Contracts

Front 1

Types of K

Back 1

1. Express K- created by words
2. Implied K- created by conduct
3. Quasi-K- constructed by courts to avoid unjust enrichment

Front 2

Bilateral K v. Unilateral K

Back 2

Bilateral K- exchange of mutual promises.

Unilateral K- offer can be accepted only by performance.

Front 3

K Elements

Back 3

Mutual assent to essential terms of a K, supported by consideration, and no effective defenses.

Front 4

Offer

Back 4

Objective manifestation of an intent to K, acceptance of which creates a K, containing definite and certain terms, communicated to the offeree.

Front 5

Essential Terms

Back 5

Parties, subject matter, price, quantity, time for performance.

Real property- price & description of land

UCC- quantity

Front 6

Termination of an Offer by Revocation

Back 6

Direct revocation by offeror before acceptance.

Indirect revocation- offeree receives correct info, from a reliable source, that offeror's acts would indicate to an RPP he no longer wishes to make the offer.

Revocation is effective when received.

Front 7

Limitations on Revocation

Back 7

1. Must revoke before acceptance.

2. Cannot revoke an option K supported by consideration.

3. Firm Offer cannot be revoked. Firm offer must be made by a merchant, by signed writing, assuring that an offer will be held open for a period of time. If no time is stated, the offer is irrevocable for reasonable time, not exceeding 3 months.

4. Detrimental reliance makes the offer an irrevocable option K if such reliance was reasonable.

5. Part Performance of a unilateral K is irrevocable under detrimental reliance or option K theory.

Front 8

Termination of an Offer by Rejection

Back 8

Offeree may reject an offer before he has accepted the offer. It is effective when received.

Counter offer = rejection + new offer.

Rejection of an option is not a rejection of the underlying offer. Offeree can still accept the offer, unless offeror detrimentally relied on the rejection.

Front 9

Termination by Lapse of Time

Back 9

Offer terminates according to its terms. Otherwise, it terminates w/in a reasonable time.

Front 10

Termination by Operation of Law

Back 10

Offer terminates if either party dies or becomes incapacitated, unless the offer is irrevocable.

Offer terminates if the subject matter is destroyed or becomes illegal.

Front 11

Acceptance

Back 11

Objective manifestation of an intent to accept the offer, on its terms*, communicated to the offeree.

Front 12

Acceptance Which Includes Additional or Different Terms

Back 12

CL- acceptance had to be the mirror image of the offer. An offer that includes additional or different terms = counter offer.

UCC- acceptance could include additional or different terms, unless acceptance is expressly conditional on its additional or different terms.

Front 13

Treatment of Additional or Different Terms Contained in an Acceptance

Back 13

If parties are not merchants, the additional or different terms are considered mere proposals and do not become part of the K unless accepted by the offeror.

If both parties are merchants, additional terms become part of the K unless it materially alters the K, offer is expressly limited to its terms, or it is rejected by offeror w/in a reasonable time.

If both parties are merchants there are 3 approaches to the treatment of different terms:
1. Different terms are ignored and do not become part of the K.
2. Inconsistent different terms are knocked out.
3. Different terms are treated like additional terms.

Front 14

Mail Box Rule

Back 14

Acceptance is effective when dispatched, unless the offer expressly states it is effective upon receipt or an option K is involved.

Front 15

What Happens if an Offeree Sends both an Acceptance and a Rejection?

Back 15

If offeree sends a rejection and then an acceptance, whichever is received first wins.

If an offeree sends an acceptance and then a rejection, the acceptance wins pursuant to the mail box rule, unless the offeror detrimentally relied on the rejection.

Front 16

Consideration

Back 16

Bargain for exchange between the parties of something of legal value.

Front 17

Past or Moral Consideration

Back 17

Generally, not sufficient consideration.

Exceptions:
1. Cts will enforce a new promise made in writing or partially performed if enforcement of the past obligation is barred by a technical defense.
2. A new promise is enforceable if the act was previously performed by the promisee at the promisor's request.

Front 18

Pre-Existing Duty Rule

Back 18

Performing or promising to perform a pre-existing is not sufficient consideration, unless a new or different consideration is promised.

CL- modifications required new consideration.

UCC- modifications need only good faith.

Front 19

Substitute Consideration (Promissory Estoppel)

Back 19

A promise is enforceable to the extent necessary to prevent injustice if the promisor should reasonably expect to induce action and such action is in fact induced.

Front 20

Defenses Based on Absence of Mutual Assent (Mistake, Ambiguity, Misrepresentation/ Fraud)

Back 20

1. Mutual Mistake if mistake concerns a basic assumption on which the K is made, the mistake has a material effect on the agreed upon exchange, and the party seeking avoidance did not assume the risk of the mistake.

2. Unilateral Mistake or Mistake by Intermediary in Transmission still forms a K, unless the other party knew or should've known there was a mistake.

3. Ambiguity if neither party is aware of the ambiguity there is no K. If both parties are aware of the ambiguity, there is no K. If 1 party is aware of the ambiguity, there is a K construed in favor of the party unaware of the K.

4. Misrepresentation- K is void if it is fraud in the factum, K is voidable if fraud in the inducement or non-fraudulent material misrepresentation.

Front 21

Defense Based on Public Policy (Illegality)

Back 21

K is void if consideration or subject matter is illegal.

K is voidable if purpose is illegal.

Front 22

Defense Based on Lack of Capacity

Back 22

A K is voidable by an incapacitated person, unless the K is for necessities or has been affirmed when he is no longer incapacitated.

A K is voidable by the party who was coerced or under duress when he made the K.

Front 23

Defense to Enforcement (SOF)

Back 23

Essential terms must be written and signed by the party charged. SOF applies to (MY LEGS):
K in consideration of MARRIAGE

K that cannot be performed w/in 1 YEAR

Interest in LAND exceeding 1 yr

LEASE of goods costing $1000 or more.

EXECUTOR/ Administrator promises to personally pay debt of the decedent.

K for sale of GOODS for $500 or more.

SURETY promise to pay the debt of another if the other person does not pay.

Front 24

Exceptions to SOF for K of Goods for $500 or more

Back 24

Oral K for goods of $500 or more is enforceable if:

1. Substantial beginning of specially manufactured goods.

2. Written confirmation sent between merchants and received by a merchant who had reason to know of its contents and did not object w/in 10 days.

3. Partial payment or delivery is enforceable to the extent paid or delivered.

4. Admission

Front 25

Exceptions to SOF

Back 25

1. Oral K for sale of land may be enforced if 2 of the following apply: payment, possession, and improvements.

2. Full performance of a K not performable w/in 1yr

3. Promissory Estoppel

4. Admission

Front 26

Remedies for Ks barred by SOF

Back 26

Parties can sue in equity for reasonable value of services or performance tendered.

Parties can sue in equity for restitution.

Front 27

Defense of Enforcement (Unconscionability)

Back 27

A K is unenforceable if it was unconscionable at the time the K was made.

Front 28

Parol Evidence Rule

Back 28

Extrinsic evidence of a prior or contemporaneous agreement (parol evidence) is inadmissible to vary the terms of a final and complete integration.

Parol evidence is admissible to supplement, not contradict, the terms of a final and partial integration.

A writing is an integration if the parties intended it to be a final expression of their agreement. To determine the parties intent, some courts look to the 4 corners of the writing, while others look to all relevant circumstances surrounding the writing.

Parol evidence rule does not apply when proving a collateral matter, condition precedent, ambiguous term, reformation, or K defenses.

Front 29

UCC Shipment K

Back 29

FOB city of buyer or seller

Delivery is complete once seller makes reasonable arrangements to ship goods, gets the goods to the common carrier, and notifies the buyer.

Front 30

UCC Destination K

Back 30

FOB anywhere else

Delivery is complete once buyer receives the goods. Seller bears the risk of loss until this time.

Front 31

Breach

Back 31

A K is breached when a K duty has become absolute.

A K duty becomes absolute when all conditions precedent have occurred or been excused, time for performance has arrived, and the duty to perform has not been discharged.

Front 32

Condition Excused by Hindrance or Failure to Cooperate

Back 32

A condition precedent is excused if the party whom it benefits wrongfully prevents the condition from occurring.

Front 33

Condition Excused by Material Breach

Back 33

The duty of counter-performance is excused if there is a material breach.

Substantial performance (minor breach) does not excuse the duty to perform.

Front 34

Condition Excused by Anticipatory Repudiation

Back 34

Anticipatory repudiation occurs when one party clearly indicates that he will not perform before his time to perform is due and the K is executory on both sides.

It can be retracted until it has been accepted or detrimentally relied on by the non-repudiating party.

Remedies for Anticipatory Repudiation:

1. Treat it as a total breach and sue immediately.

2. Suspend performance and wait to sue after performance date.

3. Treat it as an offer to rescind and treat K as discharged.

4. Ignore it and urge performance

Front 35

Condition Excused by Prospective Inability/Unwillingness to Perform

Back 35

If there is reasonable grounds to believe that the other party is unable or unwilling to perform, one may suspend performance and request adequate assurances that performance will be forthcoming.

If no adequate assurances are received, non-breaching party can treat it as a repudiation and cease performance.

Front 36

Condition Excused by Impossibility, Impracticability, or Frustration of Purpose

Back 36

Subsequent to K formation, facts arise that make performance impossible or impractical or frustrate the purpose of the K.

Front 37

Discharge by Recission

Back 37

Mutual rescission is an express agreement to rescind the K. It must be executory on both sides and supported by consideration.

Unilateral rescission is permitted if there are adequate legal grounds (mistake, misrepresentation, or fraud).

Front 38

Discharge by Novation

Back 38

New K substitutes a new party to receive benefits and assume duties that had originally belonged to one party.

Front 39

Discharge by Release

Back 39

K not to sue must be in writing and new consideration or elements of promissory estoppel.

Front 40

Discharge by Accord & Satisfaction

Back 40

Accord is a new agreement by a party to an existing K who agrees to accept different performance. It must be supported by new consideration.

Satisfaction is the performance of the accord.

Front 41

3rd Party Beneficiary

Back 41

3rd party intended by the parties to benefit from the K at the time of K formation.

3rd party's rights vest when:

1. He learns of the K & detrimentally relies on it.

2. Assents to terms of the K.

3. Sues to enforce the K.

Front 42

Donee Beneficiary v. Creditor Beneficiary

Back 42

Donee beneficiary can bring suit against the promisor, but not the promisee b/c promisee intended to make a gift to donee.

Creditor beneficiary can bring suit against either the promisor or the promisee.