final af Flashcards
statute of frauds beginning sentence
Statute of frauds is a statute requiring certain contracts to be in writing and signed by the parties bound by the contract. The purpose is to prevent fraud and other injury.
*this includes contracts that involve,
1. M arriage Contracts
2. Y (Contracts Not Performable Within One Year)
3. L and
4. E xecutors or Administrators
5. G oods of $500 or More
6. S uretyship Contracts
Contracts of Executors or Administrators
Applies to contracts where an executor or administrator agrees to pay a decedent’s debts out of their own funds.
Suretyship Contracts
(Answering for the Duty of Another)
Definition: A third party promises to pay a creditor if the debtor defaults.
Example: Gina promises to pay Dan if Sam fails to repay a loan.
Conditions:
The promise must be made to the creditor.
The principal obligation must belong to another party (the debtor).
Exception – The “Main Purpose” Rule:
If the guarantor’s main purpose is their own financial benefit, the contract can be enforced even if it’s oral.
Marriage Contracts
Applies to agreements made upon consideration of marriage, not mutual promises to marry.
An agreement made in anticipation of getting married, not actually getting married
Examples include prenuptial agreements and property settlements based on the upcoming marriage.
Contracts for the Sale of Land
Covers agreements involving the transfer or creation of an interest in land.
Exceptions: Short-term leases (typically one year or less) may not require a writing in most states.
Contracts Not Performable Within One Year
If a contract, by its terms, cannot be completed within one year from the date it was made, a writing is required.
Interpreted narrowly
Key Point: The one-year period begins on the contract date, not the date of performance.
Lifetime agreements do not fall within the statute of frauds because we may die at any time
Duration limits would apply (employment contracts of 5 years)
Full performance on one side may take an agreement out of one-year provision
Restating terms of a contract resets the contract date
There can be provisions within the contract that could result in termination of the contract that would be within the year
It it “performance”? Is terminating hte contract an “alternate performance”- is it a choice: perform or terminate?
Contracts for the Sale of Goods of $500 or More
Governed by the UCC, specifically UCC § 2-201.
Refer to the UCC’s specific statute of frauds section for more detail.
Cumulative Clauses
If a contract falls under multiple clauses, all relevant requirements must be satisfied.
Oral modifications to agreements that fall within the statute may also need to meet these requirements.
*if theres multiple rules necessary
Writing Requirements
Must be signed by the “party to be charged” (the party denying the contract).
Modern law allows flexibility with electronic signatures.
It does not have to be both parties
Multiple documents can together satisfy the writing requirement if they are related.
A writing satisfies the requirements of the statute of frauds if it follows..
- Identifies the parties to the contract
- Shows that those parties entered into a contract
- Sets forth the subject matter of the contract
- State the essential terms of the contract
Overview of Indefinite Agreements
Under the UCC, a quantity term is required, but other terms (price, delivery, payment) can be implied with gap fillers. Missing terms don’t prevent contract formation, but more missing terms make intent harder to prove.
Gap Filler Provisions
Usage of trade
Prior course of dealing
Prior course of performance
UPP
Indefiniteness and Vagueness
Example: “Fair share of profits” is vague and cannot be computed from anything the parties said or referenced.
Courts will not step in to supply indefinite terms unless there’s a reasonably certain basis for determining them.
Agreement to Agree
An agreement to agree is not enforceable if key terms are left for future negotiations without a method for determining them.
Example: If a material term is left for future negotiation, it’s unenforceable unless a methodology, objective event, condition, or standard is provided to determine that term.
real property contracts
the price and payment terms are considered essential.
Example: A renewal clause without specified rent amount or method for determining it was found unenforceable.
elements of an enforceable contract
A- acceptance
L- legality
O- offer
C- consideration
C- capacity
an offer (2)
must have cleat and definite terms
objective manifestation to enter into an enforceable contracts
must be reasonably clear to the offeree that acceptance will form a contract
Proposals to the public
ads, catelogs, circulars are usually invitations to offer
UNLESS
specific terms and conditions
objective test
in finding mutual assent (intent to contract), the courts use the objective test
*outward manifestation
bilateral contracts
each party makes a promise
unilateral contracts
only one party makes a promise
ways to terminate an offer (4)
- revoke
- rejection or counter-offer
- lapse of time
- death or incapacity
revocation
can occur any time before acceptance
does not apply to option contracts
communication of revocation
direct or indirect (from a reliable source)
death
does not terminate irrevocable offers
Offeror as Master of the Offer
. The offeror determines the manner of acceptance.
2. Acceptance must comply with the offeror’s specified terms.
Methods of Acceptance
must be the specific manner said by the offeror, if no manner is said then acceptance can be in any reasonable manner
Acceptance by Promise
*Must be a commitment to be bound, not just an acknowledgment.
*The promise must be unconditional and not require further action.
Notice is generally required for acceptance by promise.
*Acceptance is effective when communicated, but reasonable diligence must be exercised to notify the offeror.
Acceptance by Performance
- For unilateral contracts, acceptance is by performing the requested act.
- Contract forms only upon full performance.
- The offer becomes irrevocable once performance begins, allowing time for completion.
notice of acceptance by performance
No notice required unless requested by the offer.
2. Offeree must notify the offeror if the offeror is unlikely to learn of acceptance in a reasonable time.
Mixed Method of Acceptance (Promise or Performance)
Breach for Non-Completion
1. Beginning performance creates a duty to complete it.
2. Non-completion constitutes a breach.
The Mailbox Rule for acceptance
Acceptance is effective upon dispatch if made in the manner invited.
Rationale: Protects the offeree from revocation after dispatch.
mailbox rule for anything else
Revocations are effective only upon receipt.
Rejection terminates the power of acceptance upon receipt by the offeror.
An acceptance following a rejection is not valid unless received before the rejection.
Silence and Dominance as Acceptance
General Rule
1. Silence is not typically considered acceptance.
B. Exceptions
1. Acceptance inferred by exercising dominion over offered property.
2. Acceptance inferred from taking the benefit of services with the expectation of payment.
3. Offeror’s statement or previous dealings indicating silence as acceptance.
revocability generally
An offeror’s promise not to revoke is unenforceable without consideration.
Option Contracts
*An option contract provides an irrevocable period during which the offeror cannot revoke the offer.
*Requires mutual assent and consideration.
* Consideration can be nominal but must support the irrevocability.
It recites a purported consideration.
It proposes a fair exchange within a reasonable time.
*no mailbox rule
when is a contract irrevokable
- By a promise to hold the offer open which is supported by consideration
R2d §25 - By a “firm offer” UCC §2-205
- By a promise inviting acceptance by performance only and not a return
promise and the offeree tenders or begins the invited performance R2d §45 - By reliance by the offeree R2d §87(2)
Firm Offers
Limits the offeror’s power to revoke, making the offer irrevocable under certain conditions.
2. Requirements:
There must be a separate offer other than the original offeror
(a) Made by a merchant.
(b) To buy or sell goods.
(c) Includes assurances it will be held open.
(d) In a signed writing.
(e) Valid/irrevokable for the time stated or a reasonable time, up to three months.
After 3 months, offeror is no longer bound
(f) does not require considereation
Anything extra written by the offeree must be signed by the offeror
Accepting with Different/Additional Terms with non-merchants
- a contract is formed
*If someone sends a definite acceptance or confirmation (written follow-up) within a reasonable time, it counts as an acceptance, even if it includes new or different terms compared to the original offer.
Exception: This is true unless the acceptance is clearly conditional on the other person agreeing to those new terms
*note- conditional provision does not apply to the written confirmation - those terms then become proposals
Accepting with Different/Additional Terms with merchants (nem)
These new terms will automatically become part of the contract unless one of the following happens:
(a) (1. expressly limit) The original offer says, “I only accept the terms I’ve already given.”
(b) (2. materially alter) The new terms significantly change the contract in a way that would surprise or create hardship (like unexpected travel for a lawsuit).
(c) (3. notification of objection) The other party objects to the new terms either before or soon after receiving them.
conduct but with diff terms
Even if the written offers and acceptances don’t perfectly match up, if both parties behave like they have a contract (e.g., performing the agreement), then there is a contract.
Terms of the Contract: The contract consists of the terms both sides agree on in their writings, along with any extra terms provided by the UCC.
knock out
an approach for different terms, neither term becomes part of the contract, what is left are the terms on which the two writings do not conflict. the contract exists of the terms in which the parties agree
determining consideration
Is There a “Bargained For” Exchange?
Has the promisor sought something in return for the promise, whether a promise or a performance?
If the Promise is Not Bargained For, What Type of Promise is it?
Gratuitous Promise:
Is the promise simply a future gift?
If the promisor asks for and receives nothing in return, it is not legally enforceable.
Past Consideration:
Has the action taken by the promisee occurred before the promise was made?
Past Consideration
Promise based on an action already performed; lacks the inducement for a bargain.
Example: Employer promises a vacation to Pam for work done the previous year. The work was already completed, so it does not constitute consideration.
Adequacy of Consideration
Not Required to Be Equal: The values exchanged do not have to be equal.
Courts do not usually measure the value of what’s exchanged as long as there was a bargain.
However, if the exchange is extremely unbalanced, a court may consider it a factor in determining whether the bargain was tainted by fraud, duress, mistake, or unconscionability.
Sham and Nominal Consideration:
Selling a $1,000 luxury item for $1 as a pretense to make a promise enforceable could be seen as a disguised gift.
Restatement Example: A offers to buy B’s $1 book for $1,000 as a way to transfer money. The court would view this as lacking real consideration.
Example: Trading a luxury sailboat for $1 may suggest sham consideration unless there was a real exchange.
Illusory Promises
A promise that does not actually bind the promisor to any obligation.
Example: “I’ll pay you $100 for the dishwasher unless I change my mind.” No real obligation is formed due to the condition.So even if Amy agrees to give you the dishwasher, her promise would not be enforceable because she has received no consideration in exchange for it.
Conditional Promise
a promise that depends on the occurrence of a specific condition. The promise is genuine and enforceable if the condition happens, but it’s not enforceable if the condition doesn’t occur. In contract terms, it can still form a binding agreement as long as the condition is clearly stated and reasonable (even if it is uncertain or based on events outside of the promisor’s control).
Example:
“If it rains tomorrow, I will give you a ride to work.”
Here, the promise to give a ride is conditional on rain. This is a genuine promise contingent upon a specific event
“ Sara tells Tal, “If you can be ready by 8 a.m., I will give you a ride to work.” Is Sara “bargaining” for Tal to be ready at 8:00 a.m.?”
In this case, Sara is offering Tal a conditional benefit (a ride to work) if Tal meets a certain condition (being ready by 8 a.m.). This statement can be seen as a form of conditional offer rather than bargaining.
Satisfaction Clauses
Definition: Contracts with performance conditioned on one party’s satisfaction with the other party’s work or service.
Subjective vs. Objective Satisfaction:
Personal Contracts (Subjective Satisfaction): The party’s genuine personal satisfaction determines acceptance, even if others are satisfied.
Promissory Estoppel (Restatement Second § 90)
Allows enforcement of promises inducing reliance, even without traditional consideration, to prevent injustice.
Four Requirements:
Promise: A clear promise was made by the promisor.
Actual Reliance: Promisee relied on the promise, to their detriment (harm)
Foreseeability of Reliance: Reliance was reasonably foreseeable.
Injustice Without Enforcement: Enforcing the promise is necessary to prevent injustice.
Court just acts, as justice requires. There are remedies given to the promisee, equitable.
MORAL OBLIGATION
if a debtor wants to voluntarily promise to repay a debt after it has been discharged (or could have been discharged) in bankruptcy, this new promise can legally bind the debtor to repay the debt. However, for this promise to be enforceable, certain conditions must be met:
1. promise was made after bankruptcy discharge
2. promise must be express
3. partial payment or acknowledgment is insufficient
Material Benefit Rule (Restatement Second § 86):
Enforces promises made in response to a substantial benefit received by the promisor. From a previous benefit and where enforcement is necessary to prevent injustice.
Example: Webb v. McGowin: Webb saved McGowin’s life at a personal cost, and McGowin’s subsequent promise to compensate was upheld due to the material benefit and moral obligation.
Settlement of Claims
Public Policy: Encourages dispute resolution without litigation to save time, money, and court resources.
Consideration: A promise to settle a claim (e.g., Dr. Mal paying $10,000) is supported by consideration if the claim is valid. If the claim is invalid, the promise is not supported unless exceptions apply:
Exceptions:
Validity of the claim is uncertain.
The party asserting the claim has a good faith belief in its validity (i.e., honest belief the claim could be valid).
Exclusive Dealings
Wood v. Lucy, Lady Duff-Gordon – Courts infer an obligation to use reasonable efforts in exclusive dealings (e.g., Wood had exclusive rights to promote Lady Duff-Gordon’s designs, and her compensation depended on his efforts).
UCC: Implies a “best efforts” obligation in exclusive dealings (UCC § 2–306(2)).
Accord and Satisfaction
Definition: When parties agree to substitute the performance under an existing contract (the accord), and performance of the new agreement (the satisfaction) discharges the original claim.
modification-restatement
1.The parties voluntarily agree,
2. the contract is still executory on both sides (each side still owes a
performance),
3. underlying circumstances prompting the modification were unanticipated
by the parties, and
4. the modification is fair and equitable in the circumstances.
Quantity Based on Output or Requirements:
When a contract specifies the quantity of goods based on the seller’s output or the buyer’s requirements, the quantity should be what is needed in good faith. However, the quantity cannot be unreasonably more than what was estimated or, if no estimate was given, what is considered a normal or reasonable amount.
Exclusive Dealings:
If a contract creates an exclusive dealing relationship between the seller and the buyer, both parties are required to make their best efforts. The seller must try their best to supply the goods, and the buyer must try their best to promote the sale of those goods.
Misunderstanding: A defense to formation
Where parties express assent to the same words or terms, but attach
materially different meanings to what they said, their misunderstanding
may prevent a contract from being formed. Each person may say the
same thing, but each means something different. If neither party has
reason to know of the meaning attached by the other, there is no mutual
assent and no contract is formed.
● Each party said “Peerless,” but what each said had a “latent” ambiguity
because there were two ships named Peerless. Although each said the
same thing, they did not intend the same thing.
