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Contracts Flashcards

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1
Q

Offer

A

Outward manifestation of intent to enter into a K
- Intent AND specific terms
- Advertisement is an invitation to an offer, not an offer

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2
Q

Termination of an offer

A
  1. Death
  2. Lapse
  3. Rejection (i.e, counteroffer)
  4. Revocation
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3
Q

When is an offer revocable? Types and instances

A

1) Direct: retraction of an offer by the offeror

2) Indirect: offeree learns from a reliable source of revocation of offer (another deal is made)

  • Only 3 instances where irrevocable
    1. Option K: promise to keep the offer open + additional consideration
  1. Firm offer (UCC): 1. writing 2. signed by merchants to keep the offer open (time stated or otherwise max 3 months)
  2. Unilateral K: promise for a performance. Performance beings – offer becomes irrevocable.
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4
Q

Mirror Image Rule

A

Common Law -
acceptance must mirror offer

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5
Q

Acceptance

A

by silence (valid only if o’or would be okay with it) or performance

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6
Q

Mailbox rule

A

acceptance effective when sent
Exception: if rejection sent first and then acceptance, then whichever is arrived first wins

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7
Q

UCC Acceptance

A

acceptance construed liberally - different terms/methods of acceptance okay unless
- Materially changes terms of K
- Objection to the change of a term in a reasonable amount of time
- Offer limits the acceptance

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8
Q

Consideration - valid vs. invalid

A

bargained for exchange
- Illusory promise is not valid: offeror retains control BUT generally valid.
- Gift is NOT valid
- Past or moral consideration is NOT valid
- Promise to pay debt that was barred by SOL is valid
- Promise to pay debt discharged by bankruptcy is valid
- UNDISPUTED debt - debt not paid in full is not enforceable
- DISPUTED/doubtful debt - debt not paid in full is enforceable

  • Forbearance is valid (not suing when you can)
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9
Q

Promissory estoppel

A

detrimental reliance on the promise
- P’or reasonably induces action or forbearance, and such action or forbearance is induced
- consideration not necessary but enforceable

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10
Q

Defenses to Enforceability

A
  1. minority - voidable at the option of minor. K when the minor turns majority is enforceable
  2. mental illness
  3. duress - wrongful threat
  4. undue influence - uneven bargaining position
  5. unconscionability - result itself will be unfair
  6. mistake
  7. misrepresentation
  8. non-compete clause - enforceable if reasonable under the circumstances
  9. SOF
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11
Q

Defense - Mistake

A

Unilateral: one party is mistaken. generally not a defense unless the other party knew of the mistake OR clerical error

Bilateral: both parties are mistaken about material term. Remedy is rescission.

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12
Q

Defense - misrepresentation

A

Intentional: knew or should have known of falsity with intent to induce reliance
Negligent: causes the innocent party to detrimentally rely

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13
Q

Statute of Frauds

A

○ Marriage
○ Year - K that cannot be performed within a year
○ Land - interest in land including leases
§ part performance exception: (2/3) some payment, improvement, possession
○ Executor of estate of decedent
○ Goods $500 or more
§ Exception
- Partial performance (delivery/payment)
- Merchant confirmation: if a merchant sends a signed confirmation of order with quantity and other merchant doesn’t object within 10 days
○ Surety: promise to pay debt of another. If self-serving motive, no need to be in writing.
○ Legal writing:
§ Parties, subject matter (MYLEGS), material terms, signed by party to be charged

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14
Q

Parole Evidence

A
  • Adding more terms to a K

Must be information discussed prior to or at the time the parties entered the K

  1. Is the K partial or complete integration?

a. Complete/final integration: parole evidence is not admissible
§ Merger clause - final agreement between the parties
§ BUT allowed if to clear up ambiguity

b. Partial integration: PE is admissible
- Evidence that explains or supplements the original K is admissible
- Evidence that contradicts or materially alters the K is NOT admissible

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15
Q

Parole Evidence Rule Exceptions

A

evidence admissible if:
a. Fraud, mistake, duress
b. Condition precedent
c. Course of dealing, trade custom

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16
Q

Risk of Loss - Carrier

A

a. Shipment K (default): RoL on S until delivers to carrier and notifies/provides info to B
b. Destination K: RoL on S until goods delivered to destination
c. FOB (free on board)
FOB seller = shipment K
FOB any other location = destination K

17
Q

Risk of Loss - Non Carrier

A

If S is a merchant: RoL on S until B takes possession
If S is not a merchant: RoL on S until goods are tendered to B

18
Q

Requirements K v. Output K

A

Requirements K: promise to buy all widgets that the B requires
Must be in “good faith”

Output K: Seller promises to sell all widgets that it produces

19
Q

Modification - CL vs UCC

A

changing material term to K (oral or written)

  • CL needs new consideration
    ○ Oral mod allowed even with prohibiting clause
  • UCC: no consideration, needs good faith
    ○ Clause prohibiting oral mod is valid

Mutual modification: both parties agree to modify. Ok if “fair and reasonable under circumstances”

20
Q

Conditions on K

A

Precedent: event happens prior to the performance of K
Concurrent: event occurs at the time of performance of K- Subsequent: event happens after K
Excused if: waiver of condition; bad faith; to avoid forfeiture/great loss

Generally, time of is NOT of the essence unless stated in K. if stated, becomes a condition to the K.

21
Q

Installment K and nonconforming goods

A

delivered in several shipments
- Non-conforming: defective shipment cannot be rejected if the defect can be cured
- If impairs the value of entire K, then breach of whole K
- If “accommodation”, B may accept or reject. counteroffer. if not mentioned, then breach.

22
Q

Defenses to Breach

A
  • Impracticability: unforeseen events that make performance too expensive/difficult
  • Impossibility: objectively no one can perform (nature, illegal)
    ○ Temporary: then not a defense
    ○ Does not apply if parties prepared for that event (foreseeable)
  • Frustration: the core reason for K is no longer present
  • Anticipatory repudiation
23
Q

Defense - Anticipatory Repudiation

A

○ (1) Before K performance, (2) party UNEQUIVOCALLY refuses to perform
○ The other party can sue, accept, wait, or force performance
○ Assurance: can be demanded if not unequivocally refused and worried/doubtful about non-performance
§ Party must respond to demand in a reasonable amount of time (30 days)
§ UCC: demand must be in writing
- Retracting repudiation allowed unless other party: sued, accepted, or relied.

24
Q

Expectation damages

A

putting the injured party in the position if K had been performed

Allowed if foreseeable with reasonable certainty
Contract price - money received/saved + costs

25
Q

Reliance damages

A

put in the position he would have been prior to K
When P can’t get expectation damages because too uncertain or speculative
Unreimbursed costs

26
Q

Restitution

A

value of benefit conferred to D
§ Contract PARTIALLY performed
§ Market value of services
No expectation damages

27
Q

Consequential damages

A

foreseeable cost resulting from breach

28
Q

Incidental damages

A

out-of-pocket expenses incurred incident to the breach

29
Q

Liquidated damages

A

determined by parties at the time K entered

Must be reasonable. Can’t act like penalty (generally 10% of the value of the K is OK)
If damages are too difficult/speculative to calculate at the time of K

30
Q

Quantum meruit

A

benefit conferred
EVEN breaching party may recover: reasonable value of service - damages incurred

31
Q

UCC Seller damages - sale of goods

A

§ goods delivered: K price
§ some or none delivered and not resold: K price - market price
§ Goods resold: K price - resale price
+ incidental damages
lost volume seller

32
Q

Lost volume seller - damager

A

seller can sell as many widgets as possible
Recovers lost profit. Expected profit + costs - payment for resale

33
Q

UCC Buyer damages

A
  1. B purchased replacement goods = K price - cost of new goods
    2. NO replacement goods = K price - market price at the time of breach
    Incidental/consequential damages - expenses saved
34
Q

Equitable remedy

A

recoverable when remedy at law is inadequate
○ Specific performance:
- For unique items
- Land is always unique
○ Injunction: to prevent irreparable harm
- Employment Ks
- Trade secrets
- Proprietary info
○ Rescission: when no meeting of the minds
- Mistake, misrepresentation, lack of capacity, duress

35
Q

intended third-party beneficiary

A

○ OG parties intended to benefit a third party - do NOT need to be named
○ MAY have rights under K
- Rights vested when:
1. Third party is informed of rights and accepts; or
2. Third party learns of rights and relies
- If rights vested: TP has same rights and defenses as OG parties

36
Q

Incidental Third Party Beneficiary

A

incidentally benefits from K
Never has rights under K

37
Q

Assignment & Delegation

A

Valid

- Two people have a valid K
- One party transfers obligation to someone else
- No notice requirement
- Must be PRESENT intent to transfer
- Anti-assignment (prohibition) clause:
	○ The assignment still VALID but
	○ The og party liable for money damages
- Assignee cannot change the terms - bound by original rights and obligations Transfer a right to money: Obligor must be notified
38
Q

Assignment and delegation - invalid

A
  • “Void” clause: assignment INVALID
  • Anti-delegation clause: delegation is INVALID

INVALID if:
○ Materially alters risk of performance (or obligor’s duties)
○ Unique or special service - K cannot be transferred

39
Q

Novation

A

a release of the original party from the K

BAR (19 decks)

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