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62 Cards in this Set

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"Armadillos From Texas Play Rap Eating Tacos"
1. Applicable law
2. Formation of K
3. Terms of K
4. Performance
5. Remedies for unexcused nonperformance
6. Excuse of nonperformance
7. Third party problems
K Formation Essay - Steps in Analysis:
1) CL or UCC (whether parties are merchants)
2) Examine each transaction & determine its legal significance [offer, acceptance, consideration, defenses…]
--> POTENTIAL REMEDIES THAT APPLY
--> ID ALL POTENTIAL ARGS EACH SIDE CAN MAKE
K Performance Essay- Steps in Analysis:
Whether parties have (1) entered valid, enforceable K, (2) rights under K, & (3) breached/performed.
1) Terms of the K
2) Third party rights/obligations
3) Conditions that apply; satisfied/ excused
4) Duty to perform matured; discharged
5) Either party breach; minor/ material
--> POTENTIAL REMEDIES THAT APPLY
--> ID ALL POTENTIAL ARGS EACH SIDE CAN MAKE
Applicable Law: Common Law
Governs real estate & services Ks.
Applicable Law: UCC
Governs Ks involving the sales of goods, = things that are moveable at the time of transaction (N/A to sale of un-extracted oil, gas, minerals, timber, or structures)
Applicable Law: Mixed UCC/CL
Determine predominant purpose of the K; Apply that law to the entire K, UNLESS K divides payment based on goods & services
Formation of a Contract
A valid contract =
(1) AN AGREEMENT that is (2) LEGALLY ENFORCEABLE
- Requires an offer, acceptance, mutual assent, consideration & no defenses to K formation.
Formation of a Contract
First Evaluate whether there is an AGREEMENT - 3 Steps:
(1) Initial communication (OFFER),
(2) What happens after initial communication (TERMINATION OF AN OFFER), and
(3) Who responds and how she responds (ACCEPTANCE)
OFFERS - Requirements:
i. A promise, undertaking, or commitment w/ intent to enter into K,
ii. Certainty & definiteness of essential terms, and
iii. Communication to an identified offeree.
OFFERS - requirements for terms
- CL & UCC
- Offer need not contain all material terms (except REAL ESTATE: price & land description)
- Vague/Ambiguous Terms (i.e., "appropriate, fair, reasonable") NOT offer (CL & UCC)
- UCC: Goods DO NOT REQUIRE PRICE BUT MUST CONTAIN QUANTITY
OFFERS - Output/Requirements Ks (under UCC)
- Definition
- Offer language requirements
= Where seller commits to sell ALL goods it produces to buyer, valid even when no specific quantity mentioned or accepted by offeree.
- Offer can be vague (i.e., "all, only, exclusively, solely")
- UCC requires quantity be set in GF, not be unreasonably disproportionate to any stated estimate/ normal prior output. Parties must use best efforts to perform
OFFERS - Employment Ks - language requirements
Must have duration of employment
Advertisements = NOT offers, UNLESS
Promise = a reward; specific quantity & expressly indicate who can accept
TERMINATION OF OFFERS
- 4 Ways:
1) Lapse of Time
2) Revocation of an Offer
3) Rejection of an Offer
4) Death of a Party Prior to Acceptance
Termination of Offers:
- Lapse of Time requirements:
1) Reasonable time or
2) Time Stated in K
Termination of Offers:
- Revocation of an Offer (requirements)
1) Unambiguous STATEMENT by offeror to offeree of unwillingess or inability to K
2) Unambiguous CONDUCT that offerree is aware of by offeror indicating an unwillingness or inability to K
Termination of Offers:
- Revocation effective AFTER it has been accepted
1. When sent through the mail, revocation is effective when RECEIVED
2. (Mere making of multiple offers does not revoke earlier offers)
Termination of Offers:
- 2 Types of Offers that CANNOT be Revoked:
1) Option Ks
2) UCC Merchants Firm Offer Rule (that it will be held open for a time stated)
Termination of Offers:
- Offers that CANNOT be Revoked:
OPTION K:
Where offeror reasonably expects that offeree will rely to her detriment on the offer, offer will be irrevocable as an option K for a reasonable period of time. 2 Requirements:
1. Promise to keep offer open, and
2. Promise supported by payment or other consideration
Termination of Offers:
- Offers that CANNOT be Revoked:
UCC Merchants Firm Offer Rule (that it will be held open for a time stated):
An offer (1) by a merchant (2) to buy/sell goods (3) in a signed writing that gives assurances that it will be held open, CANNOT be revoked for lack of consideration for the time stated, or a reasonable time that does not exceed 3 months (as determined by the court) (even if K period is longer).
Termination of Offers:
- Rejection based on words & conduct of offeree: COUNTEROFFER =
Counteroffer = Rejection
1. Terminates offer & becomes new offer. No K unless counteroffer accepted.
2. NOT a Counteroffer: Simply inquiring/bargaining: statement in form of question (Will you take $200?) doesn’t terminate offer
- If a statement (I’ll pay $200) = counteroffer
Termination of Offers:
- Rejection:
Conditional Acceptance =
Conditional Acceptance = rejects the express K & becomes = counteroffer
- “I accept, ‘if, only if, provided that, so long as, but or on condition that’”
Termination of Offers:
- Rejection: CL-ONLY Mirror Image Rule:
If acceptance adds new terms to K, it terminates K.
(CL- ONLY)
Termination of Offers:
- Rejection: UCC Permits Alterations to an acceptance IF:
(depends on whether one or both parties are merchants)
1. There is a seasonable expression of acceptance (= K).
2. If at least one party is NOT a merchant --> additional term = a proposal.
3. If BOTH are merchants --> additional terms = part of K UNLESS:
a. Offeror rejects w/i reasonable time OR
b. It materially changes original offer, OR
c. Offer expressly limits acceptance to original terms.
Termination of Offers:
- Rejection: UCC Different terms: (“Knock-Out” Rule)
1. If acceptance contains contradictory terms, the K consists only of the terms on which the offer and acceptance agree.
2. Inconsistent terms replaced by gap-fillers
Termination of Offers:
- Rejection: UCC Written confirmation of Oral Agreements:
After oral agreement, written confirmation with additional terms treated same as alteration rule (non-merchant = proposal; both merchants = reject or material change)
Termination of Offers:
- Death of a Party Prior to Acceptance:
i. Death/incapacity of a either party after offer but before acceptance terminates offer
1. Exceptions: Option K; Part performance of offer to enter into unilateral K
ACCEPTANCE of a K offer (defined):
= Manifestation of assent to terms of an offer in manner prescribed or authorized in offer.
Who can accept?
- Only a person who KNOWS ABOUT the offer; or
- The person to whom the offer was made
- Look out for assignment:
1. Offers CANNOT be assigned
2. Options CAN be assigned UNLESS the option otherwise provides
5 Methods of Acceptance:
1. In response to offer, Offeree fully performs = always acceptance, UNLESS failure to notify of performance (discharges K duties)
2. Offeree starts to perform = acceptance- unless offer requires particular method of acceptance
3. Offeree promises to perform = acceptance
4. (Mailbox Rule) Acceptance = effective when SENT if made in a manner & by a means invited & offeree has not already sent a rejection.
5. UCC: Acceptance may be in any reasonable manner, by any reasonable medium (more details...)
Mailbox Rule: Applicable when Offeror and Offeree are at different places & there are conflicting communications:
1. Acceptance is EFFECTIVE WHEN SENT if:
- Made in a manner and by a means invited; &
- Offeree has not already sent a rejection. (Whichever arrives first is operative)
- OPTION Ks: Acceptance effective when received.
2. While a revocation is EFFECTIVE WHEN RECEIVED.
a. N/A to: offer stipulating “accepted when received” & Option Ks
UCC: Acceptance may be in any reasonable manner, by any reasonable medium:
1. Buyer inspects & indicates goods conform or will keep despite nonconform; 2. Buyer fails to reject w/i reas time; fails to notify seller seasonably of rejectn; 3. Buyer does anything inconsistent w/ seller’s ownership; 4. Seller sends the wrong goods:
--Buyer’s offer to buy seeking prompt shipment can be accepted either by seller’s 1) promise to ship or 2) by shipment of conforming or non-conforming goods --Shipping wrong goods is simultaneously an acceptance & a breach --Exception: Accommodation: Shipping nonconf goods w/ explanation of why diff goods sent & belief that they will be acceptable.--Creates counteroffer (no K, no breach)
(After evaluating whether there is an agreement). look to whether the agreement is legally enforceable: (Defenses to Formation)
LEGAL REASONS FOR NOT ENFORCING AN AGREEMENT INCLUDE: (11 total, first 5)
(1) Lack of consideration or a consideration substitute for the promise at issue;
(2) Lack of capacity of the person who made the promise;
(3) Statute of Frauds;
(4) Existing laws that prohibit the performance of the agreement;
(5) Public Policy;
Next Evaluate: Whether the agreement is LEGALLY ENFORCEABLE: (Defenses to Formation)
LEGAL REASONS FOR NOT ENFORCING AN AGREEMENT INCLUDE: (11 total, last 6)
(6) Misrepresentations;
(7) Nondisclosure;
(8) Duress;
(9) Unconscionability;
(10) Ambiguity in words of agreement; and
(11) Mistakes at the time of the agreement as to the material facts affecting the agreement.
Consideration or a Consideration Substitute
= Requires bargained-for exchange between the parties involving legal value. (=LEGAL DETRIMENT)
Types of Consideration
1. Performance (doing something not legally obligated to do)
2. Forbearance (not doing something legally entitled to do)
3. Promise to perform
4. Promise to forbear
Probable Bar Issues on Consideration
i. Anything bargained for? (asked for by promisor in exchange for her promises)
ii. Did the party incur a legal detriment?
iii. Was the promise consideration for another promise? Illusory promise exception: “I promise unless I change my mind” = not consideration
iv. Amount/adequacy of consideration irrelevant
v. Past consideration is NOT consideration
Probable Bar Issue on Consideration:
CL only: Pre-Existing Duty Rule
1. Doing what legally obligated to do is NOT sufficient consideration for consideration
2. Exceptions:
a. Addition to or change in performance
b. Unforeseen difficulty so severe as to excuse performance
c. Third party promise to pay additional money
Probable Bar Issue on Consideration: UCC has no pre-existing duty rule:
UCC has no pre-existing duty rule: but uses the GF test for changes in existing sale of goods Ks – no need for new consideration
Probable Bar Issue on Consideration: Part Payment of a debt:
If debt IS due and undisputed, then part payment is NOT consideration for the release of the debt
- If NOT due or is disputed, then part payment IS consideration
Consideration Substitutes – a promise is legally enforceable even though there is no consideration if there is one of the following:
1) Written promise to satisfy an obligation for which there is a defense to payment
2) Promissory Estoppel is the main substitute. Elements:
1. Promise
2. Reliance that is reasonable, detriment, and foreseeable
3. Enforcement necessary to avoid injustice
Promisor's Lack of Capacity
- Under 18; mentally incompetent/ insane; intoxicated P, if other party has reason to know
- Implied affirmation by retaining benefits after gaining capacity: K made before capacity; person gains capacity; keeps subject matter of K without complaint after capacity gained
- Liability for necessaries - quasi-K liability
Consequences of Incapacity
Right to disaffirm by person without capacity
i. Incapable party may still sue for breach
ii. If incapable is sued, then assert defense of incapacity
Statute of Frauds Defense
Certain agreements must be evidenced by a writing, signed by the parties sought to be bound.
- Requires claimant to have proof a K exists, either: (1) proof of performance, or (2) a writing signed by the person who is asserting there was no such agreement.
Statute of Frauds Defense - Steps in Analysis:
1) Is the K within the SF?
2) If so, is the SF satisfied?
3) Is there a SF defense?
--> If agreement is w/i SF, & SF not satisfied & D asserts SF defense --> NO K
Contracts WITHIN the SOF:
"MY LEGS"
i. Marriage- Promises to do/refrain from doing something in consid of marriage
ii. Year- Service K not capable of being performed w/i 1 year from time of K. Possibility of early termination is irrelevant. If more than a year mentioned --> SF applies; BUT: Task mentioned but no time mentioned --> OUTSIDE SF;
iii. Land- Transfer of interest in real estate of a term more than 1 yr
iv. Executory- Promises by executor to “answer for personally” debts of decendent
v. Guarantor- Promises to answer [guarantee] debts of another [suretyship] but if main purpose of obligation was to benefit the guarantor, then not w/i SF
vi. Sale of Goods: UCC requires K for sale of goods of $500 or more to be in writing to be enforceable.
SOF Writing/Memorandum Requirements: (CL)
Non-UCC SF issue
1. Writing must contain: all material terms & subject matter of contract;
2. Recital of the consideration;
3. Signed by the person to be charged.
SOF Writing/Memorandum Requirements: (UCC)
UCC SF issue
1. Examine for: the ONLY material term: QUANTITY
2. if quantity incorrect, creates a “ceiling” on enforcement
3. signed by D, UNLESS both parties are merchants & party receiving the signed writing fails to respond within 10 days
SOF Writing/Memorandum Requirements: UCC Exception
MERCHANT FAILURE TO RESPOND RULE - based on person’s failure to respond to a signed writing.
1. Both parties must be merchants &
2. Person who receives signed writing w/ quantity terms that claims there is a K fails to respond w/i 10 days of receipt
SOF May be Satisfied by PERFORMANCE (in order for agreement to be enforceable): In a CL Services K:
Services Contract
1. Full performance by either party satisfies SF
2. Part performance does NOT satisfy the SF
SOF May be Satisfied by PERFORMANCE: UCC: Sale of Goods Contracts Requirements:
1. Ordinary Goods
a. Part performance of a K for the sale of goods satisfies SF but only to the extent of part performance.
i. Delivered Goods - NO SF defense
ii. Undelivered Goods - YES SF defense
2. Specially Manufactured Goods
a. SF satisfied as soon as the seller makes a “substantial beginning” - done enough work so clear good is custom made
3. Buyer’s Part Performance (multiple items)
a. Buyer part performs by paying part of price, if multiple items, then satisfy w/ part of the items by comparing/dividing total amt w/ price
4. Buyer’s Part Performance (single items)
a. Buyer part performs & only pays some $. SF is partially satisfied.
SOF May be Satisfied by PERFORMANCE: CL Real Estate K
Part performance requires 2 of the 3:
a. Full or part payment (alone doesn’t satisfy SF);
b. Possession; and/or
c. Improvements
Contract Modification Requirements:
1. If agreement, as modified, falls w/i SF, need written evidence of modification (UCC & CL) & also need CONSIDERATION (CL) OR GOOD FAITH (UCC).
2. Where parties express agreement in a final writing, other written or oral expressions, made prior to or contemporaneously with the writing, are INADMISSIBLE to vary the terms of the writing.
- Parol evidence can be offered to show SUBSEQUENT modifications of a written K.
Other reasons Ks unenforceable:
Illegal Subject Matter/ Illegal Purpose
- Illegal Subject Matter – If the subject matter is illegal, agmt is not enforceable.
- Illegal Purpose –If the subject matter is legal but the purpose is illegal, the agmt is enforceable only by person who didn’t know of illegal purpose
Other reasons Ks unenforceable:
Public Policy
Courts can refuse to enforce an agmt bec of public policy. Look for an exculpatory agmt that exempts intentional or reckless conduct from liability
Other reasons Ks unenforceable:
Misrepresentation
- Look for false assertion of existing fact that induces the K.
- Not necessary that the representation be wrongful
- Look out for words – “Honestly” & “Innocently”
- Can rescind the K if hones misrepresentation.
Other reasons Ks unenforceable:
Non Disclosure
Must be wrongful to be a reason for not enforcing the agmt by intentionally withholding the information
1. nondislosure by affirmatively hiding it
2. no affirmative duty to disclose usually
Other reasons Ks unenforceable:
Duress – Physical or Economic
Elements - Economic Duress
1. “bad guy” – improper threat to breach an existing K
2. “vulnerable guy” – no reasonable alternative
Unconscionability
- Empowers to a court to refuse to enforce all or part of an agmt
- The Basic Tests
i. Unfair surprise (procedural), oppressive terms,
ii. Tested at the time the agreement was made by the court
- UCC: ct may grant relief from a consumer lease even though no provision of the lease is unconscionable, if there is unconscionable conduct in inducing/ enforcing the lease.
Ambiguity in Words of Agreement
No contract if:
i. Parties use a material term that is open to at least two reasonable interpretations,
ii. Each party attaches different meaning to the term, &
iii. Neither party knows or has reason to know the term is open to at least two reasonable interpretations
Ex: 2 ships named Peerless
- If one party knows, then K by terms understood by party who doesn’t know diff in terms
Mutual Mistake of Fact Existing at Time of K
No K if:
1. Both parties mistaken, &
2. Basic assumption of fact, &
3. Materially affects the agreed exchange, &
4. Not a risk that the party trying to get out of the deal bears.
- NOTE - Turns on the facts & wording of the question
Unilateral Mistake of Material Fact
- Cts reluctant to allow a party to avoid a K for a mistake made by only one party.
- Look for situations in which the other party had reason to know of the mistake.