Contracts Black Letter Law Flashcards
Memorize BLL
Common Law
Applies to contracts for
1. Services or 2. Real estate.
When analyzing a contracts question on the MBE, always apply common law, unless there is a transaction for the sale of goods (then apply Art. 2 UCC)
Predominant Purpose Test
Applies when a transaction involves both:
1. Sale of Goods and 2. The Rendering of Services
Determines which law applies to the entire transaction.
EXCEPTION –> Divisible Contracts, when the payment for goods can be easily separated from the payment for services.
What is a Contract?
A contract is a legally enforceable agreement that is created through the process of
1. Mutual assent (i.e.,
a. Offer plus
b, Acceptance
2. Consideration, with
3. No valid defensesMutual Assent
Occurs upon:
- Acceptance of a
- Valid Offer to
- Contract.
How is a party’s intent judged in contract law?
A parties intent is judged by the “Objective Theory” of contracts and judged by outward objective facts, as interpreted by a reasonable person.
The intent of a party is what a reasonable person in the position of the other party would believe as a result of that party’s objective manifestation of intent.
When the other party knew or should have known that the party lacked the intent to enter into a contract, a contract is not formed.
Intent is NOT the subjective intent or belief of a party.
The party’s mere subjective lack of intent is not sufficient to prevent the formation of a contract.
Offer
- An objective manifestation of a
- Willingness by the offeror
- To enter into an agreement
- That creates the power of acceptance in the offeree.
It is a communication that gives power to the recipient to conclude a contract by acceptance.
Intent
Intent is:
1. The Present desire of a person to be legally 2. Objective standard theory
Knowledge by the offeree
The offeree must have knowledge of the offer in order to have the power to accept the offer.
Terms
For a contract to exist, the terms of the contract must be certain and definite, or the contract fails for indefiniteness.
CL Essential terms
Under CL –> all essential terms must be covered in the agreement:
- Parties
- Price
- Subject
- Quantity
- Descriptions
UCC Essential Terms
Under UCC –> The only essential term is QUANTITY.
As long as the parties intend to create a contract, the UCC “fills the gap” if other terms are missing, such as the time or place for delivery, or even the price for the goods.
Can a K be formed under the UCC if Quantity is NOT stated?
YES!
Under the UCC, a contract is formed if
- Both parties intend to contract and
- There is a reasonably certain basis for giving a remedy if a breach occurs.
Both:
1. Requirement Contracts, and
2. Output Contracts
Satisfy UCC contract formation requirements even without naming specific quantities because the UCC implies good faith as a contract term.
Duration Term
In most ongoing contracts, if a duration term is not specified in the agreement, courts will imply that the contract will last for a reasonable period of time.
Employment contracts without a Duration
If an employment contract does not state duration, there is a rebuttable presumption that the employment is “at will.”
In an employment-at-will relationship, either party can terminate the relationship at any time, without the termination being considered a breach of the contract (unless the termination is against public policy, such as when an employee is discharged for filing a discrimination claim).
EXAM NOTE* When presented with a question involving an employment agreement that is not at will, use a traditional breach-of-contract analysis.
Can an Employment Contract be enforced for Permanent Employment?
If an employment contract provides for “permanent employment,” most courts hold that, in the absence of a proven contrary intention, the employment is “at will,” because the duration term in the contract is considered too vague.
If the offer promises “lifetime employment,” some courts hold that the agreement is for at-will employment, while others take the term literally.
CL - Missing terms
A contract may still be formed when a term is missing, if it appears that the parties intended to create a contract. The court may supply the missing term because there is a presumption that the parties intended to include a reasonable term.
UCC - Missing Terms
The UCC “fills the gap” for missing terms other than subject matter and quantity, such as:
- Time (reasonable) or
- Place for delivery (the seller’s place of business),
- The time of payment (when the buyer is to receive the goods),
- The assortment of goods (reasonable choice of the buyer), and
- The price for the goods.
If the contract omits a price or if the parties agree to set the price in the future and then fail to agree, the UCC supplies a reasonable price at the time of delivery. UCC § 2-305. The contract must have an objective standard for the court to reference. UCC § 2-305.
Vague terms
When the terms of the contract are vague,
- NO presumption made
because
- The parties have manifested an intent that cannot be determined due to the vagueness of the terms.
Language
An Offer must contain words of
- Promise,
- Undertaking, or
- Commitment
- as distinguished from words that merely indicate intention to sell or interest in buying
The offer must also be targeted to a number of people who could actually accept.
Invitation to deal
Invitations to deal ARE NOT Offers
Types of Invitations to deal include:
- Inquiries, and
- Advertisements
- UNLESS-
The Advertisement is associated with a stated reward.
If the Ad is associated with a Stated Reward, the Ad must be:
1. Sufficiently specific, and
2. Limiting as to who may accept
for the Ad to qualify as an offer
(e.g., “Used car for sale for $5,000.
First come, first served.”).
The more definite the statement (e.g., “I will sell you X for…”), the more likely it is to be an offer*
Termination of offers
An offer CAN NOT be Accepted if the Offer has been Terminated.
Offers can be terminated in the following ways:
- Time Lapse
- Death/Mental Incapacity
- Counteroffer
- Illegality
- Revocation
- Rejection
