K and Sales Flashcards
Applicable Law
UCC or CL
UCC Applicable Law
Governs Ks for sale of goods
CL Applicable Law
Everything not covered by UCC
Mixed Transactions
Predominance Purpose Test
What is the main purpose of the k
K Formation
Requires mutual assent
Consisting of offer
Acceptance and consideration
CL Offer
Manifestation of willingness to enter into bargain shown by intent
Definite and Certain Terms (QTIPS)
Communication such that offeree has knowledge
UCC Offer
Inviting acceptance in any manner and by any medium in light of circumstances
Term of Offer
Rejection Counteroffer Revocation Lapse of Time Death/Incapacity
Rejection of Offer
Outright rejection of the offer
Counteroffer
Same subject matter
But different terms
Revocation
Offeror anytime before acceptance
Direct or indirect
Unambiguous words or conduct inconsistent w/ intention to contract
Offeree aware
Exceptions to Revocation
UCC Firm Offer
Option K
Detrimental Reliance
UCC Firm Offer
Made by a merchant
Signed writing
Assurances to be held open
Limited to 3 months if not stated
Option K Exception to Revocation
Option to enter into k for
Specified time and
Promise to hold open
Consideration required
Detrimental Reliance Exception to Revocation
Made preparation to perform in part OR
In reasonable detrimental reliance
Lapse of Time Revocation
Set time for acceptance
If none, then reasonable time
Oral offers lapses at end of conversation
Death/Capacity Revocation
If either dies or loses capacity
Terminates automatically
CL Acceptance
Precise mirror image of offer Objective standard of acceptance Unilateral K Promise for performance Bilateral K Promise for promise
Silence as Acceptance
Not allowed unless offeree reason to believe offer accepted was silent and intended to OR based on prior dealing
UCC Acceptance 2-207
Expression of acceptance or written confirmation acts as acceptance even if additional or different
Battle of Forms both Merchants & Add Terms
Additional terms auto added unless:
Offer expressly limits acceptance to terms
Material alteration (warranty disclaimer)
Objection within reasonable time
Battle of Forms either not Merchants & Add Terms
Any additional term will
Not be apart of the contract
Unless the other party assents
UCC Different Terms
Knock Out Rule (Maj Rule):
Conflicting terms cancel either out K consists of agreed upon terms
UCC
Gap fillers will be used
Min Rule:
Treat different terms as additional terms
Fall Out Rule:
Offeror’s terms control
UCC Shipping Goods
Offer accepted by promptly shipping conforming or non-conforming goods
Conforming: then acceptance
Non-conforming shipment w/out acknowledging: means acceptance and breach
Shipment w/ accommodation: then no acceptance but counteroffer
Mailbox Rule
Effective upon proper dispatch
Offeree no longer has control or possession of acceptance
Exceptions to Mailbox Rule
Terms of offer control
Option k effective upon receipt; not dispatch
If acceptance and rejection sent
Rejection first, acceptance controls if received first
Acceptance first, acceptance controls
Consideration
Bargained-for exchange
Illusory Promise
Promise something but does not commit to do anything
“I will buy as many widgets as I want”
Requirement K
Implied obligation of good faith Requirements Seller will be exclusive source of Buyer’s requirements for Particular period of time
Output K
Buyer will buy all of seller’s output
For particular time period
Promissory Estoppel Cons
Foreseeably induces reliance and actually relied upon
Limited to reliance damages
Defenses to Formation
SoF Misrepresentation Fraud Unconscionability Mistake Capacity
Categories of SoF
Marriage Real Property Outside One Year Sale of Goods over $500 Surety
Req of SoF
Writing
Essential Terms
Signed by party to be charged
Exceptions of Req of SoF
Between Merchants
Written confirmation w/ in reasonable time AND
No objection w/ in 10 days of receiving confirmation
SoF Marriage Exceptions
Promises that are not consideration
SoF Real Property Exceptions
Part performance
Payment, possession or improvements
SoF One Year Exceptions
Part performance
SoF Goods over $500 Exceptions
Goods accepted or paid for
Admission in pleading or court
Specially manufactured goods
SoF Surety Exceptions
When main purpose is for
Promisor’s own economic interest
Exceptions to SoF generally
Promissory estoppel and
Judicial admissions
K Misrepresentation
One party making misrepresentation Prior to other signing the k Need not be intentional Must be material fact Justifiable and actual reliance
K Fraud
False statement of material fact Knowledge of the statement’s falsity Intent to induce reliance Justifiable and actual reliance Damages suffered
K Unconscionability
Procedural Unfairness in k formation Bargain struck flawed with Lack of meaningful choice Substantive Oppressive and One-sided that Shock conscience of court
K Mutual Mistake
Basic assumption of the k
Material effect on the deal
Adverse party did not assume risk of loss
K Unilateral Mistake
Mistaken party must show
Mutual requirements PLUS
Other party knew or should have known
K Capacity
Minor, mentally or intoxicated then
K invalid unless
Minor contracted for necessities
K Condition
Event that must occur before performance of other party is due
If does not occur, performance of other is excused
K Types of Conditions
Express
Constructive
K Express Condition
Created by language of parties
Demonstrating intent to have a condition
Strict compliance
K Constructive Condition
Supplied by court for fairness
Substantial performance
Waived/Satisfied Condition
The party with the benefit of condition always has the power to waive
Benefit: receiving and keeping benefit OR failure to insist on compliance
Can be retracted unless other party detrimentally relied
PER
Limits extent of introduction of evidence of writings made prior to or contemporaneous with signed written contract
Partial Integration
Intended to be final expression of
Agreement but not include all details
Not allowed to contradict a term
Allowed to supplement a term
Total Integration
Intended to be final expression and
Details of agreement
Not allowed to contradict or supplement
Exceptions to PER
K formation or enforcement defects
Does not bar evidence of defects or defenses
Conditions precedent
Ambiguous terms
PER Ambiguous Terms
Interpretation of ambiguous terms of k
UCC PER Ambiguous Terms
Course of Performance:
Evid of the conduct of the parties regarding the k
Course of Dealing:
Evid of conduct of parties regarding past k
Usage of Trade:
Evid of the meaning others in the same industry attach to the term
Modifications
Written or Oral
Exceptions to Oral rule of Modification
If the k as modified falls under SoF
Must meet SoF
CL Modification
Mutual assent and consideration required
“No oral modifications” clauses not enforced
UCC Modification
Mutual assent and good faith required
But not consideration
3rd Party Beneficiary of K
Person whom promisor intends to benefit
Intended or Incidental
Intended Beneficiary of K
One intended by promisor to benefit from k
Can sue to enforce
Incidental Beneficiary of K
One who indirectly benefits
Cannot sue to enforce
Assignment of K
Transfers rights under k to 3rd party Generally all rights assignable No consideration required Gratuitous assignment allowed Assignee stands in shoes of assignor
Exceptions of Assignment of K
Can’t assign if material change in duty/risk
Delegation of K
Appoints duties owed under k
Generally most duties can be delegated
Delegator remains liable
Exceptions of Delegation of K
Can’t delegate duties of special skill
Novation of K
Obligee expressly agrees to
Accept performance of delegatee
Instead of delegator
Terminates liability of delegator
Anticipatory Repudiation
Unequivocal expression by a party
Occurring before time performance due
That will not perform under k
Options for Non-Repudiating Party of Anticipatory Repudiation
Sue immediately: cannot do this if only part of performance left is payment,
Suspend performance and wait until performance is due to sue,
Treat k as discharged and repudiation as offer to rescind, OR
Urge performance under k and sue later if efforts are futile
Right to Demand Adequate Assurances
If not repudiation but cause reasonable grounds for insecurity
Can demand adequate assurances in writing
May suspend performance until assurance given
If fails to respond w/in 30 days, considered repudiation
CL Material Breach
Not substantial performance on k
Excuses performance of non-breaching party
Factors of CL Material Breach
No substantial benefit Extent of any part or full performance Willfulness of breach Time is not of essence Unless specifically agreed to Divisible contract: Can separate breach from other parts of k
CL Minor Breach
If not material may recover BUT must still perform
UCC Perfect Tender
Single delivery requires perfect performance
If non-conforming then:
Reject whole delivery w/ in reasonable time,
Accept OR
Accept any commercial unit and reject rest
Exception of UCC Perfect Tender Installment K
Substantial conformity AND
Must allow seller to cure
UCC Seller’s Right to Cure
Right to reject non-conforming Subject to seller’s right to cure Before performance due: Must give notice to buyer Make tender within time for performance OR After if believed it would be accepted
K Warranties
Express
Implied Warranty of Merchantability
Implied Warranty Fit for Particular Purpose
Implied Warranty of Good Faith and Fair Dealing
Implied Warranty of Merchantability
Fit for ordinary purpose
Can be disclaimed “as is”
Implied Warranty Fit for Particular Purpose
Buyer relies on
Seller’s judgment to select
Appropriate goods for
Stated purpose
Implied Warranty of Good Faith and Fair Dealing
Inherent in every k
Accord
One party promises to
Render substitute performance AND
The other promises to accept
Consideration required
Satisfaction
Performance of the accord
Discharges original agreement
If breached
Can sue under the original or accord
Defenses to Enforcement of K
Formation Defenses Undue Influence/Duress Capacity Condition not met Illegality Impossibility Impracticability Frustration of Purpose
Undue Influence/ Duress K Defense
Extreme pressure, coercion or threat that leads to invalidation of a k
Susceptibility to pressure due to relationship
Capacity K Defense
Minority or mental incapacity
Conditions not Met K Defense
Serves as defense to non-performance
Impossibility K Defense
Makes performance literally impossible
Neither party assumed risk
Impracticability K Defense
Non-occurrence of event makes performance
Extremely and unreasonably difficult
Must be basic assumption of k
No allocation of risk to party using defense
Monetary loss usually not enough
Frustration of Purpose K Defense
Purpose for entering contract destroyed
Both parties know of purpose
Not reasonably foreseeable
Frustration total
