Contracts Flashcards
Which test determines the governing law when the contract is for both goods and services, and how does it work?
The predominant purpose test applies when a transaction involves both the sale of goods and the rendering of services.
If the predominant purpose is the sale of goods, the UCC applies to the entire transaction.
If the predominant purpose is the rendering of services, the common law applies to the entire transaction.
What is the common law parol evidence rule (PER)? How does it apply with total integration vs. partial integration?
The common law parol evidence rule prevents the introduction of prior extrinsic evidence that contradicts the terms of the written contract.
For the PER to apply, there must be a determination as to whether the writing is integrated. If the writing completely expresses all of the terms, it is a total integration and all extrinsic evidence of prior negotiations is barred. If the writing is partially integrated (only some of the terms), then extrinsic evidence of supplementary, consistent terms is permitted.
Under the common law, how does the court determine whether a writing is integrated (for PER)? What is a merger clause?
Under the common law, the court was permitted to look only to the writing itself (the “four corners”) for evidence of intent. If the writing was detailed, the court would likely conclude it was totally integrated. A merger clause is strong evidence the parties intended a final, complete integration.
At common law, do modifications require additional consideration?
Yes. At common law, modifications of an existing contract must be supported by consideration. An agreement to modify a contract may still be enforced if there are new obligations on both sides.
(Example: A orally agrees to lower price of services contract from $4k to $3k. B happily accepts with nothing in return. Not enforceable because B has no new obligation.)
Under the UCC (goods), what are the essential terms for formation of a contract?
The identity of the parties, the subject matter of the agreement, and the quantity are the only essential terms under the UCC. As long as the parties intend to create a K, the UCC “fills the gap” if other terms are missing (e.g., time or place of delivery).
What is the applicability of the SOF to goods contracts?
An oral K for goods is valid and enforceable unless the sale of goods is $500 or more.
In that case, the K must be in writing and signed by the party to be charged in order to satisfy the SOF and be enforceable. The writing need only be sufficient to indicate that the parties intended to enter into a K.
What is an exception to the UCC SOF?
A contract for the sale of goods is outside the UCC SOF to the extent that goods are received and accepted, and to the extent that payment has been made and accepted.
(Ex: Oral contract to sell 10 knives; Seller delivers 6 and Buyer accepts and pays; SOF does not apply to those 6 but DOES apply to last 4)
What is a merchant’s confirmatory memo?
In contracts between merchants for the sale of goods for $500 or more, if a memorandum sufficient against one party is sent to the other party who has reason to know its contents, and the receiving party does not object in writing within 10 days, then the contract is enforceable against the receiving party even though he has not signed it.
But it STILL must satisfy SOF, and if it doesn’t it still won’t be enforceable.
Generally speaking, when can an offer be revoked?
In general, an offer can be revoked by the offeror at any time prior to acceptance.
What is a merchant’s firm offer (and the requirements)?
A merchant’s firm offer is a promise by a merchant to hold an offer open for a certain period of time, not to exceed 3 months.
Under the UCC firm offer rule, an offer to buy or sell goods is irrevocable if: (i) the offeror is a merchant; (ii) there is an assurance that the offer is to remain open; and (iii) the assurance is contained in a signed writing from the offeror.
(Note: A firm offer prepared by the offeree – an unusual scenario – must be separately authenticated by the offeror)
Apart from a merchant’s firm offer or option (supported by additional consideration) what is a fall-back way to keep an offer open?
It is still possible for an offer to be irrevocable if the offeree reasonably and detrimentally relies on the offeror’s promise prior to acceptance. It must have been reasonably foreseeable that such detrimental reliance would occur.
How is an offer revoked?
An offer is revoked when the offeror makes a manifestation of an intention not to enter into the proposed contract before the offeree accepts. A revocation may be made in any reasonable manner and by any reasonable means, but it is not effective until communicated.
If the offeree finds out that the proposed contract is no longer performable (e.g., because A already sold the goods to C), the offer is constructively revoked.
