CONTRACTS Flashcards
1
Q
BILATERAL K
A
One consisting of the exchange of mutual promises
2
Q
ACCEPTANCE OF BILATERAL K
A
Unless expressly indicated otherwise, bilateral Ks can be accepted in ANY REASONABLE MANNER
3
Q
UNILATERAL K
A
One in which the offeror requests performance
4
Q
ACCEPTANCE OF UNILATERAL K
A
Can only be accepted by COMPLETE PERFORMANCE (but promisee can stop before completion)
5
Q
VOID K’S
A
Have NO LEGAL EFFECT
6
Q
VOIDABLE K’S
A
One or both parties may ELECT to AVOID by raising a DEFENSE
7
Q
COMMON LAW K’S
A
Apply to real estate and services
8
Q
UCC ARTICLE 2
A
Applies to k’s for the sale of goods
9
Q
ARTICLE 2 GOODS: DEFINITION
A
ALL THINGS MOVEABLE identified to be sold under the K
10
Q
WHAT IS A MERCHANT?
A
Is one who regularly deals in GOODS OF THE KIND or who, as a professional, holds themselves out as having SPECIAL KNOWLEDGE as to the goods involved.
11
Q
UCC ARTICLE 2: GOOD FAITH AND FAIR DEALING
A
All UCC k’s require good faith - honesty in fact and observing reasonable commercial standards
12
Q
MUTUAL ASSENT: OFFER AND ACCEPTANCE
A
MA: Parties must manifest an intention to enter into a K
Offer: Creates a reasonable expectation in the offeree that the offeror is willing to enter into a contract on terms sufficiently certain.
Acceptance: SEE BELOW
13
Q
OFFERS: REAL ESTATE TRANSACTIONS
A
Must identify the LAND and PRICE
14
Q
OFFERS: SALE OF GOODS
A
MUST identify the QUANTITY or be capable of ID
15
Q
OFFER: MISSING TERMS
A
One or more terms left open does not prevent formation if INTENTION to K is evident and a REASONABLY CERTAIN basis exists for giving a remedy.
16
Q
OFFER: MISSING PRICE (ARTICLE 2)
A
REASONABLE PRICE AT THE TIME OF DELIVERY
17
Q
OFFER: MISSING TIME
A
Performance will be within a REASONABLE TIME
18
Q
OFFER TERMINATION: LAPSE
A
Offer terminates within TIME SPECIFIED or if no specification, WITHIN A REASONABLE TIME
19
Q
OFFER: EXPRESS REJECTION
A
Terminates offer
20
Q
COUNTEROFFER
A
An offer made by the offeree that terminates the original offer
21
Q
REJECTION - EFFECTIVENESS
A
Rejection is valid when RECEIVED
22
Q
REJECTION OF OPTION K
A
Rejection DOES NOT amount to termination but offeree is still FREE TO ACCEPT within the specified period UNLESS the offeror DETRIMENTALLY RELIED on the rejection
23
Q
REVOCATION
A
1) offers are generally freely revocable
2) They can be DIRECTLY communicated
3) Indirect communication is valid IF:
- Offeree received correct info
- from a reliable source
- indicating from the standpoint of a reasonable person that the offeror is no longer on the table
24
Q
REVOCATION: EFFECTIVENESS
A
When received
25
OPTION K
Offeree gives CONSIDERATION in exchange for offeror's promise to keep the offer OPEN
26
MERCHANT'S FIRM OFFER (ARTICLE 2 UCC)
1) Made by a merchant
2) in a signed writing
3) with assurances that the offer will be HELD OPEN
4) for the time stated (not longer than 3 months)
27
REVOCABILITY OF A UNILATERAL K AFTER PERFORMANCE BEGINS
Irrevocable once performance begins and offeror must give REASONABLE TIME for completion.
28
PREPARATIONS TO PERFORM
Do not make the offer irrevocable but CAN BE DETRIMENTAL RELIANCE
29
ACCEPTANCE: BILATERAL K
Unless expressed otherwise, may be accepted by either PROMISE TO PERFORM or BEGINNING performance
30
METHOD OF ACCEPTANCE
Can be done in any reasonable manner and in any reasonable medium
31
ACCEPTANCE PER ARTICLE 2: GOODS FOR CURRENT OR PROMPT SHIPMENT
offers to buy goods for current or prompt shipment can be ACCEPTED BY:
1) promising to ship OR
2) current or prompt shipment
32
SHIPMENT OF NONCONFORMING GOODS: UCC ARTICLE 2
Constitutes an acceptance and breach UNLESS:
1) seller provides seasonable notification that
2) the nonconforming goods are only offered as ACCOMMODATIONS
3) buyer can accept or reject but NO BREACH
33
BATTLE OF THE FORMS: NEW/DIFF TERMS INVOLVING NONMERCHANT
If a party to a UCC K is not a merchant, additional or different terms do NOT become party of the K UNLESS the offeror EXPRESSLY AGREES
34
BATTLE OF THE FORMS: NEW/DIFF TERMS INVOLVING MERCHANTS
Included UNLESS:
1) Materially alter the original terms
2) Offer expressly limits acceptance to the original terms OR
3) Offeror has already objected or objects within reasonable time
35
MERCHANTS CONFIRMATORY MEMO
Despite an oral agreement, if a merchant's memo confirms the terms with DIFFERENT/ADDITIONAL TERMS, it is put through the BATTLE OF THE FORMS
36
MAILBOX RULE
Acceptance is effective on DISPATCH
37
MAILBOX RULE EXCEPTIONS
1) Offer requires acceptance to be RECEIVED
2) Option contract is involved OR
3) Rejection is sent and then acceptance - whichever is RECEIVED FIRST
38
CONSIDERATION
1) Is a bargained for exchange between parties and
2) has legal value
39
PAST CONSIDERATION
Not enforceable
40
PAST CONSIDERATION: EXCEPTIONS
1) Where past consideration is UNENFORCEABLE, new consideration in writing or partial performance IS ENFORCEABLE.
2) Past acts benefiting promisor and performed at promisor's request OR
3) in RESPONSE to EMERGENCY, then
4) SUBSEQUENT PROMISE TO PAY is OK
41
PRE-EXISTING LEGAL DUTY
Is insufficient consideration
42
PRE-EXISTING LEGAL DUTY: EXCEPTIONS
1) New or different consideration
2) promise is to ratify a voidable obligation
3) Duty owed to 3rd party
4) honest dispute as to the duty OR
5) Modification is FAIR AND EQUITABLE in view of UNANTICIPATED CIRCUMSTANCES
43
UCC MODIFICATIONS
1) A good faith agreement modifying a UCC contract needs NO CONSIDERATION to be binding.
2) If the modified K would be subject to the SOF - then must be in writing
44
COMMON LAW MODIFICATIONS
Generally needs new consideration to be binding
45
MODIFICATIONS: EXCEPTIONS TO NEED FOR CONSIDERATION
1) Modification made due to circumstances unanticipated by the parties AND
2) it is FAIR and EQUITABLE
46
CONSIDERATION: FOREBEARANCE TO SUE
Promises to refrain from suing on a claim IS consideration IF the claim is valid or the claimant believes it is in GOOD FAITH
47
PROMISSORY ESTOPPEL
Consideration is NOT necessary and a promise is enforceable to prevent injustice IF:
1) promisor should reasonably expect to INDUCE ACTION OR FORBEARANCE and
2) either action or forbearance IS INDUCED
48
DEFENSES: CONTRACTING MINORS
1) Generally lack capacity to contract
2) Adults making contractual promises to minors are bound
3) DISAFFIRM - as a whole
4) AFFIRM after becoming adult: Failing to disaffirm within reasonable time after reaching 18 - BOUND
49
DEFENSES: MENTAL INCAPACITY
1) K is VOIDABLE
2) They can affirm or disaffirm when LUCID
50
DEFENSES: INTOXICATION
1) K is VOIDABLE
2) They can affirm or disaffirm on recovery
51
DEFENSES: DURESS
K is VOIDABLE. The elements are:
1) Threat to commit a wrongful act that would seriously threaten another's property or finances AND
2) No adequate means available to prevent the loss
52
DEFENSES: UNDUE INFLUENCE
K is VOIDABLE. The elements are:
1) Undue susceptibility to pressure AND
2) Excessive pressure by the other party
53
DEFENSES: MUTUAL MISTAKE
K is VOIDABLE by the adversely affected party IF
1) mistake concerned a BASIC ASSUMPTION to the K
2) mistake had a MATERIAL EFFECT AND
3) there was no ASSUMPTION OF RISK by the hurt party
54
DEFENSES: UNILATERAL MISTAKE
Does NOT prevent K formation UNLESS
1) nonmistaken party had reason to know of the mistake
2) mistake was material AND
3) no assumption of risk
55
DEFENSES: FRAUDULENT MISREPRESENTATION
K is VOIDABLE by the innocent party IF
1) they JUSTIFIABLY RELIED on the misrep
56
DEFENSES: MATERIAL MISREPRESENTATION
K is VOIDABLE by the innocent IF
1) they JUSTIFIABLY RELIED on the misrepresentation which was MATERIAL IF
- a reasonable person would be induced to agree OR
- maker knows for some special reason that the particular person would likely be induced to agree
57
DEFENSES: UNCONSCIONABILITY
Courts can MODIFY or REFUSE TO ENFORCE the entire K
58
STATUTE OF FRAUDS
Certain agreements must be evidenced in WRITING and SIGNED by the PARTY TO BE BOUND
59
STATUTE OF FRAUDS: "MYLEGS"
(M)arriage
(Y)ear or long - K can't be performed within 1 year
(L)and sale K's and those creating an INTEREST in LAND
(E)xecutor promises to pay debt's of estate
(G)oods for sale costing $500 OR MORE
(S)uretyships - promise to pay debt of anohter
60
SOF: K MODIFICATION
If the modification would fall within the SOF, then it must be IN WRITING
61
NO STATUTE OF FRAUDS: ORAL LAND SALE K - ENFORCEMENT
1) When a seller CONVEYS the land to buyer, seller can ENFORCE BUYER'S ORAL PROMISE TO PAY
2) BUYER of an interest in land can enforce an ORAL contract through SPECIFIC performance
62
NO STATUTE OF FRAUDS: PART PERFORMANCE OF UCC K
When part performance of a UCC sale of goods K occurs, it is not subject to the SOF when
1) the goods are SPECIALLY MANUFACTURED or
2) the goods have been either PAID FOR or ACCEPTED
63
PAROLE EVIDENCE RULE
When the parties to an agreement express their agreement in WRITING with INTENT that is the FINAL EXPRESSION of the bargain, the writing is FULLY INTEGRATED and prior oral/written statements + oral contemporaneous statements are INADMISSIBLE
64
PAROLE EVIDENCE RULE: PARTIAL INTEGRATION
Writing CANNOT be CONTRADICTED but SUPPLEMENTED with the additional terms
65
PAROLE EVIDENCE RULE: MERGER CLAUSE
Generally means that the writing is a full integration
66
PAROLE EVIDENCE: ARTICLE 2 UCC
Can't contradict a written K but can add CONSISTENT ADDITIONAL TERMS unless
1) merger clause exists OR
2) Court determines that the writing was INTENDED to be COMPLETE AND EXHAUSTIVE
67
UCC: IMPLIED WARRANTY OF MERCHANTABILITY
Merchants impliedly warrant that the goods will be fit for the ORDINARY PURPOSE for which the goods are used
68
UCC: IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
1) Any seller
2) who has reason to know of the particular purpose
3) impliedly warrants fitness for that purpose
4) when they know the buyer is relying on the seller's skills and
5) the buyer ACTUALLY RELIES on those skills/judgements
69
BREACH AND RISK OF LOSS: DEFECTIVE GOODS
1) Buyer generally has a right to reject defective goods and the ROL won't pass until the defect is CURED or buyer ACCEPTS defective goods
70
BREACH AND RISK OF LOSS: NONCARRIER
1) Seller IS a merchant: ROL passes on buyer's PHYSICAL POSSESSION
2) IF seller is NON-merchant: ROL passes on TENDER OF DELIVERY
71
BREACH AND RISK OF LOSS: CARRIER - SHIPMENT K
ROL passes to buyer upon DELIVERY OF GOODS TO CARRIER
72
BREACH AND ROL: CARRIER - DESTINATION K
If K requires seller to deliver to a particular place, ROL passes on TENDER TO BUYER AT THE DESTINATION
73
BREACH AND ROL: FREE ON BOARD
ROL passes to buyer at the destination named after "FOB"
74
BREACH AND ROL: FREE ALONGSIDE
Shipment occurs by boat and ROL passes on DELIVERY TO THE DOCK
75
BREACH AND ROL: DESTRUCTION OF GOODS BEFORE RISK PASSES
If goods identified to the K are destroyed
1) WITHOUT fault of either party AND
2) BEFORE ROL passes to buyer, K IS AVOIDED
76
PERFORMANCE REQUIREMENTS: COMMON LAW
Substantial performance required
77
PERFORMANCE REQUIREMENTS: UCC
PERFECT TENDER
78
UCC: SELLER'S PROPER TENDER OF DELIVERY
1) Seller must give buyer NOTICE reasonably necessary to enable possession AND
2) Tender must be at a REASONABLE HOUR
79
UCC: PLACE OF DELIVERY
Without an express statement, place of delivery is GENERALLY THE SELLER'S PLACE OF BUSINESS
80
UCC: BUYER'S OBLIGATION TO PAY - NONCARRIER
Unless the K provides otherwise, payment is required in CASH and due when DELIVERY IS TENDERED
81
UCC: BUYER'S OBLIGATION TO PAY - CARRIER
Unless otherwise agreed, payment is due when the GOODS ARE RECEIVED, in carrier cases
82
UCC: BUYER'S RIGHT OF INSPECTION
Buyer generally has a right to inspect goods before payment UNLESS payment is COD or K states otherwise
83
UCC: PAYMENT BY CHECK
Sufficient unless seller says otherwise BUT then they must allow BUYER TIME TO AMEND PAYMENT METHOD
84
ANTICIPATORY REPUDATION
Occurs if a promisor, prior to the time of performance, says they won't perform.
85
EFFECTS OF ANTICIPATORY REPUDIATION: NONREPUDIATING'S OPTIONS
1) Sue immediately
2) Suspend performance and wait to sue until the performance date
3) Treat it as a RESCISSION and K is DISCHARGED
4) IGNORE repudiation and urge performance - sue for breach if no performance after
86
REPUDATION: RETRACTION
Repudiation may be retracted before performance UNLESS the other has:
1) cancelled, materially changed their position in reliance OR
2) indicated the repudiation is FINAL
RETRACTION - reasonable manner clearly indicating intention to perform with assurances demanded
87
DISCHARGE: MUTUAL RECISSION
Can be discharged by an express agreement between the parties
88
DISCHARGE: RESCISSION OF UNILATERAL K
Ineffective unless:
1) offer of new consideration by nonperforming party,
2) Promissory estoppel,
3) or manifestation of intent by original offeree to make a gift of the obligation owed to them
89
DISCHARGE BY ACCORD AND SATISFACTION
1) Accord - party due the benefit of performance accepts some future performance by the other party
2) Satisfaction - performance of the future promise
MERELY SUSPENDS K ENFORCEMENT until satisfied
90
DISCHARGE BY IMPOSSIBILITY
Def: The occurrence of UNANTICIPATED or EXTRAORDINARY events may make duties impossible/impracticable to perform
Where the nonoccurence of the event was:
1) a basic assumption of the parties
2) and neither expressly/impliedly ASSUMED RISK,
3) Duties can be discharged
91
DISCHARGE BY IMPRACTICABILITY: TEST
Party to perform encounters:
1) EXTREME and UNREASONABLE difficulty AND
2) nonoccurence was a BASIC ASSUMPTION
92
BREACH OF CONTRACT
Must show that the breaching party's breach was material and that the non-breaching party was WILLING AND ABLE to perform but for the breach
93
MINOR BREACH
A breach is minor if the obligee gains the SUBSTANTIAL BENEFIT OF THEIR BARGAIN despite the breach. It DOES NOT relieve the non-breacher of their duty to perform but allows for damages.
94
MATERIAL BREACH
When the non-breaching party DOES NOT receive the substantial benefit of their bargain. They may:
1) treat the contract as ended
2) have an immediate right to all remedies for breach
95
BREACH: TIMELINESS OF PERFORMANCE
Failure to perform in the time stated IS NOT material UNLESS TIME IS OF THE ESSENCE
96
PERFECT TENDER RULE
If the goods or their delivery fail in any way, the buyer may:
1) Reject all,
2) Accept all OR
3) accept any amount AND reject the resr
97
BUYER'S RIGHT TO REJECT: CUT OFF BY ACCEPTING
Under the PTR, the right to reject is generally cut off by acceptance. Acceptance occurs when:
1) Buyer had a REASONABLE opportunity to inspect and indicates that the GOODS CONFORM
2) they FAIL TO REJECT within a REASONABLE TIME after tender OR
3) They do anything INCONSISTENT with the SELLER's OWNERSHIP
98
BUYER'S RESPONSIBILITY AFTER REJECTING GOODS IN THEIR POSSESSION
They must hold the goods with reasonable care for the seller to REMOVE THEM. If the seller DOES NOT then the buyer can:
1) RESHIP to seller
2) STORE them for seller
3) OR RESELL them for seller's account
99
BUYER'S RIGHT TO REVOKE ACCEPTANCE
May revoke when the defect SUBSTANTIALLY IMPAIRS the VALUE AND:
1) Accepted on REASONABLE BELIEF that the defect would be CURED OR
2) They accepted because of DIFFICULTY in DISCOVERING the DEFECT OR seller ASSURED that the goods CONFORMED
100
BUYER'S RIGHT TO REVOKE: MANNER
Must occur:
1) within REASONABLE TIME after discovery of the defect AND
2) before ANY SUBSTANTIAL CHANGE TO THE GOODS occurs
101
EXCEPTIONS TO THE PTR: SELLER'S RIGHT TO CURE
The seller may, WITHIN THE TIME for PERFORMANCE, cure the defect by
1) giving REASONABLE NOTICE of intention to cure AND
2) TENDERING NEW CONFORMING GOODS
102
SELLER'S RIGHT TO CURE: BEYOND ORIGINAL K TIME
Can ONLY do so IF the seller REASONABLY BELIEVED the goods would be ACCEPTABLE and then may have FURTHER REASONABLE TIME to perform
103
RIGHT TO REJECTION: INSTALLMENT K'S
Can ONLY reject when:
1) the nonconformity SUBSTANTIALLY IMPAIRS THE VALUE OF THE WHOLE K and
2) the installment CANNOT be CURED
104
REMEDIES: SPECIFIC PERFORMANCE
Allowed when the legal remedy is INADEQUATE
1) Available for LAND SALE K'S
2) NOT available for SERVICES
105
BUYER'S RIGHT TO CANCEL: ARTICLE 2
Allowed when they rightfully reject nonconforming goods
106
BUYER'S RIGHT TO REPLEVY: ARTICLE 2
When they have made PART PAYMENT and DELIVERY has NOT been made they may replevy under 2 situations:
1) Seller becomes INSOLVENT within 10 days after payment OR
2) Goods were for PERSONAL, FAMILY OR HOUSEHOLD USE
107
BUYER'S RIGHT TO COVER
After delivery of nonconforming goods, buyer may:
1) cover in good faith and without unreasonable delay
2) BY purchasing substitute goods AND
3) can RECOVER THE DIFFERENCE IN PRICE if any
108
SELLER'S RIGHT TO WITHOLD GOODS
When payment is due on or before deliver, and buyer FAILS to make payment, seller can WITHHOLD the goods
109
RIGHT TO ASSURANCES
Either party, when they learn that circumstances may cause non-performance by the other may:
1) demand assurances of performance in WRITING AND
2) may SUSPEND performance until those assurances are given
110
EXPECTATION DAMAGES
Sufficient damages to allow them to buy a substitute performance.
111
RELIANCE DAMAGES
Award the plaintiff the cost of their performance. It puts them in the position as if the K had never been formed.
112
CONSEQUENTIAL DAMAGES
Recoverable ONLY IF at the time the K was made:
1) A reasonable person would have foreseen the damages as a result of breach AND
2) Breaching party must have KNOWN OR HAD REASON TO KNOW that the damages could occur
ONLY available to buyer
113
LIQUIDATED DAMAGES
1) Must be reasonable in view of actual or anticipated harm
2) Must be DIFFICULT to estimate or ascertain at time of K formation
114
BUYER DAMAGES: NO DELIVERY OR REJECTION/REVOCATION
Difference between the K price and EITHER
1) market price OR
2) cost of buying replacement goods PLUS
3) ANY incidental or consequential damages MINUS
4) expenses saved
115
SELLER DAMAGES: BUYER REPUDIATES OR REFUSES CONFORMING GOODS
3 OPTIONS:
1) Resell and recover the difference
2) Recover difference between MARKET price and K price
3) OR LOST PROFITS (K price v. cost to seller)
116
RESTITUTION
1) It is based on preventing UNJUST ENRICHMENT
2) It is available for breach and when no K exists
3) It is measured by THE VALUE OF THE BENEFIT CONFERRED.
117
RESTITUTION: QUASI CONTRACT
Allowed if:
1) Plaintiff CONFERRED A BENEFIT on Def
2) With REASONABLE EXPECTATION OF COMPENSATION
3) D knew or had reason to know of EXPECTATION AND
4) D would be UNJUSTLY ENRICHED
118
INTENDED 3RD PARTY BENEFICIARY
They have CONTRACTUAL RIGHTS. They are:
1) ID'd to the K
2) they receive PERFORMANCE DIRECTLY or
3) they have some RELATIONSHIP with the PROMISEE
119
INCIDENTAL 3RD PARTY BENEFICIARIES
Have no K rights
120
VESTING OF 3RD PARTY BENEFICIARY RIGHTS
They can only enforce their rights when VESTED. This occurs WHEN:
1) Manifest assent to a promise in the manner requested;
2) They bring SUIT to ENFORCE the promise; OR
3) MATERIALLY CHANGE position in justifiable reliance on the promise
121
ASSIGNMENT OF K RIGHTS
Generally all K rights may be assigned EXCEPT
1) Assignment would SUBSTANTIALLY CHANGE the obligor's duty;
2) Assigning future rights from a FUTURE K or
3) prohibited by LAW
122
ASSIGNMENTS FOR VALUE: IRREVOCABLE
1) done for consideration OR
2) taken as security for payment OF PREEXISTING DEBT
123
GRATUITOUS ASSIGNMENTS: REVOCABLY GENERALLY
It is an assignment not for value and is generally freely revocable EXCEPT IF:
1) performance has occurred,
2) detrimental reliance by assignee
124
DELEGATION: MAY BE WRITTEN OR ORAL
Generally ALL duties can be delegated EXCEPT:
1) those involving PERSONAL JUDGMENT AND SKILL,
2) delegation would change the OBLIGEE'S EXPECTANCY, 3) special trust OR
4) K RESTRICTS IT
