Contracts Flashcards
Merchant’s Firm Offer
Merchant offers to buy or sell goods in a signed writing that gives assurances that the offer will be held open for the time stated. If no specific time frame is stated in the offer, it will remain open for a reasonable time (but in no event may such period exceed three months).
- Must be signed by the party to be bound.
- Only offeror must be a merchant.
- No consideration needed.
Option Contract
Offeree gives consideration in exchange for offeror’s promise not to revoke an outstanding offer for a period of time. The Mailbox Rule does not apply to option contracts
Unilateral Contract
Can be accepted only by full performance. Beginning performance makes it irrevocable. Offeree is not obligated to complete performance merely because he began. Only complete performance constitutes acceptance of the offer.
Example: walk across Brooklyn Bridge in your underwear. Once you start walking, offeror cannot revoke, and you can quit without breaching.
Merchant’s Confirmatory Memo
Both parties must be merchants.
If one party, (i) within a reasonable time after an oral agreement, sends the other party written confirmation of the understanding (ii) that’s sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if: (iii) he has reason to know of the confirmation’s contents; and (iv) he does not object to it in writing within 10 days of receipt.
Detrimental Reliance
Can limit offeror’s power to revoke where offeror could reasonably expect offeree would rely to his detriment on the offer, and offeree does so rely.
Example: when a general contractor uses a subcontractor’s bid in making its own offer.
Discharge by Impossibility
A contractual duty to perform may be discharged by objective impossibility (no one could have performed), but subjective impossibility (defendant could not perform) is insufficient.
Impossibility due to death: Death of a person necessary to effectuate the contract serves to discharge it for impossibility. Personal service contracts are discharged in this manner only if services involved are unique. If the services could be delegated, the contract is not discharged by the death of the person who was to perform.
Discharge by Impracticability
The test for a finding of impracticability is that the party to perform has encountered extreme and unreasonable difficulty and/or expense, and its nonoccurrence was a basic assumption of the parties.
Discharge by Frustration of Purpose
Frustration will exist if the purpose of the contract has become valueless by virtue of some supervening event not the fault of the party seeking discharge.
Past Consideration
NOT sufficient consideration.
Based on something already given or performed.
Pre-existing Legal Duty Rule
NOT consideration unless an exception applies, e.g., new/different consideration is promised, or a minor’s ratification of a voidable contract upon reaching age of majority.
One can avoid the preexisting legal duty rule by modifying the original consideration slightly. Regarding existing debt, payment before maturity or to one other than creditor; or an alternative method/medium of payment (stock instead of cash) is new or different sufficient consideration.
Statute of Frauds Exception for Goods
In a contract for the sale of goods over $500, if goods are either received and accepted or paid for, the contract is enforceable without a writing. However, the contract is not enforceable beyond quantity of goods accepted or paid for. If only some of the goods called for in the oral contract are accepted or paid for, the contract is only partially enforceable.
Statute of Frauds Exception for Land Sale
Under the doctrine of part performance, conduct that unequivocally indicates that the parties have contracted for the sale of the land will take the contract out of the Statute of Frauds. 2 of the 3 elements must be present.
- buyer paid all or part of the consideration
- buyer is in possession of the property
- buyer made valuable and permanent improvements to the property
Statute of Frauds Exception for Specially Manufactured Goods
A writing is not required where (1) the contract is for “specially manufactured” goods not suitable for resale in the ordinary course of the seller’s business; and (2) the seller has made a substantial beginning of their manufacture or commitments for their procurement.
Statute of Frauds Exception for Admitting
If party against whom enforcement is sought admits in pleadings, testimony, or in court that the contract was made, the contract that otherwise would have fallen under the SOF is enforceable without a writing.
Buyer’s Right to Cure
In single delivery contract, buyer can reject defective goods, but UCC grants seller the right to cure the defective shipment within the original time for performance of the contract.
Seller cures by (1) giving reasonable notice of intent to do so; and (2) making new tender of conforming goods within time originally provided for performance in contract, which buyer must accept.
Ordinarily, sellers have no right to cure beyond original contract time. But when buyer rejects nonconforming goods that seller reasonably believed would be acceptable, seller, on reasonable notification to buyer, has reasonable time beyond original contract time to make conforming tender. Seller will probably be found to have reasonable cause to believe tender would be acceptable if seller can show trade practices or prior dealings with buyer led seller to believe goods would be acceptable, or seller couldn’t have known of the defect despite proper business conduct.
