Contracts Flashcards
What is a K?
A legally enforceable agreement
What is an Express K?
K resulting from words, written or oral
What is an implied K?
K resulting from conduct?
Hypo: Samson walks into hair dresser, sits in the chair, and gets his hair cut. When finished, Samson gets up to leave without paying. When the hair dresser asks for payment, Samson responds “I never said I would pay anything. We have no K!” Is he correct?
No, a reasonable person in the hair dresser’s position would infer a promise to pay from Samson.
What is a Quasi K?
A remedy that may be granted when certain elements exist.
Elements of Quasi K?
1) P has conferred benefit to D
2) P reasonably expected to be paid
3) D would be unjustly enriched if P is not compensated.
What is the measure of recovery for Quasi K?
As justice requires by either
1) Quantum Merit: reasonable value of serve rendered
OR
2) extent to which the other party’s prop has been increased in value or other interests advanced.
**K price is not measure of recovery, but K price may act as ceiling if P is in default or if K recovery is barred by SoF.
Can a breaching party recover under a Quasi K?
Yes, so long as it is not a willful breach for the party’s own convince or financial advantage.
What is a bilateral K?
It is formed from an offer that is open to the method of acceptance.
Ex. I will pay you $100 to paint my house.
Acceptance can be by 1) a return promise or 2) beginning performance
What is an unilateral K?
It is formed from an offer requiring performance as acceptance
Types of unilateral K?
1) Offer expressly requires performance
2) Offer of award, prize or contest
Article 2 of UCC applies to what?
The sale of goods.
Sale = passing of title from seller to buyer for a price Goods = movable, personal property (no real/land)
Doesn’t apply to renting prop
Doesn’t apply to service K
It applies regardless of the amount of money
It applies regardless of whether the seller = a merchant
What is a mixed or hybrid K?
It is a K containing both a sale of goods and services.
In a hybrid K, do you apply the UCC or CL?
Predominant Purpose Test: If mainly a K for goods, apply UCC. If mainly a service K then apply Cl.
If UCC applies, then apply the UCC to the entire K.
Factors to determine a mixed K predominant purpose?
1) how much $ was spent on the goods vs the services
2) how much time is spent on labor
3) how sophisticated is the labor (more sophisticated = CL will apply b/c/ more likely a service K. Ex. Doctor putting in pace maker = sophisticated service)
4) does K contain typical sale language
What is an offer?
Manifestation of an intention to a K
Basic test for an offer?
Whether a reasonable person in the position of the offer would believe that his assent creates a K/
Key =manifestation (focus on what was said, wrote, did)
Doesn’t matter what person intended in his heart or what he really meant
Basic inquiry into the offer’s terms?
Must have definite and certain terms
Inquire: whether enough of the terms have been provided so that a K including them would be capable of being enforced.
More terms left open = more likely cts will view communication as negotiations not amounting to an offer.
Offer essential elements
1) identify offeree and subject matter
2) price to paid
3) time of payment, delivery, performance
4) quantity involved
5) nature of work involved
Missing Price Terms in an Offer
Real Estate K: follows CL- offers must identify land & price
Sale of Goods K: UCC: price not required if the parties so intend. Ct will presume that a reasonable price = intended
Vague or Ambiguous Material Terms in an Offer
CL and UCC: can’t be too vague. Must be more definite
Requirements K/Output K
K for sale of goods: quantity being offered must be certain (a reasonable quantity will not be implied)
K can measure quantity by buyer’s requirements or seller’s output. (Ex. Buyer promises to buy all of seller’s wine requirements for next 3 years. —Quantity here is measured by seller’s output)
Cant be unreasonably disproportionate (Ex. under a 5 year K, buyer can’t order 2000 objects for the first 4 years then only order 600 objects in the last year. This is unreasonably disproportionate)
Advertisements
Not an offer. Mere Invitation for offers
Except:
1) can be offer if there is a specific quantity and indicates who can accept
2) can be an offer if its in the nature of a reward
Auctions: What is the offer?
The bid, not the auctioneer asking for the bid, is the offer. Auctioneer is inviting offers
Auction without reserve
Auctioneer is obligated to sell to highest bidder
Auction with reserve
Auctioneer is not obligated to sell to highest bidder.
Can refuse highest bid
All auctions are with reserve unless terms state otherwise.
Four ways to terminate an offer
1) Termination by lapse of time
2) termination of an offer because of words/conduct of offeror (Revocation of offer)
3) termination of an offer because of words/conduct of offeree (Rejection of offer)
4) Termination of offer due to death of a party prior to acceptance
When can an offer not be accepted?
An offer can’t be accepted if its been terminated.
Offer termination by lapse of time
If no time limit in the offer–offer lapses after a reasonable time.
Reasonableness depends on the circumstances of the offer
Offer termination by Offeror Revocation
Revocation done by:
1) Statement by offeror to offeree indicating an unwillingness to K
2) conduct of offeror that is inconsistent with an intention to make the K and of which the offeree is aware
When does revocation of an offer become effective?
Revocation of an offer sent through the mail is effective upon receipt.
An offer can’t be revoked after it has been accepted.
An offer can be revoke any time prior to acceptance subject to four exceptions.
Offers that cant be revoked?
1) Offer cannot be revoked if a) the offeror has promised to keep the offer open and b) this promise is supported by consideration.
- Maj rule: must pay consideration, Min/GA: reciting the consideration raises an implied promise to pay it
- ct dont inquire into the adequacy of the consideration
- consideration that is nominal/sham = no real consideration
- even nominal consideration = sufficient for an option K
2) Offer cannot be revoked if it is a) a K for the sale of goods, b) written promiser to keep the offer open, c) promise is made by merchant
- -only irrevocable for a reasonable time not to exceed 3 mo absent consideration for a longer time period
3) Offer cannot be revoked if there has been a) reliance by the offeree b) that is reasonably foreseeable.
4) An offer to enter into a unilateral K cannot be revoked if performance has begun
- mere preparation = still revocable (ask has offeror benefited in any way? If yes, then its more like performance)
- Look for divisible K where consideration can be broken down into clear distinct segments
What is a merchant?
A person who deals in goods of the kind or who otherwise holds himself as having knowledge or skill peculate to the practices/goods involved
Rejection of an offer by offeree
Done by words/conduct
Terminates any right to accept the offer
Rejection sent through mail is effective when received
A counter offer terminates any right to accept the offer
Rejection by Counteroffer
Counteroffers terminates the offer.
Bargaining (mere inquiries) does not terminate the offer
(If its in the form of a ?, more likely its negotiating/bargaining)
A counteroffer/rejection does not terminate an offer in an option K.
Conditional Acceptance as Rejection
Terminates the offer b/c its really a counter offer.
Acceptance with additional terms: is this a rejection?
CL: acceptance must be the mirror image of the offer or it acts as a rejection
UCC: Acceptance can add terms
- New terms become part of the K if:
1) both parties = merchants
2) new terms does not materially alter K
3) offeror does not object within reasonable time
Acceptance with Different Conflicting Terms: Rejection?
CL: Acceptance must be the mirror image of the offer or it acts as a rejection
UCC: Can contain different terms if it is a “definite and seasonable expression of acceptance”.
Two ways to deal with it:
1) diff term becomes part of K if its doesn’t materially alter it and it isn’t objected to
2) Knock Out: conflicting terms in the K knock each other out and the UCC fills in the gap based on whats reasonable
Termination of an Offer b/c of Death of a party prior to acceptance
Death of a party terminates an offer.
Exceptions: Death does not terminate when:
1) Option K
2) part performance of offer to enter into unilateral K
Who can accept an offer?
Only the person to whom the offer was made.
Person must the aware of offer in order to accept it
Power to accept cannot be assigned
Options can be assigned unless otherwise provided
Method of Accepting an Offer
1) offeree starts to perform
2) offeree promises to perform
3) Offeree sends its acceptance through the mail (Mailbox Rule)
4) seller of goods sends wrong goods
5) offeree is silent
Accepting an offer by starting performance
Seen in
1) offers to enter into a unilateral K–here, starting to perform locks in the offeror (offer is then irrevocable) but Offeree hasn’t accepted offer until full performance (starting to perform is insufficient to accept)
2) Offers open as to method of acceptance (bilateral K): if the acceptance method is left open then starting performance = acceptance
Accepting an offer by promising to perform
Most offers are accepted in this manner
If offer requires performance, merely promising to perform = insufficient
Acceptance through the mail (MailBox Rule)
If its reasonable to accept by mail, acceptance is effective when posted.
If offeree sends both acceptance and rejection through mail, when does the mailbox rule apply?
B/C rejection = effective when received, and acceptance = effective when mailed, sometimes applying the mailbox rule = problematic
1) Offeree sends rejection, then acceptance: DONT apply mailbox rule. Whichever is received first = effective.
2) Offeree sends acceptance, then rejection: DO apply Mailbox rule. But if offeror receives the rejection first and changed his position in reliance on the rejection, the offeree will be estopped form enforcing the K.
Can you use the mailbox rule to meet option deadlines?
No. Cant use mailbox rule to meet an option deadline. Response must be received by deadline.
What occurs when the seller sends the wrong/nonconforming goods?
General Rule = this is an acceptance/breach
Accommodation Exception: If seller sends nonconforming goods and makes it clear that they are being sent as an accommodation to the buyer. This is a counter offer, not acceptance/breach. Buyer can reject or accept the goods. Buyer cannot sue for breach.
Acceptance through offeree’s silence
General Rule: offeror cannot unilaterally turn offeree’s silence into acceptance
Elements of consideration
1) Promisee must suffer some legal detriment
2) detriment must induce the promise (promisor makes his promise to induce the conduct of the promisee)
3) promise must induce the detriment (promisee is induced to act by the promise)
Forms of Legal Detriment
1) Performance (doing something not legally obliged to do)
2) Forbearance (not doing something legally entitled to do)
3) Promise to perform
4) promise to perform
Consideration essential ?
Did the promise made by the promisor induce the conduct of the promisee AND did the conduct of the promisee induce the making of the promise by the promisor
Look for a bargained for exchange- the party making the promise must be bargaining for something
Conditional Gifts: Consideration?
If either of the parties intended to make a gift, there was no bargain and thus no consideration.
