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UCC ARTICLE 2
Article 2 of the Uniform Commercial Code applies to transactions involving the sale of goods.
GOODS
Goods are things that are moveable at the time they are identified to the contract.
MOVABLE
IDENTIFIED
MIXED CONTRACT – GOODS AND SERVICES
Where a contract involves goods and services, the court will look at what aspect of the contract predominates to determine which law to apply. The value of goods versus the value of services will be the measure.
COMMON LAW FOR CONTRACTS
Any contracts not governed by the UCC are governed by common law.
UCC STATUTE OF FRAUDS
Under the statute of frauds, contracts for the sale of goods for $500 or more must be signed by the party to be charged to be enforceable.
CONTRACT FORMATION
an enforceable K requires an offer, acceptance, consideration, and no defenses to formation.
OFFER
An offer is a commitment communicated to an identified offeree with definite and certain terms.
LAPSE OF TIME
if the offer is stated to be open only for a fixed time, the offeree must accept within the time specified.

If no time is soecified, then within a reasonable amount of time.
TERMINATION OR REVOCATION
An offer may be revoked or terminated at any time, unless the offeree pays some consideration to keep the offer open.
HOW DOES ONE REVOKE AN OFFER? WHEN IS IT EFFECTIVE?
Revocation occurs by words or conduct terminating the offer and is effective when received by offeree.
OPTION CONTRACTS
In an option contract the offeree gives consideration for a promise by the offeror not to revoke an outstanding offer.

Option contracts are sometimes enforceable without consideration.
UCC MERCHANT’S CONFIRMATORY MEMO
If one party, within a reasonable time after an oral agreement has been made, sends to the other party written confirmation, that is sufficient under the SoF to bind the sender.

It will also bind the recipient if he has reason to know of the confirmation’s contents; and does not object within 10 days.
MERCHANT TO MERCHANT
REASONABLE TIME
WRITTEN CONFIRMATION
SATISFY SOF
REJECTION
an offer is rejected by the offeree if the offeree uses words or conduct rejecting the offer and is effective when received. A counter-offer acts as a rejection.
TERMINATION BY OPERATION OF LAW
Illegality, death or destruction of the subject matter, and death or incapacity of offeror or offeree.
MIRROR IMAGE RULE
Under common law, acceptance must mirror the offer to be effective, otherwise it will be considered a mere counter-offer.
UCC ACCEPTANCE
an acceptance which adds terms to the offer is valid. Between merchants, the additional terms become part of the contract unless they materially alter the contract; unless the offeror objects or unless the offer is limited to its terms. (UCC § 2-207)
MAILBOX RULE
a written offer or acceptance of offer is valid if sent in the mail within the time in which the offer must be accepted, unless the offer requires acceptance by personal delivery on or before the specified date.
CONSIDERATION
Consideration is a bargained for legal exchange. The parties must exchange something, either a promise for a promise or a promise for an act. If consideration is a return promise, it must not be illusory
"PRE-EXISTING" DUTY RULE
if a party does or promises to do what he is already legally obligated to do, or if he forbears or promises to forbear from doing something which he is not legally entitled to do, he has not incurred a "detriment" for purposes of consideration. If a pre-existing duty was discharged, PED rule is inapplicable.
PROMISE TO PAY FOR PAST WORK
a promise to pay for past work or something already given is not enforceable because there is no bargained for exchange.
PROMISSORY ESTOPPEL
requires that the promisor should reasonably expect to induce action or forbearance, and such action or forbearance is in fact induced. The promisee must actually rely on the promise. The promisee’s reliance must also have been reasonably foreseeable to the promisor.
COMMON LAW STATUTE OF FRAUDS
under the Statute of Frauds, a contract that by its terms cannot be performed within one year must be in writing.
CONTRACTS COVERED BY THE SOF
Marriage Ks Surrety Ks K’s the subject matter of which is an interest in land Service Ks there was no logical possibility to complete performance within one year from the date of formation.
EVIDENCE NECESSARY TO SATISFY SOF
Writing or Part Performance of Land or Sales Contract
INCAPACITY
If a party lacks capacity the contract is voidable at the discretion of that party. If that party gains capacity it can affirm the contract, making it enforceable by both sides. People under 18, mental incompetents, and intoxicated persons lack capacity.
ILLEGALITY
if the subject matter of the K is illegal the contract is void.
UNCONSCIONABILITY
a modification may be voidable where the additional term or different term is so one-sided to be unconscionable.
MISTAKE
If both parties are mistaken as to a matter that is central to the contract it is voidable. If one party is mistaken the contract is voidable if the other party knew or should have known of the mistake.
DURESS, FRAUD
If a person is personally under duress to make a contract the contract is voidable. If the duress is economic in nature the contract is voidable if the party taking advantage of the economic pressure committed wrongful conduct that created the pressure or made it worse.
CUSTOM AND USAGE IN THE INDUSTRY
courts will generally look to see what custom and usage is in the particular business and the particular location where the contract is either made or to be performed in order to interpret the contract or enforce provisions.
COURSE OF DEALING BETWEEN THE PARTIES
previous conduct between the parties to a particular transaction will be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
MISTAKE AND AMBIGUOUS TERMS
where a contract describes its subject using terms reasonably susceptible to more than one meaning, there is no enforceable K unless: both parties subjectively had the same meaning in mind, or one party knew or should have known that the other party had a different meaning in mind. (K terms are what the unknowing party had in mind.)
PAROL EVIDENCE RULE
if there is evidence in writing the terms of the contract cannot be altered by evidence of any prior or contemporaneous oral or written (parol) agreements purporting to change, explain or contradict the written document. If the writing is final but not complete parol evidence can be introduced to add a term. If the writing is both final and complete then the contract cannot be changed or added to by any prior or contemporaneous oral or written agreement.
EXCEPTIONS TO THE PE RULE
PE Rule does not limit the admissibility of parol evidence to show that there is a defense such as fraud, duress, or mistake. PE Rule generally does not limit admissibility of parol evidence to interpret the agreement.
MODIFICATION
Modifications are made during subsequent discussions regarding the terms of the contract.

New consideration is necessary to support contract modifications under the common law.

Under the UCC, no consideration is needed so long as the modifications are made in good faith.

A modification may need to satisfy the Statute of Frauds
CONDITIONS
a condition is an event that must occur or be excused before the promisor has a duty to perform. There can be express conditions written into the K, or constructive conditions the law will imply into the K under circumstances having to do with the sequence and duration of the performances.
EXCUSE OF CONDITIONS
if there is a condition on the duty of a party to perform, that party’s duty does not arise, and it cannot be guilty of breach for failure to perform, unless the condition is satisfied or excused.
FAILURE TO COOPERATE OR PREVENT
if a party has some control over whether a condition on her duty to perform will be fulfilled, the condition is excused is she doesn’t try to fulfill the condition or if she tries to prevent its fulfillment.
ANTICIPATORY REPUDIATION
Where a party unequivocally repudiates before performance is due, conditions on her obligation to perform are excused and there is a breach.

If no clear repudiation, but there is reasonable doubt as to performance, the innocent party can demand adequate assurance of performance in writing.
ADEQUATE ASSURANCE
IN WRITING
VOLUNTARY DISABLEMENT
where a party engages in conduct that makes he unable to perform, conditions on her promise are excused.
ESTOPPEL
A condition is excused on the grounds of estoppel where: the party whose duty is conditioned says, before the condition was to be fulfilled, that it will perform even if the condition is not fulfilled, and the other party changes position in reliance on this statement.
WAIVER
a condition is excused by waiver when, after the condition was to have been fulfilled but was not, the party whose performance was conditioned, knowing there was a failure of condition, states it will still perform.
SATISFACTION OF CONDITIONS
Express conditions require complete satisfaction. Constructive conditions require substantial satisfaction unless:
DOCTRINE OF DIVISIBILITY
if a contract is divisible, conditions can be satisfied within its divisible parts.
DISCHARGE OF CONDITIONS
if all conditions have been excused or satisfied, promisor’s duty to perform is absolute. That duty must then be performed to avoid a breach unless the duty is discharged. A duty can be discharged by agreement or by operation of law
DISCHARGE BY AGREEMENT
Contract obligations can be discharged by mutual rescission, accord and satisfaction or novation.
MUTUAL RESCISSION
so long as neither party has performed, a mutual agreement to rescind discharges everyone’s duties.
ACCORD AND SATISFACTION
a new agreement to clarify duties is an accord, performance of an accord is satisfaction.
NOVATION
all parties to an existing contract agree to extinguish the rights and duties of one party and substitute another person in her place.
DISCHARGE BY OPERATION OF LAW
Contract obligations can be discharged by impossibility, impracticability, frustration of purpose, conditions subsequent.
IMPOSSIBILITY
duty is discharged when, after formation, something happens that makes it impossible for a reasonable person to perform. (death or physical incapacity, illegality, destruction of subject matter)
IMPRACTICABILITY
Some extreme and unreasonable occurrence creates a difficulty that was unanticipated
FRUSTRATION OF PURPOSE
Duties are discharged where a party’s purpose for the contract is destroyed by some unforeseeable event and the other party knew of this purpose at the time of formation.
CONDITIONS SUBSEQUENT
a conditions subsequent is one the occurrence of which cuts off an already existing absolute duty of performance.
BREACH
if all conditions have been satisfied or excused and the duty has not been discharged the duty must be adequately performed or there is a breach.
ADEQUATE PERFORMANCE
If the contract calls for complete and perfect performance or if the UCC “perfect tender” rule applies then performance must be complete. Otherwise the promisor gets credit for substantial performance.
PERFECT TENDER RULE
if it is a sale of goods case, where the contract calls for a single delivery, performance of seller must be perfect to satisfy the constructive condition on buyers promise to pay.
COMMON LAW REMEDIES
include compensatory damages such as expectancy damages, consequential damages, incidental damages, and possible liquidated damages.
COMPENSATORY DAMAGES
are damages awarded for civil cases. They are awarded to the successful party. In the case of the plaintiff, as a compensation for the pain undergone, and in the case of the defendant, for legal services and all hardships undergone during the trial.
EXPECTANCY DAMAGES
are the difference between the net value of what was promised and the net value of what was received, if anything from the breacher.
CONSEQUENTIAL DAMAGES
non-breacher can also recover other losses caused by the breach so long as reasonably foreseeable to breacher at the time of formation.
DUTY TO MITIGATE
non-breacher must use reasonable care and diligence to minimize the damages and to prevent additional damage.
INCIDENTAL DAMAGES
non-breacher may recover reasonable costs of mitigation.
LIQUIDATED DAMAGES
are a reasonable forecast of the actual damages that are likely to occur when actual damages are too difficult to calculate at the time the contract was formed.
QUASI-CONTRACTUAL RELIEF
where a promise is not enforceable, but one party receives a benefit from the other, the party bestowing the benefit may recover itrs reasonable value.
SPECIFIC PERFORMANCE
equitable remedy by which a party to a contract is ordered to perform on the contract according to its terms. Specific performance is available only where money damages would be inadequate.
COMMON LAW REMEDIES
include compensatory damages such as expectancy damages, consequential damages, incidental damages, and possible liquidated damages.
COMPENSATORY DAMAGES
are damages awarded for civil cases. They are awarded to the successful party. In the case of the plaintiff, as a compensation for the pain undergone, and in the case of the defendant, for legal services and all hardships undergone during the trial.
EXPECTANCY DAMAGES
are the difference between the net value of what was promised and the net value of what was received, if anything from the breacher.
CONSEQUENTIAL DAMAGES
non-breacher can also recover other losses caused by the breach so long as reasonably foreseeable to breacher at the time of formation.
DUTY TO MITIGATE
non-breacher must use reasonable care and diligence to minimize the damages and to prevent additional damage.
INCIDENTAL DAMAGES
non-breacher may recover reasonable costs of mitigation.
LIQUIDATED DAMAGES
are a reasonable forecast of the actual damages that are likely to occur when actual damages are too difficult to calculate at the time the contract was formed.
QUASI-CONTRACTUAL RELIEF
where a promise is not enforceable, but one party receives a benefit from the other, the party bestowing the benefit may recover itrs reasonable value.
SPECIFIC PERFORMANCE
equitable remedy by which a party to a contract is ordered to perform on the contract according to its terms. Specific performance is available only where money damages would be inadequate.
UCC SELLER’S WARRANTIES
Express and Implied (title, merchantability, fitness)
DISCLAIMING WARRANTIES
These eliminate the warranty. Express warranties cannot be disclaimed. Implied warranties may be disclaimed. To disclaim merchantability the disclaimer must mention merchantability and, if in writing, must be conspicuous. To disclaim fitness, the disclaimer must be in writing and conspicuous.
EXPRESS WARRANTIES
are made whenever the seller makes a promise about the goods, gives a description or factual affirmation about the goods, or exhibits a sample of goods, which is the basis of the bargain.
BASIS OF A BARGAIN
To be considered the basis of the bargain, it must occur when the buyer could have relied on it when she entered the k. The sellers intent is to warranty is irrelevant.
IMPLIED WARRANTIES
Implied warranties include warranty of title, merchantability and fitness.
WARRANTY OF TITLE
a seller always impliedly warrants she has good title.
WARRANTY OF MERCHANTABILITY
when goods are sol by a merchant, the seller warrants that the goods are fit for their ordinary use and are safe.
WARRANTY OF FITNESS
Seller warrants that the goods are fit for a specific purpose if the seller knows of the buyer’s purpose for buying and knows the buyer is relying on the seller’s knowledge and skill to select the goods.
BUYER’S REMEDIES
a buyer can reject the goods, revoke acceptance of the goods, and receive damages in the amount of the diminished value if he decides to keep them, or require specific performance if the goods are unique.
REJECTION
in a contract for a single delivery, buyer can reject any nonconforming shipment before accepting the goods, no matter how trivial the nonconformity.
REVOCATION OF ACCEPTANCE
buyer can revoke acceptance for substantial defect or nonconformity if the problem was difficult to discover at the time the goods were accepted or seller said the defect would be cured but it was not.
DAMAGES
if goods are delivered and buyer decides to keep them, buyer can sue for any breach of warranty and recover the diminished value of the goods.
SPECIFIC PERFORMANCE
available if goods are unique.
SELLER’S REMEDIES FOR BUYER’S BREACH
withhold delivery, stop and recover or seek a substitute sale and recover the difference.
WITHOLD DELIVERY
if a buyer breaches while goods are still in seller’ possession, seller may withhold delivery.
STOP AND RECOVER
If the seller ships goods and then buyer breaches, seller can stop and recover shipment if the buyer is insolvent.

If the buyer is not insolvent, seller can stop transit and recover only large shipments.
SUBSTITUTE SALE
if the seller still has goods it can seek a substitute sale and recover the difference between the contract price and the substitute sale price.
MERCHANT’S CONFIRMATORY MEMO RULE
For contracts between merchants, if one merchant sends the other merchant a signed letter of confirmation, or a preprinted form contract, it is enforceable if a writing and confirmation of the contract is received within a reasonable time unless written notice of objection to the contents of the writing is given within 10 days. Thus, the effect of this merchants exception is to take away from a merchant who receives a writing in confirmation of a contract the statute of frauds defense if the merchant does not object to the confirmation.
MERCHANT FIRM OFFERS
An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months; but any such term of assurance on a form supplied by the offeree must be separately signed by the offeror.
CONDUCT IN RECOGNITION OF A CONTRACT
Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract.

In such case the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this Act.
UCC DEFINITE AND SEASONABLE EXPRESSION
A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
UCC ADDITIONAL TERMS IN ACCEPTANCE OR CONFIRMATION BETWEEN MERCHANTS
Between merchants additional terms are to be construed as proposals and such terms become part of the contract unless:

(a) the offer expressly limits acceptance to the terms of the offer;

(b) they materially alter it; or

(c) notification of objection to them has already been given or is given within a reasonable time after notice of them is received.