Contracts Flashcards
Offer
Validity, termination
An offer is a manifestation of intent to contract demonstrated by a promise, undertaking or commitment, in definite and certain terms, and communicated to an identified offeree. Offers for real estate require a description of the land and price term. Offers for goods require a quantity term, which can be expressed in terms of requirement or output contracts.
Offer - Termination
An offer can terminate by lapse of time, revocation, rejection, or operation of law.
Offer - Termination - Lapse of time
An offer must be accepted within a specified time period or, if none, within a reasonable time.
Offer - Termination - Revocation
Revocation is made by words or conduct of the offeror terminating the offer. Offers are effective on receipt. Irrevocable offers include options contracts, merchants firm offer under the UCC, and detrimental reliance.
Offer - Termination - Rejection
A rejection is made by words or conduct of the offeree rejecting the offer and is effective when received. At common law, additional terms are treated as a rejection and counter offer. Under the UCC, addition terms will become part of the contract unless one part is not a merchant, the offer is limited to its terms, the other party objects within a reasonable time, the term materially alters the obligation.
Offer - Termination - Operation of law
A contract terminates by operation of law when either party suffers death or insanity, the subject matter of the contract is destroyed, or if the subject matter becomes illegal before acceptance.
Acceptance
Mode, method, mailbox
Acceptance is unqualified assent to the terms of the bargain and is effective on dispatch. At common law, an acceptance must mirror each and every term of the offer. Under the UCC, acceptance with addition or different terms is valid. Additional terms are included in the deal, unless an exception applies. Different terms are knocked out and replaced with UCC gap fillers.
Acceptance - Mode and method of acceptance
Acceptance can be made in the manner specified in the offer, and if none is specified, then in any reasonable manner. Unilateral contracts can be accepted by full performance from an offeree who is aware of the offer. Bilateral contracts under common law can be accepted with a promise or by beginning performance. Under the UCC, acceptances of goods can be made by a promise to ship or by the shipment of goods.
Consideration
Consideration is a bargained for exchange that is a detriment to the promisee or legal benefit to the promisor, and is required by both parties. One promise can be consideration for another promise. Courts will usually inquire into the adequacy of consideration.
Statute of Frauds
The Statute of Frauds requires that certain contracts be in writing. These include contracts for marriage, year, land, executors, goods, and suretyship
Statute of Frauds - Writing sufficiency
At common law, the writing must be have some indication of contract, it must contain the essential terms, and it must be signed by the party to be bound.
Under the UCC, there must be some signed writing indicating a contract and specifying a quantity. A merchants confirmatory memo is sufficient to bind if not objected to within 10 days.
Mistake
Where there is a unilateral mistake, a contract is avoidable if the non mistaken party knew or should have known of the mistake. Where there is a mutual mistake, a contract is voidable by the adverse affected party if the mistake concerns the basic assumptions of the contract, the mistake has a material affect, and the party seeking avoidance did not assume the risk. Where a contract is ambiguous, if neither party or both parties were aware of the ambiguity, there will be no contract.
Defenses to formation
Statute of frauds, mistake, fraud and misrepresentation, illegality, incapacity, unconscionability.
General rules of contract construction
Contracts are construed as a whole and words are generally given their ordinary meaning. Written and typed terms will prevail over printed terms; custom an usage in business and location are considered, as is the cause of dealing between the parties. Courts will try and find that a contract is valid, and they will construe ambiguities against the drafter.
Modification of terms
A common law, modifications of contract terms required additional consideration. A written contract can be modified even if there is a contrary provision. Under Article 2, no consideration is needed as long as the modification was made in good faith. It must be writing if the modification places the contract within the statute of frauds. Courts will give effect to provisions prohibiting oral modifications.
Parole Evidence Rule
A prior oral or written statement, or contemporaneous oral statements, are inadmissible to vary, modify, or contradict a contract where there is an integrated agreement. An integrated agreement is one where the writing is intended to be the complete and final expression of the parties agreement. If an agreement is partially integrated, evidence can be admitted to supplement. A merger clause is evidence of full integration.
Parole Evidence Rule - Outside evidence
Evidence outside the scope of the rule may be admitted when it is evidence concerning the validity of the contract, if it is used to interpret the terms of the contract, to show that true consideration was paid, or as evidence of acts of reformation.
Warranties
Warranties can be for title, against infringement, merchantability, fitness, or express.
An implied warranty of merchantability, that the goods are fit for their ordinary purpose, is implied in every contract by a merchant of goods of the kind sold.
An implied warranty of fitness for a particular purpose is implied whenever any seller has reasonable to know the particular purpose for which goods are to be used and that buyer is relying on the seller’s skill and judgement to select goods, and the buyer does rely on that judgement.
Damages for breach of warranty is usually the difference between the goods tendered and what they would have been warranted.