Contracts Flashcards
Merchant’s Firm Offer
An offer by a merchant to buy or sell goods in a signed writing that gives assurances that it will be held open and is not revocable for lack of consideration during the time stated (not to exceed 3 months).
Inquiry
A mere inquiry such as “would you consider” or “would you be willing” in response to an offer serves as an inquiry only, and does not represent a counteroffer (i.e. they still have the power to accept).
Mutual Assent
Valid offer and an unequivocal acceptance before the offer is either rejected by the offeree or revoked by the offeror.
Landowner Breach of Construction Contract after Performance has begun (prior to completion)
Contractor is entitled to damages of:
Incurred Costs + Expected Profit
Unilateral Contract
A promise for a performance.
Acceptance of offer requires performance of stipulated act. Once performance begins, the offeror cannot cancel the offer (but mere preparation to perform is insufficient).
Does not terminate if offeror dies.
Statute of Frauds Contracts
Some Contracts must be in writing to be enforceable:
Marriage Years (term of) Land Executory Goods $500 or more Surety Promises (answering for debt of another)
Exception:
Main Purpose Rule for Sureties: if main purpose of guarantor in promising to answer for the debt was to benefit themselves, then it’s enforceable.
Statute of Fraud Requirements
Writing must contain:
- identity of party sought to be charged;
- identification of contract’s subject matter;
- terms and conditions of agreement;
- recital of consideration;
- signature of party to be charged (or agent).
Unilateral Mistake
If non-mistaken party knows or has reason to know of mistake made by the other party, the contract is voidable by the mistaken party.
Mutual Mistake
If mutual mistake goes to the essence of the agreement, it is grounds for rescission.
Consideration
A bargained-for exchange with some element of legal value to the parties.
Pre-existing Duty Rule
Common Law: To support a contract modification, new consideration required.
Modern: modification permissible if fair and equitable in view of unanticipated circumstances.
UCC: allows valid modifications regardless of new consideration, so long as it is entered into with good faith.
Merchant’s Confirmatory Memo
Between merchants, if one merchant sends the other merchant a signed, written confirmation of their oral agreement, it is sufficient to bind the seller, and will bind the recipient if he has reason to know of its contents and does not object within 10 days of receipt.
Third Party Beneficiaries
Once rights have intended TPB rights have vested, original parties cannot modify/rescind contract.
Intended beneficiaries’s rights have vested when:
- He learns of contract AND assent to it;
- He learns of contract AND brings immediate lawsuit to protect their rights; or
- He learns of the contract AND relies on it.
Incidental TPB have No Rights.
Promissory Estoppel / Detrimental Reliance
A consideration substitute.
Requires:
- promise; and
- a reasonable expectation of reliance on that promise; and
- the party actually relies on it; and
- interest of justice requires it
Damages when Assignee fails to perform
An assignment of the duties of a contract does not relieve the assignor. If non-breaching party does not received goods (UCC), it can either cancel the contract and recover incidental damages; or purchase replacement goods and sue for the cost of replacement (contract price vs. cost for replacement goods).
