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CA Bar: Elements > Contracts > Flashcards

Contracts Flashcards

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1
Q

Contracts governed by the UCC Art. 2

A

UCC Art. 2 governs all Ks for the sale of goods (“substantial part”; if merchants special UCC provisions)

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2
Q

Contracts governed by common law

A

Any contract NOT governed by the UCC (e.g., service, real estate, construction contracts, etc.)

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3
Q

Formation of Contract (Mutual Assent)

A

(1) offer; (2) acceptance; (3) consideration; AND (4) NO defense

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4
Q

Offer (definition)

A

(1) expression of promise, undertaking or commitment to enter K; (2) certainty and definiteness of terms; AND (3) communication to identified offeree

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5
Q

Offer (termination)

A

i. Lapse of time;
ii. Termination by Operation of Law (death/Incapacity of either party after offer but before acceptance kills offer);
iii. Rejection by offeree (counter-offer, conditional acceptance, additional terms);
iv. Revocation by offerror (CL unless option K w/ consideration / detrimental reliance; UCC - unless firm offer with signed written promise);
v. Reliance - reliance that is reasonably foreseeable and detrimental

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6
Q

Lapse of Time

A

Must accept within specified time period or, if none, within reasonable time

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7
Q

Revocation

A

Words or conduct of the offeror terminating an offer (effective when received by offeree; unless the offer is irrevocable–option for value; merchant’s firm offer; or detrimental reliance)

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8
Q

Rejection

A

Words or conduct of the offeree rejecting the offer (effective when received by offeror; additional terms–CL rejection and counteroffer, UCC become part of K unless (a) one party not a merchant, (b) offer is limited to its terms, c) object w/i reasonable time, (d) materially alters obligation

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9
Q

Termination by Operation of Law

A

(1) death or insanity of either party; (2) destruction of subject matter of the K; or (3) supervening illegality of subject matter of the K

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10
Q

UCC - Output Ks

A

Seller commits to sell all goods it produces to buyer (valid)

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11
Q

UCC - Requirement Ks

A

Seller commits to sell all goods buyer requires (valid)

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12
Q

Acceptance

A

Must be unequivocal acceptance

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13
Q

Acceptance (CL - mirror image rule)

A

Manifestation of assent to each and every term of the offer

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14
Q

Acceptance (UCC)

A

Acceptance with additional/different terms is valid, but inclusion of terms governed by the “battle of the forms”

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15
Q

UCC “battle of the forms”

A

(1) Additional terms: become part of K unless (a) one party not a merchant, (b) offer is limited to its terms, c) object w/i reasonable time, (d) materially alters obligation
(2) Different terms: knockout rule
(3) Gap filler terms: normal meaning normally applied

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16
Q

Acceptance (method, CL)

A

Bilateral - full performance, start performance, promise, mailed acceptance;
Unilateral - K valid upon full performance

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17
Q

Acceptance (method, UCC)

A

Mailbox Rule; Battle of the Forms; or promise to ship/shipment of the goods (note: shipment of nonconforming goods is acceptance and breach, unless accommodation)

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18
Q

Acceptance (UCC - Mailbox Rule)

A

Effective upon dispatch; doesn’t apply to option Ks; offeree sends rejection, then acceptance–first received is effect; offeree sends acceptance, then rejection–acceptance effective unless rejection first and offeror detrimentally relies

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19
Q

Acceptance (UCC - revocation)

A

Acceptance can be revoked if 1) non-conformity substantially impairs value; 2) excusable ignorance as to non-conformity; and 3) reasonable time

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20
Q

Consideration

A

[must exist on both sides of the K] (1) Bargained for exchange; (2) for legal value (legal benefit to promisor or detriment to promisee)

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21
Q

Promissory Estoppel (consideration)

A

A promise is enforceable if necessary to prevent injustice if: (1) the promisor should REASONABLY expect to INDUCE action or forbearance; AND (2) such action or forbearance is in fact induced

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22
Q

Defenses to Formation of a K

A

“Some Make Illegal Icecaps Under Fraud” – (1) SoF; (2) Mistake/Ambiguity; (3) Illegality; (4) Incapacity; (5) Unconscionable; (6) Fraud / Duress

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23
Q

Statute of Frauds (requirements)

A

writing with all material terms + signed by the party to be bound

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24
Q

Statute of Frauds (agreements covered)

A

“MY LEGS” - (1) Marriage; (2) performance not within one Year; (3) Land; (4) Executor; (5) Goods > $500; and (5) Surety

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25
Q

Statute of Frauds (service K)

A

full performance satisfies

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26
Q

Statute of Frauds (real estate)

A

partial performance if full / part payment; possession and/or improvements

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27
Q

Mistake / Ambiguity

A

mutual mistake voids – 1) basic assumption, 2) material effect on exchange, 3) no assumption of risk by adversely affected P

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28
Q

Illegality

A

illegal consideration or subject matter voids K

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29
Q

Incapacity

A

1) age (must be 18+), 2) insanity, 3) intoxication

30
Q

Unconscionable

A

K or provision unenforceable if unequal bargaining power

31
Q

Fraud / Duress

A

physical / economic duress or intentional misrepresentation of material fact voids K

32
Q

Contract Terms

A

“U-IMP” (1) UCC Risk of Loss; (2) Interpretation; (3) Modification; (4) Parol Evidence Rule

33
Q

UCC Risk of Loss

A

1) Agreement of parties controls, 2) breaching party liable, 3) if common carrier, shipment or destination, 4) if merchant seller, shifts upon receipt, 5) if non-merchant seller, shifts upon tender, OR 6) Note - F.O.B. (Destination) must reach F.O.B. listed before risk of loss shifts

34
Q

Interpretation

A

CL - plain meaning, custom/usage, dealing btwn parties; UCC 2-207 - Battle of Forms

35
Q

Modification

A

CL - new consideration required; UCC - no consideration if in good faith

36
Q

Parol Evidence Rule

A

parties express agreement in final writing (“integration”); other written/oral expressions, made prior to or contemporaneously w/ writing, inadmissible to vary, contradict, or add terms of writing

37
Q

Parol Evidence Rule (outside the scope of PER)

A

“STARVIN” - (1) Subsequent modifications; (2) showing of “True consideration”; (3) Art. 2 - consistent terms OR course of performance, course of dealing, and usage trade to explain or supplement terms; (4) Reformation; (5) Validity issues (formation defects; conditions precedent to effectiveness); (6) Interpretation (only uncertainty or ambiguity in terms); (7) Naturally omitted terms and collateral agreements

38
Q

Third Parties Beneficiaries

A

rights created in a 3rd party by K

39
Q

Intended or Incidental

A

only intended have contractual rights. Beneficiary is intended if: (1) ID’d in K; (2) performance directly from promisor; OR (3) relations w/ promisee to indicate intent to benefit

40
Q

Rights Vested

A

(1) assent to promise; (2) suit to enforce promise; OR (3) detrimental reliance on promise

41
Q

Assignment

A

transfer of K rights by one party to a third party (generally all rights assignable)

42
Q

Assignment (privity of K)

A

privity of K btwn obligor/assignee, extinguishes privity of estate between obligor/assignor

43
Q

Assignment (exceptions)

A

Assignable unless - (1) subs. changes obligor’s duty/risk, (2) based on future rights for future Ks, OR (3) assignment prohibited by law/K provision

44
Q

Delegation

A

delegate duty in one K to TP by another K; obligee must accept all duties that may be delegated

45
Q

Delagator Liability

A

liable on K; K is between delegator & delgate & obligee is 3rd party beneficiary

46
Q

Delegation (exceptions)

A

Able to delegate unless - 1) duties involve personal judgment/skill, 2) changes obligee’s expectancy, 3) special trust in delegator, OR 4) K restriction on delegations

47
Q

Performance

A

Conditions, Discharge of Duty, Breach

48
Q

Conditions (types)

A

1) precedent, 2) concurrent, 3) subsequent, 4) express, 5) implied, OR 6) constructive

49
Q

Conditions (satisfaction)

A

1) express (literal compliance), 2) personal satisfaction requires good faith, OR 3) constructive condition satisfied by substantial perf (can act to excuse complete perf)

50
Q

Conditions (EXCUSE)

A

1) anticipatory repudiation, 2) prospective inability to perform, 3) divisible K, 4) waiver or estoppel, 5) impossibility, 6) impracticability, OR 7) frustration of purpose

51
Q

Discharge of Duty

A

“FIB” - (1) Frustration of purpose; (2) Impossibility (objective), Impracticability (subjective); (3) By parties

52
Q

Impossibility (objective), Impracticability (subjective)

A

unanticipated/extraordinary event

53
Q

Frustration of Purpose

A

K has become valueless by virtue of some intervening event

54
Q

Discharge of Duty (By Parties)

A

“MRNA” - (1) Modification; (2) Rescission; (3) Novation; (4) Accord & Satisfaction

55
Q

Modification

A

modified terms N/A (CL mutual assent/consideration, UCC good faith)

56
Q

Rescission

A

oral/written between parties; invalid if only one party had duty to perform

57
Q

Novation

A

new K, replaces valid K; all parties agree to release original party, sub in new party

58
Q

Accord & Satisfaction

A

agree to accept diff perf than K, satisfaction is perf of accord

59
Q

Breach

A

Material or Minor (CL); Less than Perfect Tender (UCC)

60
Q

Breach (by seller)

A

Buyer may reject or accept all or part and sue for damages

61
Q

Breach (cure)

A

Seller may cure imperfect tender if: (1) prior deals suggests it would be okay, OR (2) time for perf has not yet expired

62
Q

Remedies

A

“C2R3S” Compensatory; Consequential; Restitution; Rescission; Reformation; Specific Performance

63
Q

Compensatory Damages (definition)

A

put non-breaching party in position would have been in if no breach

64
Q

Compensatory Damages (requirements)

A

Must be Certain in nature, Not Speculative, Duty to Mitigate

65
Q

Compensatory Damages (formulas)

A

i. S breach; B has goods -> fair market price if perfect – fair market price as is
ii. S breach; S has goods -> market price at breach OR replacement price – K price
iii. B breach; B has goods -> K price
iv. B breach; S has goods -> K price – market price OR resale price + lost profits
v. Note -> Lost Volume Seller entitled to lost profits

66
Q

Consequential Damages

A

foreseeable to a reasonable person at time of K formation

67
Q

Restitution (quasi-K)

A

measured by value of benefit conferred; (K fails, non-breacher may recover in quasi-K to prevent unjust enrichment to parties; Puts ∆ in position if K never occurred)

68
Q

Reformation

A

modify written K to reflect parties agreement

69
Q

Specific Performance

A

if damages inadequate (real estate); not for personal services

70
Q

Remedies (Defenses)

A

“SHLUMM” - (1) Sale to BFP (defense to specific performance only); (2) Hardship; (3) Laches; (4) Unclean Hands; (5) Mistake; and (6) Misrepresentation

CA Bar: Elements (7 decks)

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