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Contracts Flashcards

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1
Q

Applicable law

A

Article 2 of the Uniform Commercial Code (UCC) governs contracts for sale of goods. Goods are defined as movable things. Otherwise, Common Law dictates, unless it’s a mixed contract, where the predominant purpose of the contract will determine the appropriate law.

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2
Q

formation

A

a contract is formed when there is an offer, acceptance, and consideration and there exists no defenses for formation

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3
Q

Offer

A

manifestation of intent to be bound, there are reasonable and definte terms, and it is communicated to an identifiable oferee

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4
Q

Merchant firm offer

A

an offer is not revocable if it is made by a merchant, signed in writting, that gives assurances that it will be held open for a period stated in the writting. If no time is stated, a reasonable time is to not exceed 90 days

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5
Q

acceptance

A

Acceptance requires a manifestation of assent for the terms of the offer by the offeree

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6
Q

Bilateral contracts acceptance

A

the start of performance manifests acceptance

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7
Q

Unilateral contracts

A

Starting preformance only renders a contract irrevocable, where acceptance exists only when performance is complete. If beginning performance, an offeree must inform the offeror of completion within a reasonable time of completion of preformance

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8
Q

Retraction of a unilateral offer can happen when

A

either by lapse by a reasonable time or earlier by revocation

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9
Q

revocation

A

retraction of an offer by the offeror and is only valid if communicated to the oferree before acceptance

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10
Q

counter-offer

A

response made by the oferree to the offeror that contains the same subject matter as the orginal offer but differs in terms. It operates as a rejection of the orginal offer as well as the new offer

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11
Q

consideration

A

bargined for exchange of something for legal value. Courts will not question the adequacy of consideration - a mere peppercorn may suffice

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12
Q

Illusory contract

A

attempt to contract however is not legally binding

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13
Q

If the contract says a party can cancel before a certain date the contract is

A

illusory until that date, and binding after that

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14
Q

Implied in fact K

A

A contact based on a tacit promise, inferred when conduct creates a contract, a benefit was received that could have been refused, and it would be fair to presume payment was expected.

\

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15
Q

Option K

A

An offer is not revocable if the offeree gives consideration for a promise by the offeror to refrain from revoking an offer for either a stated period of time or reasonable time if no time is specified. Option K are an exception to the mailbox rule, and are accepted upon return not upon mailing

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16
Q

Mutual mistake

A

A contract is voidable when both partis are msitaken as to a basic assumption on which the contract is made, the mistake is material to the K and the party asserting the mistake did not bear the risk of mistake

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17
Q

Voidable K means that when you void, you can either

A

rescind or reformed

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18
Q

Unilateral mistake

A

A mistake by one party that is unknown to the other party concerning a basic assumption that has a material effect. A unilateral mistake is generally not a valid defense to formation of a K but can be if one party knew or had reason to believe the other party was mistaken, or the non-mistaken party had a duty to disclose

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19
Q

conditions

A

makes preformance obligatory only when the condition occurs.

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20
Q

Concurrent conditions

A

occur simultaneously but each function as a condition precedent to the other

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21
Q

Satisifcation co ndition

A

can be viewed subjectively but good faith. Even if objectively satisifactory by reasonable persons, client decides his own subject satisfaction

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22
Q

Breach

A

Occurs when a party fails to perform when

1) condition precedents are satisfied
2) time to perform arrives
3) performance is not discharged

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23
Q

material breach- if a party does not receive the substantial benefit of their bargain, the breach is material, and what can they do damage wise

A

1) they are no longer obligated to continue performance under terms of the contract, and 2) they will have an immediate right to all remedies for breach of the entire contract, including total damages.

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24
Q

Minor breach

A

A breach of a contract is minor if a party gains the substantial benefit of their bargain despite defective performance. A minor breach does not relieve the aggrieved party of performance under the contract; it merely gives them a right to damages for the minor breach.

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25
Q

Which contracts need to be in writting in order to be valid

A

Marriage, a contract that cannot be performed within a year, land sale or land leases for over a year in length, executor guarantees to pay, contracts for goods valued over $500 and suretyships.

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26
Q

For a writing to be valid under SOF, it must included

A

Writings must be signed by the party charged, reasonably identify the subject matter, indicate there is a contract and state the essential terms.

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27
Q

Where there is part performance that unequivocally indicates acceptance and there is no writing,

A

a party will be estopped from claiming there was no contract based on a lack of a writing.

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28
Q

Writings for SOF can be

A

a number of writings, no need for only one signed document. E-mail messages suffice, including signature or not.

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29
Q

Partial performance

A

Requires two of three: 1) payment in whole or in part; 2) possession; and or 3) valuable improvements.

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30
Q

SOF exception where you cant claim SOF

A

1) full performance; 2) judicial acknowledgement of the agreement; 3) estoppel 4) when the purpose of making the guarntee was to benefit the person making the promise

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31
Q

SOF exceptions - UCC Version

A

– 1) Merchant’s confirmatory memorandum (the other party does not object in a reasonable time); 2) goods accepted and paid for; 3) custom made goods; or 4) party admission of contract formation.

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32
Q

Common law and modifications

A

Contract modification must be supported by considerations

Exceptions include if there is a change in preformance or promise, if it is fair and equitable modification is due to a changed circumstance and the K is not fully preformed by either party

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33
Q

UCC and modifications

A

consideration is not required if done in good faith

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34
Q

Parol evidence rule

A

a party cannot introduce evidence of a prior or contemporaneous agreement that contradicts a later integrated writing

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35
Q

Exceptions to parol evidence rule

A

proof of a condition
clerical error
to establish a defense of formation
interpert vague terms
supplement a K that is only partially intergrated

36
Q

When should you assume a K is partially intergrated

A

when there is no time or date of compleition or merger clause

37
Q

Condition precedent

A

renders preformance condition upon the compleition of the condition

38
Q

Exceptions to condition precedent

A

When the protected party fails to cooperate in good faith or they voluntarily excuses the condition

39
Q

Frustration of purpose

A

discharges performance under a K if the purpose of the K no longer exists.

40
Q

Frustration of purpose - frustration of purpose discharges performance under a contract if the purpose of the K no longer exists. Performance is excused if

A

1) principal purpose if substantially frustrated
2) by an unforeseeable supervening event
3) both parties knew about the purpose at formation

41
Q

Impossibility

A

discharges preformance if it would be objectively impossible to preform due to unforeseen circumstances

42
Q

Duress

A

wrongful pressure exerted upon a person in order to coerce that person into a K that they ordinarily woulnt enter. This will invalidate the K

43
Q

Impracticability

A

Available when an event occurs after K formation that is unanticipated by both parties makes the performance unreasonably difficult or expensive

44
Q

Unconscionability

A

K may be avoided where the provisions r so one sided that they are unconscionable at the time of formation. Applies where one party has unequal bargaining power

45
Q

Time is of the essence

A

failure to preform by a specified date is generally not deemed a material breach unless the K contains a speific time of the essence clause. This is a term of art whereas a normal K can be completed within a reasonable time, even if there is a compleition date listed

46
Q

UCC Perfect tender rule

A

A seller must deliver conforming goods. The smallest non-conformity is a breach, where the buyer may reject all or a portitn of the goods. This includes timely manner, perfect quality and correct quanity.

47
Q

exceptions to Perfect tender rule

A

if the seller has a right to cure (time of performance has not expired)

installment K where the installment must be so defective it substantially impairs the value of the entire K

48
Q

Nonconforming goods- Upon receiving non-conforming goods, the buyer may

A

sell the goods in public or private sale but must notify the seller beforehand

49
Q

mirror image rule

A

under the common law, an acceptance must mirror the offer and additional terms is a counteroffer that revokes the inital offer

50
Q

Merchant

A

one who regularly deals in goods of the kind sold in the K or who holds themselves out as a merchant. Special rules apply to K’s between merchants.

51
Q

Battle of the forms

A

UCC article 2 states: acceptance does not need to mirror the offer, and can include different or additional terms. Oferees additional terms are deemed included only if 1) both parties are merchants 2) terms are not a material change 2) offer does not limit acceptance to exact terms 4) no objection was made within reasonable time

52
Q

Promissory estoppel will allow a P to pursue damages when

A

1) P reasonably and foreseeably relied to their detriment on the promise

2) promisor should have reasonably expected a change in position in reliance on that promise

3) enforcement of the promise is necessary to avoid injustice even without consideration

53
Q

Adequate assurance

A

A party with reasonable grounds for insecurity regarding preformance may request adequate assurance via writting. If the other party does not provide these assurance within reasonable time, the asking partty may treat that as an anticipatory repuidation

54
Q

Anticipatory reputation

A

Occurs when a party communicates that they are unable or unwilling to preform before preformance is due

55
Q

What happens when a party communicates that they are unable or unwilling to preform before preformance is due

A

Aggrieved party may

1) treate the anticipatory repudiation as a breach and sue immediately

2) suspend preformance and wait to sue when preformance is due

3) treat the repudiation as an offer to rescind/contract as discharged

4) ignore and urge preformance

56
Q

Anticipatory repudiation retraction

A

A repudiation can be retracted unless the aggrieved party has

1) cancelled the K
2) materially changed the position
3) indicated repudiation as final

57
Q

Expectation damages include all

A

Damages include all expected profits that would have been realized if the K was fully preformed by breaching party

58
Q

Reliance Damages

A

If P’s expectation damages r too speculative to measure, they may elect to recover based on their reasonable reliance on the K. Reliance damages are awarded to p the cost of preformance and r designed to place the P in the position had they K never been formed

59
Q

Misrepresentation

A

D makes a misrepresentation of material fact for the purpose of inducing the P to rely on misrepresentation to their detriment. Nominal damages r not available

60
Q

Gratuitous Promise

A

if consideration is provided for past services, the promise is invalid

61
Q

Assignment of rights

A

A transferor of rights where an obligor contracts with an assignor and the assignor assigns their right to be the obligors performance to the assignee.

62
Q

Generally all contractual rights may be assigned other than the ones that

A

substanitally change the obligors duty or risk

assign future rights to arise from future K

Prohibited by law

63
Q

Assignments clauses

A

prohibts the assignment of the K will be construed as barring only the delegation of assignor duties. A clause prohibiting the assignment of rights, like the right to payment, generally will not bar the assignment of those rights. The assignor has the power but not the right to assign, so if an assignment is made, the obligor has the right to sue for the breach.

64
Q

Delegation of duties

A

A delegation is a transfer of duties. It generally consists of a situation where the obligor/delegator promises to perform for the obligee but then delegates their duty to the delegatee.

65
Q

Generally duties may be delegated except

A

1) those that involve personal judgment and skill,

2) the delegation would change the obligee’s expectancy,

3) a special trust was created in the delegator by the other party to the contract, and

4) where there is a contractual restriction on the delegation.

66
Q

Enforcement of expired debt

A

An exception to the pre-existing duty rule, no consideration is required to contract to receive pre-existing defaulted debt.

67
Q

Quasi-k

A

When there is a failed contract, the defendant is required to make restitution to the plaintiff. Requires 1) plaintiff confers a non-gratuitous benefit to defendant, 2) the defendant knows the plaintiff’s expectation because they knew of the benefit and did not decline, and 3) the defendant would be unjustly enriched if they retain the benefit.

68
Q

Illegal K

A

A statute to raise revenue will not prevent contract enforcement if the contractor has not obtained a statutorily required license. Typically occurs when a client refuses to pay an unlicensed contractor, and claims the contract was illegal, therefore unenforceable.

69
Q

Novation

A

When all parties to a contract agree to release a party to a contract and substitute a third party in their place.

70
Q

express warranties

A

created by seller’s affirmation/promise, description of good

71
Q

What is not an express warranty

A

Mere puffery or exaggerations or opinions regarding the product

72
Q

Implied warranty of merchantability

A

implied in every sales contract is a warranty of merchantability or that the goods subject to the K are of a suitable quality or condition appropriate for the sale of goods in a given market

73
Q

An implied warranty of merchantability need not to be stated in the K to be valid however

A

the disclaimers of wattanty must be explicit and conspicuous

74
Q

An implied warranty of merchantability need not to be stated in the K to be valid however

A

the disclaimers of wattanty must be explicit and conspicuous

75
Q

FOB Buyers location

A

seller bears the risk of loss until the goods arrive at the buyers location

76
Q

FOB Seller’s location

A

Buyer bears the risk of loss upon shipment of the goods by the seller

77
Q

Incidental damages

A

damages awarded for costs and losses that naturally flow from the breach

78
Q

Duty to mitigate

A

Nonbreaching parties have a duty to mitigate damages. If a party prematurely incurs additional expenses absence a breach, they will not be able to recover.

79
Q

Force Majeure events

A

force majeure events or acts of god can excuse for performance when not the cause of either party

80
Q

UCC Knock out rule

A

Conflicting terms cancel each other out and neither enter the K. The K then consists of agreed-upon terms and the court will supply missing terms if needed

81
Q

Acceptance in the case of UCC

A

does not need to mirror the offer like CL an

82
Q

When are you not able to use the doctrine of anticipatory repudiation

A

does not apply when the date of performance has not passed and the nonrepudiating party has fully performed. Under those circumstances, the nonrepudiating party must wait until the repudiating party’s performance is due before filing suit.

83
Q

Mailbox rule

A

provides that an acceptance is effective upon proper dispatch.

84
Q

Proper dispatch for Mailbox rule

A

requires that the offeree no longer has control or possession of the acceptance, such as with a properly mailed letter.

85
Q

What happens if the mailbox letter sent to the offeror the offeror dies before picked up

A

Offer is not accepted

86
Q

Capcity

A

must be 18 years and older and not mentally incomptent at the time of the K.

Bar prep vs2 (16 decks)

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