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97 Cards in this Set

  • Front
  • Back
What is a contract?
A legally enforceable contract.
What are the elements to quasi contract?
1. P has conferred a benefit on D, and
2. P reasonably expected to be paid, and
3. D realized unjust enrichment if P not be compensated.
What is the measure of recovery for quasi contract?
The value of the benefit conferred.
What are the only types of unilateral contracts we have to worry about?
1. Reward, prize, contest
2. Offer expressly requiring performance for acceptance.
What is the minimum amount needed for UCC Article 2 to apply?
There IS no minimum!
What should you look at to determine if there is an agreement?
1. The offer
2. What happens after the offer (was it terminated?)
3. The acceptance.
Does an offer need to contain all material terms?
Does a sales contract need to contain price?
YES, in REAL ESTATE CONTRACTS. No, under the UCC, if the parties are agreeing to flesh it out later. But they can't be too vague ("fair").
Is an advertisement an offer? Exceptions?
Generally, it is not.

1. Rewards
2. Specific as to quantity and expressly indicates who can accept.
What are the ways an offer can be terminated?

T: Lapse of Time
R: Revocation
R: Rejection
D: Death
How can an offer be revoked?
1. Unambiguous statement by offeror to offeree of unwillingness or inability to contract, or
2. Unambiguous conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of.
On Tuesday S mails B a letter revoking the offer. The letter arrives Thursday. When is the revocation effective?
When can offers NOT be revoked?

P: start of Performance (of a unilateral contract)
R: Reliance, that is reasonably foreseeable
O: Options
F: Firm offers
What are the elements of a Firm Offer?

W: written
M: by Merchant
P: Promise
S: Signed

Can be up to three months
O offers P $1,000 to paint O's house. O's offer states that it can be accepted only by performance.

P orders paint.

Can it be revoked?

This does not constitute start of performance, but it does constitute detrimental reliance.
What are the ways to reject an offer?
1. Counteroffer
2. Conditional acceptance
3. Additional terms (common law only)
What are "bargaining terms"?
If you say "Will you take $9,000?", that's not a counteroffer. It's bargaining.
What happens if there is no valid acceptance and yet the parties perform?
It's an implied contract.
What is the mirror image rule?
At common law (not UCC), the acceptance must be a "mirror image" of the offer.
What is a seasonable expression of acceptance?
It's a fact pattern in which there is
1. An offer to buy or sell goods and
2. A response with additional terms, where the additional terms are not a condition of acceptance.
For seasonal acceptance, how do you tell if the newly proposed term is part of the contract?
1. If both parties are merchants, the general rule is that the additional term is part of the contract, as long as it does not materially change the offer and the offeror does not object to the change.
2. If one or both parties is not a merchant, the additional term is merely a proposal that is to be separately accepted or rejected.
Can you accept an offer from a dead person, if you don't know the offeror has died?
What is an exception to the rule that you can't accept an offer from a dead person?
1. Options
2. Part performance on a unilateral contract.
Who can accept an offer? Exceptions?
An offer can be accepted only 1. by a person who knows about the offer and 2. who is the person to whom it was made.

Exception: Offers cannot be assigned, but options can be (unless the agreement indicates otherwise).
What are the ways in which to accept an offer?

W: Wrong goods: seller of goods sends the wrong goods (sends vaseline petroleum jelly instead of grape jelly -- forms contract and constitutes breach; an exception is "accommodation" -- don't hvae red widgets, can you use blue -- that's a counteroffer)

M: Mailbox Rule:
P: Promise to perform (ONLY for bilateral contracts!)
S: Start to perform (ONLY for bilateral contracts!)
P: Performance (full performance, for unilateral contracts)
S: Silence (where OFFEREEE said silence would suffice)
A makes an offer to B. On Jan. 10, B mails letter of acceptance. On Jan. 11, B receives a letter from A revoking the offer.

Is there a contract?
A sends an offer to B. On Aug. 8, B mails a letter rejecting their offer. On Aug. 9, he changes his mind and mails a letter of acceptance.

What happens if rejection letter arrives first?

What if acceptance arrives first?
No contract.

What are the legal reasons for not enforcing a contract?

C: Lack of Consideration
A: Ambiguity
L: Laws prohibit it
F: Statute of Frauds
M: Mistake
U: unconscionability
D: Duress
M: Misrepresentations
C: Lack of capacity
L rents an apartment to T. One month before lease expires, L promises T that he'll renew the lease. T paints the apartment. Consideratin?
No. No BARGAINED FOR legal detriment.
What are the exceptions to the "preecisting duty" rule?
1. Addition to or change in performance.
2. Unforeseen difficulty so severe as to excuse performance.
3. Third party promise to pay.
Does Article 2 have a pre-existing legal duty rule?
NO. The test is good faith for changes in an existing sale of goods contract.
D owes C $3,000. The debt is due and undisputed. C agrees to take $2,000 in full satisfaction. D pays $2,000.

Can C now sue for the remaining $1,000 even though he agreed he would not?
Yes. The debt is due and undisputed.
What is the consideration substitute rule?
A WRITTEN promise to satisfy an obligation for which there is a LEGAL defense is enforceable WITHOUT consideration.
Do intoxicated persons lack capacity?
Only if the other party has reason to know.
What are the contracts within the Statute of Frauds?

Real Estate
Goods $500 OR MORE
Service contract for greater than one year
What is the "main purpose" exception?
Guarantors' promises usually fall under the Statute of Frauds. However, if the guarantors' promise is designed to protect his own interests (e.g., someone is buying paint for guarantor's house), the Statute of Frauds does not apply.
O orally agrees to employ P for three years, but O can terminate the contract on 30 days' notice.

Is this within the Statute of Frauds?
Yes. It can be TERMINATED but not PERFORMED within a year.
Do tasks fall within the Statute of Frauds?
No. It's always assumed that it can be performed within a year.
A offers his car to B for $500.

Within SoF?
YES! Does NOT have to be more than $500.
How can SoF be satisfied?
1. Writing: must contain material terms and signed by person to be charged (for UCC, writing must contain QUANTITY).
2. Full performance: services contract (IMPORTANT: part performance does NOT satisfy SoF for a services contract)
3. Part performance: for sale of goods (for the stuff that's been delivered -- except for "specially manufactured goods exception, where a substantial beginning is enough).
4. Real estate: Part performance is enough (two of three: part payment, possession and/or improvements) (FULL PAYMENT OF REAL ESTATE CONTRACT DOES NOT SUFFICE)
5. Judicial admission: testimony; depo; etc.
When is agency power required to be in writing?
When the underlying contract falls under the SoF.
When does a contract modification require writing?
If the modified agreement falls under SoF.
What if the contract provision requires that all modifications be in writing?
It's ignored.
What is the UCC say about contract provisions requiring written modifications?
The UCC approves these provisions (unless the provision is waived).
What if the subject matter of a contract is legal, but the purpose is void?
It's only enforceable by persons who did not know of the illegal purpose.
What's the mental state needed for misrepresentation?
None. Can even be innocent. If seller really doesn't think that the house has termites but it does, that's enough.
When are contracts unconscionable? When is it determined?
There are two basic tests: unfair surprise and oppressive terms.

Both are tested as of the time the agreement was made.
When does mutual mistake void a contract?
1. Both parties are mistaken
2. Basic assumption of fact
3. Materially affects the agreed exchange.

Key is a mistake about what it IS, not about how much it's worth.
When does unilateral mistake apply?
1. If the other party knows or should have known of the mistake.
2. Mistakes discovered before significant reliance by the other party.
What are the four fact patterns for parol evidence rule, and how does each play out?

Adding to the written deal: court can consider earlier agreements if the court finds the written agreement was only a partial integration.

Changing the written deal: Court can only look at earlier terms to determine if there was a clerical mistake.

Explaining terms: Earlier agreements can be used to resolve ambiguities.

Defenses to contract: court can always look at earlier agreements to determine if there was misrep., fraud, duress, etc.
Where's the place of delivery, if no place agreed upon?
Seller's place of business, unless both parties know they're somewhere else.
What are the two types of contracts as re. delivery?
1. Shipment contracts. Seller gets the stuff to a common carrier, makes reasonable efforts to delivery and notifies buyer.
2. Destination contracts. Seller has to actually get it to buyer.
What are the rules for determining who bears risk of loss?
1. Agreement controls.
2. If a party breaching it's responsible for loss (even if the loss is unrelated to the breach).
3. If delivery is by common carrier, risk of loss shifts to buyer as soon as seller sends it off.
What if the agreement doesn't talk about risk of loss; there's no breach; and no common carrier?
Look to see if SELLER is a merchant. If seller is a merchant, risk shifts from seller upon buyer's 'receipt.' If seller is not a merchant, risk shifts upon 'tendering.'
Is showing a sample a warranty?
Yes. It's a nonverbal express warranty.
What are the two types of implied warranties? Describe.
1. Implied warranty of merchantibility: seller must be a merchant dealing in goods of that kind; goods are fit for ordinary purposes.

2. Implied warranty of fitness for a particular purpose: buyer has a particular purpose; buyer is relying on seller; seller HAS REASON TO KNOW of purpose and reliance.
Can you agree to waive warranty liabilities?
1. Disclaimers ("as is") can waive implied warranties, if it's conspicuous.
2. Limitations of remedies are okay, too, but not if it's unconscionable (personal injury is prima facie unconscionable).
What is the "perfect tender" rule?
Goods delivered must be perfect. ONLY for Article 2.
What are the rules for rejection of goods?
It must occur before acceptance. If the goods are less than perfec,t the buyer has the option to reject unless there's a cure or an installment sales contract.
Can seller cure after time for performance has expired?
Usually, no. But if seller has reasonable grounds for believing that improper tender would be accepted (maybe via prior course of dealings) it might be okay.
What is the rule for installment contracts?
Buyer has the right to reject an installment only where there is a substantial impairment in THAT installment that can't be cured.
What are the requirements for revocation of the acceptance of goods?
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 a reasonable time after discovery of nonconformity.
Is it okay to pay a contract with a check?
Typically, yes, but the seller doesn't have to take it. If he doesn't take it, buyer gets additional reasonable time.
What is reclamation and what are its requirements?
Reclamation is the right of an unpaid seller to get its goods back. Requires:

1. buyer must have been insolvent WHEN HE RECEIVED THE GOODS;
2. seller must demand return of goods within 10 days of receipt (this becomes "reasonable amount of time" if buyer had assured solvency);
3. buyer still has goods (if buyer sold 'em, no reclamation).
What is the rule re. good faith purchasers and entrustment?
If an owner leaves her watch with a person who sells watches (to be repaired), the the entrustee sells the watch to a good faith purchaser, the owner can't get her watch back.
What are the ways to measure contract damages?
1. Protection of expectation: put plaintiff in same economic position as if contract had been performed.
2. protection of reliance interest: put plaintiff in same economic position as if contract had never happened.
What are the types of breach for sales of goods, and the remedies for each?
1. seller breaches, buyer keeps goods (fair market value IF PERFECT minus fair market value as delivered -- antique car example, p. 51).
2. Seller breaches, seller keeps goods (market value at time of discovery of breach, or replacement price if replacement is bought)
3. Buyer breaches, buyer has goods (contract price)
4. Buyer breaches, seller has the goods (contract price minus market price at time and place of delivery -- REMEMBER THE UNLIMITED INVENTORY RULE).
Are incidental damages recoverable?
Yes, always.
Are consequential damages recoverable?
What is the rule for avoidable damages?
Plaintiff has a duty to lessen damages unless it's an undue burden.
What is the rule re. liquidated damages?
Must be a reasonable forecast of damages. Can't be punitive or windfall. Always look for a single sum -- usually invalid.
When are limitations of remedies not followed?
When they are unconscionable.
What is the common law rule if the other guy breaches?
1. Damages can be recovered for any breach.
2. Only a material breach excuses you from performing.
3. Whether a breach is material is a fact question.
What is the breach rule for Article 2?
Perfect Tender rule. If it's not perfect, no obligation to perform.
What is a performance condition?
It's a clause IN THE CONTRACT (NOT IN NEGOTIATIONS) which allows one party to not perform if certain conditions are not met.
What is the rule re. express conditions?
They are construed strictly.

If the contract says "This sale is conditioned on the house being appraised at $77,000," and it's only appraised at $76,800, the condition has not been performed.
What is the exception to the rule that express conditions are construed strictly?
If a contract is expressly conditioned upon one party's approval of the other party's work, it can't be unreasonably withheld.
What is anticipatory repudiation?
An unambiguous statement that:
1. the repudiating party will not perform
2. made prior to the time that performance was due.

It excuses the other party's performance and generally gives rise to immediate claim for damages for breach.
Can anticipatory repudiation be reversed/retracted?
Only so long as there has not been a material change in position by the other party.
What is accord and satisfaction? What is needed?
Accord is an agreement by the parties to an already existing obligation to accept a DIFFERENT PERFORMANCE in satisfaction of the existing obligation.
D promises to pay his $5,000 debt to C by sending 5,000 widgets. C agrees.

D does not deliver the widgets. For what can C sue?
Either $5,000 or 5,000 widgets. But not both.
What is a modification?
An agreement by parties to an existing obligation to accept a different AGREEMENT in satisfaction of the existing obligation.

A&S only effective when the different performance is completed. Modifications are a different agreement right away.
What is a novation?
Agreement between both parties to substitute a new party to do the same thing.
Who is liable after a novation?
Novation excuses the party who is substituted.
What is delegation? How is it different from novation?
Delegation does not require both parties and does not let the original promisor off the hook.
B contracts to build a house for $100,000. He's halfway done when the house burns down. Is B excused?
No. It's not impossible to build the house.

Default is: not excused.
O contracts with P to paint P's house. P dies. O has to hire another painter, for more money.

Can O recover from P's estate?
Yes. P is not a "special person."
If I contract for plastic surgery to dance nude, and nude dancing is then outlawed, am I still bound by my contract for plastic surgery?
Yes, unless the plastic surgeon knew of my purpose.
When can third party beneficiary prevent parties from changing contract?
1. It's a creditor beneficiary.
2. Donee beneficiary has relied on benefit.
What's the difference between a contract prohibiting assignments and invalidating assignments?
With the former, the assignor is liable for breach but an assignee who does not know of the assignment can still enforce it.

With the latter, the assignee has no rights.
What if the assignment substantially changes the duties of the other party?
It's void.
What's required for assignment?
1. Language of PRESENT assignment.
2. Consideration is NOT required.
What is the rule for multiple gratuitous assignments?
Last assignee wins.
What's the exception to the rule that last gratuitous assignee wins?
If it's in writing, or if assignee has relied in a way that is reasonable, foreseeable and detrimental.
Who wins if there are multiple assignments for consideration?
The first assignee. Exception:

subsequent assignee does not know of the earlier assignment and is the first to obtain payment, judgment, novation or indicia of ownership.
When are duties not delegable?
1. Contract prohibits delegations OR ASSIGNMENTS.
2. Contract calls for very special skills.
3. Person to perform contract has very special reputation.
When is a delegatee liable to obligor?
When delegatee receives consideration (if he's doing it as a favor, he's not liable).