The bar-Contracts

Question 1

When does UCC apply?

Answer 1

Sale of goods, any price!

Question 2

What rule do you apply when you have contract that has both sale of goods and services?

Answer 2

Whichever is more important part UNLESS contract expressly divides payment for each thing.

Question 3

Offer

Answer 3

Offer is one person’s manifestation of willingness to contract. Basic test is whether reasonable person in the position of the offeree would believe that his or her assent creates a contract.

Question 4

What terms are required for valid offer of a sale of real estate?

Answer 4

Price and land description

Question 5

What terms are required for valid offer of sale of good

Answer 5

art 2: do no need price, but do need intent of parties

Question 6

Vague or Ambiguous Material Terms?

Answer 6

NOT an offer

Question 7

Requirements Contracts and Offers

Answer 7

A contract for the sale of goods can state the quantity of goods to be delivered under the contract in a term of the buyer’s requirements of seller’s output (all, only, exclusively, solely).

Buyer can increase requirements so long as the increase is in line with prior demands. No unreasonable disproportionate increases.

Question 8

How to Terminate an Offer

Answer 8

Lapse of time-
Death of party prior to acceptance (except irrevocable offers)
revocation–by unambiguous words, or conduct indicating unwillingness or inability to contract that offeree is AWARE of. (multiple offers is not automatic revocation)

Question 9

Option contract

Answer 9

irrevocable–option contract cannot be revoked if the offeror has not only made an offer but also promised not to revoke or promised to keep it open and this is supported by payment or consideration

Question 10

UCC Firm Offer Rule

Answer 10

Under UCC, an offer cannot be revoked for up to 3 months if offer to buy or sell goods, signed written promise to keep it open, party is a merchant.

Question 11

Reliance and Offers

Answer 11

An offer cannot be revoked if there has been reliance that is reasonable foreseeable and detrimental

Question 12

Offer, Revokation, and Unilateral COntracts

Answer 12

Once performance has started you cannot revoke a unilateral contract, but this requires more than mere preparation.

Question 13

Counter Offers-

Answer 13

Counter offers terminate the offer and create a new offer.

• bargaining does not terminate offer
• counteroffers do not terminate options.

Question 14

Conditional Acceptance–Common Law, UCC

Answer 14

Common Law–Rejects offer and becomes a counter offer—if the recipient responds and acts on the contract than the condition becomes part of the contract and its like he accepted the counter offer.

UCC: rejects offer–even if they respond to initial offer, the new term does not become part of contract

Question 15

Additional Terms to Contract

Answer 15

Common law—a response to an offer that adds new terms is treated like a counter offer not an acceptance. (mirror image rule)

UCC-2-207–In contract for sale of goods–between 2 merchants– where there is an offer and the other party proposes addition terms—forms a contract/treated like an acceptance. The additional term is not part of the contract unless both parties are merchants, and the additional term is not material.

if they are not merchants, but it is for sale of goods–you have acceptance w/o additional termst6yh

Question 16

UCC-2207

Answer 16

UCC-2-207–In contract for sale of goods, where there is an offer and the other party proposes addition terms—forms a contract/treated like an acceptance. The additional term is not part of the contract unless both parties are merchants, and the additional term is not material.

Question 17

Forms of Acceptance

Answer 17

*Express terms in contract
*starting to perform
sending the wrong goods is acceptance and breach.

Question 18

When is acceptance valid?

Answer 18

When MAILED!

Option contract–must be Received before deadline.

If a rejection is mailed before an acceptance is mailed what happens–neither valid until received.

Question 19

Consideration

Answer 19

Legal detriment–giving up something you had right to do.

Promise to do something (unless illusory–you have ability to terminate all along)

Past consideration? No! unless expressly requested by promisor and expectation of payment by promisee.

No consideration if one party says they will sell whatever other party chooses to order, bc that party may not order anything–ilusory

Question 20

Pre-existing contractual or statutory duty rule–common law

Answer 20

Doing what you are legally obligated to do is not new consideration for new promise to pay you more to do the same thing unless there has been an addition or change in performance or an unforeseen difficulty so severe as to excuse performance.

Promises to pay a new person are OK.

Question 21

Pre-existing contractual duty rule-UCC

Answer 21

New consideration is NOT required to modify a sale of goods contract–Good faith is the test for changes to existing sales of goods.

Question 22

Part payment as consideration for release (promise to forgive balance of debt

Answer 22

where debt is due and undisputed then part payment is not consideration

But–if it not yet due–valid consideration

Question 23

Consideration Substitute

Answer 23

A written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration=–i.e. if the SOL is run.

Say i owe you 1000 but you cant get it bc SOL is run–and i offer 600–it is enforceable although no new consideration!

Question 24

Promissory Estoppel

Answer 24

Promise, Reliance that is reasonable, detrimental and foreseeable, and enforcement is necessary to avoid injustice

Question 25

Youth and Contracts

Answer 25

You can enforce a contract against a minor but they can enforce against you.

Question 26

Quasi Contract liability for necessaries

Answer 26

A person who does not have capacity is legally obligated to pay for things that are necessary such as food, clothing, medical care, or shelter, but that liability is based on quasi-contract law.

i.e. you cant rip off a disabled person into paying more rent.

Question 27

Statute of Frauds

Answer 27

A barrier to entry to court–certain things must be in writing otherwise a Plaintiff cannot get her day in court.

in writing and evidence essential terms, signed by party against whom action is brought

Question 28

What kinds of contracts fall under the SoF?

Answer 28

1. Promises to answer for debts of another: a promise to pay another person’s debt if he or she does not pay–narrow–needs to be a guarantee.
2. Service Contract not capable of being performed within a year from time of contract.
   (if specific time period–SOF, if specific time period but can be terminated–no SOF) **SOF does not apply to life contracts
3. Transfer of real estate besides leases a year or less
4. Sale of goods for 500 dollars or more.
5. promise where consideration is marriage (if you m arry my son, i give you 10 dollars)

Question 29

How is SoF satisfied–Performance

Answer 29

Obj evidence of the contract is needed to satisfy the SoF.

Performance of transfer of real estate: part performance satisfies the SoF in transfers of reasl estate where you have 2 of the 3: improvements on land, payment, possession.

Performance of service contracts: full performance by either party–NOT part performance.

Performance of sale of goods–part performance of a contract for the sale of goods satisfies the SoF only to the extent of the part performance.
—except; part performance of a specially manufactured item satisfied SOF

Question 30

How is the SoF satisfied?

Answer 30

Performance (or Part–see special rules)

Writing

Question 31

How is SoF is Satisfied–Writing?

Answer 31

Not Art 2–the writing satisfies the SoF if it satisfies all material terms test–who and what. Must be signed by the defendant (person asserting the defense)

Art 2–contract must indicate that there is a contract for the sale of goods and state a quantity. Must also be signed by the defendant, unless they are both merchants and there is delay in responding.

Merchant to Merchant delay in responding: if you have writing between two merchants, signed by signed by P (not asserter of SoF) and the D did not respond within reasonable time–that will satisfy

Question 32

SoF also satisified by

Answer 32

Estoppel (reliance), and judicial admission

Question 33

What happens when an otherwise valid contract for the sale of goods does not state a price?

Answer 33

Price may be left open and if parties cant work it out by later negotiations, court will decide on a reasonable price.

Question 34

Accord and Satisfaction

Answer 34

Where one party agrees to accept a different performance than that contemplated by the contract, satisfaction is performance of modified accord.

Question 35

Modified Pre-existing Duty Rule

Answer 35

Modification of valid K without consideration is OK if fair and equitable given change in circumstance

Question 36

the SoF and authorization to enter into contract for someone else?

Answer 36

neccesary for authorization to be in writing when contract itself would need to be in writing.

Question 37

Contract Modification and SOF

Answer 37

If deal with alleged change would be within the SoF, then then alleged modification must be in writing.

changing from a 3 year lease to a 1 year least= no writing.

From 1-3 you would need a writing.

Question 38

Contract provisions requiring all modifications to be in writing

Answer 38

Common law: ignore they are not effective.

UCC-effective unless waived

Question 39

Ilegaility and Contract Enforcement

Answer 39

Cant enforce ilegal contract, but if purpose is illegal while subject matter is legal–it is OK as long as P did not have reason to know about ilegal purpose.

Question 40

Public Policy and Contract Enforcement

Answer 40

Courts refuse to enforce

1. non compete clauses.
2. exemptions from tort liability for intentional or reckless conduct.

Question 41

Misrepresentation

Answer 41

1. statement of fact before the contract by

2. one of parties or agent 3 that is false 4. that is fraudulent and 5 that induces the contract.

Question 42

Nondisclosure

Answer 42

no duty to disclose unless there is a fiduciary relationship

Question 43

Duress

Answer 43

can be physical or economic.

you need an improper threat and a vulnerable person who has no reasonable alternative.

Question 44

Unconscionablity

Answer 44

RARE! unfair procedural surprise–at time of agreement, and oppressive terms.

Question 45

Ambiguity in Terms

Answer 45

PICK UP HERE PAGE 33

Question 46

Specific Performance

Answer 46

Is avaiailable when 1) valid contract 2) legal remedy is inadequate (3) enforcement is feasible and 4) mutuality of remedy is present

Available for Sale of goods where good is unique and replacement or money damages will not suffice

Question 47

When can a promisor assert a promisee’s defence against a creditor?

Answer 47

If promisor has made an absolute promise to pay a third party beneficiary (not a promise to pay whatever the promisee owed_ then the promisor cannot assert the promisee’s defence

Question 48

Money Damages

Answer 48

Need to be reasonably certain:

I foresee that L-PRINCE is reasonably certain to recover!

Expectation Damages–you get what you would have gotten if contract OK. benefit of bargain damages.

Reliance Damages: if not sufficiently certain, can recover cost of performance–put plaintiff in position should would have been in if no contract had ever been formed.

Consequential Damages: reflect losses over and above standard expectation damages–arise bc of non breaching party’s particular circumstances, mostly lost profits. Recoverable only if breaching party knew or had reason to know of the special circumstances.

Incidental Damages–Contract for Sale of Goods

Question 49

Consequential Damages:

Answer 49

reflect losses over and above standard expectation damages–arise bc of non breaching party’s particular circumstances, mostly lost profits. Recoverable only if breaching party knew or had reason to know of the special circumstances.

Question 50

Incidental Damages–Contract for Sale of Goods

Answer 50

available for buyer and seller

expenses reasonably incurred by the buyer in inspection, receipt, transportation, and custody of goods rejected

by seller for storing, shopping, returning, re selling

Question 51

Liquidated Damages

Answer 51

parties stipulate to ammount of damages, only enforced if 1. at time contract was formed, it would have been difficult to estimate or ascertain and the amount was a reasonably forecast

if it is too high it seems punitive–NOT ok

Question 52

Buyer damages in sale of goods

where never delivered or rejected

Answer 52

Difference between Contract price and Market price/replacement cost PLUS incidental MINUS expenses saved as a result of breach.

if market price—market price at time buyer learns of breach.

if replace–reasonable replacement in good faith

e.g. contract to buy Beer for 100. doesn’t come, you spend 10 dollars to buy more beer for 110 dollars.

damages = 110-100 (10) + 10 = 20!

same facts but you buy beer for 90, spend 10 doing it.

damages = (100-90) + 10 = 0

Question 53

Warranty Damages

Answer 53

buyer can recover for value of goods received minus value they would have been if delivered according to contract

Question 54

Damages when seller breaches contract before due

Answer 54

dif between market price when buyer learned of breach and contract price

Question 55

Seller of goods liable for consequential damages?

Answer 55

when seller had reason to know of buyer’s particular requirement and subsequent loss resulting could not be prevented by cover.

(seller knows that buyer will lose profits if he knows the goods are to be used in manufacturing, or knows that buyer typically resells)

Question 56

What can seller recover when buyer breaches, or refuses to accept

Answer 56

1. difference btwn market price and contract price (AT TIME OF DELIVERY)
2. resell goods and difference between selling and contract price.
3. lost profiits—contract price and loss to seller

if seller has unlimited supply then lost profits measure should be used.

Question 57

Grounds for Recision

Answer 57

remember MUUMO

Mutual mistake of material fact
Unilateral mistake if other party new
unilateral mistake if hardship by mistaken party so extreme that outweighs all else
misrep. of fact/law relied upon
other grounds duress, illegality undue influence tc

Question 58

How do third party beneficiaries rights vest?

Answer 58

knowledge and:

reliance,
sue
assents

Question 59

Assigning

Answer 59

intent to immediately and completely transfer rights
recipient of rights is asignee.
person doing something is obligor.

Question 60

Assignment for Value v Gratuitous

Answer 60

For Value–(consideration or for prexsiting debt) cannot be revoked

gratuitous can unless:
1. obligor has performed
2. reliance
something about choses.

how to revoke?

death of assignor.

notice or revocation assignor

assignor taking performance directly from the obligor.

subsequent assignment of same right

Question 61

Rejection of Option Contract

Answer 61

rejection or counteroffer does not terminate. They can still accept orig offer within open period, except perhaps if oferreror has detrimentally relied.

Question 62

Acceptance

Answer 62

A manifestation of assent to the terms of an offer.

Question 63

Transferability of Acceptance power

Answer 63

Where party pays consideration to keep offer open, right to accept IS transferable. All other times,not. `

Question 64

Ucc–Shipment of Nonconforming Goods

Answer 64

Construed as acceptance, and breach.

But, if seller sends goods as an accommodation, it is not an acceptance. (ONLY APPLIES WHERE the SHIPMENT ITSELF IS THE ACCEPTANCE)

If a contract has already been formed and accepted, an accomodation is a breach.

Question 65

merchants confirmatory memo rule

Answer 65

if one party, w/in reasonable time after oral contract is made, sends other party a weitten confirmation of it—this satisifes SOF if 1)had reaosn to know of cotents, 2 does not object w/in writing in 10 days

Question 66

modern trend of contract modification for non UCC

Answer 66

modification ok w/o consideration if modification due to circumstances unanticipated by parties, and it is fair and equitabl

Question 67

read lecture notes about PERFORMANCE

Answer 67

START

Question 68

Frustration of Purpose

Answer 68

There is some supervening act leading to frustration
at time of K, parties did no reasonably forsee
purpose has been destroyed
prpose was realized by both parties wen making contract

(contract for land for a tennis tournament, gets cancled)

Question 69

Executory Contract

Answer 69

to be discharged by recission, a K must be executory on BOTH sides.

An executory contract is a contract made by two parties in which the terms are set to be fulfilled at a later date. The contract stipulates that both sides still have duties to perform before it becomes fully executed. The contract is often in place between a debtor or borrower and another party.

Both people still have something to do

Question 70

Recission

Answer 70

Can be oral even if contract says no.

must be written for SOF contracts, or if contarct says it must be written

Question 71

NOvation

Answer 71

when you had 1. a previous valid contract, 2 agreement among all parties inlcuding new party to new contract 2. immediate extinguising of contractual duties as between the original contracting parties and 4. a new contract

Question 72

Accord and Satisfaction (2)

Answer 72

accord must be supported by considaration. if new consideration is less than old, must be different/paid by third party etc

an accord will suspend the right to enfroce the original contract.

Satisfaction is performance of the accord. IT DISCHARGES THE ORIGINAL CONTRACT AND THE ACCORD.

Question 73

What happens if you breach accord agreement, before satisfaction?

Answer 73

If debtor (person who needs to do something) breachese—other may sue on either contract

if creditor breaches accord by suing on original contract–debtor may raise accord as a defense OR wait until creditor wins on the action an then sue for breach of accord.

Question 74

Breach

Answer 74

when promisor is under an absolute duty to perform, this absolute duty has not been discharged, failure to perform is a breach

Question 75

minor v substantial breach

Answer 75

minor breach will not relieve aggrieved party of duty to perform–just gives damages for the beach

material breach–not reviece substnatial benefit of bargain–material! non breaching party may treat contract as at an end. right to all remedies including total damages.

Question 76

Material breach of divisible contract

Answer 76

recovery available for substantial performance of divisiobe party

Question 77

Timeliness as Breach?

Answer 77

failure to perform on time is not material unless K says it is of the essence, or parties intended it to be

Question 78

perfect tender rule

Answer 78

UCC
goods must be exact or it is a breach.

right to reject is cut off by acceptance:

After a reasonable opp to inspect you indicate to seller that they confirom, you fail to reject–or do anything inconsistent with seller’s ownership” = accept.

Question 79

Non monetary remedies

Answer 79

specific performance
–where legal remedy is inadequate.
land or rare/unique goods
covenant not to compete–where legit, reasonable in scope and duration, no public harm

Defence:
unclean hands
laches
sale to BFP