contracts pt 2 Flashcards
pre existing duty rule
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Restatement 73 Performance of Legal Duty (pre-existing duty rule)
- performance of a legal duty owed to a promisor which is nether doubtful nor the subject of an honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of a bargain
exception:
restatement 89; a promise modifying a duty that has not been executed yet (executory)
**if modification is fair and equitable in the view of circumstances (unexpected) not anticipated by the parties when the contract was made, modification will be enforced if:
- made before contract was fully performed on either side
- underlying circumstances which prompted the modification were unanticipated by parties
- modification is fair and equitable
UCC 2-209 (goods)
- an agreement modifying a contract within this article needs no consideration to be binding
- however modifications, must meet the test of good faith
- bad faith, is barred and extortion of modification is ineffective
- however modifications, must meet the test of good faith
nominal consideration
(mere pretense of a bargain) is gesture gift
something substantial must be traded on both sides (opposite of nominal consideration)
the parties are free to make bargins even if consideration is grossly unequal or of dubious value; it is enough that something of real value was exchanged
mutuality of obligation
arises in bilateral promise circumstances
- contract where both sides consideration are promises; both promises must be authentic, if one promise is illusory, you will not have a contract
- (made a promise in exchange for something that does not count)
- not a breach, if theres a hypothetical that the other side could be in breach, then it is not illusory, because you’ve made a commitment
- just bc there is a way out, doesn’t mean it is illusory; if you can breach it is a real contract
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UCC 2-306 (goods) (pg353)
- (1) a term which measures quantity by the output of seller or requirements of the buyer may occur in good faith, except that quantity unreasonably disproportionate to any stated estimate or in the absence of a stated estimate to any normal or otherwise comparable prior output or requirements may be tendered or demanded
- (2) lawful agreement by wither seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale
specific performance
- all real estate is unique
- breaching seller; the court may decree remedy of specific performance
- money will never be compensation for the unique land
Restatement 228 (Satisfaction of the Obligor as a Condition)
when it is condition of an obligors duty that they be satisfied with respect to the obligors performance or with respect tot something else, and it is practical to determine whether a reasonable person in the position of the obligor would be satisfied, an interpretation is preferred under which the condition occurs if such a reasonable person in the position of the obligor would be satisfied
When an obligor’s duty depends on being satisfied with their performance or something else, and it’s possible to judge whether a reasonable person in their place would be satisfied, the condition is generally considered met if such a reasonable person would, in fact, be satisfied.
duty of good faith and fair dealing
- every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement
- courts may prefer objective reasonable standard; but in cases where it is personal, or fancy etc, the court will use good faith test
implied duty
A contract may be enforceable even if one party’s obligations are not explicitly stated, as long as there is an implied duty to perform.
morality of obligation
a promise in exchange for nothing; no reliance, or change in posisition; it is just a promise maker in a moral conundrum
restatement 82 (statute of limitations passed)
- a promise to pay all of part of an antecedent contractual or quasi contractual indebtedness owed by the promisor is binding if the indebtedness is still enforceable or would be except for the effect of statute of limitations
- following facts operate as such a promise unless other facts indication a different intention (implied):
- a voluntary acknowledgement to the obligee, admitting the present existence of the antecedent indebtedness, or
- a voluntary transfer of money, negotiatable instrument, or other thing by the obligor to the obligee, made as interest on or part payment of or collateral security for the antecedent indebtedness; or
- a statement to the obligee that the statute of limitations will not be pleaded as a defense
restatement 83 (bankruptcy)
- an express promise to pay all or part of indebtedness of the promissor discharged or dischargeable in bankruptcy proceedings begun before the promise is made binding
- more narrowly bounded chance to revive debt
- policy of fresh start allows the policy to restart
Restatement 86 (promise of benefit received)
- a promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice
- a promise not fitting within the 3 types (banruptcy, statute of limitations and minor)
- if the promisee conferred the benefit and the promisor has not been unjustly enriched or
- to the extent that its value is disproportionate to the benefit
UCC 2-204 contract Formation in General
- a contract for the sale of goods may be made in any manner sufficcient to show agreement, including conduct by both parties which recognizes the existence of such a contract
- an agreement suffieicnet to constitute a contract for sale may be found even though the moment of its making is undetermined
- even though one more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an apporpeiate remedy
time when acceptance takes effect (restatement 63)
unless the offer provides otherwise
- an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put of out the offerees possession, without regard to whether it ever reaches the offeror; but
- an acceptance under an option contract is not operative until received by the offeror
objective theory
it is not what we think we are saying; it is what we manifest; thru what a reasonable person in that position would understand it to mean
objective theory
- not what we think we are saying, but what we manifest to what the recepient of the communication would reasonably understand that communication to mean
manifest, manifesto
- parties that intend, but do not manifest, does not count as contract
- parties that do not intend to be in contract, but do manifest, have a contract
- those who manifest but do not mean it, are bound
restatement 20 effect of misunderstanding (20)
- there is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestation and
- (1) neither party knows or has a reason to know the meaning attached by the other
- each party knows or each party has reason ti know the maning attached by the other
- (2) the manifestations of the parties are operative in accordance with the meanings attached to them by one of the parties if
- that party does not know of any different meaning attached by the other, and the other knows the meaning attached by the first
- that party has no reason to know of any different meaning attached by the other, and the other has reason to know the meaning attached by the first party
restatement 24 (offer defined)
- an offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude** (allowing the the other person is the ability or ring contract bell once accepted)
- person making offer is offering to give power over offerree
RLID - determining offer
- reasonable person think you are offering a contract
- language of commitment
- ex: promise, prices, context of information, value
- identify the offeree
- definite terms of contract
- clear, definite and explicit
restatement 26 (preliminary negotiations)
- a manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude bargain until he has made a further manifestation of assent
- essentially a solicitation of an offer
- person advertising, wants the person to bring the offer; giving the advertiser the power of acceptance
restatement 36 (methods of termination of the power of acceptance)
- an offeree’s power of acceptance may be terminated by
- rejection or counter offer by offeree’s
- lapse of time
- revocation of offer
- death or incapacity of the offeror or offeree’s
