Contracts Flashcards
Elements of a contract
Offer, Acceptance, consideration
What does the UCC apply to?
The UCC applies to the sale of goods.
Offer
manifesting a willingness to enter a bargain on specific terms. An offer must contain reasonably certain terms, communicated to the offeree, and must not have been terminated prior to acceptance. Mere puffery or exaggerated terms in advertising is not an offer.
Termination
Ends an offer. You may terminate by rejection, lapse of time, revocation, offeror’s death or incapacity, or the destruction of the subject matter. An option may prevent termination.
Option
distinct contract where offeror agrees to hold an offer open for a definite time in exchange for consideration. Under the UCC a firm offer does create an option. To be considered an option the offer must be amde by a merchant, signed in writing, and the offer is held for no more than 3 months
Acceptance
Manifestation of assent to the offer. An object response that a reasonable person in the offeror’s shoes would understand as acceptance. Requests for more information is not acceptance.
Bi-lateral Contract
promise that induces a return promise, the contract is formed when the promises are made
Uni-lateral Contract
acceptance happens when the offeree begins work on the contract, the offeree must know about the contract, if completion takes a period of time then the offeree is given reasonable time to perform the contract
Mailbox Rule
Offers are accepted when dispatched.
How can acceptance be delivered?
Acceptance can be delivered in any way that the offeror will receive and be aware of, if offereor has no way of being aware then notice is required
Mirror Image Rule
to be effecting an acceptance must be on terms identical to those contained in the offer. Any deleted terms, additional terms, or changes act as a rejection of the original offer and the presentation of a counter-offer. Implied terms may be added without rejecting the original offer.
UCC and counter offers
If a party’s expression is otherwise valid as an acceptance but contains terms additional to or different from those in the offer, a contract is formed. If the 1 party is not a merchant then the UCC acts much like common law. If both parties are merchants than any additional terms are added to the contract unless the original offer explicitly limits the terms, the additional terms materially alter the deal, or the offeror rejects the additional terms within a reasonable time.
Drop out rule and Gap Filling
Terms that are not rolled into the new contract are dropped from the writings. Courts may then fill gaps by implication or by industry standard.
Consideration
Consideration is the bargained for exchange of value that induces another promise. Any exchange of value is sufficient. A gross disparity may support a claim against enforceability but usually not without additional factors. Consideration must be new to the bargain. You cannot exchange something that is already done as consideration.
Illusionary Contract
When 1 party determines whether or not a contract will be performed it is considered an illusory contract and will not be enforced.
Promissory Estoppel
1) Promise that induces a change in position
2) promise was intended to change their position
3) Party materially alters their position in anticipation of this promise
4) this reliance causes harm
Pre-existing duty rule
A promise to do something a party is already obliged to do or to refrain from doing something that the party has no legal right to do cannot be exchanged as consideration.
Modifications
Under Common Law, modifications require new consideration. Under the UCC an agreed upon modification, made in good faith, does not require new consideration. In fact there is also a good faith allowance for common law if the original terms of the contract are now materially different from those that originally motivated the contract.
Statute of Frauds
Specific types of otherwise valid contracts are unenforceable unless the terms appear in a writing signed by the part to be charged or the party against whom enforcement is sought. This applies to surety/guaranty contracts, transfer of interest in land, contracts that cant be performed by all parties within 1 year, sale of goods of $500 or more, executor/administer of deceased, contracts in consideration of marriage.
Writing requirements of the statute of frauds
1) lists the parties
2) lists the subject matter
3) consideration exchanged
4) nature and time of parties performance
Exceptions: confirmatory memos, partial performance of an oral contract, basically anything that confirms the existence of the contract beyond he said/she said
Writing requirements for the UCC
1) must provide the basis to believe the contract exists
2) states the quantity to be sold
The writings may be a single document or a sufficiently linked series of documents that set forth the necessary information
Misrepresentation
assertion not in accord with the facts, that is related to a material fact that substantially contributed to the decision to contract, and the injured party reasonably relies on this assertion. Time begins to run on a misrepresentation claim when the misrepresentation is discovered. The injured party may void the contracts or continue to perform and seek damages.
Fraudulent Misrepresentation
Knowingly and intentionally using a statement that is false, with the intent to induce the other party to enter an agreement. A party may void this contract regardless of the fairness of the terms.
Negligent Misrepresentation
Without deceptive intent, a party misrepresents some part of a contract. the injured party may void contract on a showing that the misrepresentation is material and the other party breached their duty.
