Contracts Flashcards
Modification
CL - every K and every K modification requires consideration. A promise to perform an existing legal duty is not sufficient consideration.
some courts allow modification without consideration if modification is fair and equitable in view of the circumstances and not anticipated when the K was made.
UCC - modification made in good faith is binding without consideration.
UCC / goods
K for sale of goods is governed by the UCC - article 2.
goods all things moveable
Duress (defense)
voidable if assent is induced based on improper threat.
K
Must be offer and acceptance, consideration and no defenses
Offer
offer is express promise, undertaking, or commitment to enter into K
definite and certain terms
communicated to offeree
can be accepted until terminated
Offeror can revoke offer anytime before acceptance unless:
option contract - which requires consideration for promise not to revoke
UCC - merchant firm offer - requires merchant (one who regularly deals in goods of the kind sold); offers to sell or buy goods in a signed writing’ writing gives assurances that it will be held open. (if form supplied by offeree the offeror has to sign)
Detrimental Reliance / restitution
Reasonably expect that offeree would rely to her detriment on offer and offeree does so rely.
Restitution = unjust enrichment (free work)
Performance
each party’s duty to perform conditioned on other party’s performance.
Failure to provide complete or substantial performance relieves the other party of duty to pay.
Substantial performance = minor breach courts look at: amount of benefit received; adequacy of damages; extent of performance; hardship to breaching party; whether breach was negligent or willful; if time is of the essence any delay = material breach
K divisible
If K is divisible then party who performed is entitled to collect on K price for those parts.
A divisible contract is a contract in which the parties’ performances are divided into matching pairs of duties to perform that the parties consider equal
In determining whether a contract is to be divisible the court will consider several factors such as: 1. Whether the contract can be evenly, and easily divided. 2. Whether or not the parties themselves have specified to the divisibility of the contract.
expectation damages
put P in position would have been in had K been performed.
(When land and cost of restoration is way more than value - one measure would be cost of restoration the other would be the difference in value - value of land as promised vs current value. (courts split because measure encourages breach)
consequential damages
additional losses beyond compensatory resulting from breach. Contract damages must be foreseeable to be recoverable. Foreseeable if a reasonable person would have foreseen damages as result of breach.
damages awards should take into account costs saved because of breach. Nonbreaching party cannot recover damages that could have been avoided by reasonable effort after breach
Assignment
to assign must manifest an intent to transfer rights under contract to assignee. Oral assignments are gernerally effective. Most contractual rights can be assigned unless:
K forbids
law forbids
would substantially change obligor’s risk
contracts for personal services cannot be assigned
incidental TP has no K rights
to delegate must manifest present intention to transfer duties under contract to another party. Delegator is secondarily liable if delegate does not perform.
Demand assurances
if party has reasonable basis for insecurity of another party’s performance he may demand assurances.
Demand must be in writing. may suspend performance until assurance received.
assurance must be given within reasonable time (not more than 30 days)
inadequate assurance results in repudiation
may treat K as breached and sue immediately
may suspend performance and wait to see
may treat as offer to rescind
may ignore and urge performance
repudiating party may withdraw repudiation before performance due unless other party has cancelled K; materially changed position in reliance or otherwise indicated considers repudiation final.
Withdrawal of repudiation can be in any manner indicating intent to perform but must include assurance.
Statute of Fraud
K cannot be completed within one year according to the terms. Writing signed by party to be charged.
Under the confirmatory memo rule, in contracts between merchants, if one party within a reasonable time after an oral agreement has been made, sends the other party a written confirmation of the understanding that is sufficient under the S.oF to bind the sender, it will also bind the recipient if he has reason to know of the confirmation contents and does not object to it in writing within 10 days of receipt.
acceptance
is manifestation of assent to the terms of the offer.
mailbox rule: accpetance is effective upon dispatch. exception if rejection sent first - then first received controls.
counteroffer
counteroffer is both a rejection and new offer.
inquiry is not counteroffer
