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Contracts Flashcards

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1
Q

Contract

A

(1) Offer

(2) Acceptance

(3) Consideration

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2
Q

Offer

A

(1) Intent to enter into a K +

(2) Specific Terms of K.

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3
Q

Advertisements

A

generally, not an offer; they are an invitation to offer (except: when it limits who can accept)

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4
Q

Terminating an Offer

A

(1) Death; (2) Lapse of Time; (3) Rejection; (4) Counteroffer; (5) Revocation

Lapse of Time – if there is no time period stated, a reasonable amount of time has passed

Direct Revocation – Offeror can revoke before offeree accepts

Indirect Revocation – Offeree learns that Offeror made a deal w another party & offer is now revoked as a result

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5
Q

Irrevocable Offers

A

When elements not met–>defaults to revocable offer. (1) Option K; (2) UCC Firm Offer; (3) Unilateral K

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6
Q

Option K

A

Irrevocable Offer. Promise to keep the offer open for a period of time + additional consideration (e.g., open for 2 weeks for $50)

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7
Q

Acceptance

A

(1) Mirror Image Rule; (2) Silence; (3) Performance; (4) Mailbox Rule

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8
Q

Mirror Image Rule

A

Acceptance has to mirror terms of the offer (e.g., accept in writing must accept in writing)

EXCEPTION: UCC Sale of Goods – offeree can accept anyway even if different terms. As long as basic material terms = same.
*Except – (1) material changes in terms (price, goods, etc.); (2) offeror rejects within reasonable amount of time; (3) offer limited acceptance

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9
Q

Silence

A

Acceptance. Offeree gives offeror the impression that silence will be considered an acceptance

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10
Q

Mailbox Rule

A

Acceptance is effective once sent (except: letter #1: rejection sent, letter #2: acceptance sent first letter to arrive)

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11
Q

UCC Firm Offer

A

Irrevocable Offer. sale of goods. Promise to keep offer open for a period of time, no consideration required but needs to be in writing signed by the merchant. Lasts for time stated or max 3 mo.

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12
Q

Unilateral K

A

Irrevocable Offer. Irrevocable once performance starts. a promise for an act (e.g., promise to pay $500 if you paint house)
-Bilateral K – promise for a promise (e.g., promise to paint your house if you promise to pay me $500)
-Payment in Unilateral K – don’t have to pay full amount until complete performance

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13
Q

Consideration

A

Bargained-for exchange. Each party is giving up something, regardless of value.

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14
Q

Peppercorn Consideration

A

Courts will not invalidate consideration regardless of how little value (e.g., $1.50)

Except:

(1) Illusory Promise: looks like a promise but not actually giving anything up/still retaining control (e.g., I’ll call you when I decide). Modern trend is that an illusory promise–> enforceable consideration;

(2) Promise to Give Gift: invalid; but giving gift–> valid & enforceable;

(3) Past or Moral Consideration: offering to give $$ after good deed invalid

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15
Q

Promise to Pay Debt After Statute of Limitations/Bankruptcy

A

valid consideration & enforceable

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16
Q

Forbearance to Sue

A

if promise not to sue even tho could –> valid consideration & enforceable

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17
Q

Promissory Estoppel

A

A promise by a party that makes other party reasonably rely in detriment valid & enforceable

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18
Q

Accord & Satisfaction

A

Hypo #1: Debt is undisputed ($100). Partial payment ($50), but check says “paid in full”–> must pay remainder ($50)

Hypo #2: Debt is disputed ($100). Negotiate & settle ($75), check says “paid in full”–> do not have to pay remainder ($25)

Hypo #3: Debt is disputed ($100). Doubt re debt amount/whether debt owed but paid partial amount ($50) –>do not have to pay remainder ($50)

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19
Q

Risk of Loss

A

No Carrier – Seller bringing goods to Buyer directly. Seller is a merchant RoL on seller until buyer takes possession of goods. Seller is not a merchant RoL is on seller until makes available for buyer to pick up

Carrier is Involved – Delivery intermediary (UPS, boat, plane).
-Shipment K (“FOB Seller”): Default. RoL is on seller until gives to carrier. Once given it to carrier, RoL shifts to buyer.
-Destination K (“FOB x”): RoL is on seller until goods get to actual location.

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19
Q

Requirements K

A

I promise to deliver all the quantity of x I have. Something happened. As long as acted in good faith valid.

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20
Q

Modification of Material Term of K

A

Oral or written (except: UCC: can have a clause prohibiting oral modification = valid)

Common Law – need new consideration v. UCC Sale of Goods – need good faith, no consideration needed

Mutual Modification – bc of unforeseen circumstance, mutually can modify terms as long as change is fair and reasonable

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21
Q

Conditions

A

I will do X if you do Y. A condition/event in the K that must happen–>requires you perform/not perform.

Condition Precedent – Condition/event must happen before performance;

Condition Concurrent - Condition/event must happen at the time of performance;

Condition Subsequent – Condition/event must happen after the K

Required Performance – Generally, if event doesn’t occur don’t have to perform.
-Except: Must perform regardless of condition occurring– (1) Waiver of condition: “do it anyway/forget about it/dw about it;”

(2) Bad Faith;

(3) Avoiding forfeiture: if a party would suffer a great loss/forfeiture

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22
Q

Time in a K

A

Time is not of the essence in a K unless it is stated. If it is stated, then it becomes a condition in a K.

23
Q

Good Faith

A

Generally implied in every K

24
Q

Nonconforming Goods

A

Seller delivers goods that are not what buyer originally ordered. Buyer may (1) reject, (2) accept, or (3) reject in part and accept in part. If reject, must reject in reasonable amount of time. If accept, buyer will pay amount of the goods in the OG k.

Hypo #1: Seller sends nonconforming goods but has reasonable grounds to think buyer would accept nonconforming goods Seller can fix nonconforming delivery if (1) can fix within reasonable amount of time (2) gives notice

Hypo #2: Seller sends nonconforming goods prior to delivery date  Seller can fix nonconforming delivery if (1) can deliver by due date (2) gives notice

Installment K – Delivering goods in installments (100 #2 pencils/week for 10 weeks).
-If one of the installments is nonconforming (#1 pencil box) does not mean total breach of K if it affects only that installment. If S cannot fix it–>B can reject it. If S can fix it B cannot reject it & must give seller chance to fix
-If one nonconforming installment materially impairs value of whole K total breach
-Accommodation: only sending you this as an accommodation. B can accept or reject.

25
Q

Impracticability

A

Unforeseen circumstances which now makes performance of K too difficult/expensive  can be discharged of performance

Foreseeable – any fluctuation of price is foreseeable. Must be extreme.

26
Q

Impossibility

A

Objectively no one could perform (UCC- Goods are destroyed; Performance is now illegal; Physically can’t do it)

Temporary Impossibility – cannot raise defense of impossibility (e.g., blizzard and roads closed for 48 hours)

Parties Prepared for Event – no defense for contingency that parties prepared for bc then foreseeable (e.g., snow tires on truck)

27
Q

Frustration of Purpose

A

Core reason for entering K no longer exists–> can be discharged of performance (e.g., bar prep course, don’t take bar)

28
Q

Anticipatory Repudiation

A

Hypo #1: Before performance, one party unequivocally refuses to perform Total breach = can sue right away or wait or start looking for other options (cancel K). If repudiating party comes back and offers to perform, other party can accept or reject.
 Repudiating party can retract repudiation UNLESS OP has (1) sued RP, (2) accepted repudiation, and/or (3) relied on repudiation and has started looking for another buyer

Hypo #2: Before performance, party1 informs OP that unsure if can perform (e.g., give money to buy house)  OP can demand assurances from party1. If Party 1 provides assurance within reasonable amount of time  OP must wait for Party 1 to perform. If Party 1 doesn’t respond within reasonable amount of time OP can find someone else/can cancel K.
 UCC Sale of Goods K demand for assurances must be in writing and reasonable amount of time = 30 days

29
Q

Defenses to K Enforceability

A

(1) Minor

(2) Insane

(3) Duress

(4) Undue Influence

(5) Unconscionability

(6) Illegal

(7) Mistake

(8) Misrepresentation

(9) Non-Compete Clauses

(10) SOF

30
Q

Minor

A

voidable at minor’s option. K can be ratified at age of majority. #s agreed upon after majority>#s agreed upon when minor

31
Q

Insane

A

K is void

32
Q

Duress

A

Threat

33
Q

Undue Influence

A

Uneven bargaining position + special relationship

34
Q

Unconscionability

A

Result of K will be unconscionable

35
Q

Illegal

A

Not enforceable, void

35
Q

Mistake

A

Unilateral – one party is mistaken about a term in the K. Generally, not be a defense unless (1) the other party knew about the mistake (take advantage of me) OR (2) clerical error

Mutual – mistake by both parties to a material term in K. Defense accepted bc no meeting of minds. Remedy = Recission.

35
Q

Misrepresentation

A

Intentional Misrepresentation – (1) said something knew or should have known was false; (2) intent to get detrimental reliance.

Negligent Misrepresentation – (1) said something false/omitted (2) special relationship (e.g., fiduciary duty) (3) detrimental reliance

35
Q

Legal Remedies

A

$

35
Q

Expectation Damages

A

Default; Granted if foreseeable with reasonable certainty. Puts person back in position before breach, had K been performed. (Market/K Price + Costs – Benefit [aka any $ you saved/received])

36
Q

Reliance Damages

A

Put person in position prior to the K. Paid $ in reliance on K. Granted generally when can’t get expectation D bc too uncertain/speculative (either or)

37
Q

Restitution

A

Get back value given to you. K is partially performed. Recover market value of the services. At the option of the non-breaching party in replacement of expectation damages (either or)

38
Q

Consequential

A

Foreseeable costs bc of breach

39
Q

Incidental

A

Out of pocket expenses

40
Q

Liquidated Damages

A

Determined at time K made. Clause in K that decides what damages will be if breach. Enforceable if reasonable (~10% or less of value of K) and does not act like a penalty.

41
Q

Quantum Meruit

A

Breaching party recover reasonable value of services done – any damages they commit during service

41
Q

UCC Seller’s Damages

A

(1) goods have been delivered & accepted = K price;

(2) some/none delivered and not resold (K price-Market price);

(3) some/none delivered and some resold (K price – Resale Price) + incidental damages

41
Q

Loss Profits

A

Seller is the lost volume seller, i.e., sell as many as possible. Expected Profit + Costs – Payment for Resale

42
Q

UCC Buyer’s Damages

A

(1) B purchased replacement goods (K Price - $ for New Goods);

(2) B has not purchased replacement goods (K Price – Market Value @ time B learns of S’s breach) + incidental/consequential damages – any expenses saved

43
Q

Equitable

A

Granted when remedy at law ($) won’t help.

(1) Specific Performance (item in K is unique/land);

(2) Injunction (prevent irreparable harm, e.g., employment K/trade secret);

(3) Recission (rescind bc no meeting of the mind via mistake, misrepresentation, duress, or lack of capacity)

44
Q

Parol Evidence

A

One/both parties trying to add more terms to an existing K parties already agreed to. Terms that parties are trying to add were talked about prior to or at the time of K. Is parole evidence admissible?

Complete or Final Integration – PE not admissible. Generally, K has a merger clause (“this is a final agreement b/w the parties”).
 Except – Parole evidence is allowed to clear up an ambiguous term in fact

Partial Integration – PE admissible. Anything that explains/supplements OG terms of K (consistent add. terms; e.g., how/where/when going to complete K) but nothing that contradicts/materially alters OG terms (e.g., price, type of car; Compare car accessories).

Fraud, Duress, Condition Precedent, Course of Dealing – parole evidence is admissible
 Condition Precedent – an event must occur before the parties are obligated to perform
 Course of Dealing – Sale of goods; customs of the trade. How we buy/sell

45
Q

Third-Party Beneficiary Rights

A

(1) 2 people have a valid K (2) 3rd party will be benefiting from K.

Intended Third-Party Beneficiary – may have rights against contracting parties. K parties intended to benefit 3rd party = intentional
 Naming Beneficiary – Generally will name individuals specifically in K but also can generally indicate who is to benefit
 Rights Vest – Can only sue when rights vest. K parties can change minds unless rights vested. Rights vest (1) When either K party tells 3rd party & 3rd party accepts OR (2) 3rd party learns about K and begins to rely.

Incidental Third-Party Beneficiary – no rights against contracting parties. incidentally benefiting from K = not intentional

46
Q

Assignment

A

Transfer of rights

Present intent to transfer (must transfer now. Can’t transfer in future, e.g., transfer 6 mo./1 year from now)
 Breach – Can sue 3rd party and OG K party for breach (no/bad performance) unless OG K parties executed a novation
 Anti-Assignment – clause prohibiting assignments but still assign anywaysAssignment is still valid but owes damages for breach unless void (clause says assignments are prohibited and void so assignment is void).

47
Q

Assignment & Delegation

A

Valid. 2 people have an agreement. One party transfers obligation/performance to 3rd party.

47
Q

Delegation

A

Transfer of duties (except: personal service Ks; Ks requiring personal skills, discretion, expertise; delegation would materially alter terms of K)

Anti-Delegation – clause prohibiting delegation (“no delegation of duty”) => Enforceable

Other times you cannot delegate:

(1) Materially alter risk of performance/obligation of OP –makes OP worried that won’t get what bargained for (assigning to co. on verge of bankruptcy/lack of expertise) or bc assigning party has unique service/expertise so want them to do it specifically (can’t even give to another specialized person)=> cannot assign to 3rd party

(2) Cannot Change Terms – Party assigned K cannot change/add terms, only receives rights/obligations

(3) Assignment of Right to Money – you owe me $100 but pay it to X. Must give notice to pay X.

47
Q

Non-Compete Clauses

A

Conditions of where you can work after quit. Enforceable if reasonable under circumstances

47
Q

Statute of Frauds

A

MYLEGS.

(1) Marriage;

(2) Year: Ks that cannot be performed w/in a year [except: employment for life & no performance date listed];

(3) Land: includes leases [except: part performance];

(4) Executor of Estate;

(5) Guarantor/surety [except: purpose for guaranteeing debt is to benefit me];

(6) Sale of Goods over $500 [except: part performance of delivery/payment, Merchant’s Written Confirmation = confirm quantity via memo + signed by sender + no objection in writing w/in 10 days of receipt]

Legal Writing – Parties, subject matter, basic material terms, signed (or initialed/symbol everyone knows) by party to be charged.

Bar Exam (8 decks)

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