Contracts Flashcards

1
Q

Choice of Law

A

The UCC applies to contracts for the sale of goods. The common law applies to contracts for services and real property.

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2
Q

Merchant

A

A merchant is someone who regularly deals in goods of the kind involved

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3
Q

Predominant Purpose Test

A

For contracts where there is both a goods and services component, the predominant purpose of the contract determines which rules apply.

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4
Q

Valid Contract

A

A valid contract requires offer, acceptance, consideration, and terms.

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5
Q

Offer

A

An offer is a manifestation of a present intent to be bound that creates the power of acceptance in the offeree. An offer must be communicated to a specific offeree. The offer must contain definite and essential terms.

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6
Q

Essential terms

A

Common law: parties, subject matter, price, and quantity
UCC: just quantity

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7
Q

Bilateral v. Unilateral Offer

A

Bilateral: can accept by either return promise or performance
Unilateral: requires acceptance by performance

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8
Q

ad

Advertisement

A

Usually an invitation to deal rather than an offer

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9
Q

Termination of Offer

A

1) Revocation
2) Lapse
3) Death/Incapacity (except for option contract)
4) Counteroffer/rejection
5) Destruction/Illegality

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10
Q

Option contract

A

offeree gives consideration to keep the offer irrevocable

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11
Q

UCC firm offer

A

If offeror is a merchant, gives an assurance the offer will remain open, in writing, for a reasonable time not to exceed 3 months

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12
Q

Partial Performance of unilateral k

A

Partial performance of a unilateral contract makes the offer irrevocable
Partial performance of a bilateral contract operates as a promise to render complete performance

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13
Q

Acceptance

A

objective manifestation of intent to be bound by the terms of the offer

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14
Q

Means of acceptance

A

Unless the offeror specifies, the offeree can accept in any reasonable manner.
Silence is not acceptance unless the offeree has a reason to believe the offer could be accepted by silence or prior dealings make it reasonable

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15
Q

Shipment of Goods

A

A buyer’s request for goods to be shipped invites acceptance by promise or by shipment.
If nonconforming goods are shipped, both an acceptance and a breach unless the seller notifies the buyer that goods are an accomodation

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16
Q

Mailbox Rule

A

an acceptance is effective when sent
Rejection following acceptance: acceptance controls but if offeror detrimentally relies on rejection, the offeree is estopped from enforcing
Acceptance following rejection: first one received prevails
Revocations: effective upon receipt
Options/firm offers: mailbox rule doesn’t apply, acceptance must be received

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17
Q

UCC battle of the forms

A

acceptance with a change in terms is valid unless agreement to the changed terms is conditioned on acceptance. Otherwise, new terms are a proposal for change
Between merchants: new or differnt terms control unless the original offer limited acceptance to its terms, the terms materially alter the offer, or the offeror objects within a reasonable time.
Knock out rule: conflicting terms nullify each other

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18
Q

Common Law Mirror Image Rule

A

acceptance must mirror terms of offer or it is a rejection and counter offer, not an acceptance

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19
Q

Consideration

A

Consideration is bargained for exchange
A gift is not consideration but remember promissory estoppel
Past consideration is not consideration (consider material benefit rule)

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20
Q

Adequacy of consideration

A

Need not be equal in value
preexisting duty is not consideration

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21
Q

Modification

A

Common law: must be supported by consideration unless recission and new contract, unanticipated difficulties arise and modification is fair, or new obligations on both sides
UCC: requires only good faith, no consideration

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22
Q

Accord and satisfaction

A

one party agrees to accept a different performance to satisfy the existing duty and discharge the original contract.
A payment of a lower amount/lesser value is not allowed unless there is a dispute as to amount or it is made in a different type of payment (i.e. giving a car instead of money)

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23
Q

Illusory promise

A

not legally binding because it is vague or the promisor can choose whether to honor it

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24
Q

Requirement and output contract

A

requirement: seller agrees to provide all the goods a buyer requires
output: a buyer agrees to buy all that a seller produces

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25
Q

Promissory Estoppel

A

a promise is binding if the promisor should reasonably expect it to induce action, the promise does induce such action, and injustice can only be avoided by enforcement of the promise.

26
Q

Parol Evidence Rule

A

PER bars extrinsic evidence of a prior or contemporaneous statements that contradict the written agreement if the agreement is integrated. an integrated writing is intended as a final expression of the prateis agreement.
Exception: attack formation, attack enforcement, show condition precedent, or explain ambiguities

27
Q

Completely integrated agreement

A

parties cannot introduce extrinsic evidence

28
Q

partial integration

A

cannot introduce extrinsic evidence that contradict the writing. UCC assumes contracts are partial integrations.

29
Q

Express warranties

A

promise, description (not an opinion) that is a basi sof the bargain. A general disclaimer for an express warranty is not valid

30
Q

Implied warranty of merchantability

A

if the seller is a merchant, implied warranty that the product is fit for its ordinary purpose. a waiver must use the term merchantability or “as is”, and if in writing, it must be conspicuous

31
Q

Implied warranty of fitness for a particular purpose

A

if seller knows of the purpose and buyer relies on the sellers representation, any waiver must be in writing and conspicuous

32
Q

Defenses to formation

A

Incapacity, Mistake, Duress, Undue Influence, Misunderstanding, Misrepresentation
[IM DUMM]

33
Q

Mutual Mistake

A

Both parties are mistaken about a fact that:
existed at the time of formation
went to a basic assumption of the contract
caused a material impact on the transaction
Did not assume the risk
Neither party can avoid if reformation is possible

34
Q

Unilateral Mistake

A

One party is mistake and can void if did not assume risk and mistake would make the contract unconscionable or the non mistaken party caused the mistake, had a duty to disclose/failed to disclose the mistake, or knew/should have known the other party was mistaken

35
Q

Misunderstanding

A

Both parties believe they are agreeing to same material terms but in fact agree to different ones
Neither party knows: no contract
one party knows: contract formed on basis of meaning as understood by the other parties
both parties knew of ambiguity: no contract
can be waived

36
Q

Misrepresentation

A

untrue representation of fact. Requires
the misrepresentation was made
1) knowingly or recklessly with the
2) intent to mislead
3) the misrepresentation induced assent
4) the other party justifiably relied on the misrepresentation

37
Q

Cure of misrepresentation

A

a contract is not voidable if the facts are cured before the deceived party has avoided the contract.

38
Q

Undue Influence

A

unfair persuasion to induce assent
occurs where there are confidential relationships, third party undue influence, etc.

39
Q

Duress

A

improper threat that deprives a party of meaningful choices

40
Q

Capacity

A

Infancy: voidable by infant except for reasonable value of necessities
mental illness: void for those adjudicated to be incompetent
intoxication voidable by intoxicated person only if other party knew of intoxication

41
Q

Illegality

A

contract is unenforceable if ocnsideration/performance is illegal
one party can recover if they are justifiably ignorant of facts
restitution: the less guilty party may be able to recover

42
Q

Unconscionability

A

if a contract is so unfair to one party that no reasonble person would agree, the contract is not enforceable
Procedural unconscionability
Substantive unconscionability

43
Q

Public policy

A

a contract that violates significant public policy is unenforceable

44
Q

Statute of Frauds

A

A contract is required to be in writing and signed against the person it is to be enforced against. Only applies to contracts for goods more than $500, contracts that will take longer than a year, real property contracts, contracts in consideration of marriage, and suretyship.
exception: partial performance, specially manufactured goods

45
Q

Third Party Beneficiary

A

intended TPB can sue, but incidental cannot
modification is fine until the TPB’s rights best, then need TPB consent
vesting: detrimentally relies, manifests assent at a party’s request, files a lawsuit

46
Q

Assignment

A

assignee takes all rights of assignor but subjec tto any defense that can be raised against assignor

47
Q

Delegation

A

generally allowed unless other party has substantial interest in a specific individual’s performance
delegator is not released from liability

48
Q

Impracticality

A

defense available if
an unforeseeable event has occured,
the non occurence of which was a basic assumption on which the contract was made, and
the party seeking discharge is not at fault (and did not assume the risk).
Examples: performance becomes illegal, subject matter is destroyed

49
Q

Frustration of purpose

A

unexpected events arise that destroy one party’s purpose in entering into the contract, even if the performance i not impossible

50
Q

Impossibility

A

performance can be discharged due to death, incapacity, illegality, or destruction of subject matter

51
Q

Order of performance

A

one party’s performance requires a period of time: that party goes first
both can render performance at same time: both must

52
Q

Condition

A

a condition is a future event that must take place before rights or obligations are created. a failure of a condiiton releives a party of the obligation to perform

53
Q

Is there a breach

A

Common law:
Material breach: did not receive substantial beenfit of the bargain, non breaching party may sue and suspend performance
Minor: receive substantial beenfit of the bargain, must still perform
UCC:
perfect tender rule, if goods or delivery are defective in any way, buyer can sue for breach. If a buyer rejects nonconforming goods, seller can cure if time remanining
installment contracts are an exception, apply substantial performance

54
Q

Anticipatory repudiation

A

express and unequivocal repudication before performance is due.
nonbreaching party can treat it as a breach and sue, can wait and see, but if date of performance has not passed and only performance left is payment, must wait for actual breach to sue

55
Q

Retraction of repudiation

A

can be retracted until the promisee acts in reliance of the repudiation, accepts the repudiation, or commences an action

56
Q

UCC demand for reasonable assurances

A

If reasonable grounds for insecurity arise, a party can make a written demand for assurances. If the other party fails to give assurances within a reasonable time (not to exceed 30 days), there is an anticipatory repudiation.

57
Q

Expectation Damages

A

puts the nonbreaching praty in as good a position as they would have been if the contract had been performed properly, plus reasonably foreseeable incidental and consequential damages, minus mitigation. Must be calcualted with reasonable certainty.

58
Q

Liquidated Damages

A

allowed if the amount is reasonableand damages would be difficult to ascertain

59
Q

Reliance damages

A

put the non breaching praty in the position as if the contract were never formed

60
Q

restitution damages

A

put nonbreaching praty in position as if the contract were never formed
restores the benefit conferred on the otehr party
cannot get restitution if they have fully performed and only remaining performance is payment of definite sum

61
Q

Specific Performance

A

(i) the contract terms are definite and certain;
(ii) the conditions for the defendant’s performance must be satisfied (mutuality);
(iii) there is an inadequate relief at law; and
(iv) enforceability of the specific performance is feasible.