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Contracts Flashcards

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1
Q

K formation requirements

A

A binding K requires manifestation of mutual assent (offer and acceptance), consideration, and a lack of defenses to K formation

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2
Q

Offer

A

Offer is an objective manifestation of the offeror’s willingness to enter into an agreement that creates the power of acceptance in the offeree.

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3
Q

Advertisements

A

Ads are generally invitations to deal or receive offers unless the ad is very specific and leaves nothing open to negotiation.

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4
Q

Required terms under CL

A

Under the CL, all essential terms must be included in the offer (parties, subject, price, quantity).

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5
Q

Required terms under UCC

A

Under the UCC, the only essential term that must be included in the offer is quantity.

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6
Q

Ways that an offer may terminate

A

express revocation, constructive revocation, offeree rejects, offeree makes a counteroffer, offeror dies, or reasonable lapse of time

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7
Q

UCC firm offer

A

Under the UCC firm offer rule, an offer is irrevocable (up to 3 months max even if stated otherwise) if the Offeror is a merchant and the offer is in writing signed by the Offeror with an explicit promise not to revoke.

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8
Q

Who is a merchant for UCC purposes

A

A merchant is someone who regularly deals in the type of good at issue.

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9
Q

Option K

A

Offers kept open based on option Ks (separate valid consideration is needed to keep the option open) are irrevocable.

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10
Q

Acceptance

A

Acceptance is an objective manifestation by Offeree to be bound by the terms of the K. Unless the Offeror specifies, an Offeree can accept in any reasonable manner.

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11
Q

Mailbox rule

A

Under the CL mailbox rule, an acceptance sent by mail is effective when sent not received. A revocation is effective upon receipt.

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12
Q

Silent acceptance

A

Silence is usually not an acceptance unless the Offeree has a reason to believe silence could be an acceptance under the circumstances or previous dealings between the parties suggest silence can constitute an acceptance.

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13
Q

How does a UCC shipment of goods invite acceptance

A

Under the UCC, a buyer’s request that goods be shipped invites acceptance either by the seller’s return promise to ship or by prompt shipment of the goods.

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14
Q

Treatment of nonconforming goods

A

Under the UCC, a seller’s shipment of nonconforming goods operates as both an acceptance and a breach. However, if seller notifies the buyer that the goods are an accommodation (which constitutes a counteroffer), the buyer may then accept or reject the nonconforming goods.

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15
Q

Implied in fact K

A

Acceptance may be communicated based on a party’s conduct, in which a K exists based on implied in fact.

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16
Q

CL Mirror image rule

A

Under the CL mirror image rule, terms in the acceptance must exactly match the terms of the offer, otherwise it’s a counteroffer.

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17
Q

UCC 2-207, at least one party is a non-merchant

A

Under the UCC, an acceptance containing additional or different terms is generally treated as a valid acceptance depending on whether the parties are merchants or not. If at least one of the parties is not a merchant, then acceptance that states new terms is valid unless acceptance is expressly made conditional upon assent to the new terms.

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18
Q

UCC 2-207, both parties are merchants

A

If both parties are merchants, then under the battle of forms rule the new terms are included in the K so long as the new terms don’t materially alter the deal and the original offer was not limited to its own terms.

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19
Q

UCC 2-207 knockout rule

A

If the new terms between the offer and acceptance contradict each other, neither will govern under the UCC knockout rule and the UCC will fill in the gaps.

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20
Q

UCC 2-207 acceptance based on conduct

A

If the new terms differ too much to create a K but parties perform anyway, then only the terms that both writings agree on become part of the K, everything else is supplemented by the UCC.

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21
Q

Consideration

A

Consideration means that the parties to the K promise to incur a legal detriment or benefit.

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22
Q

Modification under CL

A

Under the CL preexisting duty rule, a promise to do something that one is already legally obligated to do is not valid consideration. There must be either a 1) change in performance, 2) 3rd party promising to pay, OR 3) unforeseen difficulties that would excuse performance

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23
Q

Modification under UCC

A

Under the UCC, a modification is binding w/o new consideration so long as the modification was made in good faith.

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24
Q

What are the two consideration substitutes

A

Promissory estoppel
Quasi-K

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25
Q

Promissory estoppel

A

A promisor is estopped if 1) their promise is reasonably expected to induce reliance, 2) promisee takes detrimental action in reliance on the promise, AND 3) injustice can only be avoided through enforcement of the promise.

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26
Q

Charity exception to promissory estoppel

A

A promise to a charity is enforceable so long as the promise is reasonably expected to induce reliance.

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27
Q

Quasi-K

A

A quasi-K exists where 1) P confers a measurable benefit on D, 2) P reasonably expected to be compensated, AND 3) it would be unfair to let D keep the benefit w/o compensation.

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28
Q

Defense to K formation means that…

A

Valid K never existed b/c there was no meeting of the minds.

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29
Q

Misunderstanding

A

There is a misunderstanding if 1) the parties use a term that can be interpreted in 2+ ways, 2) each side attaches a different meaning to the term, AND 3) neither party knew or should’ve known of the confusion.

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30
Q

Incapacity

A

A K can be voided by the incapacitated party, which includes minors, mentally ill, or very intoxicated persons.

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31
Q

Mutual mistake

A

A mutual mistake exists if 1) there was a mistake of fact existing at the time of the deal, 2) which materially impacts the K, AND 3) the impacted party didn’t bear the risk of mistake.

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32
Q

Unilateral mistake

A

A unilateral mistake exists if all elements of mutual mistake are met and either 1) the mistake would make the K unconscionable, or 2) the non-mistaken party knew of the mistake or caused it.

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33
Q

Fraud

A

Fraud occurs when D made a 1) misrepresentation of fact (not opinion), 2) that is material or fraudulent, AND 3) circumstances justify reliance on the misrepresentation.

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34
Q

Nondisclosure

A

There is normally no duty to disclose all material facts unless a fiduciary relationship exists between the contracting parties.

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35
Q

Duress

A

Duress involves an improper threat that deprives one from making a meaningful choice to contract.

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36
Q

Undue influence

A

Undue influence is when a party puts intense pressure on the other party who may be weak-minded or susceptible to pressure.

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37
Q

Defenses to K enforcement

A

Valid K may have existed but its provisions are unenforceable.

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38
Q

Illegality

A

Illegal Ks are unenforceable.

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39
Q

Unconscionability

A

A K is unconscionable when it is so unfair to one party that no reasonable party would have agreed to it.

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40
Q

Procedural unconscionability

A

Procedural unconscionability is when there is a defect in the bargaining process

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41
Q

Substantive unconscionability

A

Substantive unconscionability is when the K terms are a rip-off.

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42
Q

Ks against public policy

A

Ks against significant public policy are unenforceable.

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43
Q

Statute of Frauds applies to

A

Marriage
Suretyship
One year
UCC sale of goods $500+
Real property

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44
Q

S/F suretyship

A

S/F is required for suretyship, which is a K promising to guarantee the debt of another.

45
Q

S/F one-year rule

A

S/F is required when a K cannot possibly be performed within one year of its making. Part performance of services K that fall under the one year rule do not satisfy S/F.

46
Q

S/F sale of goods $500+ essential terms

A

A sale of goods at least $500+ requires a writing that identifies the parties, the quantity, and is signed by the party being charged.

47
Q

Exception to S/F sale of goods $500+

A

part performance can satisfy the S/F for the quantity delivered and accepted, and custom-made goods satisfy the S/F once manufacturing substantially begins.

48
Q

S/F real property

A

Any sale of an interest in real property requires S/F satisfaction.

49
Q

Exception to S/F real property

A

part performance can satisfy S/F if at least 2 of 3 elements are met: 1) possession, 2) part or full payment, or 3) substantial improvement to the land.

50
Q

Does a modification of an S/F have to satisfy S/F requirements too?

A

S/F requirements only need to be satisfied if the newly modified K would trigger the S/F.

51
Q

Parol evidence rule (PER)

A

PER prevents the introduction of prior extrinsic evidence depending on K integration. For completely integrated Ks (as evident by merger clauses), the PER mostly bars all prior extrinsic evidence. For partially integrated Ks, parties are permitted to introduce prior extrinsic evidence of other terms so long as they are consistent with the writing.

52
Q

PER does not apply to

A

1) evidence relevant to a defense against K formation or condition precedents, 2) evidence of a separate deal, or 3) evidence of prior communications of trade usage/local customs.

53
Q

UCC assumption under PER

A

UCC governed Ks are always presumed to be partially integrated.

54
Q

Warranties

A

A warranty is a promise about a K term that explicitly shifts the risk to the party making the promise; they are different from mere opinions.

55
Q

Types of warranties

A

Express warranties
Implied warranty of merchantability
Implied warranty of fitness for a particular purpose

56
Q

Disclaimer of express warranties

A

Express warranties cannot be disclaimed if it’s already been made.

57
Q

Implied warranty of merchantability

A

When the seller is a merchant dealing in the goods at issue, there is an implied warranty that the goods are fit for ordinary commercial purposes

58
Q

Disclaimer of implied warranty of merchantability

A

Merchants can disclaim an implied warranty of merchantability orally or in writing, but it must be conspicuous. Buyers can also disclaim if they examined the goods fully or refused to examine.

59
Q

Implied warranty of fitness for a particular purpose

A

When a buyer relies on a seller’s expertise to select a special type of good used for a particular purpose, there is an implied warranty that the good will satisfy that purpose.

60
Q

Disclaimer of implied warranty of fitness for a particular purpose

A

Merchants can disclaim an implied warranty of fitness for a particular purpose only if it is in writing and is conspicuous.

61
Q

Conditions

A

A condition is an event that must occur before a party’s contractual right or obligation is impacted. Conditions can be express or implied.

62
Q

Waiver of express condition

A

An express condition can be waived by the party receiving protection of the condition. An express condition can also be waived if the party receiving protection of the condition wrongfully interferes w/ the occurrence of the condition.

63
Q

Constructive condition of exchange (CCE)

A

An implied condition means that one party’s performance is conditioned on the other side’s performance under constructive condition of exchange.

64
Q

CCE under CL

A

Under the CL doctrine of substantial performance, a party satisfies the CCE if there is not a material breach.

65
Q

CCE under UCC

A

Under the UCC perfect tender rule, a party only satisfies CCE through perfect goods and perfect delivery.

66
Q

Excuse

A

An excuse is when something has happened that excuses a party from performance.

67
Q

Types of excuses

A

Impossibility
Impracticability
Frustration of purpose

68
Q

Impossibility

A

Impossibility is when an unforeseen event occurs that renders performance impossible.

69
Q

Impracticability

A

Impracticability is when an unforeseen event occurs that makes performance still possible, but impracticable.

70
Q

Frustration of purpose

A

Frustration of purpose is when something has happened that undermines the entire reason for the creation of the K, though performance is still possible.

71
Q

CL Material breach

A

Under the CL, a material breach occurs when the nonbreaching party did not receive the substantial benefit of the bargain.

72
Q

UCC Perfect tender rule

A

The UCC perfect tender rule requires perfect goods and perfect delivery to avoid breach.

73
Q

Revocation after acceptance under the UCC perfect tender rule

A

A buyer may revoke acceptance of goods due to defect if the defect is discovered within a reasonable time after receipt.

74
Q

Buyer treatment of nonconforming tender under the UCC perfect tender rule

A

If the goods are nonconforming, buyer can either accept or reject all or part of the goods. The seller has a right to cure, so if the buyer rejects the goods as nonconforming then the buyer must give the seller a chance to cure if there’s still time left on the K.

75
Q

Anticipatory repudiation

A

Anticipatory repudiation is when a party indicates that they will not perform their K obligations. Under both the CL and UCC, the nonbreaching party can either 1) treat the repudiation as a breach and sue immediately, or 2) ignore repudiation and demand performance.

76
Q

UCC assurance of performance

A

Under the UCC, if a party has reasonable grounds for insecurity about the other party’s performance, the party can demand, in writing, an adequate assurance of performance. The other party’s nonresponse to this assurance can be treated as repudiation.

77
Q

Compensatory damages formula

A

Compensatory damages can be represented by the formula Expectation damages + Incidental damages + Consequential damages (if applicable) - Duty to mitigate - Costs avoided due to breach

78
Q

Expectation damages

A

The goal of expectation damages is to put the nonbreaching party in the position they would be in had the K been performed as promised.

79
Q

Incidental damages

A

Incidental damages are those incurred by the nonbreaching party in remedying the breach.

80
Q

Consequential damages

A

Consequential damages are only available if they are 1) reasonably foreseeable or contemplated by the parties, 2) caused by breach, and 3) can be proven with reasonable certainty.

81
Q

Duty to mitigate

A

The nonbreaching party has a duty to mitigate their damages and the damages calculation will treat them as if they did mitigate.

82
Q

Reliance damages

A

The goal of reliance damages is to put the party in the same economic position that it would be in had the K never been created. A plaintiff can only recover either compensatory damages or reliance damages, not both.

83
Q

Restitution damages

A

The goal of restitution damages it to give the plaintiff an amount equal to the economic benefit they conferred on the defendant. A plaintiff can only recover either compensatory damages or restitution damages, not both.

84
Q

Liquidated damages

A

Liquidated damages are those explicitly stated in the K in the event of breach. If they appear punitive, then courts will only enforce them if 1) the amount of liquidated damages was reasonable at the time of contracting, and 2) actual damages from breach cannot be proven with reasonable certainty.

85
Q

Punitive damages

A

Punitive damages are meant to punish a D’s willful or reckless misconduct. Punitive damages are typically not available in breach of K actions unless D’s conduct rises to the level of tort (e.g., fraud). If punitive damages are imposed, they are also constitutionally limited to a single-digit ratio of non-punitive damages.

86
Q

When is equitable relief available for K breach

A

Equitable relief may be awarded only when monetary damages are inadequate, usually for land sale Ks or the sale of unique goods.

87
Q

Specific performance elements

A

Specific performance may be awarded if P can demonstrate that 1) a valid K exists, 2) the K terms are clear, 3) condition precedents are satisfied, 4) monetary damages are inadequate, 5) it is feasible for the court to enforce, and 6) no defenses to equitable relief.

88
Q

Rescission

A

Rescission is the unmaking of a K by the court, usually followed by restitution damages.

89
Q

Reformation

A

Reformation is the judicial rewriting of a K by the court to reflect the parties’ true intent, typically applicable in cases of mutual mistake.

90
Q

Equitable defenses include

A

laches and unclean hands

91
Q

Laches

A

Laches means that the plaintiff waited too unreasonably long to bring their suit and the delay prejudiced the D.

92
Q

Unclean hands

A

Unclean hands means that the plaintiff engaged in unethical or immoral acts relating to the K.

93
Q

When is time of the essence on a K?

A

when 1) K specifically says so, 2) circumstances indicate such intention, or 3) one party gives the other party notice within reasonable time before closing.

94
Q

When is nondisclosure treated as a misrepresentation?

A

Nondisclosure of a known fact is treated as a misrepresentation if the nondisclosing party knows that disclosure is necessary to prevent a previous assertion from being a misrepresentation.

95
Q

Does anticipatory repudiation apply to lease agreements?

A

Not in most jxs. When a tenant breaches the duty to pay rent, LL is only entitled to rental payments as they become due, not all future rents that would’ve been due under the lease.

96
Q

Nonbreaching seller may reclaim goods from insolvent buyer when? And exception?

A

1) Seller discovers buyer receives goods on credit while insolvent, and
2) Seller demands return of goods within 10 days of receipt

Except: 10-day limitation doesn’t apply if buyer misrepresented its solvency in writing

97
Q

Essential terms of a land sale K

A

Identity of parties
Words of intent to buy/sell
Description of property
Sales price (set price or per-acre price)

98
Q

When does an offer lapse in a face to face negotiation?

A

In a face to face negotiation, an offer lapses if it is not accepted before the face to face conversation ends.

99
Q

Does the S/F require a writing to rescind a K for the sale of land?

A

NO, oral rescission is valid

100
Q

At-will Employment K

A

An at-will K allows the employer or employee to terminate employment at any time, w/o termination being considered a breach of the K.

101
Q

Term Employment K & termination

A

Term employment K is an employment K for a specified period of time. An employee has a property right in the job and may not be terminated w/o cause.

102
Q

When a debt is disputed in good faith, the debtor can attempt to settle the debt by giving the creditor a check conspicuously marked “payment in full.” The creditor can then?

A

Either 1) deposit the check, in which case the debtor’s duty to pay is discharged, OR 2) reject the check, in which case the debtor’ duty to pay is NOT discharged.

103
Q

Requirements K and breach

A

A requirements K is an exclusive agreement between the buyer and seller for the sale of as many goods as the buyer requires during a specified period.

The buyer’s failure to purchase the goods from the seller violates the implied duty of good faith and fair dealing and constitutes a breach of K.

104
Q

A party who anticipatorily repudiates a K may retract the repudiation if?

A

If the nonrepudiating party is notified of the retraction BEFORE: 1) canceling the K, 2) materially changing position in reliance on the repudiation, OR 3) indicating that they consider the repudiation to be final.

105
Q

What is an output K

A

An output K is where a buyer agrees to buy the seller’s entire output of some good for a specified period.

106
Q

Default formula for UCC seller’s damages based on buyer’s nonacceptance/repudiation

A

K price - Market/Resale price + Incidental damages

107
Q

Lost-volume seller formula for UCC seller’s damages based on buyer’s nonacceptance/repudiation

A

Lost profit + Incidental damages

108
Q

For S/F compliance of a K for sale of goods $500+, S/F is satisfied even if K is not signed by the party to be charged if?

A

K satisfies S/F for BOTH parties if: 1) both parties are merchants, 2) one party sends a written confirmation, and 3) recipient doesn’t object in writing within 10 days.

CA Bar (14 decks)

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