Master of Laws (LLM) Contracts and Commercial Law (Common Law and UCC Article 2) Flashcards

24 sample cards from the Contracts and Commercial Law (Common Law and UCC Article 2) deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What is impracticability and how does it differ from impossibility?

   Impracticability discharges duty when performance becomes extremely and unreasonably difficult/expensive due to an unforeseen event whose non-occurrence was a basic assumption and risk was not assumed. Unlike impossibility, performance is still physically possible but commercially senseless; mere increased cost usually is not enough.

2. What is frustration of purpose?

   A party's principal purpose is substantially frustrated by a supervening event whose non-occurrence was a basic assumption, without that party's fault. Performance is still possible, but it has lost its value to that party (e.g., renting a room to view a parade that is cancelled).

3. In a goods contract with no agreement and no breach, when does risk of loss pass from a merchant seller to the buyer?

   Under UCC 2-509, with a merchant seller, risk of loss passes to the buyer upon the buyer's receipt of the goods. (With a non-merchant seller, it passes on tender of delivery.)

4. How does risk of loss pass in shipment vs. destination contracts?

   In a shipment contract (e.g., FOB seller's city), risk passes to the buyer when conforming goods are delivered to the carrier. In a destination contract (e.g., FOB buyer's city), risk passes when the goods are tendered at the destination.

5. How does a breaching party affect risk of loss under the UCC?

   If goods are nonconforming so as to give a right of rejection, risk of loss remains on the seller until cure or acceptance. A buyer's breach may shift risk to the buyer for a commercially reasonable time for any deficiency in the seller's insurance coverage.

6. When is a buyer deemed to have 'accepted' goods under the UCC, and what is the effect?

   Acceptance occurs when the buyer, after a reasonable opportunity to inspect, signifies the goods conform or will keep them despite nonconformity, or fails to make an effective rejection, or does any act inconsistent with the seller's ownership. Acceptance precludes rejection and shifts to the buyer the burden of proving breach; revocation may still be possible.

7. What is the standard measure of expectation (benefit-of-the-bargain) damages?

   Damages that put the non-breaching party in the position they would have occupied had the contract been fully performed. Generally: loss in value of the other party's performance + other (consequential and incidental) losses − costs/loss avoided.

8. What is the buyer's measure of damages for a seller's failure to deliver goods?

   Either cover damages (cost of replacement goods bought in good faith − contract price) or market damages (market price at the time the buyer learned of the breach − contract price), plus incidental and consequential damages, minus expenses saved.

9. What are reliance damages and when are they used?

   Damages reimbursing expenses the plaintiff incurred in reliance on the contract, restoring them to their pre-contract position. Used when expectation damages are too speculative to prove (e.g., in promissory estoppel).

10. What are restitution damages and what principle do they prevent?

    Damages measured by the benefit conferred on the defendant (value of plaintiff's performance), restoring that benefit to prevent unjust enrichment. Available even to a breaching party for benefits conferred beyond the non-breacher's damages.

11. What are the requirements to recover consequential damages (Hadley v. Baxendale rule)?

    Consequential damages are recoverable only if they were a foreseeable result of the breach at the time of contracting—arising naturally from the breach or from special circumstances the breaching party had reason to know. They must also be reasonably certain and unavoidable (mitigation).

12. What is the duty to mitigate damages?

    A non-breaching party cannot recover damages it could have avoided through reasonable efforts. Failure to make reasonable efforts to limit losses reduces recoverable damages (it is not an affirmative duty but a limitation on recovery).

13. What makes a liquidated damages clause enforceable rather than an unenforceable penalty?

    Damages must have been difficult to estimate at the time of contracting, and the stipulated amount must be a reasonable forecast of probable harm. If it operates as a penalty (grossly excessive), it is void.

14. When is specific performance available as a remedy?

    When the legal remedy (damages) is inadequate—typically for unique goods or land (land is always considered unique)—the contract terms are definite, mutuality of remedy exists, and enforcement is feasible. Not available for personal service contracts (courts won't compel and it raises involuntary servitude concerns).

15. What is rescission and on what grounds is it granted?

    An equitable remedy that cancels (unwinds) the contract and restores the parties to their pre-contract positions. Grounds include mutual mistake, misrepresentation/fraud, duress, undue influence, or failure of consideration.

16. What is reformation as an equitable remedy?

    A court rewrites the written contract to reflect the parties' actual agreement when, due to mutual mistake or fraud, the writing fails to express their true intent.

17. Distinguish an intended third-party beneficiary from an incidental beneficiary.

    An intended beneficiary is one the contracting parties intended to benefit (named or identifiable) and who can enforce the contract. An incidental beneficiary benefits only indirectly and has no enforceable rights.

18. Distinguish a creditor beneficiary from a donee beneficiary.

    A creditor beneficiary is owed a prior obligation by the promisee, satisfied by the promisor's performance. A donee beneficiary receives the performance as a gift from the promisee. Both are intended beneficiaries who can sue the promisor.

19. When do a third-party beneficiary's rights 'vest,' and why does it matter?

    Rights vest when the beneficiary (1) manifests assent to the promise, (2) sues to enforce it, or (3) materially/justifiably relies on it. After vesting, the original parties cannot modify or rescind the contract without the beneficiary's consent.

20. What is an assignment of rights, and what rights are not assignable?

    An assignment is a transfer of one's rights (benefits) under a contract to a third party (assignee). Rights are not assignable if they materially increase the obligor's duty/risk, are personal in nature, or are barred by contract or law.

21. What is the effect of an assignment on the assignor and obligor?

    The assignee can enforce the right directly against the obligor and takes subject to any defenses the obligor had against the assignor. A valid assignment extinguishes the assignor's right; if for consideration, it is irrevocable.

22. What is delegation of duties, and which duties are non-delegable?

    Delegation transfers performance of a duty to a third party (delegatee). Duties are non-delegable when performance is personal (relies on special skill/judgment), the contract prohibits delegation, or delegation would materially alter the obligee's expectations.

23. After a valid delegation, who remains liable for performance?

    The delegating party (delegator) remains liable; delegation does not relieve them unless there is a novation. If the delegatee assumes the duty for consideration, the obligee may enforce against both the delegator and the assuming delegatee.

24. What is a novation and how does it differ from a delegation/assignment?

    A novation is a new contract substituting a new party for an original party, with the consent of all parties, that releases the original obligor from liability. Unlike a mere delegation, a novation discharges the original party.

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Contracts and Commercial Law (Common Law and UCC Article 2) flashcards FAQ