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74 Cards in this Set

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Contract definition
Promise of which, in breach, law gives remedy or, for performance, law recognizes a duty
Promise
Manifestation of intention to act or refrain from acting in specified way
Promisor
person manifesting intention
Promisee
person who manifestation is addressed
Agreement
manifestation of mutual assent on party of 2+ persons
UCC…goods or services?
Goods
EXPECTATION INTEREST
P is put in a position which he would have been if K had been performed
EXPECTATION FORMULA
Value of promise - value actually delivered + incidental loss - cost avoided
RELIANCE INTEREST
P put back in position that P would have been had K not been made
RELIANCE FORMULA
Expenditures made in preparation of performance - expenses saved from breach
RESTITUTION INTEREST
D is put back in a position which D woul dhave been had K not been made
RESTITUTION FORMULA
What D has gained
FORESEEABILITY
damages not recoverable for loss party in breach did not foresee; loss may be foreseeable if it follows in ordinary course of events or in special circumstances
D only liable for damages foreseen __...?
At execution of K
UCC 2-715
Incidental damages include expenses incurred in inspection/receipt/transportation/care/custody of goods; consequential damages include any loss resulting from requirements/needs seller knew at time of K and injury
R 352/CERTAINTY
Damages are not recoverable for loss beyond an amount that evidence permits to be established with reasonable certainty
R 350 / AVOIDABILITY
Damages not recoverable for loss that injured party could have avoided without undue risk, burden, humiliation; must mitigate damages
UCC 2-706
Seller not accountable to buyer for any profit made on resale
R 356/LIQUIDATED DAMAGES
only allowed up to an amount that is reasonable in light of anticipation of breach; large unreasonable amounts unenforceable; public policy prohibits
UCC 2-719
Parties can contract around liquidated damages by inserting expressed clauses
TEST TO EXAMINE LIQUIDATED DAMAGES
Reasonableness test: 1) did parties intend to provide for damages as a penalty; 2) is injury caused by breach one that is difficult of accurate estimation at time of K?
R 355 / PUNITIVE DAMAGES
punitive damages are not recoverable for breach unless breach is also a tort
SPECIFIC PERFORMANCE
awarded when monetary damages are inadequate; usually reserved for special items like antiuque cars, land, priceless items
UCC 2-716 / SPECIFIC PERFORMANCE
allowed when goods are unique; in other circumstances allowed where money is an inadequate remedy; SP not allowed where damage compensation is available
2 ELEMENTS OF FORMATION OF K
MUTUAL ASSENT OF PARTIES AND SHOWING THAT ASSENT IS THE KIND THE LAW WILL ENFORCE
Mutual assent: subjective or objective?
It is objective and based on words and acts of parties
OFFER
Need 1) manifestation of present contractual intent 2) certainty and definiteness of terms 3) communication of offeree of the offer
R 24 / offer
offer is manifestation of willingness to enter into a bargain
Letter of intent an offer?
No
Invitation to bid an offer?
No
Advertisement generally an offer?
No
REVOCATION
offer generally can be revoked until acceptance
R 45 / unilateral K revocation
can't revoke if offeree has already begun performance if unilateral contract
R 42 / revocation notification
offeree's power of acceptance is terminated when offeree receives from offeror a manifestation oof an intention not to enter intro poroposed K
Mailbox rule
offer is accepted as soon as its dispatched
Mailbox rule with option K
effective upon acceptance if option K
Unilateral K
contracts that result from acceptance by performance
Bilateral K
contracts that result from acceptance of a promise
R 54 / acceptance notification?
Notification is not required when accepting via performance unless 1) offeror has no way of learning of acceptance and a) offeree exercises due diligence in notifying or b) offeror learns of performance or c) offer states notification isn't required
R 69 / acceptance by silence
Silence only acceptable 1) when offeree takes benefit of offered services with reasonable opportunity to reject 2) offeror stated or vgave offeree reason to understand that assent can be manifested by silence 3) because of previous dealings, reasonable that offeree should notify offeror IF HE DOESN'T WANT TO ACCEPT
UCC 2-204 / Open terms?
Doesn't kill K if parties meant to make a K and there is reasonably certain basis for giving remedy; court will look to gap filler rules to fill in open terms
DIFFERENT MEANINGS BY EACH PARTY? WHO'S MEANING PREVAILS?
R 201

1) if one party didn't know the other party had a different meaning, but the other party knew party's first meaning, use that

2) if one party had no reason to know of any other meaning by other party but other party had reason to know of the meaning use by first party, sue that

3) except above, you drop the term and likely lose mutual assent if it is an important term
PAROL EVIDENCE

general definition
when there is a writing that represents the final embodiment of the contract or some terms, but parties want to introduce evidence of extrinsic agreements not in the written agreement to prove existence of additional or modified terms not found in the writing
UCC 2-202

COMPLETE INTEGRATION
expression of entire agreement between parties; parole evidence rule precludes evidence of prior or contemporaneous agreements to contradict or supplement the contract
UCC 2-202

PARTIAL INTEGRATION
an expression of only a portion of the agreement; parole evidence only precludes prior agreements that contradict a term in the contract or contemporaneous oral agreements
UCC 2-202

COMPLETE OR PARTIAL INTEGRATION?
use following methods:

- four corners/plain meaning
- collateral contract
- majority approach is "reasonable person approach"
- intention of the parties
UCC 2-202 / TO DETERMINE COMPLETE OR PARTIAL INTEGRATION:

four corners/plain meaning
if writing appears final, it is conclusively presumed to be
UCC 2-202 / TO DETERMINE COMPLETE OR PARTIAL INTEGRATION:

collateral contract
all writings are deemed to be partial integrations
UCC 2-202 / TO DETERMINE COMPLETE OR PARTIAL INTEGRATION:

reasonable person approach
if writing appears to be complete expression of parties' agreement, it is unless additional terms would be natural to enter a separate agreement as to such terms

MAJORITY APPROACH
UCC 2-202 / TO DETERMINE COMPLETE OR PARTIAL INTEGRATION:

intention of parties
relevant evidence is allowed for intent, including prior negotiations
BATTLE OF THE FORMS UCC?
UCC 2-207
UCC 2-207

general requirements
- acceptance must be seasonable
- sent in reasonable time
- valid acceptance even if it states additional terms to those offered
UCC 2-207

merchants // added terms
if two parties are merchants, added terms of acceptance become part of K unless:

1) offer expressly limits acceptance to the terms of the offer

2) materially alter it

3) notification of objection to the terms has been given already or is given with reasonable time after they're received
UCC 2-207

not merchants // added terms
If two parties aren't merchants:

additional terms are proposals for additions to contract...not automatically added in like merchants
K with different terms on acceptance than in offer...uh oh.

What do you do?
Gap fill if possible

No mutual assent otherwise; K not valid
What is a "merchant"?
one who regularly deals in goods of the kind sold or who otherwise by his profession holds himself out as having special knowledge or skills as to the practices or goods involved
mirror image rule
absolute and unequivocal acceptance of each and every term of the offer
MUTUAL MISTAKE DEFENSE
When both parties entering into a contract are mistaken about facts relating to the agreement, the contract may be voidable by the adversely affected party if:

The mistake concerns a basic assumption

The mistake has a material effect on the agreed-upon exchange

The party seeking avoidance did not assume the risk of mistake
UNILATERAL MISTAKE

...A DEFENSE?
GENERALLY NO DEFENSE.

Where only one of the parties is mistaken about facts relating to the agreement, the mistake will not prevent formation of a contract. However, if the nonmistaken 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.
UCC 2-202 RE: PAROL EVIDENCE
Under the U.C.C., a party cannot contradict the writing but he may add consistent additional terms unless:

(i) there is a merger clause, or
(ii) the courts find from all the circumstances that the writing was intended as a complete and exclusive statement of the terms of the agreement.
HAWKINS
harry hand case

expectation interest
SULLIVAN
screwed up nose

reliance interest
TONGISH
sunflower farmer

restitution interest
HADLEY V. BAXENDALE
broken millshaft

foreseeability or harm (lack thereof)
Chicago Coliseum
boxing

certainty of harm
Rockingham County
bridge to nowhere

avoidability of harm
LOVELESS
improved house/land

special performance
CUMBEST
stereo; special

special performance
PEPSI
harrier jet

advertisement is an invitation to negotiate
LUCY
drunk guy sells land

we look at objective standard and not subjective standard of person for offers...would reasonable person think it's an offer?
CARBOLIC SMOKE BOMB
don't get sick ball

ad was a unilateral offer to perform
HOBBS
eel skins

acceptance by silence due to prior dealings
SUN PRINTING
different meanings re:price

no k since different terms can't be settled
RAFFLES
different meanings of peerless boat

no k since terms didn't match