Contracts

Front 1

Misunderstanding or ambiguity in words of agreement

Back 1

there will be no contract for ambiguity if:
1. Parties use a material term that is open to more than 1 interpretation
2. each party attaches a different meaning to the term
3. neither party knows or has reason to know of the possibility of more than 1 interpretation

Front 2

Mutual mistake of material fact

Back 2

there will be no contract where:
1. both parties are mistaken
2. as to a basic assumption of fact - as to what the contract is dealing with, not the value
3. that materially affects the agreed exchange
4. and not a risk that either party bears

Front 3

facts that trigger parol evidence rule

Back 3

writing that is intended to be the final interpretation of the contract AND earlier statements made by the parties about the contract (or statement made when contract is signed)

Front 4

factor that determines when parol evidence is admissible

Back 4

purpose of the extrinsic evidence

Front 5

4 situtations where parol evidence is at issue

Back 5

even if the agreement is partial (same rules apply except for #4)
1. Contradicting the written deal - generally inadmissible
but, mistaken integration - b/c of a clerical error is admissible (THIS IS WHERE REFORMATION IS POSSIBLE)
2. Getting out of the written deal - generally inadmissible unless evidence is of a defense to formation(ie. fraud, duress, misrepresentation)(THIS IS WHERE D IS SEEKING RESCISSION)
3. Explaining the terms in the deal - evidence admissible to explain ambiguous terms of the deal
4. Adding to the written deal - generally inadmissible unless the agreement is only partially integrated or additional terms would ordinarily be in a separate agreement

Front 6

parol evidence vs. SOF (when triggered)

Back 6

i. triggered parol evidence – where there is a written agreement
ii. SOF triggered by – the absence of a written agreement

Front 7

SOurces of contract terms

Back 7

1. express words of parties
Then (in order)
2. course of performance - parties conduct under the contract at issue
3. course of dealing - what parties have done under earlier contracts
4. custom/usage - what other parties have done in the industry under similar contracts

UCC - Default terms

Front 8

UCC Default terms

Back 8

1. delivery obligations of seller
2. risk of loss
3. warranties of quality
4. limitations to warranties

Front 9

Delivery obligations of seller

Back 9

1. default = sellers place of business unless parties know of more appropriate place
2. common carrier -
- Shipment contract - seller completes delivery obligation before delivery completed – all that is required
1. seller obligated to:
a. get goods to common carrier
b. make reasonable arrangement for delivery
c. notify the buyer
- Destination contract
seller does not complete delivery until goods arrive to where the buyer is

Front 10

Is it a delivery or shipping contract? what to look for

Back 10

FOB – is always followed by name of city – either the city where the seller and the goods are located – this is a shipment contract
Or some other city – this will be a destination contract

Front 11

Risk of loss problems implicated where

Back 11

1. goods are damaged or destroyed
2. after the contract has been formed
3. but before buyer gets goods
4. with no fault to the parties

ISSUE - who bears the loss

Front 12

Who bears the risk of loss

Back 12

1. Agreement - agreement of the parties expressly placing risk of loss on party will control
2. Breach - whoever breached bears the risk
3. if shipment contract with common carrier - risk of loss shifts from the seller to the buyer at the time seller completes all delivery obligations ( 3 requirements)
4. where none of the above - if seller is merchant (ie. amazon) - risk of loss is on the seller until buyer receives the goods
or - if seller is not a merchant, until seller tenders (makes goods available to buyer)

Lease - risk of loss is on lessor

Front 13

Only time merchant is limited to one who is in the business of buying/selling goods of that kind

Back 13

implied warranty of merchantability

Front 14

triggering facts for implied warranty of fitness for a particular purpose

Back 14

buyer has a particular purpose, buyer is relying on seller to select suitable goods, seller has reason to know of purpose and reliance

Front 15

Requirements of performance for sale of goods:

Back 15

1. perfect tender rule

Front 16

If tender of goods is not perfect buyer may:

Back 16

1. reject the goods
2. accept all goods and sue for damages
3. accept conforming goods and sue for damages

Front 17

When buyer can not reject the goods

Back 17

1. Cure
2. Installment contract
3. Acceptance - MUST BE BEFORE ACCEPTANCE OF THE GOODS
- unless acceptance is revoked

Front 18

When can the seller cure:

Back 18

1. sellers reasonable ground to believe improper tender would be ok (ie. reasonable grounds based on prior transactions making sellers belief reasonable)
2. when time for performance not yet expired (if can cure before delivery date)

Buyer can not make the seller cure

Front 19

When can revocation of acceptance be made?

Back 19

a. when something really wrong with the goods
b. excusable ignorance - reason why buyer didnt reject immediately
c. must revoke within a reasonable time after discovery of nonconformity

Front 20

Time limit for which implied acceptance becomes acceptance (where can no longer send goods back without acceptance) or where can no longer revoke acceptance after discovery of nonconformity

Back 20

1 month

Front 21

Non-monetary remedies for nonperformance

Back 21

1. Specific performance/injunction
2. Reclamation
3. Rights of BFP in entrustment (this cuts off the rights of original owner against the party the good is entrusted to)

Front 22

When is reclamation available:

Back 22

(right of unpaid seller to get its goods back)
1. buyer must have been insolvent at the time it received the goods
2. seller must demand return in 10 days (timely)
a.from time goods received
3. and buyer must still have the goods at time of demand
- cant sell them to another

Front 23

Damages under the UCC
- seller breaches, buyer keeps the goods

Back 23

damages = take fair market value if perfect minus fair market value as delivered

Front 24

Damages under the UCC
- Seller breaches, seller keeps the goods

Back 24

Damages = Market price at time of discovery of breach or the replacement price minus the price of the contract

Front 25

Damages under the UCC
- Buyer breaches, buyer has the goods

Back 25

Damages = contract price

Front 26

Damages under the UCC
- buyer breaches, seller has the goods

Back 26

Damages = contract price minus market price at the time and place of delivery OR contract price minus resale price (in some situations provable lost profits)

Front 27

Types of damages (monetary)

Back 27

Common law -
a. Expectation interest
b. Restitution
c. Reliance

UCC damages

PLUS - Incidental damages
PLUS - Consequential damages (foreseeable)
LESS - avoidable damages

All subject to certainty limitation

Front 28

when there is nonperformance of a contract and something happening after the contract - what is triggered

Back 28

Excuse of nonperformance

Front 29

Excuses for nonperformance

Back 29

1. Where other party performs improperly
- where breach is material (half the contract if numerical)
- Article 2 - non perfect tender gives buyer option to reject

2. Excuse because of non-occurrence of a condition (does not amount to breach - just excuses performance)

3. anticipatory repudiation

4. insecurity

5. Excuse by reason of later contract

6. Excuse by reason of a later unforeseen event

Front 30

When a later contract excuses performance

Back 30

1. Rescission
- agreement of the parties to rescind excuses performance - requires executory contract (both parties still have to perform, at least in part)

2. Accord and Satisfation - later agreement to do something different (different manner of performance)

3. Modification

4. Novation

Front 31

Accord vs. Modification

Back 31

Accord - where "if" and "then" are used
- performance is not excused until accord is satisfied

Modification - no "if" and "then"
- performance is excused upon making of substitute contract (modification)

Front 32

What does Excuse of performance by reason of a later unforeseen event include:

Back 32

impossibility, impracticability or frustration of performance

Front 33

Requirements for excuse of performance due to unforeseen events

Back 33

i. Event occurs after formation, but before completion of performance
ii. That was unforeseen
iii. And that makes performance impossible or commercially impracticable or frustrates purpose of performance (determine if it is still possible to perform)

Front 34

When performance is excusable due to impossibility, impracticability or frustration of purpose

Back 34

1. Damage or destruction of subject matter after formation

2. Death after contract (generally no excuse unless special person)

3. Subsequent law or regulation either
- making performance of contrct illegal (excuse by impossibility) or
- making purpose illegal (excuse by frustration of purpose)

Front 35

Who can sue whom on a 3rd party beneficiary contract

Back 35

1. beneficiary can recover from promisor - promisor has all defenses available to him against promisee
2. promisee can recover from promisor
3. only one can recover (not both)
4. donee beneficiary can not recover from promisee but creditor beneficiary can recover from promisee on pre-existing debt (debt owed prior to this contract)

Front 36

Can assignee recover from obligor

Back 36

Yes

Front 37

can assignor recover from obligor

Back 37

NO

Front 38

Can obligor continue to pay to assignor after assignment?

Back 38

Yes, payment is effective until obligor knows of assignment (same result for modification contracts)

Front 39

What is required to be in an offer

Back 39

No ambiguous or vague terms

Price - for common law (but not UCC)

Quantity - for UCC (unless requirements/output contract)- in line with prior demands

Look to Content and Context

Front 40

When is an advertisement an offer

Back 40

When it is specific as to the quantity of items available

And expressly indicates who can accept

Or, it is an award

Front 41

Things that will terminate an offer

Back 41

Lapse of time (reasonable time, or stated time limit)

words or conduct of the offeror (unambiguous - offer to another will not suffice) communicated to the offeree

words of conduct of the offeree

Death or incapacity of either party

Front 42

4 irrevocable offers

Back 42

Firm offer (UCC)
Options
Part performance of a Unilateral contract
Detrimental reliance by the offeree (where reliance is reasonably foreseeable)

Front 43

Requirements of an option contract

Back 43

Promise to hold offer open
Accompanied by consideration
No writing required

Front 44

Requirements of a firm offer

Back 44

Must be for the sale of goods
From a merchant
in a signed writing
with promise to hold open
3 month limit

Front 45

How long does a firm offer last

Back 45

3 months (cant exceed)

Front 46

Effect of Additional terms for contracts involving the sale of goods

Back 46

Creates a contract (unlike common law)- unless expressly conditional

Are new terms included:
a Only if both parties are merchants,
b. And, new term is material (no rule on this, fact specific)- If one party is not a merchant, the new term is out (becomes a proposal – like a counteroffer)
c. Or the offeror objects to the change

Front 47

If a rejection is sent (mailed) before acceptance what occurs - rejection then acceptance

Back 47

Whatever is received first - mailbox rule does not apply