Contracts

Front 1

If the promissor should reasonably expect the promise to induce action or forbearance is in fact induced there are grounds for an action in promissory estoppel

Back 1

Promissory Estoppel

Front 2

The measure of damages for breach of a contract for the sale of goods under the UCC is the difference between the contract price and the amount you actually have to pay for replacement goods (cover)

Back 2

In addition to such damages the buyer is entitled to incidental and consequential damages (less expenses saved as a result of the seller's breach). Incidental damages include expenses reasonably incurred in inspection, receipt, transportation, care and custody of goods rightfully rejected. Consequential damages include any loss resulting from the general or particular requirements and needs for which the seller had REASON TO KNOW AT THE TIME OF CONTRACTING and which could not be prevented by cover

Front 3

The measure of damages in a lost volume seller case is the contract price (retail) minus the cost to the dealer (wholesale); this amount is offset against any amount of down payment that the seller keeps

Back 3

This is an exception to the normal rule of damages normally when a buyer repudiates or refuses to accept goods, the measure of the seller's damages is the difference between the contract price and the market price OR the difference between the contract price and the re-sale price of the particular goods. However, neither of theose measures gives adequate compensation for a lost volume seller b/c but for the buyer's breach the seller would have made 2 sales instead of one

Front 4

Under the Statute of Frauds certain agreements must be evidenced by a writing that contains (i) the identity of the party sought to be charged; (ii) identification of the contract subject matter; (iii) terms and conditions of the agreement; (iv) recital of consideration; (v) signature of the party to be charged or his agent

Back 4

Suretyships (a promise to answer for the debts or defaults of another), where the promise is meant to primarily benefit the debtor and NOT the surety, falls within the statute of frauds. However, where the main purpose of the promisor is to secure an advantage or pecuniary benefit for himself the contract is NOT within the statute of frauds, even if the effect is still to pay the debt of another. Thus such contracts may be proven orally.

Front 5

An offer for a unilateral contract is a promise to perform an exchange for a requested performance

Back 5

A contract is unilateral if you require acceptance by completion of performance rather than a return promise

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Quasi-contract is a legal fiction imposed to force one who has been unjustly enriched to return the unjust benefit to the person it should belong to, where that person had a reasonable expectation of being compensated

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Quasi-contract is a remedy to disgorge unjust enrichment and is not a description of an actual agreement

Front 7

Acceptances are tested by an objective standard

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A statement or conduct may be an acceptance if a reasonable person would presume that it was an acceptance

Front 8

When a contract has an F.O.B. delivery term, the seller is obligated to get the goods to the destination indicated and make a reasonable contract for freight if the destination indicated is not the buyer's place of business

Back 8

The seller has the risk of loss until the goods make it to the F.O.B. destination, and thereafter the buyer has the risk

Front 9

The promisee and the promissor in a third party beneficiary contract are free to modify the contract until the 3rd party's rights have vested.

Back 9

The 3rd party's rights can vest by his (i) manifesting assent (ii) bringing suit, or (iii) materially relying on the agreement before modified

Front 10

The statute of frauds requires a contract in consideration of marriage, must be evidenced by a writing to be enforceable

Back 10

This includes any promise that induces someone to marry by offering something of value; Note: there is no public policy against encouraging marriage

Front 11

Upon receiving non-conforming goods, a buyer may accept all, reject all, or accept any commercial unit and reject the rest

Back 11

A commercial unit is not only what unit has been the basis of the contract but whether the partial acceptance produces so materially an adverse affect on the remainder as to constitute bad faith

Front 12

Upon acceptance of non-conforming goods, the buyer is entitled to recover contract damages for the goods that it accepted

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Acceptance does not waive a buyer's right to accept damages for defects and quality; damages are the difference between the value of the goods received and what they would have been worth if they had been as warranted plus foreseeable incidental and consequential damages

Front 13

A buyer who has rejected goods is non-conforming, is entitled to any pre-payment

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OR if the seller refuses to refund, buyer may resell goods and apply proceeds to what is owed him from the seller

Front 14

Traditionally courts have held that performance of an existing legal duty is not sufficient consideration

Back 14

However the rule is riddled with exceptions and one exception recognized in most jurisdictions applies when the pre-existing duty is owed to someone other than the promissor

Front 15

Generally an offer must be certain and definite in its terms but most terms do not have to be spelled out completely

Back 15

Most courts today will supply reasonable terms if consistent with the party's intent as otherwise expressed including a price term

Front 16

Under the UCC section 2-209, no consideration is needed for a good faith modification of a contract for the sale of goods

Back 16

Under the SOF in the UCC a promise requires a writing signed by the party to be charged, to be enforceable if it is for the sale of goods for $500 or more

Front 17

Under UCC 2-206, an offer to buy goods for current or prompt shipment is construed as inviting acceptance either by a promise to ship or by current or prompt shipment of conforming or non-conforming goods;

Back 17

This means shipment of non-conforming goods can both create a contract and breach it simultaneously, affording the buyer an immediate cause of action, unless seller reasonably notifies buyer that the non-conforming goods are offered only as an accommodation to the buyer (this would be construed as a counter-offer)

Front 18

Damages for non-conforming goods are the difference between the value of the goods as received and the value they would have had if they had conformed to the contract

Back 18

Upon receipt of non-conforming goods, the buyer has the option to accept all, reject all, or accept any commercial units and reject the rest; acceptance gives buyer a right to recover damages for the non-conforming goods

Front 19

Recission is the remedy on the grounds of mutual mistake; recission is a remedy that discharges contractual duties of the parties and puts an end to the transaction, leaving the parties as though the contract had never been made

Back 19

recissions may be unilateral (where only one party desires to rescind, but the other refuses). Adequate grounds for unilateral recission include mutual mistake of a material fact (i.e. a basic assumption on which the contract is made, meaning the buyer would not have entered into the transaction had he known of the mistake)

Front 20

Generally, for a non-UCC services contract, there must be consideration for modification of a contract, and the promise to perform an act that a party is already obligated to do is not sufficient consideration

Back 20

Even if there is an intended beneficiary, you must always look for consideration to support a modification if it's a services contract

Front 21

A valid contract can be made where someone OFFERS to guarantee the purchase price of an item, in exchange for the seller selling the item to a third party

Back 21

Acceptance of that offer can be by promise to sell, or actual sale to the third party

Front 22

In a unilateral contract case, a recission promise must be supported by either (i) an offer of new consideration, (ii) elements of promissory estoppel, (i.e. detrimental reliance), or (iii) the offeree's manifestation of an intent to make a gift of the obligation owed to her

Back 22

The typical case of recission involves a bilateral contract where neither party has yet performed (i.e. the duties of both parties are still executory)

Front 23

Under the contract for the sale of goods, a modification of a contract is enforceable even though it is not supported by consideration, as long as the modification is sought in good faith

Back 23

However, the UCC also provides that contract modifications must comply with the statute of frauds if the contract AS MODIFIED is within the mandate of the statute

Front 24

The parol evidence rule is backward looking. The rule provides that the terms of the contract set forth in a writing intended as a final expression of the parties' agreement cannot be contradicted by evidence of any prior or contemporaneous oral statement

Back 24

If an agreement to modify is neither prior nor contemporaneous, but rather subsequent to the written contract, the parol evidence rule does not apply (but the SOF might)

Front 25

Generally, the right to receive goods under a requirements contract is non-assignable because the obligor's duties could change significantly

Back 25

However, the UCC allows the assignment of a requirement's contracts IF the assignee acts in good faith not to alter the terms of the contract

Front 26

When a past obligation would be enforceable except for a technical defense to enforcement, a new promise in writing will be enforceable even in the absence of any new consideration.

Back 26

As a general rule, a contract requires a bargained-for exchange between the parties as consideration; “past” or “moral” consideration is usually insufficient. Among the many exceptions to this rule is where a technical defense such as the statute of limitations bars enforcement of the prior obligation and a new promise is made in writing. In such a case, courts will state that the “moral” consideration is sufficient consideration for the new agreement, or that the existence of the prior obligation is a substitute for consideration.

Hint 26

Regardless of how the courts characterize it, the new promise will be enforceable only according to its terms, not the terms of the original obligation.

Front 27

Under certain circumstances, an executory bilateral contract may be formed without any communication
of acceptance. A common example is where prior dealings between the parties, or trade practices
known to both, create a commercially reasonable expectation by the offeror that silence represents
an acceptance.

Back 27

In such a case, the offeree is under a duty to notify the offeror if it does not intend to accept.

Front 28

Where there is a good faith dispute, a check in an amount smaller than the original contract price is treated as an accord if the check is marked payment in full

Back 28

Deposit of the check is satisfaction discharging the original contract

Front 29

A writing for an option to buy that is not supported by consideration, does not produce an enforceable contract

Back 29

However, it still may be treated as an offer

Front 30

If parties agree to modify their contract, consideration is usually found to exist where the obligations of both parties are varied

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It is usually immaterial how slight the change is because courts are anxious to avoid the preexisting duty rule

Front 31

A promise for the sale of goods of $500 or more is not enforceable unless evidenced by a writing signed by the party to be charged, however, an oral contract for such goods is enforceable to the extent of goods received and accepted by the buyer

Back 31

Oral contracts for specially manufactured goods not suitable for sale in the ordinary course of the seller's business are enforceable when the seller has begun to substantially perform