Contract Sales and Leases Flashcards by Dani Marco

What are the main sources of contract law?

Common law (judge-made law) and the Uniform Commercial Code (UCC)

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one party may cancel

Types of Contracts

Voidable

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not enforceable

Types of Contracts

Void

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not fully performed

Types of Contracts

Executory

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fully performed

Types of Contracts

Executed

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formed by actions/conduct

Types of Contracts

Implied

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clearly stated terms

Types of Contracts

Express

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promise for an act

Types of Contracts

Unilateral

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promise for a promise

Types of Contracts

Bilateral

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What are the four essential elements of a valid contract?

Agreement
Consideration
Capacity
Legality

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offer and acceptance

4 Elements of Valid Contract

Agreement

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something of value exchanged

4 Elements of Valid Contract

Consideration

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legal ability to contract

4 Elements of Valid Contract

Capacity

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subject matter must be lawful

4 Elements of Valid Contract

Legality

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involves the sale of goods and is governed by the UCC

sales contract

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involves services, real estate, or intangible items and is typically governed by common law

nonsales contract

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lease contract is an agreement under the UCC involving the transfer of the right to possess and use goods for a set time in exchange for payment

lease contract

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When both parties fulfill all terms of the contract exactly as agreed, ending their obligations

Contractual Duties

discharge by performance

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When both parties mutually agree to end or modify the contract. This can involve rescission, novation, or accord and satisfaction

Contractual Duties

discharge by agreement

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A contract ends due to external legal reasons like bankruptcy, death, illegality, or the expiration of the statute of limitations

Contractual Duties

discharge by operation of law

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Each party must perform as agreed—either by delivering goods/services or making payment—within the time and conditions stated.

performance obligations

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A clear, factual statement or promise about the quality or function of a product, made by the seller

express warranty

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A guarantee that goods are fit for ordinary use and meet the standards of the trade

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implied warranty of merchantability

A warranty that applies when the seller knows the buyer’s specific needs and the buyer relies on the seller’s expertise to choose the product

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implied warranty of fitness for a particular purpose

A false statement of fact that induces someone to enter the contract | Defenses for Nonperformance of Contractual Duties

Misrepresentation

One party is mistaken, but if the other party knew or should have known, it may still be a defense | Defenses for Nonperformance of Contractual Duties

Unilateral Mistake

Both parties are mistaken about a basic fact that is central to the contract | Defenses for Nonperformance of Contractual Duties

Mutual Mistake

Performance is still possible, but extreme/unforeseen events make it excessively burdensome (e.g., natural disaster, war) | Defenses for Nonperformance of Contractual Duties

Impracticability

It's objectively impossible to perform (e.g., subject matter destroyed, person required dies) | Defenses for Nonperformance of Contractual Duties

Impossibility

The subject matter of the contract is illegal (e.g., contract to sell illegal drugs, or violate licensing laws) | Defenses for Nonperformance of Contractual Duties

Illegality

Too much time has passed since the breach occurred, and the time allowed by law to file a lawsuit has run out | Defenses for Nonperformance of Contractual Duties

Statute of Limitations Expired

An intentional lie or deception meant to trick someone into a contract | Defenses for Nonperformance of Contractual Duties

Fraud

When someone is forced or threatened into signing a contract | Defenses for Nonperformance of Contractual Duties

Duress

When one party exerts unfair persuasion over another, especially in relationships of trust (e.g., lawyer/client, caregiver/patient) | Defenses for Nonperformance of Contractual Duties

Undue Influence

One party lacked the legal ability to enter into a contract | Defenses for Nonperformance of Contractual Duties

Lack of Capacity

returns parties to original position | remedies for breach of contract

Restitution

cancels the contract | remedies for breach of contract

Rescission

court orders performance (used when goods/services are unique) | remedies for breach of contract

Specific performance

pre-agreed amount stated in contract | remedies for breach of contract

Liquidated damages

small sum, to show legal wrong | remedies for breach of contract

Nominal damages

rare, meant to punish | remedies for breach of contract

Punitive damages

for indirect but foreseeable losses | remedies for breach of contract

Consequential damages

to cover direct losses | remedies for breach of contract

Compensatory damages

If the buyer breaches (e.g., refuses to pay), the seller can refuse to deliver the goods, especially if payment hasn’t been made or credit terms have changed due to buyer’s insolvency | If a Buyer Breaches a Contract: Seller or Lessor Rights

Withhold Delivery

If the seller discovers the buyer is insolvent or has otherwise breached, they can stop goods from being delivered—either before or during transit (especially large shipments like truckloads or shipping containers) | If a Buyer Breaches a Contract: Seller or Lessor Rights

Stop Delivery in Transit

The seller may resell the goods to someone else and sue the original buyer for the difference between the contract price and the resale price, plus any incidental damages (like storage or resale costs) | If a Buyer Breaches a Contract: Seller or Lessor Rights

Resell Goods and Recover Damages

If the goods cannot be resold or have already been accepted by the buyer, the seller can sue to recover the full purchase price agreed upon in the contract | If a Buyer Breaches a Contract: Seller or Lessor Rights

Recover the Purchase Price

The seller may cancel the contract entirely and be relieved from any further performance or obligation to the buyer | If a Buyer Breaches a Contract: Seller or Lessor Rights

Cancel the Contract

If the buyer refuses to accept the goods without a valid reason, the seller can recover damages for the buyer’s failure to accept delivery (typically the difference between the contract price and market price at the time of breach) | If a Buyer Breaches a Contract: Seller or Lessor Rights

Recover Damages for Nonacceptance

If the goods don’t match the contract (wrong type, defective, late), the buyer has the right to reject them and not be obligated to pay | If a Seller Breaches a Contract: Buyer or Lessee Rights

Reject Nonconforming Goods

If the seller fails to deliver as agreed or provides defective goods, the buyer can cancel the contract and walk away from their obligations | If a Seller Breaches a Contract: Buyer or Lessee Rights

Cancel the Contract

The buyer can purchase similar goods from another source and then sue the original seller for the difference between the cover price and the original contract price, plus any extra costs | If a Seller Breaches a Contract: Buyer or Lessee Rights

Cover (Buy Substitute Goods and Recover Damages)

If the seller breaches, the buyer can sue for direct damages (like extra shipping or handling) and consequential damages (like lost profits due to delayed goods, if foreseeable). | If a Seller Breaches a Contract: Buyer or Lessee Rights

Sue for Damages

If the goods are unique (e.g., rare art, custom-made equipment), the buyer may ask the court to force the seller to perform the contract rather than accept monetary damages. | If a Seller Breaches a Contract: Buyer or Lessee Rights

Seek Specific Performance (if goods are unique)

If the buyer has already paid for the goods and the seller becomes bankrupt or insolvent before delivering them, the buyer can claim and recover the goods (if identified to the contract and still in the seller’s possession). | If a Seller Breaches a Contract: Buyer or Lessee Rights

Recover Goods if Paid For and Seller Becomes Insolvent

Contract Sales and Leases Flashcards

(55 cards)