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Contracts Intro Cards Flashcards

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1
Q

What types of contracts are primarily governed by common law?

A

Contracts for services.

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2
Q

What types of contracts are primarily covered by Article 2 of the Uniform Commercial Code?

A

Contracts for the transfer of goods.

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3
Q

How does common law applies to the transfer of goods.

A

Base law, but the UCC Article 2 takes precedence.

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4
Q

What is a bilateral contract?

A

One party makes an offer, and the other party accepts the offer by manifesting assent, provided there is adequate consideration.

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5
Q

What is a unilateral contract?

A

One party makes an offer and an the other party accepts by performing.

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6
Q

How must an offer be communicated to the offeree?

A

With reasonable certainty.

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7
Q

Can an offer terminate prior to acceptance?

A

Yes.

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8
Q

How does an offeree accept a contract?

A

By manifesting unconditional assent.

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9
Q

How does an offeree accept a contract (what means)?

A

With a promise or performance.

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10
Q

What is the contract mirror-image rule?

A

For common law contracts, the offeree must unconditionally agree to the exact terms offered.

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11
Q

What is the mailbox rule of contracts?

A

An acceptance of an offer by mail is proper dispatch.

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12
Q

Can an offeree accept a contract with silence?

A

Generally, no. Mere silence is a failure to accept or reject an offer.

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13
Q

How is intent important in contracts?

A

A binding contract requires the parties manifest intent to enter into a bargain.

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14
Q

What is contractual consideration?

A

Bargained-for exchange of promises or performance.

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15
Q

What are the minimum requirements of consideration?

A

Exchange of value generally qualify for minimum consideration.

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16
Q

Can a party satisfy his consideration requirement by performing a legal duty that is already owed?

A

No. This is insufficient consideration.

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17
Q

What are two acceptable substitutes for contractual consideration?

A

(a) Promissory estoppel and (b) statutory substitute.

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18
Q

What is the Promissory Estoppel exception to Consideration?

A

This is an equitable form of consideration that allows the contract to be enforced. It requires: (i) that the Promisor reasonably expected the promisee to rely on the promise; (ii) that the promisee did in fact rely on the promise; and (iii) that as a result, promisee suffers a substantial detriment from the lack of performance of the contract.

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19
Q

What is the Statutory Substitute to Consideration?

A

In some states, a signed contract can be upheld even if Consideration was not exchanged.

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20
Q

What are the features of an implied-in-fact contract?

A

(i) one party provides another with valuable services, property, or money; (ii) the recipient has reason to know of this; (iii) the circumstances reasonably indicate the services, property, or money was provided with the expectation of compensation; and (iv) the recipient manifests assent.

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21
Q

What are the breach of contract defenses?

A

(a) lack of capacity; (b) duress; (c) undue influence; (d) misrepresentation; (e) illegality; (f) public policy; (g) unconscionability; (h) statute of frauds

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22
Q

How is the lack of capacity defense used for a breach of contract – what are its requirements?

A

A party may defend a breach by arguing lack of capacity due to the party’s (i) infancy; (ii) mental illness/defect; or (iii) intoxication at the time of contract.

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23
Q

How is the duress defense used for a breach of contract – what are its requirements?

A

A party may defend a breach by arguing duress when the party’s assent to the contract was induced by an improper threat leaving no reasonable alternative but to assent.

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24
Q

How is the undue influence defense used for a breach of contract – what are its requirements?

A

A party may defend a breach by arguing undue influence when assent is based on unfair or excessive persuasion by someone who either (1) dominates the party or (2) shares a special relationship of trust and confidence with the party, so that the party is justified to think the influencer will act I his best interest.

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25
Q

How is the misrepresentation defense used for a breach of contract – what are its requirements?

A

When the party’s assent is induced by an untrue assertion that is fraudulent or material, provided that the party’s reliance on the misrepresentation is justified.

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26
Q

How is the illegality defense used for a breach of contract – what are its requirements?

A

If a party would have to rely on the occurrence or nonoccurrence of an illegal act to support a right to relief under the contract, the promise is unenforceable.

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27
Q

How is the public policy defense used for a breach of contract – what are its requirements?

A

When enforcement would contravene public policy (injurious or repugnant to the public interest or welfare or good morals).

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28
Q

How is the unconscionability defense used for a breach of contract – what are its requirements?

A

Unconscionability may be asserted if both (i) the bargaining process and (ii) the terms are so one-sided as to be fundamentally unfair.

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29
Q

How is the statute of frauds defense used for a breach of contract – what are its requirements?

A

Six types of contracts are unenforceable unless the terms are set forth in a writing signed by the party to be charged.

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30
Q

What are the types of contracts covered by the statute of frauds (requiring a written contract)?

A

(i) surety contracts; (ii) land contracts; (iii) contracts that cannot be fully performed in one year; (iv) contracts for the sale of goods >$500; (v) executor-administration contracts; and (vi) marriage contracts.

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31
Q

How do courts interpret the language of contracts

A

First, by plain meaning (unless the parties clearly intended a special meaning). However, for ambiguous terms, interpretation will involve the rules of construction and the clarification of terms.

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32
Q

What does it mean for a contractual term to be ambiguous?

A

A patent ambiguity appears on the contract’s face. A latent ambiguity is when the contract is clear but multiple reasonable interpretation can exist under the circumstances.

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33
Q

What are contractual rules of construction?

A

Rules the court follows in choosing among reasonable interpretations of a contract. But the rules do not apply if the result would be inconsistent with the contract’s clear, expressed language.

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34
Q

Will a court enforce a contract with indefinite or omitted terms?

A

Yes, if the parties intended to form a binding agreement; in that case, the court will supply a reasonable term and enforce the contract. But no, if the parties did not intend to form a binding agreement, then the court will void the contract.

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35
Q

Will a court void a contract for misunderstanding?

A

Yes if the parties assigned different meanings, and neither knew of the others’s understanding. But if one party know of the other party’s understanding, the court will interpret the term against the party who knew the other’s understanding.

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36
Q

Is there a baseline rule of good faith and fair dealing for contracts?

A

Yes.

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37
Q

What is the parol-evidence rule for contracts?

A

Courts cannot consider evidence of contemporaneous oral or written agreements (or any other evidence outside the four corners of the contract) to vary or contradict the unambiguous terms of the integrated agreement.

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38
Q

What, technically, is a breach of contract?

A

Failure to perform when performance is due.

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39
Q

Must a non-breaching party perform if the other party has breached?

A

If the breach is minor or technical, the non-breaching party must render performance (and can still seek damages). If one party commits a material breach by failing to deliver substantial performance when due, then the non-breaching party may suspend performance.

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40
Q

What actions of a breaching party will discharge the non-breaching party’s duty of performance?

A

(i) the breaching party failed to cure the breach within a reasonable time after performance is due; (ii) time is of the essence; (iii) cure is impossible or not forthcoming; (iv) the breaching party repudiates the contract.

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41
Q

What is the obligation of non-breaching party before seeking a remedy for breach?

A

The non-breaching party must fully perform or at least tender (credibly offer) performance.

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42
Q

When does a Buyer commit UCC Article 2 breach in a contract for the sale of goods?

A

When the Buyer (i) failed to make a payment due; (ii) wrongfully rejects the goods; (iii) wrongfully revokes acceptance of the goods; or (iv) repudiates the contract.

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43
Q

When does a Seller commit UCC Article 2 breach in the contract for the sale of goods?

A

When the Seller (i) when goods or delivery deviate at all from the contract (because the perfect-tender rules requires that the goods and delivery must conform to the contract in every respect). The Buyer has a right to (i) inspect goods; (ii) reject nonconforming goods; (iii) revoke the acceptance of goods. The Seller has a limited right to cure any nonconformity in the goods.

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44
Q

What’s a common law contract anticipatory repudiation?

A

If one party notifies the other party that he will not perform by either (i) a statement of intent to breach or (ii) a voluntary, affirmative act that renders a party unable to perform, then the non-breaching party may immediately seek redress and remedies for breach of contract.

45
Q

What’s the UCC’s rule on anticipatory repudiation?

A

If one party announces it will not perform, and if the lost performance would substantially impair the contract’s value to the non-repudiating party, that party may (i) immediately suspend performance and (ii) await performance for a commercially reasonable time or immediately available himself of remedy for breach.

46
Q

A breach can be excused for what reasons?

A

If performance is impossible or impracticable, or the principal purpose of the contract is substantially frustrated.

47
Q

What must a party claiming changed circumstances (as an excuse to breach) show?

A

(i) the nonoccurence of the event was a basic assumption of the contract; (ii) that the even tis not the non-performing party’s fault; and (iii) the nonperforming party has not assumed the risk (by contract language).

48
Q

When can a breaching party assert the excuse of impossibility?

A

If a contract cannot be performed by anyone . Generally, only three types of events render performance impossible: (i) death or incapacity; (ii) destruction of the subject matter; (iii) prevention of the performance by law.

49
Q

What are the three common types of an impossibility excuse to a contract?

A

(i) death of the performing party; (ii) destruction of the subject matter; (iii) prevention of performance by law.

50
Q

When can a breaching party assert the excuse of impracticality?

A

When it will cause extreme and unreasonable difficulty, expense, injury, or loss to one of the parties (even if it still possible).

51
Q

Can a contract be excused if performance if possible but impractical?

A

Yes, it can still be excused if performance will cause extreme and unreasonable difficulty / expense / injury.

52
Q

When can a breaching party assert the excuse of frustration of purpose?

A

When performance has become virtually worthless, regardless of whether it is practical or possible.

53
Q

What is a condition in a contract?

A

A contingent event that must occur before one of the parties is required to perform. A party may avoid performance if the condition has not occurred and nonoccurrence is not excused.

54
Q

What’s the difference between express and constructive contract conditions?

A

Express conditions appear in the contract. Constructive conditions are implied by law.

55
Q

Can a party require performance of the counter-party even if the party has not met necessary requisite conditions?

A

Yes, if the party can show an excuse for the nonoccurrence.

56
Q

What excuses for non-occurrence of a condition can a contracting party rely on when seeking performance of the other party?

A

(i) estoppel, (ii) waiver, and (iii) disproportionate forfeiture.

57
Q

What is the estoppel contractual excuse for nonoccurrence?

A

A party that has not met a condition may still seek to enforce a contract where the obligor’s insistence on fit condition prior to performance would unjustly harm the obligee, and the obligee has changed his position in reliance on the obligor’s promise.

58
Q

What is the waiver contractual excuse for not meeting a condition (nonoccurrence)?

A

If the obligor expressly communicates its intent to waive the condition or accepts performance despite knowing the condition has not been met.

59
Q

What is the disproportionate forfeiture excuse for failing to see a condition?

A

If enforcing the condition would harm an obligee who has substantially relied (through preparation of performance) on the exchange.

60
Q

What is a mistake in a contract?

A

A belief that is not in accordance with the facts and law as they exist at the time of contracting.

61
Q

Can a contractual mistake be mutual?

A

Yes.

62
Q

Can a contractual mistake be unilateral?

A

Yes.

63
Q

What is contractual discharge?

A

A party may discharge the other party’s duty to perform, and the party no longer owes the duty.

64
Q

How does Accord and Satisfaction discharge a contractual duty?

A

If a obligee agrees to and accepts substitute performance in satisfaction for the obligor’s existing duty.

65
Q

How does Substituted Contract discharge a contractual duty?

A

If an obligee accepts new contractual terms in complete, immediate discharge of the obligor’s duties under the original contract.

66
Q

How does Novation: Substituted Party discharge a contractual duty?

A

A novation is a type of substituted contract in which the parties are to replace one party to the original contract with a new party who agrees to the substitution.

67
Q

How does Mutual Recision discharge a contractual duty?

A

It is a new contract in which both parties to a prior contract agree to immediately discharge all the other’s remaining duties of performance under the original contract.

68
Q

How does release discharge a contractual duty?

A

A release occurs when one party agrees in writing to discharge a presently existing duty (either immediately or on a condition).

69
Q

How does a contract not to sue discharge a contractual duty?

A

If the parties enter into a binding contract not to sue, the contract is unenforceable.

70
Q

What is a UCC Article 2 Warranty?

A

An express or implied representation that the goods conform to a certain condition.

71
Q

What is a UCC Article 2 express warranty?

A

The seller’s overt representation that the goods conform to certain specifications. An express warranty may arise if the buyer relies on: (i) an affirmation of fact or promise relating to the goods; (ii) a description of the goods; (iii) a sample or model of the goods.

72
Q

What is a UCC Article 2 Implied Warranty of Merchantability?

A

If the seller is a merchant (with respect to the goods of the kind), there is an implied warranty of merchantability, that the goods are fit for the ordinary purpose that the type of good is used for.

73
Q

What is the UCC Article 2 Implied Warranty of *Fitness for a Particular Purpose”?

A

Regardless of whether the seller is a merchant, the UCC implies a warranty for a particular purpose if the seller, a the time of contracting, knows or has reason to know that the buyer (i) requires the goods for a particular purpose and (ii) is relying on the sellers’ expertise or judgment to provide or choose goods suitable or that purpose.

74
Q

Can parties modify or eliminate UCC Section 2 Warranties?

A

Yes, within limits, they may modify or eliminate UCC Article 2 Warranties.

75
Q

What are the three roles that can be assigned to a third-party in a contract?

A

(i) beneficiary; (ii) assignee; (iii) delegates.

76
Q

Who is a contractual third-party beneficiary?

A

One who is not a party to the contract but who receives some advantage from the contract

77
Q

What is a contractual intended third-party beneficiary?

A

A beneficiary who receives a right to performance either (1) to satisfy an existing debt (a creditor beneficiary) or (2) if it appears under the circumstances that the performance was given as a gift.

78
Q

Can an intended third-party beneficiary enforce an obligor’s duty in a contract?

A

Yes. He can enforce the obligor’s duties just as the obligee could, subject to the same defenses the obligor could assert against the obligee.

79
Q

What is a third-party incidental beneficiary?

A

Someone who receives an indirect benefit from a contract’s performance, but is neither a party to the contract nor an intended third-party.

80
Q

Can an incidental third-party beneficiary enforce a contract right?

A

No.

81
Q

What is contactual assignment?

A

An obligee (one to whom performance is owed) may transfer his contractual rights to performance to a third party (the assignee), so that only the assignee is now owed a right of performance by the obligor. It is now upon the assignee to seek redress.

82
Q

What is contractual delegation?

A

In delegation, and obligor (one who owes a performance) arranged for a third-party to perform the obligor’s duties.

83
Q

What is the relationship between Assignment and Delegation under UCC Article 2?

A

Absent a clear contrary indication, an assignment of contractual rights also operates as a delegation of the assignor’s duties.

84
Q

What four common law remedies are available to a party seeking a remedy for a breach of contract?

A

(i) Damages; (ii) Restitution or Quasi-Contract; (iii) Specific Performance; (iv) Injunction.

85
Q

What are the four types of common law damages?

A

(i) Expectation damages; (ii) Reliance damages; (iiI) Liquidated damages; (iv) Avoidable losses.

86
Q

What are the two types of common law expectation damages?

A

(i) Incidental damages and (ii) consequential damages.

87
Q

What is the injured party’s aim in expectation damages?

A

To put the party in the position he would have occupied had the contract been fully performed.

88
Q

What are are incidental damages when calculating expectation damages?

A

Ordinary expenses that the breaching party should reasonably expect of foresee the injured party to incur.

89
Q

What are consequential damages when calculating expectation damages?

A

Consequential damages will arise from the special circumstances of the injured party; they are not recoverable unless the breaching party had reason to know of those special circumstances.

90
Q

What is the injured party’s aim in seeking reliance damages?

A

To be put in the position he would have occupied if the contract had never been made.

91
Q

What is the injured party’s aim in seeking liquidated damages?

A

Liquidated damages are a fixed measure for damages set forth in the contract. An unreasonably sized liquidated-damage provision is unenforceable as a penalty.

92
Q

How do avoidable losses impact damages calculations?

A

The injured party has a duty to mitigate loss and may not recover damages that were avoidable (unless doing so would have caused risk, burden, or humiliation)

93
Q

What’s the aim of Contractual restitution – how is it different from damages?

A

Restitution is a remedy to prevent unjust enrichment; if it would be unfair to permit a party to retain a contract benefit without compensation.

94
Q

How is recovery measured for Contractual Restitution?

A

The value of the benefit concerned on the recipient (not the loss to the party seeking restitution).

95
Q

Can a party seek Contractual Restitution without an enforceable agreement?

A

Yes. So long as there has been unjust enrichment.

96
Q

What is Specific performance?

A

An equitable remedy by which the court orders the breaching party to perform the party’s contractual duty (rather than pay damages).

97
Q

What is a Contractual Injunction?

A

A prohibition that forbids a party from breaching a contract.

98
Q

Under the UCC, what can a buyer seek in remedies?

A

(i) to recover as much of the purchase price as the buyer has paid; and (ii) to cancel the contract; and (iii) other remedies as appropriate.

99
Q

What are the UCC Buyer’s Damages for Nondelivery/Repudiation?

A

If (i) the sellers failed to make a delivery, or (ii) the buyer rightly rejects the goods or revokes services, or (iii) the seller repudiates the contract, then the general measure of damages is: (a) the difference between the market price at the time the buyer learned of the breach and the contract price; plus (b) incidental and consequential damages; minus (c) expenses saved in consequence of the breach.

100
Q

If there’s a bona fide nondelivery/repudiation under the UCC, how are the Buyer’s Damages Calculated?

A

(i) the difference between the market price at the tie the buyer learned of breach and the contract price; plus (ii) incidental and consequential damages; minus (iii) expenses saved in consequence of the breach.

101
Q

What UCC Damages are available to a Buyer who accepted nonconforming goods?

A

The buyer may recover the difference (at the time and place of acceptance) between the value of the goods received and the value the goods would have had, had they conformed to the contact.

102
Q

Does the UCC grant the Buyer the right to Specific Performance?

A

Yes, if the goods are unique or in other proper circumstances.

103
Q

What is the UCC Buyer’s Right to Recover?

A

If th Seller breaches, the Buyer may (in good faith and within a reasonable time) purchase or contract to purchase substitute goods.

104
Q

Can the Seller refuse delivery for a Buyer in Breach under the UCC?

A

(i) Withhold delivery of undelivered goods; (ii) if the buyer is insolvent, the seller may stop delivery of goods already in transit.

105
Q

How does the UCC calculate the seller’s damages if the Buyer repudiates the Contract or refuses to accept the goods?

A

(i) the difference in market price for the goods at the time and place of tender and the unpaid contract plus; plus (ii) incidental damages; less (iii) any losses or costs saved due to breach.

106
Q

What’s the UCC Seller’s Right to Resell and Recover?

A

If the Buyer breaches or becomes insolvent, the seller may resell the goods of their undelivered balance.

107
Q

What’s the UCC Seller’s Action for the Price?

A

In some circumstances, the Seller may recover the full contract price if the buyer has failed to pay the price when due.

108
Q

What’s the UCC Seller’s Lost Profits?

A

If the Seller’s right to recover the market differential (resell the goods) is inadequate to put the seller in as good as a position as it would have been ha the buyer performed, the seller may elect to recover lost profits due to the breach.

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