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
Which of the following normally would not be an exception to the preexisting legal duty rule?
A A minor’s ratification of a contract upon reaching the age of majority.
B A compromise based on an honest dispute as to duty.
C Payment of a smaller sum to settle an existing debt.
D An acceleration of the performance of the duty.
C Payment of a smaller sum to settle an existing debt.
A contract entered into between an infant and an adult is __________ by the infant but __________ on the adult
voidable; binding
The rights of a third-party beneficiary vest when he:
1) MANIFEST ASSENT to the promise;
2) BRINGS SUIT to enforce the promise;
3) or MATERIALLY CHANGES POSITION in justifiable reliance on the promise
An intended beneficiary must be ________ at the time _______________.
Identifiable at the time performance is due
What is required for an assignment to be effective?
1) an ADEQUATE DESCRIPTION of the right being assigned; and
2) the assignment must be EXPRESSED IN PRESENT WORDS OF ASSIGNMENT.
In Virginia, contracts to devise real property by will or to leave all of one’s property by will to another in exchange for services is within _______
the Statute of Frauds
in VA, to whom do warranties extend for personal injuries caused by goods?
Standard: “Reasonably expect that P would use or be effected”
VA has completely abolished privity of contract as a defense to an action for personal injury based on a breach of warranty
- in place of the UCC alternatives regarding privity, the VA legislature has enacted a statute that provides that lack of privity shall be no defense in any action for breach of warranty against the manufacturer or seller of goods even though the plaintiff did not buy the goods from the defendant so long as it was reasonable to expect that the P would use, consumer or be affected by the goods
Privity still exists for purely economic loss
How is the perfect tender rule different in VA?
Notice the buyer is not requires to notify the seller initially of all his objections but is required to notify the seller that the transaction was troublesome
What is the fraudulent retention of possession rule in VA?
every sale of goods where possession is allowed to remain with the seller is void as against lien creditors and bona fide purchases without notice until the contract or bill of sale is admitted to record
- but where no real fraud is intended, a subsequent delivery of the goods to the buyer validates the sale as to subsequent creditors and purchasers
In Virginia, if a seller breaches a warranty and the breach results in economic loss to another person,who is the seller liable to?
Any person in privity of contract with the seller, if such person suffers a loss as a result of the breach.
To recover full damages when an employer breaches an employment contract, the employee must make a reasonable effort to find a new position of the (“same” or “any”?) kind in the (“same” or “any”?) locale
same; same
When a party that offers a rare or unique service has breached a service contract, the court may grant __________ to the nonbreaching party.
Injunctive relief
A court order requiring a breaching party to perform under the contract or face contempt of court charges is also known as:
Specific Performance
If a plaintiff’s expectation damages will be too speculative to measure, the plaintiff may elect to recover __________ instead, to put the plaintiff in the position she would have been in had the contract never been formed.
reliance damages
In the case of a sale of goods contract, if the standard measure of damages does not adequately compensate a seller for the buyer’s breach because the seller can manufacture or obtain as many goods as he can sell, he may recover damages based on ____________.
Lost Profits
A court will grant an order of specific performance to enforce a contract not to compete if __________; and __________.
The services to be performed are unique; the covenant is reasonable
The equitable defense of __________ arises when a party delays in bringing an equitable action and the delay prejudices the defendant.
laches
The buyer’s damages are measured as of the time he __________, while the seller’s damages are measured as of the _________.
learns of the breach ;time for delivery
Under U.C.C. Article 2, if a seller refuses to deliver goods under a contract, the buyer may replevy the goods if the goods ___________ to the contract and the buyer is _____________
have been identified; unable to cover
Under Article 2, when a buyer refuses to accept goods or repudiates the contract, a seller ______ resell the goods, but ____________. Market damages are available if the seller does not resell.
May, not required to do so
In a construction contract, if the property owner breaches the contract __________construction has started, the builder is entitled to the ______________ from the contract
before; profits he would have derived
“Benefit of the bargain” damages are also known as:
Expectation Damages
Reliance Damages do what to the P?
Put the plaintiff in the position she would have been in had the contract never been formed
In the case of a breach of an employment contract by the employer, the measure of the employee’s damages is:
The full contract price regardless of when the breach occurs
A court will grant an order of specific performance to enforce a covenant not to compete if _________________ and __________________
the services to be performed are unique; the covenant is reasonable
In the case of a breach of an employment contract by the employee, the employer may recover:
The cost to replace the employee regardless of whether the breach was intentional
A building that is the subject of a contract between its owner and a contractor is completely destroyed by an act of nature.
If the contractor was working on a renovation, the destruction _____________; if the contractor was constructing the building, the destruction ________________.
Discharges the contractor’s duties by impossibility; does not discharge the contractor’s duties
When a party indicates that she is “waiving” a condition before it is to happen, and the person addressed detrimentally relies on the waiver, a court will hold this to be __________.
An estopel waiver
Does the mailbox rule apply to option contracts?
NO. Acceptance by the offeror of an option contract must be received within the allotted time.
When do K modifications require new consideration?
Under the UCC, no considertation required for modificiations. UCC allows for GOOD FAITH reasons
Under Common Law, condideration always required for contract mods.
What is the oral exception to the SoF between merchants?
if an oral agreement is made between merchants, and one merchant confirms in writing, if the receiving party does not object within 10 days, contract is valid
Under the perfect tender rule, what happend if the wrong products are shipped?
A contract is formed and immediately breached. Unless shipment is accompanied by a notice of accommodation, THAN the shipment is a counteroffer
A promise to marry ___ a sufficient determent to constitute valid _________
is; consideration.
There is no public policy against encouraging marriage (the opposite would not be true)
If a seller finds out a buyer is insovent after they have shipped the goods, under the UCC, what can the seller demand?
Immediate payment in cash
A contractors bid is a binding option contract when__________
the contractor reasonably relied on it to submit their bid to the general contractor.
Generally, the right to receive goods under a requirements contract is not assignable because the obligor’s duties could change significantly. However, the UCC permits the assignment of a requirements contract when______
the asignee ACTS IN GOOD FAITH not to alter the terms of the contract.
When does SoF fail for specially manufactured goods?
if goods are “specially manufactured” and not suitable for resale of others, and the seller has made a “substantial beginning” of the manufacture or commitments for the ir procurement, SoF fails despite being an oral contract
What is the exception to the Defense of “Untimely Delivery”
course of performance. If you had previously accepted one late payment, others are permissible
What is the exception to the Defense of “indefinite terms of the agreement”
if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy
What are sellers remedies under the UCC?
1) stop shipment when a buyer wrongfully rejects/revokes or fails to pay (allowed under UCC and VA)
2) Sue for the contract price + incidental damages if he isunable to resell them at a reasonable price (allowed under UCC and VA)
3) Sell the goods - must give notice to buyer and manner of sale must be commerciably reaosnable (allowed under UCC and VA)
4) sell the unfinished product (allowed under VA and UCC)
Under U.C.C. Article 2, what standard is applied to allow the modification of a sales contract without additional consideration?
Good Faith
What is the material benefit rule?
some courts will enforce a promise if it is based on a benefit that was previously conferred by the promisee on the promisor, if the promisee did not intend to confer the benefit as a gift. (majority)
When the amount due is undisputed, payment of a ————————– will not be sufficient consideration for a promise by the creditor to discharge the debt. Neither a legal detriment nor a benefit would be present.
smaller sum than due
A promise to perform a voidable obligation (i.e., ratification) is enforceable __________.
even without consideration
An otherwise valid debt that is now barred by the statute of limitations can still be enforced if______.
The debtor makes a new promise to pay the debt in writing
A promise to perform a voidable obligation is also known as __________.
ratification
A promise that the promisor will choose one out of several means of performance, most of which involve a legal detriment to the promisor, is an example of what?
an illusory promise
A completely integrated writing may not be contradicted or supplemented. A partially integrated writing cannot be contradicted, but
it may be supplemented by proving up consistent additional terms.
When the parties to a contract express their agreement in a writing that is deemed an “integration” of their agreement, how will a court deal with evidence of other written or oral expressions relating to the bargain?
Inadmissible: expressions, written or oral, writing made prior to writing, and oral expressions made contemporaneously to writing
Extrinsic evidence of a condition precedent to a fully integrated agreement is admissible, despite the parol evidence rule, because __________.
it does not effect the agreement
If, in a sale of goods, the buyer will pick up the goods, when does the risk of loss pass to the buyer?
When the buyer takes physical possession of the goods if the seller is a merchant
If the offeror is a merchant and the offeree is a nonmerchant, additional terms in an acceptance ______.
Become part of the contract if the offeror expressly agrees
A warranty will be implied in a contract for the sale of goods whenever __________ has reason to know the particular purpose for which the goods are to be used and that the ___________ is relying on the seller’s skill and judgment to select suitable goods; and the buyer in fact relies on the seller’s skill and judgment.
Any Seller, buyer
If the price is left open to be agreed upon later and the parties fail to agree,
the price is a reasonable price at the time of delivery`
In general, if there is no evidence of the parties’ intention, contracts will be construed ___________, and ambiguities in the contract will be ____________.
As a whole; construed against the party drafting the contract
The implied warranty of merchantability is ______________.
Implied in every contract for the sale of goods by a merchant who deals in goods of the kind sold
What are the effect of a written contract that expressly provides that it may be modified only by a writing:
CL: parties can still orally modify the K
UCC if both parties non-merchants: provision is efective
UCC between merchant and non-merchant: provision requiring written modification must be signed separately by non-merchant to be effective
For implied warranties, what are specific disclaimers vs. general?
general: “as is”, examination of the goods, course of dealing or trade usage
Specific: conspicuous writing, disclaimer mentioning merchantability
If the offeror is a merchant and the offeree is a nonmerchant, additional terms in an acceptance ______.
Become part of the contract if the offeror expressly agrees
Is a writing or consideration required for an assignment to be effective?
No to both.
But, a writing would be required for assignment of wages.
When a party assigns “the contract” to a third party, it results in __________.
an assignment of rights and a delegation of duties to the third party
What type of services cannot be assigned?
unique services
The general rule is that when the assignor makes two assignments of the same right, if the first assignment is ____________, the ____________ assignee has priority.
Irrevocable; first
An important difference between the rights of a donee beneficiary and a creditor beneficiary is that __________.
a creditor beneficiary can sue the promisee on the underlying obligation, but a donee beneficiary cannot
When a delegate assumes the duty to perform, what is the most important consequence?
The obligee can compel performance or bring suit against the delegate for nonperformance
Once an obligor delegates his duties under a contract to a delegate, the obligee, must look first to the ____________ for performance of the duties, but if he fails to perform, then may look to the ______ as a surety for the performance
delegate; delegator
In a sale of goods, a good faith purchaser for value can be __________.
the holder of a security interest in the goods
If an assignor takes payment or performance directly from the obligor, __________.
a gratuitous assignment is revoked, but an assignment for value is not
If an assignee for value discovers that the assignor had previously assigned the same contract rights to another party for value, the assignee may _________.
sue the assignor for breach of warranty
If a person leaves an item of jewelry with a jeweler for repair, and the jeweler sells the item to an unsuspecting purchaser, __________.
the purchaser has title to the item and the true owner cannot recover it
When an obligor delegates his duties under a contract, the delegate __________.
cannot be compelled to perform by the obligee absent an assumption of duties
What will revoke a gratuitous assignment?
death of assignor
bankruptcy of assignor
assignor taking performance directly from obligor
The best test for determining whether someone is an intended third-party beneficiary is to ask:
To whom is performance to be given according to the language of the contract?
If a third-party’s rights have vested, he must_______ to any changes in the contract
Consent
what are the 7 contract defenses?
defenses for no K
1 Statute of Frauds (exceptions: part performance, admittance of contract, promissory estoppel, merchants confirmatory memo, specially manufactured goods)
2 Mistake or Misunderstanding (mutual=no K; unilateral is a D if other party knew, or should have known about mistake)
3 Incapacity to K (minor can K, but only minor can enforce k-can ratify after reaching age of majority)
4 Duress, Undue Influence
Fraud, Misrepresentaion
Illegality, violation of public policy
- defenses for discharge of K
5 Impracticability and Frustration of Performance
6 Anticipatory Repudiation (not mere expression of doubt, needs to offer clear expression of non-performance)
7 Accord and Satisfaction
If unaticipated circumstances occur, a modification is enforceable without consideration when…..
it is fair and equitable in view of the unanticipated circumstances.
If a gratuitous promise is made offering to confer a gift, orally as a contract mod, is it enforceable?
No, if there was no consideration
Under the statute of frauds, what are considered essential terms for real estate?
Price and a reasonable description of the lanad
is a response to a specific inquiry for an offer that says “my best price is $475/ounce” a price quotation or an offer?
It is an offer
What is different about option contracts?
The mailbox rule doesn’t apply. If offer is rejected before the option expires, cannot than later be accepted
In VA contracts to devise, an oral agreement will be enforceable despite the SOF if:
- the agreement must be CERTAIN and DEFINITE in its terms
- the acts done in PART PERFORMANCE must have been done PURSUANT to the agreement and
- the contract must have been SO FAR EXECUTED that a refusal to enforce would operate a FRAUD upon the party rendering services
IN VA, contracts to devise,
If found to be unenforcable, the party rendering services may seek a ___________remedy
restitution
Define Express Warranty?
AFFIRMATION of FACT or PROMISE made by the seller to the buyer or any description of the goods creates an express warranty if it is PART OF BASIS OF THE BARGAIN.
Is an increase in construction costs justifiable legally breach a contract?
Only if EXTREME and UNREASONABLE. a normal price increase does not. Otherwise, a right to refuse to walk off a job would be valid consideration for a contract mod
General option contracts must be given consideration in order for the option to be non-revokable. If no consideration is given_____
The offerree can revoke at will
For purposes of statute of frauds, who is the “party sought to be charged”?
The party who the charge is being forced against, (the non-moving party)
Do 2 offers, identical in terms, made at the same time which cross in the post create a valide Contract?
NO. will not create a contract because neither offer counts as an informed acceptance of the other - NO MUTUAL ASSENT
Define Offer?
A COMMUNICATION that creates a REASONABLE EXPECTATION in the OFFEREE that the OFFEROR is willing to enter into a contract.
Define Acceptance?
At Common Law?
What about under Article 2?
a MANIFESTATION OF ASSENT to the TERMS OF THE OFFER
Mirror Image Rule
manifestation of assent can operate as an acceptance even if it includes terms in addition to or different from those included in the offer.
Under Virginia U.C.C. what is the definition of Express Warranty?
An AFFIRMATION OF FACT, or a PROMISE, or a DESCRIPTION OF THE GOODS, that creates an express warranty
To establish a claim for breach of an implied warranty of merchantability, the buyer must show:
1) that there was such a WARRANTY,
2) that it was BROKEN, and
3) that the breach was the PROXIMATE CAUSE of the
loss.
.
To be merchantable, the goods must be such as to:
(1) PASS WITHOUT OBJECTION in the trade under the description that applies (small tractors).
(2) to be of FAIR AVERAGE QUALITY within the category of description that applies.
(3) be FIT FOR ORIDNARY USES to which such goods are put.
(4) be SIMILAR IN KIND or quality to others in a collection being purchased
(5) be PROPERLY LABELED or packaged
(6) CONFORM TO ANY PROMISES OF FACT made on any TAGS OR LABELS
For breach of warranty cases, what is the buyers remedy for a product?
difference between the PURCHASE PRICE, and its PRESENT VALUE in the condition in which it now is
When goods are shipped by carrier, payment is due only at_______________
When payment is made my check,
payment is not final until ____________
In cases where no express payment provision is made and the contract is one for shipment by carrier,
the seller may send the goods under reservation so the buyer is unable to obtain the goods
from the carrier until_________.
At the time and place where the buyer receives the goods.
until the check is honored
the buyer pays
Define:
Course of Performance:
Course of Dealing:
Custom & Usage:
Course of Performance: same people, same contract
Course of Dealing: same people, difference but similar contract
Custom and Usage: different but similar people, different but similar contract
When a contract does not specify a method of acceptance, acceptance may be made by ________________.
ANY REASONABLE MEANS
The UCC provides that a holder who takes the instrument is a holder in due course if the following 3 requirements are met?
1) Pays for Value
2) Without Notice
3) In good faith
What is a lost volume seller and how do you calculate damages?
a seller who can manufacture as many widgets as it can sell and has ample inventory on hand.
Lost profits (Difference between contract price and price to manufacture)
CAn you be convicted of larceny if you take an item from someone who obtained the item illegally?
Yes, becausre larceny is a trespass against POSSESSION, and not OWNERSHIP
the UCC requires all parties involved in a sale of goods act _________. Which is defined as___________. You breach a duty of __________ if you fail to adhere to this.
IN GOOD FAITH;
HONESTY in FACT and the OBSERVANCE of REASONABLE COMMERCIAL STANDARDS of FAIR DEALING
GOOD FAITH
Define Statute of Frauds for essay purposes?
Under the SoF provision of Article 2 of the VA UCC, governing the sale of goods, a contract for the sale of goods for price of $500 or more is unenforceable unless there is a writing indicating that a contract has been made between the parties and signed by the parties against whom enforcement is sought.
When can you revoke your acceptance of goods?
1) NONCONFORMITY 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
Define the Specially Manufactured Goods exception to the Statute of Frauds:
1) the goods are to be SPECIALLY MANUFACTURED FOR THE BUYER
2) they are NOT SUITABLE FOR SALE TO OTHERS in the ordinary course of business AND
3) the seller has made either a SUBSTANTIAL BEGINING of their manufacture or commitments for thier procurement
How does a seller protect its rights when it discovers a buyer may not be able to pay?
1) Must have REASONABLE GROUNDS FOR INSECURITY
if So, CAN DEMAND, IN WRITING, ADEQUATE ASSURANCES OF PERFORMANCE, may SUSPEND performance until assurance has been received.
If no satisfactory assurances received within 30 days the party failing to reassure will be deemed to have repudiated the contract.
What is the difference between merchant’s firm offer and option contracts?
option contracts are supported by consideration and can be held open for more than 3 months
merchant firm offers require no consideration and can be open for up to 3 months
What are the exceptions to Statute of Frauds?
SWAP SPECIALLY made goods WRITTEN CONFIRMATION by a MERCHANT ADMISSION in court OR PERFORMANCE
IN Va, modifications of contracts for the sale of goods______require consideration. However,__________is required.
IF a party is a merchant, good faith includes_________________________
DO NOT.
GOOD FAITH
OBSERVANCE OF REASONABLE COMMERCIAL STANDARDS OF FAIR DEALING IN THE TRADE
