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86 Cards in this Set

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  • Back
A contract has been formed when what 2 things are present?
Mutual Assent and Consideration
How can mutual assent be shown under RST 19?
Is it possible to assent even though you did not want to?
Yes, if one party has reason to know the other party wil take their actions to mean assent, and acts anyway they will be bound. RST 19
What is the definition of an offer under RST 24?
An offer is a manifestation of willingness to enter into a k so made as to justify another person in undersanding that his assent to that bargain is invited and will conclude it.
When is an offer not valid under RST 26?
When one of the parties knows or has reason to know that the other party does not intend to be bound
What are the relevant terms to consider when deciding that a party may or may not have intended to be bound?
Previous inquiries, the completeness of the terms, and the # of persons to whom the communication is addressed
When can an offer form a K?
When the terms are reasonably certain. RST 33
When are the terms of a K reasonably certain?
When they provide a reasonable basis for determining a breach and for giving an appropriate remedy. RST 33
What do open terms usually show under the common law?
They may show that a manifestation of intention may not be understood as an offer
Will a K fail if the written manifestations show an intention to prepare a formal document?
Not if the manifestations of assent in themselves are sufficient to conclude a K. Circumstances may show that the agreements were preliminary negotiations though.RST 27
What are the five ways that an offeree's power of acceptance can be terminated?
1. Rejection or counter offer by the offeree
2. Lapse of time
3. Revocation by the offeror
4. Death or incapacity of the offeror or the offeree
5. The non-occurence of any condition of acceptance under the terms of the offer(RST 36)
When is the offeree's power of acceptance terminated?
When the offeree receives from the offeror a manifestation of an intention not to enter into the proposed K.(RST 42)
Can the manifestation not to be bound be indirect?
Yes. The POA is terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed K and the offeree acquires reliable info to that effect.RST 43(Dickinson v Dodd)
What is an option K?
An option k is a promise which meets the requirements for the formation of a k and limits the promisor's power to revoke an offer. Promise to hold open an offer are not legally binding w/o the existence of an option k(RST 25)
Can an option K be terminated?
Not unless the requirements are met for the discharge of a contractual duty.(RST 37)
How may an offeror invite acceptance?
By an affirmative answer in words or by performing or refraining from performing a specified act.(RST 30) The offeror is the master of the offer and may demand acceptance in any manner.
How does an offeror invite acceptance if otherwise not indicated?
In any manner and by any medium reasonable under the circumstances.(RST 63)
If there are additional or different terms included in an acceptance, is the acceptance binding?
No, under the Mirror Image rule, any change to the terms equals a counter offer that must in turn be accepted by the other party.
When does an acceptance become valid?
AN acceptance made in a manner and by a medium invited by an offer is operative and complete as soon as put out of the offerree's possession without regard to whether it ever reaches the offeror.(RST 63)
When does an accpetance of an option K become valid?
When it is received by the offeror.
When is the medium of acceptance reasonable?
UNless circumstances known to the offeree indicate otherwise a medium of acceptance is reasonable if it is the one used by the offeror or one customary in similiar transactions at the time and place of the offer.(RST 65)
Is notification of acceptance necesary when it is possible to accept by performance?
No, unless the offeree has reason to know that the offeror has no adequate method of learning of the performance.(RST 54)
What happens if the offeror is not able to learn of performance?
The contractual duty is discharged unless,
1. The offeree exercises due diligence to notify the offeror,
2. the offeror learns of performance within a reasonable time,
3. The offer indicates that notificatin of acceptance is not required(RST 54)
When there is doubt about whether a K invited acceptance by performance or by promise, how is it resolved?
The offer is interpreted to allow for acceptance in either way as the offeree chooses.(RST 32)
How does the tender or beginning to tender act under K's that invite acceptance by performance or promise?
It acts as an acceptance, and acts as a promise to render complete performance. RST 62
What happens when an offeror invites acceptance by performance and the offeree begins to perform?
An option K is formed, and is conditional on completion or tender of the invited performance in accordance with the terms of the offer(RST 45)
What are the 3 instances where silence can act as an acceptance?
1. When the offeree takes the benefit of the offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectatin of compensation
2. Where the offeror has stated or given the offeree reason to understand that assent may be manifested b silence, and the offeree intends to accept
3. Where because of previous dealings it is reasonable that the offeree should notify the offeror if he does not intend to accept.(RST 69)
What happens when an offeree does an act inconsistent with the offeror's ownership of property?
Then he is bound in accordance with the offered terms unless they are manifestly unreasonable/(RST69)
What are two situations where mutual assent fails if the parties attach materially different meaning to terms in the K?
1. If neither party knows or has reason to know the meaning attached by the other,
2. If each party knows or has reason to know the meaning attached by the other. RST 200
What happens if one party knows or has reason to know of the different meaning attached by the other party?
Then that meaning is used if that other party does not know or have reason to know that the first party has attached a different meaning.
What if both parties ahve attached the same meaning to a term?
Then the court will follow that meaning.(RST 201)
What if one party has attache done meaning and the other party has reason to know about it?
Then the court will follow that meaning.(RST 201)
What if neither party had reason to know about the different meanings?
THen there is a failure of mutual assent.(RST 201)(Oswald v Allen)
Which terms will apply and how are they ranked in importance?
From most important to least
1. The words used
2. How the words fit into the K
3. The manifested dictionary or technical definitions
4. Past performance
The court will try to interpret the manifestations of the parties to be consistent.(RST 204)
Can the terms of a K be reasonably certain if they allow for one or both of the parties to select terms during performance?
Yes, partial performance may remove uncertainty and establish that a K enforceable as a bargain has been formed.(RST 34)
What will happen when a K has not agreed with respect to a term which is essential to determining the rights and duties of the parties?
A term which is reasonable will be supplied by the court.(RST 204)
Do additional terms become binding?
As long as they are accepted yes.(Last Shot Rule) Mirror image rule makes each change to the K a counter offer, and as long as acceptanc can be shown the terms will be binding.
What is the general measure of damages for breach of K under the common law, and how are they calculated?
Expectation interest-
(Loss in value)+(Other incidental costs)-(Costs avoided)-(Losses avoided)(RST 347) or the Fuller and Perdue method is the (Reliance + Lost profits)
What are the limitations on expectation damages?
Foreseeability, Certainty, and mitigation
When are damages reasonably foreseeable?
WHen they follow from the breach in the ordinary course of events, or as a result of special circumstances that the party in breach had reason to know.(RST 351)
When can lost profits be recovered?
ONly when they are reasoably certain. They can be reasonably certain if there are past profts that will allow for estimation, or if there are other similar businesses available for comparison.
What is the duty to mitigate?
The party in breach is not allowed to recover damages that it could have avoided without undue risk, burden, or humiliation. But they are not precluded from recovery if they have made reasonable efforts to avoid loss(RST 350)(Rockingham City v Luten Bridge)
How does mitigation work in employment K's?
The employee is under a duty to locate a position of the same rank and type of work in the same locale.
Who has the burden of showing that substantially similar work was available?
The employer
What if the expectation interest is not enough(due to limitations)?
Then the injured party has the right to the reliance interest.(RST 349)
Can a person collect reliance damages on a losing K?
Yes, but they can be reduced by the amount the party in breach can prove with reasonable certainty that th injured party would have lost.(RST 349)(Mistletoe Express Service v LOcke)
What is the best course of action if the K was a loser?
THe best course of action is to sue for the restitution interest
How may the restitution interest be measured?
It may as justice requires be measured as;
1. the amount that it would have cost the other party to get the service from someone else(cost avoided), or
2. The increased value to the other party(benefit conferred)(RST 370)
Can a party get restitution if all that is left is for the other party to pay?
NO. (RST 373)
What is restitution for the party in breach called?
Quantum meruit
How much can the party in breach recover under quantum meruit?
The cost avoided or benefit conferred minus any damages caused by the breach.(RST 374)(Britten v Turner) Cap will be the K price.
What is a quasi K?
Contracts that can be implied from actions
What are the characteristics of a quasi K?
1. When one performs for another a useful service that is usually charged for
2. The party does not dissent or avails themselves to the service
3. There is no indication that the party suing intended to do the action gratuitously(Martin v Little Brown & Co.)
4. the benefit cannot be officious(the other party must be able to reject the offer)
What kind of damages will the court award for Quasi Ks?
Usually the the greater of the cost avoided or the benefit conferred(Except in cases where the party in breach's life was saved-too high of a cost-go to cost avoided)
When will a court award specific performance?
When the remedy at law is inadequate. Usually when the k concerns a unique subject matter or where damages can not be measured with reasonable certainty.(RST 359)
Will a court enforce SP in employment K's?
NO, there is a strong presumption against this(too close to slavery)(The case of Mary Clark)
Will a court enforce a negative injunction in an employment K?
Yes, if the employee is a person of exceptional skill or unique knowledge of the service called for in the emplyment K(Dallas Cowboys v Harris)
Can a K liquidate damages?
Yes, as long as they are reasonable in light of the anticipated or actual loss caused by the breach and by the difficulties of the proof of loss.(RST 356)
What if the LD's are unreasonably high?
Then they are void as a penalty clause.(RST 356)
Are punitive damages available?
Generally no, but if the conduct alleged is also a tort, or in K's involving a high level of trust(insurance, or utilities) they may be available.
What is intentional interference with K formation?
When one intentionally and improperly interferes with the performance of a K between another person and a third party by inducing or otherwise causing the 3rd person not to perform the the K(RST TORTS 766)(Lumley v Guy)(Texaco v Pennzoil)
What is a party's liability if they are found to have interfered with k formation?
They are liable for all pecuinary loss resulting from the failure of the 3rd person to perform the K.
What if the person interfering with the K thought that the agreement b/w the other parties was not legally binding?
It does not matter. Knowledge of the k with which they are interfering is enough to impart liability.(Texaco v Pennzoil)(COmment to RST Torts 766)
How may a K be formed under the UCC?
A K can be formed in any manner sufficient to show agreement including conduct by both parties(UCC 2-204)
Does a K fail if one or more terms are left open under the UCC?
NO, if the parties intended to K and there is an appropriate remedy the K will not fail.(UCC 2-204)
Is an offer that stated it would remain open for a period of time revocable under the UCC?
NO, under the firm offer rule an offer that by its terms assures that it will be hed open is not revocable during the time stated or a reasonable time.(UCC-2-205)
How is a merchant defined under the UCC?
Under UCC 1-104 a person who deals in goods of the kind under the K , or a person who holds themselves out as having special knowledge of the goods.
Unless otherwise indicated by the offer how can a person accept under the UCC?
In any medium reasonable under the circumstances.(UCC 2-206)
How will an order or offer to buy goods be construed to invite acceptance?
By promise to ship or by shipment.(UCC 2-206)
What if acceptance is by the requested performance and the offeror has not been notified of acceptance?
After a reasonable time has passed the offeror can treat the offer as having lapsed before aceptance.(UCC 2-206)
What if an acceptance includes additional terms under the UCC?
A definite and seasonable expression of acceptance will not fail if it states additional terms unless acceptance is expressly made conditional on the additional terms.(UCC 2-207)
How are additional terms to be construed under UCC 2-207?
UNless the parties are merchants, then the additional terms will be construed as proposals that can be accepted or rejected.
How are additional terms treated in a K between merchants?
Thye become part of the K unless;
1. The offer expressly limits acceptance to the terms of the offer,
2. They materially alter the terms(exclusion of warranties is included here)
3. Notification of objection to the terms has already been given or is given within a reasonable time after notice of them is received.(UCC 2-207)
In cases where the parties disagree about the terms which terms apply under the UCC?
The terms that they agree on, and any supplementary terms included in the UCC.(2-207(3))
What if the K is silent about price, time/place of delivery, or time when payment is due under the UCC?
The UCC will fill these gaps
2-305(Open price term)
2-308(open delivery term)
2-309(time for delivery term)2-310(open time for payment) Usually they will be filled with "reasonable" terms.
What is the standard measure of damages for breach of K under the UCC?
THe standard measure of damages is the difference in the K price and the market price at the time of the breach together with any incidental or consequential damages.(UCC 2-713, UCC 2-708)
How does the UCC define incidental damages for a seller's breach?
Any reasonable expenses incurred in storing or transporting goods rightfully rejected, or any commercialy reasonable charges incurred in effecting cover(2-715)
How does the UCC define consequential damages for a seller's breach?
Losses the seller had reason to know about at the time of contracting, and which could not be prevented by cover.(UCC 2-715)
HOw do sellers/buyers usually mitigate damages after a breach?
By covering(either selling or buying the good from someone else). It must be done in a reasonable way.
How does the UCC define incidental damages for a buyer's breach?
Any commercially reasonably expenses incurred in stopping delivery, transportation, the care/custody of the goods resuliting from the breach or in connection with the return of resale of the goods.(2-710)
Under the UCC what if market damages are inadequate to put the seller in as good a position as performance?
Then the seller can recover his lost profits plus incidental damages(Lost Volume Doctrine)(Neri v Retail Marine)UCC 2-208(2)
When does a buyer have the right to SP under the UCC?
When the goods are unique or in other proper circumstances. Buyer has the right to SP if after reasonable effort he is unable to effect cover for such goods, or the circumstances reasonably indicate that such effort will be unavailing(UCC 2-716)(Sedmak v Charlie's Chevrolet)
What is the action for the price?
When a buyer fails to pay the price when it is due, the seller can recover k price. He must hold onto the item to give to the buyer, or if he sells it credit the sale money back to the buyer.(UCC 2-709)
Are liquidated damages allowed under the UCC?
Yes, as long as they are reasonable in the light of the actual or anticipated harm.(UCC-2-718)
Is a buyer allowed to recover his deposit in the case of a breach?
Yes, any amount above the amount of market damages may be recovered. The buyer is entitled to restitution of any amount in excess of the liquidated damages, or if there are not LD's 20% of the purchase price or $500 whichever is smaller.(Exception for the Lost volume doctrine)(Neri v Retail Marine)
How does the UCC define consequential damages for a buyer?
Any loss from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise.(UCC 2-715)