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108 Cards in this Set
- Front
- Back
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Application of UCC or common law
Mixed deal rule + exception |
If goods is the more important part of the dispute, then UCC applies to everything; same goes for common law.
EXCEPTION: Divided payment; apply UCC to goods, common law to the rest. |
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Definition of offer (3)
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1 Expression of a promise to enter a K
2 Certainty and definiteness of terms AND 3 Communication to an identified offeree |
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Offer is NOT required to contain all material terms EXCEPT
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UCC: quantity term
Common law: price term |
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Advertisements generally NOT an offer EXCEPT (2)
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1 If in the nature of a reward
OR 2 If it is specific as to quantity and expressly indicates who can accept |
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When is a sales brochure an offer?
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When consumer requests it to make a purchase.
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Four ways to terminate an offer
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1 Lapse of time
2 Death of a party prior to acceptance 3 Revocation of an offer by offeror 4 Rejection by offeree |
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How can an offeror revoke an offer? 2 ways
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1 Unambiguous statement by offeror to offeree of unwillingness or inability to contract
2 Same as 1, though not made directly to offeree, BUT offeree is aware --Merely making multiple offers is NOT revocation --CanNOT revoke after acceptance |
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When is revocation effective?
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Upon receipt
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Which offers are NOT revocable? 4
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1 Common law: option supported by consideration
2 UCC: firm offer 3 Detrimental reliance that is reasonably foreseeable 4 Unilateral K: start of performance, but NOT mere preparation |
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Firm offer rule
3 elements + duration |
Offer canNOT be revoked IF:
1 Goods are involved 2 Signed, written promise to keep offer open (NO oral promises) AND 3 Party offering option is a merchant Duration: Up to 3 months |
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How can offerees reject an offer, other than express rejection? 4 ways
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1 Counteroffer (but NOT mere inquiry and bargaining; e.g., "Will you accept $10 instead of $9?")
2 Conditional acceptance (look for words like if, only if, provided, so long as, etc.) 3 Common law: mirror image rule 4 UCC: additional terms |
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UCC additional terms scenarios + exceptions
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1 IF only one party is a merchant, THEN additional term is merely a proposal that can be separately rejected/accepted
2 IF BOTH parties are merchants, THEN additional term is part of K Exceptions to both merchants rule --Additional term materially changes offer --Additional term is objected to |
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How can offerees accept an offer? 6 ways
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1 Improper verbal response, then later conduct indicating a K (usually conditional acceptance)
2 Full performance ONLY FOR unilateral Ks and SO LONG AS offeree notifies offeror of performance 3 Start of performance ONLY FOR bilateral Ks 4 Offeree promises to perform 5 Mail box rule 6 Seller sends nonconforming goods |
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Improper verbal response, then later conduct indicating a K; common law vs UCC
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Common law: K is formed, and the conduct is treated as acceptance of counteroffer so includes condition
UCC: K is formed, but based ONLY on proper conduct, NOT improper verbal response |
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Mail box rule for UCC
Four rules |
1 All communications OTHER THAN acceptance are effective only when received
2 Acceptance is generally effective when mailed 3 If rejection is mailed before acceptance is mailed, then neither is effective until received 4 Does NOT apply to meet an option deadline |
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Nonconforming goods
General rule + exception |
Delivery of nonconforming goods is simultaneously an acceptance AND a breach
EXCEPTION: Accommodation constitutes a counteroffer and NO breach |
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Assignability of offers and options?
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CanNOT assign offer
CAN assign option |
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Reasons for not enforcing an agreement (11)
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1 Lack of consideration
2 Lack of capacity of person who made promise 3 Statute of Frauds 4 Existing laws prohibiting performance 4 Public policy 5 Misrepresentations 7 Nondisclosure 8 Duress 9 Unconscionability 10 Ambiguity in words of agreement 11 Mistakes at time of agreement to material facts affecting agreement |
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3 step approach to consideration
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1 Identify promise breaker
2 Ask whether that person asked for something in return for her promise, i.e., did that person bargain for something? 3 Look at person trying to enforce the promise and ask what requested legal detriment that person sustained |
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3 types of consideration
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1 Performance
2 Forbearance 3 Promise (to perform or to forbear) |
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Past consideration general rule + exception
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Past consideration is NOT consideration
EXCEPT where an act or thing was expressly requested AND there was expectation of payment |
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Preexisting contractual duty and consideration
Common law vs UCC |
Common law general rule is NO considerations (hence, new consideration requirement for K modifications)
3 EXCEPTIONS 1 Addition to or change in performance 2 Unforeseen difficulty so severe as to excuse performance 3 Third party promise to pay *** UCC: NO preexisting duty rule, NO new consideration for modifications; good faith is the test |
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Part payment as consideration for release from debt
2 scenarios |
1 IF debt is due and undisputed, part payment is NOT consideration and remaining debt stands
2 IF debt is not yet due and undisputed, part payment IS consideration, and remaining debt is gone |
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Consideration substitutes (2)
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1 Promissory estoppel or detrimental reliance
2 Written promise to satisfy obligation for which there is a technical legal defense (e.g. statute of limitations) |
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Who lacks capacity to contract? (3)
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1 Infants, under 18
2 Mental incompetents 3 Intoxicated persons IF other party has reason to know |
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Consequences of incapacity (3)
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1 Right to disaffirm by person w/o capacity
2 Implied affirmation by retaining benefits after gaining capacity (ratification) 3 Quasi-K liability of the incapable party for his own necessaries |
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Ks within scope of Statute of Frauds (SOF) (6)
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M Marriage
Y Year or longer to complete L Land E Executor of will to pay estate debt G Goods $500+ S Surety of another |
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Suretyship and SOF definition and exception
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Promise to pay if someone else does not EXCEPT if the main purpose of the obligation allegedly guaranteed was to benefit the guarantor
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What will satisfy SOF? (3)
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1 Performance (common law vs UCC)
2 Writing 3 Judicial admission |
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SOF satisfaction by performance
Common law vs UCC |
Common law (service Ks)
Full performance, NOT part performance, by EITHER party satisfies SOF *** UCC; seller vs buyer Sellers and ordinary goods Seller's part performance of ordinary goods satisfies SOF to the extent of part performance (delivered goods) Sellers and specially manufactured goods Seller satisfies the SOF with a SUBSTANTIAL BEGINNING to making the goods Buyers; multiple vs single item Buyer paying for some units out of a total qty of units has NOT satisfied SOF Buyer paying partially for a single unit has SATISFIED SOF |
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SOF satisfaction and writing
Common law vs UCC |
Common law; 2 requirements
1 Contains all material terms 2 Signature by party asserting the SOF defense UCC; 2 requirements + exception 1 Material terms include K for sale of goods AND quantity term 2 MUST be signed by person asserting SOF defense EXCEPT where both parties are merchants and person receiving signed writing w/quantity term fails to respond within ten days of receipt |
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SOF and modifications
Implied vs express (common law vs UCC) |
Implied requirement of writing whenever the deal with the alleged change would be within SOF
Express, where agreement requires all modifications to be in writing; common law vs UCC Common law: provisions requiring modification in writing are NOT EFFECTIVE UCC: provisions requiring written modifications are effective UNLESS waived |
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Non-enforcement of agreement
Illegal subject matter vs. illegal purpose |
IF subject matter is legal but purpose is illegal, agreement is enforceable
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Non-enforcement of agreement
Misrepresentation vs. nondisclosure |
Misrepresentation is false affirmative assertion of fact that induces the K, NO wrongdoing necessary
Nondisclosure of fact that induces K MUST be wrongful |
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Non-enforcement of agreement
Ambiguity in words (3) |
NO K IF:
1 Parties use a MATERIAL term that is open to at least two reasonable interpretations 2 Each party attaches different meaning to the term AND 3 Neither party knows or has reason to know the term is open to at least two reasonable interpretations |
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Non-enforcement of agreement
Mutual mistake of fact (4) |
NO K IF:
1 Both parties mistaken 2 Basic assumption of fact 3 Materially affects the agreed exchange AND 4 Not a risk that the party trying to get out of the K bears |
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Unilateral mistake of fact
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ONLY applies if nonmistaken party had reason to know of the mistake
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Parol evid
Vocab (6) |
1 Integration
2 Partial integration 3 Complete integration 4 Merger clause 5 Parol evid 6 Reformation |
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Parol evid
Trigger elements (2) |
1 Written K that court finds is the final agreement
AND 2 Oral stmt made at time of K OR earlier oral or written stmts |
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Parol evid
Four factual scenarios |
1 Contradicting written deal
2 Getting out of the written deal 3 Explaining term in written deal 4 Adding term to written deal |
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Parol evid
Contradicting the written deal; general rule + exception |
Whether writing is complete or partial integration, NO parol evid to contradict terms of written K EXCEPT where it's to prove whether there is mistake in integration
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Parol evid
Getting out of written deal; general rule + exception |
Parol evid okay ONLY TO determine whether there is a defense to enforcement such as misrepresentation or duress
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Parol evid
Explaining term in written deal; general rule |
Parol evid okay to resolve ambiguities
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Parol evid
Adding to written deal; general rule + 2 exceptions |
NO parol evid of additional terms UNLESS
EITHER written agreement was only partial integration OR the additional terms would ordinarily be in a separate agreement |
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Shipment K elements (3)
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Seller completes delivery obligation when it:
1 Gets the goods to a common carrier 2 Makes reasonable arrangements for delivery AND 3 Notifies buyer |
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Risk of loss trigger elements (3)
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Arises where:
1 After K has been formed but before buyers receives goods 2 Goods are damaged OR destroyed AND 3 Neither buyer or seller is to blame |
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Risk of loss rules (4)
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Try 1 first; if 1 doesn't apply, try 2, and so on:
1 Agreement of parties controls 2 Breach makes breaching party liable for any uninsured loss even if breach is not related to problem 3 Delivery by common carrier, where risk shifts from seller to buyer at time seller completes delivery obligations 4 If none of the above, is seller a merchant? a IF YES, risk passes when buyer receives b IF NO, risk passes when seller tenders goods |
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Warranties of quality
Types (3) |
1 Express
2 Implied warranty of merchantability 3 Implied warranty of fitness for a particular purpose |
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Warranties of quality
Implied warranty of merchantability: trigger and rule |
Trigger: Seller is merchant that often deals with goods at issue
Rule: Warranty that goods are fit for ordinary purposes |
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Warranties of quality
Implied warranty of fitness for a particular purpose: trigger and rule |
Trigger: Buyer has a particular purpose AND relies on seller to select suitable goods for that purpose
Rule: Warranty that goods are fit for that particular purpose |
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Warranties of quality
Disclaimers |
Express warranties: NO disclaimer
Implied warranty of mechantability AND fitness EITHER conspicuous language of disclaimer OR "as is" or "with all faults" language |
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Warranties of quality
Limitations on remedies |
Limiting remedy okay, subject to unconscionability test
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Performance
Goods; perfect tender definition |
Perfect tender ONLY applies to goods and imperfect tender allows buyer the option of rejection
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Performance
Goods; what to do with nonconforming goods? (2) |
1 Reject some or all, notify seller, and sue for damages
OR 2 Retain and sue |
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Performance
Goods; what can seller do after sending nonconforming goods? |
Cure
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Performance
Goods; installment Ks elements (2) |
Requires or authorizes:
1 Delivery of goods in separate lots 2 To be separately accepted |
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Performance
Goods; buyer's option for rejection in installment K |
Buyer can reject an installment ONLY WHERE there is substantial impairment in that installment that canNOT be cured
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Performance
Goods; acceptance rules (3) |
1 CanNOT reject after acceptance
2 Payment w/o opportunity to inspect is NOT acceptance 3 Acceptance can be express or implied |
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Performance
Goods; revocation of acceptance by buyer elements (3) |
1 Nonconformity substantially impairs the value of the goods
2 Excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction AND 3 Revocation within reasonable time after discovery of nonconformity |
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Remedies
What can and cannot you get specific performance for? |
Yes for real estate and unique goods.
No for personal services. |
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Remedies
Reclamation definition; elements (3) |
Right of an unpaid seller to get its goods back.
Elements are that: 1 Buyer must have been insolvent at time it received goods 2 Seller demands return of goods within 10 days of receipt AND 3 Buyer still has goods at time of demand |
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Remedies
Rights of buyer in entrustment; elements |
IF
1 Owner leaves good with person who sells goods of that kind AND 2 Entrusted person wrongfully sells goods to bona fide third party THEN: Bona fide purchaser cuts off rights of original owner/entruster. |
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Remedies
Money damages vocab (7) |
-Expectation
-Reliance -Restitution -Incidental -Consequential -Avoidable -Liquidated |
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Remedies
Expectation |
Put P in same position as if K has been performed
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Remedies
Reliance |
Put P in same position as if K had never happened
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Remedies
Restitution |
Put P by putting D in same position as if K had never happened (give P whatever D got)
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Remedies
UCC damages; four scenarios |
1 Buyer breaches, buyer has goods
2 Buyer breaches, seller has goods 3 Seller breaches, seller has goods OR 4 Seller breaches, buyer has goods |
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Remedies
UCC damages formula: Seller breaches, buyer keeps goods |
Fair market value IF IT WERE perfect MINUS fair market value as delivered
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Remedies
UCC damages formula: Seller breaches, seller keeps goods |
Market price at time of DISCOVERY of breach MINUS K price
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Remedies
UCC damages formula: Buyer breaches, buyer keeps goods |
K price
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Remedies
UCC damages formula: Buyer breaches, seller keeps goods (2) |
K price MINUS Market price at time/place of delivery
OR K price MINUS resale price |
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Remedies
UCC damages formula: Lost profits: trigger + formula |
Trigger: Seller has infinite, off the rack goods
Formula: Lost profit |
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Remedies
Incidental damages; definition |
Costs incurred in finding replacement performance
Always recoverable |
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Remedies
Consequential damages; elements (2) |
1 Damages arise from P's special circumstances
AND 2 D has reason to know of these special circumstances at time of K |
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Remedies
Avoidable damages; definition |
P must subtract damages that were avoidable WITHOUT undue burden to P
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Remedies
Liquidated damages; elements (2) |
1 Damages were difficult to forecast at time of K
AND 2 Liquidated damages provision is a reasonable forecast |
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Excuse for nonperformance
Material breach rule (3) + exception |
1 Material breach is a factual question
2 ONLY a material breach by one excuses performance by the other (otw, only get damages) 3 IF there is substantial performance, THEN there is NO material breach EXCEPTION Divisible breach, where in a divisible K, there can be a K recovery for substantial performance of one part, while there is a material breach in another |
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Excuse for nonperformance
Is there material breach for UCC Ks? |
NO; perfect tender rule instead
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Excuse for nonperformance
Excuse b/c of non-occurrence of condition Definition |
Mutually agreed upon promise modifier
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Excuse for nonperformance
Excuse b/c of non-occurrence of condition Standard for determination of whether condition occurred? |
Strict compliance with condition
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Excuse for nonperformance
Excuse b/c of non-occurrence of condition How can condition be excused? (3) |
1 Waiver/estoppel
2 Prevention 3 Avoidance of forfeiture |
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Excuse for nonperformance
Excuse b/c of non-occurrence of condition Waiver vs estopel to excuse a condition |
Waiver: Based on stmt by person protected by condition AFTER conditioning event was to occur that does NOT REQUIRE reliance
Estoppel: Based on stmt by person protected by condition BEFORE conditioning event was to occur AND REQUIRES reliance |
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Excuse for nonperformance
Excuse b/c of non-occurrence of condition Excuse by anticipatory repudiation; elements (3); timing of lawsuit; possibility for retraction; insecurity |
1 UNambiguous stmt or conduct
2 Indicating that repudiating party will not perform 3 Made prior to time performance was due Can sue immediately Retraction possible SO LONG AS NO material change in position by other party IF stmt is ambiguous, NO immediate suit, BUT can ask for adequate assurances |
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Excuse for nonperformance
Excuse by reason of later K Types (4) |
1 Rescission
2 Accord and satisfaction 3 Modification 4 Novation |
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Excuse for nonperformance
Excuse by reason of later K Rescission elements (3) |
1 Must be MUTUAL (unilateral rescission only available where there is an excuse for nonperformance like duress)
2 K MUST be bilateral with both parties having executory duties AND 3 There canNOT yet be full performance |
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Excuse for nonperformance
Excuse by reason of later K Accord and satisfaction; definitions of accord, satisfaction |
Accord: Agreement by parties to an already existing K to accept a different performance (look for "if, then" language)
Satisfaction: Performance of accord |
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Excuse for nonperformance
Excuse by reason of later K Accord and satisfaction; checks |
Tender AND acceptance of check with "payment in full" is usually satisfaction of accord IF good faith dispute as to price/amount
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Excuse for nonperformance
Excuse by reason of later K Novation; definition; distinction with delegation |
Agreement to substitute party by BOTH parties
Delegation only requires that ONE party knows of substitution AND DOES NOT NECESSARILY excuse the substituting party from liability |
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Excuse for nonperformance
Excuse by reason of later, unforeseen event 3 types |
1 Impossibility, impracticability, or frustration of purpose
2 Death of party AFTER K 3 Subsequent law/regulation |
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Third parties
Vocab (5) |
1 Third party beneficairy
2 Promisor (makes promise that benefits third party) 3 Promisee (obtains promise that benefits third party) 4 Intended vs incidental 5 Creditor vs donee (was beneficiary a creditor of the promisee?) |
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Third parties
3rd party beneficiaries When does an intended third party beneficiary's rights vest? (3) |
When intended third party beneficiary...
1 Manifests assent in manner requested by parties 2 Brings suit to enforce promise OR 3 Materially changes position in justifiable reliance on promise |
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Third parties
3rd party beneficiaries Who can sue whom? (3 + exception) |
1 Beneficiary CAN recover from promisor
2 Promisee CAN recover from promisor 3 Beneficiary usually canNOT recover from promisee EXCEPT that creditor beneficiary CAN recover from promisee ONLY FOR pre-existing debt |
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Third parties
3rd party beneficiaries Defenses |
Promisor can assert any defense against beneficiary that he could assert against promisee
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Third parties
Assignments Vocab (3) |
1 Assignor
2 Assignee 3 Obligor |
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Third parties
Assignments Prohibition vs invalidation of assignment rts |
Prohibition
1 Assignor still liable for breach 2 Obligor can still sue Invalidation 1 MUST have consequential language, like "K will be void" For BOTH: Assignee who is NOT aware of prohibition/invalidation can still enforce assignment |
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Third parties
Assignments Who can sue whom? (2) |
1 Assignee CAN recover from obligor
2 Assignee CAN recover from assignor ONLY for wrongfully exercising the power to revoke an irrevocable assignment |
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Third parties
Assignments Payment by obligor to assignor, despite assignment, is effective when? |
When obligor does NOT know of assignment
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Third parties
Delegation Liability after nonperformance by delegatee (2) |
1 Delegator ALWAYS still liable
2 Delegatee liable ONLY IF delegation was for considerationn |
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Output K; definition
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Exists where seller commits to sell all the goods it produces to the buyer
Valid EVEN IF no specific quantity is mentioned or accepted by offeree |
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Valid K requires (3)
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1 Offer
2 Acceptance 3 Consideration |
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What is it called when one party insists that time of completion is important?
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Time is of the essence clause, which makes the breach major automatically
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Impossibility, impracticability and frustration, distinguished
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When is a breach minor?
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When obligee gains the substantial benefit of her bargain despite obligor's defective performance
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Certainty rule for damages
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Any losses and damages asserted must be certain, and NOT speculative (introduce evid to prove certainty)
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What is the confirmatory memo rule?
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In UCC Ks btw merchants, if one party, within reasonable time after oral agreement is reached, sends a written confirmation to the other party that binds the sender, it will bind the recipient as well IF he had reason to know of confirmation's contents UNLESS he objects within 10 days
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How does the SOF apply to UCC Ks?
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Ks for sale of goods for $500 ore more are NOT enforceable UNLESS there is some writing that is signed by party to be charged
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When is a writing not required for a UCC K? (3)
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Specially made goods
Party admission to court Performance of K |
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For UCC, what three scenarios can constitute acceptance of goods?
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1 After reasonable opportunity to inspect, indicates to seller that she accepts, whether conforming or nonconforming
2 Failure to reject within reasonable time OR failure to notify seller of rejection 3 Any act inconsistent with seller's ownership |
