Contracts Flashcards
The UCC governs ___
Common law governs ___
UCC governs the sale of moveable goods. Common law governs land sale contracts and contracts for service.
Offer
An offer is the objective manifestation of willingness to be bound to reasonably certain terms communicated to an offeree and grants the power of acceptance in the offeree
An offer is terminate by…
Revocation
Rejection
Counteroffer
Offers are generally revocable unless they are…
Option K, Firm Offer, Unilateral K
Option K
A contract with additional consideration to keep an offer open for a period of time
Firm offer
An offer from a merchant, in writing, signed, promising to hold the offer open.
No additional consideration needed.
Unilateral K
A promise for performance. Once you begin performing, the offer becomes irrevocable.
Acceptance is…
An express intent to be bound
Mirror image rule
The common law follows the mirror image rule, so acceptance must be identical to the offer, otherwise no contract is formed
Deviant acceptance
The UCC follows the rule of deviant acceptance so a contract is formed even if the acceptance contains additional or different terms
If one party is not a merchant and the acceptance contains additional or different terms… what happens?
the additional or different terms are proposals and are not part of the K (the K was accepted, the additional/different terms are not enforceable)
If both parties are merchants and an acceptance contains additional terms… what happens?
The additional terms become part of the K unless:
1) they materially alter the K;
2) the offer expressly says its contingent on acceptance as the offer is; or
3) the offeror completely rejects the additional terms.
If both parties are merchants and the acceptance of an offer contains conflicting terms… what happens?
UCC knock out rule applies–the conflicting terms in the offer and acceptance are both not incorporated.
Mailbox rule
Acceptance is effective when sent
If offeree sends rejection letter first, then an acceptance letter
Mailbox rule does not apply, whichever letter arrives first will be effective
If offeree sends acceptance letter first, then a rejection letter
The mailbox rule applies unless the offeror receives the rejection letter first and changes their position in reliance on it.
Consideration
A bargained for exchange. FL uses the legal detriment test.
Promissory Estoppel
when one party promises the other party, and the party relies on the promise to their detriment
When do you raise promissory estoppel?
When there is no consideration but there was a promise that another party relied on to their detriment
Modification of Ks under common law
Under common law, modification is not enforceable unless there is additional consideration. In FL, any change in performance is sufficient consideration for modification.
Modification of Ks under the UCC
A modification is enforceable if it is done in good faith
Mistake
Defense to K formation
A mutual mistake by both parties is a defense if the mistake is:
- a basic assumption of the K;
- has a material adverse effect on the agreed upon exchange; and
- the adversely affected party did not assume the risk of mistake.
Statute of Frauds
Ks that must be in writing
M- Marriage
Y- Ks that cannot be performed in less than 1 year
L- land sale Ks
E- executor
G- grantor
S- sale of goods > $500
Exception to Statue of Frauds
Part performance in land Ks where there is payment + possession of the land + improvements.
For all other Ks, there must be some sort of performance.
Misrepresentation
Defense to K formation or Claim to enforce K
An untrue statement about a material, existing fact, which caused reliance
Fraud
Defense to K formation or Claim to enforce K
An intentional lie which causes reliance.
Undue influence
Defense to K formation
Unfair persuasion (one party has greater power over the other)
Lack of capacity
Defense to K formation
Minors entering into Ks are voidable at the option of the minor.
Duress
Defense to K formation
Improper threat that leaves a party no choice but to agree
Material breach (what is it? what happens?)
Where you do not get the benefit of the bargain.
If there is a material breach, the non-breaching party does not need to perform.
Minor Breach/Substantial Performance (what is it? what happens?)
Where the non-breaching party received substantial benefit from the bargain.
The non-breaching party still has to perform but can recover or deduct damages from the breach.
Perfect tender rule
Under the UCC, performance has to be perfect. For any non-conformity, the buyer has the option to accept, reject, or accept in part and reject in part
If buyer receives non-conforming goods BEFORE delivery date and seller gives intent to cure…
Buyer must give seller opportunity to cure
If buyer received non-conforming goods AFTER delivery date, but seller had reasonable belief buyer would accept
Buyer must give seller opportunity to cure if they can do so within a reasonable time
Anticipatory repudiation
A clear and unequivocal refusal to perform or an act inconsistent with performance
If there is an anticipatory repudiation, the non-breaching party has a right to:
- sue immediately for breach;
- encourage performance;
- cancel the K (recission);
- wait and see
Reasonable grounds for insecurity
If the seller communicates something to the buyer that gives them reasonable grounds for insecurity, the buyer can demand assurances
Condition
Anything, something other than the passage of time, that must occur before a duty to perform arises
Illegality and impossibility
Illegality- excuses performance bc the K is illegal
Impossibility- excuses performance because objectively, no one could perform the K
Impracticability
Excuses performance because there is extreme and unreasonable difficult or expense that is unanticipated
Expectation damages
Putting the P in a position had the K been perfomed
UCC seller expectation damages
If seller resells the goods = difference between resale price and K price
If seller does not resell = difference between K price and market price
UCC buyer expectation damages
If buyer covers = difference between cover price and K price
If buyer does not cover = limited to the difference between the K price and the market price
Mitigating damages
non-breaching party has to mitigate their damages
Parol evidence
entering into evidence oral statements and prior written statements that occur prior to or at the same time with the K
If K is a final integration
NO parol evidence unless to clear up an ambiguity
If K is a partial integration
Parol evidence allowed unless it would contradict a material term
Parol evidence exceptions– allowed no matter what:
- to show a condition precedent to the K
- to show course of dealing;
- to show right of reformation because of a mistake
Assignment and Delegation
Any contractual right may be assigned or any contractual duty may be delegated unless the duty involves personal judgment or skill
