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Contracts > K2 Rules/Proofs > Flashcards

K2 Rules/Proofs Flashcards

1
Q

Undue Influence rule and proof & factors of improper pers.

A

Rule = When one party with power over another party (someone with lessened capacity) improperly exerts that power to negotiate an unfair contract
Proof =
- Improper persuasion of a party
- Special relationship (Assenting party is dominated by person persuading)
- Persuasion induces assent
Factors of improper persuasion =
- Discussion unusual or inappropriate time
- Transactions in an unusual place
- Insistent demand of immediacy
- Extreme emphasis on consequences of delay
- Multiple persuaders against single party
- Absence of 3 party advisers
- Statements like no time to consult advisers, etc

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2
Q

Duress Rule/Proof

when a threat is improper

A

Rule = Threat of force or other unlawful action to induce a party to consent
Rule Proof =
- If a party’s manifestation of assent is induced by an improper threat by the other party
- No reasonable alternative,
When a threat is improper =
- Crime or a tort or the threat itself would be a crime or tort if it resulted in obtaining property
- Criminal prosecution
- Made in bad faith or a breach of the duty of good faith and fair dealing under a contract with the recipient

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3
Q

Mutual Mistake rule/proof

A

Rule = Belief not in accord with the facts
Rule Proof =
- Both parties share same mistake
- @ the time of formation
- Nature/Subject matter is a basic assumption so fundamental parties did not expressly address, cannot be about value
- Material effect o
- Party does not bear the risk of mistake
a) The risk is allocated to him by agreement of the parties, or
b) He is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or
c) The risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

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4
Q

Unilateral Mistake Rule/Proof

A

Rule = Belief not in accord with the facts
Rule Proof =
- Both parties share same mistake
- @ the time of formation
- Nature/Subject matter is a basic assumption so fundamental parties did not expressly address, cannot be about value
- Material effect
- Party does not bear the risk
- Enforcement unconscionable or party knew or caused mistake

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5
Q

Public Policy Rule/Proof

A

Rule = Contracts that violate PP are voidable
Rule Proof =
- Significant PP
- Enforcement conflict with PP?
- PP concerns outweigh the public interest in enforcing contracts generally

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6
Q

Illegality Rule/Proof

A 
Rule = It is against PP to enforce a contract that violates the law 
Proof = 
- Statute that makes K illegal?
- SJM of a contract is illegal?
- Contract conflict with the statute?
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7
Q

Express Warranty Rule/Proof

A

Rule = Warranty that addresses the quality & characteristics of a good being sold & arise through words/actions by the seller that req. goods to conform either to the fact, promise, description, model, sample, etc.
Proof =
- Affirmation of fact or promise made by the seller to a buyer relating to goods
- Description of goods
- Any model or sample

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8
Q

Implied Warranty of Merchantability Rule/Proof

A

Rule = implied as a matter of law that addresses title and the basic quality of goods unless expressly excluded, become a part of any contract for sale of goods
Proof =
- Sale of goods
- Seller is a merchant to that kind of good
- No valid exclusion or modification of I.W.M

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9
Q

Implied Warranty of Merchantability for a P. P Rule/Proof

A

Rule proof

  • Contract sale of goods
  • @ time of contract, seller has reason to know of any P.P for which good is required
  • Buyer is relying on sellers skill or judgement
  • No valid exclusion or modification of this I.W.M
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10
Q

Course of Performance

A

Rule = manner in which parties began performing the contract in question before a dispute broke out

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11
Q

Course of dealing

A

Rule = The parties previous transactions with each other

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12
Q

Trade custom

A

Rule = ways in which a contract term is customarily used in the industry of which both parties are members

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13
Q

Integrated Agreement Rule

A

A written agreement that represents a final expression of one or more terms of the agreement

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14
Q

Partially integrated agreement Rule

A

Final expression of terms contained in the agreement but not final as to all terms

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15
Q

Parol Evidence

A

Any evidence other than the written agreement itself

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16
Q

Ambiguity Rule/Proof

A

Rule = More than one plausible meaning

  • If words are unambiguous then give them their plain meaning - question of law
  • If words are ambiguous then EE may be offered to show meaning - then it is a question of fact
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17
Q

PER Common Law Rule

A

Rule = Bars admission of evidence for review by factfinder of prior or contemporaneous EE offered as a term of a completely integrated agreement

  • Completely integrated = No contradictory or consistent terms
  • Partially = No contradictory but allows consistent additional terms
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18
Q

PER UCC

A
  • Allows integrations to be supplemented or explained with the course of performance/dealing, and trade usage
  • Evidence of consistent additional terms is allowed if not completely integrated
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19
Q

Merger Clause

A

The written provision which expressly negates collateral or antecedent understandings

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20
Q

Types of Rules of Const.

A

a) Construe agreement as a whole and give effect to all terms versus effect that makes one part extraneous
b) If clauses conflict, specific governs
c) Exclusion of one is exclusion of others
d) Meanings of words or phrases can be determined by reference to meaning of associate words or phrases
e) Negotiated terms give more weight than standardized terms
f) Handwriting over typed over printed
g) Grammar/Punction rules apply normally
h) Ambiguous terms must be construed against the drafter

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21
Q

Defenses to formation

A

K are supposed to be voluntarily so when something undercuts that voluntary aspect to assent a K can be voidable.

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22
Q

Ways E.E can/cannot be introduced

A
  • Always permitted to show a defense to formation
  • If used to interpret the agreement must determine ambiguous, only allowed if ambiguous
  • If being offered as a term then PER analysis
  • EE is permitted to show a modification (subsequent change)
  • EE is generally permitted to demonstrate trade usage/custom
  • EE is permitted to show a condition to formation
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23
Q

Definition of a condition

A

Triggers to obligations that occur within a contract

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24
Q

Promissory Condition

A

Party promises a condition will occur, if it does not then there is both a breach of promise and a failure of a condition

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25
Q

Conditional promise

A

Promise that does not come due until a condition is satisfied

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26
Q

Condition precedent

A

The event that must occur before the performance of an obligation becomes due

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27
Q

Condition subsequent

A

Event of occurrence of which discharges the obligation

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28
Q

Constructive conditions & standard of compliance

A
  • subset of implied conditions
  • Determine order of performance, timing of promises, etc
  • Substantial performance
  • If performance req amount of time then it must go first
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29
Q

Concurrernt conditions

A
  • Conditions precedent which are mutually dependent

- Expire eventually

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30
Q

Ways a court can avoid the harsh implications of conditions

A
  • Ambiguity
  • modification
  • Condition did not reflect a material part of the agreed exchange
  • Condition waived by voluntary words or conduct
  • Breach
  • Forfeiture or disproportionate
    + Look at entent of the forfeiture, importance to the obligor of the risk, and degree which protection will be lost if excused
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31
Q

Breach

A

Failure to do what is promised

32
Q

Perfect Tender Common Law

A
  • Only cancels if non conformity is material
  • Material = not substantially performed
    H = hardship on BP if excused
    A = amount of benefit bestowed on NBP
    I = innocent conduct
    L = likelihood that full performance can be performed
33
Q

Perfect Tender UCC

A
  • Seller has opp. to cure the defect if performance has not expired must notify buyer of intention to cure
  • If reasonably expect it would be acceptable then time to cure
  • Installment contracts are not covered under PT
    + Only a breach if it substantially impairs the value and it cannot be cured
  • Buyer options
    + Reject
    + accept
    + Accept any commercial unit and reject the rest
34
Q

Divisibility

A
  • When court reads contract into separate parts with dependent promises
  • Factors for determining if the contract is divisible
    + Separate considerations with all considerations present
    + Is there one fee for all of the contracts w/ no way for the court to separate
    + Intent of the parties at time of contract
35
Q

Anticipatory repudiation defin and test

A
  • Refusal to perform prior to when performance is due
  • Did obligor make a clear (definite and unequivocal) manifestation of intent (OTK) not to perform when performance is due
36
Q

Anticipatory repudiation UCC approach - options/retraction

A

Options: await performance, any remedy for beach, suspend own performance & wait
Retraction: retrack unless party has materially changed posisistion or cancelled, clearly indicated to party intended to perform

37
Q

Anticipatory repudiation UCC Assurance of Promises

A

Has to be reasonable grounds & then they have thirty days in writing to respond
+ Buyer falls behind on account w/ seller
+ Requires precision & to be used immediately upon delivery
+ long term partnership in some situations

38
Q

Anticipatory repudiation options common law

A

Responded - waive right to cancel & insist both parties perform, suspend own until party retracts or performs, cancel if maintaning would cause more injury

39
Q

Basic assumptions & issues for impracticability, impossibility or frustration

A
  • only applies when parties made the contract on the basic assumption that the contingency in question would not occur
    1) 3 sub issues
    a) Assumption has to be shared by both parties
    b) The more foreseeable the contingency was the less likely that it represents the failure of a basic assumption
    c) Risk allocation - make sure that the risk of one of the outcomes was not allocated to a party
40
Q

Impossibility

A
  • If performance by a party has been made literally impossible by the occurrence of unexpected events, then the contract may be discharged

a) Destruction or unavailability of the subject matter of the contract;
b) Death or incapacitating illness of a party;
c) Supervening illegality (where a contract is legal when it is entered into, but a subsequent change in the law renders its performance illegal).

41
Q

Impracticability

A

If performance by a party has been made highly impractical by the occurrence of unexpected events, then the contract may be discharged
i) After a contract is made
ii) Party’s performance is made impracticable
iii) Without his fault by the occurrence of an event
iv) Non-occurrence of which was a basic assumption on which the contract was made
v) Duty is discharged
Unless language or circumstances indicate the contrary

42
Q

Frustration of purpose

A

When unexpected events completely or almost completely destroy a party’s purpose in entering into the contract, the parties may be excused from performing

i) After contract is made
ii) Party's principle purpose 
iii) Is substantially frustrated 
iv) Without his fault by the occurrence of an event 
v) Non-occurrence of which was a basic assumption on which the contract was made
vi) Remaining duties to render performance are discharged 
   vii) Unless language or circumstances indicate the contrary
43
Q

Third Pary Beneficiary

A
  • A person not party to the K that still benefits
  • Created @ time of contract
  • Intended = person intended to benefit, can enforce the contract
  • Not guaranteed until vested
    i) Terms of the contract create the third party rights and expressly state they are vested or cannot be changed
    ii) 3PB materially changes its posistion by relying on rights
    iii) 3PB brings a suit to enforce rights
    iv) 3PB assents to being the 3PB at request of either party
44
Q

Delegatee

A

nonparty who takes on delegators duties under the contract

45
Q

Delegate

A

transfer your obligation

46
Q

delegator

A

original contracting party who delegates duty

47
Q

Delegation rule/exceptions

A

GR = Party may delegate but they will remain liable
Exceptions:
i) Contrary to PP
ii) Changes entire nature of the agreement
iii) Contrary to terms of the promise
iv) Not liable if the person signs a novation
Novation = obligee agrees to accept an agreement between the obligor and delegate to substitute the delegate to substitute the delegate in place of obligor & release the obligor from his duties

48
Q

Assignor

A

Original contracting part who makes an assignment

49
Q

Assignee def

A

non-party who receives assignors right

50
Q

Assign

A

present into to transfer right or benefit benefit one is receiving at the time of contract

51
Q

Assignee rule

A

1) General rule = contract benefits may be assigned
a) May be limited or prohibited by the parties agreement
b) Contractual right to the benefit cannot be assigned if the obligor reasonably intended for the right to be exercised only by the party with whom it contracted - but this rule usually only applies when a promise involves a relationship of personal trust or confidence or the obligor has expectations of counter performance

52
Q

Assignee rule exceptions

A

a) Materially change the duty of the obligor
b) Materially increase burden or risk imposed on obligor
c) Materially impair obligors chance of obtaining return performance
d) Materially reduce value to obligor
e) Forbidden by statute
f) Public policy
g) Validly precluded by the contract § 322

53
Q

Vested

A

i) Terms of the contract create the third party rights and expressly state they are vested or cannot be changed
ii) 3PB materially changes its position by relying on rights
iii) 3PB brings a suit to enforce rights
iv) 3PB assents to being the 3PB at the request of either party

54
Q

Exceptions to delegation rule

A 
Common law:
- Contrary to PP
- Changes entire nature of the agreement 
- Contrary to terms of the promise 
UCC:
- Otherwise agreed 
- Other party has subst. interest in that party performing 
- Controls acts required by the K
- Special skills or ability
55
Q

Liquidated damages general rule & exceptions

A
  • Only applicable if there is an express clause in the K
  • Presumption is there are enforceable unless
    1) Amount grossly in excess of actual damages
    2) Damage resulting from a breach is susceptible to definite measurement
56
Q

Liquidated damages test

A
  • Are damages difficult to calculate @ time K was made
  • Is the amount stated as liquidated damages reasonable in light of either
    a) Anticipated harm @ time of K or
    b) actual damages
57
Q

Liquidated damages rule proof for common law & UCC

A

a) Must be an amount reasonable in the light of anticipated loss or actual loss and difficulties of proof of loss
b) Term that gives an unreasonably large amount of damages is unenforceable on grounds of public policy

UCC is a) +
+ and difficulties of proof loss and inconvenience or non-feasibility of otherwise obtaining an adequate remedy

58
Q

Equitable relief common law

A
  • Specific performance or injunction
  • Discretionary and very limited
    R = Only available where the money would be inadequate to protect the expectation interest of the injured party
    F =
    1) Can the court fashion a remedy
    2) Enforcement burden on the court
    3) SP results in inequality in BP
    4) SP rewards NBP for unfair dealing
    5) SP conflict with PP

WILL NOT BE ORDERED:

  • The act or forbearance that would be compelled would be contrary to PP or
  • Cause undue hardship on court to enforce or supervise
  • A promise to render personal services
  • Render of personal service exclusively for one employer will not be enforced
  • Other party also breached enough to discharge the others performance
  • No way to ensure other party will perform
59
Q

UCC Equitable relief

A

It May be ordered if:
- Goods are unique or in proper circumstances
PC = Buyer made a reasonable effort to find other ways of getting the goods or the circumstances indicate that any effort to do will be unavailing

60
Q

Monetary Damages categories

A 
Expectation = benefits of the bargain
Reliance = Loss/damage you incurred on reliance of performance
Resitution = Giving back the benefit the BP received
61
Q

Limits to expectation monetary damages

A

a. Certainty
b. Causation
c. Foreseeability
d. Mitigation

62
Q

Expectation monetary damages categories

A

General damages
Consequential damages
Incidental damges

63
Q

UCC Incidental damages include

A

i) Expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected
ii) Any commercially reasonable charges
iii) Expenses or commission in connection with effecting cover
iv) Any reasonable expense incident to delay or breach

64
Q

UCC Consequential damages include

A

i) Any loss resulting from general or particular req and needs of which seller at the time of K had reason to know of and could have reasonably prevented and
ii) Injury to person or property proximately resulting from any breach or warranty

65
Q

Common-Law expectation interests

A

Loss in value + incidental loss + consequential loss - cost avoided - loss avoided

66
Q

Expectation - loss in value defin

A

difference between value P accepted to receive from promised performance and value P received from D actual non performance

67
Q

Expectation - incidental damages

A

are the direct result of one party’s breach of contract - expense occurred while trying to mitigate

68
Q

Expectation - consequential damages

A

are more indirect, being incurred not as a result of the breach itself, but due to the end result of the breach
I.e loss profits

69
Q

Expectation - Cost avoided

A

Costs that the breach enables the NBP to avoid (i.e no longer has to supply paint)

70
Q

Expectation - Loss avoided

A

extent to which NBP has mitigated damages

71
Q

Three categories of breach & NBP rights

A

Substantial performance = NBP performance is not relived but may recover damages
Material but not total = substantial deviations that might be cured, may suspended performance until the breach is either cured or becomes total
Total & Material = subst. deviations that cannot be cured, NBP may withold performance or terminate K

72
Q

Void v. Voidable

A 
Void = no contract ever existed
Voidable = enforceable unless a party can prove a defense
73
Q

UCC Expectation Damages

A

(Gross profit + reliance) - (payments made - cost avoided)
- Could also exercise reasonable judgment if reasonably believe they could avoid damages by trying to resell the project 2-704(2)

74
Q

Monetary damages equations

A

(Profit + costs) - any payments already received = seller

(value expected - cost avoided) - (what you now have to pay because of breach) = buyer

75
Q

Remedies - when buyer is in breach and has the goods

A

may recover, together with any incidental damages under the next section, the price
(a) of goods accepted or of conforming goods lost or damaged within a commercially reasonable time after risk of their loss has passed to the buyer

76
Q

Remedies - buyer is in breach and seller has goods

A

(1) When the buyer fails to pay the price as it becomes due the seller may recover, together with any incidental damages under the next section, the price ….
(b) of goods identified to the contract if the seller is unable after reasonable effort to resell them at a reasonable price or the circumstances reasonably indicate that such effort will be unavailing.

Contracts (5 decks)

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