Contracts Review Focus

Question 1

What is required for contract formation under the UCC

Answer 1

• both parties intend to contract; and
• there is a reasonably certain basis for giving a remedy

the only required term is quantity, but above looks to the formation re intent (chest question - ways of granting a remedy)

Question 2

Revocation of offer

Answer 2

an offer is revoked when the offeror manifests an intent not to enter into the proposed contract.

May be made in any reasonable manner and by any reasonable means, and it is not effective until communicated.

For constructive revocation, the offeree must acquire reliable information

Yacht question - if the revocation is not communicated to the offeree, then the offer is not yet revoked

Question 3

UCC Statute of Frauds requirements

Answer 3

1. Indicate that a contract has been made;
2. Identify the parties;
3. Contain a quantity term; and
4. Be signed by the party to be charged

signature includes any authentication that identifies the party to be charged, such as a letter on the memo

Question 4

UCC Statute of Frauds - Failure to respond to a memorandum

Answer 4

1. Both parties are merchants
2. a memorandum sufficient against one party is sent to the other party, who has reason to know of its contents
3. the receiving party does not object within 10 days

Then the contract satisfies the Statute of Frauds, even though the receiving party does not sign it

Question 5

Parole Evidence Rule Steps

Answer 5

1. Total or Partial Integration

Ways of determining Integration

• merger clause
  *Common law - four corners rule - the court can only look to the four corners of the contract to determine the intent of the parties
• Second Restatement - if, under the circumstances, an extrinsic term of an agreement would naturally be omitted from a writing, then that term can be introduced so long as it does not contradict the writing
  *UCC - assumes that a written contract is only a partial integration and allows any consistent additional terms unless a court concludes that the parties certainly would have included the term in the written contract (this is a very hard standard to meet, terms usually come in)

Question 6

When the Parole Evidence rule does not apply

Answer 6

1. Raising a defense to the formation of a contract
2. establishing a defense to the enforcement of the contract
3. Separate Deal
4. Condition Precedent
5. Ambiguity and Interpretation
6. Subsequent Agreements
7. Trade usage and course of dealing or performance

Question 7

Ambiguity and Interpretation - Parole Evidence

Answer 7

• Plain Meaning - objective definitions of contract terms control the meaning of the contract, regardless of whether the meaning corresponds with the parties’ actual intent
• Context rule - some states, judges determine the contract’s meaning by considering all evidence of the facts and circumstances related to the transaction.

Question 8

Trade Usage, Course of Dealing or Performance, Parole Evidence

Answer 8

• Course of Performance - sequence of conduct that is relevant to understanding an agreement between the parties if repeated occasions of performance, and performance accepted without objection
• Course of dealing - sequence of conduct concerning previous transactions that can reasonably establish a common basis to interpret their conduct
• Trade Usage - any practice or method of dealing in the particular gusiness or industry that is used with such regularity as to justify an expectation that it will be used in the instant case.

Question 9

Trade usage Priority in Parole Evidence

Answer 9

1. Express terms of contract
2. Course of performance
3. Course of dealing
4. Trade usage

Question 10

What is a condition

Answer 10

A future event that must take place before a party’s contractual rights of obligations are created, destroyed, or enlarged.

Failure of a condition relieves a party of the obligation to perform

Question 11

What is a promise

Answer 11

A party’s obligation to act or refrain from acting.

Failure of a promise constitutes breach

Question 12

What is an express v implied condition

Answer 12

• Express condition - established in the contract. (“on the condition that” or “provided that”)
• Implied condition - conditions that are deemed to be part of the contrac

Question 13

Consequence of Express conditions

Answer 13

Express conditions must be complied with fully unless excused; substantial performance will not suffice

Question 14

Types of Implied Conditions

Answer 14

• Implied conditions - conditions that are deemed to be part of the contract
• Implied-in-fact conditions - deemed conditions because the nature of the agreement suggests that the parties truly intended the conditions but failed to expressly include them
• Implied-in-law conditions - “constructive conditions” supplied by a court if reasonable under the circumstances

substantial performance is all that is required for an implied condition

Question 15

Condition precedent

Answer 15

A conditoin that precedes the obligation to perform

Question 16

Condition subsequent

Answer 16

A condition that excuses the duty to perform after a particular event occurs. Only exists for a duty that is absolute.

Question 17

Substantial Performance

Answer 17

The completion of all the but the nonmaterial terms of a contract.

Can recover on the contract event though that party has not rendered full performance.

SP on implied or constructive conditions can trigger other party’s obligations

Question 18

Substantial Performance and its impact on damages

Answer 18

A party who substantially performs can recover the contract price minus any amount that it will cost the other party to obtain the promised full performance

Question 19

Material Breach

Answer 19

A party who does not substantially perform is in material breach.

Whether breach is material:

1. the degree to which the breach deprives the other party of the benefit she reasonably expected
2. The extent to which that party can be compensated for that deprivation;
3. The extent to which the breaching party will suffer forfeiture;
4. the likelihood that the breaching party will cure the breach; and
5. the extent to which the breaching party has acted in good faith

Question 20

UCC Perfect Tender

Answer 20

Substantial performance does not suffice under the UCC. The party must tender the goods exactly as contracted for

Question 21

Perfect tender - installment contracts

Answer 21

Perfect tender may not apply in installment contracts, where slight breaches are okay-ish

Question 22

Methods of Tender UCC

Answer 22

1. Seller’s place of business - seller must place the goods at the disposition of the buyer and give the buyer notice, if notice is necessary to enable the buyer to take delivery
2. Shipment contract - does not specify a place of delivery (often identified by the words “free on board [FOB] seller’s place of business”) the seller must deliver the goods to the carrier, make a proper contract for their shipment, ,obtain and deliver any document necessary for the buyer to obtain possession of the goods, and give the buyer notice that the goods have been shipped
3. Destination contract - If the contract is a destination contract (FOB buyer’s place of business) the seller must deliver the goods to a particular place (specified in the contract) and tender them there by holding the goods at the buyer’s disposition and giving the buyer notice
4. Goods in the hands of a bailee

These matter for risk of loss

Question 23

Suspension or excuse of conditions

Answer 23

Waiver - A party whose duty is subject to the condition can waive the condition by either words or conduct. A condition that is material to the party’s primary purpose may be reinstated by the party.