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81 Cards in this Set
- Front
- Back
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Elements of contract?
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1) offer
2) acceptance 3) consideration 4) no defenses to formation |
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Elements of an offer?
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1) expression of promise to enter a K
2) definite and certain terms 3) communicated to the offeree |
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Advertisement generally not an offer. Exceptions?
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1) in the form of a reward
2) if there's specificity as to quantity and who can accept |
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What are the methods of termination?
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1) lapse of time (1 mo. or what K says)
2) revocation by offeror 3) rejection by offeree 4) operation of law |
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When is revocation by mail effective?
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When received.
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What offers are irrevocable?
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1) Options K: promise to keep offer open + consideration
2) UCC firm offer: signed written promise by merchant (3 months or stated time) 3) if there has been Detrimental Reliance--reliance, reasonably foreseeable, and detrimental 4) start of performance of unilateral K (more than preparation) |
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When is rejection an offer effective?
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When received.
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When is an offer terminated by operation of law?
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1) Death or insanity of either party before acceptance.
2) Destruction of the proposed K's subject matter. 3) Supervening illegality. |
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Types of rejection by an offeree?
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1) counteroffer
2) conditional acceptance 3) under CL, acceptance that adds new terms |
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What are the Battle of the Forms Rules under the UCC?
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1) Response that adds new terms = acceptance
2) if 2 merchants, then additional term = part of K UNLESS material change OR offeror objects 3) if 1 non-merchant, then new term = proposal that may be accepted/rejected |
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How to accept a bilateral offer?
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1) full performance (+ maybe notice)
2) start performance 3) promise to perform (not reward offers) 4) conduct at CL. But UCC treats conduct as new K based solely on conduct. 5) mailbox rule 6) delivery of wrong goods (acceptance + breach) |
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How to accept a unilateral offer?
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Only full performance.
Not start of performance. Not promise to perform. |
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Consideration requires mutuality. Watch out for:
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Illusory promises and past consideration! Both not valid.
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When is partial payment adequate consideration?
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Not if due and undisputed.
Early payment of a smaller sum than due is VALID. |
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What are consideration substitutes?
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1) seal
2) written promise to satisfy an obligation for which there is a legal defense 3) promissory estoppel |
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What are the elements of promissory estoppel?
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1) promise
2) reliance that is reasonable, detrimental, and foreseeable 3) enforcement of the promise is necessary to avoid injustice |
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What are the CL and UCC rules for fulfilling preexisting contractual/statutory duties as consideration?
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UCC: no rule. No new consideration requried to modify a K for goods. GOOD FAITH test.
CL: not new consideration. But watch out for: change in performance, third party promise to pay, and unforeseen difficulty severe enough to excuse performance. |
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Who lacks capacity?
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1) minors
2) mental incompetents 3) intoxicated people if the other party has reason to know |
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What does the SOF apply to?
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1) marriage-relate promises
2) estate rep's promise to pay the debt of decedent out of own funds 3) promise to answer for debt/default of another 4) interest in real estate (1+ year lease or sale) 5) service Ks not able to performed w/in 1 year 6) sale of goods for $500+ |
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How to satisfy SOF for service K?
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Full performance by either party.
NOT part performance. |
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How to satisfy SOF for real estate interests?
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Two out of three:
1) part or full payment 2) possession 3) improvement |
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How to satisfy SOF for sale of goods?
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Ordinary Goods: seller's part performance, but only to the extent of delivery/performance
Specially Manufactured Goods: as soon as seller makes substantial beginning, i.e. clear that it's custom made |
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Under what circumstances does a writing satisfy SOF?
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NOT UCC:
1) contains all material terms AND 2) signed by person against whom you are trying to enforce UCC: 1) contains QUANTITY term AND a) signed by person against whom you are trying to enforce against OR b) non-signer if both parties = merchants AND person who receives K fails to respond w/in 10 days |
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Define misrepresentation.
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False assertion of facts or concealment of facts that induces the K. No FRAUD required.
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Define duress.
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Improper threat and vulnerable victim.
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When is mistake a defense?
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1) unilateral mistake if non-mistaken party knew or should have known of the mistake
2) mutual mistake if: a) both parties mistaken b) concerns basic assumption of K c) materially affects the agreed excahnge d) adversely affected party did not assume the risk of mistake |
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Illegality as a defense?
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If illegal subject matter, K = void.
If illegal purpose, K = enforceable by the person who did not know of the illegal purpose |
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What triggers parole evidence rule?
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1) integration, i.e. final agreement
2) pre-K oral or written statement, or oral statement made at time of K |
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What are the exceptions to the parol evidence rule?
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1) to show mistake in integration (e.g. typo)
2) to establish a misrepresentation defense 3) to explain ambiguities 4) to add terms to a partial integration IF the terms would ordinarily be in a separate agreement |
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What are outside sources to interpret K?
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1) course of performance
2) course of dealing 3) custom and usage |
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Seller requirements under a SHIPMENT K?
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1) get the goods to the common carrier
2) make reasonable arrangements for the delivery 3) notify the buyer |
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Seller requirements under a DESTINATION K?
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Seller does not complete obligations until goods arrive where the buyer is.
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Risk of loss rules?
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1) agreement controls
2) breaching party is liable for any uninsured loss even if breach is UNRELATED to the loss 3) if delivery by common carrier other than seller, risk shifts when seller completes delivery obligations 4) if merchant-seller, then risk shifts on buyer's receipt of goods. But if non-merchant seller, then risk shifts upon tender. |
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What are the types of warranties?
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1) express (can't be disclaimed!)
2) implied warranty of merchantability 3) implied warrant of fitness for a particular purpose |
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Implied warrant of merchantability?
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Trigger = seller is merchant dealing in goods of that kind
Warranty = goods are fit for an ORDINARY purpose for which such goods are used Disclaimer = "as is" or "with all faults" or other conspicuous language |
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Implied warranty of fitness for a particular purpose?
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Trigger = buyer has particular purpose and relies on seller in selecting suitable goods
Warranty = goods are fit for a particular purpose Disclaimer = "as is" or "with all faults" or other conspicuous language |
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Test for limiting remedies under warranties?
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Unconscionability.
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Type of performance required for sale of goods?
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Perfect tender.
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Buyer options if NOT perfect tender?
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1) reject delivery and sue
2) retain any part of delivery and sue |
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If a seller fails to make perfect tender, when does he have right to cure?
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1) Time for performance not yet expired
2) Seller has reasonable grounds (e.g. prior dealings) to believe that what he delivered would be acceptable |
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If buyer accepts goods, he cannot later reject them. Can only revoke acceptance if:
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1) nonconformity substantially impairs value of the goods
2) excusable ignorance of the grounds for revocation or reasonable reliance on seller's assurances 3) revocation w/in reasonable time after discovery of nonconformity |
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What is an installment sales contract?
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Authorizes delivery of goods in separate lots to be separately accepted.
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Buyer has right to reject under an installment contract when:
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Substantial impairment in installment that can't be cured.
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List non-monetary remedies.
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1) specific performance
2) reclamation 3) entrustment |
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Specific performance applies to;
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1) land Ks
2) unique, non-fungible goods |
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Define entrustment.
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If owner leaves goods with a person who sells goods of that kind and person wrongfully sells to third party, P can only recover if buyer was NOT a good faith purchaser.
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When can a buyer get goods back under a reclamation theory?
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1) buyer was insolvent at time he received the goods
2) seller demanded return of goods w/in 10 days (also reasonable time rule) 3) buyer still has goods at time of demand |
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Lost profits for lost volume rule?
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If lost 1 sale where there could have been 2, then recover profits from lost sale.
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Incidental damages?
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P can always recover costs incurred in finding replacement performance.
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Consequential damages?
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Damages from P's special circumstances recoverable ONLY IF foreseeable to D at time of K formation.
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Liquidated damages clause will be upheld if:
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1) damages difficult to forecast at time K made
2) provision is a reasonable forecast |
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Excuse to NOT perform b/c of other party's improper performance?
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UCC: if not perfect tender, then need not perform
CL: excuse for material breach (not substantial performance) |
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Excuse b/c of failure to perform condition of K?
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Strict compliance required.
But not if the protected party prevents the occurrence of the condition. |
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How to excuse a condition of K?
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1) waiver = statement after conditioning event was to occur
2) estoppel = statement before + reliance 3) protected party prevents condition from occurring |
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Elements of anticipatory repudiation?
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1) unambiguous statement/conduct indicting intent not to perform
2) made prior to to the time performance was due |
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When does anticipatory repudiation action arise?
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Immediately if other party has NOT finished performing.
Contract due date if other party has finished performance. |
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Elements for excusing performance by INSECURITY?
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1) words of one party give reasonable grounds for uncertainty of performance
2) other party must demand adequate assurances 3) commercially reasonable to stop performance |
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Types of excuse by later contract?
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1) rescission
2) accord and satisfaction 3) modification 4) novation |
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Define novation.
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Agreement b/t BOTH parties to the substitution of a new party.
Same performance, different parties. |
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Define accord and satisfaction.
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Later agreement by the parties to accept a different performance in satisfaction of an existing obligation.
Same parties, different performance. If new K not performed, than breaching party can be sued under EITHER contract. |
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Types of rescission:
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1) mutual if neither party has completed performance
2) unilateral if legal grounds (e.g. mistake, duress) |
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Excuse by impossibility?
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1) something that happens after K formation but before completion
2) unforeseen 3) makes performance impossible |
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Excuse by impracticability?
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1) extreme and unreasonable difficulty or expense that was not anticipated
2) that makes performance commercially impracticable |
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Types of 3rd party beneficiary?
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Creditor: person to whom debt is owed by the promisee. CAN recover from promisee but only on preexisting debt.
Donee: person the promisee intends to benefit gratuitously. CANNOT recover from promisee. BOTH CAN RECOVER FROM THE PROMISOR. |
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3rd party beneficiary may sue if:
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1) intended beneficiary
2) K rights have vested |
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Define assignment.
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1) K b/t only 2 parties
2) 1 party later transfers rights under K to 3rd party |
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Common law limit on right to assign?
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Bars an assignment that SUBSTANTIALLY CHANGES the duties of the obligor.
NOT who gets paid. |
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Contract limitations on right to assign?
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Prohibition: "rights hereunder are not assignable" takes away right to assign but not power. Assignee can still enforce, but assignor liable for breach.
Invalidation: "all assignments of rights under K are void" takes away right and power to assign. Assignor liable for breach; assignee has NO power to enforce. |
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Implied warrant of assignment?
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1) right assigned exists
2) right not subject to defenses by obligor 3) assignor will do nothing to impair value of assignment Does NOT warrant what obligor will do. |
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Requirements for an assignment?
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1) Assignor must manifest an intent to immediately and completely transfer rights.
2) Right being assigned must be adequately described. 3) oral or written NO CONSIDERATION requried! |
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Define delegation.
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Party to a K transfers duties/burdens to a third party.
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All duties can be delegated unless:
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1) K prohibits delegations or assignments
2) K calls for very special skills 3) Person performing K has special reputation |
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Liability re: delegation?
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1) delegating party always liable
2) delegatee liable only if she recovers consideration from delegating party |
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What do with multiple gratuitous assignments?
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Last assignee generally wins unless the gift assignment was not revocable.
Gratuitous unless assignee receives writing or indicia of ownership. Or reasonable and foreseeable detrimental reliance. |
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What do with multiple assignments for consideration?
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First assignee wins.
Except if later assignee did not know of earlier assignment AND is the first to obtain payment, judgment, novation, or indicia of ownership. |
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Requirements for delegation?
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1) manifest present intent to make delegation
2) written or oral 3) no consideration required! |
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If no notice to obligor of assignment, then...
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All payments and modification agreements b/t obligor and assignor are effective.
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Define vesting.
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Notice +
1) manifests assent to the promise in the manner requested 2) brings suit to enforce the promise 3) materially changes position in justifiable reliance on the promise |
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Define surety.
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Guarantee of another's debt.
No consideration required if promise made b/f performance or promise to perform. |
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Parol Evidence Rule and course of dealing/usage/performance:
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Parol evidence does NOT bar such evidence to explain/supplement a contractual term.
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Define acceptance.
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Manifestation of assent to an offer prior to termination.
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