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47 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Legal Categories for voiding a contract.
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Mistake, Impossibility, Impracticability, Frustration of Purpose
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MIIF
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Define Mistake.
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(1) Must have been committed at the time the contract was formed. (2) An error in belief related to facts that existed at the time the contract was made.
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Error in belief
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Types of Mistake.
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(1) Mutual Mistake (2) Unilateral Mistake
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1 & 2
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Factors for a Mutual Mistake.
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(1) Basic Assumption (2) Material Effect (3) Risk not based on adversely affected party.
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Moo
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What is Basic Assumption?
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The reason the contract was formed. Ex: A dairy farmer buys a cow and a basic assumption is that the cow will be a milk cow and not a beef cow.
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What is Collateral Assumption?
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Peripheral information that is not central to the contract.
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What is a Unilateral Mistake?
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A mistake by one party where the party knew or should have known of the mistake at the time of the contract.
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WWW
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What are the Unilateral Mistake factors?
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(1) Basic Assumption (2) Material Effect (3) Risk not based by the adversely affected party. (4) Unconscionability (5) Knowledge or Fault
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Plus 2
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Do unilateral mistakes have to be palpable?
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Traditionally yes but not under modern standards.
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How is non-perfomance justified due to a non-plapable unilateral mistake?
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When enforcement is unconscionable and avoidance would not be a substantial hardship to the non mistaken party.
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What are the additional factors that must be met when a unilateral mistake was not palpable?
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(1) When the contract is executory or the other party can be placed at status quo. (2) The mistake is substantial. (3) When the mistake is clerical or computational.
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substantial
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Under Common Law what areas affect a change in circumstance?
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(1) Impossibility (2) Impracticability (3) Frustration of Purpose
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IIF
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What are examples of Impossibility?
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• death or disability of a person indispensable to performance of the contract
• destruction of the subject matter of the contract or other thing necessary for the performance of the contract, provided the destruction is not the fault of the party asserting impossibility • failure of a specific thing necessary for performance to come into existence • supervening governmental action that makes performance of the contract illegal • where performance would subject the party to potential harm • shortages or significant price increases in materials due to embargo or war • other circumstances that would involve "extreme or unreasonable difficulty, expenses, injury or loss." |
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What is the Restatement definition of Frustration of Purpose?
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Where, after a contract is made,
a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstance indicate the contrary. |
After Party Occurrence
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What is an executory contract?
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A contract that will be fully performed in the future.
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What is a force majeure clause?
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A clause that excuses unforeseeable acts and would bar a breach of contract. With out one, parties may need to rely on impossibility, impracticability, or frustration of purpose.
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What mistakes do not give rise to a mistake defense for breach of contract?
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(1) Assumption of the risk by the party adversely affected. (2) The adversely affected party is at fault for the mistake. (3) The party failed to read the contract.
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Ass-fault Read
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How mistakes, that prevent a meeting of the minds, render a contract void?
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(1) The OFFEREE knows that the offer is a product of a mistake. (2) The OFFEROR makes the offer to a party intending it for another who is aware of the mistake. (3) The parties attach a materially different meaning to the communications and neither party is aware or has reason to be aware of the meaning attached by the other.
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Offeree, offeror, attach Madonna
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What is the Restatement definition of Impracticability due to Government Regulation?
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If the performance of a duty is made impracticable by having to comply with regulations, and absence of this regulation was the basic assumption on which the contract was made.
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impracticable and basic assumption
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Can a contract be modified? How?
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Yes. A contract can be modified after its formation, only by mutual assent, with consideration (Except Sale of Goods) and it must be a product of good faith and fair dealing.
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Mutual-Faith
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What are exceptions to a modification not supported by new consideration on both sides for non-sale-of-goods contracts?
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(1) Unforeseen Circumstances (2) Reliance on a promised modification (3) Mutual Release (both parties release themselves from a contract then forming a new one with a modification)
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CRM
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According to UCC §2-209, what is necessary for a modification to a contract?
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Good Faith and Fair Dealing
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According to the UCC, does a modification have to comply with the Statute of Frauds? Are there exceptions?
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Yes. NO exceptions unless adopted by statute and an example of the exception is if the goods have been received and accepted there is no need to comply with SOF.
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Can third parties enforce a contract?
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Yes, but only if that third party was the intended beneficiary.
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What are the types of third party beneficiaries?
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(1) Donee beneficiary (2) Creditor beneficiary
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What is a donee beneficiary?
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Third parties upon whom the promisee attempts to confer a gift.
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Gift
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What is a creditor beneficiary?
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Third parties to whom the promisee owes a debt, which is to be satisfied by performance of the promise.
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Debt
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Can third party beneficiaries of a government contract sue the non-government party?
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No, unless the third party is a direct beneficiary, as opposed to a public beneficiary.
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Who is an obligor?
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One that has a duty to do something.
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Duty
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What is an obligee?
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One that has a duty owed to him.
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Owed
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What is an assignor?
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One who assigns their rights away.
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What is an assignee?
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One to whom the right is assigned.
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What is a contract right?
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The ability to require the other party to either perform or pay damages.
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What is the assignment of a right?
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It is a manifestation of an obligee's intention to transfer to an assignee its right to receive performance from the obligor.
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Can all contract rights be assigned?
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Yes, with these exceptions:
Unless otherwise agreed where the assignment would materially change the duty of the other party, or [where the assignment would] increase materially the burden or risk imposed on him by his contract, or [where the assignment would] impair materially his chance of obtaining return performance. |
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Once an assignment has happened, can the assignor take back that right?
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No, the creation of an assignment creates a new right in the assignee, while at the same time extinguishing the corresponding right previously held by the assignor.
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Create-Extinguish
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What is a contract duty?
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The requirement to perform (or not perform) something.
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Ta-Dah
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What is delegation of duty?
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Satisfying the requirement to do something, by employing others to do it for you.
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Once a duty is delegated, is the original obligor completely free from it?
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No, the person bound to perform will remain subject to that duty until performance is actually rendered. (Unless the obligee released him)
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What are the exceptions to delegation of duties?
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unless otherwise agreed or
unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. |
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What are the approaches used to determine the interpretation of a contract, its terms, or if it's fully integrated?
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Plain Meaning, Reasonable Person, Reasonable Expectations of the Party.
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Plain Person Expects
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What is used to determine the construction of existing terms?
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Course of Performance, Course Dealing, Trade Usage.
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The three
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What is course of performance?
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Denotes a pattern in the performance by the same players.
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Pattern
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What is course of dealing?
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Denotes a sequence of previous conduct. If the parties had previous contracts and transactions, these serve as the common basis of understanding.
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Prior
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What is trade usage?
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Denotes a regular practice in the trade, justifying expectation that these practices will be observed.
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Trade duh
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What is an adhesion contract?
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A contract drafted by one party and reduced to a form agreement that generally presents no opportunity for negotiations.
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One sided
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What scrutiny is involved with an adhesion contract?
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Usually greater since there was no negotiation. Restatements provides that only those contractual provisions that a reasonable person would anticipate and agree should be considered part of the contract.
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ORPP
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