What is a Contract and What Law Applies Flashcards
1
Q
What is a K
A
- A contract is a promise/set of promises for the breach of which the law gives a remedy/the performance of which the law recognizes as a duty
2
Q
Types of Contracts
A
- Express Ks: formed by language
- Implied Ks: formed by conduct
- Quasi Ks: not Ks at all, an unenforceable K results in unjustenrichemnt
3
Q
Acceptance: Bi Ks - Exchange of Mutual Promises
A
- A promise for a promise.
- Each party is both a promisor & promisee.
- Can be accepted in any reasonable way.
- Most Ks are bilateral, most offers may be accepted by promising/beginning performance.
- Unless expressly indicated otherwise, assume any K is a bilateral contract.
4
Q
Acceptance: Uni K - By Performance
A
- Offeror requests performance rather than a promise.
- Offeror-promisor promises to pay upon the completion of the requested act by the promisee.
- Once act is completed, a K is formed.
- A uni K, which requires full performance, occurs in only 2 situations:
(1) when offeror clearly indicates completion of performance is the only manner of acceptance; and
(2) where there is an offer to the public, such as a reward offer.
Tip: Look for 3 magic words—“offer… only by”; or a reward offer. Otherwise, assume the offer is for a Bi-K
5
Q
Validity: Void K
A
- A void K is one that is totally without any legal effect from the beginning (for example, an agreement to commit a crime).
- It cannot be enforced by either party.
6
Q
Voidable K
A
- A voidable K is one that one/both parties may elect to avoid, such as by raising a defense that makes it voidable, like infancy or mental illness.
7
Q
Unenforceable K
A
An unenforceable K is otherwise valid but isn’t
enforceable due to a defense, such as the SOL/SOF
8
Q
TIP:
A
The distinction between void and voidable Ks
is sometimes important to an exam question.
The key thing to remember is that void Ks
can never be enforced, but an aggrieved party may elect to enforce a voidable K
9
Q
Common Law vs Article 2 Sale of Goods
A
- Generally, CL governs Ks.
- However, for Ks involving SOG, Art 2 of the UCC.
10
Q
Goods Defined
A
- “Goods” are all things movable at the time they are identified as the items to be sold under the K.
- Thus, Article 2 applies to sales of most tangible things (including cars, horses, hamburgers), but doesn’t apply to the sale of real estate, services (such as a health club membership or employment), or intangibles (such as a patent), or to construction Ks.
11
Q
Merchants vs Non merchants
A
- Art. 2: “merchant” is one who regularly deals in goods of the kind sold/who holds themselves out as having special knowledge/skills as to the practices/goods involved.
- For Art. 2 provisions dealing with general business practices (ex. SOF, confirmatory memos, FO, mod.), almost anyone in business can be deemed a merchant.
- Some Art. 2 provisions (ex., IWM) are narrower and require a person to be a merchant with respect to goods of the kind involved in the subject transaction
12
Q
TIP
A
- Remember that a merchant must be acting in their mercantile capacity (in a way that relates to their business) in order for the merchant rules to apply.
- A party is not a merchant for purposes of sales that are solely personal (ex. sales related to a collecting hobby).
13
Q
Ks Involving Goods & Non Goods
A
- If a sale involves both goods & services, you will determine which aspect is dominant & apply the law governing that aspect to whole K.
- However, if K divides payment between goods & services, then Art. 2 will apply to the SOG portion and CL to the services portion.
14
Q
Good Faith & Fair Dealing
A
- Every K within the UCC imposes an obligation of good faith in its performance and enforcement.
- “Good faith” is honesty in fact and the observance of reasonable commercial standards.
- The CL also imposes a duty of good faith and fair dealing.
- A breach of this duty usually involves
exercising discretion in a way that deprives the other party of the fruits of the K
