Contracts Flashcards
Article 2 of the UCC
applies to transactions in goods.
Goods includes all things movable at the time of their identification to the contract for sale
UCC § 2-204(1) - k for the sale of goods may be made…
in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract
UCC Section 2-201(1)
a k for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought.
where the k for goods is for a total price of $500 or more, it is subject to the writing requirement of UCC § 2- 201(1) unless an exception applies.
a k is not enforceable beyond the quantity of goods shown in the writing
When an contract will be enforceable against a supplier
under UCC § 2-201(1) the doc must be signed by the supplier
UCC § 2- 201(2) provides an exception that if the contract is between two merchants and within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within 10 days after it is received.
UCC § 2-201(3)(a) causes a contract to remain enforceable if the goods are specially manufactured for the buyer and are not suitable for sale to others.
UCC §2-315 - Warranty of fitness for particular purpose
when a seller of goods has
1) reason to know both the buyer’s particular purpose for the goods and,
2) that the buyer is relying on the seller’s skill or judgment to select goods appropriate for that purpose,
the contract contains an implied warranty that the goods are fit for that purpose unless the warranty is excluded or modified as provided in UCC § 2-316
UCC § 2-316(2) - Instances where the implied warranty for fitness may be excluded
the implied warranty of fitness may be excluded by language that is sufficient for that purpose, so long as it is in writing and is conspicuous
conspicuous = so written, displayed, or presented that a reasonable person against which it is to operated ought to have noticed it
UCC § 2-316(3) - instances where the implied warranty for fitness may be excluded
unless the circumstances indicate otherwise, all implied warranties are disclaimed by expressions like “as is,” “with all faults,” or “other language which in common understanding calls the buyer’s attention to the exclusion of warranties and makes plain that there is no implied warranty.
Offer
when person communicates to another a statement of willingness to enter into a bargain, so made as to justify the other person in understanding that his assent to that bargain is invited and will conclude it
UCC § 2-606(1) - acceptance by buyer
when the buyer
(a) after reasonable opportunity to
inspect the goods, signifies to the seller that the goods conform to the contract or that the buyer will retain them despite nonconformity,
(b) after reasonable opportunity to inspect the goods, fails to reject them within a reasonable time, or
(c) does any act inconsistent with the seller’s ownership of the goods.
UCC § 2-608 - revocation of acceptance
1) revocation must occur w/in a reasonable time after the buyer discovers or should have discovered the ground for it.
2) the goods must fail to conform to the contract and that nonconformity must substantially impair the value of the goods to the buyer.
3) if the buyer accepted the goods without discovery of their nonconformity, the acceptance must have been reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
Common law revocation of acceptance
an offer may be revoked by the offeror at any time before acceptance unless an option contract is created limiting the power of revocation.
An offer is revoked when the offeree “receives from the offeror a manifestation of an intention not to enter into the proposed contract.”
Rightful revocation triggers entitlement to damages under UCC §2-711
recover the purchase price + the buyer is entitled to the difference between the k price of the goods for which he contracted and their market price.
Consequential damages for losses arising from the nonbreaching party’s special circumstances only if the breaching party:
knew about the nonbreaching party’s special circumstances, or
could have reasonably forseen the harm, in light of the nonbreaching party’s special circumstances, that would result from a breach
Duty to mitigate when claiming damages
a party cannot recover damages for loss that the party could have by reasonable efforts
Affirmative steps to avoid loss are not required, however, if they would involve undue risk, burden, or humiliation.
Parole evidence rule
Whether the terms of an oral agreement that predates a written agreement are part of the resulting k is determined by application of the “parol evidence rule.”
parol evidence rule applies if a k has been reduced to a writing that is integrated
- completely integrated agreement is adopted by the parties as a complete and exclusive statement of the terms of the agreement, discharges prior agreements to the extent that they are within its
scope. - If the writing is only partially integrated (i.e., integrated but not completely integrated), it
discharges prior agreements only to the extent that the written agreement is inconsistent with the prior agreement
complete integration
writing = parties final agreement about all terms
no terms will be admitted into evidence
partial integration
writing = parties final agreement about some terms
consistent additional terms will be admitted to supplement (not contradict)
parol evidence rule does not apply to
1) formation defenses,
2) interpretation of a term,
3) failure of a cond precedent,
4) a clerical error, or
5) a later modification
FICCL
Common law contract modification
generally must be supported by consideration
exception: Restatement (Second) Section 89(a) consideration is not required if the modification is fair and equitable in view of circumstances not anticipated by the parties when the k was made.
Essential terms of a k under common law
parties
subject matter
price or other consideration
quantity
duration of k
time for each party’s performance
terms must be sufficently certain and definite for the court to determine the existence of a breach and give an apprpriate remedy
salary if employment k
A k is voidable for undue influence when…
assent stems from unfair or excessive persusasion by someone who dominates or holds a special relationship of trust and confidence with the assenting party
Under the doctrine of promissory estoppel, an offer is irrevocable for a reasonable period of time if:
1) the offeror reasonably expected to induce reliance on the offer before acceptance,
2_ the offeree reasonably relied on the offer, and
3) that reliance caused the offeree to suffer substanital detriment
Anticipatory repudiation occurs when…
a party clearly and unequivocally communicates (through words or conduct) that it does not intend to perform.
mere insecurity about a party’s ability to perform is not a repudiation, but it allows the other party to demand assurance of performance.
can be express or implied
Modifying existing contracts - traditional common law view
parties agreement
new consideration
modyifying existing contracts - modern common law view
parties agreement
new consideration unless modification is fair and equitable due to unanticipated circumstnaces
modifying existing contracts under UCC
parties agreement
good faith (honesty & observance of reasonable commerical standards of fair dealing)
new consideration not required
If a party whose duty to perform is subject to a condition precedent wrongfully prevents that condition from occuring (viol of implied duty of good faith/fair dealing) then the condition will be…
excused and the party must perform
if a debt is disputed in good faith then the debtor can…
offer to satisfy the debt by giving the creditor a check w/ a conspicuous “payment in full” notation.
if the debt is liquidated (certain and undisputed in amount) then it cannot be satisfied by a check for a lesser amount even if creditor cashes the check
Non-occurence of a condition precedent may be excused if…
the party who benefits from the cond waives it by words or conduct.
waiving party cannot retract waiver if the other party has detrimentally relied on it
Substantial impairment rule
applies to installement ks
allows a buyer to reject tender of nonconforming goods when the non conformity substanitlly impairs the value of that shipment and cannot be cured
expectation damages
normal measure of damages for breach of k
loss of value of breaching party’s performance plus incidential damages plus consequential damages minus any expenses saved as a result of the breach
mitigation is required.
incidental damages
those related to avoiding the loss from the breach
(storing goods after a breach)
compensatory damages
a sum of money that would put that party in the same position as if the k had been performed
UCC formulas for breach - seller breaches and buyer has goods
buyer gets value of goods as contracted for minus the value of the goods as delivered plus incidential and consequential damages
UCC formulas for breach - seller breaches and seller has goods
buyer gets difference between mkt price (or replacement price) and k price plus incdiental and consequential damages minus expenses saved
UCC formulas for breach - buyer breaches and buyer has goods
seller gets k price
UCC formulas for breach - breaches and seller has goods
seller gets differnece between k price and mkt price plus incidential damages minus expenses saved
UCC formulas for breach - lost volume seller
seller gets lost profits plus incdientials
when an employer breaches an employment agreement, the employee can recover
the unpaid salary under the k
that recovery is reduced by the compensation the employee earned or could’ve earned by making reasonable efforts to secure comparable employment
rescission is available due to a mutual mistake if
if both parties are mistaken about a basic assumption of fact that materially affects the agreed upon exchange and neither bears the risk, the k is voidable
shipping non-conforming goods serves as both a
- sending an accomodation letter w/ defective goods = counteroffer
- sending defective goods w/ no letter = acceptance and breach
a party who anticipatorily repudiates a k may retract the repudiation if the non-repudiating party is…
notified of the retraction before
1) cancelling the k,
2) materially changing position in reliance on repudiation, or
3) indicating she considers the repudiation final
Under the UCC, a breaching buyer is entitled to restitution damages for…
the value of any advance payments it made to seller minus the amount of the seller’s damages
a party who fails to substnitally perform (material breach) can only recover restitution damages
unilateral mistake is not grounds to avoid a k unless
1) the mistake would make enforcement of the k unconscionable, or
2) the non-mistaken party caused or knew or had reason to know of the mistake