Contracts Flashcards
Contract for the Sale of Goods
Priority: High
Under Article 2 of the UCC, a contract for the sale of goods may be made in any manner sufficent to show agreement, including by conduct of both parties that recognizes the existance of a contract. A good is anything that is movable at the time of the contract.
Contract under Common Law
Priority: High
A contract for non-goods is formed when there is mutual asset, adequate consideration or a substitute, and no defenses to the contract formation making it void.
- For mixed goods and non-goods contracts, apply the law that is the predominate purpose of the contract.
Common Law Mutual Assent
Priority: High
Mutual assent is achieved through an offer by one party and the acceptance of that offer by another party.
A party is deemed to have tendered an offern when they manifest and communicate a present intent to enter into a contract with definite and reasonably certian terms. A party may revoke an offer through unambiguous words of conduct anytime before acceptance, unless it is an opton contract, firm offer, or the offeree has detramentally relied on the offer.
A party is deemed to have accepted an offer when they manifest and communicate an assent to the terms of the offer and be bound by a contract. The acceptance must be perfect or it may be considered a counter-offer. In a unilateral contract, the acceptance may be communicated by initiating performance, though the offer may still be revoked until performance is completed.
Mailbox Rule
Priority: High
An offer is deemed to be accepted when the acceptance communicaiton is sent. The revocation of any offer is effective when it is recieved.
Consideration
Priority: High
Contracts are only enforceable when both parties provide consideration for the contract. Consideration is a bargain for exchange and can be as simple as a promise or performance that benefits one party and causes a detrament to another. There are three exceptions:
1. Mateiral Benefit Rule = promise made in recognition of a benefit previously recieved may be enforced to the extent necessary to prevent injustice.
2. Promissory Estopple = when a party reasonably and forseeably relied to his detrament on a promise of another party and that party should have reasonably expected a change in position
3. Past Debt = the promise to pay non-legally enforceable past debt, if made in writing.
Contracts where one party has no obligation to form are considered illusory and are not enforceable.
Common Law: Modification to a Contract
Priority: High
Modifications to a contract require new or additional consideration unless:
1. unforseen circumstances resulting in fair and equitable modifications.
2. a third-party promise when the duty was owed to a third-person
UCC: Modification of a Contract
Priority: High
No consideration is reuqired for good faith modifications of a goods contract under the UCC. All modifications must be made in writing if they fall within the satute of frauds or the original contract was made in writing.
Statute of Frauds
Priority: High
The following contracts are not enforceable unless they are in writing and signed by the person to be charged:
1. Marriage (pre-nupt)
2. Suretyship (taking on the debt of another)
3. Contracts that cannot be performed within 1 year.
4. Contracts for the sale of real property
5. promises to pay an estate’s debt from the personal funds of the Executor
6. contracts for the sale of goods $500 or more
UCC: Statute of Frauds
Priority: High
Contracts for the sale of goods $500 or more must be in writing and signed by the person to be charged, unless:
1. One merchange sends another a memorandum confirming the deal and the recipient doesn’t object within 10 days
2. The goods are accepted and paid for
3. Custom made goods that were substantially started and are not suitable for ordinary sale
4. If the party to be charged admits to the contract during a judicial proceeding.
Parole Evidence Rule
Priority: High
A binding integrated agreement discharges prior agreements and prohibits parties from introducing evidence of prior or contemporaneous agreeemnts that contradicts the agreement. Parole evidence may, however, be admitted to:
1. correct a clerical error
2. establish a defense against formation
3. interpret a vague or ambiguous term
4. supplement a partially integrated writing
An agreement is integrated if it is a complete and exclusive statement of the terms and is usually indicated by a merger clause. A partially integarted contract is one that intentionally does not include all of the terms the parties agreed to and parole evidence may be used to provide evidence of those missing terms only.
Material vs Minor Breach
Priority: High
A material breach excuses the non-breaching party’s performance. However, a minor breach will not excuse performance. A breach is considered material when evaluating the following factors:
1. The extent of the benefit deprived
2. The adequacy of compensation for loss by non-breaching party
3. extent the breaching party will suffer hardship
4. likelihood that the breaching party will cure
5. absence of good faith or fair dealing by breaching party
UCC: Acceptance & Revocation
Priority: High
Goods are deemed to be accepted under the UCC when:
1. a buyer signifies to the seller that the goods are conforming or that he/she will accept the goods despite the non-conformance, of any commercial unit of a shippment
2. a buyer fails to reject the goods after a reasonable opportunity to inspect them
3. does any action inconsistent with the seller’s ownership of the goods
After goods have been recieved, the buyer can later revoke that acceptance by notifiying the seller within a reasionable time if:
1. the nonconformity substantially impairs the value of the goods and that defect was difficult to discover
2. acceptance was reasonably induced by seller’s assurances
3. buyer accepted goods on the reasonable assumption the defect would be cured
UCC: Anticipatory Repudiation & Adequate Assurances
Priority: High
Generally, you must wait until a breach occurs before seeking breach of contract damages. An anticipatory repudiation occurs when a party unequivacally communicates that he is unable or unwilling to perform. The breaching party may retract the repudiation and restore the contract, unless:
1. aggrieved party cancels
2. materially changed his position
3. indicated that he considers the repudation final
UCC: Warranty of Title
Priority: High
All goods contracts include the following warranties of title:
1. title conveyed shall be good
2. the transfer shall be rightful
3. the goods will be delivered free from any hidden security interest or other lean or encumberance
Expectation Damages
Priority: High
The general mesasure for damages in a breach of contract action are expectation damages, which are the damages that arise directly from the breach. To recover these damages, they must:
1. be the actual cause of the breach
2. be forseeable
3. be certiant
4. be unavoidable (non-breaching party has duty to mitigate)
You calculate expectaiton damages by determinging the position the non-breaching party would have been in but for the breach, and subtract any value that could have been mitigated.
