Contracts - Priority Flashcards
criteria for material breach
nonbreaching party does not receive substantial benefit of bargain
this permits withholding of promised performance and pursuit of remedies
criteria for mutual mistake
- mistake of fact existing at time K formed
- mistake relates to basic assumption of K
- mistake has material impact on transaction
- adversely affected party did not assume risk of mistake
parol evidence may be admitted to prove…
- a condition precedent to existence of K
what happens if a K prohibits assignment, a party assigns their rights to payment, and then the third party assignee sues for nonpayment breach?
while the original party is in breach, the third party is not. the contract clause does not mean the parties lose the power to assign. the third party takes the assignor’s rights and may sue
when does a seller have a right to cure a defective tender?
- the time for performance under K has not yet elapsed, or,
- seller had reasonable grounds (such as based on course of dealing) to believe buyer would accept despite nonconformity
seller must give notice of intent to cure + make new tender of conforming goods; if based on 2, tender must be made w/in reas time
under the UCC, when can substantial performance (rather than perfect tender) suffice?
installment contracts, or when parties agree it applies
under the mailbox rule, what is the outcome if a party sends an acceptance, then a rejection, and the other party receives the rejection first (then the acceptance)?
acceptance will control since it was effective when sent, UNLESS the offeror party detrimentally relied on the rejection
what is the application of the SoF under the UCC when it involves specially manufactured goods?
SoF excepted if:
(i) the goods are to be specially manufactured for the buyer,
(ii) the goods are not suitable for sale to others in the seller’s ordinary course of business, and
(iii) the seller has made “either a substantial beginning of their manufacture or commitments for their procurement.”
requirements under UCC firm offer rule for irrevocable offer, if no consideration for option
(i) the offeror is a merchant,
(ii) there is an assurance that the offer is to remain open, and
(iii) the assurance is contained in a signed writing from the offeror.
warrant of merchantability vs. suitability for particular purpose
why is this not a K? (both signed own letters)
nurse IDs farmer in letter and agrees to take care of medical needs for 1 year, starting in a few weeks
farmer sends responsive letter saying i agree to pay you $10/mo
Fails SoF
- not performable in one year
- even though together state all essential terms and each signed by promisor, neither references the other (at least one must)
farmer’s letter does not indicate subject matter, so not deemed responsive. writing also must be signed by person against whom enforcement sought
when is limitation of consequential damages in contract unconscionable?
when limits damages for injury to person (vs. commercial loss, which is acceptable)
might still be unconsc, however, if product of greatly unequal bargaining power (procedurally unconsc)
rules governing imperfect tender in an installment K
substantial performance is permitted
when nonconforming tender under one segment, buyer may cancel K ONLY IF nonconformity substantially impairs value of entire K to farmer
when does the mailbox rule not apply?
- if offer irrevocable (like with option K, which requires acceptance be received by offeror before offer expires)
if buyer breaches or repudiates contract for sale of goods, what are the rules for reselling the goods?
seller may sue for K price minus retail price and resell goods
if intends to resell in private sale, seller must first give buyer reasonable notice of intent to resell
remedy for defective performance in construction K
damages; generally cost to correct defect
how are damages calculated when seller resells goods after buyer breach? are there requirements for obtaining this remedy?
if resale made in 1. good faith and 2. in commercially reasonable manner, seller may recover:
contract price - resale price + incidental & conseq damages
incidental may include cost of transport
remedy for defective performance in sale of goods
damages equal to difference between value of goods as warranted and actual value of tendered nonconforming goods
remedies for defective performance in real estate
damages for failure to perform = difference between K price and market value
for late delivery = fair market rental value
define incidental damages
compensation for commercially reasonable expenses incurred as result of other party’s breach
what counts as incidental damages when seller breaches?
expenses incurred in inspection, receipt, transpo, care, and custody of goods rightfully rejected
expenses in effecting cover
any other reas expense incident to delay or other breach
what counts as incidental damages when buyer breaches?
any expenses incurred in stopping delivery
in transpo care and custody of goods after buyer’s breach
in connection with return or resale of goods, or OT resulting from breach
define liquidated damages
damages stipulated by parties to K as a reasonable estimation of actual damages to be recovered in event of breach
when are liquidated damages enforceable?
- parties intended to agree in advance to damages that might arise from breach
- stipulated amount was reasonable at time of K, bearing some relation to damages that might be sustained; and
- actual damages would be uncertain in amount and difficult to prove
