Contracts & Sales Essay Workshop – Core Rule Flashcards

These question-and-answer flashcards highlight the essential rules, doctrines, and exam tips from the Contracts & Sales Essay Workshop, covering applicable law, formation, defenses, terms, performance, third-party issues, breach, and remedies under both common law and the UCC.

What law governs contracts primarily for the sale of goods?

Article 2 of the Uniform Commercial Code (UCC).

Under the common law, what governs contracts primarily for services?

The traditional common-law rules.

In a mixed goods/services contract, how is the governing law chosen?

By the “predominant purpose” of the transaction—whichever aspect (goods or services) dominates controls.

Who qualifies as a merchant under the UCC?

One who regularly deals in the kind of goods, holds out as having special knowledge or skill about them, or a businessperson acting in a commercial capacity.

What are the three essential elements of an offer at common law?

A promise, definite terms (parties, subject-matter, price, quantity), and communication to the offeree.

What additional term can be omitted under the UCC and still have an offer?

Price—the court will gap-fill if the parties intended to contract.

When is an advertisement treated as an offer?

Only when it is specific and limits who may accept (e.g., first come, first served).

How may a bilateral contract be accepted?

By a return promise or by beginning performance.

How may a unilateral contract be accepted?

Only by complete performance.

What makes an offer irrevocable at common law?

A signed option contract supported by consideration.

What makes an offer irrevocable under the UCC firm-offer rule?

A merchant’s signed, written assurance to keep the offer open for up to 90 days—no consideration required.

When does a revocation become effective?

Upon receipt by the offeree.

What is constructive revocation?

When the offeree learns from a reliable source that the offeror took definite action inconsistent with keeping the offer open.

What is the mailbox rule for acceptances?

An acceptance is effective when placed in the mail, unless it is an option or firm offer (then it’s effective on receipt).

Under the mailbox rule, what happens if a rejection is mailed first and an acceptance later?

Whichever communication is received first controls.

What is required for valid consideration?

A bargained-for legal detriment on both sides.

Does a court examine the adequacy of consideration?

No—mere peppercorn is enough.

What is the pre-existing duty rule?

A promise to do what one is already legally obligated to do is not consideration.

Is past consideration sufficient?

No—past acts are not bargained-for, subject to the modern “material benefit” rule in some jurisdictions.

When is a promise enforceable under promissory estoppel?

If the promisor should foresee reliance, reliance actually occurs, and injustice can be avoided only by enforcement.

Name the two types of mutual-mistake remedies.

Reformation (preferred) and rescission (if reformation unavailable).

When may a unilateral mistake allow rescission?

If enforcement would be unconscionable or the non-mistaken party caused or failed to disclose the mistake and there’s no serious prejudice.

Define fraudulent misrepresentation in contract law.

An intentional misstatement or concealment of fact on which the other party justifiably relies.

What is undue influence?

Unfair persuasion of a party who is susceptible due to relationship or circumstances.

What constitutes duress rendering a contract voidable?

Improper threat leaving the victim no reasonable alternative (other than threats of physical harm, which make it void).

List the five categories of contracts within the Statute of Frauds.

(1) Marriage promises, (2) suretyships, (3) contracts impossible to perform within one year, (4) goods ≥ $500, (5) interests in real property.

What are the SOF writing requirements?

A writing signed by the party to be charged that reasonably identifies the subject matter and essential terms.

What UCC exception lets merchants enforce an unsigned writing?

The 10-day confirmatory memo rule—both parties are merchants, confirmation, which is sufficient against one party and has reason to know the content, is sent and not objected to within 10 days.

How many acts satisfy the real-property SOF part-performance exception?

Any two of: payment, possession, or substantial improvements.

What is procedural unconscionability?

Unfairness in the bargaining process (e.g., hidden terms, unequal bargaining power).

What is substantive unconscionability?

An oppressive or shockingly one-sided term.

Define an express warranty under UCC Article 2.

Any affirmation of fact, promise, description or model that forms the basis of the bargain.

How is the implied warranty of merchantability created?

Automatically whenever the seller is a merchant of goods of that kind.

What disclaims the implied warranty of merchantability?

A conspicuous writing saying “as is” or an oral disclaimer using the word “merchantability.”

What creates the implied warranty of fitness for a particular purpose?

Seller knows buyer’s particular purpose and that buyer relies on seller’s skill in selecting goods.

Under common law, when is a contract modification enforceable?

Only when supported by new consideration and, if SOF applies, put in writing.

Under the UCC, is consideration required for modification?

No, but the change must be made in good faith, and SOF may require a signed writing.

What is an accord?

An agreement to accept a different performance in satisfaction of an existing duty.

What is satisfaction (in accord and satisfaction)?

The actual completion of the agreed-upon different performance, discharging both the accord and original duty.

What does the parol-evidence rule bar?

Prior or contemporaneous extrinsic evidence that contradicts a final writing.

Name two major exceptions to the parol-evidence rule.

Evidence of (1) a separate collateral agreement and (2) a condition precedent to contract effectiveness (also ambiguity, fraud, etc.).

What performance standard applies to common-law promises?

Substantial performance.

What performance standard applies under the UCC perfect-tender rule?

Strict compliance—goods and delivery must conform exactly or the buyer may reject.

How is rejection limited in a UCC installment contract?

Buyer may reject only a shipment that substantially impairs its value and cannot be cured.

What are the two main types of contract conditions by timing?

Conditions precedent (trigger duties) and conditions subsequent (excuse duties on occurrence).

How can an express condition be waived?

By words, conduct, or failure to insist, if reliance occurs (estoppel).

Define impracticability.

An unforeseeable event makes performance extremely difficult or expensive, and the non-occurrence was a basic assumption.

Define impossibility.

An unexpected event makes performance objectively impossible (no one could perform).

Define frustration of purpose.

An event destroys the contract’s principal purpose, and non-occurrence was a basic assumption.

Who is an intended third-party beneficiary?

One the original parties meant to benefit, who acquires rights once vested.

What is required for a valid assignment of rights?

Present intent to transfer the right—generally permitted unless it materially increases obligor’s risk/duty or materially reduces the obligor’s chance of obtaining performance.

What releases the original obligor after a delegation?

A novation—agreement of all parties to substitute a new obligor.

What constitutes anticipatory repudiation at common law?

A clear and unequivocal statement or act indicating the promisor will not perform when due.

Until when may a repudiating party retract its anticipatory breach at common law?

Until the other party (1) relies, (2) accepts the repudiation, or (3) sues.

Under UCC § 2-609, when may a party demand adequate assurances?

When it has reasonable grounds for insecurity about the other’s performance.

How long does the UCC give the other side to provide assurances?

A reasonable time, not exceeding 30 days.

What is a material breach?

A breach that deprives the nonbreaching party of the substantial benefit of the bargain—excuses that party’s performance.

What damages put the nonbreaching party in as good a position as performance would have?

Expectation damages.

When will a court award diminution-in-value instead of cost-to-complete?

If cost-to-complete is economically wasteful and the breach is not willful.

What three elements must consequential damages meet?

Foreseeability, causation, and reasonable certainty.

What are reliance damages?

Expenses reasonably incurred in reliance on the contract, putting the claimant as if the contract had never been made.

What is the duty to mitigate damages?

The nonbreaching party must take reasonable steps to avoid unnecessary losses; failure reduces recovery.

When may a breaching party recover restitution?

For the value conferred on the other party minus that party’s damages, if the other party is unjustly enriched.

List the five elements required for specific performance.

(1) Valid contract, (2) definite terms, (3) conditions satisfied, (4) legal remedy inadequate, (5) feasibility of enforcement.

Name two equitable defenses to specific performance.

Laches and unclean hands.

What damages may a UCC buyer recover after seller’s non-delivery?

Cover damages (cover price – contract price) or market damages (market price – contract price), plus incidental and consequential damages.

When can a UCC buyer revoke acceptance?

If a defect substantially impairs value and there is a reasonable belief that the seller would cure the defect, but the seller has failed to do so, or acceptance was based on difficulty of nonconformity’s discovery or the seller assured conformity.

What are a seller’s options after buyer’s wrongful rejection?

(1) Contract-market damages, (2) resell and sue for loss, or (3) recover the price if unable to resell.

Does the UCC allow disclaimers that conflict with express warranties?

No, conflicting disclaimers are ignored.

What is the "knock-out" rule under the UCC battle of the forms?

Differing terms in merchants’ forms cancel each other and gaps are filled by UCC defaults.

Under common law, what happens to an offer when the offeror dies before acceptance?

The offer terminates automatically (unless it was an option supported by consideration).

What is an illusory promise?

A promise that leaves performance entirely within the promisor’s discretion—no consideration.

What is required for a valid gift promise to become enforceable?

Consideration or a valid substitute like promissory estoppel.

How can a contract be modified orally under the UCC despite a signed "no-oral-modification" clause?

It generally cannot—the UCC enforces clauses prohibiting oral modification unless waived.

What is required to disclaim the implied warranty of fitness?

A conspicuous written disclaimer, often using "as is" language.

When is silence acceptance?

Only when offeree has reason to know silence constitutes acceptance, or takes benefit with opportunity to reject.

What are incidental damages under the UCC?

Expenses reasonably incurred in inspection, receipt, transportation, care, or custody of goods rightfully rejected.

What is the effect of a counteroffer at common law?

It rejects the original offer and creates a new offer.

Can parole evidence be used to show fraud in the inducement?

Yes—the PER does not bar evidence offered to establish a formation defense such as fraud.

When does a condition precedent need only substantial performance?

Never—express conditions require strict compliance; implied conditions may require substantial performance.

What is the effect of a material alteration in the UCC battle of the forms?

If the addition materially alters, it does not become part of the contract even between merchants.

How can a party prove commercial impracticability under the UCC?

By showing an unforeseen contingency that fundamentally alters the nature of the performance (e.g., severe shortage) and good-faith attempts to allocate supply.

What remedy is typically awarded for breach of a land sale contract?

Specific performance, because real property is considered unique.

What is quasi-contract?

An equitable doctrine allowing restitution to prevent unjust enrichment when no enforceable contract exists.

How is the "reasonable time" for acceptance measured when an offer is silent?

By what a reasonable person in the offeree’s position would consider sufficient under the circumstances.

What is the effect of a lapse of time on an offer?

The offer terminates after a reasonable time or any time stated in the offer.

Under the UCC, what is the default place of delivery if the contract is silent?

The seller’s place of business.

When may a buyer in an installment contract cancel the whole contract?

Only if a nonconformity in a shipment substantially impairs the value of the entire contract.

What is the "partial performance" exception to the one-year SOF category?

Full performance by one party removes the contract from the SOF, making it enforceable.

What damages are usually awarded in promissory estoppel cases?

Reliance damages rather than full expectation.

Can moral consideration alone enforce a promise?

Modern trend sometimes enforces a promise for a prior material benefit, unless the benefit was intended as a gift.

When does a seller have a right to cure after a buyer’s rejection?

If time to perform remains or the seller reasonably believed the goods would be accepted.

What is an “integration” clause (merger clause)?

A clause stating the writing is the complete and final agreement of the parties, suggesting total integration.

What is the standard remedy for a minor (non-material) breach?

The nonbreaching party must continue performance but may sue for damages.

What is required for an effective assignment of contract rights?

Present intent to transfer; no consideration needed, but revocable if gratuitous unless relied upon.

What happens if an assignor assigns the same right twice?

The first assignment generally prevails, unless the second assignee is a bona fide purchaser for value without notice and obtains payment or a judgment first.

Why will courts not order specific performance of personal service contracts?

Because forced labor is infeasible and raises Thirteenth Amendment concerns.