Ks Flashcards
Battle of Forms: New terms in acceptance may control if…
- Both parties are merchants;
- The new term does not materially alter the deal;
- The initial offer did not expressly limit acceptance to its terms; and
- Offeror does not object within a reasonable time to the new term.
When can you use a preexisting duty under CL?
(1) change in performance,
(2) 3rd party promising to pay,
(3) unforeseen difficulties that would excuse performance
(1) promissory estoppel:
(a) Promise made that would be reasonably expected to induce reliance
(b) Promisee takes detrimental action in reliance on promise
(c) Injustice can be avoided only by enforcement of the promise
(2) Quasi-Contract (aka “K implied-in-law”)
(a) The plaintiff confers a measurable benefit on the defendant;
(b) The plaintiff reasonably expected to get paid; and
(c) It would be unfair to let the defendant keep the benefit without paying (look for an opportunity to decline or a good reason why there was no opportunity to decline).
Mutual Mistake – adversely affected party can rescind if: (+ extra step for unilateral)
(a) mistake of fact existing when K made
(b) mistake relates to a basic assumption of the K and has material impact
(c) impacted party did not assume risk of mistake
extra step for unilateral: either…
• The mistake would make the K unconscionable; OR
• The other side knew of, had reason to know of, or caused the mistake
Fraud/misrepresentation/nondisclosure
(1) Misrepresentation of a present fact (not opinion)
(2) Fact is material or fraudulent (intentional); and
(3) Misrepresentation made under circumstances in which it is justifiable to rely on the representation
nondisclosure only matters if:
(a) fiduciary duty OR
(b) active concealment
Defenses to Formation
- misunderstanding
- incapacity
- mistake
- fraud/misrepresentation/nondisclosure
- duress
- illegality
- unconscionability
Steps in K analysis
(0) UCC or CL?
(1) Was K formed? (All Contracts Don’t Stink)
- Agreement
- Consideration
- Defenses to Formation
- Statute of Frauds
(2) What was performance? (Pizza With Crawling Escargot)
- Parole Evidence Rule
- Warranties
- Conditions
- Excuse of Performance
(3) Damages?
- Expectation
- Restitution
- Reliance
- Liquidated
- (Punitive)
reqs for defense of misunderstanding
(a) Parties use a material term that is open to two or more reasonable interpretations
(b) Each side attaches a different meaning to the term
(c) Neither party knows, or should know, of the confusion.
What types of Ks does the Statute of Frauds apply to?
Mr. SOUR
- Marriage
- Suretyship
- One Year
- UCC (sale of goods over $500)
- Real Estate
How to satisfy the SoF
(1) Full performance of a services contract by either side
(2) A writing signed by party whom K is asserted against that…
• (a) indicates that a contract has been made;
• (b) identifies the parties; and
• (c) contains the essential elements of the deal
Exceptions to Parole Evidence Rule
•Evidence relevant to a defense against formation (duress, mistake, fraud, etc.)
o Maybe admitted to prove a condition precedent to the existence of K
• A second, separate deal
• A prior communication designed to interpret an ambiguous term in the final agreement
Differences between the Implied Warranties of Merchantability and Fitness for a Particular Purpose
(1) Disclaimer
• Merchantability: can be disclaimed IF very clearly done. Look for VERY CONSPICUOUS language that mentions the warranty of merchantability or words like “as is.”
• Particular Purpose: cannot be disclaimed orally, unlike the implied warranty of merchantability; its disclaimer MUST be in writing
(2) Who can apply to:
• Merchantability: merchants only
• Particular Purpose: non-merchants too
Reqs for Implied Warranty of Fitness for a Particular Purpose
(1) a buyer relies on a seller’s expertise to select a special type of good that will be used for a special purpose
(2) The seller makes an implied warranty (unless disclaimed) that the goods will satisfy this special purpose
When can seller cure a failure to tender perfect goods?
(1) Time is left on K OR
(2) seller had reasonable grounds to believe that the buyer would accept a replacement
When can a buyer reject an installment under an installment K?
ONLY when there is a substantial impairment in the installment that cannot be cured.
What must a seller do under a shipping K (F.O.B. Seller’s place of business)
(i) Get the goods to a common carrier
(ii) Make arrangements for delivery; and
(iii) notify the buyer.
Risk of Loss in Shipment Problem (Steps)
(1) Check whether parties already dealt with risk in the K. If so, their agreement will control.
(2) Ask whether either party has breached. If so, breaching party bears loss
(3) Ask what type of delivery K it was
o Shipment K → risk with buyer
o Destination K → risk with seller
(4) In all other cases, ask whether seller is a merchant
o merchant → risk stays with seller until buyer receives the goods
o not merchant → risk moves to buyer when the seller tenders the goods
When goods identified at the time the K was made are totally destroyed before the risk of their loss has passed to the buyer and w/o the fault of either party, the K is avoided and each party is relieved of its respective obligation to perform.
Excuses for Performance
- impossibility / impracticability
- death after K
- frustration of purpose
- initial K has been modified or cancelled
- accord and satisfaction
- novation
Reqs for Excuse of Impossibility / Impracticability
(1) unforeseeable event
(2) non-occurrence of the event was a basic assumption of the contract
(3) the party seeking discharge was not at fault
Non-breaching party’s options w/r/t anticipatory repudiation + when can a party retract repudiation
(1) Treat the repudiation as a breach and sue immediately for damages
EXCEPTION: if completed entire performance and only waiting for payment, cannot sue early
(2) Ignore the repudiation, demand performance, and see what happens
Party can retract repudiation so long as other side hasn’t…
(a) Commenced lawsuit for breach
(b) Acted in reliance on repudiation (by materially changing its position)
anticipatory repudiation under UCC
Reasonable grounds for insecurity about the other side’s performance allow you to demand adequate assurance of performance.
If the questionable party fails to respond within a reasonable time (30 days), then you can treat this as repudiation.
Lost Volume Profits:
normally seller needs to mitigate by trying to sell to another party, but if seller is a retailer who sells this type of product all the time, the seller can try to argue for LVP (awarded profit of sale)
3rd party beneficiaries: who can sue?
intended beneficiary can sue
incidental beneficiary can’t
Intended beneficiary = both promisor and promisee intended to convey enforcement rights to 3rd party in event of breach
