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104 Cards in this Set
- Front
- Back
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A Bilateral Contracts contains two or more promises. Each promise creates a duty on the part of the promisor and a right in the party the promise is made to - the promisee
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I promise to pay you $25 if you promise to grade for me next Wednesday for two hours beginning at 2PM. You promise.
My promise to pay you $25 creates a duty on my part to pay you simultaneously creating a right to you to the $25 for grading. Your promise to grade creates a duty on you to grade and a right to the $25 from me. |
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Contract Rights may be
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assigned or transferred to another person
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Contract Duties may be
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assigned - delegated - transferred to another person
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Define limitations on assigning contract rights
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1. Rights may not be assigned where such would increase
the duty on the party obligated to perform I assign the right to have my one story house painted for $5000 to Hill who has a two story house. Right is not assignable since such would increase the obligation on the party with the duty to paint. 2. Rights may not be assigned where the right is personal. I assign my appointment with my tax accountant to you. The Right is not assignable since your tax issues are different from my tax issues and thus the duties of performance would be different. 3. Rights may not be assigned where the contract prohibits. Provisions can be inserted in contracts stating that “rights under this contract are not assignable” 4. Rights may not be assigned where the law prohibits Rights under a liquor license are not assignable by law |
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Explain the result of assigning a non assignable contract right
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Nothing occurs if a contract right that is not assignable is assigned.
The rights and duties under the contract remain as before between the original contacting parties. The assignee obtains nothing. |
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Explain limitations on transferring - assigning - delegating contract duties
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1. Contract duties are not transferable where transfer wouldchange the performance. Your tax accountant transfers his duty to a tax accountant with adifferent firm. Duties to perform tax work are not transferable.Duties that involve personal skills, experience or taste are notdelegable since performance by another would be different. The party with the right to a performance has a right to choose persons of their personal preference to render services for them.2. Contract duties may not be assigned where the contractprohibits.
3. Contract duties may not be assigned where law prohibits. |
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Explain the result of transferring non transferrable contract duties.
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Transfer –delegation of a non transferable duty is a breach of
contract. The contact remains as originally set by the contracting parties. The party with the duty remains liable to perform. |
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Explain the result of transferring a delegable contract duty.
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One who assigns/delegates a delegable duty remains responsible for
the performance if the transferee does not perform properly. |
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Explain how one who delegates a delegable duty can be relieved of duties defining Novation.
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One who has transferred a delegable duty can be relieved of
responsibility by Novation. Novationoccurs where the party with a right to a performance agrees to allow a party who has been delegated the delegable duty to perform. Novationsubstitutes the party performing into the contract to take the place of the party originally obligated. Only the substituted party is now liable.The party originally obligated has no liability |
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You contract with a building contractor to remodel your house. The building contractor contracts with an electrical contractor to do the wiring. The wiring is not done correctly. Explain your claims against the building contractor.
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Central Contracting enters into a contract with Sharp to remodel
his house. Central contracts with West Electric to do the wiring. West fails to install any electrical outlets in a new bedroom. Explain who Sharp can hold liable. Since a general contractors duties are assignable/delegable Central remains responsible for West’s failure to perform properly. Sharp as a third party beneficiaryalso has a claim against West. One is a third party beneficiary where contracting parties intend benefits to flow to one not a party to the contract. West promised Central Contracting they would perform according to plans between Sharp and Central. West performed for the benefit of Sharp. The intent of the contracting parties was to benefit Sharp. Third Party Beneficiaries have claims against the party that promises to perform for their benefit which was West in this case. |
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Explain your claims as a Third Party Beneficiary against the electrical contractor in the example above.
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Central Contracting enters into a contract with Sharp to remodel
his house. Central contracts with West Electric to do the wiring. West fails to install any electrical outlets in a new bedroom. Explain who Sharp can hold liable. Since a general contractors duties are assignable/delegable Central remains responsible for West’s failure to perform properly. Sharp as a third party beneficiaryalso has a claim against West. One is a third party beneficiary where contracting parties intend benefits to flow to one not a party to the contract. West promised Central Contracting they would perform according to plans between Sharp and Central. West performed for the benefit of Sharp. The intent of the contracting parties was to benefit Sharp. Third Party Beneficiaries have claims against theparty that promises to perform for their benefit which was West in this case. |
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Jason promises to pay Rita $25 if Rita promises to sell him a Contract Law Book next Wednesday at 2PM. Rita promises. Rita owes Robert $25.
Rita assign her right to the $25 to Robert to pay off debts she owes to Robert. Explain who an assignor is |
Rita
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Jason promises to pay Rita $25 if Rita promises to sell him a Contract Law Book next Wednesday at 2PM. Rita promises. Rita owes Robert $25.
Rita assign her right to the $25 to Robert to pay off debts she owes to Robert. Explain who an assignee is. |
Robert
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Jason promises to pay Rita $25 if Rita promises to sell him a Contract Law Book next Wednesday at 2PM. Rita promises. Rita owes Robert $25.
Rita assign her right to the $25 to Robert to pay off debts she owes to Robert. Explain whether Rita has a claim against Jason for the $25 after Rita’s assignment to Robert. |
Rita would have a claim against Jason only if Jason didn't pay her. If she is payed then no claim would exist.
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Jason promises to pay Rita $25 if Rita promises to sell him a Contract Law Book next Wednesday at 2PM. Rita promises. Rita owes Robert $25.
Rita assign her right to the $25 to Robert to pay off debts she owes to Robert. Explain what claims Robert has against Jason for the $25 if Rita delivers the book to Jason. |
After assigning the right to the $25, the assignee can make any legal claims against the party with the duty to pay $25 that the assignor could have made if no assignment had been made
Jason would be the third person. The assignee is the only party that can make claims on the rights |
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Jason promises to pay Rita $25 if Rita promises to sell him a Contract Law Book next Wednesday at 2PM. Rita promises. Rita owes Robert $25.
Rita assign her right to the $25 to Robert to pay off debts she owes to Robert. Explain what claims Robert has against Jason for the $25 if Rita does not deliver the book to Jason. |
Yes. Any defense good against an assignor is good against an
Assignee. Since Rita, the assignor, did not honor his obligation to deliver Jason the book, Jason owes nothing on the right assigned. When an assignor fails to perform a duty owed, a defense will exist on payment on the right to the assignee. Thus Jason is not obligated to pay Robert. |
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Jason promises to pay Rita $25 if Rita promises to sell him a Contract Law Book next Wednesday at 2PM. Rita promises. Rita owes Robert $25.
Rita assign her right to the $25 to Robert to pay off debts she owes to Robert. Explain what claims Robert has against Rita for the $25 if Rita failed to deliver the book to Jason |
Rita still owes Robert $25.
Robert could have claims against her. |
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Jason promises to pay Rita $25 if Rita promises to sell him a Contract Law Book next Wednesday at 2PM. Rita promises. Rita owes Robert $25.
Rita assign her right to the $25 to Robert to pay off debts she owes to Robert. Explain what claims Robert has against Rita if the $25 was assigned as a gift and she did not deliver the book.. Explain what claims Robert has against Jason if the $25 was assigned as a gift and Rita did not deliver the book.. |
he has none.
Assignments can be made as a gift or to pay off obligations owing from the Assignor to the Assignee. If the Assignment is a gift, the Assignee has no claim against the Assignor. The Assignee always has a claim against the party obligated to perform on the right in question. However if the party obligated to perform has a valid defense, the Assignee has a claim against the Assignor only if the Assignment was for value An assignee – whether assignment was a gift or for value - can bring any claim against the party obligated to perform that the . Could have a claim towards Rita assignor could have brought. However only an assignee for value has a claim and will be able to collect from the assignor. |
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Jason promises to pay Rita $25 if Rita promises to sell him a Contract Law Book next Wednesday at 2PM. Rita promises. Rita owes Robert $25.
Rita assign her right to the $25 to Robert to pay off debts she owes to Robert. Explain what claims Robert has against Jason if the $25 was assigned as a gift and Rita did not deliver the book.. |
he has none.
Assignments can be made as a gift or to pay off obligations owing from the Assignor to the Assignee. If the Assignment is a gift, the Assignee has no claim against the Assignor. The Assignee always has a claim against the party obligated to perform on the right in question. However if the party obligated to perform has a valid defense, the Assignee has a claim against the Assignor only if the Assignment was for value |
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Explain when a contract( both rights and duties) may be assigned - transferred.
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Rights and duties under contracts may be transferred/assigned solong as no limitation exists
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Define Option.
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An OPTION is a promise/contract to keep an offer open for a stated period that must be supported by consideration to be binding. A promisee must give something to the seller/offeror in exchange for the promise to keep the offer open for a state period for an option to exist. A option may be created for any subject matter. An option is irrevocable for the stated time period. Since City Investments gave something agreed upon in exchange for the promise to hold the offer open, the owner may not revoke for the agreed upon time period. The letter of withdrawal thus amounted to a breach.
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State the requisites for an Option.
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Explain what occurs if an offeror revokes an Option.
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Revoking an offer where an option exists
amounts to a breach of contract. |
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Explain if the offeree is entitled to return of the amount paid for an Option if offeree decides not to exercise the option - accept the offer.
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Does the buyer get his/her money back that
was paid for the option? NO. |
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Define Firm Offer.
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is a promise in writing signed by a
merchant selling goods that the offer will remain open for a stated period of time not exceeding three months. A firm offer is an irrevocable offer. |
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State the requisites for an Firm Offer.
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1. Merchant selling Goods
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Explain the purpose of an Option or Firm Offer.
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The purpose of an option or firm offer is to allow the offeree the option take on a offer if they so desire. As in the case of a firm offer, offeree has a 3 month window to accept the offer.
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Define Consideration.
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is a promise or act requested by
the offeror or agreed upon between the offeror and offeree that assures the parties intend an exchange - a quid pro quo - something for something. |
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Explain the purpose of Consideration.
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The Purpose of Consideration is to assure an
exchange - that something is exchanged for something |
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Explain what can amount to Consideration.
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Consideration can take the form of:
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Explain what is required to enforce a promise made to you
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Legal Detriment.
Legal Detriment is doing something that the promisee was under no prior legal obligation to do. Legal Detriment is required for a contract to be enforceable. Legal detriment – Consideration is the price one pays for a promise |
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Explain how it is determined whether an act or promise amounts to Consideration.
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Now you have the whole story on Consideration.
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Define Legal Detriment. Please understand that in the law Legal Detriment is considered a positive since it is required to have an enforceable contract.
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Legal Detriment is doing something that the
promisee was under no prior legal obligation to do. Legal Detriment is required for a contract to be enforceable. Legal detriment – Consideration is the price one pays for a promise |
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Explain when Consideration is required to modify an existing contract.
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Consideration is required to support promises
modifying contracts other than for sale of goods. For a modification to be binding an exchange - quid pro quo - must occur between the parties. In order for Structure to be bound to pay the additional amount, they must receive something in exchange that they were not receiving under the original contract. Since Structure is receiving nothing in exchange they are not bound to pay the additional amount even though they promised in writing. Further, increased costs due to inflation, problems due to the weather, materials or labor shortages or strikes or the like are generally not found to amount to legal detriment sufficient to support modifications of contract. Such are usually defined as normal business risks. If a contracting party desires to be compensated for inflation or for labor or materials problems or such to be sufficient to support modification, such will have to be bargained for between the contracting parties at the time of entering into the initial contract |
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Explain whether Consideration is required for a contract for the sale of goods.
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No consideration is required to modify
contracts for the sale of goods. Agreement is all that is required to modify a contract for the sale of goods. |
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Explain how a requirements contract is definite enough to be enforceable.(Sorry about the offer question but I had to put Requirement and Output Contracts somewhere)
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Requirement and Output contracts enable firms to
enter into long term agreements without having to specify exact quantities of subject matter to be purchased or sold at the time of contracting. |
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Explain Consideration in a requirements Contract.
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Consideration exists since the seller is obligated to
supply and the buyer is only obligated to purchase the business needs of the buyer - what is needed for the operation of the business - not the wants or desires of the buyer or seller. Prior to the time of the Requirements contract, the buyer was not under any obligation to buy and the seller was not under any obligation to sell. Thus the buyer and seller are each doing something they were under no legal obligation to do prior to the contract. Business needs of the buyer are determined by economic conditions as well as management expertise – not the wants or desires of the buyer or seller. Thus Legal detriment exists. |
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Explain how an Output Contract is definite enough to be enforceable.
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In an Output Agreement the buyer firm agrees
to purchase and the selling firm agrees to sell all output firm for an agreed period. The agreement is definite enough since quantity and damages can be calculated if a breach occurs. |
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Explain Consideration in an Output Contract
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Consideration is the legal concept of value in connection with contracts. It is anything of value in the common sense, promised to another when making a contract. It can take the form of money, physical objects, services, promised actions, abstinence from a future action and much more. Under the notion of "pre-existing duties," if either the promisor or the promisee already had a legal obligation to render such payment, it cannot be seen as consideration in the legal sense.
Does Consideration exist since the obligations of the parties are not defined in advance? |
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1
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1
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Explain why a communication stating: I wish to sell, I want to sell, I have decided to sell a defined subject matter stating a price addressed to you is usually not an offer.
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Intent to contract generally arises after the parties have been negotiating. Describing subject matter and stating a price in an ad or a communication to a specified person is usually insufficient to indicate intent to sell. Whether intent exists will be based on what a reasonable person would conclude given the circumstances. Usually an initial response “I accept” to an ad, letter or other initial communication indicating certain subject matter is being offered for sale where the parties have not talked about entering into an agreement previously is treated as expressing an intention to negotiate, not an offer.
See Owen v Tunison |
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Explain when the courts will supply missing terms in contracting.
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The requisites of an Agreement identified in
prior slides are an attempt to assure evidence exists that parties desire to engage in a transaction and that the terms of the transaction are ascertainable by a reasonable person. Remember courts do not draft agreements. Parties draft agreements. Courts only facilitate the objective manifestations of the parties. |
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Define Acceptance
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Acceptance is an overt manifestation by the offeree
to the terms communicated by the offeror or agreed upon by the parties. Acceptance occurs when the act in question has been completed. To have acceptance earlier such as at the beginning of performance or later during performance would imply a promise by the offeree to complete the act. Since no promise was requested, none should be implied. The offeree should be free to perform or not perform or to perform in part. |
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Define Revocation
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Revocation occurs where the offeror
communicates withdrawal of the offer to offeree. Further the law of contract provides an offer may be revoked anytime prior to acceptance. |
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Define Rejection
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. Rejection occurs where the offeree communicates
no interest in the offer. A rejection terminates an offer. |
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Explain Silence as Acceptance
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Silence generally cannot amount to
acceptance. Thus an offeror cannot make an offer stating that if the offeror does not hear from you within a certain time, an agreement will exist. |
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Explain when an Offer may be Revoked
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An acceptance that differs materially from
terms of the offer amounts to a counteroffer. A response to an offer is materially different - a counteroffer- when it would affect a reasonable persons decision. A counteroffer is a rejection. A rejection terminates an offer. The response amounted to a counteroffer which was a rejection, thus no binding contract exists. Once an offeree begins performance of a requested act, the offeror cannot revoke the offer. Revocation occurs when an offeror communicates intent to withdraw offer to the offeree. The offeror must allow the offeree a reasonable time to complete performance. |
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Explain when Acceptance of a Unilateral Offer occurs.
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A Unilateral Offer occurs where a Promise
meeting the above requisites is made in exchange for a requested or agreed upon Act or where an Act is performed in exchange for a Promise. Acceptance of an Unilateral Offer occurs when performance of the act is complete. |
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Explain Revocation of a Unilateral Offer
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In the case of a unilateral contract, the offeror
cannot revoke the offer once the offeree has begun performance even though acceptance does not occur till performance is complete. The offeree must be allowed a reasonable time to complete performance. |
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Explain Rejection of a Unilateral Offer
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Rejection Defined and Rejection of a Unilateral
Offer |
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Explain an Acceptance that materially differs from an Offer in a Bilateral Contract.
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An acceptance that differs materially from terms of the offer amounts to a counteroffer. A response to an offer is materially different - a counteroffer when it would affect a reasonable persons decision. A counteroffer is a rejection. A rejection terminates an offer. The response amounted to a counteroffer which was a rejection, thus no binding contract exists. (If performance occurs following a counteroffer, the terms of the contract are the terms as stated in the counteroffer
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Explain whether a person making a offer to remain open for 10 days can revoke the offer after only 5 days
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An offeror can withdraw-revoke an offer anytime before acceptance unless a firm offer(See 2-205 below) or option exists. Revocation occurs when an offeror communicates intent to withdraw offer to the offeree.
Since the offer did not amount to option or firm offer and acceptance had not occurred prior to revocation, no breach occurred. |
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Explain whether an offeree who has received a 20 day offer who communicates a rejection the third day after receiving the offer can change her mind and accept on the 15th day. Will the acceptance create a contract?
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No.
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Explain when an Offer becomes effective where parties are not effectively dealing face to face.
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State whether an offer stated orally or in writing to remain open for one week be withdrawn before that time by the offeror?
An offeror can withdraw an offer anytime before acceptance unless a firm offer(See 2-205 below) or option exists(See option under Consideration). How long is an offer open if no time is stated? An offer is open a reasonable time if no time is stated - reasonable time is function of subject matter and rate of price fluctuation. |
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Explain when Revocation becomes effective where parties are not effectively dealing face to face.
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Explain when Rejection becomes effective where parties are not effectively dealing face to face.
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Rejection becomes effective when arrives at the offerors address.
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Explain when Acceptance becomes effective where parties are not effectively dealing face to face.
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Acceptance becomes effective when placed into channel of communication assuming the same or similar means of communication was used to make the acceptance as was used to make the offer.
Acceptance by a different - unreasonable means becomes effective when it arrives at the designated address Example: offer by telegram with acceptance by mail – acceptance occurs when delivered. |
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Explain the ways an offer may be terminated by acts of the partes and when such becomes effective.
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Termination of an Offer by Acts of Parties Occurs:
On Revocation by the Offeror On Rejection by the Offeree On Counteroffer by the Offeree Termination by Acts of the Parties becomes effective when the offeror or offeree knows or has reason to know. |
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Explain the ways an offer may be terminated by law and when such becomes effective.
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Termination of an Offer by Operation of Law Occurs:
As stated in the offer On destruction of the subject matter of the offer not the fault of contracting parties On death or incompetence of the offeror or offeree Where written enactment reclassifies offer as illegal. Termination occurs automatically on happening of any Of the above without regard to knowledge or notice! |
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Explain the terms of a contract for goods where an acceptance contains terms not in the offer where businesses are using printed forms.
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The terms are those the parties have negotiated/agreed on with additional needed terms drawn from rules governing sales of goods such as can be found in the Article 2 of the Code.
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Explain the terms of a contract for goods where a conflict exsits between offer and acceptance where businesses are using printed forms
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Such can occur since firms do not always read all the terms of an order form or acceptance form. They will check the subject matter, quantity, price and perhaps shipping dates and payment due terms
If performance of a contract for sale of goods occurs where conflicting terms exist on the order and acceptance forms, some courts cancel the conflicting terms and look to rules governing sales of goods for necessary terms such as can be found in the Article 2 of the Code. |
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Definition of Contract
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Contract may be defined as a promise or set of promises between two or more persons/entities. A promise may be defined as an undertaking that something will or will not happen in the future.
Contract or Sale also includes present transfer of goods and or services from seller to buyer for a price. |
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Requisites for a Contract
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(1)promise/s - agreement - undertaking that is:
(2)supported by consideration(something for something), (3)by parties with capacity(mentally incompetent and minors can avoid), (4)with genuineness of assent(fraud, duress or undue influence renders agreements avoidable), (5)with no questions of illegality (agreements prohibited by statute or public policy - contract for sale of cocaine or practicing medicine or law without a license). If any of the above requisites are missing, no enforceable agreement exists |
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Definition of Bilateral Contract
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A bilateral contract exist where two or more promises are exchanged between contracting parties. I promise to pay $10 if you promise to begin work tomorrow at 9am
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Definition of Unilateral Contract
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A unilateral contract is a promise for an act or an act for a promise . I promise to pay you $10 if you grade exams for one hour beginning at 9am tomorrow - promise for an act; if you allow shoe shine person on the street with a sign that states: "Shines $2" to shine your shoes, you promise to pay $2 - act for promise.
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Definition of Express Contract
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An express contract is overtly manifested by words or writing
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Definition of Implied Contract
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An implied contract is manifested by conduct
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Requisites of an Agreement
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(1)the parties - offeror/s and offeree/s must be identified,
(2)the subject matter must be identified, (3)the quantity of subject matter must be specified or some means or manner of calculating must exist, (4)the offer must be communicated to the offeree in the manner and by the means intended by the offeror - the offeree must have knowledge of the offer at the time the act of acceptance occurs by the offeree, (5)an intent to contract must be manifested. If any of the above are missing, no offer exists. |
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Why Agreement Requisites are Important
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Plaintiffs making claims for breach of contract usually request money damages. To calculate money damages the court needs to know the identity of the parties, the subject matter and quantities of subject matter in question , evidence of communications between the parties as well as evidence to establish intent of the parties or how are you going to calculate damages? You need to know who made a promise to what person and what the promise was...
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Explain the significance of what persons are thinking at the time of contracting as to whether a contract exists.
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The intentions of parties are defined by determining what a reasonable person would conclude from the manifestations of the parties, not what the parties were thinking. What the parties were thinking or what their perceptions were does not generally determine whether an agreement exists.
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Explain why advertisements, catalogues and similar communications are usually not offers.
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The general rule is that communications such as ads, circulars, and catalogues do NOT amount to offers because they do not specify offerees or quantities. For an ad to amount to an offer ALL requisites must be present. Any requisite missing - no offer exists. The case below is an example of an ad that amounted to an offer.
See Lefkowitz v. Great Minneapolis Surplus Store, Inc. (also on p 187 text) |
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Explain why one who unknowingly performs a requested act for which a reward is offered will not be entitled to the reward.
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The offeree must have knowledge of the offer at the time the act of acceptance.
The offer was unilateral - a promise in exchange for an act. For acceptance to occur, the performance of the requested act must be with knowledge of the offer that should generally be communicated to the offeror at the time of performance. Thus in case of a unilateral contract, the offeree must have knowledge at the time of performing the requested act and should communicate such to the offeror. See Glover v. Jewish War Veterans |
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Explain why a communication stating: I wish to sell, I want to sell, I have decided to sell a defined subject matter stating a price addressed to you is usually not an offer.
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Intent to contract generally arises after the parties have been negotiating. Describing subject matter and stating a price in an ad or a communication to a specified person is usually insufficient to indicate intent to sell. Whether intent exists will be based on what a reasonable person would conclude given the circumstances. Usually an initial response “I accept” to an ad, letter or other initial communication indicating certain subject matter is being offered for sale where the parties have not talked about entering into an agreement previously is treated as expressing an intention to negotiate, not an offer.
See Owen v Tunison |
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Explain when the courts will supply missing terms in contracting.
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The requisites of an Agreement identified in
prior slides are an attempt to assure evidence exists that parties desire to engage in a transaction and that the terms of the transaction are ascertainable by a reasonable person. Remember courts do not draft agreements. Parties draft agreements. Courts only facilitate the objective manifestations of the parties. |
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Define Acceptance
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Acceptance is an overt manifestation by the offeree
to the terms communicated by the offeror or agreed upon by the parties. Acceptance occurs when the act in question has been completed. To have acceptance earlier such as at the beginning of performance or later during performance would imply a promise by the offeree to complete the act. Since no promise was requested, none should be implied. The offeree should be free to perform or not perform or to perform in part. |
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Define Revocation
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Revocation occurs where the offeror
communicates withdrawal of the offer to offeree. Further the law of contract provides an offer may be revoked anytime prior to acceptance. |
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Define Rejection
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. Rejection occurs where the offeree communicates
no interest in the offer. A rejection terminates an offer. |
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Explain Silence as Acceptance
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Silence generally cannot amount to
acceptance. Thus an offeror cannot make an offer stating that if the offeror does not hear from you within a certain time, an agreement will exist. |
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Why Agreement Requisites are Important
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Plaintiffs making claims for breach of contract usually request money damages. To calculate money damages the court needs to know the identity of the parties, the subject matter and quantities of subject matter in question , evidence of communications between the parties as well as evidence to establish intent of the parties or how are you going to calculate damages? You need to know who made a promise to what person and what the promise was...
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Explain the significance of what persons are thinking at the time of contracting as to whether a contract exists.
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The intentions of parties are defined by determining what a reasonable person would conclude from the manifestations of the parties, not what the parties were thinking. What the parties were thinking or what their perceptions were does not generally determine whether an agreement exists.
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Explain why advertisements, catalogues and similar communications are usually not offers.
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The general rule is that communications such as ads, circulars, and catalogues do NOT amount to offers because they do not specify offerees or quantities. For an ad to amount to an offer ALL requisites must be present. Any requisite missing - no offer exists. The case below is an example of an ad that amounted to an offer.
See Lefkowitz v. Great Minneapolis Surplus Store, Inc. (also on p 187 text) |
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Explain why one who unknowingly performs a requested act for which a reward is offered will not be entitled to the reward.
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The offeree must have knowledge of the offer at the time the act of acceptance.
The offer was unilateral - a promise in exchange for an act. For acceptance to occur, the performance of the requested act must be with knowledge of the offer that should generally be communicated to the offeror at the time of performance. Thus in case of a unilateral contract, the offeree must have knowledge at the time of performing the requested act and should communicate such to the offeror. See Glover v. Jewish War Veterans |
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Contracts for Sale of Goods Required to be in Writing
Exceptions: between merchants specially manufactured goods admissions in court partial payment |
EXAMPLE
Hedley enters into a contract on October 1 to paint Carter’s house beginning on October 20th.On October 12 Hedley and Carter decide to end their agreement for painting Carter’s house. The recession is binding since Hedley has given up the right to payment and Carter has given up the right to have his house painted. Mutual recession has occurred. 201(1)A contract for the sale of goods priced $500 or more is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought. A writing is not insufficient because it omits or incorrectly states a term but the contract is not enforceable beyond the quantity of goods shown in such writing. (2)Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1)against such party unless written notice of objection to its contents is given within ten days after it is received. (3) A contract which does not satisfy the requirements of subsection (1) (A contract for the sale of goods priced $500 or more is not enforceable unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought), but which is valid in other respects is enforceable: (a) if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the ordinary course of seller’s business and the seller, before notice of repudiation is received and under circumstances which reasonably indicate that the goods are for the buyer has made either a substantial beginning of their manufacture or commitments their procurement; or (b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or (c) with respect to goods for which [any] payment has been made and accepted or which have been received and accepted. |
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Contracts for Sale of any Interest in Land required to be in Writing
Improvements or possession and partial payment exceptions to above |
Contracts for the sale of any interest in land
A contract for the sale of any interest in land and leases of land for more than one year are required to be in writing. However where a purchaser makes valuable improvements(construction of buildings, fences, installing utilities etc.) or takes possession and pays a portion up to all of the purchase price evidence may be introduced of the oral agreement. |
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Performance
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Performance of duties owing under a contract discharges contractual
obligations. |
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Condition Precedent
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Condition is a future event that may or may not occur that either results in a duty to perform or terminates an on-going performance.
Conditions include conditions precedent and conditions subsequent A condition precedent exists where an event must occur before performance is required. EXAMPLE Scott contracts to purchase Stephanie’s 2000 Toyota Camry for $18,000 if his bank grants him a $10,000 loan. Scott’s duty to purchase Stephanie’s Toyota is subject to what is defined as a condition precedent – an event that must occur before a duty to perform will exist. The condition precedent is the granting of the loan by Scott’s bank. If the bank does not grant the loan, Scott will have no duty to purchase. |
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Condition Subsequent
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A condition subsequent exists where an event terminates an
existing obligation to perform EXAMPLE HTech contracts in 1998 with a catering firm to supply lunches for HTech employees every working day for five year so long as HTech sales remain above $500,000 per year. In 2001, HTech sales fall below 500,000. The duty to supply lunches is terminated by the failure to HTech sales to be more than $500,000 |
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Concurrent Conditions
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Where parties do not expressly state a condition as noted above or
otherwise, performances are treated as dependent. The law classifies such as concurrent conditions. Neither party can make a claim against the other unless they offer performance. The law implies concurrent conditions. EXAMPLE I promise to pay you $50 for a Business Law book on March 10. Offering to deliver the Business Law book is a condition to my promise to pay and tendering – offering of $50 is a condition to your duty to deliver the Business Law book. |
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Substantial Performance
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Breach
Breach by a party to a contract can discharge the other party from a duty to perform where material breach occurs or result in only a claim for damages where substantial performance occurs. Substantial Performance What is Substantial Performance? Substantial performance is a performance that deviates only slightly or in a minor way from the duties owing. Whether performance is substantial is determined by the circumstances of a particular case. Example: Defendant had a contract to deliver ten 25 pound sacks of fertilizer for Plaintiff’s lawn. Defendant delivered only nine 25 pound sacks. Most Courts would find Defendant’s performance a minor deviation thereby amounting to Substantial Performance. Substantial Performance of duties owing gives the other party a cause of action for damages for the value of the obligation not performed. If performance is not substantial, a material breach exists. |
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Material Breach
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A failure to substantially perform is defined as a material breach.
A material breach discharges the obligations of the other party to the contract No clear-cut rules define what constitutes a material breach. The following principles assist. First, PARTIAL PERFORMANCE Partial performance is material if an essential part of a contract is omitted. A building contractor fails to construct a kitchen for a residence. Second, a breach will be deemed material if it is QUANTIATIVELY OR QUALITATIVELY SERIOUS quantitatively or qualitatively serious. A building contractor fails to construct two of three bedrooms or fails to install any kitchen or bathroom fixtures in a house with four bathrooms. Third, an INTENTIONAL BREACH intentional breach is material. Fourth, a FAILURE TO PERFORM PROMPTLY failure to perform promptly where the parties have clearly indicated that time is of the essence. Failure to complete a retail store remodeling by November 15 as promised with the Christmas shopping season beginning. Fifth, THE COURTS WILL WITHIN LIMITS UPHOLD WHAT THE PARTIES SPECIFY AS MATERIAL the courts will within limits uphold what the parties specify as material. Note that any of the four circumstances above can amount to a material breach - “just one can do it.” |
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Anticipatory Breach
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Anticipatory Breach
Anticipatory Breach occurs where one of the contracting parties announces that they will not perform in advance of their obligation to perform. The other party to the contract is discharged and can bring claims at any time after breach. However the other party has the option of waiting till time for performance to see if the party with the obligation changes his mind EXAMPLE Hedley enters into a contract on October 1 to paint Carter’s house beginning on October 20th. On October 5th Hedley tells Carter that he has changed his mind and will not paint Carter’s house. Hedley’s act amounts to an anticipatory breach since announced in advance of the time for performance. Carter has the option of making claims against Hedley immediately or waiting till time for performance to see if Hedley changes his mind. |
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Mutual Recession
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Mutual Recession
Prior to the time of performance, the parties to an agreement may agree to terminate their agreement. Each party thus agrees to give up their rights thereby providing consideration. EXAMPLE Hedley enters into a contract on October 1 to paint Carter’s house beginning on October 20th.On October 12 Hedley and Carter decide to end their agreement for painting Carter’s house. The recession is binding since Hedley has given up the right to payment and Carter has given up the right to have his house painted. Mutual recession has occurred. |
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Novation
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Novation
Novation occurs where a party is substituted into an existing agreement on agreement of all parties. Novation discharges a party formerly obligated to perform. See HO 11 |
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Substituted Agreement
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Substituted Agreement
Where the parties to a contract agree that issues exist with a contract, they can agree to substitute a new contract. Such discharges the original agreement |
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Accord and Satisfaction
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Accord and Satisfaction
This requires the parties to agree to a performance different from that originally agreed. Such discharges the original agreement. EXAMPLE Wade owes Hamilton $2500. Hamilton agrees to accept a PC owned by Wade valued at approximately $1500. Wade’s transfer of the PC to Hamilton discharges his duty to Hamilton. Wade incurred legal detriment for Hamilton’s accepting the PC since he was not under any prior obligation to transfer a PC to Hamilton. |
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Statutes of Limitation
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Statutes of Limitations
States a time period for the filing of a claim. After the time period has run, claims cannot be filed. The running of the Statute does not discharge the obligation owing, but it bars making claims. |
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Bankruptcy
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Bankruptcy
Discharge in bankruptcy bars creditors from making claims effectively discharging a debtor’s obligation. |
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Impossibility
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Impossibility
Circumstances such as destruction of the subject matter not the fault of the buyer or the seller, death of a party crucial to performance, wars, or embargoes can render performance objectively impossible thereby discharging performance. EXAMPLE Dobbs contracts to sell a sailboat on Lake Lewisville to Clark. Delivery is to be on October 23. On October 20th the sailboat is destroyed in a storm. The duty to deliver the sailboat is discharged. |
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1
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1
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11
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1
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1
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1
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1
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1
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assignor
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Law a person who transfers or assigns property
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assignee
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Individual to whom a title, claim, property, interest, or right has been transferred.
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