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26 Cards in this Set
- Front
- Back
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What is the “battle of the forms?
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(1) Modern business transactions are often conducted primarily through forms. The buyer sends a purchase order to the seller. The purchase order form contains the basic terms of the ale, such as price, quantity, and a description of the goods, but it also contains printed terms drafted by the buyer’s attorney in favor of the buyer. Then the seller sends a written acceptance or confirmation to the buyer. The acceptance contains the basic terms of the sale and also a series of printed terms drafted by the seller’s attorney in favor of the seller. (2) These terms may conflict with the terms printed on the purchase order.
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How does the COMMON LAW deal with the battle of the forms?
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(1) Standard contract law principles require that the offerees acceptance be in the precise terms of the offer (the mirror image rule) and that any variance the form, material or not, constitutes a rejection of the original offer. It becomes a counter offer.
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How does the UCC deal with the battle of the forms?
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(1) The UCC establishes a general rule that a contract can be formed under clashing forms, unless the responding offeree (the seller) specifically states that there shall be no contract unless his set of terms is accepted by the original offeror, in which case the offeroree’s response is treated merely as a counter offer.
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When the offeree (the buyer)’s response contains terms additional to those contained in the original offer, how does the UCC deal with the battle of the forms?
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(1) A contract exists consisting of the terms on which the offer and acceptance agree.
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The additional terms are deemed a proposal for additional to the contract (UCC §2-207(2)). If the parties are MERCHANTS, the proposals become part of the contract unless:
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(1) The offeror’s original offer expressly limited acceptance to the offered terms (take it or leave it); (2) The additional terms are a material alteration of the contract; Or (3) The offeror notifies the offeree within a reasonable time that he objects to the additional terms.
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When the offeree (the buyer)’s response proposes inconsistent additional to those contained in the original offer, how does the UCC deal with the battle of the forms?
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(1) The courts look at the parties conduct to determine whether they acted as though a contract had been formed. If so, under the majority KNOCKOUT rule, the contract consists of those terms on which the writings agree; the conflicting terms cancel each other out and necessary terms are provided by the UCC.
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How does the UCC deal with CONDUCT in the battle of the forms?
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(1) UCC 20207(3), conduct of the parties may establish a contract even thought eh writings do not. The terms of the contract are those on which the writings do agree, plus terms incorporated under other UCC provisions.
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If an acceptance contains terms different from those contained in the offer, and the original offerror does not object to the terms in at the acceptance, does the acceptance terms become part of the contract? –common law--[Treatment of Different terms—Gardner Zemke Co. v. Dunham Bush, Inc.]
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(1) No (2) At common law, the mirror image rule required the terms of the acceptance toe exactly mirror the terms of the offer; otherwise the acceptance was a counter offer.
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If a buyer objects to the seller’s limitations of liability, the seller refuses to change its terms, and the parties continue with the transaction, do the seller’s terms become part of the contract if the buyer does not expressly assent to them? [Seller’s acceptance conditional on buyer’s assent to additional or different terms—Diamond Fruit grower, inc. v. Krack Corp.,]
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(1) No (2) The UCC 2-207 applies to this case because the forms do not agree. (3) The parties differing forms do not create a contract unless the offeror assents to the additional or different terms. (4) The better approach is to require a specific and unequivocal expression of assent by the offeror in this situation.
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May a seller enforce restrictions on the use of its product if these restrictions are not disclosed prior to the purchase of the product, so long as the buyer can return the product for a refund if the restrictions are unacceptable? [Acceptance when terms not disclosed before purchase—ProCD, Inc. V. Zeidenberg]
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(1) Yes (2) There is no way to provide the buyer in advance with the full terms of the license in the software case we have here. (3) In another case, the APPROVE OR RETURN method is an efficient way to conduct commerce, whether the commerce involves software or tangible products.
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Are courts sensitive to the unconscionabilty of contracts in a form contract setting? Why?
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(1) Yes. Because form contracts are notoriously difficult to understand.
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Will the court reform an insurance policy if there has been a unilateral mistake as to its coverage? No fraud. [General rule on unilateral mistakes—Sardo v. Fidelity & Deposit co.]
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(1) No. (2) There was no fraud by D.
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How are exculpatory provisions in form contracts construed?
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(1) Very narrowly.. (2) Especially when there is personal injury involved.
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Are unconscionable contract terms enforceable? [Unequal bargaining power—Weaver v. American Oil Co.]
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(1) No. (2) There was disparity of bargaining power here. The significant of D’s signature is a mere formality, since D did not read and could not be expected to understand its terms.
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If an insurance policy contains an unambiguous provision that is contrary to the oral negotiated agreement made by the parties, and the insured failed to read the policy because of the insurer’s representation of its contents, May the courts enforce the oral agreement despite the written policy terms? [Partial Integration to reflect actual agreement—Darner Motor Sales v. Universal Underwriters]
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(1) Yes (2) However, insurance policies are not like traditional agreements reached by bargaining between the parties. (3) Most insured parties expect their losses to be covered in every case. The tern in some states has been to honor the “reasonable expectations” of the insured.
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Unambiguous boilerplate terms in standardized insurance contracts would not be enforced if: [Comment in Gordiner v. Aetna Casualty & Surety Co.]
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(1) They cannot be understood by the reasonably intelligent consumer; (2) The insured was not adequately notified of the demand the provision is usual, unexpected or emasculates apparent coverage; (3) The insurer’s activity would create an n objective impression f coverage in the mind of a reasonable insured; (4) The insurer’s activity induced a particular insured reasonably believed that they had coverage despite the policy.
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Which sections of the REtatement second discuss the effect of misunderstanding and whose menaign prevails?
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(1) Restatement 2nd sections 20 & 201
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What is the general rule to mutual mistake?
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(1) Where the parties enter into a contract while mutually mistaken concerning a basic assumption of fact on which the contract was made, and the mistake has a material effect ton the agreed exchange, the contract is voidable by the party adversely affected [Restatement 2nd §152]
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Does the general rule to mistakes apply to a mutual mistake in prediction or judgment? Example?
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(1) No. (2) Ex: when both parties think that a certain market price will move in a certain direction.
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Does the general rule to mistakes apply to a mistake where the party adversely affected bore the risk that the assumption was mistaken?
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(1) No. Restatement 2nd
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May a contract be rescinded if both parties make a mistake of material fact that goes to the very substance of the agreement?
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(1) Yes (2) The contract was based on a mutual mistake
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In a case where A sold B a stone for $1 thinking that it was a cheap stone but turned out to be a diamond worth $700 dollars, can A make B resell it to A for $1 plus interest? [Notecase in mistake]
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(1) No.
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If a mutual mistake is made so that the purpose of the contract cannot be fulfilled, may P rescind the contract? [Impossibility of performance—Griffith
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(1) Yes (2) The mutual mistake went to the very purpose of the contract; performance was impossible.
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Is the value of a mistake a relevant consideration in determining whether recession is available? [Test for granting recession—Lenawee county board of health v. Messerly]
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(1) Yes (2) This goes to the essence of the consideration.
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Define: Mistake
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(1) A mistake is a belief that does not accord with the facts. (2) The mistake must relate to a fact in existence when the contract is entered; it cannot relate to a prediction.
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What are the elements to consider in permitting recession? When the mistaken belief..
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(1) Relates to a basic assumption of the parties upon which the contract is made (2) Materially affects the agreed performances of the parties.
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