Contracts Cards Flashcards
Governing Law
Contracts for the sale of goods are governed by Article 2 of the Uniform Commercial Code. All other contracts are governed by the common law. Goods are things moveable when identified in the contract.
Statute of Frauds
While contracts generally need not be evidenced by a writing, some contracts require a writing if they fall within the Statute of Frauds. A contract for the sale of a good over $500 falls within the SoF and requires a writing signed by the party against whom enforcement is sought, and expressing the quantity involved.
Breach of Contract
A contract for the sale of goods requires that the seller of goods tender perfect goods. This means that goods have to be exactly what they buyer contracted to purchase under the terms of the contract. If the seller fails to tender perfect goods, the buyer is entitled to not accept delivery of the defective goods. However, once acceptance is made, a buyer cannot revoke the acceptance unless there is a latent defect later arising.
Substantial Performance Breach
When a party fails to perform as contemplated by the contract there has been a breach. However, a breach does not necessarily excuse the other party’s obligations to perform. When there has been substantial performance (nonbreaching party has received a substantial benefit of the bargain), the nonbreaching party must still perform its obligations under the K until there is apparent refusal to continue.
Express Warranty
is one which sits on the face of the contract and entitles the buyer to rely on such warranty. Express warranties cannot be disclaimed by a subsequent statement in the contract saying that there “are no warranties expressed or implied.”
Valid Contract
In order to bring a successful breach of contract claim, there must first be a showing of a valid contract. To form a valid contract, there must be an offer, acceptance, and consideration. Additionally, there must be no grounds for a valid defense to formation.
Mutual Assent
Parties to a contract must manifest mutual assent to be parties to the contract. This is typically shown through offer and acceptance.
Consideration
Is necessary for there to be a valid contract. Typically, a showing of consideration is done by facts evidencing the parties have obtained a legal benefit or detriment through the contract.
Mutual Mistake
A mutual mistake occurs when both parties have a belief not in accord with the facts as to a material fact underlying the contract which causes a material change in performance of the contract and for which neither party held the risk of mistake.
Parol Evidence Rule
Makes evidence of oral or written communications between K parties, made prior or contemporaneous to the written K, inadmissible if they contradict the K and the K was meant to be a complete integration of the K. Typically, to show a complete integration, the parties to the K will include a merger clause or specifically state in the K that the K is meant to encompass the entirety of the agreement. Prior terms of clarification are admissible.
Expectation Damages
Are the default damages in contract. They are meant to place the nonbreaching party in the same position it would be in had the breaching party performed.
Consequential Damages
Are those that arise as a result of the breach that are foreseeable to the parties, caused by the breach, and reasonably certain.
Incidental Damages
Are those damages that flow from the breach. This includes damages for expenses incurred to inspect goods, ship back nonconforming goods, or to warehouse nonconforming goods.
Restitution
Is available when a plaintiff confers a benefit to the defendant, without gratuitous intent, and it would be unjust to allow the defendant to keep that benefit without compensation. Can be calculated either by the value of the benefit conferred on the defendant or the cost to the plaintiff in conferring that benefit.
Duty to Mitigate
When a plaintiff suffers a breach, they have a duty to mitigate damages.
Vague/Ambiguous Terms
Courts typically construe terms in the K in their plain and simple meaning. When there are multiple ways to construe a certain term, then the courts will look first to the prior history between the contracting parties, if any, to define how they treated the meaning of those vague and ambiguous terms in the past. If there is no contractual history, the courts will to custom and usage in the industry to define the terms.
Offer
Must evince an objective intent to enter into an agreement, lay out sufficiently certain and definite terms such that the contract is capable of being enforced, and must be communicated to the offeree. Under the UCC, the key term for an offer to be sufficiently definite is the quantity term, and all other terms may usually be filled in by the court.
Acceptance
May be made by any means reasonable prior to the offer’s termination. Depending on the contract, acceptance can be oral or required in writing.
Consideration
Requires that there be 1)bargained for exchange 2) of legally valuable detriment. A bargained for exchange requires the promise induce the detriment and the detriment induce the promise.
UCC SoF Exceptions
1) Where one party has partially performed on the agreement (partial performance); 2) where promissory estoppel applies; 3) where the contract is for specially manufactured goods, after substantial performance has begun and the goods cannot be reasonably be resold; and 4) a merchants confirmatory memo.
