K&S - From Essay & MBE Debriefing Flashcards
K&S Mneumonic
Until Fall, Test Pressure, Exhaustion, Both Threaten Romance
U = UCC or common law contract law: What law applies
- Transaction - Sale, some leases, etc. (2-102)
- Goods 2-105
- If UCC Sales applies, is either party a merchant?
F = Formation: Has a contract been formed (Subtitle 2)
- Offer, acceptance, consideration, promissory estoppel 2-206 & 2-207
- Statute of Frauds 2-201
- If agent, does agent have authority to bind principal
T = Terms: What are the terms of this contract? (Subtitle 3)
- Important terms in the contract
- Read the contract
- Parole evidence rule application
- Factual terms
- What did the Parties agree to?
- Duties and Conditions
- Provisions such as Convenants not to compete, Liquidated damages provisions
- Terms Implied By Good Faith
- UCC Terms
- Implied Warranties
- Express 2-313, Implied warranty of merchantability 2-314, Implied warranty of fitness for particular purpose 2-315
- Express UCC terms
- Output, requirements, installment contracts, destination, shipment, FOB, CIF
- Implied Warranties
P = Performance: Have the parties performed their contractual obligation? (Subtitle 5)
- Focus is on the performance of the terms identified in the formation section
- Risk of loss
E = Excuse & Defense: Is there an excuse for the non-performance or other defense? (Subtitle 6)
- Defenses to formation - illegality, incapacity, mistake, etc.
- Impossibility, impracticability, frustration of purpose
B = Breach: If there is unexcused non-performance, is this a breach of the contract?
(Subtitle 6)
- Breach of contract, Breach of warranty
- Total, material or partial breach? UCC Perfect Tender Rule, Right to Cure?
- Divisibility
- Waiver & ratification
- Anticipatory breach of contract 2-610
T = Third Party Issues: Are there any third party issues? (Subtitle 4)
- Intended beneficiaries
- Assignment & delegation
R = Remedy: What are the rights and obligations with respect to any remedies? (Subtitle 7)
- UCC options - Seller and Buyer; Rights and obligations
- Rejection 2-602 or Revocation of acceptance 2-608
- Seller’s remedies 2-702 thru 2-710
- Buyer’s remedies 2-711 thru 2-717
- Prompt action, notification, mitigate damages
- Damages
- Different measures of money damages
- Seller’s Remedies
- Buyer’s Remedies
- Incidenta and consquential damages
- Different measures of money damages
- Specific Performance
Contract (CL)
- At common law, a contract requires at minimum
- Mutual Assent (offer and acceptance), plus
- Consideration or promissory estoppel
Implied-In-Fact Contract
- May be formed without an express agreement, where the parties conduct demonstrates mutual assent.
- Mutual conduct shows mutual assent
Damages - Implied-In-Fact Contract
- Are measured by either:
- the intended price, or
- if the price is unexpressed, the fair value of the services provided by the plaintiff
Implied-In-Law Contract
(a. k.a. quasi-contract)
* Permits recovery in the absence of an enforceable contract for a benefit recieved to avoid unjust enrichment, even if the recipient was not aware of the benefit.
* A contract implied-in-law is NOT an actual contract, but rather a legal obligation created to prevent unjust enrichment, in the absence of an enforceable contract.
Damages - Implied-In-Law Contract
- Damages for an implied-in-law contract are measured by the value of benefit recieved by the defendant (quantum meruit).
Defenses - Infancy
- Provides that a contract entered into by a minor is voidable
- Defense to contract formation (incapacity to contract)
- A minor need not take any action to disaffirm a contract until she reaches age of majority.
- If the minor does not avoid the contract within a reasonable period of time after she reaches majority, she has ratified it and is liable on it.
- Ratification may be any positive act signifying assent to the contract made after the minor reaches majority, or may occur simply by inaction.
- The right to avoid contract is personal to the minor and may not be exercised by a trustee or third party other than the minor’s guardian.
- If the contract has been executed all or in part, the minor has reaped some gain from it, she must return anything in possession when she elects to disaffirm the K.
- If the items are lost, used, etc. can disaffirm - no requirement that she make restitution or pay.
- Minors may avoid contracts made for necessaries (food, shelter) but the law requires payment of the fair market value of those necessaries which are not returned.
Defenses - Contract for Necessaries Exception
- Is an exception to the infancy defense and requires the minor to pay for necessaries provided to the minor.
- Minors may avoid contracts made for necessaries (food, shelter) but the law requires payment of the fair market value of those necessaries which are not returned.
Fair Value
- When a minor is required to pay for necessaries, the obligation is to pay the fair value, not the “contract price” of the services.
Ratification
- Is found when a minor enters into a contract and upon reaching the age of majority, fails to act to void the contract within a reasonable time.
- Ratification may be any positive act signifying assent to the contract made after the minor reaches majority, or may occur simply by inaction.
Installment Contract (2-612)
- Is one which requires or authorizes the delivery of goods in separate lots to be separately accepted.
- (K provides for multiple delivery of goods)
- Payment is due upon each tender of a part of the goods if the price can be apportioned
- The buyer can reject any installment which is nonconforming only if it substantially impairs the value of that installment and cannot be cured.
- But if the nonconformity can be cured and the seller gives adequate assurances of its cure, the shipment must be accepted by the buyer.
- When the nonconformity is not substantial and can be cured, the buyer must accept the goods and his only right is to sue for damages.
- There is a breach of the whole contract - a total breach - only when nonconformity or default with respect to a particular delivery substantially impairs the value of the whole contract.
- Only when the breach or cumulative breaches substantially impair the value of the whole contract can the non-breaching party cancel as to subsequent installments.
- If the buyer has failed to make payment for installment #2 the seller may withold delivery of installment #3 until the buyer pays cash for instamment #3 and pays for any unpaid installments.
- Seller always has the right to cure.
Waiver
- A voluntary and intentional relinquishment of a known right
- A party waives their right to strict enforcement of a contract when they permit a breach to occur without complaint
- The party waiving must have actual knowledge of the facts giving rise to the right he waives
- May be express or implied
Demand for Assurances
When reasonable grounds for insecurity arise concerning he likelihood of performance of a party to the contract, the other party may make a written demand for adequate assurances of future performances and suspend contractual performance until such assurances are recieved.
Repudiation
- If adequate assurances are not recieved, the aggreieved party may treat the contract as repudiated.
- The seller may recover the difference between the fair market value of goods and the unpaid price, less expenses saved by the breach.
Identify Goods to the Contract (2-704)
Where the seller has he goods at the time of the breach, the seller may “identify” those goods to the contract and resell them.
