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Contracts Flashcards

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1
Q

Termination of Offer

A
  1. Lapse (stated or reasonable time)
  2. Death or incapacity
  3. Revocation of offer by offeror (revoke before acceptance and communicate revocation to offeree)
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2
Q

Indirect Revocation

A

Offeror takes action inconsistent with the intent to go through with the offer and offeree learn of such action from a reliable source

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3
Q

Option Contract

A
  1. offer
  2. separate promise to keep open
  3. valid mechanism for enforcing the promise to keep open (i.e. consideration)
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4
Q

Reliance/Construction

A

Courts will hold offers open when the offeree has detrimentally relied on them

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5
Q

Firm Offer

A
  1. Offer made by a merchant
  2. In writing signed by the merchant
  3. Expressly stating it will be held open
    (valid for no longer than 3 months)
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6
Q

Bilateral Contract

A

A promise exchanged for a promise. Once promises are exchanged both parties are bound.

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7
Q

Unilateral Contract

A

Offer seeking performance in return.
Common Law- offeror is free to revoke until offeree has completed performance
Modern Law-Once performance has begun an option contract is created

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8
Q

Acceptance of Unilateral Contract

A

Acceptance is only effective by completing performance

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9
Q

Mailbox Rule

A

Acceptance by mail is effective upon dispatch if properly posted.

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10
Q

Mailed Offer and Rejection

A

Whichever reaches the offeror first controls

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11
Q

UCC Acceptance by Seller’s Shipment

A
  1. Promise to ship goods in conformity with offer
  2. Prompt or current shipment of goods in conformity
  3. Shipment of nonconforming goods (unless sent as an accommodation, then it is a counteroffer)
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12
Q

Battle of the Forms

A

Unless acceptance is expressly made conditional on assent to the additional or different terms, the nonconforming acceptance is an effective acceptance of the offer and a valid, enforceable contract is formed.

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13
Q

Parties to a Battle of the Forms

A

If one party is a consumer, then the additional terms are mere proposals and are not part of the contract unless offeror expressly agrees to the additional terms.

If both parties are merchants, then the additional terms are part of the contract unless (1) offer expressly limits acceptance to terms of offer (2) offeror objects to the additional terms within reasonable time OR (3) the additional terms would materially alter the contract.

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14
Q

Knock Out Rule

A

Omit both offeror’s original provision and the offeree’s differing provision

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15
Q

Legal Detriment

A

Whether promise is doing something he had a legal right not to do or forgoing some activity he had a legal right to do.

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16
Q

Illusory Promise

A

Promise of performance that leaves performance to the discretion of the promising party doesn’t constitute consideration

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17
Q

Gratuitous Transfers

A

Present intent to make a gift and actual or symbolic delivery

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18
Q

Past Consideration

A

A promise in exchange for something already given or performed is not supported by consideration.

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19
Q

Material Benefit Test

A
  1. Promisee conferred the benefit on the promisor AND

2. Benefit is material

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20
Q

Promissory Estoppel

A
  1. A promise
  2. foreseeable reliance
  3. actual reliance
  4. injustice without enforcement
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21
Q

MYLEGS

A

Contracts that fall within the statute of frauds:
Marriage
Year or longer to perform
Land
Executor or administration to answer for a duty of decedent
Guarantee or suretyship
Sale of goods over $500

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22
Q

Performance

A

A work around the statute of frauds. Part performance will make a land sale contract enforceable if there’s (1) payment of all or part of the purchase price (2) taking possession of the land OR (3) making substantial improvements to property.

If fully performed a one year contract will be enforceable, but if only partially performed it will not be enforceable.

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23
Q

Satisfying the Statute of Frauds

A
  1. Signed writing
  2. Merchant’s confirmation (2 merchants make oral agreement and 1 sends the other a written confirmation)
  3. Judicial Admission
  4. Partial performance
  5. Specially manufactured goods
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24
Q

Warranty of Title

A

Implied Warranty
Good title to the goods
Rightful transfer of the goods
No liens attached to the goods

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25
Q

Warranty of Merchantability

A

Implied Warranty

Goods fit for ordinary purpose for which they would be used

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26
Q

Warranty of Fitness for a Particular Purpose

A

Implied Warranty

Goods fit for a particular purpose buyer intend to use them for

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27
Q

Express Warranties

A

Any affirmation of promise or fact
Any description of the goods
Any sample or model

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28
Q

Missing Terms

A

Price-Reasonable price at time establish by the contract for delivery
Time-Reasonable time
Place-Seller’s place of business

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29
Q

Extrinsic Evidence

A

Can be used to fill gaps (i.e. supplement terms) and resolve ambiguities (explain terms).

Cannot be used to contradict terms

30
Q

Parol Evidence Rule

A

Extrinsic evidence can be used to explain or interpret terms and it can be used to supplement or contradict the written contract, unless the contract is completely integrated

Doesn’t apply to subsequent agreements, collateral agreements, and an attack on validity of written agreement.

31
Q

Mutual Modification

A

Both parties agree to different performance from originally required and difference is not a mere pretense of a newly formed bargain

32
Q

Unforeseen Consequence

A

Increased compensation can be given in exchange for same performance that has now become substantially more burdensome than reasonably anticipated when contract was formed

33
Q

Unilateral Mistake

A

Not an excuse for performance, unless:

  1. other party knew or had reason to know OR
  2. serious clerical error and reliance
34
Q

Mutual Mistake

A

Viodable by disadvantaged party when:

  1. mistake relates to material facts
  2. mistake made by both parties
  3. disadvantaged party didn’t bear risk of mistake
35
Q

Impossibility

A
  1. Performance is literally impossible for anyone to perform

2. Contingence that creates the impossibility arose after making the contract and was unknown/unanticipated

36
Q

Impracticability

A
  1. impracticability was unforeseen
  2. the risk was neither assumed nor allocated
  3. increased cost/burden of performance would now be far beyond what either party anticipated
37
Q

Frustration of Purpose

A
  1. principal purpose in entering the contract is substantially frustrated
  2. frustration was substantial in nature
  3. Non-occurrence of the event that cause the frustration was a basic assumption of contract
38
Q

Rescission

A

Both parties give each other consideration mid-performance to discharge the other’s duties

39
Q

Accord and Satisfaction

A

Obligee promises to accept substituted performance in satisfaction of the obligor’s duty and performance of the accord is completed, then the original duty is discharged. Consideration is required.

40
Q

Establishing Anticipatory Repudiation

A
  1. party makes a definitive statement that it will breach OR
  2. there is a voluntary act that renders party unable to perform
41
Q

Adequate Assurances

A

If reasonable grounds for insecurity exist, the insecure party can make a demand for adequate assurance of performance.

42
Q

Quantum Meruit

A

Breaching party may recover reasonable value of benefits conferred which will be reduced by damages caused by breach

43
Q

Right to Cure

A

Seller must give buyer reasonable notice of intent to cure and cure by the contract deadline

44
Q

Imperfect Tender in Installment Contracts

A

If substantially impairs value of this installment then the buyer can reject the installment but cannot cancel the whole contract. If not substantially impaired, then buyer has to allow seller opportunity to cure.

45
Q

Necessities for Minor

A

Viodable but merchant has the right to seek reasonable value of goods and services

46
Q

Mental Incompetency

A

Must be mentally incompetent at time of contracting. Must return any goods received and is liable for damages or reasonable value for use, unless the other party was aware of mental incompetency.

47
Q

Fraudulent Misrepresentation

A
  1. misrepresentation
  2. intent to mislead and knew or should have known of false statement
  3. material misrepresentation
  4. reasonable reliance
48
Q

Misrepresentation

A
  1. misrepresentation
  2. material
  3. reasonable reliance
  4. Negligent misrepresentation-reasonable care would have revealed misrepresentation
    innocent misrepresentation-good faith assertion that was not true
49
Q

Fraudulent Nondisclosure

A
  1. Nondisclosure was material to contract
  2. Reasonable reliance on nondisclosure
  3. Duty to disclose
50
Q

Remedies for Misrepresentation

A 
Avoidance-defense to contract claim
Rescission
Reliance damages
For Fraud and Non-Fraud: Live with contract and sue for benefit of the bargain
For fraud only: punitive damages
51
Q

Duress

A
  1. threat
  2. wrongful in nature
  3. no reasonable choice but to succumb to the threat
  4. Remedies-avoidance and restitution
52
Q

Undue Influence

A

unfair persuasion and other party was vulnerable to such persuasion.

remedies: voidable contract at option of aggrieved party and restitution damages

53
Q

Unconscionably

A

Procedural Unconscionably: Bargain process creates absence of meaningful choice for aggrieved party

Substantive Unconscionably: Contract terms unreasonably favor one party

Remedies: refusal of enforcement of the contract, excise the offending clause and enforce the remainder, limit application of offending clause to avoid unconscionable result.

54
Q

Public Policy

A

A contract will not be enforced if:

  1. subject is prohibited by law
  2. contract formed for the purpose of committing a crime
  3. violates certain/values or freedoms

Remedy: void or voidable at option of defending party

55
Q

Expectation Damages

A

Position he would have been in had the contract been performed. Cannot be recovered when:

  1. cost of performance greatly exceeds market value
  2. cannot be calculated with reasonable certainty
  3. damages are unforeseeable
  4. damages can be mitigated
56
Q

Reliance Damages

A

Restores aggrieved party to position before contract. Available when expectation damages are uncertain.

57
Q

Restitution Damages

A

Value of benefits conferred upon other party in transaction. Calculated in court’s discretion and as justice requires by the reasonable value or cost of benefits conferred or extent to which the other party’s property has increased in value because of the performance rendered. Available when other party hasn’t fully performed.

58
Q

Liquidated Damages

A

Enforceable if designed to compensate for breach. Unenforceable if a penalty for punishing breach.

  1. Did parties intend for clause to be LDP or penalty?
  2. Was clause reasonable at time of contracting in relation to anticipated harm?
  3. Is clause reasonable in relation to harm/losses that actually occurred?
59
Q

Seller’s Remedies

A
  1. If resold: Contract Price - Resale Price

2. If not resold: Contract Price - Market Price

60
Q

Lost Volume Sellers

A

Can recover profit they would have made on the lost sale. Must show:

  1. Could have sold to both breaching buyer and resale buyer
  2. Would have been profitable to make both sales
  3. Probably would have made the additional sale regardless of buyer’s breach
61
Q

Buyer’s Remedies

A

Covered: Contract Price - Cover Price
Not Covered: Contract Price - Market Price
Accepts Nonconforming Goods: Value of Original Goods - Value of Nonconforming Goods

62
Q

Incidental Damages

A

Expenses incurred in either seller dealing with the goods after buyer’s breach or buyer arranging for cover

63
Q

Consequential Damages

A

Buyer can recover damages that were reasonably foreseeable to the seller at the time the contract was entered into (i.e. lost profits because of the delay in obtaining the goods)

64
Q

Specific Performance

A

Available when money is inadequate (i.e. unique objects, need only adequately search and be unable to find reasonable substitutes), not available for personal service contracts or contracts requiring continued relations between the parties.

65
Q

Non-Compete Clause

A

Is there a significant business justification for enforcing restraints?
Scope of the non-compete clause reasonable?
Express provision?

66
Q

Promissory Estoppel

A

Expectation or reliance damages or choose on a case-by-case basis.

67
Q

Creditor Beneficiary

A

Promisee seeks a performance from promisor to satisfy an obligation owed to a 3rd party. Can sue the promisor but not the promisee.

68
Q

Donee Beneficiary

A

Promisee seeks performance from promisor in order to make a gift of that performance to a 3rd party. Can sue the promisor but not the promisee.

69
Q

Incidental Beneficiary

A

3rd party who will benefit from promisor’s performance as a practical matter, but are not intended beneficiaries. Do not have standing to sue.

70
Q

Vesting of 3rd Party Rights to Sue

A
  1. Beneficiary brings suit on the matter
  2. Beneficiary changes position in justifable reliance on contract
  3. Beneficiary manifests assent to the contract at the request of promisor or promisee
  4. Rights of beneficiary have vested under express contract terms
71
Q

Assignment

A

All rights are assignable unless:

  1. it materially alters duties of other party
  2. obligor has personal interest in rendering performance to the obligee and not a 3rd party
  3. would violate law or public policy
  4. assignment prohibited by contract

Assignee gets whatever rights to the contract assignor had and takes subject to whatever defenses obligor could have raised against assignor. Payment to assignor unless otherwise stated.

72
Q

Delegation

A

Doesn’t create a transfer of duties absent a novation (agreement by all parties). Generally all duties are delegable, except for personal services and when contract prohibits delegation.

Bar Exam (21 decks)

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