contracts Flashcards
(185 cards)
1
Q
bilateral contract
A
a contract with an offer that may be accepted by either a promise to perform or beginning performance.
2
Q
if offeree performs by shipping nonconforming goods, is there a contract?*
A
-yes, there is a contract but seller has breached.
- if the offeree sends the nonconforming goods with a note that they are offered as accommodation, then there is not a breach but offeree has made a counteroffer that can be accepted or rejected
3
Q
consideration*
A
i) bargained for exchange between the parties;
ii) where each party agrees to do or not do something of legal significance (the promise not to do something must benefit the other party)
4
Q
past consideration
A
promise in exchange for something that has already been done is not consideration.
exception: if payment promised after an act is done, but if promisor knew when he requested the act that promisee would expect payment
5
Q
promissory estoppel*
A
promise is enforceable to prevent injustice if:
promisor should reasonably expect to induce action or forbearance.
such action or forbearance is induced.
damages will be expectation damages but court can limit it to reliance damages (money spent bc of promise) if justice requires
6
Q
what can a merchant do to hold an offer open?
A
merchant’s firm offer
or option w/ consideration
7
Q
when can a unilateral contract offer be revoked?*
A
at any time before the offeree starts performing.
8
Q
how can the offeree accept an offer for a unilateral contract?*
A
by full performance
must know of the offer when performance completed
9
Q
consideration: how can a debtor give consideration for a promise by the creditor to accept a smaller amount of money?
A
by giving new or different consideration (different form of payment)
ex: paying before the time the debt is due, paying the money to another person, paying in a different medium
10
Q
consideration in a suretyship contract
A
suretyship contract = promise to pay another’s debt
If surety makes his promise to pay before (or at the same time as) the creditor performs or promises to perform, the creditor’s performance or promise will serve as consideration for the surety’s promise, because the creditor has incurred a detriment in exchange for the surety’s promise.
11
Q
consideration: ratification
A
A promise to perform a voidable obligation
enforceable despite the absence of new consideration.
12
Q
consideration: preexisting duty rule & exceptions*
A
rule: a promise to perform, or the performance of, an existing legal duty is not consideration.
exceptions:
- honest dispute as to duty (ex: dispute about a debt)
- unforeseen difficulty in performing if it rises to the level of impracticability
- modification of contract for sale of goods- if modify in good faith, no new consideration needed.
- preexisting duty was owed to a 3rd party, not promisee
- ratification of a voidable contract does not require new consideration
- new or different consideration (i.e. addition or change in performance or type of payment, or early performance)
13
Q
requirement and output contract*
A
promise to buy all that one requires
promise to sell all that one decides to make (or all that seller produces)
other common words: agreement to exclusively sell or exclusively buy
enforceable. however, “to buy all that one desires” or to “sell all that one chooses” are illusory promises
14
Q
what law applies to contracts involving services or land? exceptions?*
A
Common law
Mixed contract where court determines goods aspect is dominant.
when payment is divided between goods and non-goods, court applies UCC to goods part and common law to non-goods part.
15
Q
void contract*
A
ineffective (no legal effect) from the start and may not be enforced
example: agreement to do something illegal at the time it was made
16
Q
voidable contract*
A
can be enforced, but one party has a defense to avoid the contract in the event of enforcement (mental illness, infancy)
17
Q
unenforceable contract
A
an agreement that is otherwise valid but cannot be enforced because of SOF or statute of limitations
18
Q
Restitution and examples of when available*
A
Restitution damages are awarded to prevent unjust enrichment when a benefit has been conferred on one party
1 Quasi contract - a contract implied by a court to avoid unjust enrichment (plaintiff conferred a benefit, d should know P reasonably expects payment)
2 If a contract is unenforceable because a minor or person lacking in capacity is a party, and the person lacking capacity accepts services or goods that are necessaries - food, education, health care, shelter. Recipients will be expected to pay value
3 when one party has partially performed but the other has breached, to prevent unjust enrichment
4 If the contract price is lower than the actual value of goods or services provided before the breach
5 when the contract is unenforceable under SOF and one party in a services contract has partially performed
19
Q
if a buyer and seller have a requirement contract, and buyer’s requirements increase, K still enforceable?
A
yes, as long as not unreasonably disproportionate to a stated estimate or any normal prior requirement
(ex: usually 1,000, next year 1,025 ok but 1,000 Y1 and 5,000 Y2 probably not)
20
Q
when is an offer terminated? why does this matter?*
A
- lapse of time (a stated time, or reasonable time)
- operation of law (death or incapacity of a party, subject matter of contract destroyed, later illegality)
- revocation by offeror
- rejection
- counteroffer
An offer cannot be accepted once it is terminated.
21
Q
is an offer subject to an option terminated if one party dies or becomes insane?*
A
No, this is an exception to termination of an offer by operation of law based on death of a party
22
Q
methods of revocation*
A
later unambiguous statement by offeror to offeree
indirect revocation by knowledge of offeror’s conduct or correct, reliable information about offeror’s conduct that would lead a reasonable person to believe the offeror no longer wishes to make the offer
23
Q
irrevocable offers*
A
a) option
b) merchant’s firm offer
c) detrimental reliance- reas. foreseeable, detrimental reliance treated as an option for a reas. time
d) part performance (distinguish mere preparation to perform) of a unilateral contract- irrevocable for reas. time to complete
24
Q
rejection defined*
A
a statement that offeree does not intend to accept
25
when is a rejection effective?*
a revocation?*
acceptance?*
rejection: when it is received.
exception- rejection & then acceptance- whichever arrives first
revocation: when received
acceptance: when sent
exception- option K acceptance only effective when received; if acceptance sent and then a rejection, rejection will be effective if arrived first and offeror detrimentally relied
26
counteroffers- definition and common law and UCC rules*
offer made by offeree about the same subject matter but with different terms.
UCC: only a conditional acceptance is a counteroffer (ex: i accept, but only if.. or on condition that, or but, so long as, etc.). otherwise a contract is still formed, but whether the new terms are included depends on whether both parties are merchants.
effect: rejection & new offer that offeror may or may not accept
UCC- acceptance must be express, sending goods isn't an acceptance of conditioned terms
27
mirror image rule*
at common law, a response to an offer that adds new terms is treated as a counteroffer
28
if an acceptance adds terms and only 1 party or neither party is a merchant, is the term part of the K?*
no, but there is still a contract; the proposed new terms only will become part of the contract if the offeror accepts them explicitly.
29
if the offeree in a sale of goods contract expressly insists that a new term be part of the contract, can it ever be part of the contract?*
Yes, but only if the offeror accepts it
30
can silence be acceptance?
yes, if the offeree silently takes benefits or if prior dealings between the parties or trade practices make it reasonable to think silence means that the offer is accepted.
31
can an offer be assigned?
No, an offer can only be accepted by a person it was made to.
An option, however, can be assigned.
32
detriment
agreeing to do something you are not legally obligated to do or forbearing from something you have a right to do
33
if there is a legal defense to promisor having to pay a debt, can a promise to pay be enforceable without consideration?
yes, if it is in writing.
34
if contract lacks consideration, is there a way for it to still be enforced?*
promissory estoppel
35
defenses to contract formation*
- lack of capacity (minor, intoxicated, mentally ill)
- statute of frauds
- mistake
- ambiguity
- illegality
- fraud/ misrepresentation
- duress
- unconscionability: unfair surprise or unequal bargaining power (ex: fine print clauses that limit or reduce liability, exculpatory agreement that exempts intentional or reckless conduct, covenant not to compete w/ no limit or when unnecessary, contract of adhesion, limitation to repair remedy when item destroyed)
unconscionability may be applied to set aside a bad term or whole contract
36
writing to satisfy statute of frauds*
- identify parties
- must reflect the material terms
- be signed by the party to be charged
there can be multiple letters or emails as long as they state material terms & have some kind of signature by the party being sued
37
Statute of frauds - contracts that must satisfy*
MY LEGS
1. marriage (in consideration of)
2. year- can't be performed w/ in 1 year
3. land- interest in. includes lease >1 yr, easement, mortgage, profit, fixture
4. estate debts- executor/admin promise to pay
5. goods ($500 or more)
6. suretyship (promise to answer for the debt of another- i.e. someone else already promised to pay and you will pay if they don't)
38
if K says nothing about time, is it w/in SOF? what if K is for life of person?*
no time stated- no, theoretically it is capable of being performed within 1 year. exception is easements.
life- no, again, theoretically the person could live for less than 1 year from date of K.
39
defenses to failure to satisfy SOF*
*AW PASS
a) performance
- land- improvement; payment; possession (2/3)
- services- full performance (note: part performance is no defense, but can recover in quasi contract)
b) specially manufactured goods
c) written confirmation from a merchant,
d) admission in court (UCC)
e) acceptance of goods (UCC- part or all. only as to part accepted)
f) payment for goods (UCC- part or all. only as to part paid for, but if item is indivisible, part payment will save the contract.)
c) surety contract for benefit of surety
40
merchant confirmatory memo rule*
-in contracts between merchants, if one party sends the other written confirmation of the contract, the sender is bound from the date of transmittal AND the recipient is bound if
- has reason to know of its contents
- does not object in writing within 10 days
41
if someone is going to do something for someone else (delegation/assignment), when is a writing necessary?
when the contract itself would require a writing. the authorization must be of equal dignity with the K.
42
if a contract is modified, does the modification need to be in writing?
yes, if the modification would be in the SOF. (ex: original lease 1 year, extended to 3....needs to be in writing but agreement reducing original 3 yr lease to 1 need not be written)
ex2: sale of goods for $400, modified to $500- modification must be in writing.
43
is a contract provision requiring all modifications to be written valid?
No, at common law. whether a writing is necessary is determined by the subj matter of the modific.
UCC- effective unless waived.
44
what is capacity? What is the effect if someone lacks capacity to form a contract?
rule: contract is voidable if a person lacks the capacity to understand the nature and significance of their promise.
it's a defense to contract formation. they can disaffirm the contract. other person can't.
45
misrepresentation defense*
- justifiable reliance
- material misrepresentation (would induce a person to agree)
Contract is voidable.
implied statement or conduct can form basis for misrepresentation (falsely denying knowledge of a material fact, or frustrating investigation)
46
ambiguity defense
language with at least 2 possible meanings.
neither or both parties aware- no K unless both parties intended same meaning
one party aware- binding K based on what the ignorant party believed the meaning was
47
duress
assent caused by improper threat. voidable by the party under duress.
(economic duress = party threatens to commit a wrongful act seriously threatening the other's property or finances; no adequate means to prevent the loss).
48
mutual mistake
must concern a basic assumption the K is made on;
mistake must have material effect on the K;
party must not assume risk
NOTE: risk that value is different than contracted for is assumed by both parties; if one party is experienced, more likely to be found to have assumed a risk.
if elements are met there is no contract
49
unilateral mistake
will not prevent formation of K unless the other party knew or had reason to know of the party's mistake. (ex: bid too low related to others)
50
illegal contract
if subject matter of contract is illegal, K is void.
| if the purpose is illegal, it is voidable by a party unaware of the purpose and had no reason to know.
51
parol evidence rule*
when the parties express their agreement in writing with intent that the writing embody the final expression of their bargain, any other written or oral expressions made prior or contemporaneously with the writing are inadmissible to vary or add to the terms.
52
*even if complete integration, parol evidence admissible for:
- proving defenses to formation (fraud, duress, mistake, illegality)
- proving existence of conditions precedent to effectiveness
- evidence showing consideration or lack of it
- aiding the fact finder in interpreting the meaning of contract terms
- facts entitling the party to reformation (i.e. mistake in reducing to writing)
- evidence of later modificaation
53
when can parol evidence be used to add terms?*
if the agreement is a partial integration, or if the terms do not conflict with the agreement and similar situated parties wouldn't expect the term to be in agreement
or, if there is a modification (terms agreed on after agreement made)
Under ucc additional consistent terms can be proven and terms can be explained or augmented by course of performance, course of dealing, custom even if no ambiguity
54
can contract terms be supplied or explained by conduct?
UCC
yes- in order of priority
1.course of performance (this contract)
2. course of dealing (conduct in previous transactions)
3. custom & usage (other parties in industry)
55
delivery terms of a contract- carrier*
Default is shipment contract
shipment contract: delivery obligation complete when placed in hands of carrier (default)
destination contract: goods delivered when they arrive at a destination. Indicated by FOB usually
56
risk of loss*
-determines who bears the loss when goods are destroyed when neither buyer or seller is to blame.
shipment: risk of loss passes to buyer when in hands of carrier
destination: risk of loss on seller until delivered.
57
when is payment due in a shipment contract? in a destination contract?*
shipment- when the goods are put in the hands of the carrier
destination- when the goods reach the specified destination
58
in a noncarrier case, when does risk of loss pass?*
if seller is a merchant: when buyer takes possession
if seller is not: when seller tenders delivery (has ready and instructs on how to pick up )
59
express warranty*
-statement of fact or promise made by seller (not sales talk or opinions)
-sample or model provided by seller
-description of the goods
60
implied warranty of merchantability*
arises in a sale by merchant who deals in goods of the kind sold
goods must be fit for ordinary purposes goods are used for
61
implied warranty of fitness for particular purpose*
- imposed whenever:
a) any seller has reason to know
- of the particular purpose buyer will use goods for AND that buyer is relying on seller's skill and judgment in selecting suitable goods, and
b) buyer in fact relies
62
disclaimer of warranty*
very difficult to disclaim express warranties but implied warranties of merchantability and fitness can be disclaimed
-specifically, must be conspicuous (written or displayed so that a reasonable person ought to notice it) AND mention the warranty disclaimed
-or generally, by "as is" language
defects that would be obvious upon examination are disclaimed by examining goods or refusing to
63
performance requirement- UCC and common law*
common law: substantially perform all that is required by the K
UCC: perfect tender rule- delivery (time, place, manner) AND condition of goods must be exactly as contract calls for. if goods do not conform, seller breaches and buyer may reject all, accept all, or reject some and accept the rest.
Exception under ucc- right to cure before performance due date or reasonable time after if reasonable belief that the goods would be accepted
64
if goods are not a perfect tender, but close, can buyer reject the goods?
yes, as long as buyer rejects in good faith.
note: often there is still a K, b/c there has been an offer that was accepted.
buyer must hold rejected goods w/ reasonable care.
65
cure
Under ucc seller has a right to cure within the original time of performance. must give notice before doing so.
after original time of performance: VERY limited right. must have reasonably believed that goods would be acceptable to buyer (ex: by prior deals.)
66
rejection of an installment in an installment contract
buyer can only reject if:
1) defect substantially impairs installment's value
2) defect cannot be cured
K is breached only if defect in installment substantially impairs value of whole K
67
acceptance of goods
- after reas. opportunity for inspection, buyer indicates the goods conform or that she will keep them despite nonconformance
- fails to reject within reasonable time
68
revocation of acceptance- goods
buyer may revoke if:
- the defect substantially impairs the goods' value
- excusable ignorance of grounds for revocation
- revokes within a reasonable time after discovery
69
condition
an event or circumstance that must happen before a party has a duty to perform, or that releases a party's duty to perform
condition precedent: occurrence triggers duty
condition subsequent: occurrence cuts off duty
70
anticipatory repudiation*
-words or conduct unequivocally indicating that the party will not perform
applies in both sale of goods and common law
71
options in case of anticipatory repudiation*
1 immediately sue and make a substitute contract with someone else
2 suspend performance, sue after due date
3 urge to perform (doesn't waive right to sue after due date)
2 and 3 give chance for other party to retract but may create mitigation issues if that doesn’t happen and you wait too long
72
insecurity about performance (conduct or words that raise doubts)*
may suspend performance if
- reasonable grounds for insecurity
- demand written assurances and other party doesn't provide
- commercially reasonable to stop performance
73
material breach and divisible contract
breacher can recover for substantial performance of a divisible part even though material breach of entire contract
74
rescission*
A remedy that treats a contract as if it had never been made because the contract was voidable at the time it was made
for rescission to discharge performance, there must be an agreement between the parties and it must be executory (i.e. performance still due from each of the parties).
75
accord and satisfaction*
accord: agreement to accept different performance. generally requires consideration and is generally made when performance is late or there is some dispute. parties looking to resolve & discharge the contract.
satisfaction: the performance of the accord.
satisfaction discharges the original K and the new one (by performance).
The accord suspends obligation to perform the original k. if the accord is not performed, recovery is allowed on either K.
example: check tendered to resolve a dispute with a conspicuous "payment in full" note
76
novation
agreement by both parties to a contract to substitute a new party to receive benefits and assume duties belonging to one of the original parties
- must be valid old & new contract
- must immediately extinguish duties of old party
77
impossibility b/c of death of a party (after k is formed)
excuses performance only if that person is necessary to perform the contract services (i.e. only they can do it bc services unique)
78
impossibility b/c of destruction of subj matter & risk of loss already passed to buyer
buyer must still pay- contract obligations not discharged
79
impracticability*
-one party encounters extreme and unreasonable difficulty performing
-the extreme and unreasonable difficulty's nonoccurrence was a basic assumption of both parties
ex: shortage of raw materials, embargo, strike, increased costs so high it changes nature of contract
80
frustation of purpose
purpose of contract has become valueless because of a later event and not the fault of the party seeking discharge
81
impossibility
it has become impossible for anyone to perform the contract. each party is discharged from duties under the contract yet to be fulfilled
82
third party beneficiary contract*
at time of contract, one party promises to render performance to a third person or confer benefit on them. third party can enforce the contract if:
identified in the K or
receives performance directly from promisor or
has a special relationship with the promisee
+ their rights vested
usually donees, but the beneficiary can be someone that the promisee owed a debt to before the contract
83
who can a 3rd party beneficiary recover from?
generally only the promisor, but can recover from promisee on a preexisting debt. if, however, the TPB sues the promisor, can only sue promisee if hasn't gotten a satisfaction.
84
assignment
immediate and complete transfer of rights under a contract to a third party.
- consideration is not required
- need not be written unless otherwise required by SOF, just must adequately describe the right
assignee takes subject to defenses against the assignor
85
is an assignment revocable?
gratuitous: yes (by death of assignor, notice by assignor to assignee, assignor taking performance from obligor, later assignment by assignor to another person)
for consideration: no
86
if a contract limits the right to assign, what happens?
contract makes assignments void- assignment is a breach, and assignee has no rights
contract prohibits- assignment is a breach, but the assignee still has rights (ex: "not assignable", "assignments prohibited")
87
contract rights that cannot be assigned*
- assignment would substantially change obligor's duty or risk (ex: output contract where new supplier would vary output, unique services K assigned to different performer)
- future rights to arise from future contracts
- assignments prohibited by law (ex: wages)
-contract states assignments are void or prohibits "assignments of rights"
88
is assigning your right to payment a substantial change?
No, it never is.
89
on what ground could an assignee sue an assignor?
in an assignment for value, for breach of the implied warranty that:
- he hadn't previously made an assignment of that right
- the right exists and is not subject to defenses
- the assignor won't interfere with the right
if the assignee finds out the right is later assigned to another person, if he's a gratuitous assignee, he has no right.
90
delegation defined*
-manifestation of a present intent to transfer a party's duties under the K to a 3rd party
91
duties that can't be delegated*
- those involving personal judgment or skill
- delegations changing obligee's expectancy (requirement and output contracts)
- special trust placed in the delegator
- contractual restriction on delegation (a restriction on assignments is construed as restriction on delegation)
92
if delegate does not perform
delegating party is still liable
the delegatee is liable only if received consideration from the delegator, which creates an assumption
if delegatee assumed the duty (promised to perform and got consideration), obligee can force him to perform b/c obligee is a TPB.
93
seller's right to get goods back
- buyer must be insolvent and receive goods on credit
-seller must demand return of goods within 10 days after the buyer receives goods
94
reliance damages
- reliance- seek to put the party in the position he would be in if the contract was never formed
Expenses to perform or relying on k + incidental damages to remarket and resell or locate substitute product or services
95
incidental damages- buyer
always available. include expenses reasonably incurred by buyer in inspection, receipt, transportation, care, and custody of goods rightfully rejected and other expenses
96
incidental damages- seller
always available. include expenses in shipping, storing, returning, and reselling goods
97
buyer's damages if seller made a warranty and breached it
fair market value as promised - fair market value as delivered, or cost of repair
98
seller's damages if buyer accepted goods and did not pay
contract price
99
liquidated damages
- damages difficult to ascertain at time K made
- provision must be a reasonable estimate of damages at time of contract formation
if too high (i.e., penalty) will not be enforced.
100
what kind of contract is presumed if the offer is not clear?
K will be construed as a bilateral contract unless the offer provides specifically it can only be accepted by performance
101
what law applies to movable things (cars, component parts, equipment)? exceptions?
The UCC
exception: if (a) the contract deals with both goods and services/land (b) the price is not divided between goods and services, and (c) the services/land predominate, common law will apply
102
what is a merchant?
a person who regularly buys or sells the type of goods sold under the contract
103
components of mutual assent; when is mutual assent required?*
mutual assent is offer and acceptance.
offer = a statement that is communicated to another person (the offeree) that can a) reasonably be interpreted as a promise or commitment to enter into a contract and b) that contains certain and definite terms.
acceptance = a manifestation of assent to the terms of an offer.
commitment depends on offer language and whether the communication was targeted or broad (like an ad or email blast).
certain and definite = identify parties and material terms.
104
material terms
terms that are necessary for enforcement of a contract.
* at common law: parties, description of services or land
* UCC: quantity of goods. exception: output and requirements offers ("all that is needed/required" or "all that is produced" or "exclusive contract"
105
what terms can be read into an offer if not stated?
at common law, time for performance (if time is not of the essence); price in services contracts; place in services contract if it can be inferred or there is a reasonable place to perform it
UCC: price- reasonable price at time of delivery; place of delivery- seller's business ; time of delivery- reasonable time
106
what warranties does "as is" language disclaim?*
* implied warranty of merchantabiltiy
* implied warranty of fitness for a particular purpose
IT DOES NOT disclaim express warranties (conformity to a model/sample/things said)
107
how do you disclaim implied warranties of title or against infringement?*
by express disclaimers that are conspicuous (a different font size or type from rest of the K)
108
when is a condition precedent (other than performance by the other party) excused?*
* when it is waived by the party that benefits from the condition
* when the party benefited by the condition is estopped from arguing they did not waive b/c of their conduct reasonably suggesting they waive and the other party's detrimental reliance
* when it is wrongfully prevented from occurring by the party benefited by the condition and the other party would not have assumed the risk of this type of conduct (hindrance)
* supervening illegality (arises after formation)
* impossibility
* impracticability
* frustration of purpose
109
ways a duty to perform can be discharged*
Performance
lapse- no party performing in reas time
impracticability
accord and satisfaction
rescission
release
cancellation
impossibility
frustration of purpose
happening of condition subsequent
novation
110
What are the requirements for and what is the effect of assumption by a delegate?
The other party to the contract can look to the delegate and the delegator for performance. Assumption happens when there is consideration and the delegate agrees to perform the delegator obligation. The assignor is only off the hook if there is a novation substituting a new party to the k and both original parties plus the third party agree
111
Reformation
A remedy when the parties have formed a contract but it did not conform to the parties intent. The court modifies the terms to conform to the parties’ intent
Available for misrepresentation but only if misrepresentation was about the content of the agreement or it’s legal effect, not if it was a misrepresentation as to subject matter of the k
112
Delegation of duties
One party to a contract (delegator) assigns the duty to perform the contract obligations to a third party (delegate). Available unless the duties to be performed require personal judgment and skill, or if it would change the expected benefit the second party could receive from the contract
113
What is an Assignment and is it revocable?
A party’s immediate transfer of their contractual rights to a third party.
An assignment is revocable if no consideration given. Later assignments revoke earlier ones.
An assignment is irrevocable if consideration is given. Later assignments (whether for consideration or not) cannot revoke an earlier assignment for consideration.
Generally assignment of the contract or all a party’s rights is construed to include an assumption of the assignors duties by the assignee
114
Consequential damages*
Damages that arise because of non breaching party’s special circumstances and are recoverable only if reasonably foreseeable. Breaching party would have to know or have reason to know when the contract was made.
These damages must also be proven with reasonable certainty
115
Mitigation of damages
A party cannot recover for damages that could be reasonably avoided.
116
If both parties are merchants and the offeree responds to an offer with additional or different terms what happens?*
There is a contract and the new terms are included unless:
the new terms materially alter the offer (disclaimer of warranties, add indemnity, impose more risk, or change remedies) or
The offer says it is limited to the terms in the offer
**If the offeror objects to the new terms within a reasonable time there will be a k without the new or different terms.
117
How long can a party suspend performance if they have doubts about ability to perform.
Until they receive adequate assurances
118
Under ucc can the buyer force a seller to deliver goods?
Only if the buyer has partially paid for the goods, seller is insolvent or the goods are for personal or household purposes, and buyer pays the rest of the price
119
How does the offeree accept a reward, prize, or contest?
By fully performing
120
Suretyship contracts and exception*
Usually must be in writing
Exception if the main purpose of agreeing to pay the debt is for the guarantors own benefit. Then the agreement does not need to be in writing.
121
Damages in construction contract- homeowner breach
Profits plus expenses
122
What is the default measure of damages?
How are they calculated?
when are they unavailable?
Expectation damages - damages to get the non breacher a substitute contract
Unavailable when too speculative to measure (ex- profit unknown)
If question tells you expenses, contract price, and profits p would have had, it means the contract price would have covered the costs and the remainder would be profits. Compensate for expenses to get party to 0 then add profits
123
Steps to seek adequate assurances*
Evaluate whether there is a reasonable ground for doubt about person performing
Ask for them in writing
Wait reasonable time (30 days or less depending on circumstances)
Treat it as anticipatory repudiation if not received
124
How to revoke an assignment without consideration
By notice to the assignee
By assigning to someone else
By death of the assignor
By taking performance from the oblige
125
Can an assignment be oral?
Yes as long as it doesn’t come within the statute of frauds
126
Surety contract
Promise to lay someone else’s debt
If x does not pay I will
127
Is a land contract or lease with a 1 year term starting from date of signing required to be in writing?
No only contracts more than one year need to be written
128
Does a rejection or counteroffer terminate an option?*
No, unless the other party has detrimentally relied on the rejection
129
When is a performance condition excused?*
1. When the other party’s duty of performance is an implied condition concurrent or precedent to yours, and the other party has substantially performed, the other party’s duty to perform fully is excused. Substantial performance happens when breach is not material.
2. When the contract is divisible (divided into same # of parts for each party and each party's part is equivalent of the others) full performance is not required for the other party to have a duty to perform , once a party has performed a part the other party has a duty to provide the consideration for that part. True in both UCC and common law.
3. other party's anticipatory repudiation
4. other party's inability to perform that turns into anticipatory repudiation
4. illegality
5. impossibility
6. frustration of purpose
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Assessing whether a breach is a material breach at common law*
1) Amount of Benefit Received
Whether the nonbreaching party has in spite of the breach received substantially the benefit she could have anticipated from full performance. Makes finding material breach less likely.
2) Adequacy of Damages
Look to the extent to which the injured party may be adequately compensated in damages. The greater the extent, the less material the breach.
3) Extent of Part Performance
Look to the extent the party failing to perform completely has already performed or made preparations to perform. The greater the extent, the less material the breach.
4) Hardship to Breaching Party
Look to the extent of hardship on the breaching party should the contract be terminated. If a finding of materiality and termination of the contract would cause great hardship to the breaching party, the breach is less likely to be found to be material.
5) Negligent or Willful Behavior
Look to the extent of negligent or willful behavior of the breaching party. The greater the extent, the more material the breach.
6) Likelihood of Full Performance
Look to the extent of likelihood the party who has failed to perform will perform the remainder of his contract. The greater the extent, the less material the breach.
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Breach
Failing to discharge performance when you are under an absolute duty to perform
132
Breach and effect in common law*
As performance is a condition precedent to B's duty to perform
A’s failure to perform to specs causes the condition of A performing to fail
B is not under a duty to perform unless substantial performance applies
Duty is excused bc of material breach and may treat contract as at an end and sue
If the breach is minor and there's an anticipatory repudiation, performance is excused and should sue immediately to mitigate damages (because other party has said rest of k will not be performed either)
If the breach is minor must normally still perform and sue for damages
133
Time of essence
nature of the contract makes performance on the exact day agreed upon of vital importance (rental of venue for event)
Courts will look at extrinsic evidence to see if the exact timing is very important to the parties
134
when will an offeree's response with new terms fail to create a contract?*
for UCC- when the offeree's acceptance is conditional on the offeror accepting the new terms
for common law- this would be a counteroffer and no k
135
knockout rule*
if the terms of the offer and acceptance conflict (not just added terms), the terms that are different are knocked out and filled by UCC gap fillers
this is only followed by some states. some states treat the different terms as part of the contract unless they are objected to
136
if goods are defective when does the risk of loss pass?
when the defect is cured (fixed or new goods delivered)
137
if goods are destroyed before risk of loss passes to the buyer, what is the effect?
as long as it was without fault by either party, and goods were identified when made, there is no contract
138
tender of performance
goods- making available to buyer to take possession w/ reas notice at reas time or, in carrier cases, put the goods in the hands of a carrier & notify buyer
139
constructive condition of performance
-usually each party's performance is an implied condition of the other party's performance b/c simultaneous performance is possible
-if simultaneous performance is not possible, the person whose performance takes longer is an implied condition precedent to the other party's
140
who is frustration more likely to be raised by?
the person whose only performance is to pay
141
frustration of purpose
-parties both knew the purpose of the contract at time it was made
-supervening act or event that was not reasonably foreseeable when contract was made happened
-the purpose of the contract has been destroyed by the happening of the event
142
impracticability
performance has become unreasonably expensive or difficult
143
in a construction contract for a new building, if the building is destroyed before performance is due, is that a defense?
no, it is not impossibility because the contractor can rebuild. the deadline will likely be extended though.
144
in a remodeling or repair contract, if the building is destroyed, is that a defense?
yes, because the existence of the building was necessary for the repair or remodel. the contractor's duties are discharged by impossibility.
145
if a condition is waived can the waiver be revoked?*
yes until the other party detrimentally relies on the waiver
146
who can sue the obligor after an assignment?*
the assignee because privity of contract between the assignor and obligor has been extinguished
147
if the obligor tenders performance to the assignor knowing there was an assignment, and assignor accepts it, what is the effect?
The assignor has revoked the assignment and the assignor comes back into privity with the obligor, but the assignee can still sue the obligor for breaching the duty to render performance to the assignee
148
merchant firm offer*
- offeror (not offeree) must be merchant
- must be in writing
- need not have consideration
- if no time is stated, it will be held open for a reasonable time, but in no event to exceed 3 months
149
option definition*
the offeror's promise to hold an offer open for a certain period of time in exchange for consideration from the offeree
150
if the parties orally agree to an installment land contract and the buyer is in possession, does that satisfy the statute of frauds?
It may, but it depends on the kind of improvements the buyer made and how much money was given up front. Payments over time and possession are also consistent with leases.
151
seller's damages if buyer rejected conforming goods or buyer repudiated contract (anticipatory)
Exceptions for cases where goods cannot be sold or seller can sell as many goods as it receives
contract price- resale price OR
if seller does not resell or does so at an unreasonable price, contract price - market price at time of delivery
if seller can't resell (custom goods or no demand) can recover contract price
if lost volume seller (unlimited supply, can get as many goods as it can sell), may get lost profits
152
buyer's damages if the seller breaches by not delivering, or delivering nonconforming goods that the buyer properly rejects or revokes acceptance of
contract price - market price at time breach is discovered if the buyer does not cover, or covers at an unreasonable price
contract price - cost of replacement goods (if buyer covers and cost is reasonable)
153
buyer's damages if the seller delivers nonconforming goods that the buyer keeps
the buyer will get the difference between value of goods as promised and value as delivered
154
how can a buyer reject goods?*
within a reasonable time after delivery, notify the seller that the goods do not conform and buyer is rejecting delivery
155
employment contract damages- breach by employee
cost to replace employee: wages paid to new employee minus the employee's wages and payment for work employee did but not yet paid for
156
employment contract damages- breach by employer
full contract price regardless of when the breach happens - wages paid by comparable job that is available
157
if someone has an at will employment contract and is fired, do they get damages?
no because the employer is allowed to fire for any or no reason, employee has no expectation of continued employment
158
if a construction contract is breached by the contractor, what are the damages?
cost to the owner of completing the project and damages for any delay
unjust enrichment will often allow payment for work done
159
issues to consider when a contract is partially performed*
in order:
whether k substantially performed (common law only)
whether the contract is divisible (both UCC and common law)
availability of restitution damages
160
rescission- contract formation defenses that support rescission
misrepresentation
unilateral mistake and the other party knew
mutual mistake of material fact
duress
illegality
lack of capacity
lack of consideration
161
Timing of a statement required for it to create a warranty*
At a time when it could have firmed the basis of the bargain (influenced decision to proceed with a purchase)
162
Responses to argument that a party lacked capacity
a) person ratified when gained capacity by taking benefits. b) quasi contract recovery possible if K for necessaries (food, clothes, medical care, housing)
163
Can an anticipatory repudiation be withdrawn? Does it matter if it arose by default due to failure to provide assurances?*
It does not matter how it arose and it can be withdrawn if, at the time you retract:
Other side has not cancelled the contract
Other side has not materially changed position because of the repudiation
Other side has not said they consider repudiation final
For prospective inability to perform, must notify the other party you can now perform to retract and the events above must not have happened.
164
Under the ucc does a good faith modification require consideration?
No
165
invitation to deal vs offers
offers need to sufficiently identify the offeree or class of people who could be offerees
invitation to deal usually include ads and unsolicited price quotes
166
when can a price quote be an offer?
when it is given in response to a request for a quote that was not broadly distributed
167
can a gap filler be used if the parties include "at a reasonable time" or "fair price" in their offer?*
no because this is a vagueness problem; gap fillers only apply where terms are missing
168
how can an offer by publication be revoked?*
by publication in the same manner
169
if a merchant's firm offer is longer than 3 months what happens?*
the merchant is only bound to hold it open for the first 3 months. the offeree cannot accept after that.
170
if a contract can be accepted by shipping or a promise to ship, and the offeree accepts by promising to ship, and then realizes they don't have enough of the goods sought, can they send different goods as an accommodation?*
That would be a breach. The contract was accepted by a promise. Accommodation applies only if the acceptance is by shipping
171
if there are new terms in a sale of goods acceptance that affect the price or quantity and both parties are merchants what will be the result?*
there may not be a meeting of the minds and there won't be a contract if not
172
merchant confirmatory memo with additional or different terms*
there is already a contract, but with respect to the terms added:
-recipient objection keeps terms from becoming part of the contract
-if terms materially alter, they will not be part of the contract
if the jurisdiction applies the knockout rule it will use the knockout rule on the different terms
173
if an acceptance is not properly addressed, does the mailbox rule apply?
no
174
what is the traditional rule about whether a contract modification needs consideration (common law)?*
it traditionally does. in essays discuss this rule & new modern rule excusing it if unanticipated circumstances arise and it's fair*
175
if a part performance exception to the SOF applies, is the performing party limited to restitution damages?*
no, the partially performing party can enforce the contract and sue for expectation damages
176
integration*
expression of an agreement in writing made with the intent that it be the final expression of the bargain
UCC presumes all writings are partial integrations
177
can damages for breach of warranty be limited?*
yes as long as not unconscionable
limiting damages for personal injury are unconscionable*
178
if a breach is willful, what is the effect on a substantial performance defense?*
the court most likely will treat it as a material breach and not treat it as substantial performance
179
release
promise not to sue in exchange for consideration
180
modification*
a writing that changes contract terms
mutual assent
consideration (traditional rule; not required in ucc)
partially discharges to extent of modification
different from accord because desire to continue the contract on new terms re: future performance and the new terms become effective immediately
181
what defenses does a promisor have if a third party beneficiary sues?*
promisor can raise any defenses they have against the promisee against the TPB
182
General rule on revocation of an offer*
Offers are revocable even if offeror promises not to revoke, at any time before acceptance
183
Ucc- characterization of an order and the possible responses
Order is an offer
The seller can accept by
1 promising to ship
2 shipping conforming goods
3 shipping non conforming goods
A with accommodation notice (counteroffer that must be accepted or rejected in full)
B without accommodation notice (breach and buyer can choose to sue for damages or return all or some of the shipped goods)
184
Specific performance *
Available only if damages are not adequate
Available for unique goods and sale of land
Generally not available for services but may enjoin competing work if services are unique and restriction is reasonable
185
Who can a third party beneficiary sue?*
Promisor
Promisee if the third party beneficiary is involved because the promisee owes the third party beneficiary a debt
