Contracts Flashcards
Applicable Law
UCC – Sale of Goods
CL – Everything else
UCC
Goods
moveable, tangible things
UCC
Merchant
One who deals in goods of the kind or holds himself out as having specialized knowledge/skills
Mixed K?
Predominant Purpose Test
Formation
Mutual Assent + Consideration
Mutual Assent
Offer + Acceptance
CL Offer
Manifestation of Intent to enter into the bargain (intent)
+
Definite and certain terms
+
communication to offeree
UCC Offer
Inviting acceptance in any manner/medium reasonable in the circumstances
Quantity must be certain/capable of being certain
Offers in Jest
NOT offers
Prelim negotiations in K formation
Invite to offer
Solicitation of an offer
Preliminary negotiation– invite to bargain
Ads / K Formation
Invite to deal
exc: words of commitment + offeree can be id-ed with specificity
Rewards/Auctions
Only offer if clear who can accept/win
Unilateral K
Promise for Performance
Bilateral K
Promise for Promise
Quasi K
Implied in fact– restitution remedy for UE
Duty of GF and FD
Implied in every K
Definite and Certain Terms (QTIPS)
Quantity – stated or ascertainable
Time (if missing, reasonable)
ID parties
Price (UCC if missing, reasonable at time of delivery)
SM
Void / Voidable/ Unenforcable
Void – never had legal effect
Voidable– one/both may elect to voic
Unenforceable – bc defense applies
Termination of Offer
Rejection by Offeree
C/O (not just inquiring)
Revocation
Lapse of time
Rejection Methods
- Express
- Counteroffer
- Conditional Acceptance (becomes new offer) (exc: cond that would be included anyway)
- Acceptance with additional terms
Acceptance with additional terms
CL - MIR tf AT = C/O
UCC
merchant = AT become part of K unless exc applies
non merchant involved = terms govern + AT are mere proposals/excluded
Revocation
Offeror may revoke her offer = terminates offeree’s power of acceptance
- Direct or Indirect
- Unambiguous words/conduct by offeror
- Offerree is aware of ^
Revocation Effective
upon receipt
Revocation of Unilateral
Start of performance = irrevocable
Irrevocable Offers
Option K
UCC Firm OFfer
DR by Offeree
Option K
Promise to keep offer open
CL – consideration
UCC – no consideration
UCC Firm Offer
Merchant + signed + in writing + assures offer held open for time stated
3 mos max – then becomes revocable
Acceptance
Offeree’s (only) clear expression of assent to offer
within reasonable time
in response to offer
in manner required by offer (no method → reas)
UCC Acceptance by Shipment
M may accept by:
Promise to ship
Prompt shipping conforming goods
Prompt shipping nonconforming goods (acc and breach)
UCC AT Acceptance
Battle of the Forms
One or more party non merchant = mere proposal (op can agree to)
Both merchants = auto part of K unless:
Offer expressly limits acceptance to its terms
AT creates material alteration
Objection by offeror- reasonable time
Knock Out Rule
Maj rule
Conflicting terms knock each other out UOA
UCC Gap Fillers
Supply missing terms
Price = reas at time of delivery
Delivery = B picks up from S
Time of shipment = reas
Time for payment = upon receipt of goods
Additional Terms Minority Rules
Treat as diff terms
Fall out rule (offeror’s terms control)
Detrimental Reliance
Temp irrevocable if:
offeree has made prep to perform/perform in part + reas detr rel on offer s perf in part
Unilateral - perf begun = temp irrev
Bilateral - Prep to perform may make irrev
Termination - Lapse of Time
If no time limit set = reasonable
If oral – end of convo
Death/Incapacity
Either party = power to accept terminated automatically
exc: Option K
MBR
Offer = effective on receipt
Rejection / Revocation /CO effective on receipt
Acceptance= effective upon dispactch
MBR Exceptions
If offer stipulates not accepted until received → offer controls
Option K = receipt
MBR and Simultaneous Offer/Acceptance
FIRST sent wins
Acc first - acc effective on dispatch
Rej sent first – acc only effective if arrives before rej
Acceptance by Performance
UOA – partial perf (bi) and complete (uni)
Acceptance of Unilateral K by Performance
Failure to perform does not = breach bc no K formed
Irrevocable between start of performance and completion
Acceptance of Bilateral K by Performance
Part Perf = acceptance
Acceptance by Shipping NC Goods
Without acknowledgement = acceptance + breach
With Acknowledgement = “accommodation” = c/o
Promissory Estoppel
(substitute for consideration)
Promisor reasonably expects reliance by promisee
Promisee acts/refrains from acting in DR
Injustice w/o enforcement
Consideration
Bargained for Exchange (mere peppercorn)
benefit to promisor + detriment to promisee
“BFE”
Promise must induce the detriment and vice versa
Pre-Existing Duty Rule
Promise to perform a PED is NOT valid consideration
Exc: if existing duty owed to TP, will not violate PED Rule
Invalid Consideration
Illusory promises
promises of gifts/conditional gifts
Categorically Inadequate Consideration
Gifts
Sham/Nominal
Past Consideration unless exception
Past Consideration Exceptions
New promise to past debt now barred by SoL
New promise to pay past benefits previously received (emergency)
Illusory Promise
not supported by consideration (not promising to do anything)
Output K
B agrees to buy all of S’s output - specified time
Req K
Parties agree– S as exclusive source for B’s needs – specified time
Defenses to Formation
IM MIDSUM
Incapacity
SoF
Illegality
Miresp/Fraud
Duress
Misunderstanding
Mistake
Incapacity
Infants/mentally incompetent
intoxicated (if OP knows)
Incapacity + Right to Disafrrim
Person who lacked capacity can void K
Infancy Incapacity Exceptions
K involving a minor may be enforced if
Implied Ratification – gain majority and retained benefit
For necessities
Minor Implied Ratificaion
Agreement entered when under 18
Since gained capacity
Benefits retained
SoF
My Legs
Marriage
Year (1)
Land
Executor
Guarantor
Sale of goods +$500
SoF
Ks subject to require special proof of existence
Falls within SoF → Writing + Signed PTBC
SoF
UCC Exception
Signed writing not required where:
both Ms
Party asserting received signed writing memorializing terms + failed to respond within 10 days
SoF Performance as Satisfaction
- Service K – FULL only
- Sale of goods K – delivery and acceptance (unless custom then subst start toward perf sufficient)
- Real Estate – Part performance 2/3: Full/part payment; possession; improvements
SoF Marriage
Promise made in consideration of marriage
(ex: marry my son and I’ll buy you a car)
SoF 1 Year
Service Ks incapable of being performed within 1 year
SoF Land
Transfer of property interest
Leases greater than 1 year
SoF
Executor Promise
Promises by executors/admin
to pay debts of the decedent’s estate
SoF
Gaurantees
Promise to pay the debt of another (from your money)
SoF
Sale of Goods +$500
Exceptions where SoF will not apply:
Goods accepted or paid for
Admission in pleading/ct testimony
specially manufactured goods not suitable for sale to other
SoF Exceptions
Made in consideration of M –mutual promises
Part Performance
Pay debt of another but main purpose benefits payor
K cannot be performed in one year but already performed
Sale of Goods exceptions
SoF Writing Req
Made at time promise is made
CL - indication of K; essential terms; signed PTBC
UCC– some signed writing specifying qty
Merchant’s Confirmatory Memo
Exception to SoF
Must be signed by sender AND recipient
Both Ms
Know contents
Recipient does not reject within 1- days
Illegality
SM = K not enf
Illegal Purpose = only enf by one who did not know
(Based on law at time of K formation)
Misrepresentation
One party makes false stmt mat fact (need not be int’l)
justifiable and actual reliance by other
P suffers pecuniary loss
Fraud
Int’l misrep prior to signing
false rep mat fact
knowledge of falsity (scienter)
intent to induce reliance of other
Justifiably relied
(p must suffer pecuniary loss)
UI
K entered into under excessive pressure + someone susceptible to
(voidable)
Duress
w/f act/threat that overcomes party’s free will
Physical - void
Nonphyiscal - voidable by threatened party
Unconscionability
Ct may refuse to enforce where K so unfavorable to one party that no reas person would have agreed
Mutual Mistake
Mistake by both parties
voidable by affected party if:
basic assumption of fact that existed at time of K formation + mat effect on deal + adv effected party did not assume the risk
Unilateral Mistake
Made by one party– will not void K formation
Unless→ Mistaken party can void if can show : OP knew/sk of mistake
Misunderstanding
Ambiguity concerning k
Neither know– no K formed unless intended same wrong meaning
One Knows– K formed according to misunderstanding party’s intent
Both know– no k unless intended same wrong meaning
UCC Perfect Tender
Acceptance
B does not accept goods until received and has had chance to inspect = notify
B confirms → B indicates will keep despite nonconformity
B Silent → fails to reject
UCC Perfect Tender
Rejection
UCC Perfect Tender
Seller’s performance must be perfect with respect to goods + manner of delivery
UCC Perfect Tender Rejection
Imperfect tender – B can:
Retain + sue for dmgs
Reject some/all and sue for dmgs
UCC PTR Rejection Req
If B rejects:
Notify S in reas time
hold rejected goods using reas care
Give seller reas time to arrange for removal
PTR and Installment Ks
Rejection – B may only IF
Defect substantially impairs installment
+
Defect cannot be cured
(installment ONLY not entire K)
PTR
S’s option to Cure
S gives notice to B of intent to cure + time for performance has yet to expire
S had reas grounds to beleive NCG would be acceptable
PTR Acceptance Revocation
B cannot reject goods after acceptance unless discovers defect that subst impairs goods and either:
B accepted on reas belief defect would be cured and has not, or
B was excusably ignorant of defect
Substantial Performance
CL - one party substantially performed = OP obligated
Material Breach
One party’s failure to perform substantially deprives the other of the benefit of the bargain
Excuses OPs performance
(no MB if performance not on time, but within reas time after due)
Conditions
Agreed upon limitations on performance K – performance is contingent on happening of condition
Condition Precedent
Must occur before performance is due
Non occurrence of excuses OP performance
Condition Subsequent
Occurs after performance begun + excuses further if not met
Insecurity
Party has reasonable grounds to believe OP will not perform
Demand for Adequate Assurances
Insecure party must: demand in writing
No response 30 days - K repudiated (treat as breach)
Minor Breach
Non breaching party may recover damages– must still perform
Anticipatory Repudiation
Unambiguous act
prior to full performance
indicating non perforamnce
AR Withdrawal
AR party may w/d unless OP:
materially changed position in reliance on repudiation
cancelled entire K in response
indicated they consider the repudiation to be final
Non Repudiating Party Response to AR
Treat as total breach and sue
Suspend performance until due date and wait to sue
Treat as offer to rescind and discharge
Ignore and urge performance
Impossibliity
Objectively Impossible – Excuses Performance
Impracticability
Performance is only possible with extreme and unreasonable difficulty = performance excused
Frustration of Purpose
Unexpected event destroys one/both party’s purpose for entering K
Unforeseen event not fault of frustrated party
non-occurrence of event was a basic assumption of the K
Recission
Discharges Duties under the K when parties agree to rescind
May be oral (unless subj to SoF)
Cannot if TPB vested
Unilateral Rescission
One party wants to– granted if defense to K enforcement
Modification
Subsequent change to terms of K (parties agree)
CL: MA + consideration (never oral)
Modern – no consideration if fair/ due to circ unforeseen when k made
UCC- NO consideration needed, but MA + GF
Novation
Obligee (who receives performance) expressly agrees to accept performance of the delagatee (new TP)
All parties (incl tp ) agree to NEW K + new k extinguishes duties between original parties
Accord and Satisfaction
Accord = one party promises to render substitute perf + OP promises to accept
Accord = new performance (once perf- discharges og duty)
Consideration required
Accord and Satisfaction Consideration Rules
Consideration my be less if:
different than original BFE
paid to TP
resolves GF dispute concerning original K
TPBs
Benefits from K between OPs
Intended - promisor intended to benefit
Incidental- benefits but wasn’t intended to
Intended TPB
Can enforce K; has rights under K
Incidental TPB
Cannot enforce K; has no rights under K
Rights of TPBs
Vest when:
Accepts benefits (learn and agree)
Sues to Enforce (learn and sue)
DR on K (learn and rely)
TPB Enforcment
TBP → sue promisor
Promisee → sue promisor (law AND equity)
(TPB can only sue promisee if TBP creditor beneficiary)
Assignment
Transfer of rts under K to TP
Assignor receives perf
Assignee is TP
Obligor will perform
Assignment Reqs
NO consideration
Assignor- only assign rights they have in the K
CL - cannot assign if substantially changes duties of obligor
Assignment Revocability
Consideration – irrevocable
Gratuitous– revocable unless:
obligor performed / assignee received written claim/tangible object of rt to collect / DR by assignee
Assignee Right to Sue
Obligor - for non performance
Assignor - for w/f revocation
Delegation
Delegator assigns duties she owes obligee to TP (delegatee)
Delegator remains liable
nondelegable - PJ/skill; mat changes expectancy; special trust; K provision prohibts
Expectation Damages
Standard measure– in place would have been if K performed
Reliance
Expectation too speculative
Put P in position if K never made
Consequential
Dmgs f/s at time of breach + when formed, d had reason to know P would suffer special dmgs
UCC– only B can recover
Incidental
Expenses reasonably incurred by B or S as direct result of breach (cover; storing goods; inspecting; reselling)
Liquidated
Amt stipulated in K
Allowedable where dmgs = diff to calculate + reas approx (not punitive)
Nominal
P’s rights violated; no financial loss
Punitive
NEVER for K
Duty to Mitigate
P cannot recover for reasonably avoidable dmgs
Equitable Remedies
Reformation – rewrite K to accurately reflect parties’ intent
Rescission– no mtg of the minds; undo K
Grounds: Fraud, misrep, duress mistake
Defenses: Laches and UH
Quasi K
QM
Implied K to prevent injustice
value of benefit incurred
Replevin
Return of PP
Ejectment
Return of RP
Specific Performance
Valid k + conditions satisfied + inadequate legal remedy + mutuality of performance + feasibility of enforcement + no defenses
(ChaCha Is Fairly Difficult)
Laches
Unreasonable delay that is prejudicial to D
UH
P engaged in unfair dealing
Dmgs
S breach/ B has goods
K price minus Cover price (if B covered OR
K price minus mkt price (time B learned of breach)
(can also get incidental + conseq)
Dmgs
S breach/ B has goods
Std = difference between K price and goods value as tendered
Dmgs
B breach/ S has goods
If S resells → K price minus resale price
If S did not resell → K price minus mkt price
Dmgs
B breach, B has goods
Full K price
LV Seller
Can recover if:
enough supply to make both sales
would have made both sales
would have made profit on both
(+incidental but not consequential)
Conversion
FMV at the time of conversion
Parol Evidence Rule
Bars evidence of negotiations and agreements before K becomes integrated
exc: K partially integrated or AT would ordinarily be in sep agreement
PER Partially Integrated
Intended to be final expression of agreement but not intended to include all details
NO EE to contradict term; EE to supplement term
PER Fully Integrated
Intended to be final agreement and intended to include all terms
No EE to contradict OR supplement term
PER Exceptions
K formation/enforcement duties
CPs to Ks effectiveness
Ambiguous terms
PER and UCC Ambiguous Terms
Course of Performance (these parties)
Course of Dealing (general parties)
Usage of Trade (industry)
Express Warranty
UCC – implied – can be disclaimed
Promise about quality or feature of item
Breached – if falls short
IWM
Fit for ordinary purpose
Implied Warranty F for PP
S warrants goods are fit for Bs purpose
B has particular purpose
S knows
B relies on S
Disclaiming Warranties
Limits liability
Remedy – limits recovery upon breach
Damages to Warranty Breach
Difference between current value and value as warranted by S
UCC Risk of Loss
Shipment by Carrier
Shipment K → seller obligated to ship but RoL passes once delivered to carrier
Destination K → seller obligated to ensure goods reach B; RoL to B when B takes
USS Risk of Loss
NonCarrier Delivery
Merchant - RoL to B - physical possession
NonM Seller- RoL to B - upon tender of delivery
UCC Risk of Loss
Goods Destroyed before RoL passes
K avoided/no fault
FOB location
Seller has risk/expense to get goods to named location
B has RoL once at location
Construction K and Natural Forces
Land destroyed during construction – contractor responsible under original K + no QR work work completed
Residence completed → RoL shifts to owner
