Contracts Flashcards
(26 cards)
auction with reserve
the auctioneer may withdraw the goods at any time until he announces completion of the sale
auction without reserve
once the auctioneer calls for bids on an article or lot, that article or lot cannot be withdrawn unless no bid is made within a reasonable time
goods are put up in lots in a sale by auction
each lot is the subject of a separate sale, each of which could be specified as with or without reserve
What type of K requires stated price to be valid?
A contract for real property must state a price to be a valid contract. In other types of contracts, including those for personal services, consumer goods, and requirements or output contracts, the failure to state a price in the contract itself does not prevent the formation of the contract, if the parties intended to form a contract without the price being settled.
To be valid, an offer for the sale of goods must include __________.
a quantity term
When does an offer for true unilateral K become irrevocable? When is unilateral K formed?
An offer for a true unilateral contract becomes irrevocable once performance has begun. The offeree is given a reasonable time to complete performance. A unilateral contract is not formed until the total act of performance is complete. The offeree is not bound to complete performance and may withdraw at any time prior to completion.
option K
A contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer
UCC Art. 2 concept of accommodation
Under Article 2, an offer to buy goods for current or prompt shipment is construed as inviting acceptance either by a promise to ship or by current or prompt shipment of conforming or nonconforming goods. The shipment of nonconforming goods is an acceptance creating a bilateral contract as well as a breach of the contract—unless the seller seasonably notifies the buyer that a shipment of nonconforming goods is offered only as an accommodation. The concept of accommodation applies to offers to buy goods for current or prompt shipment. If a seller of goods verbally rejects a buyer’s offer but makes a counteroffer for comparable goods, this is a simple case of a rejection and counteroffer, not an accommodation. Similarly, if a seller of goods verbally accepts a buyer’s order but proposes that the buyer accept nonconforming, comparable goods in place of those ordered, accommodation is not at issue. A contract was formed when the seller verbally accepted the buyer’s order. The Battle of the Forms provision of Article 2 may then be used to determine the content of that contract. If the seller merely ships nonconforming goods to a buyer in an effort to make a counteroffer, without notifying the buyer that the shipment is being offered only as an accommodation, the act of shipping nonconforming goods is an acceptance and breach, not a counteroffer.
Ex. A seller of goods ships nonconforming goods to a buyer and seasonably notifies the buyer that the shipment is being offered only as an accommodation
merchant’s firm offer vs. option K vs. offer for unilateral K
Under Article 2, a merchant’s firm offer arises when a merchant offers to buy or sell goods in a signed writing that gives assurances that the offer will be held open. If no specific time frame is stated in the offer, a merchant’s firm offer will remain open for a reasonable time (but in no event may such period exceed three months). (Ex. merchant who offers to buy or sell goods in a signed writing that gives assurances that the offer will be held open is offering)
An option contract is a distinct contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer for a period of time.
An offer for a unilateral contract is one that can be accepted only by full performance. Note that the beginning of performance may create an option so that the offer is irrevocable. However, the offeree is not obligated to complete performance merely because he has begun performance, as only complete performance constitutes an acceptance of the offer.
Statute of Frauds
requires that certain contracts be memorialized in a writing to be enforceable
how to accept bilateral vs. unilateral K
An offer for a bilateral contract may be accepted either by a promise to perform or by the beginning of performance. Note: Unless an offer specifically provides that it may be accepted only through performance, it will be construed as an offer to enter into a bilateral contract. In contrast, a unilateral contract can be accepted only by full performance.
mirror image rule vs. battle of the forms
Article 2 has abandoned the mirror image rule and instead uses the battle of the forms provision to deal with the proposal of additional or different terms by an offeree in a definite and timely acceptance. The mirror image rule insists on an absolute and unequivocal acceptance of each and every term of the offer. Any different or additional terms in the acceptance make the response a rejection and counteroffer. Under Article 2, the proposal of additional or different terms by the offeree in a definite and timely acceptance does not constitute a rejection and counteroffer, but rather is effective as an acceptance, unless the acceptance is expressly made conditional on assent to the additional or different terms. Whether the additional or different terms become part of the contract depends on whether or not both parties are merchants. This is often referred to as the battle of the forms provision.
Mailbox Rule
The Mailbox Rule is a rule dealing with the timing of an acceptance. Under the Mailbox Rule, in most cases, acceptance by mail or similar means creates a contract at the moment of dispatch, provided that the mail is properly addressed and stamped.
Under the doctrine of substantial performance, can one party recover damages for the other party’s incomplete performance?
Yes, that party will be able to deduct any damages suffered due to the incomplete performance
Under the doctrine of substantial performance, even though the party who has substantially performed is able to enforce the contract, the other party will be able to mitigate by deducting damages suffered due to the first party’s incomplete performance. The doctrine of substantial performance applies only if the breach is minor. If the breach is material, the performance is not considered substantial, and the party is in breach. Damages could be recovered for a material breach—but not under the doctrine of substantial performance. Similarly, if the performing party’s breach was willful, most courts will not apply the substantial performance doctrine. A willful breach would be considered a standard breach of contract, and the regular damages rules would apply. While it is true that the doctrine of substantial performance was adopted to avoid the harsh result that could occur if complete performance were required, this does not preclude the nonbreaching party from also recovering any damages suffered due to the other party’s incomplete performance. It just means that the nonbreaching party has a duty to perform in spite of the incomplete performance.
In the case of an anticipatory repudiation, when can the the nonrepudiating party sue?
may sue immediately or wait until the date performance is due to sue
Anticipatory repudiation vs prospective inability/unwillingness to perform
primary distinction is one of degree of certainty
Anticipatory repudiation occurs when a party to a contract, prior to the time set for performance, indicates that he will not perform when performance is due.
Prospective unwillingness to perform occurs when a party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due.
waiver of the condition
When a party having the benefit of an ancillary condition under a contract indicates by words or conduct that she will not insist on that condition being met, courts, in certain circumstances, will enforce that party’s decision, despite the lack of additional consideration, as a waiver of the condition. No consideration is generally required for the waiver of an ancillary, or collateral, condition. In contrast, one cannot simply waive a condition regarding the main subject of a contract without receiving additional consideration. This would amount to a new undertaking that is really a gift in the disguise of a waiver. Without a waiver of the condition, nonfulfillment of the condition normally will excuse the other party’s duty to perform that was subject to the condition. When a party is under an immediate duty to perform, the duty to perform must then be discharged, normally by performance.
“constructive” condition
A constructive condition is a condition that is implied by a court even though it is not explicitly stated in the contract (ex. conditions of cooperation and notice). Constructive conditions are also known as implied conditions.
When an entire contract is not effective unless some event occurs or fails to occur, the contract is subject to an express condition precedent, not a constructive condition.
express condition precedent
explicit contractual provision providing that a party does not have a duty to perform unless some event occurs or fails to occur
When an entire contract is not effective unless some event occurs or fails to occur, the contract is subject to an express condition precedent, not a constructive condition.
anticipatory repudiation
Stems from the words or conduct of the promisor indicating that he cannot or will not perform when the time comes. An anticipatory repudiation must be unequivocal. An anticipatory repudiation must be a positive statement that the repudiating party will not perform when performance is due. It cannot be based on expressions of doubt or fear, although those statements could establish a prospective inability to perform. There is no requirement that an anticipatory repudiation should be in writing. An anticipatory repudiation can stem from the words or conduct of the promisor.
Anticipatory repudiation occurs if a promisor, prior to the time set for performance of his promise, indicates that he will not perform when the time comes. In the case of an anticipatory repudiation, the nonrepudiating party may sue immediately or choose to wait until the performance date to sue. In fact, the nonrepudiating party has four basic alternatives: (i) treat the anticipatory repudiation as a total repudiation and sue immediately; (ii) suspend his own performance and wait to sue until the performance date; (iii) treat the repudiation as an offer to rescind and treat the contract as discharged; or (iv) ignore the repudiation and urge the promisor to perform. By urging the promisor to perform, the nonrepudiating party will not be deemed to have waived the repudiation. He can still sue for breach and is excused from performing unless the promisor retracts the repudiation.
estoppel waiver
When a party indicates that she is “waiving” a condition before it is to happen, and the person addressed detrimentally relies on the waiver
condition subsequent
condition that cuts off an already existing absolute duty of performance
condition precedent
occurs before an absolute duty of immediate performance arises in the other party
conditions concurrent
capable of occurring together, and that the parties are bound to perform at the same time
