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91 Cards in this Set
- Front
- Back
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Contract
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An agreement for which the law gives a remedy for breach.
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Offer
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A manifestation of present contractual intent, communicated to an identified offeree, containing definite and certain terms.
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Valid Contract
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Consists of an offer, acceptance, consideration and lack of formation defenses
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Acceptance
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An acceptance is an unequivocal assent to the terms of an offer.
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Consideration
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Legally sufficient, bargained for exchange, which induces current performance detriment to the promisee, and a binding obligation on both parties.
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Present Contractual Intent
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would a reasonable person under the circumstances believe that the offeror is willing to be bound by a contract
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Communicated to Identified Offeree
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communication and knowledge of the offer is essential. Effective on receipt
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Containing Definite and Certain terms
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Q-tips(quantity,time of performance,interested parties,price,subject matter) Land(descrpition&price), Goods(s&q) Empl Contracts/pers serv(term& pay)
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Termination of offers
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All offers are freely revocable by direct or indirect revocation, rejection (counter offer), Operation of Law
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Direct revocation
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the offeror communicates to the offeree that he no longer wishes to be bound by the offer
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Indirect revocation
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when the offeree receives correct information from a reliable source that the offeror no longer wishes to be bound to the offer
Rumors are not sufficient |
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Rejection of offer
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WHen the offeree communicates to the offeror that he is not interested in the offer
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Counter offer/condiitonal acceptance
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are rejections, conditional acceptances are rejections
wishful thinking is NOT a rejection(hope, i wish, it would be nice) |
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Option Contracts
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offer is not terminated unless the offeror detrimentally relies on the rejection
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Operation of Law
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offer will lapse after a reasonable time(face to face-when they leave each others presence) Death or incapacity, Destruction, Supervening illegality
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Acceptance
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an unequivocal assent to the terms of the offer
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last shot rule
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COMMON LAW-the last expression before performance controls
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UCC 2-207
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under the UCC 2-207, an acceptance with additional or different terms is valid acceptance
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merchants
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additional terms become part of the contract, unless, the offer limits acceptance to the terms of the offer or the offeror objects within a reasonable time or terms materially alter the contract (arbitration clauses are not considered material due to common practice)
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1 nonmerchant
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additional terms will be ignored and do not become part of the contract
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different terms
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the majority rule is that different terms get "knocked out" and one applies "gap fillers", custom and usage, and course of dealing or performance
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Mode of acceptance
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UCC2-206
promise to ship shipment of conforming goods shipment of non-conforming goods but would be abreach if no letter of accomodation |
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Manner of acceptance
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what is required by offer or a reasonable manner which should be as fast or faster than used by offeror
Silence is accetance when implied in fact contract |
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Mailbox Rule
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acceptance is effective on dispatch, with proper postage, properly addressed and correct manner(otherwise effective on receipt)
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Post acceptance rejection
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Acceptance is sent 1st
rejection is received 1st, mailbox rule applies, we have a contract unless offeror detrimentally relies on rejection |
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Post rejection acceptance
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rejection is sent 1st
mailbox rule does not apply whichever gets to offeror 1st |
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Consideraton
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legally sufficient, bargained for exchange, which induces current performance, detriment to the promisee and a binding obligation on both parties
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Promissory Estoppel
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Restatement 2nd ss90
requires reasonable, forseeable and substantial reliance |
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Lack of formation Defenses
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SOF, Incapacity, Intoxication, Misrepresentation/fraud, Duress, Unconscionable, Undue influence, Mistake
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Statute of Frauds
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Under the SOF certain contracts must be evidenced by a writing to be enforceable. Marriage, Year, Land, Executory, Goods of $500, Surety
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Marriage
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promises to induce marriage
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Year
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cannot be performed within, time runs from the time of formation until end of performance
if it can be performed within a year, even though its been over a year, it can be taken out of the statute of frauds |
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Land
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sale, leases, easements(1y) minerals, mortgages, agency agreements. Can be taken out if 2 (make payment, make improvements, move on the land)
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Executors
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Promise to personally pay for debt of estate
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Goods
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can be taken out if it is specially manufactured goods
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Surety
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A surety is one who guarantees the payment of the debt of another.
"If A doesn't pay, then I'll pay" can be taken out if there is a benefit to the promisor |
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SOF Satisfaction
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only requires the signature of the party to be charged unless merchant confirmatory memorandum
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Incapacity
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Minors-voidable at the option of the minor unless affirmed after reaching the age of majority or dissafirmed (30 days) value of neccesities can be recovered
Mental-contracts with people who are adjudicated insane are void |
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Intoxication
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Contracts with people who are intoxicated (legal or illegal) are voidable. The person needs to be falling off the stool.
can affirm when sober up then is enforceable |
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Illegality
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subject matter is illegal (crimes, bets, usury) contract is void
no compete clauses Supervening illegality (at the time the contract was formed the subject matter was legal, then became illegal) obligation of both parties is discharged (relief may be sought in quasi-contract unjust enrichment) Licensing-unlicensed contractor In pari delicto-no relief in court or equity"must have clean hands |
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Misrepresentation
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A material fact that caused reasonable and actual reliance by plaintiff.
fact or opinion(puffing), no duty to disclose unless half truth, then must fully disclose Fraud-intentional misrepresentation requires scienter, knowledge that the statement was false (intentionally deceiving someone) |
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Duress
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physical duress-when a party enters into a contract based on physical force or threats of physical force
economic duress-when a party enters into a contract based on wrongful threats |
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Unconscionability
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when the terms favor only one party, meaningless choice
adhesion contracts, take it or leave it |
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Undue influence
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When one party unduly influences another or asserts their will over the will of another
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Mistake
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Mutual-occurs when both parties are mistaken as to the material fact (contract is voidable)
Ambiguity-court will interpret if both/neither parties aware-no contract. if 1 party aware-yes contract Unilateral-when only 1 party is mistaken (no defense, unless the other party knew or should have known about the mistake) Scriveners error-when the writing doesn't reflect the agreement |
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Requirement Contracts
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Agreements by one party to supply all that is required by the other party
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Output Contracts
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Agreements by one party to buy all that the other party produces
No limit on minimum, maximum limited to unreasonable disproportion (over20-30%) |
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Contract Construction
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Express Terms-what's written
Course of performance-repeated occasions for performance and no rejections Course of Dealing-a sequence of previous conduct between parties to a particular transaction which can be regarded as establishing a common basis or understanding for interpretating their expressions and conduct Custom and usage-any practice or method of dealing regularly |
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Gap Fillers
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When a contract fails to express nonessential items, the court will fill in the gaps:
Common Law-reasonable terms UCC-Price (reasonable),Delivery in Single lot, Place for Delivery (sellers place of business), Time for delivery(reasonable), Time for payment(at delivery with right to inspect), Warranty of Title(rightful transfer, free of any liens), Implied warranty of merchantability, Implied warranty of fitness for a particular purpose, Time and place for title to pass(at shipment or delivery), payment by check or cash(any means) |
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Parole Evidence
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any prior written or oral agreement which contradict contractual terms are inadmissable if the written contract is intended as a complete and final expression of the parties.
Exceptions: Ambiguity, fraud, duress, mistake, illegality or incapacity |
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Modification
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when the parties wish to change the terms of the contract
Requires mutual assent and common law requires consideration |
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Third Party Beneficiaries
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Where the parties, at the time of contracting, contemplate performance to be rendered to a third, non-contracting party.
Rights vest: if asked to assent the contract terms, 3rd party relies on the promise, 3rd party sues to enforce the promise. Can use any defense as the promisor |
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Assignment of Rights
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a transfer of rights under the contract to a third party. any defenses can be used. Assignments for consideration are irrevocable.
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Assignment of Contract
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is an assignment of rights and delegation of duties. Non-assignment clauses containing VOID (no power or right to assign), not containing VOID (has power to assign, no right to assign and will be liable for damages)
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Delegation of Duties
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where a party transfers duties under the contract to a third-party. Cannot transfer personal services/skill. Delegator remains a surety. Obligee may sue delegator or delegatee
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Novation
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a new contract with the substitution. All parties must agree. There is a discharge of duties of the replaced third-party.
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Conditions
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A condition is an event, not certain to occur, which must occur, unless it's non-occurence is excused, before performance under a contract is due.
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Classification of Conditions
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Condition precedent-must occur before duty arises
Condition Concurrent-both parties have a condition precedent to each other Condition subsequent-condition occurs and duty is extinguished Express condition, Implied condition, Constructive condition |
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Satisfaction of Condiitons
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Personal taste-subjective and need not be reasonable but must be in good faith.
Mechanical fitness, utility or marketability-Objective, reasonable person satisfaction Full performance, substantial performance, doctrine of divisablity |
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Substantial performance
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when performance meets the essential purpose of the contract. courts allow for damage offset
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Doctrine of Divisablity
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the performance by each party is divided into multiple parts
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Excused Conditions
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lack of good faith to meet condition, has duty to perform
inability to perform, Anticipatory Repudiation, Impossibility, waiver and estoppel(unless there is detrimental reliance), election |
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Anticipatory Repudiation
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If one party unequivocally communicates to the other party that they will not perform. Can sue immediately and suspend own performance. May be retracted unless other party detrimentally relied on it.
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Inability or Unwillingness to perform
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if the party has reasonable grounds to believe the other party will not perform when performance is due. raises doubts as to whether or not will perform. Common law-must wait until date performance is due to sue, or if there is AR. UCC-may demand assurance in writing, may suspend own performance. If no assurance in 30 days, then can treat as AR
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Full Performance
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Complete, Substantial, Doctrine of Divisability
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Discharge of Duties
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Duties can be discharged by Modification, impossibility, Force majeure, impracticability, Frustration of purpose, mutual rescission, Accord and satisfaction, Account stated, novation or condition subsequent
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Breach
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When a party has an abslolute duty to perform and does not perform or discharge the duty, then the party will be in breach
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Material Breach
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party has not received the substantial benefit of the contract
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Minor breach
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party has received the substantial benefit of the contract.
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Timeliness of performance
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Generally not a material breach if performed within a reasonable time, unless BOTH parties were aware timely performance was essential.
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UCC Breach
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Perfect tender rule(can reject whole, accept whole, accept any units), Seller has the right to cure within a reasonable time,acceptance of goods, rejection of goods (must notify the seller), right to inspect,risk of loss (FOB, FAS,CIF, C&F)
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Remedies
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Remedies try to put the non-breaching party in as good of a position as performance would.
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Damages
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All damages must be proven to a degree of certainty
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Compensatory damages
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expectation damages-benefit of the bargain. (market, cover, resale price) minus contract price. Land-contract price and fair market value. Employment-full contract or cost to replace employee. Construction contracts-Breach by owner before completion(profits plus cost to extend),Breach by owner after completion (full contract price plus interest), Breached by builder(cost of completion plus compensation for delay). Lost volume sales-lost profit even if substitute performance unless inability to satisfy more than 1 contract. Limitations on completion/repair-cost of performance rule v. value rule.
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Consequential damages
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Damages that are the consequence of a breach are recoverable if they are foreseeable at the time of formation
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Incidental Damages
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Damages that are incidental to the breach are recoverable if they are reasonable.
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Liquidated damages
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Parties agree to a set amount of damages for breach if:
damages are difficult to ascertain at the time contract was formed |
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Duty to mitigate
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nonbreaching party has a duty to mitigate their damages.
May not recover damages that were avoidable |
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Specific Performance
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the court will require the defendant to specifically perform the contract when:
money damages inadequate( subject matter is unique land is always unique), not services, but may keep from performing services elsewhere, definite and certain terms, feasible of the court to enforce, mutuality of remedies |
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Rescission
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Termination of the contract. Usually only the innocent party may rescind
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Restitution
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Return of benefit transferred, if any, to the other party. It is used to place parties back in their pre-contractual state
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Quasi-contract-unjust enrichment
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may arise from the absence of a contract or a failed contract. plaintiff reasonably expected payment or performance by defendant. Defendant would realize unjust enrichment if plaintiff is not compensated
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Warranties
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Warranty of Title, Express Warranty, Implied Warranty of Merchantability, Implied Warranty of Fitness for Particular Purpose
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Warranty of Title
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In every sale of goods there is a warranty by the seller that the title conveyed is good, it's transfer is rightful and free of liens. Can be excluded only by specific language and which buyer is aware
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Express Warranties
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If there is any description of the goods used as basis of the bargain, a model or sample, there is an express warranty that the goods will conform
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Implied Warranty of Merchantability
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Is implied in every sale of goods.
Serving food or drinks are included. fair quality, fit for ordinary purpose, adequately contained, packaged & labeled. |
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Implied Warranty of Fitness for a Particular Purpose
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if the seller has reason to know any particular purpose for which the goods are required and if the buyer relies on this information based on their skill. There is a WFPP
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Disclaimer of Warranties
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IWM-the language must mention merchantability and if in writing, must be conspicuous.
IWFPP- must be in writing and conspicuous AS-IS expressions exclude all implied warranties IF any inconsistencies, express warranty will prevail |
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Extent of Liability for injured 3rd parties
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Most states-buyers family or household or guest in home
Some states-any person who suffers personal injuries Few states-any person who suffers any injury |
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Defenses to Warranties
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Buyer's Notice to seller within a reasonable time after breach (injury) occurs or discovered.
Seller has the right to cure (replace the product) |
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Entrustment
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any entrusting of goods to a merchant who deals in goods of that kind gives the merchant power to transfer all rights to a buyer in the ordinary course of business.
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