Contracts Flashcards
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Firm Offer UCC
Applies only to merchants
Rule - A firm offer applies only to merchants under the UCC and must be in writing, signed by the offeror, and contain and explicit promise not to revoke.
Stays open for:
1. As long as stated in offer, or
2. Reasonable time not longer than 90 days
Mirror Image Rule
Rule - Under the common law, the terms in the acceptance must match the terms of the offer exactly, otherwise it is a counteroffer.
UCC 2-207
Rule - An acceptance sent within a reasonable time operates as an acceptance even though it contains additional/different terms unless acceptance is expressly made conditional on assent to the additional/different terms.
UCC 2-207 New Terms in Acceptance
Rule - The new term in the accepance becomes part of the contract only if:
1. Both parties are merchants
2. New term does not materially alter the deal
3. Initial offer did not expressly limit acceptance to its terms, AND
4. Offeror did not reject or object to new term within reasonable time
Promise Not to Sue
Rule - A promise not to sue is sufficient consideration only if:
1. P has a good faith belief in the validity of the claim, OR
2. There is reason to doubt the validity of the claim due to uncertain law.
Pre-Existing Duty Rule & Exceptions
Rule - Under the common law pre-existing duty rule, a promise to do something that you are already legally obligated to do is not consideration.
Exceptions:
1. Change in performance
2. Third party promising to pay, OR
3. Unforeseen difficulties that would excuse performance
UCC Modification and Consideration
Rule - Under the UCC, if a modification was made in good faith, it is binding without new consideration.
Promissory Estoppel - Substitute for Consideration
Rule - Promissory estoppel is a substitute for consideration that requires that:
1. The promisor should reasonably expect the promise to induce action or forebearance,
2. The promise actually induces action or forebearance, AND
3. Injustice can be avoided only by enforcement of that promise
Quasi Contract
Rule - A quasi contract is a substitute for consideration that exists if:
1. P confers a measureable benfit on D
2. P reasonably expected to get paid, and
3. It would be unfair to let D keep the benefit without paying
Defenses to Contract Formation
So Mostly I Make False Deals in Utility
1. Statute of Frauds
2. Misunderstanding
2. Incapacity
3. Mistake
4. Fraud, misrepresentation, nondisclosure
5. Duress
6. Illegality
7. Unconscionability
Misunderstanding
When sides attach different meaning to a contract term
Rule - For misrepresentation as a defense to formation, the party must show:
1. Parties use a material term that is open to two or more reasonable interpretations
2. Each side attaches different meaning to the term, and
3. Neither party knows or should know of the confusion
Mutual Mistake
Rule - Mutual mistake allows the adversely affected party to rescind the contract if it:
1. Exists at time of contracting
2. Relates to basic assumption of K and has material impact, and
3. Impacted party did not bear the risk of mistake
Unilateral Mistake
Rule - Unilateral mistake allows the adversely affected party to rescind the contract if:
1. Prove all elements of mutual mistake, and
2. Either (1) mistake would make K unconscionable or (2) other side knew of, had reason to know of, or caused the mistake
SoF Contracts
- Marriage
- Suretyships
- Contracts that cannot be performed within 1 year
- Real property
- UCC sale of goods over $500
Material Breach
Common Law
Rule - A material breach occurs when the non-breaching party does not receive the substantial benefit of the bargain. The non-breaching party can seek remedies and withhold their promised performance.
