Contracts Flashcards

Question

modification of K ( consideration )

Answer 1

GR: K can’t be modified unless modification supported by new consideration CL: modification w/o consideration if - Modification is due to circumstances that were unanticipated by parties when the contract was made -It is fair and equitable UCC: no consideration needed if dealing in good faith

Answer 2

through accord and satisfaction

Answer 3

Basis is for enforcing promise where no consideration Enforceable if necessary to prevent injustice if The promisor should reasonably expect to induce action or forbearance and Such action or forbearance is in fact induced

Answer 4

Group who can avoid liability or disaffirm K voidable Effective unless disaffirmed Only mentally incapactitated ( or representative) can disaffirm Any time while incapacited or w/n reasonable time after coming into lucid state Must return item or make restitution minor must disaffirm w/n reasonable time of reaching age of majority - liable for necessaries - don't have to make restitution

Answer 5

wrongful (unlawful) or improper act or threat that leaves party w/ no reasonable alternative but to acquiesce Threat to initiate a criminal prosecution solely for personal gain = improper Economic duress ( business compulsion ) Financial circumstances presented no reasonable alternative but to agree Other side caused financial hardship or contributed to financial hardship

Answer 6

ambiguous contract language Includes term with at least two possible meanings, the result depends on the parties’ awareness of the ambiguity Neither party aware= no K unless both parties intended same meaning Both parties aware= no K unless both parties intended same meaning One party aware= binding contract based on what the ignorant party reasonably believed to be the meaning of ambiguous words

Answer 7

clerical= computational, typose judgment= time, resources, conditions

Answer 8

ct has writing changed to conform to parties intentions must be - agreement and reduced to writing

Answer 9

2 choices for redress: tort action or K recisission Assertion not in accord w/ facts Past or present but not future Facts vs. opinion or future prediction Exceptions The person stating opinions an expert = treated as if the statement is a fact Party misrepresents state of mind Relationship of trust or confidence Susceptibility due to age, health, etc.

Answer 10

Consideration or subject matter of a contract is illegal the contract is void If only the purpose behind the K is illegal, the K is voidable by a party who was Unaware of the purpose or Aware but did not facilitate the purpose and the purpose does not involve serious moral turpitude

Answer 11

If K or clause of K is unconscionable, court can refuse to enforce all or part of K two prong test procedural= absence of meaningful choice substantive= terms unreasonably favorable to other party

Answer 12

certain agreements, by statute, must be evidence by a writing signed by the party sought to be bound Ks w/n SOF (MY LEGS) K made in consideration of marriage ( prenups, give something, etc) K not to be preformed w/n a year of its making K for sale or transfer of an interest in land K of executor to answer for decendent’s debts out of executors own funds K for sale of goods for $500+ Suretyship ( K to answer for duty of another)

Answer 13

Applies to promises that induce marriage by offering something of value ( ex: you marry my son I give you two a house)

Answer 14

performance not within one year from date of contract Promise that by its terms cannot be performed w/i one year is subject to the SoF Date runs from date of the agreement and not from date of performance Lifetime K not subject to SoF 3 year contract is

Answer 15

Ks for sale or transfer or interest in land Real property ( structures permanently attached to the land) Option to buy an interest in land Easements, mortgages, fixtures, leases ( short term leases (1-3 yrs) generally exempt) Minerals or structures if they are to be severed by the buyer K to build a building or to find a buyer for a selef do not create aninterest in land EXCEPTIONS Leases of less than or equal to a year Part performance of real estate contracts Payment, possession, improvement ( need ⅔)

Answer 16

Out of their own funds must be evidence by a writing

Answer 17

priced at $500 or more Writing is sufficient even though it omits or incorrectly states a term, but the contract is not enforceable beyond the quantity of goods shown in the writing EXCEPTIONS Goods accepted Goods paid for Substantial beginning on custom goods

Answer 18

t least 3 parties Creditor Debtor ( principal) underlying legal obligation Promisor (Surety) promise must be made to the creditor ( if Debtor does not pay then I will pay) NO Suretyship No underlying legal obligation running from the debtor to the creditor P orally promises to pay C if C delivers goods to D; D not obligated to C Result: P’s oral promise to C enforceable Novation ( underlying legal obligation extinguished) C accepts P’s oral promise to pay C in satisfaction of D’s obligation and D is discharged result:P’s oral promise to C enforceable Joint promise ( no underlying legal obligation) P&D jointly orally promise to pay C Only one obligation Result: P’s oral promise to C enforceable Suretyship EXCEPTION Main purpose (leading object) rule The main purpose of the promisor’s promise is to benefit the promisor then promise enforceable even if not in writing (helping himself) Result: P’s oral promise is enforceable

Answer 19

Contract modictions: modifications must be in writing if the contract as modified falls within the SoF For sale of goods K, if K as modified is for $500 or more, must be evidence by a writing If K as modified is less than $500 no writing is necessary CL- Provisions prohibiting oral modification is not enforceable Article 2 if party’s agree all modification’s must be in writing it is enforceable Exception for service contracts: FULLl performance K satisfies SoF An oral K that cannot be completed w/i one year but has been fully performed by one party is enforceble No part performance exception for service contracts Judicial Admissions Exception Agreement admitted to under oath enforceable K Merchant’s confirmatory Memo Merchants Agree to K One party sends signed writing containing quantity terms No objection by recipient within 10 days

Answer 20

Sales of good of $500 or more Quantity term D‘s signature ( signed by party to be charged) K for services must have All material terms ( who, what) D’s signature Signature Requirement Signature is any mark or symbol made with the intention to authenticate the writing as that of the signer Can be printed or typed Initials or letterhead Electronic signature okay

Answer 21

When the parties to a contract have mutually agreed to incorporate a final version of their entire agreement in a writing, the writing is an integration neither party will be permitted to contradict or supplement that writing agreements w/ extrinsic evidence of prior agreements or negotiations between them Any other expressions written or oral made prior to the writing as well as any oral expressions contemporneous with the writing are inadmissible to vary the terms of writing

Answer 22

Writing intended as final expression of the agreement Whether the integration was intended to be complete or partial Partially integrated writing can be supplemented but not contradicted by Prior oral or written or Contemporaneous oral or written Agreements and negotiations Totally completely integrated writing cannot be supplemented or contradicted by Prior oral or written or Contemporaneous oral or written Agreements and negotiations

Answer 23

Recites that the agreement is the complete agreement b/n the parties Presence of merger clause is usually determinative in large commercial contracts

Answer 24

Agreements, negotiations, etc AFTER writing modification of K Collateral agreements: independent of K? Separate consideration? Evidence offered to invalidate K: no consideration; fraud; K subject to condition precedent Evidence offered to explain meaning of term in K: chicken means broiler/fryer Evidence offered to reform K: parties mistakenly wrote incorrect price, typographical, computational errors

Answer 25

Final expression of parties agreement Cannot be contradicted by Prior oral or written agreements or Contemporaneous oral agreements But may be explained or supplemented by : Course of dealing; trade usage; course of performance & consistent additional terms Trade Usage: practices or methods having such regularity of observance in place vocation or trade that it justifies expectation parties will observe Course of Dealing: conduct b/n parties Before agreement in question Course of Performance: conduct by parties After agreement in question accepted w/o objection when express terms & course of performance, course of dealing & trade usage cannot reasonably be construed as consistent w/ each other, EXPRESS TERMS CONTROL Heirarchy Express terms Course of performance Course of dealings Trade usage

Answer 26

Express warranty (2-313) Created by Seller’s representations, examples & models Negation or limitation is inoperative to the extent that such construction is unreasonable Implied warranty of merchantability (2-314) Merchant warrants goods will pass w/o objection in trade & are fit for ordinary purposes for which such goods are used Goods fit for ordinary, foreseeable purpose for which they are to be used Disclaimer must be conspicuous Implied warranty of fitness for particular purpose (2-315) Seller aware of buyer’s particular purpose & Buyer relies on Seller’s knowledge/skill re: goods in making the purchase Buyer comes in with special purpose Seller knows of special purpose Seller picks out goods fit for buyer’s special purpose Disclaim by a conspicuous writing

Answer 27

Conspicuous defined Is is in larger type thn surrounding text It is in a contrasting type, font, or color Set off from the text by marks that call attention to it Implied warrant can be disclaimed by depression such as “as is” “with all faults”, etc No warranty as to defect sthat a reasonable examination would have revealed Parties may include in K clause limiting damages available in case of breach of warranty as long as it’s not unconscionable Must be agreed to during bargaining process

Answer 28

Seller bear risk= replace goods Buyer bear risk= pay contract price Hierarchy of risk Allocation of risk ( ex: buyer beas risk) Breaching party is liable Noncarrier case( buyer picks up directly or seller delivers directly to buyer) Merchant seller’s bear risk until seller takes physical possession Nonmerchant sells buyer bears risk when seller tender delivery tender= where product is and how to get it Delivery by common carry ( 3rd party in shipping business) Risk of loss shifts from seller to buyer when seller completes its shipping obligations

Answer 29

assume looking at shipping contract Shipping contract (buyer bears loss even before get the goods) Seller delivers goods to common carrier Arranges for delivery an d Notifies buyers Risk of loss passes to buyer on delivery to carrier Destination contract Seller must deliver goods to buyer’s location FOB= free on board FOB followed by city name = seller bears risk until reach city name FOB followed by seller city = shipment contract

Answer 30

CL K Substantial performance is enough Meets K’s essential purpose UCC Article 2 Perfect tender rule: seller’s delivery must be perfect Not 100% perfect buyer has right to reject INstallment K Requires delivery of goods in separate installments over specified period Terms of performance Tender payment by cash Check is okay = performance obligation satisfied Don’t have to take , if refuse have to give additional reasonable time to come in with cash

Answer 31

ons conditions= limit obligations created by contract language ( if, as long as, until, when, unless, provided that, on the condition that) An event or state of world that must occur or fail to occur before a party has a duty to perform An event or state of th eworld, the occurrence or nonoccurence of which releases a party from their duty to perform

Answer 32

must be perfectly satisfied No substantial performance rule Conditions Do not create obligations

Answer 33

easured by a reasonable person standard unless K deals w/ art r personal taste

Answer 34

Express condition precedent Performance not due until event occurs Conditions subsequent Events after performance that could terminate duty to pay Conditions may be excused by action or inaction of person protected by condition Waiver of condition: voluntary giving up of condition’s protection

Answer 35

Before performance is due Statement of intent not to perform or (Must be definite & unequivocal) Conduct Act makes it impossible to perform Refusal to perform except on terms outside K Repudiation even if party honestly believes s/he not obligated to perform NN: financial difficulty is not repudiation Upon repudiation injured party can Suspend performance or Wait until the time set for performance Or withhold performance & sue immediately Exception: if injured party has completely performed at time of repudiation must wait until time set for performance Repudiation can be retracted unless: Injured party has changed her position in reliance on or notified repudiating party she is treating repudiation as final

Answer 36

Party w/ reasonable rounds for insecurity can demand adequate assurances in writing Failure to provide adequate assurances w/n reasonable time < 30 days is repudiation Cannot use adequate assurance provision to rewrite K or demand certain assurance

Answer 37

party mutual agreement to cancel contract Each party must have some performance remaining for effective rescission

Answer 38

rescission= party mutual agreement to cancel contract Each party must have some performance remaining for effective rescission Modification agreement= replaces existing K with new K immediately Accord and satisfaction = agreement to accept different performance to satisfy existing duty ( if….then) Novation: agreement to substitute new party for existing party Delegation : one party finds replacement party to perform Original party’s obligations not excused Impossiblity/ impracticability : later unforeseen event makes party’s performance impossible Death or incapacity of essential person Supervening illegality : form of impossibiltiy If performance made illegal by subsequent gov’t regulation, performance excused Destruction of K’s subject matter Increase in cost is not an excuse Frustration of purpose = become valueless by virtue of some supervening event not the fault og the party seeking discharge Both parties understood the central purpose Performance excused if K’s essential purpose frustration Party seeking to be excused must show: Supervening act/ Event substantially frustrated principal purpose of K Nonoccurrence of event basic assumption on which K made Party did not create the impracticability & Party did not assume obligation greater than that imposed by law ( developing brand new technology and guarantee that it is going to work is an obligation assumed greater than law

Answer 39

failure to perform absolute duty nonbreaching party must show willing able to perform but for breach

Answer 40

Obligee gains substantial benefit of their bargain despite the obligor’s defective performance Minor breach doesn’t relieve the aggrieved party of their duty of performance under the K

Answer 41

Obligee does not receive substantial benefit of their bargain Noperformance or substantial performance No benefit of bargain to nonbreaching party Contract ended Counter-performance discharged Determining Amount of benefit received Adequacy of compensation Extent of part performance Hardship Negligent or willful behavior Likelihood that breaching party will perform remainder of K Time for performance Failure to perform w/i stated time is not material breach unless Time of essence Ct looks at all the circumstances

Answer 42

Benefit received by nonbreaching party Part performance by breaching party Hardship to breaching party

Answer 43

if goods don’t conform buyer may Reject entire shipment Accept entire shipment or Reject in part, accept in part Acceptance goods if they Indicate good conform to K Indicate theyll keep nonconforming goods Fail to reject w/i reasonable time Fail to notify seller of rejection Act inconsistent with seller’s ownership Acceptance may be revoke acceptance if goods have a defect that substantially iimpairs their value to the buyer and Accepted goods on reasonable belief that defect would be cured and has not been OR Accepted the goods bc of the difficulty of discovering the defects or bc of the seller’s assurance that the goods conformed to the K Revocation of acceptance must occur w/i reasonable time after discovery Before any substantial change in the goods occurs Seller has right to cure nonconforming goods w/i time for performance Notify buyer with intent to cure Installment K Buyer can reject installment if nonconfrormity substantially impairs value of installment K breach if nonconformity substantially impairs entire K’s value Anticipatory repudiation Early statement of nonperformance Can be retracted if not relied on

Answer 44

Specific performance Money damages inadequate Feasible to enforce decree Land K All land unique Specific performance available Sales of good Specific performance available only if goods unique or buyer unable to cover ( only supplier) No specific performance for personal service K Can get injunction against working for competitor Reclamation- article 2 Seller can get reclamation if Buyer insolvent and Seller demands reclamation w/i 10 days of receipt Requirements Buyer Insolvent at time received goods 10 day rule The date the goods delivered to the buyer For reclamation to work, buyer must have goods at time of demand EXCEPTION Seller can reclaim goods beyond 10 day limit if Buyer misreps solvency In writing w/i 3 mo before delivery

Answer 45

Expectation damages= put injured party in position they’d be in had K been performed Measuring expectation Damages Loss in value Due under K (general $$) + Other loss incidental/ consequential $$ ( special $$) - costs avoided Savings resulted from breach - loss avoided Salvage, other employment, etc = $$ Reliance damages Available if expectation damages uncertain Return nonbreaching party to status quo Restitution damages Measure by value of benefit conferred Incidental damages Costs incident to breach Cost incurred in dealing with a breach Consequential damages Recoverable if foressable at time of formation No punitive damages in K Liquidated damages clauses Upheld if Damages difficult to est at K formation Amount reasonable forecast of damages Invariable lump sum liquidated damages clause = invalid

Answer 46

Cover damages Cover price ( buying replacement goods)- original contract price Buyer must make reasonable K for substitute goods in good faith and w/o unreasonable delay Market damages Market price - original K price Market price at time buyer learns of the breach and at the place of tender Loss in value Value as promised- value as delivered Buyer kept nonconforoming goods

Answer 47

Resale damages K price- resale price Market damages K price - market damages Didn’t resale in good faith or couldn’t resale K price available if seller can’t resell goods (unique goods) Lost-volume seller rule Unlimited supply Lost profit measure used Avoidable damages Damages that could’ve been avoided are not recoverable Duty to mitigate Duty to mitigate limited to similar/comparable subject matter

Answer 48

Merchant who ordinarily deals in goods of kind sells entrusted goods to BFP BFP always wins

Answer 49

2 parties K to benefit 3rd party Intended beneficiary Name in K Can enforce K promisor= party who promises to perform for 3rd party promisee= party who secures promise Promisor liability Intended 3rd party beneficiaries can enforce rights under K Promisor has same defenses against 3rd party beneficiary as against promisee

Answer 50

Intended beneficiaries have rights to enforce contract Incidental beneficiaries do not Either promisee or beneficiary can enforce rights against promisor Vest when Manifest assent to a promise in the manner requested by the parties Bring a suit to enforce the promise Materially change position in justifiable reliance on the promise

Answer 51

K can be recided/modified until beneficiary rights have vested Promisor and promisee can’t cancel k after vesting unless Beneficiary consents or K provides otherwise

Answer 52

2 parties to K 1 party (assignor) assigns rights to 3rd party (assignee) Assignee can enforce rights against party who owes duty (obligor) Valid assignment Language of present transfer “I assign” No consideration needed (gift assignment OK) Restrictions on assignments Prohibition : assignments not permitted Assignee w/o knowledge can stil collect Invalidation: assignments null and void Assignments can’t substantially change duties of obligor Aignee can recover from obligor directly Obligor has same defense against assignee as against assignor Gift assignements Easily revocable Last gratuitous assignee wins Consideration assignments 1st assignee for consideration wins over all subsequent assignees and previous gift assignees Exception Later assignment for consideration if he doesn’t know of the earlier assignments and is first to get a payment from or a judgment against the obligor

Answer 53

Party to K delegates duty to 3rd party Obligor can delegate duties w/o obligee’s consent Prohibition against delegations= no delegations allowed No assignements= no delegations Party w/ special skills can’t delegate Parties to K agree to substitute new party under K = novation not delegation Delgetaing party always liable to obligee Delegate for consideration= liable Create third party beneficiary obligations