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1L Fall > Contracts > Flashcards

Contracts Flashcards

1
Q

Contract (R2d 17)

A

Parties are committed to their duties and to each other, and the promises are worthy of legal consequences

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2
Q

Purpose of contract law

A

To protect parties’ expectations

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3
Q

Mutual assent

A

Parties agree to something and the same thing, determined objectively; consensual commitment

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4
Q

Objective view for mutual assent

A

The promisee takes the manifestations of the promisor at face value for what they reasonably appear to mean UNLESS they knew or should have known otherwise (jokes, drinks, known liars)

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5
Q

Duty to read

A

Parties have a duty to read their agreement (Ray v. Eurice Bros)

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6
Q

Offer and acceptance (R2d 18)

A

Each party intends for their promise to have legal consequences and makes a promise or begins/renders performance

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7
Q

Offer (R2d 24)

A

Manifestation of a willingness to enter into a bargain, so made as to justify another person in understanding that assent is invited and will conclude the bargain

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8
Q

Advertisements as offers

A

Advertisements are only offers if they are clear, definite, reasonable, and invite assent to conclude the bargain (Izadi v. Machado (Gus) Ford)

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9
Q

Offers are revoked upon:

A

Death/incapacity, revocation, information from a reliable source that offeror took action inconsistent with the contract (Normile v. Miller), counteroffer, lapse of time

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10
Q

Definiteness rule (R2d 33)

A

Terms must be reasonably certain to determine breach or craft a remedy

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11
Q

Option contract (R2d 87)

A

Option contract must (1) be in writing, (2) be signed by the offeror, (3) recite purported consideration, and (4) be proposed on fair terms

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12
Q

Option contracts (common law)

A

Recited consideration is not enough; actual consideration is required (Berryman v. Kmoch)

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13
Q

Firm offer (UCC 2-205)

A

A firm offer is an offer (1) by a merchant (2) to buy or sell goods (3) in a signed writing (4) with assurances it will be held open (5) not to exceed 3 months

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14
Q

Acceptance (R2d 50)

A

Manifestation of assent to the terms of the offer in a manner invited or required by the offer

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15
Q

Mirror image rule

A

Acceptance must be a mirror image of the offer

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16
Q

Mailbox rule (R2d 63)

A

The time and date of acceptance is determined by dispatch (exception: option contract acceptance determined on receipt)

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17
Q

Bilateral contract (R2d 56 and 32)

A

Formed when promises are exchanged; it’s assumed that an offer is bilateral and can be accepted either by return promise or performance

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18
Q

Unilateral contract

A

Formed and accepted upon completion of performance

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19
Q

Revocability for unilateral offers

A

R2d 45: Offeree’s beginning/tendering performance renders the offer irrevocable
Common law: Substantial performance renders the offer irrevocable (Cook v. Coldwell Banker)
Old Brooklyn Bridge rule: Offer revocable any time prior to full performance
UCC: Firm offers by merchants made in writing are irrevocable

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20
Q

Browsewrap

A

Actual or constructive notice of terms and conditions must exist for them to be accepted (Hines v. Overstock.com)

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21
Q

Clickwrap

A

Assent requires notice, an opportunity to review the terms, and action by the buyer (Feldman v. Google)

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22
Q

Shrinkwrap

A

Majority view: Seller makes the offer by shipping and buyer accepts by keeping the goods (DeFontes v. Dell; ProCD v. Zeidenberg)

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23
Q

Additional/different terms under common law

A

Normally, additional/different terms are a counter-offer; if parties start performing, the last form on the table at the time of performance governs (last shot rule) (Princess Cruises v. General Electric)

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24
Q

Preliminary negotiations (R2d 26)

A

Preliminary negotiations are not offers (Lonergan v. Scolnick)

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25
Q

Agreement to agree

A

One or more terms left open to be decided later; look to whether the agreement is too indefinite to enforce or whether court can imply missing terms; court can’t imply missing terms if they are essential (Walker v. Keith)

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26
Q

Formal contract contemplated

A

Not obligated before parties agree to be bound (except when necessary to prevent injustice - reliance on option contract)

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27
Q

Letters of intent

A

Some cases find that letters of intent give rise to mutual obligations to continue negotiations in good faith (Quake Construct. v. American Airlines)

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28
Q

Consideration (R2d 71, 76)

A

Bargained-for exchange; reciprocal inducement

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29
Q

Mixed motives (R2d 81)

A

Consideration exists as long as one of the motives is bargained-for

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30
Q

Enforcement of bad bargains

A

Inadequate consideration is consideration, but grossly inadequate consideration might mean no bargain at all or a lack of mutual assent

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31
Q

Past consideration

A

Past consideration is never consideration (Plowman v. Indian Refining Co.)

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32
Q

Recited consideration

A

This alone is not consideration (Dougherty v. Salt)

33
Q

Conditional gifts

A

These don’t qualify as promises because there is no consideration (Tramp/coat scenario; Plowman v. Indian Refining Co.)

34
Q

Nominal consideration

A

Doesn’t count as adequate consideration, except for option contracts in a restatement jurisdiction

35
Q

Modification (R2d 89)

A

A promise modifying a duty is binding: (1) if the modification is fair and equitable, (2) to the extent provided by statute, (3) to the extent justice requires enforcement; pre-existing duty rule: New promise must be supported by consideration unless made in light of unforeseen circumstances (Alaska Packers’ Ass’n v. Domenico)

36
Q

Modification (UCC 2-209)

A

Agreements modifying a contract for sale of goods don’t need consideration, but there is a duty of good faith for all transactions and a duty of fair dealing on merchants

37
Q

Promissory estoppel/detrimental reliance (R2d 90)

A

(1) Express or implied promise, (2) reasonable and foreseeable reliance on the promise, (3) injustice results if promise not enforced, and (4) limit remedy if necessary to return promisee to status quo; charitable subscriptions don’t need reliance

38
Q

Promissory estoppel for commercial promises (R2d 87(2))

A

An offer may be irrevocable if it induces substantial reliance, even if there is not an explicit promise to not revoke; Traynor: An offer reasonably relied upon is irrevocable; Learned Hand: An offer is not a promise until accepted and promissory estoppel shouldn’t apply to commercial spaces

39
Q

Promissory restitution/material benefit rule (R2d 86)

A

Promise that comes after a benefit received; promisor must be the recipient of the benefit; promise made in recognition of a benefit previously received

40
Q

Quasi-contract/unjust enrichment

A

(1) Plaintiff confers a benefit to the defendant, (2) defendant knew of the benefit, (3) defendant accepted or retained the benefit, and (4) it would be unjust for the defendant to retain the benefit without paying fair market value; don’t award officious intermeddlers and good samaritans

41
Q

Parol Evidence Rule

A

In writing, ICE (integration, complete integration, exceptions), four corners approach, Corbin approach

42
Q

Reasonable expectations rule

A

A non-bargained-for term should be interpreted more in line with the reasonable expectations of the non-drafting party

43
Q

Williston approach/four corners approach to interpretation

A

Can only look outside the document for interpretation only if there is a facial/patent ambiguity; if writing is partially integrated, allow extrinsic evidence to prove consistent, additional terms; merger clause is conclusive evidence of complete integration

44
Q

Corbin approach/restatement approach to interpretation

A

Allow extrinsic evidence to establish integration, to show latent ambiguities, and to interpret patent ambiguities

45
Q

Exceptions to PER

A

(1) To interpret ambiguous terms, (2) to show invalidity defenses, (3) collateral agreements, (4) later agreements, (5) conditions on the agreement, (6) reformation of the contract

46
Q

Implied-in-fact terms

A

Court may insert term that parties omitted but that can reasonably be implied from the circumstances (Wood v. Lucy, Lady Duff Gordon)

47
Q

Implied-in-law terms

A

Court inserts a term to give legal effect to the contract; implied term to negotiate in good faith

48
Q

UCC gap-fillers

A

Court can imply terms from UCC unless the parties clearly intended to override the gap filler; include price, quantity, reasonable termination notice, time and place of delivery, time and place of payment

49
Q

Express warranties (UCC 2-313)

A

(1) Not mere puffery, (2) must form the basis of the bargain, (3) warranty can’t be disclaimed; may turn on application of PER

50
Q

Implied warranty of merchantability (UCC 2-314)

A

(1) Seller is a merchant who regularly sells these kinds of goods, the goods (2) conform to an ordinary buyer’s reasonable expectations and (3) the goods are in good working order and not defective for their ordinary and intended use; may be disclaimed but must specifically mention merchantability and, if written, be conspicuous

51
Q

Implied warranty of fitness for a particular purpose (UCC 2-315)

A

(1) Seller must know or have reason to know of the buyer’s particular purpose, (2) seller must recommend a particular product to suit that purpose, and (3) the buyer must rely on the seller’s skill and judgment when making the purchase; disclaimer must be in writing and conspicuous but can be broad

52
Q

Common law warranties

A

Implied warranty of habitability or workmanlike construction; don’t usually extend to subsequent purchasers

53
Q

Status defenses

A

Minors (except for necessaries) and mentally incapacitated parties; these void the bargain

54
Q

Duress (R2d 175)

A

Methods of pressure applied that would make an ordinary person buckle; involuntary assent coupled with no reasonable alternatives

55
Q

Economic duress

A

(1) One party involuntarily accepted the terms of another, (2) circumstances permitted no other alternative, and (3) such circumstances were the result of coercive acts of the other party; an alternative isn’t reasonable if it would cause immediate and irreparable loss to one’s economic or business interest

56
Q

Undue influence (R2d 177)

A

Extreme methods of pressure applied by a person in the unique position of making this person buckle; undue susceptibility with weakness of spirit in servient object coupled with undue pressure of excessive strength in the dominant subject; based on a trust relationship

57
Q

Misrepresentation (R2d 162, 164)

A

A contract is voidable when (1) one party makes an assertion that is not in accord with the facts, (2) the assertion induces assent, and (3) the recipient’s reliance is justified

58
Q

Fraudulent misrepresentation (R2d 160)

A

Requires intent and scienter: Intend assertion to induce the party to manifest assent and know or should know that the statement is not in accord with the facts; non-disclosure plus active concealment

59
Q

Material misrepresentation

A

(A) The misrepresentation would likely induce a reasonable person to manifest assent OR (B) the maker knows it would be likely to induce the recipient to do so

60
Q

Non-disclosure (R2d 161)

A

Non-disclosure of a fact known when there is (A) a duty to correct yourself, (B) a duty to correct the other party’s mistake, (C) a duty to correct the writing, or (D) a special relationship

61
Q

Unconscionability (UCC 2-302; R2d 208)

A

Procedural unconscionability (absence of meaningful choice for one party) coupled with substantive unconscionability (terms unreasonably favorable to the other party); used to prevent oppression and unfair surprise

62
Q

Public policy (R2d 178)

A

Term or agreement is illegal or the interest in enforcing it is outweighed by a public policy against enforcement

63
Q

Public policy and covenants not to compete

A

Noncompete is unreasonable if (1) restraint is greater than necessary to protect the employer’s legitimate interest; or (2) that interest is outweighed by the hardship to the employee and the likely injury to the public

64
Q

Mistake

A

(1) One or both parties have a basic assumption that is not in accord with the facts, (2) the assumption is the basis upon when the contract is made, (3) the mistake materially affects the agreed performance of the parties; mutual mistake is voidable by the adversely affected party unless he bears the risk of the mistake

65
Q

Unilateral mistake

A

(1) One or both parties have a basic assumption that is not in accord with the facts, (2) the assumption is the basis upon when the contract is made, (3) the mistake materially affects the agreed performance of the parties AND (4) it is unconscionable to enforce the contract or the other party had reason to know the mistake or caused it

66
Q

Changed circumstances

A

Impossibility, impracticability, or frustration of purpose

67
Q

Impracticability

A

(1) Occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made, and (2) he does not bear the risk of the occurrence of the event

68
Q

Frustration of purpose

A

(1) Occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made, and (2) he does not bear the risk of the occurrence of the event; (3) other party must be aware of the principal purpose

69
Q

Condition

A

A fact, the occurrence (or not) of which determines when and if a party must perform his obligations

70
Q

Constructive condition

A

Implied by courts to establish when the parties’ performance obligations are due in relation to one another

71
Q

Total breach (R2d 241)

A

Other party’s performance obligations are not due and the party has a right to cancel the contract and immediately seek relief for breach; nonbreaching party is discharged from obligations to perform

72
Q

Material breach (R2d 241)

A

Other party can suspend performance and request a cure; excuses further performance of a contract

73
Q

Partial breach

A

Other party’s performance obligations are still due, subject to reduction for damages caused by the partial breach

74
Q

Anticipatory repudiation

A

One party signals intent not to perform when obligations come due or circumstances change that raise doubts that the other party will perform; can be retracted prior to indication that it will be treated as a total breach; can request assurances

75
Q

Requesting assurances for anticipatory repudiation

A

R2d: Request doesn’t need to be in writing; assurances should be provided within a reasonable time
UCC: Request needs to be in writing; assurances have to be received within 30 days of repudiation

76
Q

Expectation damages

A

Benefit of the bargain; (loss in value + other loss) - (cost avoided + loss avoided)

77
Q

Reliance damages

A

Paying for receipts

78
Q

Limitations on damages

A

Damages must be (1) foreseeable, (2) proved to a reasonable certainty, and (3) subject to mitigation by the injured party

1L Fall (2 decks)

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