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103 Cards in this Set

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Specific Performance
Party in breach must fulfill the terms of the contract
Objective Theory of an agreement
1)Would a reasonable person person in the position of the offeree understand from the offeror's words and actions an intent to be bound?
2)Did the offeree so believe?
Elements of a Contract
3)Legally Enforceable Promise
Restatement 2
1) A promise is a manifestation of intention to act or refrain form action in a specified way, so made as to justify a promise in understanding that a commitment has been made
Subjective Theory
Trumps the objective theory if both parties are aware of subjective factors
Mutual Assent
Requisit to the formation of a contract, determined by either the objective test or subjective test
1) a manifestation of 2) willinginess to enter into a bargain, so made as to 3)justify another person in understanding that 4)their assent to that bargain is invited and 5) will conclude it
Restatement 27: Existence of Contract Where Written Memorial is Contemplated
Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial therof; but the circumstances may show that the agreements are preliminary negotiations
Restatement 26: Preliminary Negotiations
A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until htye have made a furhter manifestation of assent
Restatment: Advertisments
Advertisments by display, sign, handbill, newspaper, radio, or television are not ordinarily intended or understood as offers to sell. It is of course possible to make an offer by advertisment directed to the general public, but there must ordinarily be some language of commitment or some invitation to take action w/o further communication
Contemplation of Writing
When the parties understand that an offer is to be reduced to writing, and extensive performance has not begun, the burden of proof to show an objective intent to be bound before execution of the written contract is on the party who wishes the contract to be enforced
Condition Precedent
an act that must exist or occur before a duty to perform something promised arises
Restatement 26 (Preliminary Negotiations)
A manifestation of willingness to enter into a bargain is not anoffer if teh person to whom it is addressedknows or has reason to know that the person making it does not intend to conclude a bargain unitl they have made a further manifestation of assent
Factors determining if there is an offer
1) terms of previous inquiries
2) The completeness of the terms of the suggested bargain
3) number of persons to which the bargain is addressed
Advertisments as offers
ads are not usually offers unless they are specific, clear, and leaves nothing open for negotiation
UCC 2-204 (Fromation in General)
1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties whihc recognizes the existence of such a contract
2)An agreement sufficient to constitute a contract for sale may be found even though the moment of its making is undetermined
3) Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy
Price Quotations as offers
Price quotes are usually not offers the circumstances make it appropriate to regard it as such
Fairmount Holding
A reasonable person would understand that an offer was made to one person, in regards to a particular inquiry, setting forth specific terms
CA vehicle code
1)An ad in a newspaper generally constitutes an offer when details are given.
Amicus curiae
"friends of the ct." A party that provides information at and app. trail who have no direct interest in the outcome of the case, but have indirect interest
Car Ads as offers
Car ads count as offers when they are clear, distinct, and leave nothing open for negotiation
something of value received by the promiser from the promisee
The notification to the oferee that the offeror no longer wishes to be bound by the terms of the offer
Termination of offers
Restatement 43 (indirect communication of revocation)
An offeree's pwr of acceptance is terminated when the offeror takes definite action inconsistent w/ an intention ot enter into the propsed contract and the offeree acquires reliable information to that effect
Lapse of the offer
The offeror can include language in their offer to control the time period that the offer stays valid. If no such language exists, hae to look at when a reasonable person would think the offer would lapse
Acceptance and time limits
acceptance is only valid if it is w/n a reasonable time. The reasonablness of time depends on the circumstances
Restatement 48 (Death/Incapacity)
A revocable offer is terminated by the offeror's death or such insanity that it deprives them of a legal capacity to enter into the propsed contract
Fee Simple
an interest in land that stays open until the current owner dies
Lack of Consideration
When an option contract is not supported by consideration the contract fails and it becomes a revocable offer
Offeree must decline the offer and notify the offeror that they do not accept the terms such that they terminate their pwr of acceptance
The voluntary act by the offeree whereby they exercise the pwr confered upon them by the offer and creates the set of legal relations called a contract
Mirror Image Rule
The acceptance must be on the terms proposed by the offer w/o the slightes variation
Manner of acceptance
Acceptance must be in accordance to the particular mode specified. If none is specified, the offeree can accept by any means the law deems acceptable
Restatement 87.a ( elements of an option contract)
an offer is binding as an option contract if it a)is written and signed by the offeror b)recites proported consideration for the making of the offer, c)proposes an exchange on fair terms w/n a reasonable time or d) is made irrevocable by statute
Restatement 25 (options)
an option contract is a promise which meets the requirments of the formation of the contract and limits the promissors pwr to revoke the offer
Board of Control Holding (options)
written consideration merely creates a rebuttable presumption that consideration has in fact passed
Acceptance Requirements
If an offer specifies time, place, and manner of acceptance, they must be done according to the terms of the offer w/o deviation
Ever-tite Holding (time for acceptance is not specified)
If the contract does not specify the the time w/n which acceptance is expected, acceptance can be made w/n a reasonable time which will be determined by the circumstances
Unilateral Contract
A contract that results from an offer requesting acceptance in the form of performance
Bilateral Contract
A contract that results from and offer requesting acceptance in the form of a promise
Restatement 32 (Invitation of Promise or Performance
In case of doubt an offer is interpreted as inviting the offeree either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses
Notice in Unilateral Contracts
In Unilateral contracts, no notice of acceptance is required
Restatement 65 (medium of acceptance)
If the medium is not specified by the offeror, any reasonable medium may be used; The same medium the offeror used or a type that is customary in business practices
Restatment 63 (Time When Acceptance Takes Effect)
Unless the offer otherwise provides:
1)an acceptance made in a manner and by a medium invited by an offer is operative and completes the manifestation of mutal assent as soon as puto out of the offeree's possessoin, w/o regard to whether it ever reches the offeror; but
2) an acceptace under an option contract is no operative until received by the offeror.
Notification of acceptance by promise
When an acceptance is by promise, acceptance must be communicated unless otherwise specified by the offer
Mailbox Rule
Acceptance is affective upon dispatch
Acceptance by performance and notification
Acceptance by performance does not require notification.
Restatment 51
If someone learns about offer in the middle of performance, contract will not be binding until completion
Promise to Complete performance
Once performance has begun there is a promise to complete
Traditional view of performance
Completion of performance was required to constitute acceptance
Modern view of performance
Contract is binding upon the start of performance as long as performance is completed w/n a reasonable time.
Restatment 40 (Time when rejection or counteroffer terminates the pwr of acceptance)
rejection or counteroffer by mail or telegram does not terminate the pwr of acceptance until received by the offeror, but limits the pwr so that a letter or telegram of acceptance started after the sending of an otherwise effective rejection or counteroffer is only a counteroffer unless received by the offeror before the rejection or counteroffer.
Restatement 45 (Option Created by Part Performance)
1) where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders of begins the invited performance or tenders a beginning of it. 2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance w/ the terms of the contract.
Restatement 50 (acceptance by performance; acceptance by promise)
2) acceptance by performance requires that at least part of what the offer requests be performed or tendered and includes acceptance by a performance which operates as a return promise. 3) acceptance by a promise requires that the offeree complete every act essential to the making of the promise
General Rule of Acceptance by Silence
Silence is not acceptance
When Silence can be Acceptance (Restatement 69.1)
When the course of business is such that a reply is justified or the offeree takes benefit knowing that the offeor is relying on the silence, the offeree is under a duty to reply
Patent Title
The first, government granted, title
When an acceptance does not mirror the offer
Then it is treated as a revocation and possibly a counteroffer, the original offer can then only be revived by the offeror.
Restatement 54 (accpetance by promise When an offeror has no means of notification)
If it is acceptance by promise; If you know that the offeror has no reason to know that you started performance, you have to take reasonable efforts to notify them to collect on it. (Restatement 54)
UCC 2-207 II
Additional terms are construed as being proposals addition to the contract, if the parties are merchants
UCC 2-207 I
Even when there is an acceptance which contains different terms than the offer, there is a contract unless there is an explicit objection to the discrepancy or acceptance is expressly conditional on the acceptance of the different terms
UCC 2-207 III
Conduct by both parties which recognizes existence of a contract establish a sale even if there is no contract in writing
3 potential outcomes of the UCC 2-207
i. The contract reflects the terms of the offer
ii. The contract reflects the terms of the counteroffer
iii. The contract reflects the terms that the parties agreed to
Material Alterations
a. Clauses that will result in surprise or hard ship to the other parties if incorporated w/o express awareness
Non-merchants, Acceptance, and UCC 2-207
B/c P is not a merchant, additional or different terms did not become part of the parties' agreement unless P actually agreed to them.
Dorton School of Thought
Your conditional acceptance needs to be so clearly expressed in a manner sufficient to notify the offeror that the offeree is unwilling to proceed w/o the acceptance of the additional terms
Restatement 33 (Indefinitness of the Offer)
Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain
Traditional rule of indefinitness
if a contract is too vague, even if the parties intended to enter into a contract, there could be no meeting of the minds, so there is no contract.
UCC 2-204.3 (Indefinitness)
a contract will not fail for indefiniteness if the parties intend to enter into a contract and there is a reasonably certain basis for providing a certain remedy.
Modern view of indefinitness
Indicates that modern courts are much more willing to enforce a contract when there is an intention to enter into an agreement even if there are indefinite or open terms.
Indefinitness (general)
Indefiniteness does not prevent the formation of a contract unless the indefiniteness goes to a material term.
Promissory Estoppel
If you know a promise is relied on, and it is so relied upon, you should be bound to that promise.
Elements of promissory estoppel
1) Parties must have an agreement
2) Party acted to its determent on reliance of the promise
3) It must be equitable to enforce it
Ommissions of material terms
Material terms that are left out of the contract renders it unenforceable.
agreement to agree
An agreement to agree is too indefinite to be enforceable.
Restatement 33 (certainty)
1) Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.
2) The terms of a contract are reasonable certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.
3) The fact the one or more terms of a proposed bargain are left open or uncertain may show that a manifestation of intention is not intended to be understood as an offer or as an acceptance.
Letters of Intent
A letter of intent is not normally going to be construed as anything besides setting the stage for further negotiations.
basic assumption
assumption made by the parties, even if they are not conscious of the alternatives
unilateral mistake
One party believe the K accurately reflects the terms of the deal
Fraud and misrepresentation
There must be an assertion not in accord w/ the facts (may be of past or present event, but not a future event)
fraudulent mistrepresentation
consciously false and intended to mislead
materially mistrepresentation
misrepresentation would have been likely to induce a rp or this consumer into making the deal, then the misrepresentation is material
Sherwood Holding
The contract can be avoided if the contract was made on a mistake of material fact, such as subject matter, or some collateral fact and can be done when mistake is mutual.
Mutual Mistake of Law
A contract cannot be rescinded for a mutual mistake of law b/c ignorance of the law is no excuse.
Elements of Unilateral Mistake that D must prove
§ D made a mistake regarding a basic assumption upon which D made the contract
§ The mistake has a material effect upon the agreed exchange of performances that is adverse to D
§ D does not bear the risk of mistake
§ The effect of the mistake is such that enforcement of the contract would be unconscionable.
Restatment 153 (Unilateral Mistake)
Where a mistake of one party at the time a contract was made as to a (1) basic assumption on which he made the contract has a (2) material effect on the agreed exchange of performances that is adverse to them, the contract is voidable by them if they (3) do no bear the risk of the mistake, and
1) The effect of the mistake is such that (4) enforcement of the contract would be unconscionable, or
2) The other party had reason to (4b) know of the mistake or their fault caused the mistake.
Silence as misrepresentation
Silence is not a misrepresentation as long as you don't take any actions to conceal the facts
Restatement 164 (When mistrepesentation makes a contract voidable)
If a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient.
Affirmative act intended to mislead another party
Level of intoxication
Intoxicated person lack incapacity only if they are so intoxicated such that the person had lost all reason
A K can be rescinded for non-disclosure if the nondisclosure is:
(1) Deliberate
(2) Non-observable
(3) Significant nature
Restatement 12 (Capacity)
(2) a natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless they are
(a) under guardianship, or
(b) an infant, or
(c) mentally ill or defective, or
(d) intoxicated
Minors and rescinding K's
A minor can void a K for a reasonable time even after they reach majority. H/w A minor's K's for necessities are binding so long as they are used as necessities.
i. In order to show duress there must be a threat
ii. The threat must be improper
iii. The threat must induce the manifestation of assent
iv. The threat must be sufficiently grave to justify the victim's assent
manifestation of intent to inflict some loss or harm on another
Restatement 174 (Duress)
If conduct that appears to be a manifestation of assent by a party who does not intend to engage in that conduct is physically compelled by duress, the conduct is not effective as a manifestation of assent
Restatement 89
You can modify an existing K,
If the K is fair and equitable in view of circumstances not anticipated by the parties or
to the extent provided by statute or
To the extent that justice requires enforcement in view of material change of position in reliance on the promise
Duress Test under Austin
Duress Test: Economic duress must be demonstrated by proof that immediate possession of needful goods is threatened. It must appear that the threatened party could not obtain the goods from another source of supply an that the ordinary remedy of an action for breach would not be adequate (timely)
Restatement 175 (When Duress Makes a K Voidable
If a party's manifestations of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the K is voidable by the victim
Economic Duress Test under Totem
One party involuntarily accepts the term of the other
No other acceptable alternatives
Circumstances were the due to the coercive acts of the party
Undue influence
persuasion which tends to be coercive in nature, which overcomes the will w/o convincing the judgment
Factors of Undue Influence
§ Discussion of the transaction at an unusual or inappropriate time
§ Consummation of the transaction in an unusual place
§ Insistent demand that the business be finished at once
§ Extreme emphasis on untoward consequences of delay
§ The use of multiple persuaders by the dominant side against a single servient party
§ Absence of third party advisers to the servient party
§ Statements that there is no time to consult financial advisers or attorneys