Contracts and Sales Flashcards
Rights of 3rd Party Beneficiaries
Generally, only an intended 3rd party beneficiary has a right to bring an action on the contract. His rights vest when
- he detrimentally relies on the rights created
- manifests assent to the contract at one parties’ request; OR
- files a lawsuit to enforce the contract.
Assignment, Delegation, Novation
- Assignment is the transfer of right
An assignee takes all the rights or the assignor subject to any defenses
Assignments are not allowed when doing so materially increases the duty or risk of the obligor or materially reduces the beneficiary’s chance of obtaining performance
- Delegation is the transfer of duties
When obligation are delegated the delegator is not released from liability and recovery can be had against the delegator if the delegatee does not perform
- Novation is the substitutino fo a new K for an old one and the original obligor is released from his promises under the original agreement.
Resale of Non-conforming goods
The UCC provides that upon tender of nonconforming goods, a buyer must retain possession of the rejected goods for a reasonable period of time to allow the seller to reclaim them. In the absence of other instructions from the seller, the buyer may store nonconforming goods at the seller’s expense, reship them to the seller, or sell them for the seller’s account in a commercially reasonable manner
Mailbox Rule
- Acceptance valid on sending
- Rejection valid on receipt
- A then R, A controls unless relied on R.
- R then A, first to be recieved by the offeror will prevail.
Statute of Frauds
Unenforceable unless evidence by a writing including the essential elements and signed by defendant party. Applies to: [Mr. SOUR]
- marriage
- suretyship
- one year (cannot be performed within a year)
- UCC contracts over $500
- real property
Modifications, if the contract as modified falls under SoF, must also be in writing.
Common law v UCC
Art. 2 of UCC will apply whnever the transaction is a sale of goods, otherwise use common law. When a transaction involves both goods and services use the predominant purpose test.
What is a K
Mutual Assent (Offer and Acceptance) + Consideration
Termination of Offers
- Lapse of time (reasonable time unless stated)
- Death or mental incapacity of the offeror
- Destruction of subject matter
- Offer becomes illegal
- Revocation which is limited by
- Option K
- Promissory estoppel
- Partial performance
- UCC firm offer rule
- mercant
- to remain open
- in writing assurance
Battle of the Forms
When both parties in the sale of goods are merchants and acceptance was made by means of a form that included additional terms.
- Last shot rule
- additional term is included unless,
- ther term materially alters
- Offer expressly limits acceptance
- Offeror has laready objected to the additional terms, or objects within a reasonable time
- additional term is included unless,
if any of these 3 are met a K is formed but original terms hold
- Different terms
- some jurisdictions treat different terms the same as additional terms above
- most use knock-out rule where different terms are nullified and you use gap fillers
Promises binding without consideration
- Promise to pay a debt barred by the statute of limitations
- promise to perfrom a voidable duty
- promise to pay benefits received
- promissory estoppel
Defenses to formation
- Mistake
- Misunderstanding
- Misrepresenation, nondisclosure, and fraud
- Undue influence
- Fraud
- Lack of capacity
Defenses to enforcement
- Illegality
- Unconscionability
- PP
Implied-in-Fact Ks
When words express the intent of the parties, the K is an express K.
When conduct indicates assent or agreement, the agreement is considered implied in fact.
Implied-in-law (quasi) K
- P confers a measurable benefit on the D
- P reasonably expected to get paid
- It would be unfair to let D keep benefit without paying P
Warranties
- Express Warranty
- Any promise, affirmation, description, or sample that is part of the basis of the bargain unless it is merely the seller’s opinion
- Implied Warranty of Merchantability
- When seller is a merchant goods must be fit for their ordinary purpose
- Implie Warranty of Fitness for a particular purpose
- Applies when the seller has reason to know that the buyer has a particular use for the goods, and the buyer is relying upon the seller’s skill to select the goods.
Discharge
- Impracticability
- Frustration of purpose - unexpected events arise that destory one party’s purpose for K
- Recission
- Release
- Destruction or Injurty to identifed goods
3rd parties
- 2nd restatement says 3rd party can recover if she ia an intended beneficiary.
Types of Ks within Statute of Frauds
- Marriage
- Suretyship
- One year
- UCC over $500
- Real property
Parol Evidence Rule
- determine whether parties writing is completely integrated or partially
- Complete - inadmissable to contradict or supplement
- partial - inadmissible to contradict
Remedies at common law
- Expection damages - put the injured party in the same position as if the K had been performed.
- Consequential damages - reasonably forseeable losses to a nonbreaching party that go beyond expecation damages, such as loss profits
- Liquidated damages and penalties
- Restituonary - seeks to restore a party the benefit conferred on the oether party
- reliance - based on the out-of-pocket expenses incurred by the non-breaching party
- Specific performance - watch for land or unique goods
Does the right to choose alternatives in contract formation make a promise illusory?
A promise is not illusory even if it offers the option for the promisee to choose the means of performance, as long as none of the options are illusory.
How does detrimental reliance relate to promissory estoppel?
To determine whether promissory estoppel is a viable theory of recovery in circumstances of inadequate consideration, look to see whether one party relied on the other to his or her detriment.
Requirements for K modifications under the UCC
No need for consideration just good faith.
Can a pre-existing legal duty serve as consideration?
A pre-existing duty is not adequate condideration. Exceptions:
- New or different consideration
- Ratification
- Duty that is owed to a third person instead of the promisee
- Duty is disputed
- Unforeseen circumstances
Substitutes for consideration
Promissory estoppel
good faith under UCC
Elements of Promissory Estoppel
- Promisor could reasonably expect his promise to induce action or forbearance
- The action induced is definite and substantial
- The action is in fact induced
Condition precedent
A condition precedent is something that must occur before performance is required.
