Contracts MBE-ES Flashcards
Pre Existing Duty Rule
Does not apply if duty is owed to to a third person. If a person already owed a duty to perform that performance cannot be used as consideration for another promise
Modern Trend: But if duty is owed to a third party, a promise to perform given to another is valid consideration as long as it was bargained for.
Past or moral consideration
Usually insufficient except where a technical defense such as a statute of limitations bars enforcement of prior obligation and a new promise is made in writing.
Effect of Promissory estoppel
Renders an offer binding as an option contract even without consideration if the offeror should reasonably expect it to induce action or forbearance of a substantial character by the offeree before acceptance.
Risk of loss with particular goods.
If a contract requires particular goods before risk of loss passes to the buyer, and the goods are destroyed with neither party at fault, the contract is avoided.
Intended 3rd party beneficiary
- expressly designated in the contract
- performance is to be made directly to her
- stands in a relationship to the promisee that an intent to her benefit can be inferred.
When do a 3rd party ben rights vest?
vesting occurs when the beneficiary
- manifests assent to the promise in a manner invited or requested by the parties.
- brings suit to enforce the promise, or
- materially changes position in justifiable reliance on the promise.
effect of a valid assignment
to establish privity of contract between the obligor and the assignee while extinguishing privity between the obligor and assignor.
Delegation
A transfer of contractual duties to a third party is called a delegation of duties. The party delegating her duties (delegator-obligor) remains liable on her contract even if the third person expressly assumes duties.
Effect of unilateral mistake
will not be grounds to rescind a contract unless the nonmistaken party knew or should have known of the mistake.
What damages is a seller entitled to when a buyer repudiates his offer
incidental damages plus either the difference between the contract price and them market price or the difference between the contract price and the resale price, less expensees saved as a result of the breach.
Anticipatory Repudiation
Occurs where a promisor, prior to the time set for performance of her promise, indicates that she will not perform when the time comes. Serves to excuse the conditions:
1) there is an executory bilateral contract with executory duties on both sides AND
2. the words or conduct of the promisor unequivocally indicate that she cannot or will not perform when the time comes. Non-repudiating party has the option to treat the contract as being breached and sue immediately.
Age of maturity: Is a minor liable for K after age of majority?
An infant may affirm (choose to be bound) upon reaching majority. Affirmance may be either express or by conduct (failing to disaffirm the K within a reasonable time after reaching majority) Disaffirmance discharges all liability. –Making payments after reaching maturity constitutes affirmance.
Exception: Minor is liable for the reasonable value of necessaries, not the K price.
Mailbox Rule
acceptance effective on dispatch, but if mail gets lost, then, acceptance effective when given to messenger company. But Mailbox rule does not apply if a period of acceptance is stated in the offer.
Is a condition precedent excused in a tornado?
No because construction is not made impossible, but rather more costly, A builder can rebuild. But most courts will excuse “timely” performance.
Unilateral mistake
General Rule:
K will not be avoided by unilateral mistake
Exception:
Non-mistaken party either knew or should have known of the mistake.
Parol Evidence
prevents introduction of oral statements made prior to or contemporaneously with a written contract. Oral terms agreed upon after the original contract was made is ok.
If there is a mistake: Ct will allow parties to show the reformed terms because of mistake.
Liquidated Damages Clause
only enforceable if damages were difficult to estimate at the time the contract was formed, and the amount agreed upon is a reasonable forecast of damages that would result from the breach. A party can recover either liquidated damages or if not available, actual damages, but not both.
Condition precedent requirement:
A party does not have a duty to perform if a condition precedent to that performance has not been met.
When is specific performance available?
It is available only where a legal remedy( money damages) is inadequate. It is not available as a remedy regarding a contract for unique services. (if the services are not unique, then the nonbreaching party can prob find someone else to perform.
Sale of goods with 1 party non-merchant and additional terms
the additional terms will not be included unless specifically accepted.
Does the mailbox rule apply to option contracts?
No. Acceptance under an option contract is effective only upon receipt.
Does an omission of the agreed upon price in the contract for a sale of goods prevent the formation of a contract?
No. Not if the parties intended to form a contract without the price being settled. In such a case, is left to be agreed to by the parties and they fail to agree, a reasonable price at the time of delivery one will be supplied by the court.
What is an accord?
an agreement in which one party to an existing contract agrees to accept in lieu of the performance. Satisfaction is the performance of the accord agreement. It may generally be accomplished by tender and acceptance of a check marked payment in full.
FOB
delivery term that governs the contract if it is a contract for the sale of goods. It obligates the seller to get the goods to the location indicated after the term ex: FOB jewelers shop, so the jeweler is not obligated to pay for the costs of shipmet beyond his shop.
