Rules

Question 1

§ 1-103(b) Applicability of Supplemental Principles of Law

Answer 1

(b) Unless displaced by the particular provisions of the UCC, the principles of law and equity, including the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, and other validating or invalidating cause supplement its provisions.

Question 2

§ 1-201(b)(20) “good faith”

Answer 2

(b)(20) except as otherwise provided in Article 5, means honesty in fact and the observance of reasonable commercial standards of fair dealing.

Question 3

§ 1-303(a) Course Performance

Answer 3

(a) A “course of performance” is a sequence of conduct between the parties to a particular transaction that exists if
(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 4

§ 1-303(b) Course of Dealing

Answer 4

(b) A “course of dealing” is 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 5

§ 1-303(c) Usage of Trade

Answer 5

(c) A “usage of trade” is 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. Existence and scope must be proved as facts. If established usage is in a trade code (or like), the interpretation of the record is a question of law.

Question 6

§ 1-303(e) how much weight to give CoP, CoD, UoT

Answer 6

(e) Express Terms > CoP > CoD > UoT

Question 7

§ 2-201(1) SoF

Answer 7

(1) A K for the sale of goods valued > $500 must be in writing and signed by the party against whom enforcement is sought. A writing that omits or incorrectly states a term is sufficient. But the K is not enforceable beyond the quantity of goods in the writing.

Question 8

§ 2-201(2) SoF

Answer 8

(2) Between merchants, a writing in confirmation of the K received in a reasonable time, satisfies (1). Written objection must be made within 10 days of receipt.

Question 9

§ 2-201(3) SoF

Answer 9

(3) A K that does not satisfy (1), is enforceable if
(a) the goods are specially made for buyer and not suitable for sale in the ordinary course of the seller’s business. And the seller is well on their way to make the unique good.
(b) if accused breacher admits there is a K, but K is not enforceable beyond quantity of goods, or
(c) with respect to goods for which payment has been made and accepted or which have been received and accepted (K by conduct)

Question 10

§ 2-202 Parol Evidence

Answer 10

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreements or of a contemporaneous oral agreement but may be explained or supplemented

(a) by CoP, CoD, or UoT
(b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

Question 11

§ 2-205 Firm Offers

Answer 11

An offer by a merchant to buy or sell goods in a signed writing to be held open is NOT REVOCABLE, for lack of consideration, during the time stated. If no time stated, then for a reasonable time, but not to exceed three (3) months. Term of assurance by offeree must be separately signed by offeror.

Question 12

§ 2-207(1) Battle of Forms

Answer 12

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

Question 13

§ 2-207(2) Battle of Forms

Answer 13

(2) The additional terms are to be construed as proposals for addition to the K. Between merchants such terms become part of the K unless:
(a) the offer expressly limits acceptance to the terms of the offer;
(b) they materially alter it; or
(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

Question 14

§ 2-207(3) Battle of Forms

Answer 14

(3) Conduct by both parties which recognizes the existence of a K is sufficient to establish a K for sale although the writings of the parties do not otherwise establish a K. In such case, the terms of the particular K consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.

Question 15

§ 2-209 Modification

Answer 15

(1) an agreement modifying a K needs no consideration to be binding.
(2) A signed agreement which excludes modification except by signed writing must do so.

Question 16

§ 2-305 Open Price Term

Answer 16

(1) Price does not have to be on a K for the K to be valid; price is the reasonable price on delivery if
(a) nothing is said to price
(b) price will be agreed on later and it never happens
(c) price is to be determined by special market or otherwise and it never happens.
(2) A price to be fixed by one party or the other must be made in good faith
(3) If price isn’t fixed as agreed upon by one party, the other party gets to cancel the K or fix a reasonable price.
(4) If parties don’t want a K if price can’t be fixed, the K is not. Parties must return goods and monies accordingly.

Question 17

§ 2-306 Requirements and Output Ks

Answer 17

(1) A term which measures the output of the seller or requirements of buyer must be in good faith and normal and reasonable.
(2) Exclusive Dealings - requires best efforts of both parties.

Question 18

§ 2-313 Express Warranties

Answer 18

(1) (a) Affirmative by seller to fact or promise which becomes part of the bargain
(b) Description of goods which becomes part of the bargain
(c) sample or model which becomes part of the bargain
(2) “warranty” and “guarantee” are not necessary words; nor is the intention to make a warranty necessary to create one. Stating price or seller’s opinion does not create a warranty.

Question 19

§ 2-314(1) Implied Warranty of Merchantability

Answer 19

(1) If seller works in goods of that kind, the goods sold must be merchantable. Serving food or drink to be consumed on the premises is a sale.

Question 20

§ 2-314(2) Goods to be merchantable must be at least

Answer 20

(a) match the K description
(b) of fungible goods, are fair quality within the description
(c) are fit for ordinary use of good
(d) are similar to other goods ordered, if supposed to be
(e) are adequately contained, packaged and labeled
(f) are what the label says they are

Question 21

§ 2-314(3) Implied warranty of Merchantability

Answer 21

(3) other implied warranties from CoD or UoT

Question 22

§ 2-315 Implied Warranty of Fitness

Answer 22

When the seller knows the purpose of the goods being sold and the buyer is relying on the seller’s skill or judgment, there is an implied warranty that the goods will be fit for the purpose.

Question 23

§ 2-316 Exclusion or Modification of Warranties

Answer 23

If K is going to exclude the warranty of merchantability, it must mention that conspicuously.
Warranties are excluded with language like:
- “as is”, “with all faults” etc.
- if the buyer has a chance to inspect the good
- or CoD, CoP or UoT

Question 24

§ 2-716 Buyer’s Right to Specific Performance

Answer 24

(1) Where goods are unique

(2) Payment of price, damages or other

Question 25

NY Law Written Promise Expressing Past Consideration

Answer 25

A promise in writing and signed by the promisor or an agent shall not be denied effect as valid contractual obligation on the ground that consideration for the promise is past or executed...

Question 26

NY Case law arbitration per se

Answer 26

Arbitration is a per se (auto) material alteration under UCC 2-207(1)(b) ex. if offer has no arbitration clause and the acceptance does, it is not included in K, assuming battle of forms, parties are merchants and all acts take place in NY.

Question 27

What is a K?

Answer 27

A promise, which if breached, the law gives remedy. (promise enforceable by consideration; bargained-for exchange)

Question 28

What is a promise?

Answer 28

An intentional commitment to act, or refrain from acting. If the promise is enforceable, it is a K.

Question 29

Not all promises are enforceable:

Answer 29

generally, families (exception Hamer v. Sidway); no promise, just hoped-for desires; no consideration, generally; no intention for legal bind (2R § 21)

Question 30

What is a bargain?

Answer 30

an agreement to exchange promises or a promise for performance.

Question 31

Compensatory remedy of breach

Answer 31

compensate promisee for loss, usually with money (K law does not usually require specific performance unless where damages award is inadequate)

Question 32

Expectation interest

Answer 32

Breach remedy to put promisee in position they would have been if the K had been performed.

Question 33

Reliance Interest

Answer 33

Breach remedy to put promisee in position had the promise not been made.

Question 34

Restitution Interest

Answer 34

Breach remedy to put PROMISOR in position they had before the promise was made. (subset of reliance interest)

Question 35

Consideration - court's opinion

Answer 35

Courts don't care what consideration is as long as parties REALLY want what the other is giving.

Question 36

Bilateral K

Answer 36

Consideration is bargained-for return promise (or promise to perform); each promise is consideration for the other

Question 37

Unilateral K

Answer 37

Consideration is bargained-for performance (ex. Sheriff reward for robber caught)

Question 38

Motive as consideration

Answer 38

if what is bargained-for doesn't induce a K, still a K; if a promise doesn't induce a performance or return promise, still a K (ex. actress promises to be in a movie for $50K, but what she really wants is the exposure in the movie).

Question 39

Hamer v. Sidway

Answer 39

Uncle promised to pay nephew if nephew abstained from "bad" behavior. Nephew abstained. Forbearance from legal right is sufficient consideration, under the circumstances.

Question 40

Bargained-for exceptions

Answer 40

If you already have a duty to perform, that duty is not consideration for another promise (Alaska Packers v. Domenico); Modification of a K without more consideration (even if bargained-for); public official has duty to reject bribery; promise to refrain from asserting an invalid claim; illusory promise;

Question 41

General Rule: Forbearance to assert an invalid claim is not consideration: but, EXCEPTION

Answer 41

If you believe, in good faith, that you have a valid claim (even if it is invalid); example: Dyer v. National By-Products --> Leg lost on job, is laid off, though promised life-long employment. Even though his claim ended up being insufficient, it was made in good faith and he prevailed.

Question 42

Consideration is what the promisor wants

Answer 42

Even if the promisee gives something else of value

Question 43

Satisfaction clause

Answer 43

Courts say a satisfaction clause does not make a promise illusory and will be consideration for a promise (Mattei v. Hopper); satisfaction determined by reasonable person standard or good faith or other objective standard.

Question 44

Requirements K

Answer 44

Buyer promises to buy all the goods he needs from seller

Question 45

Output K

Answer 45

Seller promises to sell all her output to buyer.

Question 46

Gratuitous promises

Answer 46

NOT part of a bargained-for exchange (but promissory estoppel can work here sometimes)

Question 47

Past consideration

Answer 47

is NOT consideration; NY state exception for written and signed statement of past consideration.

Question 48

Exceptions to gratuitous promises

Answer 48

Moral obligation (VERY rare; Webb v. Mcgowin) and promissory estoppel

Question 49

Promissory estoppel/detrimental reliance

Answer 49

2R § 90: gratuitous promise that induced reasonable reliance; the reliance is detrimental (and reasonably expected by promisor) --> promise is binding if injustice can be avoided only by enforcement of promise.

Question 50

Promissory estoppel damages

Answer 50

Usually reliance damages, but can be expectation if justice requires (ex. Ricketts v. Scothorn: Grandfather offers $ to granddaughter, she relies/quits her job, he dies, estate refuses to pay)

Question 51

Cause of action for restitution (unjust enrichment)

Answer 51

To prevent unjust enrichment; a person who is by another must pay for the enrichment if it would be unjust not to pay. (ex. Pyette v. Pyette -- husband/wife law school/grad school.

Question 52

Bargain process=

Answer 52

offer and acceptance

Question 53

Intent to enter a K

Answer 53

Need promise and bargain.

Question 54

What is an offer?

Answer 54

2R § 24: The manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

Question 55

What is acceptance?

Answer 55

2R § 50: A manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer. Acceptance can only be done in a manner stated by the offer. Only the offeree can accept.

Question 56

Language not usually an offer:

Answer 56

Will you sell for X? X is the lowest price that I will sell for. I want X for my land. Advertisements.

Question 57

Unilateral mistake in construction K

Answer 57

Can sometimes allow offeror to rescind offer.

Question 58

Unilateral v bilateral K acceptance

Answer 58

Unilateral: notice of acceptance NOT generally required; Bilateral: notice generally required.

Question 59

Acceptance by agreement

Answer 59

The agreement must be communicated either expressly or implied by conduct; if conduct is ambiguous or not seen by offeror, no agreement; if conduct is clear, agreement can be implied.

Question 60

Termination of power of acceptance of an offer:

Answer 60

(1) Death of either party (2) Lapse of time (reasonable) (3) Revocation of offer by offeror (unless option contract) (4) Rejection of offer by offeree

Question 61

Revocation of offer

Answer 61

ANYTIME before acceptance; effective upon receipt by offeree;

Question 62

Option K created by reasonable reliance

Answer 62

In subcontractor's bid, option K is created by the general contractor's reliance on the irrevocability of the subcontractor's bid when the contractor incorporates that bid into his own; if contractor bid shops after being awarded K, the subcontractor's bid is revocable.

Question 63

Mailbox Rule

Answer 63

Acceptance of offer by mail (electronic instruction, etc) is effective upon dispatch. REJECTION by mail is not effective until it is received.

Question 64

Conforming/Non-conforming goods

Answer 64

Unless the seller notifies buyer that the shipment is accommodation, the shipment of either type of good is acceptance.

Question 65

Mirror-image rule

Answer 65

Common law outside of UCC § 2-207; non-mirror image response is seen as rejection and maybe counter-offer.

Question 66

Battle of the Forms

Answer 66

Definite and seasonal expression of acceptance operates as acceptance even if it contains additional or different terms, unless acceptance is expressly conditional.

Question 67

Battle of the Forms -- additional terms

Answer 67

construed as proposals for addition to the K, unless (1) the offer expressly limits the terms of the offer (2) they materially alter it; or (3) objection notice is given in a reasonable time

Question 68

Battle of the forms -- K by conduct

Answer 68

Conduct by either party can act as acceptance even if the terms don't agree

Question 69

Additional terms

Answer 69

covered by UCC § 2-207(2)

Question 70

Different terms

Answer 70

Majority Rule: Conflicting terms in offer and acceptance cancel each other out (knock out rule) and UCC gapfiller defaults apply. Minority rule: only offeree's different terms drop out. CA rule: same as additional terms (2-207(2))

Question 71

Written confirmations

Answer 71

Act as acceptance where a K is made orally or by informal written correspondence, and one or both parties later sends a confirmation with additional or different terms. Can never be a conditional acceptance.

Question 72

Good faith in negotiations

Answer 72

no obligation; party can walk away from negotiations for any reason (unless there is a K explicitly creating obligation to negotiate in good faith).

Question 73

Definiteness in Ks

Answer 73

A valid K must be definite, so to determine whether a K has been broken and to determine what expectation damages are.

Question 74

SoF

Answer 74

Some Ks, while valid in all respects, are not enforceable unless the K is written and signed by the party against whom enforcement is sought. Ks that must be in writing to be enforceable are "subject to the SoFs."

Question 75

Five categories of SoFs:

Answer 75

(1) Ks that cannot be performed within one year from the time the K is made (a K that can be performed within one year is NOT within the SoFs). (2) Agreement for the sale of land, or transfer of interest in land. (3) Agreement for the sale of goods for $500 OR MORE. (4) Agreement of suretyship, to answer to a creditor for the debt of another (5) An agreement that cannot be performed before the end of the lifetime of the promisor. Def must plead failure to comply with SoF as affirmative defense to breach of K action brought against them.

Question 76

To "satisfy" the SoF:

Answer 76

A K is within the SoF AND satisfies the requirements of the SoF.

Question 77

To be "outside" the SoF:

Answer 77

K need NOT be in writing to be enforceable.

Question 78

SoF exceptions:

Answer 78

(1) Detrimental reliance on oral K; Monarco v. Lo Greco (2) Main Purpose: (leading object) for suretyship; Central Ceilings (3) Full performance by one party takes the K outside the one-year clause (4) Part performance with equitable factors is exception for land sale. (5) Sale of goods has statutory exceptions (part performance and duty to read mail)

Question 79

UETA and E-Sign

Answer 79

E-Sign is a federal law; most states have adopted UETA (Uniform Electronics Transaction Act). Ks may be formed with electronic records and signatures.

Question 80

Policing the bargain

Answer 80

Law may refuse to enforce Ks when: the parties do not have capacity to make Ks; there is bargaining unfairness; the bargaining outcome is harsh, though the process of bargaining is fine

Question 81

Mechanisms for dealing with bargaining abuses: capacity of the parties

Answer 81

infancy; mental infirmity; under guardianship; drunk

Question 82

Mechanisms for dealing with bargaining abuses: behavior of parties

Answer 82

duress, fraud, mistake

Question 83

Mechanisms for dealing with bargaining abuses: substance of bargain

Answer 83

what no man in his right mind would agree to

Question 84

Mechanisms for dealing with bargaining abuses: exchanges between highly unequal parties

Answer 84

often enforced.

Question 85

Mechanisms for dealing with bargaining abuses: court techniques to void or modify

Answer 85

no K if no assent; K provision can be interpreted as to have unfair outcomes occur; void against public policy; unconscionability doctrine

Question 86

Infancy

Answer 86

Voidable; up to the beginning of the day before 18th birthday, and reasonable time thereafter.

Question 87

Mental infirmity

Answer 87

voidable; mental illness or defect; cannot understand manner and consequences of K; or unable to act in reasonable manner in relation to transaction AND the other party has reason to know of his condition.

Question 88

Under guardianship

Answer 88

VOID;

Question 89

Unfairness of bargaining process (overreaching)

Answer 89

Allows victim to rescind K

Question 90

pre-existing duty rule

Answer 90

Promising to do what one is legally obligated to do is not consideration; usually include aspects of duress (Alaska Packers v. Domenico); prevents overreaching and blackmail

Question 91

Rescission or modification to avoid pre-existing duty rule

Answer 91

Judicial remedies to get around pre-existing rule where applying it would lead to undesirable outcomes. Requirements: first K that is still partially executory on both sides; second K to discharge first K; third K with modifications

Question 92

2R weakens pre-existing duty rule (courts not required to apply it, however) UCC 2-209(1) rejects pre-existing duty rule --> but requires good faith

Answer 92

Section 89: Modification of Executory K: A promise modifying a duty under a K not fully performed on either side is binding if: (1) the modification is fair and equitable in view of circumstances not anticipated by the parties when the K was made (2) to the extent provided by statute (3) to the extent that justices requires enforcement in view of material change of position in reliance on promise

Question 93

Duress

Answer 93

Physical compulsion -- physically forced to sign (void); Physical compulsion -- threat of death or violence (voidable); economic harm (business compulsion); threat to emotional wellbeing Must have (common law): (1) improper threat (kind of deal we want to discourage) during bargaining (tort or crime threatened; lawful action threatened can be improper; (2) some resistance is needed (3) preclusion of free will (no real assent)

Question 94

Undue influence

Answer 94

like duress, but does not require improper threat Requires: (1) undue susceptibility of subservient one (2) Excessive pressure by dominant party (with unfair advantage)

Question 95

Misrepresentation (aka fraud, when misrepresentation in intentional)

Answer 95

Misrepresentation of fact: material to K, and upon which victim justifiably relies; remedy --> rescission Fraudulent misrepresentation --> K voidable even if not material

Question 96

Mistake

Answer 96

Can be unilateral or mutual mistake

Question 97

Unilateral mistake

Answer 97

mistake by one party that is basic assumption to K; other party does not share the assumption (common in construction Ks; mistaken calculation); can be the basis of rescinding a K;

Question 98

Parol Evidence Rule

Answer 98

precludes extrinsic evidence of prior (usually oral) agreement from being considered by fact finder in determining terms of K where a written agreement exists (1) parties have assented to final written agreement (2) terms in agreement are clearly the terms in the K (3) question is whether the K includes terms outside the written agreement

Question 99

Extrinsic evidence

Answer 99

Oral (or written) agreement that one party claims was part of bargained-for exchange but never made it into written K

Question 100

Gianni v. R. Russell

Answer 100

the lease is the written agreement and the Parol Evidence is the oral agreement giving Gianni exclusive right to sell soft drinks

Question 101

When does the PER apply?

Answer 101

only applies to integrated agreement --> where a writing constitutes a final expression of one or more terms of agreement (1) fully integrated -- complete and exclusive statement of agreement between the parties --> NO prior oral terms can be considered by jury; Merger clause; can be implied by nature of writing (2) partially integrated -- integrated only as to certain terms --> YES prior oral terms (consistent additional terms) can be admitted as evidence

Question 102

Consistent additional terms per PER

Answer 102

- - NOT terms "naturally" or "normally" included in agreement (aka. NOT consistent additional term) - - YES terms that would naturally be a separate agreement by parties (aka. IS a consistent additional term) - - YES terms that would "certainly have been included" - - NOT terms that contradict a written term (unless fraud, duress, mistake)

Question 103

Extrinsic evidence mistakenly omitted

Answer 103

NOT barred by PER

Question 104

No Oral Modification Clause

Answer 104

TYPICALLY NOT EFFECTIVE: No modifications to K are allowed UNLESS in writing (outside Article 2) (Inside Article 2) - - §2-209(1) allows modification of any K within the UCC without consideration - - §2-209(2) says that NOM clauses are effective

Question 105

Zipper Clause

Answer 105

Combo of Merger clause and NOM

Question 106

Ambiguity in K

Answer 106

If a K contains ambiguous terms (having 2 or more materially different meanings) AND the parties do not objectively agree on a meaning (with no party more at fault than the other), there is NO mutual assent and NO K. - - if parties attach different meanings to a term, but the term is not material, there IS a K - -

Question 107

Interpretation of K

Answer 107

- - PER determines what the terms of the K are | - - Judge decides what extrinsic evidence can be considered to determine what the terms mean

Question 108

What extrinsic evidence judge will consider for admission

Answer 108

- prior and contemporaneous statements - surrounding circumstances - evidence of subjective intent - communications between parties - UoT, CoD, CoP

Question 109

Plain Meaning Rule

Answer 109

A judge will not admit extrinsic evidence to determine the meaning of completely integrated writing if the the meaning of the writing is plain. - - In NY, judges look at the "four corners" of the writing - - In CA, judges look at "all credible evidence"

Question 110

Warranty

Answer 110

Under Article 2, a particular type of promise (that is important) - affirmation of fact - implied by law

Question 111

UCC 2-313(1)

Answer 111

Express Warranties by affirmation, description, sample, promise

Question 112

hard to disclaim

Answer 112

an Express Warranty (under UCC)

Question 113

easy to disclaim

Answer 113

Implied Warranty of Merchantability AND Implied Warranty of Fitness (under UCC)

Question 114

Unfairness

Answer 114

If you sue for breach of K, but it turns out the K was unfair in bargaining or substance, you will not get specific performance remedy

Question 115

Standard form K

Answer 115

aka adhesive K, if imposed by the party of superior bargaining strength (efficient) Leases, phone ks, car rental/purchase, airplane tickets, real property sales Ks

Question 116

Arm's length bargaining

Answer 116

means parties are not related, each is trying to get the best deal for themselves, and usually means equality of bargaining power

Question 117

Ks of Adhesion are fully enforceable UNLESS

Answer 117

(1) such K or provision does not fall within the expectations of the weaker (or adhearing) party (2) Even if within the expectations, the K is unduly oppressive or unconscionable.

Question 118

Unconscionable K or terms

Answer 118

Court may refuse to enforce K or terms which are unconscionable. Most likely applied where the K is unfair in process of bargaining and content of K

Question 119

Williams v. Walker-Thomas Furniture

Answer 119

Holding: unconscionable cross-collateralization because disfavored party did not understand the term Unconscionability defined: absence of meaningful choice for one party as well as K terms unreasonably favorable to the other party.

Question 120

Bargaining unfairness

Answer 120

procedural unconscionability - absence of meaningful choice - no explanations of what the terms mean - getting a party to sign with very fine print or obscure language

Question 121

Unfair content in the K

Answer 121

Substantive unconscionability - oppressively one-sided - ex. grossly excessive price -if present with procedural unconscionability, unconscionability is easier to find, but substantive uncon alone can be enough

Question 122

Duty of Good faith

Answer 122

mandatory implied-in-law term found in every K (cannot be removed from K) breach of good faith remedies vary with circumstances no duty of good faith in negotiation; exists only after K is formed

Question 123

Public Policy

Answer 123

- - cannot enforce illegal terms | - - usually covered by statutory law

Question 124

Judicially created public policy

Answer 124

-- ex. CNC -- public policy against enforcement of CNC if it is unreasonable CNC reasonableness -- geographic limitations, duration, activity limitation; protection of legitimate interest of employer, protection of confidential information; harm to the employee