Contracts - Formation and Defenses to Formation/Enforceability Flashcards
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Applicable law; Formation; Terms; Performance; Excuse of nonperformance;; Remedies; Third-party problems.
A quasi-contract/restitution exists in equity if
(1) P conferred a benefit on D;
(2) P reasonably expected to be paid; and
(3) D is unjustly enriched if P not paid
**This is NOT a contract. Recovery is through restitution. Focus on the value of the benefit conferred.
A unilateral contract exists where the offer
expressly requires PERFORMANCE as the only possible method of acceptance. Generally acceptance requires FULL performance. Once performance has started, the offer becomes irrevocable. If substantial preparations, look for quasi-contract/promissory estoppel.
On the bar, assume that all contracts are _____ unless _______ or _______.
bilateral (a contract that is open as to the method of acceptance);
(1) reward, prize, or contest
(2) offer expressly requires performance for acceptance
Article 2 of the UCC applies to contracts for
primarily (1) sales of (2) goods.
**Even for private parties. Article 2 has additional special provisions that apply if (1) one or both parties are merchants and (2) if the seller is a merchant “with respect to the goods”
Under the UCC, “goods” are
tangible, movable, personal property.
The UCC does not apply to contracts for
(1) services
(2) real estate
(3) employment
(4) construction
(5) anything else that is not the sale of goods
If a contract is for mixed subject matter (sale of goods plus something else), the general rule is
the “all or nothing rule” based on the contract’s “predominant purpose.”
Apply either all UCC or all common law depending on whether the “predominant purpose” is for a sale of goods or for something else.
Some factors to consider when determining the “predominant purpose” of a contract are
(1) purchase price allocation to goods versus the other subject matter (“SM”)
(2) the amount of time spent on the other SM
(3) the sophistication of the service or other SM
(4) words in the K typical to a sale of goods
Under a mixed deal, if the contract itself divides payment between the sale of goods and the other subject matter, apply
UCC to the sale of goods and common law to the other subject matter.
Contract formation requires
(1) offer; (2) acceptance; (3) consideration
The test for whether an offer has occurred is whether
whether a reasonable person in the position of the offers would believe that his or her assent creates a contract
An offer is a
manifestation of an intention to contract, words or conduct showing commitment.
Under common law, an offer that is missing price and/or description of real estate (if for land)
is not a definite offer under common law. Absence of price is fatal.
Under the UCC, an offer that is missing the price
can still be a legally sufficient offer.
Under the UCC, if an offer is missing the price, the default is
(1) a reasonable price
(2) the parties’ subsequently agreed to price
If there is a vague or ambiguous material term in an offer, the offer is
is NOT a legally sufficient offer under either the UCC or common law.
Look for terms like appropriate, fair, or reasonable on the bar. These make an offer invalid.
If a sale of goods contract is missing the quantity term, it is
generally invalid under the UCC.
If a contract for a sale of goods that states the quantity in terms of the buyer’s requirements or the seller’s output, it is
valid requirements/output contract under the UCC.
**Look for words like “all”, “only source”, “sole source”, “required”, “produced”.
With respect to a change in the quantity of goods required under a valid requirements/output contract, a buyer cannot
make an unreasonably disproportionate increase in demands.
Generally, an advertisement is not an offer unless
it is in the nature of a reward or is specific as to quantity and expressly indicates who can accept.
The four ways to terminate an offer are
(1) lapse of time
(2) revocation by words or conduct of offeror of which offeree is aware
(3) rejection by offeree
(4) death
An offeror can revoke an offer through words or conduct through
(1) making an unambiguous statement to the offeree
(2) unambiguous conduct indicating an unwillingness or inability to contract OF WHICH THE OFFEREE IS AWARE**
**If offeree learns of conduct through a “reliable source” it can be sufficient to terminate.
An offer can be terminated due to lapse of time if
the time is stated in the K or, if unstated, a reasonable time.
**Look for dates in the fact pattern, if more than 30 days pass between offer and acceptance, raise the issue.