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Contracts Flashcards

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1
Q

Define offer

A

An offer is an objective manifestation of a willingness by the offeror to enter into an agreement that creates the power of acceptance in the offerree

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2
Q

How is a unilateral offer accepted?

A

Acceptance of an offer for a unilateral contract requires complete performance.

Note: once performance has begun, the unilateral offer is irrevocable for a reasonable period of time to allow for complete performance unless there is a manifestation of a contrary intent

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3
Q

What types of contracts are governed by the UCC?

A

Any contract involving sale of goods

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4
Q

Define acceptance

A

An acceptance is an objective manifestation by the offer to be bound by the terms of the offer

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5
Q

Under the common law, what terms must be covered for a contract to be formed?

A

All essential terms - parties, subject matter, price, quantity

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6
Q

What is the basic concept of legal detriment?

A

There must be something of substance, either an act or a promise, that is given in exchange for the promise that is to be enforced

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7
Q

How do you accept a bilateral offer?

A

An offer requiring a promise to accept can be accepted either with a return promise or by starting performance

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8
Q

What are four forms of consideration?

A
  1. Return promise to do something
  2. Return promise to not do something legally permitted
  3. Actual performance of some act
  4. Refraining from some act
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9
Q

Under the common law, why was something given in the past not considered adequate consideration for a new contract?

A

Past consideration is typically not adequate consideration under the common law because it could not have been bargained for, nor could it have been done in reliance upon a promise.

Note: modern trend towards enforcing such promises under material benefit rule

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10
Q

What 3 conditions must be met for the defense of impracticability?

A
  1. unforeseeable event occurs
  2. nonoccurence of the event was a basic assumption on which the contract was made
  3. party seeking discharge is not at fault
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11
Q

What types of contracts are governed by common law?

A

Real estate and services

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12
Q

Under UCC, what key term must be specified for a contract to be formed?

A

Quantity

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13
Q

Under the mailbox rule, when is an acceptance effective?

A

An acceptance that is mailed properly within the allotted response time is effective when sent (unless offer says otherwise)

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14
Q

What is the main difference between contract modification under the common law and contract modification in the UCC?

A

Common law - need new consideration

UCC - need good faith

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15
Q

Who lacks capacity to make a contract?

A

Minors
Mentally ill
Very intoxicated
People whose property is under guardianship

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16
Q

Define accord and satisfaction

A

Accord - party to a contract agrees to accept a performance from the other party that is different from the performance originally promised, in satisfaction of the other party’s existing duty

Satisfaction - performance of the accord, discharges both original and accord contract

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17
Q

What is a requirements contract?

A

Contract under which buyer agrees to buy all that is required of a product from the other party. There is consideration because promisor suffers legal detriment

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18
Q

Under UCC, what 3 requirements must be met for an offer to buy or sell goods to be an irrevocable firm offer?

A
  1. offeror is a merchant
  2. there is assurance that the offer is to remain open
  3. assurance is contained in signed writing from offeror
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19
Q

What is an output contract?

A

Contract under which seller agrees to sell all that she manufactures of a product to the buyer. There is consideration because promisor suffers legal detriment

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20
Q

Define material benefit rule

A

When a party performs an unrequested service for another party that is a material benefit, the modern trend permits the performing party to enforce a promise of payment made by the other party after the service is rendered – even though at common law, such a promise would be unenforceable due to lack of consideration

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21
Q

Under UCC, when both parties are merchants, an additional term in the acceptance is automatically included in the contract unless 1 of these 3:

A
  1. term materially alters the contract
  2. offer expressly limits acceptance to the terms of the original offer
  3. offeror objects within reasonable time after notice was received
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22
Q

What is the difference between a void and voidable contract?

A

Void: treated as if no contract ever existed

Voidable: valid until one of the parties seeks to void

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23
Q

Define fraud in the inducement and its effect on contract

A

Fraudulent misrepresentation used to induce another into a contract.

Effect: voidable if injured party justifiably relied on misrepresentation

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24
Q

Define incidental beneficiary

A

One who benefits from a contract even though there was no contractual intent to benefit them.

No rights to enforce

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25
Q

What 3 factors does a court use to determine if restitutionary recovery is available in a quasi contract?

A
  1. plaintiff conferred a measurable benefit on defendant
  2. plaintiff acted without gratuitous intent and
  3. would be unfair to let the defendant keep the benefit because (i) defendant had opportunity to decline benefit but knowingly accepted or (ii) plaintiff had reasonable excuse for not giving the defendant such opportunity
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26
Q

Define fraud in the factum and effect on contract

A

Misrepresentation of character or essential terms.

Void.

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27
Q

When is the implied warranty of merchantability implied and how is it disclaimed?

A

Whenever the seller is a merchant.

Disclaimer can be oral but must use term ‘merchantability’ and must be conspicuous if in writing.
Look for “as is” or “with all faults”

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28
Q

When is the warranty of fitness for a particular purpose impliedly, and how is it disclaimed?

A

Whenever seller has reason to know that buyer has a particular use for the goods and the buyer is relying on the seller’s skill to select the goods.

Disclaimer must be in writing and be conspicuous

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29
Q

What doctrine comes into play when an unexpected event arises that destroys one party’s purpose in entering into the contract but performance of the contract is still technically possible?

A

Frustration of purpose – event must not be fault of frustrated party and its nonoccurence must have been a basic assumption of the contract

Frustrated party can rescind without paying damages

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30
Q

What is an implied in fact contract?

A

Contract that results when a person’s assent to an offer is inferred solely from their conduct.

Person must intend the conduct and know or have reason to know that the conduct may cause the offeror to believe offer was accepted

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31
Q

Define intended beneficiary

A

One to whom the promisor will pay directly to relieve the promisee from a debt

Or whom the promise intends to give the benefit of the promised performance

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32
Q

When is the doctrine of anticipatory repudiation applicable and in what manner must the repudiation be made?

A

When a promisor repudiates a promise BEFORE the time for performance is due

Must be clear and unequivocal, may be by conduct or words. If a statement, must be to promisee or third party beneficiary or assignee of the promise

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33
Q

Under the UCC, even if the terms of a written contract for the sale of goods appear to be unambiguous, what evidence can be presented to explain or supplement the contract?

A

Course of performance, course of dealing, trade usage

Priority is: express, course of performance, course of dealing, trade usage

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34
Q

What are the rights of the assignee?

A

Assignee takes all of the rights of the assignor as the contract stands at time of assignment

Also takes an defenses that could be raised against assignor

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35
Q

When is a plaintiff entitled to restitution and how is it measured?

A

When defendant was unjustly enriched by the plaintiff, restitution generally allows plaintiff to recover on benefit conferred by plaintiff to defendant.

Measured by (i) reasonable value of defendant obtaining that benefit from another source or (ii) increase in the defendant’s wealth from receiving the benefit

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36
Q

What are the requirements of a writing for contracts that fall under the statute of frauds?

A

Writing must be (i) signed by the party against whom enforcement is sought and (ii) contain essential elements of the deal

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37
Q

If a party has SUBSTANTIALLY complied/performed with a constructive condition, what can the party recover?

A

Party can recover the contract price minus any amount that it will cost the other party to obtain full performance

Note: party who has not substantially performed generally can’t recover damages based on the contract, but can try restitution

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38
Q

Under UCC, in what 2 circumstances does the seller have a right to cure a defective tender?

A
  1. there is still time on the contract
  2. seller had reasonable grounds to believe the buyer would accept nonconforming goods

Seller must give notice of intent to cure and make a new tender of conforming goods

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39
Q

If a destination contract authorizes the seller to ship the goods by carrier, when does the risk of loss shift from seller to buyer?

A

Once the goods are delivered to the particular place specified in the contract

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40
Q

At what point can repudiation no longer be retracted?

A
  1. promisee acts in reliance
  2. signifies acceptance of the repudiation or
  3. commences a lawsuit for breach
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41
Q

Define parol evidence rule

A

Prevents a party to a written contract from presenting extrinsic evidence of a prior or contemporaneous agreement that contradicts the terms of the contract as written

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42
Q

Define common law four corners rule

A

court was permitted to only look within four corners of the document for evidence of whether it was total, partial or no integration

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43
Q

Under second restatement, can an extrinsic term that would naturally be omitted from a writing be introduced?

A

Yes, as long as it doesn’t contradict the writing

44
Q

What is the difference between assignment and delegation?

A

Assignment - transfer of rights under contract

Delegation - transfer of duties under contract

45
Q

Define condition precedent

A

Condition that precedes the obligation to perform

46
Q

When are objective and subjective standards each used to determine whether a condition is satisfied?

A

Objective - whether a reasonable person would be satisfied

Subjective - for aesthetic taste

47
Q

What is required by UCC perfect tender rule?

A

Perfect goods, perfect delivery

48
Q

Under common law, if breach is material, what remedies can non breaching party seek?

A

Nonbreaching party can withhold any promised performance and pursue damages

Note: if breach is minor, non breaching party must perform but can still seek damages

49
Q

What is the formula for expectation damages?

A

Expectation damages = loss in value + other loss - cost avoid - loss avoided

50
Q

If a shipment contract authorizes the seller to ship the goods by carrier, when does the risk of loss shift form seller to buyer?

A

When the goods are delivered to the carrier

51
Q

what does a novation require?

A
  • original party repudiates liability
  • other original party accepts new party as replacement

can be express or implied

52
Q

what kind of parol evidence is ok under the UCC?

A

anything that doesn’t contradict the written terms because presumes every k is only partially integrated (unless ‘certainly’ would’ve included - high bar)

53
Q

what kind of breach is failure to substantially perform

A

material breach –> can’t recover under k, look at restitution

54
Q

how can a party who materially breached still get money

A

can only recover in restitution for any benefit conferred on the nonbreaching party minus damages for the breach

55
Q

what kind of breach is it if they still substantially performed

A

minor breach –> can recover the contract price minus any cost that the nonbreaching party incurred to receive full performance.

56
Q

when is a gratuitous assignment revoked?

A

death, incapacity, or bankruptcy of the assignor

57
Q

what is a gratuitous assignment?

A

assignment of rights made without consideration

58
Q

what happens if a price for goods is not listed in the contract?

A

UCC supplies a reasonable price at the time of delivery

59
Q

difference between incidental and consequential damages

A

incidental - reasonable expenses incurred because of the other party’s breach

consequential - losses that do not flow directly and immediately from the other party’s breach—so long as the losses are not too speculative.

60
Q

difference between accord and substitute contract

A

Accord agreement – agrees to accept different performance in satisfaction of the original promise; can sue under either the original contract or the accord agreement

Substitute - form a second agreement that immediately discharges the original contract; can sue under the substitute contract only

61
Q

when can you retract a repudiation

A

Before other party

(1) cancels the contract, (2) materially changes position in reliance on the repudiation, or (3) indicates that he/she considers the repudiation to be final.

62
Q

what is a buyer in the ordinary course

A

buyer in the ordinary course is someone who buys goods (1) in good faith, (2) without knowledge that the sale violates the owner’s rights to the goods, and (3) from a merchant in the business of selling goods of that kind.

63
Q

what kind of offers does the mailbox rule not apply to

A

Acceptance of a firm offer, option, or other irrevocable offer is effective only when it is received – not sent

64
Q

how do you waive a condition and can you retract that waiver

A

a condition may be excused if the party who would benefit from the condition waives it by words or conduct.

waiver cannot be retracted if the other party has detrimentally relied on it.

65
Q

what must a buyer who has rejected goods do if seller hasn’t reclaimed them

A

buyer must retain rejected goods for a reasonable time to allow the seller to reclaim them

In the absence of other instructions, the buyer MUST sell the goods on the seller’s behalf if the buyer is a merchant, the goods are perishable, and there is no local agent to whom the goods can be returned.

66
Q

how do you know if it is an express condition

A

look for ‘on the condition that’ or ‘provided that’

67
Q

when is an offer binding as an irrevocable option contract

A

(1) the offeror should have reasonably expected to induce reliance on the offer, (2) the offeree reasonably relied on the offer, (3) reliance caused the offeree to suffer substantial detriment, and (4) injustice can be avoided only by enforcing the offer.

68
Q

how does trade usage relate to parol evidence

A

party may explain or supplement the terms of a written contract with evidence of trade usage— any practice or method of dealing in the particular business or industry that is observed with such regularity so as to justify an expectation that it will be observed in the instant case.

69
Q

when can plaintiff recover in quasi-contract—despite having no contractual relationship with the defendant

A

plaintiff conferred a non-gratuitous and measurable benefit on the defendant that resulted in unjust enrichment because:

  • the defendant had the opportunity to decline the benefit but knowingly accepted it or
  • the plaintiff had a reasonable excuse for not giving the defendant an opportunity to decline.
70
Q

is a general contractor required to accept a sub contractor’s bid if he uses it in his bid

A

no. A subcontractor’s bid is considered an outstanding offer, so a general contractor is not bound to accept the sub-bid—even if the general contractor is awarded the general contract.

71
Q

how do you make a demand for assurances

A

UCC requires it be written

72
Q

when does an offer survive the death of offeror

A

when consideration was paid to keep the offer open for a specified period of time.

73
Q

when is revocation effective

A

when received

74
Q

UCC rule on additional/different terms in acceptance

A

not both merchants - valid acceptance, terms not included

both merchants - valid acceptance, terms included unless
1) materially alters terms
2) original offer said you can’t
3) one merchant objects

75
Q

what is promissory estoppel

A

a substitute for consideration

1) promisor reasonably expects it to induce action
2) promisee acts in reliance
3) injustice can’t be avoided otherwise

76
Q

what are the remedies for mutual and unilateral mistake

A

mutual - reformation (fix it - for if there was a mistake between the agreement and how it got written) or recision if reformation isn’t available

unilateral - recision, if the k as is would be unconscionable or the other party was at fault for the mistake

77
Q

what types of k does SOF apply to

A

Marriage
Surety
One year
UCC goods $500
Real estate

78
Q

what are the rules for a valid SOF writing

A

essential terms, signed by party being enforced against, can be multiple docs put together, can be created afterwards, UCC only needs quantity

79
Q

exceptions to if there is no writing for SOF

A

One year - full performance

Goods - full performance, part performance (to the extent), custom goods, merchant memo

Real estate: 2/3 of payment, possession, improvement

Never forget estoppel!

80
Q

requirements for merchant memo

A
  1. both merchants
  2. merchant sends writing that meets SOF to other merchant
  3. other merchant knowingly receives and doesn’t object within 10 days
81
Q

what makes a good merchantable under the warranty

A

be fit for their ordinary purpose, and would pass without objection in the trade

82
Q

UCC policy on parol evidence

A

everything is partial unless “certainly” would’ve been included

means anything that doesn’t contradict is okay

83
Q

CL policy on parol evidence

A

complete integration - no

partial integration - ok

would a term have naturally been omitted? - ok as long as doesn’t contradict

84
Q

when does PER not apply to earlier evidence

A
  1. defenses against k
  2. separate deals
  3. to interpret ambiguous terms
85
Q

clues for PER v. SOF

A

PER - there is a signed writing and earlier discussion of the deal

SOF - no signed writing

86
Q

clues for express conditions

A

magic words - only if, provided that, only in the event that, on condition that

87
Q

what does the doctrine of substantial performance say

A

as long as there is no material breach, it satisfies the constructive condition of exchange and other party needs to perform

88
Q

when does substantial performance not work under common law

A

if the failure is willful

89
Q

what is divisibility

A

if the contract can be broken up when assessing performance, do that

90
Q

exception for perfect tendy

A

installment contracts – substantial performance instead

91
Q

what does seller have to do for shipment k

A

get goods to UPS
make arrangements for delivery
notify buyer

92
Q

what does seller have to do for destination k

A

get goods to buyers house and notify

93
Q

steps for risk of loss

A
  1. did parties say in k
  2. did one breach
  3. shipment - buyer
    destination - seller
  4. seller is merchant - stays with him till goods are received
    seller is not merchant - goes to buyer when sold
94
Q

difference between contract prohibiting and invalidating assignments

A

prohibit - can do it and recover but you’re in breach

invalidate- can’t do it, can’t recover

95
Q

when is delegee liable

A

novation or received consideration for praise

96
Q

what if there is a k for assorted goods

A

UCC imposes a duty on the buyer to make that selection.

If the buyer fails to specify the assortment of goods, then the seller can treat that failure as a breach—but only if the buyer’s failure to specify the assortment MATERIALLY impacts the seller’s performance.

97
Q

when does warrant of merchantability not apply to a merchant

A

if the merchant doesn’t do biz in that kind of good

98
Q

how can an offer be terminated before acceptance

A
  1. offeror revokes
  2. offeree rejects
  3. lapse
  4. by law (someone goes nuts or stuff is destroyed)
99
Q

when does the UCC NOT say that a writing is presumed partially integrated for PER

A

when there is a merger clause

100
Q

when is payment due for UCC installment contracts

A

upon delivery of each shipment

101
Q

when can a goods be pulled from an auction (assuming hammer hasn’t dropped)

A

in a reserve auction

102
Q

when can an accord be for less than the original contract said?

A
  • genuine dispute over amount owed
  • payment is different in kind
103
Q

do you need new consideration for a promise to repay a debt if the SOL has already run?

A

A new promise to pay a debt after the statute of limitations has run is enforceable without any new consideration.

104
Q

when is restitution available / not available to breaching party

A

available - was minor breach, substantially performed

not available - breach was willful

105
Q

when will court ignore economic waste

A

the breach was willful and the only way to give the benefit of the bargain is to finish construction

106
Q

when can a party to an illegal contract recover restitution

A

party conferred benefit on other party and

(1) was justifiably ignorant of the facts that made the contract illegal,
(2) was less culpable than the other party, or
(3) withdrew before the contract’s illegal purpose was achieved and did not engage in serious misconduct.

107
Q
A

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