Contracts Flashcards
What law applies?
Common law applies to Ks for services
UCC applies to Ks for the sale of goods
UCC - Merchant
A buyer or seller who regularly deals in goods of the kind sold
UCC - Goods
All things movable at the time they’re identified as the goods to be sold under the K
Offer
An offer consists of 1) a promise, undertaking, or commitment to enter into a K; 2) with the essential terms certain & definite; & 3) communication of the promise & terms to the offeree
Revocation
A revocation terminates the power to accept if directly communicated or if the offeree indirectly receives information from a reliable source of acts that would indicate to a reasonable person that the offer is terminated
Revocation at Will Isn’t Permitted Where:
1) Consideration is given by offeree
2) Detrimental reliance by offeree
3) Merchant’s firm offer
Mailbox Rule
Revocation is effective upon receipt, & acceptance is effective upon dispatch
Acceptance
An unqualified assent to the terms of the offer
Counter-Offer - Common Law
Acts as both a rejection of the original offer and a proposal of a new offer
Counter-Offer - UCC - Different Terms
Knock-out rule
Counter-Offer - UCC - Additional Terms
As between non-merchants, it’s a proposal that must be explicitly accepted to come in
As between merchants, the additional terms become part of the K unless: 1) offer expressly limits acceptance to the terms of the offer, 2) the new terms materially alter the offer, or 3) notification of objection to the new terms are given in a reasonable time
Consideration
A valid K requires a bargained-for exchange
Illusory Promise
Invalid consideration
Promissory Estoppel
A promise is enforceable to the extent necessary to prevent injustice if 1) the promisor should reasonably expect to induce definite & substantial action, & 2) such action is in fact induced
Statute of Frauds
The following Ks must be in writing:
1) Promise to pay the debt of another
2) Creation of any interest in land
3) K can’t possibly be performed within one year
4) Sale of goods more than $500
Statute of Frauds Exception
1) Admission in court that the K exists
2) Full performance if the K is for the sale of goods/services
3) If K is for real property, any 2 of 3 - performance by payment (in whole or in part), possession, or making of valuable improvements
3rd Party Beneficiary - Intended vs. Incidental
Incidental beneficiary can’t sue
3rd Party Beneficiary - Rights Vest When
Manifests assent in a manner requested by the parties;
Materially changes in position in justifiable reliance on the promise; or
Sues to enforce the promise
3rd Party Beneficiary - Promisor’s Defense
Promisor can raise any defense against paying the beneficiary the promisor could’ve raised against the promisee
3rd Party Beneficiary - Creditor Beneficiary’s Defense
Creditor beneficiary can sue promisor who promised to pay & promisee who owes the money
3rd Party Beneficiary - Donee’s Defense
Donee can sue the promisor but not the promisee unless donee detrimentally relied on the promise
Assignment - Assignable Contracts
All K rights may be assigned except those that substantially change an obligor’s duty
Assignment - No Writing Required Except For
Interest in land, wage assignment, security interests, choses in action >$5,000
Assignment - Revocable Except
If given for consideration; Obligor already performed; Tangible claim delivered; Written assignment of chose in action; Foreseeable detrimental reliance
Assignment - Obligor’s Defense
Can assert any defense against the assignee it had against the assignor, except personal defenses that arose after the obligor had notice of the assignment
Delegation
Transfer of duties, rather than the entire K
Delegation - Can’t Delegate
Duties involving personal skill/judgment, where there’s special trust in delegator, delegation would change obligee’s expectancy, or there’s a K restriction
Delegation - Delegator’s Liability
Delegator is always liable to non-delegating party absent an express novation
Delegation - Compelling Performance
Non-delegating party can’t compel delegate to perform unless delegate promises to perform (supported by consideration). In that case, or if delegate performs, delegate is liable to non-delegating party
Construction - Parol Evidence Rule
Where the parties express their agreement in writing with the intent that it embody the full & final expression of their bargain, any other expressions made prior to the writing, & any oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing
Parol Evidence Rule Exception
Any prior contemporaneous expressions that vary the terms can’t come in unless formation defects, facial ambiguity, true consideration, or condition precedent
Modification - Common Law
Subsequent expressions or agreements that vary the terms of the K require additional consideration
Modification - UCC
Subsequent expressions or agreements that vary the terms of the K don’t require additional consideration
Conditions
Conditions that occur lead to a duty to perform, & failure to perform is a breach
A breach occurs when
A party has a duty to perform and fails to do so
Minor Breach
Where the nonbreaching party gains the substantial benefit of the bargain despite the defective performance, their duty to perform ins’t discharged
Material Breach
Where the nonbreaching party doesn’t gain the substantial benefit of the bargain, he has the right to all remedies, & need not perform his duty
Anticipatory Repudiation
If a party, in advance of a performance date, unequivocally refuses to perform, it’s an anticipatory repudiation, & the other party can treat it as a breach and immediately sue
Implied Covenant of Good Faith & Fair Dealing
Requires that both parties do nothing to prevent the other party’s performance
Discharging a Contract - Impossibility
Objective & arises after K is entered into
Discharging a Contract - Impracticability
Party to perform encounters extreme/unreasonable difficulty &/or expense that was incapable of being anticipated
Discharging a Contract - Frustration of Purpose
1) A supervening act 2) the parties didn’t reasonably foresee at the time of K, 3) the purpose of the K having been completely or almost completely destroyed by the act & 4) both parties realized the purpose when making the K
Both parties’ duties are discharged, but parties can recover in quasi-contract for work done
Accord & Satisfaction
A valid accord & satisfaction requires a valid dispute, & a good faith tender & acceptance of a check that conspicuously states full satisfaction
Waiver
A condition of a K may be waived by words or conduct indicating that the party won’t insist on the condition being met
UCC Perfect Tender Rule
If all goods aren’t perfect, Buyer can accept all, reject all, or accept some & reject others
Damages are difference between K price & either the market price or the cost of replacement, measured at time Buyer learns of the breach
UCC Lost Volume Seller
Seller’s damages are K price minus seller’s cost to get the item (i.e., the lost profit)
