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DSF Cal Bar > Contracts > Flashcards

Contracts Flashcards

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1
Q

A contract is….

A

Mutual assent plus consideration, and a lack of valid defenses.

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2
Q

Assent

A

Mutual assent entails:

(1) an offer (an objective manifestation of a willingness to enter into an agreement, which creates the power of acceptance in the offeree) and
(2) an acceptance (an objective manifestation of an agreement to be bound).

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3
Q

Silence as acceptance?

A

Only if offeree has reason to believe offer could be acceptance by silence, e.g., previous dealings

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4
Q

Shipment of goods as acceptance?

A

A request to ship the goods allows the offeree to accept either by agreement or by shipment

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5
Q

UCC Firm Offer Rule

A 
Offer remains open for 90 days if 
(1) Merchant offeror
(2) Signed writing
(3) States offer remains open.
No consideration required.
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6
Q

Unilateral K - can offeror revoke?

A

An offeror of a unilateral contract can revoke until the offeree has begun perofrmance

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7
Q

Bilateral K - can offeror revoke?

A

No - commencement of performance operates as promise to render complete performance

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8
Q

Are advertisements offers?

A

They are mere invitations to deal unless sufficiently specific and limit who can accept, or associated with a stated reward

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9
Q

Definiteness Requirements

A

A contract fails for lack of definiteness if essential terms not covered.
CL: Parties, subject matter, quantity, price
UCC: Only essential term is quantity (requirements K does not require quantity)

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10
Q

When do offers terminate

A 
At stated time or reasonable period
At death/incapacity of offeror
Upon destruction of subject matter
When subject matter becomes illegal
When revocation is communicated (effective upon receipt)
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11
Q

When is offer irrevocable

A

Option contract
UCC Firm Offer (90 days if merchant, writing, assurances remains open)
Promissory estoppel
Partial performance by offeree w/ knowledge of offer

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12
Q

Additional or Different Terms in Offer & Acceptance

A

CL: Mirror Image Rule - rejection + counteroffer
UCC 1: If one party not merchant, a definite, seasonable, unconditional acceptance is an acceptance.
UCC 2: If both parties merchants, battle of the forms, so conflicting terms both fail and add’l terms are included unless:
(1) materially change K
(2) offer expressly limited to its terms
(3) offeror objects within reasonable time.

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13
Q

Consideration

A

Bargained -for legal detriment to promisee.

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14
Q

Promise to make a gift - enforceable?

A

Yes if intended to induce the action, or under promissory estoppel theory if it causes party to reasonably and detrimentally rely.

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15
Q

Pre-existing duty rule

A

Not sufficient as consideration, except

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16
Q

Promises binding without consideration

A

Promise to pay a debt bared by SoL
Promise to perform a voidable duty
Promise to pay for a material benefit received
Promissory estoppel (promisor reasonably expects to induce action, action is in fact induced, injustice prevented only by enforcing promise)

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17
Q

Past consideration OK?

A

Modern trend is yes, to avoid injustice

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18
Q

Requirements for Contract Modifications

A

CL: Requires new consideration (e.g., new obligations on both sides)
UCC: No consideration required–just good faith

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19
Q

Accord and satisfaction

A 
Accord = agreement to discharge contract obligation b other means.  Accord requires consideration. 
Satisfaction = completion of accord, discharges original K and Accord
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20
Q

Promise to forego legal claim = valid consideration?

A

Yes

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21
Q

Defenses to Contract Formation

A 
Mistake
Misunderstanding
Misrepresentation
Undue Influence
Duress
Capacity
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22
Q

Defenses to Contract Enforcement

A

Illegality
Unconscionability
Public policy

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23
Q

Unilateral Mistake

A

(1) One party mistaken as to essential element,
(2) Did not bear the risk of mistake, and either
(a) enforcement would be unconscionable or
(b) other party violated duty to disclose or knew or should have known about mistake

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24
Q

Mutual Mistake

A

(1) Both parties mistaken as to basic assumption of K,
(2) Affected party did not bear the risk of mistake,
(3) Mistake existed at time of K formation,
(4) Mistake had material impact on transaction,
(5) No reformation available to cure mistake.

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25
Q

Misunderstanding

A

Parties thought agreed to same terms, but agreed to materially different terms
Neither party knew: no K
One party knew: construe against that party
Both parties knew ambiguous: No K unless both intended same meaning
Waiver: Either party can just agree to other party’s meaning

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26
Q

Fraudulent Misrepresentation

A

Knowing or reckless assertion of fact
Intent to Mislead
Induced Assent
Such Assent was Justifiable

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27
Q

Misrepresentation by Omission

A

Conduct to conceal a fact or nondisclosure of known material fact = assertion that fact does not exist.

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28
Q

Negligent Misrepresentation

A

Renders K voidable if other party justifiably relied on material misrepresentation

29
Q

Undue influence

A

Unfair persuasion to assent to K. Usually indicated by imbalance of power. Restitution available.

30
Q

Duress

A

Improper threat that deprives party of meaningful choice (e.g., threat made in bad faith to breach K)

31
Q

Capacity to K - Infancy

A

Voidable by infant (under 18) except for necessaries

32
Q

Capacity to K - Mental Illness

A

Void if adjudicated incompetent, voidable if not

33
Q

Capacity to K - Intoxication

A

Voidable if:
Unable to understand nature/consequences of K and
Other party knew of intoxication

34
Q

Express Warranty

A

Any statement that is part of the basis of the bargain, unless merely the seller’s opinion

35
Q

Quasi-Contract

A

P conferred measurable benefit on D
P acted w/out gratuitous intent
Unfair to let D retain benefit

36
Q

Implied warranty of merchantibility

A

If seller is a merchant, goods must be fit for their ordinary purpose, unless conspicuously disclaimed (“as-is,” etc.)

37
Q

Implied warranty of fitness for a particular purpose

A

If seller knows buyer was planning to use for a particular purpose, there is an implied warranty of fitness for that purpose, unless conspicuously disclaimed in writing.

38
Q

Impracticability

A

(1) Nearly unforeseeable event has occurred;
(2) Nonoccurrence was basic assumption of K;
(3) Party seeking discharge not at fault;
(4) Party seeking defense did not assume risk.

39
Q

Failure of a particular source

A

If buyer identified a particular source and that source fails, contract is discharged–no obligation to accept cover.

40
Q

Frustration of purpose

A

Unexpected event arises that destroys one party’s purpose of entering into K. Risk not assumed.

41
Q

Rescission

A

OK by mutual agreement or based upon K rights. If 3d party rights have vested, K not discharged.

42
Q

Consideration required to release other party from K?

A

CL: Yes
UCC: No

43
Q

Intended Beneficiary

A

One to whom the promisee wishes to satisfy an obligation or otherwise benefit by the promised performance. An intended beneficiary can sue on the K.

44
Q

When do intended 3d party beneficiary’s rights vest?

A

(1) Detrimentally relies on K
(2) Assents to K at a party’s request
(3) Files lawsuit to enforce K

45
Q

Assignment of rights under K

A

(1) Present Intent
(2) Does not materially increase duties or risks of other parties
If assignment is for consideration it is irrevocable

46
Q

Delegation of duties

A

Generally allowed, unless other party had substantial interest in performance by delegator
Delegator not released from liability
Delegation in sale of goods context may prompt demand for assurances

47
Q

SOF - Coverage

A

Marriage
Suretyship
One year
UCC at least $500 (except specially manufactured goods, part payment, receipt & acceptance, judicial admission, or failure to object to memo w/in 10 days)
Real Property (subsequent acts may render K enforceable)

48
Q

SOF - Requirements

A

Signed writing by party to be charged w/ essential elements of deal

UCC: (1) Signed writing (2) identifying parties, contain a quantity term

49
Q

Parol Evidence Rule

A

Bars introduction or prior extrinsic evidence of K if totally integrated (look at indicia of intent). Partial integration -> Can introduce supplementary terms if consistent with writing.

50
Q

When is integration present

A

(1) Look to Intent of Parties
(2) Extrinsic evidence allowed to show whether integrated
(3) UCC assumes written K is only partial integration

51
Q

Parol Evidence Exceptions

A

(1) Term is ambiguous (UCC: can supplement unambiguous terms by trade usage or course of dealing)
(2) Providing condition precedent to existence of K
(3) Defense to formation or enforcement

52
Q

Express Condition

A

Requires full compliance

53
Q

Implied Condition

A

Requires substantial performance

54
Q

Conditions based on matters of subjective taste: objective test or subjective?

A

Subjective, but good faith is required

55
Q

When is substantial performance not OK?

A

(1) Express condition

2) UCC (perfect tender, except for installment Ks, which are evaluated on a per-installment basis

56
Q

UCC Method of Tender

A

Seller must place goods at disposition of buyer and give buyer notice
Shipment contract is assumed

57
Q

Shipment K v Delivery K

A

Shipment K: “FOB Seller” = Seller must deliver to common carrier
Delivery K: “FOB Buyer” = Seller must deliver to buyer and hold for buyer’s disposition

58
Q

Divisible or Installment K - Is One Bad Tender Breach?

A

No

59
Q

Can a condition waived by words or conduct be reinstated?

A

Yes, but only before the condition is due and before the other party has detrimentally relied.

60
Q

Wrongful Interference with a Condition

A

Constitutes a breach of the implied duty of good faith and fair dealing. Court will consider the condition satisfied.

61
Q

Difference btwn Material Breach and Minor Breach

A

Material Breach: Other party did not receive substantial benefit of the bargain. Can withhold performance and sue.
Minor breach: Must perform, can still sue.

62
Q

When does “Material Breach” apply in UCC Context?

A

Installment K or by agreement

63
Q

Anticipatory Repudiation - CL

A

If promisor clearly and unequivocably repudiates, promisee may

(1) Treat as a breach;
(2) Ignore and demand performance (but not take actions that increase damages; or
(3) If date of performance has not passed and only performance left is payment, must wait until date arrives.

64
Q

Anticipatory Repudiation - UCC

A

If promisor clearly and unequivocably repudiates, promisee may demand assurances within reasonable time (up to 30 days)

65
Q

Consequential damages

A

Reasonably foreseeable losses to nonbreaching party that go beyond expectation damages (e.g., loss of profits)

66
Q

Liquidated damages

A

Enforceable if at time of K:

(1) Set forth in K
(2) Likely damages of uncertain
(3) Bore reasonable relationship to damages that might be sustained

67
Q

Specific Performance - when appropriate

A

(1) Difficult to prove damages w/ reasonable certainty
(2) Hardship to D
(3) Balance of Equities (remember laches & unclean hands)
(4) Practicalities of Enforcement
(5) Mutuality of Agreement

Presumptively appropriate for real property.
UCC: When goods rare or unique

68
Q

SOL on Breach of K

A

4 years after breach occurs, regardless of whether aggrieved party knows
Can be reduced to 1 year, cannot be lengthened

DSF Cal Bar (12 decks)

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