Contracts Flashcards
Ambiguous term (plain term meaning rule)
In determining if a term is ambiguous, the court will apply the plain-term meaning rule, which provides that the face of the contract terms should determine the meaning of the contract if it is unambiguous
Parol Evidence Rule
Evidence of prior or contemporaneous agreements, written or oral, that contradict or modify contractural terms is inadmissible to vary the terms of the contract as written.
Partial integration (PER)
Parties are permitted to introduce supplementary extrinsic evidence of other terms as long as the evidence is consistent with the writing, but not if the evidence contradicts the terms of the writing.
PER exception (ambiguity)
If a term is ambiguous, outside evidence may be introduced to explain that…
Common Law Modification
Modification at common law must be supported by additional consideration
Express condition precedent
A condition precedent is one that must occur before an absolute duty of performance arises in the other party
Substantial performance (exception to condition precedent)
When a party has almost completely performed his duties, but has breached in some minor way, the rule of substantial performance avoids forfeiture of a return performance
Material breach
A party who fails to substantially perform is in material breach
Reliance damages
Reliance damages are based on the out of pocket expenses incurred by the non-breaching party. Puts the party in the same position had the contract not be formed
Merchants
Under the UCC, a merchant is one who regularly deals in the type of goods involved in the transaction or has specialized knowledge of the goods subject to the contract
Statute of Frauds
(Reason for application) needs to be in writing and signed by the party to be charged
UCC modification
Only good faith is required. Modifications are subject to SOF if contract is subject to SOF
UCC what counts as an anticipatory repudiation of performance
Party’s words, actions, or circumstances make it unequivocally clear that he is unwilling or unable to perform
UCC Anticipatory repudiation response
Aggregated party may:
1) sue immediately
2) suspend his own performance and wait and see until due date
3) treat repudiation as an offer to rescind and treat contract as discharged
4) ignore repudiation and urge performance
Adequate assurances
Under the UCC, if reasonable ground for insecurity arise, buyer may demand in writing a written adequate assurance of due performance. Needs to be provided in reasonable time (30 days). Buyer can suspend own performance until assurance given.
UCC perfect tender
Seller must make a perfect tender of goods, including delivery by contract date
Incidental damages
May be awarded to non breaching party as compensation for commercially reasonable expenses occurred as result of breach
Impracticability
A party’s duty to perform may be discharged if due to some unforeseeable event, the nonoccurance of which was a basic assumption on which the contract was made
Impossibility
Impossibility discharges one’s duty to perform and occurs when due to death or physical incapacity, illegality, or destruction of subject matter, the contract objectively cannot be performed
Offer
A communication that gives power to the recipient to enter a contract by acceptance
Acceptance
An objective manifestation by the offered to be bound by the terms of the offer
Consideration
Valuable consideration is experienced by a bargained for exchange in the legal position between the parties
Illusory promise
Essentially pledges nothing because it is vague or the promise can choose whether to honor it
Irrevocable offer
FOUR
Firm offer
Option Contract
Unilateral Contract
Reliance
Mailbox rule rejection and acceptance both sent
Whichever one arrives first is effective
Accord
An agreement between two contracting parties to accept alternative performance to discharge a preexisting duty
Satisfaction
Substantial performance of that accord. If performance on the accord doesn’t occur, the other party can sue for the original obligation or the accord
Risk of loss (merchant seller)
Risk of loss stays with the seller until buyer takes physical possession
Risk of loss (non-merchant seller)
Risk of loss stays with seller until goods are tendered (makes the goods available for buyer to get it)
Shipment contract
If contract does not require delivery to specific location, seller has risk of loss until he delivers goods to carrier
Destination contract
Seller required to deliver goods to particular location. Seller has risk of loss until goods are delivered to that destination
Incidental damages
Those related to avoiding the loss from the breach (storing goods after breach, transporting, returning, reselling books, etc.)
Consequential damages
Damages foreseen at the time the contract is entered into, must have been foreseeable to the breaching party (lost profits)
Expectation damages
Put the party in the position it would be in if contract was performed as promised. Includes incidental and consequential damages
Liquidated damages
Fixed measure of damages for breach that is already included in contract
Rescission
Cancelling of contract to restore parties in positions they were in before contract formation. Usually done when contract is void or voidable because it’s impossible to perform
Reformation
Remedy either party can seek when contract doesn’t reflect terms they agreed to
Reclaimation
Seller may reclaim goods from buyer if buyer is insolvent or paid with a bad check
Perfect tender and installment contracts
Perfect tender rule doesn’t apply here, breach occurs if the defect or default substantially impairs the value of the contract
