Contracts and Sales Flashcards Preview

Bar Exam > Contracts and Sales > Flashcards

Flashcards in Contracts and Sales Deck (129)
Loading flashcards...

What is a unilateral K?

Promise for performance. That is, the only way to accept is to perform.

Once you start performing, offeror cannot revoke.
You can abandon performance as the offeree and not be liable for breach, but you are not entitled to the reward unless and until you finish.


What is a bilateral K?

Promise for a promise. See more in consideration.


What is a quasi k?

When K law produces an unfair result, it allows the party harmed to win in equity.


When does Article 2 of the UCC apply?

Sales of goods, that is, tangible property that is movable at the time of sale.


If I am not sure if it is goods or services, what tests are available?

1) Predominant Purpose Test - What is the main reason for the K?

2) Gravamen of Action Test - Did the problem arise from the goods portion or the services portion of the K.

Lecturer only talked about predominant purpose, so I guess use that.

If the contract expressly divides payment, then apply UCC to the goods portion, and common law to the services portion.
e.g. $5000 for the car, $400 for the driving lessons.


What is an offer?

A manifestation of intent to enter a K such that all the other party has to do is accept.


If an offer lacks a price term is that a problem?

1) At common law = yes, it's a k killer.e.g. a k for land must have a description of the land and price term.
2) Under UCC = Not a deal killer. Courts will look at intent of the parties.


I will sell you my car for a fair price. Valid offer?

No, vague or ambiguous terms such as "appropriate", "fair", and "reasonable" are trigger words that will prevent a statement from being a valid offer at common law or under UCC.


What are requirements/output Ks? Are they enforceable? What has to happen for that to change?

Requirements = You must sell to me whenever I have a need.
Output = You must buy all I produce.

Valid, unless vague or ambiguous or the amounts increase in an unreasonably disproportionate manner.

Look for words such as all, only, exclusively, or solely.


Is an advertisement an offer?

Generally, no, unless:
1) It creates a unilateral K (100 reward for catches the flu after using my smoke ball.)
2) Specifies quantity and expressly indicates who may accept (1 fur coat for $10, first come, first served.)
3) Price quotes in response to an inquiry.


How are offers terminated (4 ways)?

Yes if:
1) A reasonable or stated time lapses (for reasonable, think 30 days, but that's not exact.)

2) Death or incapacity of either party after offer and before acceptance.

3) Revoked: Generally, offers are freely revocable by later unambigious statement to offeree or unambiguous conduct indicating unwillingness or inability to go through with K, as long as, offeree knows about it (multiple offers by themselves are not enough.)
a) Option Ks - promise not to revoke, supported by consideration.
b) Firm offers (Merchant [of any kind] + writing + signed + up to 3 months [over 3 months will be reduced]). No consideration needed.
c) Cannot revoke offer to a unilateral K once a party starts performance. Must give him a reasonable time to complete.

4) Rejected
(a) At common law, anything besides a mirror image is a rejection and counteroffer unless a counteroffer is made during an option k period.
Notes -
(i) an inquiry such as "will you take ...." is not an offer/counteroffer.
(b) a conditional acceptance is a counteroffer at common law because it is not a mirror image. e.g. I accept, if, only if, provided that, so long as, but, on condition that, etc.

(b) UCC - A conditional acceptance creates a K (merchants or not).
However, the additional terms come in if the parties are both merchants unless:
(i) The additional terms is material (changes the risk or remedies of one party); and
(ii) The offeree expressly limits the acceptance on the offeror agreeing to the additional term (magic language = "only if" "express condition that");
(iii) The original offeror has previously objected to the additional term.
If one party is not a merchant than the additional terms are treated as proposals and the offeror must expressly consent.
Note**Different terms are generally subject to the knockout rule, but MA allows the different terms in (no knockout rule in MA).


S, a used car dealer, offers to sell B a 1973 Cadillac for $400. The written offer is signed by S. Can S revoke?

Yes. No promise not to revoke.


O offers P $1000 to paint his house, but that the offer can only be accepted by performance. P buys paint, then O revokes. Can O revoke?

Yes. P had not begun performance. Mere prep is not enough. If P cannot return the paint, he may recover under PE.


How may offers be accepted?

Note to start:
Generally, the offeror control the method of acceptance, but the offer is often silent.

1) Offeree can accept by starting to perform or promising to perform (unless it is a unilateral K, in which case he must finish in order to have accepted.)

2) Mailbox Rule - Generally, acceptance is effective when placed in the mail.
a) Comms other than acceptance are only effective upon receipt.
b) If you send a rejection, then an acceptance, whichever arrives first, governs.
c) You cannot use the mailbox rule to meet an option deadline (e.g. Option expires today at 4, so you pop a letter in the mail at 3:45. NO GO).

3) Seller ships the wrong goods.
(a) Generally, this is an acceptance and a breach.
(b) However, if seller ships the wrong goods with a notice of accommodation, then it is a counteroffer, so not a K and not a breach.


Who may accept an offer?

1) A person who knows about the offer when they accept (that is, if you do not know about an offered reward when you perform, you are not entitled to the reward); and

2) A person to whom the offer was made. That is, offers cannot be assigned. (No selling an offer made to you.)

Note***Options can be assigned (I can sell my option to you, unless the K giving me the option says otherwise.)


Once an offer has been accepted, may I revoke?

No. It is a K if there is also consideration.


Under what circumstances might a contract not be legally enforceable?

1) Lack of consideration
2) Lack of capacity
3) SoF
4) Existing laws that prohibit the performance of the agreement
5) Public Policy
6) Misrep
7) Nondisclosure
8) Duress
9) Unconscionability
10) Ambiguity in words of agreement
11) Mistakes at the time of the agreement as to the material facts affecting the agreement.


What is the best way to determine if there is consideration?

Is there a bargained for exchange (MA calls bargained for detriment or benefit): Each party doing something the other side wants them to do, like giving up something that they had a legal right to/to do.

(a) Promise for a promise is OK, but an illusory promise is not (e.g. "I'll do this until I don't want to anymore" is an illusory promise, but "I'll do this, and if I want to stop, I'll give you 10 days notice" is not illusory.) Note that on the bar "Illusory promise" is usually the WRONG answer, but once in a while it's right.

(b) Past consideration is not consideration unless expressly requested by promisor and there was an expectation of payment by promisee.

(i) Doing something that you have a contractual or statutory duty cannot be consideration is not consideration at common law. Any modification must be supported by new consideration unless there has been an unforeseen difficulty so severe as to excuse performance or a third party has now promised to pay.
(ii) Art. 2 does not require new consideration for a modification if the modification was done in good faith.


When is partial payment consideration for release? e.g. a promise to forgive balance of debt. THIS WILL BE TESTED!

The key is whether a debt is due an undisputed. If the debt is due and undisputed then part payment is not consideration for release.

Compare H59 and H60 on page 20 of the lecture handout.


D owes C $1000. Legal action to collect this debt is barred by the SoL. D writes C, "I know I owe you $1000. I will pay you $600." Is there new consideration for D's new promise?

If D changes his mind about paying, what are C's contract law rights?

No new consideration.

This is enforceable though without a K.

Se page 20 of lecture handout.


What is promissory estoppel? MEMORIZE

Detrimental reliance (3 elements)
1) Promise.
2) Promisee reasonably relied on that promise to his detriment in a foreseeable way.
3) Enforcement of the promise is necessary to avoid an unjust result.


In MA, what is the impact of a promise under seal?

A sealed contract has a conclusive presumption that there is consideration. The K must recite that it is sealed in addition to "L.S." after the signature.

However, the distinction between sealed and non-sealed instruments does not apply to an undisclosed principal.

Consideration is always required for option ks, regardless of whether sealed or not.


When might there be lack of capacity, what result?

1) Infant (under 18)
2) Mental incompetent
3) Intoxicated persons (if other party has reason to know)

(a) cannot hold someone under 18 to a k, but the person under 18 can hold the other party to his end of the bargain.
(b) if someone does not have capacity when she signs the k, but gains capacity (e.g. turns 18) and retains the benefit, then she has ratified the k and can be held to it.
(c) Quasi-K for necessaries requires someone under 18 to pay for these things (food, clothing, shelter) but that remedy is under equity not K law.



SoF requires certain Ks to be evidenced by objective proof (usually a writing).

MY LEGS is the acronym in the CMR, homeboy in the lecture is only worried about 4.

1) Suretyship (which he says is usually a wrong answer) but it could be correct if there is an actual guarantee to pay the debt of another "only if [the other] does not pay." See page 23 of lecture handout.

2) Ks incapable of being performed within a year, measured at the time the K was entered into. Look for:
(a) specified term of years even if could be terminated with notice.
(b) a date of performance more than one year from the day the K was signed. (The Kenny G concert hypo).
Ks that can be performed w/in one year include:
(a) A task that says nothing about time because SoF assumes that it is theoretically possible with unlimited resources.
(b) A k to work for the rest of my life.

3) K for an interest in land (not services upon the land and not a one year lease). Look for a multi-year easement, lease, or other interest in land.

4) Sales of goods valued at $500 or more.
(Note leases of goods must be in writing if $1000 or more.)


When may SoF be satisfied by performance? COMMON Q ON BAR EXAM

1) Land - If 2 of the following 3 are met, then it is a valid K.
(a) Valuable improvements made on the land by buyer.
(b) Buyer conveys all or part of the purchase price.
(c) Buyer takes possession.
MA requires all three unless a court looks at all the facts and decides that it should be enforced in equity.

2) Service Ks - Full performance required to evidence a K. Part performance does not satisfy SoF. However, even though a P could not recover under K law for part performance, he could recover under quasi-k.

3) Part Performance in UCC
(a) Seller's part performance only satisfies SoF to the extent of the performance (e.g. P alleges K was for 1000 widgets, but D only delivered 600. SoF only satisfied for 600).
(b) Seller's part performance can also satisfy SoF if the goods are specially manufactured for buyer and the seller has made a substantial beginning on the work. Remember the Size 28, pink cowboy boots.


When a writing is alleged to have satisfied SoF, what is required?

1) K for services - all material terms ($, parties, and subject matter) + sig of party sought to be bound (pretty much always D).

2) K for goods - quantity term + sig of party sought to be bound (pretty much always D) unless the confirmatory memo rule applies.
Confirmatory Memo Rule - When one merchant sends another merchant a memo memorializing their oral agreement for the sale of goods, if the recipient merchant has reason to know of the memo's contents and does not object in writing within a reasonable time (10 days) then the Confirmatory Memo satisfies SoF.


Nancy Botwin, a stay at home mom, sues Esteban Reyes, the mayor of Tijuana, to enforce an alleged contract for Esteban to buy 100 lbs of hominy grits for $500. The only writing is the following: "I agree to buy 100 pounds of grits." Signed Esteban. Satisfy SoF?

Yes. Sale of goods w/ quantity term and Buyer's signature.

$500 only material for you to know that we are in SoF land, not needed in the sale of goods K when there is a quantity term and D's signature.

If this was for services, then the price term would be a material term needed for a good writing. We would also need the parties ID'd in the K.


If I want to give Judah permission to enter a contract on my behalf, does that need to be in writing? Will be on exam.

The Equal Dignity Rules states that written proof of authorization to enter into a contract for someone else only needs to be in writing if the underlying contract is within the SoF.


Landlord sues me for breaching my one year lease agreement that Judah signed. Judah claims that I gave him permission to sign on my behalf. I file for Sum J claiming that the lease is not enforceable against me since there is nothing in writing giving Judah permission to sign for me. Am I right?

No, it is just a one year lease which is not within the SoF. If it was one year and one day, then I would be right, but it's not, so I am wrong.


If I want to modify a deal after it has been executed, does it need to be in writing?

Only if the modification brings the K within the SoF or keeps it within SoF. The original terms are irrelevant. All that matters is whether the modification will bring it into or outside of SoF land.