3 - Contract Formation - Consideration, Defenses, And SoF Flashcards
How does the UCC treat the pre-existing duty rule?
It rejects this rule
How do you know if a contract modification is binding?
Ask whether the modification was made in good faith - if so, it is binding without new consideration
What are the seven defenses to contract formation?
1) Misunderstanding
2) Incapacity
3) Mistake
4) Fraud, misrepresentation, and nondisclosure
5) Duress
6) Illegality
7) Unconscionability
When is a contract or term unconscionable?
No reasonable person in the position of the party would have agreed to it
What are the two types of unconscionability?
1) Procedural Unconscionability - a defect in the bargaining process such that a hidden term surprises a party, or they had an absence of meaningful choice
2) Substantive Unconscionability - is there a “rip-off” in the contract or term
What is the reason for the Statute of Frauds?
To prevent false assertions about a contract that was never formed
What two questions should you ask if you are in SOF world?
A - Does the Statute of Frauds apply to this transaction?
B - If so, has the SOF been satisfied?
What satisfies the Statute of Frauds?
Requires a writing signed by the other side, or some performance made on the purported deal
What UCC contracts are in SOF world?
A goods contract with a price of $500 or more
What terms or elements must be in a SOF writing?
It must be signed and include the quantity sold, but does NOT need to mention the price
What if you list the wrong quantity?
The contract is only enforceable under SOF for the quantity mentioned in writing
When will part performance satisfy SOF?
It will only be good for the quantity that has been delivered and accepted
Are custom-made or specialty goods covered by SOF?
They are exempt from SOF
-A maker can satisfy the SOF as soon as it makes a substantial beginning toward manufacturing the goods
What is a judicial admission?
A statement in a pleading or during testimony that says a contract was created
Does a judicial admission satisfy the SOF?
It satisfies the SOF under the UCC
What is a merchant’s confirming memo?
A writing sent from one party to another claiming prior oral agreement that is signed and contains quantity
-Both parties must be merchants
Does a merchant’s confirming memo satisfy SOF?
Failure to object to a conforming memo within 10 days will satisfy the SOF, but only if both parties are merchants
If a contract under SOF is modified, must that modification also satisfy SOF?
Not Automaticallyy
How do you know when a contract modification must meet the SOF?
Ask whether the deal with the modification would be in SOF world
- If YES, SOF requirements must be met for the modification
- If NO, there is no SOF requirement, even though the initial deal was under SOF