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142 Cards in this Set

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When does Article 2 of the UCC apply?
To a SALE OF GOODS - all other Ks are handled under common law
Chris purchases a gym membership and gets a free tote bag in the deal. Is this a K for Goods or Services?
Both, but it will be treated as a K for SERVICES because the services are the more important component of the deal (the tote bag was just a gimmie)
How is an express contract created?
And implied contract?
Express: Words, either oral or in writing
Implied: By the parties' conduct
Vader contracts with "Planet Destroyers R US" to build 4 Death Stars. After Luke blows up 2 of them, Vader decides not to pay them at all (SOL time bars enforcement of the K). What can PDRU do?
Recover in QUASI-CONTRACT for the "reasonable value of the benefit conferred". In this case, the value of 2 Death Stars.

NOTE: You CANNOT recover the full K price, just the value of what you DID do.
How can the offer in a Bilateral Contract be accepted?
Any reasonable way. FLEXIBLE (like your mom)
How can a unilateral Contract be accepted?
How does the offer look and what are some examples of Unilateral Ks?
ONLY by performance
Offer EXPRESSLY says "accept this by performing"
Ex: Rewards, Contests, Prizes
IHOP advertises $2.50 breakfast platter!
Is this an Offer?
No! It lacks a QUANTITY term and is therefore indefinite.
Advertisements are generally not enforceable offers.
Obi Wan signs a contract with Luke in which Obi-Wan agrees to sell and Luke agrees to purchase "one blue lightsaber, price to be negotiated later." They later disagree on price.

What result?
The court will read in a "reasonable price". Quantity is the ONLY definite requirement.
Helmets R US signs a contract with the Empire to supply, "all the empire's stormtrooper helmet needs".
Valid K?

The Empire purchases 5000-6000 helmets a month for 12 months. In month 13, they require 40,000 helmets. What result?
Contract is VALID. Quantity can be measured by buyer's requirements.

However, if there is a "sudden increase"(or decrease) in demand, then the seller is not liable to follow through. (must be "out of line)
What are the three ways in which an offer can be terminated?
1) Lapse (offeree's fault)
2) Revocation (by offeror)
3) Rejection (by offeree)
When will an offer Lapse?
a) After a stated term (specified in the K)
b) After a "reasonable time" has passed
Really AIG?
Really?
What are the two ways that an offer can be revoked?
1) Direct Revocation: Offeror indicates DIRECTLY to the offeree that he has changed his mind.
2) Indirect Revocation: Offeror a) engages in CONDUCT that indicates he has changed his mind and b) the offeree is AWARE of the conduct
What are the four exceptions where an offer CANNOT be revoked?
1) Option
2) Foreseeable Reliance before acceptance (very rare)
3) Starting to Perform a UNILATERAL contract (MBE only // NY: can revoke until perf is complete)
4) Firm Offer
What is an Option?
What is the NY distinction?
An Option is a promise to keep an offer open that is PAID FOR. (option must have its own consideration, separate from the rest of the offer)

NY: A SIGNED WRITTEN promise to keep an offer open (even w/o payment) is enough to establish an option.
Han Solo pays Jabba $100 to keep his offer to sell his sail barge for $50,000 open for 2 weeks. Jabba changes his mind a week later. Can Jabba revoke his offer?
NO! He bargained away his right to revoke when he sold Han the Option for $100
I offer to sell you a mint condition, original run Millenium Falcon model. Before accepting, you go out and buy a hyperbaric champer to store it in for $5000. Can I revoke?
YES! You are fucking nuts. By default, the offeror can assume that the offeree won't rely until AFTER accepting.

Common EXCEPTION: Subcontractors submitting bids to a general contractor. The Subs know for a fact that the general must rely on their bids in submitting its master bid.
Vader offers PDRU $5 billion to build the Death Star II and states "offer can only be accepted by performing. PDRU starts construction, but when the station is half finished, Vader hears the rebel fleet is approaching and he decides to revoke this offer. Can he do this?
MBE: NO! Once performance has bugon on a unilateral contract, the offer may not be revoked.

NY: Hell yes! A) In New York the offer can be revoked at ANY TIME until performance is COMPLETE B) he's Vader and he does whatever he damn well pleases!
How is a Firm Offer made and how long does it last?
A Firm Offer is a promise to keep an offer open made by a MERCHANT (UCC - broad def, basically all business people) in a SIGNED WRITING.

A Firm Offer lasts as long as stated -OR- a "reasonable time" not to exceed three months.
*When is an acceptance effective?
MAILBOX RULE: When it is placed in the mail. Even if it is lost in transit, it still counts as of time it was placed in the mailbox.
When is a revocation effective?
Upon RECEIPT. There is NO mailbox rule for revocation. The offeree must actually receive the revocation before he accepts for it to be effective.
Han offers to take Obi-Wan and Luke to Alderan for $15,000.

A) Obi-wan says: "We will only pay $10,000" What result?

B) Obi-wan says: "We can pay you $2,000 now and $15,000 when we reach alderan." What result.
A) Obi-wan has REJECTED the offer - counter offer acts as rejection
B) Obi-wan is merely BARGAINING, so has not rejected the offer. (these guys must really be desperate)
Leia sends Han an offer to lead the Rebel fleet for $5,000. Han agrees "so long as" Leia gives him a kiss.

What result?
Han has REJECTED the offer. Conditional Acceptance is a rejection.
*** Boba Fett offers to bring Jaba Han Solo if Jabba will pay him $5,000. Jabba says (through an interpreter droid) "I accept, you must deliver while I'm awake". Boba Fett shows up with Solo Encased in Carbonite 3 months later. Jabba and Boba are both merchants.

What result?
Common Law: Jabba has REJECTED. Changing any term is a rejection

UCC Section 2: Boba has accepted WITH the changed terms.
Adding or changing terms does NOT prevent acceptance (ever)
BUT the new/changed terms only become part of the K IF:
1) Both Parties are Merchants
2) The new/changed term is not a "material change"
3) The Offeror does not object.
What counts as a "material change" for purposes of an acceptance that varies terms?
a change "likely to cause hardship or surprise to the offeror." If customary in the industry, then its probably OK
EX: adding "Saturday delivery" is fine
Ex2: Adding "must be delivered by trained monkeys wearing matching vests and fezzes" is not OK. (but would be totally awesome)
What if a party dies before an offer is accepted?
Revocable offer: TERMINATED
Irrevocable Offer (option, etc): Still good
Luke offers Yoda his flashlight, if Yoda will train him as a Jedi and adds "you must accept by beginning my training".

Yoda says "Train you, I will, hmmmm"

Has Yoda Accepted?
NO! The language of the offer controls as to the method of acceptance.
Vader offers PDRU $5 Million to build the Death Star. Offer is silent as to method of acceptance. PDRU writes "we accept" and starts construction. PDRU decides to walk away when the Death Star is only 46% complete.

Must PDRU complete the job?
YES! This is a bilateral K and therefore once PDRU started performance, they have ACCEPTED and are obligated to "finish the job" (or be in Breach)
Grand Moff Tarkin offers Vader a new helmet if he gets the location of the Rebel base from Princess Leia, but also states "accept by bringing me the location". Vader starts questioning Leia with that creepy fucking Ball droid.

A) Can Vader stop halfway through the interrogation?

B) Can Tarkin revoke his offer halfway through the interrogation?
A) Yes. In a unilateral K, the offeree can walk away any time before complete performance

B) MBE: No, not once Vader starts performance.
NY: Tarkin can revoke until vader gets the location.
Vader offers PDRU $100,000 to paint the Death Star gray. PDRU paints it Orange.

Result?
PDRU has accepted AND breached simultaneously
Vader orders a new black helmet from Amazon.com, but Amazon sends him a live Rancor instead.
A) What result?
B) What result if amazon sends him a white Stormtrooper helmet with a note saying "we're out of black helmets, we hope this will suit your needs"?
This is a UCC sale of goods case
A) Simultaneous breach and acceptance

B) No acceptance, and No breach.
Greedo leaves a note for Han at the Cantina saying "I offer to sell you my blaster for $20. If you I don't hear from you by 6:00 PM tonight, you've accepted." Han doesn't reply.

Has Han accepted?
NO! SILENCE ≠ ACCEPTANCE
Admiral Akbar offers to sell the Medical Frigate to Leia for $400,000. The offer states "your acceptance must be received by July 23". Leia mails her offer on July 22. It arrives on july 27th.

What result?
Leia has NOT accepted. The mailbox rule is merely a DEFAULT rule that can be overridden by the terms of the offer.
What are the four exceptions to the Mailbox Rule?
1) Offer provides otherwise
2) Irrevocable Offer
3) Offeror Relies on OVERTAKING rejection
4) Rejection sent first
Admiral Akbar offers to sell Leia the medical frigate for $400,000. Leia pays him $2,000 to keep the offer open until july 23. Leia mails her acceptance on july 22. Akbar receives it on july 25.
Is Akbar bound?
NO. Mailbox rule not needed here.
What result if an acceptance is sent on jan 3 but a rejection is faxed on jan 4 and arrives before the acceptance?
Acceptance still valid UNLESS the offeror RELIES on the rejection (ie. makes a deal with someone else before the acceptance arrives).
Who lacks capacity to enter into a contract?
1) Minors (under 18)
2) Mentally Disabled
3) Drunks
What is the general rule covering contracts made with persons who lack capacity?
An incapacitated DEFENDANT can DISAFFIRM the K if he wants to avoid it.
A Stormtrooper signs a contract with Luke, selling Luke his hover bike and obligating Luke to pay $500 in over the next 3 years. Luke is 17, but the stormtrooper believes Luke is 18 because when he asked Luke, he told the stormtrooper that he was 18.
Luke changes his mind and decides not to pay.

1) Can the stormtrooper enforce the K against Luke?
2) Can Luke enforce the K against the stormtrooper?
3) What if Luke uses the Hoverbike for 6 months after he turns 18?
1) NO. Luke's ACTUAL AGE is all that matters
2) YES. Only the DEFENDANTS' age matters.
3) Stormtrooper can enforce. If an incapacitated party retains the benefit after incapacity ends, he has ratified the contract.
What are the 7 ways to claim that K was never validly formed?
1) Lack of Capacity
2) Duress
3) Misrepresentation/Non Disclosure of a Material Fact
4) Amiguity/Misunderstanding
5) Mistake
6) Lack of Consideration
7) Public Policy
What is economic Duress?
Threat of economic harm used to induce a party to enter into a contract.
Ex: I threaten to breach K1 (which you need and for which there is no substitute) if you don't agree to K2.
When will a Misrepresentation void a K?
If a MATERIAL FACT is misrepresented or not disclosed, it will be fatal to the K, even if the misrepresentation is honest! (A honestly believes his crappy roof doesn't leak)
2 merchants sign a contract for shipment of goods "on the Millenium Falcon". Neither know that there are actually 2 ships by that name, leaving Tatooine a month apart.
1) Is there a K?
2) What if merchant A knows that there are 2 different ships, but merchant B does not?
1) NO. The parties don't have a "meeting of the minds"
2) Yes! But the K uses merchant B's understanding (Innocent party wins -no shenanigans!)
When is a mutual mistake of fact fatal to a contract?
When it is about a MATERIAL fact (an issue central to the making of the K).
What is the effect of a unilateral mistake of fact on a contract?
No effect UNLESS the non-mistaken party knew, or should have known that the other party was mistaken
ex: Subcontractor submits a bid that clearly so low it must be unprofitable.
What is consideration?
Bargained-for legal detriment/benefit.
Ex: Promise, Performance, Forebearance, $
Han Solo helps rescue princess Leia from the Death Star. Afterwards, Leia promises to pay Han. Valid K?
NY Distinction?
NO. Something that's already been done is not valid consideration, must be for future performance.

NY: Past Consideration is valid IF it is EXPRESSLY STATED IN A SIGNED WRITING (and can be proven)
Luke bargains with Chewy to sell him his broken blaster for $500. It is only worth $2. Valid K?
YES. Almost any consideration is adequate, as long as it is bargained for. A "good deal" is still valid.
How do you modify an already-made contract under
1) Common Law
2) Common Law NY
2) UCC Article 2
Common Law: You need NEW CONSIDERATION for the modification.

NY Common Law: No consideration required if there is a SIGNED WRITING

UCC Art 2: New consideration NOT required but you must show GOOD FAITH
You owe Jabba $2,500, which you do not dispute. You orally agree with him to pay $2,000 now to have the debt settled.
1) Can Jabba sue you for the extra $500?
2) What if your agreement was in writing?
3) What if the debt was disputed?
1) Yes! No new consideration, so no modification.

2) MBE: Yes (same as above)
NY: NO. No consideration required if its in a signed writing

3) No. Law favors settlement of disputed debt.
You owe Jabba $4,000, but the SOL has run on his claim to collect. But fearing Greedo, you sign an agreement with him to pay $3,000 to settle the debt. Enforceable?
MBE: Yes. In this situation ONLY. Signed writing is good enough if SOL has run on a debt.
NY: Same.
What is promissory estoppel and when does it apply?
FORESEEABLE RELIANCE on a promise can make the promise enforceable despite lack of consideration.

Ex: LL promises Tenant he will renew T's upcoming lease. T paints the whole apartment. LL then does not renew it. No consideration, but T relied to his detriment so LL is bound.
**When will courts not allow Non-Compete clauses?
When it operates as a RESTRAINT OF TRADE.
Court looks at DURATION and GEOGRAPHIC reach. Freedom of K balanced against restraint of trade
Courts also consider UNIQUENESS of services (a random waiter, or the star chef?)
I sign a K which exculpates me from any tort liability. Valid?
NO. K can exculpate for NEGLIGENCE but not for Gross Negligence or Intentional Torts
Which types of contracts fall under the Statute of Frauds (SOF)?
MY LEGS
Marriage
Year in Advance
Land
Executor
Goods over $500
Suretyship
Which of the following fall under the SOF?
1) Jabba orally agrees to lease his palace to Luke?
2) Contractor orally agrees to build a fence around the Sarlac Pit (owned by Jabba)
3) Jabba authorizes Bib Fortuna to sell his palace. Does SOF apply to the authorization?
4) Jabba orally agrees to give the jawas an easement over his land for seling droids.
1) SOF applies (ANY interest in land)
2) SOF does NOT apply (building on the land isn't an INTEREST in land for the builder)
3) SOF applies (Equal dignity rule - agent's authority concerning Real Prop. must be in writing)
4) SOF applies (Easements are an interest in land)
Vader orally agrees to employ Bobba Fett for the rest of his life. Does SOF cover this?
MBE: NO
NY: YES - SOF covers lifetime Ks
The Empire contracts with the Sand People to kill every Jawa on tattooine (assuming murder contracts aren't illegal). Does SOF cover this?
NO: Specific tasks are not covered by SOF since they could always THEORETICALLY be completed in a year (however hard it may be)
Vader orally agrees to employ Bobba Fett for 11 months starting 3 months from now. SOF problem?
YES - Specific times greater than 1 year fall under SOF. Clock runs from DATE OF AGREEMENT (not from when the service starts)
Han agrees to lease the Millenium Falcon to Luke for 1 year for $300. SOF problem?

What if he leases it for 6 months for $1,500?
1) YES - 1 year or more
2) NY: YES - Article 2a (lease of goods) requires signed writing for leases over $1000
What is a suretyship?
"Answering" for the debt of another. "If A doesn't pay you, I will". Falls under SOF. The one who promises is liable for the debt only if A doesn't pay
Vader hires Boba Fett to paint the Death Star. Tarkin chimes in, "if Vader doesn't pay you, I will!" and then puts it in writing.
Result?
Tarkin has created a Suretyship. He is liable on the debt, but ONLY if Vader doesn't pay (he's the backup).
SOF applies to suretyship, but was satisfied here.
The Empire contracts orally to buy 10 Blaster Carbines at $10 a pop. Before delivery, the Empire calls the supplier and orally agrees to up the order to 100 blasters.
Valid modification?
NO - if the K AS MODIFIED would fall under the SOF, then the modification requires a writing.
The empire contracts to buy 100 blaster carbines at $10 a pop. The agreement provides that any modification must be in writing. The Empire later calls and reduces its order to 10 blasters.
1) Result?

2) What result if the original K did not contain the modification clause?
1) Modification NOT valid. Parties can contract to make their own private SOF - so here, the empire would have to modify in writing.

2) Modification is fine. The K as modified does not fall under SOF, so modification does not require a writing.
What are the miscellaneous NY SOF situations?
FAD
1) Finder's fee agreement or broker's commission EXECPT to an attorney, auctioneer or RE agent
2) Assignment of an insurance policy
3) Debt - Promise to pay a discharged debt
What sort of writing satisfies the SOF for
1) Sale of Goods:
2) Lease of Goods (NY only)
3) Other Ks
1) Must contain a QUANTITY term and be signed by THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT
2) Must state that it is a LEASE, include QUANTITY, DURATION, and RENTAL PAYMENTS, and be signed by DEFENDANT
3) Must include ALL MATERIAL TERMS
What are the exceptions to the SOF?
1) Real Property
a) Lease of one year or less
b) Part performance (2/3 of Some Payment; improvement; possession

2) Full performance - (oral k for more than 1 year - but P fully performs)

3) Sale of Goods more than $500 (specific exceptions on another card)
What are the SOF exceptions for a sale of Goods over $500?
1) Goods accepted or paid for by the buyer - (Oral K should have been in writing, but buyer accepts/pays for 1/2 the goods)
Note: Only applies to the goods accepted

2) Custom made Goods (seller started making them and they are not suitable to be sold in his normal biz)

3) Judicial Admission

***4) Merchant's Confimatory Memo
***What is a Merchant's Confirmatory Memo, what are the requirements, and what is its effect?
One party uses its OWN signed writing to satisfy the SOF against the OTHER party IF:
1) Both parties are merchants
2) The writing claims a prior oral agreement and has quantity
3) recipient doesn't object in writing w/in 10 days
What is the Parol Evidence Rule (PER)
Evidence of a PRIOR AGREEMENT (either oral or written) that contradicts a later writing is EXCLUDED.

Note: PER questions ALWAYS involve a writing. If its an oral agreement - then its probably a SOF problem
What are the 4 exceptions to the parol evidence rule? (ie. when can the evidence get in?)
1) To correct a clerical error
2) To establish a defense against formation (ie. to show that NO K WAS FORMED rather than to argue that the terms are different)
3) To interpret a VAGUE or AMBIGUOUS term (but courts will give words their plain meaning)
4) To Supplement a partial integrated writing
-NOTE: If there is a MERGER CLAUSE, this won't work
***Jabba Leases his sail barge to Luke. The lease is silent as to droids. Luke wants to present evidence that after the lease was signed, Jabba agreed to throw in serving droids. Can the evidence get in?
***YES: Parol Evidence rule LOOKS BACKWARD. Conduct AFTER the contract is formed is always admissible.
What are the three sorts of conduct a Court will look at to explain terms in a K or fill in gap and in what order of importance?
In order of importance (most to least)
***1) Course of Performance: what the parties did under THIS contract

*2) Course of Dealing: What the parties have done with each other in the past

3) Usage of trade: what is common in the industry
What effect do a seller's Express Warrenties have? Which of the following things are express warrenties?

1) "This Lightsaber was made by a trained Jedi"
2) "All parts in this Correlian Corvette are top quality"
3) "This hyperdrive is guaranteed for 2 years"
4) Seller uses a model in selling goods
Sellers are liable for ALL EXPRESS WARRANTIES

1) Yes
2) No
3) Yes
4) Yes
Vader sells a pink TIE fighter to captain Needa but tells him that it is gray. Captain Needa is colorbling and is buying the TIE fighter for recreational purposes. Has Vader breached any express warranties?
NO - Express warranties are only binding if they ARE or COULD HAVE BEEN the "BASIS OF THE BARGAIN". Here, there is no way that Needa could have thought the color was the basis of the bargain.
What are the 2 types of implied warranties in contracts?
1) Warranty of merchantability
2) Warranty of fitness for a PARTICULAR purpose
What is the Warranty of Merchantability and when does it arise?
An implied warranty that the goods are fit for their ORDINARY PURPOSE (ie. making toast with a toaster - NOT heating your gloves)

It arises ONLY when the seller is a MERCHANT WHO DEALS IN GOODS OF THE KIND (ie. not if Footlocker sells you a 12 gauge, but yes if they sell you running shoes)
What is the warranty of fitness for a particular purpose and when does it arise?
An implied warranty that the goods are FIT FOR THE BUYER'S PARTICULAR PURPOSE (can be something weird)

It arises when
1) the buyer has a special purpose in mind AND
2) the buyer is relying on the seller to select SUITABLE GOODS AND
3) the seller KNOWS this

Note: Seller does NOT have to be a merchant as long as 1-3 are satisfied
Vader asks a clerk at Helmets R Us to find him a "helmet that will inspire fear in my troops". The clerk sells him a neon pink helmet in perfect condition. Vader is laughed off the bridge of the Executor.

1) Has the clerk breached the implied warranty of merchantability?

2)What about the implied warranty of fitness for a specific purpose?
1) NO - the helmet is fit for its ordinary purpose (protecting his head)

2) YES - Vader was relying on the clerk to select a helmet that fit his purpose and the clerk knew this.
Vader sells Tarkin a TIE fighter and the contract states "as is".

1) Are there any warranties in this contract?
2) The contract says "no implied warranties are made" instead. Any warranties?
3) The contract states "all parts guaranteed for 3 years" and later states "all warranties are disclaimed?
1) No. "As is" or "with all faults" are magic words for disclaiming implied warranties

2) Yes! The implied warranties survive - you must either use the magic words or say "MERCHANTABILITY" to disclaim implied warranties

3) Express warranties cannot be disclaimed!
Can a seller limit a buyer's remedies for breach of an express warranty? How about implied?
Yes and Yes - as long as the limit is NOT UNCONSCIONABLE (at time of agreement, not breach)

Exception: Can't limit remedies for PERSONAL INJURY in consumer goods K
Vader ships goods to Luke under a sales contract. They are destroy by pirates en route. What is the result if:
1) Vader bears the ROL?
2) Luke bears the ROL?
1) if SELLER bears ROL: Seller must provide new goods at no additional cost

2) If BUYER bears ROL: Buyer must still pay K price
Luke promises to pay Vader $200 if Vader will promise to deliver 20 blasters to Luke. The contract calls for FOB Tatooine (where Luke lives). Vader ships the blasters by FedEx but they are blown up by pirates. Meanwhile, Luke calls Vader and says "I've changed my mind, I'm not paying you".

What are the parties' rights?
Luke is liable for the $200 to Vader. Even though the ROL was on Vader when the goods were lost, Luke's breach puts it on him, DESPITE the fact that his breach had nothing to do with the blasters being blown up)
****SUPER COMMON BAR QUESTION****

Vader (on Courouscant) signs a K with luke to ship him 30 blasters by FedEx and the K provides "F.O.B. Courouscant". Luke is on Tatooine.

The shipment is destroyed en route. Who bears the risk of loss?
LUKE - the F.O.B. location indicates where the ROL SHIFTS. Here, as soon as Vader puts the goods in FexEx's hands, he shifts the ROL to luke.

EX: if the K said FOB Tatooine, then Vader would bear the ROL until the goods were delivered to luke on tatooine.
In a non-common-carrier case, who bears the ROL and when?
Depend on whether the SELLER is a MERCHANT

Seller is Merchant: Seller bears ROL until BUYER TAKES POSSESSION of goods

Seller is non-merchant: Sell bears ROL until it TENDERS THE GOODS (ie. makes them available to the buyer -"come pick them up at my warehouse")
Tarkin Leases the Death star to his pal Vader for 6 months at $100 a month. Vader goes and gets it blown up by the Rebels. Who bears the ROL?
Tarkin. In a lease situation The LESSOR bears the ROL even if the Lessee is IN POSSESSION at the time of loss.
I rent a car from Avis and crash it. Who bears the ROL?
I do. For companies that rent as their business, the lessee bears the ROL, not the lessor.
What is the perfect tender rule?
If the seller does not tender performance perfectly, the buyer MAY (but does not have to) reject the goods
Wedge enters K with Biggs to sell him 20 Red Womprat pelts, delivery no later than July 20. On July 10, Wedge delivers 20 Blue Womprat pelts. What are Biggs' rights?
Biggs can reject or accept the pelts. If he rejects, Wedge has until the 20th to CURE his breach by delivering 20 red pelts.
If the seller makes imperfect tender and the date for performance has EXPIRED, does the seller have any options left?
Only if there is evidence that the buyer has been FLEXIBLE in the past about non conforming goods. If so, seller can still cure in a reasonable time.
Vader signs a K with a caterer to provide 100 donuts every monday morning in the Death Star conference room for 2 months.
on the 7th monday, the caterer only brings 90 donuts.
What can Vader do
He can reject the 7th installment but NOT the entire contract.
In an installment K, the tender is PER INSTALLMENT.

CAN reject entire K if a defect in 1 installment SUBSTANTIALLY IMPAIRS the value of the entire K
*** Vader orders 20 TIE fighters. They are delivered. 4 months later he discovers that half of them are missing their engines.
What are his remedies with the seller?
He CAN'T reject the goods. When a buyer keeps goods WITHOUT OBJECTING after having a reasonable opportunity to INSPECT, he's stuck with them.

But he CAN get damages for the missing engines.
When can a buyer revoke his acceptance of goods?
Usually never.
Exception: Only when
1) a non-conformity SUBSTANTIALLY IMPAIRS THE VALUE of the goods AND
2) the defect was "latent" or difficult to discover with reasonable inspection (hairline cracks)
What can a buyer do if he properly rejects goods or properly revokes his acceptance of goods?
DRR...

Damages - for the breach
Return - of the goods
Refund - of any money he paid
Vader buys 30 blasters for $1,000. He pays by check, but the seller informs him that they only take cash.

What are the parties' rights?
Article 2: The buyer may pay by check, but seller can demand cash. If he does so, the buyer has a reasonable time to obtain cash.
Vader contracts with some Bothans to paint the death star gray. They paint it 90% gray, but leave the main Dish unpainted. Can reject their performance?
No! This is covered by Common Law (not a sale of goods). Under common law, only SUBSTANTIAL PERFORMANCE is required to avoid a material breach.

Vader can still get damages for the 10% not completed though.
Name the 6 ways to get out of a valid K based on LATER EVENTS
1) Other party breachs
2) Anticipatory Repudiation
3) Later Agreement (recission; modification; accord **Novation**)
4) Impossibility
5) Frustration of purpose
6) Failure of EXPRESS condition
When does the other party's breach provide an excuse to get out of a K?
UCC art 2: If tender isn't perfect
Common law: if it is a MATERIAL breach

in both cases you can get damages for the nonconforming goods/service
I deliver contract goods 1 day late. Have I committed a material breach?
Usually NO. But if the K states that "Time is of the essence" then YES.
What is an anticipatory repudiation and what rights does it give the other party?
When one party tells the other UNEQUIVOCALLY that it will not perform (not just give them reason to be merely worried).

The non-repudiating party may IMMEDIATELY sue for breach and damages.

NOTE: An anticipatory repudiation can be RETRACTED as long as the other party has not RELIED (duh)
When can a contract be rescinded (recission)
At the agreement of both parties when there is at least SOME performance remaining (can't do it once one party has fully performed)
When does a K modification take effect?
IMMEDIATELY
A owes B $400. B promises that if A repaints his house right now then B will discharge the debt.

What's this called?
An accord.
What is a Novation? ****
An agreement to SUBSTITUTE a new party for an existing one.
Requires agreement of both original parties and the new party being substituted.
Vader contracts Luke to paint his TIE fighter. If the TIE fighter doesn't get painted, who can Vader sue in the following cases?

1) Luke and Han agree that Han will paint the TIE fighter instead of Luke

2) Luke and Vader agree that Han will paint the TIE fighter instead of Luke
1) This is a DELEGATION: Vader can sue Luke! (vader did not CONSENT to the change)

2) This is a NOVATION: Vader must sue Han since Vader consented to the change.
A seller contracts to sell 300 stormtrooper helmets to Vader. A fire burns down one of his warehouses that night, destroying 500 helmets. Is the seller excused from performance?
NO
Common Law: if someone or something necessary to the performance is destroyed (specific building eg) then the seller is excused
UCC Art 2: Seller is ONLY excused IF: the goods destroyed were already "IDENTIFIED TO THE CONTRACT" (ie. marked as being for that particular buyer under that contract)
Luke is contracted to provide Jedi counsel to Han. Luke is injured in a Womp Ratting accident and can't act as counsel. Is he excused from performance?
YES - The last of the Jedi is he, so his services are UNIQUE. If he had been contracted to kill a jawa, he would not be excused, since anyone can do that.
Vader Rents a room on the Death Star to Jaba who wants to watch Dantooine be destroyed. Vader then decides that Dantooine is far too remote to make an effective demonstration and decides to blow up Alderan instead. Can jaba back out?
YES - his purpose of watching Dantooine blow up was frustrated.
***A jawa contracts with Luke to buy his speeder "if it is appraised to be worth at least $15,000". It is appraised to be worth $14,999. Is the Jawa obligated to buy?
NO - STRICT compliance with express conditions is required.

Express conditions = anything after "if" "as long as" "provided that", "when", "on condition that", "unless"
Vader agrees to buy the Death Star "provided he can get a 5% mortgage". He makes no effort to get a mortgage and then refuses to close the deal. Is he bound?
YES - every express condition PROTECTS SOMEONE. In this case, Vader. Because he voluntarily gave up the protection, the condition's failure does not excuse him.
When is specific performance of a K available as a remedy?
1) In Real estate Ks
2) In Sale of goods Ks
3) In Services Ks?
Only when monetary damages are inadequate to compensate the injured party.
1) Real Property K: Specific Performance GENERALLY AVAILABLE (no money substitute for real prop)
2) Sale of Goods: Only if they are UNIQUE goods (family ring, ming vase, van gogh etc)
3) Service K: Never - but injunctive relief may be (court won't force party to perform, but they may enjoin him from working for someone else eg)
When can a Seller Reclaim delivered goods from the buyer?

From a 3rd party? (if buyer has resold)
UCC Art 2: Usually not possible EXCEPT if buyer was insolvant when it received the goods AND seller makes a demand withing 10 days after receipt.

Can't reclaim from 3rd party
***BAR EXAM CLASSIC***
A takes his watch to a watch seller to be repaired. Watch seller sell's A's watch to B while its in the shop.
What can A do?
Sue for Damages but he CAN'T get the watch back from a BFP IF the Watch seller was a MERCHANT WHO DEALS IN GOODS OF THE KIND
When can party request assurance of performance?
In a Sale of goods (art 2) if one party gives the other REASONABLE GROUNDS for INSECURITY, then the first party may request IN WRITING AN ADEQUATE ASSURANCE that the other party will perform. Must then wait a reasonable time.
What is the goal of a Expectation damages?
To put the plaintiff in as good a position as they would have been had the other party performed their duties under the K
When will a court uphold a Liquidated Damages clause?
If the damages were DIFFICULT TO ESTIMATE and are a reasonable forecast of probable damages resulting from a breach. CANNOT operate as a punishment.
Luke contracts to buy an X-Wing for $2,000 from Han. Han does not deliver. The market price for an x-wing is now $2,500 and luke buys an X-wing for $2,700 from a Jawa.

What has luke done and what damages can he get from Han?
Luke has COVERED.
Cover Damages = Cover Price - K price
Luke can get $700 from han.
The actual market price is irrelevant as long as the Buyer gets a reasonable substitute (ie. luke doesn't go and buy a Correlian Corvette)
Luke contracts to buy an X-Wing for $2,000 from Han. Han does not deliver. The market price for an x-wing is now $2,500. Luke buys a B-wing for $10,000. What damages can luke get?

What if he bought nothing at all?
Luke can get MARKET DAMAGES: Market Price - K Price
Same is true if he buys nothing.
Available when Buyer DOES NOT COVER or COVERS IN BAD FAITH


Here, Luke gets $500, the profit he would have made.
Luke contracts to buy an antique Lightsaber from Obi-Wan for $3000. Luke keeps the Lightsaber but it turns out that the Lightsaber is not antique and is only worth $1000. If it had been antique it would have been worth $6000. What damages is Luke entitled to?
Luke gets the "Benefit of the Bargain"
Value as promise - Value as delivered
Here: $5000
What are a buyer's 3 types of damages for breach of a contract?
1) Cover Damages
2) Market Damages
3) Loss in value damages
What are a Seller's 4 types of damages
1) Resale Damages (if seller resells)
2) Market Damages (if seller does not resell in good faith, or at all)
3) Lost Profit (if seller is Lost Volume Dealer)
4) Contract Price (if seller can't resell)
What are resale damages for a seller and when are they available?
Resale Damages = K price - resale price
Seller must resell IN GOOD FAITH
What are market damages for a seller and when are they available?
Market Damages = K price - Market price
If Seller does NOT resell, or resells in BAD FAITH
What are Lost Profit damages for a seller and when are they available?
Lost Profit = Profit that volume seller would have made on the breached K.

Only available if the Seller has an inventory and so could have made 2 sales instead of just the replacement sale. (car salesman)
When will a seller get the Contract price as damages?
When he can't resell the goods (ie. China with a couple's initials on it)
What are Consequential Damages and when are they available?
Consequential Damages = damages that are special to this plaintiff and were REASONABLY FORESEEABLE at the time the contract was made.

Available ONLY under common law and NOT under UCC Article 2 (sale of goods)
Luke has a 2 year employment contract as an office assistant with Vader but is fired after a year. He dicks around for the next year and then claims a years worth of salary as damages from Vader's breach. Will he get them?
NO - Those damages were AVOIDABLE
If luke could have gotten a COMPRABLE JOB in the SAME CITY, but didn't then he can't claim the lost income as damages.
If He DID get a job, but it paid him $1000 less for the year than Vader would have, he gets $1000 in damages.
What is an Intended Beneficiary in a Contract?
Somone who the contracting parties intend to benefit from the K. Only Inteded beneficiaries have legal Rights. Incidental beneficiaries do not.
in gratitude for helping him blow up the Death star, Luke hires a Bothan to clean Han's ship, the millenium falcon. What is Han's status?
Han is a Donee Beneficiary (the TPB of Luke's K with the bothan)
When can a promisor and promisee rescind or modify a K that benefits a 3rd party?
Before the TPB's rights have "Vested"
Eg: Before the TPB LEARNS of the K and RELIES on it.
Luke make a contract to hire a bothan stripper for Han. The K states "this may be modified at any time at the discretion of either contracting party. Han finds out and invites Chewy to come along.
Luke decides to hire the stripper for Admiral Akbar instead.

Can Han sue to stop the modification?
NO. Han's rights have "vested" but the language of the K controls, and it provides expressly that luke and the stripper can modify whenever they want.
Luke make a contract to hire a bothan stripper for Han. Luke pays the stripper with a check that bounces. The stripper never shows up. Can Han recover damages from the stripper for not performing?
NO. Luke couldn't recover from the stripper, so neither can Han.
Luke contracts to mow Han's lawn for $40. Luke decides to have a jawa do it without telling han. The jawa does a great job. Does han have to pay?
Yes. Delegation can be done without permission, so long as performance is still done.

Exception: Unless the K says no delegation
Exception 2: OR the person whose services are used is UNIQUE (Neil Patrick Harris as host, eg)
Luke contracts to mow Han's lawn for $40. Luke decides to have a jawa do it without telling han. The jawa fucks up Han's lawn completely. Who is liable?
LUKE - this is NOT a novation, so luke stays liable for the jawa's fuck up.
What is required for a party to assign his RIGHTS under a contract to another?
*** Language of PRESENT ASSIGNMENT ("I hearby assign" NOT "I promise to assign")
Luke contracts to protect the Ewoks for $200,000. He then promises to assign his right to get paid to Han because they're pals. 2 days later (before payment) he changes his mind and assigns his right to Leia.

What can Han do?
NOTHING. B/c no consideration was given for the assignments, last in time wins
Am I losing my mind?
AHAHAHAHAHAHAHAHAHAHAHA!!!!!!
Emperor Palpatine orders a whole leeeeeegion of his most elite troops from "Stormtroopers R Us" for $500,000. When the troops arive, it turns out that their training was not what he was expecting and he gets into a dispute with SRU claiming that they are only worth $300,000 in their poorly trained state. They cannot come to an agreement on the holophone, so palpatine keeps the troops and sends SRU a check for $300,000 (his good faith estimate of their worth) with "payment in full" written on it. SRU cashes the check.

What are SRU's rights against the Emperor?
NONE! This was a proposed accord and a satisfaction. An accord occurs where one side tenders an offer for an alternate means of discharging their obligations under the contract and the other side accepts. Here, "payment in full" on a check constitutes a proffered Accord and the cashing of the check is satisfaction. Both parties are now excused.
Vader orders 100 astromech droids for his Star Destroyer. The seller delivers them, but Vader discovers that 20 of them are defective after inspecting them.

How does Vader make a valid rejection, and if he does, what are his rights?
A buyer who receives non-conforming goods may accept all, reject all, or or accept any commercial units and reject the rest. However the rejecting party must, within a reasonable time, and before acceptance, NOTIFY the seller of the rejection and state the defect.

Thus, Vader must notify the seller that 20% of the droids are defective, at which point he may keep the other 80%, or reject them all, or keep them all.
Is price required in a sale of land contract?
YES! Open price terms are only okay in UCC art 2 sale of goods Ks. In common law Ks (like sale of land), price is an ESSENTIAL TERM.
When are the three situations where a Third Party Beneficiary's (TPB) rights will "vest"?
When the TPB either
1) manifests assent to the promise in a manner invited or requested by the partie OR
2) brings suit to enforce the promise OR
3) materially changes position in justified reliance on the promise
When is a contract divisible?
If a 3 part contract is divisible, and one party stops performing after completing only the first part, what is that party entitled to?
A contract is divisible if
1) the performance of each party is divided into two or more parts under the K AND
2) the number of parts due from each party is the same AND
3) the performance of each part by one party is the agreed upon EQUIVALENT of the corresponding part from the other party (ie. they are getting paid for what they actually did in that part, not just an arbitrary 1/3 of the K price)

If a K is divisible, then a breaching party can still get paid the K price for any parts that it did complete. If it is NOT divisible, that party will only be able to get restitution for the materials used.