Contracts Flashcards by Joe Binder

Pneumonic?

Love For Dogs - Treat Every Rover Terrifically
-Law applies? UCC/common
-Formation issues: offer/acceptance/revocation/consideration
-Defenses: Capacity, Ambiguity, Mistake, Unconscionability, Duress, Statute of Frauds, etc.
-Terms: parol evidence, UCC terms/warranties, perfect tnder
Excuse: material breach, impossibility, frustration, conditions
Remedies: specific perf, expectation interest, liquidated damages
Third Party Problems: beneficiaries, assignment, delegation

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What law does UCC Article 2 apply to?

Contracts for the sale of goods

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What is a bilateral contract?

One where you accept by return promise OR performance

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What is a unilateral contract?

Can only accept by performance

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How do we determine whether there is an offer?

Objective reasonable person standard

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Does general advertising constitute an offer?

No. But can become an offer if very specific.

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Does an offer require a price?

Yes, under common law.

- No, under UCC.

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Does an offer require a quantity?

Yes, under UCC

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When does an offer terminate?

If not specified, after a reasonable time.

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When can offeror revoke?

-At any time prior to acceptance - but a revocation is only effective if the offeree is aware of it.

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What is the consequence of an offeree beginning to perform under a unilateral contract?

Offeror must allow a reasonable time for the offeree to complete performance. Note that mere preparation does not count as beginning performance.

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When is a revocation effective?

Upon receipt

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What is the effect of a counter offer?

Rejection of the offer

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What is the effect of a conditional acceptance?

Rejection of the offer and a counter offer

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What is the effect under UCC of including additional terms in your acceptance?

If the contract is between merchants, an additional term that is not a material change is incorporated as long as the other party doesn’t object within a reasonable time.

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What is the effect of incorrect performance on offer/acceptance?

It is simultaneous acceptance and breach.

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What is consideration?

Bargained for exchange of legal value. Courts do not question the adequacy of consideration.

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Is there good consideration for a partial payment of agreed upon debt?

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Is there good consideration for payment of time barred debt?

Yes, enforceable because viewed as a new promise.

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Is there a legal way to enforce a promise even if there is no consideration?

yes, promissory estoppel. Occurs where a promise creates a foreseeable detrimental reliance.

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Who does NOT have capacity to enter into a contract?

-Children
-intoxicated
-mentally incompetent.
All will have right to disaffirm

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What gives rise to defense of ambiguity/misunderstanding?

Both parties have a reasonable misunderstanding or there is a material ambiguity. Two Ships Peerless.

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What gives rise to a defense of mistake?

Both parties make a mistake re: the subject matter of a contract. Court can conclude that there was no contract.

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What gives rise to a defense of unconscionability?

Unfair surprise and oppressive terms - as tested at the time the parties enter into the contract

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Statute of Frauds Categories

MYLEGS | Marriage // Year + // Land // Executor // Goods of $500+ // Surety

Does a modified contract fall under SOF?

Only if the original contract did

What is the required writing under SOF? At common law and UCC

UCC: quantity and signature of defendant CL: all material terms

What is real property exception to SOF?

2 of 3 PPI: | Paid // Possession // Improvements

What is service contract exception to SOF?

Full performance

What is partial sale exception to SOF?

Partial sale portion is taken out of SOF

What is custom goods exception to SOF?

Substantial beginning takes out of SOF

What is confirmatory memo exception to SOF?

If both parties are merchants, a confirmatory memo by the shipping merchant to the receiving merchant is good enough if it specifies quantity and receiving merchant doesn't object

What is general parol evidence rule?

Court will not admit evidence of any prior or contemporaneous agreements to contradict final written agreement

What are the four exceptions to Parol evidence rule?

1. correct a clerical error 2. establish a defense against formation (e.g., fraud) 3. interpret a vague or ambiguous term in the final written agmt 4. add to a partially integrated writing

What are the three types of conduct that a party may use to address performance under a contract / fill in ambiguities?

1. Course of performance 2. course of dealing 3. trade custom

What is the implied warranty of merchantability? Who does it apply to?

- Applies to merchants who regularly deal in goods of the kind. - Warranty is goods must be fit for their ordinary foreseeable use

What is the implied warranty of fitness for a particular purpose? Who does it apply to?

- Applies to all - not just merchants | - If buyer has special purpose and is relying on seller to select it, the goods must be fit for that particular purpose

What is the key way to limit an implied warranty?

Add a disclaimer ("as is" or "with all faults")

Can seller limit remedies for express and implied warranties?

Yes, as long as they are reasonable

What is a shipping contract and who bears risk of loss?

- Where seller ships goods "free on board" or "FOB". | - Buyer bears the risk after the seller gets the goods to a common carrier

What is a destination contract and who bears risk of loss?

- Shipment doesn't say FOB / free on board | - Seller bears risk of loss until they arrive at a particular destination

In shipping scenario, how does merchant bear risk of loss? How about a non merchant?

Merchant bears the risk until buyer takes possession. Non-merchant only bears risk until he tenders the goods.

What is the perfect tender rule? Any exceptions?

- Under the UCC, seller is required to deliver perfect tender - the right goods in the right place at the right time. - Exception for Installment sales

Does perfect tender rule apply outside of the UCC?

No, seller only needs to deliver substantial performance

What are buyer's rights under a UCC contract where seller failed to deliver perfect tender? What are remedies?

1. Accept all goods 2. Accept some goods 3. Accept some / Reject some Remedies: return goods, get refund, or seek damages

What is the rule of anticipatory repudiation?

If one party to a contract announces their intention not to perform, the other party can cease his performance as well.

What is the rule of failure to give adequate assurance? What contracts does it apply to?

- UCC - If a party reasonably worries the other party will not perform, they may seek assurance. If the other party fails to assure, the requesting party can be excused.

Contracts: What is rescission?

mutual agreement to terminate the contract

Contracts: what is accord/satisfaction?

Agreement to accept different performance in future satisfaction of an existing duty

Contracts: what makes a contract impossible / impractical to perform?

A subsequent unforeseen event makes performance impossible / impractical (e.g. destruction of something nec'y for performance)

Contracts: what effect does death of a party have?

Gives rise to an excuse right of the decedent had special / essential skills. Otherwise, no excuse.

Contracts: what effect of a failure of a condition precedent or condition subsequent?

Gives rise to excuse right

Contracts: when does a party have a right to specific performance?

Very rarely - only applies to real property and specific goods. Only applies when monetary damages are insufficient.

Contracts - monetary damages - what is general rule?

Remedy is expectation damages.

Contracts - monetary damages - what are buyer's options if seller breaches a UCC contract?

1. cover contract // damages = cover price - original price 2. don't cover // damages = market price - original price 3. keep non-conforming goods // damages = value as promised - value as delivered

Contracts - monetary damages - what are seller's options if seller breaches a UCC contract?

1. good faith resale // damages = contract price - resale price 2. resale not in good faith // damages = contract price - market price 3. can't resell // damages = contract price

Contracts - are punitive damages allowed?

Contracts - when are liquidated damages allowed?

- Damages were difficult to estimate when entering into contract - the liquidated damages are a reasonable forecast of damages - not enforceable if it looks like it's meant to be punitive

Contracts - when are incidental damages recoverable?

always

Contracts - what consequential damages are recoverable?

Reasonably foreseeable. Calandrillo's Be Chatty Rule

Contracts - Assignment issues - who has rights when multiple assignments?

If Consideration: first in time prevails | No Consideration: last prevails

Contracts - delegation - who is liable for breach?

Both the delegate and the delagee

Contracts - delegation - who can delegate?

Most anybody - but not contract party with special skills relevant to performance