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118 Cards in this Set
- Front
- Back
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Applicable Law |
Common Law - Services, Real Estate, etc. Contract UCC Article II - Sale of movable goods. Special rules exist for merchants, so note if parties are MERCHANTS. |
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Mixed Deals |
All or nothing test. Look to the more important part. UNLESS contract expressly divides PAYMENT. |
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Formation of Contract Issues |
Mutuality * Offer * Acceptance Consideration Defenses |
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Formation of Contract - Offer Issues |
Validity - "Manifestation of present intent to contract," definite and certain terms, communicated to an identified offerree? Terminated prior to acceptance? |
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Formation of Contract - Offer Issues of Offer Terms |
Land Contracts - Description & Price required Goods contract - Quantity required (requirements/output acceptable) Vagueness - "fair" or "reasonable" price |
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Formation of Contract - Offer Advertisements |
An advertisement is generally not an offer. However, an advertisement CAN be a unilateral offer if it is in the nature of a reward. OR if it specifies a quantity and expressly indicates who can accept (1 fur coast, first come, first served) Price quotation can be an offer if sent in response to inquiry. |
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Formation of Contract - Offer Means of termination |
Lapse Death Revocation Rejection |
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Formation of Contract - Offer Lapse |
An offer lapse either based on the time stated, or a reasonable time after offer is communicated. |
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Formation of Contract - Offer Death |
Death of a party prior to acceptance. Death or incapacity of either party after an offer but before acceptance terminates the offer (except for irrevocable offers) |
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Formation of Contract - Offer Revocation |
If there is a later, unambiguous statement by offeror to offeree of unwillingness or inability to contract If there is later unambiguous conduct indicating an unwillingness or inability to contract THAT offerree is AWARE OF. |
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Formation of Contract - Offer Irrevocable Offers - Types |
FOUR Firm Offers (UCC & Merchants only) Options Contracts Unilateral Contract (after start of performance) Reliance (reasonably foreseeable and detrimental, contractor/subcontractor) |
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Formation of Contract - Offer Rejection |
A rejection kills an offer, it is dead and gone.
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Formation of Contract - Offer Rejection (Indirect Types) |
Counteroffer Conditional "acceptance" Additional terms to a common law contract |
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Formation of Contract - Offer Option Contracts |
Must have additional consideration. Promise not to revoke given for consideration. |
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Formation of Contract - Offer Firm Offers |
UCC Only A merchant can keep an offer open for up to three months if the "firm offer" is in writing. Courts will supply a term up to three months. |
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Formation of Contract - Offer Unilateral Contracts |
Distinguish "performance" from "mere preparation." Mere preparation is not enough to make an offer irrevocable in a Unilateral Contract. |
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Formation of Contract - Offer Counteroffers General Statement |
Counteroffer generally terminates the offer and creates a new offer. Thus generally, where a counteroffer has been made there is noexpress contract unless that counteroffer has itself been accepted. Counteroffers do not terminate options |
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Formation of Contract - Offer Counteroffers / Bargaining |
Counteroffers need to be distinguished from bargaining. Bargaining does not terminate the offer. |
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Formation of Contract - Offer Conditional Acceptance |
A conditional acceptance terminates an offer. At common law, rejects and becomes a counteroffer that can be accepted by conduct (such as performance). Under the UCC - a conditional acceptance is a rejection. If it is followed on by performance the ORIGINAL contract is accepted. |
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Formation of Contract - Offer Battle of the Forms |
UCC 2-207 ONLY. If there is an offer to buy or sell goods and a response with different terms, there is a contract if the response does not make the new terms a condition of acceptance. The additional terms are only a part of the contract if BOTH PARTIES are merchants, and then only if the additional term is MATERIAL. Arbitration is material. |
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Formation of Contract - Acceptance Methods |
OFFEROR controls the method of acceptance. Usually the means of acceptance in the offer is silent on the bar exam. Words (generally) (look for mailbox rule) Start of performance (generally) (may need to provide notice if so required) (not acceptance in a unilateral contract) |
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Formation of Contract - Acceptance Mailbox Rule |
ALL COMMUNICATIONS other than acceptances are effective only when received. ACCEPTANCES are generally effective WHEN MAILED. But if a REJECTION (not a recovation) is mailed before acceptance is mailed, then neither is effective until received. |
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Formation of Contract - Acceptance Option Contract Acceptance Rules |
The offeree must accept and exercise the option contract before the deadline. The offeror must receive acceptance by the deadline. |
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Formation of Contract - Acceptance Sending wrong goods |
Simultaneously an acceptance and a breach if you send the wrong goods in response to an offer. There is NO CONTRACT if there is notice of "accommodation." Then it is just a counteroffer. |
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Formation of Contract - Acceptance Who can accept |
An offer can only be accepted by a person who knows about the offer at the time she accepts, who is the person to whom it was made. Cannot sell or transfer offers. |
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Formation of Contract - Consideration Definition of Consideration |
Consideration is "bargained for" "legal detriment." A bargain is more than a promise. Consider the apartment-painting hypothetical. "legal detriment" is something that you forego that you had a legal right to do. A promise is consideration except where illusory |
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Formation of Contract - Consideration Illusory Promise |
A promise is illusory there is literally no promise on the other side (right to terminate at any time without notice). |
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Formation of Contract - Consideration Adequacy |
"We do not consider adequacy in determining the validity of consideration" |
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Formation of Contract - Consideration Past Consideration |
Generally not consideration, because did not receive anything in exchange for consideration. However, a promise made after an express request, where there was expectation of payment by promisee will be consideration and be legally enforceable. |
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Formation of Contract - Consideration Pre-existing contractual or statutory duty |
At common law, no new consideration unless for addition or change in performance or if unforeseen difficulty so severe as to otherwise excuse performance OR if if a new party offers a promise to pay. Under Article 2, there need only be "good faith" for changes to an existing sale of goods contract. |
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Formation of Contract - Consideration Part payment as consideration for release |
If a debt is due and undisputed, then part payment is NOT consideration for release. If due or disputed, then there is consideration. |
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Formation of Contract - Consideration Consideration substitutes |
Written promise to satisfy an obligation from which there is a legal defense. Promissory estoppel (detrimental reliance) |
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Formation of Contract - Defenses What parties lack capacity |
Infants (under 18) Mental incompetents (lack ability to understand) Intoxicated persons (if reason to know intoxicated) |
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Formation of Contract - Defenses Consequences of incapacity |
Right to disaffirm (can't keep benefit of bargain though) Ratification Quasi-contract liability for necessities (legally obligated under quasi-contract to pay for necessities) |
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Formation of Contract - Defenses Types of Defenses |
Statute of Frauds Mistake/Ambiguity Illegality Incapacity Unconscionability Fraud, Duress (Consideration, or lack thereof can be considered a defense too) |
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Formation of Contract - Defenses Statute of Frauds, Contracts Within |
Suretyship (answer the debts of another, executors' promise on estate debts) Incapable of performance within a year Sale of goods $500 or more (except specially manufactured goods or goods accepted or paid for) Real estate interest (except leases one year or less) Marriage in consideration for promise MY LEGS |
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Formation of Contract - Defenses Statute of frauds, satisfaction |
Writing, signed by person trying to avoid contract, with all material terms. (for UCC, quantity only) Part performance of (2): improvements, payment, possession on real estate contract FULL performance on contract Part performance on sale of goods contracts (to extent of performance) Delay in responding (UCC MERCHANTS ONLY) Judicial admission, estoppel Merchant confirmatory memo (reasonable time, 10 days) |
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Formation of Contract - Defenses Statute of frauds, modification |
Test is whether the contract WITH modification requires the statute of frauds to be satisfied. |
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Formation of Contract - Defenses "Modifications must be in writing" |
Under common law - ineffective. Under UCC, effective unless waived. |
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Formation of Contract - Defenses Illegality |
If the subject matter of the contract is illegal, it is not enforceable. If the subject matter is legal, but there was an illegal purpose it is enforceable if plaintiff did not have reason to know of illegal purpose. |
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Formation of Contract - Defenses Public Policy |
Contracts that excuse intentional or reckless conduct from liability. Or some covenants not to compete. |
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Formation of Contract - Defenses Misrepresentation - elements |
1. Statement of FACT prior to contract 2. By a contracting party or agent 3. That is false 4. That is fraudulent or material, and 5. Induces the contract No wrongdoing required for material misrepresentations. |
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Formation of Contract - Defenses Nondisclosure |
Nondisclosure typically will not be a defense, caveat emptor. But concealment is an exception to this rule. |
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Formation of Contract - Defenses Duress/Undue Influence |
Physical duress, economic duress. Special relationship between the parties with improper persuasion. |
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Formation of Contract - Defenses Unconscionability |
Court can refuse to enforce all or part of an agreement. Test is unfair surprise and oppressive terms. Court decides based on whether unfair at time agreement was made. |
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Formation of Contract - Defenses Ambiguity |
Material term open to two reasonable interpretations, where each party attaches different meanings to the terms, and neither party knows or has reason to know the term is open. The ship Peerless. |
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Formation of Contract - Defenses Mutual material mistake of existing fact. |
Barren cow case. There must not be a party that was set to bear the risk of mistake. |
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Formation of Contract - Defenses Unilateral mistake |
Only if a palpable or clerical mistake. |
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Terms of Contract Basic cannons |
Construed as a whole Words have ordinary meaning Written or typed terms prevail over printed Prior performance is consider; then Course of dealing is considered; then Custom and usage is considered Presumption of validity Ambiguities construed against contract's preparer |
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Terms of Contract Parol evidence rule |
Prior or contemporaneous expressions; Are inadmissible to vary, modify, or contradict; An integrated agreement |
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Terms of Contract Integration |
A contract is integrated if it is meant to be the final and complete expression. A merger clause is evidence (but not irrefutable) of an integrated agreement. |
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Terms of Contract Integrated contracts - Parol Evidence Exceptions |
Evidence concerning validity (formation defects (such as clerical error) and conditions precedent) Evidence used to interpret Evidence showing true consideration paid Evidence in action for reformation |
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Terms of Contract Default Terms in UCC |
Delivery obligations of seller Risk of Loss Warranties Limitations on warranty liability |
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Terms of contract Delivery obligations |
"Shipment" contract or "delivery" contract. FOB followed by seller's city = shipment FOB = delivery Satisfaction of a delivery contract is when seller gets the goods to a common carrier and makes reasonable arrangements for delivery and notifies buyer. |
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Terms of contract Risk of loss |
No fault risk of loss issue (title is irrelevant): Agreement of parties control Breaching party is liable for uninsured loss EVEN if breach is unrelated to problem Risk of loss shifts from seller to buyer when seller completes delivery obligation If seller is a merchant, shift's when buyer receives the goods. If seller is nonmerchant, shifts when seller tenders goods. |
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Terms of Contract Warranties of Quality |
Express. Must describe or state facts. Or there must be an exemplar, sample, or model. |
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Terms of Contract Implied warrant of merchantability |
When a person buys a good from a merchant, the goods must be fit for the ORDINARY purpose for which such goods are used. Must deal in goods of this kind. |
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Terms of Contract Implied warranty of fitness for a particular purpose |
Buyer has a particular purpose of which the seller is aware and the buyer is relying on the seller to select suitable goods. |
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Terms of Contract Limitations of warranty liability |
Four year statute of limitations running when tender of delivery is made. No implied warranties to OBVIOUS defects No warranties if properly disclaimed "as is" or "with all faults" or conspicuous language of disclaimer. |
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Performance Due Perfect Tender |
Perfect tender rule applies only to the sale of goods. Perfect really means perfect. Common law goes with "substantial performance" |
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Performance Due Rejection of the Goods |
Less than perfect tender permits buyer to reject goods (if in good faith), buyer must take reasonable care of the goods and cannot use the goods. |
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Performance Due When is Cure Acceptable |
Cure is available where time for performance has not yet expired.
Seller can cure when they had a reasonable ground to believe that tender would be acceptable, perhaps with a money allowance. But seller does not always have an opportunity to cure. |
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Performance Due Installment contracts |
Can't reject an installment unless the substantial impairment frustrates the purpose of the overall contract. |
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Performance Due Accepting the goods |
If buyer accepts goods, buyer cannot later reject them. Payment prior to inspection is NOT acceptance. Rejection however must be timely. "Reasonable" time. Retention of goods acts as an acceptance. |
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Performance Due Revoking acceptance requirements |
1. Nonconformity substantially impairs the value of the goods; and 2. there was excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction; 3. revocation was within a reasonable time after discovery of nonconformity. |
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Third Party Problems - Beneficiaries Third-party beneficiaries |
Life insurance contract beneficiaries are third-party beneficiaries |
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Third Party Problems - Beneficiaries Vocabulary |
Third-party beneficiary - not a party to the contract Promisor - person who makes a promise that benefits the third party Promisee - person who obtains the promise that benefits the third party Intended/incidental beneficiary. Only INTENDED beneficiaries have contract law rights. Creditor/donee - types of intended beneficiaries. |
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Third Party Problems - Beneficiaries Cancel or modify the contract |
Cannot cancel or modify without intended beneficiary's consent if the third party knows of and relies on or assented as requested to the contract. Beneficiary's rights have VESTED. |
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Third Party Problems - Beneficiaries Who can sue whom? |
Beneficiary can recover from promisor. Promisee can recover from promisor. Beneficiary cannot recover from promisee. Creditor beneficiary can recover from promisee BUT ONLY on pre-existing debt |
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Third Party Problems - Beneficiaries Defenses |
Promisor can assert any defense against third party beneficiary as he could against promisee. |
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Third Party Problems - Assignments Definition |
An assignment is a transfer of rights under a contract. First step is a contract between two parties. Second step is an assignment. |
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Third Party Problems - Assignments Vocabulary |
Assignor - Party to the contract who later transfers his rights under the contract to another. Assignee - Not a party to the contract. Able to enforce the contract because of the assignment. Obligor - The other party to the contract. |
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Third Party Problems - Assignments Limitations on assignments |
Contract provisions can prohibit assignment. Permits the assignee to enforce absent knowledge of the contract provision. Assignor may be liable for breach of contract, however. Contract provisions can invalidate assignment. Assignee can no NOT enforce. |
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Third Party Problems - Assignments Assignability under common law |
Even absent express provision in contract, common law bars an assignment that substantially changes the duties of the obligor. Other than the right to payment, this is usually a substantial change. |
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Third Party Problems - Assignments Gratuitous Assignments |
Consideration is NOT required for assignments, but gratuitous assignments are revokable. |
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Third Party Problems - Assignments Who can sue whom? |
Assignee can recover from obligor. Assignor for consideration cannot recover from obligor. Obligor has same defenses against assignee as it would have against assignor. Payment by obligor to assignor is effective until obligor knows of assignment. |
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Third Party Problems - Assignments Warrantees from assignor to assignee |
1) Right assigned actually exists 2) Right assigned is not subject to any then-existing defenses by the obligor 3) Assignor will not impair the value of the assignment. |
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Third Party Problems - Assignments Multiple assignments |
Gratuitous - last assignee wins For consideration - first assignee wins. Later assignees have breach of contract claim. * Exception, a later assignee takes priority if it is the first to obtain payment, a judgment, novation, or indicia of ownership. |
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Third Party Problems - Assignments Delegation of duties |
A delegation is different from an assignment. Generally a contractual duty is delegable unless contract prohibits delegations or prohibits assignments. Or if it involves very special skills in a personal services contract. |
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Third Party Problems - Assignments Delegating Party's Responsibilities |
After a delegation, the delegating party always remains liable. Delegatee liable only if she receives consideration from delegating party. |
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Third Party Problems - Assignments Delegation and Third Party Beneficiary Contracts |
A delegation for consideration is ALWAYS a contract that creates an intended third party beneficiary, so you can apply those rules for between the intended beneficiary and the promisor. |
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Remedies Nonmonetary |
Specific Performance Reclamation Entrustment |
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Remedies Specific Performance |
Contracts for sale of real estate generally. Unique goods in sales of goods. Contract for services (ONLY negative specific performance/injunctive relief) |
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Remedies Reclamation |
If buyer is insolvent at time it received goods, and seller demands return of goods within 10 days of receipt, and the buyer still has goods then an unpaid seller can get his goods back. |
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Remedies Entrustment |
If you entrust goods to a service provider who wrongfully sells it to a third party, you probably cannot recover those goods. The BFP prevails under the UCC. |
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Remedies Money Damage - Basic |
Contract law compensates plaintiff, does not punish defendant. "The purpose of the money damages rules in California are designed to compensate the plaintiff""This is done by protecting the expectation interest of the plaintiff""Expectation is that there will be no breach""Plaintiff should receive the same dollar position as if no breach" |
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Remedies Money damages - types |
ECCLAIR Expectation Incidental Consequential Avoidable Certainty Reliance Liquidated |
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Remedies - Expectation Damages Seller breaches, buyer keeps goods |
Fair market value if perfect - fair market value as delivered OR Cost of repair |
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Remedies - Expectation Damages Seller breaches, seller has goods |
Market price at time of discovery of the breach - contract price OR (whichever is greater) Reasonable replacement price - contract price |
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Remedies - Expectation Damages Buyer breaches, buyer keeps goods |
Contract price |
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Remedies - Expectation Damages Buyer breaches, seller has the goods |
Contract price - resale unless seller cannot resell in which case seller recovers contract price. Lost volume seller. |
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Remedies - Expectation Damages Lost volume seller rules |
When the seller sells out of regular inventory, can recover the profit they would have made on the lost sale (breached). |
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Remedies - Incidental Damages Definition |
Costs incurred in dealing with the breach such as storing rejected goods or finding a replacement in a services contract. |
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Remedies - Incidental Damages When available |
ALWAYS recoverable |
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Remedies - Consequential Damages Definition |
Consequential or "special" damages are those kinds that are special to the plaintiff due to the plaintiff's special circumstances. |
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Remedies - Consequential Damages Limitation |
Recovery on consequential damages is limited to situations in which D had reason to know of the special circumstances at the time of the contract. |
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Remedies - Limitations Generally |
No recovery for avoidable damages. Nonbreaching party must mitigate damages reasonably. If damages cannot be recovered to a reasonable degree of certainty, may use a different measure of damages than expectation (such as reliance). |
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Remedies - Liquidated Generally |
Contract provision fixing amount of damages. Will only be valid if not considered a penalty. If damages were difficult to forecast at the time of contract and whether the provision is a reasonable forecast. A liquidated damage provision will be suspect if not a formula. |
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Excuses Generally |
Nonperformance Anticipatory Repudiation Insecurity about Performance Improper Performance Nonoccurence of Express Condition Rescision Accord and Satisfaction Novation Unanticipated Event |
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Excuses - Nonperformance Generally |
Obviously, the nonbreaching party does not have to pay if the breaching party does not perform. |
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Excuses - Anticipatory Repudiation Elements |
An anticipatory repudiation must be: 1. Unambiguous 2. Made prior to the time performance was due |
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Excuses - Anticipatory Repudiation Consequence |
Excuses the other party's duty to perform. Gives rise to an IMMEDIATE claim for damages. |
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Excuses - Anticipatory Repudiation Retraction |
An anticipatory repudiation can be withdrawn so long as there has not been a material change in position by the other party. If timely retracted, duty to perform is reimposed but delayed until "adequate assurances" are provided. |
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Excuses - Insecurity Generally |
1. Reasonable grounds for insecurity 2. Written demand for adequate assurances 3. Commercially reasonable to stop performance. Look to see if an "anticipatory repudiation" is really just grounds for insecurity. |
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Excuses - Improper performance Generally |
Article 2 has a perfect tender rule Common law has a material breach rule. Recovery can still be attained by breaching party under quasi-contract. |
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Excuses - Nonoccurrence of express condition What can be an express condition |
1. Language in contract; 2. limiting obligations created by other language; 3. with triggering words such as "if" "only if" "on condition that" etc. 4. results in an excuse, not breach. |
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Excuses - Nonoccurrence of express condition When satisfied |
Strict compliance required unless would cause excessive harm or there is not honest and good faith dissatisfaction. Waiver applies here too (example: home sale contract with closing conditioned on interest rate can be waived by the person whom it protects) |
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Excuses - Nonoccurrence of express condition & Parol evidence rule |
If there is a written contractand prior to that written contract the parties orally agreed thateffectiveness of the contract was conditional, then courts generally will consider evidenceof such an oral agreement notwithstanding parol evidence rule(s) |
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Excuses - Later contract Types |
Rescission Accord and satisfaction Modification Novation |
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Excuses - Later contract Rescission |
Key issue is whether there is still some performance remaining from each contracting party. If so, the rescission can be valid. |
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Excuses - Later contract Accord and satisfaction - definition |
Accord - A new agreement to accept a different performance in satisfaction of the existing obligation. Satisfaction - completion of the new agreement |
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Excuses - Later contract Modification |
Modification is an agreement by parties to accept a different agreement in satisfaction of the existing obligation. |
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Excuses - Later contract Accord and Satisfaction - remedies |
If party breaches the accord, then the other party can recover on either the original obligation OR the accord. |
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Excuses - Later contract Modification |
If party breaches a modified agreement, then the other party can only recover on the modified agreement (assuming the modified agreement is valid). |
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Excuses - Later contract Novation |
Novation is an agreement between both parties to an existing contract to the substitution of a new party. Novation excuses the contracted for performance of the party who is substituted for or replaced. |
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Excuses - Later, unanticipated event Basics |
The post-contract occurrence must affect the ability to perform, not just the cost of performance. Under Article 2 - if sale of goods do risk of loss first. If risk of loss is on the buyer, then buyer still has to pay. If risk of loss is still with the seller, then buyer never has to pay. Seller may be liable for damages if the goods are not "identified goods" like the 1973 cadillac. Excused from performance if identified goods are destroyed. |
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Excuses - Later, unanticipated event Law or regulations |
If a later law makes performance of contract illegal, excuse by impossibility. Also excused if later law frustrates the understood purpose of the contract. |
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Excuses - Death |
Death does not excuse performance of a contract EXCEPT where the death of a party is a "special person" whose personal services are required for performance. |
