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147 Cards in this Set
- Front
- Back
- 3rd side (hint)
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What creates an IMPLIED K?
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Party's CONDUCT indicates intent to be bound
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What creates a QUASI-K?
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Party is unjustly enriched
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Order of K Analysis
1 |
- Applicable Law?
- Formation (Offer, offer rejection, acceptance) - Terms - Performance - Remedies - Excuse for nonperformance - Third-party problems |
*Armadillos from Texas play rap, eating tacos
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Definition of a contract
2 |
Legally enforceable agreement
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Definition of a unilateral K
2 |
Promise for performance
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List the only 2 ways a K is unilateral
2 |
- Reward/prize/contest
OR - Offer EXPRESSLY REQUIRES performance for acceptance |
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[Applicable Law]
UCC Art. II applies to what? 3 |
Movable, sellable good (NOT services)
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[Applicable Law]
Is real estate covered by common law or Art. II? 3 |
Common law
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[Applicable Law]
If there is a "mixed deal" with both goods and services, does the UCC or common law apply? 3 |
It depends.
Test: All or nothing/most important test. Determine if the goods or the services is more important to the deal and apply those riles to the WHOLE disagreement over the K. |
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[Formation - Offers]
Definition of offer 5 |
Objective manifestation of intention to K (showing of commitment)
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[Formation - Offers]
At common law, what term MUST be part of the offer? 5 |
Price
(NOTE: price is NOT required to create an Art. 2 offer) |
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[Formation - Offers]
Test for quantity change in requirements Ks 6 |
Buyer CAN increase if reasonable in comparison to prior demands.
(Restated: CANNOT be unreasonably disproportionate) |
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[Formation - Offers]
EXCEPTIONS to advertisements not being offers 6 |
- Rewards
- Ads that expressly indicate who can accept |
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[Formation - Termination of offer]
Four categories of terminations of offers 6-11 |
- Lapse of Time
- Death of either part - Revocation (revocation means offerOR has terminated his offer) - Rejection (rejection means offerEE was terminated his ability to accept) |
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[Formation - Termination of offer]
Exceptions to termination of K by death 7 |
- Option K
- Part performance of a unilateral K |
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[Formation - Termination of offer]
2 ways offerOR can revoke offer 7 |
- Express, unambig. statement
OR - Unambig. conduct to which the offerEE is aware *NOTE: Multiple offers does NOT revoke |
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[Formation - Termination of offer]
When does revocation of an offer sent via mail become effective? 8 |
when RECEIEVED
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[Formation - Termination of offer]
4 situations when an offerOR CANNOT revoke 8 |
- Option K
- UCC Firm Offer - FORESEEABLE detrimental reliance - Start of Unilateral K performance |
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[Formation - Termination of offer]
Elements of an option K 8 |
-Promise not to revoke
-Supported by consideration |
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[Formation - Termination of offer]
Elements of an Art. II firm offer 8 |
- Offer to buy goods
- Signed, WRITTEN promise - Explicit STATEMENT will not to revoke - Offering party is a MERCHANT *** No payment is required *NOTE: Max firm offer period is 3 months (if not stated, is for a reasonable time, max. of 3 mon.) |
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[Formation - Termination of offer]
Elements that make a unilateral K irrevocable 9 |
- Performance started
AND - is NOT mere preparation (actually starts working) |
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[Formation - Termination of offer]
Three ways an offerEE rejects an offer (terminating ability to accept) 9-11 |
- Counteroffer
- Conditional Acceptance - Proposes new terms (mirror image rule) |
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[Formation - Termination of offer]
"Twist" to the Counteroffer termination of offer rule 10 |
Mere "bargaining" does not terminate
NOTE: look for a question |
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[Formation - Termination of offer]
Define conditional acceptance 10 |
When offerEE responds to an offer with "only if" ... or other condition
Result is that terminates offer, and the new statement becomes an offer |
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[Formation - Termination of offer]
Effect of additional terms in a sale of goods. 11 |
Sale of goods - Art 2.
New terms does NOT disturb the fact that a K is created, SO LONG AS the new terms are NOT stated as a conditional |
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[Formation - Termination of offer]
When do additional Art. II terms become part of the K? 11 |
ONE party is a merchant:
- Add'l term is mere proposal BOTH parties are merchants: - Add'l term IS part of K, UNLESS: - - Martially changes - - Offeror objects |
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[Formation - Acceptance]
Define Acceptance -- |
Objective manifestation of intent to be bound
**NOTE: MAY be shown by conduct |
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[Formation - Acceptance]
Result under common law when there is improper acceptance (such as a counter-offer), but the original offeror remains silent on counteroffer and begins performance by conduct. Is there acceptance and therefore a K? 12 |
K is and new counteroffer terms are included
Common law treats this as AN ACCEPTANCE of a counteroffer (acceptance by conduct) |
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[Formation - Acceptance]
Result under Art II when there is improper acceptance (such as adding new terms), but the original offeror remains silent on the new terms and begins performance by conduct. Is there acceptance and therefore a K? 12 |
K is created base solely on the conduct, and new terms are INCLUDED, UNLESS:
Pre-requisite: BOTH parties are MERCHANTS, and: 1 - Additional terms do not material alter 2 - Offer expressly limits acceptance to terms, OR 3 - Offeror objects to new terms within a reasonable period of time |
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[Formation - Acceptance]
Result when there is a verbal offer but no words of acceptance in response -- instead the other party fully performs without notifying offeror. Is there acceptance and therefore a K? 12-13 |
Full performance IS ACCEPTANCE, whether offeree notifies offeror or not.
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[Formation - Acceptance]
Result when offeror makes makes offer and offeree is SILENT, but begins to perform. Is there acceptance and therefore a K? 13 |
DEPENDS.
Bilateral Ks: is a K -- Start of performance is acceptance Unilateral Ks: is NOT a K -- Can only accept by FULL performance (BUT - start of unilateral performance make the offer irrevocable for a reasonable time for person to complete performance) |
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[Formation - Acceptance]
Result when person merely promises to perform, but has not begun performance yet. Is there acceptance and therefore a K? 13 |
IS a K: Promise for a promise
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[Formation - Acceptance]
The 4 mailbox rules 14 |
- ALL communications other than acceptances are effect only WHEN RECEIVED
- Acceptance, GENERALLY, is effective when mailed - Rejection THEN accept = first in time - If option K; actual receipt of acceptance required |
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[Formation - Acceptance]
Result when sale of goods and seller sends nonconforming/wrong goods. Is there an acceptance, making a K? 14 |
Sale of goods = Art 2
YES - Serves as BOTH as an acceptance AND a breach |
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[Formation - Acceptance]
Result when sale of goods and seller sends nonconforming/wrong goods, but includes an explanation that the good are an accommodation. Is there an acceptance, making a K? 14 |
Sale of goods = Art 2
NO - there is NOT an acceptance, and therefore there CANNOT be a breach |
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[Formation - Acceptance]
Who can accept an offer? 15 |
Only a person:
1 - to whom the offer was made, AND 2 - KNOWS about the offer at the time of "acceptance" (ex: can't get reward if didn't know about it) NOTE: CAN become aware of offer DURING performance and therefore accept |
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[Formation - Acceptance]
When can you assign an offer? 15 |
Generally, NEVER -- except you can assign an OPTION
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[Formation - Reason for non-enforcement: Lack of Consideration]
Consideration test? 16 |
Benefit and a detriment to both parties to the K
Note: detriment can be in the form of forbearance (NOT doing something legally entitled to do) |
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[Formation - Reason for non-enforcement: Lack of Consideration]
When are you bound to pay in a rescue situation? 17 |
When person EXPRESSLY requests service and knows that person expects to be paid. (Ex: asking to save life, knowing hospital will charge)
COMPARE: Promise to pay someone after saving life |
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[Formation - Reason for non-enforcement: Lack of Consideration]
What is the pre-existing duty rule, to what type of Ks does it apply, and what are the 3 exceptions? 18 |
ONLY applies to common-law Ks (services)
Rule: Not sufficient consideration to do what you're already required to do EXCEPTIONS: - Slight addition/change in performance - Unforeseen difficulty - a DIFFERENT person pays you to do the same task required to do under a different K |
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[Formation - Reason for non-enforcement: Lack of Consideration]
Pre-existing duty rule under Art. II 18 |
Trick question: No new consideration required to modify a sale of goods.
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[Formation - Reason for non-enforcement: Lack of Consideration]
Rules for sufficient consideration for release of debt / K modification 19 |
If dept is DUE and UNDISPUTED in amount, there is NOT consideration.
(But if GOOD FAITH dispute in amount, there IS consideration) |
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[Formation - Reason for non-enforcement: Consideration substitutes]
Rule for collection of debt barred by statute of limitations. 19 |
Treated as a consideration substitute -- but the lower amount controls
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[Formation - Reason for non-enforcement: Consideration substitutes]
Promissory estoppel elements 19 |
1 - Promise
2 - Reliance that is reasonably foreseeable 3- Enforcement necessary to aboid injustice NOTE: only use when NO CONSIDERATION |
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[Formation - Reason for non-enforcement: Lack of Capacity]
List 3 types of persons lacking capacity 20 |
- Infant (< 18)
- Mental incompetents - Intoxicated persons (ONLY IF other person has reason to know) |
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[Formation - Reason for non-enforcement: Lack of Capacity]
Consequence of K with person who has incapacity and 2 exceptions 20 |
Person with incapacity MAY void the L (K is voidABLE, not automatically void)
EXCEPTIONS: 1 - Affirmation by retaining benefits after becoming 18, OR 2 - Necessaries (NOTE: Infant only has to pay for necessaries in quasi-K --- THERE IS NO REAL K) |
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[Formation - Reason for non-enforcement: Statute of Frauds]
When is the statute of frauds implicated? -- |
When there is an ORAL agreement, and one party raises the defense that there never was an agreement.
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[Formation - Reason for non-enforcement: Statute of Frauds]
SIX types of Ks that fall WITHIN the Statute of Frauds 21-23 |
***MY LEGS
M - Marriage Y - Year (>1 year) ('not capable' of being performed w/i 1 year) L - Land (note: leases of 1 year DO NOT need to be in writing) E - Executor promise to pay from own funds G - Goods > or EQUAL TO $500 S - Surety (promise to answer for debt for another) |
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[Formation - Reason for non-enforcement: Statute of Frauds]
What is the EXCEPTION to the writing requirement for a surety (answer for the debts of another)? 21 |
If main purpose of K was the benefit the guarantor, then S/F doesn't apply
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[Formation - Reason for non-enforcement: Statute of Frauds]***
How to satisfy the S/F in a SERVICES (common law) K. 24 |
- ACTUAL FULL PERFORMANCE by EITHER party
OR - Writing (see another question for requirements of the writing) NOTE: Part performance does NOT satisfy |
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[Formation - Reason for non-enforcement: Statute of Frauds]
3 ways to satisfy the S/F in a sale of goods (Art. II) K. 25 |
1 - Seller's part performance (satisfied to the extent of the part performance)
2 - Seller's "SUBSTANTIAL BEGINNING" for specialty goods 3 - Buyer's part performance 3a - For MULTIPLE item K, S/F satisfied for as many as paid for (ex: paid $100 for $1000 K for $100 widgets, then satisfied for 1 widget) 3b - for SINGLE item K, S/F satisfied by any payment (Widget cost $1000, and buyer paid $50 = S/F satisfied) |
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[Formation - Reason for non-enforcement: Statute of Frauds]
Requirements for satisfying the S/F with a writing under common law. 26 |
Look to contents of writing OR WRITINGS, containing ALL material terms (who and what).
PLUS, writing must be signed by the person asserting the defense (in order to defeat his S/F defense) |
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[Formation - Reason for non-enforcement: Statute of Frauds]
Requirements for satisfying the S/F with a writing under Art II. 26-27 |
Only have to show it was a K for sale of good and contains QUANTITY term ($500 min. requirement is ONLY required for K to fall UNDER S/F)
***Does NOT have to be signed by the party asserting the S/F defense IF both parties are MERCHANTS and person failed to respond WITHIN 10 DAYS |
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[Formation - Reason for non-enforcement: Statute of Frauds]
What is the equal dignity doctrine? 27 |
If K to be signed is w/i S/F, then a person executing the K on behalf of another MUST have WRITTEN authorization to sign the L
This is a rule of LAW, not a rule of equity |
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[Formation - Reason for non-enforcement: Statute of Frauds]
When must a contract modification satisfy the S/F? AND what effect if original K says all modifications MUST be in writing? 27 |
Only when the MODIFICATION is w/i the S/F (Ex: Original K for 3 year lease, alleged modification to 1 year lease = S/F NOT implicated)
If original K says all modifications MUST be in writing: -Common law: IGNORE requirement -Art II: requirement is effective |
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[Formation - Reason for non-enforcement: Various policy]
Distinction of enforceable agreements concerning illegality 29 |
Illegal subject matter = void
ONE PARTY'S illegal purpose, unknown to other party = valid K |
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[Formation - Reason for non-enforcement: Various policy]
Exception to illegal subject matter rule -- |
Exception: the illegality is merely the failure to obtain a license, and the license is for revenue-raising purposes only.
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[Formation - Reason for non-enforcement: Various policy]
Define misrepresentation 29 |
-Person DOES speak
-False statement -Material fact -Induces K NOTE: party does not NEED to know of statement's falsity |
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[Formation - Reason for non-enforcement: Various policy]
Elements of common law fraud -- |
-false material assertion
-knowledge of falsity -Intended party yo rely on false assertion -Other person did reasonably rely -Damages |
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[Formation - Reason for non-enforcement: Various policy]
Reason for non-enforcement when someone does NOT speak 29 |
Nondisclosure must be wrongful:
-Knowing -Concealment -Of material fact (EX: cover over termite damage) |
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[Formation - Reason for non-enforcement: Various policy]
Define duress 29 |
-"Bad Guy" = improper threat made to ...
-"Vulnerable guy" = no reasonable alternative |
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[Formation - Reason for non-enforcement: Various policy]
Test for Unconscionability 30 |
-Unfair surprise / one-sided
-Oppressive terms -Tested as of the time of the agreement NOTE: determined by the court - NOT a jury questions |
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[Formation - Reason for non-enforcement: Ambiguity]
Test for Ambiguity, and result on the K 30 |
There will be NO K if:
-Material term that is open to 2 or more interpretations -Each party attaches a diff. interpretation -Neither party has reason to know the term is open to two interpretations |
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[Formation - Reason for non-enforcement: Mistake of Fact]
Define Mistake of Fact 30-31 |
Mistake = NO speaker (whereas misrepresentation = words before K)
Mistake of fact means NO K Test: -Both parties mistaken -Basic assumption of fact -MATERIALLY affects agreement, AND -Does not concern a risk that that one of the parties bears (Ex: mistake about what a thing IS, rather than what a thing is WORTH) |
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[Formation - Reason for non-enforcement: Mistake of Fact]
When will a unilateral mistake work for voiding a K? -- |
when the other party knew of the mistake and said nothing
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[Terms - Parol evidence rule]
What is parole evidence, and what does it implicate? 32 |
What was said BEFORE the K was reduced to writing (and can the court consider it)
NOTE: Earlier WRITINGS can be parol evidence |
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[Terms - Parol evidence rule]
What is a merger clause? 32 |
K clause that states agreement is final
NOTE: this is persuasive, but not conclusive |
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[Terms - Parol evidence rule]
What is integration 32 |
The written agreement that the court finds is the final agreement
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[Terms - Parol evidence rule]
Purposes for which you CAN introduce parol evidence 33-34 |
- To show error in transcription
- To show a K defense (misrepresentation, fraud, duress, TO SHOW EXISTENCE OF A CONDITION PRECEDENT) - To EXPLAIN a term in the written deal |
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[Terms - Parol evidence rule]
Purposes for which you CANNOT introduce parol evidence 33-34 |
- To contradict written terms (except for errors in transcription)
- To show terms are consistent with prior agreements (EXCEPT if terms are missing in new K and older K would show gap-fillers) |
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[Terms - Order of enforcability]
What is the order in which courts will evaluate a K? 34-35 |
1 - Actual paerformance
2 - Course of dealing (similar prior K w/ same ppl) 3- Custom and usage (trade custom -- different but similar ppl) |
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[Terms - Shipment/Risk of Loss]
What is a shipment K? 35 |
Seller obligations compled before ACTUAL delivery:
1 - S gets goods to common carrier 2 - S makes reasonable arrangements for delivery 3 - S notifies buyer of shipment |
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[Terms - Shipment/Risk of Loss]
What is a destination K? 35 |
Where Seller does not complet delivery obligation until goods arrive where buyer is
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[Terms - Shipment/Risk of Loss]
Interpret FOB (city) 35 |
Where city = seller's city, then shipment K
Where city = buyer's city, then destination K |
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[Terms - Shipment/Risk of Loss]
When does a risk of loss issue occur? 36 |
When there is a destruction of goods in shipment w/o fault of the buyer or seller.
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[Terms - Shipment/Risk of Loss]
4 risk of loss rules 37 |
EVALUATE IN ORDER:
1 - Agreement of parties controls 2 - Breaching party liable 3 - Shift to buyer after seller completes delivery obligations 4 - IF NO USE OF COMMON CARRIER AT ALL: 4a - If SELLER is merchant: shift risk of loss to buyer only after buyer's ACTUAL POSSESSION 4b - If SELLER is NOT a merchant: shift to buyer as soon as seller makes goods available (tender) -- does NOT have to be physical possession (ex: keys are in the car) |
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[Terms - Warranties]
What is an express warranty? 37 |
Promise that describes or states facts -- NOT mere puffery ("top quality")
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[Terms - Warranties]
What is the implied warranty of merchantability and when does it attach? 38 |
Defined: Goods fit for ORDINARY purpose for which such goods are used
Trigger: Seller is MERCHANT of that TYPE OF GOOD |
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[Terms - Warranties]
What is the implied warranty of fitness for purpose and when does it attach? 38 |
Seller is merchant in those type of goods
Defined: Good good for explicit purpose that buyer is relying on, AND seller has reason to know of the reliance Trigger: Buyer tells dealer of need for particular purpose |
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[Terms - Warranties]
How to disclaim warranties, and are they effective 39 |
Dis claim either by:
-CONSPICUOUS language, OR -"As is" Effective as to implied warranties of merchantability and fitness for purpose, but NOT for express warranties |
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[Terms - Warranties]
Is statements of limitation of warranties effective? 39-40 |
Yes, even for express warranties (unless unconscionable) ...
BUT - prima facie unconscionably is trigger if breach of warrant on consumer goods causes personal injury |
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[Performance - Art II]
What does less than perfect tender give rise to? 41 |
OPTION of buyer to REJECT the delivered goods
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[Performance - Art II]
If buy receives non-conforming goods (goods not satisfying perfect tender), what may he do? 41 |
REJECT and sue for damages
OR Detain the non-conforming goods and sue for damages [SENDING NON-CONFIRMING GOODS IS BOTH AN ACCEPTANCE AND A BREACH!] |
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[Performance - Art II]
2 situations where seller can cure when there has not been a perfect tender. 41-42 |
-Can ALWAYS cure if he time for performance has not yet expired
OR -Seller's has tried to make a reasonable accommodation and thought that the non-conforming goods would be acceptable (ex: buyer always accepted blue widgets when seller was out of green ones to send) |
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[Performance - Art II]
State the exception for perfect tender for installment Ks 42 |
Buyer only has the right to reject an installment where, because of non-conformity with an installment, there was a SUBSTANTIAL IMPAIRMENT that CANNOT be cured
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[Performance - Art II]
What is the effect of acceptance of goods by the buyer 42 |
Buyer CANNOT later reject goods that it accepts.
HOWEVER, a buyer's payment WITHOUT OPPORTUNITY TO INSPECT is NOT acceptance [look for buyer keeping goods without objection = acceptance] |
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[Performance - Art II]
Even if a buyer fails to REJECT the goods in timely manner, what other option does he have? 43 |
Buyer MAY be able to REVOKE
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[Performance - Art II]
What is the test for REVOKING? 43 |
- excusable ignorance OR reasonable reliance on seller's assurances;
- nonconformity SUBSTANTIALLY impair value of goods; AND - Revocation w/i reasonable time after discovery of nonconformity |
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[Performance - Art II]
If a buyer successfully revokes, what must he do with the goods he still has? -- |
Buyer must hold the goods and await instructions from the seller
IF seller doesn't make any instructions, then seller may: -Sell the goods for the benefit of the seller, AND -Withhold reasonable expenses AND a commission |
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[Performance - Art II]
If a sale of goods K has an open price term, how is the price determined 44 |
Determined as a reasonable price AT TIME OF DELIVERY
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[Performance - Art II]
In a TRADE of good situation, which part is treated as the seller? 44 |
BOTH parties are treated as sellers
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[Performance - Common Law]
What is the test for performance obligations under common law? 44 |
Where the other party has substantially & materially breached, do not have to complete your end of the K.
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[Remedies - Nonmonetary]
When may a buyer get specific performance under the common law? 45 |
ONLY in the case of Ks for the sale of land
EXCEPT if there is a later sale to a bona fide purchaser for value [Note: NEVER specific performance for service b/c involuntary servitude, but MAY get an injunction for breach of K not to compete IF limited in duration and geography] |
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[Remedies - Nonmonetary]
When may a buyer get specific performance under Art II? 45 |
Only for the sale of unique goods
NOTE: look for antiques, art, custom-made |
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[Remedies - Nonmonetary]
What is reclamation and when may it be used? 45 |
Definition: Right of an unpaid seller to get its goods back
Test: -Buyer insolvent at time it RECEIVED the goods, -Seller demands return of goods WITHIN 10 DAYS of receipt, AND -Buyer still has goods at time of demand |
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[Remedies - Nonmonetary]
What is entrustment, and what is its effect? 46 |
Definition: Where owners LEAVES goods w/ a person who sells goods of that kind and the seller wrongfully sells those goods to a bona fide third party
Effect: Person whose goods were sold may not later recover the goods from the bona fide purchaser |
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[Remedies - Monetary]
What is the overall policy reason for money damages in K cases? 46 |
To compensate the P, not punish the D
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[Remedies - Monetary]
When faced with a K question, what is the standard lines to state for money damages? 46 |
Money damages should be awarded based on the premise to protect a party's EXPECTATIONS.
A party's expectation is that the other party will not breach. To calculate P's damages, you compare P's current position with the position P would have been in if the K had not been breached. |
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[Remedies - Monetary]
What is the measure of RELIANCE damages? 47 |
Pay P by putting P in the same position AS IF K never occurred
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[Remedies - Monetary]
What is the measure of RESTITUTION damages, and when is it used? 47 |
Pay P by putting DEFENDANT is same economic position, by requring D pay P for his UNJUST ENRICHMENT.
(Awarded in Quasi-K cases) |
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[Remedies - Monetary]
What part of Art. II applies to damages for sale of goods cases? 47 |
Part 7
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[Remedies - Monetary]
What is the measure of damages in most sale of goods cases 47 |
Expectation
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[Remedies - Monetary]
What is the measure of damages in a sale of goods case where the BUYER breaches and the SELLER still has the goods? 48 |
If successful in re-selling good to another party: K price - cover price when resold
[BUT, if lost volume seller, where good is of the types that seller keeps in his REGULAR INVENTORY, then gets lost profits] If NOT successful in re-selling good to another party: K price - market price at time and place of delivery [BUT, may sometimes also get provable lost PROFITS, even if seller never had to perform] |
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[Remedies - Monetary]
What are incidental damages? 49 |
Costs incurred in finding replacement performance
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[Remedies - Monetary]
Test for Consequential damages 49 |
Special damages that result from the other party's breach, for which the other party HAD REASON TO KNOW OF THE special circumstances AT THE TIME OF THE K
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[Remedies - Monetary]
What is the term for damages that the non-breaching party must AVOID? And where does the burden lie? 49 |
Burden on D to show failure to MITIGATE or COVER
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[Remedies - Monetary]
What other limitation on damages is there? 50 |
Limitation that damages must be CERTAIN (can't be award for speculative damages)
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[Remedies - Monetary]
Test for allowing LIQUIDATED damages listed in the K 50 |
1 - Damages were difficult for forecast at the time of the L, AND
2 - Provision is a reasonable forecast NOTE: a single set sum is presumptively invalid |
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[Excuse for Nonperformance - Other party breached]
Test for excuse for non-performance at common law, and exception 51 |
Other party fails to substantially perform/material breach
*NOTE: substantial performance is a FACT question for the jury EXCEPT, in installment Ks, the K price is divisible, whereby an otherwise breaching party can recover for the substantial performance of each divisible party of the K -- EVEN where there is a material breach of the whole K *NOTE: to be an installment K, the K must say so EXPLICITLY |
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[Excuse for Nonperformance - Other party breached]
Test for excuse for non-performance in a case of sale of goods 52 |
Perfect tender rule (already covered) -- the seller's breach need not be material
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[Excuse for Nonperformance - Conditions]
What "special" words on the MBE give rise to a condition 52 |
If
Only if Unless Provided that So long as Subject to *NOTE: a conditional ACCEPTANCE is NOT a K condition -- it's a rejection and offer (acts as a counteroffer) |
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[Excuse for Nonperformance - Conditions]
What level of satisfaction is needed to satisfy a conditional? 53 |
STRICT compliance
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[Excuse for Nonperformance - Conditions]
What are the 4 situations that will still require K to be fulfilled, even where the conditional was not satisfied? (Exceptions to the strict compliance with conditions rule) 53-54 |
1 - Estoppel: Arises when detrimental reliance on other party not requiring condition be met BEFORE condition was to be satisfied
2 - Waiver: Arises when detrimental reliance on other party not requiring condition be met AFTER condition was to be satisfied 3 - Prevention: Party to be protected by the condition hinders or prevents the occurance of the condition 4 - Avoidance of forfeiture: Court usually will always try to avoid forfeiture |
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[Excuse for Nonperformance - Anticipatory Repudiation]
What is anticipatory repudiation? 54-55 |
Arises when ther party make and UNAMBIGUOUS statement or conduct indicating that:
-they will not perform, -PRIOR to time performance was due Result: Other party's duty to perform is EXCUSED, and may IMMEDIATELY sue for damages BUT NOTE: anticipatory reputation can be RETRACTED, if the other party hasn't made a material change in position. ... However, the party that did NOT repudiate can delay until there is adequate assurance |
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[Excuse for Nonperformance - Insecurity]
What is Insecurity? 55 |
Usually occurs in sale of goods.
Where one parts makres performance UNCERTAIN (not rising to anticipatory reputidation) Result: -Other parts can DEMAND ASSURANCE, and -If "commercially reasonably," can STOP PERFORMANCE |
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is rescission? 56 |
When both parties agree to rescind/tak-back the L.
BUT, this requires that BOTH of the parties have not completed performance |
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is accord and satisfaction, GENERALLY? 56 |
It's when there is a substituted PERFORMANCE
*HINT: on MBE, look for "Later, parties agree that IF X does something instead of original duty, THEN K will be satisfied." |
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is an accord? 56 |
Accord is the terms of the substituted agreement with the new performance to be done
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is satisfaction? 56 |
Satisfaction is when the accord (new performance) is performed, RESULTING IN EXCUSE of the original K
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[Excuse for Nonperformance - Replacement or cancellation of K]
What result if an accord is made, but not satisfied? 56 |
The party that did perform may sue the non-performance party on EITHER the original K -OR- recover on the accord --- BUT NOT BOTH
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is a modification? 56 |
Substituted AGREEMENT, whereby the MERE MAKING of the new agreement excuses the old agreement
*HINT: Think loan modification = get rid of old mortgage in lieu of creating new mortgage |
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is novation? 56-57 |
Substituted PERSON
*NOTE: this requires that BOTH parties agree to the substitution!!!! [If done unilaterally - then it's merely a delegation and assignment] The result of a novation is to FULLY excuse the original contracting party in lieu of the new party |
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[Excuse for Nonperformance - Later Event]
What are the three terms for types of things that will excuse performance b/c of later events? 57 |
-Impossibility
-Impracticability -Frustration of Purpose |
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[Excuse for Nonperformance - Later Event]
What are the THREE prerequisites to getting ANY of impossibility, impracticability, or frustration of purpose? 57 |
1 - Something happens AFTER K, but before completion of K performance,
AND 2 - Unforeseen AND 3 - Without fault of either party |
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[Excuse for Nonperformance - Later Event]
Rule to remember re: risk of loss and impossibility/frustration. 58 |
If risk of loss has already passed to buyer, and buyer only owes payment, THEN nonperformance (not paying) is NOT excused. (must still pay)
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[Excuse for Nonperformance - Later Event]
Is excuse for death considered impossibility? (and 1 exception) 59 |
Dead does NOT excuse (not impossibility b/c someone else can perform)
EXCEPT in Ks with person of special talents (specific actor, etc.) |
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[Excuse for Nonperformance - Later Event]
Result when later law makes performance of K illegal 59 |
Excuse by IMPOSSIBILITY
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[Excuse for Nonperformance - Later Event]
Result when later law makes mutually understood purpose of K illegal. (Purpose does NOT have to be explicit in the K, but BOTH parties have to know of purpose) 59 |
Excuse by FRUSTRATION OF PURPOSE
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[Third-party Problems - 3rd Party Beneficiary]
What is a 3rd party beneficiary K? 60 |
When 2 people K to benefit a 3rd person and the third person is MENTIONED IN THE K
(Ex: Life insurance) |
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[Third-party Problems - 3rd Party Beneficiary]
In 3rd party beneficiary cases, who is the promisor and who is the promisee? 60 |
Promisor: Person who is making the promise that BENEFITS the 3rd party. (the guy buying life insurance)
Promisee: Person who obtains the promise that is to benefit the 3rd party (Ex: the insurance company) |
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[Third-party Problems - 3rd Party Beneficiary]
When have 3rd party beneficiary's rights vested? 61 |
Vesting occurs when EITHER:
-Beneficiary assent in a manner provided in K, OR -Beneficiary brings suit to enforce promise, OR -Beneficiary has detrimental reliance on K |
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[Third-party Problems - 3rd Party Beneficiary]
Who can sue who? 61 |
-3rd party bene. can sue promisee (insurance company)
-Promisor (guy who bough life insurance) can sue promisee BUT ... -3rd party bene CANNOT sue promisor - guy who bought the insurance (except to the extent that promisee obtained the K to substitute for a pre-existing debt, then 3rd party can sue promisee for the pre-existing debt) |
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[Third-party Problems - 3rd Party Beneficiary]
What are the promisee's defenses to a 3rd party beneficiary? 61 |
Promisee can assert ANY defense he may have had if the promisor had sued
(Ex: promisor never PAID the insurance bill!) |
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[Third-party Problems - Assignment]
What is an assignment? 62 |
An assignment is when, AFTER a preexisting K, a party transfers his/her RIGHTS under the K
(Ex: right to $) |
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[Third-party Problems - Assignment]
Example and effect of assignment PROHIBITION in a K 62 |
Example: "rights are not assignable"
Effect: Assignee who does not know of the prohibition can STILL ENFORCE the assignment |
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[Third-party Problems - Assignment]
Example and effect of assignment INVALIDATION in a K 63 |
Example: "all assignments under this K are VOID"
Effect: Even if assignee does not know of the clause, CANNOT enforce the assignment |
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[Third-party Problems - Assignment]
Common law bars to assignment 63 |
Substantial change of the duties of the obligor will bar assignment
Ex: Now Batman has to patol a city twice as big NOTE: Change of right of WHO is paid is NEVER a substantial change |
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[Third-party Problems - Assignment]
What consideration requirements are there for assignment? 63 |
Generally, there are NONE
BUT .. a gratuitous assignment CAN BE REVOKED |
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[Third-party Problems - Assignment]
What happens when a party (assignor) assigns his/her right to all benefits to an assignee? 63 |
ONLY the assignee can now sue the obligor.
The Assignment has PERMANENTLY relinquished his rights to the benefit -- so he can't sue for them. Not a real party in interest) |
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[Third-party Problems - Assignment]
What are the Obligor's defenses to an assignee? 64 |
Obligor can assert ANY defense he may have against the assignor
(Ex: assignor didn't complete the job, so you don't get paid) |
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[Third-party Problems - Assignment]
Does the obligor breach when it continues to pay the assignor instead of the assignee 64 |
NO, if the obligor doesn't know of the assignor
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[Third-party Problems - Assignment]
What implied warranty exists when an assignor makes an assignment for value (for consideration) to an assignee? 64 |
Assignor warrants that:
1 - Right assigned ACTUALLY exists, 2 - Right assigns is NOT subject to any defenses by the obligor, AND 3 - the assignor will do nothing to impair the value of the assignment |
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[Third-party Problems - Assignment]
Who wins when there are multiple GRATUITOUS assignments? 65 |
The LAST in time
(Reason: treat earlier ones as revoked) |
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[Third-party Problems - Assignment]
Who wins when there are multiple assignments for consideration? and 1 exception. 65 |
FIRST in time
4-horsemen Exception: -2nd-in-time assignee doesn't know of earlier assignment, AND -2nd-in-time assignee is the FIRST to obtain EITHER: 1-payment from obligor 2-judgment 3-a novation, OR 4-Indicia of ownership Doesn't know & **PINJ |
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[Third-party Problems - Delegation]
What is a delegation? 66 |
Occurs when party to K reansfer DUTIES under the K to a third party
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[Third-party Problems - Delegation]
Limitations on what can be delegated 66 |
Delegations permitted unless either:
1- K explicitly prohibits delegations OR ASSIGNMENTS, 2- K calls for SPECIAL SKILLS, OR 3- Person to perform K has SPECIAL REPUTATION |
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[Third-party Problems - Delegation]
Who is liable if delegatee fails to perform? (2 rules) 66 |
- Delegating party ALWAYS REMAINS secondarily liable
- Delegatee is liable ONLY IF he received consideration from delegator |
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