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Prep Course - Contracts > Contracts, foundation and more > Flashcards

Contracts, foundation and more Flashcards

1
Q

Offer

A

An objective manifestation by the offeror of a willingness to enter into a bargain creating the power of acceptance in the offeree

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2
Q

When an “offer” is sent to multiple people and not all can accept?

A

NOT AN OFFER - it’s an invitation to BID. An announcement.
Usually - the more widespread the audience, the less likely it’s an offer.
Ad in the paper - invitation to bid.

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3
Q

Acceptance

A

An objective manifestation by the offeree to be bound by the terms of the offer

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4
Q

When does an offer terminate?

A
  • Death of the offeror
  • Revocation (from the offeror)
  • Rejection
  • Counteroffer (terminates the offeree’s power of acceptance)
  • Lapse of time
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5
Q

Rejection vs. Inquiry

A

Rejection terminates the offeree’s power of acceptanceInquiry does NOT terminate the offeree’s power of acceptance.
Offeror can renew offer in the face of a rejection.

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6
Q

The offeror

A

The master of the bargain. They set the time

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7
Q

Face-to-face conversation rule

A

When an offeror makes an offer during the course of a face-to-face conversation, the offer lapses at the end of the conversation.

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8
Q

Does an inquiry terminate an offeree’s power of acceptance?

A

NOPE.

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9
Q

What can an offeror do with a offer?

A

Can revoke

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10
Q

What can an offeree do with an offer?

A

Accept, Reject, Counteroffer, Inquiry

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11
Q

UCC 2-206: Non-Conforming Goods

A

If non-conforming goods are shipped, the shipment serves as an acceptance and at the same time a breach
Is NOT a partial acceptance

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12
Q

Unilateral Contract

A

Offeror makes an offer that calls for performance
Looking for ACTION
Example: wanted poster for lost dog promising reward.

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13
Q

Bilateral contract

A

Offeror and offeree exchange mutual promises
Looking for PROMISE

Ex. A promises her car to B, B accepts by promising to pay A money for the car.

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14
Q

UCC 2-205: Firm Offer Rule

A

A signed writing by a merchant which by its terms gives assurances that it will be held open is not revocable for lack of consideration for the stated period of time not to exceed three months
Here - can’t revoke the offer (terminate it) early.
ONLY for merchants. If private person, then this doesn’t apply.

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15
Q

Consideration

A

Bargained for legal detriment

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16
Q

Consideration considerations

A
  1. Look for a valid contract-is there a bargain the court MUST enforce?-bargained for exchange-forbearance to sue
  2. Look for a substitute for consideration-is there a bargain the court SHOULD enforce?
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17
Q

Implied in Law contracts

A

A quasi-contract is not an actual contract, rather a legal substitute for a contract formed to impose equity between to parties

  • A contract SHOULD have been formed, even though in actuality it was not.
  • Used when a court faces a situation of injustice to enforce the agreement to ensure fairness

Ex. when a doctor tries to save the guy’s life and the guy dies anyway there IS an implied quasi-contract.

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18
Q

Can an offeror terminate an offer at any time before acceptance by revoking it?

A

YEP. UNLESS they’re a merchant and the UCC 2-205 applies.

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19
Q

When is revocation effective?

A

Direct revocation - upon communication (ex. call them, write them and tell them the offer has been revoked)

Indirect revocation - ex. reading the paper, that the stamp collection that you were going to buy has been sold to someone else.

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20
Q

Generally, as an answer, is “past” or “moral” consideration sufficient to form a contract?

A

NOPE.

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21
Q

Modification

A

A subsequent agreement that alters or changes the parties’ duties and obligations under the terms of their original contract.

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22
Q

Modification - UCC

A

Good faith

No consideration required

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23
Q

Modification - Common Law

A

Pre-existing duty rule

New consideration required

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24
Q

Pre-existing duty rule

A

Performance of an act by which a party is already contractually bound to perform does NOT constitute valid consideration for a new promise.

At common law.

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25
Q

Mutual MIstake

A

BOTH parties are mistaken as to a material element that goes to the HEART or ESSENCE of the bargain.

Remedy: Rescission

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26
Q

Unilateral Mistake

A

Contract ENFORCEABLE against mistaken party UNLESS non-mistaken party knew or should have known of the other’s mistake.

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27
Q

Anti-Assignment Clause

A
  • The assignor need not consult the other party to the contract.
  • An assignment cannot have any effect on the duties of the other party to the contract, nor can it reduce the possibility of the other party receiving full performance of the same quality.
  • Certain kinds of performance, therefore CANNOT be assigned, bc they create a unique relationship between the parties to the contract
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28
Q

Implied in Law contract

A

Legal substitute for a contract formed to impose equity between two parties.

A contract SHOULD have been formed, even though it actually was not.

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29
Q

Implied in Fact contract

A

An agreement founded upon a meeting of the minds, which, although not embodied in an express contract, is inferred from the conduct of the parties.

Ex. the guy who contracts with the golf pro for $1000 for lessons for his son, and the pro lets the daughter also participate in all the lessons, he’s entitled to another $1000 for her lessons too.

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30
Q

Remedies - law

A

Money damages

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31
Q

Remedies - equity

A 
Injunction
Specific performance
Rescission
Reformation
Quiet title actions
Partition proceedings
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32
Q

F.O.B.

A

“free on board”
Tells us where the risk of loss passes.

Ex. “F.O.B. seller’s place of business” - during transit, the risk of loss is on the buyer once it leaves the seller’s place of business.

33
Q

Specific Performance

A

A remedy used to enforce a contract for the sale of unique item of personal property or real property

34
Q

Condition Precedent

A

An act or an event (other than the lapse of time) that must occur FIRST BEFORE a party is under a duty to perform.

35
Q

Are minors regarded as having sufficient capacity to comprehend questions involving contractual rights?

A

NOPE.

36
Q

Contract with Minors

A

A person dealing with a minor does so at his or her peril and subject to the right of the minor to avoid the contract.

Minors are regarded as NOT having sufficient capacity to comprehend questions involving contractual rights.

37
Q

What kind of contracts with minors CANNOT be voided?

A 
Taxes
Penalties
Bank regulations
Military
Necessities (reasonable rates - can't collect on additional excessive rates)
38
Q

Statute of Frauds (types of contracts under)

A 
Marriage
Year (1+)
Land
Executor
Guarantee (or suretyship)
Sale of goods ($500+)

MY LEGS

To be enforceable - NEEDS to be in writing.

39
Q

Main Purpose Rule

A

An oral promise to answer for the debt of another is enforceable if the promisor’s main purpose is to further his own economic advantage.

40
Q

Parol Evidence Rule

A

Once the parties have reduced their agreement to a writing, evidence of any prior oral or written or contemporaneous oral agreements is INADMISSIBLE to alter, vary, or contradict the terms of the writing.

41
Q

Exceptions to Parol Evidence Rule

A 
Fraud
Mistake
Illegality
Duress
Partial Integration
Conditions precedent
42
Q

Can a personal service be assigned?

A

NO. If you contract with a person because their unique skill, can’t assign it. Would reduce the possibility of the other party receiving full performance of the same quality.

Personal service contracts are NON-DELEGABLE.

43
Q

EXCEPTION TO LAND - STATUTE OF FRAUDS

A

PART PERFORMANCE - if you moved in, made payments, made improvements on the land. Usually, just ONE is enough. Will enforce the agreement outside of the statute of frauds.

44
Q

GUARANTEE/SURETYSHIP - Statute of Frauds - when it does NOT need to be in writing

A

MAIN PURPOSE RULE
If the main purpose behind someone promising to take on the debt of another is to benefit the person promising, then does NOT need to be in writing to be enforceable.

45
Q

When can you bring in prior oral, written, or contemporaneous evidence to a contract that’s not in the actual written agreement?

A

For purposes OTHER than proving that it’s part of the contract itself - like clarification.

46
Q

Can an oral condition precedent be brought in to show that a written agreement was subject to it?

A

YES. This is an EXCEPTION to the Parol Evidence Rule.

47
Q

UCC Coverage Areas

A 
Merchant Specific Rules (Confirmatory Memo, Firm Offer Rule)
Defenses
Damages
Requirements Contracts
Installment Contracts
Battle of the Forms
48
Q

Third Party Beneficiaries - Coverage Areas

A

Intended
Incidental
Assignment and delegation

49
Q

UCC 2-205: Firm Offer Rule

A

A signed writing by a merchant which by its terms gives assurances that it will be held open is NOT revocable for lack of consideration for the stated period of time not to exceed three months.

50
Q

Requirements Contract

A

A contract in which one party agrees to supply as much of a good or service as is required by the other party, and in exchange the other party expressly or implicitly promises that it will obtain its goods or services exclusively from the first party.

51
Q

UCC 2-712: Cover by Buyer

A 
After covering (getting substitute goods) aggrieved buyer may recover: 
(Price to cover - contract price), PLUS Incidental and consequential damages.

Price to cover is always going to be higher than the contract rate.

52
Q

UCC 2-615: Impracticability

A

Delay in delivery OR non-delivery by a seller is NOT a breach of the seller’s performance is made impracticable by a contingency whose non-occurrence was a basic assumption on which the contract was made.

53
Q

Impossibility - subjective(defense)

A

Impossibility will NOT excuse duties of performance under a contract

Ex. aphids all over the corn.

54
Q

Impossibility - objective(defense)

A

Impossibility WILL excuse duties of performance under a contract

Ex. if the removal of asbestos from buildings was suddenly illegal.

55
Q

3rd Party Beneficiary Analysis

A
  1. Identify 3rd party beneficiary contract
  2. Intent to benefit test (could beneficiary step into the shoes of the contracting party?)
    - Is 3rd party incidental - if yes, incidental, then no rights
    - Is 3rd party intended - then step 3
  3. Has third party vested?
    - learned of the contract and assented to it?or
    - changed positions in reliance on the contract?
56
Q

UCC 2-601: Non-Conforming Goods

A

Buyer has three options:

  1. Can accept the whole shipment
  2. Can reject the whole shipment
  3. Can accept any commercial unit or units and reject the rest
57
Q

Free on Board (FOB)

A

Indicates that the seller is responsible for getting the goods to a shipper designed by the buyer. At this point, the risk of loss passes from the seller to the buyer.

58
Q

Incidental Damages

A

Expenses incurred by the injured party as a result of the other party’s breach of a contract-expenses for inspection, receipt, transportation-storage of rejected goods or services-expenses associated with buying replacement goods or services, AND-any other expense related to delay in delivery or non-delivery

59
Q

Consequential Damages

A

Damages which do not derive directly from the breach, but from the results of the breach, they are more INDIRECT in nature.

Ex. losses buyer incurs which the supplier had reason to know at the time of contracting and which buyer could not reasonably have prevented.

60
Q

UCC 2-609: Right to Adequate Assurances

A

When REASONABLE grounds for insecurity arise, one party MAY (in writing) demand adequate assurances from the other that the performance will occur.

Talking about when parties want to back out before they actually perform or have to perform. Assurances must be provided within a reasonable time (no more than 30 days)

61
Q

What happens if you fail to provide assurances?

A

Repudiation of the contract.

62
Q

What is a non-conforming good under UCC 2-601?

A

Something that’s not what you ordered - like a vase that arrives broken.

63
Q

How to get incidental or consequential damages??

A

THE DAMAGE MUST BE FORESEEABLE!

Foreseeable: based on what the breaching party knew at the beginning of the contract.

64
Q

Frustration of Purpose(defense)

A

The reason why you entered into the contract has changed.

Ex. I am no longer in the business of selling corn, I am no longer a performer so I don’t need to rent the theater, etc.

65
Q

Under UCC - when a merchant is specifically advised of the use of a product, will they be liable for all foreseeable damages?

A

YES. Including consequential damages suffered by the buyer.

Ex. the data-center company seeking protection from lightning strikes from the contractor, the contractor will be responsible for all the foreseeable damages incurred by the data-center if/when lightning strikes and destroys all their data.

66
Q

Force majure

A

A common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, strike, riot, crime, or act of nature (flooding, earthquake, volcano), prevents one or both parties from fulfilling their obligations under the contract.

NOT to excuse the negligence or malfeasance of a party.

67
Q

Can a seller, upon discovering the buyer’s insolvency, withhold delivery except for cash?

A

YES.

68
Q

Difference between impossibility and impracticability

A

Impossibility - objective, CANNOT do it anymore.Impracticability - could still do it, but going to be much more burdensome, more costly than anticipated. Usually need more than just cost - like severe shortages of raw materials caused by an embargo or war or something of that nature.

69
Q

When does a contingency that frustrates the purpose of the contract NOT excuse the party from contractual obligation?

A

When the contingency was FORESEEABLE, and the receiving party did not include language in the contract discharging its duties if the contingency occurred. Would be deemed to have accepted the risk, and will be liable under the contract.

70
Q

When does the doctrine of impossibility not excuse both parties from performance?

A

When performance under the contract is only TEMPORARILY impossible - because then the parties’ obligations are only suspended until the impossibility ends. So, if only a temporary impossibility, the contract is just put on pause.

71
Q

If the agreement is silent about the order of performance, when is payment due?

A

Upon completion of the work.

72
Q

If one party to a contract has been unjustly enriched at the expense of the other party, the latter party may seek:

A

Quasi-contractual relief.

73
Q

Can you make changes to a requirements contract that has already been acted upon, but is not complete?

A

Yes, the offeree may change the terms if the change is reasonable and made in good faith.

74
Q

When a K is between merchants, and one sends a writing that is sufficient against the sender confirming the K, and the other merchant receives it and has reason to know of its contents to fails to object within 10 DAYS, will the confirmation satisfy the Statute of Frauds?

A

YES. If you get a confirmation that is wrong, but you don’t object within 10 days - going to be OK under the SOF.
So you have 10 days to object.
UCC 2-201(2)

75
Q

Bilateral executory accord

A

An agreement that an existing claim shall be discharged in the future by the rendition of a substituted performance.

76
Q

What is the measure of damages for non-delivery or repudiation by the seller?

A

The difference between the MARKET PRICE at the time when the buyer LEARNED OF THE BREACH and the K price, together with incidental damages.

So, (K price - market price on the date the buyer learned of the breach) + incidental damages

77
Q

A delegatee is not liable to the obligee unless the delegatee has assumed the obligation to perform. True or False?

A

TRUE.

If the delegatee does not know about the obligee, and does not assume the obligation to perform for them, they’re not liable to them.

78
Q

Can you admit parol evidence, not to vary or contradict the written K, but to show that there is no agreement at all?

A

YES.

Ex. the girl who was going to buy the piano from her friend, but only if she got the house. Evidence of the oral agreement (only if she gets the house) COULD be introduced to show that there’s no agreement at all.

79
Q

For hybrid cases, that involve both sale of goods and services, how do you determine what law to apply? (common or UCC)

A

Majority rule - look at the predominant purpose of the K

  1. language
  2. nature of supplier’s business
  3. relative value of the goods vs. services

Minority - apply UCC to goods, common to services

Prep Course - Contracts (10 decks)

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