Exam 7: The Terms of a Contract

Contractual quantum meruit requires a customer to pay whatever the supplier chooses to charge or whatever the market will bear.

It can be very difficult to predict how a court will interpret any given contract because the principles for interpreting the rules of a contract are guided by conflicting rules of construction.

Courts are not allowed to refer to external sources (e.g.,dictionaries)when trying to determine the meaning of ambiguous terms used in contracts.

OrganicFoods Inc.entered into a contractual supply arrangement with EcoGrow Inc.EcoGrow contractually promised to supply two tons of organic carrots by May 1,providing carrots were available.If EcoGrow does not supply the carrots as agreed,how do you think a court would view EcoGrow's obligation to OrganicFoods to do so?

Briefly explain what is meant by a standard form contract? Identify when these types of contracts are typically used and identify a situation where a court would likely disallow a term contained in a standard form contract.

When the existence of the contract is not in doubt,the court will assign as reasonable a meaning as possible to vague or ambiguous terms.

Identify and briefly describe the situations in which the court will disregard the parole evidence rule and consider evidence outside the contract.

Because a party is never successful in litigation where reliance is made on trade customs to imply a term into a contract,the more prudent course is to ensure that all important terms are explicitly recited.

Contracting parties can agree to limit the liability for a breach to less than what is recoverable under the principles of contract law.

Why is a reference in a contract to "best quality" considered to be nebulous?

A court hearing a contractual dispute has determined that an ambiguous term must be construed against the party drafting the agreement.Which of the following would the judge most likely state in his decision as being the policy rationale for the court's finding?

Which of the following is a distinguishing characteristic of a standard form contract?

A standard form contract allows major terms and conditions to be changed through negotiation.

Identify and briefly describe the conflicting consideration that arises from the common law rules of construction.Identify how this conflict arises and under what circumstances parties might find themselves facing such a dilemma.

Which of the following would automatically end a contract with a supplier if the buyer's sales fall below a stated level?

What is meant by the term "contractual quantum meruit"?

EcoGrow Inc.contractually agreed to deliver two tons of organic fertilizer on March 16 to Organics Inc.The contract provided for payment of $1,000 for each day delivery was delayed.An ice storm closed highways causing Eco to deliver four days late.Which of the following could you likely expect a lawyer representing Organics to argue before the court hearing a dispute over non-payment of the late fee?

The parole evidence rule prohibits introduction of a specific type of evidence relating to the terms of a contract when the language used in that document is clear.Which of the following would your law professor most likely indicate as the second condition required to invoke the parole evidence rule?

Parties to a sale of goods contract are always bound by the implied terms established by the Sale of Goods Act.

Marty has made his acceptance of an offer to purchase his house subject to his lawyer's approval.Why did Marty's lawyer advise him that it was essential for him to do so?