answer 237

1. Meaning of “accord,” “satisfaction”: On bar exam, accord questions will have an agreement by the parties to an already existing obligation to accept a different performance in satisfaction of the existing obligation. 2. Effect of accord AND SATISFACTION: (a) If the new agreement (“the accord”) is performed (satisfaction), then performance of the original obligation is excused. No. The new agreement is called the "accord." Delivery is satisfaction.

Answer 238

If the accord is not performed, then the other party can recover on either the original obligation or the accord: a. No satisfaction, therefore yes, can recover on the original loan agreement. b. Yes, but not both. Either existing obligation OR accord.

Answer 239

Modification is an agreement by parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation. No. Excuse b/c of modification. NOTE: different than accord and satisfaction is IF performance. Modification is a new agreement.

Answer 240

Yes. All 3 have to agree. a. A novation is an agreement between BOTH parties to an existing contract to the substitution of a new party, i.e., same performance, different party. b. Who is liable after a novation? Novation excuses the contracted for performance of the party who is substituted for or replaced. No. P is excused by novation.

Answer 241

How is delegation different from novation? Novation requires the agreement of BOTH parties to the original contract, and excuses the person replaced from any liability for nonperformance. Delegation does not require the agreement of both parties and does not excuse. This is not a novation b/c not consulting O. This is delegation, therefore yes, can recover damages from P for breach of contract.

Answer 242

Damage or destruction of subject matter of contract: Recall Taylor v. Caldwell where a concert promoter sued the owner of Surrey Gardens for breach of a contract to use Surrey Gardens for three concerts. After the contract but before the concerts, fire destroyed Surrey Gardens. The court excused the owner’s nonperformance, reasoning that the continued existence of the concert was an implied condition. 1. Common law: Yes.

Answer 243

Damage or destruction of subject matter of contract: Recall Taylor v. Caldwell where a concert promoter sued the owner of Surrey Gardens for breach of a contract to use Surrey Gardens for three concerts. After the contract but before the concerts, fire destroyed Surrey Gardens. The court excused the owner’s nonperformance, reasoning that the continued existence of the concert was an implied condition. 1. Common law: No. B still has the ability to build the house. It may be more expensive, but still possible.

Answer 244

Article 2: If sale of goods [like Karl and his coffee] do risk of loss first. (a) Risk of loss on the buyer: If risk of loss is on the buyer, then the buyer pays. Buyer’s risk of loss and destruction Conviser has the risk of loss so the buyer has to pay the $700. #187

Answer 245

offers cannot be assigned; options can be assigned unless otherwise specified