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IL Bar Prep > Contracts > Flashcards

Contracts Flashcards

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1
Q

Unilateral Contract

A

Results from an OFFER that expressly requires the performance AS THE ONLY possible method of acceptance.

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2
Q

Bilateral Contract

A

Promise for a promise. Usually silent as to the method of acceptance.

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3
Q

Mixed Contracts (goods and services)

A

Rule: All or nothing - more important part governs.
UCC - Sale of Goods
CL: services

ex. $400 for car and 2 driving lessons - what’s more important? CAR

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4
Q

Define Contract.

A

Agreement that is legally enforceable.

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5
Q

Creation of Contract

Bad REWRITE

A
  1. Was there mutual assent?
  2. Was there consideration (or some substitute, like promissory estoppel)?
  3. Are there any defenses to the creation of the contract?
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6
Q

Agreement process on the bar.

A
  1. offer (initial communication)
  2. termination of offer (what happens after the initial communication?)
  3. acceptance (who responds and how?)
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7
Q

Is the initial communication an offer?

General test.

A

Manifestation of commitment.

Whether a reasonable person in the position of the offeree would believe that his assent creates a contract.

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8
Q

Express Contract

A

Promises communicated by /language/.

Ex. X promises to paint Y’s car in return for Y’s promise to pay X $100.

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9
Q

Implied Contract

A

Parties’ /conduct/ indicates that they assented to be bound.

Ex. X fills her car with gas at Y’s gas station. There is contract to purchase gas.

X watches Y paint X’s house, knowing that Y mistakenly thought they had an agreement for Y to be paid for it.

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10
Q

Quasi-Contract (not really a contract)

A

One party is /unjustly enriched/ at the expense of the other party, so that the enriched part must pay restitution to the other party equal to the unjust enrichment.

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11
Q

Mutual Assent requires:

A

Offer and acceptance

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12
Q

Consideration

A

Bargained for exchange of something with legal value

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13
Q

Defense to Contract Formation

A
  1. Mistake
  2. Lack of Capacity
  3. Illegality
  4. Statute of Frauds
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14
Q

Offer

A
  1. Expression of promise, undertaking, or commitment.
  2. Certainty and definiteness in ESSENTIAL TERMS.
  3. Communication of the above to the offeree.
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15
Q

Definite and certain terms:

A

Whether enough of the essential terms have been provided so that a contract including them would be capable of being enforced.

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16
Q

Required details for Real Estate Contracts

A

Must include identification of land and price.

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17
Q

Required details for Sale of Goods Contracts

A

Quantity must be certain.

Except: Outputs and Requirements Contracts

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18
Q

Missing Terms?

A

Does not prevent the formation of a contract if it appears that that parties INTENDED to make a contract and there is REASONABLY certain basis for remedy.

Court can supply reasonable terms for those that are missing.

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19
Q

Vague Terms?

A

Court cannot enforce a contract where parties have included terms that are too vague to be enforced.

Uncertainty may only be cured through part performance that clarifies vague terms or by acceptance and full performance.

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20
Q

Merchant’s Firm Offer

A

Under Article 2:

  1. if a merchant,
  2. offers to sell goods in a SIGNED WRITING, and,
  3. the writing gives assurances that it WILL BE HELD OPEN, the offer is not revocable for lack of consideration during the time stated. (Not to exceed 3 months.)

(Three mo. time limit applies only to offers not supported by consideration.)

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21
Q

Revocation of Offer by Offeror. When is it effective?

A

When received.

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22
Q

Revocation of Offer by Offeror. Methods of revocation?

A

Express or implied.

e.g. offeree discovers that offeror sold subject matter to someone else.

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23
Q

Revocation of Offer by Offeror. Limitations on power to terminate?

A

Option contract, merchant’s firm offer, detrimental reliance, beginning performance on unilateral contract.

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24
Q

Terminations of offers by operation of law

A
  1. Death or insanity of either party (does not need to be communicated to the other party)
  2. Destruction of the proposed subject matter, or
  3. Supervening illegality
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25
Q

Rejection of Offer by Offeree. When Effective?

A

Effective when received.

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26
Q

Rejection of Offer by Offeree. Methods.

A
  1. Express rejection,
  2. Counteroffer, or
  3. Lapse of reasonable time.
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27
Q

Rejection by Offeree. Limitation on power to terminate?

A

Generally cannot terminate (or reject) if already accepted.

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28
Q

Art. 2 - Battle of the Forms Provision

A

Used instead of the mirror image rule under Art. 2.

Provides: proposal of additional or different terms by the offeree in a definite and timely acceptance is EFFECTIVE AS ACCEPTANCE, unless the acceptance is made EXPRESSLY conditional on assent to the different terms.

Whether the additional terms become part of the contract depends on whether both parties are merchants.

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29
Q

Promissory Estoppel (Detrimental Reliance)

A

Promise is enforceable if necessary to prevent injustice if:

  1. The promisor should reasonably /expect to induce action or forbearance/;
  2. Of a definite and substantial character;
  3. and such an action or forbearance is in fact, induced.
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30
Q

Past consideration/Moral obligation:

A

is not consideration at common law. Nor is it a substitute for consideration.

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31
Q

Requirement Contracts

A
  1. Quantity is measured by buyers needs.

2. Buyer must use good faith in determining what those needs are.

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32
Q

Option Contract: Common Law

A

A promise to keep an offer open for a certain amount of time.

Must be supported by consideration.

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33
Q

Merchant’s Firm Offer

A
  1. Offer by merchant
  2. in a signed writing which by its terms gives assurance that it will be held open
  3. is irrevocable during the time stated; AND
  4. if no time is stated then period of irrevocability may not exceed 90 days.
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34
Q

Quasi Contract Requirements

A
  1. No formal agreement

2. Evidence of unjust enrichment.

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35
Q

Material changes

A
  1. One that substantially effects the economic risks or benefits, or
  2. changes the usual remedy for breach.
36
Q

Perfect tender

A

Seller must deliver exact conforming goods to the buyer.

37
Q

Options after violation of perfect tender:

A
  1. Accept the goods and pay K price
  2. Buyer can timely reject the goods and sue for damages
  3. Buyer may accept in part and reject in part.
38
Q

Surety Contract

A

Promise to pay for the debts of another.
ALWAYS must be in writing.
(except)

39
Q

Main purpose rule

A

Exception to requirement that surety contracts must be in writing.

If it can be established that the main purpose of the guarantor was to benefit himself, it doesn’t need to be in writing.

40
Q

Exception to the parol evidence rule

A 
Fraud
Illegality
Undue influence
Duress
Mistake
Condition precedent 
Evidence showing lack of consideration.
Industry practice.
41
Q

Statute of Frauds

A

Sale of goods over $500 must be in writing.

Performance which cannot happen w.i a year must be in writing.

42
Q

Merchant’s 10 day rule

A

Exception to statute of frauds.

  1. Both parties must be merchants
  2. One merchant sends written confirmation of oral agreement binds sender immediately
  3. If the recipient doesn’t object w/I 10 days after receipt, it binds them as well.
43
Q

Third Party Beneficiary: Vesting of Rights

A
  1. When 3rd party beneficiary learns of K (alone, is not enough), AND assents to it
  2. When there is detrimental reliance
  3. When there is a lawsuit to enforce.
44
Q

Promissory Estoppel

A

Detrimental reliance → interest of justice requires enforcement of the promise.

45
Q

Accord

A

An accord suspends performance of the original agreement until such time as the accord is performed or not performed.

Not a modification of the existing agreement. NEW agreement.

46
Q

Anticipatory Breach/Repudiation

A

there must be a clear indication (statement) of an intent not to perform.

47
Q

Unique personal services: too sick to do the job:

A

(even if it’s your own fault) you are not liable for damages unless the K provides otherwise.

48
Q

Condition precedent

A

Act or event (other than lapse of time) that must occur first before a party is under a duty to perform.

49
Q

When are liquidation damages allowed?

A
  1. Damages are difficult to ascertain at the time of entering into the agreement, and
  2. Liquidated damages provision is a reasonable forecast of compensatory damages.
50
Q

Damages: Basic principle

A

To place the non-breaching party in the situation she would have been in had the K been completed.

51
Q

Lost profits doctrine

A

If you have a seller that deals in volume (unlimited supply of goods at their disposal) they will be allowed to seek lost profits against the breaching buyer.

52
Q

Lost profits standard remedy

A

For a non breaching seller: K price – resale price = sellers standard remedy.

53
Q

UCC – Gap fillers

A

K for sale of goods must state a quantity terms if other terms are missing the ‘gap fillers’ can fill in missing terms.

54
Q

Non-conforming goods

A

Ordinarily shipment of nonconforming goods is an acceptance creating a bilateral K and a breach.

55
Q

Accommodation

A

If seller seasonably notifies the buyer that the shipment of non-conforming goods is an accommodation → then that is a counteroffer and the buyer is free to reject or accept.

56
Q

NOTICE OF ACCOMMODATION

A

Counteroffer. Buyer can reject or accept.

57
Q

Revocation of unilateral contracts:

A

Once performance has begun the offer cannot be revoked as to that performer.

58
Q

Death and an Option Contract

A

An offer that was irrevocable for a period of time b/c of an option K, survives the offeror’s death and may be accepted at any time during the option period.

59
Q

If a past obligation, such as a debt, would be enforceable except for SOL, courts:

A

will enforce a new promise if it is IN WRITING or if there has been PART PERFORMANCE.

60
Q

Latent Ambiguity

A

In cases where one party is aware and the other is not at the time of K – K will be enforced according to the intent of the party who what unaware of the ambiguity.

61
Q

FOB terms

A

Seller is obligated to get the goods to the destination indicated and make a reasonable arrangements for freight if FOB is not the sellers place of business.

Seller has risk of loss until it reaches the FOB destination.

62
Q

Accord

A

Executory agreement to discharge an existing contractual duty.

63
Q

Valid accord requires:

A

consideration – it may be of a lesser value than consideration in the other K as long as it is ‘different’

64
Q

Satisfaction

A

the performance of the accord agreement. Discharges both the original K and the accord agreement as well.

65
Q

The basic measure of damages for breach of warranty is: (3 things)

A
  1. The difference between the value of the goods as delivered and the value they would have had if they had been according to the contract, plus
  2. Incidental damages, plus
  3. Consequential damages.
66
Q

Recovery in a suit for restitution:

A

the measure of recovery is the value of the benefit conferred.

Addresses unjust enrichment.

67
Q

Expectation damages:

A

The amount necessary to buy a substitute performance

68
Q

For breach of a sale of goods contract a buyer’s damages:

A

are measured as of the time he learns of the breach.

69
Q

For breach of a sale of goods contract a seller’s damages:

A

are measured as of the time for delivery.

70
Q

Reliance Damages:

A

put the plaintiff in the position she would have been in had the contract never been formed.

71
Q

Consequential damages are:

A

damages resulting from the breach that any reasonable person would have foreseen would occur from a breach at the time of entry into the contract.

72
Q

The implied warranty of merchantability is implied in:

A

every contract for the sale of goods by a merchant who deals in goods of the kind sold.

73
Q

Under the implied warranty of merchantability

A

the goods are warranted to be at least fit for the ordinary purposes for which such goods are used.

74
Q

The warranty against infringement is provided:

A

a merchant seller and warrants that the goods are delivered free of any patent, trademark, copyright, or similar claims.

75
Q

The implied warranty of fitness for a particular purpose arises when:

A

a seller has reason to know the particular purpose for which the goods are to be used and that the buyer was relying on the seller’s skill and judgment to select suitable goods when the buyer bought the goods.

76
Q

Parol Evidence: Williston Test:

A

looks only at the face of the written agreement and decide whether contracting parties (in general) would include the term sought to be proved.

77
Q

Parol Evidence: Corbin Test:

A

takes into account the specific circumstances of the transaction involved and asks whether parties like these situated as they are would naturally and normally include in their writing the extrinsic matter that is sought to be introduced.

78
Q

UCC Parol Evidence Rule:

A

a party cannot contradict a written contract but he may add consistent additional terms unless:

(i) there is a merger clause, or
(ii) the courts find from all of the circumstances that the writing was intended as a complete and exclusive statement of the terms of the agreement.

Article 2 also provides that a written contract’s terms may be explained or supplemented by the following whether or not the writing appears to be ambiguous.

79
Q

Parol evidence can be received to aid the fact-finder when:

A

there is uncertainty or ambiguity in the written agreement’s terms or a dispute as to the meaning of those terms.

80
Q

Extrinsic Evidence Outside Scope of Parol Evidence Rule

A
  1. Formation defects
  2. Conditions precedent
  3. Interpretation
  4. Showing of ‘true consideration’
  5. Reformation
81
Q

Condition precedent to the contract’s effectiveness

A

An agreement that a contract will not become binding until a certain condition has occurred

82
Q

material benefit rule:

A

(i) it is based on a material benefit that was previously conferred by the promisee on the promisor, and
(ii) the promisee did not intend to confer the benefit as a gift.

83
Q

HAS THE ABSOLUTE DUTY TO PERFORM BEEN DISCHARGED? (4 Ways)

A
  1. Discharge by performance
  2. Discharge by tender of performance
  3. Discharge by occurrence of conditions subsequent
  4. Discharge by illegality
84
Q

Discharge by Tender of Performance:

A

Good faith tender of performance made in accordance with contractual terms will also discharge contractual duties. Note that the tendering party must possess the present ability to perform; a mere promise of performance will not suffice.

85
Q

Confirmatory memo rule:

A

contracts between merchants, if one party, within a reasonable time after an oral agreement has been made, sends to the other party a written confirmation of the understanding that is sufficient under the Statute of Frauds to bind the sender, it will also bind the recipient if he has reason to know of the confirmation’s contents and does not object to it in writing within 10 days of receipt.

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