Contracts Flashcards
Elements for Frustration
Purpose of K has become basically valueless by virtue of some Unforseen Supervening Event not the fault of the party seeking discharge.
- There is some supervening act or event leading to the frustration;
- At the time of entering into the contract, the parties did NOT reasonably foresee the act or event occurring;
- The purpose of the contract has been completely or almost completely destroyed by this act or event; and
- The purpose of the contract was realized by both parties at the time of making the contract.
Test for Impracticability
(i) Extreme and unreasonable difficulty and/or expense; and
(ii) Its nonoccurrence was a basic assumption of the parties.
Mere change in the degree of difficulty or expense due to such causes as increased costs, unless well beyond the normal range, is NOT impracticability, bc these are the types of risks that a K is intended to cover.
Accord
New Agmt in which one party to an existing K agrees to accept, in lieu of performance, some other, DIFFERENT performance/obligation. (usually arises under a dispute);
-SUSPENDS performance of orig agmt until -Accord is/isn’t performed. Breach of accord? can recover on either orig K or accord.
Satisfaction
Performance of the accord agreement. Its effect is to discharge not only the original contract but also the accord contract as well.
Novation
occurs when a new contract substitutes a NEW PARTY to receive benefits and assume K duties, agreed to by both parties. The original contract will be discharged by the novation.
Discharge
may occur in several ways other than by actual performance, including by novation, accord and satisfaction.
Prospective failure to perform (NOT repudiation)
involves conduct or words that merely raise doubts that the party will perform. judged on a Reasonable person standard.
may be retracted, provided the other party has not yet changed position in reliance on the repudiation or prospective failure. The effect of a prospective failure is to allow the innocent party to suspend performance until she receives adequate assurances. She may treat this situation as a breach only if the assurances are not given. If a defaulting party regains his ability or willingness to perform, he must communicate that to the other party.
Anticipatory Repudiation and Effect
occurs when promisor, prior to time set for performance, unquestionably indicates that she will not perform. Repudiation MUST be unequivocal! need NOT be in writing
nonrepudiating party has four alternatives:
(i) Treat the anticipatory repudiation as a total repudiation and sue immediately;
(ii) Suspend his own performance and wait to sue until the performance date;
(iii) Treat the repudiation as an offer to rescind and treat the contract as discharged; or
(iv) Ignore the repudiation and urge the promisor to perform (but note that by urging the promisor to perform, the nonrepudiating party is not waiving the repudiation—she can still sue for breach and is excused from performing unless the promisor retracts the repudiation).
Note: U.C.C. section 2-610 provides substantially identical alternatives to a nonrepudiating party when there is an anticipatory repudiation in the case of the sale of goods.
*applies only to bilateral contracts with executory (unperformed) duties on both sides.
Constructive Condition
a condition read into the K by the Court
Offer
1) Manifestation of present intent to be bound demonstrated by expression of commitment, promise or undertaking, 2) communicated to identifiable offeree in 3) definite & certain terms.
1. intent (promise/undertaking of commitment)
2. communicated to identifiable offeree
3. certainty/definite in terms (UCC quantity, Land price, time, matter, parties)
(if material term to be added in the future, the terms are too vague) price of goods missing? reas price at delivery
creates a reasonable expectation in offerree that offeror is willing to enter into K on basis of offered terms.
merchant
regularly deals in this type of good; or holds itself out as having special knowledge in this type of good
intended TPB
intended and named in K (vs incidental)
TPB rights vest when:
TPB
1. manifests assent to K
2. sues to enforce K
or 3. aware of K and materially changes position in justifiable reliance
*Parties can modify K only PRIOR to TP vesting
D can raise any defense against TPB that could’ve been raised against orig K party.
Creditor TPB
TP was creditor of Promisee
! UCC 2-207 battle forms
Additional Term in acceptance?
NOT 2 Merchants:
Valid K, (UNLESS acceptance was Expressly made Conditional on assent to the additional terms) BUT, K does NOT include Additional terms (mere proposals) unless Offeror expressly agrees to them
–knocked out
2 Merchants:
Acceptance creates Valid K and ADDITIONAL term becomes PART of K UNLESS
1. offer expressly limited to acceptance to its terms
2. rejection of term w/in reas time
3. additional term Materially changes offer (substantially affects economic risks or benefits or changes usual remedy for breach; Maj. arbitration clause is material) - -
DIFFERENT TERM - KNOCKED OUT
Even if party added the material term in his OWN form, he is bound by UCC rule;
Goods
all tangible movable items
Merchant Confirmatory Memo
In K betw 2 Merchants, if one party sends the other a written confirmation of the understanding within a reasonable amount of time, it binds sender immediately and will bind recipient if he has reason to know of contents and doesn’t REJECT w/in 10 days
(exception to SoF)
Lapse of Offer
Lapse by Timing - Offer may be terminated by offeree’s failure to accept within time specified in offer. If no deadline, then within reasonable time.
Lapse by Operation of Law - Offer will terminate if not accepted before death of either party, insanity, destruction of proposed subject matter, or supervening illegality
Acceptance
Unequivocal assent to terms of offer made by one with power of acceptance, in manner prescribed or authorized by offer; manifestation of assent to an offer
CONSEQUENTIAL Damages only avail to….
buyer
Unilateral Contract:
offeror requests performance rather than a promise (once act is completed contract is formed and Payment due);
Only full performance with intent to accept is acceptance;
- unless an offer specifically provides that it may be accepted by performance only, will be construed as an offer to enter into a bilateral contract,
- ONCE performance has begun the offer cannot be revoked as to that performer. (Sort of like option)
Bilateral Contract:
Exchange of mutual promises;
-Can be accepted by either promise to perform, or beginning of performance
contract
mutual assent between parties regarding a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law, in some way, recognizes as a duty.
Mirror Image Rule
(CL ONLY) states that acceptance of an offer must be unequivocal acceptance to each and every term of offer. Any different or additional terms in the acceptance make the response a rejection and counteroffer. (be wary of mere inquiry that is NOT rejection)
Parol Evidence Rule (4 corners Rule)
where parties to a K intend to express their agmt in a final (integrated) writing, other expressions made PRIOR to or CONTEMPORANEOUSLY with the writing are not admissible to VARY, contradict, of modify the terms of the writing.
**Admissible for other purposes though (to supplement terms not mentioned, clear up Confusion in K) if not clear complete and exclusive integration of all terms..
Statements made AFTER K allowed
EXCEPTIONS: will NOT bar extrinsic evidence of Formation issues (Fraud, illegality, undue influence, duress, mistake, condition PREcedent, lack of consideration, trade usage/industry practice, course of dealing betw parties)
CL - parol evidence can be received to aid a fact-finder in interpreting a document only if the writing appears to be ambiguous on its face.
UCC - written contract’s terms may be explained or supplemented by course of dealing, usage of trade, or course of performance evidence, WHETHER OR NOT the writing appears to be ambiguous.
Reliance damages
put the plaintiff in the position she would have been in had the contract never been formed. If the plaintiff’s expectation damages will be too speculative to measure, the plaintiff may elect to recover reliance damages instead.
Mailbox Rule
Acceptance by mail or similar means creates contract at Moment of DISPATCH/mailing;
Rule does not apply to Options; does not apply when K lays out dates/times specifically; assumes stamp and proper address
Exceptions: Rejection and acceptance
- Sends Rejection then Acceptance, whichever arrives 1st binds
- Sends Acceptance then Rejection, acceptance effective unless rejection arrives 1st and offeror detrimentally relies on it
Promissory Estoppel / Detrimental Reliance
doctrine used by courts to avoid unjust outcome where there is NO legal K;
a promise that promisor
1. should reasonably expect to induce action or forbearance on part of promisee, and
2. which does induce action/forbearance/reliance,
3. becomes binding if injustice can be avoided only by enforcement of promise;
(award expectation OR reliance damages)
auction is with reserve
the auctioneer may withdraw the goods at any time until he announces completion of the sale.
auction without reserve
once the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time.
