Contract & Sales Flashcards
Nonconforming Goods & Perfect Tender Rule
A buyer can reject but the seller has the right to cure within the original time for performance. A seller cures but gives notice of his intention to fix before the end date of the contract. The buyer must accept the cure unless it is still defective.
How long does a seller have to cure?
Until the original end date of the contract, however, A seller is allowed extra time to cure only if prior dealing with the buyer, led the seller to reasonably believe that the defective shipment would have arrived acceptable.
How long does a seller have to cure? The exception to the Perfect tender rule.
Until the original end date of the contract, however, A seller is allowed extra time to cure only if prior dealing with the buyer, led the seller to reasonably believe that the defective shipment would have arrived acceptable.
Perfect Tender Rule and Installment Contracts
Installment contracts can only be rejected if the nonconformity substantially impairs the value of the entire contract. Each installment can only be rejected if the value substantially impairs the entire installment shipment.
Specific Performance
Specific performance is granted when: (i) there is a valid contract; (ii) the legal remedy is inadequate (this is when the subject matter of the contract is rare or unique like land sales); (iii) enforcement is feasible, and (iv) mutuality of remedy is present. Specific Performance is a court order requiring a breaching party to perform under a contract.
Specific Performance Exceptions
- Sale to BFP: There is no specific performance in land sales when the land has been sold to a BFP.
- Unclean Hands: the party seeking specific performance is guilty of wrongdoing in the transaction being sued upon.
- Laches: Party delays in bringing an equitable action and the delay prejudices the Defendant.
- Can’t be used for service contracts
Mutual Assent
Offer + Acceptance. A meeting of the minds and an objective manifestation to contract, if offers stating the same terms cross in the mail it does not create a contract.
Offer
An offer is an expression of willingness to enter into a bargain made in a way that the other party could reasonably believe that he could conclude the bargain by accepting. Must show intent to offer and definite terms.
Acceptance
Assent to an offer’s term. In a unilateral contract, this is only by performance in a bilateral contract you can perform or promise. Can’t accept an offer if there is no knowledge of it.
Consideration
Bargained for exchange of something of legal value.
First, there must be a bargained-for exchange between the parties; and second, that which is bargained for must constitute a benefit to the promisor or a detriment to the promisee.
Modern courts would hold that a promise to forbear suit on a claim that the promisor honestly and reasonably believes to be valid is a good consideration to support an agreement, even if the claim ultimately turns out not to be valid
Defenses to a Contract
- Mistake
- Lack of Capacity
- Illegality
- Statute of Frauds
Requirements Contract
buyer promises to buy all they require from the seller and the seller gives them that amount. exception: can’t be unreasonable amounts on a whim. Although no specific quantity is mentioned in offers to make these contracts, the offers are sufficiently definite because the quantity is capable of being made certain by reference to objective, extrinsic facts. Consideration also is present, as the promisor is suffering a legal detriment; it has parted with the legal right to buy the goods from another source.
Output Contract
Seller promises to sell all of the goods it produces and buyer agrees to buy then.
Essential Terms of a Contract
- Names
- Price (NEEDED IN LAND so supplement)
- Subject Matter
- Time
Terms can be supplemented and vague terms can make a contract void
The UCC provides that a written contract’s terms may be explained or supplemented by evidence of course of performance, course of dealing, and usage of trade-regardless of whether the writing appears to be ambiguous
How to Terminate an Offer
- Lapse of time
- Rejection (express or by counter offer) by offerer
- Revocation by offeror
A rejection is effective when it is received.
Merchants Firm Offer
An offer between merchants that is in writing and signed by the offeror is held open, no longer than three months if no time is stated, and assurance is given.
Contract Formula
K = MA (Offer and acceptance) + consideration - Defenses
Limits on Offeror’s Power to Revoke
- Option Contract
- Merchant’s Firm Offer
- Determinantal Reliance
- Beginning Performance in response to a true unilateral contract
How to termiante an offer by law
- Death/ Insanity
- Destruction of Subject Matter
- Supervening illegality
Exceptions to the mailbox rule
- Stipulates acceptance is not effective till received
- Option Contracts
- Rejection sent before acceptance - whichever arrives first
Statute of Frauds MY LEGS
Marriage
Year +
Land
Executor of an Estate
Goods $500+
Securities
Mirror Image Rule
Common law, acceptance has to mirror each and every term of the offer
Battle of the Forms
An acceptance that adds terms to an offer is valid between merchants the terms become part of the contract unless they materially alter the offeror’s objective, or the offer is limited to its terms. This does not invalidate the contract, it just determines if those terms will be included.
If both parties to the contract are merchants, the additional terms in the acceptance will be included in the contract unless they materially alter the original terms of the offer; the offer expressly limits acceptance to the terms of the offer; or the offeror has already objected to those terms, or objects within a reasonable time after notice of the terms is received. Whether an alteration is material is a fact question.
Mailbox Rule
When accepting an offer by mail, your acceptance is valid upon dispatch