Contracts Flashcards

Question

Incapacity

Answer 1

1. Infancy (minors contract) - EXCEPTION: if for necessaries (health, subsistence, education) --> minor will still be liable in restitution for value of benefits received 2. Mental Incapacity: incapable of understanding nature/significance of the K 3. Intoxicated Persons: don't understand the significance of their promise

Answer 2

MYLEGS 1. Marriage (even "if you marry my son" 2. Year - promises that cannot be performed within one year from date of K 3. Land - promises creating interests in land (lease/easement/fixture/mineral rights/mortgages) 4. Executors - promises to pay estate debts from own funds 5. Goods - contracts for sale of goods over $500 exception: specially manufactured goods 6. Suretyship: promise to pay debt of another

Answer 3

Court may modify/refuse to enforce the entire K or provision if there was an **unfair surprise OR oppressive terms** look for: - inconspicuous clauses that shift risk - release liability for intentional wrongdoing - limiting liability to damages - limit parties to certain remedies

Answer 4

1. General Rules 2. Parol Evidence Rule 3. Article 2 Provisions - gap fillers, delivery terms/risk of loss, warranties & disclaimers 4. Modifications

Answer 5

1. Contracts construed as whole 2. Words generally given ordinary meaning 3. Written/typed terms prevail over printed 4. Custom/usage in business and locale is considered 5. Court will try to find valid K 6. Ambiguities construed against contract preparer

Answer 6

When parties intend that a writing be a final expression of their bargain, no prior (oral or written) or contemporaneous (oral) expressions are admissible to vary the terms of the writing *watch out for fact patterns where only one part reduces agreement to writing (employer K) = no parol evidence here because both parties need to intend writing to be final agreement *Terms of writing may be explained or supplemented by CONSISTENT ADDITIONAL terms; unless, court finds from ALL circumstances that writing was intended to be a complete and exclusive statement of the parties agreement

Answer 7

1. Was writing intended as final expression of agreement? 2. Whether the integration was complete or partial? *To determine: court will look to whether the parties intended the writing to be the complete and exclusive statement of their agreement, it must be determined whether parties situated like the parties to this contract would naturally and normally include the extrinsic matter in writing.

Answer 8

1. Merchants confirmatory memo 2. Admission in court 3. Specially manufactured goods

Answer 9

In agreements between merchants, if one party reasonably after oral conversation sends the other party a written confirmation. Will bind the recipient if: - Have reason to know of the confirmation's contents; - do not object to writing within 10 days of receipt

Answer 10

the writing cannot be supplemented/contradicted If merger clause present = agreement is complete on its face

Answer 11

Writing cannot be CONTRADICTED, but can be SUPPLEMENTED with additional, consistent terms *Think of artwork problem: art work by a different painter could not be included (contradictory) but the Frame for a discounted price could be included (supplemental additional) didn't conflict with the art piece itself

Answer 12

1. Evidence relating to validity (formation defects, conditions precedent) *oral condition precedents fall OUTSIDE scope of parole evidence rule! 2. Evidence used to interpret (words uncertain / ambiguous) 3. Evidence showing true consideration paid 4. Evidence in action for reformation

Answer 13

If missing: Price --> reasonable at time of delivery Place of delivery --> seller's business Time of shipment --> reasonable Time for payment --> upon receipt of goods Assortment --> buyer's option NO FILLER FOR QUANTITY

Answer 14

If merchant seller --> risk passes to buyer upon taking physical possession Nonmerchant seller --> risk passes upon tender of delivery

Answer 15

Shipment: risk passes to buyer when seller delivers to carrier (no specific destination designated) Destination: risk passes on tender at destination (FOB, Buyer City) F.O.B: risk passes on delivery at FOB location FAS: ROL passes to buyer once goods are delivered to dock *UCC presumes shipment K in absence of agreement*

Answer 16

Implied in every contract by merchant of goods of the kind sold Disclaimer: must mention "merchantability" and must be conspicuous if in writing Can be disclaimed by "as is" / refusal to examine/course of dealing

Answer 17

Implied whenever any seller has reason to know of a particular purpose for which goods to be used that buyer is relying on sellers skill / judgment to select goods and the buyer does in fact rely. Disclaimed by: by conspicuous writing or general disclaimer "as is"

Answer 18

Any affirmation of fact/promise made by the seller to the buyer that buyer could have relied on when entering into the K - description of goods/model/sample - typically cannot disclaim express warranties Implied warranties disclaimed by "as is" or "without fault"

Answer 19

Any seller of goods warrants that the title transferred is good, the transfer is rightful and no liens/encumbrances *automatic/implied warranty Disclaimed by specific language/circumstances that put buyer on notice that seller is not claiming title "as is" "no guarantees"

Answer 20

Merchant seller regularly deals in goods of the kind sold automatically warrants the goods are delivered free from patent, trademark, copyright/similar claims If buyer furnishes specifications for goods, cannot hold seller liable for those claims

Answer 21

General Contract Law: additional consideration needed for the modification - look for "preexisting duty" in answer choice if CL question Modern view: permits modification without additional consideration if due to circumstances that were unanticipated by the parties when the contract was made and it's fair and equitable *written contract can be modified orally even if there is a contrary provision*

Answer 22

- No consideration needed as long as in good faith (must have a reason other than one party trying to get more money) - If contract as modified if for more than $500 worth of goods --> must be in writing - Gives effect to provisions prohibiting oral modification

Answer 23

Common law: duty to substantially perform all that is called for in a K Article 2: perfect tender --> delivery/conditions must be exactly as promised *if not satisfied, could be grounds for breach*

Answer 24

Failure of a condition is not a breach, but discharges liability of the promisor whose obligations on the conditional promise didn't happen.

Answer 25

One that must occur before an absolute duty of immediate performance arises in the other party If condition is "satisfaction" = reasonable person standard, unless with regard to creative express/personal judgment --> then only met if promisor is personally satisfied

Answer 26

Capable of performing together; parties bound to perform at the same time

Answer 27

When it occurs it cuts off an already existing duty of performance

Answer 28

1. Hindrance/failure to cooperate 2. Breach of K 3. Anticipatory Repudiation 4. Substantial performance 5. Divisibility of Contract 6. Waiver/Estoppel

Answer 29

If party having duty of performance is subject to a condition that prevents the condition from occurring --> condition will be excused if wrongful (other party wouldn't have reasonably contemplated/assumed risk)

Answer 30

By words/conduct/voluntary giving up

Answer 31

1. Party indicates their waiving condition before it happens or they are waiving performance before it's to be rendered 2. Person addressed detrimentally relies on the waiver --> court holds as binding estoppel

Answer 32

When condition doesn't occur; beneficiary of the condition or duty must make an election to: 1. terminate their liability; 2. continue under the contract

Answer 33

Promisor, prior to the time of performance of their promise, indicates that they won't perform when the time comes --> immediate claim for breach Non-repudiating party has 4 options: 1. treat anticipatory repudiation as a total repudiation and sue immediately 2. Suspend their own performance and wait to sue until performance date 3. Treat the repudiation as an offer to rescind and treat K as discharged 4. Ignore the repudiation and urge promisor to perform

Answer 34

1. Clear statement of repudiation, but NO reliance --> retraction is permitted 2. Expression of doubt rather than clear intent not to perform --> not anticipatory breach 3. Clear oral repudiation but choices imply a writing may be required --> NO WRITING REQUIRED FOR ANTICIPATORY REPUDIATION

Answer 35

1. Condition of complete performance may be excused if the party has rendered substantial performance 2. Courts typically only apply if a constructive condition is involved; NOT an express condition

Answer 36

If K is divisible and a party performs one of the units of the K --> entitled to the agreed-on equivalent for that unit even if other units haven't been completed

Answer 37

1. Performance by each party can be divided into two or more parts under the K; 2. Number of parts due from each party is the same; 3. Performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party *nonbreaching party has a cause of action for each of the unperformed units and may withhold counterperformance for those units

Answer 38

1. Performance has been completed 2. Condition subsequent occurs 3. Illegality of subject matter of K 4. Impossibility, impracticability, frustration of purpose 5. Rescission of contract 6. Modification 7. Novation 8. Accord and Satisfaction

Answer 39

Mutual: express agreement between the parties; excuse both from obligations Unilateral: party desiring must have adequate legal grounds - mistake, misrepresentation, duress, failure of consideration Grounds for rescission: 1. Mutual mistake of material fact 2. Unilateral mistake if other party knew/should have known 3. Unilateral mistake if hardship by mistaken party is so extreme 4. Misrepresentation of fact/law by either party as to material fact in negotiations that was relied upon 5. Duress, undue influence, illegality, lack of capacity, failure of consideration

Answer 40

Agreement where one party to the existing K agrees to accept some or different performance, in lieu of the original performance that they're supposed to receive from the other party Look for "if...then" Accepting and cashing a check with "full performance" noted is a sufficient accord and satisfaction

Answer 41

1. A new K substitutes a new party to receive benefits and assume duties that had originally belonged to one of the original parties under the terms of the old K 2. Requires consent of all parties 3. will discharge the old K

Answer 42

Duties could not be performed by ANYONE Must arise after K has been entered into - could be partially discharged/temporarily discharged Look for: - death/physical incapacity - supervening illegality - subsequent destruction of K matter - contracts to build

Answer 43

If constructor was working on renovation --> destruction discharges duties by impossibility. If contract was constructing the building, destruction DOES NOT discharge contractor duties. Contractor responsible for destruction of the premises under construction prior to completion; once completed --> ROL shifts to owner

Answer 44

1. Extreme and unreasonable difficulty and/or expense 2. It's nonoccurence was a basic assumption of the parties

Answer 45

1. Supervening act/event leads to frustration 2. Parties did not reasonably foresee the act/event occurring; 3. Purpose of the K has been completely/almost completely destroyed by this act or event 4. Purpose of the K was realized by both parties at time of making the K

Answer 46

Minor breach: obligee gains the substantial benefit of bargain so the aggrieved party must perform, but has right to damages Material breach: obligee does not gain substantial benefit of bargain so no duty to perform, immediate right to damages and other remedies

Answer 47

1. Amount of benefit received by non breaching party 2. Adequacy of compensation for damages to injured party 3. Extent of part performance by the breaching party 4. Hardship to the breaching party 5. Negligent/willful behavior of breaching party 6. Likelihood breaching party will perform remainder of K *failure to perform within stated time = NOT material breach unless "time is of essence"

Answer 48

If the goods or delivery fail to conform to the K in any way, the buyer may: 1. reject all 2. accept all 3. accept in part 4. reject in part

Answer 49

1. Seller's right to cure defect within reasonable time for performance 2. Seller's right to cure beyond original K time 3. Installment K's

Answer 50

1. Cure by giving reasonable notice of intent to do so; 2. Make new tender of conforming goods that buyer must accept by the original due date

Answer 51

Buyer rejects non-conforming goods that seller reasonably believed would be acceptable; upon reasonable notification to buyer --> seller has further reasonable time beyond the original K to make conforming tender Look to: trade practices/prior dealings

Answer 52

1. Nonconformity substantially impairs value of that installment and cannot be cured 2. Whole K breached if non-comformity substantially impairs value of entire K

Answer 53

1. Specific Performance 2. Damages 3. Restitution 4. Rescission/Reformation

Answer 54

Only awarded when court concludes that money damages would not be adequate Available for: - Real Estate - Sale of goods if UNIQUE/ART - Not available for services typically

Answer 55

If damages are inadequate, court may order breaching party to perform (land or rare/unique goods)

Answer 56

1. Expectation damages - put non breaching party In position they would have been in had breach not occurred - non breaching party will be awarded the benefit of the bargain she would have received - always available Incidental Damages = always recoverable 2. Consequential = may be recovered if at time K was made a reasonable person would have foreseen these damages - occur after the breach due to the particular situation of non-breaching party - breaching party knew of these circumstances at the time of the K - can be proven w/ reasonable certainty

Answer 57

Breaching party would have known at the time of the K that these damages would likely result from a breach

Answer 58

1. Must be certain and not speculative; ascertainable with reasonable certainty 2. Damages must take into account costs that were avoided as a result of the breach (could lower overall recovery) 3. Non-breaching party has a duty to mitigate damages; should not be able to recover damages that are avoidable

Answer 59

If actual damages difficult to calculate at time of contracting, amount is a reasonable forecast of the likely damages (not punitive)

Answer 60

1. Cover (K price - Cost of replacement) 2. Difference between contract and market price 3. Warranty damages (if accepted nonconforming goods) 4. Consequential damages (if seller knew of buyer's needs)

Answer 61

1. Resale price = K price - Resale Price 2. Market price = K price - Market Price 3. Lost profits (lost volume seller) = K price - cost to seller

Answer 62

Difference between contract price and FMV

Answer 63

Employer breach: full contract price Employee breach: cost to replace employee

Answer 64

Before construction = builder's prospective profits During construction = profits + cost expended If after completed construction = full K price + interest

Answer 65

If before/during --> owner entitled to cost of completion + reasonable compensation for delay If late completion --> damages because of value of lost use

Answer 66

3rd party beneficiary is intended when: 1. identified in the contract; 2. receives performance directly; 3. has some relationship w/ promisee to indicate intent to benefit *Intended third party beneficiaries can be EITHER creditor or donee beneficiaries; as long as they are "intended" Intended beneficiaries can only enforce contract rights once vested! Being intended beneficiary doesn't automatically mean rights have vested

Answer 67

1. Manifested assent; 2. Brought suit to enforce the promise; or 3. Materially changed position in justifiable reliance

Answer 68

1. Promisor can raise any defenses against third party as he could against promisee 2. If promisor fails to perform: - Donee beneficiary --> may not sue promisee unless detrimental reliance - Creditor beneficiary --> may sue promisee on underlying obligation *3rd party beneficiary may sue BOTH promisor/promisee but may obtain only ONE satisfaction

Answer 69

1. Two parties contract; 2. One party assigns rights to 3rd party 3. Assignee can enforce rights againt obligor

Answer 70

Assignments for Value = generally NOT revocable (done for consideration; taken as security for preexisting debt) Gratuitous assignment = generally revocable

Answer 71

All duties delegable EXCEPT: 1. Duties that involve personal skill/judgment 2. would change obligee's expectancy 3. A special trust was reposed in the delegator by the other party to the K 4. Contractual restriction on delegation - Can be written/oral - must manifest a present intention to make delegation

Answer 72

A third party beneficiary situation! The non delegating party to the contract can compel performance or bring suit for nonperformance.

Answer 73

NO DELEGATION CLAUSE

Answer 74

1. Identity of parties 2. Description of subject matter 3. Terms necessary to make K definite 4. Must be signed by party to be charged

Answer 75

1. Land sale K = part performance (sufficient to justify purchase; not just paying rent) must unequivocally indicate K for land 2. Services contract = upon full performance by either party 3. Sale of goods: - Goods accepted/paid OR - Goods specifically manufactured and seller has begun performing

Answer 76

At any time until the rights of the 3rd party beneficiary have vested! Once rights vest --> 3rd party beneficiary must give consent If no vesting has occurred --> don't need their consent

Answer 77

1. If reasonable grounds for insecurity with respect to a party's performance; 2. Other party may demand in writing assurances that the performance will be forthcoming at a proper time - party may suspend their own performance until they receive adequate assurances; - if not received within 30 days --> treat K as repudiated