Contracts Flashcards
Unilateral Mistake
Contract based on the mistake of one party may seek reformation by showing
(1) P was mistaken K terms;
(2) the mistake went to a material term that was a basic assumption of the contract;
(3) that the defendant-party knew of the plaintiff’s mistake; and
(4) the defendant failed to correct the mistake or even took advantage of the mistake.
Merchant (UCC)
Merchant is one who deals in goods of the kind OR by virtue of his / her professions holds himself out as having peculiar knowledge in the goods involved
Acceptance (UCC)
offer to buy goods may be accepted by
(1) prompt shipment
(2) by a promise to ship
UCC Battle of the Forms
Aditional terms included in the acceptance will become part of the contract unless
(1) offeror’s offer was expressly conditioned on only the terms included OR
(2) rejects the additional terms in a reasonable time OR
(3) the terms materially change the bargain.
Consideration
Bargained-for exchange of legal value.
Each promise must induce the detriment, and vice versa.
Compensatory Damages
Made up of (1) expecation damages and (2) consequential damages
Damages must be
- Forseeable
- Causal
- Certain
- Unavoidable (duty to mitigate)
Expectation Damages
Intended to give the non-breaching party the benefit of the bargain and to put them in a position as if the contract had not been breached.
Incidental Damages
Expenses a non-breaching party incurs as a result of a breaching party’s breach.
Consequential Damages
awarded if a reasonable person foresees at the time of contract formation such damages will result from breach.
Promissory Estoppel
(Contract)
(1) consideration not required if the fact indicate that the promisor should be estopped from not perfoming
(2) if promisor should have reasonably expected that promise to induce action or forebearance
(3) and such action or forebearance was in fact induced
Promissory Estoppel
Damages
If promissory estoppel found,
(1) might be able to be rewarded expecation damages (what was promised
(2) might be able to get reliance damages
Rescission
Rescission is a contract remedy available where one party seeks to void a contract.
Lack of mutual assent is a basis for rescission of a contract where one party shows misrepresentation, mutual mistake or non-disclosure
Misrepresentation (k)
(1) intentionally,
(2) made a misrepresentation of material fact,
(3) intending that the other party rely on that misstatement,
(4) the other party did in fact rely on that misstatement, and
(5) damages were suffered as a result.
Non-disclosure: party fails to disclose a material fact of the contract which forms the basis of the contract and the other party has no reason to know of the failure to disclose.
“as is”.
Common law: “as is” was strictly construed.
Modern trend is to relax the enforcement of “as is” clauses where one party misrepresented or committed fraud.
defense of non-disclosure,
did not disclose a material fact that formed the basic assumption of the K and the party relied on that assumption
Mutual Mistake
Both parties are mistaken to basic assumption on which the agreement was made. Adverlsy mistake party may rescind if
(1) mistake of fact that relates to basic assupmtion of K
(2) material impact on deal
(3) impacted party DID NOT assume the risk
Firm offer under UCC
Irrevocable offer by merchant to buy or sell goods without consideration
(a) 3 requirements:
(i) Offer made by a merchant +
(ii) In a writing signed by the merchant +
(iii) Expressly stating it will be held open
Parol Evidence Rule
Bars introduction of extrinsice evidence made prior or contemporaneous to the execution of the K and which contradicts or varies the terms of the integrated contract
(1)Merger clause is highly persuasive but not determinative.
(2) No PE to reform or contradict written terms, unless there’s a mistake in integration.
(3) PE ok to argue defense to enforcement, explain ambiguous terms, to provide add’l terms if only partial integration, or add’l terms would ordinarily be in sep agmt.
Condition vs Promise
A condition precedent to performance is a term in the agreement that must be satisfied strictly in order for the party’s performance to be due.
If the condition never occurs, the party never has a duty to perform.
A promise, on the other hand, only needs to be substantially performed under the common law in order for the other party’s performance to become due.
Courts favor promises over conditions
Advertisements (Offer)
Advertisements are typically invitations to deal and not offers to sell.
Exception: Ads containing words of commitment and where the offeree can be identified with specificity can be sufficiently definite to be an offer.
Catalogs
Catalogs with specified goods and prices are typically an invitation to deal, not an offer.
Rewards and auction bids:
can be offers if it is clear who can accept/win.
Definite and Certain Terms for Offer (Common La)
Quantity: The quantity term must be stated or ascertainable.
Time of performance can be a missing term supplied by the court as a “reasonable” time.
Identity of the parties: The parties must be identified.
Price: Price must be stated for real estate contracts. However, the UCC provides “reasonable price at the time of delivery” if missing.
Subject matter must be identified clearly.
