Contracts Flashcards
what do you need to consider for a contracts question
A- assent
C- consideration
D - defenses
S - statute of frauds
what is an offer
objective manifestation of a willingness by offeror to enter int agreement that creates power of acceptance in offeree
intent - a statement is only an offer if
person could reasonably interpret it as such
expresses present intent to be legally bound
requirements for terms to be certain and definite
common law - all essential
UCC - quantity
how do you terminate an offer
- lapse of time - reasonable if none specified
- death/mental incapacity (not options)
- destruction / illegality
- revocation
when is revocation effective
when communicated
revocation sent by mail is effective when received
UCC firm offer rule
offer is irrevocable for reasonable time not more than 3 months
if offeror is a merchant and it is is writing
ways to make offer irrevocable
option k
UCC firm offer
promissory estoppel
partial performance
what if a seller accepts a contract via shipping the items but they are unconforming
acceptance + breach
unless seller notifies buyer that goods are an accommodation (counter offer) and then buyer can accept or reject
mailbox rule
only acceptance
acceptance is effective when sent
what does mailbox rule not apply to
options and other irrevocable offers
rule for additional or different terms for common law
mirror image - acceptance must mirror terms of offer
conditional acceptance is a counter offer
rules for additional or different terms in ucc
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
how is battle of the forms treated for different terms in acceptnace
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
what if both parties are merchants and the terms in the acceptance /offer are different and knock each other out
nullified and use UCC gap filling
consideration is
bargained for legal detriment to promisee
test for gift
whether offeree could reasonably believe intent of offeror was to induce action – if yes, consideration
pre existing duty rule for consideration
common law - no consideration unless promisor gives something new in addition to what is owed or varies the existing duty in some way
exception for third parties for pre existing duty rule
party’s promise to third party to perform an act the party is already obligated to perform for another is sufficient
modern trend for past consideration
enforce past promises under material benefit rule
modification of k under common law
must be supported by consideration. agreements to modify k are enforceable if
- recision of existing k and entering into new k
- unanticipated difficulties and modification is fair
- new obligations arise on both sides
modification of k under UCC
just needs to be good faith
accord and satisfaction
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
when is promise not to assert a legal claim consideration
when done in good faith that the claim is valid
promises that are binding without consideration
- pay a debt barred by SOL
- promissory estoppel
- material benefit rule
defenses to formation where there is no meeting of the minds
mistake
misunderstanding
misrepresentation
undue influence
duress
capacity
can mutual mistake void a k
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
can unilateral mistake void a k
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
misunderstanding is when they think they are agreeing to same terms but actually terms are different. rules for these scenarios
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
elements for fraudulent misrepresentation
-knowing or reckless false assertion of fact
- with intent to mislead
- misrepresentation induced assent to k
- justifiable reliance by adversely affected party
effect of fraud in factum (execution)
prevents party from knowing essential terms so no K unless reasonable diligence would’ve revealed the true terms
effect of fraud in the inducement
tricked party into entering k
k voidable by tricked party if she justifiably relied
effect of non fraudulent misrepresentation
renders k voidable by adversely affected party who justifiably relied on material misrepresentation and was induced to assent to k because of it
what is undue influence
unfair persuasion - look for unequal relationship and persuasion that impairs judgment of other
if confidential relationship the dominant party must prove k was fair
what is duress
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
rules for capacity
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
defense to enforcement - illegality
k unenforceable if consideration or performance is illegal
void if contemplates illegal conduct
duty to perform discharged if k becomes illegal after formation
defense of unconscionability
so unfair that no reasonable person would agree
requirement of quasi k where court will imply k to prevent unjust enrichment
plaintiff conferred measurable benefit on defendant
plaintiff acted without gratuitous intent and
unfair to let defendant retain benefit
kinds of warranties
express
implied warrant of merchantability
implied warranty of fitness for a particular purpose
what is express warranty
any promise affirmation description or sample that is part of basis of bargain unless just opinion
what is implied warranty of merchantability
implied whenever seller is merchant
goods must be fit for ordinary purpose
can be disclaimed verbally or conspicuous writing
what is implied warranty of fitness for particular purpose
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
when is impracticability available
performance became illegal
subject matter of k is destroyed
performing party dies or incapacitated (personal services)
performance becomes impracticable
elements of impracticability
- unforeseeable event
- non occurrence of the event was basic assumption’
- party seeking discharge not at fault
when does frustration of purpose occur
- when unexpected event destroys purpose of entering into k even if not impossible
- doesn’t have to be unforeseeable, but so severe it’s not within assumed risks
how to release party from existing duty in writing
CL: need consideration
UCC: written waiver signed delivered by aggrieved party
destruction to identified goods
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
when does right of intended beneficiary vest
when B
1. detrimentally relies on rights
2. manifests assent to k or
3. files lawsuit to enforce
writing that satisfies SOF
- in writing
- signed by party to be charged
- contain essential elements
what does SOF apply to
M marriage
S suretyship
O one year
U UCC
R Real property
SOF is not required for UCC goods if
- specially manufactured goods
- part payment
- receipt and acceptance
- judicial admission or
- both merchants - failure to object to memo within 10 days
integration for PER
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
rules for intent of parties to determine integration
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
PER doesn’t apply to
anything after
defenses
providing condition precedent
interpreting ambiguity
UCC: supplementing terms by evidence of trade usage, course of dealing
priority for trade usage type evidence in UCC for PER
express terms
course of performance
course of dealing
trade usage
requirement for express condition and implied
express - must be complied with unless excused, no substantial performance
implied - only need substantial performance
damages for substantial performance
k price minus amount to complete
what if you fail to substantially perform
can still recovery through restitution
substantial performance less likely to be found when
willful breach
perfect tender under UCC
- substantial performance insufficient (except for installment k or when parties agree)
- buyer may inspect goods and upon acceptance has obligation to pay
divisible or installment k in CL
recovery limited to amount promised for segment performed
can recover for breach of other segments
divisible or installment ks under UCC
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
what does every party have in any contract ever
implied duty of good faith and fair dealing
how do you waive a condition
words or conduct
may be reinstated if waiving party communicates retraction of waiver and other party has not relied on it
what if a party chooses to continue with k after a condition is broken
they’ve waived that condition
breach under common law
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
breach under UCC
seller must strictly perform all obligations under k or be in breach
material breach only applies to installment ks or if agreed
anticipatory repudiation under CL
promisor repudiates before time of performance is due. must be clear and unequivocal via words or acts
CL nonbreaching party’s options for anticipatory repudiation
- treat repudiation as breach
- ignore and demand performance (but don’t drive up costs)
- if only thing left to do is payment, have to wait for date of performance before suing
anticipatory repudiation under UCC
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
damages for breach of k
- expectation (benefit of bargain)
- consequential damages (foreseeable)
- incidental (trying to do deal with breachl)
- liquidated (stipulated)
formula for expectation damages
Loss in value + other loss
- cost avoid - loss avoided
rules for damages for defective performance
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
economic waste for construction ks
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
UCC breach of warranty damages
difference between value of goods accepted and goods as warranted
foreseeability for consequential damages
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
elements for consequential damages
- foreseeable
- causation
- reasonable certainty of calculating damages
restitution damages
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
what are reliance damages
reasonable out of pocket expenses incurred by nonbreaching party
can you recover reliance and expectation
no
factors for ordering specific performance
- difficulty of proving damages
- hardship
- wishes and understanding of parties
- practicality
yes for real estate
yes for rare goods
UCC remedies for buyer if seller fails to tender goods
- cancel k
- recover payments
- damages (FMV - incidental + consequential)
- cover
- specific performance
- replevin
UCC buyer right to inspect
buyer has right to accept or reject all or part of the goods and to inspect before making that decision
UCC seller right to cure
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
sellers right to reclaim goods from insolvent buyer
if seller makes demand within 10 days of buyer receiving
risk of loss for shipment k and destination k
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
SOL on breach of a sales k or warranty
4 years after cause of action accrues
what if a merchant’s firm offer is prepared by someone else
then the signer must also separately authenticate it himself
