Contracts/Sales

Question 1

Contracts/Sales: Terms of the Contract What is the Implied Warranty of Fitness for a Particular Purpose?

Answer 1

The goods are fit for their particular purpose when: (i) Buyer has a particular purpose in buying the goods (ii) Seller has reason to know of buyer’s purpose and reliance (iii) Buyer relies on seller to select suitable goods

Question 1

Contracts/Sales: Formation of a Contract What is the mnemonic used to remember all aspects of law that come under the Statute of Frauds?

Answer 1

“MYLEGS” M arriage Y ear (within one) L and E xecutor (or Administrator) G oods (for $500 or more) S urety

Question 2

Contracts/Sales: Formation of a Contract What is an illusory promise?

Answer 2

A promise where only one party is bound to perform. Unenforceable contract.

Question 3

Contracts/Sales: Formation of a Contract Who lacks capacity to contract and what is the consequence of incapacity in contract law?

Answer 3

1. Infant (under 18) 2. Mental incompetents (must lack ability to understand agreement) 3. Intoxicated persons (if other party has reason to know) Consequence: The right to disaffirm by the person without capacity (exception: implied affirmation by retention of benefits after gaining capacity)

Question 3

Contracts/Sales: Third-Party Problems What is an assignment of rights?

Answer 3

A transfer of rights under a K. Assignment involves 2 separate steps: 1. Contract between only 2 parties; AND 2. One of the parties later transfers rights under that contract to a 3rd party K can limit assignment by prohibiting or invalidating. Common law bars an assignment that substantially changes the duties of the obligor.

Question 4

Contracts/Sales: Formation of a Contract Contract provisions requiring written modification: 1. CL 2. UCC

Answer 4

1. Ignore contract language that says all modifications must be in writing 2. Contract provisions requiring written modifications are effective unless waived

Question 5

Contracts/Sales: Formation of a Contract Mistake of Fact Existing at Time of Contract? 1. Mutual, material mistake of existing fact? 2. Unilateral mistake of material fact?

Answer 5

Generally no relief 1. No relief for mistake if the person seeking relief bears the risk of the mistake 2. Relief for other party when there is an obvious, palpable mistake (clerical error in making a bid)

Question 6

Contracts/Sales: Formation of a Contract Regarding performance, what objective proof satisfies the Statute of Frauds?

Answer 6

1. Part performance and transfer of interest in real estate requires two out of three: (i) Improvements to the land (ii) Payment (iii) Possession 2. In service contracts, full performance by either - - - NO PART PERFORMANCE 3. Ordinary goods: Part performance by seller only satisfies the SoF to the extent of part performance 4. Specially manufactured goods: SoF is satisfied as soon as seller makes a “substantial beginning”

Question 6

Contracts/Sales: Remedies for an Unexcused Nonperformance Nonmonetary remedies - When can a party request specific performance/injunction?

Answer 6

Damages aren’t a sufficient remedy 1. Contracts for sale of real estate, except when the land is sold to a bona fide third party purchaser 2. Contract for the sale of goods that are UNIQUE, ART, CUSTOM-MADE, or other appropriate circumstances 3. Injunctive relief for service, but no specific performance

Question 6

Contracts/Sales: Formation of a Contract Is “past” consideration valid?

Answer 6

No. A promise given in exchange for something already done does not satisfy the bargain requirement. Can’t ask someone to do what they’ve already done. EXCEPTION: An act performed in response to an emergency or a past act performed at the promisor’s request + a subsequent promise to pay is valid.

Question 6

Contracts/Sales: Excuse of Non-performance Can an anticipatory repudiation be retracted?

Answer 6

Yes. Anticipatory repudiation can be withdrawn 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.

Question 7

Contracts/Sales: Formation of a Contract How does a conditional acceptance impact a CL contract vs. a UCC contract?

Answer 7

CL: Terminates initial offer but becomes a counteroffer that can be accepted by conduct. UCC: An express insistence a condition (I accept only if you agree…) constitutes a rejection under the UCC (don’t confuse this with addition of terms/2-207)

Question 7

Contracts/Sales: Formation of a Contract CL writing requirement under Statute of Frauds?

Answer 7

All material terms test: Who and What Signature of the person asserting the Statute of Frauds as a defense

Question 8

Contracts/Sales: Performance of Article 2 Contracts 2 Things to remember about Revocation of Acceptance of the Goods

Answer 8

1. Effect is that buyer returns the goods and seller returns payments made - done sometime after accepting the goods in limited circumstances 2. Requirements for revocation of acceptance: (i) Nonconformity substantially impairs the value of the goods, and (ii) Excusable ignorance of grounds for revocation or reasonable reliance on seller’s assurances of satisfaction, and (iii) Revocation within a reasonable time after discovery of nonconformity

Question 10

Contracts/Sales: Formation of a Contract What is the general test for whether initial communication is an offer? Detail the important distinctions between CL and Article 2 as well.

Answer 10

General Test: Manifestation of commitment by one person (would a reasonable person in the position of the offeree believe that their assent creates a k?) Important distinctions: Without price/description, not an offer for real estate. No price for sale of goods ok if all other content creates reasonable inference of parties intention. Vague/ambiguous material terms (appropriate, fair, reasonable) not an offer under CL or UCC, UNLESS requirement/output contract (quantity can be stated in terms of buyer’s requirements or seller’s output- all, only, exclusively, solely).

Question 10

Contracts/Sales: Formation of a Contract What can substitute as consideration?

Answer 10

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 2. Promissory estoppel (detrimental reliance) 3. Seals

Question 10

Contracts/Sales: Remedies for an Unexcused Nonperformance Money Damages: Damages for buyer’s breach- What does Seller get when Buyer breaches but Seller has the goods?

Answer 10

Contract price - resale price (unless seller cannot resell, in which case the seller can recover the contract price) In some situations a lost volume seller can also recover provable lost profits

Question 10

Contracts/Sales: Third-Party Problems Delegation of duties- What is it and what duties are delegable?

Answer 10

A delegation is when a party to a K transfers work under that K to a 3rd party. Generally, K duties are delegable UNLESS K prohibits delegations or prohibits assignments or personal services contract that calls for VERY SPECIAL skills.

Question 11

Contracts/Sales: Terms of the Contract Delivery Obligations of Seller - Shipment Contracts

Answer 11

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 F.O.B. seller’s city

Question 12

Contracts/Sales: Excuse of Non-performance Excuse b/c of nonoccurrence of an express condition

Answer 12

An express condition is (1) language in a K that (2) limites obligations created by other K language with (3) certain triggering words (if, only if, unless, when, etc) Generally, strict compliance is required for satisfaction of a condition. IF the condition is of the personal satisfaction of one of the parties, it has to be honest and good faith dissatisfaction (would a reasonable person be satisfied?)

Question 13

Contracts/Sales: Formation of a Contract How does the UCC differ from common law with regard to pre-existing legal duties?

Answer 13

Article 2 does not have a pre-existing legal duty rule. New consideration is not required to modify a sale of goods; only good faith in change request is necessary.

Question 14

Contracts/Sales: Formation of a Contract What is a suretyship?

Answer 14

A promise to answer for the debts of another. NOTE: Courts have construed this in a way that substantially limits its applicability- “answer for” is NOT just a promise to pay another’s debts, but a promise to pay ONLY if that person doesn’t pay themselves. However, if the “main purpose” of the alleged promise to pay is to benefit the promisor, then this promise to pay is NOT within the SoF. (main purpose exception)

Question 14

Contracts/Sales: Excuse of Non-performance What is anticipatory repudiation?

Answer 14

It is an early breach that is an unambiguous statement or conduct that the repudiating party wil not perform made prior to the time that performance was due. This excuses the other party’s duty to perform. This generally gives rise to an immediate claim for damages for breach unless the claimant has already finished her performance.

Question 14

Contracts/Sales: Excuse of Non-performance What later, unanticipated events will excuse performance of a contract?

Answer 14

• Damage or destruction of subject matter of K - Death AFTER contract: Generally, death does not make a person’s contractual obligations disappear, but death of a “special” person who is a party to the K will excuse performance - Subsequent law or regulation: if law makes performance of K illegal- excuse by impossibility or frustration of purpose

Question 15

Contracts/Sales: Remedies for an Unexcused Nonperformance Money Damages: What are incidental damages? Who can recover them and when?

Answer 15

Incidental damages- costs incurred in dealing with the breach (storing rejected goods, cost of finding a replacement in a services contract). Incidental damages are ALWAYS recoverable by the party not in breach.

Question 16

Contracts/Sales: Performance of Article 2 Contracts 4 Things to remember about Acceptance of Goods

Answer 16

1. If the buyer accepts the goods, he cannot later reject them 2. Payment without opportunity for inspection is not acceptance 3. Failure to reject after the buyer had reasonable time to reject is acceptance 4. Retention of goods is implied acceptance

Question 18

Contracts/Sales: Formation of a Contract Name the 3 methods of indirect rejection by offeree.

Answer 18

1. Counteroffer (bargaining not a counteroffer- consider this when response is a q instead of a statement) 2. Conditional acceptance (words of acceptance + "if," "only if," "provided," "so long as," "but," or "on condition that") 3. Additional of terms to a CL contract (Mirror Image Rule applies to CL)

Question 19

Contracts/Sales: Terms of the Contract 5 Limitations on Warranty Liability

Answer 19

1. Statute of Limitations generally runs for 4 years, when the "tender of delivery is made," not when the buyer learns of the defect 2. Privity of Contract (i) MBE - plaintiff must have contracted with the defendant to sue (ii) MD - Not a limitation to personal injury, but property damage is not recoverable 3. Buyer's examination of the goods: NO IMPLIED WARRANTIES as to defects which would be obvious on examination 4. Disclaimer - e.g. "there are no warranties" (i) Express warranties generally cannot be disclaimed (ii) Implied warranties of merchantability and fitness can be disclaimed in EITHER of the following ways: ----CONSPICUOUS language of disclaimer, mentioning merchantability, OR ----"As is" or "with all faults" 5. Limitation of Remedies - Limits or sets recovery for any breach of warranty: (i) MBE - Possible to limit remedies even for express warranties (ii) General test is unconscionability (iii) Prima Facie unconscionable if breach of warranty on consumer goods causes personal injury MD essay rule - MD has great consumer protection

Question 20

Contracts/Sales: Formation of a Contract Judicial admission under Statute of Frauds

Answer 20

No SoF defense if defendant admits in a pleading or testimony that he entered into an agreement with the plaintiff

Question 22

Contracts/Sales: Formation of a Contract How are additional or different terms handled in a contract for the sale of goods (UCC)?

Answer 22

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 a "seasonable expression of acceptance."

Question 22

Contracts/Sales: Performance of Article 2 Contracts What is perfect tender?

Answer 22

1. Only applies to sales of goods 2. The goods and the delivery must conform to the contract terms by the seller 3. Buyer can reject a less than perfect tender so long as the buyer acts in good faith

Question 23

Contracts/Sales: Performance of Article 2 Contracts Common Requirements and Consequences for Rejection and Revocation

Answer 23

1. Requirements (i) Seasonably notify seller (ii) Hold the goods for seller (iii) Follow reasonable seller instructions 2. Consequences (i) Goods back to seller (ii) No buyer payment obligation

Question 25

Contracts/Sales: Vocabulary Define unilateral, bilateral, and quasi-contracts

Answer 25

1. Unilateral: Results from an offer that expressly requires performance as the only possible method of acceptance 2. Bilateral: All offers that are not unilateral. Usually silent on method of acceptance. 3. Quasi: Equitable remedy (consider this any time a result doesn't seem "fair")

Question 26

Contracts/Sales: Formation of a Contract What is consideration?

Answer 26

Bargained-for legal detriment

Question 28

Contracts/Sales: Formation of a Contract What is a contract option?

Answer 28

One where the offeror has not only made an offer but also (i) promised not to revoke (or to keep offer "open" for a specified time) AND (ii) the promise is supported by payment/other consideration. IRREVOCABLE.

Question 29

Contracts/Sales: Remedies for an Unexcused Nonperformance Money Damages: What are consequential damages? Who can recover them and when?

Answer 29

Consequential damages are special damage- a kind of loss that is special to the P. Limited to damages arising from P's special circumstances and recovery of consequential is limited to situations in which the D had reason to know of these special circumstances at the time of the contract.

Question 30

Contracts/Sales: Formation of a Contract What are the basic concepts of the Statute of Frauds?

Answer 30

SoF is a statute designed to prevent fraudulent claims of the existence of a contract by making it harder to prove that a contract exists in certain circumstances. If a contract claim is "within the SoF," then objective proof of a contract (usually through performance or a writing) must be provided in order for the litigant to get her/his day in court.

Question 31

Contracts/Sales: Terms of the Contract When does a risk of loss problem arise?

Answer 31

(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

Question 31

Contracts/Sales: Remedies for an Unexcused Nonperformance Nonmonetary remedies - Seller's reclamation from an insolvent buyer of goods Requirements:

Answer 31

1. Buyer must have been insolvent at the time that it received the goods, and 2. Seller demands return of goods within 10 days of receipt, and 3. Buyer still has goods at the time of demand

Question 32

Contracts/Sales: Remedies for an Unexcused Nonperformance Damage rules for sales of goods: Seller's damages when Seller breaches and buyer keeps the goods

Answer 32

Fair market value if perfect - fair market value as delivered or cost of repair

Question 32

Contracts/Sales: Remedies for an Unexcused Nonperformance Money Damages: What are Avoidable Damages?

Answer 32

Can't recover for damages that could have been avoided w/o undue burden on P. Burdens of pleading and proof on D. (EXAM HINT: Look for continued performance after other party's breach or P turning down other COMPARABLE opportunities)

Question 33

Contracts/Sales: Remedies for an Unexcused Nonperformance Damage rules for sales of goods: Seller's damages when Seller breaches and seller has the goods

Answer 33

Choose whichever formula gives the greater amount: (i) Market price at time of discovery of the breach - contract price OR (ii) Reasonable replacement price - contract price

Question 35

Contracts/Sales: Terms of the Contract What are the consequences in a risk of loss problem?

Answer 35

1. If risk of loss is on the buyer, he has to pay the full contract price for lost or damaged goods 2. If seller has the risk of loss, no obligation on the buyer and possible liability on the seller for nondelivery

Question 36

Contracts/Sales: Excuse of Non-performance Excuse by reason of a later contract- What are the ways the parties can contract to excuse performance?

Answer 36

Recission (cancellation)- is performance still remaining? Yes- recission ok. No- recission invalid. Accord and Satisfaction (substituted performance)- Parties to an existing obligation accept a different performance in satisfaction of the existing obligation. If the new agreement is performed then performance of the original obligation is excused. If not performed the party can recover on EITHER agreement. Modification (substituted agreement)- agreement by parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation. Novation- agreement between BOTH parties to an existing K on the substitution of a new party. This excuses performance of the party who is substituted for or replaced.

Question 38

Contracts/Sales: Terms of the Contract What are the risk of loss rules in descending order?

Answer 38

1. Agreement: Agreement of the parties controls 2. Breach: Breaching party is liable for any uninsured loss even though breach is unrelated 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: Look to see if seller is a merchant - If a merchant-seller risk shifts to buyer on receipt of goods, if not risk of loss shifts to buyer upon tender

Question 39

Contracts/Sales: Formation of a Contract Does a counteroffer terminate a contract option?

Answer 39

No. Although a counteroffer generally kills an offer, this is not the case within the irrevocable period of a contract option.

Question 40

Contracts/Sales: Formation of a Contract Are increases/decreases of requirement/output k's valid?

Answer 40

Buyer can increase requirements as long as increase not unreasonably disproportionate to prior demands. No settled law on decreases.

Question 40

Contracts/Sales: Formation of a Contract What are the main 4 methods of terminating an offer (killing the caterpillar)?

Answer 40

1. Lapse of time (time stated or reasonable time) 2. Death/incapacity of a party prior to acceptance 3. Words or conduct of offeror (revocation must be unambiguous statement, and offeree must be aware of it. Multiple offers NOT revocations) 4. Words or conduct of offeree- rejection

Question 41

Contracts/Sales: Remedies for an Unexcused Nonperformance Money Damages: Damages that cannot be established with reasonable certainty.

Answer 41

Subtract damages that cannot be established w/ reasonable certainty. Look for fact pattern involving a services contract and P engaged in new business or a new business activity. Consider reliance recovery as an alternative to expectation. MD does not require damages to be proven w/ certainty, but cases aren't as strict.

Question 42

Contracts/Sales: Formation of a Contract How do transfers of real estate fit within the Statute of Frauds?

Answer 42

All contracts for transfer of interest in LAND (not just the building of a house on a piece of land) are subject to the SoF, with the exception of leases for one year or less.

Question 44

Contracts/Sales: Performance of Article 2 Contracts 4 Things to Know About Rejection of Goods

Answer 44

1. Distinguish rejection of offer from rejection of goods 2. If no perfect tender, the buyer has the option to retain and sue for damages or reject "all or any commercial unit" and sue for damages 3. Buyer must take reasonable care of the rejected goods and must discontinue use of rejected goods 4. Rejection alternative is limited by cure, installment contracts, and acceptance

Question 45

Contracts/Sales: Third-Party Problems When can a third-party beneficiary assert their right to benefit from the contract?

Answer 45

Test is whether the 3rd party knows of and has relied on or assented as requested. If so, their rights have vested and the K cannot be cancelled or modified w/o their consent unless the K so provides. EITHER the beneficiary OR the promisee can recover from the promisor. Generally beneficiary cannot recover from promisee, but a creditor beneficiary can recover from a promisee on a pre-existing debt.

Question 47

Contracts/Sales: Formation of a Contract Public Policy has a defense?

Answer 47

Md is reluctant to void contracts for public policy reasons, but will do so if a an EXCULPATORY AGREEMENT tries to eliminate liability for intentional or reckless conduct

Question 48

Contracts/Sales: Formation of a Contract How is illegality used as a defense?

Answer 48

1. If Illegal subject matter, then agreement is not enforceable 2. if the subject matter is legal, the agreement is enforceable if the plaintiff DID NOT have reason to know of the defendant's illegal purpose.

Question 49

Contracts/Sales: Formation of a Contract What are the 2 questions that are determined related to the addition of terms to a contract under 2-207?

Answer 49

1. Is there a contract (consider seasonal expression of acceptance + no conditional acceptance language; merchant status irrelevant)? If yes: 2. Is the additional term part of the contract (No, unless both parties are merchants; if both are merchants, additional term not part of k if the term is "material" or if the additional term is objected to by the original offeror)?

Question 51

Contracts/Sales: Remedies for an Unexcused Nonperformance Nonmonetary remedies - Entrustment

Answer 51

(1) Owner voluntarily turns stuff over to a (2) Place that both services and sells goods of that kind (3) it is sold to a bona fide purchaser

Question 51

Contracts/Sales: Remedies for an Unexcused Nonperformance Money Damages: Damages for buyer's breach- What does Seller get when Buyer breaches and keeps the goods

Answer 51

Seller's damages are the contract price.

Question 52

Contracts/Sales: Performance of Article 2 Contracts 1.What are installment contracts? 2. What rights does the buyer have?

Answer 52

1. A contract that requires or authorizes (i) delivery of the goods in separate lots (ii) to be separately accepted. 2. The buyer has the right to reject an installment only where there is a SUBSTANTIAL IMPAIRMENT in that installment that can't be cured

Question 54

Contracts/Sales: Formation of a Contract Is an ad or price quotation an offer?

Answer 54

Generally no, UNLESS: 1. Ad is in the nature of a reward 2. Specifies quantity and expressly indicates who can accept (1 fur coat $10- first come) 3. Price quote can be an offer if sent in response to an inquiry

Question 54

Contracts/Sales: Excuse of Non-performance What is excuse because of improper performance?

Answer 54

Art. 2 & the perfect tender rule Common Law and material breach rule: 1. Damages can be recovered for any breach. 2. Only a material breach by one guy excuses the other guy from performing a K governed by common law. 3. Whether a breach is material is a fact question 4. If there is a substantial performance then the breach is not material. If the breach is material, the the performance was not substantial. -- Can have a material breach b/c of the quality of performance or b/c of the amount of performance

Question 56

Contracts/Sales: Formation of a Contract How does reliance impact the possibility of revocation?

Answer 56

An offer cannot be revoked if there has been reliance that is reasonably foreseeable and detrimental.

Question 57

Contracts/Sales: Formation of a Contract Ambiguity in Words of Agreement?

Answer 57

1. If parties use a MATERIAL term that is open to at least two reasonable interpretations, and 2. Each party attaches different meaning to the term, and 3. Neither party knows or has reason to know the term is open to at least two reasonable interpretations

Question 58

Contracts/Sales: Third-Party Problems What happens when multiple assignments have been made of the same K rights?

Answer 58

For gratuitous assignments last assignee generally wins. Multiple assignments for consideration generally the first assignee for consideration wins UNLESS the subsequent assignee didn't know about the earlier assignment AND is the first to obtain payment, a judgment, a novation OR indicia of ownership.

Question 60

Contracts/Sales: Formation of a Contract What is an accommodation by a seller and how does it impact acceptance of the wrong goods shipped by the seller?

Answer 60

An accommodation is a shipment of the wrong goods with an explanation attached. Functions as a counteroffer and no breach.

Question 61

Contracts/Sales: Formation of a Contract What are the basic "rules" surrounding the timing for mailing acceptances and rejections?

Answer 61

1. All communications other than acceptance are effective only when received 2. Acceptance generally effective when mailed ("Mailbox Rule") 3. If a rejection is mailed before an acceptance, then neither is effective until received 4. "Mailbox rule" cannot used for an contract option deadline- acceptance must be received by deadline

Question 62

Contracts/Sales: Excuse of Non-performance What is excuse because of insecurity about the other party performing?

Answer 62

If the words or conduct on one party gives reasonable grounds for insecurity, then the other party can, in writing, demand adequate assurance and if it is commercially reasonable, can suspend performance until they get adequate assurance.

Question 63

Contracts/Sales: Formation of a Contract Can part payment operate as consideration for a promise to forgive the balance of a debt?

Answer 63

Only if debt is not yet due or is in dispute. If debt is due and undisputed, then part payment is NOT consideration for release.

Question 65

Contracts/Sales: Terms of the Contract Delivery Obligations of Seller - Destination Contracts

Answer 65

Seller does not complete its delivery obligation until the goods arrive at the destination F.O.B. Any other city besides the Sellers

Question 66

Contracts/Sales: Excuse of Non-performance What are the 7 excuses for non-performance of a contract?

Answer 66

-Excuse b/c of other party's non-performance -Excuse b/c of anticipatory repudiation (early breach) -Excuse b/c of insecurity about whether the other party is going to perform -Excuse b/c of improper performance -Excuse b/c of nonoccurrence of an express condition -Excuse by reason of a later contract -Excuse by reason of a later, unanticipated event

Question 67

Contracts/Sales: Excuse of Non-performance Express Condition- How can an express condition be eliminated so that its nonoccurrence does not affect performance obligations?

Answer 67

Waiver or prevention. CAN waive the benefits/protection of the express condition. CANNOT avoid performance by preventing the express condition. Almost all conditions are conditions precedent.

Question 68

Contracts/Sales: Formation of a Contract How does a service contract fit within the Statute of Frauds?

Answer 68

Only those service contracts not capable of being performed within a year from the time of contract (i.e. more than one year) fall under the SoF. NOTE: If related to a task where no time period is specified, the SoF does not apply (consider "capable" to mean what is theoretically possible with unlimited resources)

Question 70

Contracts/Sales: Remedies for an Unexcused Nonperformance Money Damages - Measure of Damages; Expectation

Answer 70

Expectation damages protect the expectation that the other person will not breach (1) Look to facts for dollar value of performance without breach (2) Look to facts for dollar value of performance with breach, and (3) Compare the two to determine the amount of damages

Question 71

Contracts/Sales: Terms of the Contract Forms of Conduct Used to Determine Contract Terms

Answer 71

1. Course of Performance - Same people, same contract 2. Course of Dealing - Same people, Different but similar contract 3. Custom and Usage - Different but similar people, but different but similar contract

Question 72

Contracts/Sales: Formation of a Contract Can a promise constitute sufficient consideration?

Answer 72

Yes (A written agreement in which B promises to buy S's house, and S promises to sell B her house- consideration for B's promise is S's promise to sell, and vice versa)

Question 73

Contracts/Sales: Formation of a Contract 2 Statute of Frauds Issues other than as a defense VERY IMPORTANT

Answer 73

1. Authorizing a contract on behalf of someone else - look to the underlying contract and see if it satisfies the SoF ("equal dignity") 2. Written Proof of Contract Modification - Is a writing 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 Fruads

Question 74

Contracts/Sales: Formation of a Contract Misrepresentation as a defense?

Answer 74

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 WE DON'T CARE IF THE PARTY GIVING THE FACT HONESTLY BELIEVES IT TO BE TRUE

Question 75

Contracts/Sales: Terms of the Contract What is the Implied Warranty of Merchantability?

Answer 75

Applies to sales in which the seller is a merchant in goods of that kind and that the goods are fit for the ordinary purpose for which such goods are used

Question 76

Contracts/Sales: Remedies for an Unexcused Nonperformance Money Damages: What are LIQUIDATED damages?

Answer 76

A contract provision fixing amount of damages. Can't have a liquidated damages are too high, that's a penalty. Tests are: 1. damages were difficult to forecast at time contract was made and 2. provision is a reasonable forecast. EXAM HINT: Watch for single #s not a formula or range- not a forecast so not reasonable.

Question 77

Contracts/Sales: Formation of a Contract What is the definition of a contract?

Answer 77

A contract is an agreement that is legally enforceable.

Question 79

Contracts/Sales: Formation of a Contract Article 2 writing requirement under Statute of Frauds

Answer 79

Writing must simply indicate a CONTRACT FOR THE SALE OF GOODS EXISTS and the QUANTITY

Question 80

Contracts/Sales: Terms of the Contract Triggering facts for the Parol Evidence Rule

Answer 80

1. Final written contract 2. Earlier words of one or both parties

Question 82

Contracts/Sales: Formation of a Contract What is the UCC's version of a contract option?

Answer 82

The "Firm Offer Rule": An offer cannot be revoked for up to three months (maximum!) if (i) offer to sell/buy goods, (ii) signed, written promise to keep offer open, and (iii) party is a merchant.

Question 83

Contracts/Sales: Formation of a Contract What are the elements of promissory estoppel?

Answer 83

1. Promise 2. Reliance that is reasonable, detrimental, and foreseeable, and 3. Enforcement necessary to prevent injustice FOR MD ESSAY: "Courts in MD are more demanding than the majority rule that the language be that of a promise."

Question 84

Contracts/Sales: Terms of the Contract What is an express warranty?

Answer 84

1. Words promising, describing or stating facts - Also, samples or models

Question 85

Contracts/Sales: Formation of a Contract Estoppel and Reliance under the Statute of Frauds

Answer 85

Some cases hold that the plaintiff's reliance on the defendant's oral promise can estop the defendant from asserting a SoF defense

Question 86

Contracts/Sales: Third-Party Problems Nonperformance by a delegate. What if the 3rd party delegatee does not perform?

Answer 86

Delegating party always remains liable and delegatee liable only if she receives consideration from delegating party.

Question 87

Contracts/Sales: Terms of the Contract Parol Evidence Rule terms

Answer 87

1. Integration - Written agreement that court finds is the final agreement, triggers the parol evidence rule 2. Partial integration - Written and final, but not complete 3. Complete integration - Written and final and complete 4. Merger Clause - Contract clause such as, "This is the complete and final agreement" - persuasive but not definite 5. Parole evidence - words of party (parties) before integration NEVER SELECT ANSWERS THAT HAVE PARTIAL OR COMPLETE INTEGRATION IN THEM

Question 88

Contracts/Sales: Formation of a Contract Can a pre-existing legal duty suffice as consideration?

Answer 88

No. Doing what you are already legally obligated to do cannot be used as consideration for a modification of that obligation (need new consideration for this). COMMON LAW ONLY. EXCEPTIONS: 1. An addition or change in performance 2. Unforeseen difficulty so sever as to excuse performance 3. Third-party promise to pay

Question 89

Contracts/Sales: Performance of Article 2 Contracts What is Cure?

Answer 89

1. Seller is given a "second chance" for perfect tender in limited situations (i) Seller's reasonable ground to believe the delivery would be ACCEPTABLE, perhaps with a money allowance ---Look towards prior deals between Seller and Buyer (ii) Time for performance has not yet expired

Question 90

Contracts/Sales: Formation of a Contract Can offers and contract options be assigned?

Answer 90

Offers cannot be assigned- they can generally only be accepted by the person to whom the offer was made (that person must also know of the offer as well). Options are assignable unless the option otherwise provides.

Question 91

Contracts/Sales: Formation of a Contract Are unilateral contracts revocable?

Answer 91

No. The start of performance pursuant to an offer to enter into a unilateral k makes that offer irrevocable for a reasonable time to complete performance. Mere preparation does not trigger irrevocability, only actual performance!

Question 92

Contracts/Sales: Formation of a Contract What is the Mirror Image Rule?

Answer 92

Under CL, a response that adds new terms is treated like a counteroffer rather than an acceptance.

Question 93

Contracts/Sales: Formation of a Contract What are the three main methods of acceptance of an offer?

Answer 93

1. Offeree starts to perform (exception: in unilateral k's, completion of performance is acceptance) 2. Distance and delay in communications 3. Seller of goods sends "wrong" goods (generally acceptance AND breach)

Question 94

Contracts/Sales: Terms of the Contract 5 Parol evidence fact patterns

Answer 94

1. General Rule - cannot use parol evidence to change/contradict terms in the written deal 2. Using parol evidence to determining whether there was a mistake in integration 3. Use it to determine whether there is a defense to the enforcement of the agreement 4. Use it to resolve ambiguities in the written contract (Chicken case) 5. Evidence of earlier agreements if and only if (i) the written agreement was only a partial integration or (ii) the additional terms would ordinarily be in a separate agreement.

Question 95

Contracts/Sales: Applicable Law Determine whether Article 2 or the common law applies to the following: Real estate, service contracts, sale of goods, mixed k's (both services and goods)

Answer 95

1. Real estate: CL 2. Service k's: CL 3. Goods: Article 2 4. Mixed: Most "important" part of the k determines CL or Article 2 (unless k divides payment for each)