Contracts Flashcards
Merchant’s Firm Offer
An offer made by a merchant in a signed writing that assures the buyer the offer will remain open for a specific period of time. It does not require consideration to be binding. If no specific time frame is stated in the offer, a merchant’s firm offer will remain open for a reasonable time (but in no event may such period exceed three months).
Confirmatory Memo Rule
UCC Rule
In contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if: (i) he has reason to know of the confirmation’s contents; and (ii) he does not object to it in writing within 10 days of receipt.
Option Contracts with No Consideration
not enforceable unless the offeror would reasonably contemplate reliance by the offeree in using the offer before it is accepted; e.g., when a general contractor uses a subcontractor’s bid in making its own offer.
discharge by impracticability
the party to perform has encountered extreme and unreasonable difficulty and/or expense, and its nonoccurrence was a basic assumption of the parties.
UCC Risk of Loss passes to buyer
upon tender
Consideration to discharging an existing debt
Partial payment is not enough
The consideration must be new or different.
Examples of changes sufficient to constitute new consideration:
An alternative method of payment
Payment to one other than the creditor
Payment before maturity
Preexisting duty to 3rd person
Under the prevailing modern rule, the preexisting duty does not apply if the duty is owed to a third person.
Promissory estoppel
the promisor must reasonably expect that its promise will induce reliance, and such reliance must be reasonably induced. The promise will be enforceable only to the extent necessary to prevent injustice.
Statute of Frauds
certain agreements must be evidenced by a signed writing
Marriage
Year- contracts cannot be completed in one year or less
Land sale/ transfer of interest in real property
Executor
Goods $500 or more
Suretyship
Perfect tender rule
if goods or their delivery fail to conform to the contract in any way, the buyer may reject all, accept all, or accept some and reject the rest
Parol Evidence Rule
A rule used in interpreting and enforcing a written contract. Under that rule, when the parties to a contract enter into an agreement in writing, with the intent that the agreement embodies the final expression of their bargain, any other expressions, written or oral, made prior to the writing, as well as any other oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing.
Who must have signed the writing to satisfy the statute of frauds?
the party to be held liable
What type of writing satisfies the statute of frauds?
Any writing that has the signature of the party to be held liable and contains the material terms such as quantity of goods
ex: letter, receipt, check
SOF Year or More Rule
If the contract is POSSIBLE to be competed within one year, it is not subject to SOF.
The date runs from the date of agreement and not from performance.
Lifetime can be be completed within one year because the person could die
Lack capacity to contract based on intoxication
party must be so intoxicated that they do not understand the nature and significant of this promise
SOF- Land contract requirements
Price is an essential term and must be contained within the contract
Modification of a contract under the common law
Any modification requires new consideration
Consideration
bargained for exchange of something of legal value
Preexisting duty rule
the promise to perform a legal duty already owed to a promisor is not consideration
Modification permitted under common law
if fair and equitable in view of circumstances not anticipated when the contract was made
this usually means a party encountered difficulties in performing bordering on impracticability
UCC contract modifications
Contract modifications sought in good faith are binding without consideration
good faith means there must be legitimate commercial reason for the modification
duress
a contract can be voided based on duress when a party’s assent to a contract is induced by an improper threat by the other party that leaves the victim no reasonable alternative
withholding something someone wants constitutes duress when
(1) the party threatens to commit a wrongful act that would seriously threaten the other contracting party’s property or finances and (2) there are no adequate means available to prevent the threatened loss
what act alone makes an oral contract for the sale of real property enforceable
conveyance of the property from the seller to the purchaser
doctrine of part performance
land contracts
2 of the following will take the contract out of the SOF:
- payment- in whole or in part
- possession
- valuable improvements
when is a contract for the sale of goofs $500 or more enforceable without a writing
if they are received and accepted or paid for
only enforceable to the amount of goods accepted or paid for
specially manufactured goods SOF
goods that are specially manufactured for the buyer and are not suitable for sale to others by the seller in the ordinary course of the business can be enforceable without a writing if the seller has reasonably indicated that the goods are for the buyer and made a substantial beginning in their manufacture or committed for their purchase before notice of a repudiation was received
UCC defective goods; single delivery contract
a buyer can reject the goods, but the UCC grants the seller the right to cure the defective shipment within the original time for performance of the contract.
How does a seller cure under UCC
giving reasonable notice of his intention to do so and making a new tender of conforming goods within the time originally provided for performance in the contract
UCC defective goods; expectation that defect would be acceptable
in cases where the buyer rejects a tender of nonconforming goods that the seller reasonably believed would be acceptable “with or without money allowance,” the seller, on reasonable notification to the buyer, has a further reasonable time beyond the original contract time within which to make a conforming tender.
A seller will probably be found to have had reasonable cause to believe that the tender would be acceptable if the seller can show that trade practices or prior dealings with the buyer led the seller to believe that the goods would be acceptable, or the seller could not have known of the defect despite proper business conduct.
UCC defective goods, installment contract
Perfect tender rule does not apply to installment contracts. In an installment contract, an installment can be rejected only if the nonconformity substantially impairs the value of that installment. Moreover, the installment contract as a whole is deemed to be breached only if the nonconformity substantially impairs the value of the entire contract. Must afford right to cure.
When a party that offers a rare or unique service has breached a service contract, the court may grant __________ to the nonbreaching party.
A court may grant injunctive relief to enjoin a breaching party from working for a competitor throughout the duration of the contract if the services contracted for are rare or unique.
equitable defense of sale to a BFP
The right to specific performance in a land sale contract is cut off if the subject matter of the contract has already been sold to another who purchased for value and in good faith.
equitable defense of laches
arises when a party delays in bringing an equitable action and the delay prejudices the defendant. Note that mere delay itself is not a ground for this defense.
unclean hands defense
arises when the party seeking specific performance is guilty of some wrongdoing in the transaction being sued upon. Note that the wrongdoing must be related to the transaction being sued upon; it is not sufficient that the plaintiff has defrauded other persons in similar transactions.
Replevy
A nonmonetary remedy found in Article 2 of the UCC. If a buyer has made at least part payment of the purchase price of goods that have been identified under a contract and the seller has not delivered the goods, the buyer may replevy (or recover) the goods from the seller if the seller becomes insolvent within 10 days after receiving the buyer’s first payment or the goods were purchased for personal, family, or household purposes. In either case, the buyer must tender any unpaid portion of the purchase price to the seller.
Specific performance is granted when
(i) there is a valid contract; (ii) the legal remedy is inadequate; (iii) enforcement is feasible; and (iv) mutuality of remedy is present.
cover
buy the goods from another service & recover difference from the original promisor
Unconscionability
prevents oppression and unfair surprise. The basic test is whether at the time the contract was formed the clauses involved were extremely one-sided.
ads and catalogs
usually not offers
exception: price quotations may be considered as offers if given in response to a specific inquiry.
liquidated damages
A liquidated damages clause is enforceable if: (i) damages are difficult to ascertain at the time of the making of the contract, and (ii) the damages are a reasonable forecast of compensatory damages.
FOB
The term “F.O.B.” is a delivery term under the UCC, which governs the contract here because it is a contract for the sale of goods. That term means “free on board,” and it obligates the seller to get the goods to the location indicated after the term. [UCC §2-319(1)]
