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84 Cards in this Set

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What is a BARGAIN FOR EXCHANGE?
inducing another to do or refrain from doing an action that person has no legal obligation to do
What is consideration?
something (such as an act, forbearance, or return promise) bargained for and received by a promisor from a promisee which motivates a person to do something not legally obligated to do
What is the test for a bargain for exchange?
-is there evidence of a bargain?
-is the return promise sufficient consideration?
>is the return promise what the promisor is seeking?
>does the promise change the promisee's future rights?
What damages may be recovered in a Bargain for Exchange?
Expectation damages
Expectation Damages
being put in the situation that would have resulted had the contract been performed
What is PROMISSORY ESTOPPEL?
reliance on a promise where there is no evidence of a bargain
What is the test for promissory estoppel?
-was there a promise?
-was there reasonable reliance on the promise?
-did the promisee sustain detriment from the promise failure?
What damages may be recovered in Promissory Estoppel?
Reliance damages as justice may require
Reliance damages
being put in the position that would have resulted if the contract not been made, including out-of-pockets costs
What are the 2 forms of Moral Obligation?
1) where a promise is barred by law, a new promise is legally enforceable

OR

2) promise to pay for benefits previously conferred
-action done with the expectation of gain (not done gratuitously)
What damages may be recovered under Moral Obligation?
1) enforcement of the promise

OR

2) restitution damages
Restitution Damages
prevent the breaching party from retaining benefit under the contract and being unjustly enriched
What is a QUASI-CONTRACT?
a fictitious contract created by the court to do justice against the enrichment of one who benefitted at the expense of another
What are the requirements to create a quasi-contract?
-action performed with expectation of gain
-action performed under the "color of right" (and not an officious meddler)
-confer a benefit on another
-direct relationship between the parties involved
What damages are recovered under a quasi-contract?
restitution damages for the benefit incurred by another
Distinguish CONTRACT IMPLIED IN FACT and CONTRACT IMPLIED IN LAW
-parties manifest a contract by means other than express writing

-mutual assent is expressed through conduct (also called quasi-contracts)
What are the 3 elements of an offer?
-expressed intent
-clear articulation of terms of proposed bargain
-communication of intent and terms to another
How is the intent to be bound measured?
objective standard - whether a reasonable person in the position of the parties would believe assent shown by the other
How can intent be disproved?
-express intent not be bound in writing
-showing speech in anger, jest, hysteria, familial context, disporportionate value
What is an offer?
act where one person through words/deeds has present intent to give another the power to legally bind him in a contractual manner
What may be unacceptable as accepted as offers?
-a promise to make a future promise
-preliminary negotiations
-offers addressed to the public
When can an offer to the public acceptable?
-limited number available
-offeror communicated with the public at large
-no room for bargaining
What are the essential terms that must be communicated by the offer at Common Law?
-identification of the parties
-description of subject matter
-time for performance
-price
*courts may use reasonable "gap fillers" to fix an ambiguous contract
What is necessary for a contract for the sale of goods under UCC 2-204(3)?
-intent to make a contract
-reasonably certain basis for appropriate remedy
Who can accept an offer?
the person the offeror has invited to furnish the consideration
What mistakes make an offer unacceptable?
mutual mistakes

(contracts containing unilateral mistakes may still be accepted)
What is an acceptance?
voluntary act of offeree whereby he exercises the power conferred upon him by the offeror
What is the duration of an offer?
set by its own terms, statutory provisions, or act of parties
What is the rule for duration of the offer under UCC 1-204(2)?
reasonable time of the nature, purpose, circumstances of the offer"
When is an offeror free to revoke an offer?
at any time prior to the acceptance of the offer
What are the exceptions to revoking an offer?
-reliance on the offer
-option contract
-firm offer to buy/sell goods
What is the communication required for a revocation of an offer?
-direct communication to the offeree
-reliable source to the offeree that the offeror has changed mind and wishes to withdraw the offer
-if public offer, reasonable efforts to communicate to same audience
What is the Mirror Image rule?
content of acceptance must be mirror image of the offer, and only those terms
How does acceptance differ under the UCC?
-no requirement of mirror image rule
-acceptance through any medium reasonable under the circumstances
-if additional terms are added to the contract, they may become part of the contract
What does the UCC say about additional terms being added to a contract?
the new terms become part of the contract UNLESS
-offeror explicitly limits the acceptance to original terms
-terms materially alter contract
-terms rejected in a reasonable time
Describe a unilateral contract.
-offeror has future duty, offeree has future rights

-accepted only when completed, but offer becomes irrevocable after performance begins
Describe a bilateral contract.
-both parties have future duties and future rights

-offers complete protection and immediate rights to both parties

*if a contract is unclear, it is usually interpreted to be bilateral
What is the Mailbox Rule?
-only valid if expressly stated or implied in contract
-acceptance is good when placed in the mailbox (if mailed before a revocation, the revocation is not enforceable)
-revocation is not effective until it is received
Under UCC 2-205, what is a firm offer?
-offer cannot be revoked for a fixed time
-must be in writing and signed by offeror
How do courts determine whether terms materially alter a contract under the UCC?
significant shifts in:
-economic advantage
-allocation of elements of risk inherent in transaction
-prejudice to remedies which would otherwise apply if breached
Does silent constitute acceptance?
No, with exceptions:
-previous dealings where silence has been treated as acceptance
-offeree retains goods tendered under an explicit offer
What are some situations that are not consideration for a bargain?
-past payment or value
-pre-existing duty
-accord and satisfaction
-token consideration
-illusory promise
What are the 5 types of DEFENSES to forming contracts?
1) defective formation
2) capacity
3) societal prohibition
4) coercion/deception
5) form
What are the 2 types of defective formation?
ambiguity
mistake
What is Ambiguity?
when parties form a contract where a word or phrase for an essential term has more than one reasonable meaning
What is mistake?
where words do not accurately convey parties' subjective intent

mutual mistake - both parties are mistaken
unilateral mistake - only one party is mistaken
Describe mutual mistake.
the mistake must be SIGNIFICANT and involve fundamental assumption of BOTH PARTIES about a PRESENT FACT discovered in REASONABLE TIME
Describe unilateral mistake.
-mechanical miscalculations
-expectation
What are the CAPACITY defenses?
-minors
-mental disability or infirmity
Describe capacity as a minor for defense.
-obligations are voidable
-occurs when minor chooses to opt out of contract
-must restore any goods or benefits still in possession or pay restitution
-contracts for necessity items are binding
What is ratification?
after legal majority, minor makes new promise to assume liability of contract formed while a minor
What are defenses of SOCIETAL OBJECTION?
-illegality
-unconscionable bargains
-against public policy
What is an unconscionable bargain?
so unfair and grossly one-sdied as to threaten important social values

-determined in eyes of beholder
What are defenses based on fraud?
-real fraud
-fraud in inducement
What is real fraud?
any deceptive strategy which prevents victim from realizing contract is even contemplating
What is fraud in inducement?
victim aware contract contemplated, but consent induced by lies or half-truths
What is duress?
coercive force used or threatened against victim to induce consent

-physical
-economic
What is an adhesion contract?
formed by a take-it-or-leave-it proposition extended by party in superior bargaining position to weaker party in need of subject matter
What is the test for an adhesion contract?
- is there a dominant and subservient party?
- is there a limited ability to negotiate terms that only benefit the dominant party?
What is the defense of the Statute of Frauds?
- applicable only to contracts fitting requirements

> suretyships
> contracts more than 1 year
> contracts for sale of goods over $500
> sale of real property
What is a suretyship?
oral agreement to pay the debt of another

exception: where main objective is to benefit self, oral contract can be enforced
What are the essential terms under the Statute of Frauds?
- parties
- price
- subject matter
- time of performance
What is the parole evidence rule?
precludes introduction of any terms of contract other than those reduced to an integrated writing

cannot be waived and completely bars all prior or contemporaneous evidence agreements
What is an integrated writing?
the writing adopted as the final expression of terms of the agreement

- determined by document language
- determined by extrinsic evidence
Impact of a collateral agreement on a partially integrated contract.
- must be of lesser impact than the contract
- no contradiction of any term of the contract
- sufficiently distinct that makes sense why not included in original
What is a condition?
event, not certain to occur, which must occur, before performance under a contract becomes due

**if ambiguous, will be interpreted to mean a promise
What is a pure condition?
non-occurrence excuses performance of a duty
What is a promissory condition?
excuses any promises conditional on the act, and constitutes a breach of contract
Distinguish a DEPENDENT covenant and an INDEPENDENT covenant.
D: imposes a duty that depends on the other party's prior performance, so that until the performance, the other party does not have to perform

I: imposes a duty that does not depend on the other party's prior performance.
What is significant about non-concurrent conditions and performance?
where performance will take time or requires stages to achieve, and the other performance can occur at one time, the party who requires time to perform must perform first
How can a condition be removed to enforce a contract?
- satisfaction
- excuse
What is the effect of substantial performance on satisfaction?
- requires other party to perform, but claim for minor breach of contract

- not applicable under the UCC
What is the UCC doctrine for satisfaction in place of substantial performance?
Perfect Tender

seller fails to conform to terms of contract, buyer may reject whole, accept whole, or accept any unit and reject rest
What is prevention and its impact on conditional performance?
- attempt by advantaged party to intentionally frustrate the satisfaction of a condition

- grounds for non-performance
What is waiver?
- where party whose duty is conditional may promise to perform despite the non-occurrence of the condition
what is estoppel?
where a party waives a condition, BEFORE the time for occurrence and the party relies on this waiver

**satisfaction of the condition cannot be requested
What is election?
where a party waives condition AFTER time of performance
What is anticipatory repudiation?
announcement, before time for occurrence of a condition, of intent not to perform the contract
What happens after anticipatory repudiation?
other party may:

- sue immediately for material breach

- affirm contract and await due date of performance as invitation to recommit
What is the rule about assurance of performance?
when reasonable grounds for insecurity about future performance:

- the insecure party may make a written demand for assurance and suspend performance until reply
- if no reply in reasonable time, may be treated as repudiation and breach
What are ways to excuse non-performance of a contract?
- impossibility
- impracticability
- frustration of purpose
What is impossibility?
promised performance cannot be done because of events neither foreseen nor reasonably foreseeable by parties
What is impracticability?
- an unexpected contingency arises subsequent to formation of the contract
- risk of occurrence was not allocated to party seeking excuse either by terms of bargain or custom
- consequence must render performance commercially impracticable
What is frustration of purpose?
turn of events thwarts party's object in making the contract

- unforeseen event occurred
- value of other party's performance has been near to or totally destroyed