Contracts and Business Law Flashcards

Under the UCC, what is the 'perfect tender rule' for the sale of goods?

Answer: The seller must tender goods that exactly conform to the contract or the buyer may reject

The UCC's perfect tender rule gives the buyer the right to reject goods if they fail to conform to the contract in any respect, though the seller may have a right to cure.

A corporation's shareholders are generally not personally liable for corporate debts. Under what circumstances might a court 'pierce the corporate veil' and hold shareholders liable?

Answer: When shareholders comingle personal and corporate funds and use the corporation as an alter ego

Courts pierce the corporate veil when shareholders ignore corporate formalities, commingle funds, or use the corporation as a personal alter ego to perpetrate fraud or injustice.

What is the 'mailbox rule' in contract law?

Answer: Acceptance is effective when the offeree deposits it in the mail

Under the mailbox rule, acceptance of an offer is effective the moment it is properly dispatched (placed in the mail), not when the offeror receives it.

A retailer advertises a TV for $50 (clearly a printing error; the actual price is $500). A customer demands the TV at $50. Under contract law, which of the following is most accurate?

Answer: The advertisement is merely an invitation to deal, not an offer, and no contract is formed

Advertisements are generally treated as invitations to deal, not offers, so no contract is formed until the seller accepts the customer's offer to purchase.

Which of the following best describes 'consequential damages' in a breach of contract case?

Answer: Damages for losses that result as a natural consequence of the breach and were foreseeable at the time of contracting

Consequential damages compensate for foreseeable losses flowing indirectly from the breach, such as lost profits, provided the breaching party had reason to know of them at contracting.

What is a 'material breach' of contract?

Answer: A breach so significant that it defeats the purpose of the contract and excuses the non-breaching party's performance

A material breach is one that goes to the essence of the contract, allowing the non-breaching party to treat the contract as terminated and sue for total breach.

Under what circumstances is specific performance available as a remedy for breach of contract?

Answer: When money damages are inadequate, typically because the subject matter is unique

Specific performance is an equitable remedy granted when monetary damages are inadequate to compensate the non-breaching party, as is typically the case with unique goods or real estate.