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87 Cards in this Set
- Front
- Back
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1. Is the contract dealing with goods?
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a. If yes,
UCC governs and UCC 1-103 allows for common law to apply b. If no, Restatement |
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1. Is the contract dealing with a statute of frauds issue?
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a. If its goods of $500 or more, then the UCC § 2-201 governs
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i. Elemental list of 2-201
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1. Goods
2. Price of $500 or more 3. Writing sufficient to show the contract has been made 4. Signature of adverse party |
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i. Is there an issue about a missing term?
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1. If yes,
a. The contract is enforceable but only up to quantity that was included in contract b. If no quantity term, basically enforceable to 0 |
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i. Exceptions to not needing a writing
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1. Merchants exception
a. Both merchants b. Must send writing confirming oral contract within reasonable time c. Recipient has knowledge of the contents d. Recipient doesn't reject in writing within 10 days 2. Custom made goods a. If the goods are made custom for the buyer, then oral contract can be binding if the seller has made substantial start 3. Defendant admits in court to contract 4. Part-performance |
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Modifications under SOF
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1. If the modification makes the contract under the SOF, then it needs to go under 2-201 rules
2. If original contract was SOF, then modifications need to be |
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1. Defenses to Formation
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Minors
Mental incompetence Intoxication |
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Minors
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1. If yes,
a. Contract is voidable by the option of the minor b. Minor can void the contract anytime during their minority and within reasonable time after the age of 18 c. They can also ratify once they are 18 |
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Minors Restitution
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a. Pays nothing and gives back what they got, no matter what shape its in and gets their money back
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Minors Exceptions
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a. Necessities
i. Food ii. Shelter iii. Clothing iv. Medical Care b. Minors can still void contract for these, but they may have to pay back what they got under a quasi-contract obligation |
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i. Mental Incompetence
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1. Cannot enter into a contract if he can't understand the nature or consequences of the contract
2. Other party has reason to know of the condition 3. Parties under guardianship have no power to contract |
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i. Intoxicated
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a. The other party is unable to understand in a reasonable manner
b. The other party is unable to act in a reasonable manner in relation to the transactions |
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1. Is there an issue of misunderstanding?
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a. There is no mutual assent if the parties are contracting about two different things and are not aware - no contract
b. If one party knows that the other is contracting for peerless to leave in October instead of November, and knows the other is confused, the contract will be enforceable to the confused parties understanding |
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1. Is there an issue of mistake?
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a. A mistake of both parties at the time of the contract was made to a basic assumption on which the contract was made has a material effect on the agreed exchange or performances - voidable by the adversely affected party
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a. Is there a Unilateral mistake?
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i. Same rule as above but makes it voidable by both parties because they are both adversely affected
ii. Effect of the mistake makes the contract unconscionable, or iii. The other party had reason to know of the mistake or his fault created the mistake |
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1. Is there an issue of Unconscionability?
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a. When the entire contract or portion of contract imposes an unfair burden on one party to the point that it is unjust
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Court can do what under Unconscionability
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a. Refuse entire contract
b. Enforce the conscionable parts of the contract c. Limit the application of the unconscionable part |
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1. Address if its procedural and substantive unconscionability
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a. Procedural
i. Focuses of the formation of the contract b. Substantive i. Actual words in the contract c. Some courts require both |
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1. Is there an issue of Duress?
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i. Threat of death
ii. Imprisonment iii. Or serious bodily injury will void that |
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a. Economic Duress?
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i. Party involuntarily accepted terms of another
ii. Circumstances permitted no other alternative iii. Circumstances were the result of coercive acts |
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Actions under duress
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a. If there was physical compulsion - no contract
b. Any other duress - voidable by victim |
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1. Is there an issue of Undue Influence?
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a. No threat
b. Relenting effort to persuade, usually by relationship - attorney, doctor, parent |
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Undue Influence Elements
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i. Unfair persuasion
ii. Party is under domination of the persuasive person; or iii. By virtue of the relationship they trust them to not persuade them in an unfair manner iv. Voidable by victim v. If third party influenced in good faith, then contract is not voidable |
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1. Is there a Parol evidence issue?
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a. Outside evidence trying to be brought in to clarify or change a disputed term of the contract
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Parol evidence options
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i. If the contract is integrated fully - evidence is barred
ii. If the contract is partially integrated - evidence can be used to supplement the contract |
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1. Is there an interpretation issue?
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a. Plain meaning rule - what do the words say
b. Contextual - what are the circumstances surrounding it |
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Contextual Uses
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i. Usage of trade
1. Any practice method that is so regular in the industry that is expected ii. Course of dealing 1. Previous conduct in dealings iii. Course of performance 1. Conduct of the parties in this contract |
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1. Is there a warranty issue?
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Express
Implied |
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Express
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i. A
1. Affirmation of fact or promise 2. Related to the goods 3. Become part of the basis of the bargain ii. B 1. Description of the goods 2. Basis of bargain iii. C 1. Sample or model 2. Basis of bargain |
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a. Implied Merchantability
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i. Merchants
ii. Are they fit for the ordinary purposes for which the goods are used |
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a. Implied Warranty for Fitness for particular purpose
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i. Seller at the time of contracting has reason to know any particular purpose for which the goods are required
ii. Buyer is relying on the sellers skill or judgment iii. No exclusions |
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1. Defenses to Warranties
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Disclaimers
Exclusionary Clauses |
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Disclaimers - Implied March
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i. To exclude implied merchantability
1. Language must include merchantability 2. Needs to be written so that a reasonable person ought to have noticed |
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Disclaimers General
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i. If there is a warranty and disclaimer, warranty stays
i. "as-is", "with all faults" or other language ii. When the buyer before entering into the contract has examined the goods or the sample or model as fully as he desired or has refused to examine the goods there is no implied warranty with regard to defects which an examination ought in the circumstances to have revealed to him iii. Implied warranty can also be excluded or modified by course of dealing or course of performance or usage of trade |
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a. Exclusionary Clauses
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i. Restricts the remedies available
ii. Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable iii. Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this act iv. Can still be liable for incidental damages resulting from sellers breach including normal expenses normally incurred from that |
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Exclusions - 2-719
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2-719 can limit the warranty to just remedy as repair and replace
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Exclusions - Repair and Replace
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If the repair and replace remedy fails it essential purpose (doesn't fix it) then the buyer can seek damages
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Exclusions - Consequential Damages
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Consequential damages may be limited or excluded unless they are unconscionable
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Unconscionable Consequential damages
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Consumer goods - always unconscionable
Non-consumer - prove unconscionability through showing procedural and substantive |
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Consumer goods
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products that the person buys to consume and not to use for business
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Perfect Tender Rule - Single Lot Goods
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a. If the seller fails to tender delivery in the manner promised or the quantity or quality of goods does not conform to the contract, buyer generally has the right to reject the goods
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Perfect Tender Rule - Inspect
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a. The buyer has the right to inspect the goods within a reasonable time or method
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Perfect Tender - Rejection
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i. Must reject in a reasonable time
ii. Buyer must seasonably notify the seller a. Buyer must hold goods with reasonable care if they are rejected within a reasonable amount of time |
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Perfect Tender Rejection (Merchant)
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i. Must follow the instructions of the seller to return the goods
ii. If no instructions are given they must try to sell them |
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2-601 Buyers Rights on Improper Delivery
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1. reject the whole; or
2. accept the whole; or 3. accept any commercial unit or units and reject the rest |
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Perfect Tender - Reimbursement 2-603
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i. When the buyer sells goods under subsection (1), they are entitled to reimbursement from the seller or out of the proceeds for reasonable expenses of caring for and selling them, and if the expenses include no selling commission then to such commission as is usual in the trade or if there is none to a reasonable sum not exceeding 10% on gross proceeds
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Perfect Tender - Cure 2-508
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i. When goods are rejected because they're non-conforming and the time for performance has not expired, the seller may notify the buyer of his intention to cure, or make the goods conforming.
ii. Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable the seller may if they seasonably notify the buyer have a further reasonable time to substitute a conforming tender. |
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Perfect Tender - Buyer Acceptance 2-606
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i. Happens when after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that they will take or retain them anyway.
ii. Fails to make an effective rejection iii. Does any act inconsistent with the seller's ownership; but if such act is wrongful as against the seller it is an acceptance only if ratified by him. iv. Buyer must pay the contract price if there is acceptance |
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Perfect Tender - Buyer Revocation 2-608
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i. Buyer may revoke if the non-conformity substantially impairs the value to him
ii. Revocation must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. It is not effective until the buyer notifies the seller of it. iii. The buyer who revokes has the same rights and duties with regard to the goods involved as if they had rejected them. |
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Perfect Tender - a. §2-612 Installment Contract Breach
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i. Even though each delivery is treated as a separate contract
ii. Buyer may reject any installment which is non-conforming if the non-conformity substantially impairs the value of that installment and cannot be cured or if the non-conformity is a defect in the required documents 1. The seller gives adequate assurance of its cure the buyer must accept that installment iii. Where the non-conformity to one or more installments substantially impairs the value of the whole contract there is a breach in whole, the aggrieved party reinstates the contract if he accepts a non-conforming installment without seasonably notifying of cancellation or if he brings an action with respect only to past installments or demands performance as to future installments |
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Perfect Tender - a. § 2-711 Buyer's Remedies in General
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i. Where seller fails to make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract, the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price as has been paid
1. "cover" and have damages under the next section; or 2. Recover damages for non-delivery as provided in 2-713 |
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Perfect Tender - Buyer's Damages
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i. The measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price plus incidental and consequential damages , but less expenses saved
ii. Market price to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival |
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Perfect Tender - § 2-716 Buyer's right to specific performance
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i. Specific performance may be decreed where the goods are unique or in other proper circumstances
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Perfect Tender Analysis 1
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i. § 2-313 - express warranty
ii. Seller tenders goods iii. § 2-513 - buyer has the right to inspect to make sure they conform to warranty iv. If not conforming 1. § 2-601 and § 2-602 - buyer notices upon inspection that the goods do not conform and can reject the goods - rightfully 2. § 2-508 - seller has limited right to cure defects 3. § 2-711 - if the defects are uncured, buyer can pursue his remedies including cancellation, cover or damages v. Buyer notices goods to late to reject but not too late to revoke 1. § 2-608 - justifiably revoke the acceptance - defect must be substantial 2. § 2-711 - if the defects are uncured, buyer can pursue his remedies including cancellation, cover or damages |
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Damages - how do you succeed in breach?
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i. Prove the breach
ii. Prove your damages 1. Reasonable certainty on amount of losee 2. Damages were foreseeable iii. The plaintiffs duty to mitigate 1. Took all reasonable efforts to avoid the consequences of the breach |
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Damages - Possible Remedies
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i. Equitable remedies
ii. Compensatory damages iii. Rescission iv. Restitution v. Reliance |
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Damages - Reliance Damages
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1. Made Whole
2. No loss profits |
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Damages - Expectation Damages
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1. Definition
a. Put plaintiff In position she would be in if contract were completed 2. The benefit you could now realize 3. Loss profits |
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Damages - Measure § 347
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1. Loss of value
2. Any other loss, consequential or incidental 3. Less cost avoided |
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Damages - Comparison
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1. Where should the non breaching party be
2. Where are they now 3. Reward the difference |
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Damages - Limitations
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1. Forseeability
2. Certainty |
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Damages - Foreseeability
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1. Damages must be reasonably foreseeable at the time of contracting
2. Foreseeable if communicated at the time of contracting 3. Proximate result of breach 4. Basically if they reasonably could have known their breach would cause damage |
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Damages - Certainty
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i. Damages can't be speculative; we need reasonable certainty
ii. What would you have received, what you might have received |
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Damages - Avoidably
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1. The non-breaching party has a duty to behave reasonably and minimize damages
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Damages - Reliance Interest
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i. His "reliance interest," which is his interest in being reimbursed for loss caused by reliance on the contract
1. Expenditures made in preparation for performance 2. Less any loss that party in breach can prove with reasonable certainty the injured party would have suffered anyway ii. Alternative of expectation damages |
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Damages - Restitution Interest
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i. The reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in claimant's position
ii. The extent to which the other party's property has been increased in value or his other interests advanced |
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Damages - Liquidated
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a. When the parties agree to an amount of damages ahead of time
b. If they are enforceable, they just show the contract is enforceable i. Are actual damages hard to prove or ascertain? ii. Is the amount picked not so big so it's a penalty? iii. Mus be yes to both of these c. If it fails, i. Liquidated damages lift out ii. Prove breach, contract and damages d. Don't have to actually have damages |
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Damages - Equitable remedies
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i. Injunction
1. Court order to do something/not to do something 2. Standard a. Irreparable harm b. Balancing of equities c. Public interest considerations ii. Specific Performance § 345(b) 1. Puts injured party in exactly the position it expected, by forcing defendant to perform 2. Won't be granted unless the terms of the contract are sufficiently certain |
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Condition - § 224
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i. A condition is an event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due
ii. "as long as" |
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Condition - Types
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i. Condition precedent
ii. Condition subsequent iii. Concurrent condition |
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Condition - Express
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i. The parties articulate the conditional nature of their obligations
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Condition - Implied/Constructive
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i. Implied by a court where the parties have failed to adequately document their feal and relationship and performance obligations
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Condition - Effects of non-occurence
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i. Used when duty was conditional and no longer want to perform because the condition failed
ii. So the duty is discharged if it is based on condition |
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Condition - Waiving
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unilateral - only the party not conditioned can waive
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Condition - Covenants
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a. Independent covenants
i. Performance of each covenant is independent of the other party's performance ii. Even if seller hasn't performed, buyer still needs to perform and can then sue seller for his breach b. Mutual dependent covenants i. The performance of one depends on the prior performance of the other c. Mutual/simultaneous conditions i. Conditions must be performed at the same time and the failure of one party to perform is a ground for alleging breach |
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Condition - Order of Performances
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i. When all performances can be rendered simultaneously, they are due simultaneously unless the language indicate differently
ii. When only one party has performance in a period of time, his performance is due at an earlier time that that of the other party |
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Condition - Types of Breaches
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1. Material - suspends non-breaching party's duty to perform, can be cured
2. Total - material breach ripens into this, no cure 3. Immaterial/Substantial performance - breach not to the heart of the contract, will give rise to damages, no excuse for non-performance |
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Anticipatory Repudiation
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i. When a party renounces its contractual duty before the tome fixed for performance has arrived
ii. Requires a definite and final communication of intent to not perform iii. Threatened breach must qualify as a material breach if it were to happen |
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Anticipatory Repudiation - Assurances
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i. When a party renounces its contractual duty before the tome fixed for performance has arrived
ii. Requires a definite and final communication of intent to not perform iii. Threatened breach must qualify as a material breach if it were to happen |
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Non-Party Rights
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1. Assignments
2. Delegations |
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Non-Party Rights - Assignments
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i. One party voluntarily conveys the rights in a contract to another who is not a party to the undertaking.
ii. The party making the assignment is called the assignor, the one whom the rights are assigned is the assignee. The non-assigning party is called the obligor and they are the party who is required to render performance. iii. The assignee can sue directly on the contract in the name of the assignor. |
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Forms of Assignment
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1. By Law - death, bankruptcy
2. By acts of the parties - written or oral |
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Assignment - Notice
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1. Notice is not required but when an assignor makes an assignment of a right under a contract, the assignee should notify the obligor that the assignment has been made and performance must be rendered to the assignee.
2. If the assignee fails to notify the obligor of the assignment, the obligor may continue to render performance to the assignor, who no longer has a right to it. The assignee cannot sue the obligor to recover payments because the obligor has performed according to the original contract. The assignee's only course of action is to sue the assignor for damages. |
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Delegation
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i. Describes a transfer of the duties or contractual obligation alone, without a transfer of rights. The party who transfers their duty is the delegator; the party whom the duty is transferred is the delegate. The party to whom the obligation is owed is the obligee.
ii. Contracts for the provision of personal services are generally not delegable. If it would change the obligation under the contract if it were performed by someone else, the duties cannot be delegated. |
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Third Party Beneficiaries
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i. At common law, only the parties to a contract could sue upon or seek to enforce the contract. Courts held that strangers to a contract had no rights under a contract. However, courts began to make exceptions to that rule when it seemed evident that the contracting parties intended to benefit a third person, considered them third party beneficiaries.
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Third Party Beneficiary - Intended
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i. Intended: when contracts are made between parties for the express purpose of benefiting a third party outside the contract
1. They can enforce the contract against the party who promised to render performance. They are subject to any defense created by the original parties. 2. Two types: creditor and donee |
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Third Party Beneficiary - Incidental
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i. Incidental: When the parties to a contract unintentionally benefit a third party. This person is only remotely or incidentally benefited by a contract and cannot enforce the agreement.
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