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91 Cards in this Set
- Front
- Back
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Contracts: Applicable Law
(incl. NY Distinction) |
- Article II of UCC applies to sale of goods (does not incl. real estate or services
- Article IIA (NY ONLY): applies to lease of goods - Common Law: everything else (note, on MBE, CL will also incl lease of goods) - where K is mixed, choose more important purpose to dominate |
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Contract Formation: Definitions: Contract & Quasi-Contract
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- contract: legally enforceable agreement
- quasi contract: equitable remedy to protect against unjust enrichment when contract law yields unfair result * apply where party is losing it all; option of last resort * appears often on NY portion * recovery is ltd to reas value of benefit conferred, not K price |
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Contract Formation: Definitions: Unilateral vs Bilateral Contract
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- bilateral: can be accepted in any way
- unilateral: can only be accepted by performance |
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Contract Formation: Was there an Offer
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- define: manifestation of intent to be bound
- indefiniteness: terms too imprecise to be enforced * open price terms: court will read in; only need quantity and parties |
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Contract Formation: Was there an Offer: Requirements Contract
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- governed by Article II
- quantity is measured by buyer's need w/o specifics - sufficient to constitute an offer - buyer cannot take seller by surprise, increases must be in line w/ prior demands |
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Contract formation: Was Offer Terminated: Three Methods of Termination
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- Lapse
- Revocation - Rejection |
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Contract Formation: Was Offer Terminated: Lapse
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- offer terminates after stated term or reasonable time has passed
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Contract Formation: Was Offer Terminated: Revocation
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- offer can be revoked any time before acceptance
*direct: tell offeree you changed your mind * indirect: offeror conduct + offeree awareness of conduct - once an offer has been accepted it can no longer be revoked - revocation is effective only upon receipt |
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Contract Formation: Was Offer Terminated: Revocation: Exceptions
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- option: promise to keep offer open that is paid for
(NY: signed written promise not to revoke is enforceable even w/o pymt) - foreseeable reliance before acceptance - starting to perform a unilateral contract (mere prep is not enough) *NY: an offer can be revoked up until performance has been completed - firm offer under Article II: merchant promises in signed writing to keep an offer open (all elements must be present) * always look for an option first * signed writing is broad, incl letterhead & symbols * offer remains open for reas time not to exceed 3mos |
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Contract Formation: Was Offer Terminated: Rejection
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- counteroffers operate as rejection unless mere bargaining or negotitation
- conditional acceptance is not an acceptance at all - death of party before acceptance terminates a revocable offer - acceptance varying offer: * CL: mirror image rule * Article II: adding or changing terms does not prevent acceptance but those terms are only added to K if: - both parties are merchants - term is not a material change (hardship or suprise; not customary) - offeror does not object w/n reas time |
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Contract Formation; Has Offer Been Accepted: Starting Performance
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- langugage of offer controls
- bilateral contract: acts as acceptance; carries an implied promise to finish job - unilateral: not an acceptance, can only be accepted by completion (NY: party can revoke until performance is complete) |
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Contract Formation: Has Offer Been Accepted: Improper Performance
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CL: simultaneous acceptance and breach
Article II: simultaneous acceptance and breach unless seller is sending the goods as an acommodation |
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Contract Formation: Has Offer Been Accepted: Offeree Silence
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offeror cannot unilaterally turn silence into acceptance
- NY: unsolicited merchandise is considered a gift |
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Contract Formation: Has Offer Been Accepted: Mailbox Rule
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- acceptance is effective when it it s mailed
- burden of loss is on offeror |
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Contract Formation: Has Offer Been Accepted: Mailbox Rule: Exceptions
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- offer provides otherwise
- irrevocable offers - acceptance sent first but rejection arrives first (mailbox rule applies unless offeror relies on rejection) - if rejection is sent first, mailbox rule does not apply--whatever gest there first wins |
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Contracts: Defenses Against Formation: Lack of Capacity
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- an incapacitated D may disaffirm contract if he watns to
(minor, intoxicated, incompetetn) - implied affirmation: if incapacitated D does not disaffirm and regains capacity, P can enforce teh K against him |
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Contracts: Defenses Against Formation: Lack of Capacity: Infants
NEW YORK ONLY |
infants cannot void contracts for
- life insurance by those 14 or older - educational loans by those 16 or older - all contracts by 18 year olds - realty contracts related to marital home - contracts involving artistic or athletic services |
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Contract: Defenses Against Formation: Duress
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- economic or physical pressure
* threat to break exisiting contract * victim agrees only to get 1st deal done * no reasonable alternative |
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Contract: Defenses Against Formation: Misrepresentation/Non-Disclosure
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- even an honest misrepresentation can be fatal flaw if material
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Contract: Defenses Against Formation: Ambiguity/Misunderstanding
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- mutual mistake to material fact: no contract
* mistake as to marekt value, gen not material - unilateral mistake (one paryt knows or has reason to know of mistake) : contract formed using innocent party's meaning |
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Contract: Defenses Against Formation: Lack of Consideration
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- ok to bargain for a promise, performance or forbearance
* usu promise for promise * forbearance: stop doing something - past consideration is no consideration at all *NY: past consideration is binding if expressly stated in signed writing & can be proven - law doesnt care about adequacy of consideration |
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Contract: Defenses Against Formation: Contract Modification: Common Law
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CL: new consideration is required to modify contract
* performing a pre-existing duty is not enough * cant be used as a defense by 3rd party NY: no new consideration needed for modification if done in a signed writing |
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Contract: Defenses Against Formation: Contract Modification: Article II
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- consideration not required to modify contract but must show good faith
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Contract Defenses Against Formation: Lack of Consideration: partial payment
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- if debt not in dispute, no consideration necessary
- if in dispute, debtor wins bc law favors settlement NY: if promise to forgive is in signed writing no consideration needed |
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Contract Defenses Against Formation: Lack of Consideration: time barred debt
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- written promise to pay a debt, collection of which is bared by SoL is enforceable even w/o consideration
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Contract: Defenses Against Formation: Lack of Consideration: Promissory Estoppel
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- always look for consideration first
- foreseeable reliance may make a promise enforceable even w/o consideration |
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Contract: Defenses Against Formation: Public Policy
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- convenant to not to compete: invalidates or narows if operates as a restraint on trade
- exculpatory clauses: elim liability for negligence, but not intentional torts or gross negligence |
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Contracts: Statute of Frauds: MYLEGS
when writing is required |
Marriage
Year (contracts that cant be performed in less than 1 year) Land Executor Guarantee Sale of Goods ($500+) main purpose exception: an oral promise to answer for the debt of another is enforceable if promisor' main purpose is to further his own economic advantage |
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Contracts: Statute of Frauds: Land
Equal Dignities Rule |
- transfer of interest in real property (sale, lease, easement)
- EDR: where underlying trsxn falls w/n SoF, agent authorization must too |
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Contracts: Statute of Frauds: Land
Exceptions |
- leases of one year or less
- part performances ( 2 of 3: payment, improvement possession) |
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Contracts: Statute of Fraud: Year
performance cant be accomplished in year |
- doesnt matter if performance actually takes longer; if full performance is possible w/n a year-->no writing required
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Contracts: Statute of Fraud: Year
lifetime contracts |
- NY: included, must be in writing
- MBE: life contracts do not have to be in writing, only those for a specified time period |
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Contracts: Statute of Fraud: Year
Exception |
- party fully performs-->no writing needed to recover
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Contracts: Statute of Fraud: Sale of Goods ($500+)
Exceptions |
- goods accepted/paid for by buyer
- custom made goods, if not suitable for ordinary sale - judicial admission - merchant's confirmation memo: A can use its own signed writing to satisfy SoF against B if: * both parties are merchants * writing claims a prior oral agreement, w/quantity * recipient doesnt object w/ 10 days |
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Contracts: Statute of Fraud: Lease of Goods (article 2A)
NEW YORK ONLY |
lease of goods for $1000 or more must be in writing
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Contracts: Statute of Frauds: Suretyship (promise to answer for debt of another)
main purpose exception |
MBE: no writing required if surety's main purpose was to benefit himself
NY: no main purpose exception, writing required |
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Contracts: Statute of Frauds: Contract Modification
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- writining required only if contract as modified is w/n SoF
*orig contract need not be * clauses that prohibit oral modification are unenforceable |
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Contracts: Statute of Frauds: Miscellaneous New York Provisions
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- assignment of insurance policy
- promise to pay discharged debt - agreement to pay finder's fee or broker's commission (except to attorney or real estate agent) |
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Contracts: What Constitutes a Satisfactory Writing
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- sale of good: must contain quantity term and be signed by defendant
- lease of goods: words lease + quantity + duration + rental pymt + signature - any other K must contain all material terms (who/what) signed by D |
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Contracts: Parole Evidence Rule
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- keeps out evid of prior agreements that contradict later writing
- PER problems require a writing, so if fact pattern inv an oral agreement, it's a SoF problem - subsequent developments do not implicate the PER; backwards looking |
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Contracts: Parole Evidence Rule: Exceptions
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- to correct a clerical error/typo
- to est a defense against formation - to interpret vague/ambiguous term (otherwise, plain meaning used) - to supplement partially integrated writing (merger clause is evid writing is complete) |
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Contracts: Conduct of Parties as Evidence of What Parties Intended
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- course of performance: what the parties did under contract; best evid of what parties intended
- course of dealing: what they did under prior contracts w/each other - usage of trade: what others in trade do in similar contracts |
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Contracts: Seller's Warranties of Quality: Sale of Goods: Express Warranties
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- seller is liable for breach
- statements of fact, promise, description of goods, use of sample - must be a basis of bargain, if buyer could have relied |
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Contracts: Seller Warranties of Quality: Sale of Goods: Implied Warranty of Merchantability
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- goods for ordinary purpose
- seller must be a merchant who deals in goods of the kind |
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Contracts: Seller Warranties of Quality: Sale of Goods: Implied Warranty of Fitness for a Particular Purpose
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- buyer has a speical purpose in mind and is relying on seller to select suitable goods
- seller is aware of this reliance - seller does not have to be a merchant |
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Contracts: Seller's Warranties in Lease of Goods
NEW YORK ONLY |
- same warranties as under article 2
- exception for finance leases * A leases goods from Bank, which had bought it from a 3rd party * implied warranty of merchantability is only by 3rd party, not Bank |
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Contracts: Limitations on Warranty Liability: Disclaimers
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- can only disclaim implied warranties
- must use *magic words (as is, with all faults) or * conspicuous disclaimer using the word merchantability |
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Contracts: Limitations on Buyer's Remedies
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- seller can limit buyer's remedies for breach of any warranty if the limitation is not unconscionable
- limiting buyer's remedies for personal injury in consumer goods case IS presumed unconscionable |
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Contracts: Risk of Loss in Sale of Goods: Breach
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- if there is a breach, breaching party bears ROL
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Contracts: Risk of Loss in Sale of Goods: Delivery by Common Carrier
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- shipment contract: seller must get goods to common carrier, make delivery arrangemnets and notify buyer
* thereafter, ROL shifts to buyer * FOB followed by seller location - destination contract: seller must get goods to specific location * ROL remains on seller until arrival * FOB followed by any place other than location of seller |
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Contracts: Risk of Loss in Sale of Goods: Non Carrier Cases
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- if seller is merchant: seller bears ROL until buyer takes possession
- if seller is not a merchant, seller bears ROL until it tenders the goods (makes avail to buyer) |
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Contracts: Risk of Loss in Lease of Goods
NEW YORK ONLY |
- lessor bears ROL even when goods are in lessee possession
- in finance lease, lessee bears ROL |
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Contracts: Performance: Sale of Goods: Perfect Tender Rule
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- if seller is not perfect, buyer may reject goods
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Contracts: Performance: Sale of Goods: Option to Cure
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- seller who fails to make perfect tender has 2nd chance if time for perormance has not yet expired
* if it has, seller generally as no option to cure, unless (based on prior dealings) seller has reason to believe buyer will accept non conforming goods |
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Contracts: Performance: Sale of Goods: Installment Sales Contracts
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- requires or authorizes delivery in separate installments
- perfect tender rule does not apply and buyer may reject an installment only if there is a substantial impairment that cant be cured - buyer may reject the entire contract if defect substantially impairs entire contract |
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Contracts: Performance: Sale of Goods: Buyer's Implied Acceptance of Goods
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- implied acceptance where uyer keeps goods w/o objection (but only after having an opportunity to inspect)
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Contracts: Performance: Sale of Goods: Buyer's Revocation of Accepted Goods
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- buyer cant revoke acceptance unless there is a latent defect
* non-conformity substantially impairs value of goods * difficult to discover |
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Contracts: Performance: Sale of Goods: Consequences of Rejection/Revocation of Acceptance
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- buyer can reutrn to seller @ seller's expense for refund or return
- damages |
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Contracts: Performance: Sale of Goods: Buyer Payment by Check
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- buyer may pay by check but seller doesnt have to take it
- if seller refuses check, buyer still has reas time to get cash |
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Contracts: Performance: Common Law
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- does not have to be perfect; substantial performance is all that is required (no material breach)
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contracts: excuse based on other party's breach: sale of goods
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- if seller's performance is not perfect, buyer has 3 options:
* accept all of the goods * reject all of the goods * accept some, reject some |
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contracts: excused performance based on other party's breach: common law
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- injured party can recover damages for any breach but only a material breach provides an excuse to not pay K price
- breaching party may be able to recover in quasi contract |
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contracts: excused performance based on other party's breach: common law: divisible contracts
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- where pymt is on a per unit basis, breaching party can recover the K price for any unit on which he has substantially performed
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contracts: excused performance for anticipatory breach
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- AB occur before performance is due; can be retracted as long as the other party hasnt relied on it
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contracts: excused performance by later agreement
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- rescission: agreement to cancel contract each party must have some performance remaining
- modification: agree to replace an existing contract w/a new one - accord & satisfaction: agree to accept performance in future satisfaction of existing duty - novation: agreement to substitute a new party for an existing one |
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Contracts: Excused Performance for Impossibility/Impracticability
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- a later unforeseen event that makes performance impossible (common law) or impracticable (article 2) may provide seller w/excuse for non performance
- destruction of something necessary for performance - death/incapacity of essential person - supervening govnt regulation |
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contracts: excused performance for impossibility/impracticability: destruction of something necessary for performance
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- under CL: excused
- under Article II: * seller is only excused if the damaged or destroyed goods have been identified in the contract * seller who bore ROL when goods were damaged is excused by impracticability but buyer is not |
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contracts: excused performance for frustration of purpose (buyer's excuse)
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- buyer primary purpose for entering into K has been frustrated by later unforeseen event
* seller must have known of buyer's purpose at time of K |
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contracts: excused performance for failure of an express condition
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- limits obligations created by other contract language, does not create indpt obligations
- EC require strict compliance (almost doesnt count) - satisfaction clauses are measured by objective std unless contract deals w/art or matters of personal taste |
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contracts: excused performance for failure of an express condition: types
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- condition precedent (if)
- condition concurrent (obligation runs alongside condn; as long as) - condition subsequent (until) |
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contracts: excused performance for failure of an express condition: excusing the occurrence of condition
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- occurrence of condition may be excused by later action or inaction of the person protected by condn
* failure to cooperate * voluntary waiver of protection (can be retracted, absent reliance) |
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contracts: non-monetary remedies: specific performance
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- equitable remedy avail if money dmgs are inadequate to compensate injured party
- generally avail for real property - sale of goods: only avail if goods are unique - service contracts: not available, try injunction |
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contracts: non-monetary remedies: unpaid seller's right to reclaim goods
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not avail under article 2 unless:
- buyer was insolvent when goods recv'd and - seller makes a demand w/n 10 days after receives them * no right to reclaim from 3rd party |
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contracts: non-monetary remedies: unpaid seller's right to reclaim goods: entrustment (article 2)
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- an owner entrusts goods to a merchant who deals in goods of the kind has no right against a subsequent BFP
- owner assumes risk but can sue owner for conversion |
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contracts: non-monetary remedies: right to request assurances (article 2)
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- party w/reas grounds for insecurity may request in writing, adequate assurance that the other party will perform in accord w/K
- if adequate assurance is not provided, party can treat it as an anticipatory repudiation and stop performance, sue for breach |
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contracts: monetary remedies: punitive damages
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- not available for breach of contract
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contracts: monetary remedies: liquidated damages
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- upheld if damages were difficult to estimate and are a reasonable forecast of probable damages
- cannot operate as a penalty |
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contracts: monetary remedies: expectation damages: buyer's damage (sale of goods)
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- cover damages: cover price minus contract price if buyer covers in good faith
- market damages: market price minus contract price if buyer doesnt cover in good faith or doesnt cover at all - loss value: value as promised minus value delivered if buyer keeps non conforming good |
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contracts: monetary remedies: expectation damages: seller's damages (sale of goods)
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- resale: contract price minus resale price if seller resells in good faith
- market: contract minus market if seller doesnt resell in good faith or doesnt resale at all - lost profit: avail if seller is a lost volume dealer |
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contracts: monetary remedies: incidental damages
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- cost of transporting/caring for goods after breach and arranging a substitute transaction
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contracts: monetary remedies: consequential damages
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- damages that are special to this P and were reas foreseeable to breaching party at time of contract
- not avail to seller under article 2 |
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contracts: monetary remedies: avoidable damages (rule of mitigation)
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- injured party cant recover damages he could have avoided w/reasonable effort
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contracts: third party beneficiaries: rescission and modification
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- only an intended beneficiary has rights
- promisor and promisee can rescind or modify the K until the rights of TPB have vested * usu when TPB learns bout K and relies on it * once rights vested, TPB consent is required for changes, absent contrary contract language |
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contracts:third party beneficiary: rights of TPB
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- against promisor: intended beneficiary can sue breaching promisor unless promisee committed material breach
- against promisee: recovery only allowed if tPB is a creditor beneficiary; otherwise just a gift |
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contracts: delegation of duties
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contractual duties may be delegated w/o consent of person to whom performance is owed, absent contrary contract language
- no delegation allowed where party was chosen for special skills or reputation |
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contracts: delegation of duties: rights of obligee (party owed performance)
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- delegating party still remains liable
- delegate only liable if he recv'd consideration |
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contracts: assignment of rights: define
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- two people make a contract, later one transfers his rights to a third party
- must use langauge of present assignment (not future) * promises to assign are void |
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contracts: assignment of rights: consideration
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- consideration not required, gift assignments ok
- assignments for consideration: assignee prevails over all subsequent assignees except: * a later assignee prevails if he does not know of the earlier assignment and is the first to get judgment against obligor or payment |
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contracts: assignment of rights: gift
incl NY Distinction |
- consideration not required, gift assignments OK
- gift assignments: easily revoked; last in time prevails NY: not revocable if in writing signed by assignor |
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contracts: assignment of rights: assignee's rights against obligor
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- assignee can sue obligor if he is not paid for assignor's work
- if assignor fails to perform, no recovery |
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contracts: assignments of rights: what can be assigned
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- cannot substantially change duties owed
- always OK to assign right to payment - requirement contracts are assignable as long as requirements are not out of line w/that of assignors |
