Contracts and Sales Flashcards
Common Law Contracts
The common law governs all contracts not related to the sale of goods, such as services and land sale agreements.
UCC
The UCC governs all contracts for the sale of goods. Goods are movable, tangible items at the time of contracting.
Merchant
A merchant is one who regularly deals in the goods sold.
Offer
To form a valid offer, the offeror must manifest an objective willingness to enter into an agreement and create a power of acceptance.
Acceptance
An acceptance is a manifestation of willingness to enter into the agreement by the offeree. Acceptance is governed by an objective test.
Mirror Image Rule
(CL)
The mirror image rule requires the terms in the acceptance to match the terms of the offer.
Option Contract
An option contract is a promise to hold an offer open when consideration has been given in exchange. An option contract cannot be terminated by either party prior to the option date absent detrimental reliance.
Firm Offer
A merchant can make a firm offer to buy or sell goods with a promise to keep the offer open for a stated period of time. The offer must be in writing, with explicit terms not to revoke, and signed by merchant.
Additional Terms
(UCC)
Additional terms will govern when both parties are merchants unless the original offer limits acceptance to its terms, additional terms materially alter, or offeror objects within a reasonable time.
Gap Fillers
(UCC)
The terms for a contract for the sale of goods is first determined by express terms. When merchants are silent as to terms, the UCC provides gap fillers. Gap fillers include course of dealing, course of performance, and trade usage.
Consideration
Consideration involves a transfer of legal value in a bargained-for exchange.
Preexisting Duty Rule
(CL)
The preexisting duty rule provides that promises to do something that a party is already legally obligated to do is not consideration. An exception may apply if the new promise arises after a benefit has already been conferred.
Promissory Estoppel
Promissory estoppel is a substitute for consideration if there is a promise, reliance that is foreseeable and justifiable, and enforcement is necessary to avoid injustice.
SOF
The SOF requires contracts be in writing and signed by the party against whom enforcement. The writing must identify the subject-matter, indicate that a contract has been made, and state essential terms.
UCC SOF Performance
Exception
SOF is satisfied for the quantity of goods for which payment has been made and accepted.
Confirmatory Memo
The SOF is excused if there is an oral agreement between merchants, either party sends a signed writing confirming the oral contract, and the recipient fails to object within 10-days.
Substantial Performance
(CL)
A party must substantially perform in order to demand performance from opposing party. Performance is not substantial if there is a material breach based on several factors.
[Courts consider: amount of benefit received; adequacy of damages; extent of performance; hardship to non-breaching party; and negligent or willful conduct by breaching party]
Perfect Tender Rule
(UCC)
The perfect tender rule requires the seller to deliver conforming goods in accordance with the contract terms. Minor nonconformities will be a breach.
Exceptions to
Perfect Tender Rule
The perfect tender rule is excused when there is an installment contract allowing buyer to reject a specific installment delivery or seller fails to tender perfect goods. If seller fails to tender perfect goods, buyer must allow time to cure if time for performance has not expired or seller had reasonable grounds to believe buyer would accept alternative.
Revocation of Acceptance
(UCC)
If a buyer accepts good, buyer cannot reject the goods. A buyer can revoke the acceptance if the nonconformity impairs buyer; revocation is within reasonable time; buyer accepted because nonconformity was difficult to discover or seller provided assurances; or there was a reasonable belief that nonconformity would be cured.
Divisible Contracts
A contract is divisible so long as it can be apportioned and the parties would have contracted for each part separately. The parties can collect payments in the absence of substantial performance.
Anticipatory Repudiation
(CL)
Anticipatory repudiation occurs when a promisor clearly and unequivocally repudiates a promise before the time performance is due.
Anticipatory Repudiation
(UCC)
Anticipatory repudiation occurs when buyer or seller makes an unequivocal refusal to perform, or reasonable grounds for insecurity arise and repudiating party fails to provide adequate assurances after a demand has been made.
Retraction
(CL)
A party who has repudiated can retract if the non-repudiating party has not acted in reliance, signified acceptance of the repudiation, or commenced an action for breach.
Retraction
(UCC)
A party who has repudiated may retract until the non-repudiating party cancels the contract or materially changes position.
Express Warranties
Express warranties are created by an affirmation or promise made by the seller to the buyer. The warranty is breached if there is nonconformity.
Expectation Damages
Expectation damages is the default measure of damages intending to put non-breaching party in same economic position as if the contract had been performed. Expectation damages must be foreseeable and proven with reasonable certainty.
Restitution
Restitution allows a party to recover damages for the economic benefit conferred by way of part performance minus the loss caused by their own breach.
Economic Duress
A contract is voidable on the ground of economic duress if the adversely affected party’s assent was induced by an improper threat that leaves no reasonable alternatives.
