Regulation Exam

One promise given in exchange for performance

A promise is exchanged for a promise

Duties still remain to be performed under the contract

All of the duties under the contract have been performed

• Real Estate
• Insurance
• Services
• Employment

• An agreement made up of an offer and an acceptance
• An exchange of consideration (something of legal value)
• A lack of defenses

• Was there a manifestation of intent to contract (advertisements are not considered offers)?
• Was there definitieness and certainty in the essential terms?
• Was there communication of the above to the offeree (no knowledge, no acceptance e.g. reward for finding dog)?

• UCC: only needs quantity
• RISE: (1) identity of the offeree and the subject matter, (2) price to be paid, (3) time of performance, (4) quantity involved, and (5) nature of the work to be performed

• Revocation by the offeror (options and merchant firm offers are irrevocable)
• Rejection by the offeree (includes counteroffer and silence, but not a mere inquiry)
• By operation of law (includes death/incompetency, destruction of subject matter, illegality)

• Only the offeree can accept
• Can be any reasonable method; could be specified in contract
• RISE req's the mirror image rule (any changes result in a counteroffer)
• Effective on dispatch (unless opted out)

• Should constitute either a detriment to the promisee or a benefit to the promisor
• Should be a bargained-for exchange (a promise/act induced a promise/act)

Exception to the requirement of consideration; a promise made by one party and reasonably and detrimentally relied upon by another can be enforced without consideration

• M: Misrepresentation of material fact by the defrauding party
• A: Actual and justifiable reliance by the victim on the misrepresentation
• I: The defrauding intended to induce the victim to rely on the misrepresentation
• D: Damages
• S: Scienter (knew it was false or recklessly disregarded the truth)

• In the execution = Void
• In the inducement = Voidable

Fraud without scienter (essentially MAID)

• Harm threatened is physical force = Void
• Harm threatened is economic or social = Voidable

Takes advantage of a relationship by abusing a position of trust or confidence (e.g. a spouse, trustee, guardian, attorney, etc.)

Both parties are mistaken as to a material fact regarding the contract

Generally not a defense unless as to a material fact and the other party knew or should have known of the mistake (e.g. an extremely low bid)

Results in the contract becoming void

• License for protection of the public: failure means void contract
• License to raise revenue: failure means contract is still enforceable

• The promise must be reasonably needed to protect a legitimate business interest
• The promise must be reasonable in duration
• The promise must be reasonable as to distance

Generally able to disaffirm contracts (unless for food, clothing or shelter) and the minor can only be bound upon reaching the age of majority and ratifying the contract

Generally this makes the contract voidable, but if the party has been adjudicated mentally incompentent, the contract becomes void

Generally 4-6 years from date of breach

• M: Contracts where the consideration is marriage
• Y: Contracts which by their terms cannot be performed within the year
• L: Contracts involving interests in land
• E: Contracts by executors or similar reps to pay estate debts out of personal funds
• G: Contracts for a sale of goods for $500 or more
• S: Contracts to a surety

Accord is an agreement to substitute one contract for another and satisfaction is the execution of the accord

Substitution of a new party or an old party in an existing contract; all parties must agree to the release

If one party prevents another from performing their duties, the nonbreaching party is excused from performance

Prohibits a party ina lawsuit involving a fully integrated written contract from introducing evidence at trial of oral or written statements made prior to the written contract or oral statements made contemporaneously with the written contract that seek to vary the terms of the written contract

• Subsequent modifications to the contract (after = admissable)
• Evidence to explain ambiguous terms
• Evidence to show fraud, duress or mistake

For a material breach, nonbreaching party is discharged; for a minor breach, nonbreaching party is only entitled to damages

• Treat the repudiation as a breach and immediately sue for damages
• Ignore the repudiation, await the time for performance and then sue if they have not performed
• Cancel the contract

Awards the nonbreaching party enough money to obtain substitute performance; also may collect consequential damages

Court order that a breaching party perform or face contempt charges for when interests in land or unique personal property are involved (get this OR compensatory damages)

Specification as to what damages will result if there is a breach; amount must be reasonable in relation to the actual harm done and not a penalty

Only available when fraud takes place

Cancels the contract and restores the parties to their former postitions; not available under RISE when the contract has been substantially performed (UCC req's perfect tender, however)

• Consequential damages are only awardable for damages that a party could forsee would result from a breach
• Nonbreaching party cannot recover for damages he did not attempt to mitigate

Party that privity has been extended to; only includes intended beneficiaries (one named or specifically described in the contact)

Names for an intended third party beneficiary

Assignment gives contract rights to a third party, and delegation gives contractual duties to a third party

• When the assignment will change the obigor's risk (i.e. insurance contracts) or the delegated duty involves specialized personal services (i.e. an audit)
• Offers (but options can be)

Both parties unless there is a novation

A party who deals in goods of the kind sold or who has special knowledge regarding the goods being sold

UCC imposes an obligation of good faith on both parties to a sales contract

• The seller must be a merchant
• The offer must be in writing and signed by the merchant
• The offer must give assurances it will be kept open for a certain time (not longer than three months)

No

This constitutes both an acceptance and a breach unless there is notice of accomodation

• Output contract: buyer agrees to buy the entire ouput of a seller's facotry for a stated period of time
• Requirements contract: seller agrees to supply a buyer with all required goods for a stated period of time

Enforceable even without consideration as long as sought in good faith

4 years

• S: Specially manufactured goods
• W: Merchant sends another merchant written confirmation of a contract (as long as no objection within ten days)
• A: Admitted in court
• P: Contracts that have been performed to the extent that performance has been accepted

Identification

For a nonmerchant, risk passes on tender of sale. For a merchant, risk passes on actual delivery

• Shipment contract passes on delivery to carrier (FAS, CIF, FOB-seller)
• Destination contract passes at destination (FOB-buyer)

Seller, seller, buyer until goods are completely returned

As soon as the seller identifies the goods to the contract

As the parties agree; the default is on delivery

The title revests with the seller

The goods will conform to some statement of fact made by the seller in the contract that played some part in the buyer's decision to buy. They are very difficult to disclaim

Implied in every contract is the warranty that the seller has good title and the right to transfer that title. It has to be disclaimed by specific language or by circumstances

In every sale by a merchant it is implied that the goods are fit for ordinary purposes. This can be disclaimed by statement of "as is" or by using the word merchantability

Arises when the buyer relies on the seller to select goods suitable for the buyer's particular purpose which the seller is made aware of.  It can be disclaimed in an "as is" sale or by a conspicuous disclaimer

• Seller owed a duty of care
• Seller breached the duty by failing to use due care
• The plaintiff suffered damages
• The damages were caused by the seller's negligence

• The product was defective when it left the seller's hands
• The defect caused the plaintiff's injury
• The defect made the product unreasonably dangerous
• The seller was a merchant
• The product reached the user without substantial change in condition

If one party has reasonable grounds that the other will not perform when required, the party may demand assurance of performance and failure to give this assurance in a reasonable amount of time is considered anticipatory repudiation

• Cancel and sue for damages
• Withhold delivery and stop goods in transit
• Resell and sue for damages
• Regain full contract price if the goods cannot be resold for any price
• Liquidated damages

• Right to reject for any noncomformity (b/c of perfect tender rule)
• Right to cancel and sue for damages
• Right to specific performance if the goods are unique and the buyer cannot reasonably cover
• Right to replevin if goods are identified and the buyer cannot reasonably cover
• On seller's insolvency, buyer can reclaim goods if they have paid and goods are identified

• Entrusting: owner entrusts goods to a merchant and merchant sells goods in ordinary course of business
• Voidable title: owner of goods is defrauded into giving a thief title and the thief sells the goods