Contracts Flashcards
type of law used in K
service: common law; good (all things moveable): UCC. If K has both goods and services, FL law determines whether the main purpose of the K is goods or services.
K formation requirements
1-mutual assent: offer & acceptance; 2-consideration; and, 3-no valid defenses
offer definition
invitation to enter into a K: 1-promise, 2-certain essential terms, and 3-communication w/ reasonable expectation of a K?
3 types of termination
revocation of offer; rejection; and, lapse of time
revocation of offer definition
an offer is revocable before acceptance, and generally effective upon receipt unless: 1-option contract; 2-detrimental reliance; and 3-partial performance of unilateral contract
option contract rules
1-common law: consideration paid to keep offer open for a certain period of time; 2-FL mailbox rule: does not apply to option K; 3-UCC Firm Offer: offeror is a MERCHANT who signs written assurance that offer will be held open
detrimental reliance definition
the offeror could reasonably expect that the offeree would rely to his detriment on the offer; the offer will be irrevocable for a reasonable period of time in an option contract
partial performance of unilateral K: definition
where offeree’s performance has already begun, offeree has a reasonable time in which to perform,but offeree is NOT mandated to complete performance
rejection of K
includes counter-offer and conditional acceptance
lapse of time definition
failure to accept offer w/i a reasonable period of time or specificied period
acceptance in general
a manifestation of intent to enter into an agreement; must be communicated in any “reasonable manner” before offer is terminated
common law acceptance rule
mirror image rule: acceptance must be identical to the offer; otherwise no K
UCC acceptance rule
a K is formed even if acceptance contains different or additional terms. 1-if one party is not a merchant, terms of offer control; 2-if both parties are merchants, the additional terms in the acceptance become part of the K unless: they materially alter the K, the offer expressly limits acceptance to the terms of the offer, or the offeror objects to the terms w/n a reasonable time
mailbox rule of acceptance
K created at moment of dispatch unless: 1-stipulation; 2-option K; 3-first arrival of rejection/acceptance; 4-rejection and detrimental reliance
consideration in general
requires: 1-bargained for exchange; 2-legal value (benefit or detriment) between parties. FL RULE: (legal minority value rule) that consideration is either benefit or a detriment to one party.
consideration: pre-existing duty
FL finds consideration when a pre-existing duty was owed to a 3rd party
consideration: mutuality
both parties must be bound or = “illusory K”; discuss meetings of the minds, intent to be bound, mutual promises
consideration: promissory estoppel
consideration is not necessary when: 1-promise reasonably expected to induce action or forbearance; 2-of q definite and substantial character, and; 3-action or forbearance induced causing detrimental reliance. Limited remedies: restitution and reliance damages
consideration substitute-FL promises under seal
imports consideration because oral K is harder to modify, but not conclusive
no valid defenses exist generally
(usually 2-3 defenses in fact pattern) enforcement, absence of mutual assent, incapacity, excuse/discharge of performance or non-performance
no valid defenses exist: enforcement
1-SOF: a K w/i the statute must be 1-in writing, 2-signed by party to be charged, and 3-contain the essential terms of the K
Statute of Frauds K types
land; one year rule Ks; sale of goods over $500.
statute of frauds: land
promise creating an interest in land must adequately describe the land, identify the parties, and value to be paid. Ex.: sale of land, leases over 1 yr, fixtures, minerals/structures severed by buyer; mortgages
statute of frauds: one year rule
promises that cannot be completed w/i one year from DATE OF AGREEMENT; must be in writing
statute of frauds: sale of goods
sale of goods over $500, except where: 1-the agreement is for specifically manufactured goods; 2-the agreement is b/w merchants & one sent a confirmatory memo; 3-a party admits the K in court of pleadings; 4-part payment or acceptance has been made, which makes the K enforceable to that extent
FL specifically applies SOF to:
healthcare guarantees, debts barred by SOL, newspaper subscriptions, home solicitation sales, home improvement Ks, & credit card agreements to be in writing
defenses: enforcement: unconscionability
a K may be VOIDABLE where its clauses are extremely one-sided or unfair when made. This includes Ks w/ inconspicuous risk-shifting provisions (hidden disclaimers of warranty) and Ks of adhesion (“take it or leave it” where the parties don’t have equal bargaining power). Tested at TIME K WAS MADE, not later.
defense: absence of mutual assent: unilateral mistake
K enforceable, unless: 1-unconscionable or 2-other party knew/should have known of the mistake
defense: absence of mutual assent: mutual mistake
mutual mistake is a defense if: 1-concerns a basic assumption, 2-adverse material effect on agreed upon exchange, and 3-adversely affected party did not assume risk of the mistake
defense: absence of mutual assent: ambiguity
1-neither party aware-no K unless both parties happened to intend the same meaning; 2-both parties aware-no K unless parties in fact intended the same meaning; 3-one party aware-binding K exists based on the ignorant party’s reasonable interpretation of ambiguous terms
defense: absence of mutual assent: fraudulent misrepresentation
“fraud in the inducement”- VOIDABLE K if innocent party justifiably relied upon the misrepresentation
defense: absence of mutual assent: non-fraudulent misrepresentation
must be representation of a material fact justifiably relied upon; remedy = recission of K
