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Contracts Flashcards

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1
Q

What is a contract?

A

A legally enforceable agreement.

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2
Q

What are the 2 types of contracts, and how are they formed?

A

Express-Oral or written language.
Implied-Conduct

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3
Q

What is a quasi-contract?

A

An unenforceable contract that results in the unjust enrichment of a party.

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4
Q

What is a unilateral contract?

A

A contract that requires performance as an acceptance.

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5
Q

When contracts mix goods and services, how do you determine controlling law?

A

The predominate purpose of the contract determines controlling law, unless the goods and services are separated by payment.

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6
Q

For purposes of Article 2 UCC, what is a ‘merchant’?

A

Regularly deals in goods in the contract, or acts like it, and entered the contract for the business.

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7
Q

How to know when there has been an offer?

A

When it creates a ‘reasonable expectation’ of intent to enter a contract.

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8
Q

Can an invitation to enter into negotiations or make an offer be an offer to enter into a contract?

A

No

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9
Q

An offer involving realty must include what 2 things?

A

Land description
Price

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10
Q

In a contract for goods, when the parties agree to a quantity unknown at the time of the contract, the quantity can never be what?

A

Unreasonably disproportionate to estimates or prior dealings.

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11
Q

Without a time limit for acceptance, an offer remains effective for how long?

A

Reasonable amount of time.

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12
Q

What’s the difference between a counteroffer and an inquiry?

A

A counteroffer rejects the original offer.
An inquiry just negotiates and doesn’t reject the original offer.

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13
Q

When is a rejection effective?

A

Upon receipt by the offeror.

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14
Q

What are the 3 requirements to prove an indirect revocation by the offeror?

A

Offeree receives correct info,
from a reliable source,
that offeror acted in a way that a reasonable person would interpret as revocation.

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15
Q

When is an offer revocation effective?

A

Upon receipt by the offeree, or when published through comparable means as the offer.

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16
Q

What is an option contract?

A

Where there is consideration paid for keeping the offer open for a certain amount of time.

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17
Q

A merchant’s firm offer is not revocable. What are the 3 elements?

A

Merchant,
Offers to buy/sell goods in writing,
writing gives assurance that offer will remain open (3 months max).

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18
Q

A merchant’s firm offer that doesn’t specify a time is valid for how long?

A

A reasonable amount of time no longer than 3 months.

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19
Q

When is there an acceptance for a unilateral contract?

A

When performance is complete.

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20
Q

When can a unilateral offer be revoked?

A

Before performance has begun.

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21
Q

Is mere preparation considered performance for a unilateral contract?

A

No, but it may be considered detrimental reliance.

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22
Q

What are the 3 ways an offer is terminated by law?

A

Death or insanity of party,
Destruction of subject matter,
supervening illegality.

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23
Q

For goods, is shipment of nonconforming goods considered acceptance?

A

Yes, but also a breach.

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24
Q

The mirror image rule generally applies accept in what kinds of contracts?

A

Contracts between merchants for goods.

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25
When does the 'mail box rule' not apply-4 situations?
Offer stipulates acceptance by receipt, Option contracts, Offeree mails rejection before acceptance, Offeree sends both but rejection is received first and offeror detrimentally relies on it.
26
What is consideration?
A benefit to the promisor, or a detriment to the promisee.
27
Under common law, what are the 2 requirements to modify an active contract WITHOUT further consideration?
Circumstances unanticipated by parties when forming contract, Fair and equitable
28
A pre-existing duty to perform, for purposes of contract formation, only applies to when?
When the pre-existing duty to perform was to the same person as the new contract.
29
Who has the authority to dissolve a contract between a minor and an adult?
Only the minor if dissolving in whole and return whatever benefit remains.
30
A mutual mistake to a contract will render it voidable by the adversely affected party if these 3 requirements are met.
Mistake concerns a basic assumption to make the contract, It has a material effect on the exchange, Seeking party didn't assume the risk of the mistake.
31
Is mistake of value usually a valid defense to contract formation?
No
32
A unilateral mistake will NOT render a contract voidable unless it is material, claimant didn't assume the risk of the mistake, and:
Non-mistaken party had reason to know other party was making a mistake.
33
When does fraudulent misrepresentation render a contract voidable?
When the other party justifiably relied on the misrepresentation.
34
When is a non-fraudulent misrepresentation grounds for voiding a contract?
When the other party justifiably relied on the misrepresentation AND it was material to them entering the contract.
35
What are the 6 kinds of contracts that fall under the Statute of Frauds?
Marriage Year-greater than 1 Land Executor or administrator Goods for $500 or more Surety
36
The statute of frauds doesn't apply to contracts lasting more than a year if:
It lasts for a party's lifetime.
37
When do violations of the Statute of Frauds render a contract unenforceable?
Only when being used as a defense to enforcement.
38
What are the 4 requirements of a writing for purposes of the Statute of Frauds?
Reasonably identify subject matter of contract, Indicate formation of contract, State essential terms w/reasonable certainty. Signed in some way
39
What is the statute of frauds for 2 merchants?
Only one needs to confirm the deal in writing by sending it to the other to bind both parties...no signature required.
40
What are the 3 exceptions to the statute of frauds?
Specially manufactured goods, Admitting the contract in court, Partial performance
41
If partial performance is complete when statute of frauds was required but failed, what is the recovery for P?
Only the value of the partial performance
42
Regarding a misunderstanding of ambiguous terms of a contract, what is the effect of both parties either being aware or unaware of the ambiguity?
There is no contract unless they both intended the same meaning of the ambiguous term.
43
Regarding a misunderstanding of ambiguous terms of a contract, what is the effect if one party was aware of the ambiguous term?
Contract was formed according to the understanding of the unaware party.
44
When are the two times the parol evidence rule does not apply?
Partial integration, Contract validity issues.
45
What is the implied warranty of merchantability?
The goods are fit for the ordinary purpose of use.
46
Is a statement of an opinion regarding goods an express guarantee?
No
47
What are the 3 elements to establish and implied warranty of fitness for a particular purpose?
Buyer has a particular purpose, Buyer relies on seller to select goods, Seller know buyer is relying on seller and purpose.
48
Disclaimers can limit liability for what kind of warranties, and how must they be made?
Implied, but not express. They must be conspicuous.
49
What level of performance is due on contracts at common law...under UCC?
Substantial performance Perfect Tender
50
What are the 2 types of contracts for goods where the parties intend to use a carrier for delivery?
Shipment Contracts Destination Contracts
51
What is a shipment contract?
Contract for goods where the seller doesn't agree to ship to a destination.
52
What is a destination contract?
Contract for goods where the seller does agree to ship to a destination.
53
When does the risk of loss transfer from the seller to the buyer for shipment contracts...destination contracts?
Shipment-When delivered to carrier. Destination-When delivered at destination.
54
For non-carrier contracts for goods, when does risk of loss switch from seller to buyer for merchants...nonmerchants?
Merchants-Physical possession by buyer. Non-merchants - Upon delivery
55
When does destruction of the goods before completion render the contract void-3 requirements?
Goods identified when contract formed, Neither party at fault, Risk still on seller
56
What are the 3 requirements of a seller in a shipment contract?
Make a carrier contract and deliver to carrier, Promptly notify buyer, Provide buyer with documents for goods.
57
Anticipatory repudiation of performance on a contract can be retracted as long as what?
The other party has NOT materially changed their position due to the repudiation.
58
Is rescission of a contract available if one party has completed performance?
No
59
When can a modification discharge the prior duty to perform?
When the modification immediately discharges the prior duty.
60
What is a discharge by accord and satisfaction?
When a prior agreement is discharged upon performance of a new agreement in place of the original.
61
What is a novation-4 requirements?
Old contract, Immediate replacement of one party to the contract, New contract, All parties agree.
62
Death is only a discharge for service contracts when what?
When the person who died was specifically needed to perform.
63
Impossibility as a defense is only allowed if performance was made impossible by an objective standard or a subjective standard?
Objective-Not impossible simply for the party involved, but for generally anyone to perform.
64
What is a minor breach?
When the claiming party has gained substantial benefit despite the other party's defective performance.
65
What is the remedy for a minor breach?
Offset damages
66
What is a material breach?
When the claiming party has not received a substantial benefit due to the other party's lack of performance.
67
Generally failure to perform on time is not a breach if performed within a reasonable time unless:
There's a "Time is of the essence" clause.
68
What can a buyer do if the seller does not provide perfect tender under UCC?
Reject all, Accept all, Accept some and reject the rest
69
What does a buyer do with goods they have rejected them?
Wait for instructions from Seller, Then either reship, store for seller, or resell for seller.
70
A buyer accepts goods unless they:
Reject the goods within a reasonable time.
71
When can a buyer revoke their acceptance of goods-2 ways?
Reasonably believed a defect that substantially impairs value would be cured but hasn't been; Difficulty at time of acceptance to see a substantial impairment of the goods.
72
What are the 2 requirements needed when revoking a prior acceptance of goods?
Revoke within reasonable time of discovering defect of goods; Before a substantial change in goods
73
When is specific performance available as a remedy-3 times?
Money damages are inadequate. Land sales. Unique goods.
74
What are the 2 requirements for a seller to reclaim goods that were bought on credit when the buyer is insolvent?
Demand return from buyer within 10 days of receiving them, Buyer must still have the goods.
75
What is the exception to the 10 day rule for reclamation by a seller which would prolong the amount of time?
If the buyer misrepresented their insolvency in writing within 3 months of delivery.
76
What are 'expectation damages'?
The main form of monetary reward for breach. It puts the party in similar situation as if there was no breach.
77
What are reliance damages?
It puts the party in similar situation as having never entered the contract.
78
What are incidental damages?
Replaces the costs incurred due to replacing the party who breached.
79
What are consequential damages?
Foreseeable costs due to breach that aren't expectation damages.
80
Are punitive damages available for contract issues?
No
81
Do parties to a contract have a duty to reasonably mitigate damages?
Yes
82
If a merchant sells another's good (normally by merchant) to another bona fide purchaser, does the other have a right to sue the new owner?
No...only the merchant.
83
What are the 2 kinds of 3rd party beneficiaries in contracts, and which has contractual rights?
Intended and incidental. Only intended beneficiaries.
84
A 3rd party contract can be rescinded or modified until when?
3rd party rights vest
85
When does a 3rd party's rights vest?
Suing to enforce, Relying on the contract, Assent as per the contract.
86
Do assignments of contracts to a third party need to be in the past, present, or future tense?
Present
87
To prevent assignment of a contract, what language is needed?
That all assignments are void.
88
If a contract merely stats that assignments are not allowed, what remedy is there if a party assigns anyway?
Damages only if the assignee didn't know about the prohibition, otherwise it cannot be assigned.
89
When there are multiple gratuitous assignees, which has the legal claim?
The last gratuitous assignee.
90
Who has rights when there are multiple assignees and at least 1 has provided consideration?
The 1st consideration assignment is effective against subsequent consideration assignments and all gratuitous assignments.
91
Is delegation of duties under a contract are allowed if the obligor has special skills?
No
92
Do delegations preclude the original obligor's duty?
No
93
When can a delegate be liable for damages?
If the delegate was paid consideration for taking the contract duties.

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