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108 Cards in this Set
- Front
- Back
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Definition of contract
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A legally enforceable promise between parties with mutual obligations.
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When does the UCC art 2 apply?
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When the K is for the sale of goods.
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Merchant
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One who regularly deals in goods of the kind sold or by his profession holds himself out as having special knowledge/skills
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Types of contracts
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Express - language
Implied in fact - conduct Quasi-contract (not K, equity) |
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Types of acceptace
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Bilateral - mutual promises
Unilateral - by performance Modern - uni only where offeror indicates completion by performance only manner of accept; where offer to public (ie reward) |
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Void K
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Without any legal effect from the beginning; no enforcement by either party
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Voidable K
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One or both parties may elect to avoid K
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Unenforceable K
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Agreement otherwise vaid but due to an extraneous defense (ie SOF or SOL) is unenforceable
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Creation of a K questions
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Mutual assent?
Consideration? Any defenses? |
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How mutual assent determined
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Objective - did words or conduct manfirest present intention?
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Offer?
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Promise, undertaking, or commitment with definite and certain terms communicated to offeree
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For communication to be an offer...
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it must create a resonable expectation, thus:
not I would consider; I quote Use of publications, advertisiements generally solicitation or invitation for offer |
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Definite and certain terms...
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Whether enough of the essential terms have been provided so that a K w/ them would be capable of being enforced
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Essential terms of an offer
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Id of offeree
Definiteness of subject matter Communication to offeree |
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Term requirements for specific types of contracts
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Real estate - id land and state price
Goods - quantity (exception: requirements contract) Services - nature of work |
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Requirements K
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Impermissible tender or demand for quantity unreasonably disproportionate
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Missing terms
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Do not prevent formation if it appears parties intended to make a K and reasonably certain basis for remedy. Art 2 - reasonable terms can be supplied
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Vague terms
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Court cannot presume parties' intent, but can be cured by part performance that clarifies vague term or acceptance of full performance
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Terms agreed on later
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If material, offer too uncertain
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Termination of offer by offeror
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Revocation
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Revocation
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Effective when received or published
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Limitations on revocation
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Option - consideration for a promise
Merchant's firm offer Detrimental Reliance Part Performance (unilateral) Part Performance (bilateral) |
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Merchant's firm offer rule
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If merchant
Offers to sell goods in a signed writing And the writing gives assurances that it will be held open Offer irrvocable during time stated, or if not stated, for no more than 3 months |
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Termination of offer by offeree
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Rejection
Lapse of Time |
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Termination by operation of law
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Death
Destrcution of K's SM Supervening illegality |
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Rejection
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Either express or by counteroffer
Distinguish mere inquiry Effective when received Rejecting option offer does not reject unless offeror DRies on rejection |
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Acceptance of offer for UK
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Completion of performance, notice of completion unless offeror waived or completion comes to offeror's attention
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Acceptance of offer of BK
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Either by promise to perform or beginning of performance
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Shipment of nonconforming goods
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Acts as an acceptance and simultaneous breach of K unless seller sends goods as an accommodation. Buyer must accept or reject ALL of goods shipped.
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Accommodation trap
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Watch out where seller accepts by promising to ship, then discovers lack of specified goods and ships nonconforming goods as accommodation -- this is BREACH as accommodation NOT POSSIBLE
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Revocation
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Effective when received or published
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Limitations on revocation
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Option - consideration for a promise
Merchant's firm offer Detrimental Reliance Part Performance (unilateral) Part Performance (bilateral) |
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Merchant's firm offer rule
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If merchant
Offers to sell goods in a signed writing And the writing gives assurances that it will be held open Offer irrvocable during time stated, or if not stated, for no more than 3 months |
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Termination of offer by offeree
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Rejection
Lapse of Time |
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Termination by operation of law
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Death
Destrcution of K's SM Supervening illegality |
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Rejection
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Either express or by counteroffer
Distinguish mere inquiry Effective when received Rejecting option offer does not reject unless offeror DRies on rejection |
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Acceptance of offer for UK
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Completion of performance, notice of completion unless offeror waived or completion comes to offeror's attention
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Acceptance of offer of BK
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Either by promise to perform or beginning of performance
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Shipment of nonconforming goods
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Acts as an acceptance and simultaneous breach of K unless seller sends goods as an accommodation. Buyer must accept or reject ALL of goods shipped.
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Accommodation trap
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Watch out where seller accepts by promising to ship, then discovers lack of specified goods and ships nonconforming goods as accommodation -- this is BREACH as accommodation NOT POSSIBLE
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Battle of the forms
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Proposal of additional or different terms by offeree does not act as rejection/counteroffer but is effective as an acceptance unless acceptance expressly made condition on assent to teh additional or different terms
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Mailbox rule
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Offeree sends A then R:
K if A first then R, no K if R and DR then A Offeree sends R then A: |
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Offeror sends offer, then revocation
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K if offeree sends acceptance before receiving revocation
No K if receives revocation before sending acceptance |
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Mailbox rule and option K
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Acceptance under an option K is effective upon receipt
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Elements of consideration
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bargained for exchange
bargain must be considered of legal value - either a benefit to promisor or detriment to promisee |
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Gift consideration
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No bargain involved, but a benefit need not be economic
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Past/Moral Consideration
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Does not satisfy bargain requirement, EXCEPT:
- where a new promise is made in writing OR is partially performed - if a poast act benefited the promisor and was performed by the promisee at the promisor's request or in response to an emergency, a subsequent promise enforceable |
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Adequacy of consideration
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Cts do no inquire, however if entirely devoid of value, no consideration.
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Preexisting legal duty
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Not consideration, EXCEPT:
- new or different consideration promised; - promise is to ratify a voidable obligation -preexisting duty owed to a thrid person - honest dispute as to the duty - unforeseen circumstances sufficient to discharge |
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Consideration to modify a K
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Yes for CL
Only good faith (no consideration) for UCC |
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Forebearance to sue
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May constitute consideration if claim is valid or claimant in good faith believe claim to be valid
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Illusory promises
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A promise to chose one of several alternative means is illusory unless every alternative involves legal detriment to the promisor, OR
- at least one alternatnive involves detriment and power to choose rests with promisee or a 3d party - an alternative involving detriment actually selected |
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Primsory Estoppel and consideration
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Consideration not required if:
- promisor should reasonably expect to induce action or forbearance; - of a definite and substantial character - and such action or forbearance is in fact induced |
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"As justice requires"
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This means the answer is saying promisorry estoppel!!!
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Defenses to formation
Absence of mutual assent |
- mutual mistake
- unilateral mistake - mistake by intermediary - ambiguous K language - misrepresentation |
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Mutual Mistake
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Voidable if
- mistake concerns a basic assumption - mistake has a material effect - party did not assume the risk |
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Ambiguous K language
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Neither party aware - no K unless both parties intended same meaning
Both parties aware - no K unless both parties intended same meaning One party aware - binding K based on waht the ignorant party raesonably believed to be the ambiguous words One area where subjective intent considered |
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Misrepresentation
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Fraud in inducement - K voidable
Nonfraudulent Misrepresentation - K voidable if misrep was material Innocent party may rescind agreement |
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Illegal consideration or subject matter
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If consideration or subject matter illegal, K is void, UNLESS
- pltf unaware of illegality while def knows - parties not as culpable as the other - illegality is failure to obtain license when license for revenue raising and not protection |
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Illegal purpose
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K voidalbe by a party who was
- unaware of the prupose - aware but did not facilitate the prupose AND the purpose does not involve serious moral turpitude |
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Contracts of infants/minors
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Lack capacity to enter into K binding themselves, but an adult making K with minor has duty to perform
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Disaffirmance
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Minor may disaffirm before 18, but must return anyting received that still remainds
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Affirmance
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Upon age of majority can affirm K and be bound, either expressly or by conduct
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Exceptions to infancy
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If making K for necessities (reasonable value)
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Mental incapacity and intoxication
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K voidable, but necessities exception applies. For intoxication--only if other party had reason to know of intox.
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Duress/coercion
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Voidable, but may reaffirm
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Defenses to enforcement
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Statute of Frauds
Unconscionability |
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Statute of Frauds
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Certain agreements, by statute, must be in writing and signed by the party against whom enforcement is sought.
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SOF - Agreements covered
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MYLEGGS
Marriage Ks that cannot be performed in less than a year Land contracts Executory Ks Goods above $500 Surety |
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SOF - Goods exception
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Confirmatory memo rule between merchants:
If one party w/in a reasonable time sends to the other party a written confirmation that is sufficient under SOF t obind the sender, it will bind recipient if - he has reason to know of confirmation's contents and - he does not object w/in 10 days |
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SOF defense not raised...
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it is waived
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SOF part performance
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Performing party has option of suing on the K for exepcation damages rather than just restitution
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Unconscionability
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Generally not the answer on the MBE
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Parol Evidence Rule
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When parties to a K express agreement in writing w/ intent that it embody final expression of bargain, any other expressions made prior to or contemporaneous with writing are inadmissible to vary terms of the K
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Who decides whether writing is an integration?
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Majority: judge
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Evidence outside of the PER
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Attacking validity of agreement
K interpretation Evi. to show true consideration Reformation Subsequent modifications |
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Art 2 PER
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Party may add consistent additional terms unless
- a merger clause exists - the ct finds from all the circumstances that agreement complete and exclusive |
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Art 2, Agreement explained or supplemented by
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- parties' course of dealing
- trade usage - parties' course of performance |
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Art 2 provisions re interpretation
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Battle of the Forms
Gap-filler terms Delivery Terms and Risk of Loss Insurable interests and identification Bilateral Contracts formed by performance Warranties |
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UCC - Acceptance w/ additional terms flowchart
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Is k for sale of goods? (Y)
Are the parties merchants? (Y) Did offer limited acceptance to its terms (N) Do the terms materially alter the K? (N) Did offeror object to the new terms? (N) Then k formed WITH the additional terms, otherwise, K bbut W/O additional terms. |
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Gap-filler terms
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If nothing said to price:
- price left open to be agreed upon and parties fail to agree; OR - price to be vixed in terms of some standard set by 3d party and is not set, THEN - price is a reasonable price at time of delivery |
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Risk of loss - noncarrier
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If seller merchant, ROL passes only when buyer takes physical possession. If S not a merchant, then ROL passes upon tender of delivery.
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Risk of loss - carrier
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Shipment K (seller must ship by carrier but no particular destination) - ROL passes when given to carrier
Destination K (seller must deliver goods at particular destination) - ROL passes to B when goods are tendered to B at destination |
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Common delivery terms
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C.I.F. - Cost insurance freight
C.F. - Cost freight (both are shipment) F.A.S. - Free alongside F.O.B. - Free on board |
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Effect of breach on ROL
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Defective - ROl does not pass until defects cured or accepts goods in spite of defects
Revocation of acceptance - ROL rested on seller from beginning |
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Implied warranty of merchantability
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Implied in every K for sale by a merchant (including sale of food or drink for consumption)
Goods must at least be fit for ordinary purposes for which such goods are used |
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Implied warranty of merch - seller's knowledge of defect
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Irrelevant - not based on negligence but rather on absolute liability imposed on certain sellers
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Implied warranty of fitness for a particular purpose
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Implied whenever any seller has reason to know the the particular purpose for which goods are to be used and that buyer is relying on seller's skill and judgment to select suitable goods and buyer in fact relies on seller's skill
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Express Warranties
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Any sample or model creates an exprss warranty if statement is part of basis of bargain (if buyer could have relied on it)
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Disclaimer of warranty
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implied warranties - must mention merchantability and be conspicuous.
For fitness - must be consicuous |
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UCC general disclaimers
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Will disclaim implied warranties ("as is" "with all faults")
- or through inspection or refusal to inspect - or by course of dealing |
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Damages for breach of warranty
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Generally, difference between value of goods accepted and value of goods as warranted
If Warranty of title - buyer may rescind K, revoke acceptance, or sue for damages. |
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Modifications of K terms - Consideration
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Under CL, no modification unless supported by new consideration.
Under UCC, valid so long as in good faith |
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Modifications of K terms - Writing
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A written K can be modified orally. Under UCC, mod must be in writing if K as modified is for $500 or more
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UCC - no modification clauses
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No modification excepted by signed writing is given effect.
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CL - provisions prohibiting oral modification
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NOT effective.
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UCC - Buyer's obligation to pay and right to inspect
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When shipped by carrier, price due at time when buyer receives. When no carrier, price due at tender of delivery.
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Discharge of duty to perform by...
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Performance
Impossibility Impracticability Frustration of purpose Mutual rescission Release Modification Accord and satisfaction Novation Lapse |
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Promise vs condition
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Failure of condition is not breach but discharges liability of promisor
A promise is a commitment to do or refrain from doing something, and failure to perform according to its terms constitutes breach |
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What determines promise vs condition
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Intent of the parties - words and phrases used.
Provided, if, when = condition Promise, agree = promise |
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Classifications of conditions
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Condition precedent
Conditions concurrent Condition subsequent |
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Absolute duty to perform discharged by...
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Performance
Impossibility Impracticability Frustration of purpose Mutual recission Release Modification Accord and satisfaction Novation Lapse |
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Promisor's satisfaction as a condition precedent
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Business/marketability = objective reasonable person test
Personal taste or judgment = Subjective test (but honest and in good faith) |
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Implied (Constructive) Conditions
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Most important: duty of each party to render performance is conditioned on other party rendering performance
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A duty to perform has not become absolute unless/until
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the condition has been performed OR the conditions have been legally excused
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A condition may be excused by:
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- hindrance or failure to cooperate
- by actual breach (if material) - by anticipatory repudiation |
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Effect of anticipatory repudiation
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- treat as total repudiation and sue immediately
- suspend own performance and wait to sue until performance date - treat it as an offer to rescind and treat K as discharged - ignore repudiation and urge promisor to perform (though no waiver of repudiation) |
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Retraction of repudiation is...
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ok, so long as other party has not canceled, materially changed position or indicated that she considered repudiation final
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