Contracts Flashcards
Difference between Consequential and Incidental
Consequential - damages resulting from breach but arise out of special circumstances unique to the parties
Incidental - commercially reasonable expenses incurred as a result of the breach
SoF exception for UCC
- Specially Manufactured Goods
- Partial payment
- Receipt and acceptance of goods
- Failure to object to signed confirmation memo within 10 days of acceptance (if both parties are merchants).
SoF UCC
Goods over 500, must be in writing, signed by party to be bound, identify quantity term.
Can be a memo sent by one party after oral agreement.
When can a repudiation be retracted?
Can be retracted as long as the following has not occurred:
- other party acts in reliance on the repudiation
- other party accepts the repudiation
- other party sues for breach of contract
Course of performance, course of dealing, trade usage in UCC contract
Even if terms are unambiguous, parties to a UCC contract can introduce evidence in following heirarchal order:
Express terms
course of performance
course of dealing
trade usage
UCC seller’s remedies
- Resale: notify buyer of intent to resale, resell in good faith and commercially reasonable manner, can recover K minus cost of resale (including incidental damages such as shipping)
Implied warranty of merchantability
- Seller must be merchant
- Goods must be fit for ordinary purpose
Can be disclaimed with as is clause. Otherwise a conspicuous statement (not in writing), saying merchantability
Implied warranty of fitness for a particular purpose
- Implied whenever seller has reason to know that buyer has specific use and is relying on seller’s particular skill in selecting
- Can be disclaimed if conspicuous writing or as is clause
Impracticability
- Performance becomes impracticable because
- unforeseeable event occurs
- non-occurrence was a basic assumption upon which K was formed
- Neither party assumed the risk or was at fault in causing the event
Frustration of Purpose
- Unexpected event occurs that destroys one parties’ purpose in entering into the K.
- Event must be so severe that it cannot be said that party assumed the risk of the event happening
Rescission
- Unilateral rescission - Grounds for Rescission must have existed at time K was made
- Mutually - can be rescinded by mutual agreement. Surrender of rights is sufficient consideration for rescission.
- EXCEPTION: if third party beneficiary rights have vested then cannot rescind.
Destruction/Damage to IDENTIFIED goods
- IDENTIFIED Goods are destroyed before risk of loss passes to buyer and no party is at fault - discharged
- Good damaged - Buyer can choose to take goods at reduced price with no other claim against Seller.
Third party beneficiary
Intended - can enforce
Incidental - cannot enforce
Rights of intended beneficiary vest when:
1 - detrimental reliance
2 - manifests assent to K at one party’s request
3 - files a lawsuit to enforce rights
Is an assignment of rights irrevocable?
It is only irrevocable if consideration is paid for the assignment. If consideration is not paid for assignment, then it is revocable.
Is assignment of K always allowed
Unless it materially duty or risk of obligor, then an assignment is allowed.
Anti-assignment provision does not affect assignment of rights, only delegation of duties.
When is delegation of a K not allowed?
Delegation is not allowed when the other party to the K has substantial interest in a particular party performing the K.
Does the delegator of a K remain liable?
Yes.
The delegatee is liable because acceptance of delegation constitutes a promise to perform. If consideration is given or consideration substitute then promise is enforceable.