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175 Cards in this Set

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When does Article 2 of the UCC apply?
When you have a sale of goods. It doesn't matter if both parties are merchants and it doesn't matter the price
What about leases for goods?
ON the MBE, they will be governed by CL.

On the NYBE, they will be governed by Article 2A of the UCC
Define contract, express contract, and implied contract?
An express contract is created by the parties words, either oral or written.
An implied contract is created by the parties' conduct
A contract is a legally enforceable agreement.
What is a quasi-contract and what is it designed to do?
Its a remedy in equity that applies wherever contract law yields an unfair result. ITs designed to protect against unjust enrichment.

Begin an answer with "However, there may still be a cause of action in...."
How can an offer in a bilateral contract be accepted?
In any reasonable way?
How can an offer in a unilateral contract be accepted?
Ony by performance.

Every contract is bilateral unless the offer says it can be accepted only by performing
How should you approach a contract formation question?
1. Look for an agreement
2. See if it is legally enforceable (defenses against formation)
Is an advertisement an offer?
Usually not. Only if specifies quantity and specific person.
Are requirements contracts definite enough, even though there is no specific quantity mentioned?
Yes. An offer to buy all the beans you need for your restaurant from one store is valid.
When and when aren't open price terms valid?
Not valid under common law, but are under Article 2 sales of goods (fills gap with a reasonable price)
When does an offer become not valid?
After the stated term or after a reasonable time has passed.

Or after offeror revokes.
What are the 2 ways an offerror can revoke?
Direct- "I do not want to sell anymore to you"

Indirect- "I sell to X and you tell Y who i originally offered to"
Conduct that unambiguously indicates that i've changed by mind.
When is a revocation of an offer effective?
Only on receipt. (not when i mail it) mailbox rule does not apply.
What are the 4 situations where an offeror cannot revoke?
1. OPtion
2. Reasonably foreseeable reliance
3. Beginning Performance
4. Firm offer under Article 2.
Why is an option not revokable?
b/c the right to revoke was bargained away
What is the only fact pattern where reasonable foreseeable reliance before acceptance makes the offer nonrevokable?
Contractors relying in subcontractors bids
What are the differences in NY and MBE about beginning performance and whether the offer is revokable?
On MBE, once performance begins, you can't revoke.
IN NY, an offer to enter into a unilateral K can be revoked until performance has been completed
What is a firm offer?
Under Art. 2 its a signed, written promise by a merchant to keep an offer open

Limit is 3 months. YOu can't say you will keep an offer open for 6 months.

IF it does not state a time period, its for a reasonable time, not to exceed 3 months.
What does a counteroffer operate as?
A rejection. Mere bargaining does not operate as a rejection though.

I will only pay X = counteroffer
Will you accept X? = Bargaining
What does a conditional acceptance operate as?
A rejection.

Look for "provided that," "so long as," "if"
What is the divergenace about ADDITIONAL TERMS?
Under Common Law, they are a rejection. Mirror image rule applies.

Under Article 2, additional terms drop out and only become part of the contract if

1. both parties are merchants
2. the term is not a material change
3. the offeror does not object within a reasonable time.
Typically do these additional terms become part of the contract?
No, different terms usually just drop out. Same is ture of offeree's different terms
What is a material change? Is custom a material change?
Any change that will provide hardship or surprise for offeror. Additional terms that are customary are not a material change.
How can the offerro keep out insignificant or minor changes?
Simply be rejecting them.
What happens if either party dies before acceptance of the offer?
It terminates an offer, unless there's an option
Can an offer control the manner of acceptance?
Yes, sometimes. Normally saying something like "only by doing this can you accept this offer" will be allowed.

If you say "must be..." you can accept by making a promise.
In a unilateral contract (Painter can accept ONLY by painting the house), if offeree starts performance, have you accepted the offer so that you are bound to finish the job?
NO. Painter does not have to finish the job.
Does improper performance operate as acceptance?
Usually, yes. Improper performance is simultaneous acceptance of the offer and breach of a contract.
Why are "as an accomodation" magic words?
Because they are not acceptance of the offer and therefore are not breach. It signifies a counteroffer.
IS silence acceptance?
No. Offerror cannot singlehandedly turn offeree's silence into acceptance.
What is the mailbox rule?
An acceptance is effective when mailed.

IT doesn't matter if it gets lost
What are the exceptions to the mailbox rule?
It does not apply if the offer provides otherwise

Does not apply to an irrevocable offer

Acceptance, than rejection (MB rule applies unless rejection gets there first and offeror relies on the rejection)

Rejection ,then acceptance: whichever arrives first is effective.
What are the defenses to lack of capacity?
Under 18, intoxicated, mentally incompetent

INcapacitated defendant has the right to disaffirm the contract.

Incapacitated party can impliedly affirm a contract by retaining the benefit of the contract
IS an incapacitated liable for necessaries? (ie food, shelter, clothing, medical care)
Yes, but only on a quasi-contract basis, ie a reasonable price.
Are contracts formed under durress enforceable?
No. And economic durress is not enforceable, but to prove it:


1. a threat to break an existing K unless person gets a better deal.
2. Other party agrees only b/c he needs to get the 1st deal done.
3. There are no reasonable alternatives.
What about misrepresentation/nondisclosue about a Material Fact?
No K. Even if its an honest and innocent misrepresentation, as long as its material, its a fatal flaw
What about ambiguity of term?
If both are clueless, no K
If one of them knows, the terms are in favor of the clueless one, because we want to encourage the knowledgeable one to disclose.
What about mutual mistake?
No K. If its a mistake about market value, its not considered material, so you do have a K.
What about unilateral mistake?
ONe party's mistake is not a fatal flaw, unless the other party knows or has reason to know about it. [think about it: if this wasn't the rule, you could get out of a K by making something up]
What is lack of consideration?
Its a lack of a "bargained-for legal detriment/benefit"
Can past consideration constitute consideration?
No. You can't bargain for something that's already done.
What is the NY distinction on past consideration?
In NY, past consideration is binding if its expressly stated in a signed writing and can be proven
Does the adequacy of the consideration matter?
No. law doesn't care.
What is the pre-existing duty rule?
Under CL, must have consideration to modify a contract.
If i agree to sing at a club for 24K, and then demand on arrival, 30K and owner agrees, and then after the show, he won't pay me the extra 6K, what can i do?
Under common law, you don't have any consideration for the modification. SO you won't get the extra money.
What if the contract modification without consideration is in writing?
It doesnt matter for MBE, but in NY pre-existing duty rule does not apply if its signed and in writing
Can the preexisiting duty rule be raised by a 3rd party?
ONly a defense that can be raised by the original party K
What is the Artiicle 2 rule for modifying a K?
You don't need consideration, but you must show good faith
WHen is part payment consideration for a promise to forgive debt?
When that debt is in dispute. If the debt is not in disupte, they can still sue you for the rest.

In NY though, if its wiriting its ok.
IF the collection of debt is barred by a SOL, is it enforceable even without consideration if its in writing?
Yes, in both MBE and NY the signied writing is valid consideration.
What is promissory estoppel?
Its a way to get a K even if there's no consideration. You just need a promise and foreseeable, detrimnetal reliance on that promise.
Are illegal contracts valid?
No
What are the main public policy question?
Coveant not to compete and exculpatory clauses.

Court will invalidate or narrow them. Policy is to balance freedom of contract w. restaint of trade. The only time it will allow them is with somebody unique, like the chef of tavern on the green rather than the busboy

AN exculpatory clause eliminates liability for negligence. They are valid for negligence, but you can never contact away gross neglignece
What should you keep an eye out for unconsciounability?
Look at oppressive terms or unfair surprise at the time of the agreement. It can be both substantive (slavery) or the process (fine print, legales, unequal bargaining power)
What are the three things to keep in mind for the statute of frauds?
1. Do you need a writing (most of the time, no)
2. DO you have a satisfactory writing
3. If you don't have a writing, is there an exception
What is a classic example of something that must be in writing to be enforced?
The transfer of an interest in real estate (any interest, including an easement)

NOt for leases less than one year
A service contract that cannot be fully performed within one year from the date of the agreement must be in writing to be enforceable?
Yes. But service contracts are usually presumed to be performable within a year, so they are not covered by the statute of frauds.
What about lifetime contracts?
In the MBE, they don't need to be in writing
IN NY they do and they fall w/in SoF
What a bout a specific time period in excess of 1 year for employment>
Falls w/in SoF
What if its for an event 1.5 years out?
Must be in writing, falls w/in statute of frauds.
What is the dollar cutoff for a sale of goods to fall within Article 2's Statute of Frauds?
$500 or more
What is the dollar cutoff fo ra lead of goods to fall within Article 2's Statute of Frauds?
Where total lease payments total $1000 or more.
What suretyships and must it be within the statute of frauds?
Its a promise to "answer for" the debt of another" And its within the statute of frauds.

Note, a suretyship is a back up promise, just a regular promise doesn't count.
Do Prenups and Postnups fall witin the statute of frauds?
Yes. A promise given in considerations of marriage must be in writing.
What are some other miscellaneous provisions of the NY statute of frauds?

FID
Insurance Policy, Promise to pay a discharged debt, agreement to pay finder's fee or broker's commission

Finder's Fee
Insurance Policy
Promise to pay a discharged Debt
What's the rule about statute of frauds with regards to modifications?
Only if the contract as modified falls within the statute of frauds.
Under Common Law are clauses that prohibit oral modification enforceable?
No. So under the common law, feel free to modify your contracts orally and know that they will be enforced.
What kind of writing will satisfy the Statute of Frauds? [sale of goods]
The sale of goods must contain a quantity term an dbe signed by the defendant (the party asserting a Statute of Frauds defense)
What kind of writing will satisfy the Statute of Frauds [ lease of goods]
Writing must state its a lease, include the number of itemse leased, the term, and rental payments; and be signed by the defendant.
What kind of writing will satisfy the Statute of Frauds [ All other prongs]
The writing must contain all material terms "who" and "what" and be signed by the defendant.
What does it mean, the Statute of Frauds can be a 1 way street?
It means I can sue you under a statute of frauds defense, you can't sue me.
What is the "Real Estate, Part performance" exception to the Statute of Frauds?
Part performance eliminates the need for a writing. Part perofrmance is 2 out of 3 of the following 1)Some payment 2)Buyer makes permanent improvements 3) Buyer is in possession
What is the exception with regard to service contracts longer than 1 year?
Full performance eliminates the need for a writing (partial performance is not enough)
What is the statute of frauds exception with regards to the sale of goods?

4 of them
MACA
1. Any goods that the buyer accepted or paid for, you can't use the statute of frauds defense

2. Custom made goods not suitable for sale to others

3. Judicial admission in a pleading, in testimony or in response to testimony

4. Merchant's confirmatory memo
what is a merchant's confirmatory memo?
A merchant can use its own writing to satisfy the Statute of Frauds against the other party to the contract if:

1. Both parties are "merchants"
2. The writing claims there is a prior oral agreemnt
3. The recipient doesn't object in writing within 10 days.

Usually its when busines is conducted on the phone and then one side follows up. This satisfies the Statute of Frauds against the other merchant.
What is the exception on the MBE with regard to suretyship?
If the surety's main purpose in making the promise was to benefit himself, then there's no need for a writing on the MBE
True or false, written authority to enter a contract on behalf of a nother person is required if the underlying contract falls within the statute of frauds?
True
What is the Parol Evidence Rule (PER)?
Keeps out evidence of a prior agreement that contradicts a later writing (policy is to respect a later writing)
What does every PER problem on the MBE require?
A writing
What are the exceptions to the PER? (where the parol evidence gets in)
1. To correct a clerical error
2. To establish a defense against formation of an agreement
What about vague and amiguous terms?
IT is another exception to the PER. YOu can always get in evidence to show what a term means if a term is ambiguous
Can PE be allowed in to supplement a "partially-integrated" writing [ a final statment of the terms included, but not a complete statement]?
Yes. as long as its not complete on its face. ANd as long as there isn't a Merge clause
Does the PER have anything to do with what happens after an agreement is reduced to writing.
No. In that case, the modification rules apply and modification needs consideration.
What are the 3 ways that conudct can be used to explain terms or fill in gaps?
1. Course of Performance (bw the parties under this K)
2. Course of dealing (what parties did under earlier K's with one another
3. Usage of trade (what others in the trade do under similar K's
What constitutes an express warranty?
A seller is liable to a buyer for breach of any express warranty. Statements of fact, promises, descriptions, and samples or models are express warranties.

To be actionable, an express warranty must be a basis of the bargain (if a buyer could have relied on the warranty, it's a basis of the bargain)
What is the implied warranty of merchantability?
That goods are fit for their ordinary purpose.

Key: S is a merchant who deals in goods of the kind because this is associated with special knowledge about the particular goods involved.
What is the implied warranty of fitness for a particular purpose?
The goods are fit for the buyer's special purpose.

The buyer has a special purpose in mind, the buyr is relying on the seller to select suitable goods; and the seller knows both of these facts.
What is the rule with regards to warranties of quality wrt Lease of Goods under Article 2A?
There is an implied warranty of merchantability.

With finance leases (leasing something from a bank) there is no implied warranty of merchantability
Can a seller disclaim implied warranties? Express warranties?
Yes, no.
How do you disclaim implied warranties?
You say the magic words, "as is" "with all"
A seller can limit a buyer's remedies for breach of any warranty if the limitation is not unconscionable. With consumer goods, what's considered unconscionable?
Limiting a buyer's remedies for personal injury
When goods are damaged before the buyer gets the goods and neither the buyer nor the seller is to blame, who bears the risk of loss?
If seller, the seller must provide new goods to the buyer for no additional costs or be liable for breach of K

If buyer, buyer must still pay the K price
What is the hierarchy that determines who bears the risk of loss?
1. Agreement of the party controls
2. Breaching party bears any uninsured loss, even if the loss is unrelated to the breach.
What are the two types of delivery by common carrier?
1. Shipment K (seller must get to a common carrier)
2. Destination K (seller must get goods to a specific destination) (where the buyer is located)
Who has the risk of loss in a shipment K?
Risk shifts to the buyer when the seller complete its delivery obligations
What does FOB San Antonio mean?
It means "Free on Board" and San Antonio is where seller lives, it means its a shipment K and once seller ships it, risk of loss shifts
how is risk of loss distributed wrt non-carrier cases?
Depends on whether the seller is a merchant.

If the seller is, seller bears the risk of loss until the buyer takes possession

If not, seller bears the risk of loss until seller tenders the goods (ie makes them available)
What is the key, if a K gives the buyer the right to return the goods
IT matters whether B is buying primarily for resale or for his own use.

For resale ("sale or return") same rules apply

For the buyer's own use ("sale on approval"), the risk of loss remains on the seller until the buyer has accepted the goods
Who bears the risk of loss on a lease of goods (Article 2A)
the lessor bears the risk of loss, except in a finance lease.
What is the perfect tender rule?
A seller must deliver perfect goods in the right place at the right time. If tender is nto perfect, buyer has the right to reject the goods.
What is the cure for violation of the perfect tender rule?
A seller who fails to make perfect tender may have an option to cure. It usually depends on whether the time for the seller's performance has expired.
How can I the seller get the right to cure even though the K deadline has passed?
IF the S had reason to believe Buyer would take yellow shirts based on past conduct.
Does the perfect tender rule apply to an installment sales K?
No.

B has the right to reject an installment only if there is a substantial impairment in the installment that cannot be cured.

B has the right to reject the entire K only if a defect in an installment substantially impairs the value of the whole K
What is implied acceptance?
It occurs when the B keeps the goods w/o objection after having an opportunity to inspect.
Once a buyer accepts goods, its too late to _____
Reject them. However a buyer who accepts non-conforming goods can still get damages though revocation
When can a buyer revoke acceptance?
As a general rule, he can't. However if the non-conformity substantially impairs their value and was difficult to discover, he can
Does it matter whether a buyer rejects goods or revokes acceptance?
No. Either way, he can return the goods to the seller, get his money back, and sue the seller for breach.
What happens if I the seller insist on cash?
I can do it, but I have to give buyer additional, reasonable time
For Common Law Contacts, what's the standard for performance?
Need not be perfect, substantial performance is enough, ie, can't commit a material breach.
What happens in a sale of goods if tender is not perfect?
3 options.

1. Accept All
2. Reject All
3. Accept any commercial units and reject the rest.

Note: whichever options B chooses, he can still get damages.
In common law what damages are available in the case of breach?
Damages are available for any breach, but only a material breach excuses th einjured party from having to perform
So if i don't have to pay because my obligor materially breached, what rights does my obligor have?
He can still recover in quasicontract for the reasonable value of the benefit conferred.
What effect does an anticipatory repudiation have?

[you know what, you're fucking it up, stop painting the house]
Its an excuse for non-performance. Its essentially a material breach.

[ok, im going to stop painting the house and im going to sue you for damages]
What if I retradct my anticipatory repudiation?

[ok, im sorry please go back to painting the house]
Its ok as long as the other party hasn't relied on it.
How can a rescission be effective?
For a rescission to be effective, each party must have some performance remaining, otherwise no consideration for the agreement.
What is a modification?
Its an agreement replacing an existing contract with a new contract.
What is an accord?
An agreement to accept a stated performance in future satsifaction of an existing duty and Satisfaction (performance of the accord)
How do you tell if you have a modification or accord?
If it takes affect now, modification
If it takes affect later, accord
What is a novation?
Its an agreement substittuing a new party for an existing one.
Define impossibility/impracticability?
A later unforeseen event that renders the seller's performance impossible (it rarely excuses the seller on the MBE)
Is destruction of something necessary for performance a valid excuse of impossibility?
Yes. Under Common law and Article 2.

Be careful with the trick for article 2 though: it must be the goods "identified" in that particular K that are destroyed.
What is another Article 2 "trickiness" wrt destruction of goods?
The other one, in addition to "were the goods identified in this particular K, is did the buyer bear the risk of loss
Does death or incapacity qualify for impossibility/impracticability excuse for nonperformance?
Not always. Depends whether the incapacitated person can delegate or not. If they can, its no excuse.
IS govt regulation an excuse for impossibility/impracticability?
Yes.
IS frustration of purpose a valid excuse for impossibility/impracticability?
Yes, but it depends on buyer telling and seller knowing of buyer's idiosyncracies.

ie, i am renting this apartment just to see the macy's day parade. If its cancelled, i don't have to pay
Will failure of an express condition excuse non-performance?
Yes. Strict compliance is required if there's language in the K like "if", "so long as"when" "on the condition that" and "unless"
What is the standard for satisfaction clauses?
A reasonable person standard. Unless its idiosyncratic by nature, such as a portrait.

Painting house; reasonable person, objective standard
Portrait: subjective standard.
B agress to buy a S's house for 200k if he can get a mortgage for 200k at 5% or less. B is lazy and does shit, then tries to get out of buying the house. What result?
S will win this one.
Can a waiver be used to excuse the occurence of a condition?
Yes. And it may be revoked to the extent that other party has not relied.
What is specific performance?
An equiable remedy, available only if monetary damages are clearly inadquate to compensate the injured party. Whether specific performance is available depends on the the subject matter of the contract.
Is specific performance, sometimes, often, or rarely the answer on the MBE?
Rarely.
Is SP available for real property?
Yes. RP is viewed as unique.
Is SP available for a sale of goods (SOG)
Under Article 2, SP is available only if the goods are unique or if the B can't cover. What's unique? Art, antiques, custom goods.
Is SP available in service contracts?
No. The law is not going to force someone to work. That's slavery.
What are an unpaid seller's right to reclaim goods under Article 2?
An unpaid seller has no rights under Article 2 in goods it has delivered to the buyer.

The exception is if the buyer was insolvent when it received the goods and the seller demand return within 10 days of B's receiving the goods.
What if the insolvent buyer has sold the goods to a third party?
Under Art II, S has no right to reclaim from a 3rd party.
What is the exception to the general rule that an unpaid seller has no rights under Article 2 in goods it has delivered to the buyer?
Seller has right to reclaim goods at any time if buyer misrepresented its solvency to the seller in writing within 3 months before delivery
Does an owner who entursts his property to a merchant who deals in goods of that kind have any rights against a BFP?
No. You can only sue for conversion.
What is a right to request assurance under Article 2?
You can request adequate assurance @ the quality of the goods.

If the other party refuses to grant it, B can treat it as an anticaptory repudiation of the K.

Which means you can revoked to the extend the other party has not relied on it.
What does the Right to Request Assurance NOT allow you to do?
Rewrite the K.
Are punitive damages available in K cases?
No- just tort. The purpose of K damages is to compensate, not to punish.
What is liquidated damages and when will they be enforced?
They are permissible if damages were difficult to estimate and the provision is a reasonable forecast of probably damages.
What happens if my liquidated damages clause gets struck down?
I still get actual damages.
What are expectation damages?
A sum that leaves an injured party in as good a postion as full performance. It's the usual measure of damages.
How do you calculate damages under article 2?
If B covers in good faith = Cover - contract or
if B does not cover in good faith or does not cover at all, B gets Market - contract.
What about damages for seller when buyer breaches?
If S resells in good faith, S gets contract-resale

If S does not resell in good faith or doesn't resell at all, S gets contract- market
what is the rule wrt to lost volume sellers?
If seller loses profit even though he resells the same one, he is entitled to lost profits.
What are incidental damages? Are you able to get them?
Absolutely. They are the cost of caring for/transporting goods after breach and cost of arranging a substitute transaction
What are consequential damages? Can I get them?
It depends. They are Damages that are special to this particular plaintiff and were reasonably foreseeable by the breaching party at the time of the contract.
What is the classic case on consequential damages?
Hadley v. baxendale, mill owner.
What are avoidable damages and can you recover them?
You cannot recover damages you could have avoided with reasonable effort.

The classic case is with employment, where you fire someone in violation of their K. If they were making $900/wk and could get a comparable job for $800/wk, the damages are mitigated to $100/wk.
What is a Third Party beneficiary?
The third guy in the room who can enforce the K. the person who did not make a K but stil has rights under it because the K was intended to benefit him.
What is an intended/incidental beneficiary?
If named in the K, its an indended beneficiary. If not, you're incidental. Only an intended beneficiary has rights
What is the difference between creditor/donee beneficiary?
If promisee's main reason for entering contract is to discharge a debt owed to the 3rd party, the third party is a creditor beneficiary. otherwise he's a donee beneficiary. Most 3rd parties are donee beneficiaries.
When can promisor and promisee rescind or modify the contract
until the rights of third party beneficiary have "vested". usually when he knows about it. They can always modify the K with TPB's consent.
Can a TPB sue the breaching promisor?
Yes.

But the promisor can raise the same defenses against the TPB it could have raised against the promisee
When can a TPB sue the promisee?
Only if he was a creditor-beneficiary
Can the promisee recover from the breaching promisor?
Yes, just like in any other K. But he prob didn't suffer much so he prob can't get much damages
What is the general rule on delegation of duties?
Contractural duties may be delegated without the consent of the person to whom performance is owed (the obligee)
What are the exceptions to the general rule allowing delgations without consent?
K language controls
What if the K prohibits assignment (but is silent about delegation)
Its a trick so be careful If there's no assignment, there's no delegation allowed either.
Can duties that involve special skills or reputation be delegated?
No. David letterman cannot delegate his duties to host the 2008 Academy Awards show
Does the delegating party remain liable to the obligee?
Yes. If it had been a novation, he wouldn't be.
When is the delegate also liable to the obligee?
When he receives consideration.
what is the effect of an assignment of rights? an assignment of an entire K?
2 people make a contract. later on, one person transfers his rights under the K to a 3rd party. it transfers rights, NOT obligations. An assignemnt of an ENTIRE CONTRACT transfers both rights and obligations
What is the difference bw a TPB and an Assignment?
In a TPB, all 3 parties are involved from the beginning.

In Assignment, 2 people contract and a TP appears LATER ON
Are PROMISES TO ASSIGN effective?
No
True or false, without consideration, an assignment is not valid
False
How do i make sure K rights are not assignable.
K language controls. Making rights "not assignable" will just prohibit them and essentially do nothing sonce it means they are assignable.

If you want to really make sure someone doesn't assign the K, make it say "all assignments under this K are void."
What can an assignment not do?
Substantially change the duties of the obligor
Are requirements K's assignable?
Yes, as long as the assignee's requirements are not out of line with the assingor's requirements.
What are the rights of an assignee?
The assignee can sue the obligor for breach of K, but is subject to the same defenses the obligor could have raised against the assignor.
Two gratuitous assignments. Which one prevails?
The latter in time prevails.
Two assignments for consideration, which one prevails?
The first one.
What is the exception to the first assignment for consideration prevailing?
A latter assignee for consideration prevails over earlier assignees if he does not know of the prior assignments and is the first to obtain payment from or a judgment against the obligor.