Contracts Flashcards
(130 cards)
1
Q
Bilateral Contract
A
promise for a promise
can be accepted in any reasonably way
2
Q
Unilateral Contract
A
offeror requests performance rather than a promise
Once act is completed K is formed
Occurs only in 2 situations
1. when the offeror clearly indicates that completion of performance is the only manner of acceptance
2. Where there is an offer to the public
(Look for “only by”)
3
Q
Goods
A
all things movable at the time they are identified as the items to be sold in the contract
4
Q
Merchants
A
one who regularly deal in goods of the kind sold or who otherwise by their profession holds themselves out as having special knowledge or skills as to the practices involved
5
Q
Hybrid Contract
A
Contract involving sale of both goods and services
Determine which aspect dominates and apply the law governing that aspect to the whole K
If contract divides payment between goods and services then Art 2 applies to sale portion and common law to service portion
6
Q
Offer
A
must create a reasonable expectation in the offeree that the offeror is willing to enter into a K on the basis of the offered terms
7
Q
Offer Requirements
A
Definite and certain in its terms
Identification of the Offeree
8
Q
Real Estate Offer Requirements
A
must identify the land and the price
Land identified with particularity
Deed description not required
9
Q
Sale of Goods offer requirements
A
quantity term required
10
Q
Requirements contract
A
a buyer promises to buy from a certain seller all of the goods the buyer requires and the seller agrees to sell that amount to the buyer
11
Q
Output contract
A
a seller promises to sell a certain buyer all the goods that the seller produces and the buyer agrees to buy that amount from the seller
12
Q
Offers for Employment Contracts
A
if duration of employment is not specified the offer, if accepted, is constured as creating a contract terminable at will of either party
13
Q
Offers for Other Service Contracts
A
The nature of the work to be performed must be included in the offer
14
Q
Termination by lapse of time
A
offeree must accept the offer within the time period specified or if no time period is specified within a reasonable time
failure to do so means offer is terminated
15
Q
Express Rejection
A
statement by the offeree that they do not intend to accept the offer
Terminated the offer
16
Q
Counteroffer
A
offer made by the offeree to the offeror that contains the same subject matter as the original offer but differs in terms
Rejection and new offer
17
Q
Conditional acceptance as rejection
A
when an acceptance is made expressly conditional on the acceptance of new terms, it is a rejection of the offer
18
Q
Revocation
A
Retraction of an offer by offeror
By direct communication to offeree or indirect communication if offeree receives correct info from a reliable source of acts of the offereor that would indicate to a reasonable person that the offeror no longer wishes to make the offer
19
Q
When is a revocation effective?
A
When received
20
Q
Limitations on offerors power to revoke
A
Offers can be revoked at will unless
Option K
Merchants firm offer
Detrimental reliance
Performance in Unilateral K
21
Q
Option K
A
Offeree gives consideration for a promise by offeror to not revoke an outstanding offer
22
Q
Merchants Firm Offer
A
If a merchant offers to buy or sell goods in a signed writing and the writing gives assurances that it will be held open the offer is not revocable during the time stated or for a reasonable time (but no more than 3 months)
23
Q
Detrimental reliance
A
offeror could reasonably expect the offeree would rely to their detriment on the offer and offeree does rely, irrevocable as option K for reasonable length of time
24
Q
Offer w/ Performance with Unilateral K
A
irrevocable once performance has begun
But offeree can withdraw prior to completion of performance
25
Termination by operation of law
Death
Destruction of subject matter
Supervening Illegality
26
Acceptance
manifestation of assent to terms of offer
27
Acceptance of offer for bilateral K
accepted by promise to perform or by beginning of performance
Must be communicated to offeror
Acceptance can be made in any reasonable manner
28
Acceptance of Offer for Unilateral K
Acceptance only by completion of performance
29
Acceptance with Article 2
offer to buy goods accepted by promise to ship or by a shipment of conforming or nonconforming goods
Silence is not acceptance unless prior dealings or trade practices say it is
30
Common Law Mirror Image Rule
Absolute and unequivocal acceptance of each and every term of the offer
Any different or additional term is rejection and counteroffer
31
Article 2 additional or different terms (battle of the forms)
different or additional terms is not rejection and counteroffer, is effective as acceptance unless acceptance is expressly made conditional on assent to additional or different terms
32
Terms included in K for non-merchants w/ different or additional terms
different or additional terms are mere proposals to modify the K and do not become a part of K unless offeror expressly agrees
Only one party needs to not be a merchant
33
Terms included in K for merchants w/ different or additional terms
If both parties are merchants additional terms will be included unless
They materially alter the OG terms of offer
Offer expressly limits acceptance to terms OR
Offeror has already objected to particular terms or objects within a reasonable time after notice of them is received
34
Mailbox rule
acceptance by mail is effective at the moment of dispatch unless
Offer stipulates not effective until receipt
Option K
Offeree sends a rejection then sends an acceptance (whichever arrives first is effective)
Offeree send acceptance then rejection - acceptance effective unless rejection arrives first and offeror detrimentally relies on it
35
Consideration
a bargained for exchange between parties for legal value
36
Common Law modification of K's
Generally cant be modified unless the modification is supported by new consideration
Modern view permits modification w/o consideration if modification is due to circumstances that were unanticipated by parties when the K was made and fair and equitable
37
UCC modification of K
No extra consideration necessary just need good faith promises of new and different terms
38
Preexisting legal duty and consideration
Gnerally promising to perform or performing an existing legal duty is insufficient consideration UNLESS
New of different consideration promised
Promise is to ratify voidable obligation
Duty is owed to 3P
Honest dispute as to duty
Unforeseen circumstances sufficient to discharge party
39
Discharge of Debts and Consideration
accord and satisfaction required
Accord supported by consideration
40
Promissory Estoppel
Consideration is not necessary if facts indicate that the promisor should be estopped from not performing. Promise is enforceable if Necessary to prevent injustice if
Promisor should reasonably expect to induce action of forbearance AND
such action or forbearance is in fact induced
41
Lack of capacity
Minors lack capacity to make K binding on themselves
But contractual promises on adult who made K with minor is binding on adult
Minor can disaffirm K anytime before turning 18 in whole not in party
When turning 18 they can choose to be bound by K (affirm it)
42
Duress and Undue Influence
K induced by either will be void and can be rescinded as long as not affrimed
43
Economic Duress
Party threatens to commit a wrongful act that would threaten the other contracting party's property of finances AND
No adeqaute means available to prevent the threatened loss
44
Undue Influence
undue susceptibility to pressure by one party and excessive pressure by the other party - think caregiver situation
45
Absence of Mutual Assent - Ambiguity
K includes term with two meanings result depends on knowledge of ambiguity
If neither aware no K unless parties intended same meaning
Both aware no K unless parties intended same meaning
One party aware binding K based on what the non-knowing party believed meaning is so long as reasonable
46
Mutual Mistake as to existing facts
K may be void by adversely affected party if:
Mistake concerns a basic assumption on which K is made, mistake has a material effect on exchange, and party seeking avoidacne did not assume the risk of the msitake
47
Mistake in value
not a defense!
48
Unilateral Mistakes
if one party mistaken about facts relating to agreement mistake will not prevent formation of K
If non-mistaken party knew or had reason to know of mistake by other party K is voidable (need material effect and mistaken party must not hav borne risk of mistake)
49
Misrepresentation
Contract void is party induces another party into K by using fraudulent misrepresentation if innocent party justifiably relied on the misrepresentation.
Must be a material misrepresentation - induce a reasonable person to agree or maker knows for some special reason that it is likely to induce person to agree even if reasonable person would not
50
Illegality
Contract is void if the consideration of the subject matter of the K is illegal
51
Unconscionability
Allows a court to modify or refuse to enforce an entire K or a provision in it to avoid unfair terms usually due to some unfairness in the bargaining process
Unfair surprise and oppressive terms at the time of formation
52
Statue of Frauds
Certain agreements need to be evidenced in writing signed by the party sought to be bound
53
MY LEGS
Marriage
Years (more than 1)
Land Sale contracts
Executor
Goods ($500 or more)
Surety
54
Marriage
A promise the consideration for which is marriage needs to be evidenced in writing
55
Land
A promise that by its terms cannot be performed within one year is subject to S of F
Date runs from date of agreement not performance
56
Interest in land and S of F
Below need a writing
Leases for more than 1 year
Easements more than ! year
Mortgages and most other security liens
Fixtures
Mineral or structuers if to be severed by the buyer
57
Executors
Promise by an Executor or administrator to pay the estates debts out of their own funds must be evidence by writing
58
Suretyship
Promise to answer for the debt or default of another must be evidence by writing
If XYZ does not pay I will
59
Statute of Frauds Contract Modifications
Written K can be modified orally, but modification must be in writing if the contract as modified falls within S of F
Under common law, provisions prohibiting oral modification are not effective
UCC - if a K says that it may not be modified or rescinded except by a signed writing it is given effect
60
Land Sale K Performance and S of F
Seller conveys property to the buyer the seller can enforce the buyers oral promise to pay
Buyer can seek to enforce oral K for part performance
BUT need 2/3 of below
Payment, possession and/or valuable improvements
61
Service K's and S of Fr
An oral K that cannot be completed within one year but has been fully performance by one party is enforceable
62
Sale of Goods and S of Fr
Part performance takes sale of goods out of S of f when goods have been specially manufactured or the goods have been paid for or accepted
63
3 scenarios K is enforceable without a writing
1. Specially manufactured goods (no suitable for sale to others, goods are for buyer, substantial beginning or commitments for their purchase)
2. Admissions in pleading or court
3. Merchants Confirmatory Memo rule (between merchants; one party send to other party written confirmation of understanding binds sender and also binds recipient if they have reason to know of the confirmations contents and do not reject within 10 days of receipt in writing.
64
Parol Evidence Rule
Excludes evidence of prior or contemporaneous agreements contradicting a final writing
65
Is the writing an integration - 2 components
Whether the writing was intended as a final expression of the agreement and whether the integration was intended to be complete or partial
66
Partial Integration vs. Complete integration whats allowed
Complete integration writing cannot be contradicted or supplements
partial the writing may not be contradicted but may be supplements by proving consistend additional terms
67
Express warranties
Any affirmation of fact or promise from seller to buyer, any description of the goods, and any sample of model creates and express warranty if the statement, description, sample, or model is a part of the basis of the bargain
Cannot be mere puffery, value or opinion!
68
Implied warranty of merchantability
Implied in every K by a merchant who deals in goods of the kind there is a warranty that the goods are fit for the ordinary purpose for which the goods are used
69
Implied warranty of fitness for a particular purpose
Any seller (merchant or not) has reason to know the particular purpose for which the goods are to be used and that the buyer is relying on the sellers skill and judgment to select the goods and the buyer relies on the sellers skill or judgment
70
Warranty of title
any seller of goods warrants that the title transferred is good, transfer is rightful and there are no liens
71
Warranty against infringement
merchant seller regularly dealing in goods of the kind sold automatically warrants the goods are delivered free of patent, trademark, copyright etc.
72
Disclaiming warranty of title
specific language or by circumstances giving buyer notice that the seller does not claim title or that they are selling only such rights as they or a third party may have
73
Disclaiming Express warranties
Can't really disclaim these, very hard
74
Disclaiming implied warranty general
implied warranty of merchantability and fitness can be disclaimed by expressions of as is, with all faults, or other expressions that in common understanding call the buyer's attention to the fact that there are no implied warranties (does not have to be conspicuous)
Specific disclaims - conspicuous
75
Disclaimer of warranty of merchantability
have to mention merchantability and be conspicuous
76
Disclaimer of warranty of fitness
Must have conspicuous writing
77
Limitation on damages
party can limit damages available in the case of breach of warranty so long as no unconscionable
Limitations on damages for PI are always unconscionable
78
Risk of Loss
Who bears the burden for damaged or destroyed goods
For R of L to apply, goods must be designated as the subject of K and distinguished from the sellers other goods
79
Effect of R of L with defective goods
If buyer has right to reject goods, R of L does not pass to buyer until the defects are cured or the buyer accepts the goods in spite of their defects
80
Effect of breach of R of L w/ noncarrier case
Parties did not intended that the goods would be moved by common carrier
If seller is a merchant, R of L passes to the buyer only when they take physical possession of the goods
Seller not a merchant, risk of loss passes on tender of delivery
81
Effect of breach of R of L w/ carrier case
Parties intended goods to be moved by a carrier
Two types:
1. Shipment K - K requires seller to ship goods by carrier but does not specify particular destination; R of L passes when goods are delivered to carrier
2. Destination K - contract requires seller to deliver goods to particular destination; R of L passes when goods are tendered to buyer at destination
82
Sellers duties under Shipment K
make a reasonable K with carrier on behalf of buyer, deliver goods to carrier, promptly notify buyer of the shipment, provide buyer with any documents needed to take possession of goods
83
FOB
Free on board
Always followed by location and R of L passes to buyer at that named location
Can be either shipment or desitnation Ks
Seller bears risk and expense of getting goods to the name location
84
Goods destroyed bfeore risk of loss passes
Good identified when K made are destroyed without fault by either party and before the risk of loss passes to the buyer the K is avoided
Goods not identified until after K made the seller would have to prove impracticability to be discharged
85
Performance at common law
substantially perform
86
Performance for UCC
perfect tender - goods must be exactly as promised in the K
87
Installment K
one that requires or authorizes delivery in separate installments
Seller may demand payment for each installment if the price can be apportioned, unless a contrary intent appears
88
Promisor's satisfaction as condition precedent
Express condition that a party will only pay if it is satisfied with other party's performance
If K involves mechanical, fitness, utility, or marketability a condition of satisfaction is fulfilled by a performance that would satisfy a reasonable person
If K involves personal taste or judgment a condition of satisfaction is fulfilled only if promisor is personally satisfied
89
Condition precedent
one that must occur before an absolute duty of immediate performance arises in the other party
90
Condition Subsequent
One that, when it occurs, cuts off an already existing absolute duty of performance
91
Anticipatory repudiation
promisor prior to the time set for performance indicates they wont perform when the time comes
applies only if bilateral contract
Must be unequivocal
92
Effect of anticipatory repudiation
Non-repudiating party can
1. Treat AR as a total repudiation and sue immediately
2. suspend their own performance and wait to sue until performance date
3. treat the repudiation as an offer to rescind and treat the contract as discharged OR
4. ignore the repudiation and urge the promisor to perform
93
Mutual Recession
contract may be discharged by express agreement between the parties to rescind
94
Accord
an agreement in which one party to an existing contract agrees to accept in lieu of performance that they are supposed to received from one party some other different future performance
Alone it merely suspends the right to enforce it in accordance with the terms of the accord contract
95
Satisfaction
the performance of the accord agreement
Discharges the OG contract but also the accord K as well
96
Novation
Occurs when a new contract substitutes a new party to receive benefits and assume duties that had originally belonged to one of the original parties under the terms of the old contract
97
Perfect Tender Rule
If goods or delivery fail to conform to the contract in any way the buyer may reject all, accept all, or accept any commercial units and reject the rest
98
When does the buyers right to reject get cut off?
acceptance
Buyer accepts when after a reasonable opportunity to inspect they indicate the goods conform or they will keep goods even if they fail to conform; they fail to reject within a reasonable time after tender or delivery of the goods or fail to seasonably notify the seller of their rejection to they do any act inconsistent with the sellers ownership
99
When can the buyer revoke acceptance?
goods have a defect that substantially impairs their value to the buyer and they accepted the goods on reasonable belief that the defect would be cured and it has not been OR they accepted the goods because of the difficulty of discovering the defects or because of the seller's assurance that the goods conformed to the K
100
When must revocation of acceptance occur
Within a reasonable time after the buyer discovers or should have discovered the defects and before any substantial change in the goods occurs that is not caused by a defect present at the time the seller relinquished possession
101
Sellers right to cure for a single delivery contract
buyer rejects goods because of defects, seller may within the time originally provided for performance cure by giving reasonable notice of their intention to do so making a new tender of conforming goods that the buyer must then accept
102
Specific performance
an order from the court to the breaching party to perform or face contempt of court charges
Always available for land sale contracts and for goods that are rare or unique at time performance is due
Not available for breach of contract to provide serivces
103
Defenses to specific performance
Laches
Unclean hands
sale to a bona fide purchaser
104
Laches
a claim that the plaintiff has delayed bringing the action and that the delay has prejudiced the defendant
105
Unclean hands
a claim that the party seeking specific performance is guilty of wrongdoing in the transaction being sued upon
106
Sale to a bona fide purchaser
a claim that the subject matter had been sold to a person who purchased for value in good faith
107
Right to recover from buyer on buyer's insolvency
If seller learns that a buyer has received delivery of goods on credit while insolvent, the seller may reclaim the goods upon demand made within 10 days after the buyer's receipt of the goods
Exception to this is if a misrepresentation of solvency has been made in writing to the seller within 3 months before delivery
108
Expectation damages
default; put the injured party in position they would have been in had the K happened
109
Reliance Damages
award the plaintiff the cost of the performance; put the plaintiff in the position that they would have been in had the contract never been formed
110
Incidental damages
Costs incurred in dealing with the breach; always recoverable; foreseeability does not matter
111
Conesquential damages
Recoverable if at the time the K was made a reasonable person would have foreseen the damages as a probable result of a breach
Breaching party must have known or had reason to know of the special circumstances giving rise to damages
Only the buyer may recover these
112
Liquidated Damages
stipulation that damages are to be paid in the event of a breach
must be in an amount that is reasonable in view of the actual or anticipated harm caused by the breach
Two requirements:
1. damage for contractual breach are difficult to estimate or ascertain at the time K is formed AND
amount agreed on is reasonable forcast of compensatory damages in the case of breach
113
UCC Cover Damages
Difference between contract price and cost of buying replacement goods
reasonable K must be made for substitute goods in good faith and without reasonable delay
114
UCC market price damages
Difference of K price and market price
Determined at the time the buyer learns of the breach and at the place of tender
115
Warranty damages
difference between value of the goods as delivered and the value they would have had if they had been according to K
116
Entrusting
Entrusting goods to a merchant who deals in goods of the kind gives them the power (but not the right) to transfer all rights of the entruster to a buyer in the ordinary course of business
117
Voidable Title
If a sale is induced by fraud, seller can rescind the sale and recover the goods from the fraudulent buyer UNLESS there was a goods faith purchaser for value who bought from the fraudulent buyer
118
Third party beneficiaries
Promisee contracts with promisor to render some performance to the third-party beneficiary
only intended beneficiaries have contractual rights not incidental
119
Intended beneficiaries
Look to whether beneficiary is identified in the K, receives performance directly from the promisor or has some relationship with the promisee to indicate the intent to benefit
Two typesL creditor beneficiary (person to whom a debt is owed by the promisee) and donee beneficiary (party whom the promisee intends to benefit gratuitously
120
Third party beneficiary v. Promisor
beneficiary can sue the promisor of the K
121
Third party beneficiary v. promisee
creditor beneficiary can sue the promisee on the existing obligation between them; they can also sue the promisor but may obtain only 1 satisfaction
Donee beneficiary has no right to sue the promisee unless grounds for detrimental reliance remedy exist
122
Promisee v. promisor (third party beneficiary)
Promisee may sue the promisor both at law and in equity for specific performance if the promisor isn't performing for the third person
123
Vesting of beneficiary rights
Vesting occurs when they manifest an assent to a promise in the manner requested by the parties, bring a suit to enforce the promise, or materially change position in justifiable reliance on the promise
before 3P rights vest, promisor and promisee can modify K without consulting 3P; once rights vest, they cant change K
124
Assignment
X (the obligor) contracts with Y(the assignor), Y assigns his right to X's performance to Z (the assignee)
Two parties make a K, one party (assignor) transfer right to third party (assignee)
Assignee can enforce rights against party who owes duty (obligor)
125
Elements for effective assignment
assignor must manifest an intent to immediately and completely transfer their rights
Consideration not required
Right must be adequately described
126
Assignment for value
done for consideration or taken as security for or payment or preexisting debt
Cannot be revoked
First one wins if multiple
127
Gratuitous assignments
An assignment not for value generally revocable
but irrevocable if obligor has already performed, a token chose is delivered, an assignment of a simple writing, or the assignee can show detrimental reliance on the gratuitous assignment
last gratuitous assignee prevails over earlier gratuitous assignees
128
Express contractual provision against assignment
Clause prohibiting the contract will be construed as barring only delegation of the assignor's duties
Clause prohibiting assignment of contractual rights generally doesn't bar assignment bit rather merely gives the obligor the right to sue for damages
If K provides that attempts to assign will be void that parties can bar assignment
If assignee has notice of the non assignment clause, an assignment will be ineffective
129
Delegation
Y (Obligor) promises to perform for X (the obligee) Y delegate their duty to Z (delegate)
130
What duties may be delegated
All duties EXCEPT
duties involving personal judgment and skill
Delegation would change the obligee's expectancy
A spacial trust was reposed in the delegator by the other party to the K
There is a contractual restriction on delegation
