Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
128 Cards in this Set
- Front
- Back
|
When does Article 2 apply? |
The sale of goods |
|
|
What is the definition of goods? |
Moveable personal property |
|
|
What is the definition of an express contract? |
Contract created by the parties' words |
|
|
What is the definition of an implied-in-fact contract? |
Contract created by the parties' conduct |
|
|
What is the purpose of restitution or a quasi-contract? |
Protects against unjust enrichment whenever contract law yields an unfair result. |
|
|
What is a bilateral contract? |
When an offer can be accepted in any reasonable way |
|
|
What is a unilateral contract? |
When an offer can be accepted only by performance |
|
|
What is the definition of an offer? |
A manifestation of an intention to be bound |
|
|
What is the general rule regarding advertising? |
Generally an ad is not an offer, unless there is a quantity. |
|
|
What will happen if an offer does not include a price term? |
Court will read in a "reasonable" price except in a contract for the sale of real property. |
|
|
What is a requirement contract? |
When a person agrees to buy all of its requirements for a certain item from another person |
|
|
Are requirement contracts allowed under Article 2? |
Yes |
|
|
Can a buyer who has entered into a requirement contract suddenly increase his requirement dramatically? |
No, can't take seller by surprise with a sudden increase in need. |
|
|
When does an offer lapse? |
After a stated term or a reasonable time has passed |
|
|
How can an offer be revoked? |
1) Direct Revocation - The offeror indicates directly to the offeree that he has changed his mind about the deal. 2) Indirect Revocation - The offeror engages in conduct that indicates he's changed his mind and the offeree is aware of the conduct. |
|
|
What is a firm offer under Article 2? |
In a sale of goods, a merchant promises in a signed writing to keep an offer open, the offer is irrevocable. |
|
|
How long does a firm offer stay open for? |
Reasonable time not to exceed 3 months |
|
|
What is an option? |
A promise to keep the offer open that is paid for |
|
|
Can an offeror revoke an offer of an unilateral contract once performance has begun? |
On MBE - No In NY - Yes, until performance is completed |
|
|
When is a revocation effective? |
Once it is received by the offeree |
|
|
What happens to an offer once it is rejected? |
Terminates |
|
|
Does a counteroffer serve as a rejection? How about mere bargaining? |
Yes. No. |
|
|
What is a conditional acceptance? |
Not an acceptance at all, actually a counteroffer |
|
|
What is the mirror image rule? |
The acceptance must exactly mirror the offer.
Applies at common law, not UCC |
|
|
Does an offeree adding or changing a term in an acceptance of a sale of goods bar acceptance? |
Not under Article 2 |
|
|
What must be true for a offeree's term to be included in the resulting contract? |
1) Both parties must be merchants 2) There is no material change in the contract, and 3) No objection made within a reasonable time |
|
|
If a term is customary in the industry is adding it into contract a material change? |
No |
|
|
What happens to a revocable offer if either party dies? |
It is terminated |
|
|
Is there an obligation to finish performance if an offeree starts performance on a bilateral contract? |
Yes because starting performance is an acceptance |
|
|
Is there an obligation to complete performance if an offeree begins performance on a unilateral contract? |
No because beginning performance is not an acceptance |
|
|
Under the common law what is the result of improper performance (painting the house the wrong color). Under UCC? (shipping nonconforming goods without a note)? |
Considered to be a simultaneous acceptance and a breach of that contract |
|
|
Under article 2 what is the result of improper performance? |
Considered simultaneous acceptance and a breach of that contract unless the seller is sending the nonconforming goods as an accomodation only. |
|
|
Can an offeree's silence be considered acceptance? |
No |
|
|
What is the mailbox rule? |
Acceptance is effective when mailed |
|
|
Can the offeror overrule the mailbox rule through their offer? |
Yes |
|
|
What is the general rule regarding an incapacitated defendant to a contract action? |
An incapacitated defendant may disaffirm a contract |
|
|
How does implied affirmation of a contract by an incapacitated defendant work? |
Previously incapacitated defendant can be held to a contract they entered while incapacitated if they retained the benefit after regaining capacity |
|
|
What is the definition of consideration? |
Bargained-for legal detriment/benefit |
|
|
Is past consideration considered consideration on the MBE? |
No |
|
|
Is past consideration considered consideration in NY? |
Yes if it's expressly stated in a signed writing and can be proven |
|
|
What is the relevance of the adequacy of consideration? |
It isn't relevant as long as there was a bargain |
|
|
At common law is new consideration required to modify an existing contract? |
Yes |
|
|
Is new consideration needed to modify an existing contract under Article 2? |
No but you must show good faith |
|
|
Does partial payment of an undisputed debt preclude the creditor from recovering the remainder of the debt? |
No, because no consideration for the new contract |
|
|
Does partial payment of a disputed debt preclude the creditor from recovering the remainder of the debt? |
Yes because there was consideration for the modification |
|
|
What types of contracts fall under the purview of the statute of frauds? |
1) Transfer of interest in real property 2) Performance cannot be completed within a year 3) Sale of goods for $500 or more 4) Lease of goods for $1000 or more (NY ONLY) 5) Suretyship - promise to answer for the debt of another 6) Contract modification if underlying contract was under Statute of Frauds |
|
|
What must be in a writing to satisfy the statute of frauds for the sale of goods? |
A writing must include the quantity term and must be signed by the party to be bound. |
|
|
What must be in a writing to satisfy the statute of frauds for the lease of goods? |
Must state it is a lease; include the quantity, duration, and rental payments; and be signed by the defendant. |
|
|
What must be included in a writing to satisfy the statute of frauds for anything other than the transfer of goods? |
Must contain all material terms and be signed by the defendant |
|
|
Must a contract modification be in writing to satisfy the statute of frauds? |
Only if the contract, as modified, must be in writing |
|
|
What special transaction in New York must satisfy the Statute of Frauds? |
Assignment of an insurance policy, a promise to pay a discharged debt, an agreement to pay an finder's fee or broker's commission |
|
|
What is the part performance exception to the statute of frauds? |
Statute of frauds need not be satisfied if two of three facts are true in a real estate transaction - buyer in possession, buyer made some payment, buyer made improvements |
|
|
If a buyer accepts goods in a transaction that does not satisfy the statute of frauds is the contract enforceable? |
Yes, but only for the amount of goods accepted. |
|
|
What is the custom goods exception to the statute of frauds? |
Once the seller has made a substantial start on custom made goods and they are not suitable for sale to others that statute of frauds wil not bar enforcement |
|
|
What is the confirmatory memo exception to the statute of frauds? |
One party can use its own signed writingto satisfy the statute of frauds against the other party if: 1) both parties are merchants 2) writing claims agreement/has quantity 3) there is no written objection within 10 years |
|
|
What is the suretyship: "main purpose" exception? |
On MBE: No writing required if the suretyship is for a transaction is to benefit the person giving the surety On NY: No such exception |
|
|
What is the Parol Evidence Rule? |
A rule of evidence keeps out evidence of a prior or contemporaneous agreement (either oral or written) that contradicts a later writing. |
|
|
What are the exceptions to the parol evidence rule? |
1) Correct a clerical error 2) Establish a defense against form 3) Interpret a vague or ambiguous term 4) Add to a partially-integrated writing |
|
|
What is the effect of a merger clause? |
Ensures that the writing is complete |
|
|
What is the parol evidence's role in actions taken after an agreement is reduced to writing? |
Nothing. |
|
|
What 3 types of conduct can be used to determine what was agreed to under the contract? |
1) Course of Performance - what the parties have done under this agreement - best evidence of what parties intended 2) Course of dealing - what the parties did under prior contracts with eachother 3) Usage of trade - what others do in the trade under similar contracts |
|
|
What is an express warranty? |
Statement of fact, promises, descriptions of the good, and the use of sample or model - seller is liable for breach of an express warranty - must have been an basis of the bargain |
|
|
What constitutes a basis of the bargain? |
If the buyer could have relied upon the express warranty |
|
|
What is an implied warrant of merchantibility? |
The goods are fit for their ordinary purpose - seller must be a merchant who deals in goods of the kind.
Can only be waived by mentioning 'merchantability' or if the goods are sold 'as is.' |
|
|
What is an implied warranty of fitness for the buyer's particular purpose? |
The goods are fit for the buyer's particular purpose - seller must know the buyer's special use ofr the goods and the buyer msut be relying on the seller to pick out goods suitable for that use |
|
|
Can a seller disclaim implied warranties? |
Yes |
|
|
Can a seller disclaim express warranties? |
No |
|
|
What is the effect of "as is" or "with all faults" language? |
All implied warranties are disclaimed |
|
|
Can a seller limit buyer's remedies for any breach of warranty? |
Yes but not if the limitation is unconscionable |
|
|
What is the hierarchy for determining who bears the risk of loss? |
1) Agreement - agreement of party controls 2) Breach - breaching party bears risk of loss 3) Delivery by Common Carrier - ROL shifts to buyer once seller completes its delivery obligations 4) Non- carrier cases - depends on whether seller is a merchant |
|
|
What is a shipment contract? |
Seller must get the goods to a common carrier, make delivery arrangements, and notify the buyer |
|
|
What is a destination contract? |
Seller must get the goods to a specific destination |
|
|
What is the effect of FOB language? |
Risk of loss shifts to the buyer at the place listed after the FOB |
|
|
If the FOB is listed as the place where the seller is located, what do you have? |
A shipment contract |
|
|
If the FOB is listed as anywhere else that is not where the seller is located, what do you have? |
Destination contract |
|
|
When you have a non-carrier case and the seller is a merchant what is the rule for risk of loss shifting? |
Seller bears ROL until buyer takes possession of the goods |
|
|
When you have a non-carrier case and the seller is a non-merchant what is the rule for risk of loss shifting? |
Risk of loss shifts to the buyer once they sell makes the goods available to the buyer |
|
|
What is the general rule about the risk of loss in the lease of goods? |
Risk of Loss is on the lessor |
|
|
What is the perfect tender rule under article 2? |
If the goods tendered are not perfect, buyer may reject the goods. |
|
|
What is the option to cure? |
If a seller fails to make perfect tender and time to perform has not expired then seller has the option to cure the tender. |
|
|
If the time to perform has lapsed is there an option to cure? |
No, unless prior dealings have shown that the buyer was willing to accept imperfect tender |
|
|
Does the perfect tender rule apply to installment contracts? |
No, buyer may only reject if the imperfect tender leads to substantial impairment |
|
|
What is an implied acceptance of goods? |
When buyer keeps goods after having an opportunity to inspect them |
|
|
What happens to a buyer's right to refuse when a buyer accepts a good? |
Too late for the buyer to reject them |
|
|
What is the exception to general rule prohibiting the buyer from revoking acceptance? |
If the non-conformity substantially imparis the value of the goods ant the defect was difficult to discover |
|
|
What are the consequences of rejection of goods? |
1) Return - buyer can return goods at seller's expense 2) Refund - buyer can get back any money buyer has paid for the goods 3) Damages - buyer can get damages from seller for breach of contract |
|
|
Does performance have to be perfect under the common law? |
No, only substantial performance is required |
|
|
What is the general rule about what the buyer can do if the seller's performance is not perfect? |
Pretty much has free reign - 1) Could reject all the goods 2) Could accept all the goods 3) Could accept some and reject others - Buyer entitled to damages in all 3 |
|
|
Under the common law what kind of a breach by another party provides an excuse for another party's breach? |
Only a material breach |
|
|
Can a party recover damages for any type of breach of contract at common law? |
Yes |
|
|
Is an anticipatory repudiation a material breach? |
Yes |
|
|
What is an anticipatory repudiation? |
When one party revokes the agreement after such time as the other party has began performance |
|
|
Can a party revoke an anticipatory repudiation? |
Yes as long as the other party has not relied upon it |
|
|
What can a person do if the other party performs an anticipatory repudiation? |
Stop performance and sue for damages as long as the person was "ready, willing and able to perform." |
|
|
When can a party require adequate assurance from another party? |
When the first party has reasonable grounds for being insecure about the second party's performance |
|
|
What happens if a party refuses to give adequate assurance? |
The other party can consider that to be an anticipatory breach. |
|
|
What is a recission? |
An agreement to cancel the contract |
|
|
In order for a recission to be effective, what must be true? |
Both parties must have some performance left |
|
|
What is a modification? |
An agreement to replace an existing contract with a new one. Modification takes effect immediately. |
|
|
What is accord and satisfaction? |
An accord is an agreement to accept performance in future satsifaction of an existing duty; satisfaction is performance of the accord. The existing duty is extinguished only when the accord is satisfief. |
|
|
What is a novation? |
An agreement to substitute a new party for an existing one |
|
|
Does an increase in cost of the seller's performance excuse non-performance? |
On MBE - No On NYBE - May be excused, look at: 1) Dollar amount 2) Percentage increase |
|
|
Does failure of an express condition excuse non-performance? |
Yes |
|
|
What standard is used to determine if satisfaction clauses have been met? |
Reasonable person standard - unless for art then it is a subjective standard |
|
|
When is specific performance available? |
Only when monetary damages are inadequate to compensate injured party - depends on nature of contract 1) Real property - specific performance is usual remedy 2) Sale of goods - only available if goods are unique or there are "other proper circumstances" 3) Service contracts - specific performance not available but injunctive relief might be |
|
|
In general does a seller have right to reclaim goods if he was not paid? |
No - but there is an exception when the buyer was insolvent when received goods and seller makes a demand within 10 days after buyer received goods |
|
|
Are punitive damages awarded in breach of contract cases? |
No |
|
|
When are liquidated damages clauses upheld? |
When damages were difficult to estimate at time of contract and they are a reasonable forecast of probable damages, but cannot operate as a penalty |
|
|
What are expectation damages? |
Damages that put the injured party in as good a position as full performance |
|
|
What are the three options for buyer's damages under article 2? |
1) Cover damages: cover price- contract price if buyer covers in good faith 2) Market damages: market price - contract price if buyer doesn't cover in good faith or doesn't cover at all 3) Loss in value: value as promised - value delivered if buyer keeps non-conforming goods |
|
|
What are the four options for seller's damages? |
1) resale damages: contract price - resale price if seller resells in good faith 2) Market damages: contract price - market price if seller does not resell in good faith or doesn't resell at all 3) Lost profit - if seller is a lost volume dealer 4) Contract price: If seller can't resell the goods |
|
|
What are incidental damages? |
Cost to the injured party of transporting/caring for goods after a breach and of arranging a substitute transaction |
|
|
What are consequential damages? |
Damages special to this plaintiff that were reasonably foreseeable to the breaching party at the time of the contract |
|
|
Can an injured party recover avoidable damages? |
No |
|
|
Third Party Beneficiary |
A person who is not a party to a contract, but has rights because the contract was intended to benefit them |
|
|
Does an intended beneficiary have legal rights? |
Yes |
|
|
Does an incidental beneficiary have legal rights? |
No |
|
|
Donee beneficiary |
A person who is getting the performance as a gift |
|
|
Creditor beneficiary |
A person who is getting the performance to repay a debt |
|
|
What is the general rule regarding recission and modification of a contract with a third party beneficiary? |
Can rescind or modify until the TPB's rights have veted |
|
|
When does a TPB's rights vest? |
When the TPB learns fo the agreement and relies upon it |
|
|
Is the promisor liable to the third-party beneficiary? |
Yes |
|
|
Is a promisee liable to a donee beneficiary? |
No |
|
|
Is a promisee liable to a creditor beneficiary? |
Yes |
|
|
What is the general rule regarding delegation of contractual duties? |
Contractual duties may be delegated without the consent of the person to whom performance is owed |
|
|
What are the exceptions to the general rule regarding delegation |
1) Contract language controls: if prohibits delegation or assignment then it is prohibited 2) Special skill or reputation: if contracted with because of special skill or reputation then prohibited from delegating |
|
|
Does a delegating party remain liable to the promisee? |
Yes |
|
|
Is a delegate liable to the original promisee for a breach? |
Only if delegate received some sort of consideration |
