Contracts review Flashcards
Revoking offer
Offeror can revoke by manifesting intent not to enter proposed contract either
- expressly: when the offeror communicates the revocation directly to the offeree
- constructively: when the offeree acquires reliable information that the offeror has taken definite action inconsistent with the offer
Substantial performance
Substantial performance is less than full performance that, while imperfect, does not defeat the contract’s main purpose
Common law damages if only one party substantially performs
Under common law (contracts for services/RP), a party that has substantially performed can recover damages based on the contract if the other party fails to perform.
Those damages are generally equal to contract price minus cost to remedy and defects in performance
Damages for breach of employment contract
Because the purpose of compensatory damages is to give them the benefit of the bargain, when an employer breaches an employment agreement, the employee can recover unpaid salary
BUT they need to also mitigate their loss by securing comparable employment. Note that recovery will not be reduced if the employee made reasonable but unsccessful efforts to secure comparable employment
UCC parol evidence rule and trade usage
Evidence of trade usage can be used to explain or supplement the express terms of a final written contract, so long as it is not negated by those terms.
Trade usage
Trade usage is a practice or method of dealing that is observed with such regularity in the industry that the parties would be expected to observe it
UCC firm offer rule
Merchant’s written and signed assurance that an offer will remain open is roreovcable for the time stated in the offer.
What happens if an offer states acceptance is only effective upon receipt
The mailbox rule does not apply if it is inconsistent with the offer’s terms, such as when the offer states that acceptance is effective only upon receipt
When is acceptance by performance effective
for bilateral Ks/offers that dont specify manner of acceptance
Acceptance by performance is effective as soon as the offeree begins to perform
How can an offer that doesn’t specify manner of acceptance be accepted
Can be accepted by either
1. Promising to perform the requested act; or
2. Performing the requested act
Acceptance by performance is effective as soon as the offeree begins to perform
Examples of reasonable time for acceptance
- face to face/phone offers: lapses when convo ends
- mailed/faxed offers: lapses after time required to transmit offer and acceptance
- Speculative offers: lapses quickly so offeree cannot speculate at offeror’s expense
- reward for capture offers: lapses when SOL expires
What happens if the item of the offer is destroyed
If the item of the offer is destroyed, the offer is destroyed too
Terms that materially alter a K
Include warranty disclaimers or severe limits on the parties’ remedies.
What is a release?
A release is a writing that manifests intent to discharge another party from existing duty
Shipment contract
“FOB [seller’s place of business]”
seller must deliver goods to carrier and make K for their shipment. Shipment contracts are implied when K requires shipment by third party carrier
Applicable law
UCC governs contracts involving the sale of goods
Common law governs contracts involving services and real estate
Mixed contracts
When a contract has both goods and services aspects, whichever one predominates will determine the governing law.
Who is a merchant?
Someone who regularly deals in the kinds of goods in the transaction
Someone who by occupation holds themselves out as having knowledge or skill peculiar to the goods in the transaction
In some instances, any business person when the transaction is a commercial nature
Offer
Objective manifestation of present intent to enter into an agreement which creates the power of acceptance in the offeree
What terms need to be in an offer under CL
All essential terms required (parties, subject matter, price, quantity)
What terms need to be in an offer under the UCC
Parties, subject matter, quantity.
The UCC will gap fill the rest of the remaining terms. Both parties must intend to form a contract and there must be a reasonably certain basis for giving recovery
What if UCC contract is silent to delivery
Default is seller’s place of business
What can breaching party recover?
Breaching party can recover restitutionary damages for the reasonable value of the work performed before the breach, minus any damages suffered by the nonbreaching party
What happens if, during a contstruction K, builder breaches during construction?
Nonbreaching party can generally recover the cost of completion over the contract price*
*if cost of completion is excessive compared to the loss in value caused by the breach, recovery is based on the value of promised contruction minus value of nonconforming construction
Restitutionary damages
Awarded to restore to a contracting party the value of any benefit conferred on the other party.
Restitutionary damages and the UCC
Under the UCC, where the seller fails to deliver the promised goods or the buyer rightfully rejects the goods, the buyer is entitled to the return of any payment made on the goods as restitution
Partial payment and UCC SOF
A contract is excepted from the UCC SOF when some amount of payment was accepted.
A partial payment for seperable goods renders the K enforceable up to the quantity paid for in full, while a partial payment for an indivisible good renders the entire contract enforceable
