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147 Cards in this Set
- Front
- Back
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Acceptance of Goods |
B accepts goods if: - Tells S they conform - Tells S will accept despite failure to conform - B fails to reject w/i reasonable time - Act inconsistent w/ S's ownership (by B) * Revocable where: difficulty discovering defects, S assurance they conform, S's assurance will cure and doesn't |
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Acceptance of Offer |
Communication in response to an O manifesting willingness to enter K Generally: * Result = K formation * Only P to whom O is made may accept * O must be known to accepting P * In the same manner O is made (oral, written) * Actively communicated to offeror |
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Accommodation |
Ship nonconforming goods in response to O - w/ Notice they are sent as an accommodation - S thinks acceptable substitute Counteroffer B may accept/reject * Must have notice or = acceptance & breach |
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Accord |
Agreement in which 1 party to an existing K agrees to accept a performance different from that in the existing K |
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Satisfaction |
Performance of an accord Satisfaction discharges both accord & original K duty |
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Anticipatory Repudiation |
Before the time for performance, 1 P unequivocally indicates that he will not perform Breach Other P discharged from performing & may sue for damages immediately |
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Article 2 |
Article 2 of the Uniform Commercial Code governs all contracts for the sale of goods |
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Capacity |
The ability to comprehend the nature and effect of one’s acts Lack capacity: - Minors (in most states, persons under 18) - Declared incompetent in judicial proceeding - Improper threat - Undue influence (excessive pressure) * K w/ 1P lacking capacity still bind other P |
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Basis of the Bargain |
Express warranties can arise from a statement, description, sample, or model that is part of the basis of the bargain Made at a time when B could have relied on it in entering the K |
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Consideration |
A bargained-for exchange of something of legal value Consideration is required of both Ps to form a K * Peppercorn (nominal consideration) sufficient |
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Counteroffer |
A response to an offer that proposes different or additional terms Operates as rejection of the original offer and as a new offer to the original offeror |
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Cover |
Difference between the contract price and the cost of buying replacement goods The usual measure of damages for B |
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Types of Damages in K
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1. Compensatory 2. Consequential 3. Incidental 4. Liquidated 5. Reliance 6. Warranty |
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Compensatory Damages |
An amount of money to put the nonbreaching P in the position would have been in had the promise been performed * Normally money damages to pay for substitute performance (expectation damages/benefit of the bargain) * For warranty cases see Warranty (Damages) |
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Consequential Damages |
Special damages that reflect losses over & above standard compensatory damages (usually lost profits resulting from breach) Result from non breaching Ps particular circumstances Only recovered if breaching P knew (should have known) of particular circumstances. |
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Incidental Damages |
Expenses incurred that naturally & usually would accompany the breach B: costs to inspect, transport, store rightfully rejected goods & costs in finding substitute goods S: costs to store, ship, and resell goods resulting from the breach * Reasonably incurred natural consequence |
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Liquidated Damages |
An amount of damages stated in the K that are to be paid in the event of breach Enforced if (1) damages were difficult to estimate at the time of K and (2) amount was a reasonable estimate of the likely compensatory damages (reasonable damages for breach) * No punitive damages in K law * LD Clause materially alters K |
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Reliance Damages |
Damages based on the non breaching P’s costs Attempt to put the non breaching P in position he would have been in had the K not been made * No reliance damages for mere speculation (unfair since uncertain) |
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Warranty (Damages) |
When B accepts non conforming goods: Entitled to the difference in value btwn goods as delivered & the goods as warranted (promised) |
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Express Warranty |
Warranty created by the words/actions of S UCC: can be created by a statement of fact or promise relating to the goods, a description of goods, or a sample or model by/from S that becomes the basis of the bargain |
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Extrinsic evidence |
Facts outside of a document (i.e. oral evidence) |
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Frustration of Purpose |
Frustration exists if purpose of K (known to both Ps) has become valueless by virtue of some unforeseen event not the fault of P seeking discharge |
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Implied Warranty of Fitness for a Particular Purpose |
If S has reason to know of the B’s particular purposes for the item & that B is relying on S’s judgment, S warrants that the item is suitable for those purposes. (AKA Implied Warranty of Fitness) * B must actually rely on S's skill |
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Implied Warranty of Merchantability |
Merchant S’s warranty that, among other things, the item sold is fit for its ordinary purposes Implied in every K for a SOG by a merchant * Merchant S need not have knowledge of defect to be liable |
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Impossibility |
Something that cannot be done. Duties could not be performed by anyone. If duties could be performed by someone but not P, performance is not impossible. * K duties will be discharged if bc impossible to perform bc of an event whose nonoccurrence was a basic assumption of K. |
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Impracticability |
P would encounter extreme & unreasonable difficulty or expense in performing under K bc of an event whose nonoccurrence was a basic assumption of K (i.e. shortages due to embargo) * K duties will be discharged if impracticability is demonstrated |
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Installment Contracts |
K that requires or authorizes the delivery of goods in separate lots to be separately accepted |
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Integration |
A written K is an integration if the Ps intended the writing to be final and complete expression of their agreement. |
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Legal Value |
Legal value is often described as legal detriment to the promisor or legal benefit to the promisee |
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Lost Volume Seller |
S who can obtain/manufacture as many goods as he can sell (i.e. car dealership) * If B breaches K from such a S, the S is not made whole if another B purchases same item *But for B’s breach, S would have made 2 sales |
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Mailbox Rule |
Common Law Rule acceptance is effective & K is formed moment acceptance is dropped in mailbox, properly addressed *Extended to email, fax, voicemail, web orders Rejections & terminations are only effective on receipt * Doesn't apply: option Ks, O w/i express time frame, “Acceptance effective only upon receipt” |
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Merchant |
Generally, a person who deals in goods of kind sold or who otherwise by occupation holds himself out as having knowledge or skill peculiar to the practices involved |
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Merchant's Firm Offers |
If merchant agrees to hold O open for a length of time in a signed writing, the O is irrevocable for that period even w/o consideration * No express time frame needs to be included but not > 3 mos. * Only offeror must be a merchant |
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Mirror Image Rule |
Common Law - Acceptance is only valid if the offeree assents to every term of the offer - Acceptance w/ new/different terms = rejection and a counteroffer UCC abandoned in favour of Battle of the Forms |
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Misrepresentation |
An intentional or unintentional untrue statement of fact K is voidable if: - Made before K by 1P - Is fraudulent (intentional) or material - Part of reason other P entered into K * No wrongdoing required for material misrepresentations |
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Mistake |
An incorrect belief or ignorance of a fact Mutual mistake: Assumption shared by both Ps to a K. * K = voidable if: material effect on agreed exchange & P seeking to avoid K did not assume risk of the mistake Unilateral mistake: 1 P mistaken, other reason to know of mistake *Mistaken P may void |
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Mitigation |
Act of avoiding damages that can be avoided with reasonable effort after a breach of K CL: Non breaching P can't recover damages that could have been mitigated. Must make reasonable efforts to cut down losses by procuring a substitute performance at a fair $ to recover |
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Offer |
A communication of willingness to enter into K that creates the power of acceptance in the offeree (* Not assignable to 3rd party) A valid O requires: (i) intent to enter into a bargain (ii) definite terms |
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Option Contract |
An option is a distinct K in which offeree gives consideration for a promise by offeror not to revoke an outstanding O * K rights are generally assignable to 3rd parties |
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Parol Evidence Rule |
If a written K & that K is integration, written or oral statements made prior to writing (& oral expressions made contemporaneously) will not be admitted in court to vary terms of written K * Integration = Ps intended to be final/complete Exception: evidence of validity of agreement (fraud/duress/mistake/condition precedent) |
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Perfect Tender Rule |
Article 2 SOG rule entitling B to a perfect tender (goods and delivery that conform to K in every respect) * CL substantial performance doctrine does not apply |
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Preexisting Duty |
This is the notion that the promise to perform, or the performance of, something that one already is legally obligated to do is not consideration |
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Promissory Estoppel (Doctrine) |
If a promise to make a gift induces detrimental reliance by the other P in a manner that the promisor should have reasonably expected, the promise will be legally enforceable, at least to the extent of the reliance * Substitute to enforcepromises not supported by consideration |
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Quantum Meruit |
“As much as he deserves” Equitable remedy - Recover for benefits conferred under unenforceable K - Breaching party can recover value of services - Remedy for unjust enrichment - Use to cure vague terms (AKA Quasi-K) Type of Restitution |
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Refusal of Goods |
Refusal to accept goods delivered pursuant to K If S delivery of goods does not conform to K, B may reject all of the goods/any commercial unit * If B rejects the goods, no duty to pay arises * If the goods conform to K and B rejects, rejection is a breach. |
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Rejection of Offer |
An indication by an offeree that does not intend to accept the O CL: answer to an O that does not mirror the offer’s terms is a rejection. If it varies the terms of O, it is a counteroffer. A rejection terminates the O, and it can no longer be accepted. |
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Restitution |
Court in its discretion can: (1) restore a party to previous position; (2) return something to rightful owner; (3) restore the status quo; or (4) prevent unjust enrichment (benefit conferred w/o intent to gift) by recovering payments or V of perform. rendered * K Price minus damages incurred from breach * May not be avail for intentional breach |
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Right to Cure |
If B has rejected goods bc of defects, S may w/i original time to perform, “cure” by giving reasonable notice of her intention to do so and making new tender of conforming goods B must accept * If B rejects accommodation, S has further reasonable time ti cure |
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Specific Performance |
Court order requiring a P to perform as promised * Remedy only available if money damages are inadequate * Land (all land is considered unique), goods are unique or in short supply |
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Statute of Frauds |
Statute requiring certain types of Ks be evidenced by a writing and signed by P being sued (P to be charged) (don't need writing to revoke) Includes: K can't be performed w/i 1 year, SOG > $500, interest in real property * No writing = unenforceable at option of P to be charged; * Evidence admissible to explain particulars but not to add missing terms |
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Time of the Essence |
Term providing that: K duties must be performed by time in K * Late performance = substantial breach *Nonbreaching P can cancel K & seek damages * Assumed if nature of K makes exact day performance of vital importance (Otherwise delay is nonmaterial breach) |
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Unconscionability |
Doctrine intended to avoid oppression and unfair surprise in K Ct refuse enforce K or provisions bc unfairness in bargaining process * Inconspicious/incomprehensible terms burdensome K provisions hidden in fine print * Extreme 1-sidedness of K's terms due to uneven bargaining power such as release from liability for intentional wrongs |
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Unilateral Contract |
K involving an exchange of a promise for an act * Only 1 promise Performance = acceptance |
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Voidable Contract |
K that 1 or both Ps may elect to have declared invalid i.e. by raising a defense (infancy or insanity) that makes it voidable |
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Warranty of Title |
Warranty that S of property has title to that property & transfer is rightful Automatic whenever anyone sells goods |
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Auction With Reserve |
Auctioneer can withdraw at any time prior to sale |
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Auction Without Reserve |
Once auctioneer calls for bids on an article or a lot can't withdraw unless no bid made w/i reasonable time |
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Battle of the Forms Provision |
UCC Art.2 Inclusion of new terms in acceptance is effective acceptance if not expressly conditioned on assent to new terms Merchants (Both Ps) new terms incl. if not materially altering K or objection in reasonable time Non-merchants new terms not incl. |
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To be valid, an offer for SOG must include: |
A quantity term Certain or capable of being made certain by reference to extrinsic facts (Note: Courts can supply a reasonable price term; Item can be specified w/i reasonable range of choices) |
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If the Ps to an otherwise valid K have included a term that is too vague: |
K will be unenforceable unless vagueness can be cured |
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Termination by Operation of Law |
- Death or insanity of a P (inability to K) - Destruction of subject matter (impossibility) - Supervening legal prohibition (illegality) |
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K for SOG is missing price term: |
Price will be reasonable price at the time of delivery Courts can supply reasonable price term |
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Common Law Terminating an offer |
Express rejection: statement by offer that does not intend to accept offer Counteroffer: alternative offer or acceptance conditional upon other terms Reasonable mere inquiry into changing terms NOT a termination/counteroffer |
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Advertisement, catalog, or circular letter listing listing price willing to sell product is: |
Invitation for an Offer Only an O if: (1) promissory language; (2) certain & definite terms; (3) offers are clearly identified *"First come, first served" is sufficient * Price quotation response to direct enquiry = O |
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Part Performance |
Supplies the needed clarification of terms used to cure vagueness (*Quantum Meruit = remedy for unjust enrichment where P performs despite vague term) (Note: Distinguish gap fillers & presumption of Ps intent that supply missing terms) |
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Court can apply presumption that the Ps intent was to include reasonable term: |
To rectify a missing term if it reasonably appears Ps intended to make a valid K |
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If a sale involves both goods and services: |
Court will determine which aspect is dominant and apply that aspect's governing law to the whole K |
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Inclusion of additional terms under Battle of the Forms (A2 UCC) depends on: |
Whether or not both Ps are merchants |
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Once an offer begins performance in response to a true unilateral K |
Offer becomes irrevocable |
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Legal detriment |
Doing something one is not legally obligated to do or refraining from doingsomething one has a legal right to do |
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Express Contract |
Formed by language, oral or written |
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Contract |
Legally enforceable promise or set of promises (agreement btwn Ps) that can be either oral or in writing * Need mutual assent & consideration * Ps have a duty to perform * Breach = P fails to perform * Other P entitled remedy (specific performance/damages) |
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Mutual assent |
Meeting of the Minds Agreement, usually in the form of offer & acceptance |
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Past Consideration |
Something that is done before the bargain is made cannot serve as consideration bc it was not bargained for * Past consideration is no consideration * Moral consideration is noconsideration |
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Definite Terms |
Specific enough that a courtcould enforce K based on them: - Identity of offeree (person or class) - Subject matter - Price * Resulting K may be enforceable w/o a material term if standard for the court to supply it |
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Termination of Offer |
- Passage of Time - Death of Either Party (b4 acceptance) - Revocation by offeror (comm. to offeree) - Rejection by offeree * Counteroffer operates as rejection * Mere inquiry doesn't terminate |
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Rules of Construction |
- K are construed as whole (clauses subordinate to general intent) - Words construed ordinary meaning - Try to interpret so K is valid/enforceable - Ambiguities construed against P prepared K |
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Article 2 Gap Fillers |
Price: Reasonable at time for delivery Delivery Place: S place of business * or home if no place of business Time for Shipment: Reasonable time Time for Payment: Time/place B receives goods |
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Risk of Loss |
All K require delivery & terms determine ROL: * If S = merchant, ROL passes to B when B takes possession * If S is not merchant, ROL passes tender of delivery (goods ready for pick up at any time) * If shipped with common carrier, ROL passes to B when S delivers goods to CC |
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Breach of Warranty |
Breach of warranty = Breach of K B entitled to $ damages Damages = difference in value of goods |
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Misunderstanding |
K language with 2 possible meanings: * Both Ps unaware- no K unless intend same meaning * Both Ps aware- no K unless intend same meaning * 1P aware, 1P unaware- K enforced according to intended meaning of unaware P |
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Excuse of Performance |
K formed, but Ps released from duty to perform: - Express condition occurred/did not occur - Waiver of condition - Other Ps breach - Anticipatory Repudiation |
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Insecurity |
Reasonable grounds for insecurity other P won't perform, can issue written demand for adequate assurance (statement to give confidence performance will occur) and suspend performance until receive it * Failure to provide adequate assurances = anticipatory repudiation |
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Rescission |
K is still executory (not fully performed) on both sides, it can be discharged by an express agreement between the Ps * Surrender of rights under original K = consideration |
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Modification |
K subsequently modified by Ps, will discharge terms of the original K that are subject to modification * Doesn't discharge entire K * Generally mutual assent & consideration * A2 reqs. only good faith, no consideration |
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Novation |
New K between both Ps that substitutes a new P to perform same duties * Excuses performance of P who is replaced |
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Minor Breach |
Breach is minor if promisee receives substantial benefit of what is bargained for * K is still valid but any damage suffered for failure of performance can be offset |
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Material Breach Factors |
1. Amount of benefit to non breaching P 2. Can NBing P be compensated with $ damages 3. Extent of performance 4. Hardship to breaching P 5. Breach wilful or negligent? 6. Likelihood breaching P will fully perform |
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Installment Ks |
A2 treats like CL K (no perfect tender rule) * Installment can only be rejected if nonconformity substantially impairs V and can't be cured *Defect will only constitute breach of whole K where nonconformity substantially impairs V of entire K |
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Main goal of K Remedies |
Put the non breaching P in the position he would have been if there had been no breach |
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Cancellation |
P to whom performance is owed can cancel the K in the event of a material breach * Doesn't restore position but it is an available remedy |
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Quasi-K When No K |
Remedy available when: - P conferred benefit on D - P reasonable expectation of compensation - D reason to know of expectation - D would be unjustly enriched * Dr rendering services at scene of an accident |
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Recission |
Remedy that seeks to restore Ps to position if there was no K * Available where inaccurate belief about 1 of terms |
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Reformation |
Ps agree to a certain deal but written K doesn't reflect it * Ct may amend the K to reflect agreed terms |
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3rd Party Beneficiaries |
Promise to confer benefit on 3rd party in exchange for performance * 3rd P can only sue with knowledge of benefit & detrimental reliance * If benefit is in exchange for an already existing debt to 3rd P, 3rd P can sue on original debt |
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Assignment (of K Rights) |
Replacement of a real party in interest - Establishes privity btwn obligor & assignee - Extinguishes relationship obligor & assignor - Revocable, except where assignment is consideration for an existing debt and for V (then irrevocable) |
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Delegation (of K Duties) |
Generally, all K duties are delegable except where personal judgement or skill is required * Delegating party still remains liable for performance |
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Offer to buy goods |
Article 2 Construed as inviting acceptance by promise to ship or ship (acceptance is effective as soon as either is dispatched) |
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Unjust Enrichment |
Benefit conferred on 1P by other P w/o intent to gift * Focus is on the unfair benefit to D, not on any cost/loss to P |
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Doctrine of Laches |
Equitable doctrine: "Out of time" Unreasonable delay by the P in bringing claim * Ordinarily applied only to claims for equitable relief (injunctions), and not to claims for legal relief (damages) |
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Suretyship Contract |
An accessory agreement by which a person binds himself for another already bound, either in whole or in part, as for his debt, default or miscarriage * Must have consideration or surety makes promise before creditor agrees |
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Ratification |
Promise to perform a voidable obligation Enforceable despite the absence of new consideration * Exception to the preexisting legal duty rule * Promisor is providing consideration by promising to perform when he can avoid it |
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Conditional promise |
Unenforceable if the condition is entirely within the Promisor's control |
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Consideration? Fulfillment of a condition to receive a gift |
NO, not adequate consideration * Fulfillment of the condition must be of some benefit to the promisor to constitute proper consideration * Promise to make a gift lacks consideration |
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Material Benefit Rule |
Modern Trend Some courts will enforce a promise if: (i) it is based on a material benefit that was previously conferred by the promisee on the promisor, and (ii) the promisee did not intend to confer the benefit as a gift |
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An otherwise valid debt that is now barred by the statute of limitations can still be enforced if |
The debtor makes a new promise to pay the debt in writing * An oral promise is not enough |
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A promise not to sue on a claim can be considered valuable consideration only if |
The claim is valid or the claimant reasonably and in good faith believes the claim is valid |
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What is the test used for determining if a promisee’s act or forbearance serves as valuable consideration? |
Whether the act or forbearance would be of any benefit to the promisor |
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If a past obligation would be enforceable except for the fact that a technical defense to enforcement stands in the way (e.g., statute of limitations), the courts will enforce a new promise if |
it is in writing or it has been partially performed |
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A court will grant an order of specific performance to enforce a contract not to compete if __________; and __________. |
The services to be performed are unique; the covenant is reasonable * To be reasonable, the covenant must be reasonably necessary to protect a legitimate interest of the person benefited by the covenant, it must be reasonable as to its geographic scope and duration, and it must not harm the public |
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Which of the following statements is most accurate regarding the measure of damages for breach of a contract for the sale of goods? |
The buyer’s damages are measured as of the time he learns of the breach, while the seller’s damages are measured as of the time for delivery |
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When a party that offers a rare or unique service has breached a service contract, the court may grant __________ to the nonbreaching party. |
Injunctive relief |
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Under Article 2, when a seller breaches a contract by refusing to deliver identified goods to the buyer, the buyer may replevy the goods if: |
B is unable, after reasonable effort, to acquire substitute goods |
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Which of the following is not a valid measure of a seller’s damages? |
Amount of loss resulting from the S's particular circumstances that a reasonable person would have foreseen, as a result of breach is the measure for consequential damages. * Consequential damages cannot be recovered by a seller. * Either NB B or NB S may recover incidental damages, but only a B may recover consequential damages |
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Incidental damages |
Include a buyer’s reasonable expenses in care of goods rightfully rejected and a seller’s expenses of reselling goods as a result of the buyer’s breach |
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Possible measures of a seller’s damages in the event of a breach by the buyer in a sale of goods contract include: |
- Difference btwn K price and the market price - Difference btwn K price and the resale price - Lost profits |
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Under the U.C.C., what is required to cure a defective delivery in a single delivery contract? |
Reasonable notice of the intention to cure and a new tender of delivery of conforming goods within the time for performance |
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When should the nonbreaching party treat an otherwise minor breach as a material breach? |
When the breach is coupled with an anticipatory repudiation * NB P may sue immediately for total damages & permanently discharged from any duty of further performance * NB P must not continue on with K, bc to do so would be a failure to mitigate damages |
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Under ___________ contract, the risk of loss passes from the seller to the buyer when the goods are delivered to the trucking company for transport |
A shipment K * F.O.B. (free on board) contract always specifies a location after F.O.B. The risk of loss passes upon delivery to the specified location. |
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Implied warranties may be disclaimed by specific or general disclaimers.General disclaimers may include: |
(i) language such as “as is,” “with all faults;” (ii) examination of goods by the buyer or a refusal to examine when the defects would be revealed by examination; and (iii) course of dealing, course of performance, or usage of trade. |
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If any party to the contract is not a merchant, as is the case here, additional or different terms are considered to be mere proposals to modify the contract that do not become part of the contract unless: |
The offeror expressly agrees |
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In a contract in which the seller is in Michigan and the buyer is in Texas, which of the following terms is interpreted as creating a destination contract? |
F.O.B. the buyer’s place of business |
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F.A.S. |
“Free Alongside” Generally used only when goods are to be shipped by boat. The risk of loss passes to the buyer once the goods are delivered to the dock. |
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A warranty will be implied in a contract for the sale of goods whenever |
any seller has reason to know the particular purpose for which the goods are to be used and that the buyer is relying on the seller’s skill and judgment to select suitable goods; and the buyer in fact relied on the seller’s skill and judgment. |
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In a shipment contract, the risk of loss passes to the buyer when the goods are delivered to the carrier, unless: |
The goods are defective |
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An implied warranty of merchantability may be disclaimed by |
A specific disclaimer mentioning merchantability or by general language such as “as is” |
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Under Article 2’s version of the parol evidence rule, a party __________. |
May offer evidence explaining or supplementing the existing terms of an integrated writing, whether or not the writing appears to be ambiguous * Differs from general rule that parole evidence can be received to aid a fact-finder in interpreting a document only if the writing appears to be ambiguous on its face. |
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Under CL, evidence of additional terms is generally admissible even if the written contract appears to be completely integrated if the alleged terms __________. |
Are of a type that would naturally be omitted from a written agreement * If does not conflict with the written integration * Subject similarly situated Ps would not ordinarily be expected to include in writing *If naturally omitted term present, writing is only partially integrated despite appearance of complete integration. |
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Naturally omitted terms |
The Restatement of Contracts allows a P to an agreement to introduce evidence of additional terms not included in a written integration of the agreement if the new terms do not conflict with the written integration and the terms concern a subject that similarly situated parties would not ordinarily be expected to include in a written instrument |
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What does it mean if a term is “collateral” to a written agreement? |
Term is related to the subject matter of the agreement, but not part of the primary promise |
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If a sale is induced by fraud |
S can rescind the sale and recover the goods from the fraudulent B * defrauded S may not recover the goods from a good faith purchaser for V who bought from the fraudulent B *one who takes a security interest in the goods can be a good faith purchaser for V |
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Unless a contrary intention appears elsewhere, if a party to a contract assigns “all my rights under the contract” to a third party, that assignment __________. |
Will be construed to include an assumption of all duties as well * Language implies a promise by the assignee to assume the duties of performance, and thus does not limit the transfer to only the assignor’s rights under K |
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The right to receive personal services can/cannot be assigned? |
The right to receive personal services cannot be assigned * If an assignment of rights would result in the obligor having to perform personal services (involve the personality or personal characteristics) for someone other than the original obligee, the attempted assignment is invalid |
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If a watch owner leaves her watch for repairs at the store where it was purchased and the store then borrows money from a bank, giving the bank the owner’s watch as pledged collateral, __________. |
The watch owner can recover the watch from the bank immediately. * Store had no right/power to use watch as collateral, & title to watch remained w/ owner at all times * Entrustment gives the merchant the power (but not the right) to transfer all rights- not case bc Bank is not B in ordinary course of business |
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An important difference between the rights of a donee beneficiary and a creditor beneficiary is that __________. |
A creditor beneficiary can sue the promisee on the underlying obligation, but a donee beneficiary cannot * No right to sue for nondelivery of a gift * Creditor beneficiary can sue the promisee on the underlying obligation that the promisor’s performance was meant to discharge |
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An obligor who delegates his duties __________. |
Remains secondarily liable on the contract, even if the delegate expressly assumes the obligor’s duties under the contract, as a surety, for the delegate’s performance of the duty. |
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Can a 3rd party beneficiary bring suit for assigning his rights under the contract?
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No, bc will not cause the third-party beneficiary’s rights to vest |
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Under the U.C.C., a good faith purchaser for value can be _________ or ____________. |
A buyer without knowledge of any fraud; a person without knowledge of any fraud who takes a security interest in the goods |
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Which of the following best describes the elements required for an effective assignment? |
An adequate description of the rights being assigned and words of assignment |
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The rights of a third-party beneficiary vest when he: |
Manifests assent to the promise; Brings suit to enforce the promise; Materially changes position in justifiable reliance on the promise * Whether 3P is expressly designated in K (need only be identifiable at the time performance is due) bc it is more likely primarily for his benefit * Learning of 3PB K will not vest the beneficiary’s rights. Must assent, sue, or rely. |
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Under the U.C.C., the modification of an assigned right that has not yet been fully earned by performance is? |
Effective against the assignee if made in good faith * The modification is effective against the assignee |
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An assignee’s rights against an obligor are subject to ___________. |
The defenses the obligor had against the assignor but not to setoffs arising after notice of assignment |
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An effective assignment generally need not be in writing, except: |
- wage assignments - assignments of an interest in land - assignments of choses in action worth >$5,000 - intended as security interests (A9 U.C.C.) |
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When an obligor delegates his duties under a contract, the delegate __________. |
cannot be compelled to perform by the obligee absent an assumption of duties * Delegation creates a power in another to perform the delegator’s contractual duties. The obligee cannot compel the delegate to perform because the delegate has not promised to perform (assumes duties is supported by consideration) |
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In every assignment for value, the assignor implied warrants that: he has a right to make the assignment; the right exists and is not subject to any undisclosed limitations or defenses; and _________. |
He will do nothing to defeat or impair the assigned right |
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An assignor properly assigns his rights under a contract to an assignee. The obligor of the contract is subsequently incapable of performing under the contract due to insolvency.Will the assignor be held liable to the assignee? |
No, an assignor is not liable to the assignee if the obligor is incapable of performing * The assignor does not make a warranty that the obligor will actually perform, and he is not secondarily liable as a surety of the obligor’s performance. The assignee can look only to the obligor for his failure to perform. |
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The assignor warrants |
- He will do nothing in the future to defeat the assigned right - The assigned right is not subject to any valid defenses - The assignor has the right to assign |
