Contracts Flashcards
Applicable Law
UCC for sales of goods; Common Law for everything else
Mixed deals - more important part controls, unless contract expressly divides payment
Definition of Contract
An (1) Agreement that is (2) Legally enforceable
Agreement Analysis
- Offer?
- Termination of Offer?
- Acceptance of Offer?
Offer
An offer is:
- an expression of a promise, undertaking, or commitment to enter into a contract
- with certain and definite terms
- communicated to the offeree
General Test: Look for a Manifestation of Commitment (whether a reasonable person would believe that his assent would create a contract).
Terms in an Offer
- Price Required in Contract for Sale of Land
- Material Terms cannot be vague
- Example of vague terms (appropriate, reasonable, fair)
- Requirement/output contracts not vague
Termination of Offer
- Lapse of Time (time stated or reasonable time)
-
Death of either party
- Except Irrevocable Offers
-
Revocation (by words or conduct of offeror known to offeree)
- Except Irrevocable Offers
-
Rejection (by words or conduct of the offeree known to offeror); can be direct or indirect, indirect includes
- Counteroffer (distinguish bargaining)
- Conditional Acceptance (I accept if)
- Mirror Image Rule (common law)
- Additional or Different Terms (UCC)
UCC Firm Offer Rule
An offer cannot be revoked for up to 3 months if:
- It is in writing
- signed promise to keep open
- party is a merchant
Conditional Acceptance
- Common Law: Rejection and counteroffer that can be accepted by conduct
- UCC - Rejection only (not counteroffer that can be accepted by conduct)
Mirror Image Rule
(Common law) Acceptance must mirror offer to be a valid acceptance, otherwise it is rejection and counteroffer
Additional terms in acceptance of a sale of goods contract
- There is an acceptance
- Are the new terms part of the contract?
- Yes, if both parties are merchants and the term is not material or objected to
Acceptance
- Contract can state manner of acceptance
- Start of performance is acceptance (unless unilateral contract)
-
Mailbox Rule: Acceptance effective when sent, all other communications effective when received
- Does no apply to option contract
- Seller send wrong goods: Generally, acceptance and breach,
- unless accomodation (explanation), then it is counteroffer and no breach
Reasons an agreement may not be legally enforceable
- Lack of Consideration
- Lack of Capacity
- Statute of Frauds
- Existing Laws Prohibit Performance
- Public Policy
- Misrepresentations
- Nondisclosure
- Duress
- Uncoinsionability
- Ambiguity
- Mistake as to Material Fact
Consideration
Bargained for Legal Detriment
- Does modification require new consideration
- Common Law - Yes
- UCC - No (only requires good faith)
- Promise to pay a due and undisputed debt is not consideration
- Consideration Substitutes
- Written promise to satisfy an obligation for which there is a legal defense
- Promissory Estoppel
- promise
- reliance that is determintal and reasonable/foreseeable
- enforcement necessary to avoid injustice
Lack of Capacity
- Infancy (under 18)
- Mentally incompetant
- Intoxicated (and other person has reason to know)
Party lacking capacity can disaffirm
If party gains capacity, they impliedly affirm if they do not disaffirm in a reasonable time
Consider quaid-contract
Statute of Frauds
(Contracts w/in SoF)
Contracts within SoF require proof (writing or enforcement to be enforceable); contracts within SoF:
- Suretyship: Promises to Answer for Debt of Another
- Not Capable of Performance within a Year
- from date of contract
- SoF does not apply to tasks of unspecified length or contracts for life
- Transfers of Real Estate
- Except leases for 1 year or less
- Sale of Goods for more than $500
Statute of Frauds
(How to Satisfy with Performance)
Generally, contracts within SoF require proof (writing or performance) to be enforceable.
- Performance
- Real Estate: any 2/3 of improvements, payments, and possession
- Service Contracts
- Full performance of either party satisifies
- Part performance does not satisfy
- Sale of Goods:
- Ordinary goods: part performance satisfies to the extend of performance
- Specially manufactured goods: satisfies once seller makes a “substantial beginning”
*
Statute of Frauds
(How to Satisfy with Writing)
Contracts w/in SoF requires proof (performance or writing) to be enforceable
Writings that Satisfy:
- Common Law Contracts
- All material terms (who and what)
- Signed by persons asserting defense
- UCC Contracts
- Quantity Term
- Signed by defendant unless both parties are merchants
Modifications and Statute of Frauds
If contract with modification would be within SoF, then modification must satsify SoF
- Common Law - contract provisions requiring modifications be in writing are invalid (ignore)
- UCC - contract provisions requiring modifications be in wirting are valid
Misrepresentation and Nondisclosure
Contract not legally inforceible if:
- Misrepresentation
- statement of “fact” before contract
- by party or agent
- is false
- induces contract
- Nondisclosure where there is a fiduciary-like relationship
- no general duty to disclose
Duress/Undue Influence
- Physcial duress = no contract
- Econimic duress = no contract if threat is improper and and threatened party is vulnerable
- Undue influence = no contract if one party takes advantage of special relationship with weaker party by means of improper persuasion.