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Flashcards in Contact and Sales Deck (91):

Article 2 of UCC

Applies to sales of goods.


Common LAW

Applies to real estate and services contracts.


What is a contract?

An agreement that is legally enforceable.


Test for an Offer

Whether a reasonable person in the position of the offeree would believe that his or her assent creates a contract.


Terms of sales real estate needs

price and land description.


sale of goods have a price requirement?



vague or ambiguous terms.

fair, appropriate, reasonable. not an offer


requirement contracts/output contracts.

all, only, exclusively, solely. an offer.


can buyer increase in requirements?

so long as the increase is in line with prior demands.


How is an offer revoked by offeror conduct.?

(1) unambiguous statement by offeror to offeree of unwillingness or inability to contract. or
(2)later unambiguous conduct by offer indicating an unwillingness or inability to contract that offeree is aware of.


What is an option? (common law)

(1) promise not to revoke (or keep the offer open) and (2) this promise is supported by payment or other consideration.


What is the UCC "Firm Offer Rule"

(1) offer to buy or sell goods, (2) signed, written promise to keep the offer open. (3) party is a merchant.


Can an offer be revoked if there is Reliance?

an offer cannot be revoked if there has been (1) reliance that is (2) reasonably foreseeable and (3) detrimental.


When is an Unilateral contract become irrevocable?

The start of performance makes that offer irrevocable for a reasonable time to complete performance. mere preparation is not enough.


Does a counteroffer generally terminate an offer?

Yes. Counteroffer generally terminates the offer and creates a new offer. They do not defeat terminate options.


Does a conditional acceptance at common law terminate the offer?

Yes, it becomes a counteroffer that can be accepted by conduct. Look for a response to an offer with the word accept, followed by "if", "only if", "provided", "so long as", "but", or "on condition that."


Mirror Image Rule (common law)

A response to an offer that adds new terms is treated like a counteroffer rather than acceptance.


Additional or different terms under the UCC

Under the UCC, a response to an offer that adds aditional or different terms, but does not make the new terms condition of acceptance, is generally treated as an acceptance. Additional term is not part of the contract unless both parties are merchants. If the additional term is material its not part of the contract OR if the additional term is objected.


Can the offeror control the method of acceptance?



Is generally the start of performance acceptance?

Yes. Except is not acceptance of unilateral contract offers. Completion of performance is required.


When is Acceptance effective when mailed?

when mailed (mailbox rule)


When are all communications other than acceptance effective?

when received?


Can the mailbox rule be used to defeat an option?



If rejection is mailed before acceptance is mailed?

Neither effective until received.


If the seller sends the wrong goods, is there an acceptance?

yes an acceptance and breach.


what is an accommodation, in regards to sending wrong goods?

an explanation, which creates a counteroffer and no breach.


Generally who can accept?

(1) Only a person who knows about the offer at the time they accepts. (2) who is the person to whom it was made.


Can offers be assigned? Can options be assigned?

No, yes.


Can the offeror revoke their offer, once offerree rejects?

No it has become a full butterfly.


Reasons for not enforcing a contract

Lack of consideration, lack of capacity, statute of frauds, existing laws, misrepresentations, nondisclosure, duress, unconscionability, ambiguity in words, mistakes at the time of the agreemenent.


What is a consideration?

bargained for legal detriment.


Is past consideration valid?



Pre-existing duty rule

Doing what you are already legally obligated to do is not new consideration for a new promise to pay you more unless there is a change in performance or peformance is excused to unforeseen difficulty, third party to promis.


Does the Pre-existing duty rule apply to the UCC?



Under the UCC is new consideration required to modify a sale of goods contract?

No. good faith is the test for changes.


What is Promissory Estoppel?

Promise, Reliance that is reasonable, detrimental, and foreseeable, Enforcement necessary to avoid injustice.


Who lacks capacity of contract?

Infant under 18, metal incompetents, intoxicated persons.


What are the four contracts within the statute of frauds?

1. promises to pay another person's debts only if that person does not herself pay.
2. Service contract not capable of being performed within a year form the time of the contract.
3. Transfers of real estate, unless for a lease of a year or less.
4. Sale of goods for $500 or more.


How can the statute of frauds be satisfied?

by performance or writing


How does performance in the transfers of real estate satisfy the statute of frauds?

Part Performance by having 2 of the 3: (i) improvements in land, (ii) payment, and (iii) possession.


How does performance in service contracts satisfy the statue of frauds.

Full performance.


How does performance in the sale of goods contracts satisfy the statute of frauds?

For ordinary goods, part performance but only to the extent of the part performance. Look for delivered vs. undelivered. For specially manufactured goods, as soon as seller makes a substantial beginning. custom made or specifically ordered.


How does writing satisfy the the statute of frauds? (common law)

All material terms test, who and what. Look at who signed the writing. Only the D matters.


Requirement for Article 2 Statute of Frauds writing?

Contract must indicate that there is a contract for the sale of goods and contain the quantity term. It must be signed by Defendant except if there is a delay in responding (but there must be a writing)


When is written proof of authorization to enter into contract for someone else required?

when its in within the statute of frauds.


When is written proof of contract modification required?

when the deal with the alleged change would be within the Statute of Frauds.


Under common law, are contract provisions requiring all modifications be in writing effective?

NO. Ignore contract language.


Under UCC, are contract provisions requiring all modifications be in writing effective?

Yes unless wived.


what is misrepresentation? and can it rescind the contract?

Statement of fact before the contract, by one of the contracting parties, that is false, that is fraudulent or material, and induces the conduct. Yes it can rescind the contract.


Do Non-disclosures effect aggreements?

No unless you conceal.


Can physical and economic duress effect the enforcement of the agreement?

yes, not enforceable.


what is unconscionability?

Empowers a court to refuse to enforce all or part of an agreement. Must be an unfair surprise and oppressive terms.



there will be no contract if parties use a material term that is open to at least two reasonable interpretations, each party attaches different meaning to the term, and neither party has reason to know the term is open at least two reasonable interpretations.


Unilateral Mistake of Material fact

There will be only relief if the other party had reason to know of the mistake.


Multilateral Mistake of Material fact

There will only relief if both parties are indeed mistaken about an existing fact that is material and person seeking relief does not bear the risk of the mistake.


When can the parol evidence rule be used?

1. Evidence of earlier agreements cannot be considered for the purpose of contradicting the terms in the written contract.
2. Court may use parol evdidence for the limited purpose to determine whether there is a mistake in integration.
3. Parol evidence may be used for the limited purpose of determining whether there is a defense to the enforcement of the agreement.
4. Parol evidence may be used to resolve ambiguities in the written contract.
5. Prevents for the use of adding additional terms unless it was a partial integration. would ordinarily be in a separate agreement.


Can conduct be a source of contract terms?

Yes. Course of performance, Course of dealing, Custom and Usage.


What are the sellers delivery obligations under a shipment contract?

1) get the goods to a common carrier, 2) makes reasonable arrangements for delivery, and 3) notify the buyer.


When does the seller complete its delivery obligation under a destination contract?

when the goods arrive at the te destination.


How can you determine whether its a shipment or destination contract?

Its a shipment contract when the FOB matches the sellers city.


When is there a risk of loss problem?

(1) after the goods have been formed, and before the buyer receives the goods, (2) the goods are damaged or destroyed, and (3) neither buyer nor the seller is to blame.


what are the four risk of loss rules?

1) Look to the Agreement, 2) who breached, 3) Common carrier delivery, 4) catch all. if the seller is a merchant the risk of loss is when the buyer receives the goods, but if the seller is a non-merchant, risk of loss is when the seller makes available the goods.


What is an express warranty?

Look for words that promise, describe or state facts. Sample or model. Not an opinion.


What is an implied warranty of merchantability?

when person buys goods from a merchant, there is an implied warranty that the goods are fit for the ordinary purpose for which such goods are used.
Must be merchant who deals in goods of that kind.


What is an implied warranty of fitness for a particular purpose?

Goods fit for particular purpose. buyer has to have particular purpose, relying on seller to select suitable goods, and seller has reason to know of purpose and reliance.


Can express or implied warranties be disclaimed?

Express cannot, implied can. "as is" or "with all faults"


What is the Perfect Tender?

Only applies to the sale off goods. It means that delivery must completely comply with the contract terms.


what happens if there is anything less than perfect tender?

Gives the buyer the option to reject the goods so long as the buyer acts in good faith, the buyer must take reasonable care of the goods and cannot continue to use the goods.


When can a seller cure a delivery that is less than peferct.

He can cure, as long as the time for performance has not yet expired, and the seller has reasonable ground to believe tender would be perhaps with a money allowance.


Installment Contract

the buyer has the right to reject an installment only where there is a substantial impairment in that installment that cant be cured.


Can a buyer reject the goods, once it accepts them?

No, but they can revoke if nonconformity impairs the value of the goods, there is excusable ignorance, and revocation is is within a reasonable time after discovery.


When does the third party beneficiary vest?

When he knows of and has relied on or assented as requested.


who can the beneficiary recover from?



who can the promisse recover from?

the promisor


Can you usually get specific performance for sale of real estate?

yes but cannot take away from bona fide purchaser.


Can you get specific performance for services contract?

there is no specific performance for contract for services, but you can get possible injunctive relief.


What do we look for, for excuses?

1) non-performance of contract (2) something happening or not happening after contract.


what is anticipatory repudiation?

anticipatory repudiation is an unambiguous statement or conduct (1) that the repudiating party will not perform (ii) made prior to the time that performance was due.


what does anticipatory repudiation excuse?

excuses the other party's duty perform.


when can one recover for an anticipatory repudiation?

immediately, unless the claimant has already finished her performance.


can anticipatory repudiation be withdrawn?

yes so long as there has not been a material change in position by the other party.


does insecurity excuse the other party to perform?

No. other party can in writing demand adequate assurance.


What kind of breach excuses the other party from performing a contract by common law?

A material breach. Have to look at whether there is substantial performance.


If an express condition is not met? Is there a breach and an excuse to perform?

No there is an excuse. Strict compliance with condition is required.


when can parties rescind a contract?

if there is still performance remaining on both sides.


What is an accord?

An agreement by parties an already existing obligation to accept a different performance. ( if, then)


if the new agreement is performed, is performance of the original obligation excused?



If the accord is not performed, can the other party recover on the original obligation?



what is modification?

an agreement by parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation. (Instead) it excuses once party agrees.


what is novation?

an agreement between BOTH parties to an existing contract to the substitution of a new party.


how is novation different than delegation?

novation requires the agreement of both parties to the original contract.