Contracts and Uniform Commercial Code Flashcards
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Read the first 7 Contracts and Uniform Commercial Code flashcards as text
A buyer sues a seller for breach of an express warranty made in an oral sales pitch, but the signed final contract contains a merger clause and no such warranty. How does the parol evidence rule apply?
Answer: The prior oral warranty is likely excluded because it contradicts or supplements a fully integrated writing
The parol evidence rule bars prior oral terms that vary a fully integrated written agreement.
A general contractor uses a subcontractor's bid to compute its winning master bid. The subcontractor then tries to revoke before the general accepts. Is revocation effective?
Answer: No, because promissory estoppel holds the bid open when the general foreseeably relied on it
Under Drennan-style reasoning, foreseeable reliance on a sub-bid makes it temporarily irrevocable via promissory estoppel.
A written output contract obligates a bakery to sell "all bread produced" to one distributor. The bakery triples production solely to exploit a price spike. Must the distributor take all of it?
Answer: No, because output quantities may not be unreasonably disproportionate to prior output under good faith limits
UCC § 2-306 limits output and requirements contracts to good-faith quantities not unreasonably disproportionate to prior levels.
A debtor honestly and reasonably disputes the amount owed and sends a check marked "payment in full" for a lesser sum, which the creditor cashes. What is the effect?
Answer: An accord and satisfaction discharges the debt because the claim was genuinely disputed
Cashing a full-payment check on a good-faith disputed claim effects an accord and satisfaction.
A buyer pays in advance for custom machinery. The seller becomes insolvent within 10 days of receiving the first payment while the goods are identified to the contract. What may the buyer do?
Answer: Recover the identified goods by tendering any unpaid balance
UCC § 2-502 lets a buyer recover identified goods when the seller becomes insolvent within 10 days of receiving the first payment.
An employer and employee sign a contract with a clause liquidating damages at $500,000 for any breach, however minor. Actual harm from most breaches would be trivial. How will a court treat the clause?
Answer: As an unenforceable penalty because it is not a reasonable forecast of harm
Liquidated damages must reasonably estimate anticipated or actual harm; a disproportionate fixed sum is a void penalty.
A third party is named in a contract as the person to receive the contract's benefit, and the contracting parties intended to benefit her. Before her rights vest, the parties modify the deal to cut her out. Can she sue?
Answer: No, because an intended beneficiary's rights can be modified before they vest
Contracting parties may modify or rescind an intended beneficiary's rights until she detrimentally relies, assents, or sues.
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