Contracts

Front 1

A contract is bilateral unless...

Back 1

1. it is a reward, price or contest
2. offer expressly requires performance for acceptance

Front 2

The UCC Article 2 applies to contracts for...

Back 2

sale of goods - tangible, personal property, and moveable - even if between private individuals, not merchants

Front 3

The common law applies to contracts for...

Back 3

real estate and services

Front 4

When a deal involves both the sale of goods and services, apply either Article II or the common law to the whole transaction, based on...

Back 4

the law that goes with the most important part of the deal.

Front 5

If a mixed deal (goods and services, ex) divides payment, apply...

Back 5

UCC to sale of goods part and common law to the rest.

Front 6

Define offer, and the basic test for when one exists.

Back 6

An offer is a manifestation of an intention to contract. The basic test is whether a reasonable person in the position of the offeree would believe that his or her assent creates a contract - what parties mean/intend/think but do not say is irrelevant - concerned only with manifestations of intent.

Front 7

What terms must an offer contain?

Back 7

An offer need not contain all material terms. However, for sale of real estate, price and description are required. For sale of goods under UCC, no price required, an offer exists if parties so intend.

Front 8

What sort of terms, if included in the "offer," will make it not an offer?

Back 8

vague or ambiguous material terms - ex, I offer to sell you my car for a fair price.

Front 9

Define requirement or output contract - an example of requirement K and a K that does not meet either?

Back 9

a contract for the sale of goods stating the quantity of goods to be delivered in terms of the buyer's requirements or seller's output or in terms of exclusivity
ex of requirement K: B offers to buy grits from S for five years
ex of neither: S offers to sell B all the grits it might request for five years.

Front 10

A buyer in a requirement contract can increase requirements so long as...

Back 10

the increase is in line with prior demands - the increase must be not unreasonably disproportionate

Front 11

An advertisement is not an offer unless...

Back 11

1. it is in the nature of a reward
2. it is specific as to quantity and expressly indicates who can accept

Front 12

Four ways to terminate an offer directly, and brief explanation:

Back 12

1. lapse of time - even if no time is stated in an offer, offer is only open for a reasonable time
2. death or incapacity of either party after the offer but before acceptance terminates the offer
3. words or conduct of offeror - revocation of an offer
4. words or conduct of offeree - rejection

Front 13

Death of a party prior to acceptance terminates an offer EXCEPT:

Back 13

1. an option
2. part performance of offer to enter into unilateral contract

Front 14

Two methods for revocation of an offer through the words or conduct of the offeror:

Back 14

1. unambiguous statement by offeror to offeree of unwillingness or inability to contract, or
2. unambiguous conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of

Front 15

The mailbox rule:

Back 15

-a revocation of an offer sent through the mail is not effective until received

Front 16

What offers are irrevocable (4 situations):

Back 16

1. an option - a promise not to revoke supported by payment or other consideration 2. UCC firm offer - an offer cannot be revoked for up to 3 months if (i) offer to buy or sell goods; (ii) signed, written promise to keep the offer open and (iii) party is a merchant 3. an offer cannot be revoked if there has been (i) reliance that is (ii) reasonably foreseeable and (iii) detrimental 4. the start of performance (not just mere preparation) pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete performance

Front 17

Three methods of indirect rejection of an offer:

Back 17

1. counteroffer - always terminates the offer and becomes a new offer - but bargaining does not terminate the offer
2. conditional acceptance always operates the same way as a counter-offer - terminates the offer and becomes new one ("if", "only if," "provided that")
3. additional terms to a common law contract - mirror image rule

Front 18

Define the mirror image rule (indirect rejection of an offer):

Back 18

a response to an offer that adds new terms is treated like a counteroffer rather than an acceptance

Front 19

Under UCC, mirror image rule does not apply; instead have seasonable expression of acceptance:

Back 19

if there is an offer to buy or sell goods and a response with additional terms raises two separate questions: 1. is there a K - if response to offer adds new terms, it is generally treated as acceptance if there is a seasonable expression of acceptance 2. is the additional term a part of the contract - if at least one party is not a merchant, the additional term is merely a proposal that is to be separately accepted or rejected; if both parties are merchants, the general rule is that the added term is a part of the contract. BUT, the added term is not part of the K b/w merchants if it materially changes the offer and the added term is not part of the K b/w merchants if the offeror objects to the change

Front 20

Methods of accepting an offer (6 fact patterns):

Back 20

1. improper verbal response to an offer then later conduct indicating a contract (common law = acceptance of a counter offer; UCC = conduct treated like new K based solely on conduct); 2. the offeree fully performs (no verbal response, but full performance;vconsider whether notice needed)
3. the offeree starts to perform (verbal offer, no words in response and start of performance - exception, not acceptance for unilateral K) 4. offeree promises to perform (for bilateral K only) 5. mailbox rules - (i) all communications other than acceptance are effective only when received; (ii) acceptance is generally effective when mailed; (iii) if a rejection is mailed before an acceptance is mailed, then neither is effective until received; (iv) cannot use mailbox rule to meet an option deadline 6. seller of goods sends the wrong goods - generally have acceptance and breach of the K (accommodation exception - if seller sends explanation, treated as counteroffer and no breach)

Front 21

Who can accept an offer?

Back 21

A person who knows about the offer who is the person to whom the offer was made - offers CANNOT be assigned (options can be assigned unless option otherwise provides).

Front 22

Legal reasons for not enforcing an agreement (11):

Back 22

1. lack of consideration or consideration substitute for the promise at issue 2. lack of capacity of person who made the promise 3. statute of frauds 4. existing laws that prohibit the performance of the agreement 5. public policy 6. misrepresentations 7. nondisclosure 8. duress 9. unconscionability 10. ambiguity in words of agreement 11. mistakes at the time of the agreement as to the materials facts affecting the agreement

Front 23

Three step inquiry to use when dealing with consideration questions (to determine whether there is a bargained-for legal detriment):

Back 23

1. identify the promise maker/promise breaker, ie, person who is not doing what she promised to do
2. ask whether that person asked for something in return for her promise, ie, bargained for something
3. look at the person who is trying to enforce the promise and ask what requested legal detriment that person sustained

Front 24

forms of consideration (four examples):

Back 24

1. performance
2. forbearance
3. promise to perform
4. promise to forbear

Front 25

Define "bargained for" for purposes of consideration:

Back 25

asked for by the promisor in exchange for her promises

Front 26

An illusory promise is not consideration; what is an illusory promise?

Back 26

ex, a promise to do something unless the promisor changes her mind

Front 27

Is the adequacy of consideration relevant?

Back 27

NO

Front 28

Past consideration is generally not consideration except...

Back 28

where the past consideration (ex, act, item) was expressly requested and there is expectation of payment.

Front 29

State the pre-existing contractual or statutory duty rule under common law and UCC:

Back 29

-common law: new consideration is needed for a K-modification - 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 (exception - unforeseen difficulty so severe as to excuse performance - continuing to perform for more money = consideration; also, third party promise to pay does not need new consideration)
-any change in performance = new detriment = new consideration
-UCC: no pre-existing duty rule - new consideration not required to modify a sale of goods contract - good faith is test for changes in an existing sale of goods K

Front 30

Part payment of a debt is consideration for release (foregiveness of balance) only if:

Back 30

the debt is not yet due or is disputed. If the debt is due and undisputed (no dispute over existence or amount), then part payment is not consideration for release.

Front 31

Consideration substitutes (promise will be legally enforceable even though no consideration if one of following three substitutes is present):

Back 31

1. seals (majority rule now that seal not consideration substitute; PA allows)
2. written promise to satisfy an obligation for which there is a legal defense (ex, statute of limitations has passed on a debt) is enforceable w/o consideration
3. promissory estoppel - promise; reliance that is reasonable, detrimental and foreseeable; enforcement necessary to avoid injustice
(4. in PA, a promise in writing and signed is enforceable even w/o consideration)

Front 32

Persons who lack capacity to enter into a contract: (3)

Back 32

1. infant - under 18
2. mental incompetents - lack ability to understand agreement
3. intoxicated persons if other party has reason to know

Front 33

Consequences of incapacity benefit only the person without capacity - three consequences -

Back 33

1. right to disaffirm by person without capacity
2. implied affirmation by retaining benefits after gaining capacity (if party enters K before 18, and maintains K after 18, K affirmed)
3. quasi-contract liability for necessities - person w/o capacity legally obligated to pay for necessities but liability based on quasi-K law, not K law (only pay FMV)

Front 34

Contracts within the statute of frauds (6 kinds of contract) (Ks that must satisfy statute of frauds to be enforceable):

Back 34

1. promises to answer for (guarantee) the debts of another (suretyship)
*main purpose exception - if main purpose of the obligation allegedly guaranteed was to benefit the guarantor, the guarantee is not w/in statute of frauds 2. promise by executor to personally guarantee the debts of the decedent 3. promise in consideration of marriage 4. service contract not capable of being performed within a year from the time of the contract (if there is a specific time pd, and is more than a year or more than year from date of K, statute of frauds applies; if a task or for life, no SOF) 5. transfers of interest in real estate (w/exception for leases of year or less) 6. sale of goods for $500 or more

Front 35

If a statute of frauds defense is asserted and established....

Back 35

there is no legally enforceable agreement - no contract liability.

Front 36

How is statute of frauds satisfied:

Back 36

1. performance - if performance or service K, need full performance by either party to satisfy SOF; for goods, depends on whether buyer or seller part performs, whether ordinary or specially made 2. writing - common law, must contain all material terms (who and what) and be signed by person asserting SOF defense; UCC, must indicate that there is a K for sale of goods and contain quantity term, but d/n need price, and must be signed by person asserting SOF defense (except if person asserting SOF defense failed to respond to a signed writing w/in 10 days of receipt and both parties are merchants); 3. judicial admission - if D asserting SOF admits K in a pleading or testimony

Front 37

The statute of frauds is satisfied for sale of ordinary goods contracts by part performance by seller only to the extent of ... and hinges on whether the goods were...

Back 37

part performance... delivered. A buyer will not have an SOF defense as to the delivered goods, but will as to undelivered.

Front 38

The statute of frauds is satisfied for sale of specially manufactured goods contracts by part performance by seller as soon as...

Back 38

seller makes a substantial beginning which means the seller has done enough work that it is clear that what she is working on is specially manufactured (ie, custom made or made to order).

Front 39

The statute of frauds is satisfied for sale of goods contracts for multiple items by part performance by buyer as to...

Back 39

amount paid - buyer entitled to proportion of goods paid for (ex, if order 100 cows for $50k, pay 1k, S returns money and calls off deal, B can assert K as to two cows)

Front 40

The statute of frauds is satisfied for sale of goods contracts for one item by part performance by buyer as to...

Back 40

entire K.

Front 41

For an individual to have authorization to enter into a K for another person, the agent must have written authorization only if... (rule of equal dignity).

Back 41

the K to be signed is within the statute of frauds.

Front 42

When do rules of law require written evidence of modification of a written contract?

Back 42

When the deal with the alleged change would be within the statute of frauds, the alleged modification agreement must be in writing as well.

Front 43

Are contract provisions requiring all modifications be in writing effective? Under common law, under UCC:

Back 43

under common law, such provisions are ineffective - ignore the clause; under UCC, contract provisions requiring written modifications ARE effective unless waived.

Front 44

If the subject matter of a K is illegal, the agreement...

If the subject matter is legal but hte purpose is illegal, the agreement...

Back 44

is not enforceable.

is enforceable only by the person who did not know of the illegal purpose.

Front 45

A contract will not be enforced for public policy reasons in contracts that contain: (2 examples)

Back 45

1. exculpatory agreement that exempts intentional or reckless conduct from liability or
2. a covenant not to compete without a reasonable need or reasonable time and place limits

Front 46

Misrepresentation voids a contract if:

Back 46

a false assertion of fact induced the K. no wrongdoing is needed (can be honest and innocent).

Front 47

Nondisclosure voids a contract if:

Back 47

the nondisclosure is wrongful.

Front 48

To establish economic duress, to void a contract, two necessary elements are:

Back 48

1. a 'bad guy' - improper threat
2. a 'vulnerable guy' - no reasonable alternative

Front 49

Requirements for not enforcing an agreement based on unconscionability:

Back 49

1. unfair surprise (procedural) and oppressive terms (substantive)
2. tested as of the time the agreement was made
3. by the court

Front 50

A contract will not be enforced because of ambiguity in words of agreement if:

Back 50

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 two reasonable interpretations

Front 51

There will be no contract based on mutual mistake of material fact if:

Back 51

1. both parties are mistaken
2. about a basic assumption of fact
3. that materially affects the agreed exchange and
4. it is not a risk that the party trying to get out of the deal bears

*do not confuse with misunderstanding or misrepresentation - mistake is an incorrect belief as to facts not based on either what the other party has said or what the K says

Front 52

A unilateral mistake of fact will not allow a party to avoid a contract unless...

Back 52

the other party has reason to know of the mistake (courts will not allow the other party to take advantage of the mistake)

Front 53

The parol evidence rule is a rule of evidence in the sense that it is concerned with...

Back 53

whether evidence is admissible and the purpose for which the evidence is to be introduced is often determinative.

Front 54

Define integration, and partial and complete, for purposes of parol evidence:

Back 54

integration - written agreement that court finds is the final agreement, triggers parol evidence rule

partial integration - written and final, but not complete

complete integration - written, final and complete

Front 55

Does whether integration of a contract is complete or not generally matter, with regards to application of the parol evidence rule?

Back 55

NO - partial and complete integration are generally used in wrong answers - the degree of integration is generally irrelevant.

Front 56

A merger clause in a contract generally provides terms that...

Is its presence in a contract persuasive or conclusive as to the admission of parol evidence?

Back 56

the contract is the complete and final agreement.

Its presence is persuasive but not conclusive.

Front 57

Definition of parol evidence: (what is it)

Back 57

words of a party or parties, before integration (before the agreement was put in written form) that are either oral or written

Front 58

Define reformation, and whether courts apply it in contracts:

Back 58

an equitable action to modify written contract to reflect the actual agreement.

Courts generally deny, because of the parol evidence rule.

Front 59

Triggering facts for application of the parol evidence rule (two):

Back 59

1. written K the court finds is a final agreement
AND
2. oral statement made at the time the K was signed OR earlier oral or written statement by the parties to the contract

Front 60

Parol evidence rule prohibits the introduction of oral or written evidence that...

Back 60

contradicts the written agreement (regardless of whether integration is complete or not).

Front 61

The parol evidence rule does not prohibit the consideration of evidence used to: (4 uses)

Back 61

1. determine whether there was a mistake in reducing the agreement to writing 2. determine whether there is a defense to the enforcement of the agreement, such as fraud, duress or misrepresentation (determine if there is a way to get out of the deal) 3. explain the terms in a written deal (to resolve ambiguities in the written K) 4. add to the written deal if there was only a partial integration or such added terms would ordinarily be in a separate agreement - cts generally cannot consider parol evidence as a source of consistent, additional terms unless the written agreement was only partially integrated or the added terms would ordinarily be in a separate agreement

Front 62

The parol evidence rule does not extend to what kind of written or oral evidence (temporal):

Back 62

written or oral evidence created AFTER the contract - post-contract statements, writings are not parol evidence

Front 63

Three forms of conduct that courts will use to explain words in contracts or fill gaps in contracts:

Back 63

1. course of performance (same people, same contract)
2. course of dealing (same people, different but similar Ks)
3. custom and usage (different but similar people, different but similar Ks)

Front 64

UCC default delivery obligations of a seller of goods if delivery is by common carrier - a seller is liable for the goods...

Back 64

until they reach the city following "FOB" - ex, sale from seller in Boston to buyer in Philadelphia shipped "FOB New York," seller liable til goods reach NY

Front 65

In a shipment contract under the UCC, a seller completes its delivery obligation when:

Back 65

1. it gets the goods to a common carrier
2. it makes reasonable arrangements for delivery and
3. notifies the buyer

Front 66

In a destination contract under the UCC, a seller is liable for goods...

Back 66

until the goods arrive where the buyer is.

Front 67

Describe when a risk of loss problem arises and the respective obligations of buyer and seller when they bear the risk:

Back 67

-risk of loss arises when, after the contract has been entered into but before the buyer receives the goods, the goods are damaged or destroyed through no fault of the buyer or seller
*If the risk is on the buyer, he has to pay the full K price for the lost or damaged goods.
*If the risk is on the seller, there is no obligation on the buyer (rescission); possible liability on seller for nondelivery

Front 68

There are four ways the risk of loss between a buyer and seller may be apportioned (risk of loss arising when K completed but goods not yet delivered, and damaged or destroyed through no fault of buyer or seller):

Back 68

1. agreement of the parties (controls) 2. breach (breaching party is liable for uninsured loss, even if breach unrelated to problem) 3. delivery by common carrier other than seller - risk of loss shifts from seller to buyer at teh time the seller completes its delivery obligations (goods reach FOB city) 4. if no agreement, no breach and no common carrier, the determining factor is whether SELLER is a merchant (whether buyer is merchant is irrelevant) - risk of loss shifts from merchant-seller to buyer on buyer's receipt of the goods - risk of loss shifts from seller when he tenders the goods

Front 69

Define the three warranties of quality for goods:

Back 69

1. express: look for words that promise, describe or state facts or for use of sample or model - distinct from sales talk, opinion
2. implied warranty of merchantability: when any person buys goods from a merchant, a term is automatically added to the K by operation of law that the goods are fit for the ordinary purpose for which such goods are used
3. implied warranty of fitness for a particular purpose: arises where buyer has particular purpose and is relying on seller to select suitable goods - seller has reason to know of purpose and reliance, warranty that goods fit particular purpose

Front 70

For a warranty of quality to apply to a sale of a good, there must be privity, in that:

Back 70

there must be vertical and horizontal privity between the person asserting the warranty and the person they are asserting against - if buyer buys from middle man, cannot sue manufacturer, because no privity; if bystander tries to assert, also fails, no horizontal privity

Front 71

A disclaimer has what effect on warranties of quality for goods?

Back 71

A disclaimer eliminates implied warranties (of merchantability or fitness, by either conspicuously language of disclaimer or selling "as is" or "with all faults"); an express warranty cannot be disclaimed (cannot have a K asserting express warranties and later disclaiming them)

Front 72

A contractual limitation of remedies has what effect on a warranty of quality for goods?

Back 72

It does not eliminate the warranty, simply limits or sets recovery for any breach of warranty. Can limit remedies even for express warranties. General test is unconscionability.

Front 73

If a breach of warranty of quality on consumer goods causes personal injury, what effect on a contractual limitation of remedies?

Back 73

Prima facie unconscionability

Front 74

For purposes of sale of goods performance, define and identify the application and effect of "perfect tender."

Back 74

Perfect tender means the seller's performance must be perfect - perfect goods and delivery.

Applies only to sale of goods.

Less than perfect tender by seller means buyer generally has option to: RETAIN and SUE for damages OR REJECT all or any commercial unit and sue for damages.

Front 75

The ability of a buyer to reject less than perfect tender of goods is limited by three concepts:

Back 75

1. cure - seller will have option of curing where seller had reasonable grounds to believe the imperfect tender would be ok OR time for performance has not yet expired (buyer cannot compel cure) 2. installment contract: (K that authorizes or requires delivery of goods in separate lots to be accepted separately) buyer has right to reject installment only where there is a substantial impairment of the installment that can't be cured 3. acceptance of the goods: if buyer accepts goods, cannot later reject them; payment w/o opportunity for inspection is not acceptance; acceptance can be implied from buyer keeping goods w/o objection

Front 76

If a buyer accepts a tender of less than perfect goods, she generally cannot revoke the acceptance, except in limited circumstances: [w/effect that K is cancelled]

Back 76

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 w/in reasonable time after discovery of nonconformity

Front 77

A buyer may return goods and recover payment through rejection and revocation, defined as (in terms of timing, standard, requirements and consequences):

Back 77

1. rejection: must occur early, before acceptance, of a perfect tender
2. revocation: may occur later, after acceptance, if there is substantial impairment
Other requirements for both: must seasonably notify seller, hold the goods for the seller, and follow reasonable seller instructions
consequences for both: goods go back to seller; no buyer payment obligation

Front 78

At common law, the perfect tender (sale of goods) requirement does not apply - rather, common law applies the standard of...

Back 78

substantial performance. In a common law K, if one party substantially performs, the other must pay or otherwise perform.

Front 79

Specific performance or injunction may be available as a remedy for unexcused nonperformance if the remedy at law is inadequate, there are unclean hands or equity demands it. Specific performance may be applied in what two contexts ... Injunctive relief may be available in what context...

Back 79

1. contracts for sale of real estate (but not if land sold to an intervening bona fide purchaser)
2. contract for sale of unique goods (antiques, art, custom made) or other appropriate circumstances in sale of goods

Injunctive Relief: contract for services - can bar breacher from providing services to competitor (specific performance NOT available)

Front 80

An unpaid seller can assert the remedy of reclamation where:

Back 80

1. the buyer was insolvent at the time it received the goods
2. the seller demands return of goods within 10 days of receipt (or w/in reasonable time, if before delivery there had been an express representation of solvency by the buyer) AND
3. the buyer still has goods at the time of demand

Front 81

If a buyer (and now owner) of goods entrusts the goods with a person who sells goods of that kind and that person wrongfully sells the goods to a good-faith third party purchaser, the buyer/owner's right of recovery is:

Back 81

cut off by the good faith purchaser.

Front 82

Expectation money damages pay the plaintiff by...

Back 82

putting P in same economic position as if K had been performed

Front 83

Reliance money damages pay the plaintiff by ...

Back 83

putting P in same economic position as if K had never happened.

Front 84

Restitution money damages pay the plaintiff by...

Back 84

putting D in same economic position as if K had never happened - money goes to P, but focus on what D got in determining how much P recovers.

Front 85

For the sale of goods, the UCC applies ______________ money damages.

Back 85

expectation

Front 86

Under the UCC, if a seller breaches and the buyer keeps the goods, the recovery is as follows:

Back 86

the buyer gets the amount of [fair market value if the goods were perfect] minus [the fair market value of the goods as delivered]

Front 87

Under the UCC, if the seller breaches and the seller keeps the goods, the money damages are as follows:

Back 87

The buyer gets the [market price at the time of the discovery of the breach] minus [the contract price] OR [the replacement price] minus [the contract price]

Front 88

Under the UCC, if a buyer breaches and the buyer keeps the goods, the money damages are as follows:

Back 88

The seller gets the contract price.

Front 89

Under the UCC, if a buyer breaches and the seller has the goods, the money damages are as follows:

Back 89

The seller gets the [contract price] minus [market price at time and place of delivery] OR [contract price] minus [resale price] and, in some situations, provable lost profits

Front 90

Under the UCC, when a merchant who regularly deals in a product and stocks the product in its regular inventory (can order unlimited numbers to meet unlimited demand), and a buyer breaches a sale contract, the merchant can recover:

Back 90

the lost profits from the sale, EVEN IF the merchant later sells the buyer's unbought merchandise to another buyer.

Front 91

Define incidental damages and when they are available:

Back 91

costs incurred in finding replacement performance

ALWAYS recoverable

Front 92

Define consequential damages and when they can be recovered:

Back 92

-the kind of damages that are special to this plaintiff - are limited to damages arising from P's special circumstances - must be foreseeable
-recovery limited to situations where D had reason to know of the special circumstances at the time of the contract

Front 93

Define avoidable damages and their effect on a plaintiff's recovery:

Back 93

-defined as damages that could have been avoided without undue burden on the P - burden of pleading and proof on D
-effect - P's recovery reduced by the amount

Front 94

Damages in contracts recovery are limited by the reasonable certainty test - damages must be reasonably certain - which arises in fact patterns involving...

Back 94

a new business or a new business activity

Front 95

Describe the test for validity of liquidated damages:

Back 95

1. damages were difficult to forecast at time K was made
2. provision is a reasonable forecast

Front 96

Damages can be recovered for which kinds of breaches of contract?

Which kinds of breaches by the other party excuse performance?

Whether a breach is material can be determined by asking whether there has been _____________ performance.

Back 96

ALL

Material

Substantial - if substantial performance, breach not material; if no substantial performance, breach material.

Front 97

Under what kind of contract can there be K law recovery for substantial performance even where there is a material breach? To identify these contracts, look for price stated on a per performance basis.

Back 97

Divisible contract exception

Front 98

Non-occurrence of a condition generally excuses performance; four situations where occurrence of the condition is excused (ie, remaining K obligations not excused):

Back 98

1. estoppel - statement by person protected by condition before the conditioning event is to occur; reliance on statement 2. waiver - statement by person protected by condition after conditioning event was to occur; no need for reliance 3. prevention - person protected by condition hinders or prevents occurrence of condition 4. avoidance of forfeiture - cts excuse non-occurrence of condition to avoid excessive harm to the arty not protected by the condition

Front 99

The effect of non-occurrence of condition precedent, and occurrence of condition subsequent:

Back 99

non-occurrence of condition precedent excuses performance

occurrence of condition subsequent excuses further performance

Front 100

Define anticipatory repudiation and its effect on the parties:

Back 100

-an unambiguous statement or conduct indicating that the repudiating party will not perform made prior to the time that performance was due
-anticipatory repudiation by one party excuses other party's duty to perform and generally gives rise to immediate claim for damages for breach unless claimant has already finished her performance (then, no recovery til time for repudiating party's performance has passed)

Front 101

Anticipatory repudiation can be reversed or retracted if...
in which case, the parties' duties...

Back 101

there has not been a material change in position by the other party,

to perform is reimposed, but performance can be delayed until adequate assurance is provided.

Front 102

If the words or conduct of one party to a K give reasonable ground for insecurity, the other party can...

Back 102

demand in writing adequate assurance and, if it is commercially reasonable, suspend performance until it gets adequate assurance

Front 103

A contract may be validly rescinded by both parties if...

Back 103

performance is still remaining from each of the parties - if one party completes work, no valid rescision.

Front 104

Definition and effect of Accord and Satisfaction:

Back 104

-accord - agreement by parties to an already existing K to accept different performance in satisfaction of the existing obligation

-if the new agreement (accord) is performed (satisfaction), then performance of the original obligation is excused - distinguished from modification by use of IF ... THEN...

-if the accord is not satisfied, the other party can sue on either the original K or the accord

Front 105

Modification:

Back 105

agreement by parties to existing K to accept a different agreement in satisfaction of the existing obligation - if modification not performed, party can only sue on modification, not original obligation

Front 106

Novation, its effect, and how it is different from delegation:

Back 106

-an agreement between BOTH parties to an existing K to the substitution of a new party (same performance, different party)

-effect - novation excuses contracted for performance of the party who is replaced/substituted for - substituted party is liable

-different from delegation in that both parties must agree, and replaced person excused

Front 107

Excused performance because of impossibility, impracticability or frustration of purpose occurs where:

Back 107

1. something happens after K formation but before completion of K performance
2. that was unforeseen and
3. that makes performance impossible, commercially impracticable, or frustrates the purpose of performance

Front 108

The difference between impossibility and impracticability, in terms of excusing K performance:

Back 108

-impossibility is objective; impracticability subjective
-impossibility means task can't be done, impracticability means task can only be done w/extreme and unreasonable difficulty and expense

Front 109

Where death of a party occurs after the K has been entered into but before performance, it has what effect:

Back 109

-performance/K obligations remain against the estate
-exception - when the party to a K is a 'special person,' party to a personal service K

Front 110

Effect of a later law that makes:
-performance of K illegal
-purpose of K illegal

Back 110

-excuse by impossibility
-excuse by frustration of purpose

Front 111

A third party beneficiary exists where:

Back 111

-two parties contract with the intent of benefiting a third party

Front 112

Distinguish intended versus incidental third party beneficiaries:

Back 112

intended 3rd party Bs have contract law rights; incidentals do not; intent of parties to contract determines whether a B is incidental or intended

Front 113

When can a 3rd party beneficiary enforce the contract benefiting her:

Back 113

-when her rights have vested, when she:
1. knows of
2. relied on OR
3. assented to
the contract.

Front 114

Who can recover against the promisor and promisee in a third party beneficiary K:

Back 114

-promisor (person making promise that benefits 3rd party): beneficiary and promisee can recover against
-promisee (person obtaining promise that benefits 3rd party): beneficiary CANNOT recover against EXCEPT a creditor beneficiary can recover from promisee ONLY on pre-existing debt

Front 115

Rule regarding defenses to 3rd party beneficiary contracts:

Back 115

if 3rd party sues promisor, promisor can assert any defenses he would have had if sued by promisee

Front 116

Assignment:

Back 116

one party to a K later transfers rights (after enter K) under the K to a third party

Front 117

Effect of contractual limitations on assignments - prohibition and invalidation:

Back 117

-K language that prohibits assignment: takes away right but not power to assign, so that assignor is liable for breach but assignee unaware of prohibition can still enforce assignment
-invalidation language: takes away both right and power, so that there is breach by assignor and no right in assignee

Front 118

Common law bars assignment of a K where:

Back 118

the assignment substantially changes the duties of the obligor- assignment of right to payment is never a substantial change, but assignment of right to contract performance usually is

Front 119

Requirements for valid assignment:

Back 119

-consideration not required, BUT a gratuitous assignment (and only gratuitous assignments) can be revoked

Front 120

Under K assignment, who can recover against obligor and what is the effect of assignment on defenses:

Back 120

-assignee can recover from obligor
-assignor for consideration cannot recover from obligor
-the obligor has same defenses against assignee as against assignor

Front 121

Under K assignment, payment by obligor to assignor and modification agreements between obligor and assignor are effective until...

Back 121

obligor learns of the assignment.

Front 122

In a K assignment for value, the assignor makes the following implied warranties to the assignee:

Back 122

1. the right assigned actually exists
2. the right assigned is not subject to any defenses by the obligor
3. the assignor will do nothing to impair the value of the assignment
*assignor does not, however, warrant what the obligor will do

Front 123

If there are multiple gratuitous assignments of a K:

Back 123

the last assignee wins (later assignments act as revocation), EXCEPT if the assignment was written and delivered to assignee, the assignee received some indicia of ownership, or assignee relied on the assignemnt in a way that is reasonable, foreseeable and detrimental (rendering it irrevocable, so that it takes priority over later assignments)

Front 124

If there are multiple assignments for consideration,

Back 124

the first assignee for consideration wins EXCEPT (very limited) if the later assignee does not know of the earlier assignment and is the first to obtain (1) payment, (2) a judgment, (3) a novation or (4) indicia of ownership

Front 125

Definition of delegation, and its distinction from assignment:

Back 125

-a party to a K transfers work under the K to a third party
-assignment is transfer by a party to a K of his rights or benefits under the K to a third party; delegation is transfer by party to a K of his duties or burdens to a third party - often occur together

Front 126

Delegations of contract duties are permitted unless either:

Back 126

1. K prohibits delegations or assignments or
2. K calls for VERY SPECIAL skills or
3. person to perform K has a VERY SPECIAL reputation

Front 127

Effect on party liability of a contract delegation:

Back 127

-delegating party always remains liable
-party delegated to (delegatee) only liable if she received consideration from delegating party