Contracts Flashcards
When is revocation considered received?
When enters into physical possession of offeree.
Does not have to have actual knowledge of the contents, does not have to open the letter, as long as in physical possession.
- or if someone authorized by him to receive it
- or when it is deposited in some place authorized as the place for this or similar communications to be deposited.
Is Option K revocable? Does Mailbox rule apply?
Option k is NOT revocable!
Mailbox rule does not apply!
What is in a UCC K a non-merchant adds term in the acceptance?
Different terms are considered to be mere proposals to modify the contract. They do not become part of the contract unless the offeror expressly agrees.
If both parties are merchants, additional terms in the acceptance become part of the contract unless they materially alter the terms of the offer, the offer expressly limits acceptance to the terms of the offer, or the offeror has already objected to the terms (or objects within a reasonable time after notice of them is received).
UCC k between merchants acceptance with DIFFERENT (not additional) terms, what are the terms?
Between merchants, some courts treat different terms in an acceptance the same as additional terms;
Other courts apply the knockout rule (i.e., conflicting terms are knocked out and replaced by gap-filling terms under the UCC).
What is the knockout rule?
UCC between merchants
Under the knockout rule, conflicting terms are knocked out of the contract and gaps are filled by the UCC gap-filler provisions.
When there is a K for performance, how can you tell if it is unilateral or bilateral?
If there was a signed K to do something (fly a plane), it is BILATERAL => has already been accepted by signing.
unilateral if, I will pay you in you fly and you start flying
SOF Definition
Certain Ks must be created in writing signed by the party against whom you are enforcing it.
Common law - material terms + signed + price
UCC - indicate that K is made + quantity
Does Mortgage K have to be in writing?
YES, promise creating an interest in land must be evidenced by a writing.
This includes not only agreements for the sale of real property, but also other agreements pertaining to land, such as a mortgage contract.
note: does not apply to
- getting a broker to buy house
- k to build a house
To to calculate 1 year term for statute of frauds Ks?
The 1 year starts running form the date of K is signed, not from the beginning of performance.
ex: bill build a room within a month in 2 years => SOF!
Is a K enforceable against a drunk person? 🍺
depends how drunk:
generally, drinking and entering K is OK, unless:
The party is so intoxicated that the party does not understand the nature and significance of his promise.
What must merchant memo confirming sale contain to get around SOF problems?
must be 2 merchants, and
(i) quantity,
(ii) the signature of the party to be charged, and
(iii) a writing sufficient to indicate that a contract was formed
What degree of specificity does SOF require
- requires to reasonably describe the subject matter, no need to specifically describe the property etc.
When does a K HAVE TO have price to be valid?
- common law issue (no good/UCC)
- subject to statute of frauds (property, marriage, 1+ year, executor, surety)
CHECK THIS - HOW ABOUT CL ORAL K NOT SUBJECT TO SOF
UCC - no price ok - gap fillers.
Does getting around fo parol evidence rule automatically make you a winner int he action?
Not, at all, only admissible evidence.
How can you avoid pre-existing duty rule?
Modifying the original deal, even a tiny bit.
What is and what is not enough consideration to discharge an existing debt with creditor?
CONSIDERATION
- payment in another medium (work instead of cash)
- payment before maturity or
- payment to to one other than the creditor
- partial payment when there is a dispute if/how much is owed
NOT CONSIDERATION
- paying less money than is due
- unforeseen difficulty to be able to pay
Can an unforeseen extreme difficulty to perform serve as a consideration for modification of K?
Yes, (ex: asking for more money if find out the job is 3 times harder and that was not anticipated).
Modern view permits modification without consideration if the modification is fair and equitable in view of circumstances not anticipated when the contract was made
applies only if the contract has not been fully performed on either side
Pre-existing duty to third parties.
A duty is a preexisting duty only if you try to use it against the same person whom you already owe the duty.
Otherwise, can use the same performance to contract with a number of different people as long as you get something from them in return (obtain a consideration 🤓)
Promissory Estoppel
> the promisor must reasonably expect that its promise will induce reliance,
> P does rely
> promise will be enforceable only to the extent necessary to prevent injustice.
(check only if no consideration)
Parol Evidence rule
Bars stuff before the K that 1) contradicts the terms of K, 2) wants to add new extrinsic stuff to a completely integrated K - one that shows that parties intended for it to be a final and exclusive manifestation of parties’ understanding.
When is restitution not available?
Usually, when there is a valid K signed. To decide if there is unconscionability, we look at the K at the time it was formed, not that it became unjust later.
Impracticability due to necessity
Serves as an excuse not to perform => if a person is necessary for you to perform our duties, their incapacity to work with you may excuse your performances (photograph).
Note: if delay from incapacity is mot material, may not fully excuse, but may serve to suspend, not discharge parties duties to perform (if person you wanted to take pictures of is sick, may get more time to finish the job).
The TEST for a finding of impracticability is that the party to perform has encountered:
(i) extreme and unreasonable difficulty and/or expense; and
(ii) its nonoccurrence was a basic assumption of the parties. (NOTE - CAN BE AN EXTREME HEALTH ISSUE)
when can trade-usage (industry standard) get looked at to interpret K terms?
Priority when interpreting K terms:
- how parties behaved previously in the same transaction.
- parties previous dealings
- how industry deal with such situations usually => courts almost always allow this.
> will be admitted even if there is a completely integrated k
> UNELSS it cannot be reasonably reconciled with K express terms.
when is it reasonable to ask for written reassurance of K performance?
There must be an insecurity related to other party’s
- unwillingness
- inability to pay
Note: skyrocketing market price is not in itself enough to ask for assurance.
Illusory Promise
looks like it binds a party, but not a consideration cuz does not really cause any burden to the party.
Illusory:
> K saying a party can get out anytime he wanted until a date (May 13).
Not illusory:
> any limitation on party’s right to change his mind.
> offering alternative ways to perform
Can helping unconscious person create an implied K?
no - but can create bases for other action, such as restitution, because we assume that D would want care.
Action for deceit
making a misrepresentation to induce a person into a K
- must be based on false representation of fact about the car, cannot be mere puffery
- D knows that B might suffer injury
When can a money be inadequate remedy?
- when there is a K for someone’s life (pay mother 50 every month until she dies), cuz we do not know when mother will die.
Sale of goods, SOF exception
- Upon the seller’s conveyance of the complete property to the purchaser, the seller can enforce the buyer’s oral promise to pay.
- part performance - at least two of the following: payment (in whole or in part), possession, and/or valuable improvements.
- accepted and paid for - enforceable only as to the stuff accepted, if only half was shipped, partially enforced.
- judicial admission
- custom-made goods
- confirmation merchant memo if both merchants, had quantity, and no written objection within 10 days.
part performance for the sale of lands
under the part performance doctrine, conduct that unequivocally indicates that the parties have contracted for the sale of land will take the contract out of the Statute of Frauds
2/3
Installment k performance
In an installment contract, an installment can be rejected only if the nonconformity substantially impairs the value of that installment.
Moreover, the installment contract as a whole is deemed to be breached only if the nonconformity substantially impairs the value of the entire contract.
must give time to cure if not substantially impairing
Where does it matter that SELLING party is merchants?
- firm offer
- battle of the forms (both)
- confirmation (both)
- implied warranties
When can a third party beneficiary sue the obligated party?
- creditor can sue
- if it was a gift, cannot sue
obligated party can bring any defense against third party suit he could have against original contracted person
when is third party beneficiary right vested so that the original k cannot be canceled or reformed?
3 scenarios:
- 3d party is asked to agree to the initial contract and does (learns and assents)
====> be careful here: sending a check to be paid is enough to vest the right when 3d party had a k with one of the parties before they formed the beneficiary k
- learns about the K and detrimentally relies on it (learns and relies)
- 3d party sues to enforce rights (learns and sues)
Can a person accept the offer by conduct without knowing of the offer
NO, must know before performing
ex: finding a dog and seeing an add for money => not acceptance, cuz did not know of the offer.
when does usually time lapse to accept an offer
- stock options
- service providers
==> have to move on after a reasonable time, cannot keep it open for a long time.
after saying no, can offeree change his mind?
No, if he agrees later, this is a counteroffer.
what if you put down a wrong address for mailing acceptance?
- Mailbox rule does not apply: your acceptance is effective upon receipt, not dispatch.
- note: if you acceptance gets lost in mail, it is still a valid acceptance under MB rule
can you still accept not-option (firm) k if you have learned that seller already sold it to someone else.
NO, this functions as a revocation .
Indirect revocation
offeree learns that it is sold to someone else from a reliable source.
Does calling not picking up matter when you are trying to accept an option K before the day.
NO!
Can’t pick promissory estoppel if
do not see detrimental reliance
“I’ll pay you if someone else does not”
this is SURETY k that has to be in writing cuz SOF
Note: there still had to be consideration: assured party must do something. (check this and study)
what is material change?
any change to the offer that affects
money,
liability,
remedy
for breach of K.
what if UCC offeree makes acceptance CONDITIONAL on % of additional term
this is treated by a counteroffer (UCC rule that K is formed and additional material change is out does not apply)!
I accept only, provided, on the condition that you agree ===> this is counteroffer, not acceptance under UCC.
this is not a proposal, this is demand to agree to new stuff => treat as rejection and counteroffer
do we need consideration for promissory estoppel?
NO, just detrimental reliance. this is substitute for consideration.
surely k v. normal promise to pay
Surety - I am responsible to pay you if G does not pay, so there will be no nonpayment pay, so there will be no debt (co-signer)
Not-surety contract - son ALREADY owed debt, mom says, she should pay soon, if you son does not pay the she will pay. => not surety, just contract to pay someone else’s already existing debt.
When is mutual mistake grounds for recession?
when if does to the heart of the bargain. with get to the heart of the issue.
10-day exception to statute of frauds
is merchant within reasonable time sends a written confirmation of a oral agreement, this binds the other one immediately if does not reject within 10 days, must be signed.
S sends wrong goods
=> acceptance + breach
B has 3 options:
1) accept and pay the price
2) reject and sue for damages
3) accept in part, reject in part
unless notice of accommodation
what’s non-breaching party’s remedy under UCC
cover price - k price
if sale of goods k, S breaches and sends half of the stuff, B takes the half and covers for the rest, what must B pay S?
(S breaches and sues)
B must pay S the full price for the half she accepted MINUS the difference in cover price and k price FOR THE COVERED HALF.
who can raise statute of frauds defense?
parties to the K, if both parties agree and in court do not want to raise SOF defense, that is fine.
3d party beneficiary cannot raise a SOF issue cuz not a party UNTILL 3D P RIGHTS VEST.
Parol Evidence Rule Exceptions
- K was formed
- Trade Usage
- Industry practice
- CONDITION PRECEDENT
- course of dealing between parties
- correct a clerical error
- interpret vague terms
- partially integrated k - careful, this is only available when you are adding stuff to k, not contradicting it, so if the k says anything about this term, or says “k is limited to terms herein” do not consider this expectation.
anticipatory breach
if you hear them clearly saying that they are going to breach (ex: if do not pay more money, I will not work) => you can immediately sue for damages and fire someone else to do the work.
what if they change their mind and say ok, I will perform => may be ok if the other party has not relied of the anticipate breach (like hire someone else)
Compare => asking for adequate assurances if there is just doubt that the party may breach (cannot sue yet)
Impossibility/impracticality
has to be a complete impossibility, usually acts of god
does assignment/delegation have to be in writing?
NO
Are assignments revokable?
gratuitous - REVOKABLE (fine but revokable)
- if i decide to assign my right to a car to my cousin as a gift, then the car comes and I decide to keep the car, this effectively revokes the assignment as a gift.
consideration - irrevocable
