Contract Law I Online Flashcard Outline
(107 cards)
1
Q
What is a contract? (Definition)
A
A promise or set of promises, breach of which si protected by law
2
Q
what makes a contract
A
exchange, mutual agreement, one promise, recognized as enforceable
3
Q
what two types of authroties are present in contract law?
A
Contract law is based upon state law and the common law of that state
4
Q
types of damages
A
purpose is to compensate for the economic damage from breach of contract
Direct, incidental, consequential,
5
Q
what are direct damages
A
expenses incurred during the breach
ex.: had to skip a day of work to find a new person
6
Q
consequental damages are:
A
losses as a consequences of the breach of contract
Ex.: loss of money from delayed opening
7
Q
incidental damages mean:
A
expenses incurred during the breach
Ex.: Had to skip a day of work to find a new person
8
Q
What is the UCC
A
Statue that governs the sale of goods; the Universal Commercial Code that is adopted by the states one by one, it is not in itself law, but it is a model law.
9
Q
What governs service contract
A
the common law
10
Q
what governs the sale of goods
A
UCC
11
Q
Predominant Purpose Test
A
developed in pass v. shelby; majority test; looks at the overall purpose of the contract as a whole
12
Q
factor analysis of the predominant purpose test
A
language of the contract; nature of business; primary reaons to enter into contract (strongest indicator); distribution of costs
13
Q
Gravamen Test
A
Minority test, splits up contract and applies law as appropriate
14
Q
Example of Gravamen Test
A
Court would have had to determine what cuased the failure of the wing, if it results from the defect in the bracket, the breahc would have arisen from the sale portion of the transaction. However, if it was installed improperly this would relate to the service aspect and article 2 would not apply then. thus, may result in partial UCC warranty protection as it may apply the UCC to the part of the goods, and then the common law to the part of the services
15
Q
Why does it matter to decide scope
A
it matters because it can be determinative of the case, if it goes forward, what type of law applies to the case, and this can make or break the case
16
Q
Example of why scope of contract matter
A
Custom com. Eng. Inc. v. E.F. Johnson Co.: court had to decide if UCC applied or not because it would be 4 years staute of limitation under the uCC vs. 6 years in most states if it’s a service contract under the common law
17
Q
Merchant Definition
A
In theb usiness of selling or buying goods of the kind involved in the transaction, or
her occupation is such that it can be reasonably tkaen to represent hat she has expertise relating either to the goods sold or the practices invovled in the transaction.
18
Q
Objective Test
A
Looks at the observable, overt action of the parties in forming their contract, must have mutual assent and objective manifestation of that assent
Must be aware of offer, execpt agains government reward offers
19
Q
When does Subjective intent come into play?
A
when there in an unclear meaning in the terms, and while not controlling, it may be used to shed light on the state of those negotiations and could bear on that party’s objective actions
20
Q
reasonable person construct
A
attributes, (experience, trainig, and commercial sophistication),
background information that he possessed,
relationship between the parties, and
context of the transaction
21
Q
Duty To Read
A
assenting party has a duty to read the contract
22
Q
requirement for duty to read
A
the terms but have been identified and been made available for the assenting party to review
23
Q
Example of duty to read
A
James v. McDonalds: Rules To participate in contest; rules made available and put on notice by sings placed aroudn McDonalds direcitng her to where the ruels could be located at
24
Q
Boxtop Terms
A
Terms printed on the box containing the product on the exterior of the packaging and discernable before opening the packaging
25
Shrinkwrap Terms
Terms could be included inside the package, say, in a printed insert or userís manual package with the product, or in electronic from on software included in the package.
26
Clickwrap
terms on a website that are set up that when you want to book the airline ticket, for example, you have to scroll to bottom and click a button or check a box that signify acceptance of the standard terms
27
Browsewrap
terms are provided for in a link and the buyer can click on them and review them, but doesnít have to go and review them before being able to proceed and be bound by them
28
Fair and forthright standard
Terms can't be hidden. Cannot be styled, or presented in a manner, or the placement of the provisions is seen unfairly, or designed to conceal or deemphasize its provisions if identically presented
29
Submerged terms
Terms found below view of the screen, beyond the material that initially filled the screen and users would not reasonably have concluded the unseen portion contained a notice of standard terms
Terms are not made available anywhere else
30
Bad Jokes
Objective manifestation of intent still controls & Subjective assent not required
31
Example of Bad Joke
Lucy v. Zhamer
Specific performance was ordered as the contract is based upon the express, objective manifestation of the and not the secret, objective, unexpressed, intent manifestation.
However if offeree does not take it as a serious offer then it will not be held as contract
32
Manifestation of intent from offeree
Reasonable:
if the offeree deems the contract as reasonable then it will be deemed to be binding
Based upon outward, objective intention of the parties
33
Exclusion/Exception to Bad Joke
Invitation to negotiate or invitation to provide offer
| Acts evidently done in jest or without interest to create legal relationship
34
Offer Definition
Manifestation of willingness to enter into bargain so made so as to other person to know his assent to the bargain is invited and will conclude it
35
Offer Requirement
(1)Clear, Definite, Explicit
(a)Language of limitation
(i) How many you have
(b)Time to obtain it
(c)Act/promise that must be performed
(d)Etc.
(2)Leaves nothing open for negotiation
(3)Acceptance will complete the contract
36
UCC and Application of Offer
Leaves it oppen for Common Law to Mandate
37
Acceptance Two Types
Can be acceptance of the susbtantive, which are the terms written in the contract, or said for oral contracts; or it can be procedrual which is the method by which you can accept the contract
38
Restatement for Acceptance
Section 30
(1) deals with the explicit requriement for acceptance via words, or by performance or refraining from certain act as method of performance
(2) where no specific method has been specified then it will be anyone that is deeemed reasonable under the circumstances
39
Requirement of Acceptance
a) Acceptance must be communicated to the Offeror
(1) Offeror must be made aware of the acceptance
b) Acceptance must be in compliance with instructions from offer relating manner and method of acceptance
c) Acceptance must not vary the terms of the contract proposed in the offer
(1) Any disagreement with the material terms of the offer will constitute a rejection or counteroffer
(2) If counteroffer is given, then there is no chance for the old offer to be accepted if the offeree changes its mind.
d) Acceptance must occur while the offer is still in effect: lapse or Termination of the Offer
(1) If no time frame is given, then there is a reasonable time frame open for which the offeree can communicate it's acceptance.
(2) Offer will terminate as a result of acceptance coming in after lapse
40
Termination of Acceptance
a) Lapse
(1) Time has run out to accept
b) Rejection by offeree
(1) The offeree rejects the offer
c) Counter-offer
(1) The offeree gives his own offer instead of accepting the original offer
d) Revocation
(1) The offeror takes back its offer
(2) Effective when it is communicated to the offeree
41
General Effective Date of Acceptance
Takes effect when communicated in fact to the offeror
42
Mailbox Rule Exception
(1) Effective date of non-instantaneous communication of an acceptance is governed by the mailbox rule
(a) Where mail is an expressly or implied authorized or reasonable medium of acceptance, a properly stamped and addressed acceptance takes effect when deposited in the mail.
(b) Can avoid it simply by specifying in the offer that acceptance will only be effective on receipt
(2) Requirements
(a) Communication must be substantially instantaneous, and
(i) Occur within a few seconds or at the most within a minute or two
(b) Communication must be two-way
(i) One party must be able to readily determine whether the other party is aware of their communication, through immediate verbal response, or nonverbal cues if face-to-face.
(c) Answers must be NO to both
43
General Rule on Silence as Acceptance
No Response=rejection
Offeror cannot change this general rule by writing the offer in away that compels the offeree to respond to avoid being bound
44
Exception to Silence as Rule
Section 69 of Restatement:
(a) Parties have Relationship
(1) The parties have a relationship of dealing together and do not require assent to signify acceptance
(b) Takes advantage of services
(1) If the offeree accepts the services while given a reasonable opportunity to reject them and reason to now that they were offered with the expectation of compensation then they will be held to be bound by it
(c) Property
(1) Can still be bound if acted to the property (personal) in a manner inconsistent with the offerorís ownership of it.
45
Revocation of an offer
1. When can he revoke
(1) Whenever he wants as long as that is communicated, even when stated the offer will remain open until a certain time it can still be closed
2. Cannot revoke when
(1) It is a firm offer
(2) When something was given to keep the offer open for a certain period of time
3. Notification
(a) Valid Notification
(1) Given at any moment directly to the offeree
(2) Given indirectly by a reliable source that the offer has been revoked
(b) Not valid notification
(1) Telling an agent is sufficient to meet requirement
(2) Private acts are not acceptance
46
Bilateral
Contract where both parties have made promises to be performed at a future date
47
Unilateral
Only one party has made a promise to a future date and the other party has ocmpleted the perofmacne of the contract
48
Performance vs. Promsie
both good under common law; can be made exclusive method via terms of contract
49
shipment of goods as acceptance
(a) It is a reasonable manner of acceptance when they are shipped out it is considered as acceptance
(b) Non Conforming goods
(1) When the shipment is that of goods which were not ordered by the buyer, then the shipment is considered a counteroffer and not an acceptance
50
UCC 2-206(1)(b) alteration of non conforming goods
(1) Acceptance by promise to ship or prompt or current shipment of conforming or non-conforming goods, but if seasonably notified the buyer that the shipment is an accommodation it is a counteroffer.
(b) Allows non-conforming goods to be viewed as acceptance unless the seller gives notice that the goods are just meant to be as a replacement that they can take
51
Communication of Acceptance by Performance
Acceptance takes place immediately upon perofmring the prescribed act
notification can be done after the act ahs been complicated
52
Performance: UCC vs. Common Law
UCC 2-206 (2)
(a) Notify of acceptance once it has been started but make sure its accepted before it lapses
Rest. Sect. 45
(a) not necessary, unless:
(i) Specifically requested
(Offeree has reason to know that the offeror does not have adequate, reasonably prompt, and relaible means to know that the offeror has of learning of the performance then offeree must notify)
53
Acceptance of an offer that cannot be complted instantaneously
Governed by Restatment Sect. 45 & Sect 62
(a) Restatement Section 45
(1) Scope:
(a) Exclusive by performance
(2) acceptance when promise is started, but will be left open until completion, and if never finished then there is no acceptance
(b) Restatement Section 62
(1) Scope:
(a) When method is left open
(2) Acceptance when the performance is started
(a) If quit midway then there is a breach of contract
54
Battle of The Forms & Service Contracts
Additional or propsed terms are counter-offer
55
Battle of the Forms applies when:
(1) different forms in paper
(2) confirmation
exception: non-material alteration don't fall into additnional or propsed terms
56
Rolling Contract
Where there are additional terms given after paying for goods at store
57
Two Methods fo Rolling Contract
1. Contract at store
(1) Contract is created at store when paid for, and then there are additional terms that are read and accepted at home when the product is kept and enjoyed
2. Offer in Box
(1) The offer is not at the store but in the box and when the terms are reviewed and you keep and enjoy the good then you are accepting the good
58
Opportunity to Reject Rolling Contract
Buyer needs to get the opportunity to reject the terms by specifying how they can reject in the terms
(a) acceptnace by silence is okay and allowed
59
Does 2-207 apply to rolling contract
(1) It doesnít apply because the acceptance is made by performance and 2-207 requires for there to be two written forms
60
General Rule for Preliminary Agreeemnts
They are Not Binding
61
Exception to Rule for Preliminary Agreements
Is there:
(1) An expressed reservation not to be bound
(a) First factor frequently the most important
(2) Partial performance
(3) Agree upon all of the terms
(4) Is it a type of contract usually committed to writing
62
Types of Agrreement Letters
Two Sets, one has 2 types, the other has four types, with the first two being a type one from first set, and the second two being a type 2 from the first set
63
(a) Type I
(1) Reflecting a meeting of the minds on all the issues perceived to require negotiation
(2) Binds both sides to their ultimate contractual objective
64
(b) Type II
(1) Binding only to a certain degree, reflecting agreement on certain major terms, but leaving other terms open for further negotiation
(2) Do not commit the parties to their ultimate contractual objective, but rather to the obligation to continue negotiation the open issues in good faith in an attempt to reach the objective with the agreed framework
65
Type I
Parties may say specifically that they intend not to be bound until the formal writing is executed, or one of the parties has announced to the other such an intention
66
Type II
They clearly point out one or ore specific matters on which they must yet agree before negotiations are concluded
67
Type III
Parties express definite agreement on all necessary terms, and say nothing as to other relevant mattes that are not essential, but that other people often include in similar contracts
68
Type IV
Cases like those of the tired class, with the addition that the parties expressly state they intend their present expressions to be a binding agreement or contract; such an express statement should e conclusive on the question for their intent
69
Four Factor Analysis for Type I Aggreement
a) Whether there was an expressed reservation of the right not to be bound in the absence of an agreement;
b) Whether there has been partial performance of the contract;
c) Whether all of the terms of the alleged contract have been agreed upon; andd) Whether the agreement at issue is the type of a contract that is usually committed to a writing
70
Five Factor Analysis for Type II Agreement
a) Parties may say specifically that they intend not to be bound until the formal writing is executed
b) Parties clearly point out terms on which they must yet agree before negotiations are concluded
c) Parties express definite agreement on all necessary terms, and say nothing as to other relevant matters that are not essential
d) Cases where parties expressly state that they intend their present expressions to be a binding agreement or contract
71
Indefiniteness or Vagueness in agreement
a) Unenforceable for vagueness when it's essential terms are too indefinite to allow a court to determine with reasonable certainty what each party has promised to do
Essential Terms:
(1) price
(2) duration of contract
72
Good Faith
Reserved for those terms that you can't know at all. If you have an agreement to continue negotition in good faith
73
The Statue of Fruads is what type of action in court?
It is an affirmative defense
74
General Rule for Instrument of Contract
Do not need to be written instrument for contract
75
Type of Contracts that require instrument
under the statue of frauds there are 6 types of contracts the require a written instrument, but three are the most important:
1. Contract for the sale of land
2. Contract that cannot be performed within a year from the time of execution
3. And contract for the sell of goods over $500
76
Contract for the Sale of Land
(a) Promise to transfer to any person any interest in land is within the statue of frauds
(1) Lease, mortgage, easement, etc. are included in here as well.
77
Contract that Cannot be Performed within a year from the time of execution
(a) Cannot be completed within one year
(b) Wont apply when
(1) Indefinite length
(2) Performance could possibly be completed within one year of itís terms
78
Contract for the Sell of Goods over $500
(a) UCC 2-201
(1) Basic requirements
(a) Omission or incorrect term do not destroy contract
(b) Quantity of goods must be established
(c) Merchant is anyone who is a business, not matter if goods are in kind
(2) Between merchants
(a) Objection must be given within 10 days or is held as acceptance and is bound
(3) Exceptions to (1)
(a) If the goods are to be specially manufactured for the buyer, before being told they didnít want them anymore, and is reasonable to assume that they are for the buyer, and SUBSTANTIAL BEGINNING of their manufacture or commitments for their procurement
(b) Admits in his pleading, testimony, or otherwise in court that a contract for sale was made, not enforceable beyond the quantity of goods admitted
(c) Goods that have been paid for and accepted, and goods received and accepted for
79
Requirements
Section 131 Restatements:
Writing or record
Signature
Content
80
Writing or record
a) Can be electronic or in paper
b) Can be spread across multiple papers/documents so long as they can be linked together
c) Not matter if it wasnít intended to be contract, it is only to provide evidence that there was a contract formation taking place
81
Signature
a) Signature of whom the contract is to be enforced against
b) Signature can be any symbol in writing or electronic that has been adopted as signature to identify yourself and mark the paper as yours
(1) This can be an email address, or a letter head
82
Content
(a) Need enough info to evidence a contract was made
83
Application Analysis
1. Was it type that applies Statute of Frauds
2. Is there a signed record to satisfy the Statute of Frauds
3. Is there another exception to the statute of frauds that will allow enforcement?
84
Exception
1. Part Performance
(a) Part performance of an oral contract may provide enough of the contract existence to justify enforcing it despite noncompliance with the statue.
(b) Conduct of the parties not only proves the contract but also demonstrates reliance on a contract that is worthy of protection.
(1) No other reason for the performance unless there was a contract in existence between the two
(c) Courts are quite begrudging in applying it.
85
Bargain for Exchange
The proise of one party must be in exchange from bargain of the promise of the other
86
Consideration my consist of:
1. Right, interest, profit, or benefit to one party, or
2. Forbearance, detriment, loss or
3. responsibility given, suffered, or undertaken by other
87
Adequacy of consideration
Court will not look at adequacy, it is enough that the proises induced each other to satisfy the barian-exchange rquirement
88
Past Consideration
consideration for past events/action is not sufficient to meet consideration requriement. That is only being a good person to the other party in ginving something as payment for their preivosu act. This is due to the fact that they are not mutually inducing, one doing one thing for the promise of the other. past events were done without the promsie of getting osmething out of them in the future, well at least this specific promsie provided wasn't what they wanted when they toook those actions, therefore, they do not meet the basic requirment of consideration
89
Notification of consideration
not requried to notify or state, so long as the court can deterine that consideration does in fact exist
90
Conditional Gift vs. Consideraition
Consideration has an inducement of the pormises of each other, they were bargained for. Conditional gifst is just a means to enable one to receive the gift
91
Nominal Consideration
this is sham consideration where they are only giving or doing the act in order ot receive the money as consdieration but it's most obiosuly false
92
Example of Nominal Consideration
(1) Give me napkin and Iíll give you $25K. not so as this is obviously sham consideration and thus is not in fact a bargain or an inducement from the promises
93
PreExisting Duty
Legal Duty owed to the PROMISOR
Cant be honestly disputed that the legal duty is owed
94
Scope of the UCC
applies to transactions in goods
95
UCC definition of transactions
(1) This refers to sales
| (2) The passing of title from the seller to the buyer for a price
96
UCC definition of goods
All things (including specially manufactured goods) which are movable at the time of identification to the contract for sale
97
Objective Manifestation
Observable acts of the parties as seen by their expressed words and deeds interpreted by the reasonable expectation of the parties
98
Reasonable expectation based on:
(1) Attendant circumstances [in which the agreement was made]
(2) The situation of the parties
(3) The objectives they were striving to attain
99
Meeting of the minds
each party to the contract must have been fairly informed of the contract's terms before entering into the agreement
100
Example of Bad Joke:
Leonard v. PepsicoHeld that the promotional ad run by Pepsico was clearly made in jest when it offered the Jet because there is no way that this could have been made as serious
101
UCC 2-204
(1) Contract may be made in any manner sufficient to show agreement, and includes conduct by parties which shows existence of contract
(2) Time of when it was formed not necessary
(3) One or more terms may be left open as long as it doesn’t fail for indefiniteness if intention to make contract is present, and reasonably certain basis for giving appropriate remedy
102
Are advertisements
1. General rule
(1) No offer in an offer or solicitation
2. Exception
a) When the offer or solicitation is:
(1) Clear, definite, and explicit, and
(2) Leaves nothing open for negotiation, and
(3) Acceptance will complete the contract
103
Acceptance under the UCC 2-206
(1)(a): unless otherwise indicated, offer can be accepted by any manner and by any medium reasonable under the circumstances
104
Types of Revocation
(a) Direct revocation
(i) Given by offeror
(b) Indirect revocation
(i) Given by reliable source
c) Death/mental incompetency
(i) If offeror or offeree die in the middle of negotiations, and it doesnít matter if the offeror or offeree knew of the oncoming disability or death. Also, this doesnít happen during an actual already existing contract, it just passes on to the estate or legal custodian of the parties, respectively
105
Exceptions to the right of Revocation?
Exception is the firm offer
106
(a) Restatement Section 45
(1) Scope:
(a) Exclusive by performance
(2) acceptance when promise is started, but will be left open until completion, and if never finished then there is no acceptance
107
(b) Restatement Section 62
(1) Scope:
(a) When method is left open
(2) Acceptance when the performance is started
(a) If quit midway then there is a breach of contract
