Contracts I

Question 1

promisor

Answer 1

A person who makes a promise.

Question 2

statements of opinion, prediction, or intention

Answer 2

A statement of opinion, prediction, or intention is not a promise, unless there are additional circumstances that would give the speaker reason to know the recipient would construe the statement as a promise.

Question 3

applicable law

Answer 3

The UCC applies to contracts for the sale of goods (even if none of the parties is a merchant). The common law applies to contracts that are not for the sale of goods (for example, the sale of land or services). If the UCC does not have a rule applicable to a particular issue involved in a contract for the sale of goods, the common law rule applies.

Question 4

strict liability

Answer 4

Contract liability is generally strict liability, meaning that a promisor is generally liable for breach of contract even if, in breaching the contract, she did not act negligently or with a bad motive.

Question 5

legal enforceability of promises

Answer 5

The two principal ways promises are made legally enforceable is the promise is within a contract (a bargain) and the doctrine of promissory estoppel (reliance). “The mere fact that one… promises something to another creates no legal duty and makes no legal remedy available in case of nonperformance. To be enforceable, the promise muust be accompanied by some other factor.” Corbin

Question 6

breach of contract [elements]

Answer 6

The elements of a breach of contract claim are (1) a manifestation of mutual assent, (2) consideration, (3) reasonably certain terms, and (4) a breach or repudiation.

Question 7

promissory estoppel [elements]

Answer 7

The elements of a promissory estoppel claim are: (1) a promise; (2) the promisor should reasonably have expected the promise to induce action or forbearance by the promisee; (3) the promise induced action or forbearance by the promisee (detrimental reliance), (4) a breach or repudiation, and (5) injustice can be avoided only by enforcing the promise.

Question 8

quasi-contract [elements]

Answer 8

A claim for quasi-contract (unjust enrichment or restitution) requires the plaintiff to prove that (1) the defendant has been enriched (benefited, either in the form of money, property, or services) (2) by the plaintiff, and (3) it would be unjust for the defendant to not pay for the benefit.

Question 9

objective theory of contracts

Answer 9

The doctrine that a contract is not an agreement in the sense of a subjective meeting of the minds but is instead a series of external acts giving the objective semblance of agreement.

Question 10

manifestation of mutual assent [elements]

Answer 10

A manifestation of mutual assent ordinarily takes the form of (1) an offer and (2) an acceptance.

Question 11

misunderstanding doctrine (“Peerless doctrine”)

Answer 11

If the meaning the parties attached to a particular contract provision or word was different (a “misunderstanding” or a “mistake in expression”) and the misunderstanding goes to conflicting and irreconcilable meanings of a material term that could have either but not both meanings, and each meaning is equally reasonable, there is no manifestation of mutual assent. Remember that this case was named after the case of the Peerless ships. One ship came in October and one in December, but neither could be declared the Peerless referenced in the contract.

Question 12

offer [elements]

Answer 12

An offer is (1) a promise or set of promises, (2) conditioned on acceptance by the promisee (3) that is communicated or delivered to the offeree.

Question 13

“reason to know” standard

Answer 13

In the absence of information about another person’s characteristics that would make the other person more or less likely to construe a person’s actions or words as a promise, the person has reason to believe that another person will construe the person’s actions or words as a promise if a reasonable person in the position of the other person would believe the person made a promise, taking into account the context of the words or conduct.

Question 14

intention to not be legally bound

Answer 14

Although a promisor need not manifest an intention that the promise be legally binding, an act or communication is not a promise if a reasonable person would understand that the alleged promisor did not intend a legal obligation to arise.

Question 15

promise

Answer 15

A manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made.

Question 16

advertisements

Answer 16

An advertisement is not ordinarily considered an offer, and is instead considered a solicitation (an invitation for an offer), because it ordinarily lacks a promise.

Question 17

acceptance [elements]

Answer 17

Acceptance of an offer requires (1) a manifestation of assent (2) to the terms of the offer (3) made in a manner invited or required by the offer (4) while the offeree still has the power of acceptance.

Question 18

silence as acceptance

Answer 18

Silence is ordinarily NOT construed as a manifestation of assent to an offer. Silence/inaction operates as an acceptance ONLY: (1) where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation; (2) where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction; (3) where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intend to accept; or (4) where an offeree does any act inconsistent with the offeror’s ownership of offered property and the terms of the offer are not unreasonable.

Question 19

unordered merchandise

Answer 19

Under federal law, the recipient of merchandise mailed to him or her without prior express request or consent has the privilege to retain, use, discard, or dispose of it in any manner he or she sees fit without any obligation whatsoever to the sender.

Question 20

preliminary negotiations

Answer 20

A communication is not a promise (and thus not an offer or acceptance), but simply preliminary negotiations, if a reasonable person in the position of the recipient of the communication would believe the person making the communication does not intend to conclude a contract until he or she has made a further manifestation of assent.

Question 21

knowledge of offer

Answer 21

“Generally, a contract can only be formed if the offeree knew of the offer at the time of the alleged acceptance.” Perillo

Question 22

motive

Answer 22

An offeree who engages in the act or acts necessary to accept an offer will be presumed to have manifested assent unless the offeree clearly manifested an intention to act solely for other purposes.

Question 23

grumbling acceptance

Answer 23

An offeree’s expressed lack of enthusiasm or dissatisfaction about an offer will not render ineffective what is otherwise an acceptance.

Question 24

mirror image rule

Answer 24

A purported acceptance that varies the terms of the offer in ANY way and that is conditional on the offeror’s assent to the additional terms is not an acceptance, it is a counteroffer. But an offeree’s SUGGESTION or REQUEST for an additional/different term made along with the acceptance will not render ineffective an otherwise effective acceptance.

Question 25

promisee

Answer 25

A person to whom a promise is made.

Question 26

master of the offer

Answer 26

The offeror is the "master of the offer," which means the offeror not only specifies the terms of the proposed agreement, but has the privilege to insist on a particular place, time, or manner for the offeree to manifest assent.

Question 27

prescribed vs. suggested method of acceptance

Answer 27

"If an offer prescribes the place, time or manner of acceptance its terms in this respect must be complied with in order to create an agreement. If an offer merely suggests a permitted place, time or manner of acceptance, another method of acceptance is not precluded."

Question 28

when offer doesn't prescribe method of acceptance

Answer 28

"Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances."

Question 29

bilateral contract

Answer 29

A contract "in which there are mutual promises between two parties to the contract, each party being both a promisor and promisee."

Question 30

unilateral contract

Answer 30

A contract in which the promisor does not seek a return promise, but instead seeks only completed performance by the promisee.

Question 31

accepting offer of bilateral contract vs. unilateral contract

Answer 31

If an offeror requires a return promise as the exclusive method of acceptance, the offeree must provide a return promise to have an acceptance.

Question 32

written document to follow

Answer 32

When negotiations show that the parties discussed expressing their agreement in a written document, but they fail to do so, there is no contract if either party manifested an intention that the agreement would not be binding until expressed in a written document. If the parties manifested an intention to have a binding agreement prior to completing the written document, and manifested an intention to prepare the written document simply to memorialize the agreement already reached, the failure to reduce it to a written document will not prevent it from being binding.

Question 33

case of doubt or offeror indifference

Answer 33

"In case of doubt [or offeror indifference] an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance."

Question 34

case of doubt or offeror indifference results in bilateral contract

Answer 34

Where an offer can be accepted by either a return promise or by performance (a case of doubt or offeror indifference), the tender or beginning of the invited performance or the tender of a beginning of it operates as an acceptance and a promise to completely perform.

Question 35

late or defective manifestation of assent as counteroffer

Answer 35

A late or otherwise defective manifestation of assent to an offer is a counteroffer, but the original defective manifestation of assent to an offer is a counteroffer, but the original offeror's silence in response constitutes an acceptance of such counteroffer only if such silence qualifies as an exception to the general rule that silence is not ordinarily an acceptancec

Question 36

door-to-door sales

Answer 36

Under federal law, a person who makes a purchase of $25 or more for a personal, family, or household purchase has three days to cancel the transaction when the buyer's agreement or offer to purchase is made at a place other than the seller's regular place of business

Question 37

termination of power of acceptance

Answer 37

Except as stated in the rule regarding the effect of an option contract, an offeree's power of acceptance is terminated by (1) the offeree's rejection (unless the offeror has manifested a contrary intention) or counteroffer (unless the offeror has manifested a contrary intention), (2) lapse of time, (3) offeror's revocation, (4) offeror's or offeree's death or legal incapacity, or (5) the non-occurrence of any condition of acceptance under the offer's terms.

Question 38

revocation

Answer 38

An offeree's power of acceptance is terminated when (1) the offeree receives from the offeror a manifestation of intention not to enter into the proposed agreement (direct revocation), or (2) the offeror takes definite action inconsistent with an intention to enter into the proposed agreement and the offeree acquires reliable information to that effect from someone other than the offeror (indirect revocation).

Question 39

rule of Dickinson v. Dodds

Answer 39

In general, an offeror can revoke an offer any time prior to acceptance, and a promise to keep an offer open is unenforceable unless there is a basis for making such a promise enforceable.

Question 40

when power to accept terminates upon revocation of an offer made by newspaper or similar medium

Answer 40

Although as a general rule an offeror's revocation only terminates the power of acceptance when notice of the revocation is received by the offeree, when an offer is made by advertisement in a newspaper or other general notification to the public... the offeree's power of acceptance is terminated when a notice of termination is given publicly by advertisement or other general notification equal to that given to the offer and no better means of notification is reasonably available.

Question 41

notice of acceptance by return promise (dispatch rule)

Answer 41

An acceptance by return promise, made in a manner and by a medium invited by the offer, is effective and completes the manifestation of mutual assent as soon as it is put out of the offeree's possession (regardless of whether it reaches the offeror) UNLESS (1) the offer provides otherwise, (2) the offer includes an option contract (in which case acceptance is effective only when received by the offeror) or (3) the acceptance is sent after a rejection is sent by mail or telegram (in such a situation, whichever is received by the offeror first is effective.)

Question 42

notice of acceptance by performance

Answer 42

"Where an offer invites an offeree to accept by rendering a performance, no notification is necessary to make such an acceptance effective unless the offer requires such a notification.

Question 43

lapse of time

Answer 43

"An offeree's power of acceptance is terminated at the time specified in the offer, or, if no time is specified, at the end of a reasonable time."

Question 44

in-person or telephonic negotiations

Answer 44

"Where the parties bargain face to face or over the telephone, the time for acceptance does not ordinarily extend beyond the end of the conversation unless a contrary intention is indicated. A contrary intention may be indicated either by express words or by circumstances.

Question 45

when power to accept terminates upon death or legal incapacity

Answer 45

The offeror's death or legal incapacity immediately terminates the power of acceptance, without notice to the offeree.

Question 46

rejection

Answer 46

"A manifestation of intention not to accept an offer... unless the offeree manifests an intention to take it under further advisement."

Question 47

inquiry not a rejection

Answer 47

An offeree's mere inquiry regarding an offer (including an inquiry regarding the possibility for different or better terms or a request for a better offer) is not ordinarily treated as a rejection of the offer.

Question 48

when power to accept terminates upon rejection

Answer 48

A rejection does not terminate the power of acceptance until received by the offeror.

Question 49

counteroffer

Answer 49

"An offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer."

Question 50

when power to accept terminates upon counteroffer

Answer 50

A counteroffer does not terminate the power of acceptance until received by the offeror

Question 51

option contract

Answer 51

An actual or implied-in-law promise to not revoke an offer for a particular amount of time

Question 52

effect of option contract

Answer 52

An offeree's power to accept an offer that is irrevocable under an option contract is NOT terminated by an offeree's rejection or counteroffer, by revocation, or by the offeror's death or legal incapacity (but IS terminated by the offer's expiration based on lapse of time or the offeree's death or incapacity).

Question 53

option contract with consideration

Answer 53

A promise to not revoke an offer for a stated period of time is enforceable if the promise was given in exchange for consideration.

Question 54

option contract through formality

Answer 54

An offeror's promise to keep an offer open is enforceable if the promise (1) is in writing, (2) is signed by the offeror, (3) recites a purported consideration for the promise, or (4) proposes an exchange on fair terms (5) within a reasonable amount of time.

Question 55

equitable option contract

Answer 55

"Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it. The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer."

Question 56

option contract through promissory estoppel

Answer 56

An offer (even without an express or implied promise to keep the offer open) will be deemed irrevocable if (1) the offeror should reasonably expect the offer to induce action or forbearance of a substantial character by the offeree before acceptance, (2) it does induce such action or forbearance, and (3) injustice would result from permitting revocation of the offer.

Question 57

consideration

Answer 57

For an agreement to have "consideration," the parties' agreement must include (1) a genuine exchange (2) that is legally sufficient.

Question 58

genuine exchange

Answer 58

For an agreement to include a genuine exchange, a reasonable person must believe that (1) one of the conditions of acceptance by the offeree was providing a return promise, act, or forbearance, and that at least part of the offeror's motive in making the promise in the offer was to obtain such return promise, act, or forbearance, and (2) at least part of the offeree's motive in accepting the offer was to receive the offeror's promise.

Question 59

peppercorn theory of consideration

Answer 59

If a genuine exchange exists, there is no additional requirement for purposes of establishing consideration that what either party received in the exchange is "adequate" for what the party gave up.

Question 60

sham consideration

Answer 60

A pretense of an exchange (so-called sham consideration), including a false recital of consideration, is not a genuine exchange, and there is thus no consideration.

Question 61

condition on promise of a gift

Answer 61

A condition on a purely gratuitous promise is not consideration. Also, a mere promise to accept a gift, or the act of accepting a gift, is not consideration for a promise to give a gift.

Question 62

illusory promise

Answer 62

A promise that appears on its face to be so insubstantial as to impose no obligation on the promisor; an expression cloaked in promissory terms but actually containing no commitment by the promisor. An illusory promise typically, by its terms, makes performance optional with the promisor.

Question 63

illusory promise rule

Answer 63

A party cannot breach an illusory promise, and if one party to an agreement has given only an illusory promise, there is no exchange.

Question 64

test for illusory promise

Answer 64

A purported promise can only be illusory if the promisor's discretion to perform is completely within the promisor's control. The promise is NOT illusory if the promisor's discretion is limited in any way or when it is possible for the promisor to breach her promise. A promise cannot be illusory if the condition determining whether the promisor must perform or not is something outside of the promisor's control.

Question 65

implied promise

Answer 65

A party has made a promise as long as she has made an implied commitment.

Question 66

exclusive dealing contracts

Answer 66

Unless the agreement provides otherwise, an agreement by a buyer and seller for the buyer to be the exclusive dealer of the seller's goods imposes upon the seller an implied promise to use best efforts to promote their sale.

Question 67

power to terminate

Answer 67

An agreement that by its terms can be terminated or cancelled by a promisor renders that promisor's apparent promises in the agreement illusory if the termination power is unrestricted. The power to terminate or cancel is NOT unrestricted if it is limited in ANY way.

Question 68

output and requirements contracts

Answer 68

The buyer's and seller's promises in a requirements contract are not illusory because the buyer has promised to buy all of its requirements from the seller and the seller has agreed to supply the buyer with all of its requirements. The seller's and buyer's promises in an output contract are not illusory because the seller has promised to sell all of its outputs to the buyer and the buyer has agreed to buy all of the seller's output.

Question 69

past consideration

Answer 69

An act done or a promise given by a promisee before making a promise sought to be enforced. Past consideration is not consideration for the new promise because it has not been given in exchange for this promise

Question 70

past consideration rule

Answer 70

If a promise is given solely in recognition of a past act, past forbearance, or past promise by the promisee, there is no consideration.

Question 71

promise to pay debt

Answer 71

A promise to pay a contract debt made after default on the debt and after the expiration of the applicable statute of limitations on the debt is enforceable in the amount promised (but not exceeding the amount of the debt plus interest) and starts a new statute of limitations, despite a lack of consideration or reliance by the promisee. Such a promise will be inferred from (1) a signed, written, voluntary acknowledgement to the creditor, admitting the debt, (2) part payment of the debt, o (3) a signed, written statement to the creditor that the statute of limitations will not be pleaded as a defense.

Question 72

promissory restitution

Answer 72

Majority rule: not enforceable. Minority rule: A promise is enforceable under the doctrine of promissory restitution if there was (1) a promise (2) made in recognition of a benefit previously received (3) that was not a gift (4) which unjustly enriched the promisor (5) the promisor breached (6) enforcement is necessary to prevent injustice.

Question 73

legally sufficient exchange

Answer 73

It works UNLESS it is: (1) a preexisting legal duty, or (2) a promise to not assert an invalid legal claim

Question 74

rule of stilk v. myrick

Answer 74

A promise or agreement to modify a contract, to be enforceable, requires consideration (and a promise to perform a contract duty that is neither doubtful nor the subject of an honest dispute is usually not consideration) or one of the bargain substitutes.

Question 75

promissory estoppel and modification

Answer 75

A promise to modify a contract duty not fully performed on either side is binding to the extent that justice requires enforcement in view of a material change of position in reliance on the promise.

Question 76

unanticipated circumstances doctrine

Answer 76

A promise to modify a contract is enforceable despite a lack of consideration if the promised modification is (1) fair and equitable (2) in view of circumstances not anticipated by the parties when the contract was made

Question 77

UCC and modification

Answer 77

A promise to modify a contract for the sale of goods is enforceable as long as the promisee acted in good faith in obtaining the promise

Question 78

reasonably certain terms

Answer 78

To form a contract, the bargain (after incorporating any implied-in-fact and implied-in-law terms) must be so definite in its terms "that the promises and performances to be rendered by each party are reasonably certain."

Question 79

gap-filling

Answer 79

When the parties have entered into a bargain that omits an essential term (including a so-called agreement to agree), the court will supply a term as directed by a statute (such as the UCC) or, in the absence of a statutory directive, a term that is reasonable in the circumstances.

Question 80

breach of contract

Answer 80

To establish the breach of contract, the plaintiff must prove (1) the occurrence of any conditions to the defendant's duty to perform, or that the non-occurrence is excused, and (2) the nonperformance of the defendant's duty to perform.

Question 81

express conditions v. promise or term or manner of performance

Answer 81

To determine whether an event is a condition or simply a promise or a term or manner of performance, courts use the objective theory of contract interpretation. However, when it is unclear as to whether a particular event is a condition or a promise or a term or manner of performance, it will generally be construed as providing for a promise or term or manner of performance, not a condition, so as to avoid forfeiture.

Question 82

interpreting conditions of satisfaction

Answer 82

When a condition to a party's performance is the satisfaction of a third party with the respect to the other party's performance or something else, the satisfaction clause will be construed under an objective standard, unless (1) the contract clearly provides otherwise, or (2) the performance or event requiring satisfaction involves fancy, taste, sensibility, or judgement, as opposed to operative fitness, utility, or marketability, in which case it will be construed under a subjective standard.

Question 83

constructive condition precedent

Answer 83

It is an implied-in-law condition of a party's remaining duties under a bilateral contract that there is no uncured, material failure of performance (whether a breach or not) by the other party of its contract duties under the same bilateral contract that were due at an earlier time, unless a contrary intention is clearly manifested.

Question 84

constructive concurrent conditions

Answer 84

When the parties' performances are due at the same time, it is an implied condition of each party's duty to render such performance that the other party render or, with manifested present ability to do so, offer performance of his or her part of the simultaneous exchange (so-called concurrent conditions).

Question 85

order of performance

Answer 85

The order of performance is the order agreed to by the parties, based on an interpretation of the contract. In the absence of an agreement on the order of performance, the order is as follows: (1) simultaneous, or (2) the party who will take longer goes first.

Question 86

determining whether non-performance is material

Answer 86

Whether there has been substantial performance is based on whether the performance meets the contract's essential purpose.

Question 87

UCC's perfect tender rule

Answer 87

In a contract for the sale of goods, a buyer, acting in good faith, has the privilege to reject any goods under a sale of goods contract (other than an installment contract) if the goods or the tender of delivery fail in any respect to conform to the contract and the buyer exercised the privilege to reject within a reasonable time after delivery, and also has the power to cancel the contract if the seller cannot or does not exercise his power to cure.

Question 88

quasi-contract claim by breaching party

Answer 88

A party who has repudiated or materially breached a contract, resulting in the non-breaching party refusing to perform its own contract duties [(traditional rule: CANNOT) (modern rule: CAN)] assert a quasi-contract claim against the non-breaching party for any benefit she provided to the non-breaching party through part performance.

Question 89

doctrine of divisible contracts

Answer 89

If a contract involves multiple promises on each side, and it can be concluded that pairs of corresponding promises were consideration for each other, those corresponding promises are considered "divisible" or "severable" from the other corresponding promises in the contract. In that situation, a breach of promise only affects the duty to perform the corresponding promise.

Question 90

prevention doctrine

Answer 90

A party has an implied duty to cooperate with the other party and to not intentionally prevent the occurrence of a condition to the party's duty to perform (an express or constructive condition). If a party breaches its implied duty and prevents the occurrence of the condition, the non-occurrence of the condition is excused.

Question 91

repudiation

Answer 91

A repudiation (or anticipatory breach) discharges the other party's remaining contract duties and entitles the other party to immediately sue for breach of contract.

Question 92

waiver

Answer 92

The non-occurrence of a condition is excused if (1) the party whose duty is subject to the condition manifests an intention to perform the duty despite the non-occurrence of the condition, and (2) the occurrence of the condition is not a material part of the agreed exchange.

Question 93

reinstating a condition after a waiver

Answer 93

A condition that has been waived without consideration can be unilaterally reinstated by the waiving party (1) if done before the condition is to occur (i.e. done in advance); (2) the occurrence of the condition is within the control of the other party; (3) the waiving party notifies the other party while there is still a reasonable time to cause the condition to occur (i.e. an extension); and (4) reinstatement would not be unjust because of material reliance by the other party.

Question 94

impracticability

Answer 94

The non-occurrence of a condition is excused if (1) its occurrence is impracticable; (2) the occurrence of the condition is not a material part of the agreed exchange; and (3) forfeiture would result if its non-occurrence was not excused.

Question 95

disproportionate forfeiture

Answer 95

A court may excuse the non-occurrence of a condition if (1) a failure to excuse it would cause disproportionate forfeiture; and (2) the condition was not a material part of the agreed exchange.

Question 96

importance of time of formation

Answer 96

As a general rule, the moment of acceptance (i.e. the time of contract formation) fixes the contract's terms to those in the offer, and a party does not have the power to unilaterally change a contract's terms after the contract is formed.

Question 97

duty to read rule

Answer 97

In general, a party is considered to have manifested assent to a written contract and all of its terms even though the party did not read it unless (1) the party was prevented from reading it; (2) the party was induced by statements from the other party to refrain from reading it; or (3) the party neither knew nor had reason to know that the document was a proposed contract.

Question 98

rolling acceptance theory

Answer 98

If a buyer pays for goods or services at a store, or orders and pays via credit card for goods or services by telephone or on the Internet, and the buyer knows or has reason to know that the seller intends the transaction to include terms that are not disclosed to the buyer at the time the buyer orders or pays for the offered goods or services, and the buyer has the option of rejecting the offered goods or services, and the buyer has the option of rejecting the offered goods or services and receiving a refund after having an opportunity to inspect the previously undisclosed terms, the seller is the offeror and they buyer's acceptance of the seller's offer (which includes the previously undisclosed terms) occurs when the buyer manifests assent to seller's terms by using the goods or services or failing to exercise the return-and-refund option after having an opportunity to review the terms.

Question 99

parol evidence rule

Answer 99

An oral or written promise or agreement (otherwise enforceable) is rendered unenforceable by a subsequent integrated agreement if a reasonable person would believe the parties intended the integrated agreement to supersede the prior promise or agreement.

Question 100

test for parties' intentions

Answer 100

A reasonable person would believe the parties intended the integrated agreement to supersede the prior promise or agreement if either (1) the prior promise or agreement is contradicted by a term in the integrated agreement, or (2) under the circumstances the prior promise or agreement naturally (or "certainly" under the UCC) would have been included in the integrated agreement if the parties had intended it to be binding.

Question 101

condition to integrated agreement

Answer 101

The parol evidence rule does not render unenforceable an agreement under which the paries agree that the written contract will not become effective until a particular event occurs, unless the agreement contradicts the written document.

Question 102

mistake in integration

Answer 102

Where the parties reduce their agreement to a written document, and a party can prove by strong, clear and convincing evidence that a drafting error by the parties' actual agreement, unless the rights of third parties will be unfairly affected.

Question 103

mutual understanding

Answer 103

If both parties attached the same meaning to a provision or word in a contract, that is the meaning that applies (even if a reasonable person would have attached a different meaning).

Question 104

rule for interpretation (objective theory of contract)

Answer 104

If the meaning the parties attached to a particular contract provision or word was different (a misunderstanding or mistake in expression), but the provision or word is unambiguous (reasonably capable of only one meaning), that is the meaning that applies. If the provision or word is ambiguous, the meaning that a reasonable person would apply is used.

Question 105

extrinsic evidence to determine ambiguity

Answer 105

Majority rule: To determine if a provision or word is ambiguous, the court only considers the provision or word and other provisions of the document. (Plain meaning/four corners) Minority rule: To determine if a provision or word is ambiguous, the court considers any relevant evidence (contextual) If a misunderstanding involves a provision or word that is ambiguous, relevant extrinsic evidence is permitted to determine the reasonable meaning.

Question 106

express warranty

Answer 106

An express warranty is created by (1) an affirmation of fact (2) that relates to the goods or services (3) and that is part of the basis of the bargain.

Question 107

course of performance

Answer 107

A sequence of conduct between the parties to a particular transaction when (1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and (2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.

Question 108

course of dealing

Answer 108

A sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

Question 109

usage of trade

Answer 109

Any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question.

Question 110

implied covenant of good faith and fair dealing

Answer 110

Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.

Question 111

good faith

Answer 111

Honesty in fact and the observance of reasonable commercial standards of fair dealing.

Question 112

Essential Terms

Answer 112

Common Law (1) the parties, (2) subject matter, (3) price, and (4) quantity UCC (1) quantity (not required for output contracts or requirements contracts)