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50 Cards in this Set
- Front
- Back
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What are the eight topics tested in contracts?
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Formation, defenses, parol evidence, parties, conditions, discharge, performance, and breach.
"Fairway Drivers Putt Par; Cocaine Drugsters Piss Blood" |
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Define offer
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A Communication of commitment to a identified Offeree with certain and Definite terms. (COD)
--Objective test --Reward exception for ID offeree |
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How certain and definite do terms have to be?
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Land-Property and price
Goods-Quantity and goods involved Service--Duration and nature of services. (no duration then at will) |
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Types of irrevocable offers and requirements to create
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Merchant firm-Someone in business of buying and selling the goods involved makes an offer that is in writing and signed states it will be held open for a period of time. (no consideration 90 days max).
Option contract-consideration required. Reliance on offer Performance has begun on unilateral contract. |
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Ways to terminate offers
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1. Revocation either expressly or by conduct.
2. Rejection (difference between inquiry and rejection/counteroffer) 3. Termination by operation of law (illegailty, death or dest. of subj. matter, death or incapacity of offeror or offeree) |
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Mailbox rule: what does it apply to and what are the exceptions?
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Applies to acceptances only. Effective on dispatch.
Exc.: 1. Offer says it does not apply; 2. if offeror "suggests" a method of acceptance and a reasonable alternative is used; 3. option contract; 4. the offeree dispatches an acceptance, then send rejection. Effective on dispatch unless reliance on rejection; 5. offeree sends rejection first and then acceptance. First one that offeror comes into possession. (rej. 1st then counteroffer). |
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When is silence a method to accept?
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1. offeree suggests;
2. course of dealing that creates a duty. |
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Rules regarding which terms govern between offer and acceptance under UCC and common law
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(1) UCC Battle of the Forms (does not apply if accommodation): (a) not both merchants-new or different terms are part of contract only if offeror agrees; (b) both merchants-new terms in acceptance unless material alteration or offeror objects in reasonable time. Conflicting terms split of authority (gap fillers come in or treated as new terms).
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Define consideration
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A bargained for exchange with legal detriment.
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Exceptions to past consideration
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1. Restatement 2nd-Material benefit was given and the benefit was not intended to be a gift (e.g., ER physician).
2. Debt discharged by running of statute of limitations or bankruptcy and there is a subsequent promise to pay in "writing." 3. Preexisting duty is owed to a third party |
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Define legal detriment
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Promise asks promisee to do something it is not otherwise bound to do, or not to do something it has a right or reasonable and good faith belief it has a right to do.
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What does illusory mean and some typical MBE cases where the promise is not illusory?
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Promisor has unfettered discretion to perform.
(1) requ. and output contracts (course of dealing and good faith) (2) promise subject to a condition of satisfaction (matter of taste good faith requ.; not a matte rof taste good faith and reasonable person's sat.) |
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Consideration exceptions
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(1) mod- UCC ONLY (good faith)
(2) promissory estoppel (induces detrimental, reasonably and foreseeable reliance) |
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SOF is applicable to what types of contracts?
(remember signed by party to be CHARGED) |
(1) marriage
(2) surety contracts not made primarily for promisor's personal benefit; (3) land; (4) service contracts not capable of complete performance within one year from formation (remember no log. poss.) (5) Sale of goods for $500 or more. |
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Misrepresentation v. fraud in the inducement?
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Both are voidable unlike fraud in the execution.
Misrepresentation (negligent): defense if it goes to a material factor and there is reasonable reliance. Fraud (intentional misstatement): Defense if there is reasonable reliance on the fraudulent statement. |
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Test for unconscionability
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(1) Unfairness in the bargaining power (procedural); AND
(2) contract contains a term that is unreasonably one sided or contrary to public policy (substantive). Ex.: liquidated damage clause that an unreasonable forecast of actual damages (i.e. penalty) or waiver of personal injuries in contract for consumer goods (i.e. products liability waiver for consumers). |
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Unilateral mistake and when it is a defense
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One party is mistaken as to a material fact and the other party knew or should have known of the mistake.
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Parol evidence
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Bars admission of prior or contemporaneous statements that add or conflict with the writing when the writing is final and complete. If not complete then just bars conflicting terms.
(does not apply to defenses or ambiguous terms) |
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Define intended third party beneficiary and identify the types are there?
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(1) There is a 3rd party beneficiary contract where the 3d party is the intended, not incidental, beneficiary of a promise (arises at time of contract cpr. to assignment).
(2) creditor (promisee already owes an obligation and promisee negotiates for the promise to satisfy underlying obligation) and donee (gift). |
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When do 3rd party's rights vest?
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Learns of the promise and assents, changes position in reliance on it, or sues on it.
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What is an assignment and what are the requirements?
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(1) occurs when a party to a contract that has already been formed unilaterally assigns rights to a third party
(2) (a) right must be assignable; and (2) right must be properly assigned. Ex. contract prohibits assignment (UCC assignment ineffective, common law effective but breach); assignment changes nature of the bargain). |
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Order of assignments when there are multiple assignees
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(1) Last gratuitous assignment takes priority unless first in writing, indicia of ownership, or detrimental reliance.
(2) first assignment for consideration takes priority unless subsequent assignee does not have knowledge and receives performance, judgment, novation, or indicia of ownership. |
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Define what a condition is
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A condition is an event that must occur or be excused before promisor has a duty to perform
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What are the ways that conditions can be excused
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(1) failure to cooperate or prevention;
(2) anticipatory repudiation; (3) voluntary disablement (party engages in conduct making unable to perform (e.g., spends all money)); (4) estoppel (party says that will perform even if condition is not met and detrimental reliance results); (5) waiver |
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UCC v. common law satisfaction
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UCC: perfect tender (exc. installment contracts and don't forgot right to cure if reasonably believe goods would be acceptable base don course of dealings or time in contract has not come yet)
(2) common law-substantial satisfaction. |
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Test for divisible contracts and implication
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(1) performance of each party is divided into two or more parts; (2) number of part on each side is the same; and (3) each part of the performance by one party has a corresponding part in the other party's performance.
(1) irrevocable when one divisible part has been performed; (2) satisfaction is broken up by each part; (3) damages- because satisfaction is broken up the promisor must pay as to which parts were satisfied even if entire contract not satisfied. |
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What are the eight grounds to discharge duties?
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Frustration of purpose, Accord and satisfaction, Condition subsequent, Impossibility, Novation, Modification, , Impracticability, and Mutual rescission.
(FACIN MIM) FACINg MIM or FACkIN MIMe) |
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What is required for discharge by Accord
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An Accord must be supported by valid consideration (usually an actual dispute where both party is giving something up); and satisfaction.
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What is a novation
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When "ALL PARTIES" to an existing contract agree to extinguish the rights and duties of one party and substitute another person in her place. (No agreement by all parties then it is an assignment or delegation and the assignor or delagator remain liable as suretys)
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Define impossibility and what it requires
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Duty is discharged when, after formation, something happens that makes it impossible for a reasonable person to perform. (e.g., destruction of subject matter or illegality after formation).
(1) Not applicable when temporary incapacity (merely suspends duty); (2) duties are delegable; (3) under the UCC risk has passed to buyer (common carrier passes to buyer unless FOB or FAS--Non common carrier merchant--when received; non-merchant-makes goods available and buyer receives notice. |
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Define impracticability
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Something occurs that was unforeseeable at the time of formation that now makes it unreasonably difficult or expensive to perform. (e.g., building contract where discover that house is built on solid rock a geological condition unheard of in the area).
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Define Frustration of purpose
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A party's purpose for the contract is destroyed by some unforseeable event and the other party knew of this purpose at the time of formation (e.g., renting out an apartment in which it is known that the purpose is to practice for rock band concerts and then the concert pavilion burns down).
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Define condition subsequent
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An express condition after having the duty to perform that will discharge that duty.
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Common law remedies for breach
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Expectancy damages; consequential damages; incidental damages; quasi-contractual recovery; liquidated damages; specific performance.
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What are expectancy damages and the limitation on them?
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The difference between the net value of what was promised and the net value of what was received, if anything from the breacher.
Limit: Not recoverable to the extent they could be reasonably mitigated. |
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What are consequential damages?
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Losses caused by the breach so long as reasonable foreseeable to the breacher at the time of formation. Duty to mitigate.
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What are incidental damages?
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The reasonable costs of mitigation.
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Define quasi-contractual recovery?
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Where a promise is not enforceable, but one party receives a benefit from the other, the party bestowing the benefit may recover its reasonable value.
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Requirements for liquidated damage clause to be recognized as not a penalty.
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(1) at time of formation the damages were difficult to estimate, and (2) the amount specified in the clause is a reasonable forecast of the actual damages.
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Define specific performance and when it is appropriate.
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An equitable remedy by which a party to a contract is ordered to perform according to its terms.
(1) The legal remedy must be inadequate; (2) enforcement must be feasible; and (3) there are no equitable defenses (e.g., laches, unclean hand) |
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UCC remedies-what are the seller's warranties?
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(1) express warranties. and (2) implied warranties.
Implied: (1) warranty of title, warranty of merchantability; and warranty of fitness. |
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Define the implied warranty of merchantability
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The goods are fit for their ordinary use and are safe. (safe runs with products liability)
(dist. from fitness---remember the merchant is not fit) |
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Define the warranty of fitness
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When the seller knows buyer wants goods for a particular purpose and the buyer relies on the seller's skill to select goods for the purpose. Seller warrants that the goods are fit for the specific purpose.
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What limitation might there be on warranties? When are they enforceable and when aren't they enforceable?
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(1) Disclaimer
(a) express warranty-not enforceable (b) implied-fitness must be in writing. (2) limit on remedies: enforceable unless fails its essential purpose or is unconscionable. (e.g., not liable for pers. inj. unconscionable) |
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Buyers remedies for breach under UCC
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(1) rejection-perfect tender
(2) revocation of acceptance (problem difficult to discover or seller says will cure but has failed to do so) (3) damages: diminished value if accepted or cover when rejected. |
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How are damages measured when buyer covers after rejection?
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Different between cover price and contract price
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How are damages measured when buyer accepts nonconforming goods?
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Difference between market price at the time buyer learned of the breach and contract price.
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Can buyer get specific performance under UCC?
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Generally, no. However, it is in the limited situation of unique goods (e.g., short supply of goods when seller breached)
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Seller's remedies for buyer's breach
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(1) right to withhold goods (buyer breaches while goods in seller's poss.)
(2) Right to stop transit and recover goods (only if buyer is insolvent or large shipments) (3) damages |
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How are damages measures under UCC when buyer breaches?
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(1) substitute sale: difference between contract price and the substitute price; or
(2) difference between contract price and the market price at the time and place delivery was to be made. (3) incidental damages; (4) Lost volume seller: lost profit. |
