Contracts 2

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Contracts 2
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2011-08-11 03:02:20
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  1. What is the effect of a promise vs. a condition subsequent?
    Promise: pay damages for breach, condition precedent, then the contract clauses is nullified.
  2. What are the general guidelines for promises and conditions, determining which it is?
    If it's ambiguious, then it's a promise. Courts abhor a forfeiture, contracts are construed against the drafter.
  3. What is a forfeiture?
    The resulting denial of compensation where the non occurrance of a condition of na obligor's duty causes the oglibee to lose his roght to the agreed exchange after he has relied substantially on the expectation of that exchange
  4. What are the condition words and promise words?
    Condition words: shall not be payable until, shall be a condition precendent, provided that, on condition that.

    Promise words: Promise: shall not, shall be.
  5. What is the difference between conditions subsequent and precedent?
    Precedent triggers a duty, subsequent terminates a duty.
  6. Explain the burdens in conditions subsequent and precedent
    Burden is on the party who wants to change the status of performance. Person who wants it to start in precedent, person who wants it to stop in subsequent.
  7. What is a satisfaction clause?
    A condition precedent that triggers a duty, it means that you must be satisfied with your compensation.
  8. Is a pay when paid clause a promise or a condition?
    Promise, just looks like a condition.
  9. Is satisfaction a subjective or objective standard?
    Can be either, depending on the contract. Objective is reasonable businessman/person, subjective is your own opinion, but must use good faith.
  10. What are the types of conditions?
    • Express: words of the contract
    • implied: conduct or context gives rise to condition
    • Constructive: Legal fiction of quasi contract.
  11. What is and what are the rules of constructive condition of exchange
    Constructive condtion of exchange is the court deciding who must go first in the contract. They arise out of dependent promises. As to who must go first, the first rule is that when exchanges can be done simultaneously, they should be. The second rule is that the condition that takes longer to perform is the one that must occur first.
  12. What is tender?
    an unconditional offer to perform coupled with the demonstrated ability to carry out the offer of performance and procude the subject matter of the tender. Manifestation of ready willing and able to perform.
  13. What is the substantial performance test?
    Purpose to be served, desire to be gratified, excuse for deviation, creulty of enforced adherence. No willfil transgressors.
  14. What is the issue with the magnitude of a breach?
    If it's a material breach, then the contract can be treated as a total breach and be terminated. If it's a minor or partial breach, the contract can't be terminated, only a case for damages brought later.
  15. What is the divisiblity of a contract?
    A contract is divisilbe if it can be divided into 10 corresponding pairs of part performance in such a way that the court could treat each pair as it's own trasnaction.
  16. What are the UCC TARR rules?
    Delivery must be tendered in single delivery, goods tendedred must conform to the contract in every respect, buyer has right to reject nonconforming commercial units, seller has right to cure if he seasonably notifies or delivered early, Acceptance of goods is taking them after a reasonable opportunity to inspect and fails to reject them. Recovation an occur only after inspection if nondiscovery of defect was induced by difficulty of discovery or seller assurances.
  17. What is the measure of an express condition? Of a constructive condition?
    • Express: literal performance
    • Constructive: substantial performance. Do test. If yes, minor breach, if no, material breach.
  18. What are the excuse doctrines?
    • Prevention: Other party prevents you from performing condition wrongfully/excess of legal rights.
    • Disproportiate forfeiture:must not be material part of the contract.
    • Public Policy: If ondition is too harsh, against public policy.
    • Waiver :inteiontally relinquishing a condition of the other, only immaterial conditions.
    • and Estoppel: Your conduct caused the other party to rely on your not enforcing the condition, material or non material
    • Election: Waiver + time. Too late to reinstate condition, because non-occurance of condition has already happened.
    • Impossibility:Unexpected or unforseen event makes performance impossible. If material, discharged, if not material, rest of contract remains in effect.
  19. Explain anticipatory repudiation.
    Excuses the condition of being ready, willing, and able to perform, occurs when the other party has given you very good reason to believe that they won't perform. May sue right way, don't have to wait until law day.
  20. Explain prospective inability to perform
    You have reason to believe that other party won't be able to perform, excuses readiness to tender, can't sue right away, but may ask for reasonable assurances. If they aren't given, then you have anticipatory repudiation.
  21. Is insolvency AR or PIP?
    PIP, because you might recover from it.
  22. Does UCC allow assurances?
    Yes, when reasonable grounds for insecutity arises, you may demand in writing adequate assurances of performance, and may suspend your own performance until you get them. Other party has 30 days to assur. Acceptance of improperty delivery does not remove this right ot demand assurances.
  23. What is a novation
    a substituted contract that includes a party one who has neither the obligor or the obligee of the origional duty. Substitionl by mutla agreement of one debot for another whereby the old debt is extinguished. The origional debtee must actually agree.
  24. Who are the parties in a third party beneficiary?
    The promisor: person doing the promise, promisee is person promise was made to, third party beneficary is person being benefited.
  25. What are the restatement I beneficiaries?
    • Donee: didn't have an interest before
    • creditor: had a financial interest before, owed something
    • incidental: just happen to benefit from transaction, not for your benefit.
  26. what are the restatement II beneficiaries?
    Intended and incidental
  27. What makes a beneficary intended?
    either the promise will fulfill an obligation to the TPB, or it was intended for the purpose of benefiting the TPB.
  28. Explain assignment
    Someone giving someone's contract rights to another. Creates an obligor, who has to do something, assignor, who has the right to receive whatever obligor did, and asignee, who now has those receiving rights.
  29. Explain delegation:
    Delegation to another of a contractual duty you had. Creates an obligee, who the duty is owed to, and delegator, who had the duty, and a delegatee, who has it now.
  30. What are the two ways to take a mortgage?
    Assume the mortgage, promises to pay the mortgate, creates a third party beneficiary in the mortgage. Subject to the mortgage, buyer does not promise to pay the mortgage, only the person. No liability for non payment.
  31. Can two parties modify a TPB agreement?
    Yes, unless A. contract says otherwise, B. materially changed position in reliance or brought a suit, this creates vesting.
  32. When is assignment forbidden?
    When the promise reuires a particular person with special skills, personal services contract.
  33. What is a non-delegable duty?
    A duty that public policy dictates you can't make someone else responsible for, e.g. getting your car fixed.
  34. what can you always assign/delegate
    the payment/receipt of money.
  35. Under the UCC, when can you assign?
    Always, except when the there is a material change of the burden, that impairs chance of return performance.
  36. When is a gratiutious assignment revocable? irrecovable?
    Recovable: always, except when exception applies, automatically revoked at death. Irrevocable if 1. parties agree and it's a signed writing
  37. Are anti assignment clauses effective?
    Generally not, they are strictly construed. Never if payment and services have been rendered, never money, generally ineffecgtive unless obligor has legitimate interest in non-assign ability.
  38. What is a setoff? A recoupment?
    A set off is when damages arise nrelated to the contract. Recoupment is when damages arise from the same contract transaction. In setoff, can't make a assignee liable after receiving notice, in recoupment, you can.
  39. what are teh three warranties made by assignor?
    Won't defeat or impair the value of the assignment, the right actually exists, the writing is genuine.
  40. what is a misrepresentation? what are the specific times you can't misrepresent?
    assertion of a present fact not in accord with the truth, can't be a misrepresention of opinion, unless there is a fudiciary duty, some trick has been employed, or the parties are not deatling at arms length. Also, when the parties don't have equal opportunity to discover the truth.
  41. How is fraud different from misrepresentation?
    fraud is a knowing misrepresentaiton, mere misreprentation can be innocent.
  42. What is concealment?
    an act of knowingly or intentionally preventing another from learning of a fact that she otherwise would have learned.
  43. What is silent fraud?
    When one party learns an assertion is false, and does not tell the other party, when they know the other party believes it to be true.
  44. Explain the culpability index.
    mustal mistake is a recission only if it's basic to the transaction. Misrepresentaiton is recission only when it's a material fact. Intentioanl misrepresentitation is recission when it's any fact, not mere puffery
  45. What are the elements of fraud?
    • Misrepesentation/concealment silence
    • Intentional or of a material fact
    • reliance occured
    • reliance was justified.
  46. What is duress?
    Wrongful act or threat that causes a person to take action when they had no reasonable alternative.
  47. What is undue influence?
    A combination of one parties weakness, due to age, illness, etc. and another party's superior strength.
  48. What happens with a unilateral mistake?
    If no one has relied on the mistake, then y ou can get relief. If it has been relied on, then no relief.
  49. What is a mistake?
    an affirmative belief held at the time of the contract, w3hich goes to the nature of the contract, which isn't true.
  50. What is illegality in contracts?
    violation of a law that makes the contract illegal, or a contract to do an illegal act. Different is it's illegal due to lack of license, can still get paid in that circumstance.
  51. What is incapacity?
    A person incapable of entering into a contract, e.g. a minor, mentally ill, etc.
  52. When are non compete clauses valid
    when a person has a special skill. Must be reasonable in both time and space. If not, gets blue penciled.
  53. What may minors do with contracts?
    they may disaffirm them before the age of majority, allowing the ocntract to be completely erased. Can't disaffirm contracts for necessities.
  54. What are the three choices with an unconscionable contract?
    1. throw out the contract, 2. delete the language that's unconscionable, 3. modify the language.
  55. What's the difference between substantial and procedural unconscionablity?
    procedural is unfairness in the bargaining process. Substantive is harsh terms in the contract
  56. What makes something unconscionable?
    When it is so extreme as to appear unconscionable to the mores and business practices of the time and place.
  57. what's the difference between impossibility and impracticabilty?
    • Impossible: can't physically be done.
    • Impractible: would be very difficult or burdensome.
  58. When is performance excused for impossibility?
    When an unforseen expected event, which occurs after the formation of the contract, before the performance is due, makes performnace physically impossible. E.g., the building you were to paint burns down.
  59. what are the 3 basic assumptions that can create impractibility?
    Goverment will not make performance illegal, neither party will die, existence of thing at time of contract will remain in existence.
  60. What is impractibility?
    Performance is impractiable,extreme or unreasonable difficulty, expense injury or loss. Economic impractibility must be very extreme, merely increased costs isn't enough.Neither party expressly or impliedly agrees to bear the risk.
  61. When have parties agreed to bear the risk of impractibilty/impossibilty?
    Express: force majure clauses, Implied: course of performance, course of dealing, usage of trade, technological brakethroughs, was reasonabley likely to occur when contract was made.
  62. What is the test for frustration of purpose?
    What was the foundation of the contract? Was the performance prevented?
  63. What is a misunderstanding?
    When there is no meeting of the minds, there is no contract.
  64. What is a mistake in expression?
    A mistake where two people mean two different things, each thinks the other means what they mean. Can sometimes be a misunderstanding, but if mutual mistake, then a reformation occurs

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