MBE Contracts Flashcards
MBE
An offer is
Offer refers to a promise that one party makes in exchange for another party’s performance
Mutual assent = meeting of the minds
MBE
Offer is: revocable v. rejectable
Revocable: by the person that made it
Rejectable - by the person who recieved the offer.
MBE
Un-revocable offers
Option Contract: have the option to keep it open for certain amount of time and for extra consideration. (Non-Merchants)
Firm Offer:
1) Between merchants and
2) In writing (if not, it’s revocable) and
3) 3 months max – unless stated in offer.
After time expires, offer does not expire, just becomes revocable.
Unilateral Contract: a promise in exchange for performance - 1 way promise.
Ex. Promise to paint house for $100.
* Once performance starts, cannot revoke.
* $$ is not owed until the work is complete.
MBE
Types of revocation
Direct: effective when other party is notified.
Indirect: effective when other party learns that deal is no longer available.
MBE
Acceptance
manifestation of intent to accept an offer
Was to accept: satisfy the terms of the agreement
Can be given:
1. verbally
2. in writing
3. by action (implied)
MBE
Mailbox Rule
Acceptance: effective when mail is sent.
Rejection: effective when mail is received.
Exception: if a rejection and an acceptance is sent - whichever arrives first.
Option contracts - when recieved.
MBE
Consideration
Bargain for exchange
MBE
Types of consideration
Gifts: promise to give a gift is not enforceable consideration UNLESS they give the gift. Then cant take it back.
Past/Moral deeds: Did a good deed and someone offered you consideration/compensation.
Not enforceable if given after the deed – enforceable if given before
MBE
Third party beneficiary
Two people make a contract and someone else benefits
Types:
1. intended
2. incidental
MBE
Intended Beneficiary
- Parties had the intent to benefit them.
- Beneficiary may have rights against other parties but only if rights have vested.
- Parties can change beneficiary before the rights vest.
MBE
Incidental Beneficiary
- No intent to benefit them – no rights against the other parties.
MBE
Baneficiary: Vesting of rights
- Rights only vest when:
1) The beneficiary is notified of the right or
2) Beneficiary learns of intent and relies on it.
MBE
Assignment
One party ASSIGNS away their rights in the contract.
MBE
Delegation
One party DELEGATES their duty under the contract.
MBE
Rule: Assignment and Delegations
Parties can freely assign and delegate their duties without any notice or consent.
- Even if the contract prohibits assignments/delegations, can still transfer but must pay damages.
- If contract says “no delegation” then cannot transfer.
- If contract says “void if transfer” then cannot transfer.
If the new party breaches, the non-breaching party can sue either one or both UNLESS THERE IS A NOVATION.
- If assigned or delegated: new party cannot alter the previous contract terms.
Exception
- Cannot delegate or assign if the nature of the agreement is unique.
Ex. I am the only one in the community that can shave a plant into a heart. Can’t even transfer it to someone with same skill.
MBE
Statute of Frauds: MY LEGS
Marriage.
Year – all contracts that can’t be performed in less than 1 year.
Land.
Executor of estate.
Guarantor – debt of another person.
Sale - $500 or more.
MBE
Statute of Frauds: Exceptions
Partial performance.
- Land:
when you pay portion of price and (1) take procession or (2) Improvements. - Goods – (1) part delivery or (2) part payment.
MBE
Parole Evidence: Types
Final Integration:
Must have language that stated that its final – a merger clause.
Ex. “Final agreement & shall not be modified.” Parole evidence NOT admissible UNLESS it is to clear up an ambiguous term. Can’t be admitted to change anything.
Partial Integration:
If it does not say the contract is final – can assume it is partial.
Parole evidence IS admissible – any information can come but CANNOT contradict or materially alter a term.
MBE
Parole Evidence: always admitted
Parole evidence is always coming in when:
1. To prevent fraud/duress or
2. Show existence of a condition or
3. Anything that shows custom (how they’ve always done business)
4. Anything that shows trade. (what happens in the industry)
MBE
Conditions
Condition Precedent = before the contract.
Condition Subsequent = after the contract.
Condition Concurrent = at the time of the contract.
MBE
Legal remedies ($$$)
Expectation Damages
- Non breaching party put in the position they’d be in if contract had been performed.
Liquidated Damages
- Clause must be in the contract.
- Pre-determined amount of damages when the contract is entered in case of any breach.
- Usually done like this if damages would be to difficult to calculate after breach.
Enforceable as long as they are:
1) reasonable and
2) Not acting as a penalty/punishment.
10% or less is usually reasonable – look for down payment/deposits or late fines or performance.
MBE
Equitable Remedies: (no adequate remedy at law)
Specific Performance
- Someone has to perform – contract is UNIQUE.
Ex. Land.
Injunction
- Stop someone from performing in order to prevent irreparable harm.
Recission
- To put parties in the position prior to the contract Usually used for mistake or misrepresentation.
- Court will grant if there was no meeting of the minds.
MBE
Modification
Common Law
- Only for services or land.
- Additional consideration needed.
UCC
- Only for the sale of goods.
- No extra consideration needed – only good faith.
MBE
Non-Conforming Goods
This is used when seller delivered something buyer didn’t want/order.
Does not mean the product is defective or broken.
If buyer gets non-conforming goods on the day specified on the contract, buyer may:
1) Reject or
2) Accept or
3) Accept in part or
4) Reject in part.
If before the date on the contract: buyer must give seller the right to cure if seller can show that they can fix it.
If the seller reasonably believed that the buyer would take other goods: then must give seller opportunity to cure.
if there is an installment contract (several deliveries): 1 non-conforming installment is not enough to claim material breach unless it substantially impairs the value of the whole contract.
