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53 Cards in this Set
- Front
- Back
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What does UCC art. 2 cover?
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Sales of goods (moveable personal property).
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What is the test to determine whether a contract is for goods or services?
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Predominant factor test.
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What is a lease?
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Transfer of a right to possess/use specific goods for a specific term for consideration.
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What is required for the formation of a valid contract?
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1. mutual assent manifested through the process of offer and acceptance.
2. consideration 3. capacity to contract |
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What factors help determine whether something is an offer?
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1. terms certain and definite (subject matter, price, quantity)
2. language used 3. fewer rather than larger # of potential acceptors. |
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Are advertisements offers?
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Generally no.
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What does a bilateral offer seek?
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a return promise
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What does a unilateral offer seek?
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a performance
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How can an offeror terminate an offer?
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1. direct revocation
2. indirect revocation 3. by publication |
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What is required for an indirect revocation?
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1. direct information
2. from a reliable source 3. about acts of the offeror that he no longer intends to make an offer. |
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What a revocation by publication to be effective, how must it be made?
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In the same means/area as the offer.
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What are some limitations on the offeror's power to revoke?
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1. Option contracts
2. Firm offers 3. Part performance 4. Promissory estoppel/detrimental reliance. (NOT in NC) |
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How can an offeree terminate an offer?
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1. Rejection
2. Counter-offer |
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How can operation of law terminate an offeree's power of acceptance?
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1. lapse of time
2. death or incapacity of one of the parties 3. destruction of subject matter 4. supervening illegality |
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Who has the power of acceptance and can it be assigned?
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Offeree, who must know of the offer, and cannot assign it.
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What is the mailbox rule?
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If acceptance by mail is required/permitted,
1. acceptance is effective upon dispatch (except acceptance of an offer for an option contract, which is upon receipt) 2. If offeree sends both an acceptance and a rejection: a. acceptance then rejection, contract formed when acceptance sent, unless offeror receives rejection first and changes position in reliance. b. reject first, then acceptance - whichever is received first controls. |
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Can silence be acceptance?
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Generally no, unless there were prior dealings between the parties suggesting silence is acceptable method of acceptance, or trade customs known to both parties make silence ok.
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What is the Mirror Image Rule?
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Common law rule that acceptance must exactly mirror the offer, or else it's a counter-offer.
Corollary = Last Shot Rule |
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What is the Battle of the Forms?
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UCC - a contract may be formed even though the expression of acceptance has in it additional or different terms from those in the offer (assuming that the offeree did not make his acceptance expressly conditional on the additional or different terms)
1. between merchants, the additional/different terms become part of the contract unless material alteration, offer expressly limits to terms, or offeror objects within reasonable time. 2. one/both party not merchants = additional/different terms are proposals |
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What is consideration?
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A bargained for exchange of legal detriments.
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What is the pre-existing duty rule? Under Common law? Under UCC?
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Common law - a promise to perform a preexisting legal duty does not count as consideration.
- exceptions: (1) new or different consideration, (2) unforeseen circumstances, (3) maybe if the modification is fair and reasonable... UCC - a contract for the sale of goods may be modified without consideration with mutual assent/good faith. |
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What is accord and satisfaction?
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is there acceptance of offer to settle?
is there consideration to support promise to take less? |
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How are illusory promises created? How is it relevant?
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Generally choice or discretion on the part of one of the parties makes the party's promise illusory. If a promise is illusory, the agreement lacks mutuality of obligation, and therefore no consideration.
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Where will mutuality still be found with illusory promises?
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Requirements/outputs contracts
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What are the elements for promissory estoppel?
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1. promise that might reasonably induce action/forbearance
2. person to whom promise was made reasonably relies to his detriment 3. injustice can be avoided only by enforcing the promise 4. remedy - fashion may be limited as justice requires |
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Has NC allowed promissory estoppel to be used affirmatively?
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No, only defensively.
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What is the effect of a seal in NC?
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1) NC: older SC authority suggests that seal is a substitute for consideration; more recent authority from the court of appeals suggests that seal raises a presumption of consideration that must be rebutted by clear and convincing evidence
2) NC: a document under seal has a 10 year statute of limitations. The statute of limitations otherwise applying to contracts is 3 years. The UCC statute of limitations is 4 years. |
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What is the general rule regarding minors and contracts?
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must be at least 18 years of age to have capacity to contract. If a person enters into a contract prior to reaching the age of capacity, then the contract is voidable at the option of the minor. If the other party to the contract is an adult, the adult is bound to the contract unless the minor avoids it.
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Most states allow tort actions for fraud against minors that misrepresent their age and enter contract, does NC?
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in NC, a court has held that to impose liability for deceit would in effect enforce the contract merely by change the form of action from contract to tort. The policy is to protect the minors from their improvident acts.
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What is the NC Set off Rule?
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set off value of any damages, return money, minor keeps property but doesn't get money back for current value of the property.
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What is Coogan's Law?
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NC rule for minors who are artists (including actors), creators of intellectual property, athletes or performing extras
Minor may disaffirm contract unless employer obtained prior court approval of contract Employer also required to set aside 15% of minor's gross in a trust fund for benefit of minor. |
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What is the rule regarding insanity or mental incapacity?
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an incompetent party may disaffirm the contract (when lucid or through a legal representative) if the incompetent cannot understand the nature and significance of the contract.
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What is the rule regarding intoxicated or drugged persons?
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may disaffirm the contract (upon recovery from intoxicated or drugged state) if at the time contract was entered into person was not able to understand the nature and significance of promise made in the contract and if the other party had reason to know of the intoxication.
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What contracts must be in writing (and what exceptions)?
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1. Interest in land (lease/easements greater than 1 year)
2. Sale of goods greater than $500 (except specially manufactured, judicial admission, part performance) 3. Leases of personal property > $1000 4. Guaranty contract (except Main Purpose Rule) 5. Long-term contract (greater than 1 year) (no writing needed in NC!) 6. Marriage 7. Covenants not to compete 8. NC - promise to lend money commercial loan commitment by bank exceeding $50k. |
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What are the common law requirements to satisfy SoF?
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a. Party charged identified
b. Subject matter c. Other terms/conditions d. Recital of consideration e. Signature of party charged |
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What are UCC requirements to satisfy SoF?
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a. Something showing contract of sale made
b. Quantity c. Signature of party charged 1. Exception if both merchants |
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May several writings be pieced together to satisfy the SoF?
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Yes, but in NC the signature must occur after this happens.
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When can Parol Evidence be introduced?
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1. to clarify ambiguity
2. to show fraud, mistake, failure of consideration 3. collateral agreements 4. conditions precedent to the contract 5. UCC - usage of trade, course of dealing, or course of performance may explain or supplement an integrated agreement. |
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What is unilateral mistake?
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mistake by one party at time contract is entered into. Generally, relief will not be allowed. But, if the nonmistaken party knew or had reason to know about the other's mistake, then the contract is voidable at the option of the mistaken party.
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What is mutual mistake and is rescission allowed?
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Rescission allowed for mutual mistake of a material fact. At the time of contract
1) Mistake by both parties about a basic assumption on which the contract was made. 2) The mistake has a material effect on the contract, and 3) The party seeking to avoid or rescind did not bear the risk of that mistake Rescission is not allowed for mistakes of value or opinion |
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What are latent ambiguities and what are their effect?
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at time contract is formed, the agreement appears to be clear, but subsequently discovered facts make it obvious that the agreement can be interpreted in more than one way.
a. If both parties unaware of the ambiguity, then there's no contract unless they both intended the same thing. b. If both parties are aware of the ambiguity, then there's no contract unless they both intended the same thing. c. If one party is aware of the ambiguity and the other is not, then contract is enforced but according to the intentions of the innocent party. |
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How can a court determine a contract is unconscionable?
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Procedural unconscionability - problem in procedure of bargaining
AND substantive unconscionability - unfair contract terms. |
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Do intended or incidental beneficiaries have the right to sue?
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Intended.
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Factors to determine whether an intended beneficiary?
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1) Is the 3d party expressly designated in the contract?
2) Is the performance to be made directly to the 3d party? 3) Is the 3d party specifically given any rights under the contract? 4) Does the 3d party have such a relationship with the promisee that one could infer that the promisee wished to make an agreement for the benefit of a 3d party? |
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What two kinds of intended beneficiaries and how defined?
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Creditor beneficiary - object of the promise was to pay the 3d party beneficiary a debt owed to him by the promisee.
Donee beneficiary - object of the promise is to confer a benefit on the 3d party beneficiary. |
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When do rights of 3d party vest, cutting off ability of the promisor and promisee to modify or rescind the contract?
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1) When beneficiary
a) Manifests assent in manner invited/requested, b) Sues to enforce the promise, or c) Materially changes position in justifiable reliance Older authority indicates that donee beneficiary's rights immediately vest |
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What is a gratuitous assignment and when is it irrevocable?
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no consideration from the assignee to the assignor in return for the assignment. This assignment is revocable by the assignor
1) Irrevocable when: a) Obligor has already performed b) If token of assigned rights is delivered to assignee c) Assignment made in writing to assignee d) Detrimental reliance by assignee |
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Is an assignment for consideration revocable?
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irrevocable. Rights of assignee are vested.
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What rights are not assignable?
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1. rights materially affecting the rights and duties of the obligor
2. rights under a future contract 3. Common law - "assignment is void" 4. UCC - if contract bars assignment, it only bars delegation of duties. |
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What are expectation damages?
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Use money damages to put victim of breach where they would have been had the contract been fully performed.
1. Lost profits 2. Reliance expenses |
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How can consequential or special damages be recovered?
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must be reasonably foreseeable at the time of contracting in order to recover.
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What is the mitigation rule?
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the victim of a breach cannot recover for damages she could have reasonably mitigated or avoided
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When will impossibility excuse performance of a contract?
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Where no one could perform the contract (objective). Where defendant can't perform the contract, but others could, this is not enough.
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