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Contracts Flashcards

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1
Q

Quasi contract

A

An unenforceable contract results in unjust enrichment

Recover through restitution

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2
Q

Unilateral contracts

A

Payment upon completion of requested act

1) offeror clearly indicates that completion of performance is the only manner of acceptance (offer…only by)

2) offer to public - reward

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3
Q

Void, Voidable, Unenforceable

A

Void - can never be enforced
Voidable - may elect to avoid
Unenforceable - otherwise valid but unenforceable due to a defense

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4
Q

Merchant

A

one who regularly deals in goods of the kind sold or who otherwise by their profession holds themselves out as having special knowledge or skills as to the practices and goods involved

Must be acting in their mercantile capacity

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5
Q

Mutual assent

A

Offer and acceptance

did the words or conduct manifest a present intention to enter a contract

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6
Q

Elements of a contract

A

Mutual assent - offer and acceptance

consideration

no defenses

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7
Q

Offer

A

Communication from offeror to offeree that creates a reasonable expectation in the offeree that the offeror is willing to enter into a contract on the basis of the offered terms

Promise, undertaking, or commitment to enter into a contract

essential terms

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8
Q

Advertisement

A

Mere invitation for offers unless it contains a quantity term

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9
Q

Essential terms

A

Identification of offeree

Subject matter
- real estate: land and price
- sale of goods: quantity (article 2 supplies reasonable price at time of delivery if not specified)
- services: nature of the work

if material term is vague or ambiguous - not an offer

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10
Q

Requirement or output contracts

A

Promise to buy all goods required or promise to sell all good produced

implied good faith

cannot be unreasonably disproportionate to any stated estimate or any normal or comparable requirement/output

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11
Q

Termination of offer

A

By act of either party (effective when received or published) or operation of law

By offeree: lapse of time (stated or reasonable), rejection (express or counteroffer)

By offeror: revocation (direct, by publication of comparable means, indirect with correct information from a reliable sources of acts what would indication that the offeror no longer wishes to make the offer)

Operation of law: death or insanity of either party (unless irrevocable), destruction of subject matter, supervening illegality

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12
Q

Conditional Acceptance

A

cannot be accepted by performance

If perform: contract created BY THEIR CONDUCT, and the new terms are not included

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13
Q

Irrevocable offers

A

1) options - gives consideration for promise not to revoke

2) merchant’s firm offer - merchant offers to buy or sell goods in a signed writing and writing gives assurance that it will be held open (irrevocable for no more than 3 months)

3) detrimental reliance - reasonable expect to rely to detriment and does rely, treated as option for reasonable length of time

4) Beginning performance of unilateral contract offer

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14
Q

Acceptance

A

Manifestation of assent to the terms of the offer

offeree must know the the offer

Bilateral contract - beginning of performance or promise to perform
unilateral contract - completion of performance

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15
Q

Battle of the forms

A

Common law - mirror image rule

UCC - no mirror image, seasonable expression of acceptance unless acceptance is expressly made conditional on assent to additional terms

UCC contract with nonmerchant - terms of offer govern unless express agreement

UCC contract between merchants - additional terms included unless
- materially alter original terms
- offer expressly limits acceptance
- offeror objects in reasonable time

conflicting terms knocked out, some jurisdictions treat the same as additional terms

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16
Q

Effectiveness of acceptance and termination

A

Mailbox rule - acceptance generally effective when dispatched

Exceptions:
- option contract - when received
- offer stipulates when received
- rejection send first - whichever is received first
- rejection send after but received first - estopped from enforcing if offeror detrimentally relied
- unauthorized means - may be effective when received

termination effective when received

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17
Q

Auction contract

A

sale complete by call of hammer

with reserve (auctioneer may withdraw goods at any time until he announces completion of sale) unless explicitly say without reserve

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18
Q

Consideration

A

Bargain for exchange of legal value (promise induce benefit to promisor or detriment to promisee)

Past consideration not valid
- promise given in exchange for something already done

Preexisting duty not valid
-performing or promising to perform an existing duty
-exceptions: new or different consideration, ratify voidable obligation, owed to third party, honest dispute as to duty, unforeseen circumstances, modernly is fair and equitable in light of circumstances not anticipated
-UCC - only need good faith to modify

need mutuality - cannot be illusory

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19
Q

Promissory estoppel/detrimental reliance

A

Consideration not necessary - estopped from not performing

promisor should reasonably expect to induct action or forbearance and action or forbearance is in fact induced

usually reliance damages

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20
Q

Defense: Lack of Capacity

A

Minors: can disaffirm any time before or shortly after reaching age of majority, unless necessity then liable for restitution of reasonable value

mental incapacity: so deficient that incapable of understanding the nature and significance of a contract - voidable, unless under guardianship, then void

intoxication: so intoxicated, cannot understand nature and significance of their promise - voidable if other party had reason to know

duress and undue influence: voidable
- economic duress is not duress unless party threatens to commit a wrongful act that would seriously threaten the other party’s property or finances, and there are no adequate means to prevent the loss

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21
Q

Defense: Absence of mutual assent

A

misunderstanding/ambiguous contract:
- neither or both parties aware - no contract unless both had same meaning
- one party aware - contract based on unaware party’s understanding

mutual mistake: voidable if mistake of material fact and moving party did not assume the risk (usually not mistake of value)

Unilateral mistake: not a defense unless the other part knew or had reason to know

Misrepresentation: voidable if justified reliance on a material fact

22
Q

Defense: Illegality

A

Illegality of consideration or subject matter - void

Exception: P does not know of illegality and it is a failure to obtain a license required revenue raising purposes

if only purpose is illegal, voidable by party unaware of the purpose or was aware but did not facilitate the purpose and the purpose does not involve serious moral turpitude

23
Q

Defense: Unconsiounability

A

Unfair surprise or oppressive terms at the time the contract was formed

24
Q

Defense: Statute of Frauds

A

Must be evidenced by writing signed by the party sought to be bound: MY LEGS

Marriage as consideration
Year - more than a year

Land: Interest in land
- equal dignity rule, iif underlying deal is under SoF, most be in writing (authorization of agent to sell ranch must be in writing)

Executor: promise to personally pat estate debts

Goods: $500 or more
-Exceptions: SWAP
-specially manufactured goods- substantial beginning
-Written confirmation between merchants
-admission
-performance

Suretyship: promise to pay debt of another, unless serves pecuniary interest of his own

Defense: promissory estoppel

25
Q

Oral modification prohibition

A

Common law - can still orally modify
UCC - clause given effect and cannot be oral

26
Q

Land: Performance taking it out of SOF

A

Sellers conveys property - buyer promise to pay enforceable

Buyer part performance: 2 of the 3
- payment
- possession
- improvement
exception - installment contract: possession and payment looks like a lease

27
Q

Merchant confirmatory memo

A

contract between merchants

if one party within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the the SoF to bring the sender, it also binds the recipient

Unless object in writing within 10 days

28
Q

Parol evidence rule

A

when agreement in writing with intent that it is the final expression, any other expression made prior or contemporaneous with the writing is inadmissible to very the terms

complete integration: writing cannot be contradicted or supplemented - merger clause

partial integration: cannot be contradicted by can be supplemented by proving consistent additional terms

29
Q

Admission of parol evidence

A

partial integration

defense against formation

explain vague terms

correct clerical errors

30
Q

UCC parol evidence

A

can explain or supplement written contract by evidence of course of performance, course of dealing, and usage of trade, regardless of whether the writing is ambiguous

1) course of performance - prior installments of current deal
2) course of dealing - prior contracts
3) usage of trade - industry norms parties should be aware of

31
Q

Warranties

A

Express warranties - statement of fact or description
-a statement of value or opinion is not a warranty

implied warranty of merchantability - every contract by a merchant who deals in goods of the kinds sold - fit for the ordinary purpose for which such goods are used

Implied warranty of fitness for a particular purpose - any seller has reason to know the particular purpose for which the goods are to be used and that the buyer is relying on the seller’s skill and judgment, and buyer does rely

Can disclaim implied, not express

can limit damages unless unconscionable - limitation on personal injury caused by breach of warranty is prima facie unconscionable

32
Q

Risk of loss

A

defective goods - seller until defects are cured or buyer accepts

Noncarrier cases:
If seller is merchant: risk of loss passes to buyer when they take physical possession
If seller is not a merchant: risk passes to buyer upon tender of delivery (tell where it is and how to get it)

Carrier cases:
Shipment contract: passes to buyer when goods are delivered to the carrier (assumed)
Destination contracts: passes to buyer when the goods are tendered to the buyer at destination

FOB: risk passes to buyer at that location
- fob + seller city = shipment
- fob + anything else = destination

FAS: shipment buy boat - passes sto buyer at dock

33
Q

Performance requirements

A

Common law - substantial performance (meet essential purpose of contract)

UCC - perfect tender (right goods, place, time)

34
Q

Payment by check

A

generally ok unless stated otherwise

do not have to accept but have to give additional reasonable time to get cash

35
Q

Condition

A

an event or state of the wold that must occur or fail to occur before a party has a duty to perform or that releases a party from their duty to perform

36
Q

Anticipatory Repudiation

A

Prior to the time set for performance of their promise, party indicates that they will not perform

can be retracted before relied on

Treat as immediate breach and ca suspend performance

37
Q

Prospective failure

A

not anticipatory repudiation

prospective inability or unwillingness to perform - raises doubt

innocent party can suspend further performance until they receive adequate assurance that performance will be forthcoming - if fail, treat as repudiation
- cannot rewrite deal or demand certain assurances, only get adequate assurances

can retract if regains ability of willingness to perform by communicating to innocent party

38
Q

Divisible Contract

A

1) performance of each party is devideed into two or more parts

2) the number of parts due from each party is the same

3) the performance of each aprty by one party is agreed on as the equivalent of the corresponding party

39
Q

Excuse of condition

A

Impossibility

Impracticability

Frustration of purpose

40
Q

Discharge by occurrence of condition subsequent

A

Discharge by illegality

Rescission

41
Q

Minor breach

A

obligee still gains the substantial benefit of their bargain

does not relieve party of their duty of performance, just gives them the right to damages

failure to perform by the time stated in the contract is generally a minor breach if rendered within a reasonable time
- unless expressly provides that time is of the essence

42
Q

UCC when acceptance may be revoked

A

goods have a defect that substantially impairs their value to the buyer and:

  • they accepted the goods on the reasonable belief that the defect would be cured and it has not been

OR

  • they accepted the goods because of the difficulty of discovering the defects or because of the seller’s assurance that the goods conform

must occur within a reasonable time and before any substantial changes in the goods occurs

43
Q

Seller right to cure

A

can cure by notice and new tender within time for performance - buyer must accept

beyond original contract time - only if seller reasonably believed that the nonconforming goods would be acceptable, has a further reasonable time to cure
-trade practice or prior dealings
-seller could not have known of the defect despite proper business conduct

44
Q

UCC installment contract

A

An installment can be rejected only if the nonconformity substantially impairs the value of that installment and cannot be cured

Whole contract is breached only if the nonconformity substantially impairs the value of the entire contract

45
Q

UCC Damages timing for calculation

A

Buyer damages - at the time they learn of the breach

Seller damages - at the time for delivery

46
Q

Entrustment

A

Entrusting goods to a MERCHANT who deals in goods of that kind gives them the power to transfer all rights of the entruster to a buyer in the ordinary course of business

47
Q

Third party beneficiaries

A

Intended beneficiaries have contractual rights

intended: identified in contract, receives performance directly, or has some relationship with the promisee to indicate intent to benefit

Can enforce when rights vest:
- manifest assent
- bring a suit to enforce
- materially change position in justified reliance

48
Q

Assignment

A

All contractual rights can be assigned unless it would substantially change the obligor’s duty or risk, it is an assignment of future rights to arise from future contract, or the assignment is prohibited by law

must be a present transfer

assignments for value cannot be revoked

clause prohibiting assignment - assignee without knowledge can collect; invalidation clause - cannot collect

multiple assignments:
-last gratuitous assignee prevails
-first assignee for value and without notice prevails, unless other party gets judgement or money from the obligor first

49
Q

Delegation

A

All duties are delegable unless duties involve personal judgment or skill

generally do not need consent

clause for no assignments means no delegations

Delegating party always liable to obligee

A delegate for consideration is liable

50
Q

Novation

A

Substitutes new party for original

requires assent of all parties

completely releases original party

51
Q

Doctrine of prevention

A

a party must refrain from conduct that prevents or hinders the occurance of a condition

bar exam (12 decks)

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