CONTRACTS LAW Flashcards
Applicable Law: Common Law vs. UCC
USG CCEE
UCC Article 2 applies to contracts for the sale of goods. Common law applies to all other contracts.
Contracts: Legal agreements between parties.
Sale of Goods: Transactions involving the transfer of ownership of tangible personal property.
All Other Contracts: Agreements not involving the sale of goods, such as services, real estate, and employment contracts.
Mnemonic Sentence 1:
UCC Sells Goods, Common Covers Everything Else.
Requirements to Form a Valid Contract
MA(OA)CD
A valid contract requires: mutual assent (offer and acceptance), consideration, and no defenses to formation.
Mutual Assent: Agreement by both parties to the terms of the contract.
Offer: A proposal by one party to enter into an agreement.
Acceptance: The agreement by the other party to the offer’s terms.
Consideration: Something of value exchanged between the parties.
Defenses to Formation: Legal reasons that a contract might be invalid, such as duress, fraud, or incapacity.
Mnemonic Sentence 1:
My Official Contract Details.
Mutual Assent
Offer and Acceptance
Consideration
Defenses to Formation
Modification of Contracts: Pre-Existing Duty Rule and Exceptions
CLNNC UGF
Under the common law, past performance/pre-existing duty is not adequate consideration. Under the UCC, there is no consideration requirement, and a modification is valid if in good faith.
Not Adequate Consideration: Under common law, a promise to do something you are already legally obligated to do is not sufficient consideration for a new contract.
Consideration Requirement: Under the UCC, modifications do not require new consideration.
Valid if in Good Faith: Under the UCC, a modification is enforceable if it is made in good faith.
Mnemonic Sentence 1:
Common Law Needs New Consideration, UCC Gets Freedom.
Common Law: Past performance/pre-existing duty is not adequate consideration.
Needs New Consideration: A new promise must have new consideration.
UCC: No consideration requirement.
Gets Freedom: Modifications valid if in good faith.
Anticipatory Repudiation and Adequate Assurances
PUS UUP U MCPP WAA
Anticipatory repudiation is when a party unequivocally states that they are unable or unwilling to perform unless there has been a material change in the other party’s position.
If there are reasonable grounds for being insecure about performance, a party may request in writing adequate assurances. If the other party does not comply, the requesting party may treat it as an anticipatory repudiation.
Unequivocally: Clearly and without ambiguity.
Unable or Unwilling: Lacking the ability or intent to fulfill contractual obligations.
Perform: Carry out the contractual duties.
Material Change in the Other Party’s Position: A significant alteration affecting the other party’s situation, potentially excusing performance.
Reasonable Grounds: Justifiable reasons to be concerned about the other party’s performance.
In Writing Adequate Assurances: A formal, written request for confirmation that the other party will perform as agreed.
Anticipatory Repudiation: Treating the contract as breached due to the other party’s clear indication of non-performance.
Mnemonic Sentence 1:
Unable Unless Performance Makes Reasonable Assurances.
Unable or Unwilling: Lacking ability or intent to fulfill obligations.
Performance: Carry out contractual duties.
Material Change: Significant alteration in the other party’s position.
Reasonable Grounds: Justifiable concerns about performance.
Adequate Assurances: Written request for performance confirmation.
Statute of Frauds: Contracts Requiring a Signed Writing
S SM CWM AET
If a contract is subject to the Statute of Frauds, the writing must (1) be signed by the party against whom enforcement is sought, (2) identify and describe the subject matter, (3) indicate that a contract was made, and (4) state all essential terms.
Contracts subject to the Statute of Frauds are: (1) marriage contracts, (2) suretyship contracts (promising to pay for the obligations of others), (3) contracts that cannot be fully performed within one year, (4) contracts for the sale of real property or creating an interest in land, and (5) contracts for the sale of goods worth $500 or more.
Signed: The writing must be signed.
Party Against Whom Enforcement is Sought: The individual or entity that the contract is being enforced against.
Identify and Describe: The writing must clearly specify the subject matter.
Subject Matter: The focus or object of the contract.
Indicate: Show or make clear that a contract exists.
Contract was Made: Confirmation within the writing that a contract exists.
State All Essential Terms: Include all necessary terms for the contract.
Types of Contracts Subject to the Statute of Frauds:
Marriage Contracts: Agreements made upon consideration of marriage.
Suretyship Contracts: Promises to answer for the debt or duty of another.
Cannot be Fully Performed Within One Year: Contracts that require more than one year to complete.
Sale of Real Property or Creating an Interest in Land: Contracts dealing with the sale or interests in land.
Sale of Goods Worth $500 or More: Contracts for the sale of goods over a certain value.
Common Ways This is Tested:
Identifying Statute of Frauds Requirements: Exam scenarios often test whether the writing meets all Statute of Frauds requirements. Confirm it is signed, identifies and describes the subject matter, indicates a contract, and states all essential terms.
Determining Applicable Contracts: Fact patterns may involve determining whether a contract falls under the Statute of Frauds. Ensure the contract type matches one of the specified categories.
Exceptions to the Statute of Frauds: Questions may involve exceptions, such as partial performance or promissory estoppel. Understand when these exceptions apply.
Common Tricks on the Exam:
Incomplete Writings: Questions might present a contract missing essential terms or lacking a clear indication that a contract was made. Ensure the writing is complete.
Unsigned Contracts: Scenarios may involve unsigned contracts. Verify that the party against whom enforcement is sought has signed the document.
Misclassification of Contracts: Fact patterns might misclassify contracts under the Statute of Frauds. Confirm the contract type correctly.
Parol Evidence Rule
PCI POC CLW
The parties cannot introduce a prior or contemporaneous agreement that contradicts a later writing.
Prior: An agreement made before the written contract.
Contemporaneous: An agreement made at the same time as the written contract.
Contradicts: Conflicts with the terms of the written contract.
Later Writing: The final written contract that is intended to be the complete and final agreement between the parties.
Common Ways This is Tested:
Identifying Contradictions: Exam scenarios often test whether evidence of prior or contemporaneous agreements contradicts the written contract. Verify if the earlier agreements conflict with the later writing.
Complete and Final Agreement: Fact patterns may involve determining if the written contract is intended to be the complete and final agreement. Ensure the writing is meant to be comprehensive.
Common Tricks on the Exam:
Partial Integration: Questions might present a scenario where the written contract is only partially integrated. Understand when additional terms may be admissible if they do not contradict the writing.
Exceptions to the Rule: Fact patterns may involve exceptions, such as evidence of fraud, mistake, or duress. Recognize when the parol evidence rule does not apply.
Misunderstanding Contemporaneous Agreements: Scenarios may incorrectly categorize contemporaneous agreements. Ensure they are accurately identified and assessed for contradictions.
