Contracts Flashcards

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1
Q

Applicable law

A
  1. Article 2 of UCC
    - goods (movable)
    - merchant: deals in goods of the kind
  2. Common law: not goods
  3. Predominance test: both goods and services, look to predominant purpose of K as a whole
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2
Q

Contract formation

A
  1. Offer
    - expression of intent to enter into a contract
    - define terms (QTIPS: quantity, time, id parties, price, subject matter)
    - communicated to offeree
  2. Irrevocable offers
    - UCC firm offers
    - - merchants
    - - signed writing
    - - 3-month max (if not supported by consideration)
    - option contract: consideration given
    - detrimental reliance
    - once performance (not preparation) starts for a unilateral K, or bilateral K indifferent as to the manner of acceptance
  3. Acceptance: manifestation of asset to terms of offer
    - within reasonable time
    - only in response
    - C/L mirror image rule
    - UCC: shipment of nonconforming goods both acceptance and breach, unless:
    - - accommodation: seller gives notice of nonconforming shipment (buyer may accept/reject all)
  4. Termination of power to accept
    - rejection
    - counteroffer (also a new offer)
    - revocation
    - lapse in time
    - death or incapacity of either party
    - destruction of subject matter
  5. Mailbox rule
    - only to acceptance
    - exceptions:
    - - offer says otherwise
    - - option K: upon receipt
    - - both acceptance & rejection
    - – rejection 1st: whichever received 1st
    - – acceptance 1st: acceptance unless rejection received 1st and detrimental reliance
  6. Battle of the forms (UCC)
    - added terms:
    - - 1 not a merchant: then proposal only
    - - both merchants: then add terms, unless:
    - – offer limited to its terms expressly
    - – material alteration
    - – objection within reasonable time
    - conflicting terms:
    - - knock-out rule
    - - UCC gap fillers
  7. Consideration - bargained for exchange of legal value
    - illusory promise
    - requirements contracts: seller is exclusive source and promises to sell required amount to buyer
    - output contracts: buyer agrees to buy all of seller’s output
    - promissory estoppel
    - - promisor should reas expect to induce action or forbearance; and
    - - such action or forbearance is in fact induced.
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3
Q

Defenses to formation

A

SUD FILM

  1. SOF (MY LEGS)
    - marriage
    - year
    - land
    - executor
    - goods $500 or more (except SWAP: specially manufactured goods, written confirmation by merchs, admission in court, performance)
    - surety (debt of another), except “main purpose”
  2. SOF writing requirement
    - essential terms
    - signed by party charged
    - exception: merchant’s confirming memo:
    - - 2 merchants
    - - 1 receives confirmation
    - - both are bound
    - - unless objection within 10 days
    - exception: promissory estoppel
    - exception: judicial admission
    - exception: performance
    - - land: full or part if unequivocally indicate K
    - - services: full performance only
    - - goods: specialty manufactured, goods paid or accepted
  3. Unconscionability
  4. Duress
  5. Fraud/misrepresentation
    - fraud in the inducement: innocent party justifiably relied on misrepresentation
    - nonfraudulent misrep: K voidable if material + justifiable reliance
  6. Illegality
  7. Lack of capacity (except for necessities): infants, crazy, intoxicated, duress/undue influence
  8. Mutual mistake
    - basic assumption
    - material effect
    - party voiding K did not assume the risk
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4
Q

Contract terms

A
  1. Parol evidence rule
    - partial integration
    - - PE not to contradict
    - - PE ok to supplement
    - total integration
    - - PE not to contradict
    - - PE not to supplement
  2. PER exceptions:
    - subsequent communications (i.e. reformation, modification)
    - K formation defect evidence
    - collateral agreements
    - conditions precedent to K effectiveness
    - interpret ambiguous terms
    - - course of performance
    - - course of dealings
    - - usage of trade
  3. Contract modification
    - C/L: mutual assent + consideration, unless unanticipated circumstances and fair + equitable
    - UCC: mutual assent + good faith (no consideration required)
    - 3P beneficiary
    - - intended (can sue)
    - - incidental (can’t sue)
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5
Q

Breach of contract

A
  1. Material v. minor
    - amount of benefit received
    - adequacy of compensation
    - extent of part performance
    - hardship to breaching party
    - negligent/willful behavior
    - likelihood breaching party will perform remainder of K
  2. UCC: Perfect tender rule
    - reject the whole
    - accept the whole
    - accept a commercial unit
    - except: does not apply to installment Ks (must be substantial impairment of installment/K)
    - except: accommodation is a counteroffer (not a breach)
  3. Seller’s right to cure (UCC)
    - notice + timely new tender
    - further time to cure if seller reasonably believed goods would be accepted
  4. Divisible contract
    - agreed equivalents
    - operates as separate Ks
  5. Anticipatory repudiation
    - unequivocal expression
    - won’t perform
    - before performance due
    - non-repudiating party can:
    - - sue immediately
    - - suspend performance
    - - urge performance
    - right to demand adequate assurances
    - - reasonable grounds for insecurity
    - - in writing
    - - ok to suspend performance pending assurances
  6. Warranties
    - express
    - implied warranty of merchantability:
    - - merchant seller
    - - goods fit for the ordinary purpose for which such goods are used.
    - fitness for a particular purpose:
    - - any seller;
    - - has reason to know the particular use + buyer is relying; and
    - - buyer in fact relies.
    - implied warranty of title: any seller
    - implied warranty against infringement: merchant seller
    - implied good faith + fair dealings
  7. Accord
    - agree to substitute performance
    - doesn’t discharge original K
  8. Satisfaction
    - performance of the accord
    - discharges both Ks
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6
Q

Defenses to enforcement

A
  1. Formation defenses (other flashcard)
    - no mutual assent
    - lack of consideration
    - no writing and writing was required SOF (MY LEGS)
    - misrepresentation/fraud/duress
    - unconscionability
    - lack of capacity
    - illegality of contract
    - condition precedent not met
  2. Impossibility/Impracticality
    - supervening, unforeseeable event
    - makes performance impossible/impractical (extremely and unreasonably difficult)
    - neither party assumed risk
  3. Frustration of purpose
    - supervening, unforeseeable event
    - destroys party’s purpose for entering K
    - both parties know the purpose
    - frustration is total
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7
Q

Remedies

A
  1. Damages limitations
    - foreseeability
    - duty to mitigate
    - certainty
    - Goods:
    - - buyer: (K - market) or (cover - K) + consequential + incidental - $ saved b/c breach
    - - seller: (K - market), (K - resale), or lost profit (if seller has unlimited supply) + incidental - $ saved b/c breach
  2. Expectation damages
    - as if K performed (benefit of the bargain)
  3. Consequential damages
    - direct foreseeable consequences
    - could not be reasonably avoided
    - unique to plaintiff (i.e. lost profits)
  4. Incidental damages: expenses related to sale of GOODS (inspection, storage, shipping)
  5. Reliance damages
    - as if K was never made
    - if expectation damages too speculative
    - put P in the position would have been had the K never been formed
  6. Liquidated damages
    - difficult to calculate
    - reasonable approximation of damages
    - only measure used if ok
  7. Nominal damages: breach w/o actual loss
  8. No punitive damages in K
  9. Restitution (quasi-K, quantum meruit)
    - nonbreaching party must not have fully performed
    - value of benefit conferred to D or loss suffered by P
    - unfair to allow D to keep
    - when there is no K:
    - - P conferred a benefit;
    - - reasonable expectation of being compensated;
    - - D knew/should have known P’s expectation; and
    - - D unjustly enriched
  10. Replevin (person prop or inability to cover)
  11. Ejectment (real prop)
  12. Reformation (rewrite K)
    - mistake
    - misrepresentation
  13. Rescission (undo K)
    - mutual mistake
    - unilateral mistake if other party knew
    - unilateral mistake w/ extreme hardship outweighs other party’s expectations under K
    - misrepresentation of fact or law
    - other grounds: duress, undue influence, illegality, etc
  14. Specific performance
    - K is valid
    - K conditions satisfied
    - inadequate legal remedy (never services)
    - - damages too speculative
    - - insolvent D
    - - multiplicity of suits
    - - property is unique
    - mutuality of performance
    - feasibility of enforcement
    - no defenses
    - - laches: delay prejudiced defendant
    - - unclean hands: P is also wrongful
    - - other K defenses
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8
Q

Third party rights and duties

A
  1. Only intended (not incidental) 3P beneficiaries have K rights:
    - specifically identified in K; and
    - receives performance directly from promisor; or
    - has relationship with the promisee to establish intent.
  2. Only vested 3P beneficiaries can enforce K:
    - manifests assent to K
    - brings suit to enforce
    - material changes position in justified reliance
  3. Assignment (transfer rights)
    - no consideration required
    - gratuitous assignment ok
    - assignee stands in shoes
    - can’t if material change
  4. Assignment irrevokable if:
    - for value:
    - - for consideration; or
    - - for security/payment of preexisting debt
    - gratuitous:
    - - token chose (stock) delivered;
    - - assignment of simple chose (K right) put in writing;
    - - obligor already performed
    - - assignee detrimentally relied on assignment
  5. Delegation
    - delegator remains liable
    - not allowed for:
    - - personal judgment and skill
    - - would change obligee’s expectancy
    - - special trust
    - - contractual restriction
  6. Novation
    - obligee accepts new performance
    - terminates delegator liability
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9
Q

Contract performance

A
  1. Conditions: promise modifiers
    - precedent/subsequent
    - express: strict compliance
    - constructive: substantial compliance
  2. Excuse of conditions (SWAN DIPE)
    - substantial performance of constructive condition
    - waiver
    - anticipatory repudiation (unequivocal)
    - noncooperation
    - divisibility of K (i.e. CL price per unit)
    - impossibility/impracticability/frustration: basic assumption, neither party assumed risk
    - - impossibility: can’t perform by anyone
    - - impracticability: extreme and unreas difficulty + nonoccurance basic assumption
    - - frustration:
    - – supervening act
    - – parties did not reasonably foresee
    - – purpose of K destroyed
    - – both parties knew purpose during K formation
    - prospective inability or unwillingness to perform (raise doubts)
    - estoppel
  • actual breach
3. Discharge of performance 
IM FOR SANTI
- impossibility/impracticability
- modification of K
- frustration
- operation of law
- substitute K
- accord and satisfaction
- novation
- time (lapse)
- illegality
  • performance/tender
  • condition subsequent
  • rescission
  • cancellation
  • release
  • statute of limitations
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