Contract Flashcards
Applicable Law
UCC: governs contracts for sales of good
Common: governs contracts for service
if both, predominant purpose test
Contracts elements
1) mutual assent 2) consideration 3) no defense to formation
Mutual Assent
an offer by one party and acceptance of the offer by another party
offer
(1) intent to enter into contract (2) with definite or reasonably certain terms (3) with an identified offeree - effective when received
Termination of an offer
can occur anytime before acceptance by (1) revoking (2) rejection (3) lapse of time (4) death or incapacity of either party (5) supervening illegality
Method of revocation
1) indicating through unambiguous words or conduct unwillingness to enter into contract OR (2) offeree learns through a reliable source that offeror took an act inconsistent with entering into the contract
irrevocable offers
Option contracts; merchant firm offer; detrimental reliance; and start performance on unilateral contract
Option Contract
When offeree gives consideration for offeror to hold contract open for designated time
Merchant firm offer
1) offer by merchant 2) in signed writing 3) stating offer will be open 4) separately signed by offeror (if form provided by offeree)
Mirror Image Rule
Common law contracts require acceptance of the offeror’s exact offer, any variance constitutes a counteroffer
Battle of the Forms (UCC)
UCC does not require mirror image rule; additional/different terms are included if (1) both parties are merchants (2) does not materially change the contract (3) offer does not expressly limit acceptance to exact offer (4) and no objection was made within a reasonable time
Mailbox rule
1) acceptance of offer effective when dispatched (unless its option contract or offer requires receipt by certain date) 2) if acceptance is sent after rejection, whichever is received first
Promissory Estoppel
(1) party reasonably & foreseeably relies to their detriment another’s promise (2) promisor reasonably expected a change of position in reliance (3) necessary to avoid injustice
Modification of Contracts under Common Law
Requires mutual and new consideration ; past performance/pre-existing duty not adequate unless addition/change in performance or there’s an unforeseen circumstances
Modification of Contracts under UCC
allowed w/o consideration if its in good faith - must be made in writing only if SOF applies, or original contract says modification needs to be in writing
Statute of Frauds
Requires certain contracts to be in writing: MY LEGS
Marriage; Year or more; Land; Executor; Guaranty; Sale of good over $500
UCC SOF Exceptions
merchant’s confirmatory memo; goods accepted or paid for; custom made good
merchant’s confirmatory memo
(1) contract between 2 merchants (2) writing signed by person enforcing it (3) other party did not promptly object within 10 days
Custom made good
seller made substantial start and goods not suitable for sale in ordinary course of seller’s business
Common law SOF exceptions
full performance; partial performance in land contract (requires 2 of following: payment for land, possession of land, valuable improvement to land)
Parol Evidence Rule
evidence of prior or contemporaneous negotiation or agreement is inadmissible to contradict/suppler a later written contract; exceptions: establish defense against formation, interpret vague or ambiguous terms, supplement partially integrated writing, to correct typo ; does not apply to subsequent agreement
implied warranty of merchantability
good sold by merchant must be fit for ordinary purpose
implied warranty of fitness for particular purpose
applies when seller knows buyer’s particular purpose for which goods are required AND buyer relies on seller’s skill or judgment to select or furnish suitable goods
Material Breach
occurs when a party does not render substantial performance; excuses non-breaching party’s performance
minor breach
does not excuse performance; non breaching party may bring separation action for damages
Delayed performance
not a material breach unless (1) time of the essence clause OR (2) deprives other party benefit of contract
Perfect tender rule
seller must deliver conforming good, slightest variance is a breach and buyer may reject all or portion of goods
Exceptions to perfect tender rule
right to cure: time for performance has not expired OR seller believed goods would be accepted
installment contract: buyer can contract only if installment is so defective to. substantially impair value of entire contract; buyer can reject installment if time to cure has passed and non-conformity impairs that installment
anticipatory repudiation
party unequivocally communicates inability or unwillingness to perform under contract; party cant retract repudiation unless non breaching party (1) cancelled contract, (2) materially changed position (3) indicated repudiation was final
