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33 Cards in this Set

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Is a contract voidable for mistake when a mistake existed in a fact that was the subject of a warranty? [Express warranty—Smith v. Zimbalist]
(1) Yes (2) Where both parties made an honest mistake about the identity of the subject matter of the contract, the contract is voidable.
The UCC Section 2-313 provides that in the seal of goods, there will be express warranties by the seller where;
(1) The seller makes an affirmation of fact or a promise about the goods (2) There is a description given about the goods (3) There is a sample or model that is used to describe the goods sold.
Describe: Unilateral Mistake
(1) One party may make words that are clear but make some unilateral mistake of fact so that, ha he known of this mistake, eh would not have expressed himself in the same way.
Is there a binding contract if the other party neither knew or should have known of thee mistake?
(1) Yes. (2) This sib based on the objective theory of contracts. (3) But some authority exists for the proposition, however, that if A has not changed his position in reliance before B informs A of B’s mistake, then recission will be allowed.
If A is aware (or should have been aware_ of B’s mistake, is there a contract?
(1) No. (2) A knew what B really meant.
If a party has an irrevocable option to accept a contractor’s bid but learns of the contractor’s mistake of computation before accepting, is the contractor entitled to rescission? [Rescission allowed—Elsinore Union Elementary school district v. Kastroff]
(1) Yes (2) P knew or had reason to know before it accepted the bid that there had been a unilateral mistake.
Does the seller of a residence have a duty to disclose to the buyer facts pertaining to past termite infestation? [Nondisclosure—Hill v. Jones]
(1) Yes (2) This may be somewhat like fraud and misrepresentation.
The modern approach under Restatement (second) section 161 places an affirmative duty on a vendor to disclose material facts if:
(1) Disclosure is necessary t o prevent previous assertion from being a misrepresentation or from being fraudulent or material; (2) Disclosure would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if nondisclosure amounts to a failure to act in good faith an in accordance with reasonable standards of fair dealing: (3) Disclosure would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part; or (4) The other person is entitled to know other fact because of a relationship of trust and confidence between them.
Is mutuality of mistake necessary to have a reformation in all cases? [Mistakes in transcription and reformation—Travelers insurance co. v. Bailey]
(1) No (2) P had the burden of proving, beyond a reasonable doubt, the true agreement underlying the contract to be reformed. P has no such proof. (3) Mutuality adds nothing to this kind of case.
If facts that a promisor had no reason to anticipate, and did not cause, render performance of her promise objectively impossible, is her duty to perform discharged?
(1) Yes.
What types of impossibility will discharge the promisor?
(1) Supervening illegality of the contract by change in the law or act of government (2) Supervening destruction or nonexistence of the contract’s subject matter or the specified means for performance or source of supply (3) Death or illness in a personal services contract.
Is a contractor’s duty discharged if the partially constructed building si accidentally destroyed without fault by either party?
(1) No. It is not discharged.
Is a contractor’s duty to only repair or renovate an existing building discharged if the partially constructed building is accidentally destroyed without fault by either party?
(1) Yes. It would be discharged.
Would destruction of the subject matter discharge performance if the obligator has assumed the risk of loss?
(1) Yes.
Will D be excused from performance by the accidental destruction of the concert hall, which made the performance y him of the contract impossible?
(1) yes. (2) Both parties to the contract are excused.
Does impossibility include commercial impracticability because of extreme and unreasonable difficulty or expense?
(1) Yes.
Do basic engineering difficulties that prevent timely delivery constitute commercial impracticability excusing performance? [Engineering difficulties—United States v. Wegematic Corp]
(1) No. (2) Otherwise the seller is free to express what are only aspirations and gamble on mere probabilities of fulfillment without any risk of liability.
If performance is rendered more difficult or expensive by unforeseen events, may the injured party proceed with performance, recover the contract price, and then, in addition, recover its extra costs? [Unforeseen events rendering performance more expensive—transatlantic Financing Corp. v. United States]
(1) No. (2) Legal possibility really is commercial Impracticability. (3) When alleged, the court is asked to construct a condition of performance based on the changed circumstances.
What are the steps/elements that courts use in constructing a condition of performance based on changed circumstances? 3 steps
(1) A contingency must have occurred. (2) The risk of the unexpected occurrence must not have been allocated by agreement or by custom. (3) The occurrence of the contingency must have rendered performance commercially impracticable.
If repair work is rendered impossible because of the destruction of the property being repaired, is the party conducting the repairs entitled to recovery of the value of his materials and services? [Destruction of underlying property—Fowler v. Insurance Company of North America]
(1) Yes (2) In cases of repair or additions to an existing building, the contract is discharged by the destruction after part performance and has a right to compensation for materials and services. (3) News construction does not excuse the contractor when the partly completed work is destroyed through the fault of neither party.
Define: Objective impossibility
(1) The performance cannot be done by anyone (2) Most courts hold that only objective impossibility will excuse the promissors performance.
Define: Subjective Impossibility
(1) The performance cannot be done by the promisor, although someone could perform. (2) Most courts hold that only objective impossibility will excuse the promissors performance.
May a subcontractor recover in quantum meruit for preparatory work performed pursuant to a contract when performance of the general contract is barred by impossibility? [Remedy for damages caused by impossibility following performance—Albre Marble & tile Co. V. John Bowen Co.,]
(1) Yes
What is the ”wrought in” principle
(1) Recovery for damages caused by impossibility following performance (2) Permits recovery for those expenditures that, but for the supervening act, would have inured to the benefit of D as contemplated by the contract.
Does the fact that events occurring after the contract was entered make the contract economically disadvantageous for one of the parties constitute impossibility?
(1) No.
Does economic loss alone justify excuse of nonperformance when the contract does not specifically so provide? [Insufficient price escalator clause—Missouri Public Service Co. v. Peabody Coal co.,]
(1) No. (2) D anticipatorily breached the contract.
In contracts in which goods must be supplied by a third party, and that third party fails to supply the goods, how can the contract be discharged under UCC section 2-615?
(1) Only if the parties contemplated using that specific supplier (2) Failure of source of supply.
Define: Frustration of purpose
(1) Where the bargained for performance is still possible, but the purpose or value of the contract has been totally destroyed by some supervening event, such frustration of purpose will discharge the contract.
What are the four elements that must always appear in order to find frustration of purpose sufficient to discharge a contract:
(1) There must be some supervening act or event (2) The supervening act or even t was not reasonably forseeability at the time the contract was entered into (3) The avowed purpose or object of the contract was known and recognized by both parties at the time they contracted (4) The supervening act or event totally or nearly totally destroy the purpose or object f the contract.
Will frustration of purpose excuse performance of a contract? [Contract purpose upset by unforeseen event—Krell v. Henry]
(1) Yes. (2) If the purpose of the contract is frustrated by an unforeseeable supervening event, and the purpose was within contemplation of both parties when the contract was made, then performance is excused.
If a government entity eliminates certain requirements of a construction contract, is the private contractor excused form paying its subcontractor who was to supply those requirements? [Government intervention—Chase Precase Corp. v. John J. Paonessa Co]
(1) Yes.
Define: Doctrine of frustration of purpose
(1) Means that when an event neither anticipated nor cause by either party, the risk of which was not allocated by the contract, destroys the object or purpose of the contract and thereby the values of performance, the parties are excused from further performance. This is comparable to the UCC defense of commercial impracticability.
If a manufacturer is unable to ship the finished goods because of an international embargo, are the manufacturer’s contracts with its component suppliers cancelled for being commercially impracticable? [International embargo had no effect on domestic business—Power engineering & Manufacturing , Ltd. V. Krug International]
(1) No. (2) D’s performance is not commercially impracticable. (3) It can still purchase the equipment intend for shipment to Iraq.