Flash Cards for Bar Courses - Contracts
Damages
A damaged party is entitled to damages that will place them in the position they would have been in but for the breaching party’s breach. However, the non-breaching party has a duty to mitigate loss. The difference in the actual K offer and the offer recieved to mitigate is the amt of damages recoverable
Illusory Promise
a promise that is not sufficient consideration to support a counter promise. Is a statemetn that appears to be promising something but does not actually commit the promisor to anything at all. (ex. promisor reserves the. right to change his mind.) An illusory promise may become adequate if the time during which the promisor could choose alternative performances has passed.
Quasi K
name given when unenforceable contract results in unjust enrichment.
Bilateral K
K that is one consisting of the exchange of mutual promises; a promise for a promise.
Can be accepted in any reasonable way.
Unilateral K
Offeror requests performance rather than a promise.
Offeror promises to pay upon completion of the requested act.
Once the act is completed, K is formed.
Unilateral K is irrevocable once performance has begun.
Merchant
one who regularly deals in goods of the kind sold or who otherwise by their profession holds themselves out as having special knowledge or skills as to the practices or goods involved.
Offer
creates a reasonable expectation in the offeree that the offeror is willing to enter into a K on the basis of the offered terms.
Advertisements
Are mere invitations for offers; unless
promise was specific and the offeree was identified.
Offer Requirements: Land or Real Property
Must:
-Identify land with some particularity
-price terms
Offer Requirements: Sale of Goods
Must contain QUANTITY
Offer Requirements: Other SERVICES
Must contain NATURE OF WORK TO BE PERFORMED.
UCC Missing Terms (Gap fillers)
Price- reasonably price at the time of delivery
Time of shipment/delivery: Within a reasonable time
Delivery: seller’s place of business
Time for payment: time and place at which the buyer is to receive the goods.
Rejection of option
Offeree is still free to accept the option within the option period if the offeree has rejected the option. HOWEVER, offeree cannot accept the option if the offeror has detrimentially relied on the offeree’s rejection
Merchant’s Firm offer
1) Merchant
2) signed writing
3) assurance that it will be held open w/o consideration
Must be for a reasonable time no more than 3 months.
Detrimental Relaince
When the offeror could reasonably expect that the offeree would rely to their detriment on the offer, the offer will be irrevocable as an option K for a reasonable length of time.
Silence as acceptance
-can be accepted b/c of prior dealings or trade practices
-or if the recipient of services knows or should have known that the services were being rendered with the expectation of compensation, and by word could have prevented the mistake.
UCC acceptance (Shipment)
Acceptance by
-promise to ship OR
-prompt shipment
UCC Battle of the Forms
IF NOT MERCHANTS - additional terms are considered to be mere proposals and do not become part of K unless the offeror expressly agrees,
IF MERCHANTS: additional terms become part of K unless:
-materially altrer the original terms
-offer expressly limits acceptance to the terms of the offer, OR
-offeror objects to the terms within a reasonable time
Mailbox Rule (When rejection is also sent)
Rejection 1st: whichever arrives first
Acceptance then rejection: acceptance is effective, unless rejection arrives first and the offeror detrimentally relies on it.
Consideration
a bargained for exchange between parties of legal value.
When is a pre-existing duty considered consideration?
New or different consideration
to raatify a voidable obligation
preexisting dut is owed to a 3rd person
honest dispute
Unforeseen circumstances and the modification is fair and equitable.
GOOD FAITH FOR UCC
K Modifications
Tranditionally- cannot modify w/o new consideration
Modern view (CL): can modify if
1) mod is due to unforeseen circumstances
2) and the mod is fair and equitable.
UCC
Can modify K if there is good faith by both parties
Promissory Estoppel & Detrimental Reliance
1) Promisor should reasonably expect to induce action or forbearance and
2) such action or forbearance is in fact induced.
2nd restatement provides: remedy may be limited as justice requires
Defenses based on incapacity
-Minors
-Mental Incapacity
-Intoxicated persons: voidable if other party had reason to know of the intoxication
- Duress & Undue Influence
1) The party threatens to commit a wrongful act that would threaten the other party’s property or finance
2) undue susceptibility to pressure one by party and excessive pressure by that party.
- Mistake
-Misrepresentation
-illegality
-unconscionability
Mistake
Mutual: can be voidable
Unilateral: Does not prevent K formation UNLESS the nonmistaken party knew or had reason to know of the mistake made by the other party
K Modification Oral
CL: Even if written K provides that it may be modded only by wriitng, the parties can orally modfify K
UCC: if K says only written, then only written mods.
HOWEVER, if the parties agree to modify orally, then OK
When Real estate K is excused from SOF
- payment
- possession
- valuable improvements to the land
NEED AT LEAST 2 OF 3
Merchants Confirmatory Memo
SOF req met if merchant sends written confirmation of the understanding
1. they have reason to know of the memo’s contents
2. they do not object to it in writing within 10 days of receipt.
Exceptions to Parol Evidence
-Formation Defects
-Conditions precedent to effectiveness
-Interpretation
-showing of true consideration
-Reformation
-Subsequent Modifications
-Additional terms under Art. 2
Disclaimer of Warranties
Warranty of merchantability: Must mention merchantability and IF written, MUST BE CONSPICUOUS
Warranty for fitness of a particular purpose: MUST BE IN WRITING AND CONSPICUOUS
Cannot disclaim express warranties – non merchants cannot be liable for the breach of a warranty
Risk of Loss
Noncarrier:
Seller is a:
Merchant: risk of loss passes on PHYSICAL POSSESSION
Nonmerchant: Passes on tender of delivery
Carrier:
Shipment K: risk of loss passes to the buyer when the goods are delivered to the carrier
Destination K: risk of loss passes to buyer when the goods are tendered to the buyer at the destination; i.e. FOB & FAS
Anticipatory Repudiation
4 options
-Sue immediately
-suspend performance and wait to sue
-treat the K as discharged-
-urge promisor to perform
Divisible K
-performance of each party is divided into 2 or more parts under the K
-number of parts due form each party is the same
-performance of each part by one party is agreed on as the equivalent of the corresponding part from the other party
Accord
is an agreement in which one party to an existing K agrees to accept, in lieu of the performance that they are supposed to receive form the other party, some other, different future, performance.
Novation
1) a previous valid K
2)an agreement among all parties, including the new party to the new K
3) the immediate extinguishment of contractual dutioes as between the og contracting parties,
4) a valid and enforceable new K`
Impracticability
1- extreme and unreasonable
2) its nonoccurrence was a basic assumption of the parties
Discharge by frustration of Purpose
-supervening act
-parties did not reasonably foresee
-the purpose of the K has been detroyed by the act or event
-the purpose of the K was known by both parties at the time of makin the contract
Liquidated Damages
Damages must be difficult to estimate and the amount agreed on is a reasonable forecast of compensatory damages in case of breach
When do a third party’s rights vest?
1) manifest assent to a promise in the manner requested by the parties
2) 3rd party brings a suit to enforce the promise
3) when they materially change position in justifiable reliance on the promise
Rule for Parol Evidence
Extrinsic evidence regarding any oral agreements from before the contract was signed will not be considered if it directly contracdicts the terms of the contract.
Fully integrated = extrinisic evidence only to help clarify an ambigious term
Partiall integrated = extrinisc evidence can be offrered to prove consistent or supplementary terms as long as the terms do not contradict the express terms of the contract.
Non compete requriements
must be for a reasonable period and reasonably bounded geographically.
