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Flashcards in Contracts Deck (35)
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1

UCC vs. Common Law

UCC: Governs sale of movable goods

Common Law: Governs everything else including land and services

2

Offer
(invitation/advertisement)

An objective manifestation of a willingness to be bound by the reasonably certain terms communicated to the offeree.

Creates power of acceptance in offeree

Advertisements are generally not offers unless it is in the nature of a reward or it is specific as to quanitty and expressly indicates who can accept (First come, First served)

3

General Rule: Offer is Revocable

EXCEPTIONS:

Firm Offer (UCC): Requires a merchant to have a signed written promise to hold the offer open

Option Contracts (Common Law): For an option contract to bind offeror to hold that offer open, there must be consideration (something paid/given up/etc.)

4

Firm Offer (UCC)

Exception to the general rule that an offer is revocable. Requires a merchant to have a signed written promise to hold the offer open

5

Option Contracts (Common Law)

Exception to the general rule that an offer is revocable. To bind the offeror to hold that offer open, there must be consideration

6

Acceptance

A manifestation of an intent by the offeree to be bound by the terms of the K

Mailbox Rule: Acceptance is effective when sent

Elements of Acceptance:
- Offeree with power of acceptance
- Deviant Acceptance (UCC): A contract is formed even if the acceptance contains additional or different terms. Whether the terms become part of the contract depends on the status of the parties. If at least one of the parties isn’t a merchant, the terms of the offer control and it counts as a proposal. If both parties are merchants, additional terms become part of the contract.
- Mirror Image Rule (CL): Acceptance must be identical to the offer, otherwise no contract is formed

7

Consideration

"Bargained for exchange" Look for benefit to the promisor or detriment to the promisee. In FL, there only needs to be legal detriment on one side of the K for consideration.

Exception: Promissory Estoppel: A K can be enforced even if there is no consideration if there is a promise and foreseeable, reasonable detrimental reliance on that promise.

8

Mistake

Defense to Formation

A belief, basic assumption of the K, is material, and adversely affects someone who did not assume the risk

Mutual Mistake: Both sides share the mistaken belief

Unilateral Mistake: Only one side has the mistaken belief. Generally not a defense unless the other party knew or should have known of the others' mistake

9

Statute of Frauds

Defense to Formation

Some K's require a writing, signed by the party to be charged, with the essential terms.

K's that must be in writing:

M marriage
Y k's that cannot be performed w/in 1 year
L land
E k's by executors of estates
G guarantee k's
S sale of goods > $500 + quantity (UCC)

10

Misrepresentation

(Defense to Formation)

An untrue statement as to a material fact with detrimental reliance

11

Fraud

(Defense to Formation)

An intentional lie as to a material fact with detrimental reliance

12

Undue Influence

(Defense to Formation)

Unfair persuasion -- look to relationship of the parties

13

Lack of capacity

(Defense to Formation)

K's entered into by minors are voidable at the option fo the minor

14

Duress

(Defense to Formation)

Improper threat where a party has no choice but to acquiesce

15

Breach

When a party is under an absolute duty to perform but does not

Perfect Tender Rule (UCC): A buyer can accept or reject any non-conforming goods in whole or in part
Exception: If the seller had reasonable grounds to think the buyer would accept the shipment

Benefit of the Bargain (CL): (argue both)
Material Breach: Did not get the benefit of the bargain. Non-breaching party does not have to perform.
Minor Breach: There was substantial performance. Still have to perform, but can get damages

16

Anticipatory Repudiation

Argue Anticipatory Repudiation & Reasonable Grounds for Insecurity!

If there is an unequivocal refusal to perform or an act inconsistent with performance, the non-breaching party can:
1) Sue immediately
2) Encourage performance
3) Cancel the K
4) Wait

In FL, the non-breaching party must show they could perform

17

Reasonable Grounds for Insecurity

Argue Reasonable Grounds for Insecurity & Anticipatory Repudiation!

If have reasonable grounds for insecurity, can ask for assurances. If other party does not give adequate assurances, can:
1) Sue immediately
2) Encourage performance
3) Cancel the K
4) Wait

18

Conditions

May keep a duty to perform from arising

Precedent: Something that must occur other than the passage of time before a duty to perform arises
Ex: If I get financing I am going to buy your house... getting financing is condition precedent. Argument is didn't breach because didn't get the financing.

Concurrent: Performance is exchanged at the same time
Ex: I'll buy your car for $500 so if don't bring car, don't need to bring $500

19

Divisible Contract

An equitable remedy to avoid hardship that allows a breacher to recover for partial performance, but only if the performance of both parties an be divided into equal parts.

20

Defenses to Enforcement

1) Illegality: Either the consideration or the subject matter is illegal... K is void

2) Impossibility: Circumstances have changed such that no one could perform this K

3) Impracticability: Extreme and unreasonable difficulty or expense that was not anticipated. Not just an increase in cost. In Florida, performance that is different from what was anticipated is sufficient

4) Discharge by Substituted K: If new K, can't use old K

21

Legal Remedies ($)

Expectancy Damages

Puts the party in the position they would have been in had the contract been performed. Must mitigate damages.

Buyer Breaches (UCC): Seller must resell
Resell --> K price - Resale price
~Resell --> K price - Market price
Lost Volume Seller --> Lost profits (since could have gotten profits from 2 sales if buyer didn't breach)

Seller Breaches (UCC): Buyer must cover
Cover --> K price - Cover price
~Cover --> K price - Market price

Buyer can also get incidental and consequential damages

22

Legal Remedies ($)

Restitutionary Damages

Available to the breaching or non-breaching party. Look for the benefit conferred on that party. Can get either expectancy OR restitution. Available even if no valid K

23

Legal Remedies ($)

Reliance Damages

The amount expended on performance in reliance on the K or promise

24

Legal Remedies ($)

Liquidated Damages

Damages that are agreed upon in the K. Must be reasonable (10% or less) and not a penalty.

25

Legal Remedies ($)

Consequential Damages

Damages that flow indirectly from the breach. Must be foreseeable by both parties.

26

Legal Remedies ($)

Incidental Damages

Damages that flow directly from the breach.

27

Equitable Remedies

Specific Performance: Available only where a monetary award would be inadequate. For rare/unique things

Injunction: Stop other party from doing something

Rescission: Cancelling the K (mistake or misrepresentation)

Reformation: Court allows parties to rewrite a portion of K so that it reflects parties original intent more closely

28

Specific Performance

Equitable Remedy
Available only where monetary award would be inadequate. For rare/unique things

29

Injunction

Court order not to do something

30

Rescission

Cancelling the K (mistake / misrepresentation)