Contracts Flashcards
Suretyship— Paying debt of another
A promise to guarantee a debt is supported by consideration if (1) the guarantor is compensated, (2) the loan is conditioned on obtaining a guarantee, or (3) the promise is made before or at the same time as the loan.
UCC Battle of Forms
Under the battle-of-the-forms rule, an acceptance is effective even when it contains new terms. If both parties are merchants, the new terms become part of the contract unless:
(1) the offer expressly required the offeror’s assent to new terms
(2) the offeror objected within a reasonable time, or
(3) the new terms materially alter the contract.
Accord & Satisfaction (Discharging Contractual Obligations)
An accord requires consideration to be valid. That consideration can only be worth less than what was agreed to in the original contract if:
1) there is a good-faith dispute as to the amount owed or
2) the new consideration is of a different type than what was owed under the original contract.
Revocation of Option Contract
An offer to form an option contract is revocable before the option is accepted. Revocation occurs when (1) the offeror directly communicates the revocation to the offeree or (2) the offeree obtains reliable information that reasonably indicates the offer was revoked.
Implied In Fact Contract
Can be created by a party’s conduct or failure to act if the party 1) intentionally engages or fails to engage in conduct and 2) know or has reason to know that assent can be inferred from that conduct.
Example: a contractor, thinking that he was paving a customer’s driveway, mistakenly paved the neighbor’s driveway while the neighbor looked on without saying anything or raising any objection
Implied In Law Contract
The court may construe an implied-in-law contract to prevent one party from being unjustly enriched by a benefit conferred upon it by another.
Example: an unconscious person receives treatment from a physician without the person’s knowledge or consent
UCC Battle of the Forms
Under the UCC’s battle-of-the-forms rule, any reasonable manifestation of acceptance (even one including new terms) is effective unless it is expressly conditioned on the offeror’s assent to the new terms.
warranty of merchantability
Under UCC, warranty of merchantability is implied in all contracts for the sale of goods by a merchant—ie, one who regularly deals in goods of the kind involved in the contract
Promise to make a gift
A promise to make a gift is generally unenforceable because it does not involve the bargained-for exchange that is required to constitute valuable consideration.
Contract and Conditions
A contract is generally formed when a mutual agreement is supported by valuable consideration and may include conditions that delay (condition precedent) or excuse (condition subsequent) a party’s promised performance.
Offer & Acceptance
Once the offer has terminated, it cannot be accepted. But the offer can be revived if the offeror conveys that it is still open. This creates a renewed opportunity for acceptance by the offeree. If the offeree then accepts, the offer can no longer be rescinded and a binding contract is formed.
UCC Gap Fillers
The UCC fills the gap when certain terms are missing from a sale-of-goods contract. For example, the gap filler for the place of delivery is generally the seller’s place of business if the seller has one. And unless the contract specifies otherwise, payment is due at the time and place the buyer is to receive each shipment of goods.
Preexisting Duty Rule
Under the preexisting duty rule, a debtor’s promise to pay a liquidated debt (ie, one that is certain and undisputed in amount) is not consideration for a creditor’s return promise.
Consideration for Settlement Agreements
A promise to surrender a claim or defense constitutes consideration for a settlement agreement so long as (1) the claim or defense is valid or subject to a good-faith dispute or (2) the surrendering party believes that the claim or defense may be valid.
No Oral Modification
a clause in a written contract that says, “This contract can only be amended by a writing,” or “This contract cannot be modified orally.”
generally not enforceable.
Charitable Subscription
Promise is made as a gift. Courts excuse the lack of consideration because it is assumed charity relied on the promise.
IT IS ENFORCED
Discharge by Accord & Satisfaction
Contractural obligation is discharged by accord and satisfaction if a party tendered a negotiable instrument with a conspicuous statement that it was tendered as a “payment in full” and the other party obtained/deposited payment.
Terms
Parties to a contract are free to set their own terms, including limiting a party’s liability for consequential damages. Even if there is knowledge and foreseeability
Loss Volume Seller
Is a retailer who can obtain as many items from a supplier as she can sell
Selection of Goods contract
Delay in making a selection of goods is not a material breach of contract
