Mbe Contracts

Front 1

The mirror image rule requires __________.

Back 1

An absolute and unequivocal acceptance of each and every term of the offer

Front 2

If a seller accepts a buyer’s offer to purchase goods without an exact price term included, the price will be ______.

Back 2

a reasonable price at the time of delivery

incorrect to say: the fair market price at the time the contract was formed

Front 3

Under Article 2, when a merchant responds to an offer to buy goods by simply shipping similar, but nonconforming, goods, that shipment is considered __________.

Back 3

an acceptance and a breach of the contract

Front 4

Generally, whether a communication is deemed an offer depends upon __________.

Back 4

the objective or apparent intention of the offeror to make an offer

Front 5

the necessary elements for a merchant’s firm offer?

Back 5

• a merchant offers to sell goods,
• in a signed writing, and
• that writing gives assurances that the offer will be held open

Front 6

A letter of revocation of an offer becomes effective at the moment it is __________.

Back 6

received by the offeree

Front 7

Traditional contract law insisted on an absolute and unequivocal acceptance of each and every term of the offer.
This concept is commonly referred to as:

Back 7

the Mirror Image Rule

Front 8

in a unilateral contract, when can an offeror properly revoke an offer?

Back 8

anytime before offeree has begun performance

Front 9

Article 2 has abandoned the __________, in favor of the __________.

Back 9

Mirror Image Rule; Battle of the Forms Provision

Front 10

To be valid, an offer for the sale of goods must include __________.

Back 10

a quantity term

Front 11

A valid offer for a real estate contract must include:

Back 11

the identity of the land and a price

Front 12

Under the Article 2 Battle of the Forms Provision, whether additional or different terms proposed by the offeree during acceptance ultimately become part of a contract depends on whether or not __________.

Back 12

Both parties are merchants

Front 13

A communication will not be considered to be definite and certain enough to be an offer if it is for the sale of goods and __________.

Back 13

missing a QUANTITY term

Front 14

When can an offeror properly revoke an offer for a unilateral contract?

Back 14

anytime before the offeree has begun performance

Front 15

a mutual mistake as to a basic assumption on which the contract is made will always render the contract ______.

Back 15

voidable

Front 16

When two merchants enter into an oral contract for the sale of goods and one party sends to the other party a signed, written confirmation of the agreement, it:

Back 16

Binds both the sender and recipient, provided the recipient had reason to know of its contents and did not object in writing within 10 days of receipt

Front 17

The confirmatory memo rule applies __________.

Back 17

only if both parties are merchants

Front 18

In a contract for a sale of goods priced at $500 or more, if the goods are _________ or __________, the contract will be enforced even if there is no writing.

Back 18

Received and accepted; paid for

Front 19

A contract entered into between an infant and an adult is __________.

Back 19

voidable by the infant but binding on the adult

Front 20

In an auction __________, the auctioneer may withdraw the goods at any time until he announces completion of the sale.

Back 20

with reserve

*an auction w/out reserve, auctioned may not withdraw the goods at any time.

Front 21

What is an option contract?

Back 21

A contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer.

*general rule: offers can be revoked at will by the offeror, even if he has promised not to revoke for a certain period. An option contract is an exception to this general rule, which limits the offeror’s power to terminate the offer.

Front 22

What is an offer to for a bilateral contract?

Back 22

An offer where the offeree has the option to accept by a promise or by the start of performance.

*Under UCC and R2d of Contracts, all offers are deemed bilateral contracts unless clearly indicated otherwise.

Front 23

merchant’s firm offer requires a __ assurance __ by the merchant-offeror.

Back 23

written, signed

*only the offeror must be a merchant, not both parties.

Front 24

Merchants Firm-Offer:

If no specific time frame is stated in the offer, a merchant’s firm offer will remain open for a reasonable time (but in no event may such period exceed __ __).

Back 24

three months

Front 25

At common law, a written communication revoking an offer is considered “received” by an offeree at the moment:

Back 25

the revocation comes into the offeree's physical possession.

*NOT when dispatched, NOT when read

Front 26

When an offeree gives consideration for a promise by the offeror not to revoke an outstanding offer, this is known as __________.

Back 26

option contract

Front 27

Under the Article 2 Battle of the Forms Provision, whether additional or different terms proposed by the offeree during acceptance ultimately become part of a contract depends on whether or not __________.

Back 27

both parties are merchants

Front 28

If it reasonably appears that the parties intended to make a valid contract, a court may apply the presumption that the parties’ intent was to include a reasonable term to rectify any __________ term.

Back 28

missing

Front 29

To be valid, an offer for the sale of goods must include _____ term.

Back 29

quantity

Front 30

Full performance is necessary to properly accept an offer for a(n) __________ contract.

Back 30

unilateral

Front 31

An offer is terminated by the death of the offeror unless:

Back 31

offeree has paid consideration to keep the offer open

Front 32

For a real estate contract, a ____ term is necessary; for a valid offer for a contract for the sale of goods, a ____ term is necessary.

Back 32

price; quantity

*A valid offer for a real estate contract must include a property description identifying land with some particularity

Front 33

In a SHIPMENT contract, when goods are destroyed en route from the Seller to the Buyer, the risk of loss is borne by:

Back 33

the buyer

-b/c ROL passed to buyer when the goods were delivered to the carrier

Front 34

Under Article 2, the warranty of merchantability can be specifically disclaimed or modified only by mentioning the word ___.

Back 34

merchantability

*However, unless the circumstances indicate otherwise, an implied warranty of merchantability can be disclaimed by expressions, such as “as is,” “with all faults,” or other expressions that call the buyer’s attention to the fact that there are no implied warranties.

Front 35

A written, conspicuous disclaimer of the warranty of merchantability is necessary only if the sales contract is in __.

Back 35

writing

Front 36

Which warranty will be implied in a contract for the sale of goods whenever any seller has reason to know the particular purpose for which the goods are to be used and that the buyer is relying on the seller’s skill and judgment to select suitable goods; and the buyer in fact relied on the seller’s skill and judgment?

Back 36

implied warranty of fitness for a particular purpose

*NO req't that seller be a merchant or a merchant who deals in goods of that kind. Nor is it req'd that buyer be a non-merchant

Front 37

Seller sells goods to Buyer on Friday. Buyer and Seller agree that Buyer will pick up the goods from Seller at 1 p.m. on Monday. The goods are ready for Buyer at 12:30 p.m. on Monday. At 2 p.m., before Buyer has arrived to retrieve the goods, the goods are destroyed.

The risk of loss is on __________.

Back 37

buyer if seller is NOT a merchant

Front 38

Under Article 2, if goods are so defective that the buyer has a right to reject them the __________.

Back 38

risk of loss does not pass to the buyer until the defects are cured or the buyer accepts the goods despite the defects

Front 39

The implied warranty of merchantability is Implied in every contract for the sale of goods by a merchant who:

Back 39

deals in goods of the kind sold

Front 40

General disclaimers of implied warranties may include:

Back 40

•Examination of the goods,
•refusal to examine the goods, and •course of dealing

Front 41

In a contract in which the seller is in Michigan and the buyer is in Texas, the following terms "F.O.B. the buyer's place of business" is creates a _____ contract.

Back 41

destination

F.O.B. the buyer’s place of business = Destination Contract

Front 42

An F.O.B. buyer’s place of business is a destination contract, so the ___ has the risk of loss until the goods reach the buyer’s place of business.

Back 42

seller

Front 43

All C.I.F. contracts are ___ contracts.

Back 43

shipment

Front 44

F.O.B. the seller’s location is a ____ contract, so the ___ bears the risk of loss while goods are in transit.

Back 44

shipment; buyer

Front 45

Any affirmation of fact or promise made by the seller to the buyer, any description of the goods, and any sample or model creates an _____ warranty if the statement, description, sample, or model is part of the basis of the bargain.

Back 45

express.

*but a statement of opinion relating to the value of the goods does NOT create an express warranty.

Front 46

Is consideration necessary for a valid mutual rescission of a contract?

Back 46

Consideration is necessary for a valid mutual rescission of a contract, and each party giving up her right to counterperformance from the other party serves as consideration for the agreement to rescind the contract.
-There is no need for additional valuable consideration beyond that for the rescission to be effective.

Front 47

if the subject matter of the contract has become illegal due to a subsequently enacted law or other governmental act, performance will be ____.

Back 47

discharged

*this is called a supervening illegality

Front 48

A contractor is hired to remodel a restaurant. After the contractor completes 90% of the work, the restaurant is destroyed in an earthquake.

-The destruction of the restaurant will:

Back 48

discharge the contractor’s duty to perform.

*as long as the destruction of the subject matter was NOT the FAULT of either party

Front 49

in a contract to construct a building, destruction of the building in progress will not discharge the duty to perform because performance is NOT _____ (the building can still be built).

Back 49

impossible

*date of performance will likely be extended

Front 50

Where the nonoccurrence of the event was a basic assumption of the parties in making the contract and neither party has expressly or impliedly assumed the risk of the event occurring, contractual duties may be ____.

Back 50

discharged

Front 51

When is performance discharged by IMPRACTICABILITY?

Back 51

when performance is possible, but can be accomplished only with extreme and unreasonable difficulty or expense.

Front 52

Owner enters into a contract with Builder under which Builder agrees to renovate Owner’s 100-year-old mansion for $400,000. When the renovation is 80% complete, the mansion is washed away in a flood.

(i) Builder’s duties under the contract will be discharged by:

(ii) Owner's duties under the contract will be discharged by:

Back 52

(i) impossibility

(ii) impossibility OR frustration of purpose
i.e., the contract to renovate his mansion became valueless.

Front 53

A remedy whereby a writing setting forth the agreement between the parties is changed by the court so that it conforms to the original intent of the parties is known as:

Back 53

reformation

Front 54

For a liquidated damages clause to be valid:

Back 54

•damages for contractual breach must have been difficult to estimate or ascertain at the time the contract was formed, and
•the amount agreed on must have been a reasonable forecast of compensatory damages in the case of breach.

*if liquidated damages clause is valid--can get liquidated damages even though no actual money (or pecuniary) damages have been suffered.

Front 55

“Benefit of the bargain” damages is another name for ___ damages.

Back 55

EXPECTATION damages

-i.e., those damages sufficient for the plaintiff to buy a substitute performance.

Front 56

____ damages put the plaintiff in the position she would have been in had the contract never been formed.

Back 56

Reliance

Front 57

____ damages consist of losses resulting from the breach that any reasonable person would have foreseen would occur from a breach at the time of entry into the contract.

Back 57

Consequential

Front 58

___ damages may be granted in an action for breach of contract for the sale of goods for expenses reasonably incurred by the buyer in inspection, receipt, transportation, care, and custody of goods rightfully rejected, and other expenses reasonably incident to the seller’s breach, and by the seller in storing, shipping, returning, and reselling the goods as a result of the buyer’s breach.

Back 58

Incidental

•In a sale of goods contract, only the buyer may recover consequential damages

Front 59

To recover full damages when an employer breaches an employment contract, the employee:

Back 59

Must make a reasonable effort to find a new position of the same kind in the same locale.

*a nonbreaching party cannot recover avoidable damages.

Front 60

In a construction contract, if the property owner breaches the contract after construction has started but before it is completed, the builder is entitled to:

Back 60

The profits he would have derived from the contract, plus any costs he has incurred.
-(aka, contract price minus cost of completion)

Front 61

A buyer’s right to recover undelivered, identified goods from a seller under certain circumstances is called ____.

Back 61

replevin

Front 62

If an assignee for value discovers that the assignor had previously assigned the same contract rights to another party, the assignee may sue the assignor for breach of warranty. Why?

Back 62

The assignor makes several implied warranties to the assignee, the breach of which gives rise to a cause of action. One of those warranties is the warranty that the assignor has the right to assign, which means he has made no prior assignment of that right.

Front 63

Does the Mail Box Rule Apply?

K states that the offer expires on July 1, if acceptance is not received by the offeror on or before that date?

Back 63

NO.

The offer specifically says acceptance not effective until received. Thus the offeror opted out of the mailbox rule.

Front 64

[Exception]

•the defense of "Unilateral Mistake" will allow the mistaken party to avoid the contract if:

Back 64

the nonmistaken party knew or should have known of the mistake.

-(the K is voidable)

note: the parties could reform the contract so long as the reform is put in WRITING. Which would remove the voidable issue.

*The general rule is that Unilateral Mistakes will not allow the mistaken party to avoid the contract.

Front 65

Where one party is a merchant and the other is a nonmerchant and the acceptance contains additional terms, the contract will only include the terms of the offer. Any additional terms will be ___ unless specifically accepted.

Back 65

ignored.


*UCC Battle of the Forms rule says the acceptance is VALID even if it contains additional terms.

Front 66

Does the Mail Box Rule Apply?

Offeree paid consideration to off error to hold the offer open for 30 days?

Back 66

NO.

*mailbox rule does NOT apply to "option contracts."
-under an option contract, acceptance is only upon RECEIPT.

Front 67

• to be an intended third-party beneficiary, the third party must be an intended beneficiary at the TIME the contract was MADE.

•an Assignment on the other hand is a contract that does NOT contemplate performance to a third party at the time the contract was made.

Back 67

•Intended 3PB = designated at time contract is made.

•Assignee = created after the original contract was made.

Front 68

in a performance contract with a condition precedent to payment under the contract, the obligor is relieved of his duty to perform if the condition is not met.

Back 68

obligor is excused of performance if condition precedent not met.

*equity rules may apply however

Front 69

What kind of contract is this?

-customer walks into a barbershop and sits down into a barbers chair and receives a haircut from the barber w/out saying award.

Back 69

Implied-in-fact Contract

*circumstances imply the customer will pay.

Front 70

a court will NOT grant specific performance if the subject matter of the contract has been transferred to:

Back 70

a bona fide purchaser for value

Front 71

What is an "executory contract"?

Back 71

• a K where all or part of the performance has yet fully performed--not yet fully "executed."



-even if one party has fully performed, but not the other party is classified as executory contract.