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Second Semester > Contracts II > Flashcards

Contracts II Flashcards

1
Q

Doctrine of Impracticability

A

Discharges a party’s duty to perform due to it’s impossibility or impracticability

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2
Q

Misrepresentation (4 elements)

A

Party can void contract when (1) misrepresentation is made; (2) that is either fraudulent or material; (3) misrepresentation induces assent; and (4) justifiable reliance

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3
Q

Duress (3 elements)

A

party can void when an (1) improper threat [crime or tort]; (2) induces assent; and (3) there was no reasonable alternative but to assent

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4
Q

Undue Influence (3 elements)

A

power to void when (1) unfair persuasion; (2) victim either under domination or “confidential relationship”; (3) inducement

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5
Q

Disabilities

A

Infancy doctrine; Mental infirmity; Intoxication make contracts voidable. Guardianship makes contract void.

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6
Q

Unconscionability (2 elements)

A

Requires (1) Procedural Unconscionably; and (2) Substantive Unconscionability

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7
Q

Procedural Unconscionability (2 elements)

A

Exists when improprieties in contract formation lead to (1) “unfair surprise” or an (2) “absence of meaningful choice”

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8
Q

Substantive Unconscionability (4 elements)

A

Exists where there are terms that are (1) oppressive, (2) unduly harsh, (3) commercially unreasonable, or (4) grossly unfair

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9
Q

Existing Impracticability (3 elements)

A

Duty to perform is discharged when (1) an existing unknown fact; (2) makes performance impossible or impracticable; and (3) the party should not bear the risk of the fact’s existence.

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10
Q

Supervening Impracticability (3 elements)

A

Duty to perform is discharged when an (1) unexpected event occurs after formation; (2) that makes performance impossible or impracticable; and (3) party should not bear the risk of the event’s occurrence

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11
Q

Supervening Frustration of Purpose (3 elements)

A

Duty to perform is discharged when an (1) unexpected event occurs; (2) that substantially frustrates the principle purpose of contract; and (3) party should not bear the risk of the event’s occurrence

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12
Q

Effect of a Minor Disaffirming a Contract for a Necessary

A

The adult can still recover the fair reasonable value of the necessaries under Quasi Contract

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13
Q

Existing Frustration of Purpose (3 elements)

A

Duty to perform is discharged when an (1) existing unknown fact; (2) substantially frustrates the principle purpose of contract; and (3) party should not bear the risk of the fact’s existence

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14
Q

Agreements Against Public Policy (2 elements)

A

Are void if (1) legislation provides that it is void; or (2) interest in enforcement is clearly outweighed by public policy against enforcement

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15
Q

Restitution for Contract that was void under Public Policy (4 elements)

A

Only available if (1) the forfeiture would be disproportionate to contravention of public policy; (2) party was excusably ignorant of minor fact or legislation that made contract unenforceable; (3) party was not equally in the wrong with promisor; or (4) party did not engage in serious misconduct and withdrew before illegal purpose was acheived

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16
Q

Court’s Options for Unconscionable Contract Term (3 elements)

A

(1) refuse to enforce contract; (2) refuse to enforce unconscionable term; or (3) limit application of unconscionable term to avoid unconscionable result

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17
Q

Intoxication (3 elements)

A

A party may void a contract if during formation (1) he was intoxicated; (2) as a result he couldn’t understand the nature and consequences of agreement; and (3) the other party had reason to know he couldn’t appreciate consequences of his actions

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18
Q

Mental Infirmity (2 elements)

A

A party may void a contract if during formation (1) he had a mental illness or defect; (2) that prevented him from understanding the nature and consequences of transaction

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19
Q

Infancy Doctrine

A

Minor may void contract if he was under 18 upon formation. must void before turning 18 if contract is for a necessity, adult entitled to reasonable value of benefit

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20
Q

Unilateral Mistake (4 elements)

A

Adversely affected party may void contract if (1) he made a mistake upon formation; (2) that was material to him assenting; (3) he should not bear the risk of that mistake; and (4) either (a) mistake’s effect makes enforcement unconscionable; (b) other party had reason to know; or (c) mistake was other party’s fault

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21
Q

Mutual Mistake (3 elements)

A

Adversely affected party may void if (1) both parties made a mistake upon formation; (2) that was material to assent; and (3) party should not bear the risk of mistake

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22
Q

Statute of Frauds

A

Declares an oral contract unenforceable if it is for (1) Marriage excluding mutual promises; (2) performance over a Year from formation; (3) Land; (4) Executor/Administrator; (5) Goods: $500 or more; or (6) Suretyship

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23
Q

Primary Purpose Exemption

A

A promise to pay the debt of another falls without the statute of frauds if the primary purpose of the promise is to benefit the promisor

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24
Q

Statute of Frauds Requirements (Common Law) (4 elements)

A

Contract for “MYLEGS” must be evidenced by a writing that is (1) signed by burdened party; (2) identifies subject matter; (3) sufficiently indicates contract has been made or offered by signor; (4) reasonably certain terms

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25
Q

Statute of Frauds Requirements (UCC) (3 elements)

A

Contract for “MYLEGS” must be evidenced by a writing that is (1) signed by burdened party; (2) provides evidence oral contract was real transaction; and (3) includes a quantity term recovery limited to amount stated

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26
Q

Common Law Part Performance Doctrine

A

Specific performance available when party seeking enforcement, in reliance, has significantly changed his position where injustice avoidable only with specific performance

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27
Q

3 Part Performance Factors (land)

A

(1) delivery and assumption of actual or exclusive possession of the land; (2) payment or tender of consideration; and (3) the making of permanent, substantial, and valuable improvements, referable to the contract

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28
Q

Court Related Admissions Exception

A

UCC: Admission in court or through court related document by non-performing party satisfies Statute of Frauds for however much is admitted. Common Law: Admissions do not prevent Statute of Frauds defense

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29
Q

Merchant’s Exception

A

Between Merchants: a party may satisfy statute of frauds if after oral contract a sufficient written confirmation is sent after formation and written objection is not sent within ten days of receipt.

30
Q

Exculpatory Clause

A

Contractual provision that removes one party from liability resulting from a negligent or wrongful act

31
Q

Licensing (2 elements)

A

A party is prohibited from doing an act because of his failure to comply with a licensing if (1) the requirement has a regulatory purpose [as opposed to revenue], and (2) interest in enforcement is clearly outweighed by public policy behind requirement.

32
Q

Restraint of Trade (2 elements)

A

Void on grounds of public policy unless the restraint is (1) justified by a legitimate business reason, and (2) must be reasonable in terms of scope, geography, and duration

33
Q

Legitimate Business Reason for Restraint of Trade (3 elements)

A

(1) knowledge of confidential employer information, (2) development of substantial relations with the employer’s customers, or (3) specialized training by employer

34
Q

Bear the Risk (mistake)

A

A party bears the risk when they either have conscious ignorance or the court allocates the risk

35
Q

Force Majeure Clause

A

An express agreement addressing the effect on the parties’ duties upon occurence of possible future events

36
Q

Effect of Statute of Frauds on Promissory Estoppel claim

A

(Traditional rule) claim is subject to SoF. (Modern rule) is enforceable notwithstanding the SoF

37
Q

Weighing Factors: Injustice will result (5 elements)

A

(1) availability and adequacy of other remedies, including restitution; (2) scope of reliance; (3) extent to which reliance goes along with terms of the promise; (4) reasonableness of reliance; and (5) foreseeability

38
Q

Effect of Misrepresentation of Age on Infancy Doctrine

A

may still void his contract under the infancy doctrine, but the adult may also void the contract

39
Q

Court’s Weighing Factors for Allocation of Risk to a Mistaken Party (3 Elements)

A

(1) Degree of fault, (2) [unilateral], whether the other party invested time and effort to avoid making mistake; (3) whether applying doctrine of mistake to cases of particular subject matter may (a) cause instability in market or (b) lead to the filing of non meritorious suits

40
Q

Bearing the Risk of the Occurrence (Supervening) (2 elements)

A

The party bears the risk unless: (1) the party was not at fault for the occurrence of the event; and (2) upon formation the possibility of the event’s occurrence was not sufficiently foreseeable, or if it was the likelihood was so improbable that it was understandable that the parties left it out.

41
Q

Bearing the Risk of an Unknown Fact (2 elements)

A

The party bears the risk of the unknown fact unless: (1) the party was not at fault for ignorance of fact’s existence; and (2) whether the party had sufficient reason to know the fact’s existence

42
Q

Absence of meaningful choice (2 elements)

A

determined by analyzing (1) respective bargaining powers of contracting parties, and (2) ability of particular contracting party, in light of his education, intelligence, or lack thereof, to understand the terms of the contract

43
Q

Incidental Damages

A

Any commercially reasonable charges,expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer’s breach, in connection with return or resale of the goods or otherwise resulting from the breach

44
Q

Attorney’s Fees Available (2 Options)

A

When (1) there is a statute which provides for attorney’s fees, or (2) if there is a provision in the contract which allows for attorney’s fees in the given circumstances

45
Q

Usual Remedy for Breach

A

award of damages (money=legal remedy, NOT specific performance=equitable remedy)

46
Q

Common Law Expectation Damages Calculation

A

(general damages + incidental losses + consequential damages) - (loss avoided + avoidable losses + unforeseeable losses)
(GD+IL+CL) - (LA+AL+UL)

47
Q

General Damages

A

loss in value to non breaching party of other party’s performance or applicable alternative to loss in value if loss in value cannot be proved to a reasonable certainty

48
Q

Incidental Losses

A

Expenses incurred by the non-breaching party after the breach or repudiation, and that would not have been incurred had the other party performed (such as expenses incurred attempting to secure substitute performance, in actually securing substitute performance including the price paid for the substitute performance, and storing goods that the breaching party failed to accept).

49
Q

Consequential Losses

A

Losses that do not flow directly and immediately from an injurious act but that result indirectly from the act

50
Q

Emotional Disturbance Damages

A

Only available if (1) the breach caused bodily harm or (2) the contract or the breach is such a kind that serious emotional disturbance was particularly likely result

51
Q

U.C.C. Expectation Damages Calculation (buyer’s remedies)

A

When seller breaches, buyer is entitled to (1) recover any portion of the price already paid; and (2) either cover and obtain damages under cover remedy; or if the buyer is not able to recover under cover remedy, obtain damages based on the market price-contract price differential

52
Q

UCC Cover Remedy

A

buyer is entitled to recover difference between the cost of cover and the contract price, plus any incidental or consequential losses resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and that could not reasonably have been prevented by cover or otherwise, minus any expenses saved in consequences of the seller’s breach, if the buyer’s cover was (1) in good faith; (2) without unreasonable delay; (3) reasonable; and (4) of substitute goods

53
Q

UCC Contract Price Market Price remedy

A

If a buyer is not entitled to recover under the cover remedy, the buyer is entitled to recover the

(Contract Price-Market Price) + Consequential Losses + Incidental Losses - Expenses Saved
* CP-MP when buyer learned of breach
*

difference between the contract price and the market price at the time when the buyer learned of the breach, plus any incidental or consequential losses resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and that could not reasonably have been prevented by cover or otherwise, minus any expenses saved in consequence of the seller’s breach.

54
Q

A contract right can be assigned without the obligor’s consent unless…

A

(1) the parties have agreed not to allow assignment; or (2) (a) the assignment would materially change duty of obligor, (b) materially increase burden or risk imposed on obligor, (c) materially impair chance of obtaining return performance, or (d) materially reduce its value to obligor

55
Q

Gratuitous Assignment is revocable unless

A

Assignment is: (1) in writing; (2) signed or under seal; and (3) delivered by the assignor

56
Q

Effect of Assignment of contract

A

gives assignee the right to obligor’s performance, and gives him the right to sue obligor for breach if breach occurs

57
Q

Assignment

A

Manifestation by holder of a contract right to presently transfer the right to another person, and to not retain any control over the right assigned or any power of revocation

58
Q

Delegation (2 Elements)

A

A party may delegate her contract duties to a third party without consent of obligee unless: (1) parties have agreed there will be no delegation; or (2) the obligee has a substantial interest in having the delegator perform or control the acts promised

59
Q

Effect of Delegation

A

If delegation is effective, obligee is required to accept performance by delegatee in liu of performance by delegator, and failure to do so is either a breach or a repudiation. If neither delegator nor delegatee performs, obligee can sue either delegator (privity of contract) or delegatee (under intended beneficiary law, assuming delegatee made enforceable promise to perform) / Delegator may also sue delegatee if delegatee fails to perform.

60
Q

Tacit Agreement Test

A

Imposes an additional requirement that the breaching party have expressly or impliedly agreed to be liable for the loss.

61
Q

U.C.C. Expectation Damages

A

When the seller breaches, the buyer is entitled to (1) recover any portion of the price already paid; and (2) either cover and obtain damages under the cover remedy or, if the buyer is not able to recover under the cover remedy, obtain damages based on the market price-contract price differential.

62
Q

Liquidated damages

A

A contract provision specifying an amount of damages to be paid in the event of a breach is enforceable if (1) at the time of contracting the amount of damages that would result from a breach were difficult to predict; and (2) the sum agreed on as damages represents a reasonable estimate of damages expected to occur in the event of a breach

63
Q

Specific Performance and Injunction (Common Law) (4 elements)

A

is within court’s discretion, and will only be ordered if: (1) damages is inadequate to meet expectation interest; (2) such relief would be unfair; (3) the order would not impose burden of enforcement and supervision disproportionate to advantages; and (4) neither party’s remaining duties include a personal service.

64
Q

Seller Remedy (resale remedy)

A

If a buyer wrongfully rejects goods, and the seller resells the goods in good faith and in a commercially reasonable manner, the seller may recover
(Resale Price - Contract Price) + Incidental Losses - Expenses Saved

65
Q

Seller’s Consequential Losses (U.C.C.)

A

Never Recoverable

66
Q

Seller Remedy (no resale)

A

If a buyer accepts goods and fails to pay for them, or the buyer wrongfully rejects goods and the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such an effort would be unavailing, the seller may recover
Contract Price + Incidental Losses

67
Q

U.C.C. (seller’s contract price-market price remedy)

A

If a seller is not entitled to recover under the “resale remedy,” the seller is entitled to recover
l((Contract Price - Amount Paid) - Market Price)l + Incidental Losses - Expenses Saved

68
Q

U.C.C. (lost-volume seller’s profit remedy)

A

If any of the seller’s other available remedies would not put the seller in as good a position as performance would have, the seller can receive

Contract Price + Incidental Losses - Expenses Saved

if the seller can establish that (1) Seller had the capacity to produce or obtain a unit in addition to the unit sold; (2) it would have been profitable for Seller to have produced or obtained and sold both; and (3) Seller probably would have made an additional sale had the buyer not breached. U.C.C. § 2-708(2).

69
Q

Bear the Risk (Frustration of Purpose)

A

If you were at Fault and it was Foreseeable

70
Q

U.C.C. Disgorgement remedy (buyer remedy)

A

The non-breaching party is entitled to the profit realized by the breaching party from breach if (1) breach was deliberate and (2) non-breaching party’s expectation interest can’t be adequately protected through award of damages.

71
Q

Reliance Damages (3 elements)

A

awarded when non-breaching party: (1) only seeks reliance damages; (2) expectation damages would be less than reliance; (3) policy reasons prevent courts from permitting expectation damages for the type of breach.
* if contract is a losing contract, non-breaching party is not entitled to damages in excess of expectation damages

72
Q

Reliance Damages Equation

A

Amount spent in reliance minus any losses the breaching party can prove the non breaching party would have incurred (foreseeable losses)

AS - FL

Second Semester (6 decks)

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