Contracts Flashcards
What are the 3 methods for satisfying SOF?
- performance
- services: full performance only
- goods: pt performance ok, SOF still applies to undelivered goods - writing
- services: all material terms, signed by party
- goods: quantity, signed b/w merchants (memp fr 1 ok) - judicial admission (in pleadings)
When will a breach excuse an injured part from performance?
if there is material breach
What is the parol evidence rule?
evidence of oral/ written statements made prior to or contemporaneously with a contract are excluded
-evidence of subsequent contract modification are ok
What are the 5 exceptions to the parole evidence rule?
evidence admitted to…
- correct a cerical error
- establish defense to enforceability (formation challenge)
- explain vague or ambiguous term
- supplement partially integrated writing
- show existence of a merger clause- everything before agreement merged into later writing
What is a constructive trust?
equitable remedy similar to a trust imposed by court to benefit a party that has been wrongfully deprived due to unjust enrichment
What 2 factors make liquidated damages permissible?
- damages are difficult to estimate at time of contract
2. liquidated amount is a reasonable forecast of damages
What is accord?
agreement to substitute a different act or performance for an original act or performance
What is satisfaction?
when an accord agreement successfully carried out
Who can 3rd party beneficiary to a contract sue? (2)
- promisor (can assert any defense he would have if sued by promissee)
2) promissee (3rd party bene. cant sue unless 3rd party was a creditor bene (ex promisee owed 3rd party $)
How does mitigation relate to damages?
P cannot recover for losses she could’ve avoided by taking appropriate steps
-For goods and construction contracts, completion may equal mitigation
What is a material breach?
breach that goes to the essence of the contract
– substantial performance is not material breach
What is anticipatory repudiation (A.R.)?
When a party indicates they will not perform contractual obligation (repudiates)
-excuses non-repudiating party from performance and creates immediate right to sue if contract executory (both sides still have obligations to perform)
When can a party to a contract demand assurances?
when the conduct of other party to the contract appears to be approaching breach
- other party may demand assurance that other will comply
- reasonable time must be given 4 assurances to be met, if not met, can treat as A.R.
When is specific performance available?
- monetary damages inadequate
- subject matter of contract must be…
-land
-good (if rare/ unique)
(SP not available for service K’s)
What is a novation?
Agreement by all parties to an existing contract to substitute a new party w/ the same performance
-party that was replaced is excused of all liability : compare to delegation
What are the 4 contract damages?
- expectation (parties left in position as if parties fully performed)
- reliance (place parties as if contract never existed)
- consequential (occurred as consequence of breach)
- incidental (storage, shipping fees)
When is an illusory promise a consideration?
when what appears to be an illusion creates a new obligation
What 3 conditions must exist together for no contract to be made due to ambiguity?
- contract uses a material term open to 2 or more reasonable interpretations AND
- each party to the contract attaches a different meaning to term
- neither knows/ has reason to know the meaning of the other
What is the general test of an offer?
reasonable person in position of offer would believe his assent creates contract
What are the 4 risk of loss (ROL) rules?
- agreement
- breach
- delivery by common carrier (not seller)
- no agreement, no breach, no delivery by a carrier
What are the 3 key elements of reclamation?
- buyer insolvent at time goods received
- seller demand return goods w/in 10 days of receipt
- buyer still has goods at time of demand
What is the measure of damages when buyer breaches & buyer keeps goods?
seller gets contract price
What is the measure of damages when buyer breaches & seller keeps goods?
seller gets contract price (resale price) OR if volume seller (ex car dealer) get lost profits
In sale of goods, what is measure of damages when seller breaches & seller keeps goods?
buyers gets contract price (value of goods at discovery of defect) OR replacement price (contract price)
In sales of goods, what is the measure of damages when seller breaches & buyer keeps goods?
buyers gets fair market value of perfect goods minus value of goods as received
What is a suretyship?
promise to answer for the debts of another (ex co-signer)
What 5 contracts require compliance w/ SOF?
- marriage (pre-nup)
- take over 1 yr to perform
- sale of goods $500> (UCC2)
- land transfers/ leases > 1 yr
- suretyships
What are the 6 components of contract formation?
- valid offer
- acceptance
- consideration
- legal capacity
- legal subject matter
- compliance w/ SOF
When are Ads not invitations to offer?
IF AD specifies quantity & who can accept (ex 1 BMW for $40,000 1st come 1st serve)
When can buyer in an output contract increase requirements?
When increase is in line w/ prior demands
- 10% or less ok for bar exam
When does revocation of an offer become valid?
offeree must receive revocation before she accepts for revocation to be valid
What is a firm offer?
signed, written offer by merchant to keep offer open for up to 3 months
What is the mail-box rule?
as soon as acceptance is mailed it becomes valid
How long before an offer ususally lapses?
30 days
When can offeror NOT revoke acceptance? (4)
- option k- during option period
- reasonable foreseeable reliance before acceptance
- unilateral k where offeree starts to perform
- firm offer
What is the mirror image rule?
acceptance that adds terms (does not mirror offer) is treated like counter offer not acceptance
When will a unilateral mistake about a material fact make contract unenforceable?
when non-mistaken party discovered OR should’ve known about mistake & there is significant reliance by mistaken party
What is an option contract?
promise to keep an offer open w/ valid consideration
-options are assignable
B/W merchants, when does an additional term in an acceptance not become part of the contract? (2)
- term materially changes offer (disclamiers are material changes)
- offeror objects to change
- custom: if add’l term customary in industry, not a material change
When is a covenant not to compete reasonable?
- furthers legit interest of non-convanenting party
2. geographic scope (area) & time (length) provisions reasonable
What are 4 forms of contract?
- performance
- forebearance (of something legally entitled to do)
- promise to perform*
- promise to forebear*
* in good faith
When will mutual mistake of fact still create contract?
only when mutual mistake was about value alone
-when mistake regards subject matter of contract, no contract
How is a unilateral contract accepted?
unilateral contract requires complete performance for acceptance
What are the 5 types of confidential relationships?
- spouse
- parent-child
- attorney-client
- doctor-patient
- teacher-student
When is a contract unconscionable? (2)
- unequal bargaining power & weaker party treated unfairly
- unfair surprise
- oppressive terms
- process unfair
When does tender of non-conforming goods NOT result in acceptance and breach?
when goods come w/ an accommodation (letter w/ explanation) there is a counteroffer and no breach
When is a pre-existing duty sufficient consideration?
- when there is unforeseen difficulty so severe as to excuse performance
- when 3rd party makes promise b/c 3rd party wouldn’t have duty
When is impossibility a valid excuse for non-performance? (3)
- destruction of something necessary for performance
(destruction of goods that can be replaced not sufficient) - death/ incapacity of necessary person (must be special skill)
- supervening government regulation
Does SOF apply to lifetime contracts?
No (person could live for less than 1 yr)
When will economic duress void a contract?
when duress is only reason buyer agreed to contract
What is the main-purpose rule pertaining to suretyships
if surety’s main purpose in making promise to pay for another was to benefit himself, then the promise is not w/in SOF and no writing necessary
What action will court take where a party to a confidential relationship secures an advantage?
court will presume advantaged party exercised undue influence and set aside agreement
-presumption is rebuttable by opposing party
=victim can ratify agreement, but burden on opposing party to show acquiesced w/ full knowledge
When is past consideration or moral obligation sufficient consideration?
only when offeror expressly requests assistance w/ offeree’s expectation of payment
What are the 3 consideration substitutes?
- partial payment for debt
- written promise to pay debt
- promissory estoppel
What are the 3 elements of promissory estoppel?
- promise
- reasonable reliance that is detrimental and foreseeable
- enforcement is necessary to avoid injustice
When does a 3rd party beneficiary to a contract have legal rights?
when they are named in contract
