Quick Contracts Flashcards
What is a unilateral contract?
offer that expressly requires performance as the only possible method. Look for words “only by”
Cannot be revoked once performance has begun. (mere preparation does not trigger the beginning of performance)Acceptance does not occur until performance is complete.
Does common law or UCC apply to mixed services/goods deal? what is the doctrine called?
Predominate Purpose Test: Whichever service (CL) or goods (UCC) is predominate in the contract, that’s which law you should apply.
Is price required in a common law contract?
YES…but not required in a UCC contract.
When can ads be offers?
Generally not, unless either ad is in the nature of a reward, or if it is specific to quantity and expressly indicates who can accept.
When does revocation of an offer become effective?
When it is recveived. Mail box rule does not apply to revocation of offer.
What is the Merchant Firm Offer Rule?
an offer cannot be revoked for up to 3months, IF 1) offer to buy or sell goods, 2)signed, written promise to keep the offer open and 3) party is a merchant.
What is the effect of a conditional acceptance on an offer?
It termiatnes the offer and becomes a new offer (like a counter offer), look for words “if”, “but”, “provided”, “so long as” “on the condition that”
When are additional terms part of the contract?
Under common law - adding additional terms is a violation of the mirror image rule thus, no accpetance
Under UCC -
1) Is there a contract? “seasonable expression of acceptance” adding new terms is generally treated as an acceptance, BUT
2) the additional term is NOT part of the contract if between merchants, if it materially changes the offer, OR if the offeror object to the change
When is past consideration considered condieration?
Generally never. 1 exception is when it is expressly requrested and there is an expectation of payment. (although Virginia rejects this exception)
If SoL has run on a debt collection, and the debtor offers in writing to pay a fraction of the debt to the creditor, is it enforceable?
Yes. Even without consideration. ALthough Cvreditor cannot collect orgiinal amoung
When can those who lack capacity sue under contract law?
If they are hired to perform, fulfil there duty, and the other side does not live up to their end of the bargain. If infant never performs, obviouls there is no breach…..If infant enter contract while under 18, but continues to make payments on a car after they turn 18 contract is enforceable because Infant retained benefit AFTER age of capacity was reached.
What types of contracts fall within the statute of frauds?
1) promises in consideration of marriage
2) promise by executor of estate to pay debt obligation from own funds
3) Promises to answer for the debts of another
4) Service contracts not capable of being performed within 1 year (if task said nothing about time, or is for lifetime, SoF does not apply)
5) Transfers of interest in real estate for more than 1 year (exact 1 year lease would not apply)
6) sale of goods for $500 (exactly 500 or more)
How is the SoF satisfied by performance?
Service Contract: Full performance by either party.
Sale of Goods: Part performance will satisfy SoF, ONLY for the goods that have already been delivered. There IS a SoF defense for undelivered goods.
Real Estate Transfer Contract:
Part performance if can satisfy 2 of the following 3: 1) payment (full or close) 2)Possession AND/OR 3) improvements
When is SoF satisfied for specially manufactured goods?
as soon as the seller makes a “substantial beginning”
How to satisfy the SoF writing requirement for Ks NOT under UCC?
1) Must contain ALL material terms (who what) 2) must be signed by the person to be charged (the D)
How to satisfy SoF writing requirement under UCC?
Look to contents, who signed writing and must contain the quantity term.
What is the exception the SoF writing requirement under the UCC?
Generally the writing must be signed by the person to be charged (the D). EXCEPT under UCC - the Merchant Confirmatory Memorandum rule, 1) both parties must be merchants 2) person who receives a signed writing with a quantity term that claims there is a contract and fails to respond writing within 10 days of reciept
Are contract provisions requiring that all modifications be in writing effective?
Under CL, these are ignored.
Under UCC, contract provisions requiring written modifications are effective unless waived.
What is unconscionability in contracts law?
empowers a court to refuse to enofrce all or part of a contract if 1) UNFAIR SURPRISE or 2) OPPRESSIVE TERMS.
Tested as of the time the agreement was made!
When has a seller completed his delivery obligation under a shipment contract?
1) gets the goods to a COMMON CARRIER
2) makes REASONABLE ARRANGEMENTS for delivery
3) NOTIFIES the buyer
When has a seller completed his delivery obligation under a destination contract?
Look for FOB followed by City name. Obligation satisfied at delivery
When does the risk of loss shift?
If Delivery by common carrier: Risk of loss shifts once seller has met his delivery obligations.
If Seller is a merchant: shift to buyer on the buyer’s receipt of goods.
If non-merhcant: shifts to buyer upon tender of goods
What are the tricky issues about express warranties?
1) Look for mere puffing “top quality” “best one around”
2) seller’s demonstration of a floor model, and then buyer asks to purchase same model, will bring up an Express Warranty
3) CANNOT BE DISCLAIMED
What is the Implied Warranty of Merchantability?
When and goods are purchased from a Merchant (deals in goods of that kind), a term is automatically added to the contract, that the goods are fit for their ordinary purpose
*CAN BE DISCLAIMED BY 1) “as is” or “with all faults” 2) MUST BE CONSPICUOUS
What is Implied Warranty of Fitness for a Particular Purpose?
1) buyer has particular purpose to buy goods
2) buyer is RELYING on the SELLER to select suitable goods 3) seller has reason to know of purpose and reliance
*CAN BE DISCLAIMED BY 1) “as is” or “with all faults” 2) MUST BE CONSPICUOUS
When can remedies be limited in a contract i for breach of warranty liability?
Remedies can be limited, unless unconscionable (at time of contract formation). Prima facie unconscionability if breach of warranty causes personal injury
When does a seller have an option for curing an IMPERFECT tender, AFTER the contract delivery date?
If the seller had reasonable grounds for believing that the improper tender would be acceptable (look for info about prior deals between buyer and seller that allowed such deals)
In what type of merchant contracts is perfect tender not applied?
Installment sales contracts. 1) delivery in separate lots, 2) the be separately accepted. - Buyer has right to reject an installment only where there is a SUBSTANTIAL IMPAIRMENT - that can’t be cured
When can you revoke your acceptance of goods?
1) noncomformity substantially impairs the value of goods AND
2) Excusable ignorance of grounds for revocation or reasonable reliance on seller’s assurance of satisfaction, and
3) revocation within a reasonable time after discovery of noncomformity (sleeping bag hypo
Rejection v Revocation - main points
Rejection
Timing: early, before acceptance
Standard: Perfect tender (generally
Revocation
Timing: Later after acceptance
Standard: Substantial Impairment
When would courts grant specific performance?
Contracts for sales of Real Estate
Contract for sales of UNique Goods (artwork, antiques, custom made goods)
Contracts for services - Never, but injunctions might be possible
What is Reclamation
Rights of an unpaid seller to get its goods back. 1) buyer must have been insolvent at the time the it received the goods , and 2) Seller must demand goods within 10 days of receipt and 3) buyer still has goods at time of demand
What are the rights of Good Faith Purchaser in Entrustment?
If owner leaves goods witha person who sells goods of that kind and that person wrongfully sells the goods to a BFP 3P, BFP purchaser cuts off rights of original owner, entruster. (thiefs are not BFPs)
What is the general rule on expectation damages?
Put P in same economic position as if contract had been performed (compensate P, not punish D)
What is the rule on reliance interest?
Put P in same economic position as if contract had never happened
what is the rule on restitution interest?
Put Defendant in same economic position as if contract had never happened (prevent unjust enrichment)
What is the damages rule for sales of goods when Seller breaches, and buyer keeps goods?
Fair market value if perfect minus fair market value as delviered
What is the damages rule for sales of goods when Seller breaches, and seller keeps goods?
market price at time of discovery of the breach minus contract price OR replacement price minus contract prices
What is the damages rule for sales of goods when Buyer breaches, and Buyer has the goods?
Contract price
What is the damages rule for sales of goods when Buyer breaches, and seller has the goods?
Contract price minus market price at time and place of delivery OR contract price minus resale price (and sometime lost profits)
When are incidental damages recoverable in K law?
costs in dealing with breach are always recoverable regardless of forseeability
When are forseeable consequential special damages awarded in K law?
Damages arising from P’s SPECIAL CIRCUMSTANCES; recoverable only if D had reason to know at TIME OF CONTRACT
When are liquidated damage clauses enforced?
1) damages were difficult to forecast at time contract was made and 2) provision is a reasonable forecast
Common Law Material Breach Rule - 3 general rules
1) Damages can be recovered for any breach
2) only a material breach by one guy excuses the other guy from performing
3) whether a breach is material is a fact question (and so whether a breach is material is a fact question (and so whether a breach is material is not likely to be a bar exam question)
How can an express condition be excused?
1) Estoppel - based on a statement by the person preotceted by the condition BEFORE the conditioning event was to occur and requires a change of position.
2) Waiver - Waiver is based on a statemebt by the person protected by the condition AFTER the conditioning event was to occur and does not require a change of position
Anticipatory Repudiation
UNAMBIGUOUS STATEMENT
1) that the repudiating party will NOT PERFORM
2) made PRIOR to the time that performance was due. - excuses other parties duty to perform
- CAN be retracted as long as there has not been a material change in position by the other party.
Recission -
Cancellation of the contract - (look for wheteher or not performance is still remaining - if so, duties can be excused)
Accord and Satisfaction
Substituted Performance - (different than what was originally promised to do) ACcord is not enough excuse - must also SATISFY (deliver) look for IF followed by THEN
Novation
Substituted person - agreement by both parties to an existing K for the substitution of a new party
When can you excuse performance by reason of a later, unforseen event?
Can be excused due to impossibility (illegal), impractability or frustration of purpose (becomes illegal after contracting):
1) something happens after K formation but before completion
2) that was unforseen
3) that makes performance impossible or commercially impractble
What is the VA rule on paying past consideration?
VA rejects modern trend which says a promise to pay for apreviously performed acts will be enforceable if the promisee performed at the request of the promisor
What is the SoF requirement in VA?
writing doesn’t need to CONCLUSIVELY ESTABLISH existence of a contract as long as it provides a BASIS FOR BELIEVING it was a REAL TRANSACTION
What is delegation? When are they permitted?
Whose Liable?
party to a contract transferring work under that contract to a 3rd party.
Permitted unless 1) contract prohibits delegations or assignments 2) contract calls for VERY SPECIAL skills or 3) person to perform contract has a VERY SPECIAL reputation
delegating part always remains liable….3P only liable if receives consdieration from delegating party
What is assignment? What does it meant o prohibit assignment vs. invalidate assignment?
Transfer of rights under a contract in two seperate steps:
1) contract between only 2 parties and 2) one of the party’s later transfer of rights under that contract to a 3rd party
If a contract prohibits assignment, if 3P does not know about prohibition can still collect.
If assignment invalidated, assignments are void no matter what
What is the pre-existing legal duty rule?
if a party to a contract is under a pre-existing duty to perform (legal or contractual), then no consideration is given for any modification of the contract and the modification is therefore voidable.
When do the rights of a 3rd party beneficiary vest?
when 3rd party learns of contract and either 1) assents to it; 2) relies on it or 3) sues to enforce it
A communication will not be considered to be definite and certain enough to be an offer if it is for the sale of goods and is missing________________:
a quantity term
How can a vague term in a contract be cured?
By part performance
What is a key distinction between an anticipatory repudiation and a prospective failure to perform?
Repudiation must be unequivocal, whereas prospective failure to perform involves mere doubts
What is an element needed for a discharge of a contract due to frustration?
An unforeseen act or event has completely or almost completely destroyed the purpose of the contract
An agreement to rescind is itself….
…..a binding contract supported by consideration
When should the nonbreaching party treat an otherwise minor breach as a material breach?
When the breach is coupled with an anticipatory repudiation
NOT when breach causes the nonbreaching party damages
For a breach of contract to provide services, specific performance is….
Never available as a remedy
Either a nonbreaching buyer or a nonbreaching seller may recover ___________damages, but only a ___________may recover _________ damages
incidental; buyer; consequential
What is the measure of recovery in a suit of restitution?
the value of the benefit conferred
Which of the following types of evidence may be outside the scope of the parol evidence rule?
A Evidence of a condition precedent
B Evidence of a contemporaneous oral agreement
C Evidence of a prior oral agreement
D Evidence of a condition subsequent
A Evidence of a condition precedent
Which type of warranty is included in EVERY sale of goods?
Warranty of Title: Any seller of goods warrants that the title transferred is good, that the transfer is rightful, and that there are no liens or encumbrances against the title of which the buyer is unaware at the time of contracting.
Which of the following would not be considered valuable consideration that supports a contract?
A A benefit with no economic value.
B Peace of mind for the promisor.
C The gratification of influencing the mind of another.
D Fulfillment of a condition to receive a gift.
D Fulfillment of a condition to receive a gift.
This is not adequate consideration. The fulfillment of the condition must be of some benefit to the promisor to constitute proper consideration. The benefit to the promisor need not have economic value. Peace of mind or the gratification of influencing the mind of another may be sufficient to establish bargained-for consideration.
Which of the following promises is commonly considered to be illusory?
A A promise with an unqualified right to cancel or withdraw at any time
B A promise conditioned on the promisor’s satisfaction
C A promise to purchase all that one requires
D A promise to sell all that one decides to make
A A promise with an unqualified right to cancel or withdraw at any time
What element is not needed to show promissory estoppel?
A The reasonable expectation that the promise will induce action or forbearance
B Valuable consideration on both sides of the bargain
C Detrimental reliance
D An action or forbearance that is in fact induced by a promise
B Valuable consideration on both sides of the bargain
Promissory estoppel is considered a substitute for consideration. Thus, consideration is not necessary if the facts indicate that the promisor should be estopped from not performin