Contracts Flashcards
What is the first step in analyzing a contract?
Determine what law applies
What is required for a valid contract?
Mutual assent, an offer and acceptance, and consideration
What defines an offer?
A promise with certain and definite terms communicated to the offeree
What are the ways an offer can be terminated?
- Lapse
- Revocation
- Rejection
What constitutes acceptance of an offer?
An unqualified assent to the terms of the offer
What is the mailbox rule?
Acceptance is effective upon dispatch and rejection is effective upon receipt.
What is the implied covenant of good faith and fair dealing?
Both parties must not prevent the other party from performing
What is consideration in contract law?
A bargained-for exchange for a return promise or performance
What is the Statute of Frauds?
A requirement that certain contracts be in writing to be enforceable
What is the predominant purpose test?
A test to determine if UCC or common law governs a contract with goods and non-goods
What are expectation damages?
Damages that aim to give the nonbreaching party the benefit of the bargain
What is the parol evidence rule?
Determines if prior oral agreements are part of a written contract
What defines a material breach?
A breach that excuses the other party’s performance
What is a valid excuse for non-performance?
Material breach, performance condition, or anticipatory repudiation
What is the difference between novation and delegation?
Novation substitutes a new party, while delegation does not excuse the old party
What is the definition of implied warranty of fitness for a particular purpose?
A warranty that goods are fit for a specific purpose known to the seller
Fill in the blank: A contract for the sale of goods is governed by _______.
Article 2 of the UCC
True or False: Punitive damages are generally recoverable in breach of contract actions.
False
What is substantial performance?
A doctrine allowing recovery if a party has not materially breached the contract
What is the effect of a rejection of goods under the UCC?
Rejection must occur before acceptance; buyer can reject nonconforming goods
What must a buyer demonstrate to revoke acceptance of goods?
Nonconformity that substantially impairs value and revocation within a reasonable time
What is the material benefit rule?
An exception allowing enforceability of a promise made after receipt of a significant benefit
What are the types of warranties under the UCC?
- Express warranty
- Implied warranty of merchantability
- Implied warranty for fitness for particular purpose
What is a breach of a construction contract typically measured by?
The reasonable cost of replacement or completion
What conditions must be met for a modification to be binding under the Second Restatement?
Modification must be fair and equitable due to unanticipated circumstances
What is the effect of an anticipatory repudiation?
The other party is excused from performance
What is the definition of duress in contract law?
A contract is voidable if assent is induced by an improper threat
What does the term ‘perfect tender’ refer to?
The seller’s obligation to deliver goods that conform perfectly to the contract
What is the role of the implied warranty of merchantability?
Goods must be fit for ordinary purposes and must be from a merchant
What is the effect of a willful breach on a party’s performance?
A party’s performance cannot be substantial if the breach is willful
Some courts hold that willful breaches negate the right to enforce obligations, while others consider it among factors for performance assessment.
Define substantial performance in contract law.
Substantial performance occurs when a party completes its obligations with no uncured material failure.
What factors determine whether a failure to perform is material?
- Extent of deprivation of expected benefit
- Adequacy of compensation for the deprived benefit
- Forfeiture suffered by the non-performing party
- Likelihood of curing the failure
- Conduct of the failing party regarding good faith and fair dealing
What happens if a party fails to substantially perform its contractual obligations?
The other party is excused from its obligation to pay on the contract.
What is promissory estoppel?
A doctrine allowing recovery for damages if a party detrimentally relied on a promise.
List the requirements for promissory estoppel.
- Promisor should expect reliance
- Promisee changes position in reliance
- Change is to promisee’s detriment and injustice can be avoided only by enforcing the promise
What defines a divisible contract?
A contract is divisible if performances can be paired and treated as equivalents.
Under common law, what is required for a contract modification?
An agreement modifying a contract must generally be supported by consideration.
What is the exception to the consideration requirement for contract modification under the Restatement (Second)?
Consideration is not required if the modification is fair and equitable due to unforeseen circumstances.
Under the UCC, what is required for a contract modification?
No consideration is needed, but modifications must be made in good faith.
What is an intended third party beneficiary?
A beneficiary who can enforce the contract if they are expressly designated, identifiable, and expected to benefit.
What are the conditions under which a contract assignment is not allowed?
- Materially changes the obligor’s duty
- Increases burden or risk on the obligor
- Impairs obligor’s chance of obtaining return performance
- Forbidden by statute or public policy
- Validly precluded by contract
What is required for an effective assignment?
- Intent to transfer rights by the assignor
- Assent to the assignment by the assignee
What is a delegation in contract law?
A transfer of duties.
What duties cannot be delegated?
- Duties involving personal judgment and skill
- Duties involving special trust
- Duties that change the obligee’s expectancy
- Duties restricted by contract
Who remains liable after a delegation of duties?
The delegator remains liable even if the delegatee assumes the duties.
True or False: A non-delegating party can compel the delegatee to perform without a promise.
False
