Contracts & Sales: Final Review Flashcards
What types of contracts are governed by the UCC?
Any contract involving the sale of goods
When is a revocation of an offer, sent by mail, effective?
Upon receipt.
How is a unilateral offer accepted?
Complete performance.
Once performance has begun, the offer is irrevocable for a reasonable period of time to allow for complete performance unless there’s a manifestation of a contrary intent.
When a preexisting duty is at issue, what 2 options does a promisor have to create valid consideration?
(1) Give something in addition to what is already owed
(2) Vary the preexisting duty in some way
State the common-law mirror-image rule.
Acceptance must mirror the terms of the offer.
Any change to the terms or addition of new terms = rejection of original offer + proposal of counteroffer
Define fraud in the inducement, and state its effect on a contract.
Fraudulent misrepresentation is used to induce another to enter into a contract.
Effect: contract voidable by adversely affected party if they justifiably relied on the misrepresentation in entering the agreement.
Define consideration.
Evidenced by bargained-for change in legal position b/w parties. Most courts will find consideration exists if there’s a detriment to promisee, irrespective of benefit to promisor.
Define acceptance.
Objective manifestation by offeree to be bound by terms of offer.
What’s an output contract?
Contract under which a seller agrees to sell all that they manufacture of a product to the buyer.
Consideration exists b/c promisor suffers legal detriment.
What’s the difference b/w git and valid consideration?
Whether offeree could’ve reasonably believed that the intent of offeror was to induce action.
What’s the main difference b/w contract modification under the common law and contract modification under the UCC?
Common law: modifications require consideration
UCC: modifications require good faith
What’s an illusory promise?
Essentially pledges nothing b/c it’s vague or b/c the promisor can choose whether to honor it.
Under the common law, what terms must be covered in order for a contract to be formed?
All essential terms: parties, subject matter, price, quantity
Define the common-law four-corners rule.
Courts may only look to the writing itself for evidence of intent, regardless of any integration.
What are the 3 requirements for a promise to be binding under promissory estoppel?
(1) Promisor should reasonably expect it to induce action or forbearance on the part of the promisee or a 3P
(2) Promise does induce such action or forbearance
(3) Injustice can be avoided only by enforcement of the promise
Define condition subsequent.
Excuses the duty to perform after a particular event occurs.
What requirements must be met to allow an adversely affected party to void a contract based on mutual mistake?
(1) Mistake of fact existing at time of contract formation
(2) Mistake relates to basic assumption of contract
(3) Mistake has material impact on transaction
(4) Adversely affected party did not assume the risk of the mistake
What’s an implied-in-fact contract?
Results when person’s assent to offer is inferred solely from person’s conduct. Must intend the conduct and know or have reason to know the conduct may cause the offeror to believe the offer was accepted.
When is the implied warranty of merchantability implied, and how is it disclaimed?
Whenever the seller is a merchant.
Disclaimer can be oral, but it must use the term “merchantability.” Must be conspicuous if in writing. Language indicating there is no implied warranty is sufficient (e.g., “for instance” or “with all faults”).
What are the rights of the assignee?
All of the rights of the assignor as the contract stands at the time of the assignment. Assignee takes subject to any defenses that could be raised against the assignor.
What are the 3 events that would cause the rights of an intended beneficiary to vest?
(1) Beneficiary materially changes position in justifiable reliance on the rights created
(2) Beneficiary manifests assent to the contract at one party’s request
(3) Beneficiary files a lawsuit to enforce the contract
What 3 conditions must be met for the defense of impracticability to be available?
(1) Unforeseeable event occurred
(2) Non-occurrence of the event was a basic assumption on which the contract was made
(3) Party seeking discharge is not at fault
When may a non-breaching party pursue specific performance as a remedy?
When damages are an inadequate remedy
Note: legal remedies are often inadequate in contracts for land or other unique goods.
Define constructive condition of exchange.
When a party’s performance can be rendered at the same time as the other party’s performance, each performance is conditioned on the other’s performance; both performances are due simultaneously, unless the language or circumstances indicate otherwise.
Define intended beneficiary,
One to whom the promisor will pay directly to relieve the promisee from a debt or whom the promisee intends to give the benefit of the promised performance.
Name the types of contracts that fall within the Statute of Frauds.
Marraige Suretyship One year UCC Real property
Under the UCC, even if the terms of a written contract for the sale of goods appear to be ambiguous, what evidence can be presented to explain or supplement the contract?
Course of performance, course of dealing, and trade usage
Note: if express terms are inconsistent w/course of performance or trade usage, priority is given to the express terms. Then course of performance, course of dealing, and trade usage.
Under the UCC, what is required by the “perfect tender rule”?
Perfect goods and perfect delivery. “Perfect” means in accordance w/contract provisions or in accordance w/UCC if the contract is silent on tender.
When is the doctrine of anticipatory repudiation applicable, and in what manner must the repudiation be made?
Applicable when a promisor repudiates a promise BEFORE the time for performance is due. Repudiation must be clear and unequivocal, may be by conduct or words, and, if a statement, must be made to the promisee or a 3P beneficiary or assignee of the promise.
What’s the formula for expectation damages?
Loss in value + other loss - cost avoided - loss avoided
