Exam 2 Flashcards by grace steil

state statute that stipulates what types of contracts must be in writing

Statute of Frauds

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What are the contracts that must be written in writing

any interest in the sale or lease of land
Guarantees
Prenuptial Agreements
Sale of Goods over $500

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What is the exception to having a contract in writing which pertains to a Guarantee

if the main purpose of the contract is to secure personal benefit to the Guarantor

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Exceptions to having to have the contract in writing

partial performance, Admit in court proceeding there is an agreement, and Promissory esptopel - someone relied on that agreement

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what is the Parol evidence rule

final document = agreement

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the transfer of contractual rights to a third party is known as an

assignment

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Exceptions to assignment

Workman’s compensation
Contract is personal in nature - specialized service
delegate duties - the assignment significantly increases or alters the risks of the obligator

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when the original parties to the contract agree that the contract performance should be rendered or directly benefit a third person the third person is a

third party beneficiary

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What is the most common why to discharge yourself from a contract

complete the work

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something must happen before performance can occure commonly used in real estate like the buyer must obtain financing before getting the loan

condition precedent

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something must happen in order to continue the agreement an example of this would be passing the bar in order to continue working at a law firm

condition subsequent

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both parties perform at the same time an example would be an agreement to sell a care the money and car exchange would be this

condition concurrent

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Exception would be if the person performed everything almost exactly nessessary these things must be done in good faith, not vary greatly from what was promised and changes can be remedied with compensation, and the performance is basically what was said in the contract

substantial performance

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non performance of a contractual duty, can sue for damages, example would be Garth brooks donating money for a hospital wing and that wing never being built

Material Breach

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notification of duty to perform that contract won’t be fulfilled and can sue or see if they perform for breach of contract an example would be the prom dress store

anticipatory repudiation

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both parties agree that they shouldn’t complete the contract **GET IN WRITING

Discharge by Mutual Rescission

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1 party can’t fulfill their obligation and they get another party to fill their spot

Novation

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what are the rules to Novation

1 valid obligation
2 agreement by all parties
3. extinguishing of old obligation
4. new contract is put into place

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law says there is a discharge
due to Material Obligations
Statute of limitations
Bankruptcy 
Impossibility of performance

Operation of Law

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what are the 3 parts of Impossibility of performance

person dies
subject matter destroyed
change in law

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contract becomes very difficult to complete and it wasn’t reasonably anticipate

Commercial impracticability

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actual damages form the breach (to make person whole)

compensatory damages

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foreseeable damages due to resale of goods or loss of profits example would be the prom dress store

Consequencial damages

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NOT ALLOWED FOR BREACH OF CONTRACT meant to punish the individual

Punitive damages

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breach of contract exists but there are no damages just says that you win

nominal damages

if you don't breach the contract they breaching party owes you the $ due **These MUST be reasonable or you will get nothing!!!!!

Liquidated damages

there was no contract but court says there was because one party was unjustly enriched

Quasi Contract

in the UCC you must deal in

GOOD FAITH

what is the primary fact or the contract and you go with that ex. sale of goods/services

predominate factor test

These people are held to a higher standard than others because they have unique knowledge of the product/service

merchants

If UCC conflicts with Common Law in the sale of goods who wins

UCC

What makes something a consumer lease

1. lessor regularly engages in the business of the lease/selling 2. a Lessee who leases the goods are for a personal family or household use 3. lease payments are less than $25,000

in this lease you must make the payments even it if the product doesn't work (usually from a bank)

Financing lease

these contracts can have open terms except they must specify a quantity

sale of goods

an exception to the sale of goods contract would be if the parties agree to buy and sell as many as the buyer wants

Requirements Contract

this would be an exception to the sale of goods contract would be when the buyer will take as many as you can make

outputs contract

seller has obligation to ship/tender conforming goods can agree to move away from this rule seller can't meet the seller can provide a cure

Perfect Tender rule

make sure the company will perform obligation

right of assurance

what can the seller do if the buyer breaches the contract

the seller can resell the product | pay for the unfinished goods

what can the buyer do if the seller breaches

get specific performance | right to cure or buy from someone else

company gets a letter of credit from the bank saying they will accept this debt

letter of credit

this is a feel good letter about the company's credit

credit letter

signed writing that contains an unconditional promise/order to pay an exact amount either on demand or at a specific future date

negotiable instrument

create of the draft

drawer

pays the money

drawee

receives the money

payee

type of note issued whey party deposits funds in the bank and the bank pays you back

What are the requirements for a negotiable instrument

1. in writing 2. signed by maker/drawer 3. unconditional promise/order to pay 4. state fixed $ amount 5. payable on demand or at a specific time 6. be payable to order or to bearer

bank demands you pay a dollar amount bank ahead of the call date

acceleration clause

allows more time to pay back a note

extension clause

something payable to the bearer

bearer instrument

changes into bearer instruments just sign name on the back

blank endorsement

contains signatures of endorser and intends to make it payable

special endorsement

endorse to someone and they can't come back at you

qualified endorsement

only get money if you do something

Conditional endorsement

requires the endorse to follow instructions before you can get the money

restrictive endorsement

person who takes a instrument free of most claims and defenses and this person must have taken the instrument in good faith or at FMV and doesn't know any of the defects

Holder in due course

a person who is not a HDC can become a HDC if that person takes the instrument from a HDC

Shelter Principle

not protected if postdated unless you contact them in a reasonable amount of time

postdated checks

if a check is cashed 6 months after it is written then you don't have to cash them

stale check

no legal effect and the bank is liable where your signature has been sold Customer negligence Lady who had her check book stolen

forged signatures

send digital image of check to the bank and not the paper called substitute checks and created after 9/11

Check 21

claim against someone's property which makes sure you get paid

lien

when you have provided labor services or materials furnished for real estate and don't get paid

mechanic's lien

personal property and must have possession until paid for

artisan lien

from court judgement and can attach to real estate

Judicial Lien

seize wages from person and must get ruling in order to do (Can take all the money out of a bank account but not pay check) also can attempt to peacefully reposes personal property

garnishment

sale of property for less than balance on mortgage loan

short sale

process by which lender repossesses and then auctions off property that secured the loan

foreclosure

promise made by 3rd person to be responsible for obligation primary liable

surety

secondary liable for a loan and if they have to pay can go after the person for damages

guarantor

any rights that the creditor had given to guarantor

subrogation

allowed to maintain family home up to a certain amount

homestead exemption

creates lien on assets of person/business

security agreement

refereed to as the instrument normally filed to give notice you have a lien

financing statement

establishes priority in collateral

perfection

exceptions to the financing statement

inventory bought for resale

default can only be done in

good faith

peaceful repossession can occur but resale must

sale commercially acceptable must be done at a reasonable time and place

What are the goals of Bankruptcy

give the debtor a fresh start and treat the creditors fairly

Chapter 7

liquidation all non exempt assets gathered and sold off

Chapter 11

reorganization plan to pay off creditors for businesses

Chapter 12

for fisherman and farmers to qualify 50% of income and debt must be from the farm

Chapter 13

Reorganization of individuals plan to pay off creditors

try to determine if you should go through bankruptcy

means test

individuals must go through what before starting bankruptcy process

credit counseling

all attempts to collect stop immediately

automatic stay

any transfer made withing 90 days of creditor more than normal can cancel

preferential transfer

hides assets somewhere so not available to the creditor stretches back 2 yrs before bankruptcy and you are kicked out

fraudulent transfer

exceptions from the discharge of debt

back taxes, domestic obligations, and student loans

continue to pay debt to get credit going forward and must be in signed writing from the court

reaffirmation agreement