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55 Cards in this Set
- Front
- Back
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PAROLE EVIDENCE RULE (DEFINITION)
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Prior written or oral, and contemporaneous oral expressions that contradict, modify or vary contractual terms are inadmissible if the written contract is intended as as complete and final expression.
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WHAT IS A GOOD WAY TO HAVE COMPLETE AND FINAL EXPRESSION?
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The presence of a merger clause strengthens the presumption that the written document is final.
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NAME EXAMPLE OF A MERGER CLAUSE?
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There are no promises, verbal understandings or otherwise of any kind other than the ones specified herein.
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HOW CAN YOU TEST FOR COMPLETE AND FINAL EXPRESSION?
WHAT DOES IT NOT APPLY TO? |
If the parties would have normally included a provision, BUT didn't then it will NOT become part of the contract
- Subsequent dealings modifications |
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WHAT ARE THE EXCEPTIONS TO THE PAROLE EVIDENCE RULE (4)?
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a. ambiguity - can bring in evidence
b. Fraud/misrepresentation, duress, mistake, illegality, incapacity c. legal condition precedent to the contract d. May be explained through course of dealing, usage of trade or by course of performance |
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WHAT ARE EFFECTIVE WAYS TO KEEP COSTS FIXED?
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Requirement and Output contracts
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REQUIREMENT CONTRACTS (DEFINITION)
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Agreements by one party to supply all that is required by the other party
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OUTPUT CONTRACTS (DEFINITION)
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Agreements by one party to buy all that the other party produces
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WHAT ISSUES ARISE FROM THESE CONTRACTS AND HOW ARE THEY RESOLVED?
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a. Definite and certain terms - UCC gap fillers
b. Binding obligation - not illusory as parties are required to perform in good faith |
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WHERE ARE THERE LIMITATIONS IN REQUIREMENT AND OUTPUT CONTRACTS?
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Limit on MAXIMUM to require or output. No unreasonable quantity of prior output or requirement. - Usually no more than 20-30% higher
(NO LIMITS ON MINIMUM AND CAN BE BROUGHT DOWN TO ZERO) |
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IN ANALYZING CONTRACT CONSTRUCTION, WHAT ORDER IS APPLIED?
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OACCCWG
1. Ordinary language 2. Agreement - the bargain by language or implied 3. Custom/Usage of trade - practice or method having regularity in the trade 4. Course of dealing - sequence of previous conduct 5. Course of performance - repeated occasions of performance already accepted 6. When not consistent with each other - conflicts are resolved through express terms, COP, COD and CAU UCC 2-15 (in that order 7. Gap Fillers - Court will fill in the gaps (Common law - reasonable terms) (UCC - price, delivery, time, payment, warranty etc... |
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DO MODIFICATIONS VIOLATE THE PAROLE EVIDENCE RULE?
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NO
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MODIFICATION (definition)
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A valid contract exists but the parties wish to change the terms of the existing contract.
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WHAT DOES A VALID MODIFICATION REQUIRE?
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a. Mutual assent to the terms of the modification
b. Consideration c. The modification MAY need to satisfy the SOF unless waiver and estoppel have occurred (If signed by both parties - enforceable UNLESS waiver and estoppel have occurred UCC 2-209 governs modifications for sale of goods) |
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WAIVER + RELIANCE =....
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ESTOPPEL
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A waiver may apply if not in writing BUT
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May be retracted if detrimentally relied upon
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PRIVITY (Definition)
Who can enforce it? |
The relationship that empowers contracting parties to enforce the contractual obligations
- Only the party that is in privity of the contract can enforce it |
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WHAT ARE THE EXCEPTIONS TO PRIVITY?
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a. Third party beneficiaries
b. Assignment c. Delegation |
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THIRD PARTY BENEFICIARIES (TPB) - Definition
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Where that parties at the time of contracting, contemplate performance to be rendered to a third, non contracting party.
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WHICH TPB HAVE RIGHTS AND WHAT ARE THEY USUALLY?
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Intended TPB's
a. named in the contract b. Performance runs directly from promisor to TPB c. There is a relationship between the TPB and promisor |
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IF A TPB IS NOT INTENDED, WHAT ARE THEY?
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INCIDENTAL - Have no rights (mortgage lenders on your employment contract for example)
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NAME TWO EXAMPLES OF TPB'S
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Creditor TPB - to satisfy and underlying obligation
Donee TPB - The person becomes a TPB because of a gift from the promisee |
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WHEN CAN MODIFICATION NO LONGER HAPPEN WITH A TPB
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Once they are vested
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HOW DO TPB;s GET VESTED?
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a. TPB is asked to assent by the parties
b. TPB detrimentally relies on it or c. Brings a lawsuit to enforce |
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WHEN WILL TPB's NOT VEST?
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When the contract is formed or when they learn about the contract
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WHO CAN THE TPB SUE?
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a. The promisor for enforcement
b. The promisee on the underlying obligation IF the TPB is a creditor third party beneficiary |
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WHO CAN PROMISEE SUE?
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The promisor for specific performance to TPB
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What defenses can a promisor use against the TPB?
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Any defense that the promisor could have raised against the promisee
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WHAT ORDER IS CONTRACT CONSTRUCTION SOLVED BY?
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conflicts are resolved through express terms,
Course of Perf Course of Dealing Custom & Usage |
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ASSIGNMENT OF RIGHTS ( DEFINITION)
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Where the parties at the time of contracting, do not contemplate performance to a third non-contracting party, but subsequently, a party transfers rights under the contract to a third party.
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ASSIGNMENTS ARE GENERALLY VALID, UNLESS...
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a. They materially alter the obligor's duty or risk
i. Too personal (can't assign malpractice insurance) ii. Requirement and output contracts (everyones requirements and outputs are different) b. or the assignments are prohibited by law |
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ARE ASSIGNMENTS ALLOWED UNDER THE UCC AND COMMON LAW?
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Only under the UCC because of the good faith requirement
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HOW DO ASSIGNMENT OF RIGHTS GET PROPERLY ASSIGNED?
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a. Intent to assign by assignor
b. no particular language required c. MAY require a writing IF i. Wage assignment ii. Interests (options) in land iii. Choses of action over $5,000 iv. Security interests |
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WHAT HAPPENS IF THE RIGHT IS ASSIGNABLE AND PROPERLY ASSIGNED?
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a. the assignee becomes the real party in interest, and
b. once notice is given, the obligor must deal directly with assignee (if you don’t the assignee can sue) |
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WHO CAN THE ASSIGNEE SUE?
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6. The assignee may sue
a. the obligor under the contract; or b. the assignor under breach of warranty (1) Warranty not to interfere with assignment (2) Warranty that assigned right is not subject to defenses |
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WHAT DEFENSES CAN THE OBLIGOR USE?
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Any defenses against assignee that the obligor could have used against assignor
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GRATUITOUS ASSIGNMENTS ARE GENERALLY REVOCABLE... WHEN DO THEY BECOME IRREVOCABLE?
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the assignee detrimentally relied upon it
b. The assignment is in writing (a gratuitous written assignment is irrevocable) c. the assignee receives a token chose; or d. the obligor has completely performed to the assignee |
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ARE ASSIGNMENTS FOR CONSIDERATION REVOCABLE?
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NO - IRREVOCABLE
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WHICH MULTIPLE ASSIGNMENTS ARE REVOCABLE AND IRREVOCABLE
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Revocable - revoked by subsequent assignments
Irrevocable - first in time, first in right UNLESS (1) subsequent assignee does not know of prior assignment(s) and (2) gets judgment, payment, token chose, obtains a novation or estoppel |
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WHAT IS AN ASSIGNMENT OF A CONTRACT AS FAR AS RIGHTS AND DUTIES?
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It is an assignment of rights and delegation of duties
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WHAT DOES A PROHIBITION OF ASSIGNMENT DO?
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It only bars the delegation of the duties
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EXPLAIN WHICH NON ASSIGNMENTS CLAUSES ARE VALID AND WHICH ARE INEFFECTIVE?
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A. If the clause does not contain the word VOID, then the assignor has the power to assign but does not have the right (promised not to) to assign - the assignment is effective but the assignor will be liable for damages. Assignment is valid BUT assignor is liable for any damages due to breach
B. If the clause does contain the word VOID then the assignor does not have the power to assign nor the right to assign – the assignment will be ineffective. |
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DELEGATION OF DUTIES (DEFINITION)
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Where the parties at the time of contracting, do not contemplate performance by a third, non contracting party, but subsequently, a party transfers duties under the contract to a third party
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DELEGATIONS ARE GENERALLY VALID, UNLESS..
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a. the duties involve personal judgment and/or skill; or
b. the delegation would materially change the obligee’s expectations. |
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HOW ARE DELEGATIONS OF DUTIES PROPERLY DELEGATED?
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a. Intent to delegate by delegator
b. No particular language required c. May be oral or written |
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WHAT HAPPENS IF A DUTY IS DELEGABLE AND PROPERLY DELEGATED?
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The obligee MUST accept performance from delegatee and the delegator remains a SURETY for delegatee
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WHO CAN THE OBLIGEE SUE?
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a. Delegator - as a surety
b. Delegatee - ONLY if the delegation was for consideration under a third party promise with the delegates being the promisor and the obligee being the TPB (If the contract is gratuitous then not enforceable due to no consideration) |
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WHAT IS NOVATION?
WHAT ARE THE NECESSARY ELEMENTS? |
A new contract with a substitution of a new party (A way to get out of an obligation on a contract)
a. a previous valid contract b. an agreement among all parties (including new party); c. immediate extinguishment of one contract; d. immediate enactment of a new contract |
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IF THERE IS A NOVATION, WHOSE DUTIES CHANGE?
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The replaced party has no longer any duties
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ONCE ALL CONDITIONS ARE SATISFIED OR EXCUSED WHAT ARE BOTH PARTIES?
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under an absolute duty to perform; they MUST perform, discharge their duty or be in breach
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CONDITIONS (DEFINITION)
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An event that determines if and when a duty arises or is extinguished.
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PROMISE, COVENANT AND CONDITION GENERALLY MEAN THE SAME THING... WHAT IS A PROMISE?
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A promise is a commitment to do or refrain from doing something
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HOW DO YOU DETERMINE IF ITS A PROMISE OR CONDITION? (5)
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a. Look to the intent of the parties (express?)
b. Look to the language (if and only if, unless - condition) c. Look to any prior dealings of the parties d. Look to custom in the industry or business e. In doubtful situations, courts prefer a promise to a condition because of a breach of a promise will not result in forfeiture |
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A CONDITION FOR ONE PARTY MAY BE A...
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promise for the same OR another party
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WHAT IS NOT A CONDITION?
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Passage of time (generally not interpreted as a conditional event)
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