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196 Cards in this Set

  • Front
  • Back
Overall approach acronym
Applicable Law
Formation
Terms
Performance
Remedies
Excuse
Third Party Problems

Armadillos From Texas Play Rap, Eating Tacos
Contract
Legally Enforceable Agreement
Quasi-Contract (Elements)
Equitable Remedy.

P has conferred a benefit on D, and...

P reasonably expected to be paid, and...

D realized unjust enrichment if P not compensated
Quasi-Contract (Measure of Recovery)
Contract price is not the measure of recovery.

Focus on value of benefit conferred.

The contract price is a ceiling if P is in default.
Unilateral Contract
Results from an offer that expressly requires performance as the only possible method of acceptance
Contract will be BILATERAL unless:
-Reward
-Prize
-Contest
-Offer expressly requires performance for acceptance
Is performance important?
Every K contemplates performance

Performance is important ONLY IF offeror says "only form of acceptance is performance."
APPLICABLE LAW (ALLIGATORS)
1-Common Law

2-Article 2 of UCC

3-Article 2A of UCC
Article 2 of UCC
Applies to Ks that are primarily sales of goods
Factors that determine whether Art. 2 applies:
1-Type of transaction (Sale of goods for ANY amount)

2-Subject-matter of transaction (Goods-i.e. tangible, personal property)

Real Estate = COMMON LAW
What if the question has mixed common law/Article 2 issues?
More important part controls

EX: Sale of car ($400) along with driving lessons - Sale of car (Article 2 ) controls.
Exception to mixed issues
If K expressly divides payment, then apply UCC to sale of goods part and common law top the rest
Article 2A of UCC
Applies to LEASES of goods

In most controversies involving only lessor/lessee - similar to Art. 2

Default by lessee or priority contests - similar to Art. 9
FORMATION (FROM)
Look for an agreement first, then determine if the agreement is legally enforceable
In looking for an agreement, watch for:
1-The initial communication (offer)
2-What happens after the initial communication (termination)
3-Who responds and how they respond (acceptance)
(1) The initial communication - OFFERS - What's the general test?
Manifestation of Intent
Manifestation of Intent
Shows an intention to contract.

Words or conduct showing commitment

BASIC TEST-Whether a reasonable person in the position of the offeree would believes their assent creates a K
Specific OFFER problems to watch out for:
1-Content (you want ACTUAL WORDS). Offer is NOT required to contain ALL material terms

2-Context
S offers to sell car to B. Nothing is said about price. Offer?
It can be if parties so intend.

Art.2 - no price requirement if parties so intend
Is an advertisement an offer?
No.

Exceptions: Can be if it is in the nature of a reward, or if it is specific as to quantity and expressly indicates who can accept
Are vague or ambiguous material terms an offer?
No.

Must be appropriate, fair, and reasonable
What is the Content problem with Requirements Contracts/Output Contracts?
First make sure it is this type of K - look for words "all" "only" "exclusively" or "solely"

A K for the sale of goods can state the QUANTITY of goods to be delivered under the K in terms of the buyer's requirements or seller's output or in terms of exclusivity

VALID
Can Buyer increase requirements?
Yes. So long as the increase is IN LINE with prior demands
(2) TERMINATION OF OFFERS - Rule
An offer CANNOT be accepted if it has been terminated.

An offer that has been terminated is DEAD
METHODS OF TERMINATION (4)
1-Lapse of time
2-Death of a party prior to acceptance
3-Revocation (words or conduct of offeror)
4-Rejection (words or conduct of the offeree).
4b-Indirect Rejection (Counteroffer, Conditional Acceptance, Mirror Image Rule)
Termination (1) - Lapse of Time
Time Stated or Reasonable Time

TIP: Watch for exam facts when you have the date of the offer and the date of acceptance. ANYTHING over 1 month = revoked.
Termination (2) - Death of a Party Prior to Acceptance
Death or incapacity of either party after the offer but before acceptance terminates the offer.

EXCEPTIONS:
-Option
-Part performance of offer to enter into unilateral K
Termination (3) - Words or Conduct (Revocation)
How?
-Unambiguous Statement by offeror to offeree of unwillingness or inability to contract, or

-Unambiguous conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of

OFFEREE AWARENESS also required
When does Revocation of an Offer become effective?
1-Revocation sent through the mail is not effective until RECEIVED
2-An offer CANNOT be revoked after it has been accepted
What kind of Offers CANNOT BE REVOKED?
1-Option
2-UCC "Firm Offer Rule"
3-Where there has been (a) reliance that is (b) reasonably foreseeable and (c) detrimental
4-Start of performance pursuant to unilateral K
Option
An offer cannot be revoked if the offeror has:

1-promised not to revoke/promised to keep the offer open, AND
2-the promise is supported by payment or other consideration
UCC "Firm Offer Rule"
An offer cannot be revoked for up to 3 MONTHS if:
1-Offer to buy or sell goods,
2-signed, written promise to keep the offer open, and
3-party is a merchant
Reliance
An offer cannot be revoked if there has been:
1-RELIANCE that is
2-reasonably foreseeable, and
3-detrimental
G is a general contractor(GC) who is bidding on a K to build a new hotel, using various subcontractors(SC). S, a SC submits a bid to G to do the painting work for $100k. G uses S's bid in making its bid and is awarded the hotel construction K. Can S still revoke its bid?
No. G RELIED on S's bid.
An offer that cannot be revoked by start of performance
The start of performance pursuant to an offer to enter into a unilateral K makes that offer irrevocable for a reasonable time to complete performance

MUST BE PERFORMANCE, NOT "MERE PREPARATION"
Termination (4) - REJECTION (words or conduct by the offeree)
Watch for one of the following 3 methods of INDIRECT REJECTION
1-Counteroffer (all Ks)
2-Conditional Acceptance (all Ks)
3-Additional Terms (common law)
Counteroffer
Method of INDIRECT REJECTION

Always terminates the offer and becomes a NEW OFFER. Where a counteroffer is made there is NO EXPRESS K unless the counteroffer has been accepted
Difference between COUNTEROFFER and BARGAINING
COUNTEROFFER - S offers Blackacre to B for $10k. B says "I will only pay $9k"

BARGAINING - S offers Blackacre to B for $10k. B says "will you take $9k?"
Conditional Acceptance
Method of INDIRECT REJECTION. NOT AN ACCEPTANCE!!!!!

Always operates the same way as a counteroffer: it terminates the offer and becomes a new offer.
What kinds of words will tip you off to a Conditional Acceptance?
"Accept" followed by:

-if
-only if
-provided
-so long as
-but
-on condition that
Mirror Image Rule
Method of INDIRECT REJECTION

Common Law.

An "acceptance" that adds NEW TERMS is treated like a COUNTEROFFER rather than an acceptance
Additional Terms Still Acceptance Under UCC
2-207 - Seasonable Expression of Acceptance

Fact pattern where there is:
-offer to buy or sell goods, and
-a response with additional terms raises 2 questions:
(1)Is there a K?
(2)Is the additional term part of the K?
What is a "seasonable expression of acceptance?"
Under the UCC, a response to an offer that adds new terms (but does not make the new terms a condition of acceptance) is generally treated as a "seasonable expression of acceptance"
Is the Additional Term a part of the K?
If both parties are merchants, then yes.

If at least one party is not a merchant, the add'l term is merely a proposal that is to be separately accepted or rejected
If both parties are merchants - when are additional terms NOT a part of the K?
1-if the additional term materially changes the offer, or

2-if the offeror objects to the change
(3) - ACCEPTANCE OF AN OFFER
Look at the OFFER for information about HOW the offer was accepted and WHO accepted
Methods of accepting an offer (6)
1-Later conduct by offeror implying contract notwithstanding improper response to an offer (improper response kills offer and becomes counteroffer)
2-Offeree FULLY PERFORMS
3-Offeree STARTS to PERFORM (bilateral K's only)
4-Offeree PROMISES TO PERFORM
5-MAIL BOX RULE
6-Seller of goods sends the WRONG GOODS
Is Start of Performance an acceptable way to accept unilateral K's?
No. Completion of performance is required. If offer requires "performance" for acceptance, then "performance" for purposes of acceptance of that offer means completion of performance.
MAIL BOX RULE
1-Acceptance is GENERALLY effective when mailed

2-All other communications are effective only WHEN RECEIVED

3-If a REJECTION is mailed BEFORE an acceptance is mailed, then NEITHER is effective until received.
C receives a letter from E offering to sell C his car for $400. ON Jan. 10, C mails acceptance. On Jan. 11 C receives a revocation from E. Is there a K?
Yes. Must be revoked BEFORE acceptance (which is effective when sent). Revocation is effective when received.
What happens if seller of goods sends the wrong goods?
Acceptance of offer and Breach of K.

ACCOMMODATION EXCEPTION = Counteroffer
B orders 100 red widgets. S sends 100 blue widgettes with the explanation "out of red widgets, hope you can use the blue widgettes instead." Is there a K? Is there a breach of K?
No K.

No Breach.

ACCOMMODATION EXCEPTION - It was a counteroffer
Who Can Accept?
1-Person who knows about the offer...
2-who is the person to whom it was made
Can offers be assigned?
No.
Can options be assigned?
Yes, unless otherwise provided.
CHECKLIST OF REASONS FOR NOT ENFORCING AN AGREEMENT
1-Lack of consideration or a consideration substitute for the promise at issue
2-Lack of capacity of the person who made that promise
3-Statute of frauds
4-Existing laws prohibiting performance of the agreement
5-Public policy
6-Misrepresentations
7-Duress
8-Unconscionability
9-Ambiguity in words of the agreement
10-Mistakes at the time of the agreement as to material facts
Consideration
Bargained-for legal detriment

3-Step Approach
1-Identify the promise maker/promise breaker
2-Ask whether that person asked for something in return for her promise (bargained for something)
3-Look at the person who is trying to enforce the promise and ask what requested legal detriment that person sustained
Forms of Consideration
1-Performance (doing something not obligated to do)
2-Forbearance (not doing something legally entitled to do)
3-Promise to Perform
4-Promise to Forbear
Possible Consideration Issues
1-"Bargained For"
2-"Legal Detriment"
3-Promise as Consideration
4-Adequacy of Consideration/Amount of Consideration
5-Past Consideration
6-"Preexisting Contractual or Statutory Duty Rule"
7-Part Payment as Consideration for Release (promise to forgive balance of debt)
What if you see an illusory promise in an answer?
IT IS ALWAYS WRONG. TOO OBVIOUS!
Past Consideration
NOT Consideration

Stuff that happened before the promise can NEVER be consideration for the promise

Exception: Expressly requested AND expectation of payment
"Preexisting Contractual or Statutory Duty Rule"
Common Law differs from Article 2

Doing what you are already legally obligated to do is NOT new consideration for a new promise to pay you more to do merely that.

Common Law - NEW consideration required for K modification
EXCEPTIONS to "Preexisting Contractual or Statutory Duty Rule"
1-Addition to or change in performance

2-Unforeseen difficulty so severe as to excuse performance

3-3rd party promise to pay
"Preexisting Contractual or Statutory Duty Rule" under Article 2
No preexisting duty rule

New consideration is NOT required to modify a sale of goods K

GOOD-FAITH is the test for changes in an existing sale of goods contract
Is part payment consideration for release (forgiveness) of debt?
If debt is DUE and UNDISPUTED then part payment is NOT consideration for release

Early payment, or payment to settle a dispute is NEW consideration
CONSIDERATION SUBSTITUTES
1-Written promise to satisfy an obligation for which there is a legal defense IS ENFORCEABLE WITHOUT CONSIDERATION
2-Seals - ALWAYS WRONG ANSWER
3-Promissory Estoppel (Detrimental Reliance)
PROMISSORY ESTOPPEL
aka Detrimental Reliance

Elements:
1-Promise
2-Reliance that is reasonable, detrimental, and foreseeable
3-Enforcement necessary to avoid injustice
Who Lacks Capacity to Contract?
1-Infant - Under 18

2-Mental Incompetents - lacks ability to understand agreement

3-Intoxicated Persons - IF other party has reason to know
Consequences of Incapacity
1-Right to disaffirm by person without capacity

2-Implied affirmation by retaining benefits after gaining capacity (ratification)

3-Quasi-contract liability for necessities (food, clothing, medical care, shelter)
Statute of Frauds - Overview of 3 primary S-of-F issues
1-Is the K within the S-of-F?

2-If so, is the S-of-F satisfied?

3-Is there a S-of-F defense?
Contracts Within the Statute of Frauds
1-Promises to Answer for (Guarantee) the Debts of Another (Suretyship)
2-Promises by executor to "answer for personally"(Guarantee personally)the debts of the decedent
3-Promise in consideration of marriage
4-Service K not capable of being performed within a year
5-Transfers of interest in real estate
6-Sale of goods over $500
7-Lease of goods with payments over $1000
S-of-F - Promises to Answer for (Guarantee) the Debts of Another (Suretyship)
Not merely a promise to pay but rather a promise to pay if someone else does not

LOOK FOR A GUARANTEE. If all you have is a promise to paya debt - NO GUARANTEE
S-of-F - Promise in Consideration of Marriage
Not merely a promise to marry but rather a promise to do something or refrain for doing something if parties marry
John Tesh claims that Club hired him on 1/12/2008 to perform on 12/24/2009. Is this within the S-of-F?
Yes. Cannot fulfill within one year. Does not matter how long it takes to actually perform.
If there is a task to be done, and nothing is said about time, does the S-of-F apply?
No
P claims that D agreed to sell Blackacre for $400. Is this within the S-of-F?
Yes. Transfer of real estate
P claims that D agreed to lease Blackacre for one year. Is this within the S-of-F?
No. Special Exception for the lease
How is S-of-F satisfied?
1-Performance
2-Writing. (Generally, writing must be signed by person asserting the S-of-F defense.)
3-Judicial Admission
Satisfaction of S-of-F by PERFORMANCE
Rules vary depending on whether (1)services K, (2)sale of goods, or (3)real estate transfer K
Satisfaction of S-of-F by PERFORMANCE - SERVICES CONTRACT
Full performance by either party satisfies the S-of-F.

Part performance DOES NOT satisfy
Satisfaction of S-of-F - SALE OF GOODS CONTRACT
1-Ordinary Goods. Part performance satisfies S-of-F but ONLY to the extent of the part performance
2-Specially Manufactured Goods Exception. If the K is for sale of goods that are to be specially manufactured, S-of-F satisfied as soon as seller makes "substantial beginning"
"Substantial Beginning"
Means the seller has done enough work that it is clear that what they are working on is specially manufactured (custom made or made-to-order)
Satisfaction of S-of-F by PERFORMANCE - Performance and Transfers of Interests of Real Estate.
"Part Performance" by buyer of real estate can satisfy S-of-F.

Part Performance is generally any two of three:
1-Full or Part Payment
2-Possession and/or
3-Improvements

Full payment ALONE does not satisfy the S-of-F
Satisfaction of S-of-F by a WRITING
Look at CONTENTS of writing

Look at WHO SIGNED the writing. Must be signed by person asserting S-of-F defense (person saying no agreement)
Satisfaction of S-of-F by a WRITING - UCC
Must contain QUANTITY term

EXCEPTION: Based on that person's failure to respond to a signed writing. BOTH PARTIES must be MERCHANTS and the person who receives a signed writing with a quantity term that claims that there is a K fails to respond within 10 days of receipt.
Satisfaction of S-of-F by a JUDICIAL ADMISSION
Based on common-sense recognition that if the D admits in a pleading or testimony that he had entered into an agreement with the P, S-of-F is fulfilled - SO NO DEFENSE
When do RULES OF LAW REQUIRE written evidence of modification of a written K?
1-Look at the deal with the alleged change and...
2-determine whether the deal with the alleged change would be within the S-of-F.

If the deal with the alleged change would be within the S-fo-F, then the alleged modification agreement must be in writing
T leases a building from L for one year. L cvlaims they later agreed to increase the term to 3 years. Is written evidence of the alleged modification required AS A MATTER OF LAW?
Yes. S-of-F.
What if the agreement is in writing and requires that all modifications be in writing?
Under COMMON LAW, contract provisions requiring that all modifications be in writing are NOT EFFECTIVE - IGNORE K LANGUAGE
1-C contracts to buy 600 bottles of wine from E for $600. C later claims they agreed to modify the K by increasing the number of bottles to 650. Does modification have to be in writing AS A MATTER OF LAW? 2-What if C now claims that they later agreed to reduce the price to $3? Is writing required AS A MATTER OF LAW?
1-Yes. Sale of goods over $500

2-No.
OTHER REASONS FOR NOT ENFORCING AN AGREEMENT
1-Illegality (Illegal Subject-Matter/Illegal Purpose)

2-Public Policy

3-Misrepresentation or Nondisclosure

4-Duress (Physical or Economic)
REASON FOR NOT ENFORCING AGREEMENT: UNCONSCIONABILITY
-Part of K law generally
-Empowers a court to refuse to enforce all or part of an agreement
-
UNCONSCIONABILITY TEST
2 Basic tests

1-Unfair Surprise (Procedural)

2-Oppressive Terms (Substantive)

Tested by the COURT as of the TIME THE AGREEMENT WAS MADE
REASON FOR NOT ENFORCING AN AGREEMENT: MISUNDERSTANDING (AMBIGUITY IN WORDS OF AN AGREEMENT)
No contract if:

1-Parties use a MATERIAL term that is open to at least two REASONABLE INTERPRETATIONS, and
2-each party attaches different meaning to the term, and
3-neither party knows or has reason to know the term is open to at least 2 reasonable interpretations
REASON FOR NOT ENFORCING AGREEMENT: MISTAKE OF FACT EXISTING AT THE TIME OF K - Mutual Mistake
Distinguish from Misunderstanding (words in K) and Misrepresentation (words before K)

There will be no K if:
1-Both parties mistaken, and
2-basic assumption of fact, nd
3-materially affects the agreed exchange, and
4-not a risk that either party bears
REASON FOR NOT ENFORCING AGREEMENT: MISTAKE OF FACT EXISTING AT THE TIME OF K - Unilateral Mistake
Generally, courts have been reluctant to allow a party to avoid a K for mistake made by only one party.

Look for situations in which the other party had reason to know of the mistake.
THIRD ISSUE: TERMS OF THE K ("TEXAS")
1-Parties' Words and Parol Evidence Rule
2-Conduct and Course of Performance
3-UCC for Terms in Sales of Goods Contracts
TERMS of the Parol Evidence Rule
1-Integration
2-Partial Integration
3-Complete Integration
4-Merger Clause
5-Parol Evidence
6-Reformation
Integration
Written agreement that court finds is the final agreement, TRIGGERS the parol evidence rule
Partial Integration

Complete Integration
IF THESE ARE IN THE ANSWER - PROBABLY WRONG
Parol Evidence
It is an evidence rule in the sense that (1)issue is whether court can consider evidence, and (2)purpose for which the evidence is to be introduced is often determinative

Essence is the EXCLUSIONARY EFFECT of written K on earlier (or contemporaneous agreements)as a possible source of terms of the K
Reformation
Equitable action to modify written K to reflect actual agreement
Facts triggering parol evidence
1-Written K that court finds is the final agreement, AND

2-Oral statement made at the time the K was signed OR earlier oral or written statements by the parties to the K
Parol evidence FACT PATTERNS
1-Contradicting the written deal
2-Getting out of a written deal
3-Explaining term in the written deal
4-Adding to the written deal
Parol evidence to contradict the written deal
Rule prevents court from admitting evidence of earlier agreements for the purpose of contradicting the terms in the written K.

However, court may consider evidence of such terms for the LIMITED PURPOSE of determining whether there was a mistake in integration
Parol evidence to get out of a written deal
Regardless of whether the writing is a complete or partial integration, rule does not prevent a court from admitting evidence of earlier words of the parties for the LIMITED purpose of determining whether there is a defense to the enforcement of the agreement such as misrepresentation, fraud, duress.
Parol evidence to explain a term in the written deal
Regardless of whether the writing is a complete or partial integrating, the rule does not prevent a court from admitting evidence of earlier agreements to resolve ambiguities in the written K.
Parol evidence to add to the written deal
Rule prevents a court from admitting evidence of earlier agreements as a source of consistent, add'l terms unless the court finds:
1-written agreement was only a partial integration, or
2-that the additional terms would ordinarily be in a separate agreement
CONDUCT AND COURSE OF PERFORMANCE - ORDER OR PRIORITY
1-Course of Performance (same people, same K)
2-Course of Dealing (same people, different but similar K)
3-Custom and Usage (different but similar people, different but similar K)
UCC FOR TERMS IN SALES OF GOODS CONTRACTS ("DEFAULT" TERMS)
1-Delivery Obligations of Seller of Goods if Delivery by Common Carrier
2-Risk of Loss
3-Warranties of Quality
4-Contractual Limitations on Warranty Liability
UCC FOR TERMS IN SALES OF GOODS CONTRACTS ("DEFAULT" TERMS) (1) Delivery Obligations Of Seller of Goods if Delivery by Common Carrier - SHIPMENT K's
DEFAULT

Seller completes delivery obligation when it:
1-Gets the good to a common carrier, and...
2-makes reasonable arrangements for delivery and
3-notifies buyer
UCC FOR TERMS IN SALES OF GOODS CONTRACTS ("DEFAULT" TERMS) (1) Delivery Obligations Of Seller of Goods if Delivery by Common Carrier - DESTINATION K's
Seller does not complete its delivery obligation until the goods arrive where the buyer is
How do you determine whether the K is a SHIPMENT K or a DESTINATION K
-Most K's with delivery obligations are SHIPMENT K's.

-Watch for FOB (Free on Board) as a source for determining whether the K is a SHIPMENT K or a DESTINATION K

-FOB (city where seller is or where goods are) = SHIPMENT K
-FOB (any other city) = DESTINATION K
UCC FOR TERMS IN SALES OF GOODS CONTRACTS ("DEFAULT" TERMS) (2) RISK OF LOSS
Risk of Loss issues arise where:

1-After the K has been formed but before buyer receives the goods
2-the goods are damaged or destroyed and
3-neither the buyer nor the seller is to blame
RISK OF LOSS RULES - ORDER OF APPLICATION
1-Agreement (Agreement of the parties controls)
2-Breach (Breaching party is liable for any uninsured loss even though breach is unrelated to problem)
3-Delivery by common carrier other than seller (Risk of loss shifts from seller to buyer at the time that the seller completes its delivery obligations)
4-No agreement, no breach, no delivery by a carrier - determining factor is if seller is a merchant
UCC FOR TERMS IN SALES OF GOODS CONTRACTS ("DEFAULT" TERMS) (3) WARRANTIES OF QUALITY
1-Express(look for words that promise, describe, or state facts or for use sample or model-"all steel""guaranteed")
2-Implied(operation of law - goods are fit for purpose)
3-Implied Warranty of Fitness for a Particular Purpose
4-2A Warranties on Leases (lessor makes same warranties as seller, finance lease=warranties made by supplier to lessor enforceable by lessee)
Contractual Limitations on Warranty Liability
-Disclaimer
-Limitation of Remedies
Disclaimer
-Eliminates IMPLIED warranties
-Express warranties cannot be disclaimed
-Implied warranties of merchantability and fitness can be disclaimed in 2 WAYS
(1)CONSPICUOUS-language of disclaimer, mentioning merhcantability, OR
(2)"as is" or "with all faults"
Disclaimer-Limitation of Remedies
Does not eliminate warranty, simply limits or sets recovery for any breach of warranty
-possible to limit remedies even for express warranties
-general test is unconscionability
-prima facie unconscionable if breach of warranty on consumer goods causes personal injury
(4) PERFORMANCE ("PLAY")
1-Sales of goods performance
-Perfect Tender
-Rejection of Goods
-Cure
-Installment Sales K's
-Acceptance of the Goods
-Revocation of Acceptance of the Goods
2-Common Law Performance Concepts
PERFECT TENDER
-NOT a common law concept
-SALE OF GOODS
-Seller's performance must be PERFECT (perfect goods and delivery)
-Less than perfect tender gives buyer the option of rejection of delivered goods
REJECTION OF THE GOODS
-Distinguish rejection of an OFFER from rejection of the GOODS
-If seller does not meet perfect tender, buyer can retain and sue for damages or reject "all or any commercial unit" and sue for damages
-Limited by CURE/INSTALLMENT K/ACCEPTANCE
CURE
(1)Not every seller has opportunity
Q-did seller have reasonable grounds for believing improper tender would be acceptable?
-->Look for PRIOR DEALINGS
(2)Buyer cannot compel - time for performance has not yet expired
INSTALLMENT SALES CONTRACTS
REQUIRES or AUTHORIZES
1-Delivery of the goods in separate lots
2-to be separately accepted

Buyer has the right to reject an installment only where there is a SUBSTANTIAL IMPAIRMENT in that installment that can't be cured.
ACCEPTANCE OF THE GOODS
1-Effect of acceptance of the goods: if buyer accepts, cannot later reject them

2-Effect of payment: payment without opportunity for inspection not acceptance

3-LOOK FOR BUYER KEEPING GOODS W/O OBJECTION. If delay of a month = Constructive Acceptance
REVOCATION OF ACCEPTANCE OF THE GOODS
Requirements

1-Nonconformity substantially impairs the value of the goods, and
2-excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction, and
3-revocation within a reasonable time after discovery of nonconformity
(5) REMEDIES FOR AN UNEXCUSED PERFORMANCE ("RAP")
1-NON-MONETARY REMEDIES
1a-Specific Perf/Injunction
1b-Reclamation
1c-rights of good-faith purchaser in entrustment
2-MONEY DAMAGES FOR BREACH
2a-Expectation
2b-Consequential
3-DAMAGES FOR SALE OF GOODS
3a-Seller breaches, buyer keeps goods
3b-Seller breaches, seller keeps goods
3c-Buyer breaches, buyer has goods
3d-Buyer breaches, seller has goods
What is the common law equivalent to perfect tender?
Substantial performance
NONMONETARY REMEDIES (IN REM) - SPECIFIC PERFORMANCE/INJUNCTION
-Equitable Remedy
-Look for ADEQUACY OF REMEDY AT LAW or "unclean hands" or other parties' equities
1.K'S for sale of real estate
2.K's for sale of goods: unique goods or other appropriate circumstances
NONMONETARY REMEDIES (IN REM) - RECLAMATION
-Right of an unpaid seller to get its goods back
-Key facts
1-Buyer must have been insolvent when received goods, and
2-seller demand return goods within 10 days of receipt (reasonable time if buyer represented solvency before delivery), and
3-buyer still has goods at time of demand
NONMONETARY REMEDIES (IN REM) - RIGHTS OF GOOD-FAITH PURCHASER IN ENTRUSTMENT
If an owner leaves their goods with a person who sells goods of that kind and that person wrongfully sells the goods to a 3rd party, then such a good-faith purchaser from dealer cuts off rights of the original owner/entruster
MONEY DAMAGES FOR BREACH OF K: GENERAL CONCEPTS - VOCABULARY
1-EXPECTATION
1a-Reliance
1b-restitution
1c-Incidental
2-CONSEQUENTIAL
2a-Avoidable
2b-Liquidated
MONEY DAMAGES FOR BREACH OF K: GENERAL CONCEPTS - Measure of Damages - General Approach
-Protection of Expectation.
-Put P in same economic position as if K had been performed. i.e. Compare money value of D's performance without breach with money value of what D actually did
MONEY DAMAGES FOR BREACH OF K: GENERAL CONCEPTS - Measure of Damages - Alternate Approaches
1-Protection of RELIANCE interest. Put P in same economic position as if K never happened
2-Protection of RESTITUTION interest. Pay P by putting D in same economic position as if K had never happened. Confusing because money goes to P but you focus on what D got in determining how much P can recover
MONEY DAMAGES FOR BREACH OF K: GENERAL CONCEPTS - Damages Rules for SALE OF GOODS
-Part 7 of Article 2 reflects the general contract damages policy of putting the innocent party where it would have been had the K been performed (i.e. Expectation)
-2 relevant facts
1-Who breached
2-Who has the goods
MONEY DAMAGES FOR BREACH OF K: GENERAL CONCEPTS - Damages Rules for SALE OF GOODS. 4 ARTICLE 2 DAMAGES FACT PATTERNS AND SETS OF RULES
1-Seller Breaches, Buyer Keeps the Goods-->FMV if perfect (-) FMV as delivered
2-Seller Breaches, Seller Keeps the Goods-->market Price at time of discovery of breach (-)K price or replacement price(-)K price
3-Buyer Breaches, Buyer Has Goods-->K Price
4-Buyer Breaches, Seller Has Goods-->K price(-)market price at time/place of delivery or K price(-)resale price
INCIDENTAL DAMAGES
costs incurred in finding replacement performance-ALWAYS RECOVERABLE
CONSEQUENTIAL DAMAGES
-MUST BE FORESEEABLE
-Special Damages
-Damages arising from P's SPECIAL CIRCUMSTANCES
-Recoverable ONLY if D had reason to know at time of K
AVOIDABLE DAMAGES
-NO RECOVERY for damages that could have been avoided without undue burden on P.
-Burdens of pleading and proof on D
LIQUIDATED DAMAGES
-Look for K provision fixing the amount of damages
-Issue will be VALIDITY
-Concern is whether provision is too high-a penalty
LIQUIDATED DAMAGES-TEST
1-Damages were difficult to forecast at time K was made
2-Provision is a reasonable forecast
(6) EXCUSE OF NONPERFORMANCE OF K BECAUSE OF SOMETHING THAT HAPPENED AFTER K WAS MADE ("EATING")
1-Because of other guy's improper performance
2-Because of non-occurrence of a condition
3-Because of other party's anticipatory repudiation
4-Insecurity
5-Because of a later K
6-Because of a later, unforeseen event
COMMON LAW AND MATERIAL BREACH RULE - 4 GENERAL RULES
1-Damages can be recovered for any breach
2-Only a material breach by one guy excuses the other guy from performing
3-Whether a breach is material is a FACT question
4-If there is substantial performance then the breach is not material. If breach material then performance was not substantial
COMMON LAW AND MATERIAL BREACH RULE - EXCEPTION
-DIVISIBLE K EXCEPTION
-If payment is divided (EX: Paying $1k/apartment to paint rather than $10k for 10 apartments) then not material breach
CONDITION
-A condition is a mutually agreed upon promise modifier
-Does not create a new obligation, but merely LIMITS obligations created by other language in the K
What type of language creates a condition?
-If
-Only if
-Provided that
-So long as
-Subject to
-In the event that
-Unless
-When
-Until
-ON condition that
What Is The Standard For Satisfying a Express Condition?
STRICT COMPLIANCE
How Can a Condition Be Excused?
1-Good-Faith/Avoidance of Forfeiture
2-Waiver/Estoppel
Waiver/Estoppel of a Condition
-Identify the person who benefits from or is protected by the condition. Then look for a statement by that person giving up the benefits and protection of the condition
-Estoppel is based on a statement by the person protected by the condition BEFORE the conditioning event was to occur and requires reliance.
-Waiver is based on a statement by the person protected by the condition AFTER the conditioning event was to occur and does not require reliance.
-Understand WHO BENEFITS FROM THE CONDITION
ANTICIPATORY REPUDIATION
-Made after the K
-Excuses other party's duty to perform
-Gives rise to an IMMEDIATE claim for damages for breach
-Unambiguous statement or conduct indicating:
1-that the repudiating party will not perform
2-made prior to the time that performance was due
Can Anticipatory Repudiation be reversed or retracted?
-Yes, so long as there HAS NOT been a MATERIAL CHANGE in position by the other party
-If the repudiation is timely retracted, the duty to perform is reimposed by performance can be delayed until ADEQUATE ASSURANCE is provided
INSECURITY
-Occurs when words or conduct of one party give "reasonable grounds for insecurity"
-Other party can then demand adequate assurance
-If it is "commercially reasonable" may also suspend performance until gets adequate assurance
EXCUSE BY REASON OF A LATER CONTRACT
1-Rescission
2-Accord and Satisfaction
3-Modification
4-Novation
Rescission
-Key is whether performance is still remaining from each of the contract parties (executory)
Accord and Satisfaction
-aka Substituted Performance
-ON EXAM:Accord question will have an agreement by the parties to an already existing obligation to accept a different PERFORMANCE in satisfaction of the existing obligation
EFFECT of Accord AND Satisfaction
-If the new agreement (the "accord") is performed (the "satisfaction"), then performance of the original obligation is excused
-If the accord is NOT performed, then the other party can sue on either the original obligation or the accord
MODIFICATION
-A new agreement is made and an old one goes away
-aka An agreement by parties (common law=need new consideration)to an existing obligation to accept a DIFFERENT agreement in satisfaction of the existing obligation
NOVATION
An agreement between BOTH parties to an existing K to the substitution of a new party (same performance, different party)
Who is liable after a NOVATION?
Novation excuses the contracted-for performance of the party who is substituted for or replaced
How is DELEGATION different from NOVATION?
Novation-requires agreement of BOTH parties to the original K and excuses the person replaced from any liability for nonperformance
Delegation-does not require the agreement of both parties and DOES NOT EXCUSE
EXCUSE OF PERFORMANCE BY REASON OF A LATER, UNFORESEEN EVENT - IMPOSSIBILITY, IMPRACTICABILITY, AND FRUSTRATION OF PURPOSE
-Something that happens after K formationbut before the completion of K performance, and
-that was unforeseen, and
-that makes performance impossible or commercially impracticable or frustrates the purpose of the performance
EXCUSE OF PERFORMANCE BY REASON OF A LATER, UNFORESEEN EVENT - EXAMPLES
1-Damage or Destruction of Subject Matter of Contract AFTER Contract
2-Death AFTER Contract
3-Subsequent Law or Regulation - Later law makes performance of K illegal (excuse by impossibility)
-Later law makes mutually understood purpose of K illegal (frustration of purpose)
(7) THIRD PARTY PROBLEMS ("TACOS")
1-Third Party Beneficiaries
2-Assignments of K rights
3-Delegation of K duties
THIRD PARTY BENEFICIARY
-A person trying to enforce a K they did not make
-What you must do:
1-Identify 3rd party beneficiary problems
2-Use the correct vocabulary
3-Deal with efforts to cancel or modify a 3rd party beneficiary K
4-Figure out who can sue whom
5-Assert any available defenses
Identifying 3rd Party Beneficiary Problems
-Look for 2 parties contracting with the intent to benefit a 3rd party
3rd Party Beneficiary DEFINITION
3rd Party Beneficiary-->Not a party to the K. Able to enforce K others made for their benefit.
PROMISOR
Person making the promise benefiting the 3rd party
PROMISEE
Person who obtains the promise benefiting the 3rd party
INTENDED/INCIDENTAL BENEFICIARY
-Only INTENDED beneficiaries have K law rights. Intent of parties to K determines whether intended or incidental
-Question of FACT
-If a 3rd person is named in the K, that person is the INTENDED beneficiary
CREDITOR/DONEE
-Intended beneficiaries are either DONEES or CREDITORS.
-Usually DONEES.
-Look at whether beneficiary was a CREDITOR of the promisee.
3rd Party's Rights to Cancel or Modify the K
-The TEST is whether the 3rd party knows of the K and has relied on or assented as requested
-If so, their rights have VESTED and the K cannot be canceled or modified without their consent unless the K otherwise provides
WHO CAN SUE WHOM?
1-Beneficiary Can Recover From Promisor
2-Promisee Can Recover From Promisor
3-Donee beneficiary CANNOT recover from promisee
4-Creditor beneficiary CAN recover from promisee BUT ONLY on preexisting debt
If the 3rd party sues the promisor, what defenses may the promisor assert?
If the 3rd party sues the promisor, the promisor can assert any defense that he would have had if sued by the promisee.
ASSIGNMENTS
Person trying to enforce a K they did not make
ASSIGNMENT - What do you need to know?
1-What an assignment is
2-Vocabulary
3-Limitations on assignment
4-Requirements for assignment
5-Rights of the assignee
6-How to deal with multiple assignments
ASSIGNMENT-Definition
Transfer of rights under a K in 2 separate steps:
1-K between ONLY 2 parties
2-One of the parties later transfers rights under that K to a third party
ASSIGNOR
Party to the K who later transfers rights under the K to another
ASSIGNEE
-NOT a party to the K
-Able to enforce the K because of the assignment
OBLIGOR
Other party to the K
LIMITATIONS ON ASSIGNMENT
1-Contract Provisions
1a-Prohibition
1b-Invalidation
2-Common law
2a-Assignment of right to payment
2b-Assignment of right to K performance other than right to payment
LIMITATIONS ON ASSIGNMENT-Contract Provisions
-Courts favor assignability of K rights and so are reluctant to read K language as preventing an assignemt
-Determine whether the K:
1-prohibits assignments, or
2-invalidates assignments
LIMITATIONS ON ASSIGNMENT-Contract Provisions-PROHIBITION
-Language of prohibition takes away the right to assign but not the power to assign
-This means that the assignor is liable for breach, but an assignee who does not know of the prohibition can still enforce the assignment
LIMITATIONS ON ASSIGNMENT-Contract Provisions-INVALIDATION
-Language of invalidation takes away both the right to assign and the power to assign so that there is a breach by the assignor and no right in the assignee
-EX:Language saying "all assignments of rights under this K are void."
LIMITATIONS ON ASSIGNMENT-Common Law
Even if a K does not in any way limit the right to assign, common law bars an assignment that substantially changes the duties of the obligor
-TYPES:
1-Assignment of right to payment
2-Assignment of right to K performance other than right to payment (usually SUBSTANTIAL change on exam)
REQUIREMENTS FOR ASSIGNMENT
-DO NOT NEED CONSIDERATION
-GENERAL RULE:Though consideration not required, gratuitous assignments can be revoked
-Watch for present assignment and NOT promise to collect and pay or promise to assign
RIGHTS OF ASSIGNEE
-Assignee can recover from the obligor
-Assignor for consideration CANNOT recover from obligor
-Obligor has same defenses against assignee as it would have against assignor
-Payment by obligor to assignor is effective UNTIL obligor knows of assignment.
-Modification agreements between obligor and assignor are effective IF the obligor did not know of the assignment
MULTIPLE ASSIGNMENTS-Gratuitous Assignments
-Are allowed
-Last assignee generally wins since later assignments revoke earlier ones.
-Can be freely revoked.
MULTIPLE ASSIGNMENTS-Gratuitous Assignments-Exception to Last in Time Rule
-A gratuitous assignment is not revocable if:
1-It is the subject matter of a writing delivered to the assignee
2-The assignee has received some indicia of ownership
3-The assignee has reasonably, foreseeably, or detrimmentally relied on the assignment
MULTIPLE ASSIGNMENTS-Assignments for Consideration
-First assignee for consideration wins
-LIMITED Exception: Subsequent assignee takes priority only if:
1-New assignee does not know of earlier assignment, and
2-is the first to obtain payment, a judgment, a novation, or inidicia of ownership
DELEGATION OF DUTIES
Disputes arising from a person's performing a K they did not make
DELEGATION-What do we need to know?
-What a delegation is
-Relationship of assignment and delegation
-Which duties are delegable
-What are the consequences of delegation
What is a delegation?
Party to a K transferring work under that K to a 3rd party.
Relationship of Assignment and Delegation
1-Assignment-transfer by a party to a K of his rights or benefits under the K to a 3rd party who WAS NOT a party to the K
2-Delegation-transfer by a party to a K of their duties or burdens under the K to a 3rd party who WAS NOT a party to the K
Which Duties are Delegable?
-Contractual duties generally
Limitations on Delegation
-The K prohibits delegations or prohibits assignments
-K calls for VERY SPECIAL SKILLS
-Person to perform K has a VERY SPECIAL reputation
Delegation-What if the 3rd party does not perform?
-Delegating party ALWAYS remains liable
-Delegatee liable ONLY IF tey receive consideration from the delegating party