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Contracts Flashcards

1
Q

Which law do you apply?

A

Common law - majority rules governing contracts other than the sale of goods

UCC - Art. 2 governs the sale of goods with applicable rules applying to merchants

Mixed contracts - determined by the predominant purpose of the deal (service - CL, sale of goods - UCC)
**If equal, UCC governs sale part and CL governs service part

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2
Q

Types of Contracts

A

Unilateral K - offer expressly requires performance as acceptance

Option K - agreement to leave open an offer in exchange for consideration

Ads - generally preliminary proposals unless words are to identifiable person

Quasi K -

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3
Q

Requirements for a valid contract

A

Offer (manifestation of intent to enter into a contract)

Acceptance of offer (commitment to be bound)

Consideration (adequate or bargained for)

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4
Q

Offfer

A

Manifestation of present intent to contract with definite and specific terms that is communicated to an identified offeree

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5
Q

Offer requirement in UCC

A

description and quantity. Price not needed. Art. 2 will fill in a reasonable price term

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6
Q

Offer requirements for other Ks -

Land, Employment, Requirement

A

Land - ID of land and price

Employment - duration

Requirement - terms of exclusivity (“I promise to supply you with all your requirements for the next year”)

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7
Q

Revocation of offer

A

Unambiguous words or conduct by oferror to offeree indicating unwillingness or inability to contract. Must be made before acceptance

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8
Q

When is an offer irrevocable

A
  • option contracts (paid to keep it open)
  • Merchant’s firm offer (UCC: signed written promise to keep open for 3 months)
  • Detrimental reliance (offeree relied on offer to their detriment)
  • Start of perfromance (for Unilateral K; offeror not bound til completion of K though)
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9
Q

Acceptance

A

Manifestation of assent to the terms of the offer in manner prescribed or authorized by offer

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10
Q

Types of acceptance

A
  • Full performancefor unilateral K
  • Start of performance for bi-lateral K, but not for unilateral K
  • Mail box rule - acceptance effective when mailed, all others when received
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11
Q

Rejection and Counteroffer

A

Intent to not to accept an offer. Must be communicated to offerror. Offer cannot be accepted after it is rejected.

Counteroffer (offer with new terms) counts both as a rejection that terminates the original offer AND a new offer

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12
Q

Consideration

A

Bargained for exchange of legal detriment between parties.

UCC - money for goods is buyer’s consideration, goods sold is sellers consideration
*Consideration not needed for Merchant’s FIRM OFFER

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13
Q

Past or Moral Consideration

A

NOT SUFFICIENT consideration

Minority view - Material Benefit Rule
Past consideration sufficient to the extent necessary to prevent injustice

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14
Q

Illusory Promise

A

One party has no obligation to perform, thus inadequate consideration

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15
Q

Promissory Estoppel

A

Contracts that lack consideration can be enforced when a party
-reasonably and foreseeably relied on an oral promise to his detriment, and enforcement necessary to avoid injustice

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16
Q

Battle of the Forms (Mirror Image rule and UCC exception)

A

Common law mirror image rule holds that acceptance must exactly mirror the offer. New or add terms is counter offer and revokes the initial offer

UCC exception - Different or add terms not a counter offer if:

  • both parties are merchants
  • term is not a material change
  • no objection made w/in reasonable time
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17
Q

Preexisting Duty & UCC exception

A

Common law - in modifications of Ks, past performance or performance of preexisting duty not sufficient UNLESS

  • an addition or change in performance, OR
  • unforeseen difficulty excuses performance

UCC exception - modifications don’t require consideration, just good faith. Must be in writing if Statute of Frauds or original contract requires it

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18
Q

Incapacity defense

A

Minors have right to void contract UNLESS minor retains benefit after gaining capacity (reaching 18yrs old)

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19
Q

Duress defense

A

Improper threat to enter into K and no reasonable alternative

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20
Q

Mutual mistake v. Unilateral mistake

A

Mutual mistake - BOTH parties are mistake as to basic assumption of fact that materially affects K

Unilateral mistake - made by one party. NOT voidable unless other party knew or should have known

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21
Q

Misrepresentation/non disclosure defense

A

Innocent party may rescind if induced to enter K by fraud misrepresentation or non-fraudulent material misrepresentation

22
Q

Illegality defense

A

Courts will not enforce contracts that are illegal or contrary to public policy

23
Q

Unconscionability

A

“shocks the conscience of the court”

Terms that are unfair and oppressive at time of K

24
Q

Impracticability

A

K not enforced if a later unseen event by both parties makes performance extremely and unreasonably difficult or expensive

25
Frustration of Purpose
Performance excused if purpose of contract no longer exists
26
Statute of Frauds
Requires certain contracts to be in writing | "MY LEGS" - Marriage, Year (more than), Land, Executory, Goods over $500, Suretyships
27
Writing requirements : CL and UCC
Common Law - parties, subject matter, terms and conditions, consideration, signatures UCC - parties, quantity, description of goods and signatures, EXCEPT -Merchant Confirm Memo of oral K if no objection w/in 10 days
28
Parole Evidence Rule
Integration issues. Merger clause is highly persuasive but not determinative. NO PE to reform or contradict written terms, unless there's a mistake in integration. PE OK to argue defense to formation, explain ambiguous terms, fix clerical errors, or to provide additional terms if only partial integration
29
Delivery obligation - who bears risk of loss
Generally - Shipment contracts, seller liable to certain points FAS - Free alongside: seller liable until drop off next to carrier FOB - Free on board: seller liable until goods are on actual carrier Destination contracts - seller liable until delivered to buyer
30
Breach under common law: minor vs. material
Party will be excused of performance for a breaching party's MATERIAL breach. MINOR breach will NOT excuse performance, BUT non breaching party may bring separate action for damages due to breach Material breach means party does not render substantial performance of major terms of contract
31
UCC Perfect tender rule
Seller must deliver conforming goods. Even if minor non-conformity, buyer may reject all or a portion of the goods. EXCEPTIONS under UCC -seller has right to cure if: time for performance not yet expired or seller had reasonable grounds deliver would be accepted -Installment contract defects: can only be cancelled if defect substantially impairs value of entire contract
32
Buyer's remedies for non-conforming goods
With accommodation (letter stating reason - can accept nonconforming goods, cant sue; or reject ALL and sue for damages Without accommodation - can keep, try to sell and sue for cover, OR reject all and sue for damages **Partial non conforming goods - same options as above or accept conforming goods, ship back non conforming and sue for damages
33
Performance excused if...
- Improper perfection - Non-occurrence of condition: mutually agreed promise requiring compliance - Insecurity: if reasonable grounds, relying party can demand adequate assurance and may suspend performance
34
Anticipatory Repudiation
Party unequivocally state that they are unable or unwilling to perform UNLESS there has been a material change in the other party's position.
35
Options when a party anticipatorily repudiates
- sue for damages, and treat contract as discharged - wait until performance due and then sue for damages if no performance - urge other party to perform
36
Accord and Satisfaction
Excuses obligations under K Mutual agreement of existing obligation to accept different performance or by acceptance of check marked "paid in full"
37
Express Warranty under UCC
seller liable for breach of statements of fact, promises, description of goods, etc OPINION - does not create express warranty
38
Implied Warranty of Merchantability
UCC, all goods sold by merchant must be fit for ordinary use. Can disclaim warranty with "as is" language
39
Implied Warranty of Fitness for a Particular Purpose
Warranty applies if: - seller knows or has reason to know of buyer's purpose - and buyer relies on the seller's skill or judgement
40
Intended 3rd Party Beneficiaries v. Incidental Beneficiary
Incidental - benefits from K without original parties meaning for them to. No rights in K. Can't bring claim Intended - gets benefit of K from original parties. Has rights in K. Original parties must intend their performances benefit a third party
41
Delegable Duties
All contract duties are delegable UNLESS - contract prohibits OR - K is for personal services that call for VERY SPECIAL SKILLS
42
Common Law Expectation Damages
General measure of damages. Arise DIRECTLY from the breach and attempts to make injured party in position as if K wasn't breached
43
Consequential Damages
Arises INDIRECTLY from breach and awarded because injured party's special circumstances.
44
Punitive damages
Awarded to punish the defendant. Generally not available in K except for fraud or corresponding tort claims.
45
Specific performance
Equitable remedy, if money damages are inadequate. (land sale contracts, if goods were unique, etc.)
46
UCC Seller's Remedy Damages
Cover damages - diff between resale price and contract price of goods
47
UCC Buyer's Remedy Damages
- Cover damages - Market damages: if buyer did not cover in good faith, diff between market price and contract price - Loss in Value Damages: if buyer keeps non conforming goods, diff between the value as promised and value of the non-conforming goods
48
Restitution
Prevents D's unjust enrichment. Damages based on value of benefit conferred on D. Party CANNOT recover both expectation and restitution damages
49
Rescission
Treats original K as cancelled if problem with formation of K
50
Duty to mitigate
Injured party must take reasonable steps to mitigate his losses. If he doesn't court will reduce total damages by amount he could have mitigated.
51
Liquidated damages
Clause in K that fixes that amount of damages. Valid if: - damages are difficult to ascertain - reasonably foreseeable

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