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Semester II Contracts > Contracts II Plain Language Outline > Flashcards

Contracts II Plain Language Outline Flashcards

1
Q

Restatement 151; Mistake, What is a mistake?

A

A mistake is a belife not in accord with the facts

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2
Q

“I know you are looking for a car no larger than 15 feet wide, Chevy trucks are 15 feet wide, so I will sell you a Chevy truck” When a Chevy truck is actually 18 feet wide.

Mistake or misunderstanding?

A

Mistake

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3
Q

“I will sell you a house in Paris” But there are two cities named Paris

A

Misunderstanding

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4
Q

“I will purchase 50 chickens from you, when they arrive, for market price” When there are different types of chicken with different market prices

A

Misunderstaning

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5
Q

“I will purchase 50 chickens from you, when they arrive, for market price” when the animals yet to arrive are actually pidgeons.

A

Mistake

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6
Q

What does it for a contract to be void?

A

The transaction upon which the contract was purportedly formed created no contractual obligations at all

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7
Q

What does it mean for a contract to be unenforcable?

A

The transaction upon which the contract was purportedly formed did create a contract, but a court will not enforce it

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8
Q

Restatement 152; Mistake, When will a mistake by both parties make a contract voidable?

A

(1) At the time of entering a contract
(2) Both parties are mistaken in fact
(3) about a basic assumption that has material effect on their exchange
and;
(4) the adversely affected party did not assume the risk of mistake

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9
Q

Restatement 154; Mistake, When will a party bear the risk of a mistake?

A

(1) It is agreed upon by the parties
or;
(2) is aware at contract time
(3) that their knowledge of mistake-related facts is limited and
(4) treats this limited knowledge as sufficient (take on risk themselves)
or;
(5) The court allocates the risk to them because it is reasonable

NOTE: Figure out what reasonable and what conduct “treating something as sufficient.” is(

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10
Q

Restatement 153; Mistake, When will one parties mistake make a contract voidable?

A

When there is a mistake
(1) on the basic assumptions of the contract
(2) that has a material effect
(3) Which is averse to him
(4) The mistaken party does not assume the risk
and;
(5) enforcing the mistake would make the contract unconsionable
or;
(6) The other party had reason to know of the mistake or their fault caused the mistake

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11
Q

Restatement 159; Misrepresentation, What is a misrepresentation

A

As assertion not in accord with the facts including

Opinions, half-truths, concealment, failures to disclose

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12
Q

Restatement 159; Misrepresentation, When is a misreprentation fraudulent?

A

(1) When a misrepresentation is intended to induce a party to enter into a contract and
(2) the misrepresenter knows or believes the assertion is false
or;
(3) knows he does not have a basis for what has been stated or implied

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13
Q

Restatement 164; Misrepresentation, When can a mistrepresentation make a contract void

A

When
(1) assent by the non-misrepresenting party is induced by a
(2) fraudulent or material misrepresentation
(3) that the non-misrepresenting party is justified in relying on

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14
Q

Restatement 164; Misrepresentation, What happens when the misrepresenting party is a non-party to the transaction?

A

(1) It is still voidable
unless;
(2) the non-party is in good faith and
(3) does not have reason to know the misrepresentation gives value or creates a material reliance on that misrepresentation

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15
Q

Restatement 161; non-disclosure When is non-disclosure the same as an assertion that something is not the case?

A

(1) Disclosure of a fact is necessary to prevent a previous assertion from being a fraudulent, material, or, a misrepresentation
(2) Where one knows disclosure of a fact would correct a mistake on a basic assumption, such that failing to correct the mistake amounts to a faliure to act in good faith/in occordance with reasonable standards of fair dealing
(3) Where one knows disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing
(4) Where another person is entitled to know this fact because of their relations of trust and confidence between them

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16
Q

Restatement 168; Reliance on Assertion of Opinion, Tell me what makes the “is justified” element.

A

Reliance on opinions are only justified when opinion getter

(1) is reasonable in reliance based on
(2) relationship of trust an confidence
or;
(3) reasonably belives that the opinion have, comparatively, special skill/judgement/ or objectivity on the subject
or;
(4) is specially susceptable of a misrepresentation of the type involved

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17
Q

Restatement 18; Capacity/Duress, Tell me about age limits and contracts

A

All contracts made by someone are voidable until the beginning of the day before their 18th birthday

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18
Q

Restatement 15; Capacity/Duress, What are the two tests used to determine mental illness?

A

(1) Cognitive test
(2) Volitional/Affective test

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19
Q

Restatement 15; Capacity/Duress, What is the Affective test?

A

(1) One can understand what’s going on
but;
(2) Cannot act reasonably or control their actions
and;
(3) The other party has reason to know their condition

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20
Q

Restatement 15; Capacity/Duress, what is the Cognitive test

A

(1) One cannot understand the
(2) Nature and consequences of the transaction

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21
Q

Restatement 16; Capacity/Duress, When does intoxication create only voidable contractual duties

A

(1) when the other party has reason to know that, because of the intoxication, the intoxicated party cannot
(2) Pass the cognitive or affective test

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22
Q

Restatement 16; Capacity/Duress, When one is intoxicated, what can contracts do?

A

They grant only voidable contractual duties

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23
Q

Basic definitions; What does it mean for our contract to be void?

A

A void contract creates no contractual obligations at all

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24
Q

Basic definitions; what does it mean for a contract or contractual duties to be voidable

A

(1) Contracts incurr contractual duties upon the parties
(2) A contractual duty can be voidable
(3) Voidable contractual duties give the power to dissolve the legal relationship between the two.

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25
Q

Restatement 175; When will threats render a contract voidable?

A

When an
(1) Improper threat
(2) by the other party leaves the threatenee with no reasonable alternative

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26
Q

Restatement 176; Duress, When will threats be improper

A

A threat is improper if
(1) What is threatened is a crime or tort/would be a crime or tort
(2) What is threathened is ‘criminal’ prosecution
(3) what is threatened is a bad faith use of civil process
(4) the threat would be a breach of good faith/fair dealing
or;
(5) The resulting exchange is not on fair terms + un otra condition

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27
Q

Restatement 175; Duress, What other conditions, in addition to an exchange on unfair terms, will render a threat improper?

A

(1) Threatened act would harm the recipient and would not significantly benefit the party making the threat
(2) the effectiveness of the threat is significantly increased by prior unfair dealing
(3) What is threatened is otherwise a use of power for ‘illegitimate’ ends.

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28
Q

What is undue influence?

A

Undue influence is
(1) unfair persuasion of a party who is under domination of the party persuading
or;
(2) Unfair persuasion of a party where the relationship between the two justifies that party assuming the other will act consistent with the persuaded parties’ welfare

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29
Q

Restatement 177; Undue influence, When will undue influence make a contract voidable?

A

When their manifestation of assent is induced by the other party through undue influence.

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30
Q

Unconscionably; What are the elements of unconscionably?

A

(1) imbalance of bargaining power
(2) unfair terms - Think ‘suprise’

NOTE: what is the difference between imbaance here and Inequality

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31
Q

Unconsciobability; What factors to consider for unconscionability?

A

(1) inequality of bargaining power
(2) Lack of negotiation
(3) Fine print
(4) Terms are unreasonably favorable
(5) It ‘shocks the concious’
(6) no man in his senses and not under a delusion would make it
NOTE: What the hell does “fine print” mean?

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32
Q

Unconcioability, What may a court do in response to an unconscionable term or contract?

A

A court may refuse to enforce a contract or term that it deems unconcounable at the time of contract

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33
Q

What guarentees does the UCC provide that the restatements do not in terms of unconscionability?

A

Under the UCC, parties may be afforded a reasonable opportunity to present evidence for
(1) commercial purpose
(2) commercial setting
(3) commercial effect

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34
Q

Under the UCC, what is the basic test for unconciounability?

A

In light of
(1) the general commercial background and
(2) The commercial needs of the particular trade or case
the clauses involved end up being
(3) so one-sided
(4) that to enforce them would propogate oppression and
(5) unfair suprise

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35
Q

What is the default rule as to allow courts to render a contract unconscionable?

A

A contract requires both Procedural and Substantive unconsionability to declare a contract or term unconsonable

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36
Q

Restatement 512; Illegality, when will a bargain be considered Illegal?

A

A bargain is illegal when its
(1) formation or performance
is
(i) criminal
(ii) tortious
(iii) or otherwise opposed to public policy

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37
Q

Restatement 598; Illegality, When can parties to illegal bargains recover?

A

Generally, never.
NOTE: But see 599/600?

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38
Q

Restatement 178; Illegality, when will a term be unenforceable by means of public policy?

A

When it does not pass
a balancing test

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39
Q

Restatement 178; Illegality, what factors are on the side of enforcing an agreement for public policy reasons?

A

(1) the parties justified expectations
(2)any forfeiture that would result if enforcement were denied
(3) special public interest in the enforcment of a particular term

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40
Q

Restatement 179; Illegality, What are the factors against enforcing a term for public policy reasons?

A

(1) Strength of the policy shown by legislation or judicial desicions
(2) Likelihood that refusal to enforce the term will further that policy
(3) the seriousness of any misconduct involved and the extent to which that conduct is deliberate
(4) the directness of the connection between that misconduct and the term

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41
Q

Restatement 198; Illegality, When can a party claim restitution for a promise deemed unenforceable on grounds of public policy?

A

When a party was
(1) excusably ignorant of facts or minor legislative details that make the difference in terms of enforcability
(2) is not equally in the wrong as the promisor

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42
Q

Restatement 198; Illegality, When can a party claim restitution for a ‘performance’ deemed unenforceable on grounds of public policy?

A

When the party has
(1) withdrawn from the transaction before the improper purpose is acheived
or;
(2) allowing the claim would end the situation that’s contrary to public interest

Note: figure out what this means lol

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43
Q

What is a Parol Agreement?

A

(1) An oral or written agreement
(2) made before or at the same time as
(3) a final written agreement

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44
Q

When is the ONLY time when you can use the PER?

A

When a party
(1) offers evidence of a
(i) term
or;
(ii) obligation
that is ‘allegedly’
(2) part of the parties agreement

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45
Q

What is not applicable when evidence offered for an interpretation issue, modification, or condition precedent?

A

The Parole Evidence Rule

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46
Q

What is the Parole Evidence Rule?

A

Generally, a party cannot introduce a prior or contemporaneous agreement that contradicts a
(1) later
(2) written
(3) contract
(4) Unless it falls under one of four exceptions

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47
Q

What are the four exceptions for the Parole evidence rule?

A

Parole Evidence can be introduced
(1) to correct a clerical/typographic error
(2) to establish a formation defense
(3) to interpret vague/ambiguous terms
(4) to supplement a ‘partially integrated’ writing

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48
Q

What are the eight formation defenses?

A

(1) Incapacity
(2) Duress
(3) Undue influence
(4) Mistake
(5) Against public policy
(6) Misrepresentation
(7) Unconscionably
(8) Illegality

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49
Q

What are the three levels of integration?

A

(1) Not integrated
(2) Partially Integrated
(3) Fully integrated

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50
Q

What are the three different tests for deciding if a writing is integrated?

A

(1) The ‘Lath’ Textual test
(2) The ‘Masterson’ Contextual test
(3) UCC 2-202 approach

51
Q

How does one apply the ‘Lath’ Textual test?

A

Ask if the writing “on its face” appears to be complete and exclusive. MORE NEEDED

52
Q

How does one apply the ‘Masterson’ Contextual Test?

A

Include all surrounding circumstances in one’s integration analysis. MORE NEEDED

53
Q

What is a merger clause?

A

A clause in a contract stating it is intended to be a fully integrated final agreement

54
Q

What are the two possible merger clause tests?

A

(1) The ‘Masterson’ test
(2) Wiliston’s rule

55
Q

What is Wiliston’s rule for integration of a writing?

A

Merger clauses are decisive unless
(1) the instrument is ‘obviously’ incomplete
or;
(2) the merger clause is the product of fraud/mistake

56
Q

What is the ‘Masterson’ rule for integration clauses

A

Masterson holds they are
(1) informative along with
(2) surrounding circumstances
(3) as to an actual final goal which is
(4) to determine the intent of the parties to finalize the contract
unless;
(5) the merger clause is seperately negotiated, then it is decisive

57
Q

What is “interpretation?”

A

Where a court will ascertain the meaning of specific contract language, or imply terms where a contract might be silent.

58
Q

What are the two tests that courts will use to determine if a term is susceptible to more than one meaning?

A

(1) ‘Giancontieri’ Textual approach
(2) ‘Drayage’ contextual approach

59
Q

How do we know there is an interpretation issue?

A

When a term in the contract is reasonably susceptible to more than one meaning.

60
Q

What happens if both meanings are found equally reasonable?

A

Then, it will be a misunderstanding case

61
Q

How do you tell which side wins in an interpretation issue?

A

You decide which meaning is more reasonable

62
Q

Give 3 reasonability factors for contract interpretaion

A

(1) An interpretation that gives a reasonable, lawful, effective meaning is more reasonable than one that does not

(2) Specific/exact terms are more reasonable than general language

(3) Seperately negotiated terms more reasonable than standardized or non-negotiated terms

63
Q

Under a textualist approach, What will be the sole determiner of ambiguity?

A

The plain meaning of the language in the contract.

64
Q

What factors will determine the reasonability of a contract term? Order them from last to first in terms of priority.

A

(1) Course of dealing
(2) Usage of trade
(3) Course of performance
(4) Language;
(i) of the contract
(ii) as stated in the dictionary
(iii) as interpreted by canons of construction

65
Q

What is the default rule for who gets ruled against in interpretation problems

A

Generally, the meaning ‘against’ the drafter of the contract will be preferred

66
Q

What are the three ‘language of contract’ factors, and how do we account for them?

A

(1) Plain Meaning of the contract (essentially, how the judge understands contract ‘on its face’)
(2) Dictionary definitions of the terms
(3)Canons of construction
NOTE: Figure out what the canons of construction are for this class.

67
Q

What is “Usage of trade” when discussing interpretation?

A

(1) A practice or method
(2) regularly used in a particular trade that
(3) justifies an expectation regarding
(4) the transaction in question

68
Q

What is a “course of dealing” when discussing an interpretation issue?

A

(1)A Sequence of conduct
(2)between the parties
(3)particular to the transaction in question

69
Q

What is a “course of performance” when dealing with an interpretation issue?

A

A sequence of conduct involving repeated occasions for performance, which the other party accepts.

70
Q

What are the “mechanics of good faith”

A

(1) A mandatory term implied in every contract
(2) that can only be modified ‘not excluded fully’ by the express terms of the contract

71
Q

What is a warranty?

A

A warranty is a guarantee that a representation from a party is true.

72
Q

What are the three types of warranties?

A

(1) Express warranties
(2) Implied waranties
(3) Disclamers

73
Q

When will(and what case states) when a statement can become an express warranty?

A

‘Rogath’ states a statement can become an express warranty only if it is, in some way “a basis of the bargain.”
if it is
(1) an affirmation of fact
(2) a description of the goods
(3) or a sample or model of the goods

74
Q

Under the UCC, what does not create an express warranty?

A

A mere opinion or commendation of the good

75
Q

What are the three types of implied warranties

A

(1) Implied Warranty of title
(2) Implied warranty of merchantibility
(3) Implied warranty of fitness for a particular purpose

76
Q

What is a warranty of title?

A

It is a warranty that the seller has the right to transfer ownship of the good in question

77
Q

What is a warranty of merchantability? When is it implied?

A

(1) A warranty of merchantability will be implied in a contract where the seller is a merchant of the goods in question.

(2) A warranty of merchantability warrants that
(i) The product is fit for the ‘ordinary purposes’ for which some goods are used

78
Q

What is a warranty of fitness for a particular purpose?

A

It is
(1) When a seller has reason to know
(2) a particular purpose that the goods are to be used for
and;
(3) The buyer is relying on the seller’s skills or expertise in selecting a good suitable for the purpose

79
Q

When will a warranty be disclaimed?

A

(1) When express:
(i) Generally never because,
(ii) since language disclaiming it would be inoperative due to inconsistency
(2) When Implied:
(i) Disclaimer must be conspicuous
(ii) plus some other elements depending on if it is merchantability or fitness

80
Q

I have an effective warranty disclaimer in my contract. What piece of the PER can prove a warranty?

A

Trick question. PER just doesn’t matter once you have an effective warranty

81
Q

General merger clauses exclude all implied warranties, true or false?

A

It depends.
(1) Generally, merger clauses do not disclaim implied warranties.
(2) But, the warranty of fitness for a particular purpose can be “excluded by general languge”
if;
(i) in writing
(ii) conspicuous

82
Q

(1) Give two examples of language that can count as a disclaimer of merchantability
(2) Tell me what examining a good does

A

(1)
(i) “as is”
(ii) “With all faults”
(2) Examining a good ‘fully’
(i) meaning as long as one desires or refusing to examine it
(ii) it excludes implied warranty in regards to defects which an examination should have been revealed to him

83
Q

Restatement 235; Performance, What kinds on nonperformance shall be breach?

A

Any nonperformance where performance is due is breach

84
Q

What are the possible categories of contract terms?

A

A contract term may be
(1) A promise
(2) A condition
(3) Both a promise or a condition

85
Q

What are the two types of conditions?

A

(1) Condition Precedent
(2) Condition Subsequent

86
Q

What is the difference between a condition and a promise in contracts?

A

One has a contractual duty to do what they promised - so they legally must do what they promised.
but;
Conditions are not certain to occur, and generally trigger some kind of duty.

87
Q

What is a condition precedent?

A

A condition precedent is a condition that must occur before a promisors duty arises.

88
Q

What is a condition subsequent?

A

A condition subsequent will discharge or extinguish contractual duties when they happen.

89
Q

What is the difference between a warranty and a condition?

A

(1) Warranties are ‘Swords’
(2) Conditions are ‘Shields’

90
Q

What is forfeiture?

A

(1)Forfeiture is the loss of
(i) a right
(ii) privilege
or;
(iii) property
as a consequence of violating the law or neglecting a legal duty

91
Q

Restatement 227; Conditions, What is the default rule for resolving when an event is a condition of a duty?

A

(1)An interpretation that reduces an the party owed an obligation’s risk of forfeiture is preferred
unless;
(2) the event was within the obligee’s control or
(3) the circumstances indicate he has assumed the risk

This card needs more clarification

This card needs more clarification

92
Q

Can conditions be excused, waived, neither, or both?

A

Conditions can be waived and excused

93
Q

What is the difference between an excuse of a condition and waiver of a condition?

A

Kind of another trick question. They have the same effect
but;
(1) Courts excuse conditions
(2) Parties waive conditions

94
Q

What are the three kinds of waivers?

A

(1) Election Waiver
(2) Estoppel Waiver
(3) Waiver w/o either

95
Q

Can waivers be retracted?

A

(1) Yes.
but;
(2) You cannot retract them after they have been relied upon

96
Q

What is an election waiver?

A

Where a party elects to act in a way inconsistent with an advantageous use of a condition, they cannot then go back and insist on the condition

97
Q

What is an estoppel waiver?

A

Where a condition is waived because a party materially changes their position based on relying in a representation that the waiving party made.

98
Q

What is a waiver without estoppel or election?

A

Where one party has promised or represented that they will not insist upon express conditions, Waiver(excuse) can be used as a judicial device to avoid forfeiture where an agreed modification cannot be found.

NOTE: Learn more about this SEE GENERAL THEORY OF WAIVER P. 28

99
Q

What are the three kinds of conditions?

A

(1) Express
(2) Implied
(3) Constructive

100
Q

What are the two kinds of promises?

A

(1) Independent
(2) Dependent

101
Q

What happens when a condition fails to occur?

A

The promisor is excused from performance

102
Q

What is the presumption for the timing of performances? What is this presumption called?

A

Unless
(1) Language or circumstances indicated otherwise
(2) Each performance is a condition of each other
(3) This is called constructive conditions of exchange

103
Q

What is a promissory condition?

A

A term that is both a promise and a condition

104
Q

Give me an example of a promissory condition (just be honest w/ yourself if you gave a good one. The one on the other side of the card is just an example to help you understand.)

A

If I promise to sell you my car, you will give me $15,000 within 30 days. “My promise to sell you the car” is a promissory condition. The performance of my promise - tendering the car - is a condition of your paying the money in 30 days. If I don’t do it, you don’t have to pay me the money. The term in which I promise the car is both a promise and a condition of your later performance
If a promissory condition fails to occur, the innocent party is BOTH excused from performing AND can sue for damages.

105
Q

When can an implied warranty of fitness for a particular purpose be disclaimed?

A

(1) it is conspicuous
(2) it is in writing
(i) and may be written in “general lanuguage”

106
Q

When can an implied warranty of merchantability be disclaimed?

A

(1) it uses certain words such as
(i) “merchantability”
(ii)”as is”
(iii) “with all faults”
or;
(iv) makes it clear by common understanding that there is no implied warranty”
(2) and is conspicuous

107
Q

What are the materiality factors?

A

(1) Injured party deprived of reasonably expected benefits
(2) If the injured party can be adequately compensated
(3) Failing party and forfetuire
(4) The likelhood of the failing part to cure their failure
(5) Weather the party failing comports with good faith

Look in the supplement to figgur out wth this means

108
Q

Impacticability elements?

A

(1) Event that makes performance impracticable takes place after contract is made
(2) Non-occurance of that event was a basic assumption of the contract
(3) The adversely affected party is not at fault
(4) The adversely affected part did not assume the risk of the event

109
Q

What is a “basic assumption?”

A

NOTE: need more details on this

110
Q

What is a repudiation?

A

An expression or conduct which displays intent that one party will not be able to preform their contractual duty ahead of time

111
Q

Will an expression of doubt toward being willing to perform be a redpudiation?

A

No. But it can be create insecurity that ‘could’ create a repudiation in Restatement 251

112
Q

When is a “faluire to give assurances” treated as repudiation?

A

When
(1) after reasonable grounds arise to belive the obligor will commit a breach
and;
(2) the obligee demands assurance of performance
(3) the obligor does not give this assurance in a reasonable time.

113
Q

What kind of conduct is explicitly stated in Restatements as counting as a reasonable ground of belife?

What do we look at to see if there are reasonable grounds for belife?

Reasonable grounds of belife for what?

A

(1) Minor breaches
(2) events that indicate a parties inability to perform

(3) the totality of the circumstances

114
Q

Give me three factors that can “exclude or modify” implied warranties

A

Course of dealing
Course of performance
Usage of trade

115
Q

What does good faith look like under UCC?

A

(1) Honesty in fact
(2) observence of reasonable commercial standards

116
Q

What does good faith look like under restatements?

A

(1) Evasion of the spirit of the bargain
(2) lack of diligence/slacking off
(3) abuse of power to specify terms
(4) willful rendering of imperfect performance
(5) interference with or faliure to cooperate in the other party’s performance

NOTE: READ AND MAKE A CARD FOR EACH GOOD FAITH CASE TO GET VIBES

117
Q

What are constructive conditions of exchange?

A

(1) Unless otherwise indicated
(2) by language or circumstances
(3) performances are implied conditions of the other

118
Q

What are the consequences of a material vs a total breach?

A

(1) Material breach justifies a suspension of one’s performance
(2) total breach justifies termination of the contract

119
Q

What factors make a breach material?

A

(1) Injured party deprived of the benefit reasonably expected?
(2) Injured party adequately compensated for being deprived?
(3) Will the failing party suffer forfeiture?
(4) likelithood failing party may cure their failure under all the circumstances?
(5) Does the failing party comply with the standards of good faith and fair dealing?

120
Q

What does it mean for a contract to be divisible?

A

A court may divide a contract into ‘subcontracts’ where each part can be considered “agreed equvilents”

121
Q

What does it mean for a subcontract to be an “agreed equivilent?”

A

N/A

122
Q

Example that will not make a contract divisible on its own?

A

Progress payments

123
Q

What are the factors under which specific performance will be granted

A

For:
(1) Unique goods and services
(2) Weakly, When dollar value is too uncertain to calculate
Against:
(3) Reasonable alternatives in damages
(4) Requires too much court supervision
(5) Terms of Contract are to uncertain or unfair
(6) Involuntary Servitude
(7) Weakly, in situations where breach is efficient

Nipsco?

124
Q

What about injuction?

A

‘Ebay case’ think performance

Semester II Contracts (3 decks)

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