Contracts Flashcards
Performance of Article 2 Contracts
6 Concepts
- perfect tender
- rejection of the goods
- Cure
- Installment contracts
- Acceptance
- Revocation of Acceptance
perfect Tender
- only applies to sale of Goods UCC
- it means only the goods and the deliver must conform to the contract terms
- less than perfect ender by the seller gives the buyer the option of rejection of the goods, so long as the buyer acts in good faith
Rejection of the Goods
- Distinguish rejection from an offer, from rejection of goods
- Buyer has option to reject if seller fails to meet perfect tender; buyer can retain goods and sue for damages or reject any and all commercial units and sue for damages
Buyer must take reasonable care of rejected goods - Right to reject is limited by cure, installment contracts, and accepteance
Right to cure
in some instances, a seller who fails to make perfect tender will be given the option to cure:
- seller reasonably believed the nonperfect tender would be acceptable (here, seller can cure even after deliver date)
- time for performance not yet expired
Right to reject installment
Only when there is a substantial impairment in the installment that cannot be cured
Acceptance of Goods
- if buyer accepts the goods, he cannot later reject them
- payment without the opportunity to inspect is not acceptanct
- failure to timely reject is acceptance (retention of the goods is implied acceptance)
Revocation of acceptance of Goods
Once the buyer accepts the goods, he cannot reject them; he may, however be able to revoke the acceptance which has the same effect as rejection
Requirements
1. nonconformity substantially impairs the value of the goods
2. exusable ignorance of the grounds for revocation and reasonable reliance on seller’s assurance of satisfaction
3. revocation within a reasonable time after discovery of the nonconformity
When is specific performance available
contracts for sale of real estate
contracts for sale of unique goods
not for service contracts
Seller’s reclamation from an Insolvent Buyer
Right of an unpaid seller to get its good back, if:
- buyer was insolvent at the time it received the goods;
- seller demands return of goods within 10 days of receipt;
- buyer still has goods in his possession.
The critical date is delivery date
Money Damages (boilerplate)
The purpose of monetary damages in a contract case is to compensate the non-breaching party by protecting his expectation interst. this is done by placing the non-breaching party in the same monetary position it would have been in if there had been no breach.
Money Damages Formula
Damages= expectation damages + incidental damages + freseeable consequential damages - avoidable damages - unreasonably uncertain damages
Nonperformance of Common Law Contract
Material Breach rule:
- damages can be recoverd for any breach
- only material breach excuses nonperformance
- materiality of breach is a fact question
- if there is substantial performance the breach is not material
Excuse of Non performance
because of something happening after contract was made
- other side’s nonperformance
- other side’s anticipatory repudiation
- insecurity about whether other side will perform
- breach
- nonocurance of an express condition
- rescission
- accord and satisfaction
- modification
- novation
- impossibility or impracticality
Excuse by Insecurity
- reasonable ground for insecurity
- written demand for adequatte assurance
- commercially reasonable to stop performance
Excuse by Nonoccurance of an Express condition
Express Condition must be strictly satsified unless it is based on personal satisfaction then it must be honest and in good faith
Express condition can be waived
Performance not excused if person protected by condition prevents the occurence of the condition
Accord and Satisfaction
Substituted Performance
Parties agree to accept a diff performance in satisfaction of the existing agrement
nonbreaching party can recover on the accord or original agreement
Novation
substituted party
Parties agree to replace one of parties witha third party- replaced party no longer liable
Compare w/ delegation- does not require all parties to agree and does not exclude liability
Third Party Contract issues (3)
Third party beneficiares
Assignment of Contract Rights
Delegations of Contract Duties
Third Party Beneficiary
Third party beneficiary (must be intended)
Promissor: person who will benefit the TPB
Promisee: Person obtaining the promise that benefits TPB
Creditor/Donee
Can’t cancel contract once TPB knows of and has relied on contract
Either TPB or promissee can recomver from promissor
promissor can assert any defense it could have asserted against the promissee against the tpb
Assignment of Rights
Assignment is a transfer of rights under a contract; two steps
- contract between 2 parties
- 1 party transfers rights to third party
Limitations on Assignment of Cotnract Rights
Prohibition: of assignment (assignee who does not know of prohibition may sill enforce
Invalidation: all assignments involved
Requirements for Assignment of Contract
Generally consideration not required, but gratuitous assignments can be revoked
if multiple assignments, last gratuitous assignment wins, but first assignement for consideration wins
UCC firm offer rule
Offer cannot be revoked for up to 3 months if:
1. it is in writing
2 signed promise to keep open
3. party is a merchant
Mirror Image Rule
Acceptance must mirror offer to be a valid acceptance (common law)
Additional Terms in Acceptance of Sale of Goods Contract
There is an acceptance
ARe the new terms part of contract?
only if both parties are merchants and the term is not material or objected to
Misrepresentation (defense to formation)
- statement of fact
- by one of contraccting parties
- that is false
- and induces the contract
Unconscionability (efense to contract formation)
Procedural - manner timing sequence
Substantive- terms
Tested by the court as of the time the agreement was made
Ambiguity (defense to contract formation)
There will be no contract if:
- parties use a material term open to at least two reasonable interpretations and
- each party attaches a diff meaning to term and
- neither paryt knows or has reason to know of the ambiguity (if one party knows, the contract is construed against them)
Mistake of FAct (possible defense to contract formation)
Mutual Mistake: relief only if both parties are mistake about existing facts- but no relief for mistake if the prson seeking relief bears the risk of mistake)
Unilateral Mistake- no relief unless other pary knew or had reason to know of mistake
Risk of Loss in non-common carrier cases (ucc)
merchant: RoL on seller until buyer picks up goods
nonmercant: on buyer once seller tenders goods for delivery
Offer (boilerplate)
- expressiong of a promise, undertaking, or commitment to enter into a contract
- with certain and definite terms
- communicated to offeree
