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Contract Final Flashcards

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1
Q

Promissory Estoppel

A

§90 – A fundamental principle that permits enforcement of a promise even though the legal requisites for a contract are absent. The result is not to make the contract itself enforceable, but to grant a remedy for breach that “may be limited as justice requires.”

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2
Q

Promissory estoppel requires that a promisee’s reliance on a promise

A

be reasonable.

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3
Q

A gratuitous (and thus unenforceable) promise is nevertheless transformed into a binding and enforceable contract if

A

the promisee reasonably and detrimentally relies on the promise.

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4
Q

An offer which the offeror should reasonably expect to induce definite and substantial reliance by the offeree, and which does induce such reliance is binding on the offeror and enforceable even without consideration if

A

enforcement is necessary to prevent injustice to the offeree.

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5
Q

Unjust enrichment exists if

A

a defendant received a benefit from a plaintiff and it would be unjust for the defendant to keep that benefit for free

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6
Q

Promise to perform a voidable duty §86

A

A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.

Webb v. McGowin – A lumber mill worker was injured saving his employer from harm, prompting the employer to promise biweekly payments. After the employer’s death, the estate stopped the payments, leading the worker to sue for enforcement of the promise. The promise was enforceable

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7
Q

§15(2) - if the contract is made on fair terms and the other party has no reason to know of the incompetence,

A

performance in whole or part may so change the situation that the parties cannot be restored to their previous positions or may otherwise render avoidance inequitable.

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8
Q

A contract involving a mentally incapacitated individual is not inherently void, but rather

A

voidable

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9
Q

Unenforceability on the Grounds of Public Policy §178

A

A contract is unenforceable if its formation or performance violates public policy, unless the public policy interest is outweighed by the interests in enforcement. Factors considered include the strength of the policy, the public interest, and the parties’ expectations.

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10
Q

Unenforceability on the Grounds of Public Policy
§179

A

Public policy encompasses laws, judicial decisions, administrative regulations, and societal standards that aim to protect public welfare, morals, or economic interests.

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11
Q

For public policy reasons, agreements providing for future procreation are

A

not enforceable even if they are clear when entered.

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12
Q

Misrepresentation Defined §159

A

A misrepresentation is an assertion not in accord with the facts.

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13
Q

Active Concealment §160

A

Active concealment of a material fact is equivalent to an assertion that the fact does not exist

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14
Q

Duty to Disclose §161

A

Non-disclosure can be a misrepresentation if a party has a duty to disclose due to circumstances like fiduciary relationships or correcting a prior statement.

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15
Q

Material Misrepresentation §162

A

A misrepresentation is fraudulent if intended to induce assent or material if it would likely induce a reasonable person to agree.

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16
Q

Misrepresentation Preventing Assent §163

A

If a misrepresentation prevents a party from understanding the character or essential terms of a contract, the contract is void.

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17
Q

Effect of Misrepresentation §164

A

A contract is voidable if a party’s assent was induced by fraudulent or material misrepresentation, provided they were justified in relying on it.

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18
Q
  • If a seller creates a condition that materially impairs the value of a contract and is within the knowledge of the seller or unlikely to be discovered by a prudent purchaser exercising due care,
A

nondisclosure of the condition constitutes a basis for rescission of the contract.

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19
Q

A disclaimer of reliance on specific representations contained in a contract bars

A

the use of parole evidence showing fraud.

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20
Q

§197 Term Exempting from Consequences of Misrepresentation

A

A term unreasonably exempting a party from the legal consequences of a misrepresentation is unenforceable on grounds of public policy.

Counter to Danann Realty Corp. v. Harris

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21
Q

Mistake of One Party §153:

A

A contract is voidable if one party makes a mistake about a basic assumption that has a material effect, unless they bear the risk of the mistake.

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22
Q

When a Party Bears the Risk of a Mistake §154

A

A party bears the risk of a mistake if the risk is allocated to them by agreement, they treat their limited knowledge as sufficient, or the court assigns the risk to them as reasonable under the circumstances.

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23
Q

A party may not rescind a contract for a mutual mistake of fact if

A

the party knew that the fact might not be true at the time the contract was formed.

Eisenberg v. Hall An ancient art expert bought two pieces from a dealer, both mistakenly believing they were ancient when they were modern reproductions. The buyer sought to rescind the sale, arguing mutual mistake about the age of the pieces. The seller disagreed, disputing the rescission despite having refunded the buyer for prior similar mistakes. Mutal mistake will not work if one consciously accepts and assumes the risk.

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24
Q

Under the UCC, a purchaser may be bound by terms included in product packaging if

A

the purchaser has an opportunity to review the agreement and reject it by returning the product.

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25
Q

Additional or different terms provided in the acceptance do not become terms of the contract unless

A

acceptance is made expressly conditional upon acceptance of the additional terms, or the non-merchant offeror expressly agrees to the additional terms.

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26
Q

Must provide reasonable notice if

A

consumer is to assent to terms of use.

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27
Q

Unconscionable Contract or Clause §2-302

A

Courts can address unconscionable terms in contracts by refusing enforcement, removing the clause, or limiting its application to prevent unfairness. Parties may present evidence on the contract’s commercial context to aid the court’s determination.

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28
Q

Unconscionable Contract or Term §208

A

Courts may refuse to enforce a contract, enforce it without the unconscionable term, or limit the term’s application if it is found to be unconscionable at the time the contract was made. The determination considers factors such as fairness, bargaining power, and the reasonableness of the terms.

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29
Q

Where an element of unconscionability is present at the time a contract is made,

A

the contract should not be enforced.

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30
Q

A contract of adhesion that

A

contains burdensome procedure and cost is unconscionable and will not be enforced.

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31
Q

The inability to read and understand an arbitration agreement does not make the agreement unconscionable and unenforceable,

A

as law requires it to be read to them in this event.

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32
Q

Punitive damages are not available as

A

a remedy on a breach of contract claim.

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33
Q

Measure of Damages in General §347

A

The injured party has the right to damages based on: (1) loss in value (2) any other loss, including incidental or consequential (3) any cost or other loss that he has avoided by not having to perform.

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34
Q

Alternatives to Loss in Value of Performance §348(2)

A

If breach results in defective or unfinished construction and the loss in value is not proved with sufficient certainty by the non-breaching party, he may recover damages based on (1) the diminution in the market price of the property caused by the breach or (2) the reasonable cost of completing performance or of remedying the defect if that cost is not clearly disproportionate to the probable loss in value to him.

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35
Q

Avoidability as a Limitation on Damages §350

A

Damages are not recoverable for loss that the injured party could have reasonably avoided.

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36
Q

The measure of damages is ordinarily the reasonable cost of performance, but it

A

can be limited to a diminution in value when the economic benefit is grossly disproportional.

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37
Q

Unforeseeability and Related Limitations on Damages §351

A

Limits damages to those that were foreseeable as a probable result of the breach at the time the contract was made, including damages arising from ordinary circumstances or special circumstances known to the breaching party.

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38
Q

The breaching party is only liable for damages that were

A

reasonably foreseeable at the time the contract was made.

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39
Q

If a reasonable probability of damages from a breach of contract can be clearly established,

A

uncertainty as to the amount will not preclude recovery.

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40
Q

Liquid damages Def

A

Also known as stipulated damages, an amount of damages expressly provided for by contract that is intended to represent the parties’ reasonable estimation of damages in the event of a breach. Liquidated damages may also be prescribed by statute.

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41
Q

Liquidated Damages and Penalties §356

A

Enforces liquidated damages clauses if the amount is reasonable based on anticipated or actual loss and the difficulty of estimating damages at contract formation. Clauses imposing penalties are unenforceable.

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42
Q

Liquidation of Limitation of Damages; Deposits §2-718(1)

A

Allows liquidated damages clauses in sales contracts if they are reasonable in light of anticipated or actual harm and the difficulty of proving loss; unreasonable clauses are considered penalties and unenforceable.

43
Q

Liquidated damages clause must be reasonable,

A

both in amount and difficulties of proof of loss.

44
Q

Efficient Breach

A

(CB 303) Breach leads to an outcome where the total benefits to all parties exceed the cost of performance, and the non-breaching party is fully compensated for any damages caused by the breach which leaves them no worse off than if the contract had been performed. This principle emphasizes economic efficiency over obligation to perform.

45
Q

Specific performance will not be enforced unless ordinary common law remedy for damages for breach is inadequate and incomplete

A

Specific performance generally undercuts the efficient breach theory but may be suitable for unique goods, sale of land, etc.

46
Q

Parol Evidence Rule

A

Final written agreements cannot be contradicted by prior or contemporaneous agreements but may be explained or supplemented by trade usage, course of dealing/performance, or consistent additional terms unless the writing is fully integrated.

47
Q

A preliminary oral agreement is superseded by, and becomes part of, the written contract when,

A

after comparison of the terms, it appears that the former was intended to be covered within the latter.

48
Q

Parole evidence can be examined to determine if other things

A

within the contract were intended to be included or excluded.

49
Q

Parole evidence should have been allowed for the oral agreement’s assignability here because

A

(1) the written agreement was silent on the matter and (2) the oral agreement doesn’t contradict or alter the meaning of the written terms (may mislead the fact finder).

50
Q

Extrinsic evidence may be introduced to show the meaning of the express terms of a written contract when

A

the extrinsic evidence offered is relevant to providing a meaning to which the language of the contract is reasonably susceptible.

51
Q

A writing is integrated if

A

if intended as a final expression of the agreement

52
Q

Integration may be complete

A

(exclusive) or partial

53
Q

A binding integrated agreement discharges prior inconsistent terms and,

A

if complete, discharges additional terms

54
Q

Prior agreements cannot

A

contradict an integrated writing §215

55
Q

Consistent additional terms may supplement

A

a partially integrated agreement unless it is completely integrated

56
Q

A merger clause in a contract is generally

A

sufficient evidence that the parties intended the writing to be final.

57
Q

A complete and unambiguous contract should be enforced according to

A

its terms without reference to evidence from outside the contract itself.

58
Q

Courts will create contract terms that the parties did not discuss under two categories:

A

Terms implied by the court to achieve the parties’ intent

Courts will provide missing terms when they are convinced that the parties intended to contract but overlooked or omitted an essential term that can be inferred under the circumstances.

59
Q

Terms implied to further some public policy.

A

Attempts to impose on parties the obligation to refrain from taking (or not taking) actions that would deprive the other party of the benefit of its bargain.

Ex. If contract says, “must be to buyer’s satisfaction” and buyer suddenly adopts high standards to try to get a free painting.

60
Q

Supplying an Omitted Essential Term §204

A

When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to the determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court.

61
Q

If the contract implies that a particular result was fixedly desired although not expressed by formal words, that defect may be supplied

A

by the court, so long as it is sufficiently implied by the contract. (The court has the power to make implications based the intentions of the contract)

62
Q

An implied obligation of good faith and fair dealing

A

exists in the performance of every contract and acts as a limit on the discretion possessed by the parties.

63
Q

The duty of good faith prevents a party from taking opportunistic advantage of another party in a way

A

that was not resolved explicitly by the parties at the time of drafting and that undermines the parties’ cooperative venture.

64
Q

Condition Defined §224

A

A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due

65
Q

Effects of the Non-Occurrence of a Condition §225

A

Failure of a condition prevents performance from becoming due but does not constitute a breach, unless the party is under a duty to ensure the condition occurs.

66
Q

How an Event may be made a Condition §226

A

Conditions may be expressed in the contract, implied from the agreement, or imposed by law.

67
Q

Standard of Preference with Regard to Conditions §227

A

Courts prefer interpreting terms as promises rather than conditions to avoid forfeitures, unless the parties clearly intended otherwise.

68
Q

Excuse of a Condition to Avoid Forfeiture §229

A

Courts may excuse a condition if its non-occurrence would cause disproportionate forfeiture, unless the condition was material to the agreement.

69
Q

A plaintiff may not recover upon its contract without

A

proof that it has performed all conditions precedent required of it.

70
Q

History between parties or type of transaction can determine if a provision

A

should be interpreted as setting a condition precedent or if it is subject to other interpretation.

71
Q

A condition of performance in a contract may be excused without reason if

A

its requirement will involve extreme forfeiture or penalty, and its existence or occurrence forms no essential part of the exchange for the promisor’s performance.

72
Q

Good faith and fair dealing favors an objective standard, but

A

under certain circumstances can be a subjective test.

73
Q

Subjective standard for good faith in this circumstance.

A

§228 states preference in favor of objective reasonableness standard.

74
Q

Order of Performances §234

A

Performances are due simultaneously if possible, or the performance requiring time must be completed first, unless otherwise agreed.

75
Q

Effect on Other Party’s Duties of a Failure to Offer Performance §238

A

Where performances are due simultaneously, a party’s duty to perform is conditioned on the other party’s readiness and ability to perform.

76
Q

If one party’s performance under a contract is dependent on the prior

A

performance of the other party, the other party’s performance is a condition precedent, and performance will be excused unless the condition is satisfied.

77
Q

Repudiation §250

A

A party repudiates the contract by indicating they will not perform or making performance impossible.

78
Q

Failure to Give Assurance Treated as Repudiation §251

A

If one party has reasonable grounds to believe the other will not perform, they may demand adequate assurance and suspend their performance until it is provided.

79
Q

Effect of Insolvency §252

A

A party’s repudiation can be retracted unless the non-breaching party has materially changed position or indicated they consider the repudiation final.

80
Q

Effect of Repudiation as a Breach and on Other Party’s Duties §253

A

Repudiation by one party gives the other party a claim for total breach, excusing the latter from further performance.

81
Q

When one party to an agreement is informed by another party to the agreement that the second party intends to breach

A

the agreement, the first party has an option to file suit for damages immediately in anticipation of the breach or to wait until the act was supposed to be done.

82
Q

Right to Adequate Assurance §2-609

A

A party to a contract for the sale of goods may demand adequate assurance of performance if they have reasonable grounds for insecurity about the other party’s performance. Until adequate assurance is received, the demanding party may suspend their own performance if it is commercially reasonable. Failure to provide adequate assurance within a reasonable time (not exceeding 30 days) constitutes a repudiation of the contract.

83
Q

Quantum Meruit

A

A remedy entitling the provider of services to be compensated for the value thereof, not exceeding the contract.

If an employee voluntarily breaches a contract for labor by failing to continue the agreed employment, the employee is entitled under quantum meruit to the reasonable value of the services provided, unless the contract specifically provides otherwise.

84
Q

If a party substantially performs its obligations under a contract, that party will not be forced to bear the replacement cost needed to

A

fully comply with the agreement but instead will owe the nonbreaching party the difference in value between full performance and the performance received.

85
Q

Circumstances significant in determining whether a failure is material §241

A

(Doctrine of Material Breach, CB 550) A breach is material based on factors including the extent of deprivation of expected benefits, adequacy of compensation, potential forfeiture, likelihood of cure, and adherence to good faith and fair dealing.

86
Q

There is substantial performance when the completed performance meets the essential purpose of the contract, unless

A

the parties specifically made the specifications of performance the essence of the contract.

87
Q

Installment Contracts; Breach §2-612

A

In installment contracts, a buyer may reject a nonconforming installment if it substantially impairs its value, but must accept if cure is assured; a breach substantially impairing the entire contract allows the buyer to cancel or reinstate.

88
Q

In installment contracts, a buyer may reject a nonconforming installment if it substantially impairs its value, but

A

must accept if cure is assured; a breach substantially impairing the entire contract allows the buyer to cancel or reinstate

89
Q

Supervening Impracticability §261:

A

A party’s duty to perform is discharged when performance becomes impracticable due to an unforeseen event, the non-occurrence of which was a basic assumption of the contract. The party must not have caused the event and must not have contractually assumed the risk.

90
Q

Supervening Frustration §265

A

A party’s principal purpose for entering the contract is substantially frustrated by an unforeseen event, the non-occurrence of which was a basic assumption of the contract. Performance must still be possible, but the value to the affected party is destroyed.

91
Q

Partial and Temporary Impracticability §270, §269:

A

When impracticability or frustration is only partial or temporary, the duty to perform may be suspended or adjusted rather than fully discharged.

92
Q

Death/Destruction of Subject §262, §263

A

If performance depends on a specific thing or person and that thing or person is destroyed or incapacitated, duties may be discharged unless the party assumed the risk.

93
Q

A condition is implied that the impossibility of performance arising from .

A

the perishing or destruction of the person or thing excuses the performance

94
Q

If a condition that is not expressly mentioned in a contract can nevertheless be implied from extrinsic evidence

A

as being understood by both parties to be the subject matter of the contract, the nonoccurrence of the condition may excuse nonperformance of the contract by both parties.

95
Q

Casualty to Identified Goods §2-613:

A

If identified goods are destroyed or damaged before the risk of loss passes to the buyer, the contract is voided or modified depending on the extent of the loss.

96
Q

Substituted Performance §2-614:

A

If an agreed method of performance becomes impracticable, a commercially reasonable substitute must be tendered

97
Q

Excuse by Failure of Presupposed Conditions §2-615:

A

Performance is excused if impracticability arises due to unforeseen events that were a basic assumption of the contract, provided the seller notifies the buyer.

98
Q

Procedure on Excused Performance §2-616:

A

The buyer can either terminate the contract or agree to modify it when the seller’s performance is excused under §2-615, with proper notice required.

99
Q

A party to a fixed-price contract may

A

not excuse performance for frustration of purpose or impossibility.

100
Q

Force Majeure:

A

An event or effect that can be neither anticipated nor controlled. The term includes both acts of nature (e.g., floods and hurricanes) and acts of people (e.g., riots, strikes, and wars). A force majeure clause in a contract excuses a party from performing under certain conditions that are beyond their control and unavoidable.

101
Q

An unexpected contingency that requires an adjustment of method

A

or route will not, by itself, render performance of a contract legally impossible.

102
Q

Three conditions that must occur for the doctrine of impossibility to apply:

A

(1) something unexpected must have occurred. (2) the risk of the unexpected occurrence must not have been allocated either by agreement or by custom and (3) the occurrence of the contingency must have rendered performance commercially impracticable

103
Q

Estoppel

A

estoppel prevents a party from going back on a promise if another party has relied on it to their detriment.

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