Contracts

Front 1

Contract Terms-
Conduct

Back 1

Can expalin terms or fill in gaps.
(1) Course of Performance- what the parties did under this k. Course of performance is the best evidence of what the parites intended
(2) Course of dealing- what they did under prior k's with each other. Must be a basis of the bargain- buyer could have relied on it.
(3) useage of trade- what others in the trade do in similar k's.

Front 2

K terms-- Seller's warranties of quality in sale of goods

Back 2

(1) express warranties- A seller is liable for breach of an express warranty. (Statements of fact, promises, descriptions, use of a sample). Opinion is not.
(2) Implied warranties- (a) Implied warranty of merchantability- goods are fit for their ordinary purpose. Merchant must deal in goods of the kind. (b) Implied warranty of fitness for a particular purpose- seller knows buyer has special use for goods and is relying on seller to pick out goods suitable for that use.

Front 3

k terms- Lessors warranties in a lease of goods

Back 3

Article 2A (NY ONLY)- same warranties as under Art. 2. Except- finance lease (usually tax purposes). Look for banks.

Front 4

K terms- Limitations on warranty liability in sales and leases of goods

Back 4

(1) disclaimers- A seller can disclaim implied but not express warranties. Look for "as is" or "with all faults." if no magic phrase, must be conspicuous and must be word "merchantability."
(2) limtiation on buyers remedies- seller can limit buyers remedies for breach of any warranty, if the limitation is not unconscionable. EXCEPT- limiting buyers remedies for personal injury in the case of consumer goods is presumed unconscionable.
If a limited remedy fails of its essential purpose, the remedy provisions of article 2 apply

Front 5

K terms- Risk of Loss in sales of goods

Back 5

Article 2. When goods are damaged/destroyed before buyer gets them and neither party is to blame.
(1) Agreement- agreement of the parties contorls.
(2) Breach- the breaching party bears ROL, even if loss is unrealted to breach
(3) Delivery by a common carrier- ROL shifts to buyer when seller completes its delivery obligations. (A) Shipment k- seller must get the goods to a common carrier, make delivery arrangements and notify buyer (then ROL shifts to buyer). (B) Destination k- seller must get the goods to a specific destination. ROL reamins with seller until goods arive.
*FOB (Free on board) followed by desitnation- ROL passes to the buyer at the named location. If its where seller is located, its a shipment k, if its anywhere else its a destination k.
(4) Non-carrier cases- (A) Merchant seller- seller bears ROL until buyer takes possession of goods, (B) non-merchant seller- ROL passes to buyer once seller tenders the good (tells buyer where the goods are and how to get them).

Front 6

K terms- Risk of loss in a lease of goods

Back 6

NY ONLY. Art. 2A.
(1) Generally, ROL is on lessor. (even when goods in possession of lessee). EXCEPT finance lease- ROL is on the lessee.

Front 7

Performance of the k-
For a sale of goods. Perfect tender rule

Back 7

Art. 2.
(1) Perfect tender rule: If tender is not perfect, buyer may reject the goods.

Front 8

Performance of the K for a sale of goods-- option to cure

Back 8

A seller who fails to make perfect tender may have an option to cure.
(1) time has not expired- seller has option to cure.
(2) time has expired- seller has no option to cure, unless (a) based on prior dealings, has been flexible about accepting non-conforming goods in the past.

Front 9

Peformance of the K for a sale of goods- Installment k's

Back 9

Requires or authorizes delivery in seperate installments. (doesnt matter what they do it matters what the k says). Ex: daily delivery.
Rejection- Pefect tender rule does not apply in installment k's. Buyer can reject only for substantial impairment.

Front 10

Peformance of the k for a sale of goods- buyers acceptance of the goods

Back 10

(1) implied acceptance- when buyer keeps goods after having an opportunity to inspect them.
(A) once buyer accpets goods, it too late to reject them, but can still get damages for sellers breach.

Front 11

Peformance of the K for a sale of goods.
Buyers revocation of acceptance of goods

Back 11

A buyer cannot revoke acceptance of goods. EXCEPT- if the non-conformity substantailly impairs the vlaue of the goods and was difficult to discover. Then you have a reasonable time after you discover to revoke.

Front 12

Performace of the K for a sale of goods

Consequences of rejection/revocation of accpetance

Back 12

(1) return- buyer can return goods to seller at sellers expense.
(2) refund- buyer can get back any money buyer has paid for the goods.
(3) damages- buyer can get damages from seller for breach of k.

Front 13

performance of the k for a sale of goods

buyers obligation to pay

Back 13

A check is ok, but seller can refuse it, but must give reasoanble time to get alternative means if deadline has passed.

Front 14

Peformance of the K for a sale of goods-

Common law k

Back 14

performance does not have to be perfect. Substantial performance is all that is required.
Generally, finishing late is not a material breach, unless K or circumstance indicates time is of the essence.

Front 15

Excuse

Other Party's breach

Back 15

(1) Sale of goods (UCC)- If performance is not perfect in every respect "Perfect tender" can: (a) reject everything, (b) keep everything, (c) accept some, reject some- whatever they do they can still get damages.
(2) Common law k- injured party can recover damages for breach of k, whether material or not. Only a MATERIAL breach provides an excuse. (a) where a payment is to be made on a per unit basis breaching party can recover the k price for any unit on which they substantially performed.

Front 16

Excuse

Anticipatory Repudiation

Back 16

(before the time performance is due)
Can stop and sue for damages
You can retract a anticipatory repuidation as long as other party doesnt rely on it.

Front 17

Excuse

Failrue to give adeaute assurance

Back 17

A party with reasonable grounds for being insecure about the other party's performance may request in writing adequate assurance that the other party will perform in accordance with the k. If they dont provide it, you can treat it as anticipatory repudiation.

Front 18

Excuse

Rescission

Back 18

Rescission- an agreement to cancel the k. Each party must have some performance remaining (for consdieration to be satisfied).

Front 19

Excuse

Modificiation

Back 19

An agreement to replace an exsiting k with a new one. Takes effect immediately.

Front 20

Excuse

Accord and satisfacton

Back 20

An accord is an agreement to accpet performance in future satisfaction of an existing duty; satisfaction is performance of the accord. The existing duty is satisfied only on when the accord is satisfied (can sue on either).

Front 21

Excuse

Novation

Back 21

An agreement to substitute a new party for an existing one.
You give up your rights to sue the first party- unless you didnt give consent (then its delegation)

Front 22

Excuse

Impossibility (generally)

Back 22

A later unforeseen event that makes performance impossible, may provide SELLER with an excuse. *Under Art. 2 its called impracticability.
(1) destruction of something necessary for perfomrance
(2) death/incapacity of essential person
(3) supervening governmental regulation
(4) increase in the cost of sellers performance

Front 23

Excuse
Impossibility
Destruction of something necessary for performance

Back 23

(1) CL: destruction provides an excuse for non-performance.
(2) UCC: same general rule, EXCEPT:
(a) risk of loss- seller who bore ROL when goods were damaged or destroyed is excused by impracticality.
(b) unidentified goods- seller is excused only if the good were damaged or destroyed had been "identified to the k" (set aside for sale to particular D)

Front 24

Excuse

Impossibility- Death/Incapacity of an essential person

Back 24

Not just any person, they must be essential- look at the k.

Front 25

Excuse

Superveneing governmental regulation

Back 25

yeah, it exists

Front 26

Excuse

Increase in the cost of sellers performance

Back 26

MBE- increased cost of sellers performance almost never excuses seller. N
**NY- could be excused. look at $ increase and % increase.

Front 27

Excuse
Impossibility
Frustration of buyes primary purpose

Back 27

a superveneing event. must know of purpose when they enter the k.

Front 28

Excuse- failure of an express condition

Back 28

Limits obligations created by other k language. (does not create an independent obligaiton)
Strict compliance is required.
Satisfaction clause- satisfaction is measured by a reasonble person, unless the k deals with art or matters of personal taste.
Types of express conditions: (1) precedent, (2) concurrent- runs along obigation, (3) subsequent- occurrence of event cuts off the obligation.

Front 29

Excusing the occurence of a conditoin

Back 29

may be excused by later action or inaction of hte person who is protected by the condition.
(1) failure to coperate-
(2) waiver- voluntarily give up protection. after one waiver you may retract for future payments to the extent they have not relied.

Front 30

Remedies
Non-monetary

Back 30

(1) specific performance- equitable remedy. available only if monetary damages are inadequate to compensate injured party. (a) real property- specific perfomrance is the usual remedy because its considered unique. (b) sale of goods UCC- only if the goods are unique or there are other proper circumstances (antiques or custom made goods) (C) service k- not avaialble, but injunctive relief might be - cant force you to work, but can prevent you from working for others.
(2) unpaid sellers right to reclaim goods- Not available under Art 2, EXCEPT buyer was insolvent when it received the goods AND seller makes demand within 10 days after buyer recived them. (make sure question says they are insolvent). *no right to reclaim against an innocent third party. EXCEPT seller can reclaim goods at any time if buyer misrepresents its solvency to seller in writing in 3 months before delivery.

Front 31

Remedies

Monetary remedies

Back 31

(1) punitive- not awarded for breach of k because the prupose to compensate, not punish.
(2) liquidated- upheld if damages were difficult to estimate and are a reasoanble forecast of probable damages, but cannot operate as a penalty. (k says what damages are). Look for a graduated amount that increases over time. ***Under Art. 2. if the damages are reasoanble either when k made or when breached liquidated damages will be enforceable.
(3) expectation damages- *general rule.(A) CL: Put injured party in as good a position as full performance. (B) UCC: general rule- buyers damages: (i) cover damages- cover price-contract price. If cover in good faith. (ii) market damages- market price- k price. if buyer doesnt cover in good faith or doesnt cover. (iii) loss in value- value as promised-value as delivered. If buyer keeps non-conforming goods. SELLERS DAMAGES- (i) resale damages- k price- resale price. if resell in good faith.(ii) market damages- k price- market price if does not resell in good faith/doesnt resell. (iii) lost profit- if seller is a lost volume dealer- sells out of its regular inventory, (iv) k price- if seller cant resell the goods.
(4)incidental damages- cost to the injured buyer or seller of transporting, caring for goods after a breach and of arranging a substitute transaction.
(5) consequential- damges special to this P that were reasoanbly foreseeable to the breaching party at the time of the k. *not avaialbe under article 2.
(6) avoidable damages- can not recover damages that could have been easily avoided with reaosnable effort (mitigated- comparable job- same type, same city).

Front 32

Third party problems

Entrustment

Back 32

An owner who entrusts goods to a merchant who deals in goods of the kind has no rights to a bona fide purchaser.

Front 33

Third part beneficiary

vocab

Back 33

third pary beneficiary- a person who is not party to a k, but has rights bc the k was inteded to benefit him.
promisor- the party who promises to perform for TPB.
promisee- the party who secures the promsie
intended beneficiary- the person who whom perofmrance is to be given udner the k. An incidential beneficary just happens to benefit.
donee beneficiairy- a person who is getting the performance as a gift. A creditor beneficiary is getting perfomrance to repay a debt.

Front 34

Third party benefit

Recission and modificiation

Back 34

The promisor and promisee can rescind or modify the k until the rights of the TPB have vested (once they hear about k and relies upon it). EXCEPT when there is contrary language in the k.

Front 35

Third party beneficiary

liability

Back 35

(1) promisor liable to thrid party beneficiary- regardless of lack of priviity, but if promisee cant sue for breach, tpb cant either.
(2) promisee liable to a creditor beneficiary
(3) promisor liable to promisee-

Front 36

Third party beneficiary

Delegation of duites

Back 36

K duties may be delegated without the consent of the person to whom perfomrance is owed. EXCEPT:
(a) k langauge controls: (i) if it prohbits delegation, cant delegate. (ii) if it prohibits assignemnt, no delegation either.
(b) special skills/reputation

Front 37

Third party beneficiary

Rights of obligee

Back 37

(1) delegating party remains liable.
(2) a delegating party who gets consideration is liable.

Front 38

Third party beneficiary

Assignemtn of rights

Back 38

2 people make a k, one later transfers his rights to another.
(1) must have language of present transfer- (I assign, not i promise to assign)
(2) consideration not requried

Front 39

Restrictions on assignment

Back 39

(1) k langauge controls- distinguish a clause that prohbits assignment from one that completely invalidates assignment. (if it says rights are not assignable it just prohibits it, if it says all assignments are void, it invalidates them)
(2) cannot substantially change duteis of obligor
(3) obligor liable to assignee. must know about assignments.
(4) multiple assignments- gratuitous assignments are easily revoked. The last gratuituous assingess prevails oer earlier gratituitous assingess. **NY a gift assignment is irrevocable if its in a signed writing.
-Assignments for consideration are more durable: the first assignee for consideration previals over all subsequent assignees and prior gratuitous assingess. EXCEPT a later assignee for consideration prevails if he does not know of the earlier assignments and is the first to get payment from or a judgemnt against the obligor.