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MBE Contracts Flashcards

1
Q

Ways to Terminate Offers

A 
Lapse
Death of Offeror
Counteroffer
Rejection
Constructive Revocation
Offeror Revokes
Destruction/Illegality
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2
Q

Limits on Revocation

A

Option Contract
Firm Offer
Promissory Estoppel (reasonable and detrimental reliance)
Partial Performance
- Unilateral: can’t revoke once performance begins
- Bilateral: performance beginning is a promise to render complete performance

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3
Q

When Silence is Acceptance

A

Offeree has reason to believe the offer could be accepted by silence or previous dealings make it reasonable to believe that the offeree must notify the offeror if they intend not to accept

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4
Q

Factors of Consideration

A

Must be a bargained-for exchange (legal detriment to promisee) for the promise
Promise must induce the detriment
Detriment must induce the promise

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5
Q

Preexisting Duty Rule Exception: Third Parties

A

A party’s promise to a third party to perform an act they are contractually obligated to perform for another is sufficient consideration

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6
Q

Modification Requirements under Common Law

A

Consideration Required
Enforceable if:
- Rescission of existing contract and entering into a new one
- Unanticipated difficulties arise and modification is fair
- New obligations arise on both sides

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7
Q

When Waiving a Legal Claim is Consideration

A

A promise not to assert (or release) a legal claim is not consideration unless the claim is doubtful or the party promising not to assert the claim believes in good faith it’s valid

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8
Q

Elements of Promissory Estoppel

A
  1. Promisor should reasonably expect it to induce action on the part of the promisee or a third party
  2. Promise does induce such action
  3. Injustice is only avoided y enforcement of the promise
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9
Q

Defenses to Formation

A 
Mistake (Mutual and Unilateral)
Misunderstanding
Misrepresentation, Fraud
Duress, Undue Influence
Incapacity
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10
Q

Mutual Mistake

A

Both parties mistaken as to an essential element
Contract is voidable by the party adversely affected if:
1. Mistake existed when contract was formed
2. Mistake relates to a basic assumption of the contract
3. Mistake has a material impact on the transaction
4. The adversely affected party didn’t assume the risk

Neither party can avoid the contract if reformation can cure

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11
Q

Unilateral Mistake

A

One party’s mistaken as to an essential element
The mistaken party can void the contract if:
1. Mistake existed when contract was formed
2. Mistake relates to a basic assumption of the contract
3. Mistake has a material impact on the transaction
4. The adversely affected party didn’t assume the risk
5. Mistake would make enforcement unconscionable OR the non-mistaken party caused the mistake, had a duty to disclose or failed to, or knew or should have know of the mistake

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12
Q

Misunderstanding

A

Both parties think they’re agreeing to the same material terms but they’re not

  • Neither party knows: no contract if material term
  • One party knows: contract based on unknowing party’s definition
  • Both parties know: no contract unless they intend it or waive it

Misunderstanding is subjectively determined

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13
Q

Fraudulent Misrepresentation

A
  1. Misrepresentation is fraudulent (knowing or reckless false assertion of fact with the intent to mislead) as to a present fact
  2. Misrepresentation induced assent; and
  3. Adversely affected party justifiably relied on the misrepresentation
    Can be in the Execution or Inducement
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14
Q

Nonfraudulent Misrepresentation (Innocent Misrepresentation)

A

A misrepresentation of a material present fact that induced assent with justifiable reliance
Voidable

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15
Q

Fraud in the Execution

A

Other party doesn’t know they’re signing a contract at all

Void

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16
Q

Fraud in the Inducement

A

Other party knows its a contract but the terms are misrepresented
Voidable

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17
Q

Undue Influence

A

Unfair persuasion of a party to assent to a contract where one party puts intense pressure on another who is often weak minded or susceptible

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18
Q

Unfair Persuasion

A

Relationship between a dominant and dependent party due to lack of experience or diminished mental capacity
The persuasion of one party seriously impairs the free judgment of the other

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19
Q

Confidential Relationship

A

Dominant party has the burden of proving the contract was fair (may have a higher standard of disclosure)

20
Q

Duress

A

An improper threat that deprives a party of a meaningful choice (like legal action in bad faith or breaching a contract in violation of good faith or bad dealing)
Void if Physical Compulsion
Voidable in other instances

21
Q

Incapacity

A

Infancy: voidable by infant, not by adult
Mental Illness: void for someone adjudicated mentally incompetent, voidable if no adjudication
Intoxication: voidable if unable to understand the nature/consequences and the other party knew

22
Q

Defenses to Enforcement

A 
Impossibility/Impracticability
Frustration of Purpose
Accord & Satisfaction
Novation
Unconscionability
Public Policy
23
Q

Impracticability

A

Performance becomes illegal
Subject matter is destroyed
Performing party dies (services contract for special services) - general contracts estate still on the hook

More expensive is not a defense

24
Q

Frustration of Purpose

A

Performance can still occur, but something has happened to undermine the entire reason for creating the contract
Must be extreme and risk is not previously allocated to one of the parties

25
Accord & Satisfaction
Parties to an earlier contract agree that performance will be satisfied with different performance New Performance: Accord Excusal of Original Performance: Satisfaction If accord not performed, can sue either for accord or original contract terms (modification can only sue for new terms)
26
Novation
When both parties agree a substitute person will take over the contractual obligations Releases the original promisor from performance/liability
27
Unconscionability
A contract is unconscionable when it is so unfair to one party that no reasonable person in the position of the parties would agree to it
28
Implied-in-Fact/Quasi-Contract Elements
1. Plaintiff conferred measurable benefit on defendant; 2. Plaintiff acted without gratuitous intent; 3. Unfair to let defendant retain the benefit
29
When Performance Obligations are Discharged
``` Impracticability Frustration of Purpose Rescission Release Destruction/Damage to Identified Goods ```
30
Rescission
Cancelling of a contract to restore parties to their positions before the contract was made Grounds must have existed at the time contract was made Contract cannot be discharged if a third party's rights have vested
31
Release
A writing that manifests an intent to discharge the other party from a duty Common Law: requires consideration UCC: no consideration required
32
Destruction/Damage to Identified Goods
Destruction - If destroyed by no fault of either party: Risk of loss on seller: contract avoided Risk of loss on buyer: contract not avoided, seller may demand performance Damaged - Buyer can avoid or take the goods at a reduced price
33
Third Party Beneficiaries
Intended: one the promisee wants to satisfy an obligation to or benefit (can be creditor or donee) Right to enforce once rights have vested Incidental: one who benefits from a contract despite no intent to benefit them by the parties No right to enforce
34
Vesting of a Beneficiary's Rights
1. Detrimental reliance on the rights created; 2. Manifests assent to the contract at one of the party's request; or 3. Files a lawsuit to enforce the contract
35
Statute of Frauds Covers:
``` Mr. SOUR Marriage Surety One Year UCC (>$500) Real Estate ```
36
Statute of Frauds Elements
1. Writing 2. Signed by the party to be charged 3. Contains all essential elements (parties, subject, price, quantity)
37
Exceptions to the Statute of Frauds under the UCC
``` Specifically Manufactured Goods Part Payment Receipt and Acceptance Judicial Admission Failure to Object to Memo Within 10 Days (both merchants) ```
38
General Exceptions to the Statute of Frauds
Judicial Admission | Promissory Estoppel
39
When the Parol Evidence Rule is Inapplicable
1. Raising a defense to formation 2. Raising a defense to enforcement 3. Proving a condition precedent 4. Interpreting/clarifying ambiguity 5. UCC: supplementing even apparently unambiguous terms with trade usage/course of dealing (express terms > course of performance > course of dealing > trade usage)
40
Substantial Performance
Does not generally apply for sales involving goods Express Condition Precedent: strictly held to the condition; full compliance required Implied/Constructive Condition Precedent: substantial compliance can trigger the other party's obligation to perform
41
When Conditions are Waived and Reinstated
A party whose duty is subject to a condition can waive a nonmaterial condition by words or conduct Conditions material to the party's primary purpose may be reinstated if: 1. Waiving party communicates retraction before condition is due; and 2. Other party hasn't suffered detrimental reliance
42
Elements of Anticipatory Repudiation
Common Law: clear and unequivocal repudiation through words or acts UCC: unequivocal refusal to perform or when reasonable grounds for insecurity arise with no adequate assurances in time
43
Liquidated Damages
1. Parties intended to agree in advance to damages that might arise from the breach 2. The amount was reasonable at the time of contracting 3. Actual damages would be uncertain and difficult to prove 4. Can't be punitive
44
Specific Performance: Factors Considered in Determining Whether Damages are Adequate
``` Difficulty of proving damages with reasonable certainty Hardship to defendant Balance of the equities Wishes and understandings of the parties Practicality of enforcement Mutuality of agreement ```
45
Buyer Remedies under the UCC: Failure to Tender Goods
1. Cancel contract (if installment, breach must go to the entire contract) 2. Recover payments 3. Damages 4. Cover/Recover 5. Specific Performance (unique goods) 6. Replevin (if at least partial payment made or can't cover)
46
Buyer Remedies under the UCC: Nonconforming Tender
Accept or reject all or part of the goods | May be subject to seller's right to cure
47
Seller Remedies under the UCC
1. Price: if buyer has accepted goods; conforming goods are destroyed/lost after risk shifts to buyer; seller can't sell identified goods 2. Reclaim from insolvent buyer if demand within 10 days 3. Stoppage in Transit 4. Wrongful Rejection by Buyer - can collect damages, resell, recover, and may get lost profits if a lost volume seller

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