Contracts Law Flashcards
(40 cards)
SALE
A contract in which title to goods passes from seller to buyer for a price.
GOODS TRANSACTION
a good is anything that is movable at the time they are identified as items to be sold under the contract. Article 2 of the UCC applies to most every transaction in goods
NONGOODS TRANSACTION
If a sale involves an exchange of service or is a mix of both goods and services a court will determine which aspect is dominant and apply the law governing that aspect to the whole contract. Contracts for nongoods are controlled by the common law.
GOOD FAITH & FAIR DEALING
Every contract under the UCC imposes an obligation of good faith in its performance na enforcement (UCC §1-304). “Good Faith” is honesty in fact and the observance of reasonable commercial standards. The Common Law also imposes a duty of good faith and fair dealing on each party to a contract with respect to performance and enforcement.
Breach of the duty of good faith and fair dealing is a question of fact, but usually involves exercising discretion in a way that deprives the other party of the fruits of the contract.
BILATERAL CONTRACT
A traditional bilateral contract is one consisting of an exchange of mutual promises, in which both parties are promisors and promisees
UNILATERAL CONTRACT
A traditional unilateral contract is one in which the offeror requests performance rather than a performance. Offeror-Promisor promises to pay upon completion of the requested act done by promisee.
CREATION OF A CONTRACT
- Mutual Assent (Offer & Acceptance)
- Consideration or some substitute
- Are there any Defenses to the Creation of a K?
OFFER
Offeror must communicate to the offered in such a way to create a reasonable expectation in the offer that the offeror is willing to enter into a contract on the basis of the offered terms. In deciding whether a communication creates a reasonable expectation, consider the following questions:
- Was there an expression of a promise , undertaking, or commitment to enter into a K?
- Was there certainty and definiteness?
- Were these communicated to the offeree?
Promise, Undertaking, Commitment
To find a promise, undertaking, or commitment has been communicated, there must be finding of intent on the part of the offeror to enter into a K, e.g. “I offer”, “I promise”, Quoting a price, “I am asking for…”, “I would consider selling for…”,
Communication
The broader the communication media the Moree likely the court finds a communication to be a solicitation of an offer, e.g. advertisements are generally considered invitations for offers.
Statute of Frauds Subjects (MYLEGS)
Marriage, Land, Year-long performance or more, Executor Promise, Goods greater than $500, Surety
Defenses to a Meeting of Minds (MUDII)
Mistake
Unconscionability
Duress/Fraud – overcome another party’s will by force or misrepresentation
Illegality
Incapacity (Minor, Mental illness, Intoxication)
Compensatory Damages - Expectation Damages
Generally, compensatory damages will be measured by the standard known as expectation damages. In other woads standard calculates the benefit of the bargain, and the goal is to place the non-breaching party in the position he would have been in but for the breaching party’s non performance.
What is a Merchant under Art.II UCC?
UCC defines a merchant as someone who regularly deals in goods of the kind sold or who otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved.
Explain the Mailbox Rule
Acceptance by mail or similar communication means creates a contract at the moment of dispatch, provided that the mail is properly addressed and stamped, unless:
(i) the offer stipulates that acceptance is not effective until received; or
(ii) where an option contract is involved, acceptance under an option contract is effective only upon receipt
An acceptance transmitted by unauthorized means or improperly transmitted by authorized means may still be effective
Acceptance (CL)
Acceptance must be:
i. communicated
ii. in a reasonable manner
iii. Absolute and unequivocal
Shipment of NonConforming Goods (UCC)
Shipment of nonconforming goods is acceptance creating a bilateral contract as well as a breach of the contract unless seller seasonably notifies buyer that a ship of nonconforming goods is offered only as an accommodation. Buyer is not required to accept accommodation, and may reject. If he does, shipper is not in breach and may reclaim accommodation goods, because her tender does not constitute an acceptance of the buyer’s original offer.
Consideration
To have a legally enforceable contract there must be a bargained for change in legal position between the sprites, i.e. a valuable consideration of some kind. Three elements:
- Bargained for exchange between parties
- a. Must be of Legal Value, or
- b. it must constitute a benefit to the promiser or a detriment to the promisee.
Suretyship Promises
A suretyship contract involves a promise to pay the debt of another.IT is not enforceable unless it is supported by consideration.
Promissory Estoppel (CL)
It is an equitable remedy. Consideration is not necessary if the facts indicate that a promisor should be estopped from not performing on a contract. A promise is enforceable if necessary to prevent injustice if:
- promisor should reasonably expect to induce action or forbearance and
- such action or forbearance is in fact induced.
What is Anticipatory Repudiation, and what elements are required?
Occurs if a promisor prior to the time set for performance of his promise indicates that he will not perform when the time comes to execute the contract. If the following conditions are met, anticipatory repudiation will serve to excuse conditions
- Bilateral Contact Requirement - AR applies only if there is a bilateral contract with executory (unperformed duties on both side). Nonrepudiator must wait until the time originally set for performance by the repudiating party,. until such time, nonrepudiator can change his mind and perform the contract
- AR must stem from the words or conduct of the promisor unequivocal indication that he will not perform when the time comes
What are Potential Response to Anticipatory Repudiation ?
Four options available to the nonrepudiating party
- Treat AR as total repudiation and sue immediately
- Suspend performance and wait to sue on performance date
- Treat Repudiation as an offer to rescind and treat the K as discharged
- Ignore the repudiation and urge promisor to perform. There is no waiver by doing this and nonrepudiator can still sue for breach.
Warranty of Title
Any seller of goods warrants that the title transferred is good that the transfer is rightful and that there are no liens or encumbrances against the title of which the buyer is unaware at the time of contracting. This warranty arises automatically
Warranty Against Infringement
merchant seller automatically warrants that the goods delivered are free of any patient, trademark, copyright or similar claims. Buyer who furnishes specifications for the good to seller must hold seller harmless against any such claim.
