Contracts Flashcards
Condition precedent
Delays performance until a specified event occurs and requires the plaintiff to prove that the event occurred to prevail.
EX: Buyer’s promise to pay “as soon as she is able to”
Can a breaching party recover restitution damages?
Yes, a breaching party who has significantly performed may recover restitutionary damages from the non breaching party for the reasonable value of the work performed, as measured by the cost of obtaining comparable performance.
How can a seller accept an offer to buy goods under the UCC?
By shipping OR promising to ship the goods. Acceptance by shipment is effective immediately and creates a contract with terms identical to those of the offer.
Misunderstanding material term of K
Occurs when the parties to a K assign different meanings to the same term. Whether a valid K exists depends on who knew or had reason to know that there was a misunderstanding:
* neither party OR both parties — no contract formed because there was no meeting of the minds
* one party — valid K was formed, and the unknowing party’s meaning of the term controls
How long will a firm offer be held open for?
Firm offer can never exceed three months — even if the offer states that it will be held open for a longer period
Ways to discharge contractual obligations
FIRM SCAN
F: Full performance of contractual obligations
I: Impossibility, impracticability, or frustration of purpose
R: Release (in writing only)
M: Mutual recission
S: Substituted K
C: Contract or covenant not to sue
A: Accord & Satisfaction
N: Novation
Does an unexpected event discharge a party’s duty to a K?
Yes, the duties of both parties to the K are discharged if (1) an unexpected event makes it impossible for one or both parties to perform their duties or frustrates the purpose of the K, (2) the K was formed under a basic assumption that the event would not occur, and (3) neither party was at fault in causing the event to occur.
**Party can recover in quasi-K
Modifications of K’s under the UCC
Modifications of a K that fall within and satisfies the SOF do not need to be in writing unless they affect the subject matter of the K or the quantity of goods to be sold
Can a rejected offer be revived?
Yes! Although an offer that has been terminated cannot be accepted, an offer can be revived by the offeror. This creates a renewed opportunity for acceptance by the offeree.
Anticipatory repudiation
Applies when a party clearly and unequivocally indicates an unwillingness to perform a promise before the time for performance is due. The non repudiating party may treat the repudiation as a breach or ignore it and demand performance pursuant to the contract.
Option K
Created when there is a promise to hold an offer open and consideration to support the promise. The offer can be accepted during the time the offer is held open even if there is first a rejection. The only exception to this is if the offer takes steps in reliance on the offeree’ a rejection prior to the acceptance.
Intended beneficiary
Nonparty to a K who receives some benefit to the K. The intended beneficiary can enforce the K if he/she is the intended beneficiary
What does a builder recover when an owner breaches a contraction K?
If breach was before or during the construction, the builder is entitled to recover the profits it would have earned had the K been completed plus costs incurred up to that point. However, any costs caved or otherwise avoided (i.e. mitigated) by the builder will be subtracted to arrive at the final damages award
Does a minor have capacity to enter into a K?
No, a minor lacks capacity to enter into a K and any K entered by the minor is voidable by the minor. However, the K is not voidable by the other contracting party.
Contract for necessaries
A minor can still incur liability for the reasonable value of the necessaries under a quasi-contract theory.
Necessaries includes food, clothing, shelter, and anything else that (1) is actually required for the minor’s support or well-being and (2) has not been provided by the minor’s parent or guardian.
What is required to modify existing K under the UCC?
(1) Parties’ agreement; (2) Good faith (i.e. honesty & observance of reasonable commercial standards of fair dealing); and (3) new consideration is NOT required
Restitutionary damages
Awarded to restore to a contracting party the value of any benefit conferred on the other party.
Exception to preexisting duty rule
New/altered consideration; ratification of voidable duty; honest dispute; unexpected event; renewed promise; third party
When is a debtor’s renewed promise to pay all or part of a pre-existing debt enforceable?
When (1) the debtor renewed the promise despite the existence of a technical defense to recovery of the original debt (eg, statute of limitations, bankruptcy) and (2) the renewed promise was made in writing or partially performed
Compensatory damages
Sum of money that would put a party in the same position as if the contract had been performed.
What happens when an employer breaches an employment contract?
The employee is entitled to recover unpaid salary under the K. The employee’s total recovery will then be reduced by compensation the employee earned or could have earned had he/she made reasonable efforts to secure comparable employment (i.e. mitigate damages).
EX: builder breached employment K before the brick mason’s employment began. Mason can seek compensatory damages for his unpaid salary under the K. Since there was no masonry work available in the community for the 1-year K period, mason could not reasonably mitigate his damages by securing comparable employment. Thus, mason is entitlted to recover the full employment K price.
UCC Gap filler for place of delivery
Generally the seller’s place of business if the seller has one
UCC gap filler for when payment is due
Unless the K specifies otherwise, payment is due at the time and place the buyer is to receive each shipment of goods
Incidental beneficiary
Someone who receives some indirect benefit from the contract even though there was no contractual intent to benefit them (i.e. all third-party beneficiaries who are not intended beneficiaries)
Is a nondisclosure of a known fact treated as an untrue assertion of fact (misrepresentation)?
Yes. A nondisclosure of a known fact is treated as an untrue assertion of fact (i.e. misrepresentation) if the non-disclosing party knows that disclosure is necessary to prevent a previous assertion from being fraudulent.
Consequential damages
Damages for losses stemming from nonbreaching party’s special circumstances if breaching party: (1) knew of those special circumstances OR (2) could have reasonably foreseen harm caused by breach
