Contracts Flashcards
When is a contract created?
When there is mutual asset (offer and acceptance) and
Consideration
What is an offer?
Objective manifestation of the willingness by the offeror to enter into an agreement that creates the power of acceptance in the offered
What are the essential terms under common law?
Parties
Subject matter
Price
Quantity
What are the essential terms for UCC?
Quantity
UCC will fill all other gaps
How can an offer be terminated?
Lapse of time
Death or mental incapacity
Destruction or illegality
Revocation
What is the UCC Firm offer rule?
Offer to buy or sell goods are irrevocable if:
1) offeror is a merchant
2) assurance the offer will stay open and
3) assurance is in a signed writing by the offeror
Merchant: person who regularly deals in the type of goods involved or hold himself as having knowledge or skill in the good involved
When is there acceptance?
When there is an objective manifestation by the offeree to be bound by the terms of the offer.
What if there are different or additional terms under common law?
Acceptance must mirror offer.
Additional or different terms is a rejection of the original offer and is a counteroffer.
What if there are different or additional terms under UCC?
Included
Unless merchant and materially alters original contract, or the offer limits acceptance, or objected within a reasonable time after receiving.
What is consideration?
A legal detriment or bargained for exchange.
What is needed for modification under common law?
Modification must be supported by consideration
What is needed for modification under UCC?
Good faith: honesty in fact and fair dealing in accordance with reasonable commercial standards.
What is accord?
Party agrees to accept performance that differs from the performance that was promised in the contract in satisfaction of the party existing duty’s
What is satisfaction?
The performance of the accord agreement.
What is the rule of Promissory Estoppel?
Can enforce a promise without consideration if:
- Promised should reasonably expect it to induce action or forbearance on the part of the promised or a 3rd party
- The promise does induce such action or forbearance and
- Injustice can be avoided only by enforcement of the promise
What are defenses to formation?
Mutual mistake
Unilateral mistake
Misunderstanding
Misrepresentation, nondisclosure or fraud
Undue influence
Duress
Capacity to contract
What is the material benefit rule (promise binding without consideration)
When a party performs an unrequested service for another party that constitutes a material benefit, permits the performing party to enforce a promise of payment.
What is an implied in fact contract?
Persons assent to an offer is inferred by the persons conduct.
To be bound the person must intend the conduct but also know or have reason to know that his conduct may cause the offeror to understand the conduct as assent to the offer
What is the implied warranty of fitness for a particular purpose?
Implied whenever the seller has reason to know that the buyer has a particular use for the goods and the buyer is relying upon the sellers skill to select the goods.
What falls under the statute of frauds?
Mr SOUR
marriage
Surety
One year rule
UCC over $509
Real estate
What is the parol evidence rule? Tested July
Prevents a party to a written contract from presenting extrinsic evidence of a prior or contemporaneous agreement that contradicts the terms of the contact as written.
How must you perform under common law?
A party who substantially performs can recover on the contract even though full perform are has not been tendered
How must you perform under the UCC?
Perfect tender
What is anticipatory repudiation?
Unequivocal manifestation the party cannot or will not perform their obligations.
Non breaching party may treat as breach as sue immediately or ignore and demand performance.
If time for performance has not passed then must wait until due before filing suit
When can anticipatory repudiation be retracted?
Until the promised
1) acts in reliance on the repudiation
2) signifies acceptance of the repudiation or
3) commences an action for breach of contract
What is prospective inability to perform?
A party can demand assurance of performance of there are reasonable grounds for insecurity about the other party’s ability or willingness to perform.
Once requested performance may be suspended until provided.
Failure to give in a reasonable time can be treated as repudiation
What is the normal measure of damages on contracts and what does it do?
Expectation damages: meant to put the non reaching party in the same position as if the contract had been performed.
What are consequential damages?
Result naturally from the beach but need not be the usual result of the breaching party’s conduct only FORESEEABLE RESULT of the breach
MITIGATION: a party cannot recover damages for a loss that the party could have avoided by reasonable efforts
What is foreseeable?
Must be foreseeable by the reaching party in order to be recoverable
If a party commits a medial breach they are limited to restitution damages NO UNJUST ENRICHMENT
