Contracts Flashcards
What is a merchant?
someone who regularly deals in goods of the kind sold, or
who otherwise by his profession holds himself out as a having special knowledge or skills as to the practice or goods involved
NB: has to be acting in a mercantile capacity - a party is not a merchant for purposes of sales that are solely personal
What is good faith under the UCC and where is it imposed?
1) honesty in fact, and 2) observance of reasonable commercial standards.
performance and enforcement of contract.
cannot be waived.
What is a quasi-contract?
Not a contract at all, but a construction by the court to avoid unjust enrichment, allowing a plaintiff to bring an action in restitution to recover the amount of the benefit conferred on the defendant
Under the modern view, what are the two scenarios where a unilateral contract is formed?
1) when the offeror clearly indicates that completion of performance is the only manner of acceptance.
2) where there is an offer to the public, such as a reward
What standard is used to determine whether there was mutual assent in a contract?
Objective standard - did words or conduct manifest a present intent to enter into a contract
What is an offer?
Creates a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms, thereby creation the power of acceptance in the offeree.
Need: 1) promise, undertaking, or commitment; 2) certainty and definiteness of terms; and 3) communication of above to offeree (i.e. need to identify offeree or class of offeree)
Are price quotations offers?
Generally no, unless they are included with a quantity term
What will courts look to to determine if a valid offer was made?
1) Circumstances surrounding the language - how was it reasonably understood in the context?
2) Prior practice and relationship of the parties
What constitutes definite and certain terms?
Whether enough of the essential terms have been provided so that a contract would be capable of being enforced
What is the effect of missing terms?
Does not prevent formation if parties intended to make a contract and there is reasonably certain basis for giving a remedy.
Majority of jurisdictions and UCC hold that a court can supply reasonable terms for those missing.
NB: not the case if terms are included but deemed vague
When is an offer irrevocable?
1) Option K (consideration)
2) Merchant’s Firm Offer (by merchant & no consideration)
3) Detrimental Reliance (reasonably foresee - substantial preparation maybe)
4) Start of Performance for Unilateral K
5) Start of Performance for Offer Indifferent to Manner of Acceptance (notice to offeror may be required)
Does a rejection of a option K offer terminate the offer?
No, unless the offeror has detrimentally relied on the rejection.
What is an acceptance?
A manifestation of assent to the terms of the offer
What is the right to accept transferable?
When an option K is created
When does the “beginning” of performance constitute an acceptance?
Bilateral contract where form of acceptance is not articulated.
When is silence adequate acceptance?
Generally never, unless based on prior dealings or trade practice, it would be commercially reasonable for the offeror to consider silence as acceptance.
Also potentially when recipient of service knows the service is occurring and that compensation would be required, and knows that a word is needed to stop the service.
What is the method of acceptance for: “an offer to buy goods for current or prompt shipment” ?
Construed as inviting acceptance either by:
1) promise to ship
2) current or prompt shipment of (non)conforming goods
What is the effect of a shipment of non-conforming goods in response to an offer?
Acceptance AND breach, unless offered only as an accommodation
What is the effect of accepting non-conforming goods as an accommodation?
Seller as not breached, as buyer has not accepted original offer, and so is entitled to reclaim goods
When does the accommodation rule applu?
ONLY when shipment is used as a form of acceptance
Can offer that results from a conditional acceptance be accepted by performance?
No.
If parties ship or accept goods after a conditional acceptance, a contract is formed by conduct, and the new terms are not included
What are the exceptions to the pre-existing legal duty rule? (7)
1) new or different consideration
2) promise to ratify a voidable obligation
3) pre-existing duty is owed to a third person
4) honest dispute as to the duty
5) unforeseen circumstances sufficient to discharge a party (impracticability)
6) modern view - where modification is fair and equitable in the view of new circumstances not anticipated
7) good faith modification to UCC contract
When is a misrepresentation material?
1) it would induce a reasonable person to agree, OR
2) the maker knows that for some special reason it is likely to induce the particular person to agree, even if a reasonable person would not
When is a contract NOT void despite the consideration and/or subject matter being illegal?
1) P is unaware of the illegality while the D knows of it
2) the parties are not in pari delicto (one party is not as culpable as the other)
3) the illegality is the failure to obtain a license when the license is for revenue-raising purposes rather than the protection of the public.
4) If only the PURPOSE of the contract was illegal, then the contract is voidable by a party who was 1) unaware of the purpose, and b) aware but did not faciliatet the purpose AND the purpose does not involve serious moral turpitude
Define mental incapacity as a lack of capacity defense?
One whose mental capacity is so deficient that he is incapable of understanding the nature and significance of a contract.
When does taking advantage of someone’s economic needs constitute duress?
Generally, taking advantage of someone’s economic needs or wants will not constitute duress.
However, withholding something someone wants or needs will constitute economic duress if:
1) the party threatens to commit a wrongful act that would seriously threaten other party’s property or finances
2) there are no adequate means available to prevent threatened loss
What must be included in a writing so satisfy the SoF
1) reasonably identify subject matter
2) indicate a contract has been made
3) state with reasonable certainty the essential terms
What are the remedies for a contract that violates the SoF?
Party can sue for the reasonable value of the services or part performance rendered, OR sue on the contract for the expectation damages, OR sue in restitution of the benefit conferred
What is a partially integrated agreement?
A writing the parties intended to be final, but doesn’t express the full understanding of the parties. Extrinsic evidence of prior or contemporaneous agreements that contradict the written agreement are barred, but additional terms or agreements that supplement the written agreements are admissible
What is the effect of acceptance by performance?
Where an offer invites acceptance by performance, the offer’s beginning of performance creates an option contract that precludes the offeror from revoking its offer
What is the effect of a merger clause under the UCC?
Under the UCC parol evidence rule, a merger clause does not conclusively establish that an agreement is completely integrated, and a finding that an agreement is completely integrated does not necessarily bar admission of extrinsic evidence. Such evidence is admissible to explain the terms of an agreement.
Modern trend.
What is the effect of a mutual mistake?
Performance is excused when there is a mutual, material mistake of an existing fact, and whoever is seeing relief did not bear the risk of mistake
What are the general rules of construction for interpreting Ks?
1) construed as a whole
2) words given their ordinary meaning
3) written/typed > printed
4) try to make K valid and enforceable
5) ambiguities construed against the drafting party
6) Ranked: a) express terms, b) course of performance, c) course of dealing, d) usage of trade
What is the naturally omitted terms doctrine?
Doctrine allows evidence of terms that would naturally be omitted from the written agreement. A term would be naturally omitted if: 1) it does not conflict with the written integration, and 2) it concerns a subject that similarly situated parties would not ordinarily be expected to include in the written instrument.
