Final Flashcards

Question

Irrevocable Offers

Answer 1

Option Contract (Common Law) Firm Offer (UCC)

Answer 2

Contract formed through mutual assent AND consideration in order to keep an offer open for a set period of time in exchange for $

Answer 3

A firm offer BY A MERCHANT must be in writing and cannot be revoked during the time stated, or if that time is not stated, what is reasonable ONLY IRREVOCABLE FOR 3 MONTHS! Then, may be left open or revoked by seller before acceptance is made even if still in the time frame offered to be kept open

Answer 4

Offerree's power to accept is terminated upon the death or incapacity of the offeror

Answer 5

Bargained-for exchange. Both parties must acquire something of value in which they desire from the agreement in exchange

Answer 6

Past Consideration Moral Consideration Nominal Promises Settlement of Claims Illusory Promises Pre-Existing Duty Rule

Answer 7

Something that has already taken place cannot be bargained for in an agreement now

Answer 8

A promise to do what one is morally obligated to do, or morally should do, is not valid consideration

Answer 9

Consideration that is so insignificant as to bear no relationship to the value of what is being exchanged I.e. $100 in exchange for 1 cent

Answer 10

Giving up ones legal rights to do something is consideration in exchange for something of value

Answer 11

If consideration is found, the courts will not inquire whether it is adequate It does not need to be an equal bargain

Answer 12

A settlement agreement that turns out later to be an invalid claim is upheld if (1) P had a genuine belief that the claim was in good faith (subjective); and (2) the claim had a reasonable basis not surpassing doubtfulness (objective) I.e. bastard baby

Answer 13

A promise to do what one is already legally obligated to do, and has not given new consideration, yet the other side has Issue frequently arises when parties one existing contract and then make a second contract Does not apply to UCC

Answer 14

One party makes a promise to potentially do something in exchange for the other party promising to actually do something ONLY ONE PARTY IS BOUND TO PERFORM! Completely up to a party to do what they want in an agreement unchecked. If you cannot prove breach, then it is illusory

Answer 15

Parties are always allowed to make changes to their agreement, but they both must agree to the modification Common Law: Mutual Assent and Consideration UCC: Mutual Assent, but 2-209 rule

Answer 16

(1) A promise made to a promisee which (2) a promisor should reasonably expect the promisee will rely on (induce action or forbearance), (3) the promise does induce such action or forbearance (promisee actually relies on it - detrimental reliance), and (4) injustice can only be avoided by enforcing the promise

Answer 17

Formation If there was an agreement between parties and the parties act like they have an agreement, there is a contract It does not matter when the contract was formed, as long as there was an offer and acceptance Even if the terms are murky, if there was an offer and acceptance, there was a contract

Answer 18

Deception Mistake Duress Illegality Incapacity Unconscionability Statute of Frauds

Answer 19

Misrepresentation Non-Disclosure Concealment

Answer 20

Intentional Negligent Innocent

Answer 21

An assertion not in accord with the facts (1) False Statement (2) About a fact material to the contract (3) Made with the requisite mental state (4) Actually and justifiably relied on by the other party (5) Causing damages

Answer 22

(1) Failure to disclose a fact (2) A duty to disclose a fact (3) The non-disclosed fact was material to entering the contract (4) The other party actually and justifiably relied on the state of the terms in the absence of the disclosed fact (5) Damage

Answer 23

(1) Active efforts to prevent another party from learning a fact (2) The concealed fact was material to the decision to enter into a contract (3) The other party actually and justifiably relied on the facts as they appeared within the concealment (5) Damage

Answer 24

Mutual Mistake (1) Erroneous belief about a material fact was shared by both parties (2) The erroneous fact was a basic assumption upon which the contract was formed - CORE OF THE DEAL (3) The erroneous fact had a material effect on the agreed upon exchange between the parties Unilateral When one party is mistaken as to the subject matter or terms contained in the contract

Answer 25

(1) One party makes an overt or implicit threat (2) The threat induces assent The other party cannot exercise free will because there is no reasonable alternative but to agree

Answer 26

Traditional Economic

Answer 27

Violence or threats to the other person

Answer 28

Untoward economic pressure that goes beyond reasonable and fair - result in great economic harm

Answer 29

If either the consideration or subject matter of the contract is illegal, this will serve as a defense

Answer 30

When a party lacks the legal capacity/rights to enter into a legally binding contract

Answer 31

Minority Mental Disability Intoxication

Answer 32

A party entering the contract was under 18

Answer 33

Must have no capacity to be legally bound Objective standard

Answer 34

Can make contracts while drunk Must be in a state of drunkenness to incapacitate them Objective standard

Answer 35

Procedural -Absence of a meaningful ability to bargain -Gross inequality of bargaining power Substantive -Shocks the conscious

Answer 36

Certain agreements, by statute, must be evidenced by a writing signed by the party sought to be bound to be valid In most instances, an oral contract is enforceable

Answer 37

(1) Is the contact subject to the Statute of Frauds? -Land sales (common law) -Contracts that cannot be performed within one year (common law) I.e. building a house -Sales over $500 (UCC) (2) Does the contract comply with the writing requirement? Common Law -Does not require formal written contract -Memo of agreement is written -Indicate that a contract has been made between two parties -Signed by the party charged UCC 2-201: Statute of Frauds -Requires only some signed writing indicating contract has been made and the quantity of goods -If goods were specially manufactured, or if a party admits or there is payment or acceptance, a contract was entered If it violates, invoke Promissory Estoppel because reliance theory

Answer 38

Step 1: What kind of breach did the defendant commit? Step 2: To what damages might the plaintiff be entitled? Step 3: Do any limitations justify reducing plaintiff’s damages recovery?

Answer 39

Non-performance -Performance did not occur at all Defective performance -Partial performance

Answer 40

Seek to give the damaged party the benefit of the bargain (BoB) Put Plaintiff in Position if Performance occurred Economic damages rewarded only

Answer 41

General (BoB) Special MINUS expenses saved

Answer 42

Reliance Consequential

Answer 43

$ spent performing or preparing to perform $ spent in anticipation of other party’s performance $ spent dealing with fallout from the breach Restore P to their economic status before the contract

Answer 44

Lost use profits Lost resale profits Property damage Personal injury

Answer 45

Buyer K$ - FMV Seller FMV - K$ UCC 2-708 If it is such a unique good that it essentially has no market value (unsellable), then P may recover the full K price

Answer 46

Cost of repair -Amount necessary to fix the problem or finish the work Use as default Diminution in value -Value of what was promised minus the value of what was received -ONLY in exceptional circumstances: -Repair would produce economic waste, or -Cost of repair is grossly disproportionate to loss in value

Answer 47

Essential Incidental

Answer 48

$ spent performing K $ spent preparing to perform K

Answer 49

$ spent because the party is expecting the contract to be formed $ spent fixing the problems directly caused by the breach

Answer 50

Avoidability Foreseeability Certainty

Answer 51

No recovery for damages that could reasonably have been avoided, if able to be avoided without unreasonable burden, risk, or humiliation P is required to use the market to mitigate losses Duty to attempt to use the market to recover the losses through alternative means (cover) STOP PERFORMING AND MITIGATE LOSSES

Answer 52

Recovery only for damages that were reasonably foreseeable as a result of the breach

Answer 53

Can only recover for damages that are reasonably certain P must be able to prove the damages and calculate it Damages that are speculative in nature are not recoverable

Answer 54

Equitable remedy - NOT A FORM OF DAMAGES Used when contract damage calculations are unfair Focus on D's unjust enrichment Restores to the plaintiff the value of a benefit that was unjustly gained by the defendant

Answer 55

Common clause the parties put into the contract themselves Agreed upon damages in advance if a breach occurs If the liquidated damages clause is deemed valid, recovery will be awarded in the agreed amount

Answer 56

(1) Damages are difficult to calculate (2) The amount of damages are reasonable in light of: -The estimated damages at formation OR -Actual damages after the breach IF TOO MUCH, PUNISHMENT

Answer 57

Specific Performance Injunctive Relief

Answer 58

Forcing a party to perform a promise after the breach Disfavored by the court Only used when there is no other remedy to make the plaintiff whole or in unusual circumstances UCC 2-716 - Goods are unique

Answer 59

Preventing a party from breaching an agreement, court order prohibiting a party from doing a particular act or activity before beach actually occurs

Answer 60

Used to determine if extrinsic evidence can be admitted when a party is arguing an additional term not written in the contract was supposed to be included New/extra term in K Limits what can be entered into evidence

Answer 61

Step 1: Does it even apply? Step 2: Is evidence consistent or inconsistent with the written agreement? Step 3: If consistent with written agreement, does it bar evidence?

Answer 62

Applies to: Prior written or oral terms OR Contemporaneous oral terms AND There is not separate consideration for that term in addition to the consideration in the written agreement If neither, PER doesn’t apply and default to admitting the evidence

Answer 63

Determine whether the extrinsic evidence changes the meaning of the contract (consistent or not) Consistent when -Terms that explain or supplement the contract may be added If this: PROCEED Inconsistent when -Evidence is fundamentally inconsistent with the contract or irrelevant to the contract will not be considered If this: STOP

Answer 64

You look to see if the contract was integrated, partially integrated, or not integrated at all

Answer 65

Written contract says everything to which the parties have agreed to STOP: written contract says everything needed, so courts will bar extrinsic evidence

Answer 66

Written contract has writing that addresses those topics, but does not include everything to which parties had agreed to STOP: courts will only admit extrinsic evidence if it is consistent with terms in writing

Answer 67

Writing that really does not express a final and complete agreement as to any terms it states STOP: extrinsic evidence comes in automatically

Answer 68

Williston Corbin

Answer 69

Does the contract include an integration/merger clause? Yes: STOP Extrinsic evidence is not permitted (fully integrated) No: PROCEED Does the contract appear complete when considering only what is included within the four corners of the document? Yes: STOP Extrinsic evidence is not permitted (fully integrated) No: Look for exceptions -Context of the K -Naturally omitted terms test: 1. Things that are almost common sense that people would not need to say because everyone understands it and doesn’t need to be written 2. If court deems it to naturally have be omitted, then K complete If no exceptions and not complete, allow extrinsic evidence

Answer 70

Typically all evidence is permitted to help court determine whether the contract is integrated or not Intent of parties, circumstances and context Completely Integrated -No extrinsic evidence permitted Partially Integrated -Extrinsic evidence permitted Merger Clause -Strong presumption completely integrated BUT still must look to the parties' intent and context

Answer 71

States that the terms of K are the complete and final agreement between the parties

Answer 72

Patent Ambiguity Latent Ambiguity Ambiguous Gap in K

Answer 73

An ambiguity that appears on the face of a document More commonly the subject of litigation Patent ambiguities are hard to see in the writing of the contract I.e. Language that is unclear or words that have multiple meanings

Answer 74

An ambiguity that is only revealed after learning additional information Tend to be resolved by applying Parol Evidence rules

Answer 75

The contract is silent or incomplete regarding an issue Courts use “gap fillers” to cure these ambiguities Terms that are implied but are not spelled out Goal is for court to fill in missing term by ascertaining what the parties must have meant

Answer 76

EXTRINSIC EVIDENCE AMBIGUITY

Answer 77

PER - new/extra term in K Ambiguity - resolving a term already in K

Answer 78

Step 1: Identifying Step 2: Resolving

Answer 79

-Course of Performance -Course of Dealing -Evidence of Admissions or Negotiation Evidence -Trade Usage -Public Policy -Contra Proferentem

Answer 80

How the parties actually performed the contract at issue

Answer 81

How parties performed prior contracts containing the same term at issue

Answer 82

Evidence submitted that related to the admissions or other significant statements made during the negotiations stage of contract formation Often as persuasive as, and sometimes more persuasive as, "course of dealing"

Answer 83

Particular language with an understood meaning in the industry the agreement and parties are dealing in

Answer 84

Make the contract reasonable and consistent with public policy

Answer 85

Default rule that a contract should be interpreted against the party that drafted it We don’t like this because it unnecessary penalizes the drafter Only used as a last resort

Answer 86

An event that will not automatically occur, but must occur before performance by the other party is required (unless the condition is for some reason excused)

Answer 87

Express Constructive

Answer 88

Found within the contract itself Includes court “gap fillers” Common Express Conditions: "time is of the essence" recitals, "pay when paid" clauses, and "satisfaction" requirements Requires perfect performance of the condition Must be clear, conditional language

Answer 89

Court reads into a K to create a condition to determine the order in which obligations must occur

Answer 90

ALWAYS NOT ALWAYS (optional) However, courts can impose conditions on a contract even if the parties have not done so themselves

Answer 91

Promises - created by parties in K to create an obligation If it occurs, it discharges an obligation and the effect of failure includes remedies for breach Conditions - created by parties in K or read into K to postpone an obligation If it occurs, it creates an obligation and the effect of failure excuses the obligation to perform

Answer 92

Event happens prior to performance of K One party needs to perform first in a contract

Answer 93

Event occurs at time of performance of K When parties intend to have their performance occur simultaneously

Answer 94

Promisor must perform the promise regardless of whether the other party has performed

Answer 95

Independent Duties -Must be performed regardless of non-performance by the other party Dependent duties -Subject to a constructive condition precedent -Only become an obligation once the other party’s duty is fulfilled Substantial vs Perfect Performance -Unless it is an express condition, substantial performance is usually adequate to trigger dependent duties

Answer 96

Express condition Could give unfettered discretion and be an illusory promise Generally will be read into as creating an obligation of reasonableness and good faith Reasonableness is an objective standard Subjective standard – if the person is satisfied and not trying to get out of it for a minor thing

Answer 97

Courts look to the context of the agreement to determine if the clause is a promise or a condition If a condition, it is express -Often a boiler plate term -Specifies the time for performance or completion of performance

Answer 98

Firm Offer

Answer 99

Offer and Acceptance in Formation of Contract An offer should be accepted by any reasonable manner You can accept by words or deeds even if there was no confirmation of shipment Although beginning of performance is a mode of acceptance, when the offeror is not notified within a reasonable time of acceptance, it can be treated as a lapse

Answer 100

Additional Terms in Acceptance

Answer 101

Modifications You do not need additional consideration to modify a contract Therefore, if you already have a legally binding contract governed by the UCC, the parties are free to make alterations to the promises contained in that contract without additional consideration, so long as there is mutual assent to modify the terms

Answer 102

Merchants A person, corporation, or other entity who either: Deals in goods of the kind, or By occupation has knowledge or skill applicable to the particular field of goods or services in the transaction, or Employs others that have this specific knowledge or skill