Contracts Flashcards
Contract —
a legally enforceable promise or set of promises requiring mutual assent and consideration.
Mutual assent —
offer and acceptance
Consideration —
a bargained-for exchange and legal value.
Can a gift be consideration?
No
Can consideration for a past contract constitute consideration for a present contract?
No
Under the common law, can something that one is obligated by law to do constitute consideration for a present contract?
No
Promissory Estoppel —
the requiring of a party to perform their promise because the other party has acted in reliance on the promise to their detriment.
The other name for promissory estoppel is . . .
detrimental reliance
The Parole Evidence Rule —
other expressions (typically testimony) will not be admitted to vary a written contract if the writing is an integration; i.e. the final expression of their bargain.
To what does the Parole Evidence Rule not apply?
Evidence showing lack of consideration, fraud, mistake, or duress. Basically, it does not apply to any evidence which is introduced to prove the contract was illegal or to disprove the existence of a contract. The PER only applies to evidence introduced to change the interpretation of the contract.
Battle of Forms —
a contract can be formed even though the terms of acceptance do not match the terms of an offer. UCC 2-207.
To what does the Battle of the Forms apply?
Exchanges between merchants.
What is the basic duty of contract law at common law?
To substantially perform all that is called for in a contract.
The Uniform Commercial Code requires two things from merchants who exchange goods:
1) perfect tender; and 2) good faith.
Perfect Tender —
the delivery and condition of the goods must be exactly as promised by the contract.
Good Faith [for purposes of the UCC] —
honesty and the observance of reasonable commercial standards of fair dealing.
Explain legal incapacity —
those who are under the age of 18 cannot form a contract.
Explain the defense of mutual mistake —
when both parties to a contract are mistaken about existing facts relating to the agreement, the contract may be voidable by the affected party if 1) the mistake concerns a basic assumption on which the contract is made; 2) the mistake has a material effect on the agreement; and 3) the party seeking avoidance did not assume the risk of the mistake.
Explain the defense of unconscionability —
a court may refuse to enforce a provision, an entire contract, or a modification of a contract if it is in order to avoid unfair terms.
Explain claiming the Statute of Frauds as a defense —
if the SoF requires certain contracts to be written, and they are not, the defendant may use that as a defense to the existence of a contract.
Explain the defense of fraud and misrepresentation —
if a party induces another to enter into a contract by using fraudulent misrepresentation, the contract is voidable by the innocent party if she justifiably relied on the fraudulent misrepresentation.
An agreement for the sale of real property requires . . .
a price for the land.
For an agreement for the sale of goods to be valid, it requires a . . .
quantity term; i.e. how much of the goods are being sent.
When does a unilateral contract become irrevocable?
When the offeree begins performance in response to the offer.
Option Contract —
a contract in which the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer.
What might a court do if there appears to be a missing term in a contract?
If the contract appears to have been intended as a valid contract by the parties, a court will apply the presumption that the parties’ intent was to include a reasonable term to rectify any missing term.
For what purpose will a court establish a quasi-contract?
To avoid unjust enrichment by one of the parties.
Accommodation —
a seller of goods ships non-conforming goods to a buyer and reasonably notifies the buyer that the shipment is being offered only as an accommodation.
When can an offeror properly revoke an offer for a unilateral contract?
Anytime before the offeree has begun performance.
What is the concept of a merchant who offers to buy/sell goods in a signed, written contract which gives assurance that the offer will be held open?
A merchant’s firm offer.
Where a merchant proposes different or additional terms during their acceptance of an offer, what will the court do?
The court will apply the Battle of the Forms to determine whether the additional/different terms become part of the contract.
What part of the Uniform Commercial Code governs the sale of goods between merchants?
Article 2, Uniform Commercial Code.
A communication to another party will not be considered a definite and certain offer for the sale of goods if it is missing a __________________.
Quantity term
Doctrine of Substantial Performance —
a party can recover damages for the other party’s incomplete performance by deducting any damages suffered due to the incomplete performance.
In the case of an anticipatory repudiation, when can the non-repudiating party sue?
Either immediately or on the date the performance is due.
When a party indicates by words or conduct that she will not insist on the performance of an ancillary condition being met by the other party, this is referred to as a ______________.
Waiver
Constructive Condition —
a condition that is implied by a court even though it is not explicitly stated in the contract.
An anticipatory repudiation must be ___________.
unequivocal
In the case of an anticipatory repudiation, the repudiating party has until when to retract their repudiation?
The repudiating party has until the date the performance is due to retract their repudiation UNLESS the other party has materially changed their position in reliance on the repudiation.
When will a duty to perform premised on a condition be excused?
When the condition on which the performance was premised is not fulfilled. Ex: If A, then B. If no A, then no B.
Estoppel Waiver —
the waiving of a condition before it is required to be performed, and a person detrimentally relies on the waiver.
Condition subsequent —
an act or event which, if it takes place, prevents something. Ex: John must go to college. If he does not, then he will be disinherited.
Anticipatory Repudiation —
where a party to a contract, prior to the time for their performance, indicates that he will not perform when performance is due.
Condition precedent —
a event or act which must occur before something else can occur.
What is the difference between a promise and a condition on a promise?
Promise —binds a party to perform under a contract.
Condition on a Promise —creates or extinguishes a duty to perform under a contract.
When might the condition of complete performance be excused by a court?
Where a party renders substantial performance of their duty to perform (the doctrine of substantial performance).
What is the difference between an anticipatory repudiation and a prospective failure to perform?
An anticipatory repudiation must be unequivocal that one will not do what one had previously promised, whereas a prospective failure to perform is just that —prospective. There is no guarantee that the person will retract their promise, only a possibility.
Election Waiver —
where a condition is not satisfied or a duty to perform is not fulfilled, and the beneficiary of the condition chooses to continue under the contract rather than claim a breach and end their performance.
Ex: A offers to paint B’s apartment white if B gives A $20. B does not give A the $20, but A chooses to continue painting the apartment anyways. He has elected to waive the condition he set.
A court will apply the doctrine of substantial performance to excuse the condition of complete performance in the case of a _____________________ and a _____________.
constructive condition; minor breach.
Under the common law, what is the effect of a minor breach of the conditions of the contract?
Under the common law, there is no effect. The conditions are still in place.
How must a repudiating party who thereafter chooses to perform retract their repudiation?
The party must retract their repudiation in a manner which clearly indicates their intent to perform.
To what does the doctrine of substantial performance not apply?
Sales of goods.
What are the two methods by which an offer for the sale of goods can be accepted?
1) prompt shipment; or 2) a promise to ship.
Non-conforming goods are considered a ______________ if they are sent along with a(n) _________________.
counter-offer; accommodation.
The mirror image rule applies to sales of goods when the offeree accepts the offer by what method?
Promise to ship.
The mirror image rule applies to sales of goods between merchants when one merchant accepts an offer to buy goods by promising to ship the goods in question.
Under the UCC, the shipment of non-conforming goods with conforming goods is an ____________ and a _____________.
Acceptance; breach.
In response to the receipt of both conforming and non-conforming goods, the receiver may either:
1) accept the whole shipment; 2) reject the whole shipment; or 3) accept the conforming goods while rejecting the non-conforming goods AND seeking damages.
Where a offeree sends an acceptance via the mail, and subsequently sends a rejection . . .
the mailbox rule applies and there is a contract.
Where the offeree sends a rejection, and subsequently sends an acceptance . . .
the mailbox rule does not apply and there is no valid contract.
The Mailbox Rule —
in a bilateral contract, acceptance is effective upon dispatch; i.e. a contract is formed upon dispatch.
To what kind of contracts does the mailbox rule apply?
Bilateral contracts.
For the specifically manufactured goods exception to apply to the Statute of Frauds . . .
1) the goods must be specially manufactured for the buyer; 2) the seller must have made a substantial beginning on their manufacture or made commitments for their purchase; and 3) the goods must not be resellable in the normal course of business.
Contract —
a legally enforceable agreement.
Bilateral Contract —
a contract which leaves open the method of acceptance.
Unilateral Contract —
a contract which requires a particular form of acceptance.
Quasi-Contract —
an equitable remedy do which contract law does not apply.
Offer —
a manifestation of intent to contract.
What does a sale of real estate require that other contracts do not?
A description of the land and its price.
Is a price necessary for a sale of goods contract?
No
What are the exceptions to the rule that advertisement are not offers?
1) when the advertisement is made in the nature of a reward; and 2) if the advertisement is specific to quantity and expressly indicates who can accept.
What are the methods by which an offer can be terminated?
1) lapse of time; 2) revocation by offeror; and 3) rejection by offeree.
What are the forms of irrevocable offers?
1) option contracts; 2) merchant firm offers; 3) reliance; and 4) starting to perform a unilateral contract.
What are the methods by which an offer can be rejected?
1) by counteroffer; 2) by conditional performance; 3) by adding terms; or 4) by death of one of the parties.
What happens if one of the parties dies after the offer has been extended and it has already been accepted?
It must be performed.
Who can accept an offer?
Only one who 1) knows of the offer; and 2) to whom the offer was extended.
Can you assign an offer?
No
Can you assign an option?
Yes
What are the general methods of accepting an offer?
1) full performance; 2) beginning performance; 3) promising to perform; 4) sending the wrong goods as an accommodation; and 5) being silent when custom allows silence to be considered an acceptance.
Consideration —
a bargained-for legal detriment.
When can past consideration be considered sufficient consideration for a current contract?
Only where the past consideration is expressly requested and there is an expectation of payment.
A communication will not be considered to be definite and certain enough to be an offer if it is for the sale of goods and:
is missing a quantity term
A revocation generally is effective when __________, and an acceptance generally is effective when _____________.
received; dispatched
Does a merchant’s firm offer require consideration?
No
An offer for a bilateral contract can be accepted by:
A promise to perform or the beginning of performance
Under Article 2, when an offeree proposes additional or different terms during acceptance, what will the court apply to determine whether the additional or different terms become part of the contract?
The battle of the forms provision
A vague term in a contract can be cured by:
partial performance
