Contract Law Fundamentals Flashcards

A design firm completes 80% of its contracted services before the client wrongfully terminates the agreement. The firm's best contractual remedy is to claim:

Answer: Expectation damages including anticipated profit on the unperformed portion

When a contract is wrongfully terminated, the non-breaching party is entitled to expectation damages, including the profit they would have earned on the remaining work.

Which of the following best describes a 'conditions precedent' in a professional services contract?

Answer: An event that must occur before a party's duty to perform arises

A condition precedent is an event or act that must occur before a contractual obligation of one or both parties becomes due.

An owner and contractor enter into a contract where the contractor agrees to accept payment of $50,000 in full settlement of a $70,000 disputed debt. This arrangement is called:

Answer: Accord and satisfaction

Accord and satisfaction occurs when parties agree to accept a different performance than originally required to settle a disputed or unliquidated claim.

Under the Uniform Commercial Code (UCC), when a contract for goods does not specify a delivery date, delivery must occur:

Answer: Within a reasonable time

Under UCC §2-309, when no time for delivery is specified, the obligation arises within a reasonable time based on the circumstances.

A licensed engineer assigns her rights under a professional services contract to a colleague without the client's consent. The most likely legal consequence is:

Answer: The assignment is void because professional contracts are personal in nature

Professional services contracts are generally non-assignable without consent because they are based on personal skill, trust, and licensure of a specific individual.

A contractor submits a bid that is accepted by the owner. Before the formal contract is signed, the contractor attempts to withdraw. In most US jurisdictions, the owner can enforce the bid based on:

Answer: Promissory estoppel

Promissory estoppel can bind a contractor to a bid when the owner foreseeably and reasonably relied on the bid to its detriment, such as by using it in a prime bid.

A contract clause states that any dispute must be resolved by arbitration and that arbitration awards are 'final and binding.' Under the Federal Arbitration Act, grounds to vacate an arbitration award include:

Answer: The award was procured by fraud or corruption

Under the FAA, an arbitration award may be vacated if it was procured by fraud, corruption, or evident partiality, but courts give very limited review to the merits of the decision.