Contracts Flashcards
Express
Implied
Quasi-contract
Formed by language
Formed by conduct
Restitution remedy- when unenforceable contract results in unjust enrichment allows ct to issue restitution
Bilateral Contract
Exchange of mutual promise, accepted in any reasonable way
Unilateral Contract
. Offeror requests performance rather than a promise, requires full performance for acceptance, offeree can begin performance and stop without consequence
. Situations: 1) when the offeror clearly indicates completion of performance is only manner of acceptance or 2) offer to the public
. Magic words: “offer…only by” or reward
Mutual Assent
offer + acceptance
Offer
. Requires: 1) promise to enter into contract, 2) certainty and definiteness in terms and 3) communication to the offeree based on an objective, reasonable person standard
. Price quotes are not generally offers but may be if they include quantity terms
. Method of communication: broad communications like advertisements are invitation for offers: can be if it contains promise, certain terms and offeree identified, wool coats given to first 3 at store
. Series of communications: if there is an invitation to deal, a response is not an acceptance
Definite & Certain Terms
Name
Subject matter
Price
Time
Rejections
. Express: statement by offeree, will terminate offer
. Indirect Rejection: no explicit statement
. Counteroffer: made by the offeree with different terms. Rejection and new offer that must be accepted. *Difference between I will take it for $450. Period v. question mark
. Mere Inquiry: will not terminate offer, test is whether a reasonable person would believe it has been rejected: Will you take $450?
. Conditional Acceptance: when an acceptance is made expressly on the condition of a new material term, it is a rejection: I will take it if you paint the house- just like counter
Revocation
Termination by offeror: retraction of the offer any time before acceptance
Indirect: effective when known- if the correct info, from a reliable source, of acts they no longer wish to make the offer- sold to someone else
Limitations on the Power to Revoke
. Options: CL contract where the offeree gives consideration for a time period
. Merchant’s Firm Offer Article 2: If a
1) merchant,
2) offers to buy or sell goods in a signed writing, and (on letterhead with no signature ok)
3)the writing assures it will be held open for a time (do not need specific, less than 3 months, reasonable is 1 month)
The offer is not revocable for time stated, shall not exceed 3 months- NO CONSIDERATION
*Can use either option or merchant’s firm for sale of good, first apply option, less requirements
. Detrimental Reliance: foreseeable the offeree would rely to their detriment it will be held open as an option contract for a reasonable length of time
. Beginning Performance: UNILATERAL contract becomes irrevocable once performance has begun and must be given a reasonable time to complete but the offeree is not bound to complete the performance *Mere preparation≠ Start of Performance
. Beginning Performance: BILATERAL contracts are indifferent to the manner of acceptance and may be formed by beginning performance, then the contract is complete and revocation from both sides is impossible *May need notification for the start of performance *See also prompt shipment
. Termination: Death, destruction of subject matter or supervening illegality. Death makes an offer revocable before acceptance, does not terminate a formed contract
Acceptance
Manifestation of assent to the terms of the offer
Acceptance Bilateral Contract
promise to perform or beginning of performance if no provision for unilateral (accepted only through performance)
Acceptance must be communicated to offeror
Silence: generally no, but ct may find if prior dealings it would be reasonable- accepted furs for 6 months and did not pay last month
Method: must follow specific provisions if they are contained otherwise any reasonable manner or medium
Acceptance Unilateral Contract
If only accepted by performance, not accepted until performance is completed, offeree not obligated to complete but cannot revoke once begun, must know of offer, if you find watch and return it without knowledge of reward offer, no contractual right to the reward
Acceptance Under Article 2
Prompt Shipment: Art 2 offer to buy for current or prompt shipment is inviting acceptance as a promise to ship or prompt shipment
Shipment of Nonconforming Goods: acceptance and breach of contract unless the seller seasonably notifies the buyer that it is offered only as an accommodation, which is a counteroffer, buyer not required to accept, if rejected seller is not in breach
*Accommodation is not possible if they accepted the offer then realized they could not fulfill, this is breach
Battle of the forms: Mirror image is not required for Art. 2, instead inclusion of additional terms does not constitute a rejection and counter but is an acceptance unless assent is expressly made conditional, whether the terms become part of contract depends if they are both merchants *only for goods not land- adding tenant may keep pet is violation of mirror image bc of land, rejection + counter
Contracts between Merchants: both parties are merchants=additional terms will be accepted unless:
1) They materially alter the terms- changing risk or remedies, warrantability, Hardship or surprise to the other party
2) Expressly limits acceptance to terms of offer, or
3) Offeror has already objected to particular term or objects in a reasonable time after receiving
Merchant’s Confirmatory Memo: confirms oral agreements that contain different terms, subject to battle of forms *EXAM TIP watch for oral agreement and confirmatory memo sent with different terms, apply material alteration, jurisdictions can leave in or knock out
Mailbox Rule
effective at the moment of proper (addressed and stamp) dispatch, applies only to acceptance, unless:
1) Offer stipulates not effective until receipt
2) Option Contract: must be received
3) Offeree sends a rejection and acceptance- whichever arrives first is effective
4) Offeree sends acceptance and then rejection- acceptance is effective if received first and the offeror detrimentally relies on it
Consideration
Bargained for exchange of legal value
Adequacy: mere peppercorn is enough
e.g. Promises + promises = consideration
Forbearance to Sue: is consideration if claim is valid
Consideration Not Allowed
Gifts
Past acts- unless new promise made or emergency
Contract Modification & Consideration
CL: contract cannot be modified unless the modification is supported by new consideration
Modern View: allowed if: 1) the modification is due to unanticipated circumstances and 2) it is fair and equitable
UCC: no new consideration needed if it is good faith
Consideration: Discharge of Debts
bank can make and break because you owe the money- example: if you owe 300, offer to pay 200 they accept, they can still charge you 100 more unless: 1) you agree to pay early or 2) there is a dispute
Exceptions to Consideration
Promissory Estoppel: consideration is not necessary if the facts indicate the promisor should be estopped from not performing
Detrimental Reliance: Reasonably foreseeable: enforceable without consideration if necessary to prevent injustice if: 1) the promisor should reasonably expect to induce action or forbearance and 2) such action is induced
Defenses
Capacity
Duress/Undue Influence
Absence of Mutual Assent
Absence of Consideration
Illegality
Unconcionability
Statute of Frauds
Defense Capacity
Minors: under 18 lacks capacity, does not matter if you were unaware, minor has a right to disaffirm, but does not have to, if they do not disaffirm and turn 18 and keeps using the item, it is implied affirmation and they are bound. You are bound if they sue bc you have capacity
Exceptions for Minors: Necessaries: subsistence, health or education: minor may disaffirm contract for necessaries but will be liable in restitution for the value of the benefits, not the negotiated price, reasonable value
Mental: contract is voidable, they may disaffirm or affirm when lucid or representative, no ability to contract if appointed guardian
Intoxicated: voidable if the party had reason to know of intoxication
Defenses Duress or Undue Influence
voidable and may be rescinded if not affirmed, physical threat or economic duress: 1) wrongful act and 2) no other means example: I will not sell you x unless you also buy z- and there are no other means to get x in time
Defenses: Absence of Mutual Assent
Misunderstanding: Ambiguous contract language: depends on awareness-
1) Neither party aware: no contract unless both parties intended the same meaning
2) Both parties aware: no contract unless both parties intended the same meaning
3) One party aware: binding contract based on what the ignorant party reasonably believed to be the meaning of ambiguous words
Mutual Mistake to Existing Facts: mistake as to whether the subject matter exists- is the bat Babe Ruth’s, not value. The mistake must concern a basic assumption (the bat was not ruined and it was BR’s), Mistake has material effect on the agreed upon exchange and the party did not assume the risk
Whether the subject matter exists: if it does not exist: grant relief, no contract. If it does exist: enforce
Unilateral Mistake: courts more reluctant to grant relief: if only one party mistaken, it will not prevent contract formation unless obvious the other party had reason to know example: Bids for work 3 bids at 10,000, one at 1,000= mistake that is obvious
Misrepresentation: Fraud: contract is voidable; Material Misrepresentation(can be inferred from conduct): voidable if justifiably relied
Defenses: Absence of Consideration
no contract exists if one promise is illusory, gift, modification under CL, past consideration
Defenses: Illegality
if consideration or subject matter is illegal- contract is void
Unconscionability
Modify or refuse to enforce a contract with unfair terms- unfair price alone is not enough
Risk shifting: in fine print because they are inconspicuous and incomprehensible
Adhesion Take it or leave it: unenforceable if buyer is unable to procure from any other seller without the provision
Exculpatory Clauses: releasing yourself from intentional wrongful acts are against public policy, releasing from negligence are usually allowed
Limitations on Remedies: only if it fails of its essential purpose- limit to repair and cannot be repaired
Timing: unconscionability is determined by the circumstances at the time the contract was formed
Effect: court may refuse to enforce, enforce remained without the clause or limit the application of the clause
Defenses: SOF
Must have signed writing if:
Marriage
Year
Land
Executor
Goods of $500
Suretyship
SOF Marriage
Applies to promises that induce marriage by giving something of value, prenups, not promises to marry generally
SOF Year
if performance cannot be in one year, must be in writing. Assume superman can move pyramids to Atlanta in a year, but Lifetime: no signature, may be dead tomorrow, or dates over a year that need signatures- performing on NYE in 18 months
