Contracts Flashcards
Bilateral contract
Exchange of mutual promises
Unilateral contract
Acceptance by performancd
Definite and certain terms of offer
- Real estate- land and price terms
2. Goods- quantity
Ucc gap fillers
- Price- reasonable at time of deliver
- Time - within a reasonable time
- Vague terms- reasonable term unless too vague
- Terms to be agreed later- if material too uncertain
Revocation
- Valid when received by offeree
2. Or when published
Option Contract
- Consideration for promise to hold open
2. Up to three months only unless consideration is given
Merchants firm offer
- Merchant
- Signed writing
- Assurances that Held open
No consideration needed, but max 3 months without
Option- detrimental reliancd
Offeror reasonably expects detrimental reliance
Offeree detrimentally relies
Option contract for reasonable time
Unilateral contract acceptance
Irrevocable once performance begun
Offeree not bound to complete performancd
Termination by offeree
Rejection
Counteroffer- (rejection and new offer)
Common law acceptance
Mirror image rule
Article 2 Acceptance
Promise to ship
Or current and prompt shipment of conforming or nonconforming goods
Shipment of nonconforming goods
Acceptance and breach
Unless notifies buyer offered as accommodation
Article 2 acceptance
Battle of the forms
- Merchant to merchant only
- Additional terms included
Unless
A. Materially alter terms of offer
B. Limit acceptance to new terms
C. Offeror objects to new terms in reasonable time
Materiality is a question of fact
Different terms
Court specific
- Some treated as additional terms
- Some use knockout rule +ucc gap fillers
Merchants confirmatory memo
- Written confirmation of oral contract
2. Battle of forms applies
Mailbox rule exceptions
- Offer stipulated acceptance not effective until received
- Option contract is involved
- Sends rejection then sends acceptance- received first wins
- If send acceptance then rejection mailbox rule applies to acceptance unless detrimentally relies on pre arriving rejection
Consideration
- Bargained for exchange
2. Legal value
Preexisting legal duty exceptions
A. New or different consideration
B. Promise to ratify a voidable obligation
C. Preexisting duty owed to third person
D. Honest dispute as to duty
E. Unforeseen circumstances- fair and equitable in view of unanticipated circumstances
F. Good faith agreement modifying UCC contract
Promissory estoppel/ detrimental reliance
- Promisor should reasonably expect action or forbearance
2. Action or forbearance is induced
Mutual mistake
- Mistake of Basic assumption
- Material effect
- Party seeking avoidance did not assume that risk
Mistake by intermediary
Message as transmitted is operative unless other party knew or should have known
Defenses to contract
- Absence of mutual assent
- Absence of consideration
- Illegality
- Lack of capacity
- Statute of frauds
- Unconscionability
MY LEGS
- Marriage
- Year +
- Land
- Executors/ estates
- Goods $500+
- Suretyship
Statute of frauds exceptions i
SWAP
Specially made goods
Written confirmation by merchant
Admission in court
Performance
Contract construction
- Construed as a whole. General intent> specific provision
- Construed by ordinary meaning
- Written or typed> handwritten
- Courts favor toward enforceable construction
- Ambiguity construed against drafter
- Course of dealing, usage of trade, course of performance considered
- Express> performance> dealing> trade
Parol Evidence
- Integration?
A. Final expression?
B. Complete or partial?
Partial- may not be contradicted, but may be supplemented
UCC gap fillers
A. Price- reasonable at time of delivery
B. Place- sellers place of business
C. Time- reasonable time
D. Time of payment- time and place where buyer is to receive goods
Buyers damages for breach of warranty
Usually difference between goods tendered and as warranted
Modification of contract terms
Traditional view- needs new consideration
Modern view- no consideration needed if:
- Unanticipated circumstances
- Fair and equitable
UCC
- good faith promises of new and different terms valid without consideration
Performance
Common law- substantially perform
UCC- perfect tender
Retraction of repudiation
A party may retract repudiation unless other party has relied on original repudiation
Divisible contract
- Performance of each party divided into parts
- Number of parts due from each party is the same
- Performance of each part of one party is agreed on as equivalent of corresponding part
Discharge by impossibility/ impracticability
Nonoccurrence of event Basic assumption of contract of which neither has assumed the risk
Discharge by frustration
- supervening act or event leading to frustration
- Not reasonably foreseen
- Purpose of contract destroyed
- Both parties realized purpose of contract
Novation
- Previous valid contract
- Agreement of all parties to new contract
- Immediate extinguishment of duties between original parties
- Valid and enforceable new contract
Breach
- Promisor under a duty to perform
- Duty of performance has not been discharged
Non breaching party must show willing and able to perform
Material or minor breach?
- Minor breach- obligee gains substantial benefit of bargain
Non breaching party entitled to recover but must still perform - Material breach- obligee does not receive substantial benefit of bargain
Non breaching party excused
Materiality of breach
- Amount of benefit received
- Adequacy of compensation
- Extent of part performance
- Hardship to breaching party
- Negligence or willfulness of breaching p
- Likelihood that breaching party will perform
Revocation
- Defect substantially impairs goods value
- Accepted on reasonable belief defect would be cured and has not been
- Accepted because of difficulty discovering defects or sellers assurances that conformed
- Revocation must happen within reasonable time
- Before substantial change to goods occurs
Damages
- Expectation damages- benefit of bargain
- Reliance damages - profits uncertain- in position had contract never been formed
- Consequential damages- foreseeable
- Liquidated damages- difficult to estimate damaged, reasonable forecast and agreement of parties
Buyers damages
- Difference between contract price and market or cover price
- Incidental and consequential damages
- expenses saved
At time of learning of breach
Sellers damages
- Difference between Market price and contract price at time of delivery
- Contract price - resale price
- Lost profits- difference between contract price and cost to seller
Ucc statute of limitations
Four years from breach
Third party beneficiary
- Intended beneficiary
A. Identified in contract
B. Received performance directly
C. Relationship with promisee - Rights vest
A. Manifests assent
B. Brings suit to enforce
C. Relies on contract
