Contracts and Sales Flashcards
Common Law v. UCC
The common law of Contracts applies to all contracts, other than the sale of goods, to which the UCC applies.
Valid Contract
If facts say there is a valid contract OR told both parties executed a written agreement and there is nothing more about formation, then no need to discuss.
A valid contract requires an offer, acceptance, and consideration.
Offer
- A promise, undertaking, or commitment to enter into a contract; (intent element)
- With the essential terms certain and definite and
- Communication of the promise and the terms to the offeree
(separate numbers = elements/separate subheadings)
An advertisement is an invitation to make an offer, NOT an offer
Revocation
Terminates power of acceptance
Acceptance
Acceptance is an unqualified assent to the terms of an offer and MUST be communicated to the offeror.
Offer may be accepted by any medium reasonable under the circumstances, except where an offer limits the form of acceptance, acceptance must then comply with offer’s limitations
Conditional acceptance is NOT an acceptance, it is a rejection
Counteroffer
Counteroffer operates as both as a rejection of the original offer and a new offer under common law
Acceptance with Varying Terms
UCC 2-207 (“Battle of the Forms”)
As between Merchants additional terms become a part of the contract UNLESS:
1. Offer expressly limits acceptance to the terms of the offer OR
2. They materially alter the offer OR
3. Notificiation of objection to the additional or different terms is given with a reasonable time after notice is received
HOW TO ANALYZE:
* Do you have additional or different terms?
* If Different terms, start with Majority Rule (Knock-Out Rule) [UCC Gap Filler - normally course of performance or usuage of trade)
* Then go to additional term anaylsis (rule above)
Consideration
Consideration requires a bargained for exchnage
If past or moral consideration, then discuss and apply promissory estoppel
Promissory Estoppel
To enforce the promise
Only applies if contract fails for lack of consideration or similar flaw (promisee gets reliance damages)
- The promisor should resonably expect to induce definite or substantial action or forebearance and
- Such action or forbearance is in fact induced
Statute of Frauds
Defense to Enforcement
Think of it as an (oral) agreement THAT HAS TO BE IN WRITING
Contract MUST be:
1. in writing and
2. signed by the party to be charged (the party against whom it is enforced) if it involves:
* a promise to pay the debt of another
* any interest in land - deeds, leases, easements, deeds of trust
* contract cannot be performed within 1 year - performance date more than 1 year out
* sale of goods of $500 or more
The four catergories triggers SOF
Instances where a contract is removed/NOT SOF:
* Admission
* Full performance if the contract is for the sale of goods/services
* If contracts for real property are any two of the 3: [(1) performance by payment (whole or part); (2) possession; (3) making of valuable improvements
* Deterimental reliance/promissory estoppel - promisor is estopped from asserting SOF, and contract is thus valid and enforceable
Assignment of Rights
All rights may be assigned except those that change an obligor’s duty
The transfer of rights under a contract
Issues:
1. What rights may be assigned
2. What is required for an assignment
3. When is an assignment irrevocable
Writing ONLY required for:
* interests in land
* wage assignments
* security interests
* choses in action > $5k
Revocable EXCEPT:
* if given for consideration
* obligor performed
* delivery of tangible claim
* assignment of chose in action in writing
* forseeable detrimental reliance
Delgegation of Duties
Rather than assignment of entire contract
Delegator liable to non-delegating party ONLY IF:
1. Delegate attempts to perform or
2. Delegate promises to perform and promise is supported by consideration
CANNOT delegate duties involving personal/skill judgement
Delegator always liable
Parol Evidence Rule
Discuss when an integrated writing signed by BOTH PARTIES and prior or contemporaneous discussion of other terms
Where the parties express their agreement in wirting signed by both parties with the intent that it embody the full and final expression of their bargain, any other expressions, written or oral, made prior to the writing, and any oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing
Fully integrated - prior contemporaneous expressions that vary the terms are barred, as are supplemental terms
Partially integrated - supplemental terms OK (ex: sale of real property, written contract omits closing date)
Exceptions:
* formation defects
* condition precedent to effectiveness
* ambiguity
* true consideration
Modification
Modification exists if a subsequent expression or agreement that varies terms
Common Law - requires additional consideration
UCC - no consideration required if modification made in good faith
Condition
An event, other than passage of time, that will extinguish, modify, limit or create a duty to perform
Failure of condition excuses performance so there is no breach
Types:
* Condition Precedent to Effectiveness - must arise before contract is effective at all
* Condition Precedent to Performance - must arise before particular duty to perform arises
* Condition Subsequent - cuts off duty to perform
