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
when breaching party sues
they can get the REASONABLE VALUE of services provided MINUS damages caused to non-breaching party.
even if — k said “will get paid only if completes all the work”
When there is part performance and both parties sue each other (breaching - to recover conferred benefit, non-breaching - for damages).
non-breaching party recovers expectation damages
breaching party does not recover anything if non-breaching party will end up spending MORE to get the k job done = even if breaching party has spent a bunch of money on the work (this does not matter how much they spent if non-breaching still has to pay more to get that k said, can mean that breaching party was stupid and did wasteful stuff).
Are a party’s duties discharged if the other party fails/delays performance for some excuse ?
Doctrine of constructive conditions
- only if MATERIAL breach
- if not material, duties are not discharged even if the other party breaches a little (give chance to cure)
Factors decide if breach is material:
- chances of curing
- how much breach affected party’s expectation of benefit
- are compensatory damages available/adequate?
TAKEAWAY RULE => non-material failure to preform in common law, does not discharge the k.
Modern approach to illusory promises
Courts tend to read in consideration as much as possible.
if there is any limitation on parties ability to deice not to preform, then it enough to not be illusory.
Ex: “I will pay $100 as soon as I am able to” is NOT illusory. other party must prove that S actually is able to perform but is not performing. (BOD)
what is an equitable estoppel?
Invoked to prevent a party from taking advantage of another party in an unfair way, often for fraud or fraudulent actions.
accord satisfaction
agreement to do different performance now, discharge duties later (the original duty is not excused until performance is complete). Until completed, party pay sue both under original or the accord.
Can partial payment of debt satisfy accord/satisfaction?
YES! NOTE: partial payment of original debt will satisfy accord/satisfaction if there is a genuine dispute re validity of the claim (amount of money).
what to check for if have a breaching party trying to collect for their partial performance?
- substantial performance (CL)
- divisibility (divisible parts, can get for the parts he did)
- restitution
What is a divisible k?
- The performance is divided into 2 or more parts under k
- the parts are equal
- paid for each part
in case of breach, breaching party can ask to get back the benefit for parts done
the breached party will have to pay this, but can subtract her damages for the rest of the divided units that P failed to perform.
does giving an option to the offeree to choose between options make the offer too vague?
NO!
when is a shuretyship promise fall under SOF?
- when it is promise to answer for the debt of another
- NO SOF if the surety person’s main objective is to serve his own interest (agree to pay contractors supply debt if he does not pay, so that the contractor can work on his house) => no SOF.
Marriage SOF
MUST BE IN WRITING
includes stuff to induce marriage by offering something of value
I will give you a house if you marry => sufficient consideration.
Note: will you marry me? - yes! => does not have to be in writing.
what land contracts do not fall under SOF
- k to build a house
- broker k
land sale k taken out of SOF
- full performance by seller
- part-performance by buyer
- 2/3 test by b
what will always take a k out of statute of frauds?
full performance by a party
Can a Confirmatory merchant memo be enforced against party who was not signed it
YES, if the other party knew, had a reason to know of the memo’s content and does not object within 10 days of receipt.
When does writing signed by party to be enforced against not required for SOF > $500 goods?
1) Performance (goods received and accepted or paid for)
2) Specialty made goods.
3) Admission in Court
4) Merchant confirmatory memo
When is SOF actionable?
When raised at the defense.
if not raised, is waived even if k actually violates SOF.
What can take a contract out of SOF?
Performance
> land sale: 2/3 rule (part or full payment, possession, improvements)
> Sale of goods rules
- Performance(goods received and accepted or paid)
- Specialty made goods.
- Admission in Court
- Merchant confirmatory memo
> Service (employment) contracts: full performance required
Equitable and Promissory Estoppel
> it would be unfair to allow D to win on technicality
> usually false and misinformation by the other party
Judicial admission
> party admits there was k in pleading or testimony.
Land sale k SOF nuances
Usually must be in writing.
No writing ok if 2/3 met
BUT: if it is an installment k (may every month to buy land) some payment and possession will NOT take it out of SOF and make k enforceable because can also be viewed as a lease.
offer v. solicitation of an offer
solicitation - need general ads through broad communicating media, bigger the reach, less likely to be an offer.
Ads, catalogs, even mailing with return shipping stuff are viewed as invitation for offers.
for PER to apply
need BOTH parties to intent that the writing be the final expression of their agreement.
Note: one party cannot randomly write something, sign it herself and say PER.
Condition precedent to effectiveness.
If a party says that before the written k, there was an oral agreement that the k would not become effective until an orally agreed condition occurred, all evidence regarding that oral understanding can come in.
Parol Evidence rule would not bar this.
contrast to condition precedent for performance => extrinsic stuff cannot come in (PER will block)
What happens if half performance (builds half the house) then the thing gets destroyed (not at anyone’s fault).
Duty to built is not discharged if destruction happens when the work is in progress.
> ok even if builder incures additional (unfair) costs
> courts may give more time to finish
NOT-BUILDING cases - if hired to remodel, paint, etc, and distraction happens after entering k, contract canceled => builder can sue for restitution for stuff done
Can a price quotation be an offer?
YES IF given in response to a specific inquiry.
The courts will look to the surrounding circumstances ro decide.
note: usually if you read an ad and then send an inquiry about the price of a specific item and the seller sends you a detailed info with price and quantity of the item,
=> offer
then you order => acceptance.
Can you rescind a k orally?
YES, even if the is in writing and falls under SOF, can rescind orally.
Contrast: cannot be modified orally if original was in writing unless oral agreement has been executed already.
what if there is no closing date on land sale k?
parties can postpone closing reasonably
UNLESS
there is “time is of the essence” clause
Are Requirement contract assignable under UCC?
Generally NO, UNLESS
The assignee acts in good faith not to alter the terms of the contract.
How to decide if UCC oral modification is enforceable?
> original K is under 500
> the complete sum AFTER modification is NOT over $500 (ex: goes from $400-450).
> Remember ANY UCC modification can be done without consideration, EVEN IF no merchants are involved.
UCC modification consideration and SOF rules
… apply to anyone, not just merchants:
merchant only matters for
- firm offer
- battle of the forms (additional terms may become part of k if merchants, but do not kill k for anyone, even for not merchants)
- confirmation
- implied warranties
Lapse by operation of law
An offer is terminated by death of the party. 😾
when is liquidated damages ok?
(i) damages are difficult to ascertain at the time of the making of the contract, and
(ii) the damages are a reasonable forecast of compensatory damages.
if you have to take a turn because of someone’s wrongful action and end up at someone’s property
Defense of necessity (still must pay for stuff you damaged in property).
Can a party transfer half of rights?
partial assignments are effective—an assignor may transfer some rights under the contract and retain others
Difference between doing something and promising to do something.
If A says “I will pay if you donate your cloths” => conditional k. A does not have to pay until you do not donate.
if A says “I will pay if you promise to donate clothes” => A has to pay when you promise (A’s performance is not conditional to you donating).
——note: if you do not donate, it will be a breach.
difference between rejection and agreement to rescind the offer.
If S sends acceptance => MB rule applies. Then S calls and rescinds the offer, B does not know about mailed acceptance, say OK. ===> there is valid k and no recession.
To have a valid rescission after sending acceptance. BOTH PARTIES must know that there was acceptance, and then AGREE together to cancel (rescind) their k.
UCC firm offer - merchant requirement. i
Only the promising party has to be a merchant, they both do not have to be.
If there is a k to pay debt + interest until certain date, then parties are gee to extend the due date and continue with he same interest, is this valid consideration?
YES, creates enforceable k, because after the certain date, debtors could not pay interest anymore, but agreed to pay interest - and other side agrees not to sue => this is a valid consideration.
an agreement to sell “as many calls as you desire” .. what is this?
NOT BINDING => This is illusory promise, take this as an invitation seeking offers!
The original “agreement” between the parties was nothing more than an invitation seeking offers.
It did not create a contract between the department store and the manufacturer because it was illusory—an agreement to buy only what is desired is not consideration.
The “agreement” probably does not even qualify as an offer. An offer must express a commitment to conclude a bargain on the offered terms. Absent some quantity limitation, a court would probably find the “agreement” here too vague to constitute an offer; otherwise, the manufacturer could be committing itself to sell more canoes than it can supply.
When is duty to deliver completed?
In a proper tender of delivery under UCC section 2-503, the seller must put and hold conforming goods at the buyer’s disposition for a time sufficient for the buyer to take possession.
The seller must give the buyer notice reasonably necessary to enable him to take possession of the goods.
Proper tender of delivery entitles the seller to acceptance of the goods and to payment according to the contract. [UCC §2-507]
Having made a proper tender of delivery at the place designated and having notified the rancher of his fiancée’s nonacceptance, the horse breeder has DISCHARGED his duty under the contract.
NOTE: When a party’s duty of performance is discharged, but the thing sold has not be taken, the other party is entitled to restitution of anything given to the seller for the not accepted thing.
what happens when in k for sale, S makes a valid delivery, but for some reason the benefitted party refuses to take it?
D’s duties to perform are discharged, but he will be unjustly enriched if keeps the money paid; therefore buyer k can sue for restitution and take back what he paid D for that item.
If there is an anticipatory breach, what moment FMV do we look at for damages?
Also, can non-breaching person cover?
we look at the FMV of the time the P learned of the breach, not at the time of performance.
Also, once she learned of the anticipatory breach, P can treat as total breach and cover or give S reasonable time to perform. IF CHOSE TO COVER - must be reasonable cover!!! cover does not have to be the cheapest, but cannot know of a perfectly good available cover, but go get e fancier, more expansive version.
Firm offer
> must be in writing
> gives time
> must be held open during the time stated
> if no time stated < 90 days
> must be given my a merchant
acceptance by implication
if painter rejects offer with counteroffer, then changes mind and comes and points house, and owner watches = => can argue acceptance of counteroffer by implication
Careful to language that rejects and makes a counter offer v. inquiry (negotiation)
😾
modern rule for common law modification
> fair and equitable without new consideration is OK
note: Chuck says that common law has caught up. so modern CL is fair and equitable.
NOTE is not available - still choose no consideration (traditional CL)
does POR apply to modifications?
NO
Defense as minor!
usually a very good defense !!!
BUT - exception for basic necessities (food, housing, medical emergency)
ex: kid is injured, does to hospital, doc says I will take care of you but you have to work for me for free for 3 years => NO MINOR DEFENSE !!!!
here => un conscionability will be the defense.
when choosing a damage
A breached k with B
1) B will recover full k price
2) B will recover cover - k price
pick 1 if B had already paid for k
pick 2 if B has not still paid or does not say if he did. 🙉
assignment/deliagation
all ks assignable and delegable unless
1) unique personal service ks
2) long term requirement ks
> can both be oral or in writing
can be gratuitous or for value
- gratuitous ks are revokable if no reliance
accord
new agreement between the parties already in contract
must call for a new type of obligation
does not have to be equal in value
does not discharge the original agreement, but merely SUSPENDS performance under the original agreement unless the accord is satisfied.
if accord is not satisfied, can sue under both. Accord does not discharge the original agreement until it is fully satisfied.
must give time until the accord performance date to sue.
minor breach
canNOT cancel the k
CAN sue for damages
condition precedent
careful between breach of k and not meeting condition
if condition to “get paid when start work on April 15” and does not start work on April 15, this is unmet condition.
not a breach, cannot get out of k, BUT if may be a breach of does not finish one time. CHECK THIS
if there is a time of the essence provision
USUALLY courts will enforce it, does not matter if it is not a material breach.
When can ad offers (flyers on school bulletin) be construed as offer (not invitation to deal)?
When the ad has some limiting language (first come first serve; to the winners of the competition), etc.
k to close and deliver possession on May 1, A wants to push back a few weeks.
this is only a PARTIAL breach and does not relieve the on-breaching party from duty to perform. B cannot get out of K, an must be ok with the delay.
Note: this only applies if there is no TIME IS OF THE ESSENCE or similar language in the k.
when you apply for assurances, do you have to keep performing?
No, you can suspend performance until you get an assurance.
Supervening event.
when existence of a thing is required of k performance, the destruction of that thing is a supervening event thta relates to a basic assumption of the k. This discharges all obligations and duties of all parties. But any benefit already conferred under the k can be recovered by RESTITUTION (quasi-k).
Note: restitution is NOT AVAILABLE for impracticability or impossibility (duties and obligations are discharged here, but no restitution)
what is a consideration for modifying a debt contract?
LOOK AT THE SURRENDERING PARTY => he must have a good faith belief that his argument is correct, but agrees to pay something (this creates valid consideration.
Impracticability
If due to changed circumstances, performance would be infeasible from commercial standpoint, promisor is excused from performing just as if it was impossible to perform, even though technically it is still possible to perform.
assignment of rights v third party beneficiary
assignment => A and B have a k, where A must pay B. Later, B tells A to pay C instead. - C is assignee. This can be irrevocable if C can show detrimental reliance.
Third party beneficiary. N tells A to pay C in the first contract signed. - this must vest to be irrevocable.
if the contract does not mention where stuff must be delivered..
seller does not have to get it to B’s door, all he has to so it make it available at his place of business.
ALSO, payment is due at the time B receives the goods
When can a repudiating party retract the repudiation?
as long as non-breaching party has not materially relied on repudiation or made clear to breaching party that she considers this a final repudiation
Cannot claim a reward if learned about it after finishing the task!
remember <3
exclusive output contract obligations:
S has obligation to use best efforts to supply B.
B has obligation so use best efforts to sell.
B cannot back out of k just because the demand went down.
constructive condition
not explicitly stated in the contract, but we imply, mostly stuff like B does not have to pay until performance is rendered and vice-versa.
but the implied condition of complete performance may be excused if substantial performance is rendered. if there is substantial performance, the other partly must fully perform. (like fully pay).
if a k requires payment before inspection
payment is not acceptance and B can still inspect and reject later
rescinding a k based on mutual mistake
mistake must be
- re basic assumption of the k
- have material effect on the agreed exchange
- not fair for adversely affected party to bear the risk (did not assume the risk).
basically, look for cases were both did not know and one gained unbargained advantage and the other suffered unexpected loss.
if S spends 50k more (150k) than k price (100k) to build a thing and unjustifiably breaches, can he get restitution for the 50k benefit conferred?
No, not if unjustifiable breach. Also, if S has already been paid the k price for the work he did => cannot recover in restitution at all.
If A says I will submit the bid if you choose my contract, is this consideration?
YES! Conditional promises are enforceable, but the duty to perform does not become absolute until the condition has been met or is legally excused.
such a bid is bargained for.
what do we look at to see if agreeing to pay less is a good enough consideration for modification?
we look if the party had a good faith belief that he owed less money.
Here has to be an honest dispute about the amount.
how is the non-assignment clause enforced?
A contract clause prohibiting the assignment of the contract will be construed as barring only the delegation of the assignor’s duties, not the assignment of rights.
is trade usage always admissible?
No, cannot come in to change meaning of the k is fully integrated.
Can come in to define terms, not change
merger clause
makes k fully integrated - says “this is the final expression of our agreement”
Can you supplement partially integrated k with parol ev.? How do you know it’s partial?
look at factors:
> writing was only one page,
> it did not include a merger clause (inclusion is strong evidence the parties intended the writing to be a full and final integration),
> and it did not specify a time of completion.
if partial => can use oral (parol ev.) to supplement, but not contradict
exception to incapacity rule
incapacitated person is still liable for necessities - food, shelter, medical - note: not the k price, bu the reasonable value
does 3d party beneficiary have to be explicitly named in the k?
No, k can have factors indicating intent to benefit 3rd party. Usually named, but not required
Can a party avoid the contract way after signing because of fraud or misrepresentation when signing it?
YES, the timing start when the buyer find out or should have known about the misrepresentation/fraud.
if a k is formed cuz of misrepresentation void on the outset?
NO, this k is not void, but is voidable
When can a trade usage come in in fully integrated contracts.
usually trade usage is viewed as an additional thing and can come in even if PER and fully integrated, UNLESS COMPLETELY NEGATES EXPRESS LANGUAGE OF THE K
note: trade usage can always come in => fully integrated crap does not matter, unless completely negates.
when can a reliance make an offer irrevocable?
> an offer for a unilateral contract
subcontractor’s bid to a general contractor.
If the offeror is seeking a bilateral contract in a circumstance other than that of a subcontractor, it would be extremely rare for the offer to be irrevocable due to detrimental reliance
firm offer
ONLY SELLER MUST BE A MERCHANT
MUST BE IN WRITING AND SIGNED
if there is an option k, when does it terminate?
when the option k time ends
> note: even if B expressly tells S that is rejecting the offer, it STILL REMAINS OPEN, unless S detrimentally relies on rejection.
if parties orally agree to sell a house then write a contract
k is formed when both agree - but becomes enforceable after signed writing, so B cannot back out after agreemnt but before the written thing.
exception to shipment k risk allocation
There is an exception, however, if the buyer has a right to reject the goods - S sends the wrong goods, risk does not shift.
In that case, the risk of loss does not pass to the buyer until the defects are cured or the buyer accepts the goods.
3rd party beneficiary rights vest
Vesting occurs when the beneficiary:
(i) manifests assent to the promise in a manner invited or requested by the parties;
(ii) brings suit to enforce the promise; or
(iii) materially changes position in justifiable reliance on the promise.
note: just learning about i is not enough
100k contract. builder does 80k work, then breaches. Owner spends 40k to compete work. How much restitution can b get?
100 - 40k = 60k
note we do not subtract from the spent, but the k price.
if B gets stuff and some is defective and says nothing, but sends money only for not defective stuff, did he properly reject?
NO!! To properly reject, the rejecting party must, within a reasonable time after delivery and before acceptance, reject the goods or NOTIFY the seller of the rejection
When can a k right be assigned?
basically anytime, can be after B fully performed.
evidence of course of dealing in completely integrated contracts
always available to supplement or explain
+ course of dealing
+ trade usage
+ course of performance
