Contracts Flashcards
1
Q
Applicable law
A
- Article 2 of UCC
- goods (movable)
- merchant: deals in goods of the kind - Common law: not goods
- Predominance test: both goods and services, look to predominant purpose of K as a whole
2
Q
Contract formation
A
- Offer
- expression of intent to enter into a contract
- define terms (QTIPS: quantity, time, id parties, price, subject matter)
- communicated to offeree - Irrevocable offers
- UCC firm offers
- - merchants
- - signed writing
- - 3-month max (if not supported by consideration)
- option contract: consideration given
- detrimental reliance
- once performance (not preparation) starts for a unilateral K, or bilateral K indifferent as to the manner of acceptance - Acceptance: manifestation of asset to terms of offer
- within reasonable time
- only in response
- C/L mirror image rule
- UCC: shipment of nonconforming goods both acceptance and breach, unless:
- - accommodation: seller gives notice of nonconforming shipment (buyer may accept/reject all) - Termination of power to accept
- rejection
- counteroffer (also a new offer)
- revocation
- lapse in time
- death or incapacity of either party
- destruction of subject matter - Mailbox rule
- only to acceptance
- exceptions:
- - offer says otherwise
- - option K: upon receipt
- - both acceptance & rejection
- – rejection 1st: whichever received 1st
- – acceptance 1st: acceptance unless rejection received 1st and detrimental reliance - Battle of the forms (UCC)
- added terms:
- - 1 not a merchant: then proposal only
- - both merchants: then add terms, unless:
- – offer limited to its terms expressly
- – material alteration
- – objection within reasonable time
- conflicting terms:
- - knock-out rule
- - UCC gap fillers - Consideration - bargained for exchange of legal value
- illusory promise
- requirements contracts: seller is exclusive source and promises to sell required amount to buyer
- output contracts: buyer agrees to buy all of seller’s output
- promissory estoppel
- - promisor should reas expect to induce action or forbearance; and
- - such action or forbearance is in fact induced.
3
Q
Defenses to formation
A
SUD FILM
- SOF (MY LEGS)
- marriage
- year
- land
- executor
- goods $500 or more (except SWAP: specially manufactured goods, written confirmation by merchs, admission in court, performance)
- surety (debt of another), except “main purpose” - SOF writing requirement
- essential terms
- signed by party charged
- exception: merchant’s confirming memo:
- - 2 merchants
- - 1 receives confirmation
- - both are bound
- - unless objection within 10 days
- exception: promissory estoppel
- exception: judicial admission
- exception: performance
- - land: full or part if unequivocally indicate K
- - services: full performance only
- - goods: specialty manufactured, goods paid or accepted - Unconscionability
- Duress
- Fraud/misrepresentation
- fraud in the inducement: innocent party justifiably relied on misrepresentation
- nonfraudulent misrep: K voidable if material + justifiable reliance - Illegality
- Lack of capacity (except for necessities): infants, crazy, intoxicated, duress/undue influence
- Mutual mistake
- basic assumption
- material effect
- party voiding K did not assume the risk
4
Q
Contract terms
A
- Parol evidence rule
- partial integration
- - PE not to contradict
- - PE ok to supplement
- total integration
- - PE not to contradict
- - PE not to supplement - PER exceptions:
- subsequent communications (i.e. reformation, modification)
- K formation defect evidence
- collateral agreements
- conditions precedent to K effectiveness
- interpret ambiguous terms
- - course of performance
- - course of dealings
- - usage of trade - Contract modification
- C/L: mutual assent + consideration, unless unanticipated circumstances and fair + equitable
- UCC: mutual assent + good faith (no consideration required)
- 3P beneficiary
- - intended (can sue)
- - incidental (can’t sue)
5
Q
Breach of contract
A
- Material v. minor
- amount of benefit received
- adequacy of compensation
- extent of part performance
- hardship to breaching party
- negligent/willful behavior
- likelihood breaching party will perform remainder of K - UCC: Perfect tender rule
- reject the whole
- accept the whole
- accept a commercial unit
- except: does not apply to installment Ks (must be substantial impairment of installment/K)
- except: accommodation is a counteroffer (not a breach) - Seller’s right to cure (UCC)
- notice + timely new tender
- further time to cure if seller reasonably believed goods would be accepted - Divisible contract
- agreed equivalents
- operates as separate Ks - Anticipatory repudiation
- unequivocal expression
- won’t perform
- before performance due
- non-repudiating party can:
- - sue immediately
- - suspend performance
- - urge performance
- right to demand adequate assurances
- - reasonable grounds for insecurity
- - in writing
- - ok to suspend performance pending assurances - Warranties
- express
- implied warranty of merchantability:
- - merchant seller
- - goods fit for the ordinary purpose for which such goods are used.
- fitness for a particular purpose:
- - any seller;
- - has reason to know the particular use + buyer is relying; and
- - buyer in fact relies.
- implied warranty of title: any seller
- implied warranty against infringement: merchant seller
- implied good faith + fair dealings - Accord
- agree to substitute performance
- doesn’t discharge original K - Satisfaction
- performance of the accord
- discharges both Ks
6
Q
Defenses to enforcement
A
- Formation defenses (other flashcard)
- no mutual assent
- lack of consideration
- no writing and writing was required SOF (MY LEGS)
- misrepresentation/fraud/duress
- unconscionability
- lack of capacity
- illegality of contract
- condition precedent not met - Impossibility/Impracticality
- supervening, unforeseeable event
- makes performance impossible/impractical (extremely and unreasonably difficult)
- neither party assumed risk - Frustration of purpose
- supervening, unforeseeable event
- destroys party’s purpose for entering K
- both parties know the purpose
- frustration is total
7
Q
Remedies
A
- Damages limitations
- foreseeability
- duty to mitigate
- certainty
- Goods:
- - buyer: (K - market) or (cover - K) + consequential + incidental - $ saved b/c breach
- - seller: (K - market), (K - resale), or lost profit (if seller has unlimited supply) + incidental - $ saved b/c breach - Expectation damages
- as if K performed (benefit of the bargain) - Consequential damages
- direct foreseeable consequences
- could not be reasonably avoided
- unique to plaintiff (i.e. lost profits) - Incidental damages: expenses related to sale of GOODS (inspection, storage, shipping)
- Reliance damages
- as if K was never made
- if expectation damages too speculative
- put P in the position would have been had the K never been formed - Liquidated damages
- difficult to calculate
- reasonable approximation of damages
- only measure used if ok - Nominal damages: breach w/o actual loss
- No punitive damages in K
- Restitution (quasi-K, quantum meruit)
- nonbreaching party must not have fully performed
- value of benefit conferred to D or loss suffered by P
- unfair to allow D to keep
- when there is no K:
- - P conferred a benefit;
- - reasonable expectation of being compensated;
- - D knew/should have known P’s expectation; and
- - D unjustly enriched - Replevin (person prop or inability to cover)
- Ejectment (real prop)
- Reformation (rewrite K)
- mistake
- misrepresentation - Rescission (undo K)
- mutual mistake
- unilateral mistake if other party knew
- unilateral mistake w/ extreme hardship outweighs other party’s expectations under K
- misrepresentation of fact or law
- other grounds: duress, undue influence, illegality, etc - Specific performance
- K is valid
- K conditions satisfied
- inadequate legal remedy (never services)
- - damages too speculative
- - insolvent D
- - multiplicity of suits
- - property is unique
- mutuality of performance
- feasibility of enforcement
- no defenses
- - laches: delay prejudiced defendant
- - unclean hands: P is also wrongful
- - other K defenses
8
Q
Third party rights and duties
A
- Only intended (not incidental) 3P beneficiaries have K rights:
- specifically identified in K; and
- receives performance directly from promisor; or
- has relationship with the promisee to establish intent. - Only vested 3P beneficiaries can enforce K:
- manifests assent to K
- brings suit to enforce
- material changes position in justified reliance - Assignment (transfer rights)
- no consideration required
- gratuitous assignment ok
- assignee stands in shoes
- can’t if material change - Assignment irrevokable if:
- for value:
- - for consideration; or
- - for security/payment of preexisting debt
- gratuitous:
- - token chose (stock) delivered;
- - assignment of simple chose (K right) put in writing;
- - obligor already performed
- - assignee detrimentally relied on assignment - Delegation
- delegator remains liable
- not allowed for:
- - personal judgment and skill
- - would change obligee’s expectancy
- - special trust
- - contractual restriction - Novation
- obligee accepts new performance
- terminates delegator liability
9
Q
Contract performance
A
- Conditions: promise modifiers
- precedent/subsequent
- express: strict compliance
- constructive: substantial compliance - Excuse of conditions (SWAN DIPE)
- substantial performance of constructive condition
- waiver
- anticipatory repudiation (unequivocal)
- noncooperation
- divisibility of K (i.e. CL price per unit)
- impossibility/impracticability/frustration: basic assumption, neither party assumed risk
- - impossibility: can’t perform by anyone
- - impracticability: extreme and unreas difficulty + nonoccurance basic assumption
- - frustration:
- – supervening act
- – parties did not reasonably foresee
- – purpose of K destroyed
- – both parties knew purpose during K formation
- prospective inability or unwillingness to perform (raise doubts)
- estoppel
- actual breach
3. Discharge of performance IM FOR SANTI - impossibility/impracticability - modification of K - frustration - operation of law - substitute K - accord and satisfaction - novation - time (lapse) - illegality
- performance/tender
- condition subsequent
- rescission
- cancellation
- release
- statute of limitations
