Contracts Flashcards
what is a unilateral contract?
a contract that can only be accepted by performance
Article 2 of the UCC applies to what kinds of contracts?
sale of goods (tangible items)
common law applies to what kinds of contracts?
service contracts
real estate
What happens if a contract involves both the sale of goods and land?
the most important part controls, unless there is a price for both. In that case, you use both.
what is a contract?
a contract is an agreement that is legally enforceable.
what is an offer?
a manifestation of commitment
how do you tell if there is an offer?
a reasonable person in the position of the offeree would believe that their assent would create a contract.
what is required in the sale of real estate?
the price and land description
what happens if there is a missing price term in the sale of land?
there is no contract
is there a price requirement for the sale of goods?
no, can be an offer even without price. Must look at intent of parties.
what happens if there are vague terms such as fair, appropriate, reasonable, in the sale of goods?
no offer. Has to state quantity, can use all, only, exclusively, solely.
can a buyer increase requirements so long as the increase is in line with prior demands?
yep
is an advertisement or price quotation an offer?
no
when is an advertisement or price quotation an offer?
if it is in the nature of a reward,
if it specifies and expressly indicates who can accept,
price quotation can be an offer in response to an inquiry
how can an offer be terminated?
- lapse of time - time stated or reasonable time (usually month)
- death of a party prior to acceptance
- offeror revokes
- offeree rejects
how can an offeror revoke an offer?
- unambiguous statement by offeror to offeree
- unambiguous conduct by offeror that offeree is aware of.
must be of unwillingness or inability.
does the fact that there are multiple offers revoke the initial offer?
no unless offeree learns of the inabilityt to the contract.
what are the 4 situations in which an offer cannot be revoked?
- option
- UCC firm offer rule
- reliance
- start of performance
when can an option not be revoked?
promise to not sell and payment/consideration for the promise, paid promise!!!
what are the elements to the ucc firm offer rule?
- offer to buy or sell goods
- party merchants
- written and signed promise to keep offer open
- cannot be more than 3 months
how does reliance prevent an offer from being revoked?
an offer cannot be revoked if there has been (1) detrimental reliance that is (2) reasonably foreseeable, and (3) detrimental
when is a unilateral contract offer irrevocable?
start of performance, for the reasonable time to complete performance. mere preparation is not enough.
what are the ways to reject an offer?
- counteroffer
- conditional acceptance
- additional terms (mirror image rule)
what happens when the offeree makes a counteroffer?
terminates the offer and creates a new offer.
does bargaining terminate an offer?
no, the offer is still open. can tell its an offer because there is a question mark.
can counteroffers terminate options?
no as long as its a valid option.
does a conditional acceptance terminates the offer?
yes, look for words “provided”, “only if”, “if”, “but”, “on condition”
at common law how does conditional acceptance work?
rejects the offer, and becomes a counteroffer that can be accepted by conduct.
under the ucc how does conditional acceptance work?
the ucc rejects, additional term not accepted by conduct
what does the mirror image rule apply to?
common law
what is the mirror image rule?
a response to an offer that adds new terms is treated like a counteroffer rather than acceptance.
additional terms under the ucc?
seasonal expression of acceptance: generally treated as an acceptance, but must look to see if the additional term is part of the contract?
when is the additional term added to the contract under the ucc?
if both merchants and (1) the term is not material or (2) the term is not objected to by offerror
what are the methods of acceptance?
- start of performance except for unilateral contracts which requires complete performance
- mail box rule
- sends wrong goods
what is the mailbox rule?
- acceptance is when mailed
- all others is when received
- if rejection mailed before acceptance, whatever received first controls
- mailbox rule cannot defeat an option
what happens when the seller sends the wrong goods?
its considered an acceptance and breach
what happens if the seller sends the wrong goods but there is an explanation?
counteroffer and no breach.
who can accept a contract?
a person who the offer is made to and knows about the offer at the time of acceptance.
can offers or options be assigned?
only options can be assigned.
what are the reasons why a contract is not enforceable?
- lack of consideration
- lack of capacity for the defendant
- statute of frauds
what is consideration?
a bargained for legal detriment
does the amount of consideration matter?
no.
is past consideration, consideration?
no. unless requested by promisor before and promisee expects payment.
what is the common law rule for preexisting duty?
doing what you are already legally obligated to do is not new consideration for a new promise.
what are the common law exceptions to preexisting duty?
1) addition to or change in the performance;
2) unforseen difficulty so severe as to excuse performance
3) third party promiseto pay
does article 2 have a preexisting duty rule?
no, good faith is the test.
what happens when you owe money and you want to pay less on the due date, is that consideration?
no only consideration is if you pay less on a date before it is due.
what is a consideration substitute
promissory estoppel
what are the elements to promissory estoppel?
- promise
- detrimental reliance, that is forceeable.
- enforcement necessary to avoid injustice.
who does not have capacity to enter contract?
- minors under 18
- mentally imcompetent - cannot understand
- intoxicated- if other people have reason to know
only applies if these people are defendants.
what happens if a minor retains benefits after gaining capacity
thhen it is legally enforcable.
what are the four contracts within the statute of frauds defense?
- guarantee by guarantor to pay debts of another if that person cannot pay, except when it benefits the guarantor (main purpose exception)
- service contracts not capable of being completed within one year of the contract.
- sale of goods over 500$
- transfer of interest in real estate except if lease under 1 year
how is the statue of frauds satisfied by the plaintiff?
- performance
2. writing
what are the performance requirements?
- service contract: full performance by one of the parties
- transfer of interest in land: part performance, need to satisfy 2 of 3. payment, improvements, possession
- goods, part performance, unless specially manufactured, then it is substantial beginning.
what are the writing requirements for common law under sof?
material terms who what and wear
signed by person who raised sof defense
what are the writing requirements for ucc?
not material terms test, must be sale of goods with quantity, signed by defendant except between two merchants where there is a delay
use of statute of frauds other than as a defense?
- whether written authorization is needed to enter into a contract for someone else? only if within statute of frauds.
aka equal dignity. - whether written proof is need of a contract modification? you look and see if the modification is within the statute of frauds.
- contract porivisions requiring that all modifications be in writing
Under the ucc, contract provisions requiring that all modifications be in writing valid?
yes, contract provisions requiring written modifications are effective unless waived
under common law, contract provisions requiring that all modifications be in writing valid?
no, ignore.
if the subject matter of a contract is illegal, is the agreement enforceable?
no the agreement is not enforceable.
if the subject matter is legal but the purpose is illegal is the agreement enforceable?
yes if plaintiff did not know of the defendants illegal purpose.
can a court refuse to enforce an agreement because of public policy?
yes, look for exculptory agreement
what are the elements for misrepresentation?
- statement of fact before contract
- by one of the parties
- that is false
- material
- induces the contract
is there a duty to disclose what they know?
nope, but they cannot conceal. They may have to disclose if their is a fiduciary relationship.
unconscionability?
- terms were unfair surprise or oppressive
- at time agreement was made
- by the court
does ambiguity render a contract enforceable?
yes if 1) terms is opened to at least reasonable interpretations 2) both parties attach different meaning to term 3) neither party knows or has reason to know the term is open to at least two reasonable interpretations.
will courts be reluctant to allow a party to avoid a contract for a mistake made by only one party?
nope, only if the other party had reason to know about it.
what is parol evidence?
words (oral or written) of the parties made before final written contract
words of parties (oral or written) before integration
what are the five main parol evidence patterns?
- contract - parol evidence cannot be used to contract terms in the written contract.
- ambiguities- parol evidence
- defense, getting out of the written agreement
- mistake in integration
- adding to the written deal if partial integration, terms would usually be in separate
can conduct be a source of contract terms? If so how?
Yes, course of performance, course of dealings, course of usage
what is course of performance?
same people, same conduct -
what is course of dealings?
same people, similar contract
what is the course of usage?
different but similar people, different but similar contract
what is a shipment contract?
FOB CITY same as seller or where goods originate
what are the obligations of a seller to a shipment contract?
- get the goods to common carrier
- make reasonable arrangements
- notify the buyer
what are the obligations of a seller to a destination contract?
seller has delivery obligation until goods arrive at destination.
what is a risk of loss pattern?
goods damaged during shipment, neither the buyer or seller is to blame
what are the risk of loss rules.
- first look to Agreement
- whoever Breached, doesnt matter if it relates
- common carrier; risk of loss shifts once he meets delivery obligations
- catch all; if seller is merchant he is obligated until reciept of goods.
if seller is not a merchant he is only obligated till he makes it available.
what are the three different warranties?
- express warranty
- warranty of merchantability
- warranty of fitness for a particular purpose
what is an express warranty?
facts, not opinion
what is the implied warranty of merchantability?
- merchant (deals in goods of that kind)
2. fit for ordinary purposes
what is the implied warranty of fitness for a particular purpose?
- if buyer relies on sellers knowledge (seller has reason to know)
- good must be fit for that particular purpose
what are the limits on warranty liability?
- statute of limitation for 4 years, after purchase
- privity
- no implied warranties as to defects
- disclaimers
can express warranties be disclaimed?
no
can implied warranties be disclaimed, if so how?
conspicuous language of disclaimer, words “as is” or “with faults”
what does perfect tender mean?
goods and delivery must completely comply with contract terms.
perfect tender only applies to?
the UCC sale of goods
what happens if there is less than perfect tender?
the buyer has the opportunity to reject, the buyer must take reasonable care of the goods and stop using them
how is the option of rejection limited because of a less than perfect tender?
- seller can cure, if time of performance has not expired
- seller has reasonable grounds to believe tender would be acceptable (prior deals)
- in terms of installment contracts, buyer can only reject when there is substantial impairment in that installment.
if buyer accepts goods, can they later reject them.
no they cannot.
what is acceptance?
payment without opportunity to inspect is not acceptance.
what is the effect of buyer’s keeping goods?
implied acceptance.
what are the elements to the revocation of acceptance?
nonconformity that impairs the value
reasonable reliance, honest mistake
revocation within a reasonable time after discovery
