Flashcards in Contracts Deck (47)
What are the Requirements of an Offer?
An offer must be specific as to the price, the item and the manner of acceptance
An offer is an expression of a promise, undertaking or commitment to enter a contact with certainty and definiteness of terms that is communicated to an identified offeree.
What is Impracticability?
Performance so impractical or burdensome that performance should be excused.
Requires that a party encounter extreme and unreasonable difficulties or expenses that were not anticipated and makes performance commercially impracticable.
What is Impossibility?
Something happens after the contract's formation but before completion that makes performance as originally promised impossible.
The event must have been unforeseen and the event must have made performance impossible.
(E.g. death of necessary actor, subsequent law passed making conduct illegal, destruction of contract's subject matter).
What Are the Rights of a Creditor or Donee Beneficiary in a Contract Between Two Other Parties?
If the promisee's main reason for entering a contract is to discharge a debt owed to a 3rd party, 3rd party is a creditor beneficiary and may sue promisor.
Otherwise, 3rd party is a donee beneficiary and may sue only if her rights have vested.
What Are the Rights of a Third-Party Beneficiary?
A 3rd party named in the contract is an intended beneficiary with legal rights, otherwise 3rd part is incidental and has no rights.
An intended 3rd party beneficiary may sue breaching promisor.
A contract may be modified until an intended 3rd party beneficiary's rights have vested, the 3rd party knows of the contract, and the 3rd party has taken action to its detriment in reasonable reliance.
When May Performance of A Contract Be Excused For Frustration of Purpose?
When an unforeseen supervening event 1) frustrates the buyer's primary purpose for entering into contract, 2) of which the seller knows of at time of contract.
What Type of Privity Is Created By An Assignment?
Creates privity of contract with assignee.
What is a Novation?
The Substitution of new party for an existing party.
With the consent of the other party, the original party is released.
Without consent of the other party, it is treated as a delegation.
What is an Accord and Satisfaction?
An agreement to accept different performance in satisfaction of an existing duty of performance.
If the accord and satisfaction is not performed, party may hold breaching party to either agreement.
What Are the Consequences for a Breach of Contract?
Damages available for any breach, but only a material breach will excuse performance.
An anticipatory repudiation occurs when a party notifies the other of its intent to not perform.
This amounts to a breach and opposing party may recover if they have already taken detrimental action in reasonable reliance.
What Are a Seller's Damages for a Buyer's Breach for the Sale of Goods?
If seller has goods: difference between contract price and resale value. If the seller cannot resell: contract price is appropriate.
Lost volume sellers are entitled to damages of lost profits in the sale, because they would have sold twice but for the breach.
If buyer has goods: contract price.
What Are a Buyer's Damage for Seller's Breach of Contract for the Sale of Goods?
If seller has goods: the greater of the difference between reasonable covering price and contract price.
If Buyer keeps goods: difference between fair market value of goods delivered and value of goods promised (not contract price).
What Is the Buyer's Right of Recovery from Insolvent Seller in a Contract for the Sale of Goods?
The buyer can recover for identified, paid-for goods from a seller who becomes insolvent within 10 days of payment.
What Is the Seller's Right of Reclamation from Insolvent Buyer in a Contract for the Sale of Goods?
Seller has a right to force the buyer to return an item where
1) the buyer is insolvent when the goods were received;
2) the seller requests return within 10 days of receipt; and
3) the buyer still has the goods.
When May a Buyer Revoke Acceptance of Goods?
Buyer can revoke acceptance of goods only if:
1) the nonconformity substantially impairs the value;
2) the nonconformity is difficult to discover; and
3) revocation occurs within a reasonable time of discovery.
What Are a Buyer's Rights of Revocation of Acceptance in an Installment Contract?
Installment contracts provide for delivery of goods in separate installments.
A Buyer may reject an installment only if there is a substantial impairment and it cannot be cured.
A Buyer can reject the entire delivery if a defect substantially impairs the whole value of the shipment.
What is the Perfect Tender Rule?
Seller must deliver perfect goods at the right place and time.
If tender is not perfect, buyer has right to reject goods but must take reasonable care of rejected goods.
Seller can cure if the deadline for performance is still open, or if the parties course of dealing indicates that the seller has previously cured in a similar fashion.
What Are the Limits on Warranty Liability?
1) The statute of limitations for warranty claims is four years from delivery.
2) A Buyer's examination eliminates implied warranties for obvious defects.
3) An express warranty cannot be disclaimed, while implied warranties must be disclaimed with conspicuous language.
4) Courts will enforce limitations of liability as long as they are not unconscionable.
What is the Implied Warranty of Fitness for a Particular Purpose?
A warranty providing a remedy where
1) the buyer has a special purpose in mind;
2) the buyer relies on the seller to select suitable goods; and
3) the seller knows both of these facts.
The Seller need not be a UCC "merchant" in order to create liability for breach of this warranty.
What is the Warranty of Merchantability?
Warranty that goods are fit for their ordinary purpose.
Arises when a seller is a merchant who regularly deals in goods of the kind at issue.
What Interpretive Meaning is Given to Parties' Course of Conduct?
It is used as evidence to determine ambiguity in a contract. The order in which such history of performance is examined is:
1) Course of performance--this contract;
2) Course of dealing--other contracts between these parties;
3) Usage of trade--other industry participants with similar contracts.
What is a Merchant's Confirmatory Memo?
A Plaintiff may use its own signed writing against a defendant if:
1) both are UCC merchants;
2) the writing notes a prior oral agreement; and
3) recipient doesn't object in writing within 10 days of receipt.
Because a merchant's memo is a writing, it is considered an exception to Statute of Frauds.
What Are the Requirements for Guarantees of Debt and the Statute of Frauds?
If the main purpose is to benefit guarantor, no writing is required.
If there is a general promise to pay regardless of what another party does, no writing is required.
BUT, A promise to pay someone else's debt if that person does not MUST be reduced to writing to satisfy the Statute of Frauds.
When May Parties Modify a Pre-Existing Duty?
At common law, a promise to pay more for an already agreed-upon performance is unenforceable.
BUT, there is an exception for an addition or change in performance, such as an unforeseen difficulty.
Under the UCC, new consideration is not required if the modification is made in good faith.
When May a Promise to Pay for Past Performance Be Enforced?
Only if performance was requested and party knew payment would be expected.
Otherwise unenforceable for lack of consideration.
What is the Timing of Acceptance and Revocation?
Revocations are effective when received.
Acceptances are effective when sent.
Acceptances under option contracts are effective when received.
What is an Option Contract?
A contract where a promisee may pay money to keep the promisor's offer open.
What is Improper Performance?
Improper performance constitutes an acceptance but is also a breach unless it is accompanied by words of explanation.
These explanations are technically a rejection and a counter-offer to be accepted.
What Is the Effect of Starting Performance?
It constitutes acceptance and an implied promise to finish unless the contract is unilateral.
Unilateral contracts require complete performance for acceptance.