Contracts and sales Flashcards
(43 cards)
Unilateral contract
Offer expressly states it can be accepted only by performing.
Offers made to the public.
Merchant offer
Offer to keep the offer open only up to three months without consideration. Has to be between merchants.
Party must know of offer to accept- crossing offers and rewards
An offer must know of the offer to accept it. If they act without knowledge and learn of the offer later, their acts were not an acceptance.
What if a merchant’s confirmatory memo contains additional terms/
Despite the fact that there is already a K at the same time the memo is sent, the memo is put through the battle of forms provision, such as the material alteration test, as it were an acceptance.
Subcontractor bids: Watch for detrimental reliance and unilateral mistake
Whenever you see a subcontractor’s bid in a question, look for: (1) detrimental reliance by the general contractor, which would make the bid irrevocable, and (2) unilateral mistake by the sub- contractor. Unilateral mistakes arise most com-
monly from a mechanical error in computation. If a subcontractor’s bid was based on a mistake, consider whether the general should have known and the contract may be avoided due to unilateral
mistake.
Contract need only be signed by one party to be enforceable- but it must be the right party
The writing must be signed by the party being sued.
Which circumstances take a goods K out of the Statute of Frauds: SWAP
A mnemonic for remembering when a writing signed by the party to be charged is not required for a sale of goods, even if for $500 or more, is SWAP:
Specially made goods
Written confirmation by a merchant (confirmatory memo)
Admission in court, or
Performance
Destruction of subject matter of construction contract: Build versus
repair or remodel
Destruction of: New building under construction- contractor is still obligated to build and is entitled only contract
price Building being repaired or remodeled-contract discharged and contractor entitled to restitution
for value of work done prior to destruction
Minor breach does not discharge duty to perform
Not all breaches are equal in their effects. Re- member that a minor breach allows the aggrieved party to recover damages, but they still must per- form under the contract. If the breach is a material
one, the aggrieved party need not perform.
Anticipatory repudiation
There must be a clear indication that the other party is unwilling or unable to perform.
Right to demand assurences
Arises when something makes a party nervous that the other will not perform
Vesting of third-party
Third party beneficiaries vests their rights by suing.
- asserting to the K
- materially changing position in justifiable reliance on the promise
Effect of paying the assigning party instead of the assignee
An assignment of a right to payment or performance comes with peril for the person obligated. The obligor doesn’t necessarily know whether an assignment was gratuitous or for value. Suppose the obligor, after notice of the assignment, renders performance to or pays the assignor. If the assignment was revocable, it’s revoked by the assignor’s acceptance of the performance or payment, and the obligor is discharged. But, if the assignment was for value, the obligor isn’t discharged by his performance or payment to the assignor. The obligor remains liable to the assignee.
Quasi-K
One party is unjustly enriched at the expense of the other party, so that the enriched party must pay restitution to the other party equal to the unjust enrichment.
Revocation by Offeror- Limitations on Power to Terminate
Option K, merchant’s firm offer, detrimental reliance, beginning performance on unilateral K
Warranty of Title
Promises title is good, transfer rightful, no liens or encumbrances.
Arises by sale of goods by whom any seller.
Disclaimer can be made by specific language or circumstances showing seller does not claim title
Warranty of merchantability
Promise fit for ordinary purposes. It arises by sale of goods of the kind regularly sold by the merchant. Made by the merchant only.
By disclaimer mentioning “merchantability”.
Warranty of Fitness for a particular Purpose
Promise that the thing is fit for the buyer’s particular purpose. Arises by sale of goods where seller has reason to know of particular purpose and of buyer’s reliance on seller to choose suitable goods. Made by any seller.
Disclaimer can be made by conspicuous written disclaimer.
Express warranty
Arises by affirmation of fact, promise, description, model or sample. Made by any seller.
Extremely difficult to disclaim.
What happens if the seller provide notice that the nonconforming goods were shipped as an accommodation
The shipment is a counteroffer, which buyer may accept or reject.
How does one determine third-party beneficiary status
- Specifically identified in the K
- to receive performance directly from the promisor
- in some relationship with the promisee to indicate an intent to benefit
Unilateral mistake
K is voidable if non mistaken party knew or should have known of mistake
Statute of Frauds- certain Ks must be in writing, signed by the party to chared
Marriage—when marriage is consideration for promise. Example: “If you marry my son, I will buy you a car”
Year—promises that cannot be performed within one year from date of contract
Land—promises creating interests in land. Examples: land sales, leases, easements, fixtures, mineral rights, mortgages
Executors and administrators—promises to pay estate debts from own funds
Goods—contracts for sale of goods for a price of $500 or more. Exceptions: specially manufactured goods, goods accepted or paid for
Suretyship—promise to answer for debt of another
Mutual mistake–
contract is voidable by adversely affected party if:
Mistake concerns basic assumption on which contract was made;
Mistake has material effect; and
Party seeking avoidance did not assume risk