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19 Cards in this Set
- Front
- Back
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FLORIDA ESSAYS
CONTRACTS |
FLORIDA ESSAYS
CONTRACTS |
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February 2009
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February 2009
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UCC Article 2 governs transactions in goods.
Widgets are goods, so the K here will be governed by UCC Article 2. |
BREACH OF CONTRACT: S may have a COA against B for breach of K.
To establish breach of K, a party must prove that the other party was under a present duty to perform and that duty has neither been performed nor discharged. An enforceable K requires an offer, acceptance, consideration and no defenses to K enforcement. Initially, it appears S and B entered into an enforceable K... |
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SOF: A promise that by its terms cannot be performed w/in a year is subject to the SOF. (The date runs from the date of the agreement and not from the date of performance.)
SOF: In addition, an agreement for the sale of goods of $500 or more is not enforceable unless evidenced by a writing signed by the party to be charged. The UCC requires only 3 things of the writing: (1) Quantity; (2) Signature of the party to be charged; and (3) A writing sufficient to indicate that a K was formed. The facts indicate that there was a signed K that covers the essential K terms. Therefore it doesn't appear that B would be able to assert a defense based on the SOF. it seems S and B entered into an enforceable K. |
S breached the K in April and May by delivering less than the required quantity and in June by delivering late.
UCC REMEDIES: The remedies available to a B vary depending on whether the B has already accepted the goods. Under the UCC, the B ACCEPTS goods when she indicated to the seller that the goods conform or that she will keep them even though they fail to conform (after a reasonable opportunity to inspect), or when she fails to reject them w/in a reasonable time after tender or delivery of the goods. In an INSTALLMENT K, an installment can only be rejected if the nonconformity substantially impairs the value of that installment and cannot be cured. In addition, the whole K is breached if the nonconformity substantially impairs the value of the entire K. A deficiency in quantity may be cured by an additional delivery. The facts indicate that B waived any action she might have had based on these breaches by accepting and paying for the deliveries in April and May, and further by accepting the later shipment in June. |
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The contract MODIFICATION (addendum) is enforceable.
CL: K modification is unenforceable unless it is supported by consideration. UCC: K modifications sight in good faith are binding without consideration. There's no indication of bad faith w/ regard to the modification. B/c S and B entered into an addendum to the original K, it appears the K as modified sufficiently evidences the required parties, subject matter, and other terms. |
S may argue that B breached the modified K when she demanded written assurances. B would argue that her action reasonable based in the rumors.
Under the UCC, actions or circumstances that increase the risk or nonperformance by the other party to the K, but do not clearly indicate that performance will not be forthcoming, may not be treated as a repudiation. ADEQUATE ASSURANCES: Under the UCC, the party who reasonably fears that the other party will not perform is that she may demand assurances in writing that the performance will be forthcoming at the proper time. Until she receives adequate assurances, she may suspend her own performance. If the proper assurances are not given within a reasonable time (within 30 days after a justified demand for assurances), the other party seeking assurances can treat the K as repudiated. If it is determined that B had reasonable grounds for insecurity, she was justified in making the demand for assurances. B/c S did not provide reasonable assurances w/in 30 days, B would be justified in treating the K as repudiated and canceling. |
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If B did not have reasonable grounds for seeking written assurances,
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In defense, B might assert that S breached the K first by
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If it is determined that S breached by failing to make the July delivery, S might argue that late delivery was not a material breach based on the course of performance.
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S may also have a defense if he can establish IMPRACTICABILITY.
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Assuming B did not have reasonable grounds for demanding written assurances and canceling the K, S can wait and urge B to perform under the K or can suspend his own performance. He may also bring an action for breach and seek damages.
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When a Buyer repudiates or refuses to accept goods, the seller is entitled to recover
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JULY 2009 - CONTRACTS
One week before her 18th birthday, Mary saw the following ad in the prior week's local newspaper: "Owner of Red Model T Sports Car Interested in Selling $300 Contact Seller c/o ABC Food Co., Main Street, Anytown, Florida" Mary, who always wanted that particular car, told her Dad about the ad. Dad, although hesitant, told Mary that he is a customer of ABC Food Co. (Company), that the Company is reliable and because Dad enjoys fixing cars as a hobby, he would be willing to help Mary fix up the car, if necessary. Because the ad is a week old, Mary convinced Dad that they must send in the purchase price immediately. Dad then gave Mary a check in the amount of $300, payable to Company, to buy the car. In her excitement, Mary simply mailed Dad's check, without any explanatory notation, directly to Company. The Company's bookkeeper received the check in the mail with Dad's name. The bookkeeper deposited the check and credited the amount against Dad's overdue outstanding balance due the Company. |
Two weeks later, Mary contacted Seller about the car. Seller told Mary he has no record of her responding to the ad and that in any event the ad was incorrect and the purchase price was $3,000. Seller told Mary that she can have the car for $3,000, and that he will ask his boss if the Company would return the $300 to Dad. In addition, Seller told Mary that Mary must pay for and pick up the car by the end of the following week. Mary said "ok." A day later Seller turned down an offer to sell the car for $2,500 from a third party.
Two days later, Dad and Mary phoned Seller and told Seller that they want the car for the $300 already paid. Seller told Dad and Mary that a deal is a deal and that he expected Mary to pay him the $3,000 for the car. Mary replied, "good luck" and hung up the phone. A week later Seller sold the car to another buyer for $2,000. In the meantime, Dad contacted Attorney, a sole practitioner, about the car transaction with Seller. Attorney indicated that she knows the Company well because her previous law firm represented the Company, and Attorney had worked on collection matters on behalf of the Company. Dad is impressed with Attorney and retained her. Please discuss: 1. The validity of the contract to purchase the car. 2. Claims of Mary and Dad; and counterclaims of Seller. 3. Any ethical issues concerning Attorney. |
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(1) Validity of the Contract to Purchase the Car:
• The general elements required for an enforceable contract are: OFFER, ACCEPTANCE, CONSIDERATION, and NO VALID DEFENSES. • An OFFER creates a reasonable expectation in the offeree that the offeror is willing to enter into a K on the basis of the offered terms. • There must be (i) an expression of a promise, undertaking, or commitment to enter into a K; (ii) certainty and definiteness of essential K terms (e.g., price, time of payment and goods to be purchased); and (iii) communication of the offer to offeree. |
• An ACCEPTANCE is a manifestation of assent to the terms of the offer in manner prescribed or authorized by the offer.
• For there to be CONSIDERATION, (i) there must be bargained-for exchange between the parties, and (ii) that which is bargained-for must constitute either a benefit to the promisor or a detriment to the promise. • Because the car is a “good” – a thing movable at he time identified as the item to be sold – Article 2 of the UCC will govern this transaction. |
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Contract to Sell for $300 – (a) Offer:
- Seller would argue that the advertisement was not an offer, but instead was an invitation to deal or negotiate. • For a communication to be an offer, it must contain a promise of commitment to enter into a K. • In determining whether a communication was an offer, courts will consider the language used. • Certain language is generally construed as contemplating an invitation to deal rather than an offer, including phrases such as “I quote,” “I am asking for,” and “I would consider selling for.” - Accordingly, the language in the ad that the Seller is “interested in selling” weighs in favor of finding that no offer was extended. |
- However, Mary would argue that courts have treated advertisements as offers where the language of the advertisement can be construed as containing a promise, where the terms are certain and definite, and where the offer is clearly identified.
- Mary would argue that the custom is that when a person places an ad in a newspaper regarding a vehicle, including a description of the vehicle and the price, the person placing the ad is offering the vehicle for sale. |
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Contract to Sell for $300 – (b) Acceptance:
• The general rule is that acceptance must be communicated to the offeror. • Under the traditional C/L rules, whether an acceptance becomes effect upon dispatch or receipt depended on whether the offeree used an authorized mode of communication. • However, the UCC states than an offer may be accepted by any reasonable medium under the circumstances. • The offeror may still limit acceptance to a particular means – but must do so unambiguously – any ambiguity will allow the offeree to accept using any reasonable means. • Acceptance by mail or similar means creates a K at the moment of dispatch, provided the mail is properly stamped and addressed, unless: (i) the offer stipulates that acceptance is not effective until received; or (ii) an option K is involved. • An acceptance transmitted by unauthorized means or improperly transmitted by authorized means may still be effective if it is actually received by the offeror while the offer is still in existence. |
- Mary would argue that she accepted the offer by mailing a check for $300, and that her acceptance was effective at the time she placed her check in the mail.
- Mary would argue that based on the language in the advertisement, it was reasonable for her to assume that Seller was simply an agent for Company (b/c the ad indicated a person should contact “Seller c/o” Company). - However, Seller would likely prevail in arguing that if there was a valid offer, it was not effectively accepted. - Seller would first argue that the ad clearly required any acceptance be by means of contacting the seller. - Although Mary mailed the check to Company, the check was made payable to Company, she did not contact Seller, and Seller did not receive an acceptance. |
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- Although Mary did actually contact Seller 2 wks later, Seller (S) told her at that time that he did not have any record of her responding to the ad, the ad was incorrect, and that the purchase price was $3K.
- Seller would likely prevail in his argument that he effectively revoked any offer before acceptance b/c he directly communicated revocation of the offer to the offeree. • A revocation is generally effective when received by the offeree. - There is no indication in the facts that any offer by Seller would be a “firm offer” under the UCC – there is no indication that Seller is a merchant (one who regularly deals in the kind of goods sold), and there is no indication that there was a written offer giving assurances that it would be held open. |
Contract to Sell for $300 – (c) Consideration:
• In Florida, either a benefit to one party or a detriment to the other party will be sufficient with regard to consideration. - Mary would argue that there was consideration b/c Seller promised to sell the can and she paid $300. - While it is true that there was consideration, it will not save the transaction if there is a flaw in the other K elements (e.g., offer and acceptance). |
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Contract to Sell for $300 – (d) Lack of Defenses:
- Seller might argue that no K to sell the car for $300 was created b/c Mary was under the age of 18 at the time she mailed the check. • Although minors generally lack CAPACITY to enter into a K binding on themselves, contractual promises of an adult made to a minor are binding on the adult – a K entered into b/t a minor and an adult is voidable by the minor, but binding on the adult. • Additionally, a minor may affirm the k upon reaching the age of majority, either expressly or by conduct. |
- Seller might also argue that no K was created based on MISTAKE.
• Where 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 fact concerns a basic assumption on which the K is made; (ii) the mistake has a material affect on the agreed upon exchange; and (iii) the party seeking avoidance did not assume the risk of the mistake. • Where 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, he will not be permitted to snap up the offer. - The facts do not seem to present a mutual mistake – there is no indication that both parties were mistaken about the facts relating to the agreement. Instead it appears that there was a typographical error in the ad. If $300 was clearly an unrealistic price for the type of car advertised for sale and Mary had reason to know this, she will not be able to take advantage. |
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- Seller might also assert the STATUTE OF FRAUDS as a defense to enforcement.
• Certain agreements, by statute, must be evidenced by a writing signed by the party to be charged. • One such agreement is a promise for the sale of goods $500 or more. - If Mary succeeds in establishing that there was an offer to sell the car for $300 and she validly accepted the offer, the SOF would not apply and, thus, will not be a defense to enforcement. • The relevant fact is that selling price for the good, even if the good (car) is actually worth $3K. |
Contract to Sell for $3,000
- Seller may argue that when Mary finally contacted him about the car, he offered to sell the car for $3K and Mary accepted the offer. - Seller would argue that his promise to sell and Mary’s promise to buy constitutes sufficient consideration. - Seller would also argue that he detrimentally relied on Mary’s promise and turned down an offer of $2,500 for the car. - Mary would argue that her response of “ok” to Seller’s statement that the price was $3K and that she must pay for and pick up the car by the end of the week, was not an unequivocal acceptance of the offer. - If a K was formed, Mary would assert the SOF as a defense. • Again, the SOF requires that a K for the sale of goods $500 or more be evidenced by a writing, signed by the party to be charged in order to be enforceable. |
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(2) Claims of Mary and Dad, and Counterclaims of Seller
- Mary could file and action against Seller alleging breach of a K to sell the car for $300. - Mary would argue that Seller breached by failing to deliver the car and and then selling the car to someone else. - This would be a material breach – Mary did not receive the “substantial benefit of the bargain” as a result of Seller’s failure to perform. • If breach is material, the non-breaching party (i) may treat the K as at an end, and (ii) will have an immediate right to all remedies for breach of the entire K, including total damages. |
- Mary might seek EXPECTATION DAMAGES.
• The purpose of K damages based on affirmance of the K is to give compensation for the breach – to put the non-breaching party on the where they would have been had the K been fully performed (so far as money can do this). The standard measure of damages is based on an expectation measure – sufficient damages to buy her a substitute performance. - In addition, Mary might seek CONSEQUENTIAL DAMAGES – to recover any losses resulting from the breach that a reasonable person would have foreseen would occur from a breach at the time the K was entered into. - Also, Mary might seek INCIDENTAL DAMAGES – for cost incurred in locating and purchased a similar car. - This in not the type of case where punative damages would be recoverable. |
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- Mary will not be successful in seeking specific performance of the K.
• If the legal remedy (damages) is inadequate, the non breaching party may seek to specific performance. • Damages are generally inadequate when the subject matter is rare or unique, so that damages would not put the non-breaching party in as good as a position as performance would have. • If the subject matter of a K for the sale of goods has already been sold to another who purchased for value and in good-faith (i.e., a bona fide purchaser), the right to specific performance is cut off. - The facts indicate that the Seller sold the car to another purchaser for $2k, and nothing in the facts indicates that the buyer was not a BFP. |
- Mary will have an obligation to mitigate her damages by making reasonable efforts to cut down her losses. ¶
- In defense, Seller would assert that if the K is enforceable, Mary owes him $300 (which he never received). ¶ - Seller would counter-claim and assert an action for breach of K against Mary, based on her failure to tender the $3K by the end of the following week and pick up the car. - Because he subsequently sold the car for $2K, his damages would be $1K (the difference in the K price and the resale price) plus any consequential and/or incidental damages incurred in selling the car to another person. - Seller would have a duty to mitigate his damages. |
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- In defense, Mary might assert impossibility, frustration, or anticipatory repudiation based on the fact that Seller sold his car to another buyer “a week later.”
• Contract duties will be discharged where it has become impossible to perform them. The impossibility must arise after the K has been entered into. Where a K is discharged because of impossibility, each party is excused from duties arising under the K that have yet to be fulfilled. • Discharge by 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. • Anticipatory repudiation stems from words or conduct of the promisor unequivocally indicating that he cannot or will not perform when the time comes. - Whether Mary succeeds on any of these defenses will depend whether Seller sold the car to the other buyer before “the end of the following week,” when Mary’s payment was due. |
- Dad might file an action seeking return of the $300 from Company. Although Dad might seek restitution of the $300 from Company he is unlikely to succeed.
• Restitution is based on preventing unjust enrichment and can provide a remedy where no contractual relationship exists at between the parties. - In the present case, however, it appears there was a contractual relationship (Dad had a credit account with Company and an outstanding balance of $300 that he owed). It does not appear that Company was unjustly enriched since Dad had an outstanding, overdue balance. |
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(3) Ethical Issues Concerning Attorney
• Conflict of Interest – Attorney’s must avoid representation where a potential conflict of interest is likely to adversely affect her ability to exercise independent and professional judgment. • A lawyer may not represent a client if: (i) the representation of 1 client will be directly adverse to another; (ii) there is a substantial risk that the representation of one or more clients will be materially limited by the lawyer’s responsibilities to another client, former client, or third person. • If a conflict exists a lawyer may still represent a client if: (1) the lawyer reasonably believes that she will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve asserting a position that is adverse to another client when the attorney represents both clients in the same proceeding before a tribunal; and (4) each affect client gives informed consent, confirmed in writing, or clearly stated on the record at a hearing. • Attorney must not accept compensation for representing client from someone other than client (i.e., from a third party) unless; (i) client gives informed consent; (ii) there is no interference with attorney’s independent professional judgment or with the lawyer-client relationship; and (iii) information relating to representation of client is protected as required by the rules of confidentiality. |
- There is also a possible ethical issue based based on the fact that Attorney's former law firm represented Company, and Attorney worked on collection matters on behalf of Company.
• A lawyer who has represented a client in a matter must not thereafter: (i) represent another client in the same or substantially related matter in which that client's interests are materially adverse to the interests of a former client unless the former client gives informed consent; or (ii) use information relating to the representation to the disadvantage of the former client except as the rule relating to confidentiality of information would permit, or when information has become generally known. The duty of confidentiality applies to all info about a client "relating to the representation, regardless of when or where it was acquired, regardless of whether the client asked for it to be kept in confidence, and regardless of whether revealing it might harm or embarrass the client. |
