Contracts And Sales

Question 1

What is the general rule for express terms control in contracts?

Answer 1

Courts look to course of performance, course of dealing, and trade usage.

Question 2

What are gap fillers in the context of UCC?

Answer 2

Default rules for terms that govern contracts for the sale of goods if no term is stated.

Question 3

What does the parol evidence rule (PER) prevent?

Answer 3

It prevents adding a term from preliminary negotiations to a final written agreement.

Question 4

What happens if there is a complete integration in a contract?

Answer 4

No terms will be admitted into evidence.

Question 5

What is a merger or integration clause?

Answer 5

A clause stating, ‘this is the full and final agreement.’

Question 6

What is the outcome if there is a partial integration?

Answer 6

Consistent additional terms are admitted.

Question 7

What are the exceptions where the PER does not apply?

Answer 7

• Formation defenses
• Interpretation of a term
• Failure of a condition precedent
• Clerical error
• Later modification

Question 8

What rights do intended third-party beneficiaries (TPBs) have?

Answer 8

They have rights under a contract once their rights vest.

Question 9

What factors determine if a TPB is intended?

Answer 9

• Is the TPB expressly designated in the contract?
• Is performance directly to the TPB?
• What is the relationship between the TPB and the promisee?

Question 10

What is the difference between delegation and assignment?

Answer 10

One delegates duties and assigns rights.

Question 11

What is required to delegate a duty under a contract?

Answer 11

The contract must not prohibit it and must not involve special skill, judgment, or trust.

Question 12

What is the liability of the delegator after delegation?

Answer 12

The delegator remains liable on the contract.

Question 13

Under what conditions can rights be assigned?

Answer 13

Unless the assignment substantially changes the obligor’s duties or the contract prohibits it.

Question 14

What is the general rule for the Statute of Frauds (SOF)?

Answer 14

Requires a writing signed by the party to be charged that evidences a contract.

Question 15

Which contracts fall under the SOF?

Answer 15

• Contracts made in consideration of marriage
• Contracts that cannot be performed within a year
• Contracts for the sale of land
• Promises made by an executor to pay a debt from his own estate
• Contracts for the sale of goods for $500 or more
• Surety contracts

Question 16

What is an exception to the SOF regarding land?

Answer 16

Part performance when one’s actions evidence a contract.

Question 17

What are the exceptions to the SOF for the sale of goods?

Answer 17

• Merchants confirmatory memo exception
• Substantial beginning in manufacture
• Judicial admissions
• Part performance

Question 18

What is the definition of duress in contract law?

Answer 18

Threatening a wrongful act that would threaten the other party’s finances, property, well-being, or life.

Question 19

What constitutes undue influence?

Answer 19

Unfair persuasion by a person in a position of trust or dominance.

Question 20

What is mutual mistake in contract formation?

Answer 20

Both parties are mistaken about a basic assumption of fact that materially affects the exchange.

Question 21

What is a unilateral mistake?

Answer 21

When one party knows or has reason to know of the other party’s mistake.

Question 22

What is mutual misunderstanding?

Answer 22

There is no contract if both parties have a different understanding of a material term.

Question 23

What happens if a contract has illegal subject matter?

Answer 23

The contract is void.

Question 24

What is unconscionability in contract law?

Answer 24

It consists of procedural and substantive unconscionability.

Question 25

What does the general rule for remedies state?

Answer 25

The damaged party recovers expectation damages.

Question 26

What are incidental damages?

Answer 26

Related to avoiding the loss from the breach.

Question 27

What are consequential damages?

Answer 27

Foreseen at the time the contract is entered into.

Question 28

What does specific performance refer to?

Answer 28

An equitable remedy not usually available unless goods are unique or in a land contract.

Question 29

What is an injunction?

Answer 29

An equitable remedy that tells a party to do or not do something.

Question 30

What is rescission?

Answer 30

Undoing the contract when it is void or voidable.

Question 31

What is reformation in contract law?

Answer 31

A remedy sought when the contract does not reflect the agreed terms.

Question 32

What are liquidated damages clauses?

Answer 32

Enforced if damages are difficult to estimate and a reasonable forecast of damages exists.

Question 33

What does restitution mean in contract law?

Answer 33

Recovering the value of the benefit conferred.

Question 34

What does the Uniform Commercial Code (UCC) apply to?

Answer 34

Transactions in goods ## Footnote Common law applies to everything else (services) on the MBE.

Question 35

How do courts determine the applicable law for a contract?

Answer 35

By looking at the predominant purpose of the contract

Question 36

What are the key components required to create an offer?

Answer 36

* Intent to enter into a contract * Specific terms (e.g., price, quantity, identity of parties) * Communication to the offeree

Question 37

What is a requirements or output contract?

Answer 37

A contract that will not fail for lack of quantity if the amount is in good faith and not unreasonably disproportionate

Question 38

List the four ways to terminate an offer.

Answer 38

* Lapse of time * Rejection (including counteroffer) * Revocation of an offer * Death or incapacity of the offeror

Question 39

What are the conditions under which an offer can be revoked?

Answer 39

* Firm offer by a merchant in a signed writing under the UCC * Option contract * Unilateral contract with performance * Reasonably foreseeable substantial reliance on the offer

Question 40

What are the two types of contracts based on acceptance?

Answer 40

* Bilateral contracts: accepted by promise or beginning performance * Unilateral contracts: accepted only by full performance

Question 41

How is acceptance effective under the mailbox rule?

Answer 41

Acceptance is effective when sent

Question 42

Under common law, what must an acceptance do?

Answer 42

Be the 'mirror image' of the offer

Question 43

Under the UCC, what can an acceptance include?

Answer 43

Additional or different terms without needing to mirror the offer

Question 44

What constitutes consideration in a contract?

Answer 44

Bargained-for exchange

Question 45

What are examples of what is not considered valid consideration?

Answer 45

* Promise to make a gift * Moral obligation * Past consideration * Illusory promise

Question 46

What is reliance in the context of consideration?

Answer 46

A substitute for consideration, enforcing promises to avoid injustice if there is foreseeable and justifiable reliance

Question 47

What is required to modify a contract under common law?

Answer 47

Consideration

Question 48

What is required to modify a contract under UCC?

Answer 48

Only good faith

Question 49

What must occur for a party's duty to arise under common law?

Answer 49

Substantial performance of duties

Question 50

What is an express condition in a contract?

Answer 50

A condition that must be complied with exactly

Question 51

What is the seller required to provide under UCC?

Answer 51

Perfect tender of the goods

Question 52

What happens if the seller does not provide perfect tender?

Answer 52

The buyer can reject the goods

Question 53

What is anticipatory repudiation?

Answer 53

When a party unequivocally breaches a contract

Question 54

What can a party do if anticipatory repudiation occurs?

Answer 54

* Sue immediately * Suspend performance and wait to sue * Treat the contract as discharged * Urge the other party to perform

Question 55

What discharges a duty according to the text?

Answer 55

* Occurrence of a condition subsequent * Agreement (e.g., novation, modification) * Frustration of purpose * Impossibility

Question 56

What is an express warranty?

Answer 56

An affirmation of fact about the goods that cannot be disclaimed

Question 57

What is the implied warranty of merchantability?

Answer 57

A warranty that goods are fit for their ordinary purpose

Question 58

What is the implied warranty of fitness for a particular purpose?

Answer 58

A warranty made by any seller who knows the buyer's specific purpose and the buyer relies on the seller

Question 59

What is a limitation of remedies clause?

Answer 59

A contractual provision that limits or controls the remedies

Question 60

True or False: Mere 'puffery' creates an express warranty.

Answer 60

False