Contracts & Sales Flashcards

Under the common law mirror image rule, what effect does an acceptance with additional or different terms have on the formation of a contract?

Answer: It operates as a rejection and counteroffer

Under common law, the mirror image rule requires that an acceptance must match the offer exactly. An acceptance that adds or changes terms is treated as a rejection of the original offer and a counteroffer, which the original offeror is then free to accept or reject.

Under UCC Article 2, what is the effect of a merchant's firm offer?

Answer: It binds the merchant for a reasonable time not to exceed six months even without consideration

Under UCC § 2-205, a merchant's written, signed offer that by its terms gives assurance it will be held open is not revocable for lack of consideration during the time stated, or if no time is stated, for a reasonable time — but in no event may such period exceed three months.

Under the doctrine of promissory estoppel, which element is NOT required to enforce a promise that lacks consideration?

Answer: A writing signed by the promisor

Promissory estoppel under Restatement (Second) of Contracts § 90 requires: (1) a promise; (2) that the promisor should reasonably expect to induce action or forbearance; (3) which does induce such action or forbearance; and (4) injustice can be avoided only by enforcement. No writing is required.

Seller contracts to deliver 500 widgets to Buyer by March 1. On February 20, Seller unequivocally states it will not deliver the widgets. Under the doctrine of anticipatory repudiation, what may Buyer do?

Answer: Treat the repudiation as an immediate breach, cancel the contract, and immediately seek damages or a substitute

Under anticipatory repudiation (Restatement (Second) § 250 and UCC § 2-610), when a party unequivocally indicates it will not perform before the performance date, the non-breaching party may immediately treat it as a total breach, cancel, seek damages, and cover through substitute performance.

Which of the following contracts must be in writing under the Statute of Frauds?

Answer: A contract for the sale of goods valued at $600

Under UCC § 2-201, contracts for the sale of goods priced at $500 or more must be evidenced by a writing signed by the party to be charged. A contract for goods at $600 falls within this requirement.

Under the objective theory of contracts, how is the intent of the parties determined?

Answer: By what a reasonable person in the position of the other party would understand the words and conduct to mean

The objective theory of contracts, as opposed to the subjective (will) theory, asks not what a party actually meant but what a reasonable person in the position of the other party would have understood the words and conduct to mean. This promotes certainty and protects reasonable reliance.