Contracts & Sales Flashcards
What are the essential terms of a contract under Common Law?
- Parties
- Price
- Quantity
- Subject Matter
What are the essential terms of a contract under the UCC?
- Quantity.
*Exception: requirements or output contracts (UCC implies “good faith”)
How to terminate an offer?
- Lapse of time
- Death/Mental incapacity (Exception: offers for option Ks do not terminate b/c consideration was paid to keep the offer open)
- Destruction/Illegality
- Revocation (not effective until communicated)
- Rejection
- Counteroffer
What is the difference between an option contract and merchant firm offer?
Option K (Common Law) - offeree must generally give consideration for option to be enforceable
Merchant firm offer (UCC) -
1. Needs consideration
2. Has to be in writing
3. Signed by offeror (signature or letterhead)
4. Can’t exceed 90 days
*If you want to go past the 90 days, need to pay consideration
Means of Acceptance
Silence-is not acceptance unless offeree has reason to believe offer could be accepted by silence or previous dealings make it reasonable to believe that offeree must notify offeror if he does not intend to accept
Shipment of goods- Buyer’s request that goods be shipped is inviting acceptance either by sellers promise to ship or prompt shipment of goods
- Nonconforming goods shipped: both an acceptance and a breach, unless seller seasonably notifies buyer that goods are an accommodation (counteroffer); buyer may accept or reject the nonconforming goods
What is the similarity between an option contract and merchant firm offer?
Option K (Common Law) & merchant firm offer (UCC) are types of irrevocable offers.
Battle of the Forms
Both parties are merchants
Additional terms-automatically included in the K, unless:
1. Term materially alters original K (i.e. would result in surprise or hardship)
2. Offer expressly limits acceptance to terms of the offer; or
3. Offeror objects to new terms within a reasonable time after notice of new terms is received.
Different Terms AKA Knockout Rule: different terms in offer/acceptance nullify each other, and court uses Article 2’s gap-filing provisions to patch holes in K.
Past Consideration
Modern trend toward enforcing past promises under the material benefit rule
Accord
One party agrees to accept a different performance from the other party to satisfy the other party’s existing duty
How do you modify a contract under common law and UCC?
Common Law - Must be supported by consideration
UCC - Only requires good faith (no consideration necessary)
Satisfaction
Performance of the accord agreement will discharge both the original K and the accord K
OG K is not discharged until satisfaction is complete
Promissory Estoppel
A promise is binding if:
1. Promisor should reasonably expect it to induce action on the part of the promisee or the third person
2. Promise does induce such action, and
3. Injustice only avoided by enforcement of promise
What is the difference between contract release in common law and UCC?
Common Law - Release must be supported by consideration
UCC - Written waiver or renunciation signed/delivered by aggrieved party is enough (no consideration necessary)
How do you make a Gratuitous Assignment Irrevocable
If an Assignment is not supported by consideration, then it is a Gratuitous assignment and is generally revocable unless:
1. obligor already performed
2. document symbolizing assigned right delivered
3. written & signed assignment delivered
4. Promissory estoppel applies
What is the general measure of damages in Construction Contracts?
In construction contracts, the general measure of damages for a contractor’s failure is the difference between the contract price and the cost of construction by another builder, plus any progress payments made to the breaching builder and compensation for delay in completion of the construction.
When a breach results in a defective or unfinished construction, if the award of damages based on the cost to fix or complete the construction would result in economic waste, then a court may instead award damages equal to the diminution in the market price caused by the breach. Economic waste occurs when the cost to fix or complete the construction is clearly disproportional to any economic benefit or utility gained as a result.
