Contracts Flashcards
(138 cards)
1
Q
Requirements of a Firm Offer
A
- Merchant involved
- Written
- Signed by the offeror
- Contains explicity promise not to revoke
- DOES NOT need consideration
2
Q
Under the UCC can the buyer revoke acceptance of the goods?
A
Yes! If the goods seemed ok when delivered but a defect is later discovered within a reasonable time
3
Q
What are the situations statue of frauds applies to?
A
Monsieur Sour
- Marriage (ex: prenup)
- Surretyship: Guaranteeing debt of other NOT for your own econmic benefit (ex: covering loan someone else took for renovations to your house)
- One-year: There is no possible way for contract to be performed within one year of contract formation (interpreted narrowly)
- UCC: goods contracts for $500 or more
- Real Property: Sale of interest
4
Q
When can you accept by silence?
A
- Unilateral rewards or contests
- Unilateral and parties are geographically close
- Past history of silence being acceptance
- Offer says acceptance by silence and offeree intends to accept by silence
5
Q
What is the effect of seller’s shipment of nonconforming goods with a notice of accommodation?
A
It is a counter offer that the buyer can accept or reject
6
Q
If you have a contract with someone and they send you nonconforming goods, what are your options?
A
- Accept everything
- Reject everything
- Accept some, and reject the rest
7
Q
Unconscionability Defense (2 varities)
A
Two Varieties:
- Procedural - defect in the bargaining process (ex: hidden term)
- Substantive - a rip-off
Split jurisdiction: some require one variety others require both
8
Q
Impossibility and Impracticability Defenses
A
Look for an unforseen extreme event that hinders the ability to perform, not just something that increases the cost to perform
Examples: Performance becomes illegal (prohibition 2), subject of contract destroyed, picasso dies or is incapacitated
Impracticable vs. Impossible: I ask you to paint my house. Impracticable is it burns down because you would need to build another house. Impossible is it became illegal to paint houses.
9
Q
IS a contract for $500 of goods in SOF?
A
Yes
10
Q
Real estate satisfying of SOF
A
Signed writing
OR
two of the following three are met
- Possession
- Payment
- Improvements to the Land
11
Q
Is material harm needed for a breach of contract claim?
A
No, but it may be needed for damages
12
Q
Quasi-Contracts Requirements
A
- Plaintiff confers measurable benefit on defendants
- Plaintiff reasonably expects to be paid
- It would be unfair to let the defendant keep the benefit without paying (look for opportunity to decline or good reason why there is no opportunity)
Note: Damages often limited to fair value of benefit
13
Q
What happens if a contract has a clause requiring all modifications to be in writing?
A
Unless the modification puts the contract in SOF terriroty, the court will not enforce the clase (Under common law)
EXCEPTION: Under UCC, these provisions are enforceable
14
Q
When is an express condition waived?
A
- The party receiving the protection of the condition can waive by:
- Words
- Conduct
- A party can waive through:
- Wrongfully interefering with condition
- Hindering occurence of condition
Judged on a good faith standard
15
Q
Three types of UCC warranties
A
- Express Warranty
- Implied Warranty of Merchantability
- Implied warranty of fitness for a particular purpose
16
Q
Main types of intented third party beneficiaries
A
- Creditor: Promisee striikes deal with promisor in order to repay some earlier debt to the third party
- Donee Beneficiary: No preexisiting obligation, but the promisee clearly intends to confer a gift of enforcement on a third party (ex: life isnurance receiver)
17
Q
Two requirements to accept an offer
A
You must know about the offer to accept it
You must communicate acceptance to the offeror for it to be effective
18
Q
Defenses to contract formation
A
- Misunderstanding
- Incapacity
- Mistake
- Fraud/Misrepresentation/Nondisclosure
- Duress
- Illegality
- Unconscionability
19
Q
Performance Topics to Look at
A
Pizza With Crawling Escargot
- Parol Evidence Rule
- Warranties
- Conditions
- Excuse of performance obligations
20
Q
What happens if a contract fails to specify the assortment of goods?
A
The duty to select is on the buyer, and the seller may treat the failure to select as a breach only if the failure materially impact’s the seller’s ability to perform
21
Q
What should a buyer do when they reject nonconforming goods?
A
They must retain possession of the goods for a reasonable period of time to allow the seller to reclaim them.
22
Q
When is the delegating party not liable to the obligee?
A
When there has been a novation
23
Q
What contract universe are you in when the contract is for goods and services?
A
Both rules are important
Rule 1: All or nothing - Can only be in one universe
EXCEPTION: Divisible/Mini contracts
Rule 2: Predominant purpose - does the good or service play a bigger rule
What is the main thing you are getting?
24
Q
Misunderstanding Defense
A
“Sitcom Defense” i.e. we were on a break
Requirements:
- Parties use a material term that is open to 2+ reasonable interpretations
- Each side attaches a different meaning to term
- Neither party knows, or should know, of confusion
25
6 ways to terminate an offer
1. Communicated revocation
2. Constructive revocation: Offeree learns offeror has taken inconsistent action
3. Rejection by offeror (can be revived)
4. Counter-Offer by offeror (rejection + new offer)
5. Death
6. Reasonable amount of time has passed (context matters but look for weeks and months)
26
Do initials count as a signature?
Yes
27
Three limits on expectation damages
* Damages must be proven with reasonable certainty (ex: unproven business venture lost profits)
* Unforeseeable consequential damages are not recoverable unless the breaching party had some reason to know about
* **consequential damages**: losses unique or special to this plaintiff
* A breached against party must take reasonable steps to reduce damages from breach
* Breaching party bears burden of proving failure to mitigate
* Mitigation must be reasonably similar to contract (ex: replacing movie from romance to western is not reasonable mitigation)
28
When can a repudiation be revoked?
At any time as long as the other party has not:
- Commenced a lawsuit OR
- Acted in reliance on the repudiation by materially changing its position
29
When can a seller get lost volume profits under expectation damages?
General Rule = If paying party breaches, selling party needs to mitigate by reselling goods/services
EXCEPTION = If the seller is a retailer who sell this product all of the time they may be able to get LVP (arguing they should have had both sales)
30
What happens upon death to a gratuitous assignment of contract rights?
the assignment terminates
31
Determining counter-offer under common law and UCC
common law = mirror image rule: terms of acceptance must match terms of offer **exactly,** otherwise counteroffer
UCC = a definite and seasonable expression of acceptance (or written communication) is acceptance even if it states additional or differnt terms from offer (**unless** acceptance is expressly conditional on assent to new/changed terms)
32
The two questions of statute of frauds
1. Does the statute of frauds apply to this transaction?
2. Has the statute of frauds been satisfied?
33
How can you repudiate under the UCC?
If one side has reasonable grounds for insecurity about the other side's performance, they may demand an adequate assurance of performance.
IF the other side fails to respond in a reasonable time OR responds with inadequate assurance THEN can treat it as repudiation
34
Four ways to have an irrevocable offer
1. Option
2. Firm offer (merchant buying/selling goods & meets requirements)
3. Offeree has stated performance on a unilateral contract (right to finish)
4. Detrimental reliance: Offeree reasonably and detrimentally relies on offer in foreseeable manner (sub-contractor/contractor bidding)
35
Liquidated Damages
Come from a contract clause as a negotiated amount due upon breach
**Courts will only award them if:**
* The amount of damages was reasonable at the time of contracting AND
* Actual damages from breach would be uncertain in amount and difficult to prove
36
Obligations of Perfect Tender
* Perfect goods
* Perfect Delivery
37
Is there a breach when a condition is not met?
No, it just means that whatever the condition triggers does not happen.
Ex: You promise me to deliver a package. I promise to pay you if it is delivered by 5pm. You deliver it at 6 pm. You have not breached, but you don't get paid.
38
Consideration
A deal in which the parties exchange promises involving a legal detriment or benefit
_Questions_
* Who is making the promise?
* Is there a beenfit to promisor or a detriment to promisee?
* Was this bargained for?
39
What if there is a material breach under CCE under common law?
Breaching party does not get paid under the contract
BUT: they may be able to get some money under quasi-contract theory
EXCEPTION: if the breach was in regards to an express condition
40
Do you need to tell the other side all of the material facts?
No
**exception:** special fiduciary relationship or active concealment
41
Under the UCC does a seller have the right to cure?
Yes,
if they failed to tender perfect goods AND time is left on the contract OR seller had reasonable grounds to believe buyer would accept alternative, THEN buyer MUST give seller chance to cure
42
Illegality defense to contract formation
Illegal contracts are **unenforceable**
Courts will just let parties remain where they stand
EXCEPTION: contract entered in furtherance of illegal act is fine (eg taxi driver to a crime)
NOTE: contracts against public policy are also uneforceable
Ex: I will give you money if you divorce your wife --\> technically legal, but not great policy to allow
43
When does the mailbox rule not apply?
* If offeree sends something back first (ex: rejection)
* Mailing a non-acceptance
* It is an option
* Unclear about application to other media
44
How are express conditions created?
By language in the contract
45
Implied Warranty of Merchantability
Requires seller to be a **merchant** that deals with the goods at issue
Warranty = Goods are fit for ordinary commercial purposes
Can be disclaimed if clearly and conspicuously done
46
Right of reclamation
*When unpaid seller tries to reclaim goods that were sold on credit when buyer is insolvent*
_Requirements_
1. The buyer was insolvent when they received the goods
2. Must demand the return of goods within 10 days of receipt (or longer is buyer earlier misrepresented solvency in writing)
3. The buyer still has the goods
47
Effect of death on a **contract**
General rule = estate is on the hook (liability continues to exist after death)
EXCEPTION: If there is something special about the person performing the contract (ex: Mick Jagger dies, you and Rolling Stones are excused)
48
Unilateral Mistake Requirements
*more difficult to get out of than mutual mistake*
Party can rescind if:
1. They can prove all elements of mutual mistake (mistake of fact, basic assumption, material impact, did not bear risk)
2. EITHER a) mistake would make contract unconsionable OR b) other side knew of, had reason to know of, or caused the mistake (eg clearly mistaken price quote)
49
Delivery Requirements (Shipment vs Destination)
* Shipment Contract Requirements
* Get goods to common carrier
* Make arrangements for delivery AND
* Notify the buyer
* Destination Contract
* Get goods to buyer's business
* Notify the buyer
50
What standard applies to a satisfaction condition?
*Use objective test **unless** the contract involves aesthetic taste*
**Objective:** If most reasonable people would be satisifed then condition is met
**Subjective:** Buyer must be in good faith satisfied or disatisfied, but it is a personal thing
-Only used for aesthetic things, like art, tutoring, etc.
51
Can both parties just agree to walk away from a contract?
Yes, if there is some performance remaining from each side to the conract.
Called recission by mutual agreement
52
Do you need to have warranties for an agreement?
No, you can disclaim all warranties
53
Who can use an incapacity defense?
1. minors (aka under 18)
2. People who are mentally ill
1. If they cannot understand actions OR
2. They cannot act in reasonable manner in relation to the transaction and the other side knows or should know this
3. Very intoxicated people that the other side knows about
54
What are the terms under UCC contract when parties accept by conduct/act as if there is a contract when there isn't
Terms are only the terms both parties agree to
All other terms are UCC default rules
55
When can a seller withdraw their item from an auction?
Always before the gavel is hit unless the item is announced to be without reserve
56
Reliance Damages
Goal = put parties in same economic position as if contract never happened (rewind the time)
NOTE: cannot recover expectation and reliance damages, must choose one
57
Modification & SOF
Would the deal with the modification be in SOF?
Yes --\> must meet SOF requirements
No --\> don't need to meet SOF requirements
Applies whether or not original contract was in SOF world
58
How are installment contracts paid?
Payment is per delivery, unless payment cannot be apportioned
59
Requirement and Outpout Contracts
_Requirement:_ Buyer gets everything they need from this supplier
_Output:_ Supplier sells everything they make to buyer
\*Both are valid quantity under UCC\*
60
When must a person satisfy the Construction Condition of Exchange under **Common Law**?
A party must satisfy CCE if there is not a material breach (doctrine of substantial performance) --\> Aka if one party does not substantially perform, other party can withhold performance
BUT: The party that did not fully perform can still recover damages for any deficiency
Usually cost to complete performance
EXCEPTION: If there is a immaterial breach but the failure was willful than other party can withold performance
61
Is an expression of doubt anticipatory repudiation?
Ex: I may not be able to deliver you the goods in time, but will do my very best to do so
No
62
Requirements for doing an accord and satisfaction through a negotiable instrument
(1) the obligation must be unliquidated (i.e., uncertain in amount) or otherwise in dispute;
(2) the obligor must, in good faith, tender the negotiable instrument with a conspicuous statement that the instrument is tendered as full satisfaction of the obligation;
(3) the obligee must obtain payment of the instrument (e.g., by cashing the check).
63
When can you delegate?
Generally always, unles:
- the contract prohibits delegation
- the other party has a special interest in having a specific individual perform
64
What is an offer?
A manifestation of a willingness to enter into an agreeemnt (by the offeror) that creates a power of acceptance (in the offeree)
Offeror should have an intent to be bound
65
What happens if you make a contract with a person who lacks capacity?
The contract is voidable (incapacitated party can disaffirm)
BUT: If the party obtains capacity and keeps the benefits, they ratify the contract
ANOTHER BUT: If the contract is for a necessity (food, shelter, etc.), the incapacitated party must still pay fair vule
66
What is the typical way to calculate damages in contracts?
Expectation damages
67
Four excuses to performance
1. Impossibility and Impracticability
2. Death after a contract
3. Frustration of purpose
4. Initial contract has been modified or canceled
68
How must you meet a condition?
You must **strictly** saitsfy it
UNLESS the condition is excused
69
Mutual Mistake Elements
Party can rescind if:
1. There is a mistake of fact that exists at the time the contract is made
2. The mistake reltates to a basic assumption of contract and has material impact on deal
3. The impacted party did not bear the risk of the mistake (no one knows what the type the rock is, and you are willing to pay a lot anyway)
70
Express Warranites
A promise that describes the goods and is part of the basis of the bargian
- NOT an opinion
- Use of sample creates one that the goods sold will be like it
71
Under UCC when does a new term in acceptance control?
(4 requirements must be met)
\*applies to confirming memos\*
1. Both parties are merchants
2. The new term does not **materially alter the deal**
3. Inital offer did not expressly limit acceptance to its terms
4. Offeror does not object to new term within a reasonable amount of time
72
Course of dealing vs. Course of performance
Course of dealing = Conduct of companies in regards to other contracts
Course of performance = Conduct of companies in regards to this contract
73
Confirming Memo & SOF
The failure to object to a confirming memo withing **10** days satisfies SOF **if both** parties are mechants
74
Restitution Damages
Goal = Give plaintiff an amount equal to the economic benefit that the plaintiff conferred on the defendant
75
Do you need a signed writing to authorize an agent to form a contract that is in SOF?
Yes (equal dignity rule)
76
When must a person satisfy the Construction Condition of Exchange under UCC?
UCC requires **perfect tender** (only need to pay if goods are perfect)
**Exceptions:** Contract changes default rule OR it is an installment contract
77
Calculating Expectation Damages
Goal = put people in same economic position as if contract has been performed
You compare the value of the performance without the breach to the value of the performance with the breach
AKA What is the situation they are in compared to where they would have been if breaching party preformed
AKA what is the cost to complete?
78
Two general ways to satisfy statute of frauds
1. Performance
2. Writing
79
Punitive Damages
Not typically allowed in contract law
80
Novation
**Both parties** agree that a substitute person will take over the contractual obligations (original promisor excused)
81
What contract benefits/rights can be assigned?
Almost all (in whole or in part) UNLESS the contract prohibits or invalidates assignments
If it prohibits --\> assigning party has breached BUT rights have been transfered and third party can recover (power to assign persists, but right to assign does not)
If it invalidates --\> assigning party has breach AND third party cannot recover
82
What four things do you need for a contract?
*All contracts don't stink*
1. Agreement (offer + acceptance)
2. Consideration
3. Defenses to formation
4. Statute of frauds
83
Can a party breach a subjective satisfaction condition?
YES! If they claim dissatisfaction in bad faith they breach
84
Does letterhead count as a signature?
Yes
85
Diminution in Market Value
Used when the cost to complete will dramatically overcompensate the plaintiff (Ex: You built skyskraper and used the wrong permanent marble)
DMV Expectations = Market value of what you wanted - market value of what you got
Not normally used when breaching party acted in an intentional manner
86
What is the remedy for conversion?
The fair market value of the goods at the time of the conversion
87
UCC Goods Contract SOF Requirements
EITHER
1. **Signed writing** that needs quantity but *not* price
Note: contract is only enforceable for that quantity, even if mistake was made
OR
2. **Part Performance** for the quantity delivered and accepted
OR
3. **Custom Goods Exception**: SOF is satisfied as soon as maker make a *substantial beginning* towards the manufacturing of the goods
OR
4. **Judicial Admission**
88
Who is liable for breach when you delegate?
The delegator is liable
The delegatee is ONLY liable if they receive consideration from the delegating party.
89
When can an offeror revoke?
Anytime before acceptance
EXCEPTION: Irrevocable offer
90
Assignment vs delegation
Assignment = The transfer of rights
Delegation = the transfer of duties
91
Parol Evidence Rule
If the parties have reduced their contract to a comprehensive writing, then earlier statements related to this agreement are not part of the deal
Ex: Hugh Grant getting Malibu home while working on movie, but no mention in contract
- Applies to earlier written documents
- Does not apply to later documents/communications, that would be whether there was a modification
92
Common Law Specific Performance
* It is the exception used only when monetary damages are inadequate
* Typically used for real estate transactions (if land has not already been transferred to other bona fide purchaser)
* Almost never available for contract of personal service BUT might get injunction prohibiting performance of similar services for a competitor for reasonable period of time
93
Ways to have an enforceable agreement without consideration
1. Promissory estoppel
2. Quasi-Contract
3. Moral obligation plus subsequent promise
1. Not used by many jurisdictions
Note: Seal is not consideration in most jurisdictions
94
What does a third party beneficiary have the right to sue?
When they are an intended beneficiary
Incidential beneficiaries do not have a right to sue
_Difference between two:_ Did the initial counterparites intend to convey enforcement rights to the third party in the event of a breach?
Ex: A pays B to mow C's lawn. C is intended, the neighbor who gets weed from no mowing is incidential.
95
What happens if someone assigns the same rights twice?
If the rights are assigned without consideration --\> assignment is revokable and **last assignment controls**
If the rights are assigned for consideration --\> **first assignment for consideration is irrevocable and controls**
EXCEPTION: Later assignment controls if later assignee does not know of initial assignment AND is first to obtain payment/judgment
96
Requirements of the writing for SOF
You only need the signature of whoever the contract is being enforced against
The writing does not need to be a formal contract
_It must contain the fundamental facts:_
* Shows contract has been made
* Identifies the parties
* Contains the essential elements of the deal
97
When can a delivery under an installment contract be rejected?
Only when there is a **substantial impairment** that cannot be cured
98
How specific must an offer be?
*Split universe rule*
## Footnote
_Common Law:_ Need all essential terms
-At least parties, subject, price, and quantity
_UCC:_ Need parties, subject, and quantity (not price)
-Anything missing will be filled in
99
Accord and Satisfaction
The parties to earlier contract agree that performance will be satisfied by different performance
**accord** = new performance
**satisfaction** = the excusal of the initial performance obligation
If the accord is **not** performed, can sue under either the old or new promise
Different from modification, because can still perform under old obligation
100
How long does a firm offer last?
as stated in the offer OR a reasonable time period not to exceed 3 months
101
Modifying a UCC contract
No consideration needed, modification just needs to be made in good fatih
102
When can the rights of third parties be revoked?
*Whenever as long as the third party has not changed their position*
_Third Party Rights Vest When:_
1. TP detrimentally relies on the rights
2. TP manifests assent to the contract
3. TP has filed a lawsuit to enforce the contract
103
Duress Defense
*Gun to the head defense*
An improper threat that deprives a party from making a meaningful choice to contract
104
Satisying statute of frauds for a service contract that cannot be performed in one year
Either writing OR full performance by **one side**
Note: Part performance will not satisfy statue of frauds
105
Incomplete Performance Formula
*Used when paying party breaches, but performing party keeps performing*
Damages = contract price - amount already paid - amount needed to finish job
106
UCC and the Parol Evidence Rule
Parol evidence rule does not apply in UCC world
Presumes that a writing is at most a partial integration, ***unless*** the parties have certainly disputed a term in the writing
Easier to get prior infromation in
107
Knock out rule
*applies under ucc when terms are different in offer and acceptance*
_Majority:_ Both terms are knocked out and UCC Provision applies
_Minority:_ Inital offer term controls
108
How to determine if parol evidence rule applies
***Have the parties created an integrated writing/final expression of agreement***
* **Complete Integration:** contract expresses all terms of the agreement
* Look for merger clause
* **Partial Integraton:** There is a final writing, but not all terms are included
May also ask: would this extrinsic term naturally be omitted from the writing?
109
Delivery Responsibility
*go down the list, and stop when you get to one that applies*
1. If mentioned in agreement, it controls
2. If either party has breached any part of the contract, they bear the risk of loss
3. If it was a shipping contract, what type?
1. Shipment --\> Buyer bears risk
2. Destination --\> Seller bears risk
4. Was seller a merchant?
1. Yes --\> Risk remains with seller until Buyer receives
2. No --\> Risk moves to buyer when seller tenders the goods
110
When do you not need consideration for contract modification?
* There is a change in performance of both parites
* Third party is promising to pay
* Unforeseen difficulties that excuse performance
* Partial payment for release from debt when debt is disputed **or** not currently due
111
Misrepresentation Defense
A **fradulent of accidental** statement at the time of contracting that is not true
_Defense Requirements:_
1. Misrepresentation of a present fact (NOT opinion)
2. Misrepresentation is material OR fraudulent
3. it is reasonable to rely on the misrepresentation
112
Mistake Defense
Mistake: a belief that is not in accord with present factMutual
**Two Types**
1. Mutual
2. Unilateral
113
What is a warranty?
A risk shifting tool
It is a term of the contract that explicitly shifts the risk to the party making the promise
114
Types of non-expectation damages/remedies
* Reliance damages
* Restitution damages
* Liquidated damages
* Punitive Damages
* Specific Perfomance/injunction
115
Implied Warranty of Fitness for a Particular Purpose
**Think special situation**
When a buyer relies on a seller's expertise to select a special type of good that will be used for a special purpose
Warranty = The good will satisfy this special purpose
DOES NOT ONLY APPLY TO MERCHANTS - can be any seller
Can be disclaimed, but must be in writing and conspicuous
116
Frustration of Purpose Excuse
Peformance **can** occur, **but** something has happened to undermine the entire reason for the creation of the contract
RARE
Ex: You rent apartment for one day to view king parade. King dies so no parade.
117
Under common law, if other side immaterially breached can you withhold payment?
No, but you may be able to recover for the breach
118
Anticipatory Repudation
1. When does it happen?
2. What are your options?
The party must clearly and unequivocally reupdiate (say they will not be performing)
_Two Options_
1. Treat the repudiation as a breach and sue immediately for damages
EXCEPTION: If only payment is left, cannot sue early (must wait for payment to come due)
2. Ignore repudiation, demand performance, see what happens
119
What is a contract?
A legally enforceable agreement
120
UCC specific performance
ONLY availble for unique goods (art, custom made items, etc.)
121
Constructive Condition of Exchange (CCE)
When one party's performance is conditioned on the other side's performance
Ex: You and I contract for you to buy my jeep for 5k. If day of I refuse to sign pink slip, you don't have to pay 5k.
Note: for determining substantial performance, if the contract is divisible, then it will be broken into mini contracts
122
Consideration Rules
* Must be more than nominal
* **but** difference in econ value is ok
* There must be a way for promisor to breach, otherwise illusory
* Past consideration cannot be consideration
* Ex: boat rescue
* Promising not to sue is consideration if:
* Plaintiff has good faith beleif in validity of claim
* There is reason to doubt validity of claim (uncertain law)
123
When will PER not bar evidence?
* Evidence related to a **defense** against contract formation
* Evidence of a second seperate deal
* Evidence to interpret an ambiguous term in the final agreement
124
Does the parol evidence rule apply to the UCC
Yes, but it assumes that the agreement is partial and will let in any evidence of terms that are not inconsistent with the writing
125
Does statute of frauds apply to contracts for someone's lifetime?
No, the person could dies within the first year making it possible to perform within one year
126
Promissory Estoppel Elements
1. Promise is made that would be reasonably expected to reduce alliance
2. The promisee takes detrimental action in reliance on the promise
1. Exception of this element for charities
3. Injustice can only be avoided by enforcement of the promise
127
When is there no implied warranty of merchantability
If the warranty is expressly disclaimed
OR
if the buyer was able to fully examine the goods and the defect is one that would have been noticed during inspection
128
Priority order of interpreting UCC contracts
1. Course of performance
2. Course of dealing
3. Trade usage
129
How long does a firm offer last?
Three months, even if it is stated otherwise (although if it is stated otherwise the offer remains open for that time, but it is now revocable)
130
What happens if you enter into an illegal contract
The contract is not enforceable/not a contract under the law
BUT if the party does not actually engage in the promised legal act they are due restitution
131
When will a court reform a writing for a mistake?
* there was a prior agreement (either oral or written) between the parties
* there was an agreement by the parties to put that prior agreement into writing
* as a result of a mistake, there is a difference between the prior agreement and the writing.
132
Does an assignment of rights need consideration
No, but it is revocable if there is no consideration
EXCEPTION: If, like third party rights, the assignee detrimentally relies on the assignment
133
When may a bidder withdraw their bid in an auction?
At any time before the completion of of the sale is announced by the auctioneer
134
Three requirements for consequential damages
1. Foreseeability: Damages are natural and probably consequences of the breach or contemplated by the parties at the time the contract was formed
2. Causation: Damages were caused by the defendant's breach
3. Certainty: The dollar amount must be proven with reasonable certainty
135
If an auction seller announces no reserve, can they still withdraw?
Yes, they can withdraw until bids are open for that item --\> Each item/lot is treated as a separate sale
136
Two requirements for consideration to exist
(1) there must be a **bargained-for exchange** of promises or performance
AND
(2) the promised or provided performance must have **legal value**
137
When can a buyer reject goods in an installment contract?
only if the nonconformity of the goods substantially impairs the value of that shipment to the buyer and cannot be cured.
138
What are the damages for failing to perform a real estate contract?
the difference between the contract price and the market value on the date of the breach
