Contracts Flashcards
What is procedural unconscionability?
A defect in the bargaining process.
What is substantive unconscionability?
An unfair contract term, such as stating the remedy for a breach is indentured servitude.
What contracts are subject to the Statute of Frauds?
- Marriage
- Year or more to complete
- Land
- Executor
- Guarantor
- Sale of goods over $500
(Think M.Y. L.E.G.S.)
What are the types of implied warranties?
- Implied warranty of merchantability
2. Implied warranty for fitness of a particular purpose
What is an express warranty?
Can be…
- A promise that the item will act a certain way
- Using a sample or a model
How do you comply with the Statute of Frauds?
- Complete performance by one side
- Satisfying the writing requirement, OR
- Part performance when delivering goods
How do you satisfy the writing requirement for the Statute of Frauds?
- A writing
- Signed by the party who denies the contract
- Identifies the parties
- Contains the essential terms
Can confirming memos satisfy the writing requirement for the Statute of Frauds?
Yes, but only if…
- Both parties are merchants, and
- The receiving party does not object within 10 days
What is the implied warranty of merchantability?
Only applies to a merchants. When a merchant sells an item, this warranty automatically applies and it warrants that goods are fit for their ordinary purpose.
How can you disclaim the implied warranty of merchantability?
Orally or in writing.
If orally, it must be clear and you must say the phrase “merchantability.”
If in writing, it must be clear/conspicuous and you can use language like “as is” or “with all faults.”
What is the implied warranty for fitness of a particular purpose?
A promise that the goods will be suitable for the buyer’s intended purpose.
When does the implied warranty of fitness for a particular purpose apply?
- Buyer tells the seller they want the good for a particular or special purpose,
- Seller says the good will work for that purpose, and
- The buyer relies on the seller’s word
How do you disclaim the implied warranty of fitness for a particular purpose?
Can only be disclaimed by a clear and conspicuous writing.
What is an express condition?
A condition that must be strictly satisfied for the contract to be fulfilled. Think of terms like “only if” or “on the condition that.”
Can an express condition be waived?
Yes, but only by the party that created the condition.
When is a contract impracticable?
When the contract becomes very very difficult (although not impossible) to perform. Must be due to something unforeseeable and cannot be caused by the party seeking discharge.
EX: A homeowner contracts with an artist to build a sculpture out of number 2 pencils. The government then imposes an incredibly high tax on number 2 pencils in an attempt to encourage Americans to use pens instead. If this substantially increases the cost of the project, the artist could be excused due to impracticability.
When is a contract impossible?
When it is no longer possible to complete the contract. The party seeking discharge must not be at fault.
EX: A homeowner contracts with a remodel team to remodel her master bathroom. The house burns in a fire. It would be impossible for the remodel team to remodel the bathroom.
When may a party’s contract performance be excused due to frustration of purpose?
When something unforeseeable occurs and defeats the purpose of the contract.
EX: You rent a room with a view of 7th Street to watch the president give a speech on 7th Street. The president dies and the event is cancelled.
What does “accord and satisfaction” mean?
When parties agree a contract can be satisfied with different performance.
“Accord” - the new performance
“Satisfaction” - excusal of the original promise
When an accord and satisfaction is created, what happens if the accord is not satisfied?
The non-breaching party may sue for the original promise OR the new promise.
What are the remedies when one party anticipatorily repudiates the contract?
- Sue immediately (only if non-breaching party hasn’t completed performance)
- Demand performance and see what happens
- Wait for contract to expire and then sue
Can a buyer waive the implied warranty of merchantability?
Yes, if…
- The buyer examined the goods prior to purchase, or
- The buyer refused to examine the goods prior to purchase
At an auction, when can a bidder withdraw their bid?
Before completion of the sale (regardless of what type of auction).
When is payment due for installment contracts?
Payment is due at each delivery.
Can you collect a debt after the statute of limitations has applied.
Generally, no. But if the debtor makes a new promise to pay the debt, then yes.
What is an offer?
A manifestation of a willingness to enter into an agreement. This creates a power of acceptance in the offeree.
Can you accept an offer that you overhear?
No, you may only accept an offer that is directed at you.
What terms need to be included in a common law contract?
ALL ESSENTIAL TERMS.
- Parties
- Subject
- Price
- Quantity
What terms need to be included in a UCC contract?
Only the quantity of goods (the UCC will gap-fill the rest).
What is a requirements contract?
When someone offers to buy 100% of the goods they need from someone.
Exact number is not necessary. “100%” can serve as the quantity term.
What is an output contract?
When someone offers to sell 100% of their goods to someone.
Exact number is not necessary. “100%” can serve as the quantity term.
When can an advertisement be an offer?
- Reward advertisements
- Advertisements that are so specific and leaves nothing open for negotiation. Includes how acceptance can occur
How can a standard offer be terminated?
- Express revocation
- Offeree rejects
- Counteroffer is made
- Time lapses (a reasonable amount of time)
- Death by offeror
- Constructive revocation
(Think: Every Offer Can Terminate, Duh Calvin)
What is a constructive revocation?
When the offeree learns the offeror has acted inconsistently with making a contract.
EX: Tommy offers to sell me his jeep for 10k. I take a few days to think about it. I later learn Tami has purchased Tommy’s jeep.
What are the types of irrevocable offers?
- Detrimental reliance
- Part performance (unilateral contract)
- Options
- Firm offers
(Think: Dummies Promise Offers Forever)
What is an option contract?
When the offeree pays to keep the offer open for a certain period of time. The offeror may not revoke the offer during that time.