MEE Essentials: Contracts Flashcards
Article 2. Rule Statement
Article 2 of the Uniform Commercial Code applies to transactions of goods, which are THINGS MOVEABLE at the time of contracting. A contract under Article 2 can be made in ANY MANNER SUFFICIENT to show agreement
Offer rule statement
A person makes an offer when he COMMUNICATES a statement of WILLINGNESS to BARGAIN so that the other understands that his ASSENT is INVITED and will CONCLUDE it.
What must terms of offer be (adjective)
REASONABLY CERTAIN
Counteroffer rule statement: common law
At common law, a statement is COUNTEROFFER rather than acceptance when the TERMS of the initial offer are CHANGED
(MIRROR IMAGE RULE)
Modified terms in UCC: between merchants
Between merchants, terms AUTOMATICALLY PART OF K unless they
1) materially change K
2) offeror objects
3) offer was explicitly limited
Counteroffer in UCC: between non-merchants
Additional terms NOT incorporated, but acceptance still VALID
Promise to hold an offer open
Generally, offer may be revoked before acceptance UNLESS there is 1) consideration (when for specific period–option K) or 2) or UCC firm offer exception (irrevocable if by merchant for max of 3 months)
Acceptance rule statement
Acceptance is a manifestation of assent to terms of offer made in a a manner invited by offer. It is effective upon dispatch (mailbox rule)
Rejection rule statement
A rejection is a manifestation of intent to NOT accept the offer, which terminates offeree’s power to accept an offer. It is effective when RECEIVED by offeror.
Rejection v. acceptance: when rejection sent first, which is valid?
Whichever is RECEIVED first is effective
Consideration rule statement
Consideration is a legal detriment or bargained-for exchange. A promise to make a gift does NOT constitute consideration
Pre-existing duty rule
Under COMMON LAW, a promise to perform a legal duty ALREADY OWED to a promisor is not valid consideration UNLESS duty changes or there are UNFORESEEN circumstances
Material benefit rule
Some jdx recognize exception to past consideration limitations when promise made after SIGNIFICANT BENEFIT (usually after emergency)
What is needed to modify K under UCC?
ONLY GOOD FAITH
Promissory estoppel rule statement
When there is 1) promise 2) reliance (foreseeable and justifiable) 3) enforcement necessary to AVOID INJUSTICE
Gap fillers (UCC)
A contract for sale of goods does not fill if terms are missing if parties intended to make contract and there is APPROPRIATE REMEDY. Including course of performance, trade usage, course of dealing.
Only essential term is quantity
Common law performance obligations
Under common law, party must SUBSTANTIALLY PERFORM its contractual obligations to demand performance/payment from other party. Courts will look at several factors to determine whether performance was substantial.
UCC performance obligation rule
PERFECT TENDER RULE: perfect sale + perfect delivery
Divisible contract rule statement
K is divisible if it is 1) apportionable and 2) parties would have contracted for each part separately. Party may collect for portions that he performed
UCC rejection of goods
Buy can usually reject goods for any reason under perfect-tender rule
Anticipatory repudiation rule statement
occurs when there is UNEQUIVOCAL MANIFESTATION by one party to other that it CANNOT OR WILL NOT PERFORM under K, made BEFORE repudiating party’s performance is due
When may a buyer reject goods?
Generally cannot after accepting unless
1) nonconformity limits value
2) reasonable belief that nonconformity would be cured OR didn’t discover nonconformity
3) revokes within reasonable time
4) revokes before substantial change in goods not caused by their own defect
Anticipatory repudiation: other party remedies
Other party may wait reasonable time for performance OR resort to remedy for breach of K
Reasonable grounds for insecurity rule statement
When a party has reasonable grounds for insecurity that other party is unable or unwilling to perform (doubt alone insufficient), party may then demand IN WRITING adequate assurance of performance, and until she receives assurance, she may suspend performance. If assurance not given in reasonable time (30days or less) other party may treat as REPUDIATION
Retracting repudiation
Party who has repudiated can retract his repudiation unless the other party CANCELS K, MATERIALLY RELIES on repudiation, or indicated that she BELIEVED REPUDIATION to be final
Statute of Frauds Rule Statement
Statute of Frauds K must be evidenced by writing that 1) identifies SUBJECT MATTER of K 2) ESSENTIAL TERMS 3) SIGNED BY party to be charged
Which types of Ks under statute of frauds?
Marriages
Surety Ks/executor debt Ks
One year or more to perform
UCC (over $500)
Real Estate/Land
UCC Statute of Frauds rule Statement
A contract for sale of goods over $500 is not enforceable UNLESS there is K SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT + limited to QUANTITY of goods shown
UCC Statute of Frauds exceptions (enforceable even if not written)
-merchant confirmatory memo
-part performance
-specially manufactured goods
-judicial admissions
Duress defense rule statement
K is voidable when it is established that party’s manifestation of assent was induced by IMPROPER THREAT that leaves them no reasonable alternative
Breach of express warranty defense rule statement
Under UCC, affirmations of fact relating to goods that are part of BASIS OF BARGAIN create EXPRESS WARRANTIES that goods will conform to these descriptions
Warranty breached if they do not conform
General damages for breach of K: rule statement
Normal measure of damages for breach of contract is EXPECTATION DAMAGES, which aim to give NONBREACHING PARTY benefit of his bargain
expectation damages rule statement
Must be FORESEEABLE and proven with REASONABLE CERTAINTY (similar to UCC which puts aggrieved party in ‘as good of a position as they had been if the other party had fully performed’)
punitive damages rule statement
punitive damages are generally not recoverable in K action UNLESS conduct is also TORT for which punitive damages can be recovered
Mitigation
As general rule, party cannot recover damages that party could have AVOIDED by reasonable efforts
Restitution
ALSO unjust enrichment/quantum meriut
Party may be able to recover restitution for BENEFIT CONFERRED by PART PERFORMANCE in excess of loss caused by his breach
