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Contracts Flashcards

1
Q

A valid offer requires:

A
  1. Manifestation of a present intent to contract demonstrated by a promise, undertaking, or commitment
  2. Communicated to an offeree
  3. With definite and certain terms
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2
Q

An offer may be terminated by

A

-Lapse in time
-Revocation by words or conduct
-Rejection
-Termination by operation of law

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3
Q

Revocation and rejection are effective when

A

received by the offeree/offeror

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4
Q

These are irrevocable offers:

A

-Option K (for consideration)
-Merchant’s firm offer (under UCC - by a merchant, signed, to be held open for not longer than 3 months)
-Detrimental reliance - if reasonably foreseeable and actual
-Beginning performance in a unilateral K - can’t be mere preparation

A mere promise to hold open is not binding unless detrimentally relied upon

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5
Q

A K is terminated by law through

A

-Destruction of subject matter of K
-Supervening illegality of K
-Death or insanity of either party (except for real property)

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6
Q

Acceptance under the common law requires

A

Mirror image acceptance - each and every term of the offer without alteration (any alteration = rejection and counteroffer)

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7
Q

For acceptance under the UCC

A

Alterations do not prevent acceptance AND they do not become a part of the contract UNLESS

Both parties are merchants, the alterations are not material, the offeror doesn’t object, and acceptance is not conditioned on new terms

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8
Q

Merchants are

A

Anyone who regularly deals in goods of the kind sold OR who otherwise by their profession hold themselves out as having specialized knowledge or skills as to the practice or goods involved

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9
Q

For confirmatory memos, firm offers, modifications, a merchant can be

A

Almost anyone in business

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10
Q

For implied warranty of merchantability/fitness, to be a merchant you must

A

be a merchant with respect to the goods of the kind involved in the transaction

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11
Q

The methods of acceptance include:

A

UCC - any reasonable means (promise to ship, current/prompt shipment, etc)
Unilateral contract - full performance
Bilateral contract - any reasonable way including promise or performance

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12
Q

Acceptance is effective on ____ unless ___

A

Dispatch (mailbox rule) UNLESS
-Offer stipulates that acceptance is effective when received
-There is an option K (acceptance on receipt)
-The offeree sends a rejection, then acceptance (first to arrive is effective)
-The offeree sends an acceptance, then a rejection (acceptance effective unless rejection arrives first and offeror detrimentally relies on it)

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13
Q

Consideration can be

A

-something of value, bargained for (even a peppercorn)
-Detriment or promise to do something

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14
Q

Exceptions to the pre-existing duty rule include:

A

-New or different consideration promised
-Unforeseen circumstances make modification fair and equitable or rise to the level of impracticability (modern trend)
-Good faith modification under UCC
-Where the promise is to a third party

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15
Q

Mistake is a defense to formation if

A

Unilateral - if the nonmistaken party knew or should have known of the mistake OR if the unilateral mistake was induced by the fraudulent behavior of the nonmistaken party

Mutual mistake - if there was a basic assumption whose occurrence or absence materially effects the K, and the party seeking avoidance did not assume the risk

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16
Q

Defenses to contract formation include

A

Mistake - unilateral, mutual
Fraud/misrep
Illegality
Incapacity
SoF
Unconscionability

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17
Q

Contracts subject to the statute of frauds

A

MYLEGS
Marriage - when marriage is a consideration for a promise
Year (1+) - must not be capable of being completed w/in a year
Land - any promises creating interests in land
Executor - promise to pay estate debts from own funds
Goods ($500+)
Surety

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18
Q

Parol evidence rule bars

A

Prior or contemporaneous oral or written expressions inconsistent with the terms of the writing

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19
Q

The parol evidence rule applies only when

A

the writing is the final expression of the bargain

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20
Q

If a K is not fully integrated through a merger clause, then

A

evidence may be admitted to provide additional, consistent terms (not to vary the terms)

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21
Q

If a K is fully integrated through a merger clause, then

A

no additional evidence is admissible

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22
Q

Exceptions to parol evidence bar include:

A

-Evidence of formation defects or conditions precedent
-Evidence to interpret terms
-Evidence showing true consideration paid
-Evidence in action for reformation

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23
Q

UCC will provide terms as gap fillers including:

A

-price (reasonable at time of delivery)
-place of delivery (seller’s business)
-Time of shipment (reasonable)
-Time for payment (receipt of goods)
-Assortment (buyer’s option)

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24
Q

Delivery terms in a noncarrier case pass the risk of loss according to:

A

Nonmerchant seller - passes RoL at tender of delivery
Merchant seller - retains RoL until buyer takes physical possession

UNLESS imperfect tender, in which case buyer does not take RoL

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25
Delivery terms in a carrier case pass the RoL:
-Shipment - RoL passes to buyer on delivery to carrier -Destination - RoL passes to buyer on tender at destination -FOB - RoL passes to buyer on deliver to FOB location
26
Implied warranty of merchantability promises
that the goods are fit for the ordinary purpose Only applies if the seller is a merchant of the kind of goods sold
27
Implied warranty of fitness promises
that the goods are fit for a particular purpose IF: -seller knew of the particular purpose -made recommendations -buyer relied on those recommendations
28
For modifications at the common law
-Additional consideration is generally required -Modern view permits modification w/o consideration if circumstances unanticipated at formation have made modification fair and equitable -A written contract can be modified orally (unless mod K falls in SoF) even if there is a contrary provision
29
Modifications under the UCC
-Are allowed w/o consideration so long as they are in good faith -Must be in writing if for $500+ -Prohibitions on oral modification are effective
30
A third party can enforce a contractual right if
they were an intended beneficiary
31
A third party's rights vest if:
-they manifest assent -bring suit -materially relied on the K
32
There are two types of third party intended beneficiaries, only one type can sue the promisee for performance:
-Donee beneficiary - someone intended to be gratuitously benefited by the promisee, can't sue unless detrimental reliance -Creditor beneficiary - someone who is owed a debt by the promisee, can sue on underlying obligation
33
Contract rights that are assignable:
All of them UNLESS it materially alters the obligor's duty or risk
34
A provision barring assignment has what effect
it prohibits only the seller's delegation of duties
35
Assignments for value are
irrevocable
36
A delegation is effective if
there is a present intent to make a delegation
37
An assignment is valid if
there is a manifestation of intent to immediately and completely transfer rights
38
A delegatee is only liable for performance if
there has been an assumption, where delegatee expressly/impliedly promised to perform and the promise is supported by consideration
39
Accord and satisfaction is
An accord is an agreement in which one party to an existing contract agrees to accept, in lieu of the performance that she is supposed to receive from the other party to the existing contract, some other, different performance. Satisfaction is the performance of the accord agreement. Satisfaction discharges not only the original contract but also the accord contract.
40
Accord and satisfaction for a monetary obligation is allowed when
The monetary obligation is uncertain OR subject to a bona fide dispute AND There is a good faith tender and acceptance of a indicating it is to satisfy the "full" obligation
41
If the requirements for accord and satisfaction are met, the acceptance of a check appropriately marked as "in full" results in
Satisfying the original contract and the accord contract such that the payor will not be liable for any difference between the original contract and the payment provided.
42
Consequential damages are ____ and are recoverable if ____
Special damages that reflect losses over and above standard expectation damages Reasonably foreseeable as a result of breach (the breaching party must have known or had reason to know of the loss)
43
Damages cannot be awarded if they are too ____ but evidence through comparison or history may be used to render them ____
speculative reasonably foreseeable
44
Incidental damages are
costs reasonably incurred in inspection, receipt, transportation, care, and custody as a result of buyer's breach
45
Liquidated damage clauses are enforceable if
-Damages for breach can't be reasonably estimated at time of formation -The amount agreed is reasonable (not a penalty, must be related to the damage)
46
A common example of consequential damages is ____ and the hurdle to recovery is ____
Lost profits as a result of breach Being too speculative (history or comparison may be sufficient to make the losses reasonably ascertainable)
47
A third party becomes the party in interest (such that they can sue for performance) once a party to the K manifests to the other party the intent to
Assign their rights
48
Acceptance occurs if there is a
manifestation of assent to the terms Generally, acceptance of an offer must be communicated to the offeror and must be unequivocal.
49
An exception to the statute of frauds is ____ performance
Partial -Sale of goods - specially manufactured OR paid for/accepted (enforceable for what was paid/accepted) -Sale of land - if 2 of 3: possession, payment, or improvement
50
A merchant's confirmatory memo is
An exception to the SoF creating a contract if -Sent within a reasonable amount of time -Includes terms -Binding against the sender if signed -Binding against the recipient if they don't object within 10 days
51
A sale of goods is governed by the UCC. Goods are:
all things moveable at the time that they are identified as goods to be sold under the contract
52
To comply with the SoF, a UCC sale of goods requires
A signed writing indicating the existence of a contract and specifying the quantity
53
In a UCC sale, the battle of the forms states that
differing terms by the offeree do not constitute a rejection, but is effective acceptance UNLESS expressly conditioned on acceptance of the new terms This applies to confirmatory memos of oral contracts as well
54
For a battle of the forms issue, if the parties are merchants then ____. If they are not merchants then ____
Merchants - terms become part of the K unless they materially alter (change obligations, risks, or remedies), expressly limit acceptance to new terms, or objection has been made or is made within a reasonable amount of time Non-merchants - terms generally do not become part of the K unless expressly agreed to
55
Impossibility excuses obligations of both parties if
an unanticipated or extraordinary event occurs making contractual duties impossible to perform. If either party has partially performed, that party has a right to recover in quasi-contract for the reasonable value of his performance
56
An assignee may be liable for ____ of the assigning party
breach They are subject to the contract-related defenses that the obligor has against the assignor Substantial performance will trigger their duty to pay, but it will be decreased by the value of the minor breach
57
Under the UCC, if a buyer has rejected goods before performance is due because of defects, the seller may
cure within the time originally provided for performance if it gives reasonable notice of the intent to do so and does ship conforming goods (the buyer must accept if conforming)
58
Under the UCC, if a seller ships goods it believes to be reasonably conforming, but the buyer rejects
the buyer must seasonably notify of the rejection for non-conformity and allow a commercially reasonable time to cure, even beyond the originally contracted for delivery date
59
In a contract for goods, specific performance is possible where
The goods are unique or circumstances otherwise make it proper
60
An incidental vs intended beneficiary is:
Incidental - someone who will be benefitted, but is not intended to be so (identified, related, receives performance). An incidental bene does NOT have contractual rights Intended - someone who is identified in the K, related to the promisee, or receives performance DOES have contractual rights
61
An intended 3P beneficiary whose rights have vested can always sue the _____ for performance, but they may raise ____
Promisor (not the party who has identified the 3P) The promisor can raise defense they would have against the promisee
62
In a contract with both goods and nongoods, the law that applies is
whichever law is dominant UNLESS the contract divides payment between goods and services in which case the applicable law is used for each side
63
Every K in the UCC imposes an obligation of Every K in the Common Law imposes an obligation of
Good faith - honesty, commercial reasonableness Good Faith and Fair dealing
64
Every contract requires:
Mutual assent - offer and acceptance Consideration - Bargained for exchange OR a substitute (Prom Estoppel, Det Rely, Good Faith Mod under UCC) No defenses to formation - mistake, lack of capacity, illegality, SoF
65
Mere inquiry is NOT
Rejection IF a reasonable person would not have believed it operated as rejection
66
An option contract is not terminated by
Rejection - it remains upon for the agreed period UNLESS the offeror has deterimentally relied on the rejection
67
Indirect revocation occurs when an offeree receives
-Correct info -from a reliable source -of acts of the offeror reasonably indicating revocation
68
A shipment of non-conforming good is both
acceptance and breach UNLESS the seller seasonably notifies the buyer that the shipment is only an accommodation
69
If acceptance occurs through shipment of an accommodation of non-conforming goods is offered under the UCC, the buyer has the right to
Accept them Reject them - if the buyer rejects, the shipper isn't in breach This rule doesn't apply to acceptance through a promise to ship
70
An illusory promise is one where
only one party is bound to perform Usually indicated by vague terms like an output K that states "all the widgets I want" (illusory) as opposed to "all I require" or "all you produce"
71
Promissory estoppel is
A K is enforceable if necessary to prevent injustice because: -Promisor should have reasonably expected detrimental reliance -Detrimental reliance occurs
72
Mistake by an intermediary renders a K
Operative as transmitted unless the other party knew or should have known
73
Unconscionability allows a court to
modify or refuse to enforce a K to avoid unfair terms Usually due to unfairness in bargaining process -Contracts of adhesion are unconscionable -unfair price alone is insuff
74
Impracticability is a defense to nonperformance if
(1) the parties incur excessive and unreasonable difficulty or expense due to an event (2) whose nonoccurrence was a basic assumption of the parties at the time of formation (3) AND neither party has expressly or impliedly assumed the risk of the event occurring
75
An offer to forbear a suit is sufficient consideration if
the promisor honestly and reasonably believes the claim is valid (even if it ultimately turns out to be invalid)
76
Incapacity renders a K voidable if
The party is incapacitated AND the other party knows or should know of the incapacity
77
If a third party's rights have not vested then the promisor and promisee are free to
modify the K without consent of the third party
78
Material breach factors include:
-Benefit received -Adequacy of damages -Extent of performance -Hardship to the breaching party -Whether the breach was negligent or willful
79
Some courts have held that a breach is always material if it is
Willful Other courts consider the willfulness as one factor
80
A divisible contract is one where
-performance is divided into parts (corresponding performance due from each party, I.e. finish x, pay y) -cost is individually apportioned -Provided it is fair to read a contract in such a manner
81
Under a divisible contract, payment is due
when an individual portion of the contract is completed

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