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62 Cards in this Set
- Front
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"Armadillos From Texas Play Rap Eating Tacos"
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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 |
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K Formation Essay - Steps in Analysis:
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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 |
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K Performance Essay- Steps in Analysis:
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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 |
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Applicable Law: Common Law
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Governs real estate & services Ks.
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Applicable Law: UCC
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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)
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Applicable Law: Mixed UCC/CL
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Determine predominant purpose of the K; Apply that law to the entire K, UNLESS K divides payment based on goods & services
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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. |
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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) |
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OFFERS - Requirements:
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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. |
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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 |
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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 |
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OFFERS - Employment Ks - language requirements
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Must have duration of employment
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Advertisements = NOT offers, UNLESS
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Promise = a reward; specific quantity & expressly indicate who can accept
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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 |
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Termination of Offers:
- Lapse of Time requirements: |
1) Reasonable time or
2) Time Stated in K |
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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 |
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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) |
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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) |
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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 |
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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).
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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 |
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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’” |
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Termination of Offers:
- Rejection: CL-ONLY Mirror Image Rule: |
If acceptance adds new terms to K, it terminates K.
(CL- ONLY) |
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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. |
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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 |
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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)
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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 |
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ACCEPTANCE of a K offer (defined):
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= Manifestation of assent to terms of an offer in manner prescribed or authorized in offer.
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Who can accept?
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- 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 |
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5 Methods of Acceptance:
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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...) |
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Mailbox Rule: Applicable when Offeror and Offeree are at different places & there are conflicting communications:
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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 |
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UCC: Acceptance may be in any reasonable manner, by any reasonable medium:
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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) |
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(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; |
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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. |
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Consideration or a Consideration Substitute
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= Requires bargained-for exchange between the parties involving legal value. (=LEGAL DETRIMENT)
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Types of Consideration
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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 |
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Probable Bar Issues on Consideration
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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 |
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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 |
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Probable Bar Issue on Consideration: UCC has no pre-existing duty rule:
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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
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Probable Bar Issue on Consideration: Part Payment of a debt:
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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 |
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Consideration Substitutes – a promise is legally enforceable even though there is no consideration if there is one of the following:
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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 |
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Promisor's Lack of Capacity
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- 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 |
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Consequences of Incapacity
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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 |
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Statute of Frauds Defense
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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. |
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Statute of Frauds Defense - Steps in Analysis:
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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 |
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Contracts WITHIN the SOF:
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"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. |
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SOF Writing/Memorandum Requirements: (CL)
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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. |
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SOF Writing/Memorandum Requirements: (UCC)
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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 |
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SOF Writing/Memorandum Requirements: UCC Exception
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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 |
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SOF May be Satisfied by PERFORMANCE (in order for agreement to be enforceable): In a CL Services K:
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Services Contract
1. Full performance by either party satisfies SF 2. Part performance does NOT satisfy the SF |
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SOF May be Satisfied by PERFORMANCE: UCC: Sale of Goods Contracts Requirements:
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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. |
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SOF May be Satisfied by PERFORMANCE: CL Real Estate K
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Part performance requires 2 of the 3:
a. Full or part payment (alone doesn’t satisfy SF); b. Possession; and/or c. Improvements |
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Contract Modification Requirements:
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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. |
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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 |
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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
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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. |
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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 |
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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 |
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Unconscionability
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- 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. |
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Ambiguity in Words of Agreement
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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 |
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Mutual Mistake of Fact Existing at Time of K
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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 |
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Unilateral Mistake of Material Fact
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- 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. |