Contracts Flashcards
Battle of the Forms – Sale of Goods
Applies to the Sale of Goods:
• No mirror image rule: The offeree’s adding or changing a term does not prevent acceptance under Article 2
• Thus, if not merchants the additional terms are not included in the contract, but there is still a contract if the acceptance does not mirror the offer
• Offeree’s term is included ONLY IF:
1. Both parties are merchants
2. No material change – (material includes: anything substantially effects the economic risks, benefits or changes usual remedy for breach of contract – i.e. arbitration clause) (If term is customary in industry not material)
3. No objection within a reasonable time
Shipment of nonconforming goods
Advertise in catalog is not an offer to sell the goods it is an invitation of offer. When (buyer) send invoice = Offer.
Accept in 3 ways:
1. Promise to ship
2. A prompt shipment of conforming goods
3. The prompt shipment of nonconforming goods is both an acceptance and a breach of contract UNLESS seller notifies buyer that the goods are nonconforming – accommodation notice → Acts as a counteroffer and can be accepted or rejected by retailer
~without accommodation notice, seller in breach of contract
Surety
Promise to answer for the debt of another - must be in writing.
EXCEPTION: When main purpose is to benefit the person making the guarantee does not have to be in writing
Entrustment
An owner who entrusts goods to a merchant who deals in goods of a kind (i.e., a dealer) has no rights against a bona fide purchaser (BFP).
Example:
Michael Phelps takes his watch to a jeweler to be repaired. The jeweler wrongfully sells the watch to Raphael Nadal. Can Mike get his watch back?
ANWSER: Not if Raphael is a BFP. Michael assumes the risk by taking watch to be repaired by someone who also sold watches.
3rd Party Beneficiaries
Two people enter into a contract intending to benefit a 3rd party.
3 major issues:
1. Do you in fact have an intended 3rd party beneficiary are they just incidental beneficiaries – incidental NO RIGHTS
2. When can the contract be canceled or modified
• Can be canceled or modified by original parties without 3rd party until rights of 3rd party beneficiary vested – once vest, can’t modify or change UNLESS 3rd party consents.
• When Vests:
• 3rd party is asked to assent to the contract and he assents – not enough to learn about contract, has to assent
• 3rd party learns of contract and detrimentally relies
• 3rd party brings lawsuit to enforce contract
3. If 3rd party can sue – what defenses used:
• If sued by 3rd party, defendant can raise any issue he could have raised had he been sued by any other party to the contract
Assignments
4 rules:
• A valid assignment does not require consideration – valid even if a gift
• As a general matter – assignment does NOT have to be in writing
• An assignment can be revoked unless:
1. Assignee collected from the creditor
2. Consideration was given for assignment
3. Assignee detrimentally relied on the assignment
• Assignment revoked when the assignor collects the money from the assignee
Anticipatory Repudiation
Expression of doubt – cannot support a lawsuit. MUST BE A CLEAR STATEMENT OR CLEAR INTENT NOT TO PERFORM
When have an anticipatory breach, non-breaching party can then:
• File lawsuit immediately
• Make alternative plans
• Both
• But if the non-breaching party has done nothing in reliance on the breach, the breaching party can change his mind and the original contract will be enforced
Contract Damages
Goal is to place the non-breaching party in position would have been had the contract been completed.
• If lost volume seller: The measure of damages is the wholesale - contract price
Anticipatory Repudiation
Expression of doubt – cannot support a lawsuit. MUST BE A CLEAR STATEMENT OR CLEAR INTENT NOT TO PERFORM
When have an anticipatory breach, non-breaching party can then:
• File lawsuit immediately
• Make alternative plans
• Both
• But if the non-breaching party has done nothing in reliance on the breach, the breaching party can change his mind and the original contract will be enforced
Contract Damages
Goal is to place the non-breaching party in position would have been had the contract been completed.
• If lost volume seller: The measure of damages is the wholesale - contract price
Anticipatory Repudiation
Expression of doubt – cannot support a lawsuit. MUST BE A CLEAR STATEMENT OR CLEAR INTENT NOT TO PERFORM
When have an anticipatory breach, non-breaching party can then:
• File lawsuit immediately
• Make alternative plans
• Both
• But if the non-breaching party has done nothing in reliance on the breach, the breaching party can change his mind and the original contract will be enforced
Contract Damages
Goal is to place the non-breaching party in position would have been had the contract been completed.
• If lost volume seller: The measure of damages is the wholesale - contract price
