Contracts & Sales Flashcards

A party seeks rescission of a contract based on mutual mistake. Which of the following elements is required?

Answer: The mistake must concern a basic assumption on which the contract was made, materially affecting the agreed exchange

Under Restatement (Second) of Contracts § 152, mutual mistake allows rescission when: (1) both parties were mistaken; (2) about a basic assumption on which the contract was made; (3) the mistake has a material adverse effect on the agreed exchange; and (4) the adversely affected party did not bear the risk of mistake.

What is the parol evidence rule's effect on prior or contemporaneous agreements when the parties have executed a complete and final written contract (full integration)?

Answer: No prior or contemporaneous oral or written agreements may be admitted to contradict or supplement the written terms

When a written contract is a complete integration (fully integrated), the parol evidence rule bars admission of prior or contemporaneous agreements — whether oral or written — to contradict OR supplement the written terms. Only subsequent agreements and certain exceptions (fraud, mistake, condition precedent to formation) are outside the rule's bar.

Under UCC § 2-314, what warranty is implied in every contract for the sale of goods by a merchant who deals in goods of that kind?

Answer: Warranty of merchantability

UCC § 2-314 implies a warranty of merchantability in every sale of goods by a merchant who deals in goods of that kind. The warranty requires that the goods be fit for the ordinary purposes for which they are used and conform to other merchantability standards.

When a contractor is discharged from a contract due to impracticability under the common law, which scenario best satisfies the elements of the doctrine?

Answer: A government regulation enacted after contract formation made the contractor's specific method of performance illegal

Common law impracticability (evolved from impossibility) requires: (1) a supervening event after contract formation; (2) that was not reasonably foreseeable; (3) that makes performance impracticable; and (4) the party seeking discharge did not assume the risk. A post-formation law making the specific performance method illegal satisfies all elements.

A buyer breaches a contract for goods. Under UCC § 2-708, what is the seller's primary measure of damages?

Answer: The contract price minus the market price at the time of tender, plus incidental damages

Under UCC § 2-708(1), the seller's market price damages are the difference between the unpaid contract price and the market price at the time and place for tender, plus incidental damages, minus any expenses saved in consequence of the breach.

Under the common law, what is the effect of a condition precedent that fails to occur, absent any excuse for non-occurrence?

Answer: The party whose duty was conditioned is discharged from that duty

A condition precedent is an event that must occur before a party's contractual duty arises. If the condition fails to occur and is not excused, the duty conditioned upon it never arises — the party is discharged from performance. No breach occurs because there was no duty.