Contracts Flashcards
(45 cards)
Checkpoint Items
- Contracts involving the sale of land;
- Contracts containing contingencies
- I will buy your house IF I can get 5% financing
- I will buy if I sell my house first
- Consideration and substitution for consideration
- Modification
- Contracts mixing goods and services
Approach to Contract.
1) What law applies? UCC or Common Law
2) What kind of contract - unilateral or bilateral
3) Who are the parties?
Merchants/Kids - necessitites.
Define Offer.
An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understating that his accent to the bargain is invited and will conclude it.
** Watch our for language like “I am asking” or “I quote you” as these are invitations to negotiate, not an actual offer.
Termination of an Offer
1) Death of the offeror
2) Revocation (offeror)
3) Rejection (offeree)
4) Counteroffer
5) Lapse of Time
Face-to-Face Conversations
The offer ends at the conclusion of the conversation UNLESS additional consideration is given.
Rejection v. Mere Inquiry
Rejection terminates the offeree’s power of acceptance.
Inquiry does not terminate the offeree’s power of acceptance.
Offeror can renew offer in the face of rejection.
Firm Offer (2-205)?
A signed writing by a merchant which by its terms gives assurances that it will be held open is NOT revocable for lack of consideration for the stated period of time not to exceed THREE months.
Define Implied in Law contracts (quasi-contracts).
- A quasi-contract is NOT an actual contract, rather a legal substitute for a contract formed to impose equity between two parties.
- A contract SHOULD have been formed, even though in actuality, it was not.
- Used when a court faces a situation of injustice to enforce the agreement to ensure fairness.
Define modification.
A subsequent agreement that alters or changes the parties’ duties and obligations under the terms of their original contract.
Modification under UCC (Bad faith and the UCC).
Modification made under the UCC must meet the test of good faith. If the manufacturer acted in bad faith, then the modification would be ineffective and unenforceable.
Modification under Common Law
Pre-existing duty rule
New Consideration REQUIRED!
Impracticability (UCC 2-615)
Delay in deliver or non delivery by a seller is NOT a breach if the seller’s performance is made impracticable by a contingency whose non-occurrence was a basic assumption on which the contract was made.
Impossibility (Objective & Subjective)
Subjective: WILL NOT EXCUSE duties of performance under a contract. (You can’t perform, but the THING can still be performed)
Objective: WILL EXCUSE duties of performance under a contract. (Nobody can perform - things made illegal)
Non-Conforming Goods (2-601)
Buyer has three options:
1) he can accept the whole shipment;
2) he can reject the whole shipment; or
3) he can accept any commercial unity or units and REJECT the rest.
Describe a Divisible Contract
One in which the parties have divided their respective performances into separate unity. So that performance of a given installment on one side is a constructive condition to the duty of performance on the other.
Describe Incidental Damages
Expenses incurred by the injured party as a result of the other party’s breach of contract.
- expenses for inspection, receipt, transportiaon
- storage of rejected goods or services
- expenses associated with bying replacement good or services; and
- …
Consequential Damages
Those that derive from the breach and are a consequence of the breach (more indirect in nature).
Example - losses buyer incurs which the Supplier had reason to know at the time of contracting and which Buyer could not reasonably have prevented.
What is the Main Purpose Rule?
An oral promise to answer for the debt of another is enforceable if the promisor’s main purpose is to further his own economic advantage.
What are the parol evidence rule exceptions?
Fraud Mistake Illegality Duress Partial Integration Conditions Precedent
Cover by Buyer (2-712)
After covering aggrieved buyer may recover:
Price to Cover LESS Contract Price PLUS Incidental and Consequential Damages.
What is the Intent to Benefit Test?
Is 3rd party incidental - then no rights.
Is third party intended - THEN
Has 3rd party vested (learned of the K and assented; or changes positions in reliance on the contract)
Right to Adequate Assurances (2-609)
1) When REASONABLE grounds for insecurity arise, one party may (in writing) demand adequate assurances from the other that the performance will occur.
2) Assurances must be provided within a reasonable time (no more than 30 days); and
3) Failure to provide assurances is a repudiation of the contract.
Between merchants, when is confirmation deemed to satisfy the SoF?
If on emerchant, within a reasonable time, sends a writing that is sufficient against the sender confirming the contract, and the other merchant receives it, has reason to know of its contents but fails to object to it within 10 days.
What is the rule to remember with respect to third-party beneficiary contracts?
INTENTION TO CONFER A BENEFIT ON THE THIRD PARTY has always been delcared by the courts as essential tot he right of the thrid party to enforce a promise.
Ask yourself, “To whom is performance to be rendered?”
If performance is to the third party, she is a protected beneficiary and this entitled to sue. If the promised performance is to be rendered to the promisee, the contract is for the benefit alone of the parties thereto, and any third party is an incidental beneficiary.
