Contracts Flashcards
(26 cards)
Contract Formation
Under the UCC, a contract is formed if both parties intend to contract and there is a reasonably certain basis for giving a remedy. The only essential term is quantity, and as long as the parties intend to create a contract, the UCC “fills the gap” if other terms are missing, such as the time or place for delivery. At Common Law, all essential terms must be covered in the agreement, including the parties, subject, price, & quantity.
Acceptance
For acceptance, generally any reasonable method will be allowed, but silence is only allowed if expressly provided in the contract.
Firm Offer Rule
Under the UCC firm offer rule, an offer to buy or sell goods is irrevocable if: (i) the offeror is a merchant, (ii) there is an assurance that the offer is to remain open, and (iii) the assurance is contained in a signed writing from the offeror. A firm offer in a form prepared by the offeree, however, must be separately authenticated by the offeror to protect against inadvertent signing.
Consideration - gifts
Gifts are not exchanged for a bargain, so there is NO consideration for gifts and they are thus hard to enforce.
Consideration - pre exsisting duty
if someone already has to do something, there’s no new consideration
Past consideration
CL says it’s a no go, the modern trend says that if someone provided a very specific, meaningful benefit to somebody and that person then promises back, that MAY be considered consideration
consideration - promissory estoppel
may be enforceable as a consideration substitute if the person making that promise reasonable expected the promise to induce action or forbearance, the promise actually induces action or forbearance, and injustice can only be avoided by enforcement of the promise. NOTE: typically only reliance damages are available for promissory estoppel.
Revocation
An offer is revoked when the offeror makes a manifestation of an intention not to enter into the proposed contract before the offeree accepts. A revocation may be made in any reasonable manner and by any reasonable means, and it is not effective until communicated. Under the UCC, a person receives notice when: (i) it comes to that person’s attention, or (ii) it is duly delivered in a reasonable form at the offeree’s place of business.
option
In general, an offer can be revoked by the offeror at any time prior to acceptance. However, an enforceable option will render the offer irrevocable. An option is an independent promise to keep an offer open for a specified period of time. Such a promise limits the offeror’s power to revoke the offer until after the period has expired, while also preserving the offeree’s power to accept. Under the common law, if the option is a promise not to revoke an offer to enter a new contract, the offeree must generally give separate consideration for the option to be enforceable.
Substancial Performance
The doctrine of substantial performance provides that a party who substantially performs can recover on the contract even though full performance has not been tendered. Substantial performance is negated if the incomplete performance amounted to a material breach of contract. If the failure of a constructive condition of exchange is minor, however, it will not negate substantial performance.
Installment contracts recovery
A divisible or installment contract is one in which the various units of performance are divisible into distinct parts. Recovery is limited to the amount promised for the segment of the contract performed.
Unjust enrichment
When a plaintiff confers a benefit on a defendant and the plaintiff has a reasonable expectation of compensation, allowing the defendant to receive the benefit without compensating the plaintiff would be unjust. Although this type of action is often characterized as based on an implied-in-law contract or a quasi-contract, quantum meruit does not depend on the existence of a contract.
Anticipatory Repudiation
Parties in a contract are entitled to expect due performance of contractual obligations and are permitted to take steps to protect that expectation. Anticipatory repudiation occurs when there has been an unequivocal refusal of the buyer or seller to perform, or when a party creating reasonable grounds for insecurity fails to provide adequate assurances within 30 days of demand for such assurances.
Recovery for repudiation
Repudiation allows the non-repudiating party to resort to any remedy given by the contract or code. But until the repudiating party’s next performance is due, he may retract the repudiation unless the aggrieved party has since accepted the repudiation, acted in reliance on the repudiation, or brought an action for breach.
– Retraction must include any assurances of performance that the other party has justifiably demanded about whether the retracting party will perform. A proper retraction reinstates the repudiating party’s contract rights.
Forseeability
Contract damages are recoverable only if they were in the contemplation of the parties at the time of contract formation or were otherwise foreseeable.
Economic waste
Courts may refuse to enforce an award that is economically wasteful where the cost of restoration greatly exceeds any diminution in value. If a court finds that restoration will be wasteful, then the measure of damages may be the difference in value. Courts may refuse to use the diminution in value measure of damages, however, when the breach appears to be willful, and only completion of the contract will enable the nonbreaching party to use the land for its intended purposes.
certainty of damages
Contract damages are recoverable only if they can be proven with reasonable certainty. To that end, courts are hesitant to award damages for lost profits—especially in the case of new businesses—because profits are often speculative.
mitigation
A nonbreaching party has the obligation to mitigate damages by taking steps that do not result in undue risk, expense, or burden. The amount of damages that the nonbreaching party could have mitigated, but failed to mitigate, should be offset against the total damage award.
UCC SOF
When the price of goods is at least $500, the UCC requires a memorandum of the sale that must (i) indicate that a contract has been made, (ii) identify the parties, (iii) contain a quantity term, and (iv) be signed by the party to be charged.
UCC SOF Signature
A signature includes any authentication that identifies the party to be charged, such as a letterhead on the memorandum.
merchant
A merchant is a person who regularly deals in the type of goods involved in the transaction or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction.
UCC SOF merchant
In contracts of $500 or more between merchants, if a memorandum sufficient against one party is sent to the other party, who has reason to know its contents, and the receiving party does not object in writing within 10 days, then the contract is enforceable against the receiving party even though he has not signed it.
Acceptance – differences between that and offer
At CL, the acceptance must be a mirror image of the offer, so no changes or new terms
If at least one of the parties is not a merchant, an acceptance with new terms will be a valid acceptance, but the new terms are not going to come back in, but If BOTH parties are merchants, additional terms do come in with the acceptance UNLESS, those additions/changes are material changes, the terms of the original agreement say that no changes can come in, or if the offeror objects before or after receiving the new terms.
Consequential Damages
The UCC permits recovery for incidental and consequential damages resulting from the seller’s breach. Incidental damages are damages that are incidental to the seller’s failure to perform. Consequential damages are any losses resulting from requirements and needs of which the seller, at the time of contracting, had reason to know and which could not be reasonably prevented by purchasing substitute goods or otherwise.
Consequential damages may be limited or excluded under the UCC unless such limitation or exclusion would be unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable, whereas limitation of damages when the loss is commercial is not.
