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82 Cards in this Set

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Predominant Purpose Test (majority)
looks to the transaction as a whole - primarily goods or services?
Gravamen Test (minority)
looks to the portion of the transaction upon which the complaint is based, and asks if it is primarily concerned with goods or services?
Identification
when the goods have been created and designated for the buyer
contract
a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty
promise
a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made
Expectation (ex post)
RSC 347 loss in value (promised-received) + consequential damages (3rd party agreements) - cost avoided (what you haven't expended yet) - loss avoided (shifted risk; mitigated costs) = expectancy damages
Reliance (ex ante)
RSC 349 essential reliance (all expenditures) - loss the breaching party can prove
Restitution (ex ante)
RSC 371 a. 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 the claimant's position [usually greater] b. the extent to which the other party's property has been increased in value or his other interests advanced [usually less; the only remedy available to the breaching party]
Injured party can't get restitution if
(RSC 373) he has performed all his duties under the K and the other party only owes payment of a definite sum of money for that performance
Breaching party is entitled to restitution for
any benefit that he has conferred by way of part performance or reliance in excess of the loss that he has caused by his own breach (374(1). If there is a liquidated damages clause, the party in breach is not entitled to restitution if the value of the performance as liquidated damages is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss (374(2).
Seller's Remedies Under the UCC
2-703 Seller may withhold delivery, stop delivery by the bailee, resell and recover damages, recover damages for the price, or cancel the K
Seller's Resell Remedy
2-706 Seller can recover the difference between the K price and the resale price (conditions laid out in (2) - including that if the resale is at a private sale, the seller must reasonably notify the buyer of his intention to resale)
Seller's Damages for Breach
2-708 (1) The seller can recover the difference between the unpaid K price and the market price and the time and place for tender + incidental damages (costs incurred in stopping delivery, transportation, care, and custody of goods after the buyer's breach, costs incurred in resale or return) LESS expenses saved in consequence of he buyer's breach (2) lost-volume sellers can recover lost profit + incidental damages
Buyer's Remedies Under the UCC
2-711 The buyer may cover and get damages, get damagers, or in some cases, specific performance
Buyer's Cover Remedy (preferred if possible)
2-712 The buyer can recover the difference between the cost of cover and the K price + incidental damages and consequential damages (Hadley rule - any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise) LESS expenses saved in consequence of the seller's breach
Buyer's Damages for Breach
2-713 The buyer can recover the difference between the market price at the time when the buyer learned of the breach and the contract price + incidental and consequential damages LESS expenses saved
If goods are nonconforming, the buyer can get
the loss in value (promised-received) (2-714)
Buyer's Right to Specific Performance if
the goods are unique or in other proper circumstances (2-716) (right to replevin (3) - if goods have been identified) (unique, sentimental demonstrated in Cumbest v. Harris) (scarce - Sedmark v. Charlie's Chevrolet, Inc.)
2-717 Upon notifying the seller, the buyer may
deduct any or all of the damages due to breach from part of the price still due under the K
Foreseeability
RSC 351 and 2-715 (Hadley rule) Can get damages for likely consequences (foreseeable at the time of breach) but not consequential damages unless the breaching party knew or had reason to know of them
Certainty
RSC 352 Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty
Avoidability
RSC 350 The nonbreaching party may not recover for any losses it could have avoided without unreasonable risk, burden, or humiliation.
2-719 Liquidated Damages Clauses
permitted so long as it is not unconscionable; can't limit recovery for personal injury
Test to determine if a particular clause is enforceable
1. Subjective intent of the parties (doesn't matter much; ex. both parties intend that this clause not be punitive)
2. Ascertainment (the harder it is to ascertain the damages, the more leeway a clause is given to reasonably forecast the damages)
3. Reasonableness (ex ante - was it reasonable at the time the K was formed - an ex post - is it reasonable in light of what actually transpired?)
Equitable defenses
1. Unclean hands
2. Laches (delays)
3. Equitable estoppel (P being misleading/inconsistent)
4. Hardship
Types of injunctions
TRO's (usually 10 days or so ), Preliminary Injunctions (last until trial), Permanent Injunctions
Factors showing an implied (in fact) K
1. Does the person normally get paid for the services rendered?
2. Have the parties interacted before?
3. Who initiated it?
What are we looking for to determine if the parties intended to enter a K?
external manifestations (words, inference from the parties' conduct, circumstances surrounding the formation of the contract) (Lucy v. Zehmer, Embry)
Factors for distinguishing between preliminary negotiations and an offer
1. Nature of the language
2. Completeness of the terms (enough to define breach and an appropriate remedy - usually when and how much)
3. Timing of the communication
4. Number of people to whom it's addressed (Nebraska Seed Co. - invitation to bid)
As long as the amount of goods (quantity) is included, the UCC can fill in the rest.
These are outlined in the cards below.
Place for delivery
At the seller's POB or where the goods are if the parties know
Manner or medium for acceptance
reasonable
Price
reasonable
Time for delivery
reasonable
Time for payment
at the time and place for delivery (when the buyer picks them up)
Factors to determine intent to be bound (v. an agreement to agree)
1. Express Reservations
2. Partial Performance
3. Essential Terms
4. Complexity (Texaco)
RSC 36 Methods of Termination of Power of Acceptance: Offeree's PofA may be terminated by
a. rejection or counter-offer by the offer, or
b. lapse of time (stated in the offer or a reasonable amount of time), or
c. revocation by the offeror, or
d. death or incapacity of the offeror or offeree.
(2) - also, the non-occurrence of any condition of acceptance under the terms of the offer
RSC 42 Revocation of the offer is terminated when the offeree
receives the revocation from the offeror.
RSC 43 Indirect Communication of Revocation (rule in Dickinson)
Offeree's PofA terminated when the offeror takes definite action inconsistent with an intention to enter into the proposed K and the offeree acquires reliable information to that effect.
The Mailbox Rule
An acceptance is effective upon dispatch. (Options effective upon receipt.) (Acceptances on the phone or in person also effective upon receipt - upon hearing them.)
Common Law Mirror Image Rule
In an purported acceptance, any qualification of or departure from the terms in the offer invalidates the offer, unless the same is agreed to by the party who made it.
RSC 61 - Acceptance Which Requests Change of Terms
An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms. (See Ardente v. Horan.)
UCC 2-207 Additional Terms in Acceptance or Confirmation
(1) Expression of acceptance or a written confirmation operates as an acceptance despite additional or different terms UNLESS acceptance is expressly made conditional on assent to the additional or different terms.
(2) Additional terms are to be construed as proposals for addition to the contract.
But between merchants, such terms become part of the contract UNLESS
a. the offer expressly limits acceptance to the terms of the offer (conditional offer)
b. they materially alter it
c. notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
(See StepSaver.)
Conflicting clauses under UCC 2-207 - The Knockout Rule
(Comment 6) Where clauses on confirming forms sent by both parties conflict each party must be assumed to object to a clause of the other conflicting with one on the confirmation sent by himself. The conflicting terms are knocked out and the contract then consists of the terms originally expressly agreed to, terms on which the confirmations agree, and terms supplied by 2-207.
RSC 32 (offeree has power to choose how to accept)
In case of doubt the offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.
RSC 45 Option K Created by Part Performance or Tender
Where an offer requires acceptance by performance, an option contract is created when the offeree begins performance (and is not concluded until the performance is completed - if not completed, the offer lapses; this section functions to prevent the offeror or offered from being able to revoke their offer once performance has begun)
RSC 62 Effect of Performance by Offeree Where Offer Invites Either Performance or Promise
When the accepting party can choose of the offer is ambiguous about it, the accepting party's beginning of performance is an acceptance.
RSC 69 Cannot accept by silence unless
a. the offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.
b. the offeror has stated or given the offer reason to know that assent can be manifested through silence or inaction.
c. previous dealings (Hobbs)
Ambiguous terms
capable of more than one meaning
Vague terms
parties agree on the term's core meaning, but disagree as to how broadly it should be read
RSC 201 Whose Meaning Prevails
(1) Interpret it according to the meaning attached by the parties
(2) If one party did not know of a meaning different to its understanding, and the other knew the meaning attached by it (a) or had reason to know that meaning (b) - that meaning would rule
(3) If there is no objective meaning that can be established and the parties attached different subjective meanings, there is no mutual assent as to that term.
RSC 202 Rules in Aid of Interpretation
Interpret according to a generally prevailing meaning if one exists (dictionaries) or if a technical term, look at trade custom within that technical field
UCC Interpretive Devices
Express Terms --> Course of Performance (dealings for this K) --> Course of Dealing (prior dealings between the parties) --> Trade Custom/Usage
RSC 204
The Restatement will supply "a term" (one term), if it is essential to a determination of their rights and duties. The supplied term needs to be reasonable in the circumstances as supplied by the court.
Illusory promises
where one side has a clear obligation and the other side has complete discretion regarding performance
UCC 2-306 Output, Requirements, and Exclusive Dealings
Supplies "good faith" for the requirements of the buyer and states that no quantity "disproportionate" to the stated estimate or if no stated estimate, to comparable prior output or requirements, may be demanded.
Substitutes "best efforts" as the obligation for seller in supplying the goods and for buyer in promoting their sale
Form Contracts
Courts will enforce these unless they are unconscionable (RSC 208 and UCC 2-302 - higher standard in the UCC for them to throw out a K - needs to be really really bad)
RSC 208 If a form K if unconscionable, the court may
1. Throw out the K
2. Enforce the K without the unconscionable term.
3. Limit the application of any unconscionable term so as to avoid any unconscionable result.
Terms that Follow Later: Easterbrook's postition in ProCD and Hill v. Gateway (majority view)
UCC 2-207 is for battle of the forms, so UCC 2-204 and 2-606 should be consulted instead.
2-204 "A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract." Seller makes offer, limits that offer in certain ways (in ProCD - restrictions limiting use to non-commercial uses), and the buyer accepts by using the software after having an opportunity to read the K and to reject it by returning the goods (see below).
2-606, A buyer accepts goods when, after an opportunity to inspect, he fails to make an effective rejection [problem with this argument - UCC is referring to cases where there already is a K, here, the existence of a binding K is in dispute] are consulted instead.
Terms that Follow Later: Klocek (substantial minority follow)
Easterbrook was wrong - 2-207 does not only apply to battle of the forms - it says it applies to a (one; singular) written confirmation as well.
Easterbrook got the offer and acceptance wrong too - the buyer offers to purchase, and the seller accepts by shipping the goods. Therefore, under 2-207, the terms of the agreement included in the package are mere proposals for acceptance, and since they were never assented to by the buyers in Klocek, they fall away.
RSC 214 Parol Evidence Rule: Prior or contemporaneous agreements are admissible in evidence to establish
a. that the writing is or isn't integrated.
b. that the integrated agreement is completely or partially integrated.
c. the meaning of the writing.
d. illegality, fraud, duress, mistake, lack of consideration, or other invalidating clause [even with a merger clause, this last possibility can be validly claimed]
e. ground for granting or denying equitable relief
RSC 210 A completely integrated agreement is
an integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement
UCC 2-202 Parol Evidence Rule: Terms may be explained or supplemented by
course of dealing or trade usage, or by course of performance, and by evidence of consistent additional terms UNLESS the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement. [UCC doesn't tell us if we should take the 4 Corners or the Modern Approach]
Integration: 4 Corners Approach
Look to the document itself only to determine if K is completely integrated. If a term in dispute does not appear to be integrated into the K, parol evidence as to that term may be admitted into evidence for the jury to determine if they intended them to be integrated or not.
Integration: Modern Approach
Look at parol evidence to determine whether the K is completely integrated or not.
Interpretation: Plain Meaning
Look to the document itself to determine if the term(s) in dispute are established given their plain meaning in the K. If a term is ambiguous, parol evidence may be admitted as to that term.
Interpretation: Reasonable Susceptibility
Court allows evidence that shows a particular meaning to which the language of the K is reasonably susceptible.
What is required for a court to grant a party reformation (a type of equitable relief)?
Need "clear and convincing" (or some other high burden of proof) evidence of an underlying contract.
Needs to be a material mistake.
The reformation cannot prejudice one party's rights under the contract so as to make it inequitable.
Statute of Frauds covers
Land, One-Year K, Goods for More than $500, Security Interests, Suretyship
UCC 2-201 The Statute of Frauds requires
some writing sufficient for evidentiary purposes, signed by the party against whom enforcement is sought; can omit terms, but need to include quantity; between merchants, written confirmation is sufficient (without a signature) UNLESS written notice of objection to its contents is given within 10 days after it is received
Exceptions to SF defined in 2-201
specially manufactured goods exception, an exception for if the party against whom enforcement is sought admits to the K in court, and a very limited partial performance exception
UCC 1-201 A writing must be
something that can become tangible.
UCC 2-209 Altering the default rule for merchants
Parties can alter the default rule by requiring any modifications, revisions, or terminations of the K to be signed by all parties. [UCC encourages this]
RSC 131 - A contract within the Statute of Frauds must
1. Reasonably identify the subject matter of the K
2. Be sufficient to indicate a K is made.
3. State with reasonable certainty the essential terms.
Partial Performance in Land Sales to Get Around the Statute of Frauds - courts usually require all of these
1. Possession
2. Pay (usually, the full purchase price)
3. Improvements
RSC 317 Rights under a K can be assigned unless
it materially changes the duty of the obligor or materially increases the burden or risk imposed on him by the K, or assignment is forbidden by statute (see statute in In re Nance), or assignment is inoperative on grounds of public policy (similar to UCC 2-210(2)
To show a transfer, there must be
Present appropriation (absolute, irrevocable transfer of rights with the intent to transfer presently)
RSC 321 No assignment of future rights unless
an employment or business relationship exists at the time of assignment.
RSC 332/UCC 2-210(3) If you say "no assignment"
only delegation is barred
UCC 2-210(1) Delegation possible unless
otherwise agreed or unless the other party has a substantial interest in having the original promisor perform or control the acts required by the contract (Sally Beauty)
UCC 2-210(4) An assignment of the contract or of all the rights under the K acts as a
transfer of all rights and duties (an assignment and a delegation) unless it is an assignment of a security interest or an assignment of collateral
For a 3PB to be an intended beneficiary (thus having the same rights as the parties to the K),
1. Must have both parties' intent to create a 3PB.
2. Must be either a creditor (Sisters of St. Joseph Hosp.) or a donee (Seaver) relationship.