Contracts

Question 1

How do you determine which law applies?

What is the all or nothing rule?

Answer 1

Article 2 - sale of goods - goods are personal moveable property

Common law - everything else.

When you have a mixed transaction, the more important part governs.

Question 2

What is the difference between a bilateral and unilateral contract?

Answer 2

Bilateral - Offer is accepted in any reasonable way. - any method of acceptance.

Unilateral - offer that expressly wants performance to accept. “only by” or a reward offer.

Question 3

What is the defitnition of an offer?

When can an advertisement be deemed an offer?

How definite must terms of an offer be?

Answer 3

A manifestation of an intention to be bound (judged objectively).

When quantity is included.

For goods, open price terms are okay, as court will read in a reasonable price. However, not for common law.

Question 4

How can an offer be terminated?

Answer 4

(1) Lapse of time - after a stated term or after a reasonable time has passed. (dates seperated by more than one month).
(2) Revocation
(3) rejection
(4) death

Question 5

How may an offer be revoked?

What are the four exceptions to when an offer can be revoked?

When is a revoction effective?

Answer 5

(1) Direct revocation
(2) indirect revocation - (1) offeror engages in conduct that indicates shes changed her mind (b) offoree knows of this conduct.
(1) option K - a promise with consideration that an offer will stay open
(2) Article 2 firm offer - merchant prmoised in signed writing to keep an offer open.
(3) foreseeable reliance
(4) Starting to perform a unilateral k - you must start, not mere preperation.

On reciept.

Question 6

What are the ways in which an offer is rejected?

For sale of goods, when are additional terms in acceptance added to K?

Answer 6

(1) Counteroffer - more than mere bargaining.
(2) Conditional acceptance
(3) Accepting adding terms/varying offer - common law has mirror image rule while article 2 permits. For article 2, adding terms does not prevent acceptance as long as there is seasonable expression of acceptance.
(a) both merchants, (b) not a material change (c) no objection within reasonable time.

Question 7

What controls the method of acceptance?

Starting performance as acceptance - describe difference between unilateral and bilateral k?

When is acceptance effective?

Answer 7

The offer

Bilateral - starting performance is acceptance and carries with it implied promise to finish. Unilateral - only completing is is acceptance but makes the offer revocable.

Mailbox rule - when delivered unless offer states otherwise. Moreover, irreovacble offers do not get mailbox protection. Additionally, a rejection letter sent before destroys mailbox protection. If sent at the same time, whichever is recieved first.

Question 8

What is consideration?

Answer 8

Bargained for legal benefit/detriment.

(1) promising to do something that party has no prior legal duty to do (2) Performing action parrty is not otherwise obligated to take (3) refraining from or promising to refrain from exercising a legal right.

Preexisting legal duties are not consideration

Past consideration is not consideration.

Question 9

How can a contract be modified?

Answer 9

Under common law and the preexisting duty rule, must be supported by consideration, which means the promise to do something that you are legally entitiled to do already is not valid consideraiton.

Under UCC - no consderation requirement as long as the modifaction is made in good faith.

Question 10

When a contract lacks consideration, how else may it be enforced?

Answer 10

Promissory estoppel - (a) promisor reasonably expects promise to induce action (b) promise does induce that action to the promisee’s detriment (c)injustice can be avoided only by enforcement. - you get reliance damages. - THINK GIFT PROMISES THAT LACK CONSIDERATION TO CHARITABLE ORG.

Quasi k - (1) P confers measure benefit to D (2) P reasonably expected to get paid AND (3) it would be unfair to let D keep payment. - get restitution.

Some jurisdictions - Moral obligation + promise - “ i save you from fire, you promise to pay me 500 $”

Question 11

What are the incapacity defenses to K formation?

What is the neccessaries doctrine?

Answer 11

Incapacity - infancy, mental illness, intoxication.

Infancy - Person under 18 can void by either disaffirming (must return anything they recieved under the K or affirm- hold the adult liable. ( do this expressly or impliedly by not disaffirming before 18.

Mental illness - (1) cant understand in reasonable manner nature and consequesnes of transaction or (2) act in a reasonable manner in relation to transaction AND other party knows. HOWEVER, you cannot disaffirm if K was made on fair terms AND other party did not know of mental illness.

Intoxication - if other party has reason to know you are fucked up and the individual cant (a) understand in reasonable manner nature of transaction or (2) act in a reasonable manner in relation to k.

When necessaries are furnished to person who lacks capacity, the party who lacks is liable for reasonable value of the services or goods under quasi k.

Question 12

When is mistake a defense to K formation?

Answer 12

Mutual mistake - both parties are mistaken to basic assumption. Adversely affected party can rescind if

Mistake of fact, basic assumption, material impact, impacted party did not assume risk of mistake. (no “as is”).

Unilateral mistake - may rescind if

MIstake of fact, basic assumption, material impact, no assumption of risk, mistake would be k unconsiosoable OR other side knew of or caused mistake.

Question 13

what are the general defenses to K formation?

Answer 13

Incapacity, mistake, misrepresenation, Duress and undue influence, illegality, unconsiosability.

Question 14

When is misrepresentaiton a defense to K formation?

Answer 14

an intentional or accidental untrue fact which is (1) not an opinon (2) is material or fraudulent AND (3) justifiable to rely on it. - MORE THAN PUFFERY.

Question 15

Duress and undue influence?

Answer 15

Duress - void if party is compelled by physical duress. Voidable if induced by improper threat which leaves no reasonable alternative.

Improper threat (1) crime or tort (2) criminal prosecution (3) use of civil process in bad faith (4) breach of duty of good faith and fair dealing or (5) no fair terms.

Undue influence - Voidable if assent is a result of (1) parties suseptibilty to pressure and (2) excessive party by other party.

Question 16

When is illegality a defense to K formation?

Answer 16

Consideration or performance is illegal or contrary to public policy, K will be void. However, K used in furtheance of illegal purpose will be enforced. (Taxi to go kill someone).

Question 17

When is a K unconscionabal?

Answer 17

Schocks the conscience of the court.

Two types - procedural - defect in barganing process (2) substantive - grossly unfair and one sided.

Question 18

What are the types of Ks? that trigger the statute of frauds?

Answer 18

MYLEGS

Marriage - prenump for example

Year - cannot by its terms be performed within one year from its making - no possible way.

Land - transfer, recieve, or create intrest in real estate.

Executor

Goods 500$ or more

Suretyship - Gaurenteeing the debt of another - however, if for promisor’s economic benefit, then doesnt fall within SOF.

Modifications - ONLY IF K as modifed falls within SOF.

Question 19

How is the SOF satisfied?

Answer 19

(1) writing and (2) performance

By writing - (a) signed by whom enforcement is sought against (2) shows K was formed (3) requisite terms. (common law - parties, subject, quanitty, and price). (UCC - parties, subject, quanitity).

By performance -

(a) services K’s under Y - Full performance by either side satisfies.
(b) Real estate - (i) full performance (ii) posession, payment in full or part, AND/OR (iii) substnatial improvements. - you need 2/3.
(c) goods 500 or more - PAWS - Performance, Admission in court, Written confirmation between merchants, specifically manfucatured goods.

P - satisifed for quanitty of goods for which payment has been made and accepted or which have been recieved and accepted.

A - admission in pleading, tesitomony or other court proceeding.

W - oral agreement between merchants, either party sends written confirmation(signed by sender) written confirmation is recieved UNLESS notice of objection within 10 days.

S - substnaital beginning towards custom goods and not suitable for sale to others.

Question 20

What is the Parol evidence rule?

What is complete integration? Partial integration?

When does PER not apply?

Answer 20

WHen parties express agreement in writing with intent that it embodies final expression of bargain, this is an integration. However, if not an integration ( non - final expressions such as tenative drafts), PER does not apply.

Complete - emobodies all terms of the agreement. ALL other expressions or statements, written or oral, made prior to the writing ,as well as oral contemporaneous writings, are inadmissable. - MERGER CLAUSE SHOWS THIS.

Partial - some terms, but not all terms, it is partial. - other expressions or statemetns, written or oral, made prior to the writing, as well as oral expressions made contemporaneous with writing, are admissable as long as they dont contradict terms of the writing.

Defenses - extrinsic evidence can be shown to establish defense to formation or enforecement

Seperate deals - extrinsic evidence if it represents distinct deal

Conditions precedent - oral agreement that written k wold not become effective till condition occured

Ambiguity and interpreation - extrinsic evidence may be offered for purpose of intereting or clarifying ambiguity in the agreement.

Question 21

How are express warranties created undet the UCC?

What is the implied warranty of merchantability?

What is the implied warranty of fitness for a particlar purpose?

Answer 21

(1) affirmation of fact or promise
(2) description
(3) sample or model

Remember that broad disclaimers are unenforceable.

all merchants make an implied warranty(unless disclaimed), that goods are fit for their ordinary commerical purpose. You can disclaim by conspicious language. However, if there is an inspection prior to k, no IWOM with respects to defects that inspection should have revealed

If seller knows goods are for paricular purpose, and buyer is relying on sellers skills to select goods. Does not need to be a merchant. - disclaimers must be in writing and conspicious.

Question 22

What is an express condition?

What is good faith and fair dealing?

What is substantial performance?

What is the perfect tender rule?

Answer 22

Makes performance condtional upon completion of the condition

All k’s contain implied obligation which requires parties to act without (1) breaking their word (2) using deceptive means to avoid obligations OR (3) denying what the other party obviously understood.

Under common law, substantial performance is required, meaning that performance is satisfied so long as there is no material breach of the K.

Under UCC, perfect tender is required - seller must deliver conforming goods in accordance with terms of the K. The smallest non conformity allows buyer to reject all or a portion of the goods. However, the excetions to the rules are - (I) parties can change defeault rules to include substantial performance (ii) installment contracts do not have to satify perfect tender(substantially impairs standard) (iii) buyer must give the seller a chance to cure if time of performance is not yet expired OR seller has reasonable grounds to believe that buyer would accept a replacement, and thus must be given time to cure (even beyond date of performance).

Revoaction of acceptance - if buyer fails to reject nonconforming goods, buyer is deemed to have accepted. Buyer may revoke acceptance if - nonconformity substantially impairs value, revocation ocurs in reasonable time, buyer accepted the goods on a reasonable assumption that nonconformity would be cured or without discovery of nonconformity

Question 23

What are the four exuses to K performance?

Answer 23

(1) Impossibility and impractiability
(2) frustation of purpose
(3) Accord and satisfication
(4) novation

Question 24

When is party excused from performance under impossiblitiy and impractiablity ?

Frustration of purpose?

Accord and satisfaction

Answer 24

(1) unforseeable event occurs that makes performance extremely and unreasonably difficult or impossible (2) nonoccurence of event was basic assumption of k AND (3) party seeking discharge was not at fault.
(1) unexpected events arise which destroy one parties purpose (2) event is not fault of frustrated party (3)non occurence was basic assumption of k.
(a) accord - agreement to accept alternate performance to discharge preexsiting duty between them (b) satisfaction - subseuqnet performance of accord. - diffrent than modifaction because it does not discharge originial promise.

Novation - BOTH parties agree that a substitue person will take over obligations.

Question 25

What is anticpatory repudiation? Desribe common law and UCC.

What can non - breaching party do?

Answer 25

Clear and uneqivocal repudiation before time for performance is due (words or conduct). Can be retracted untill (a) reliance on repudiation (b) signifies acceptance of repuduiation (c) commences BOC claim.

Under UCC - (1) unequivocal refusal to perform OR (2) reasonable grounds for insecurity arise.

Treat as breach and sue immediately(unless last perfromance is payment) or ignore, urge performance, and wait and see.

Question 26

How are expected damages calculated?

What are the limitations to expectation damages?

Relaince damages do what?

Restitution prevents?

What are liquidated damages? When will a court award?

Punititve damges

Answer 26

Comparing the value of the performance without the breach to the value of the performance with the breach.

(1) must be proven with reasonable certainity
(2) unforseeable consequential damages are not recovarable unless the breaching party had some reason to know about the possiblity of these unforseeable damages. Conseqential damages are those losses unique or special to the plaintiff.

Make the plaintiff whole by putting him in the same position he would have been without the existence of the K.

Unjust enrichment. - gives P the economonic benefit he conferred on D.

Expressly state amount due upon breach.

Reasonable at time of K AND actual damages uncertain and difficult to prove.

Punish D. under resttatement, punititve damages are not available unless breach is also a tort.

Question 27

When is specific performance allowed?

What is the right of reclaimation?

Answer 27

ONLY when monetary damages are considered inadequate. Presumptively available for real estate transactions.

Under UCC, seller may reclaim goods if (1) insolvent buyer on credit if demand is made within 10 days (2) bad checks if demand is made within reasonale time.

Question 28

What is the duty to mitigate?

Answer 28

P has to take reasonable steps to mitigate losses. If he fails, court will reduce the total damages by the amount that could have been avoided if he did so.

Question 29

WHen does a third party have the right to sue on the K?

When can parties rescind rights of third party beneficiary?

Answer 29

When they are intended, not incidental. ex - Tom pays mechanic $$$ to fix giselle’s truck.

Untill (1) deterimentally relied (2) accepted the benefit or (3) brough suit to enforce.

Question 30

When is assignment of rights or duties of a K unallowed? What are the consequenses of each?

What are the assignee’s rights?

is consideration provided for assignment?

WHen is delegation allowed?

Answer 30

If K explicitly prohibits or invalidates assignments. If K probits, than assignor breaches and is liable. However, assignment is still valid.

If k invalidates assignments, then the assignment is void and the assignee cannot enforce the assignment or recover.

Can go afterobligor for non - performance or the assignor for wrongful revocation of assignment or breach of implied warranty.

no, but if so, then it is irrevoavable.

(1) K doesnt prohibit AND (2) other party doesnt have special interest in having specific individual perform.