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111 Cards in this Set
- Front
- Back
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The two universes of contracts? |
Common law and UCC |
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Common law contract deal with... |
services |
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UCC contracts deal with... |
sale of goodies |
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Two approaches to mixed contracts |
1. "All or nothing" = pick either CL or UCC
2. "Predominant purpose" = what plays bigger role/main reason for K |
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Four things to remember when determining if an enforceable contract has been formed |
Agreement (offer/acceptance) Consideration Defenses to formation Statute of Frauds (All Contracts Do Suck) |
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Offer (definition) |
manifestation of willingness to enter into K (by offeror) that creates power of acceptance (in offeree) |
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Offer and acceptance are governed by a _______ test |
Objective. Outward appearance of actions and words matter, not secret intentions Does offeror have objectively serious intent to be bound? |
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Are expressions of opinion an offer? |
Negative |
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Must an offer be directed to someone specific? |
Yeah |
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All ______ terms must be covered in a common law contract agreement |
Essential |
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What are the "essential" terms in the common law? |
Parties, subject, price, quantity |
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In the UCC, what are the "essential" terms? |
Parties, subject, quantity *need not include price |
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6 ways to revoke an offer |
1. Express revocation 2. Constructive revocation (offeree learns that offeror acted inconsistent with ability to K) 3. Offeree rejects 4. Offeree makes a counter-offer 5. Offeror dies 6. Reasonable amount of time passes (varies depending on K) |
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4 ways in which an irrevocable offer can arise |
1. Option 2. Firm offer 3. Offeree has started performance (unilateral offer) 4. Detrimental reliance |
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Option contract |
Giving consideration to keep the offer open ex. Offer to sell house for $1M. Also pay $100 in exchange for you not revoking offer for a week *essentially a second K |
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Firm offer |
Offeror must be merchant Must be written, contain explicit promise not to revoke, and signed by merchant (offeror) Lasts as long as stated, or for a reasonable time not longer than 90 days |
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Offeree started performance |
Unilateral offer to contract can't be revoked if offeree started performance ex. John Foster/Hamoudi |
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Unilateral offers can only be accepted by ______ |
performance |
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Detrimental reliance |
Offeree reasonably and detrimentally relies on the offer in a foreseeable manner Shows up a lot in contractor/subcontractor |
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Acceptance (definition)
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manifestation of a willingness to enter into agreement by the offeree Governed by the objective test Offeree must accept per the rules of the offer |
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If seller tries to accept by shipping wrong goods, the UCC treats this as?
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Acceptance plus breach |
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Must you know about an "open to all offer" in order to accept? |
Yes sir |
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Mailbox rule |
Acceptance by mail is valid when SENT Does not apply: -if offeree sends something else (ex. revocation) -to other types of communication (ex. revocation) -to option contracts -unclear if applies to email |
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What if you reject by mail, and then change your mind and send an acceptance by mail? Both letters arrive same day. |
Whatever is opened first
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When is acceptance by silence cool? |
-Unilateral reward offers -unilateral offers when parties are geographically close so that they would see performance has occurred -past history of silence serving as acceptance -offeror says that acceptance must come via silence |
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Implied in fact contracts |
Communicate acceptance without writing/speaking
ex. Haircut example |
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Common law counter offer rule |
Mirror image rule |
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UCC 2-207 counter offer rule |
If acceptance doesn't match terms exactly, offer can still count as acceptance "definite seasonable expression of acceptance" |
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When will new terms in acceptance under UCC 2-207 come into the contract? |
-Parties are merchants -New time does not materially alter deal -Initial offer did not expressly limit acceptance to its terms -Offeror does not object within reasonable time to the new term (seems like new terms rarely come in) |
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Consideration (definition) |
exchange of promises involving legal detriment of benefit (bargained for exchange) Is there benefit to promisor? OR detriment to promisee? (Need only one) |
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Do gift promises and conditional gifts count as consideration?
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Nope |
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Is not doing something that you're legally entitled to do deemed to be consideration? |
Yep |
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Pre-existing duty rule (common law) |
A promise to do something you're already obligated to do is NOT consideration |
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Modification under the UCC? |
Must be made in good faith Don't need consideration |
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Promissory estoppel (reliance) |
1. Promise is made that would be reasonably expected to induce reliance 2. Promisee does take detrimental action in reliance on that promise 3. Injustice can be avoided only by enforcing the promise |
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Quasi-contract (definition) |
Situation when you would've made a contract but you couldn't Look for situation when one party conferred benefit on another party and would be fair to pay for that benefit |
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Quasi-contract elements
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-P confers measurable benefit on D -P would reasonably expect to get paid -Would be unfair to let D keep benefit without paying |
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Seven defenses to contract
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1. Misunderstanding 2. Incapacity 3. Mistake 4. Fraud/misrepresentation/nondisclosure 5. Duress 6. Illegality 7. Unconscionability |
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Misunderstanding |
-Parties use material term open to two or more reasonable interpretations -Each side attaches different meaning -Neither party knows/should know of the confusion |
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Incapacity |
Minors Mentally ill Contract voidable (incapacitated party can disaffirm) |
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Two standards for mentally ill |
1. Person can't understand nature/conseq of actions (other side doesn't have to know) 2. Person cannot act in reasonable manner (if other side knows) |
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Mistake (general definition) |
Belief not in accord with present fact
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Mutual mistake |
Lets adversely affected party rescind if: -mistake of fact existing at time deal is made -mistake relates to basic assumption of K and has material impact on deal -impacted party did not assume risk of mistake |
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Unilateral mistake |
Lets adversely affected party rescind if: -prove all elements of mutual mistake -other side knew/had reason to know of/caused the mistake |
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Misrepresentation |
Statement at time of contracting that is not true Must show: -misrepresentation of present fact -material OR fraudulent -made unders circumstances in which it is justifiable to rely on representation |
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Fraud in the execution |
Trick someone into signing something they don't know is a K |
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Nondisclosure |
Other party doesn't learn the truth, but you just remain quiet Usually don't have to tell other side all material facts -BUT have to if there's a special relationship (fiduciary) or active concealment |
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Duress |
Improper threat depriving party from making meaningful choice to contract Economic duress - one party makes threats to induce another party to K/modify a K |
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Undue influence
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Puts intense pressure on someone who seems weak-minded or susceptible to high pressure sales tactics |
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Illegality |
Unenforceable -but K to further criminal act (that is not itself illegal) is OK |
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Unconscionability |
"Shocks the conscience" Procedural - defect in bargaining process itself (ex. hidden term) or absence of meaningful choice Substantive - ripoff terms |
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Statute of Frauds (five types of Ks) |
Marriage Suretyship One year UCC $500+ Real property
(My Steelers Over Ur Ravens) |
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Main purpose exception |
If main purpose in agreeing to pay debt of another is for the surety's own economic advantage, not in SOF world |
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How can SOF be satisfied?
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Performance or writing |
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Does part performance of service K satisfy SOF? |
No |
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SOF: a writing signed by _________ will satisfy SOF
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the party against whom enforcement is sought |
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Part performance of a real estate K |
Two of the three: 1. Possession 2. Payment 3. Improvements to land |
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Can part performance on a UCC goods contract satisfy SOF?
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Yes, but only for quantity delivered/accepted |
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Do custom-made/specially manufactured goods need to be in writing?
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Nah
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Do judicial admissions and failure to object to confirming memo satisfy SOF? |
Yes (failure to object = both must be merchants) |
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A deal in SOF world, and requirements are met. Now parties want to modify deal. Must they also satisfy SOF? |
Not automatically...only if modification has to be in SOF |
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Parol evidence rule |
Applies to prior or contemporaneous statements (oral or written) |
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Complete integration vs. Partial integration |
Complete - contract expresses all terms of agreement (look for merger clause) Partial - written and final writing, but not all terms included |
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Does the UCC presume a writing is complete or partial? |
Partial (unless parties would have certainly included a disputed term in the writing) |
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In what situations does the PER NOT bar earlier evidence?
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-Evidence relevant to a defense -Even if totally integrated, party can introduce evidence of second, separate deal -Prior communication to interpret ambiguous term |
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Express warranty |
Promise that affirms/describes goods and is part of basis of the bargain (unless seller's opinion)
ex. model goods |
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Implied warranty of merchantability |
Seller is merchant Goods are fit for ordinary commercial purposes Can disclaim if conspicuous |
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Implied warranty of fitness for a particular purpose
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Buyer relies on seller's expertise to select special type of good to be used for a special purpose Seller implies this, unless disclaimed (so long as conspicuous) |
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Express conditions |
Created by K language "provided that", "on the condition that" etc. Must be strictly satisfied (unless somehow excused) |
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Can parties waive express conditions?
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Yes, by words or conduct Can also be waived if other party wrongfully interferes/hinders condition (good faith standard) |
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Constructive Condition of Exchange |
One party's performance is conditioned on other side's performance |
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Does the CCE have to be satisfied perfectly? |
No. Substantial performance is OK so long as not material breach can't be willful |
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Divisibility of K |
If K is divisible, will be broken down into mini contracts to determine if there's been substantial performance |
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UCC rule for performance |
Perfect tender -perfect goods -perfect delivery |
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Cure |
If seller fails to tender perfect goods and time remaining on K OR seller had reasonable grounds to believe the buyer would accept replacement, then seller has a chance to cure |
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Installment contract and perfect tender
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Can only reject specific delivery when substantial impairment in installment that can't be cured |
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Shipment contract |
FOB seller's place of business Seller must: 1. get goods to common carrier 2. make arrangements for delivery 3. notify buyer |
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Destination contract |
FOB buyer's place of business Seller must get goods to buyer's business and notify buyer |
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Risk of loss
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1. See if parties have dealt with ROL in K 2. If not, ask if either has breached (if yes, then they bear risk of loss, even if unrelated) 3. If no breach, then ask what type of K it was: shipment = ROL during delivery with buyer destination = ROL during delivery rests with seller |
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If seller is merchant (ROL) |
Risk of loss stays with seller until buyer receives goods if merchant If not merchant, ROL moves to buyer when seller tenders the goods |
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Impossibility/impracticability
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-Performance becomes illegal after K formed -Subject of K is destroyed -Services with special person and that party dies/incapacitated -but only if it's more expensive, not impossible/impracticable (look for hindering ABILITY to perform, not just cost) |
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Death after contract |
Usually doesn't relieve obligations Estate is on the hook for obligations |
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Frustration of purpose |
Performance can still occur, but something happened to undermine entire reason for K Event must be extreme and not previously allocate to one of the parties (rare) |
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Can both parties agree to just walk away from K? |
Yeah |
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Accord and satisfaction |
Parties to earlier K agree that performance will be satisfied instead by something else accord = new performance satisfaction = excusing of initial obligation |
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What happens if accord is not performed? |
Other side can sue on either original obligation or new promise |
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Novation
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Both parties agree that substitute person will take over K obligations if valid, original promisor is relieved of obligation |
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Anticipatory repudiation |
Other side says they won't perform before performance is due Can either: 1. Treat repudiation as breach and sue immediately (but if payment is only thing left to do, cannot sue early) 2. Ignore, demand performance, see what happens |
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Can a party retract their repudiation? |
Yes so long as other side hasn't commenced a lawsuit or acted in reline on repudiation |
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UCC and anticipatory repudiation |
Reasonable grounds for insecurity about other side's performance allows you to demand for adequate assurance of performance if party fails to respond within reasonable time, then you can treat this as repudiation |
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Expectation damages
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typical remedy in K law goal is to put party in position they would've been in had the K been performed Value of performance without the breach minus value with the breach |
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Three limits on expectation damages |
1. Must be proven with reasonable certainty 2. Unforeseeable consequential damages are not recoverable unless breaching party had reason to know about possibility of these unforeseen damages 3. Breached-against party must try to mitigate damages |
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General damages |
Types of losses almost anyone would suffer from breach ex. incidental damages (cost of storing rejected goods, finding new buyer, replacement vendor) |
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Consequential damages |
Losses unique or special to this plaintiff
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Lost volume profits |
Basically award the profit they would've made, even if they resold the product |
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Reliance damages |
Goal to put party back in the position they would've been in had the contract never been formed |
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Restitution
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Goal is to give P an amount equal to the benefit that P has conferred on D |
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Liquidated damages |
must be: -reasonable at time of contracting -actual damages from breach would be uncertain/difficult to prove |
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Punitive damages |
almost never allowed in K law |
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Specific performance |
If money damages won't do Presumptively available for real estate Look for unique goods |
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Right of reclamation |
Equitable right of unpaid seller to reclaim goods when buyer is insolvent 1. Buyer must be insolvent at time of receipt of goods 2. Seller must demand return of goods within 10 days of receipt 3. Buyer still has the goods |
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Third party beneficiary |
Intended and incidental Ask whether the initial parties intended to convey enforcement rights in the event of a breach |
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Do intended and incidental beneficiaries have right to sue? |
Intended has right to sue Incidental doesn't |
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Creditor beneficiary |
Promisee strikes deal with promisor in order to repay some earlier debt to third party |
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Donee beneficiary |
No preexisting obligation, but promisee clearly intends to confer gift of enforcement on third party |
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When will a third party NOT lose enforcement rights? (these cause enforcement rights to vest) |
-beneficiary detrimentally relies on the rights (similar to promissory estoppel) -beneficiary manifests assent to the K/rights -beneficiary files lawsuit to enforce K |
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Assignment |
Transfer of rights under K Assignment is almost always ok, unless K prohibits or invalidates it |
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a. If contract prohibits assignment? b. If contract invalidates assignment? |
a. Assigning party has breached deal when he makes the assignment, but third party can still recover b. Third party cannot recover (because this right is invalidated, so there's no power or right to assign) |
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What happens if someone assigns same rights twice? |
Assignment without consideration = last assignment controls Assignment with consideration = first assignment with consideration controls |
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Delegation |
"outsource" duties to someone else Generally ok, so long as K doesn't prohibit and as long as the party doesn't have special interest in having a specific person perform |
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Is delegatee liable for breach? |
No, unless received consideration from delegating party |
