Contracts -- Cbx

Front 1

What is the measure of recovery for quasi-contract?

Back 1

The value of the benefit conferred--NOT the K price. K price is a ceiling if P is in default.

Front 2

What is the general rule regarding acceptance by start of performance?

Back 2

Start of performance is acceptance. Starting to perform is treated as an implied promise to perform and there is a bilateral K. Notification required.

EXCEPTION: If the offer was for a unilateral contract, completion is required for acceptance. Notification required only at completion unless it would normally come to offeror's attention.

Front 3

If a rejection is mailed before an acceptance is mailed, which is effective? What if acceptance is mailed first, followed by a rejection.

Back 3

Rejection first: Neither is effective until received; i.e. the first one received is effective.

Acceptance first: It is effective unless other party detrimentally relies on the rejection.

Front 4

What consideration is requred to modify a K under the UCC?

Back 4

New consideration is not required to modify a sale of goods K; good faith is the test for changes to an existing sale of goods K.

Front 5

List three consideration substitutes.

Back 5

1. Seals--minority
2. Written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration. (think statute of limit'ns)
3. Promissory estoppel

Front 6

What are the consequences of incapacity?

Back 6

1. Right to disaffirm by person without capacity
2. Implied affirmation by retaining benefits after gaining capacity (ratification)
3. Quasi-K liability for necessities (NOT K law)

Front 7

Sale of goods K: Does seller's part performance satisfy statute of frauds?

Back 7

Generally, yes--but only to the extent of the part performance; statute of frauds not satisfied as to remaining performance (e.g. undelivered goods)

Front 8

What is the exception to the UCC rule that a writing must be signed by the person asserting the defense to satisfy its statute of frauds?

Back 8

When a merchant fails to respond to another merchant. Merchant A receives a signed writing with a quantity term from Merchant B but does not respond within 10 days of receipt

Front 9

What if an agreement is in writing and requires that all modifications be in writing?

Back 9

Common Law: Requirement not effective; ignore K language.

UCC: Requirement effective (Even if modified deal is not within S of F)

Exceptions: Term is minor or one party waives and other party detrimentally relies on that.

Front 10

What is the rule regarding illegal subject matter/illegal purpose?

Back 10

If the subject matter is illegal, the agreement is not enforceable. EXCEPTION: one party did not know or there has been performance by a party who is not in pari delicto or only violated malum prohibitum law such as non-safety-related license.

If the subject matter is legal but the purpose is illegal, the agreement is voidable by one who didn't know the purpose, or was aware but didn't facilitate a non-turpitudinous purpose.

Front 11

What is the result of a unilateral mistake of material fact?

Back 11

Generally, courts are reluctant to let a party avoid a K for unilateral mistake UNLESS the other party had reason to know of the mistake or unconscionable hardship would result.

Front 12

Under what circumstances may a court consider evidence of earlier agreements as a source of consistent, additional terms to a contract?

Back 12

If the court finds that
-The written agreement is only a partial integration, OR
-The additional terms would ordinarily be in a separate agreement.

Front 13

When does risk of loss shift to buyer if there is no agreement, no breach in performance, no terms of delivery?

Back 13

For merchants, it shifts upon buyer's "receipt" of the goods;

For non-merchants, it shifts upon seller's tender" of the goods.

Front 14

What is the implied warranty of merchantability? What is the triggering fact on the exam?

Back 14

A warranty attaching to any goods sold by any merchant--states that goods are fit for ordinary purpose for which such goods are used.

Triggering fact--seller is a merchant; deals in goods OF THAT KIND

Front 15

What is the implied warranty of fitness for a particular purpose? What is the triggering fact on the exam?

Back 15

a. Triggering facts--Buyer has a particular purpose; buyer is relying on seller to select suitable goods; seller has reason to know of purpose and reliance.

b Warranty: goods fit for particular purpose

Front 16

What is the effect of disclaimer on implied warranties? How can implied warranties be disclaimed through messages or conduct?

Back 16

Disclaimer eliminates implied warranties, but NOT express warranties. Disclaim by CONSPICUOUS language. Merchantibility disclaimer must use that word. Particular Purpose disclaimer may use any language but must be in writing.

Can also disclaim by selling "as is."

Disclaimer of warranty as to obvious defects also happens if buyer examines or refuses to examine the product.

Course of dealing/performance/trade can effect a disclaimer as well.

Front 17

How can contract terms limit warranty liability?

Back 17

Limitation of remedies: Does not eliminate warranties; simply limits or sets recovery for any breach of warranty. Must not make remedy fail of its essential purpose.

Front 18

When is a limitation of warranty remedies prima facie unconscionable?

Back 18

When the breach of warranty on consumer goods causes personal injury. But not when a commercial contract causes property damage.

Front 19

What can a buyer do if seller of goods does not meet the perfect tender standard?

Back 19

Buyer has option to retain and sue for damages or to reject "all or any commercial unit" and sue for damages.

Front 20

In what situations may a seller "cure" imperfect tender?

Back 20

1. Seller's reasonable ground to believe goods tendered would be acceptable, perhaps with a money allowance. Look for info in fact pattern about prior dealings with such an allowance.

2. Time for seller's performance has not yet expired.

Front 21

How can a buyer claim a violation of an express warranty on a contract?

Back 21

She can draw a warranty from a promise, description or model that is part of the basis of the bargain on which she could have relied. Not necessary to prove actual reliance.

Front 22

How can a contract condition be waived implicitly? What happens to the right to damages if a condition is waived? Can the waiver be retracted?

Back 22

Waiver is created if a party continues performance despite a broken condition. But only collateral conditions can be waived.

Waiver doesn't cancel rights to damages.

A waiver can be retracted unless the other party detrimentally relies on it.

Front 23

REASON FOR NOT ENFORCING AN AGREEMENT: MISUNDERSTANDING (AMBIGUITY IN WORDS OF AN AGREEMENT)

Back 23

No contract if:

1-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 2 reasonable interpretations

Front 24

REASON FOR NOT ENFORCING AGREEMENT: MISTAKE OF FACT EXISTING AT THE TIME OF K - Mutual Mistake

Back 24

Distinguish from Misunderstanding (words in K) and Misrepresentation (words before K)

There will be no K if:
1-Both parties mistaken, and
2-basic assumption of fact, nd
3-materially affects the agreed exchange, and
4-not a risk that either party bears

Front 25

UCC FOR TERMS IN SALES OF GOODS CONTRACTS ("DEFAULT" TERMS) (1) Delivery Obligations Of Seller of Goods if Delivery by Common Carrier - SHIPMENT K's

Back 25

DEFAULT

Seller completes delivery obligation when it:
1-Gets the good to a common carrier, and...
2-makes reasonable arrangements for delivery and
3-notifies buyer

Front 26

Under UCC, what is the Buyer's right to reject? How is it different for an INSTALLMENT SALES CONTRACT?

Back 26

Buyer has the right to reject an installment only where there is a SUBSTANTIAL IMPAIRMENT in that installment that can't be cured.

Has the right to reject whole contract if installment ruins whole lot or raises doubts.

Front 27

When can a buyer exercise REVOCATION OF ACCEPTANCE OF THE GOODS

Back 27

1-Nonconformity substantially impairs the value of the goods, and
2-believed it would be cured or there was difficulty of discovering defects or reasonable reliance on seller's assurance of satisfaction, and
3-revocation within a reasonable time after discovery of nonconformity and before any substantial change in goods not caused by a defect present at the time seller delivered.

Front 28

What can a contract party do if he has reasonable grounds for insecurity regarding performance?

Back 28

-Other party can then demand adequate assurance within 30 days
-If it is "commercially reasonable" may also suspend performance until gets adequate assurance

Front 29

What is required for Contract Rescission and must it be in writing?

Back 29

-Key is whether performance is still remaining from each of the contract parties (executory)

They may be oral even if contract said otherwise unless it is an SoF contract or a sale of goods that expressly required written rescissions.

Front 30

Elements of contract discharge by IMPOSSIBILITY, IMPRACTICABILITY

Back 30

-Something that happens after K formation but before the completion of K performance, and
-that was unforeseen,
-risk not allocated to D
-objectively impossible/impractical

Front 31

Elements of contract discharge by Frustration of Purpose

Back 31

Supervening act
Not foreseen
Destroyed purpose, which was
Realized by both parties at time of entry

Front 32

What happens if a contract prohibits assignment?

Back 32

Prohibition of assignment of contract is construed as prohibition of delegation only

Prohibition of assignment of contractual rights takes away the right to assign but not the power to assign. This means that the assignor is liable for breach, but an assignee who does not know of the prohibition can still enforce the assignment

But explicit language of invalidation is effective except 1) one who has fully performed can always assign the payment right and 2) Article 9 always allows assignment of payment right by one who is assigning as a security interest for a loan received.

Front 33

What happens if there are multiple gratuitous assignments of a contract?

Back 33

-Last assignee generally wins since later assignments revoke earlier ones.

EXCEPTIONS:
1-It is the subject matter of a writing delivered to the assignee
2-The assignee has received some indicia of ownership
3-The assignee has reasonably, foreseeably, or detrimentally relied on the assignment
4-The obligor gives payment to the assignee

Front 34

What happens if there are multiple assignments of a contract for consideration?

Back 34

First assignee for consideration wins UNLESS

New assignee is a BFP and is the first to obtain payment, a judgment, a novation, or writing/indicia of ownership

Front 35

What are the factors for establishing whether a breach of contract is material?

Back 35

Degree of benefit received
Adequacy of damages to compensate
Performance rendered so far
Hardship to wronged party
Likelihood of fixing it
Wilfulness

Wronged party must show ability and willingness to perform.

Front 36

When does Buyer's right to Reject end under Article 2?

Back 36

He accepts after reasonable opportunity to inspect
He fails to reject within reasonable time after delivery
He does any act inconsistent with ownership.

Front 37

What right does seller have to cure under Article 2?

Back 37

Must give reasonable notice and then can cure within time originally provided.

Gets extra time if reasonably believed the goods would have been acceptable based on trade, prior dealings, or impossibility of detection.

Front 38

When will a non-compete covenant be enforced?

Back 38

When services were unique and a legitimate employer interest is being protected.

Must be reasonable as to time and place scope, and must not harm the public.

Front 39

When can buyer replevy goods?

Back 39

They must be identified to the contract.

1) Possible if B can't cover
2) Also if B made part payment and S becomes insolvent within 10 days of receiving it OR goods were purchased for family purposes.

Front 40

What price is used as market price for calculating damages in a breached sale of goods contract?

Back 40

For Buyer, it's price at the time he learned of the breach.

For Seller it's price at time for delivery.

Front 41

What damages can an employer get if employee breaches contract?

Back 41

Cost of replacing but modernly must pay wages even if breach was intentional.

Front 42

In contract law, is restitution always available to the non-breaching party? Is it capped by the contract price? What does UCC say about the breaching buyer?

Back 42

If he completed performance, he can only sue on the contract. It is only capped by the contract price in the case of a (minor non-willful) breaching Plaintiff.

Under UCC, the breaching buyer can get restitution of his deposit except for 20% of contract price or $500, whichever is smaller.

Front 43

What might prevent an infant from disaffirming a contract?

Back 43

Land contracts can't be disaffirmed until majority.

Active inducement of other party to perform after infant reaches majority may be a ratification, but more than just part payment/performance by infant is required.

Can't disaffirm contract for necessaries.

Front 44

When can mental incompetents and intoxicated persons disaffirm a contract?

Back 44

Mental incompetents: if they fail to understand the contract OR they are acting irrationally and other party has reason to know it.

Intoxicated: if they don't understand and other party has reason to know.

Front 45

If a contract is assigned, can assignor and obligor modify it?

Back 45

They can modify at will before obligor has notice of assignment. But this right stops once obligor has notice AND assignor finishes performance.

Front 46

When a contract is assigned, can obligor assert claims against assignee if assignee sues him on the contract?

Back 46

Claims related to that contract are recoupments: yes
Claims related to assignor but not the contract are set-offs: Yes, but only if they accrued before obligor had notice of assignment.
Claims related to assignee are counterclaims: yes, including affirmative recovery.

Front 47

Can assignee of a contract sue assignor if obligor doesn't perform?

Back 47

Only if assignee gave value. The assignor has warrantied that he will not interfere and that there is a valid, unencumbered claim, but he has NOT warrantied obligor's solvency or willingness to perform.

Front 48

Can a promisor assert set-oofs against a third-party beneficiary if 3PB sues him on the contract?

Back 48

No, he can only raise defenses related to the contract. Claims that promisor has against promisee don't affect 3PB's recovery.

Front 49

Is there anything that could prevent a party from suing for anticipatory repudiation?

Back 49

If a party has already performed in full, she cannot sue until the date of performance.