Exam 3 Flashcards
(36 cards)
Statute of Frauds- certain classes of contracts to be enforceable must be:
- evidenced by a writing
- signed by the person sought to be bound
Found in contracts where lying was a problem so now it needs to be written down to be enforceable. Contracts under the statute of frauds are VOIDABLE.
Classes of Contracts Required in Statute of Frauds: (Required List)
- *Contracts evidencing an interest in Real Property (sale or lease of land)
- *Contracts which by their terms cannot be performed within one year agreement (by terms of contract)
o Lifelong contract can occur in one year if the person dies - *Promises to answer for debts of another (collateral contracts)
- *Promises of executor of an estate to pay estate claims from personal funds(if someone dies with debt and you have written down you will pay out of pocket to avoid from liquidating estate)
- *Promises arising from a promise to marry (antenuptual and postnuptual agreements)
- *U.C.C. Contracts exceeding $500 dollars.
Exceptions To Statute Of Frauds: (Be able to apply these)
- Partial Performance
- Part Payment – UCC
- Judicial Admission
Parole Evidence Rule-
Based on idea that there was never an oral agreement prior to contract/or the parties’ abandoned original contract when they began negotiating. Parole or external evidence shall not be allowed into evidence to add or modify a contract that is fully integrated or complete on its face. (Do not need to know as a definition)
• Cannot make something ambiguous that which at its face is not ambiguous
Construction Rules:
- Contract Construction- Always look at the entire agreement. Law exercises good faith and applies contract to the better party if one is worse.
- Rules of Construction- How do you interpret the language? Ordinary words are to be interpreted based on ordinary meaning.
- Whole Contract Rule-The provisions of a contract must be construed as a whole so that every party is given effect. Every word is equally important. (Provides context)
- Strict Construction Against Drafting Party- ambiguity is held against the drafting party because they are the ones in power. (Insurance Rule)
Interpreting Contradictory Contracts (What part takes precedence over others?)
- *Handwritten (most like an actual discussion) is over…
- *Type Written is over …
- *Pre-Printed
3 types of Third Parties:
- *3rd Party Beneficiary- 3 people and none are added. Contracts ends with 3
- *Assignments- Beginning with 2 people, then add 1. Ends with 3
- *Novation-Substation for an old contract with new one. Starts with 2 then adds 1 and subtracts 1. Ends with 2.
3 Types of 3rd Party Beneficiaries: (LEARN THESE)
- *Creditor- 3rd party who was going to collect can sue B for breach of contract. Enforceable Rights
- *Donee- (Recipient of gift) Life insurance. Beneficiary can sue. Has claims against Promisor. Enforceable Rights.
- *Incidental- If there was no intent to benefit this 3rd party can’t sue. Not Enforceable
Assignments
Transfer of a right, generally rights to receive payment. Courts encourage ability to assign because it promotes commerce
Assignment of a Contract include:
- Assignment of Rights (More common)
2. Delegation of Duties (more limited)
Contracts That Aren’t assignable (delegation): Non-Assignable Rights (LIKELY A LIST)
- *Assignment is prohibited by the contract
- *Assignment would increase the burden of performance
- *Where the right to receive personal services (ex: can’t assign marriage)
- *Credit transactions- (Can’t assign credit to someone else)
Assignee is Subject to
The Assignee takes the contract (right) subject to claims, defenses, and set-offs good against the assignor (MUST KNOW)
- Claims or Cause of Action (a right to payment)
- Defenses (a reason not to pay)
- Set Offs (off-set; you owe a refund and so we will deduct that from what we owe you)
If A has a reason not to pay B, they have a reason not to pay C also
Assignor’s Warranties-
- The assigned right is valid
- Assignor is the owner of the claim or has the right assigned
(Potato Example in class)
• Assignor is still liable for the performance
Parts of a Contract-
- *Covenant/Promise- Gives rise to damages when breached.
o Major-> Material-> Breach
o Minor-> Nonmaterial-> Set off - *Condition- stipulation or prerequisite in a contract. Triggering events; usually judicially disfavored
o *Condition Precedent- Condition that must occur before a party to a contract has an obligation to perform under contract. Contract created once certain event happens. (ex: wild rose=failure of a condition precedent for championship game)
o *Condition Subsequent- (RARE) event whose occurrence or lack thereof terminates a contract. Contract created but if something happens after, it’s over. (ex: If something happens, failed drug test, then you will be fired)
o *Condition Concurrent- Mutual duties of the contract are to take place simultaneously. (right to payment)
Two Types of Tenders:
- *Tender (TIME) of Performance- “If time is of the essence” (time is a material term). This is specified in contact. If not specified then it would be reasonable performance. Depends on facts of given contract.
- *Tender of Payment- If you owe me money and try to give it to me now and I say no, you still owe me money
Law of Perfect Tender
Having to accept anything but exactly what was ordered. Right to get what you asked for.
• *Substantial Performance Doctrine- (Adequacy of Performance) Exception to the rule of perfect tender. Equitable rule that if good faith attempt to perform does not precisely meet the terms of the agreement, the agreement will still be considered complete if the essential purpose accomplished. (If the defects are not INTENTIAL nor MATERIAL)
o *For this to apply the breach has to be Neither(Non): Material or Intentional
Discharge-
action releasing you from completion of contract.
• 99% of contracts are discharged by performance
DO NOT MEMORIZE AS LIST; Context in true false, know definitions pg. 404)
*8 Ways a Contract Is Discharged By Agreement:
- By the terms of the Original Contract
- Mutual Cancellation- both parties agree to cancel and walk away. No repayment.
- Mutual Recession- both parties agree to cancel and go back to status quo (original standing). Give back item and money. Trade back (ex: cow case)
- Substitution- agree to new agreement between same contracting parties. Same parties; new agreement.
- Novation- substitution for an old contract with a new one that either replaces an existing obligation or replaces an original party with a new party. Different parties; same agreement.
- Accord and Satisfaction- agreement after having differing views on different performance. Change the amount of payment because of unsatisfactory work.
- Release- 1 party letting the other party off the hook.
- Waiver- release or relinquishment of a known right or objection or specific part of contract; a provision in a contract.
Impossibility- Standard is OBJECTIVE not Subjective:
• *Impossibility-> COMMON LAW- Objective. Based on the fact that the thing cannot be done due to external conditions. Terminates contract
o *Temporary Impossibility- Suspends the duty to perform. Does not terminate contract. Common Law. Weather is in this category.
• *Frustration of Purpose-> COMMON LAW- (Economic Frustration) Because of change in circumstances the purpose of the contract must have no value (frustration must be complete) to the party entitled to receive performance. This discharges a contract. Must completely destroy the purpose of the contract by events outside of your control.
o ex: Guys getting hotel room to watch parade, parade route changes, the room is now useless.
• *Commercial Impracticability-> U.C.C.- Applies to sales. Imposed to deal with the harsh rule that a party must perform its contracts unless it is impossible. However, not all impractabilities are excuses for nonperformance. Does not require same level of frustration. Expanded frustration of purpose. Tangible movable personal property.
Curative Tender-
Replace defective; you have a chance to fix it
Discharge by Operation of Law- Discharging a contract when (pg. 410 True/False)
- An alteration or change is made by a party
- The destruction of written contract with intent to discharge it
- Bankruptcy
- • Surrendering all assets when one is unable to pay debts results in discharge for unpaid balance of debt. A federal law that allows debtors to seek and be granted discharge from their debts. - Operation of statute of limitations
- Statute that restricts a time period in which a lawsuit can be brought against someone. The maximum period for judgments of record is 10-20 years. A contract cannot be discharged by unilateral action unless authorized by the act itself or by statute. - Contractual limitations. If an event takes place it has effect.
- • - Typically occurs between major companies; agree to a shorter term for the contractual limitations if a dispute arises.
Breach
-failure to act or to perform in the manner called for in a contract. Frees material party from contract.
• If it is a quasi-contract there are equitable remedies (status quo ante to prevent unjust enrichment) instead of damages.
• Law gives rise to damages to give non-breaching party the benefit of the bargain.
1. *Material (Major) Breach- breaks the contract and gives rise to a claim for damages
2. *Non-Material (Minor) Breach- does not break the contract, but does provide a basis for incidental damages and/or offsets
3. *Law- Damages
4. *Equity- Unjust Enrichment (Remedy)
Anticipatory Breach-
A party to a contract clearly repudiates his or her obligations under the contract. (Material Breach and Anticipatory breach) Can result in repudiation (undoing of the contract). Refers to time of the contract.
- Repudiation- result of a buyer or seller refusing to perform the contract as stated.
- *Anticipatory Repudiation- Can occur if there is a material breach. Result of the buyer or seller refusing contract made in advance of time of performance.
Repudiation is by:
- Words- “I am not going to do it”
- *Conduct- If a farmer only has a certain crop and sells it to another party prior to contracting parties date, then contract is impossible to carry out and is reputed. If adequate insurance wasn’t given,
