Uniform Bar Examination (UBE) Contracts and Sales Syllabus

Distinguish procedural from substantive unconscionability.

Procedural unconscionability concerns unfairness in the bargaining process (hidden terms, unequal bargaining power, adhesion). Substantive unconscionability concerns oppressive/one-sided terms. Unconscionability is tested at the time of formation and decided by the judge.

What categories of contracts fall within the Statute of Frauds (must be in writing)?

MY LEGS: Marriage (contracts in consideration of marriage), contracts that cannot be performed within one Year, contracts for Land/interests in land, promises by an Executor to pay estate debts personally, contracts for the sale of Goods $500 or more, and Suretyship (promises to answer for another's debt).

What must a writing contain to satisfy the Statute of Frauds at common law?

It must (1) identify the parties, (2) identify the subject matter, (3) state the essential terms, and (4) be signed by the party to be charged (the one against whom enforcement is sought).

What does the UCC require for the Statute of Frauds writing in a sale of goods?

A writing that indicates a contract was made, is signed by the party to be charged, and states a quantity. The contract is not enforceable beyond the quantity shown.

State the UCC merchant confirmatory memo exception to the Statute of Frauds.

Between merchants, a signed written confirmation that satisfies the Statute against the sender also binds the recipient if the recipient has reason to know its contents and does not object in writing within 10 days of receipt.

List the UCC exceptions that allow enforcement of a goods contract despite no signed writing.

(1) Specially manufactured goods (not suitable for resale, where seller has begun production), (2) admission in pleadings/court that a contract was made, (3) goods that have been paid for or received and accepted (enforceable to that extent), and (4) the merchant confirmatory memo rule.

How can full performance or part performance satisfy the Statute of Frauds for services and for land?

For service contracts, full performance by one party takes a one-year contract out of the Statute. For land, part performance — typically 2 of 3: payment, possession, and/or valuable improvements — allows enforcement.

State the parol evidence rule.

When parties express their agreement in a writing intended as a final integration, prior or contemporaneous oral statements and prior written statements that contradict the writing are inadmissible to vary or contradict its terms.

Distinguish a complete (total) integration from a partial integration for parol evidence purposes.

A complete integration is the full and final expression of all terms; no extrinsic evidence of additional terms is allowed. A partial integration is final as to the terms it contains but not complete; consistent additional terms may be added but contradictory terms may not.

Name situations where parol evidence is admissible even with a written contract.

To: (1) show a formation defect (fraud, duress, mistake, illegality), (2) clarify ambiguity, (3) show a condition precedent to effectiveness, (4) show a separate consideration/collateral agreement, and (5) supply consistent additional terms (if partial integration).

What evidence may always be used to interpret/supplement a UCC contract's terms, and in what priority?

Course of performance, course of dealing, and usage of trade. Priority for consistency: express terms > course of performance > course of dealing > usage of trade.

Distinguish a condition from a promise.

A promise is a commitment to act whose breach gives rise to liability/damages. A condition is an event (not certain to occur) that must occur before performance becomes due; failure of a condition excuses the other party's duty but is not itself a breach.

Distinguish a condition precedent, concurrent condition, and condition subsequent.

Condition precedent: must occur before a duty to perform arises. Concurrent condition: parties perform simultaneously (each tendering). Condition subsequent: a later event that discharges an already existing duty.

Distinguish express conditions from constructive (implied) conditions, including the standard of compliance.

Express conditions (stated by the parties) require strict/literal compliance. Constructive conditions (implied by law to ensure fair order of performance) require only substantial compliance.

Name three ways a condition can be excused.

(1) Waiver or estoppel by the protected party, (2) hindrance/wrongful prevention or failure to cooperate by the protected party, and (3) the party's own anticipatory repudiation or voluntary disablement. (Also avoidance of forfeiture.)

What is the common-law substantial performance doctrine?

A party who substantially performs (only a minor breach remains) may recover on the contract minus damages for the defect. It does not apply where the breach is material or where an express condition required strict performance.

State the UCC perfect tender rule and its key limits.

Under the perfect tender rule, if goods or tender fail to conform in any respect, the buyer may reject all, accept all, or accept any units and reject the rest. Limits: seller's right to cure, installment contracts (substantial impairment standard), and the buyer's acceptance/waiver.

When does a seller have a right to cure a nonconforming tender under the UCC?

(1) Before the contract's performance time has expired, the seller may cure by notifying the buyer and making a conforming tender; and (2) after the time has expired, the seller may cure if it had reasonable grounds to believe the nonconforming tender would be acceptable (e.g., trade usage or prior dealings).

Under the UCC, when may a buyer reject an installment in an installment contract, and when may it cancel the whole contract?

A buyer may reject an installment only if the nonconformity substantially impairs the value of that installment and cannot be cured. The buyer may treat the whole contract as breached only if the defect substantially impairs the value of the entire contract.

What is the UCC implied warranty of merchantability — who gives it and what does it require?

Implied automatically when the seller is a merchant who deals in goods of that kind. The goods must be fit for their ordinary purposes (pass without objection in the trade, be of fair average quality, adequately packaged/labeled).

What are the requirements for the UCC implied warranty of fitness for a particular purpose?

(1) The seller (any seller, not just a merchant) has reason to know the buyer's particular purpose and that the buyer is relying on the seller's skill/judgment to select suitable goods, and (2) the buyer in fact relies.

How is an express warranty created under the UCC?

By any affirmation of fact or promise, description of the goods, or sample/model that becomes part of the basis of the bargain. Mere opinion or 'puffery' does not create a warranty.

How can implied warranties be disclaimed under the UCC?

Merchantability is disclaimed by mentioning 'merchantability' (oral or written; if written, conspicuous). Fitness must be disclaimed in a conspicuous writing. Both are disclaimed by 'as is,' 'with all faults,' or by the buyer's examination/refusal to examine the goods.

Under the UCC default rule, when does risk of loss pass in a NON-carrier (delivery in place) case?

If the seller is a merchant, risk passes to the buyer on the buyer's receipt of the goods. If the seller is a non-merchant, risk passes on tender of delivery (when goods are made available).

Distinguish a shipment contract from a destination contract for risk of loss in a carrier case.

Shipment contract (e.g., FOB seller's city or no destination specified): risk passes when goods are delivered to the carrier. Destination contract (e.g., FOB buyer's city): risk passes when goods are tendered at the destination.

How does a breach affect risk of loss under the UCC?

Risk of loss stays on (or shifts to) the breaching party to the extent of any uninsured loss. If the seller ships nonconforming goods, risk remains on the seller until cure or acceptance; if the buyer repudiates conforming goods, risk shifts to the buyer for a commercially reasonable time.

What is a sale on approval versus a sale or return, regarding risk and title?

Sale on approval (goods for the buyer's use): risk/title stay with the seller until the buyer accepts; goods not subject to buyer's creditors. Sale or return (goods for resale): risk/title pass to the buyer like a normal sale, and goods can be returned if unsold; subject to buyer's creditors.

Distinguish a void title from a voidable title under the UCC entrustment/good-faith purchaser rules.

A thief has void title and can pass none, so the true owner prevails. A seller with voidable title (e.g., obtained by fraud or bad check) CAN pass good title to a good-faith purchaser for value. Entrusting goods to a merchant who deals in such goods lets that merchant pass title to a buyer in the ordinary course of business.

What is anticipatory repudiation and what are the non-repudiating party's options?

A clear, unequivocal statement or act before performance is due that a party will not perform. The other party may: (1) sue immediately, (2) suspend performance and await performance, (3) treat the contract as discharged, or (4) urge retraction. Repudiation may be retracted unless the other party has relied or canceled.

Under the UCC, when may a party demand adequate assurances of performance?

When reasonable grounds for insecurity arise, a party may demand adequate assurance in writing and suspend its own performance until received. Failure to provide assurance within a reasonable time (max 30 days) is treated as a repudiation.

Distinguish impossibility, impracticability, and frustration of purpose as excuses for nonperformance.

Impossibility: performance is objectively impossible (death of essential person, destruction of subject matter, supervening illegality). Impracticability: an unforeseen event makes performance extremely and unreasonably difficult/costly. Frustration of purpose: an unforeseen event destroys the basic purpose of the contract though performance remains possible.

Distinguish rescission, accord and satisfaction, and novation as ways to discharge a contract.

Rescission: mutual agreement to cancel (each gives up remaining rights). Accord and satisfaction: agreement to accept a different performance (accord) plus its actual performance (satisfaction) discharges the original duty. Novation: substitution of a new party with all parties' consent, releasing the original obligor.

State the goal and standard of expectation damages.

To put the non-breaching party in the position it would have occupied had the contract been performed (the 'benefit of the bargain'). Damages must be foreseeable, certain, unavoidable (mitigated), and causally connected to the breach.

State the buyer's UCC damages formulas for a seller's failure to deliver or repudiation.

If the buyer covers (buys substitute goods in good faith): cover price − contract price + incidental/consequential damages − expenses saved. If the buyer does not cover: market price (at time buyer learned of breach) − contract price + incidentals/consequentials − expenses saved.

State the seller's UCC damages formulas for a buyer's breach/repudiation.

Resale: contract price − resale price + incidentals. No resale: contract price − market price + incidentals. Lost-volume seller: lost profit + incidentals. Action for the price: when goods can't be resold or risk has passed, seller may recover the full contract price.

What are incidental versus consequential damages?

Incidental damages are costs of dealing with the breach (inspection, transport, storage, reselling/recovering goods). Consequential damages are foreseeable special losses (e.g., lost profits) arising from the breaching party's knowledge of the non-breaching party's particular needs at contract formation (Hadley v. Baxendale).

What is the duty to mitigate, and what is its effect on recovery?

The non-breaching party must take reasonable steps to avoid/reduce damages. Damages that could have reasonably been avoided are not recoverable, but the burden is on the breaching party to show the failure to mitigate.

When is a liquidated damages clause enforceable?

When (1) actual damages were difficult to estimate at the time of contracting, and (2) the amount is a reasonable forecast of probable damages. If it operates as a penalty (grossly disproportionate), it is void and the party recovers only actual damages.

Distinguish reliance damages from restitution damages.

Reliance damages compensate for expenses incurred in reliance on the contract (restoring the plaintiff to the pre-contract position). Restitution prevents unjust enrichment by recovering the value of a benefit conferred on the other party (measured by benefit received, available even absent an enforceable contract via quasi-contract).

When is specific performance available, and when is it unavailable?

Available when the legal remedy (money) is inadequate — typically for land (always considered unique) and unique goods (e.g., heirlooms, art). Unavailable for personal-service contracts (courts will not compel service, though they may enjoin competing work) and where terms are too uncertain or enforcement would be too difficult to supervise.

What UCC remedies allow a buyer to obtain the goods themselves rather than money?

(1) Specific performance for unique goods or other proper circumstances, and (2) replevin if the buyer cannot reasonably cover. (3) A buyer who has paid may recover identified goods if the seller becomes insolvent within 10 days of receiving the first payment.

What are an aggrieved seller's remedies regarding the goods upon the buyer's breach or insolvency?

The seller may (1) withhold delivery, (2) stop goods in transit, (3) reclaim goods from an insolvent buyer (demand within 10 days of receipt; no time limit if buyer misrepresented solvency in writing within 3 months), (4) resell and recover damages, or (5) sue for the price.

What are the buyer's rights after rightfully revoking acceptance of nonconforming goods under the UCC?

Revocation is allowed if the nonconformity substantially impairs value and was hard to discover or the buyer relied on cure. After revocation, the buyer is restored to pre-acceptance position: may cancel, recover payments, cover, and obtain damages, and holds the rejected goods with a security interest for payments made and expenses.

Distinguish reformation from rescission as equitable remedies.

Reformation rewrites a written contract to reflect the parties' true agreement (used for mutual mistake or fraud in drafting). Rescission cancels the contract and returns the parties to their pre-contract positions (used for mistake, misrepresentation, duress, etc.).

What is an intended third-party beneficiary, and what are the two types?

A non-party the contracting parties intend to benefit and who can enforce the contract. Creditor beneficiary: the promisee owes the beneficiary a debt being satisfied. Donee beneficiary: the promisee intends to make a gift. (Incidental beneficiaries have NO enforcement rights.)

When do a third-party beneficiary's rights vest, cutting off the original parties' power to modify or rescind?

When the beneficiary (1) manifests assent to the promise, (2) detrimentally relies on it, or (3) brings suit to enforce it. Before vesting, the original parties may freely modify or rescind.

Whom may a third-party beneficiary sue, and what defenses apply?

The beneficiary may sue the promisor (the one who promised the performance). A creditor beneficiary may also sue the promisee on the underlying debt. The promisor may assert against the beneficiary any defenses it would have had against the promisee.

Distinguish an assignment of rights from a delegation of duties.

Assignment transfers a contract right (e.g., the right to payment) to a third party (assignee), who can then enforce it. Delegation transfers the performance of a duty to a third party (delegate). Contracts typically involve both ('assignment of the contract').

Which rights are NOT assignable?

Assignments that would (1) materially change the obligor's duty or risk, (2) be barred by contract (anti-assignment clauses — often construed to give only a right to damages, not to void the assignment), or (3) be prohibited by law/public policy. Future rights from future contracts are generally not assignable.

What is the effect of a valid assignment on the obligor, and what happens with successive assignments?

The assignee gains the right to performance and may sue the obligor directly; the obligor must perform for the assignee once notified. Among successive assignees, the general rule is the first assignee for value prevails, though a later assignee who takes for value without notice and is first to obtain payment/judgment/novation may prevail.

Which duties may NOT be delegated, and does the delegating party remain liable?

Non-delegable duties: those involving special skill/personal judgment, where the obligee has a substantial interest in personal performance, or where the contract prohibits delegation. The delegating party (delegator) remains liable; only a novation (with the obligee's consent to substitute) releases the delegator.