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1L > CONTRACTS SEMESTER #1 > Flashcards

CONTRACTS SEMESTER #1 Flashcards

1
Q

CONTRACTS EXAM STARTER

A

To determine the rights of the parties, we must first determine whether a valid enforceable contract was formed. A valid enforceable contract consists of an offer that is open for acceptance (not revoked or terminated), acceptance, and is supported with adequate consideration.

In a contract regarding the sale of goods, provisions of the UCC will apply.

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2
Q

OFFER

A

An OFFER is a promise to do or not to do something. It consists of intent to enter into an agreement, with terms that are certain and definite (parties, subject, price, and time for performance), and is communicated to the offeree, giving the offeree the power of acceptance. An offer is effective upon receipt. An offer is generally not an opinion, negotiation, estimate, price quote (unless in response to a direct inquiry), or advertisement (unless contains quantity and promise/words of commitment).

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3
Q

INTENT TO BE BOUND

A

Intent to be bound is judged by stepping in the shoes of the parties. If the parties do not intend to be bound, then there is no enforceable agreement. Intent to memorialize is when the parties intend only to be bound when there is a written agreement. If intent to memorialize exists, then no contract can exist until a writing is created.

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4
Q

TERMS: P S T P

A

Terms: (PSTP): parties, subject matter (quality & quantity), time for performance; price
Under common law, an offer that lacks terms fails for indefiniteness. Modernly (UCC and non UCC) courts Will insert a reasonable or customary price or time for performance.

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5
Q

An offer is open until?

A

An OFFER IS OPEN if it has not been revoked or terminated.

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6
Q

TERMINATION OF AN OFFER

A

An offer can be Terminated by (DR-C-LAID) death of the offeror, rejection by the offeree (including a counter-offer unless offer was irrevocable), occurrence of a condition that’s stated, lapse of time, adjudication of insanity, a supervening illegality or destruction of the subject matter.

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7
Q

REVOCATION

A

An ofter can be Revoked at any time prior to acceptance unless made irrevocable by detrimental reliance, partial performance, payment to create an option agreement, or a merchant’s firm offer (UCC only). A Merchant’s Firm Offer is a merchant’s promise in writing to keep an offer open for a certain period cf time, not to exceed 90 days (longer than 90 days requires additional consideration).
Revocation of a unilateral contract can be done by the same means as the offer was made unless that means is no longer available; in which case any similar means is acceptable. If the offeror knows of particular offerees, he must notify them. Revocation is effective upon receipt.

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8
Q

ACCEPTANCE bilateral

A

ACCEPTANCE (bilateral contract) is a voluntary act of unequivocal assent that is communicated to the offeror. There is normally no acceptance by silence unless circumstances create a duty to speak.

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9
Q

UNEQUIVOCAL ASSENT

A

Unequivocal assent, or the “mirror image” rule, means that i he acceptance agrees with the exact terms of the offer and is required by common law. If the contract is for the sale of goods, UCC 2-207 applies:

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10
Q

UCC 2-207

A

if there is a definite and timely acceptance and additional or different terms, there is a contract formed and the additional or different terms become proposals which must be unequivocally assented to in order to become part of the contract,
UNLESS both parties are merchants and the additional terms are minor (different terms are not minor) then those minor terms become part of the agreement unless objected to within 10 days.

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11
Q

ACCEPTANCE unilateral

A

Acceptance for a unilateral contract is the full performance of the act that’s called for.
Offer for UNILATERAL K can be accepted by performance and need not be communicated

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12
Q

ACCEPTANCE IS EFFECTIVE UPON?

A

Acceptance is effective on dispatch UNLESS otherwise specified or unless it is on an
irrevocable offer, in which case it’s valid upon receipt.

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13
Q

SPECIFIED / UNSPECIFIED MODE OF ACCEPTANCE

A

Specified exclusive mode of acceptance is when the offeree may only accept by procedure or means specified by the offeror. Unspecified mode allows the offeree to use any reasonable mode to notify the offeror.

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14
Q

VACILLATING OFFEREES

A

Vacillating Offerees have the burden to make their wish known to the offeror and get
them to act on it.

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15
Q

CONSIDERATION

A

CONSIDERATION, in a bilateral contract, is the mutually bargained for exchange of contemporaneous legal detriment. In a unilateral contract, it is the bargained for exchange of legal detriment. Adequate consideration does NOT include gifts, moral obligations, past consideration, pre-existing duties, or illusory offerings. Illusory offerings are agreements allowing a party the unfettered right to avoid obligations.
Agreements not to sue or agreements to pay a debt barred by bankruptcy are valid consideration.

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16
Q

REQUIREMENTS AND OUTPUT K

A

Requirements and Output contracts are generally valid even though they may appear
illusory based on the ability to avoid obligations.

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17
Q

MODIFICATIONS UCC

A

MODIFICATIONS: Once an agreement is in place a modification to that agreement is allowed for goods under the UCC if the change is made in good faith and mutually agreed upon.

You can orally modify a K even if it says you can only modify in writing; both at C/L(unenforceable) and under UCC-209 which says parties can waive that K restriction.

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18
Q

MODIFICATIONS COMMON LAW

A

For non-goods related agreements, the changes can be enforced under Common Law if there are unforeseen circumstances that have occurred and that gross hardship will happen if the changes are not allowed.

You can orally modify a K even if it says you can only modify in writing; both at C/L(unenforceable) and under UCC-209 which says parties can waive that K restriction.

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19
Q

MODIFICATION RESTATEMENT STATES

A

In Restatement states the changes must be fair and equitable

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20
Q

MODIFICATION CALIFORNIA

A

In California, the changes must be in writing and in good faith.

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21
Q

MODIFICATION: S.O.F. / ORAL

A

The modification should also be examined with respect to the statute of frauds. An oral modification agreed to by both parties acts as a waiver to a clause in an agreement requiring written modifications.

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22
Q

PROMISSORY ESTOPPEL

A

Promissory Estoppel is an alternative theory of recovery (typically applied when you
cannot sow a valid contract formation) that may apply when there has been substantial
reasonable and foreseeable detrimental reliance on a promise and injustice is avoided
by enforcing the promise to compensate for the loss. Damages are limited to losses
resulting from the detrimental reliance up to the value of the promise.

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23
Q

QUANTUM MERUIT

A

Quantum Meruit is a contract implied in law to compensate the injured party for goods
and services received by the other party.

24
Q

ACCORD and SATISFACTION

A

An accord and satisfaction is a good faith agreement to settle a dispute. Accord is the
agreement on a term and payment is satisfaction.

25
Q

DEFENSES

A

DEFENSES to contract include Real Defenses (formation), illegality, lack of Capacity, lack of Consent, Unconscionability, and Writings (Parole Evidence Rule and Statute of Frauds).

26
Q

REAL DEFENSES

A

Real Defenses are mutual mistake of fact, lack of consideration, and fraud in the execution.

27
Q

MUTUAL MISTAKE OF FACT

A

Mutual mistake of fact requires that both parties at the time of agreement were mistaken as to the subject matter of the agreement but this does not include mistake as to the value alone.

28
Q

REFORMATION

A

Reformation occurs when there has been a clerical error that is mutual (e.g. numerical typo) and the parties requires that the court reform the contract to what they originally intended.

29
Q

UNILATERAL MISTAKE

A

Unilateral mistakes, such as a clerical error made by one party,
is not usually a defense unless one party knew or should have known and took advantage of it.

30
Q

LACK OF CONSIDERATION

A

Lack of consideration means a complete failure of consideration.

31
Q

FRAUD IN THE EXECUTION

A

Fraud in the execution happens when a person is tricked in to the voluntary act of agreement like being tricked to sign a document.

32
Q

ILLEGALITY

A

Illegality is when the contract is an agreement to do something illegal or to do something legal in an illegal way. If the agreement has an innocent party, the courts will equitable establish restitution in favor of the innocent party.
If the illegality was malum prohibitum then the agreements can sometimes be enforced.
If both parties are equally guilty in pari delecto the court will not recognize a contract and will not enforce the agreement. This is malum in se.

33
Q

LOCUS POENTENTIAE

A

Locus poententiae is when a party knows when entering a K that it is likely illegal and then goes to the court and tries to get out and makes every effort to bring down the bad enterprise.
(CAN’T BE MALUM PER SE)

34
Q

LACK OF CAPACITY

A

Lack of Capacity is when one party is either mentally or legally incapable of making a contract. A minor may avoid or disaffirm the contract up until a reasonable time ater reaching the age of majority. The minor may still be responsible for paying for contracts for necessities of living, but not necessarily at the contract price. When there is an adjudication of insanity or declared incompetence of either party then there is no meeting of the minds. In cases where there is no adjudication the burden is on the party making the claim of incapacity.

34
Q

LACK OF CONSENT

A

Lack of Consent is when one party that agreed to the contract agreed under duress,undue influence,or fraud in the inducement. Fraud in the inducement happens when one party has detrimental reliance on a material misrepresentation of fact.

35
Q

DURESS/ECONOMIC DURESS

A

Duress is when the party agrees under force, threat of force or other types of coercion.
Economic duress is when a party has no other options to get goods or services elsewhere and is forced to agree to something.

36
Q

UNDUE INFLUENCE

A

Undue influence is when a party agrees to something with a person that holds a position of dominance (trust, fiduciary responsibility or is the attorney of the party) and the burden shifts to this dominant party to show that the agreement was fair.

37
Q

UNCONSCIONABILITY

A

Unconscionability is when the agreement is grossly one-sided or has hidden terms or unfair surprises. The court can exercise their option to “blue pencil” or strike the parts of the K that are unfair.

38
Q

STATUTE OF FRAUDS

A

The Statute of Frauds requires 5 types of agreements to be written -those whose terms
can in no way be completed in under one year from the date for formation, real property,
getting in or out of marriage, sale of goods for $500 or more, and suretyships. A writing
is satisfied by a memo of essential terms signed by the party against whom
enforcement is sought. Full performance by one party will eliminate the statute of frauds
requirement for the one year rule. For real property, the court can provide equitable
relief if a person has occupied the property or partially performed (paid money).

39
Q

MERCHANT’S CONFIRMING MEMO

A

A Merchant’s Confirming Memo under the UCC is a memo sent by the merchant that must contain a signature by the merchant and specify quantity.

40
Q

PAROLE EVIDENCE RULE

A

The Parole Evidence Rule declares inadmissible extrinsic evidence that is prior to or
contemporaneous with an integrated written agreement if it adds to, varies, or
contradicts terms in the written agreement. A fully integrated written agreement is one
that the parties intended to be the full, final and complete agreement. Partially
integrated agreements are final but not full and complete so evidence can be used
but not contradict what is in the agreement.

41
Q

EXCEPTIONS TO THE PER

A

Exceptions to the PER include (1) to clarify an ambiguity, (2)show a defense (3)Collateral agreements (4) subsequent agreements and (5) conditions.

42
Q

REFORMATION:

A

The act of changing a written contract when one of the parties can prove that the actual agreement was different than whats written down. Reformation is usually made by a court, for example, when both parties overlooked a mistake in the document, or when one party has deceived the other.
(1.agreement 2.to be put in writing 3. mistake in the terms)

43
Q

Rescision

A

to cancel a contract by mutual agreement of the parties, putting them in the positions they would have occupied had the contract not existed

44
Q

Collateral Agreement In PER

A

collateral agreement – one that would naturally and normally be included in a separate writing – will not be barred.

46
Q

PER Merger Clause

A

The merger clause states that the contract is a complete statement of the agreement and that any previous agreements or negotiations, oral or written, that are not contained in the contract are not part of it. The purpose of this clause is to show that both parties completely understand all of the terms that were agreed upon and that neither party can alter the conditions after the contract has been signed. It is also sometimes called an integration clause.

47
Q

Formation: O

A

O : Intent to be bound
Terms (PSTP)
CONSIDERATION

48
Q

OO

A

OO: Revocation

Termination

49
Q

A

A

A: Voluntary Act
Unequivocal Assent
Communicated to the offeror

50
Q

C

A

C: MBECLD

BELD

51
Q

90

A

Promissory Estoppel is an alternative theory of recovery (typically applied when you cannot sow a valid contract formation) that may apply when there has been substantial
reasonable and foreseeable detrimental reliance on a promise and injustice is avoided
by enforcing the promise to compensate for the loss. Damages are limited to losses resulting from the detrimental reliance up to the value of the promise.

52
Q 
R
I
C
C
U
W
A

Real: Fraud in Execution; Total Failure consideration; Mistake ( mutual/unilateral)
Illegality: (LP;MP)(PD;MIS)
Capacity: age;mental
Consent (undue influence, duress: personal/economic, fraud/inducement; detr. reliance on material misrepresentation
Unconscionability 1 sided, unfair surprises
W: S of F ; PER

53
Q

UCC

A

TP
MFO
2-207
Good Faith, 209

54
Q

UCC 2-206

A

KNOCK OUT: 2-206 DIFFERENT TERMS ARE KNOCKED OUT. ANY GAPS ARE FILLED IN BY PROVISIONS OF THE UCC

55
Q 
O                        TP
OO                      MFO
A                         2-207
C                         Good Faith Mutually agreed
90                       
R
I
C
C
U
W: S.E.R. / P.E.R.
A 
O : Intent to be bound
      Terms (PSTP)
      CONSIDERATION
OO: Revocation
        Termination
A: Voluntary Act
     Unequivocal Assent
     Communicated to the offeror
C: M.E.B.C.L.D
     B.E.L.D.
90:

Real: Fraud in Execution; Total Failure consideration; Mistake ( mutual/unilateral)
Illegality: (LP;MP)(PD;MIS)
Capacity: age;mental
Consent (undue influence, duress: personal/economic, fraud/inducement; detr. reliance on material misrepresentation
Unconscionability 1 sided, unfair surprises
W: S of F ; PER

1L (6 decks)

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