Contracts Flashcards
Mistake (makes K voidable)
Unilateral - One party’s mistake. Not defense to K formation unless other party knew, or should have known of mistake.
Mutual - voidable by adversely affected party by (1) mistake concerns basic assumption of K (2) material effect; (3) party seeking avoidance did not assume risk of mistake
Perfect Tender Rule (UCC)
For the sale of goods, Buyer may reject goods if the goods or delivery fail to conform to the K.
Seller can cure defect w/ reasonable notice of intention to cure
Delivery of Non-Conforming Goods (Buyer’s Right)
(1) Reject all and cancel K or sue;
(3) Accept all; or
(2) Accept commercial unit, reject the rest and sue
Buyer’s Acceptance of Goods
Buyer (1) indicates he will accept after reasonable time to inspect;
(2) fails to reject w/in proper amount of time
(3) does any act inconsistent with Seller’s ownership
UCC Battle of the Forms
If K b/t merchants, additional terms in acceptance included unless:
(1) materially alter K;
(2) offer expressly limits acceptance to its terms; or
(3) offer objects w/in a reasonable time
Mailbox Rule
Acceptance effective upon dispatch (as long as properly stamped and addressed)
Revocation effective upon receipt (regardless of reading it)
If rejection sent prior to acceptance, whichever received first prevails
Impossibility
Discharges contractual duty to perform if OBJECTIVE (no one could have performed [i.e. due to act of god])
Compared to subjective (defendant could not perform)
NOTE: Can recover reasonable value of performance
Unconscionability
One party has substantially superior bargaining power and can dictate the terms of the terms of the K to the other party w/ inferior bargaining power
Shipment of Conforming and Nonconforming goods
Constitutes an acceptance and breach by S
If shipment sent w/ accommodation letter, then acceptance and counteroffer
Promissory Estoppel
(1) Promise
(2) Reasonable detrimental reliance that is foreseeable
(3) Enforcement necessary to avoid injustice
3rd Party Ben Vesting
(1) Manifests Assent;
(2) Brings suit to enforce promise; or
(3) Justifiable reliance
Irrevocable Offers (4)
(1) CL: (1) promise not to revoke/keep open and (2) consideration
(2) UCC Firm Offer: (1) Written offer; (2) signed by a merchant to leave open for REASONABLE time (no more than 90 days)
(3) Reliance: Reasonably foreseeable detrimental reliance
(4) Unilateral contract - once performance has begun (not mere preparation
* Note survives death of either party in option K
Statute of Frauds (MYLEGS)
Marriage; Services that can’t be performed in less than 1 year; Leases of more than 1 year; Executory; Goods of $500 or more; Surety
EXCEPTION: Buyer accepts goods not evidenced by writing
Divisible Contract
(1) Performance divided into 2 or more parts
(2) Numbers of parts for each party is same
(3) Performance of each part is equivalent on each side
Can recover for substantial performance
Restitution - For Quasi-contract theory
Breaching party may recover where the other party conferred benefit resulting in unjust enrichment
Contract Formation
Offer - willingness to enter into bargain (C/L need prices; UCC need quantity) *price quote in response to inquiry
Acceptance - Assent to the terms of the offer
Consideration - bargained for exchange of legal value
Confirmatory Memo to Satisfy SOF
(1) between merchants
(2) after oral agreement sends written confirmation w/in reasonable time
(3) binds recipient if reason to know of the contents and does not object w/in 10 days
Part Performance Exception to SOF
(1) Goods specially manufactured;
(2) goods either paid for or accepted
K only enforceable to extent of performance
Offer Termination (4)
(1) lapse of time
(2) Death of a party prior to acceptance (except irrevocable offers and does not excuse performance)
(3) Words or conduct of revocation (learns that sold car = revoked vs. learns made offer to other = no revoked)
(4) Rejection by Offeree (Counteroffer, Conditional Acceptance [CL is rejection and counter; UCC is rejection], mirror image rule/UCC seasonable acceptance - additional terms of acceptance added if not material)
Acceptance of an Offer
(1) Offeree starts to perform (unless unilateral K)
(2) Communication (MB rule)
(3) Shipment of wrong goods = acceptance and breach unless accommodation (counter and no breach)
* Only a person who knows about offer at time of acceptance or whom the offer was made to can accept
Consideration
Bargained for exchange of legal detriment
(1) Past consideration = not consideration unless expressly requested
(2) Pre-existing duty rule (CL - need consideration unless addition to or change in performance or unforeseen difficulty; UCC only need good faith to modify
(3) Part payment of balance of not yet due or disputed = consideration
Consideration Substitutes (2)
(1) Written promise to satisfy an obligation that has a legal defense
(2) promissory estoppel - promise the induces reasonably foreseeably detrimental reliance and enforcement necessary to avoid injusitice
Statute of Frauds Satisfaction (4)
(1) Performance - Real estate (improve land, pay, possess); full perf of services k (not part); part perf of sale of goods [only to extent of perf] unless specially manufactured
(2) Writing - signed by the party to be charged (note confirmatory memo rule)
(3) Judicial Admission
(4) Estoppel - oral agreement asked to be put in writing, but D never does
Contract Provisions Reqiuring Written Modification
CL - if K states modifications be in writing - NOT effective
UCC - K modification provisions effective unless waived
Parol Evidence
Bars oral or written evidence prior to or contemporaneous with contract (note post k not barred)
(1) Changing terms - No PE
(2) Mistake in Integration (misspelling) PE
(3) Defenses (getting out of deal b/c fraud) PE
(4) Ambiguity - Explain term in the written deal (If one party aware of ambiguity, party unaware can enforce to their terms b/c unaware of ambiguity)
(5) Adding to written K - Only PE if partial integration if trade usage or course of dealing or performance
Risk of Loss for Shipment/Destination Contracts
(1) Agreement - controls
(2) Breach - breaching party liable
(3) Common carrier delivery - ROL shifts from S to B at time seller completes delivery obligations
(4) If 1-3 don’t apply, if S is merchant - ROL shifts when B receives goods; if non-merchant then when S tenders (makes available)
Implied Warranty of Merchantability
(1) Seller is a merchant that deals in goods of that kind
(2) Warrants that goods are fit for ordinary purpose
Implied Warranty of fitness for a Particular Purpose
(1) B has particular purpose
(2) relying on S to select suitable goods
(3) S has reason to know of purpose and reliance
(4) warrants goods fit for particular purpose
Money Damages
Expectation - look to value if breach and value if no breach
Incidental - costs incurred in dealing with the breach
Consequential - special damages for foreseeable damages that D had reason to know of
Liquidated - damages difficult to forecast and provision is reasonable forecast (usually can’t be for more than 10% of K price)
All less mitigating damages or less damages that cannot be established w/ reasonable certainty
Anticipatory Repudiation
-Unambiguous statement or conduct that party will not perform made prior to the time performance was due
Gives rise to immediate claim unless performed already
- If insecurity about performance can get adequate assurance - must be made in writing and assurances received w/in reasonable time
Remedy: (1) sue immediately; (2) wait to sue; (3) offer to rescind and discharge; (4) urge performance
Repudation can be W/D unless reliance, cancellation or repudiation considered final
Installment Contract
B may declare total breach only if defect substantially impairs the value of the entire contract
Third Party Beneficiaries
3P Ben Rights Vest: (1) Assents (2) knows and relies or (3) sues to enforce - any mods after vest 3P ben must consent
General rule - Ben cannot recover from promisee except for creditor beneficiary only on pre-existing debt
Promisor can assert any defense he would have if sued by promisee
Assignments
Transfer of rights under a K
Assignment cannot substantially change duties of obligor (i.e. right to contract performance)
*CONSIDERATION NOT REQUIRED but gratuitous assignment can be revoked
Assignor for consideration cannot recover from obligor
Obligor has same defenses against assignee as against assignor
Delegation of Duties
Party to K transferring work under K to 3rd party
Cannot delegate if prohibited or personal services for very special skills
Delegatee liable only if she receives consideration from delegating party (delegating party always liable)
Reformation
Remedy where the contract is changed to reflect the actual agreement between the parties (usually based on mutual mistake)
Fixtures
Objective intention to annex based on nature of article, manner of attachment, amount of damage etc.
If personal property (custom made) may be fixture
Annexed chattels must be removed by the end of the lease term, or within a reasonable time after termination of an indefinite tenancy
