contracts Flashcards
Choice of Law
The UCC applies to contracts for the sale of goods. The common law applies to contracts for services and real property.
Merchant
A merchant is someone who regularly deals in goods of the kind involved
Predominant Purpose Test
For contracts where there is both a goods and services component, the predominant purpose of the contract determines which rules apply.
Valid Contract
A valid contract requires offer, acceptance, consideration, and terms.
Offer
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.
Essential terms
Common law: parties, subject matter, price, and quantity
UCC: just quantity
Bilateral v. Unilateral Offer
Bilateral: can accept by either return promise or performance
Unilateral: requires acceptance by performance
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Usually an invitation to deal rather than an offer
Termination of Offer
1) Revocation
2) Lapse
3) Death/Incapacity (except for option contract)
4) Counteroffer/rejection
5) Destruction/Illegality
Option contract
offeree gives consideration to keep the offer irrevocable
UCC firm offer
If offeror is a merchant, gives an assurance the offer will remain open, in writing, for a reasonable time not to exceed 3 months
Partial Performance of unilateral k
Partial performance of a unilateral contract makes the offer irrevocable
Partial performance of a bilateral contract operates as a promise to render complete performance
Acceptance
objective manifestation of intent to be bound by the terms of the offer
Means of acceptance
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
Shipment of Goods
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
Revocation of acceptance of goods
A buyer may revoke an acceptance of goods if the nonconformity substantially impairs their value to the buyer.
the buyer accepted the goods without discovery of the nonconformity or such acceptance was reasonably induced either by the difficulty of discovering the nonconformity or because the seller gave assurances that the goods were conforming.
The buyer must inform the seller of its decision to revoke within a reasonable time after the nonconformity is discovered or should have been discovered by the buyer.
Mailbox Rule
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
UCC battle of the forms
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
Common Law Mirror Image Rule
acceptance must mirror terms of offer or it is a rejection and counter offer, not an acceptance
Consideration
Consideration is bargained for exchange
A gift is not consideration but remember promissory estoppel
Past consideration is not consideration (consider material benefit rule)
Adequacy of consideration
Need not be equal in value
preexisting duty is not consideration
Modification
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
Accord and satisfaction
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)
Illusory promise
not legally binding because it is vague or the promisor can choose whether to honor it