Contracts Flashcards
Contract
A contract is a bargained for exchange between two people
UCC
Goods = (movable tangible property) Merchants = regularly deal in goods of that kind
Contract Formation
Offer
Acceptance
Consideration
Offer
- Intent to enter into contract
- definite terms (quantity, parties, UCC =price)
- communicated to the offeree
Irrevocable offers
- UCC firm offer rule
- Option Contract
- Detrimental Reliance
UCC firm offer
- merchant
- signed writing
- 3 months max to keep offer open
Option Contract
Common law contracts that an offer will be held open . Consideration is required and offer will be irrevocable during the stated option period
When a general contractor submits a bid on a construction project and secures a bid from a subcontractor for a part of the work, the subcontractor is binded to the contract and there is now a option contract
Detrimental Reliance
Offer will be irrevocable if offeree has detrimentally relied on the offer or performed in part
Unilateral contract = once performance has begun the offer is temporarily irrevocable
Bilateral Contract = detrimental reliance
Acceptance
-must be within a reasonable time
-mirror image rule (acceptance must be the precise image of the offer otherwise its a rejection and a counteroffer)
-UCC added term
*if not a marchant, proposal only
*if both merchants; then the term is added
except if material or objection within a
reasonable time
Acceptance Terminated
- rejection
- counteroffer
- revocation
- lapse of time
- death or incapacity
Consideration
A bargained for exchange of legal detriment or benefit. Can be a promise to do something or not to do something
A promise to not sue is sufficient consideration even if the claim turns out to be invalid, so long as the person promising not to sue has a good faith belief its valid
Inadequate Consideration
- gifts
- past consideration
- pre-exisiting duty rule
Defenses to Formation
- SOF
- Misrepresentation
- Unconscionability (unfair)
- Mistake (mutual mistake)
- Capacity
- Duress
Contract Terms
- Conditions
- Parol Evidence
- Modification
- 3rd Party Beneficiaries
- Assignment
- Delegation
- Novation
Conditions
Must occur before performance is due
Parol Evidence
Limits what evidence made before the signed written contract is considered part of the agreement.
Partial integration = not allowed to contradict terms but can be used
Final Integration = all statements made before agreement cannot be admitted a evidence except
a. fraud
b. mistake
c. illegality
d. duress
e. partial integration
f. conditions precedent
h. ambiguous terms
i. usage of trade
Parol evidence is admissible to attack a contract on the grounds of fraud
Even if a agreement is completely integrated the contract can still be reformed for mutual mistake. Parol evidence does not apply if a party to a valid agreement alleges facts that entitle him to reformation of the agreement
Modification/Reformation
Common Law = need mutual assent and consideration
UCC= need only good faith
SOF = if modification falls within SOF, it must be in writing
If there is a difference between the original agreement and the writing, the writing can be reformed to reflect the intent of the parties. A plaintiff who wants to obtain reformation of a contract must show that the agreement does not correctly reflect the contract because of a mistake.
3rd Party Beneficiaries
A person who is suppose to benefit from the contract but who is not already a party to the contract
Intended (can sue) = rights vest (1) accept promise (2) files suit to enforce (3) materially changes position in reliance
Incidental (cant sue) = incidentally benefits from the contract but not the intent of the promisor
Assignment
A party to a contract transfers her rights under the contract to a 3rd party
- no consideration is required
- a gift is allowed
- assignee stands in the shoes
Delegation
When a party to an existing contract appoints a 3rd person the duties owed under the contract
- transfers duties
- delegator remains liable
- cant delegate if special skill
Novation
Obligee (person recieving performance) agrees to accept performance from a new person. A novation terminates the liability of the delegator. Need assent by all parties
Breach
- Material v. Minor
- UCC perfect Tender Rule
- Anticipatory Repudiation
- Request for Assurances
- Warranties
- Accord & Satisfaction
Material v. Minor
Material = party doesn’t get substantial benefit of bargain. Not substantial performance on the contract
Minor = Non-breaching party gets the substantial benefit of the bargain despite the other party’s defective performance. A minor breach does not relive the nonbreaching party of her duty to perform under the contract, but will be entitled to remedial damages for the breach.
UCC Perfect Tender Rule
- can reject of accept
- sellers have the right to cure any time before performance is due or had a reasonable belief that it would be acceptable
