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83 Cards in this Set

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Applicable Law: UCC v. Common Law
UCC applies to sales of goods (moveable, tangible objects) while common law applies to all other types of contracts.
CREATION OF A CONTRACT (K)
A court will ask the following 3 basic questions:

1. Was there MUTUAL ASSENT?

2. Was there CONSIDERATION or some substitute for consideration?

3. Are there any DEFENSES to creation of the K?
K Formation

In order to form a valid K, the following elements must be present:
OFFER

ACCEPTANCE

CONSIDERATION
MUTUAL ASSENT--OFFER & ACCEPTANCE
Mutual assent = "a meeting of the minds"
The process by which parties reach this meeitng of the minds generally is some form of negotiation, during which, at some point, one party makes a proposal (an OFFER) and the other agrees to it (an ACCEPTANCE). Courts use an OBJECTIVE measure to determine if a meeting of the minds has occurred.
OFFER
An offer is a manifestation of an INTENT TO CONTRACT (words or conduct showing commitment = "PROMISE, UNDERTAKING OR COMMITMENT). An offer must also have DEFINITE AND CERTAIN TERMS and be COMMUNICATED to the offeree.

An offer 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.
Advertisements as Offers
Although most advertisements are not offers, rather invitations for offers, where the language of the advertisement can be construed as containing a promise with certain terms and where the offeree, or class of offerees, is clearly identified it will be considered an offer.

Offer: DEFINITE & CERTAIN TERMS
An offer must be definite and certain in its terms. Basic question is whether enough of the essential terms have been provided so that a K including them would be CAPABLE OF BEING ENFORCED.

Depends on the kind of K contemplated. Typically, the following are important:

(i) the IDENTITY OF THE OFFEREE;

(ii) the SUBJECT MATTER; and

(iii) the PRICE to be paid.

However, a promise generally will be enforceable even if it does not spell out every material term, as long as it contains some OBJECTIVE STANDARD for the ct to use to supply the missing terms.
Requirements for Sale of Goods
In a K for the sale of goods, the QUANTITY being offered must be certain or capable of being made certain.

No price requirement under Article 2. BUT, vague or ambiguous MATERIAL terms are NOT an offer under either common law or UCC.

Magic Words: "appropriate," "fair," or "reasonable" = BAD; "all," "only," "exclusively," or "solely" = GOOD
"Requirements" and "Output" Ks
In a requirements K, a buyer promises to buy from a certain seller all of the goods the buyer requires, and the seller agrees to sell that amount to the buyer.

In an output K, a seller promises to sell to a certain buyer all of the goods the seller produces, and the buyer agrees to buy that amount from the seller.

Although no specific quantity is mentioned in offers to make these Ks, the offers are sufficiently definite because the quantity is CAPABLE of being made certain by reference to objective, extrinsic facts.

--It is assumed that the parties will act in good faith; unreasonably disproportionate terms are not recognized as tender.

--must also be an established business.
Requirements for Service Ks
The nature of the work to be performed is required in an offer for services.
ACCEPTANCE
An acceptance must manifest an intent to contract to the terms of the offer and be communicated to the offeror.

The offeree exercises the power given her by the offeror to create a contract.
Acceptance: The Mailbox Rule
Acceptance by mail or similar menas creates a K at the MOMENT OF DISPATCH provided that the mail is properly addressed and stamped, UNLESS:

(i) The OFFER STIPULATES that acceptance is not effective until received; or

(ii) An OPTION K is involved (--> an acceptance under an option K is effective only upon RECEIPT).

NOTE: because in most jxns a revocation is effective only upon receipt, under the mailbox rule if the offeree dispatches an acceptance BEFORE HE RECEIVES A REVOCATION sent by the offeror, a K is formed.
CONSIDERATION
Consideration is a BARGAINED FOR EXCHANGE whereby there is a DETRIMENT AND BENEFIT flowing from each party to the other.

LONG RULE: Two elements are necessary to constitute consideration:

(i) there must be a BARGAINED FOR EXCHANGE between the parties; and

(ii) that which is bargained for must be considered of LEGAL VALUE or, put differently, it must constitute a benefit to the promisor OR a detriment to the promisee. Detriment is determined by whether an exchange contains legal value.
CONSIDERATION: (i) Bargained-for exchange
requires that the promise induce the detriment AND the detriment induce the promise. Both elements must be present.

It is not enough that the promisee incurs detriment; the detriment must be the PRICE of the exchange, and not merely fulfillment of certain conditions for making the gift. The TEST is whether the act or forbearance by the promisee would be of any benefit to the promisor.

Economic benefit is not required.
DEFENSES to Consideration
1. Absence of Mutual Assent

2. Absence of Consideration

3. Public Policy Defenses -- Illegality

4. Lack of Capacity

5. Defenses to Enforcement
(i) Statute of Frauds
(ii) Unconscionability
Defenses: ABSENCE OF MUTUAL ASSENT -- Mutual Mistake
When both parties entering into a K are mistaken about the facts relating to the agreement the K may be voidable by the adversely affected party if:

(i) The mistake concerns a BASIC ASSUMPTION on which the K is made (i.e., not really a diamond, but instead a cubic z);

(ii) The mistake has a MATERIAL EFFECT on the agreed-upon exchange (e.g., cubic z is only worth 1/100 of what the diamond is worth); and

(iii) The party seeking avoidance DID NOT ASSUME THE RISK of the mistake.

Mutual mistake is NOT a defense if the adversely affected party bore the risk that the assumption was mistaken.

And generally, a mistake in value not a defense.
Defenses: ABSENCE OF MUTUAL ASSENT -- Unilateral Mistake
If only one of the parties is mistaken about the facts relating to the agreement, the mistake will NOT prevent formation of a K. However, if the non-mistaken party KNEW OR HAD REASON TO KNOW OF THE MISTAKE made by the other party, the K is voidable by the non-mistaken party.

A majority of jxns hold that mistakes in COMPUTATION may be canceled in equity, assuming that the nonmistaken party has NOT RELIED on the K.

Modern authority also has held that a unilateral mistake that is SO EXTREME that it outweighs the other party's expectations under the agreement will be a ground for cancellation of the K.

Errors in judgment will NOT prevent the formation of a K.
Defenses: STATUTE OF FRAUDS (SOF)
In most instances, an oral contract is valid. However, certain agreements, by statute, must be evidenced by A WRITING SIGNED BY THE PARTIES SOUGHT TO BE BOUND.
Defenses: UNCONSCIONABILITY
The concept of unconscionability allows a court to REFUSE TO ENFORCE A PROVISION OR AN ENTIRE K to avoid "unfair" terms. It is sometimes said that there are two types of unconscionability: substantive unconscionability (i.e., based on price alone) and procedural unconscionability (i.e., based on unfair surprise or unequal bargaining power). However, few cases recognize substantive unconscionability based on price alone.

TIMING: Unconscionability is determined by the circumstances as they existed at the time the K was formed.

Effect if Ct finds unreasonable: the court may:
(i) refuse to enforce the K;
(ii) enforce the remainder of the K without the unconscionable clause; or
(iii) limit the application of any clause so as to avoid an unconscionable result.
PROMISSORY ESTOPPEL or Detrimental Reliance
Absent consideration, if a party detrimentally relied on a promise it can serve as a substitute for consideration. One must show that the promisor intended for him to rely on the information and that he in fact relied on it to his detriment.

LONG RULE: CONSIDERATION IS NOT NECESSARY if the facts indicate that the promisor should be estopped from not performing. Under RS90, a promise is enforceable if necessary to prevent injustice if:

1) the promisor should reasonably EXPECT TO INDUCE ACTION OR FORBEARANCE;

2) OF A DEFINITE AND SUBSTANTIAL CHARACTER;

3) And SUCH ACTION OR FORBEARANCE IS IN FACT INDUCED.

Modernly, the Second Restatement 90 no longer requires the action or forbearance to be of "definite and substantial character" and further provides that the remedy "may be limited as justice requires."

Typically award expectation damages.
BREACH: When does a breach occur?
If (i) a promisor is under an absolute duty to perform, and (ii) this absolute duty of performance has not been discharged, then this failure to perform in accordance with the K terms will amount to a breach of K. The non-breaching party who sues for breach of K must show that she is WILLING AND ABLE to perform but for the breaching party's failure to perform.
MINOR BREACH
A breach of K is minor if the obligee gains the substantial benefit of her bargain despite the obligor's defective performance.

The effect of a minor (immaterial) breach is to provide a remedy for the immaterial breach to the aggrieved party; the aggrieved party is NOT relieved of her duty of performance under the K.

Examples: insignificant delays in performance or small deficiencies in the quality or quantity of performance when precision is not critical.
MATERIAL BREACH
If the obligee does not receive the SUBSTANTIAL BENEFIT OF HER BARGAIN as a result of failure to perform or defective performance, the breach is considered material. If the breach is material, the consequences are more severe. The non-breaching party:

(i) may treat the K as at an end, i.e., any duty of counterperformance owed by her will be discharged; and

(ii) will have an IMMEDIATE right to all remedies for breach of the entire K, including total damages.
BREACH
When a party fails to perform materially by the terms of the K he is in breach. The nonbreaching party may seek damages.
PAROL EVIDENCE RULE
When the parties to a K express their agreement in a WRITING with the INTENT that it embody the full and final expression of their bargain (i.e., the writing is an "INTEGRATION"), any other expressions--written or oral--made PRIOR TO the writing, as well as any oral expressions CONTEMPORANEOUS WITH the writing, are INADMISSIBLE to vary the terms of the writing under the parol evidence rule.
Parol Evidence Rule: ARTICLE 2
Article 2 generally follows the PER, providing that a party cannot contradict a written K but he may add CONSISTENT ADDITIONAL TERMS unless:

(i) there is a merger clause; or

(ii) the courts find from all of the circumstances that the writing was intended as a complete and exclusive statement of the terms of the agreement.

Article 2 also provides that a written Ks terms may be EXPLAINED or SUPPLEMENTED by the following, whether or not ambiguous:

1. The parties COURSE OF DEALING;

2. A USAGE OF TRADE; or

3. The parties' COURSE OF PERFORMANCE.
Article 2: WARRANTIES
Ks for the sale of goods automatically include a warranty of title (in most cases). They may also include certain implied warranties and express warranties.

WARRANTY OF TITLE & WARRANTY AGAINST INFRINGEMENT:

Any seller of goods warrants that the title transferred is good (free of liens or encumbrances). This arises automatically and need not be mentioned in the K.

A merchant seller regularly dealing in goods of that kind automatically warrants that the goods are delivered free of any patent, trademark, copyright, or similar claims. But a buyer who furnishes specifications for the goods to the seller must hold the seller harmless against such claims.
IMPLIED WARRANTY OF MERCHANTABILITY

IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE

EXPRESS WARRANTIES
Article 2: IMPLIED WARRANTY OF MERCHANTABILITY
1) implied in every K for SALE BY A MERCHANT;

2) to be merchantable, goods must at least be "fit for the ordinary purposes for which such goods are used."

3) seller's knowledge of defect is irrelevant.
Article 2: IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE
A warranty will be implied in a K for the sale of goods whenever:

(i) ANY SELLER, merchant or not, HAS REASON TO KNOW THE PARTICULAR PURPOSE for which the goods are to be used and that the BUYER IS RELYING on the seller's skill and judgment to select suitable goods; and

(ii) the BUYER IN FACT RELIES on the seller's skill or judgement
Termination of Offer: Limitations -- Merchant's Firm Offer
Under Art 2:

(i) If a MERCHANT;

(ii) Offers to sell goods in a SIGNED WRITING; and

(iii) the writing GIVES ASSURANCE THAT IT WILL BE HELD OPEN; then

(iv) the offer IS NOT REVOCABLE for lack of consideration during the time stated, or if no time is stated, for a reasonable time (but in no event may such period exceed 3 months)
Article 2: EXPRESS WARRANTIES
Any affirmation of fact or promise made by the seller to the buyer, any description of the goods, and any sample or model creates an express warranty if the statement, description, sample, or model is part of the BASIS OF THE BARGAIN.

Buyer need not prove that he actually relied on the statement, but that he COULD HAVE RELIED on it when he entered into the K.
Article 2: PERFORMANCE
Article 2 generally requires a PERFECT TENDER--the delivery and condition of the goods must be exactly as promised in the K.

--Obligation of good faith
--Seller's obligation of tender and delivery
--Buyer's obligation to pay
--Buyer's right to inspect
NON-PERFORMANCE: Discharge by Accord & Satisfaction
A K may be discharged by an accord and satisfaction.

ACCORD = an agreement in which one party to an existing K agrees to accept, in lieu of the performance that she is supposed to receive from the other party to the existing K, some other, different performance.

SATISFACTION = the performance of the accord agreement. Its effect is to discharge not only the original K, but also the accord K as well.
1. Ks Essay Checklist
"Armadillos From Texas Play Rap, Eating Tacos."

A -- Applicable Law
F -- Formation of Ks
T -- Terms of the K
P -- Performance
R -- Remedies for Unexcused Nonperformance
E -- Excuse of Nonperformance
T -- Third-Party Problems
MATERIAL BREACH: Determining Materiality of Breach
Courts look at:

1) The amount of benefit received by the nonbreaching party;

2) The adequacy of compensation for damages to the injured party;

3) The extent of part performance by the breaching party;

4) Hardship to the breaching party;

5) Negligent or wrongful behavior of the breaching party; and

6) The likelihood that the breaching party will perform the remainder of the K.
Art. 2: PERFECT TENDER RULE
If goods or their delivery fail to conform to the K in ANY WAY, the buyer generally may reject all, accept all, or accept any commercial units and reject the rest.

Seller has a right to CURE.
REMEDIES: Specific Performance
SP is an equitable remedy. If the legal remedy is inadequate, the nonbreaching party can seek SP, which is an order from the court to the breaching party to perform or fact contempt of court charges.

In Ks for the sale of GOODS, look for unique goods such as ANTIQUES, ART, or other CUSTOM MADE items.

Courts will grant SP for covenants not to compete if: (i) the covenant is necessary to protect a legitimate interest; (ii) it is reasonable as to its geographic scope or duration; and (iii) the covenant does not harm the public.
DAMAGES
1) COMPENSATORY DAMAGES:

a) EXPECTATION Damages
b) Reliance Damage Measure
c) Consequential Damages
d) Incidental Damages

2) PUNITIVE DAMAGES (NOT awarded in Ks)

3) NOMINAL DAMAGES (e.g., $1)

4) LIQUIDATED DAMAGES
DAMAGES: Compensatory Damages in General
The usual goal of damages for breach of K is to "put the nonbreaching party where she would have been had the promise been performed."
DAMAGES: Expectation Damages
Standard measure of damages; based on an "expectation" measure, i.e., sufficient damages for her to buy a substitute performance.

BENEFIT OF THE BARGAIN.
DAMAGES: Reliance Measure
If P's damages are too speculative to measure (like lost profits), the P may elect to recover damages based on the "reliance" measure rather than an expectation measure.

Reliance damages award the P the cost of her performance; i.e., they are designed to put the plaintiff in the position she would have been in had the K never been performed.
DAMAGES: Consequential Damages
Consequential damages consist of losses resulting from the breach that any REASONABLE PERSON would have FORESEEN would occur from a breach at the time of entry into the K.

For sales of GOODS, only the BUYER can recover consequential damages.
DAMAGES: Incidental Damages
Incidental damages include expenses reasonably incurred by the B in inspection, receipt, transportation, care, and custody of the goods rightfully rejected and other expenses reasonably incident to the Seller's breach, and by the seller in storing, shipping, returning, and reselling the goods as a result of the Buyer's breach.
DAMAGES: Liquidated Damages
The parties to a K may stipulate what damages are to be paid in the event of a breach. Enforceable, so long as:

(i) Damages for K breach must have been DIFFICULT TO ESTIMATE OR ASCERTAIN AT THE TIM ETHE K WAS FORMED; and

(ii) The amount agreed on must have been a REASONABLE FORECAST (if damages are too high, courts construe this as a penalty and will NOT enforce the provision)
DAMAGES: Article 2
1) SELLER BREACHES, BUYER KEEPS THE GOODS: FMV if perfect - FMV as delivered

2) SELLER BREACHES, SELLER HAS THE GOODS: Market price at time of discovery of the breach - K price (OR replacement price - K price)

3) BUYER BREACHES, BUYER KEEPS THE GOODS: K price

4) BUYER BREACHES, SELLER HAS THE GOODS: K price - resale price (AND, in some situations, provable lost profits)
RESCISSION
Rescission is a remedy where the original K is considered voidable and rescinded. Parties are left as though no K had ever been made. Grounds for rescission must have occurred either before or at the time the K was entered into. Grounds include:

(i) MUTUAL MISTAKE of a material fact;

(ii) UNILATERAL MISTAKE if the other party knew or should have known of the mistake;

(iii) UNILATERAL MISTAKE if the hardship by the mistaken party is so extreme it outweighs the other party's expectations under the K;

(iv) MISREPRESENTATION OF FACT OR LAW by either party as to a material factor in the negotiations that were relied upon; and

(v) OTHER GROUNDS, such as duress, undue influence, illegality, lack of capacity, and failure of consideration.
REFORMATION
Reformation is the remedy whereby the writing setting forth the agreement between the parties is changed so that it conforms to the original intent of the parties. A reformation action is usually based on mutual mistake, but may also be possible for a unilateral mistake where the party who knows of the mistake did not disclose it and when the writing is incorrect because of misrepresentation.
THIRD PARTY BENEFICIARY Rules
3rd Party Beneficiary: NOT a party to the K. BUT, able to enforce K others made for her benefit if it vested.

Intended/Incidental Beneficiaries: Only intended beneficiaries have K law rights. Intent of parties to K determines whether intended or incidental.

WHO CAN SUE WHOM?

1) Beneficiary can recover from Promisor

2) Promisee can recover from Promisor

3) Beneficiary CANNOT recover from Promissee

4) Limited Exception: Creditor Beneficiary CAN recover from Promisee, BUT ONLY on a pre-existing debt.

DEFENSES: If the Third Party Beneficary sues the Promisor, the Promisor can assert any defense that he would have had if sued by the Promisee.
ASSIGNMENT
An assignment is a transfer of rights under a K.

Generally, all contractual rights may be assigned.

EXCEPTIONS:

(i) an assignment that would SUBSTANTIALLY CHANGE the obligor's duty or risk;

(ii) an assignment of future rights to ARISE FROM FUTURE Ks; and

(iii) an assignment PROHIBITED BY LAW.

A clause PROHIBITING assignment of the K will be construed as barring only delegation of the assignor's duties. A clause prohibiting the right to assignment generally does not BAR assignment, but merely gives the obligor the right to sue for damages. If K provision says assignment will make the K VOID (invalidation), then it will bar assignment.
DELEGATION of Duties
Delegations are permitted unless either:

(i) the K prohibits delegations or prohibits assignments; or

(ii) it is a "personal services K" that calls for VERY SPECIAL skills.
Art. 2: PERFECT TENDER RULE -- Right to Reject Cut off by Acceptance
A buyer's right to reject is generally cut off by acceptance. Under Art. 2, a buyer accepts when:

(i) After reasonable opportunity to inspect the goods, she INDICATES TO THE SELLER THAT THEY CONFORM to the requirements or that she will keep them even though they fail to conform;

(ii) She FAILS TO REJECT within a reasonable time after tender or delivery of the goods or fails to seasonably notify the seller of her rejection; or

(iii) She does any ACT INCONSISTENT WITH THE SELLER'S OWNERSHIP.
Art. 2: PERFECT TENDER RULE -- Right to Revoke After Acceptance
The buyer may revoke her acceptance if the goods have a defect that SUBSTANTIALLY IMPAIRS their VALUE to her AND:

(i) She accepted them on the REASONABLE BELIEF THAT THE DEFECT WOULD BE CURED and it has not been; or

(ii) She accepted them because of the DIFFICULTY OF DISCOVERING DEFECTS or because of the SELLER'S ASSURANCE THAT THE GOODS CONFORMED to the K.

Revocation of acceptance must occur WITHIN A REASONABLE TIME after the B discovers or should have discovered the defect; and BEFORE ANY SUBSTANTIAL CHANGE IN THE GOODS OCCURS that is not caused by a defect present at the time the seller relinquished possession.
Art. 2: Perfect Tender Rule Exception -- INSTALLMENT Ks
In an installment K situation, an installment can be rejected only if the nonconformity SUBSTANTIALLY IMPAIRS the value of that installment AND CANNOT BE CURED. In addition, the whole K is breached only if the nonconformity SUBSTANTIALLY IMPAIRS the value of the ENTIRE K.
DAMAGES: Restitution in Quasi-K
Measure of restitution is the Value of the benefit conferred. Restitution may be available in a quasi-K action when a K was made but is unenforceable and unjust enrichment otherwise would result. Restitution may be available if:

1) The P has CONFERRED A BENEFIT on the D by rendering services or expending properties;

2) The P conferred the benefit with the REASONABLE EXPECTATION OF BEING COMPENSATED for its value;

3) The D KNEW OR HAD REASON TO KNOW of the P's expectation; and

4) The D would be UNJUSTLY ENRICHED if he were allowed to retain the benefit w/o compensating the P.
ASSIGNMENT
An assignment is a transfer of rights under a K.

Generally, all contractual rights may be assigned.

EXCEPTIONS:

(i) an assignment that would SUBSTANTIALLY CHANGE the obligor's duty or risk;

(ii) an assignment of future rights to ARISE FROM FUTURE Ks; and

(iii) an assignment PROHIBITED BY LAW.

A clause PROHIBITING assignment of the K will be construed as barring only delegation of the assignor's duties. A clause prohibiting the right to assignment generally does not BAR assignment, but merely gives the obligor the right to sue for damages. If K provision says assignment will make the K VOID (invalidation), then it will bar assignment.
OFFER (2)
An offer is:

(1) a promise, undertaking, or commitment;

(2) with definite and certain terms; and

(3) must be communicated to an identifiable offeree.

To be valid, an offer must clearly demonstrate a manifestation of intent to be bound such that a reasonable person would construe it as inviting acceptance.
ACCEPTANCE: UCC
Under the UCC, acceptance by any reasonable means is valid.
UCC 2-201: Confirmatory Memo
UCC 2-201 provides that a CONFIRMATORY MEMO detailing orally-agreed upon terms by one merchant will suffice if not objected to within 10 DAYS.
Modification of K Terms under UCC 2-209
Under UCC 2-209, modifications do not require consideration so long as they are made in GOOD FAITH.
ANTICIPATORY REPUDIATION (short rule)
An anticipatory repudiation occurs when a party to the K, PRIOR to the time set for PERFORMANCE of his promise, indicates an unwillingness to perform. This repudiation must be UNEQUIVOCAL.

Non-breaching party may make demand for further assurances.

If UNEQUIVOCAL AR, non-breaching party may:
(1) sue immediately;
(2) suspend performance and wait to sue until performance is due;
(3) treat the breach as a rescission and void the K; or
(4) take no legal action and encourage performance.
COMMERCIAL IMPRACTICABILITY
Under the doctrine of commercial impracticability, the promisor is RELEASED from his obligation on the grounds of an UNFORESEEABLE SUPERVENING EVENT that INCREASES THE COST OF PERFORMANCE OR DAMAGES LIABILITY beyond those originally anticipated.
Parol Evidence Rule: ARTICLE 2
Article 2 generally follows the PER, providing that a party cannot contradict a written K but he may add CONSISTENT ADDITIONAL TERMS unless:

(i) there is a merger clause; or

(ii) the courts find from all of the circumstances that the writing was intended as a complete and exclusive statement of the terms of the agreement.

Article 2 also provides that a written Ks terms may be EXPLAINED or SUPPLEMENTED by the following, whether or not ambiguous:

1. The parties COURSE OF DEALING;

2. A USAGE OF TRADE; or

3. The parties' COURSE OF PERFORMANCE.
Article 2: BATTLE OF THE FORMS (2-207)

Ks involving NON-MERCHANTS
If any party to the K is not a merchant, the additional or different terms are considered to be mere proposals to modify and DO NOT become part of the K unless the offeror expressly agrees.
Article 2: BATTLE OF THE FORMS (2-207)

Ks between MERCHANTS
If BOTH parties to the K are merchants, ADDITIONAL terms int he acceptance will be included in the K UNLESS:

(i) they MATERIALLY ALTER the original terms of the offer;

(ii) the offer EXPRESSLY LIMITS ACCEPTANCE to the terms of the offer; or

(iii) the OFFEROR HAS ALREADY OBJECTED to the particular terms, or OBJECTS WITHIN A REASONABLE TIME after notice of them is received.
Article 2: BATTLE OF THE FORMS

"Knockout Rule"
Some courts treat different terms like additional terms, and follow the rule of Ks between merchants.

OTHER COURTS follow the KNOCKOUT RULE, which states that conflicting terms in the offer and acceptance are knocked out of the K, because each party is assumed to object to the inclusion of such terms by the K. Under the knockout rule, gaps left by the knocked out terms are filled by the UCC.
Article 2: "Gap-Filler"/Supplemental Terms
The key to forming a K for the sale of goods is the quantity term. If other terms are missing, Article 2 has gap-filler provisions to fill in the missing terms:

NO PRICE: then the price is a REASONABLE PRICE at the time for delivery.

NO PLACE OF DELIVERY: then the place is usually the SELLER'S PLACE OF BUSINESS (if he has one); otherwise, seller's home.

NO TIME FOR SHIPMENT OR DELIVERY: then shipment or delivery is due in a REASONABLE TIME.

NO TIME FOR PAYMENT: then payment is due at the time and place at which the buyer is to RECEIVE the goods.

ASSORTMENT OF GOODS: if the party who has the right to specify the assortment does not do so SEASONABLY, then the other party is excused from any resulting delay and may either proceed in any reasonable manner or treat the failure as a breach.
NON-PERFORMANCE: Discharge by Impossibility
Contractual duties will be discharged if it has become impossible to perform them.

Impossibility is an "objective" standard (i.e., duties could not be performed by anyone).
NON-PERFORMANCE: Discharge by Impracticability
The TEST for a finding of impracticability is that the party to perform has encountered:

a) EXTREME AND UNREASONABLE difficulty and/or expense; and

b) Its nonoccurrence was a BASIC ASSUMPTION of the parties.
NON-PERFORMANCE: Discharge by Frustration
Frustration will exist if the purpose of the K has become valueless by virtue of some supervening event not the fault of the party seeking discharge.

Requirements for Frustration:

1) There is some SUPERVENING ACT or event leading to the frustration;

2) At the time of entering into the K, the parties DID NOT REASONABLY FORESEE the act or event occurring;

3) The PURPOSE of the K has been completely or almost completely DESTROYED by this act or event; and

4) The purpose of the K was realized by BOTH PARTIES at the time of making the K.
NON-PERFORMANCE: Discharge by Rescission
Rescission will serve to discharge contractual duties. Rescission may be either mutual or unilateral.

MUTUAL: The K may be discharged by an express agreement between the parties to rescind. K must be executory on both sides.

UNILATERAL: If the K is unilateral (only one party owes an absolute duty), a K to mutually rescind where one party still has a duty to perform will be INEFFECTIVE. For effective rescission, the rescission promise must be supported by one of the following:

1) An offer of NEW CONSIDERATION by the nonperforming party;

2) Elements of PROMISSORY ESTOPPEL (i.e., detrimental reliance); or

3) Manifestation of an INTENT by the original offeree to make a gift of the obligation owed her.
Art. 2: PERFECT TENDER RULE
If goods or their delivery fail to conform to the K in ANY WAY, the buyer generally may reject all, accept all, or accept any commercial units and reject the rest.

Seller has a right to CURE.
Art. 2: PERFECT TENDER RULE -- Right to Reject Cut off by Acceptance
A buyer's right to reject is generally cut off by acceptance. Under Art. 2, a buyer accepts when:

(i) After reasonable opportunity to inspect the goods, she INDICATES TO THE SELLER THAT THEY CONFORM to the requirements or that she will keep them even though they fail to conform;

(ii) She FAILS TO REJECT within a reasonable time after tender or delivery of the goods or fails to seasonably notify the seller of her rejection; or

(iii) She does any ACT INCONSISTENT WITH THE SELLER'S OWNERSHIP.
Art. 2: PERFECT TENDER RULE -- Right to Revoke After Acceptance
The buyer may revoke her acceptance if the goods have a defect that SUBSTANTIALLY IMPAIRS their VALUE to her AND:

(i) She accepted them on the REASONABLE BELIEF THAT THE DEFECT WOULD BE CURED and it has not been; or

(ii) She accepted them because of the DIFFICULTY OF DISCOVERING DEFECTS or because of the SELLER'S ASSURANCE THAT THE GOODS CONFORMED to the K.

Revocation of acceptance must occur WITHIN A REASONABLE TIME after the B discovers or should have discovered the defect; and BEFORE ANY SUBSTANTIAL CHANGE IN THE GOODS OCCURS that is not caused by a defect present at the time the seller relinquished possession.
Art. 2: Perfect Tender Rule Exception -- INSTALLMENT Ks
In an installment K situation, an installment can be rejected only if the nonconformity SUBSTANTIALLY IMPAIRS the value of that installment AND CANNOT BE CURED. In addition, the whole K is breached only if the nonconformity SUBSTANTIALLY IMPAIRS the value of the ENTIRE K.
DAMAGES: Restitution in Quasi-K
Measure of restitution is the Value of the benefit conferred. Restitution may be available in a quasi-K action when a K was made but is unenforceable and unjust enrichment otherwise would result. Restitution may be available if:

1) The P has CONFERRED A BENEFIT on the D by rendering services or expending properties;

2) The P conferred the benefit with the REASONABLE EXPECTATION OF BEING COMPENSATED for its value;

3) The D KNEW OR HAD REASON TO KNOW of the P's expectation; and

4) The D would be UNJUSTLY ENRICHED if he were allowed to retain the benefit w/o compensating the P.
RESCISSION
Rescission is a remedy where the original K is considered voidable and rescinded. Parties are left as though no K had ever been made. Grounds for rescission must have occurred either before or at the time the K was entered into. Grounds include:

(i) MUTUAL MISTAKE of a material fact;

(ii) UNILATERAL MISTAKE if the other party knew or should have known of the mistake;

(iii) UNILATERAL MISTAKE if the hardship by the mistaken party is so extreme it outweighs the other party's expectations under the K;

(iv) MISREPRESENTATION OF FACT OR LAW by either party as to a material factor in the negotiations that were relied upon; and

(v) OTHER GROUNDS, such as duress, undue influence, illegality, lack of capacity, and failure of consideration.
REFORMATION
Reformation is the remedy whereby the writing setting forth the agreement between the parties is changed so that it conforms to the original intent of the parties. A reformation action is usually based on mutual mistake, but may also be possible for a unilateral mistake where the party who knows of the mistake did not disclose it and when the writing is incorrect because of misrepresentation.
ASSIGNMENT
An assignment is a transfer of rights under a K.

Generally, all contractual rights may be assigned.

EXCEPTIONS:

(i) an assignment that would SUBSTANTIALLY CHANGE the obligor's duty or risk;

(ii) an assignment of future rights to ARISE FROM FUTURE Ks; and

(iii) an assignment PROHIBITED BY LAW.

A clause PROHIBITING assignment of the K will be construed as barring only delegation of the assignor's duties. A clause prohibiting the right to assignment generally does not BAR assignment, but merely gives the obligor the right to sue for damages. If K provision says assignment will make the K VOID (invalidation), then it will bar assignment.
ACCEPTANCE: UCC
Under the UCC, acceptance by any reasonable means is valid.
UCC 2-201: Confirmatory Memo
UCC 2-201 provides that a CONFIRMATORY MEMO detailing orally-agreed upon terms by one merchant will suffice if not objected to within 10 DAYS.
Modification of K Terms under UCC 2-209
Under UCC 2-209, modifications do not require consideration so long as they are made in GOOD FAITH.
ANTICIPATORY REPUDIATION (short rule)
An anticipatory repudiation occurs when a party to the K, PRIOR to the time set for PERFORMANCE of his promise, indicates an unwillingness to perform. This repudiation must be UNEQUIVOCAL.

Non-breaching party may make demand for further assurances.

If UNEQUIVOCAL AR, non-breaching party may:
(1) sue immediately;
(2) suspend performance and wait to sue until performance is due;
(3) treat the breach as a rescission and void the K; or
(4) take no legal action and encourage performance.
COMMERCIAL IMPRACTICABILITY
Under the doctrine of commercial impracticability, the promisor is RELEASED from his obligation on the grounds of an UNFORESEEABLE SUPERVENING EVENT that INCREASES THE COST OF PERFORMANCE OR DAMAGES LIABILITY beyond those originally anticipated.