Contracts - MBE Rules from Missed Questions Flashcards
Does an intended beneficiary have rights to sue under a K? For example, Person A contracts with Person B and promises Person B “I will pay you.” Person A then contracts with Person C. Person C says to Person A, “I wil pay your debt to Person B.” Person A and Person C never paid Person B. Who can Person B sue?
An intended beneficiary have rights to sue or enforce a K. An intended beneficiary to whom the promisee owed money (aka the creditor beneficiary) or an intended beneficiary to whom the promisee is under a legal obligation, may sue either the promisor to enforce his contractual promise, or the promisee on the underlying obligation, BUT ONLY ONE RECOVERY IS ALLOWED.
Person B can sue both A and C but only one recovery is allowed.
For TPB Issues, can the promisor raise any defense against the TPB that the promisor had against the original promisee?
Yes, promisor can raises any defenses against the TPB
Example 1: A agrees to paint B’s house in return for B’s promise to pay $5,000 to C, to whom A owes $5,000. A paints half of B’s house. B does not pay C. C sues B. B can assert the defense of A’s material breach of their contract as a defense against C.
Also remember the Chocolatier hypo where the Dad K with the Store, store says ok dad ill pay your daughter instead. The dad says didnt deliver so store didnt pay daughter. Daughter even though intended TPB, the promisor can raise the defense that the Dad didnt deliver
Death or mental incapacity usually terminates an offer, but what are the exceptions?
option K or consideration paid
When an offeror dies and an offer has been accepted, does the death of the offeror automatically terminates the offer?
No, death of an offeror does not automatically terminate an offer. The contract may be enforceable unless there is some reason such as impracticability or impossibility, that justifies discharge of the contractual obligation.
Hypo: A contracts with B to make tables. B accept. A also contracts to make chairs in addition to tables. B didnt accept. A died. Can B sue to enforce the K for the chairs and the tables? No, because A died terminates the chairs K before it being accepted, and with respect to the tables, its impossible for A to make it because he’s dead. Thus, impossibility discharges A’s contractual obligation to perform under the K.
What is the Implied Warranty of Merchantibility?
it is implied whenever the seller is a merchant. It means that to be merchantable, the goods must be fit for their ordinary purpose.
How do you disclaimed an implied warranty of merchantibility?
It can be disclaimed by use of “as is”, “with all faults” or similar language that makes plain that there is no implied warranty. The disclaimer may be oral, but it must use the term “merchantibility” and must be conspicuous if in writing.
Eg. A disclaimer in writing that says “All warranties, express or implied, are hereby disclaimed” WILL NOT count as disclaimer. Why? because it did not use the term merchantibility
Modification in Common Law
Under the common law, modification of an existing contract must be supported by consideration. However there are EXCEPTIONS where agreements to modify a K may still be enforced if:
1) rescission of an existing K by tearing it up or some outward sign and then entering into a new K and one of the parties must perform more than she was to perform under the K
2) there are anticipated difficulties and one of the parties agrees to compensate the other when the difficulties arise if the modification is fair and equitable
3) new obligation on both side
