MBE One Sheet Flashcards
1
Q
Ks & Sales
A
- Uniform Commercial Code (UCC) applies to transactions in goods.
- CL applies to everything else (services).
- Cts look at the predominant purpose of K if it is not clear which applies.
2
Q
FORMATION OF CONTRACTS—OFFER, ACCEPTANCE, AND CONSIDERATION: Offer
A
- Creation: There must be intent to enter into a K plus
specific terms (price, quantity, & identity of parties). - And, it must be communicated to offeree.
- Note: A requirements/output K will not fail for lack of quantity. The amount sold/requested must be in
good faith & not unreasonably disproportionate to a
stated estimate/prior comparable output. - Termination of an offer: 4 ways to terminate offer:
(1) Lapse of time: an offer lapses after a reasonable time.
(2) Rejection (including counteroffer, which is a rejection & new offer)
(3) Revocation of an offer: An offer can be revoked b/f acceptance unless it is falls into one of the 4 :
(A) Firm offer by a merchant in a signed writing under UCC. Can be held open for a max of 3 months.
(B) Option K: a promise to hold open offer plus consideration for that promise.
(C) Unilateral K: if offeree begins performance on a unilateral K, offer is held open for a reasonable time.
(D) Reasonably foreseeable substantial reliance on offer.
(4) Death/incapacity of offeror
3
Q
ACCEPTANCE
A
- Look at type of K
- Bilateral Ks are accepted by promise to perform/ beginning performance.
- Unilateral Ks (rewards, prizes, or offers that specify they are unilateral) can only be accepted by full performance.
- Tip: most Ks are bilateral.
- Article 2: An offer for SOGs is accepted by promising to ship/shipping the goods.
- Note: if seller ships defective goods w/ an accommodation letter, that constitutes a counteroffer.
- If there is no letter, it is an acceptance & breach.
- Acceptance is effective: acceptance is effective when sent (mailbox rule).
- Exceptions: an option K (acceptance effective upon
receipt) or if a rejection then an acceptance is mailed (the one received first controls). - Terms of acceptance
- CL: acceptance must be “mirror image” of offer.
- UCC: An acceptance does not need to mirror offer & may have additional/different terms.
- Between merchants, an additional term will be a part of K unless it materially alters it, offeror objects w/in reasonable time, or offer limits acceptance to offer terms.
- Majority rule: a different term is knocked out& replaced w/ gap fillers.
4
Q
CONSIDERATION
A
- “Bargained-for exchange”
- The following are not consideration: a promise to make a gift, a moral obligation, past consideration, or an illusory promise.
- Reliance (a substitute for consideration): if there is a
promise & foreseeable & justifiable reliance, enforcement will be granted as necessary to avoid injustice. - Modifications:
- CL: Consideration is needed to modify K. The performance of a preexisting legal duty is not consideration unless it falls into an exception (unforeseen difficulty, a good faith settlement of a
lawsuit, a good faith payment in full of a due disputed debt, a written promise to pay a time-barred
debt, or if duty was owed to 3rd person). - UCC: only good faith is needed to modify K.
5
Q
PERFORMANCE, BREACH, AND DISCHARGE: Common law
A
- One has to substantially perform one’s duties in order for the other party’s duty to arise.
- Exception: Express condition (“I will buy it if I like it” or “I will buy it if I can get a 10% interest rate”).
- These must be complied with exactly.
- Tip: cts find that most conditions are “constructive” & substantial performance is enough.
6
Q
PERFORMANCE, BREACH, AND DISCHARGE: UCC
A
- UCC: Seller must provide perfect tender of goods (or buyer can reject goods).
- If seller does not provide perfect tender & buyer rejects goods, seller only has an automatic right to cure if (1) there is time left to perform under K, or (2) seller reasonably believed that buyer would accept the nonconforming goods with/without a money allowance such as a discount (ex. seller sent better goods than contracted for).
- Exception: Installment K. Buyer may reject an installment if there is a “substantial impairment” & seller cannot cure the installment.
- Note on revocation: If buyer accepts goods, he may not reject them. However, he may later revoke his acceptance.
- Revocation is a higher standard than rejection as it
requires showing that defect substantially impairs value of the goods to him, among other things.
7
Q
PERFORMANCE, BREACH, AND DISCHARGE: Delivery obligations
A
- Carrier cases: Most Ks are shipment Ks (K is silent/ has shipping terms like “FOB Seller’s Place of Business,” “CIF,” “C&F,” or “FAS”).
- Seller only has to get goods to shipper & risk of loss (ROL) passes to buyer at that point.
- For destination Ks (Ks that state, “FOB Buyer’s Place of Business” or “Ex-Ship”), seller has to get goods to destination.
- Non-carrier cases: If seller is a merchant, seller must actually deliver goods to buyer for ROL to pass.
- If seller is not a merchant, seller must tender delivery (make goods available) for ROL to pass.
- Breach: if seller is in breach, ROL is on seller until defective goods are cured by seller/accepted by buyer.
8
Q
PERFORMANCE, BREACH, AND DISCHARGE: Excusing performance and conditions:
A
- A party is excused from performing if other party breaches.
- An anticipatory repudiation occurs when a party unequivocally breaches. If this occurs, other party can sue immediately, suspend performance & wait to sue, treat K as discharged, or urge other party to perform.
- A prospective inability to perform is when a party has reasonable grounds for insecurity that other will not perform. The insecure party can demand adequate assurances that performance will take place. Note that conditions can also be waived.
9
Q
PERFORMANCE, BREACH, AND DISCHARGE: Discharging duties:
A
A duty can be discharged by:
(1) Occurrence of a condition subsequent: This is a condition that cuts off a duty. (“I will paint the house until it starts to rain.” The rain is a condition subsequent that cuts off the duty to paint the house.)
(2) Agreement: ex. novation (new party steps into shoes of an existing party), modification, release, accord & satisfaction (parties agree to new/different consideration), & rescission (K is undone).
(3) Frustration of purpose: primary purpose of K known by both parties at time of contracting is substantially frustrated by an unforeseeable event that occurred after K was entered into.
(4) Impossibility: an event that renders performance impossible occurs after K was made, it was not reasonably foreseeable at the time of K, the nonoccurrence was a basic assumption of the parties, neither party is at fault, & neither party bears the risk.
10
Q
PERFORMANCE, BREACH, AND DISCHARGE: Warranties
A
- Express warranties are affirmations of fact about goods/sample of goods. These cannot be disclaimed. Mere “puffery” does not create an express warranty.
- The implied warranty of merchantability is made by a merchant & warrants that goods are fit for their ordinary purpose. This warranty can be disclaimed (by express language such as a conspicuous “as is” clause/through conduct).
- The implied warranty of fitness for a particular purpose can be made by any seller who knows of buyer’s specific purpose & buyer relies on seller. It can be disclaimed. Tip: seller does not have to be a merchant.
- A limitation of remedies clause is a contractual provision that limits/controls remedies. It is enforceable unless it is unconscionable/it “fails of its essential purpose.” The clause is unconscionable if it attempts to limit/avoid paying consequential damages for a personal injury due to a consumer product.
11
Q
INTERPRETATION: General rule:
A
- Express terms control.
- Then cts look to course of performance, course of
dealing, & trade usage.
12
Q
INTERPRETATION: Gap fillers:
A
- UCC has default rules for terms that govern Ks for SOGs if no term is stated in K (if nothing is said as to price, price is a reasonable price at time of delivery).
13
Q
INTERPRETATION: Keeping terms out with the parol evidence rule (PER):
A
- PER applies when a party wants to add a term from preliminary negotiations to a final written agreement.
- If there is a complete integration, no terms will be admitted into evidence.
- Tip: look for a merger/integration clause in K; ex. one that states, “this is the full & final agreement.”
- If there is a partial integration, consistent additional terms are admitted.
- PER does not apply to (FICCL) formation defenses, interpretation of a term, failure of a condition precedent, a clerical error, or later mods.
14
Q
THIRD-PARTY RIGHTS: THIRD-PARTY BENEFICIARIES (TPBs)
A
- Intended TPBs have rights under K once their rights vest.
- Rights vest when there is assent, reliance, or when 3rd party brings a lawsuit.
- Incidental TPBs do not have rights under K.
- Factors to determine if a TPB is intended:
(1) Is TPB expressly designated in K?
(2) Is performance directly to the TPB?
(3) Does TPB have any rights?
(4) What is the relationship between TPB & promisee?
15
Q
THIRD-PARTY RIGHTS: DELEGATION
A
- Tip: if you mix up assignment & delegation, remember that generally, one delegates duties & assigns rights (usually right to be paid).
- Generally, one may delegate duties under a K unless K prohibits it/if K involves special skill, judgment, or trust.
- Neither consent, nor consideration, nor a writing is needed to delegate a duty.
- Delegator remains liable on K after delegation.
- Delegatee is liable if he receives consideration from delegator.
