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Bar II > Contracts > Flashcards

Contracts Flashcards

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1
Q

what do you need to consider for a contracts question

A

A- assent
C- consideration
D - defenses
S - statute of frauds

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2
Q

what is an offer

A

objective manifestation of a willingness by offeror to enter int agreement that creates power of acceptance in offeree

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3
Q

intent - a statement is only an offer if

A

person could reasonably interpret it as such
expresses present intent to be legally bound

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4
Q

requirements for terms to be certain and definite

A

common law - all essential

UCC - quantity

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5
Q

how do you terminate an offer

A
  1. lapse of time - reasonable if none specified
  2. death/mental incapacity (not options)
  3. destruction / illegality
  4. revocation
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6
Q

when is revocation effective

A

when communicated

revocation sent by mail is effective when received

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7
Q

UCC firm offer rule

A

offer is irrevocable for reasonable time not more than 3 months

if offeror is a merchant and it is is writing

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8
Q

ways to make offer irrevocable

A

option k
UCC firm offer
promissory estoppel
partial performance

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9
Q

what if a seller accepts a contract via shipping the items but they are unconforming

A

acceptance + breach

unless seller notifies buyer that goods are an accommodation (counter offer) and then buyer can accept or reject

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10
Q

mailbox rule

A

only acceptance

acceptance is effective when sent

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11
Q

what does mailbox rule not apply to

A

options and other irrevocable offers

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12
Q

rule for additional or different terms for common law

A

mirror image - acceptance must mirror terms of offer

conditional acceptance is a counter offer

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13
Q

rules for additional or different terms in ucc

A

acceptance containing different terms is acceptance

one or both parties not merchants: treated as proposed additions that must be separately accepted

both merchants: battle of forms

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14
Q

how is battle of the forms treated for different terms in acceptnace

A

included in k unless one of these:
- materially alters k
- offer limits acceptance to the terms of offer
- offeror objects to new terms within reasonable time

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15
Q

what if both parties are merchants and the terms in the acceptance /offer are different and knock each other out

A

nullified and use UCC gap filling

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16
Q

consideration is

A

bargained for legal detriment to promisee

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17
Q

test for gift

A

whether offeree could reasonably believe intent of offeror was to induce action – if yes, consideration

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18
Q

pre existing duty rule for consideration

A

common law - no consideration unless promisor gives something new in addition to what is owed or varies the existing duty in some way

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19
Q

exception for third parties for pre existing duty rule

A

party’s promise to third party to perform an act the party is already obligated to perform for another is sufficient

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20
Q

modern trend for past consideration

A

enforce past promises under material benefit rule

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21
Q

modification of k under common law

A

must be supported by consideration. agreements to modify k are enforceable if

  1. recision of existing k and entering into new k
  2. unanticipated difficulties and modification is fair
  3. new obligations arise on both sides
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22
Q

modification of k under UCC

A

just needs to be good faith

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23
Q

accord and satisfaction

A

accord - agreement to accept a different performance from other party to satisfy the duty

satisfaction - performance of the accord will discharge both original k and accord k

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24
Q

when is promise not to assert a legal claim consideration

A

when done in good faith that the claim is valid

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25
Q

promises that are binding without consideration

A
  1. pay a debt barred by SOL
  2. promissory estoppel
  3. material benefit rule
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26
Q

defenses to formation where there is no meeting of the minds

A

mistake
misunderstanding
misrepresentation
undue influence
duress
capacity

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27
Q

can mutual mistake void a k

A

no if reformation is available

yes if
- mistake existed when k formed
- mistake relates to basic assumption
- mistake has material impact
- adversely affected party didn’t assume risk

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28
Q

can unilateral mistake void a k

A

yes if mistaken party didn’t void the risk and
- mistake would make it unconscionable or
- non mistaken party caused or knew of the mistake

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29
Q

misunderstanding is when they think they are agreeing to same terms but actually terms are different. rules for these scenarios

A

neither party knows - no k if material term

one party knows - k formed based on unknowing parties understanding

both parties know - no k unless parties intended same meaning

all this is subjective

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30
Q

elements for fraudulent misrepresentation

A

-knowing or reckless false assertion of fact
- with intent to mislead
- misrepresentation induced assent to k
- justifiable reliance by adversely affected party

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31
Q

effect of fraud in factum (execution)

A

prevents party from knowing essential terms so no K unless reasonable diligence would’ve revealed the true terms

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32
Q

effect of fraud in the inducement

A

tricked party into entering k

k voidable by tricked party if she justifiably relied

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33
Q

effect of non fraudulent misrepresentation

A

renders k voidable by adversely affected party who justifiably relied on material misrepresentation and was induced to assent to k because of it

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34
Q

what is undue influence

A

unfair persuasion - look for unequal relationship and persuasion that impairs judgment of other

if confidential relationship the dominant party must prove k was fair

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35
Q

what is duress

A

improper threat that deprives party of meaningful choice

threats of lawsuit in bad faith or threats to breach k in violation of good faith and dealing

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36
Q

rules for capacity

A

minor - voidable by kid except for necessities
mental - void if adjudicated, voidable if no
guardianship - void except for necessities
intoxication - voidable if unable to understand and other party knew

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37
Q

defense to enforcement - illegality

A

k unenforceable if consideration or performance is illegal

void if contemplates illegal conduct

duty to perform discharged if k becomes illegal after formation

38
Q

defense of unconscionability

A

so unfair that no reasonable person would agree

39
Q

requirement of quasi k where court will imply k to prevent unjust enrichment

A

plaintiff conferred measurable benefit on defendant
plaintiff acted without gratuitous intent and
unfair to let defendant retain benefit

40
Q

kinds of warranties

A

express
implied warrant of merchantability
implied warranty of fitness for a particular purpose

41
Q

what is express warranty

A

any promise affirmation description or sample that is part of basis of bargain unless just opinion

42
Q

what is implied warranty of merchantability

A

implied whenever seller is merchant
goods must be fit for ordinary purpose

can be disclaimed verbally or conspicuous writing

43
Q

what is implied warranty of fitness for particular purpose

A

implied whenever seller has any reason to know buyer has particular use for goods and is relying on seller’s skill to choose

can be disclaimed by conspicuous writing

44
Q

when is impracticability available

A

performance became illegal
subject matter of k is destroyed
performing party dies or incapacitated (personal services)
performance becomes impracticable

45
Q

elements of impracticability

A
  1. unforeseeable event
  2. non occurrence of the event was basic assumption’
  3. party seeking discharge not at fault
46
Q

when does frustration of purpose occur

A
  1. when unexpected event destroys purpose of entering into k even if not impossible
  2. doesn’t have to be unforeseeable, but so severe it’s not within assumed risks
47
Q

how to release party from existing duty in writing

A

CL: need consideration
UCC: written waiver signed delivered by aggrieved party

48
Q

destruction to identified goods

A

destruction: before risk passes to buyer, k is avoided, everyone discharged, no breach

damaged: k avoided or buyer can choose to take at reduced price

risk of loss has passed to buyer: k not avoided

49
Q

when does right of intended beneficiary vest

A

when B
1. detrimentally relies on rights
2. manifests assent to k or
3. files lawsuit to enforce

50
Q

writing that satisfies SOF

A
  1. in writing
  2. signed by party to be charged
  3. contain essential elements
51
Q

what does SOF apply to

A

M marriage
S suretyship
O one year
U UCC
R Real property

52
Q

SOF is not required for UCC goods if

A
  1. specially manufactured goods
  2. part payment
  3. receipt and acceptance
  4. judicial admission or
  5. both merchants - failure to object to memo within 10 days
53
Q

integration for PER

A

total: parties can’t introduce extrinsic evidence of prior understandings or negotiations

partial: can introduce extrinsic supplemental evidence of terms as long as it doesn’t contradict

54
Q

rules for intent of parties to determine integration

A

CL: four corners, look only at doc

Second Restatement: if extrinsic term of agreement would naturally be omitted, term can be introduced as long as it doesn’t contradict

UCC: assumes partial integration and allows almost any outside tersm

55
Q

PER doesn’t apply to

A

anything after
defenses
providing condition precedent
interpreting ambiguity

UCC: supplementing terms by evidence of trade usage, course of dealing

56
Q

priority for trade usage type evidence in UCC for PER

A

express terms
course of performance
course of dealing
trade usage

57
Q

requirement for express condition and implied

A

express - must be complied with unless excused, no substantial performance

implied - only need substantial performance

58
Q

damages for substantial performance

A

k price minus amount to complete

59
Q

what if you fail to substantially perform

A

can still recovery through restitution

60
Q

substantial performance less likely to be found when

A

willful breach

61
Q

perfect tender under UCC

A
  • substantial performance insufficient (except for installment k or when parties agree)
  • buyer may inspect goods and upon acceptance has obligation to pay
62
Q

divisible or installment k in CL

A

recovery limited to amount promised for segment performed

can recover for breach of other segments

63
Q

divisible or installment ks under UCC

A

perfect tender does not apply

buyer can only reject if nonconformity substantially impairs value and can’t be cured

buyer may cancel k only if nonconforming tender substantially impairs value of entire k

64
Q

what does every party have in any contract ever

A

implied duty of good faith and fair dealing

65
Q

how do you waive a condition

A

words or conduct

may be reinstated if waiving party communicates retraction of waiver and other party has not relied on it

66
Q

what if a party chooses to continue with k after a condition is broken

A

they’ve waived that condition

67
Q

breach under common law

A

material: nonbreaching party doesn’t get substantial benefit of bargain, can withhold performance and pursue remedies

minor: breaching party substantially performed, nonbreaching parties must perform but can seek remedies

68
Q

breach under UCC

A

seller must strictly perform all obligations under k or be in breach

material breach only applies to installment ks or if agreed

69
Q

anticipatory repudiation under CL

A

promisor repudiates before time of performance is due. must be clear and unequivocal via words or acts

70
Q

CL nonbreaching party’s options for anticipatory repudiation

A
  1. treat repudiation as breach
  2. ignore and demand performance (but don’t drive up costs)
  3. if only thing left to do is payment, have to wait for date of performance before suing
71
Q

anticipatory repudiation under UCC

A

unequivocal refusal of buyer/seller to perform or
when reasonable grounds for insecurity arises and other party fails to provide adequate assurance within 30 days

72
Q

damages for breach of k

A
  1. expectation (benefit of bargain)
  2. consequential damages (foreseeable)
  3. incidental (trying to do deal with breachl)
  4. liquidated (stipulated)
73
Q

formula for expectation damages

A

Loss in value + other loss

  • cost avoid - loss avoided
74
Q

rules for damages for defective performance

A

construction ks - cost to correct defect

sale of goods - difference in value between goods as warranted and actually tendered

real estate - failure to perform - difference between k and fmv

real estate - late deliver - fair market rental value

75
Q

economic waste for construction ks

A

occurs when cost to fix or complete is clearly more than any economic benefit gained as a result

court can award damage equal to diminution in FMV instead

but if willful breach – fuck that guy, he gotta pay

76
Q

UCC breach of warranty damages

A

difference between value of goods accepted and goods as warranted

77
Q

foreseeability for consequential damages

A

unforeseeable - not recoverable unless breaching party had reason to know about the possibility

foreseeable - natural and probable consequence, contemplated by parties at formation, or just foreseeable

78
Q

elements for consequential damages

A
  1. foreseeable
  2. causation
  3. reasonable certainty of calculating damages
79
Q

restitution damages

A

restores benefit conferred on other party

measured by reasonable value of getting that benefit from somewhere else or D’s increase in wealth from getting the benefit

80
Q

what are reliance damages

A

reasonable out of pocket expenses incurred by nonbreaching party

81
Q

can you recover reliance and expectation

A

no

82
Q

factors for ordering specific performance

A
  • difficulty of proving damages
  • hardship
  • wishes and understanding of parties
  • practicality

yes for real estate
yes for rare goods

83
Q

UCC remedies for buyer if seller fails to tender goods

A
  1. cancel k
  2. recover payments
  3. damages (FMV - incidental + consequential)
  4. cover
  5. specific performance
  6. replevin
84
Q

UCC buyer right to inspect

A

buyer has right to accept or reject all or part of the goods and to inspect before making that decision

85
Q

UCC seller right to cure

A

seller has right to cure defective tender if time of performance under K hasn’t ended or seller had reasonable grounds to think buyer would accept despite the nonconformity

86
Q

sellers right to reclaim goods from insolvent buyer

A

if seller makes demand within 10 days of buyer receiving

87
Q

risk of loss for shipment k and destination k

A

shipment k: risk passes to buyer when seller gives goods to the carrier and makes k for them to deliver

destination k: risk passes to buyer when good arrive

88
Q

SOL on breach of a sales k or warranty

A

4 years after cause of action accrues

89
Q

what if a merchant’s firm offer is prepared by someone else

A

then the signer must also separately authenticate it himself

90
Q
A

Bar II (16 decks)

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