R6 BLAW Flashcards
Contract
promise that the law will enforce
express contract
formed by language, oral or written
implied-in-fact contract
formed by conduct
implied-in-law contract/ quasi-contract
not a contract
- it is a remedy allowing a plaintiff to recover a benefit unjustly conferred upon the defendant to prevent unjust enrichment
Unilateral contract
1 promise in exchange for performance
- contract isn’t formed until performance is completed
Bilateral Contract
2 promises- promise in exchange for a promise
- contract is formed as soon as promises are exchanged
Executory Contract
if duties remain to be performed under contract
Executed Contract
all duties under the contract have been performed
Sources of Contract Law
Common Law
- RISE: real estate, insurance, services, and employment
Uniform Commercial Code (UCC)
- governs contract for sale of goods
3 requirements for Legally Enforceable Contract
- offer and an acceptance
- exchange of consideration (something of legal value)
- lack of defenses
-note: doesn’t have to be in writing except for exceptions
What makes an Offer?
- was there intent?
- obvious joke is not an offer
- advertisements GR not offers except: ads that limit scope of persons who can accept
- rewards in offer is okay - are terms definite and certain?
- RISE: all terms
- UCC: quantity - was there communication to offeree?
- no knowledge, no acceptance
Termination of Offer
an offer must be accepted before it is terminated
- Revocation by Offeror
- GR: offeror can revoke any time before acceptance by communicating revocation to offeree
- even when offeror promises to keep offer open
- may be direct or indirect
- if offer is published, revocation must be published through comparable means
Limits on revocation: - Option Contract- consideration paid to keep offer open
- Unilateral Contract- substantial start on unilateral contract
- Firm Offers
- Rejection by Offeree
- once offer is rejected, it can’t be accepted
- counteroffer is both a rejection and an offer
- note: diff b/w mere question and counteroffer
- effective when received
- no response is a rejection - Termination by Law
- termination by death or incompetency of parties automatically
- destruction of subject matter before offer is accepted
- illegality
The Acceptance
- only person whom offer was made may accept
- GR: acceptance can be anything reasonable except: if offeror specializes method of communication
- RISE follows Mirror Image Rule, requiring acceptance to mirror the offer (a change is a counteroffer)
- Mailbox Rule: acceptance are effective when dispatched and irrelevant if properly addressed acceptance is lost or delayed unless specified otherwise
- vs offers and terminations and counteroffers effective date received
Consideration
both sides of contract must be supported by legal consideration. 2 elements of consideration
- legal value given by each party
- consideration if promisee agrees to do something they are not already obligated to do
- e.g. if job or under contract and offer to pay for them to do their job, don’t have to pay - bargained for exchange
- not consideration unless given in exchange for consideration
- gifts are unenforceable bc no exchange
- if something has already been given/done, it’s unenforceable
- exception: detrimental reliance/promissory estoppel (donation to charity)
Defenses
most tested area for contracts
make a contract unenforceable
note: most defenses only make voidable, few make void
Fraud “MAIDS”
- misrepresentation of material fact
- actual and reasonable reliance
- intent to induce victim to rely
- damages
- scienter, knew falsity or reckless disregard
if no scienter, no punitive damage just cancellation
- fraud in the execution: void
- fraud in the inducement: voidable
- physical force duress: void
- economic or social duress: voidable
- undue influence: abuse of position of trust or confidence
- mutual mistake
- nonexistence when contract is made: void (stolen/destroyed)
- unilateral mistake GR not defense UNLESS other party knew or should have known of the mistake
- illegality: void
- no license to “protect the public”: void
- no license to “raise revenue”: enforceable
- minors can cancel contracts while minor or reasonable time after becoming adult unless for necessities, can ratify upon reaching adulthood
- intoxication
- mental incompetency: voidable
- adjudicated mentally incompetent: void
- Statute of Limitation*
- Statute of Frauds- 6 contracts in writing*
- impossibility
- Accord and satisfaction
- Novation
- prevention of performance
- Parol Evidence Rule*
- unconscionability: extremely unfair
Statute of Limitations
Contracts
if statute of limitations has expired, it is unenforceable
- RISE: 4-6 years
- UCC: 4 years
- from date of breach
Statute of Frauds- 6 Contracts Requiring Writing
signed by defendant "MYLEGS" - Marriage - multiYears: can't be performed w/i a year from contract date - Land/real property unless lease is less than a year or partially performed - Executors to pay estate debts - Goods sale $500+ - Surety: pay debt of another
Accord and Satisfaction
same parties, new agreement
Novation
same agreement, substituted parties
- all parties must agree to release
Parol Evidence Rule
prohibits:
- party in a lawsuit w a fully integrated written contract from introducing evidence at trial of:
- oral/written statements prior to written contract or
- oral/written statements made contemporaneously w written contract that seek to vary terms of contract
Remedies
Breach “RISE”
- nonbreaching party discharged
- if only minor breach, not discharged just damages
- Anticipatory Repudiation: immediately sue for damages, await time for performance then sue, or cancel contract
Damages
- put nonbreaching party in as good a position had there been no breach (no punitive damages)
Money: to obtain substitute performance and reasonably forseeable
Specific Performance: land or unique items
- SP can’t be used for personal service contracts
- either money or specific performance, not both
Liquidated Damages: agreed to in contract for breach is enforceable if reasonable amount and NOT A PENALTY
Rescission or Cancellation
- UCC requires “perfect tender” so can cancel for breach
- RISE can’t cancel if substantially performed (only monetary damages for minor breach)
Quasi-Contract Damages
- return stuff already exchanged if contract doesn’t happen
Third Party Rights
GR: only parties in privity have rights EXCEPT intended third party beneficiaries
- must be named or specifically described in contract
Intended Beneficiaries
- Donee Beneficiary: gift
- Creditor Beneficiary: bc they were owed
Assignment of Rights and Delegation of Duties
Assignment of Rights: give contract rights to third party
Delegation of Duties: third party perform contractual duties
Assignment of a contract is both
Exceptions: assignment will change the obligor’s risk OR duty involves specialized personal services
- both delegator and delegatee liable unless novation
- creditors right to receive money is assignable to another even if contract prohibits assignment, effective when debtor receives notice
- more R6-27
Firm Offer*
Sales Article of UCC
GR: offers are revocable before acceptance EXCEPT options
Firm Offer is irrevocable:
- seller must be a merchant
- offer in writing and signed by merchant
- offer gives assurances it will be kept open for certain time
- irrevocable for time stated or 3 months
Acceptance
Sales Article of UCC
no mirror image rule for UCC
- minor changes, valid acceptance
Promise to Ship or Prompt Shipment: valid acceptances
- shipment of nonconforming goods is both an acceptance and a breach of contract
- except: if notified, then counteroffer
Auctions
Sales Article of UCC
- with reserve: seller doesn’t have to sell until adequate bid
- without reserve: it’ll go to highest bidder unless no bid made w/i reasonable time
Consideration
Sales Article of UCC
GR: quantity must be stated EXCEPTION for output and requirements contracts
- output contract, agree to buy entire output for stated period of time
- requirements: agree they’ll produce all requirements for stated period of time
Modifications Enforceable without Consideration
- just agreement in good faith
Defenses
Fraud “MAIDS”
Statute of Limitations: 4 years from time of breach
Statute of Frauds: 4 Exceptions to MYLEGS (G) “SWAP”
- specially manufactured goods
- written confirmation of order if no objection in 10 days
- admitted in court
- performed
Impracticality (vs common law impossibility)
- failure of agreed upon method of transportation: no defense
Delivery and Risk of Loss
GR: seller’s duty to hold conforming goods for buyer and give reasonable notice to enable buyer to take delivery
- for risk of loss to pass, goods must be identified
- as parties agree- contract terms
- no specific agreement: noncarrier and carrier cases
- noncarrier cases: merchant vs nonmerchant
a) merchant: risk of loss passes upon actual delivery
b) nonmerchant: risk of loss upon seller’s tender of delivery (garage sale)
- carrier case: shipment or destination contract
a) shipment: risk passes on delivery to carrier
b) destination: risk passes at destination
Shipping Terms
FAS- Free Along Side
CIF- Cost, Insurance, and Freight
^ both are Shipment Contracts: risk passed when delivered to carrier
FOB- Free on Board
- FOB seller’s place: shipment contract
- FOB buyer’s place: destination contract
If seller ships nonconforming goods
UCC Sales
risk of loss remains on seller, regardless of shipping terms unless buyer accepts defective goods
Risk in Sale on Approval and Sale or Return Contracts
Sale on Approval: risk on seller until approval
Sale or Return: risk on buyer until returned
Title
Sales Article of UCC
GR: title can pass as parties agree
If no agreement, title passes upon delivery
- shipment or destination
buyer rejects good: title revests with seller
Warranties
Sales Article of UCC
seller must make UCC perfect tender so goods must conform to all warranties (4)
- Express warranties
- implied warranty of title
- implied warranty of merchantability and
- implied warranty of fitness for a particular purpose
Express Warranties
oral/written in contract goods will conform to statement of fact, to the description, or to the sample/model
- must be part of basis of the bargain
- can be made by any seller
- very difficult to disclaim
Implied Warranty of Title
- implied in every sales contract
- implies seller has good title and right to transfer, no encumbrances, don’t infringe on patent or trademark
- can’t be disclaimed by general disclaimer, only specifically or by circumstances
- all disclaimers have to be made before on concurrently w sale
Implied Warranty of Merchantability
- implied in every sale by a merchant
- implies goods are fit for ordinary purposes
- very easy to disclaim with general disclaimer “as is” or using the word “merchantability”
Implied Warranty of Fitness for Particular Purpose
- when buyer relies on any seller to select goods suitable for particular purpose
- not limited to merchants
- very easy to disclaim w general disclaimer, doesnt need to mention fitness
Warranty protection not limited by privity
Sales Article of UCC
- unlike common law
- anyone injured can sue
Tort Liability
Sales Article of UCC
Negligence: failure to use reasonable care must prove
- seller owed a duty of care
- seller breached duty
- damages
- causation- damages from negligence
Strict Product Liability: injured by goods must prove
- product was defective when left seller’s hands
- defect caused injury
- product was unreasonably dangerous
- seller in business of selling this good
- reached user w/o substantial change
- privity not required, anyone can sue
- negligence not required, sellers are strictly liable
Seller or Buyer Remedies
Sales Article of UCC
Anticipatory Repudiation: sue or wait
Right to demand Assurances if reasonable grounds
- failure to give assurance w/i reasonable time is anticipatory repudiation
- no punitive damages available
- can’t recover for damages that could’ve been avoided
Seller’s Remedies
Sales Article of UCC
Buyer Breaches
- seller can cancel or rescind and/or sue for damages
Right to Withhold Delivery and Stop Goods in Transit
- if discovers buyer is insolvent
- if buyer is insolvent and received goods, seller may reclaim w/i 10 days after receipt
Seller’s right to resell goods
- can also sue for difference b/w contract price and resale plus add. or incidental damages
Seller’s right to full contract price
- if goods can’t be resold
Liquidated Damages- must be reasonable, not punitive
- even if no liquidated damages, seller may keep lesser of $500 or 20% of price
Buyer’s Remedies
Sales Article of UCC
Right to Reject for Any Nonconformity
- UCC perfect tender
- rejection w/i reasonable time
- must notify seller and state reasons for rejection
- Seller’s right to Cure: if time remaining under contract
- Right to Inspect Before Payment, except on COD (cash on delivery) sale
Buyer’s right to cancel or rescind
-if goods are nonconforming
Buyer’s Right to Sue for Damages
- may accept nonconforming goods then sue
- usually difference b/w value of conforming goods and value of goods delivered + incidental damages
- For Rejected or Undelivered Goods
a) Cover- purchase comparable goods and sue for difference
b) sue for difference b/w market price and contract price + incidental damages
Buyer’s Right to Specific Performance or Replevin
- for unique and buyer can’t reasonably cover
- Replevin if goods are identified and buyer can’t reasonably cover
If Seller Insolvent
- if buyer paid part or all of price, may recover goods if they are identified
Entrusting and Voidable Title
Sales Article of UCC
Entrusting:
if owner of goods entrusts them to a merchant and sold in ordinary course of business, purchaser gets good title even tho merchant didn’t have good title
Voidable Title:
if owner of goods is defrauded into giving thief title, can rescind contract and recover goods
- but if thief sold to purchaser, purchaser gets good title and suit for damages is only remedy
Copyright
life + 70 years
federal right to control reproduction of work
generally submit to Copyright Office but starts as of creation
artistic works, computer program “source code”, architectural works, foreign language reproduction of copyrighted work
gives exclusive right to:
- reproduce
- prepare derivative works based off work
- distribute copies and
- perform or display the work publicly
Fair Use Doctrine allows w/o permission:
- criticism and comments
- news reporting and
- teaching
Typically, creator owns copyrights UNLESS
- created by an employee for employer w/i scope of employment
- someone commissioned the work to be created
Copyright rights transferable if in Writing
Civil and Criminal Penalties
Patents
20 years
federal right
must be: novel, useful, and not obvious to person skilled in the area
- not automatic, must apply to US Patent and Trademark Office
Creator owns Patent UNLESS
- employee makes for emlpoyer, employee owns but must use for employer’s benefit and assign right to employer
- if not hired to create patent but used employer’s facilities, employer has shop right to use w/o royalty
Rights transferable in writing signed by patent owner
Remedies: no criminal (unlike copyright)
Recission
restores parties to positions they would’ve been in had no contract been made
