Contracts - Mbe - California

Front 1

Offer

Back 1

to be a offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a K on the basis of the offered terms

There must be a promise, undertaking, or commitment to enter into a K w/ certain definite terms.

Front 2

Unilateral mistakes - grounds for rescission

Back 2

no - unitlateral mistakes will not be grounds to rescind a K unless the nonmistaken party knew or should have known of the mistake.

Front 3

Anticipatory Breach

Back 3

occurs where a promisor, prior to the time set for performance of her promise, indicates that she will not perform when the time comes.

Anticipatory Breach - if
1) there is an executory bilateral K w/ executory duties on both sides; and

2) the words or conduct of the promisor unequivocally indicates that she cannot or will not perform when the time comes.

Front 4

Liquidated Damages

Back 4

Must be:

1) damages were difficult to estimate at the time the K was formed, and

2) The amount agreed upon is a reasonable forecast of the damages that would result from a breach.

Front 5

Specific Performances

Back 5

Available only where money damages is inadequate (legal remedy).

No available for personal services - unless for unique shit; money damages would be adequate b/c nonbreaching party could use the damages to hire someone else to perform.

Front 6

Implied K

Back 6

Parties' CONDUCT indicates that they assented to be bound.

Front 7

When are unilateral Ks created?

Back 7

1) where the offeror clearly indicates that performance is the ONLY manner of acceptance; or

2) where there is an offer to the public clearly contemplating acceptance by performance (e.g. reward offer)

Front 8

Void K

Back 8

K without any legal effect from the beginning (K to commit a crime)

Front 9

voidable K

Back 9

one that a party may ELECT to avoid or ratify

Front 10

Unenforceable K

Back 10

one otherwise valid but for which some defense exists extraneous to formation

Front 11

Elements necessary to form a K

Back 11

1) mutual assent (offer/acceptance)

2) Consideration or a substitute; and

3) no defenses to formation

Front 12

Offers - should consist of...

Back 12

1) Id of the offeree
2) definiteness of subject matter (sale of goods - quantity)
3) Duration for employment Ks

Front 13

Ways to terminate an offer

Back 13

1) Revocation

2) Rejection

3) Operation of law

Front 14

Revocation - how can this be accomplished?

Back 14

1) directly communicates the revocation to the offeree (retracts the offer); or

2) acts inconsistently w/ continued willingness to maintain the offer, and the offeree receives correct information of this from a reliable source

Front 15

Option Ks

Back 15

must be supported by consideration

Front 16

Firm offers (UCC)

Back 16

1) signed writing by a merchant

2) promise to hold the offer for some period of time

3) usually no more than 3 months

Front 17

Rejection of offer

Back 17

an offeree may reject an offer:

1) expressly or

2) by making a counteroffer

Front 18

When is a rejection effective?

Back 18

once received, unless restated again later, can revive power of acceptance

Front 19

Rejection of option - can it be still accepted?

Back 19

rejection of an option does NOT terminate the offer; the offeree iss still free to accept the offer w/in the option period UNLESS the offeror has detrimentally relied on the offeree's rejection

Front 20

Lapse of time - is this a rejection?

Back 20

yes - failure to accept w/in the time specified or if there is no specified deadline, w/in a reasonable period

Front 21

Termination by Operation of Law

Back 21

1) Death or insanity of either party

2) Destruction of the proposed K's subject matter; or

3) Supervening illegality

Front 22

Acceptance

Back 22

1) an offeree w/ the power of acceptance;

2) unequivocal terms of acceptance; and

3) communication of acceptance

Front 23

Acceptance - one party is only a merchant

Back 23

1) terms of the offer govern - new or different terms are considered mere proposals

Front 24

Acceptance - generally for sale of goods

Back 24

is an acceptance if the parties so intend to be bound - unless it is made conditional on the acceptance of new/different terms

Front 25

Acceptance/ different/additional terms - between merchants

Back 25

1) become part of the K UNLESS:

a) they materially alter the agreement

b) offer expressly limits acceptance to the terms of the offer

c) offeror objects w/in a reasonable time to the additional terms.

**jxns differ as to accepting additional/different terms - knockout rule can be utilized.

Front 26

Do additional terms between merchant become part of the K even though it materially alters?

Back 26

Yes - even though it materially alters the agreement, but become part of the K only if the offeror expressly assents to inclusion.

Front 27

What happens if the parties act like there is a K, even after all the debacle of new terms?

Back 27

A K is formed, consisting of all terms on which their writings agree

Front 28

When is acceptance considered communicated?

Back 28

Objective standard - would a reasonable person think there was an acceptance??

UCC - any reasonable means unless the offeror unambiguously limits acceptance to particular means

Front 29

Mailbox Rule

Back 29

1) Acceptance -effective at the moment of dispatch

2) Rejection/Revocation - effective upon receipt

3) unless offer stipulates that acceptance is effective UNTIL receipt

Front 30

Does the Mailbox rule apply to option Ks?

Back 30

No

Front 31

What happens if offeree sends a rejection and then sends an acceptance?

Back 31

whichever arrives first is effective

Front 32

What happens if the offeree sends an acceptance and then a rejection?

Back 32

the acceptance is effective UNLESS the rejection arrives first and the offeror detrimentally relies on it.

Front 33

Consideration needs:

Back 33

1) Bargain

2) legal value

**consideration must exist on both sides of the K

*if only one party is bound to perform, the promise is illusory and will not be enforced

Front 34

Forbearance - when it is a bargain

Back 34

if it benefits the promisor in some way

Front 35

What are the substitutes for consideration?

Back 35

1) Promissory Estoppel or Detrimental Reliance

2) Modification under the UCC

3) Promises to Pay legal obligations barred by law

4) Seal

Front 36

Promissory Estoppel - Detrimental Reliance - elements?

Back 36

1) the promisor should reasonably expect her promise to induce action or forbearance,

2) of a definite and substantial character, and

3) such action or forbearance is in fact induced

**as justice requires - check whether there is a valid K first

Front 37

Modification under the UCC

Back 37

consideration is NOT necessary to a good faith written modification of a K

Front 38

Promises to Pay Legal Obligations Barred by Law

Back 38

If a legal obligation is not enforceable under law (e.g. debt barred by the statute of limitations) a new promise to fulfill the legal obligation is enforceable if in WRITING. But enforceable only to the new terms

Front 39

Defenses to Formation - Absence of Mutual Assent: List...

Back 39

1) Mutual Mistake
2) unilateral mistake
3) mistake by intermediary
4) latent ambiguity mistakes
5) Misrepresentation

Front 40

Mutual Mistake

Back 40

A mistake by BOTH parties is a defense if:

1) the mistake concerns a basic assumption on which the K was made;

2) the mistake has a MATERIAL adverse effect on the agreed upon exchange; and

3) the adversely affect did not assume the risk of the mistake

Front 41

Misrepresentation

Back 41

Generally voids a K, b/c lack of mutual assent.

1) Fraudulent misrep - voidable by innocent party if she justifiably relied on the misrep.

Front 42

Absence of Condiseration

Back 42

No K - no formation

Front 43

Illegality of K

Back 43

c'mon - no illegal consideration or subject matter, no K.

Unless - the P is unaware of the illegality; if the purpose is only illegal, the K is voidable by the party that did not know about the purpose

Front 44

Defenses to enforcement

Back 44

1) Statute of Frauds

2) Unconscionability

Front 45

Statute of Frauds

Back 45

Needs writing

MY LEGS

Front 46

Memorandum Requirements

Back 46

Statute is satisfied if it contains:

1) Id of the parties

2) ID of the K's subject matter

3) Terms and conditions of the agreement

4) Recital of the consideration; and

5) the signature of the party to be charged or his agent

**D must have signed

Front 47

Sale of goods over $500

Back 47

Must meet SoF, otherwise there is a defense to enforcement.

NOT needed if:

1) specially manufactured goods,

2) a written confirmation of an oral agreement between merchants

3) admission in pleadings or court that a K for goods existed, or

4) Partial payment or delivery made and accepted.

Front 48

Merchants

Back 48

1) one who regularly deals in the goods of the kind sold

2) holds himself out as having special knowledge or skill as to the practices or goods involved.

Front 49

Open Terms

Back 49

Does not negate a K, courts will "fill in the gaps" - HOWEVER, quantity in a sale of goods K is essential.

*seller's output, or buyer's requirements satisfy the quantity requirement

Front 50

When is a writing NOT required?

Back 50

1) If the goods are specially made for the buyer and not suitable for sale to others in the ordinary course of the seller's business, and the seller has started making them or committed for their procurement;

2) if the party admits in his pleading or court testimony that a K was made; or

3) if the K is performed (goods are either received and accepted or paid for)

SWAP - Specially made goods, Written confirmation by a merchant, Admission in court, or Performance. - no SoF need be satisfied.

Front 51

Parol Evidence Rule

Back 51

The terms of a K set forth in the confirmatory memoranda of the parties or in a writing intended as a final expression of the parties' agreement CANNOT BE CONTRADICTED by evidence of any PRIOR AGREEMENT or CONTEMPORANEOUS ORAL AGREEMENT.

Such terms may be expalined or supplemented by:

1) consistent additional terms
2) Course of dealing
3) Usage of trade or business; or
4) Course of perforamcne

Front 52

Is there valid consideration when surrendering an enforceable claim?

Back 52

Yes. Valid consideration exists when a claim is surrendered by a party in a good faith belief that the party is surrendering an enforceable claim.

When someone promises to surrender a valid legal claim or to refrain from asserting a legal defense of that claim, that is sufficient consideration for a return promise if it has been bargained for. Where the claim surrendered is not valid, there is insufficient consideration.

Front 53

What is the amount recoverable under a p/e claim for substitute consideration?

Back 53

A promisor will not be able to assert the defense of lack of consideration if an injustice to the promisee can be avoided only by enforcing the promise. In such case, the promise will be enforced only to the extent necessary to avoid injustice to the promisee.

Front 54

When is a gift not just a gift, but an enforceable promise?

Back 54

It is true that ordinarily, a gift does not constitute consideration, as the element of a "bargained-for-exchange" is missing. However, in some cases, the objective theory of contract formation favors the finding of a bargain if the promisor's promise has induced the promisee to change position in a way that was both foreseeable to the promisor and detrimental to the promisee.

Front 55

UCC modifications are appropriate when....

Back 55

While the UCC allows modifications to be enforceable without separate consideration, a modification must likewise satisfy the Statue of Frauds if the contract as modified triggers the Statute of Frauds.

Front 56

Statute of Frauds - involving oral promises and substantial performance

Back 56

The Statute of Frauds provides that, in order to be enforceable, certain contracts must be in writing and signed by the party to be charged. Unless the subject matter of a contract is within the Statute of Frauds, an oral contract is enforceable. Contracts triggering the Statute of Frauds include those involving the sale or transfer of real property. The agreement between the widow and her nephew falls within this category, and the Statute of Frauds is therefore applicable to the parties’ agreement; as such, barring an exception to the unenforceability of contracts falling within the purview of the Statute of Frauds, their oral agreement will not be valid. However, there exist several exceptions to the unenforceability of oral contracts falling within the categories addressed by the Statute of Frauds; otherwise, a party, who in good faith believes a contract to exist and therefore spends time and money to perform the contract, would be unable to force the other party to perform merely because the agreement was not in writing. The term “part performance” is used to describe instances in which a plaintiff’s conduct based on the belief that a contract exists justifies enforcement of the contract, even though it has failed to comply with the Statute of Frauds. The plaintiff’s actions must be substantial in order to demonstrate that he actually has relied on the terms of the contract. Furthermore, where services have been performed based upon a contract that is unenforceable because of the Statute of Frauds, the value of those services can nevertheless be recovered on the basis of quantum meruit, or the reasonable value of those services. If a person performs services in reliance on an oral promise that he will inherit certain property and that promise is not fulfilled, that individual can sue the decedent’s estate on a quantum meruit basis for the reasonable value of his services

Front 57

Statute of frauds exception - specialty items

Back 57

There exist, however, several important exceptions to the UCC Statute of Frauds, one of which involves contracts for the sale of "specialty goods." Under this exception, if the goods are to be specially manufactured for the buyer and are not suitable for sale to others in the normal course of the seller's business, no writing is required. Since the treadmills were built according to the particular specifications of the luxury health club, were not suitable for sale on the general market, and had little scrap value, they are considered "specialty goods."

Front 58

Mere Inquiry

Back 58

mere inquiry about additional terms or matters is not a counteroffer.

Test: whether the reply is a counteroffer or inquiry is whether a reasonable person would believe that the offer was being rejected.

Front 59

Subjective v. Objective Impossibility

Back 59

Subjective impossibiliyt - D could not perform, not sufficient for an excuse

Objective impossibility - NO ONE could have performed.

Front 60

Anticipatory Repudiation

Back 60

occurs where a promisor, prior to thte time set for performance of his promise, indiciates that he will not perform when the time comes.

K must be executory on boths sides and the repudiation must be unequivocal.

Front 61

How can sellers accept and order from a buyer

Back 61

by communication and shipping conforming OR nonconforming goods; this is an acceptance either way, but a breach of K for shipping non-conforming goods, UNLESS a notice of accommodation is sent with

Front 62

Modifications for just one party

Back 62

not enforceable if the modification (even if it is in writing) benefits only one party

Front 63

Test for Impracticality to allow excuse

Back 63

there must be an extreme and unreasonable difficulty and/or expense and that this difficulty was NOT anticipated.

Front 64

Accord and Satisfaction

Back 64

A K may be discharged by an accord and satisfaction.

1) An accord is an agreement in which one party to an existing K agrees to accept, in lieu of the performance that he is supposed to receive from the other party, some other, different performance.

2) Satisfaction is the performance of the accord agreement

**there must be a bona fide dispute of the claim

Front 65

Test - determining intended beneficiaries

Back 65

First off, intended beneficiaries have contractual rights...

1) is identified in the K

2) receives performance directly from the promisor, or

3) has some relationship w/ the promisee to indicate intent to benefit

**the right must vest (reliance, materially changes position, manifests assent, suit to enforce)

Front 66

Assignments

Back 66

All contractual rights may be assigned; but NOT if

1) it will substantially change the obligor's duty or risk;

2) an assignment of future rights to arise from future Ks, and

3) an assignment prohibited by law (e.g. wages)

Front 67

Non-assignment provisions

Back 67

A clause prohibiting assignment of the K will be constrused as barring only delegation of the assignor's DUTIES.

A clause prohibiting assignment of contractual rights generally does not bar assignment, but merely gives the obligor the right to sue for damages.

HOWEVER - if the K provides that attempts to assign will VOID, the parties can bar assignment; also, if the assignee has notice of the nonassignment clause, an assignment will be ineffective.

Front 68

Is assignment revocable or irrevocable??

Back 68

An assignment for consideration is irrevocable.

An assignment not for consideration is generally revocable.

However, a gratuitous assignment is irrevocable if:
1) obligor has already performed;
2) a token chose is delivered;
3) detrimental reliance on the gratuitous assignment

Front 69

Delegation of Duties

Back 69

All duties may be delegated, except:

1) the duties involve PERSONAL judgment and skill;

2) delegation would change the obligee's expectancy

3) a special trust was reposed int he delegator by the other party to the K; and

4) there is a contractual restriction on the delegation

Front 70

How do you delegate?

Back 70

just manifest a present intention to make a delegation

*rights are assigned - duties are delegated

Front 71

PER

Back 71

evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary contractula terms is inadmissible if the written K is intended as a complete and final expression of the parties.

*merger clause only strengthens presumption that document is final

Front 72

Exceptions to PER

Back 72

1) formation defects (fraud, duress, mistake...)

2) the existence of a condition precedent to a K;

3) parties' intent regarding ambiguous terms

4) consideration problems

5) a prior valid agreement which is incorrectly reflected in the writing

6) collateral agreement if it does not contradict or vary the main K and if it is not so closely connected as to be part of the main K; and

7) subsequent modifications

Front 73

Promise v. condition

Back 73

failure of a promise gives rise to a breach, whereas the failure of a condition relieves a party of the obligation to perform

Front 74

Discharge of duty to perform - list

Back 74

1) By performance or tender of performance

2) condition subsequent

3) illegality

4) impossibility, impracticability, or frustration

Front 75

Impracticability

Back 75

subjective test - requires that a party encounter EXTREME and UNREASONABLE difficulty or expense that was NOT ANTICIPATED. A mere change in the difficulty or expense duty to normal risks that could have been anticipated will NOT warrant discharge by impracticability

Front 76

Discharge by Frustration of Purpose

Back 76

requires:

1) supervening event;
2) that was not reasonably foreseeable at the time of entering into the K;
3) which completely or almost completely destroys the purpose of the K; and
4) the purpose was understood by BOTH parties

Front 77

Mutual Rescission

Back 77

where both parties expressly agree to it. The K to be rescinded must be executory on both sides.

Front 78

Partial Discharge by Modification of K

Back 78

duty may be discharged by modification of the K. There must be mutual assent to the modifying agreement.

Generally, consideration is necessary, although courts will usually find it where EACH PARTY has limited his right to enforce the original K. Consideration is not necessary where the modification is only a correction, or for a modification of a K for the sale of goods.

Front 79

Discharge by Accord and Satisfaction

Back 79

Accord - accord is an agreement in which one party to a K agrees to accept performance different from that originally promised. Generally requires consideration,

**does not discharge a contractual duty, merely suspends the other party's right to enforce it

Satisfaction - is the performance of the accord. It discharges both the accord and the original debt.

Front 80

Liquidated Damages

Back 80

valid if:

1) damages were difficult to ascertain at the time the K was formed, and

2) the amount agreed upon was a reasonable forecast of compensatory damages.

Front 81

Sale of Goods - Buyer breaches - result?

Back 81

seller may withhold delivery or stop delivery by the carrier, resell the goods and recover the difference, plus incidental damages and minus expenses saved as a result of the breach, or recover ordinary K damages for nonacceptance.

If the buyer has already accepted the goods, or if the seller is unable to resell identified goods, the seller may recover the K price.

Front 82

Sale of Goods - Seller breaches - result?

Back 82

buyer may reject nonconforming goods, cancel, cover, recover goods identified to the K, obtain specific performance, or recover damages for nondelivery.

Front 83

what falls outside the scope of the PER?

Back 83

1) a party to a written K can attack the validity of the agreement - that there was a condition precedent

Front 84

Define condition

Back 84

an event, other than the passage of time, the occurrence or nonoccurrence of which creates, limits, or extinguishes the absolute duty to perform in the other contracting party

**can be waived, by words/conduct

Front 85

Surety - SoF

Back 85

Requires only that a promise to answer for the debt or default of another be in writing; such a promise must be collateral to another person's promise to pay rather than a primary promise.

Front 86

Additional/Different terms to K - part of K when between merchants??

Back 86

Yes

If both parties to a K are merchants, additional terms in an acceptance will be included in the K unless:

1) they materially alter the original K;
2) the offer expressly limits acceptance to the terms of the offer; or
3) the offeror has already objected to the particular terms, or objects w/in a reasonable time after notice of them is received

Front 87

What does the UCC require in a writing to satisfy SoF?

Back 87

1) a writing sufficient to indicate that a K was formed

2) quantity ****

3) signature of the party to be charged

Front 88

can requirements K be assigned?

Back 88

Generally, No. because the obligor's duties could change significantly. HOWEVER, the UCC allows the assignment of requirements Ks if the assignee acts in good faith not to alter the terms of the K