Contracts Flashcards
(40 cards)
When is a revocation of a contract effective?
Upon receipt.
(Example: On day 1, A mails an offer to B. On day 2, A mails a revocation to B. If B receives the offer and accepts before receiving the revocation, a contract is formed.)
What is an output contract?
a contract under which a seller agrees to sell all that she manufactures of a product to the buyer.
what is a requirements contract
Inverse of output contract. Buyer agrees to buy all that they need of a product from a seller
What is the difference between contract modification under the UCC and under the common law?
Under common law, modification requires new consideration given. Under the UCC, only good faith is required to modify.
What is an illusory promise?
a promise that essentially pledges nothing because it is vague or because the promisor can choose whether to honor it.
What must be present to void a contract via mutual mistake?
(i) Mistake of fact existing at the time the contract was formed;
(ii) The mistake relates to a basic assumption of the contract;
(iii) The mistake has a material impact on the transaction; and
(iv) The adversely affected party did not assume the risk of the mistake.
When can if the defense of impracticability be raised?
(i) An unforeseeable event has occurred;
(ii) Nonoccurrence of the event was a basic assumption on which the contract was made; and
(iii) The party seeking discharge is not at fault.
when is specific performance available as a breach remedy?
When damages are inadequate to remedy the injury
What is constructive condition of exchange?
When a party’s performance can be rendered at the same time as the other party’s performance, each party’s performance is conditioned on the other party’s performance; both parties’ performances are due simultaneously, unless the language or circumstances indicate otherwise.
What types of contracts fall within the Statute of Frauds?
(M Sour)
Marriage contract
Suretyship
One year: contract could not possibly be performed within 1 year
UCC sale of goods of $500 or more
Real property sale
Under the UCC, what other aspects can be introduced to clarify the terms of the contract?
trade usage, course of dealing, course of performance
If the express contract terms are inconsistent with the course of performance, or trade usage, priority is given to the express terms, followed by course of performance, course of dealing and trade usage.
Expectation damages formula
loss in value + other loss - cost avoided - loss avoided
what is anticipatory repudiation?
When one of the parties, before their performance is due, informs the other party that they won’t perform their contractual obligations when time comes
What is an implied-in-fact contract?
A contract presumed to exist based off the conduct/actions of a party.
The party is presumed to have assented to an offer based on their actions.
What is a quasi contract?
A contract that the court presumes to exist, when:
1) the plaintiff conveyed a measurable benefit to the defendant
2) the plaintiff reasonably expected to get paid
3) it would be unfair to let the defendant keep the benefit without paying.
Also called an “implied-by-law” contract. Can be created in the absence of normal consideration.
What are identifiable goods under the UCC?
Goods that are specifically identified within the scope of the deal (ex. a specific painting or car)
What happens if an identifiable good is damaged?
If it’s totally destroyed, then all parties’ obligations to performed are excused so long as 1) neither party caused the destruction and 2) the risk of loss hadn’t yet passed to the buyer.
If it’s only partial destruction, the buyer can demand inspection and either 1) treat the contract as avoided or 2) accept the damaged goods but at a reduced price (this kills any future claims they’d have against the seller under the contract)
With UCC contracts for goods, when does the risk of loss/damage get placed on the buyer?
In a contract where the seller is directly delivering the goods to the buyer, once the buyer is physically given the goods
If the goods are shipped through a common carrier, the risk of loss passed onto the buyer when the seller gives the goods to the common carrier
What are assignment and delegation?
Assignment is when someone transfers their contractual rights to a third party
Delegation is when someone transfers their contractual duties to a third party
When is assignment and/or delegation not allowed?
1) If the contract explicitly says assignments aren’t allowed, or
2) if the assignment materially reduced the non-assigning party’s chance of receiving performance or materially increases their duties/risks
Can a breaching party still be entitled to damages?
Yes, although the damages they’re entitled to depend on whether their breach was material or minor
What damages is a breaching party entitled to for a minor breach?
Expectation damages, i.e., placing the parties in the same position as if the contract had been fully performed; and
Reliance damages to put the parties in the same position as if the contract had never been formed (e.g., by paying out-of-pocket expenses) and are used when expectancy damages are too speculative
What damages is a breaching party entitled to if they materially breached?
Only restitution damages to ensure that the nonbreaching party is not unjustly enriched by the breaching party’s work.
The breaching party is entitled to recover the reasonable value of the benefit conferred less any damages suffered by the nonbreaching party due to the breach.
What happens if a buyer repudiates or breaches a contract for identifiable goods?
The risk of loss immediately passes from the seller to the buyer. The seller can then recover any deficiency between the seller’s insurance coverage and the contract price within a commercially reasonable time.
