Contracts Flashcards
Offer
An offer is an objective manifestation by the offeror to enter into an agreement that creates the power of acceptance in the offeree.
7 ways to terminate an offer
- Lapse of time
- Death
- Distrusction or illegality
- Revocation
- Rejection by offeree
- Revival
Promissory Estoppel
When the offeree reasonable and detrimentally relies on the offeror’s promise prior to acceptance, then the offer may be irrevocable.
- must be reasonably foreseeable
- liable to avoid injustice
consideration substitute.
Additional Terms
- Common Law
Mirror Image rule- the acceptence must mirror the terms of the offer. Any different terms show a rejection of original offer and a counteroffer.
- UCC
Additional terms do not automatically constitute a rejection of an offer.
- 1 or no merchant: Additional terms are often seen as an acceptence of the original offer, unless the terms are conditional, and additional terms are seen as proposals.
- Both merchants: Contract exist under terms of acceptence unless
a. terms materially alter the agreement.
b. offer expressly limits the terms, or
c. the offeror objects to the new terms within the reasonable time.
Consideration
If there is a valid offer and acceptance that creates an agreement, the agreement is legally enforceable as long as there is consideration. Consideration is a benefit bargained for and received.
Defenses to Formation
A person can defend a breach of contract action by showing that there was no meeting of the minds due to one of the following
1. Mistake
2. Misunderstanding
3. Duress
4. Undue Influence
5. Misrepresentation
6. Lack of capacity
Defenses to Enforcement
A party can assert that the nature of the agreement or the manner in which the parties entered into the contract should prevent enforcement.
Defenses include
1. illegality
2. Unconscionability
3. Public policy
Discharge
If conditions are excused or satisfied, parties have a duty to perform unless a supervening event happens.
- impractibility
- frustration of purpose
- release
- mutual mistake
- Destruction of injury to identified goods
SOF
Contracts that fall within the SOF are unenforceable unless evidenced by writing. The writing must be signed by enforcement saught party and contain elements of deal.
Parol Evidence
Generally prevents a party to a written contract from showing outside evidence that contradicts terms of the agreement.
UCC is more foregiving. UCC assumes only a partial integration unless the parties would have certaintly included a disputed term in the writing.
Substantial performance
The doctrine of substantial performance provides that a party who substantially performs can recover even though full performance has not been tendered. But, there is no substatial performance if the incomplete performance is a material breach (fail to recievr substantial benefit of bargain).
Less likely to be found when intentionally not performed.
Common Law Material Breach
Allows breaching party to withhold promise performance, and seek damages.
Installment Contracts
varible units of performance can be divided into distinct seperate contracts.
Recovery limited to payment for the part of contract performed.
3 forms of Monetary Damages
- Expectation Damages- place the injured party in the same position as if the contract had been performed.
- Reliance Damages- cover cost from relying on agreement. as if performance was performed.
- Restitution Damages- restore a party the benefit conferred on the other. (may be denied if willful)
Unjust Enrichment
P confers a benefit on D and P has a reasonable expectation of payment. Allowing D to receive benefit would be unjust.
Compensatory Damages
meant to compensate the non-breaching party for actual economic losses.
Consequential Damages
a direct result of the breach but need not be the usual result of the breaching party’s conduct
Expectation Damages
intended to put the non-breaching party in the same position as if the contract had been performed.
need reasonable certainty
Consequential Damages
a reasonably foreseeable result of the breach given the parties’ specific circumstances.
need to be foreseeable and calculated with reasonable certainty
Duty to Mitigate
A party to a contract must avoid or mitigate damages to the extent possible by taking steps that do not involve undue risk, expense, or inconvenience.
3 elements of impractibility
- an unforeseeable event
- nonoccurance of the the event was an essential element of the contract
- the party seeking discharge is not at fault
Reviving bids at Auctions
At a reserve or no-reserve auction, a bidder has the right to withdraw a bid until the auctioneer announces the completion of the auction sale. However, the bidder’s retraction will not revive any prior bids.
Firm Offer
Under the UCC firm-offer rule, an offer is irrevocable if the offeror is a merchant who provides a signed, written assurance that the offer will remain open.
Parol Evidence Rule
The parol evidence rule generally prohibits the admission of extrinsic evidence of a prior or contemporaneous agreement that supplements or contradicts the terms of a completely integrated written contract. However, such evidence is admissible to prove a condition precedent to the existence of the contract.
Reclaim Goods
A nonbreaching seller may reclaim goods from a buyer when the seller (1) discovers the buyer received the goods on credit while insolvent and (2) demands the goods be returned within 10 days after their receipt. But this 10-day limitation does not apply if the buyer misrepresented its solvency in writing within three months before delivery.
Parol Evidence Rule does not apply when
- evidence relevant to a defense against contract formation
- second separate deal
- prior communication that is designed to interpret an ambiguous term in the final agreement
UCC Missing Terms
A contract may still be formed when a term is missing. The UCC files the gap for missing terms other than subject matter. Need to be an objective standard for courts to reference.
Revocation of general offers
a general offer is an offer made to a large number of people generally through an advertisement. Can only be delivered by notice that is given the same level of publicity as the offer.
Mailbox rule
An acceptance that is mailed within the allotted time is effective when sent, unless the offer provides otherwise. Properly addressed and posted.
Battle of the forms
A contract exist under the term of acceptances unless (1) the terms materially alter the agreement, (2) the offer expressly limits the terms, or (3) the offeror objects to the new terms in a reasonable time.
Consideration vs. Gift
Whether the offeree could have reasonably believed that the intent of the offeror was to induce the action.
Promise to pay a debt barred by the SOL
A new promise to pay a debt after the SOL has run is enforceable without any new consideration.
Duress
an improper threat that deprives a party of meaningful choice
subjective test
Implied warranty of merchantability
Whenever the seller is a merchant in the goods of kind sold, goods must be fit for their ordinary purpose and pass without objection in the trader under the contract description.
Can be disclaimed orally or in obvious writing.
Implied warranty of fitness for a particular purpose
A warranty that the goods are fit for a particular purpose is implied whenever the seller has reason to know that (1) the buyer has a particular use for the goods and (2) the buyer is relying upon the seller’s skill to select the goods.
doesnt have to be a merchant
Can be disclaimed orally or in obvious writing. A writing is conspicous when a reaosnable person would have received notice of it
Implied warranties
- As is language
- buyer’s inspection of the goods
- course of dealing/trade usage
Impracticability
A Party’s duty to perform can be dismissed by impracticability. It is availible if
(1) the performance becomes illegal after the contract is made,
(2) specific subject matter of the contract is destroyed,
(3) the performing party dies or become incapacity in a serve contract (4) service becomes impracticable
(1) unforeseeable event
(2) non occurance is a basic assumption of the contact
(3) party seeking discharge is not at fault
Frustration of purpose
The doctrine of frustration of purpose applies when an unexpected event arises that destroys one party’s purpose in entering into the contract, even if performance of the contract is not rended impossible.
Perfect Tender
UCC requires perfect goods and perfect delivery
do not discuss substantial performance or material breach
Seller’s right to cure
If a seller fails to tender perfect goods and time is left on the contract or the seller had reasonable grounds to believe that the buyer would provide a replacement then the buyer MUST give the seller a chance to cure e
Installment contract imperfect delivery
The buyer can reject a specific delivery that is not perfect only when there is a substnatial impairment int he installment that can not be cured k
Shipment contract
three actions needed to satisfy perfect delivery
- deliver goods to a common carrier
- make arrangements fro delivery
- notify the buyer
risk of loss is with buyer
Destination Contract
The seller must get the goods to the buyer’s place of business and notify the buyer
risk of loss is with seller
Excuses
- impossibity and impracticability
- death after a contract
- frustration of purpose
- performance is excused because initial contract has been modified or cancelled
If a party clearly and unequivocally repudiates, the nonbreaching party has two options
- treat the repudiation has a breach and sue immediately. Buy if you have completed performance and are only waiting for payment then you can not sue early
or - ignore the repudiation, demand performance, and waits to see what happens.
Can a party retract its repudiation
Yes, as long as the other party has not (1) commenced a lawsuit or (2) relied on the repudiation
Adequite assurance
In the UCC, if a party ahs reaosnable grounds for insecuity about the other side’s performeance allows you to demand an adequite assurance of performance. If the party fails to respond within a reasonable time, then can treat as a repudiation.
