Contracts Flashcards
Applicable Law:
Article 2 of the Uniform Commercial Code (UCC) governs all contracts for the sale of goods. Goods are defined as all things that are movable. The common law governs all contracts other than those for the sale of goods. The predominant thrust of the contract determines which law governs.
Formation Requirements:
A valid contract is formed when there is: 1) mutual assent (an offer and acceptance of that offer by the other party); 2) adequate consideration; AND 3) no defenses to formation.
Offer and Acceptance:
An offer is 1) a manifestation of intent to contract by one party, 2) with definite or reasonably certain terms, 3) that is communicated to an identified offeree. Acceptance is a manifestation of assent to the terms that mirrors every term of the offer.
Consideration:
1) Bargained-for exchange involving legal value. 2) A contract requires consideration on both sides. 3) One promise can be consideration for another promise.
Statute of Frauds (Writing requirements):
must be 1) one or more writings signed by the party charged; 2) reasonably identify the subject matter; 3) indicate a contract has been made and state the essential terms with certainty; 4) which terms are essential depend on the circumstances; 5) if the writing does not include essential terms, extrinsic evidence may not be submitted to supply them.
Exceptions: 1) full performance, or partial performance on a land contract with 2/3: a) payment, b) possession, or c) valuable improvements; 2) acknowledgement in pleadings; or 3) estoppel.
Exceptions to Parol Evidence:
Court will permit evidence: 1) to correct a clerical error, 2) to establish a defense against formation (e.g., condition precedent); 3) to interpret vague or ambiguous terms outside the plain meaning rule; and 4) to supplement a partially integrated writing. Parol evidence does not apply to subsequent agreements
Breach (Material v. Minor):
If a promisor is under an absolute duty to perform, failure to perform is a breach. The nonbreaching party must show that he is willing and able to perform but for the breaching party’s failure to perform. If oblige has not received the substantial benefit of his bargain, the breach is considered material. If the breach is material, the nonbreaching party may immediately sue for damages.
Estoppel:
If a defendant’s conduct or promise foreseeably induces plaintiff to change a position in reliance on an oral agreement, courts may use the doctrine of estoppel.
Equitable estoppel is also available when there has been a fraudulent misrepresentation, where the speaker knew the assertion was untrue.
Modifications:
Under common law, modifications must be supported by consideration. Past performance or performance of a pre-existing duty owed to a party is not treated as adequate consideration. EXCP: 1) an addition or change in performance, OR 2) a fair and equitable modification due to significant changed circumstances while the contract is still executory.
Frustration of Purpose:
Performance is discharged if 1) a party’s principal purpose is frustrated without fault, 2) by an unforeseeable superseding event, and 3) both parties knew the principal purpose from the outset.
Impracticability:
Performance is discharged as impractical when: 1) event occurs after formation, 2) that is unanticipated by both parties, and 3) makes performance extremely and unreasonably difficult or expensive. Mere increase in price is insufficient.
Anticipatory Repudiation:
the duty to perform is excused if there is an anticipatory repudiation by either party, where a party unequivocally communicates that she is unable or unwilling to perform.
Retraction: May be retracted unless the aggrieved party has: 1) cancelled, 2) materially altered, or 3) considered the repudiation final.
Damages: The non-breaching party may: 1) treat the contract as final and sue for breach, 2) treat the contract as discharged, 3) wait until performance is due and sue, or 4) urge the party to perform.
