Multistate Essay Examination (MEE) Contracts and Sales Flashcards

24 sample cards from the Contracts and Sales deck

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

1. What is anticipatory repudiation and what may the nonbreaching party do?

   An unequivocal statement or conduct before performance is due indicating a party will not perform. The other party may: (1) sue immediately, (2) suspend performance and wait, (3) treat it as discharged, or (4) urge retraction. Repudiation may be retracted before the other party relies or cancels.

2. What are an aggrieved party's options when reasonably insecure about the other's performance (UCC)?

   Under UCC 2-609, demand adequate assurance of performance in writing and suspend its own performance. Failure to provide adequate assurance within a reasonable time (max 30 days) is treated as a repudiation.

3. What is the implied warranty of merchantability?

   In every sale by a merchant who deals in goods of the kind, the goods are warranted to be fit for their ordinary purpose (pass without objection in the trade, adequately packaged/labeled, fungible goods of fair average quality). Implied by law; need not be stated.

4. What is the implied warranty of fitness for a particular purpose?

   Arises when 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 the buyer so relies.

5. How can implied warranties be disclaimed under the UCC?

   By conspicuous language. Merchantability disclaimer must mention 'merchantability' (can be oral if conspicuous); fitness disclaimer must be in writing and conspicuous. Both are disclaimed by 'as is,' 'with all faults,' or by the buyer's examination of the goods.

6. What is an express warranty under the UCC?

   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' is not an express warranty.

7. Name the ways contractual duties can be discharged.

   Performance; impossibility; impracticability; frustration of purpose; rescission; accord and satisfaction; novation; modification; release; account stated; lapse; condition subsequent; and operation of law.

8. Distinguish impossibility, impracticability, and frustration of purpose.

   Impossibility: performance is objectively impossible (death of essential person, destruction of subject matter, supervening illegality). Impracticability: extreme/unreasonable difficulty due to an unforeseen event whose non-occurrence was a basic assumption. Frustration: performance is possible but the purpose has been destroyed by an unforeseen event; the other party knew of that purpose.

9. Distinguish accord and satisfaction from a novation.

   Accord and satisfaction: an agreement to accept a different performance to discharge an existing duty (accord), discharged only when the new performance is rendered (satisfaction). Novation: substitution of a new party for an original party, with all parties' consent, immediately discharging the original obligor.

10. What is the goal of expectation damages and how are they measured?

    To put the nonbreaching party in the position it would have occupied had the contract been fully performed (the 'benefit of the bargain'). Generally: loss in value + other/consequential loss − cost avoided − loss avoided.

11. Compare reliance and restitution damages.

    Reliance damages reimburse expenses incurred in reliance on the contract, restoring the party to its pre-contract position (used when expectation is too speculative). Restitution restores to the nonbreaching party the value of any benefit conferred on the breaching party, to prevent unjust enrichment.

12. What are the limitations on contract damages?

    (1) Foreseeability (Hadley v. Baxendale — consequential damages must have been foreseeable at contracting); (2) certainty (damages provable with reasonable certainty); (3) mitigation (no recovery for avoidable losses); and (4) causation.

13. How are liquidated damages clauses enforced?

    Enforceable if: (1) damages were difficult to estimate at the time of contracting, and (2) the amount is a reasonable forecast of probable harm. A clause that operates as a penalty is unenforceable (UCC also allows testing against actual harm).

14. What are the UCC buyer's remedies when the seller breaches?

    Cover (buy substitute goods; recover cover price − contract price + incidental/consequential − expenses saved); market damages (market price at time buyer learned of breach − contract price); specific performance for unique goods; replevin; damages for accepted nonconforming goods (warranty); and the right to reject/revoke acceptance.

15. What are the UCC seller's remedies when the buyer breaches?

    Resell and recover (resale price vs. contract price + incidental − expenses saved); market damages (contract price − market price); lost-profit (lost-volume) damages; action for the price (if goods can't be resold or buyer accepted); withhold/stop delivery; and reclaim goods from an insolvent buyer.

16. When does a UCC seller recover lost-volume profits?

    When the seller has an effectively unlimited supply and would have made both the breached sale and the resale, so resale does not actually mitigate. The seller recovers the lost profit (plus incidentals) it would have earned on the buyer's order.

17. When is specific performance available?

    When the legal remedy (damages) is inadequate — typically for unique subject matter such as land (always presumed unique) or rare/unique goods. Not available for personal service contracts (court may enjoin competing work instead).

18. What equitable defenses may bar specific performance?

    Laches (unreasonable, prejudicial delay), unclean hands (plaintiff's own wrongdoing in the transaction), and sale to a bona fide purchaser. Also unconscionability and impossibility of performance.

19. What is reformation and rescission?

    Reformation: an equitable remedy rewriting a writing to reflect the parties' true agreement, used for mutual mistake or fraud in expressing the deal. Rescission: cancellation of the contract, returning parties to the status quo ante, available for grounds like mistake, fraud, duress, or misrepresentation.

20. Who is an intended third-party beneficiary and what rights do they have?

    A non-party the contracting parties intend to benefit (creditor or donee beneficiary). Once their rights vest, they may sue to enforce the contract. Incidental beneficiaries have no enforceable rights.

21. When do a third-party beneficiary's rights vest?

    When the beneficiary: (1) manifests assent at one party's request, (2) detrimentally relies on the promise, or (3) sues to enforce. Before vesting, the original parties may freely modify or rescind; after vesting, they cannot without the beneficiary's consent.

22. What is the difference between assignment of rights and delegation of duties?

    Assignment transfers a party's contractual rights (to receive performance) to a third party (assignee). Delegation transfers the performance of a party's duties to a third party (delegate). Rights are assigned; duties are delegated.

23. Which rights cannot be assigned, and what is the effect of an assignment?

    Rights cannot be assigned if they materially change the obligor's duty/risk, are personal, or are barred by law or a valid anti-assignment clause. A valid assignment extinguishes the assignor's rights; the assignee may enforce directly against the obligor, who may raise defenses good against the assignor.

24. Which duties cannot be delegated, and does delegation discharge the delegator?

    Duties cannot be delegated if they are personal (special skill/judgment) or barred by contract. Delegation does NOT discharge the delegating party's liability — they remain liable if the delegate fails to perform (unless there is a novation).

What this deck covers

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