CONTRACTS FINAL QUIMBEE VER.

Question 1

three types of warranties?

Answer 1

1. express warranty: seller’s warranty, description, or sample/model
2. implied warranty of merchantability: goods fit for ordinary use (only for merchants)
3. implied warranty of fitness for a particular purpose: goods fit for buyer’s special purpose (seller knows of purpose and reliance)

Question 2

Express warranty - creation?

Answer 2

• affirmation of fact, description, or sample/model
• no specific words or intent needed
• mere puffery does not create a warranty

Question 3

Implied Warranty of Merchanability - creation?

Answer 3

• automatically applies when seller is a merchant of the goods
• goods must be fit for their ordinary purpose

Question 4

implied warranty of fitness for a particular purpose - creation?

Answer 4

• buyer relies on seller’s skill/judgment for specific need
• seller must know buyer’s purpose and reliance

Question 5

Disclaiming - express warranties?

Answer 5

explicit and clear language

Question 6

disclaiming - implied warranty of merchantability?

Answer 6

• must mention “merchantability”
• can be oral or written, but must be conspicuous if written

Question 7

disclaiming - implied warranty of fitness for a particular purpose

Answer 7

• must be written and conspicuous

Question 8

implicit disclaimers?

Answer 8

• “as is” or “with all faults” language negates implied warranties
• buyer’s examinations or refusal to exmaine goods also negates implied warranties for discoverable defects

Question 9

five common defenses

Answer 9

1. lack of capacity
2. duress
3. illegality
4. unconscionability
5. misrepresentation

Question 10

lack of capacity, the three grounds?

Answer 10

1. infancy (under 18)
2. mental illness/defect (unable to understand or act reasonably, and other party knows)
3. intoxication (other party knows imparied understanding or judgment)

Question 11

void or voidable for lack of capacity?

Answer 11

1. minor: voidable
2. mental illness: voidable
3. intoxication: voidable

Question 12

duress - definition

Answer 12

• party’s assent induced by an improper threat leaving no reasonable alternative
• threats may be express or implied (word or conduct)

Question 13

illegality - overview

Answer 13

• contract violates public policy (serious crime, tort, or endangers welfare)
• neither party can enforce illegal contract

Question 14

two types of unconscionability

Answer 14

1. procedural
2. substantive

Question 15

procedural unconscionability

Answer 15

• significant inequality of bargaining power
• hidden or non-negotiable terms

Question 16

substnative unconscionability

Answer 16

• overly harsh or one sided terms

Question 17

majority view for unsconscionability

Answer 17

require both substantive and procedural at time of contract formation

Question 18

who decides whether a contract is unconscionable

Answer 18

a judge as a matter of law

Question 19

misrepresentation - definition

Answer 19

party’s assent induced by fraudulent or material misrepresentation with justified reliance

Question 20

misrepresentation - forms

Answer 20

1. untrue assertion: false factual statement
2. concealment: active hiding of facts
3. non-disclosure: failure to correct another’s mistake or breach of trust

Question 21

misrepresentation - fraudulent vs material

Answer 21

1. fraudulent: intentional deception; party knows/believes assertion is false or unsure
2. material: likely to induce a reasonable person’s assent (Even if innocently made)

Question 22

what is a condition?

Answer 22

• uncertain event that must occur before a party’s duty to perform arises

Question 23

express conditions

Answer 23

explicitly agreed upon by parties

Question 24

constructive condition

Answer 24

implied by law to avoid injustice (buyer must notify seller of defects promptly)

Question 25

general effect of conditions

Answer 25

1. if condition occurs => performance required 2. if condition fails => performance excused (unless excused by another doctrine)

Question 26

excusing non-occurrence

Answer 26

sometimes a party must still perform even if the condition fails

Question 27

when can non-occurrence be excused?

Answer 27

1. bad faith 2. impracticability 3. estoppel 4. waiver 5. disproportionate forfeiture

Question 28

excuse by bad faith

Answer 28

- there is a duty of good faith implied in every contract - party cannot cause failure of condition in bad faith and avoid performance

Question 29

excuse by impracticability

Answer 29

- if condition is not material and performance is impracticable, nonoccurrence excused

Question 30

excuse by estoppel requirements

Answer 30

1. obligor promises to perform despite nonoccurrence 2. obligee reasonably and detrimentally relies 3. enforcement of condition would cause unfair harm

Question 31

excuse by waiver

Answer 31

1. express waiving condition OR 2. accepting performance despite nonoccurrence - limitation: waiver ineffective if condition is material

Question 32

excuse by disproportionate forfeiture requirements

Answer 32

1. condition not material 2. obligee substantially relied on expected exchange 3. Loss to obligee > loss to obligor if excused

Question 33

what is a breach

Answer 33

- failure to render full performance when due - any breach entitles nonbreaching party to damages

Question 34

two types of breach

Answer 34

1. material: nonbreaching party can suspend performance 2. minor: nonbreaching party must perform but can sue for damages

Question 35

factors to determine material breach

Answer 35

1. loss of benefit to injured party 2. adequacy of compensation for loss 3. forfeiture suffered by breaching party 4. likelihood of cure considering all circumstances

Question 36

anticipitatory repudiation - overview

Answer 36

- repudiation: clear indication party will breach before performance is due - nonbreaching party can immediately sue for remedy

Question 37

two forms of anticipitary repudiation

Answer 37

1. express statement: clear refusal to perform (i won't paint tomorrow) 2. affirmative action: party voluntarily becomes unable to perform (closes business)

Question 38

doubts vs repudiation

Answer 38

- expression of doubt (i'm not sure i can perform) does not equal anticipitory repudiation - no right to sue until actual breach if only doubt is expressed

Question 39

retraction of anticipatory repudiation

Answer 39

- repudiation can be retracted if: a) no material reliance by injured party b) no indication repudiation is final - retraction by: a) notice (i'll perform after all) b) change in circumstances (reopening business)

Question 40

when repudiation becomes final

Answer 40

1. injured party materially changes position (hires another painter) 2. injured party states repudiation is final (cancels contract)

Question 41

prospective inability to perform - overview

Answer 41

- reasonable grounds for insecurity allow for suspension of performance - party may demand adequate assurance

Question 42

adequate assurance - key points

Answer 42

- if assurance not provided within reasonable time, injured party may treat it as an anticipatory repudiation and sue

Question 43

summary - breach and remedies

Answer 43

1. material breach = suspend + sue 2. minor breach = perform + sue for damages 3. anticipatory repudiation = immediate right to sue 4. prospective inability = suspend + demand assurance