Contracts Flashcards
The ingredients for a valid contract are _____
TACO: T – Definite TERMS, express or implied A – ACCEPTANCE of terms C – CONSIDERATION O – OFFER inviting acceptance
When asserting a strict products liability claim, P must prove that a ____ dangerous defect in the product proximately caused a physical injury:
DIM
D – DESIGN defect
I – INADEQUATE warning
M – Mistake in the MANUFACTURING process
Strict products liability is imposed on a regular seller of a _____ product:
DUD
D – DEFECTIVE, and an
U – UNREASONABLY
D – DANGEROUS product
_____ can use the following defenses against a breach of warranty claim:
G.P.S. LAMP G – GOVERNMENT military contract defense P – Federal PREEMPTION S – STATUTE OF LIMITATIONS L – LACK of timely notice to a seller A – ASSUMPTION of risk (can be asserted against any PINE claim) M – Unforeseen MISUSE of a product P – Lack of PRIVITY of contract
A P’s claim against a seller for a defective good can be based on one or more overlapping but different ____ theories of liability:
PINE
P – Torts theory of strict PRODUCTS liability
I – Contract theory for breach of IMPLIED warranty
N – Torts theory of NEGLIGENCE
E – Contract theory for breach of an EXPRESS warranty
Express warranties are _____
SAD:
S – SAMPLE or model, which is the basis of the bargain
A – Written or oral AFFIRMATION of fact or promise made by the seller relating
to the goods
D – DESCRIPTION of the goods in advertisements, brochures, or catalogs
A sales contract contains_____ warranties:
M FEET M – Warranty of MERCHANTABILITY F – Warranty of FITNESS for a particular purpose E – Warranty against ENCUMBRANCES E – EXPRESS warranties T – Warranty of TITLE
Remedies available to a buyer are _____
CID’S WAR:
C – COVER
I – INCIDENTAL & consequential damages
D – DAMAGES for lost benefit of the bargain, or for the price paid S – SPECIFIC PERFORMANCE on a contract for unique goods
W – Breach of WARRANTY
A – ACCEPTANCE revocation
R – REJECTING non–conforming goods
Remedies available to a seller are _____
SPARKLE: S – STOPPING goods in transit P – Suing for the entire contract PRICE A – Demanding ASSURANCES R – RE–SELLING goods to another buyer K – KEEPING part of a breaching buyer’s deposit, never more than $500 L – Suing for LOST Profit E – EXERCISING the right to reclaim goods delivered to the insolvent buyer
_____ and _____ affect risk of loss:
SOAL–V and SORE–V affect the risk of loss:
SOAL V – SALE ON APPROVAL LATE VESTING (goods held by the buyer are not subject to claims of the buyer’s creditors)
SORE V – SALE OR RETURN EARLY VESTING (title and ROL vest immediately in the buyer, even though the buyer has a right to rescind the K)
If a sales contract is silent on a topic, the UCC implies the following ____ rules:
CIDER
C – Seller is not obligated to extend CREDIT to the buyer
I – Buyer has the right to INSPECT the seller’s tendered goods (except no right
to inspect when the transaction involves a bill of lading)
D – Seller’s tender of DELIVERY is implied to be at seller’s place of business,
unless both parties know that the goods are located elsewhere
E – Buyer and seller must EXCHANGE performance concurrently
R – RISK OF LOSS is on the party in the best position to bear that risk
Exceptions to the Statute of Frauds requirement are _____
SWAMP: S – Contracts for SPECIALLY manufactured goods W – WAIVER A – Judicial ADMISSION of contract M – “MERCHANT MEMORANDUM” P – PART PERFORMANCE
A _____ clause materially alters an offer if it would cause surprise or hardship to the offeror if the offeror was not made aware of its existence:
J STRAW
J – Bestowing JURISDICTION on a particular court, or requiring offeror to
consent to jurisdiction in particular state
S – Shortening the STATUTE OF LIMITATIONS to sue for non–conforming
goods
T – Limiting TORT liability or limiting a buyer’s right to sue for consequential
damages
R – Altering UCC rules for RISK OF LOSS
A – Adding an ARBITRATION CLAUSE (unless customary to do so in the
trade)
W – Adding a clause negating a WARRANTY (e.g., one of merchantability or
fitness)
Additional terms will not be added to the contract when _____
OCAN:
O – The offeror OBJECTS to additional terms within a reasonable time
C – The offer expressly CONDITIONS the agreement on accepting the terms in
the offer as they are
A – The additional terms materially ALTER the offer N – Either or both parties are NON–MERCHANTS
____ limits the Perfect Tender Rule:
ICOP
I – INSTALLMENT contracts
C – Timely delivery was COMMERCIALLY IMPRACTIBLE by an event not
contemplated by the parties.
O – Delivery in good faith, OBJECTIVELY and reasonably believing the goods
would be acceptable to the buyer
P – PRIOR TO DELIVERY DATE set forth in the contract, conforming goods
are delivered to replace the nonconforming goods
Eat a ______to recover in quasi contract
PEAR:
P – Plaintiff’s good faith PERFORMANCE of services
E – Plaintiff’s EXPECTATION of compensation;
A – ACCEPTENCE of the services performed; and
R – For the recovery of REASONABLE value of the services performed
An offer expires when it gets______
TIRED:
T – Reasonable TIME after an offer is made, or after expiration date expressly stated in an offer
I – Mental INCAPACITY or death of offeror or offeree
R – REVOCATION of an offer communicated to an offeree before acceptance
E – EXPRESS or implied rejection communicated to offeror
D – DESTRUCTION of the subject matter of the offer or intervening illegality terminates an offer by operation of law
Options can _____ by:
DIE:
D – DESTRUCTION of subject matter
I – Intervening ILLEGALITY
E – EXPIRATION of a stated option time extinguishes the option
Generally, contracting parties are free to modify a 3rd party beneficiary (3PB) K, unless, prior to receiving notice of the K modification, the 3PB got _______
MAD:
M – MANIFESTED an assent called for in the 3PB K, at the request of one of the contracting parties (i.e., accepted a K offer arising from the 3PB K) A – Commenced a breach of K ACTION against the promisor, or
D – DETRIMENTALLY relied on the K
Contract assignments may involve the ________
ADA
A – ASSIGNMENT of a contractual right to collect money owed under the K
D – DELEGATION of the performance required under the K
A – ASSUMPTION of liability for performing the K
A gratuitous assignment becomes irrevocable, and a second assignee prevails over a prior assignee of the contract when ________
J.P.N.C.
J – Recovers a JUDGMENT
P – Gets PAID, or
NC – Enters a NEW CONTRACT with the obligator
Absent express language in a K prohibiting assignment, K rights are freely assignable, except those of ________
SIR
S – Where a STATUTE expressly prohibits the assignment of a K right (but if that claim is reduced to judgment, it is assignable)
I – Where the assignment is coupled with an IMPROPER delegation of a duty under the K to a person unqualified to fulfill that duty
R – Where the assignment increased the RISK to the other contracting party
Statues prohibit assignment of a _________
WASP W – WORKER’S COMPENSATION payments A – ALIMONY or child support payments S – SPENDTHRIFT TRUSTS income P – PERSONAL INJURY or wrongful death clamp
Look at _______ to determine whether a breach is material or immaterial:
HAIL
H – HARDSHIP on breaching party if total material breach is declared
A – AMOUNT of benefit bestowed on non–breaching party
I – Whether breach was INNOCENT
L – LIKELIHOOD of full performance being achieved
Breach of contract defenses are ____________
I3 FU2MED & I S2IP: I – INFANCY I – INSANITY & INCOMPETENCY I – INTOXICATION F – FRAUD U – UNCONSCIONABILITY U – UNDUE INFLUENCE M – MISTAKE E – EQUITABLE DEFENSES D – DURESS I – IMPOSSIBILITY of performance S – STATUTE OF FRAUDS S – STATUTE OF LIMITATIONS I – ILLEGALITY P – PAROLE EVIDENCE RULE
Lack of contractual capacity arises from the _________
3 I’s:
I – INFANCY
I – INTOXICATION
I – Mental INCOMPETENCY
_______ is a fraud:
S – SCIENTER
I – D lied with an INTENT to defraud the P
I – P suffered an economic INJURY
R – P justifiably RELIED on D’s misrepresentation
M – D misrepresented a MATERIAL fact, which induced P to enter the K
Badges of constructive fraud ________
SHIRTS
S – SECRETLY done H – HASTILY done I – INADEQUACY of consideration R – A close RELATIONSHIP between the transferor and transferee T – TRANSFEROR continues to the control property S – SCIENTIFIC (knowledge) of the creditor’s claim, an inability to pay it after the transfer.
A unilateral mistake in calculating figures may allow the mistaken party the remedy of equity of rescission, if he calls the _______
COPS
C – The computational mistake was COMMUNICATED to the other party before that person changed his/her position in reliance on those mistaken figures
O – The mistake involved was one of ORDINARY negligence
P – The mistaken party gave PROMPT notice of the mistake
S – The mistake will impose SUBSTANTIAL hardship on the party if not corrected
The following _________ contracts must be in writing, subscribed by the party to be charged with the breach (i.e., must contain defendant’s signature):
MRS SLY
M – MARRIAGE contracts
R – REAL ESTATE contracts
S – SURETY contracts
S – UCC Article 2 SALES CONTRACTS for $500 or more
L – LEASES longer than 1 year
Y – Contracts not capable of complete performance within 1 YEAR
There are 4 ______elements for a constructive trust:
T CUP
T – TRANSFER of property in reliance on promise
C – Existence of CONFIDENTIAL or fiduciary relationship
U – UNJUST enrichment to transferee of property or to some third party, AND
P – PROMISE, express or implied, to hold property for plaintiff’s benefit, which promise has been breached
A ________ may render an illegal contract enforceable, based on:
THUG
T – TYPE of illegality & extent to which the public is harmed
H – HARM that forfeiture would cause if contract was declared unenforceable due to illegality; ct looks to see whether contract has been substantially performed
U – UNJUST enrichment (a windfall) to party asserting illegality defense
G – Relative GUILT of each party
The theory of impossibility frequently involves the _____
4D’S
D – DEATH
D – DANGER to life/ill health
D – DESTRUCTION of the subject matter of the lawsuit D D – DELAYS, temporarily causing performance to become impracticable or impossible
________ permits parole evidence:
OF MICE2
O – To establish an ORAL condition precedent to legal effectiveness of contract, provided it doesn’t contradict express term(s) of the contract
F – A party cannot invoke the Parole Evidence Rule to shield that party from allegations of FRAUD or Misrepresentation
M – To establish MUTUAL Mistake or claim for reformation of contract
I – To establish ILLEGALITY
C – To establish failure of CONSIDERATION
E – To EXPLAIN ambiguous or missing terms
E – To show that no ENFORCEABLE agreement was ever intended
Contract law does not allow damages recovery for _______
CAPS
C – To recover consequential damages, unless they were within the CONTEMPLATION OF BOTH PARTIES when the contract was executed
A – Damages that party could have AVOIDED
P – Damages for PAIN & suffering or emotional distress resulting from a breached contract, even if such damages were foreseeable
S – SPECULATIVE damages aren’t recoverable (all damages must be proven within a reasonable certainty)
Generally, parties can put whatever terms they’d like into a K, except for ___________
PLUS
P – Terms that violate PUBLIC POLICY
L – Terms providing for an excessive amount of LIQUIDATED DAMAGES
U – Terms that are UNCONSCIONABLE
S – Clauses providing that one party can seek SPECIFIC PERFORMANCE in the event of a breach (the contract does NOT have to enforce these clauses)
Apply a ________ to a covenant restricting a former employee from competing:
TISSUE
T – TIME restriction must be reasonable (usually two years or fewer)
I – INABILITY of the employee to gain work elsewhere
S – The geographic SPACE/SCOPE of the restriction must be as narrow as possible (must only be to the extent necessary to protect the employer’s interest)
SUE – The employee services must be SPECIAL, UNIQUE, or EXTRAORDINARY
