Contracts Rules Flashcards
(10 cards)
How an an invested beneficiary’s rights vest?
Vesting occurs when the beneficiary (1) materially changes position in justifiable reliance on the rights created, (2) manifests assent to the contract at a party’s request, or (3) files a lawsuit.
Once an intended beneficiary’s rights have vested, the contracting parties cannot modify or rescind the contract without the beneficiary’s consent.
delegation is not permitted if:
the other contracting party has a substantial interest in having the delegating party (delegator) perform (e.g., the contract is for personal services that require the delegator’s taste or special skill) or
the contract prohibits delegation (e.g., “this contract may not be assigned”).
What happens when a Suretyship K is oral? (e.g. dad says “I guarantee my sons car loan”)
Suretyship is a three-party contract in which a surety promises to be secondarily responsible to a creditor (the obligee) for another’s (the principal’s) debt or other obligation if that person fails to perform. A suretyship falls within the statute of frauds and therefore must generally be in writing and signed by the party against whom enforcement is sought. However, a suretyship is excepted from the statute of frauds if it was made mainly for the surety’s economic advantage or to indemnify (i.e., reimburse) the creditor for monetary loss.
What happens when there’s a mutual mistake?
A party may seek reformation as an equitable remedy on several grounds, including mutual mistake. A mutual mistake arises when both parties are mistaken as to an essential element of the contract. When this occurs, reformation is available if:
- there was a prior agreement (oral or written) between the parties
- the parties agreed to put the prior agreement in writing AND
- there is a difference between the prior agreement and the writing due to the mistake.
Special rules for auction sales under the UCC
A rule limits the seller’s ability to bid at an auction sale. It allows a winning bidder to avoid the sale or pay the price of the last good-faith bid if the auctioneer (1) knowingly accepted a bid by the seller or on the seller’s behalf or (2) procured the seller’s bid to drive up the price of the goods. However, the winning bidder may not do so if:
the seller bid at a forced sale (e.g., a foreclosure sale initiated by a secured creditor) OR the seller gave notice reserving the right to bid.
An assignment of rights made without consideration is a gratuitous assignment. Can it be revoked by the assignor?
Yes it can be revoked, unless (1) the obligor has already performed, (2) a document symbolizing the assigned right has been delivered, (3) a written assignment signed by the assignor has been delivered, or (4) the assignee has detrimentally relied on it.
discharge due to impracticability
performance is discharged by impracticability, both parties are no longer required to perform.
However, a party may seek restitution damages for any benefit conferred on the other party if it would be unfair to allow the other party to keep the benefit without providing compensation (i.e., unjust enrichment)
Who can an intended beneficiary of a gift sue?
an intended beneficiary can enforce the contract.
However, the intended beneficiary of a gift promise (i.e., a donee beneficiary) may generally sue only the promisor (the person who made the promise) because the promisee is under no obligation to the donee beneficiary. But the donee beneficiary may also sue the promisee if: 1) the promisee should have reasonably foreseen reliance AND 2) the donee beneficiary justifiably and detrimentally relied on the contract.
A duty is discharged by impracticability when:
1) an unanticipated event occurs
2) the parties assumed that the event would not occur and
3) the offeror was not at fault in causing the event.
A buyer of goods purports to accept a seller’s offer in a document that constitutes a definite and seasonable expression of acceptance that is sent within a reasonable time, but states a different term from that contained in the offer. Has a contract been formed?
Yes, under the UCC, a confirmation that contains additional or different terms is treated as an acceptance UNLESS the acceptance is expressly made conditional upon assent to the different term.
When at least one party is not a merchant, additional or different terms are treated as a proposal for addition to the contract that must be separately accepted to become a part of the contract.
If both parties are merchants, a contract exists under the terms of the acceptance unless:
· The terms materially alter the agreement;
· The offer expressly limits the terms; or
· The offeror objects to the new terms within a reasonable time.
If the offer and purported acceptance differ to such a degree that there is no contract, but the parties have begun to perform as if there were, then Art 2 provides that there will be a contract. The contract’s terms will consist of those terms on which the parties’ writings agree, together with any supplementary terms filled in by UCC provisions
