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259 Cards in this Set

  • Front
  • Back
What is the mnemonic about armadillos?
Armadillos from Texas play rap, eating tacos!

a - applicable law
f - formation of K
t - terms of K
p - performance
r - remedies for unexcused nonperformance
e - excuse of nonperformance
t - third-party problems
What's a unilateral K?
results from an offer that expressly requires performance as the only possible method of acceptance
What's a bilateral K?
all offers other than unilateral ones, usually offer that is silent as to acceptance

Default UNLESS
i. Reward, prize, contest or
ii. Offer expressly requires performance for acceptance
What does a quasi K allow for?
Equitable Remedy
What are all the elements you need for a quasi K? (3)
i. P has conferred a benefit on D
ii. P reasonably expected to be paid
iii. D realized unjust enrichment if P not compensated
What are the measures of recovery in quasi K?
i. K price is not the measure of recovery
ii. focus on the BENEFIT CONFERRED. The K price is the ceiling if P is in default
What happens if you have two types of law in a K question?
Determine what’s the more important part of the transaction

Ex: selling car with 2 lessons in parallel parking – apply article 2

Exception – if K divides the payment. Then apply UCC to sale of goods part and common law to the rest
When does Article 2A of the UCC – Law of Leases apply?
a. Applies to leases of goods – not to leases of land or buildings
b. Not on multistate bar. Unlikely to be on MA essay day.
What is an offer?
a MANIFESTATION of an intent to contract – words or conduct showing commitment
What is the basic test for an offer?
a reasonable person in the position of the offeree would believe that his or her assent creates a contract
What happens if an offer is missing the price?
i. Sale of real estate – common law – THUS - price and description required, not an offer

ii. Sale of goods – UCC – THUS - no price requirement
What happens when there are vague or ambiguous terms in the offer?
Vague or ambiguous MATERIAL terms are NOT an offer under either CL or UCC (“for a fair/ reasonable/ appropriate price”)
What is a requirement/output K?
A K for the sale of goods which CAN state the quantity of goods to be delivered under the K in terms of the buyer’s requirements or seller’s output
B offers to buy grits from S for 5 years. No specific quantity mentioned, just mentions “all” - is this valid? Why?
This is NOT vague because of the commitment for exclusivity – valid!
Is an increase in requirements permitted in output Ks?
Yes - Buyer CAN increase requirements SO LONG AS the increase is in line with prior demands. NOT UNREASONABLY DISPROPORTIONATE limitation on increases
B buys 1000 lbs of grits in each of the first 3 years of the agreement. B then orders 1,020 lbs the 4th year. - Valid?
this is valid because not unreasonably disproportionate
What is the rule and what are the exceptions for advertisements?
a. General rule - An advertisement is NOT an offer

b. Exceptions - can be an offer IF
i. It is in the nature of a reward (“$100 reward for anyone who will bring me my missing dog”)
ii. It specifies quantity and expressly indicates who can accept (“1 fur coat $10 – first come, first served”)
What happens to an offer when a party died prior to acceptance? Exception?
Death or incapacity of EITHER party after the offer but before acceptance terminates the offer

Exception: Irrevocable offers
How is an offer revoked?
i. UNAMBIGUOUS statement by offeror to offer of unwillingness or inability to contract OR

ii. UNAMBIGUOUS conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of

only the offer maker can revoke and offeree must be aware!
What are the four types of irrevocable offers?
1 - Option Ks

2 - UCC firm offer rule

3 - detrimental reliance

4 - start of performance with unilateral K
In an option K - an offer cannot be revoked if the offeror has not only made an offer but ALSO: (2)
a. Promised NOT to revoke (or promised to keep the offer “open”) AND
b. This promise is supported by payment or other consideration (“option”)
B pays $10 to keep it open for a week – revocable?
no - irrevocable
S offers to sell her car for $400 to B and promises “to keep the offer open for a week” - revocable?
yes - S CAN still revoke because wasn’t paid for
*What is the UCC firm offer rule?
An offer CANNOT be revoked for up to three months IF:

a. Offer to buy or sell goods AND

b. Signed, written promise to keep the offer open, AND

c. Party is a merchant (Merchant is GENERALLY a person in business)
S offers to sell B her house for $100k and the written offer states that it cannot be revoked for the next four months - revocable?
yes – revocable because it’s real estate – NOT the firm offer rule
S, a used car dealer, offers to sell B a car for $400. Written offer is signed by S and states it will not be revoked for 6 months - revocable?
irrevocable only for 3 mths
S, a used car dealer, offers to sell B a car for $400. Written offer is signed by S and states it will not be revoked but no time period stated. - revocable?
S cannot revoke. Court will fix the time period – whatever is reasonable up to 3 months
S, a used car dealer, offers to sell B a car for $400. Offer is oral and includes promise to keep it open a week - revocable?
revocable because oral
S, a used car dealer, offers to sell B a car for $400. Written offer is signed by S. - revocable?
revocable because no express promise not to revoke
What is the rule on detrimental reliance?
An offer CANNOT be revoked if there has been RELIANCE that is REASONABLY FORESEEABLE + DETRIMENTAL
G, general Ker, uses S, sub-Ker’s $100K bid to get a hotel construction K - revocable?
S’s offer is irrevocable b/c of detrimental reliance
What is the rule on irrevocable offers with unilateral Ks?
The start of performance pursuant to an offer to enter into a unilateral K makes that offer irrevocable for a reasonable time to complete performance
O offers P $1K to paint O’s house. O’s offer states that it can be accepted only by performance. P starts painting - revocable?
No - O cannot revoke now
O offers P $1K to paint O’s house. O’s offer states that it can be accepted only by performance. P buys paint. - revocable?
yes - P merely BUYING paint would not count
What are the four ways that words or conduct can signify a rejection?
1 - counteroffer
2 - conditional acceptance
3 - mirror image rule (CL)
4 - UCC 2-207 (mirror image rule for goods)
What does a counteroffer do?
Generally terminates the offer and becomes a NEW offer. Thus no express K unless counteroffer is accepted
How do you distinguish a counteroffer from mere bargaining?
Bargaining involves a QUESTION.


1. Counteroffer: S offers Blackacre for $10K. B says “I will only pay $9K.” – original offer killed by counteroffer
2. Bargaining: S offers Blackacre for $10K. B says, “will you take $9k?” – B can still accept S’s offer b/c not dead
If you have an option K and you make a counteroffer - what effect does this have?
While counteroffers generally kill, they have no effect in situations involving an option
On Jan 15, S offers Blackacre to B for $10K. B pays S $2 for his promise not to revoke the offer until Apr 5. On March 3, B makes a counteroffer to S for $9K.

can B still accept S’s offer?
Yes
What is a conditional acceptance?
Responses with the word “accept” followed by one of these words or phrases:

if, only if, provided, so long as, but, on condition that
What happens with a conditional acceptance under common law?
New terms reject the offer and replace it, becoming a new offer
T sends back L the lease saying, “I accept provided that all disputes will be resolved by arbitration.” L sends the keys.

What's the status of the K?
L accepted with her conduct and the conditional acceptance is the new offer
What happens with a conditional acceptance under UCC?
New terms reject the offer. NO new offers created
B sends S a purchase order for pant suits and the purchase order doesn’t mention arbitration. S sends acknowledgment form with arbitration clause, and states, “accept only if you agree to arbitration clause.” No further communications or actions.

What's the status of the K?
S has NOT accepted B’s offer of an express K
B sends S a purchase order for pant suits and the purchase order doesn’t mention arbitration. S sends acknowledgment form with arbitration clause, and states, “accept only if you agree to arbitration clause.” S sends the suits and B pays for them.

What's the status of the K?
there is a K but without the arbitration term because now the K consists solely on their conduct
What is the CL mirror image rule?
A response to an offer that adds new terms is treated like a counteroffer rather than an acceptance
L offers to lease a building to T by sending T a signed lease that is silent about arbitration of disputes. T adds a sentence that states, “All disputes to be resolved by arbitration” and signs.

What's the status of the K?
T has NOT accepted L’s offer creating an express K. Nor can T later accept L’s offer
*When is there still a K under UCC 2-207?
1. Is there a K? (doesn’t matter if they are merchants)
a. An offer that adds new terms *but does not make them a condition of acceptance is generally treated as an acceptance* – “a seasonable expression of acceptance”

2. Is the additional term part of the K?
It’s ONLY part of the K IF:
i. Both parties are merchants AND
ii. Additional term is not “material” (fact question) AND
iii. The additional term is not objected to by offeror
B sends S a signed order for grits that is silent about arbitration. S responds by sending back a signed acknowledgment that states, “all disputes shall go through arbitration.”

What's the status of the K?
There IS a K!
Epstein offers to sell car to Conviser for $400. Conviser says, “I accept. Deliver it on Saturday.” No more communications or actions.

What's the status of the K?
there IS a K. BUT Saturday delivery NOT a K term because both parties not merchants.
Epstein offers to sell car to Conviser for $400. Conviser says,, “I accept IF the car is delivered on Saturday.”

What's the status of the K?
NO K

"If" tells you there's no K!
What happens when the offeree starts to perform?
Start of performance is acceptance. Treated as an implied promise to perform, thus bilateral K
O offers P $1K to paint his house. Offer is silent on method of acceptance. P starts painting the house.

What's the status of the K?
P starts to painting = acceptance of O’s offer.
What is the exception to the performance rule?
start of performance is NOT acceptance of unilateral K offers - Completion of performance is required
O offers P $1K to paint his house. O’s offer states that it can be accepted only by performance, not by promising to perform. P starts paining O’s house. Has P accepted O’s offer so that he is contractually obligated to continue painting O’s house?
No
What are the four rules governing the mailbox rule?
1. All communications OTHER THAN ACCEPTANCE are effective ONLY when RECEIVED
2. Acceptance is GENERALLY effective WHEN MAILED
3. *If a rejection is mailed before an acceptance is mailed, then neither is effective until received
4. You cannot use the mailbox rule to meet an option deadline
C receives a letter from E offering to sell C his car for $400. On Jan 10, C mails his acceptance. On Jan 11, C receives a letter from E revoking the offer.

What's the status of the K?
there was a K on Jan 10th. Revocation too late!
C receives a letter from P inviting him to replace a band member. On Aug 8, C mails a letter to the group rejecting their offer. On Aug 9, he changes his mind and mails a letter of acceptance.

What happens if the rejection letter arrives first?
No K; offer will have been killed
B and S execute an option K that gives B the option to buy Blackacre from S for $100K. The option K provides that it expires on July 13 at 5pm EST. B sends S a letter on July 13th at 4:50pm EST exercising the option and agreeing to buy Blackacre for $100K. Can S revoke her offer at 6pm EST on July 13th?
Yes
What is the general rule when a seller of goods sends the "wrong" goods?
It's a breach

Ex: B orders 100 red widgets but S sends 100 blue widgets. There is a K and a breach of K.
What happens when a seller sends the wrong goods but sends an accommodation explanation?
counteroffer and no breach

policy reason: Don’t want to punish seller who is trying to be helpful
B orders 100 red widgets. S sends 100 blue widgets with the explanation “out of red – hope that you can use blue instead.”

What's the status of the K?
there is no K and no breach of K. B can accept the red widgets if she wants.
Who can accept an offer?
an offer can be accepted only by a person WHO KNOWS ABOUT THE OFFER AT THE TIME SHE accepts who is the person to whom it was made
Can offers be assigned?
No.

ex: I offer to see you my car for $400. Can you sell the offer to C so that he can accept it? No.
Can options be assigned?
Yes unless the option otherwise provides

Ex: you pay me $10 for a 10-day option to buy my car for $400. Can you sell the option to C so that he can now exercise the option and accept the offer? Yes.
What are the three steps of consideration?
i. Identify the promise breaker – person who isn’t going what she promised to do
ii. Ask whether that person asked for something in return for her promise – bargained for something
iii. Look at the person who is trying to enforce the promise and ask what requested legal detriment they sustained
What is "bargained for" consideration?
Asked for by the promisor IN EXCHANGE for her promises
L rents a condo to T. 1 mth before the lease expires, L sends T a letter promising to renew the lease at the same rental rate. T paints the condo. L increases the rent. T sues L for breach of K. L asserts no K because no consideration. Is T’s painting the condo consideration for L’s promise to renew the lease at the same rate?
No.
Can a promise be consideration? Exception?
Yes

Exception: Illusory Promise
promising something UNLESS you change your mind – No consideration.
On April 15, B and S enter into a written agreement in which B promises to buy S’s house and S promises to sell his house to B, with B’s payment and S’s transfer of title to occur on June 6.

What consideration is happening here?
S’s promise to sell IS THE consideration for B’s promise to buy & B’s promise to buy is consideration for S’s promise to sell
Does past consideration count as consideration? Exception?
No

Exception: it’s expressly requested by promisor AND expectation of payment by promise
Apu saves Lisa’s life and Homer is so grateful that he promises to pay Apu $3K. Homer later changed his mind.

What's the status of the K?
Is there consideration?
No - There’s NO consideration for Homer’s promise so it is NOT legally enforceable b/c it’s in the past.
Homer sees Lisa in danger and asks Apu to save her knowing he would expect to be paid. After Apu saves Lisa, Homer promises to pay $3K.

What's the status of the K?
Is there consideration?
Yes - This is legally enforceable b/c it was expressly requested beforehand
What's the rule about consideration with a preexisting contractual or statutory duty under CL?

Exceptions? (3)
Doing what you’re already legally obligated to do is NOT new consideration for a new promise to pay you more to do merely that. New consideration is required for K modification

Exceptions
a. Addition or change in performance
b. Unforeseen difficulty so severe as to excuse performance
c. Third party promise to pay
What's the rule about consideration with a preexisting contractual or statutory duty under UCC?
No pre-existing legal duty rule. New consideration is NOT required to modify a sale of goods K. Good faith is the test for changes to an existing sale of goods K
S contracts to sell B grits for $500 but then after tells him he can’t do it for less than $700. B promises by fax that he will pay additional $200 and S delivers.

Is there consideration?
No new consideration and K is legal.

New consideration is NOT required to modify a sale of goods K.

Good faith is the test for changes to an existing sale of goods K

because this is under the UCC SALE OF GOODS under the statutory duty rule
Part Payment for Consideration for Release (i.e. promise to forgive balance of debt) if due and undisputed - is this consideration?
part payment is NOT consideration for release
D owes C $3K and the debt is due and undisputed. C and D agree that D will pay $2K in exchange for a release (i.e. C’s promise that she won’t take any action to collect the debt). D pays $2K.

Is there consideration?
There is no consideration and this debt settlement is NOT legally enforceable
Part Payment for Consideration for Release (i.e. promise to forgive balance of debt) if NOT due OR disputed - is this consideration?
part payment CAN BE consideration for release
D owes C $3K and the debt is due and undisputed. C and D agree that D will pay $2K in exchange for a release (i.e. C’s promise that she won’t take any action to collect the debt). Debt was due on Jan 15. C says she will take $2K if on or before Jan 11th. D pays $2K on Jan 11.

What's the status of the K?
Is there consideration?
The early payment is the new consideration.
Consideration Substitutes: A promise is legally enforceable even though there is no consideration if there is one of the following: (2)
- A WRITTEN promise to satisfy an obligation for which there is a legal defense is enforceable WITHOUT CONSIDERATION
ex: D owes C $1K. Legal action to collect it is barred by SOL. D writes C, “I know I owe you 1K. I will pay you $600


- promissory estoppel / detrimental reliance
D owes C $1K. Legal action to collect it is barred by SOL. D writes C, “I know I owe you 1K. I will pay you $600.

What's the status of the K?
Is there consideration?
No new consideration but C can enforce this new promise
What are the elements of promissory estoppel / detrimental reliance?
1. Promise
2. Reliance that is reasonable, detrimental, and foreseeable
3. Enforcement necessary to avoid injustice
Who Lacks Capacity to Contract? (3)
a. Infant – Under 18
b. Mental incompetents – lacks ABILITY to understand agreement
c. Intoxicated persons IF THE OTHER PERSON HAS REASON TO KNOW
what are the consequences of incapacity?
a. Right to disaffirm (D avoiding liability) by person without capacity
b. Implied affirmation by retaining benefits after gaining capacity
c. Quasi-K liability for necessaries
C hires Paola (15) to lecture on K for $100 a lecture

1 - If Paola doesn’t do it, can C enforce?
2 - If Paola does it, and C doesn't pay - can Paola enforce?
1 - No, C can't enforce
2 - Yes, she CAN. Don't care about P's age
S sells a car on credit. B is only 17, doesn’t pay, and refuses to return the car. B later turns 18 - can S enforce?
Yes
What is the statute of frauds (SOF) designed for?
designed to prevent fraudulent claims of the existence of a K

SOF makes it harder to make a false or fraudulent claim by requiring the claimant to have proof that the K exist
Which 3 types of K's are within the SOF?
a. Promises to Answer for the Debts of Another (suretyship) – VERY narrow

b. Service K not “Capable” of Being Performed Within a Year from the time of the K

c. Transfers of Interest in Real Estate

d. Sale of Goods for $500 or more

e. Lease of Goods for $1000 or more
What is a suretyship?
Not merely a promise to pay but rather a promise to pay if someone else does not. Look for a GUARANTEE

NOTE: BUT if the “main purpose” of the obligation allegedly guaranteed was to benefit the guarantor, then not even that guarantee is within the SOF
What happens is the requirements of SOF aren't met?
there is a SOF defense

If asserted and established – there’s no legally enforceable agreement – no K liability
What are the 3 ways the SOF can be satisfied?
- performance
- writing
- judicial admission
*How can performance satisfy the SOF in a transfer in real estate?
It requires 2 out of the 3 of the following:
- Improvements to the land
- Payment
- Possession
*How can performance satisfy the SOF in service Ks?
ONLY FULL performance by either party satisfies the SOF
*How can performance satisfy the SOF in the sale of ordinary goods Ks?
Part performance of a K for the sale of goods satisfies the SOF but ONLY to the extent of the part performance
*How can performance satisfy the SOF in the sale of specifically manufactured goods Ks?
the SOF is satisfied AS SOON AS the seller makes a “substantial beginning.”

Means that seller has done enough work that it’s clear that what she is working on is specially manufactured, i.e. custom made or made to order
When attempting to satisfy the SOF in a non-UCC K - what are the requirements of the writing?
- All the material terms must be included AND
- Must be signed by the person who is asserting the SOF defense - the person who is saying there wasn't a K
*When attempting to satisfy the SOF in a UCC K - what are the requirements of the writing? (2 parts + exception)
1) Writing must indicate that there is a K for the sale of goods AND contain the quantity term

note: doesn't matter if you can't tell WHO made the agreement

2) Generally writing must be signed by the person asserting the SOF defense (the D)

EXCEPTION IF: BOTH PARTIES ARE MERCHANTS *AND* The person who receives a signed writing with a quantity term that claims there is a K fails to respond within 10 days of receipt
S, a grits distributor, gets the following fax from B, a grits store: “as we agreed during our phone convo today, you will be sending me 200 sacks of grits s/B” S doesn’t respond and never sends the grits. B sues S for breach of K.

Is the SOF satisfied?
The SOF is satisfied even though S did not sign anything because their failure to answer the letter causes B to be within the SOF. Must be signed by the person asserting SOF.
How can the SOF be satisfied by judicial admission?
If a D asserting a SOF defense in a pleading or testimony that he entered into an agreement with the P, the purpose of the SOF – protection against fraud/false claims – is fulfilled and so the SOF is satisfied. No SOF defense.
*What is the equal dignity rule? (re: SOF)
Rules of law require that the authorization (for a person to have written authorization in order to execute a K for someone else) must be in writing ONLY IF the K to be signed is within the SOF

GET IT? - Authorization must be of equal dignity with the K
When is there no legal requirement of written evidence of an alleged modification of a written K?
Determine whether the deal with the alleged change would be within the SOF. If the deal w/ the alleged change would be w/in the SOF, then the alleged modified agreement must be in writing
T leases condo from L for 1 yr. L claims they later agreed to increase the term to 3 years. Must this be in writing?
Yes
T leases condo from L for 3 yrs. T later says they agreed to reduce it to 1 yr. Must this be in writing?
no - doesn't have to be in writing
Are K provisions requiring all modifications to be in writing valid?
Common Law - These are NOT effective – ignore contract language

UCC - These ARE effective UNLESS waived (whether or not there is waiver is a question of fact)
What happens if the subject matter of a K is illegal?
agreement is not enforceable (Ex: to injury someone)
What happens if the subject matter of a K is legal, but the purpose is illegal?
agreement ONLY enforceable by the person who didn’t know of the illegal purpose
What is misrepresentation?
false statement of “fact” before the K by one of the contracting parties or her agent that induces the K

NO WRONGDOING REQUIRED
S tells B that the house had no termites. B agrees to buy the house in reliance on S’s representation. S honestly believes that the house has no termites, but the house has termites.

Can B rescind? What is this called?
Yes because of misrepresentation
When is nondisclosure a reason to invalidate a K?
Only matters if you can show a fiduciary relationship OR concealment (ex: hiding termite damage when showing house)
What are the elements of economic duress?
i. “bad guy” – improper threat which is usually threat to breach existing K AND
ii. “vulnerable guy” – no reasonable alternative
D has a K to supply 1000 lbs of kosher grits to P for Chanukah sales in 2011. D refuses to perform this K until P agrees to buy 4000 lbs of cheese grits in 2012. P has no other source of kosher grits and so agrees. D delivers the kosher grits.

can P do anything?
P *can* get out of the agreement to buy the 4000 lbs of cheese grits in 2012
What are the two basic tests in unconscionability and when are they tested?
Unfair surprise (procedural) and oppressive terms (substantive).

Tested as of the time the agreement was made by the court.
If there's ambiguity in the words of the K - there will be no K if: (3)
i. Parties use a material term that is open to at least two reasonable interpretations AND
ii. Each party attaches a different meaning to the term AND
iii. Neither party knows or has reason to know the term is open to at least two reasonable interpretations
What is the test for invalidating a K due to mutual mistake of fact? (3)
1 - Mistake must concern a BASIC ASSUMPTION on which the K was made

2 - Mistake must have a MATERIAL EFFECT on the agreed-upon exchange

3 - Party seeking avoidance did NOT assume the risk of the mistake
S and B contract for the sale of a cow named Rose for $80. Both thought she was barren but she turned out to be fertile and worth $750. S refuses to deliver and B sues - what result?
K is still valid. The fact that S thought she was barren is NOT a misrepresentation.
Why would a unilateral mistake be a defense to a K?
If the non-mistaken party knew or had reason to know of the mistake made by the other party, the K is voidable by the mistaken party.

* Generally, courts have been reluctant to allow a party to avoid a contract for a mistake made by only one party. Look for situations in which the other party had reason to know the mistake

Ex: offering a price WAY lower than is reasonable because mistake of amount - voidable

Ex: stating that there was a small mistake in computing the total price of the K - not voidable
When should you realize the issue is a parol evidence rule question?
Written agreement + Someone saying it’s not right
What is "integration" and what does it do?
written agreement that the court finds is the final agreement, triggers the PER


i. Partial integration – written and final, but not complete (assume wrong answer on MBE)
ii. Complete integration – written and final and complete (assume wrong answer on MBE)
What is a "merger clause"?
K clause such as “this is the complete and final agreement.” This strengthens the presumption that all negotiations were merged in the written document.

(used in the context of the PER)
What IS parol evidence?
i. Words of party (or parties)
ii. Before integration – ie BEFORE agreement was put into written form
iii. Oral or written
What is reformation in the context of the PER?
Equitable action to modify written K to reflect actual agreement
PER - can you change or contradict terms in the written deal?
No - cannot use parol evidence to change or contradict terms

BUT CAN ADMIT POST-K EVIDENCE
S contracts in writing to sell B 1000 chickens a month for 12 months. B sues for reformation of the written K, claiming that S told him just as they were signing the K that S would deliver as many chickens as B needs during the 12 month K term and offers evidence of pre-K faxes from S supporting this claim.

admissible under PRE?
The court CANNOT admit this evidence that changes/contradicts the terms of the K
When MAY the court look at parol evidence? (4 reasons)
for the limited purpose of determining:

1 - if there was a mistake in integration (i.e. a mistake in reducing the agreement to writing)- AKA when the agreement suggests a letter for left out or a number got cut off so the meaning changes

2 - if there's a duress defense

3 - if there's a fraud defense

4 - to resolve ambiguities
S contracts in writing to sell B chickens. B says that “chickens” means only fryers while S says it includes boiling hens. Can the court consider evidence of pre-K statements by B and S as to what they mean by the word “chicken”?
Yes - to resolve ambiguities
The PER prevents a court from admitting evidence of earlier agreements as a source of consistent, additional, terms UNLESS: (2)
the court finds that:

1. The written agreement was only a partial integration OR [question of fact for the judge]

2. That the additional terms would ordinarily be in a separate agreement
S contracts in writing to sell B chickens. The K doesn’t talk about how chickens will be packaged and wrapped.

the court CAN admit evidence of earlier agreements between S and B as to how the chickens are to be packaged and wrapped for the purpose of determining ONLY IF.... ?
if the terms should be added to the terms of the written K – UNLESS the court finds its compete integration
What are the 3 gap fillers used as a source of K terms?
a. Course of performance (most important!) – same people, same K

b. Course of dealing – same people, different but similar K

c. Custom and usage – different but similar people, different but similar K
When does a seller complete its delivery obligation in a shipment K if using delivery of a common carrier? (3)
The seller completes its delivery obligation when it:

1. Gets the goods to a common carrier AND

2. Makes reasonable arrangements for deliver AND

3. Notifies the buyer

THUS seller completes its delivery obligations before delivery is completed
When goes a seller complete its delivery obligation in a destination K (aka going to a particular destination) if using delivery of a common carrier?
risk of loss passes to the buyer when the goods are tendered to the buyer at the destination
What does F.O.B. mean?
"Free on board" - always followed by a location, and the risk of loss passes to the buyer at the named location.

The seller bears the risk and expense of getting the goods to the named location

(can be EITHER in a shipment or destination K)
What are the possible consequences in a risk of loss problem when no party is at fault?
i. If risk of loss is on the buyer – he pays the full K price for the lost or damaged goods

ii. If seller has risk of loss – no obligation on the buyer; possible liability on seller for non-delivery
What are the 4 steps evaluating risk of loss cases?
1 - agreement

2 - breach (breaching party is responsible)

3 - delivery by common carrier other than seller - risk of loss shifts from seller to buyer at the time that the seller completes its DELIVERY OBLIGATIONS

4 - if none of the above - "catch all" - The determining factor is if the SELLER is a merchant
In the "catch all" category in the risk of loss context how does the burden shift?
- Risk of loss shifts from a merchant-seller to the buyer on the buyer’s “receipt” (physical loss) of goods

- Risk of loss shifts from a non-merchant seller when he or she “tenders” the goods
B buys a stove from S, a used appliance dealer. S tells B that he can pick up the stove at the loading dock. Before B can drive his truck to the loading dock, lightening strikes the stove. Does B have to pay for the damaged stove?
no – seller still has the risk of loss because he’s a merchant
B, a used appliance dealer, buys a used stove from S, a non-merchant. S tells B to pick up the stove at his convenience, that the stove is on S’s back porch. Later, vandals damage the stove before B gets it.

Does B have to pay for the damage stove?
Yes – after tender the risk of loss shifted from non-merchant seller to the buyer
What is an express warranty?
Look for words that promise, describe or state facts or for use of sample or model

Ex: “all steel”, “guaranteed to operate for two years”, seller showing buy a sample

Distinguish from sales talk which is more general, an opinion (ex: “top quality”)
What is an implied warranty of merchantability?
When any person buys any goods from any merchant, a term is automatically added to the K by operation of law – that the goods are fit for the ordinary purpose for which such goods are used

seller is a merchant WHICH HERE MEANS IT DEALS IN GOODS OF THAT KIND
what is Implied Warranty of Fitness for a Particular Purpose?
Trigger Facts - buyer has a particular purpose; buyer is relying on seller to select

Warranty - goods fit for a particular purpose
Can express warranties be disclaimed? If so, how?
No
Can implied warranties be disclaimed? If so, how?
Implied warranties of merchantability and fitness CAN BE disclaimed in EITHER of the following ways:

1. CONSPICIOUS language of disclaimer, mentioning merchantability OR

2. “as is” or “with all faults”
How does limitation of remedies work for any breach of warranty? (3 things to know)
simply limits or sets recovery for any breach of warranty:

1. Possible to limit remedies even for express warranties

2. General test is unconscionability

3. Prima facie unconscionable IF breach of warranty on consumer goods causes personal injury
B buys oven from S. The K provides “all operating parts are guaranteed for 2 years and “warranty liability shall be limited to replacement parts.” A defective heating element causes a fire which causes $100 of property damages. If B sues S for breach of contract, what can B recover?
ONLY the replacement part
What is the perfect tender rule?
that the seller’s performance must be perfect: perfect goods, perfect delivery

A less than perfect tender by the seller generally gives the buyer the option of rejection of the delivered goods
If the seller does not meet the perfect tender standard, the buyer has what options?
i. to retain and sue for damages OR

ii. reject “all or any commercial unit” and sue damages. This rejection alternative is limited by CURE “INSTALLMENT CONTRACT AND ACCEPTANCE”

note: EITHER way they can sue for damages!!
What are the two cases when a seller would have the opportunity to cure?
1 - Seller had reasonable ground to believe would be “ok” (VERY LIMITED - ex: always accepted wrong goods in the past)

2 - Time for performance has not yet expired
B and S enter into a K for 2000 green widgets. S delivers yellow ones. Previously B had accepted widgets in different colors (than what he ordered).

Can S cure?
Yes because reasonable ground
B ordered green widgets from S to be delivered no later than 6/6. S delivered YELLOW widgets on 5/5. B notifies S that she is rejecting the yellow widgets.

Can S cure?
S CAN CURE BUT only by delivering the right goods by 6/6
When does a buyer have a right to reject an installment of a K?
only where there is a substantial impairment in that installment that can’t be cured
What is an installment K?
Requires or authorizes:

i. Delivery of the goods in separate lots

ii. To be separately accepted


NOT: buying something on credit and paying for it in monthly installments
S and B enter into a K for the delivery of 10 kegs of beer at 6pm for each night of the bar review course, payment on delivery. One night S delivers 9 kegs at 6:30pm. Can B reject it?
No because it was an installment K and a minor issue
Effect of acceptance of the goods?

Effect of payment of the goods?
a. Effect of acceptance of the goods - if the buyer accepts the goods, it cannot later reject them

b. Effect of payment - payment without opportunity for inspection not acceptance (ex: paying for infomercial thing before you get it)
How can a buyer accept goods that don't meet the perfect tender rule? (3 ways)
1 - after an opportunity to inspect - she indicated to the seller that they conform to requirements or that she will keep them

2 - she fails to reject them within a reasonable time after tender of delivery of the goods or fails to seasonably notify the seller of her rejection

3 - she acts inconsistently with the seller's ownership
In what limited circumstances can a buyer revoke their acceptance of the goods?
Requirements of revocation:

1. Nonconformity substantially impairs the value of the goods, AND

2. Excusable ignorance of grounds for revocation or reasonable reliance on seller’s assurance of satisfaction, AND

3. Revocation within a reasonable time after discovery of nonconformity
In July, B buys a sleeping bag from S. The K provides that the sleeping bag is insulated for temperatures as low as 10 degrees. B uses the sleeping bag for various warm weather camping adventures throughout the summer. When B does camping in October, she learns that the sleeping bag isn’t insulated for temperatures as low as 10 degrees.

1 - Can B reject the goods?
2 - Can B reject her acceptance of the goods?
1 - No
2 - Yes
When is specific performance / injunction appropriate in real estate sales?
When there hasn't already been a subsequent bona fide purchaser
When is specific performance / injunction appropriate in the sale of goods?
For unique goods - antiques, art, custom-made or other appropriate circumstances
When is specific performance / injunction appropriate in K's for services?
NO specific performance!

POSSIBLE injunctive relief
When can a UCC seller get his goods back AKA reclamation? (3)
i. The buyer must have been insolvent at the time that it got the goods

ii. The seller demands the return of goods within 10 days of receipt. (If before delivery there had been an express representation of solvency by the buyer this becomes a “reasonable time rule”)

iii. The buyer still has the goods at the time of demand
On Jan 15, S sells grits to B on credit. They are delivered to B on Jan 22. B is insolvent on Jan 22. S learns of B’s financial difficulties and demands return of the grits on Jan 27.

Can S get the grits back by reclamation?
yes - BUT if B had sold the grits to C for $1000 on Jan 25 then S wouldn’t be able to get them back
What is the general approach for measure of damages?
protection of expectation -expectation simply means that people who contract expect the other person will not breach
How do you measure damages in service Ks? (3)
i. Determine dollar value of performance without breach

ii. Then determine dollar value of performance with breach

iii. Compare the two to determine the amount of damages
P contracts to paint O’s house for $1000, payable when P completes the work. P breaches and does not paint the house. O hires another painter who charges $1400. O sues P for breach of K.

Damages?
O’s damages that he can recover from P = $400
P contracts to paint O’s house for $1000, payable when P completes the work. P anticipates making $200 profit from the K. O breaches after P has started work and used $100 of paint and labor. P sues O for breach of K.

Damages?
P’s damages are $300
What are the two relevant facts for money damages for breach of the sale of goods?
Two relevant facts: Who breached + Who has the goods
What happens if seller breaches and buyer keeps the goods?
fair market value if perfect MINUS fair market value as delivered
S sells B an antique car for $30K. B pays the $30K and S delivers the car. Even though the K said that all parts were original, some weren’t. B keeps the car and sues for breach of K. Jury finds car was only worth $20K and that if the car has been delivered as contracted, it would have been worth $34K.

Damages?
B can recover $14K. $34K (expectation) - $20K (actual) = $14K
What's the calculation for damages if seller breaches and seller has the goods?
market place price at time of discovery of breach MINUS K price

OR

replacement price MINUS K price
S contracts to sell B carpeting for $5K. S never delivers it (or it’s not a perfect tender – so S rejects it). At the time B learned of the breach, the market price of comparable carpet was $6,600. How much can B recover?
B can recover $1,600. $6600 (market price at time of discovery of the breach)-$5000 (K price)
What if buyer breaches and buyer keeps the goods? What can the seller recover?
K price
B contracts to buy carpet from S with K price of $800. B gets the carpet and doesn’t pay. Market price for carpet is now $900. How much does B owe?
$800 (K price)
What's the calculation for damages if buyer breaches and seller has the goods?
K price MINUS resale price and, in some situations, provable lost profits
E contracts to sell his car to C for $1000 but C breached. E then sells the car to S for $800.
E gets $200 – expectation
E contracts to sell his car to C for $1000 but C breached. E then sells the car to S for $1000.

What can E do?
E cannot recover!
S&M leather contracts to sell leather clothing to C for $1000 which are a part of S&M’s regular inventory. C breaches. S&M sells the same items to K for $1000. Can S&M recover any damages from C?
Yes – provable lost profits. Would have been 2 sales if C hadn’t breached!
What are incidental damages and when are they recoverable?
Costs incurred in dealing with the breach such as costs of storing rejected goods or finding a replacement in a services K – ALWAYS recoverable
P contracts to paint O’s house for $1000 but P breached. O spends $20 finding another painter, X, who agrees to paint the house for $1000.

Damages?
O can collect $20 from O for incidental damages
In what case would foreseeable consequential special damages arise?
Limited to damages arising from P’s special circumstances and recovery of consequential damages is limited to situations in which D has reason to know of these special circumstances at the time of the K
M contracts with C carrier to transport goods to another village for repair for $100. C breaches by nonperformance. M is unable to find anyone else who will transport the goods for less then $150 and pays T $150 to transport the goods. M sues C for breach of K.

Damages?
$50 – general expectation damages that are recoverable
M contracts with C carrier to transport goods to another village for repair for $100. C breaches by nonperformance. M is unable to find anyone else who will transport the goods for less then $150 and pays T $150 to transport the goods. M sues C for breach of K. C’s breach resulted in a 5 day delay and M lost $1000 in profits from the closure of M’s mill. M sues C for breach of K.

Damages?
a. $50 – general expectation damages that are recoverable

b. $1000 – consequential damages that are NOT recoverable
M contracts with C carrier to transport goods to another village for repair for $100. C breaches by nonperformance. M is unable to find anyone else who will transport the goods for less then $150 and pays T $150 to transport the goods. M sues C for breach of K. C’s breach resulted in a 5 day delay and M lost $1000 in profits from the closure of M’s mill. M sues C for breach of K. M told C *BEFORE THE K* that the mill was closed because of the broken shaft and would remain closed until the shaft was repaired and returned.

Damages?
a. $50 – general expectation damages that are recoverable

b. $1000 – consequential damages that ARE recoverable BECAUSE C KNEW
What does mitigation mean for damages? Who has this burden?
No recovery for damages that could have been avoided without undue burden to P.

Burdens of pleading and proof on D
P contracts to paint O’s house for $1000. P anticipates that she will make $200 profit from painting O’s house. O breaches after P has incurred $100 of costs for paint and labor. Notwithstanding O’s breach, P finishes painting O’s house. P’s recovery?
limited to $300
What are liquidated damages?
Damages in the K that FIX the amount of damages in case of a breach
What is the are things to look for to test the validity of liquidated damages?
Things to look for:
i. Damages were too difficult to forecast at time K was made AND

ii. Provision is a reasonable forecast


FIXED DAMAGES ARE SUSPICIOUS – not reasonable!
B contracts to build store for O. K fixes damages for delay at $10,000.

1 - Is this liquidated damages?
2 - Valid liquidated damages?
1- yes
2 - no
What is the only type of breach that can excuse the other party from performing?
MATERIAL breach

- If there is substantial performance then the breach is not material

- If the breach is material, then the performance was not substantial
P contracts to paint 10 identical apartments for $10,000. P breaches after painting 2 of them.

Breach? Result?
1. This is a material breach and under K law, O is NOT obligated to pay $10,000 or for two of them

2. Under quasi-K law, possibly O is obligated to pay
What is the special rule for divisible Ks?
In a “divisible K” there can be a K law recovery for substantial performance of a divisible part even though there hasn't been a material breach of the entire K.

Look if price is stated in a lump sum or on a per performance basis
P contracts to paint 10 identical apartments for $1000 PER apartment. P breaches after painting 2 of them.

Damages?
This is 10 separate obligations – apply on a per apartment basis.
O hires P to paint his house white for $1000 but P paints it purple

Breach? Result?
1. P breached - did not substantially perform

2. O is excused from paying him and O can recover money damages
O hires P to paint his house white for $1000. P paints it but fails to paint one of the closets, which O pays S $25 to do.

Breach? Result?
1. P substantially performed – O is NOT excused from paying because not a material breach.

2. BUT O is owed some money because every breach matters
How does the material breach rule apply to UCC?
IT DOESN'T - USE THE PERFECT TENDER RULE
What is an express condition?
mutually agreed upon promise modifier: Language in the K that MERELY LIMITS OBLIGATIONS created by other language in the K

- Express Conditions in Ks are created by language in the K – watch for these words:
*If, only if, provided that, so long as, subject to, in the event that, unless, when, until, and on condition that*
S and B enter into an agreement that states that B will buy S’s house for $100,000 “if a mortgage no more than 6% can be obtained.”

Is there a K?
there IS a K but B doesn’t have to buy the house is the condition isn’t met
How do you determine if the express condition has been satisfied?
Strict compliance is required for “satisfaction” of a condition
B contracts to build O’s house. The K states, “O’s payment for B’s work is conditioned on B’s using only copper Reading pipe.” Instead, B uses comparable copper Cohoe pipe.

Result?
Condition has not been satisfied so B has no K liability and doesn’t have to pay
How can an express condition be eliminated even if did NOT occur? - 2 ways
1 - waiver/estoppel:
ID the person protected by the express condition and see if they waive their protection.

2 - prevention:
If the party protected by the express condition hinders or prevents the occurrence of the express condition, then the express condition is excused and the K must be performed
How does a party commit anticipatory repudiation?
UNAMBIGUOUS statement or conduct indicating:

1. That the repudiating party will not perform

2. Made PRIOR to the time that performance was due
When is there a claim for damages in response to anticipatory repudiation?
gives rise to an immediate claim for damages for breach UNLESS the claimant has already finished her performance
P contracts to paint O’s house with payment to be made by July 13th.

On March 10th, BEFORE P has finished painting, O tells P she is doing a great job but that O is not going to pay.

Status?
P is excused from performing
P contracts to paint O’s house with payment to be made by July 13th.

On March 10th, BEFORE P has finished painting, O tells P she is doing a great job but that O is not going to pay.

If P stops painting and sues O on March 11 – can P recover damages for breach of K even though K date for payment was July 13th?
Yes
P contracts to paint O’s house with payment to be made by July 13th.

On March 25, AFTER P has finished painting the house, O tells P that he has done a great job but that O is not going to pay. If P sues O on March 26 - can P recover?
P cannot recover until July 13th
Can the repudiation be retracted?
Yes - So long as there has not been a material change in position by the other party. If the repudiation is timely retracted, the duty to perform is reimposed but performance can be delayed until adequate assurance is provided.
What can a party do if the words or conduct of a party merely make performance uncertain? (look for this in the sale of goods)
If the words/conduct of one party give the other “reasonable grounds for insecurity,” then the other party can in writing demand adequate assurance and if it is “commercially reasonable” can suspend performance until it gets adequate assurance
In January B contracts to buy custom-made widgets from S. K requires B to pay 25% of the price in March and requires S to deliver them no later than April 5. In February, B learns that S was late on all January widget deliveries to other customers and that a substantial number of the widgets delivered were defective. B in writing, demands adequate assurance.

Status of the K?
B is excused from making the March payment until S provides adequate assurance
When can there be a valid recission / cancellation?
The key is whether PERFORMANCE IS STILL REMAINING FROM EACH of the contract parties
P begins work but before he completes it – P and O agree to rescind the K – valid?
this is valid
After P completes the work, P and O agree to rescind the K – valid?
this is invalid
What is accord and satisfaction?
An agreement by the parties to an EXISTING obligation to accept a DIFFERENT PERFORMANCE in satisfaction of the existing obligation
D borrows $1000 from D and agrees to pay the loan with interest. Later D and C agree that IF D delivers 20 widgets by the end of the month, THEN the debt will be excused - what is this?
An accord
If the new agreement (the “accord”) is performed (satisfaction) - what happens to the original obligation?
it's excused
If the accord is NOT performed what can the other party do?
the other party can sue on either the original obligation or the accord
D borrows $1000 from C and agrees to pay the loan with interest. Later D and C agree IF D delivers 20 widgets by the end of the month, THEN the debt will be excused. D delivers the 20 widgets before the end of the month. C sues D on debt.

What happens?
No liability on the original debt – no recovery because excused by accord and satisfaction
D borrows $1000 from C and agrees to pay the loan with interest. Later D and C agree IF D delivers 20 widgets by the end of the month, THEN the debt will be excused. D does NOT deliver the widgets.

What happens?
C can recover the original loan agreement OR the accord amount – but not both
What is a modification?
an agreement by the parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation
D borrows $1000 from C and agrees to pay the loan with interest. Later D and C agree that D will deliver 20 widgets by the end of the month INSTEAD of paying $1000 with interest. D doesn’t deliver the widgets.

What happens?
C cannot recover on the original loan agreement because it was excused. No right to recover because it’s a modification.
What is a novation?
An agreement between BOTH parties to an existing K to the substitution of a new party (same performance)

Ex: P contracts to paint O’s house. After, P, O, and X agree that X will do the work instead of P – i.e. who will replace P
Who is liable in a novation for nonperformance?
the original party is excused - new party takes over as liable
P contracts to paint O’s house. After, P, O, and X agree that X will do the work instead of P – i.e. who will replace P.

X does not paint the house. Can O recover damages from P for breach of K?
No P was excused
P contracts to paint O’s house. After, P, without consulting O, asks X to do the work and X agrees. X doesn’t paint the house.

Who can O recover from?
O can recover damages from P because delegations don’t excuse.
When is damage or destruction an excuse to performance of a K?
i. If P supposed to paint house and it burns down – P excused from performing K

ii. If E’s car destroyed in a flood – excused from sales K with C
When is damage or destruction NOT an excuse to performance of a K?
A contractor’s duty to construct a building is NOT discharged by destruction of the work in progress because construction is not impossible – he can still rebuild

If a contractor’s SUPPLY of items is destroyed he must still fulfill K – there are other grits in the world
What is the result if a party dies after making the K?

What is the exception?
Death does NOT make a person’s K obligations disappear – can recover from the estate of the individual.

Exception: special / unique skill (i.e. Movie star, sport athlete)
What happens if after the K a law makes performance of the K illegal?
excuse by legal impossibility

Ex: town makes nude dancing illegal – K excused for nude dancing
What happens, if after the K, a law makes makes mutually understood purpose of K illegal?
EXCUSED by frustration of purpose

Ex: H wants plastic surgery so he can dance nude and tells his doctor so. If it becomes illegal – excused
who is a 3rd party beneficiary?
Not a party to the K. Able to enforce K others made to her benefit.
When does a 3rd party beneficiary K become irrevocable?
Test: if the 3rd party knows of and has relied on or assented as requested

If so, her rights have vested and the K cannot be canceled or modified w/o her consent unless the K otherwise provides
B and S enter into a K in which S agrees to provide 5 cars to T and B agrees to pay S $20K for S’s providing the cars to T.

When can B and S cancel?
B and S can cancel the K before T learns of it but not after


Test - if the 3rd party knows of and has relied on or assented as requested
i. If so, her rights have vested and the K cannot be canceled or modified w/o her consent unless the K otherwise provides
B and S enter into a K in which S agrees to provide 5 cars to T and B agrees to pay S $2000 for S’s providing the cars to T.

When S fails to deliver the cars – what happens?
T can recover under K law as a 3rd party beneficiary
E has an insurance policy with Allstate that provides he makes annual payments and they will pay S $250K when he dies.

When E dies, what happens?
S has K right to recover $250K from Allstate as a 3rd party beneficiary
Can the beneficiary ever recover from the promisee? Exception?
No.

exception: creditor beneficiary can recover from promise BUT ONLY on pre-existing debt

T can recover from B if B owed him $20K before B ordered the cars to satisfy the debt & they weren’t delivered
Can the promisee recover from the promisor?
Yes but BOTH the 3rd party beneficiary and the promisee cannot recover from the promisor.

ex: If B pays $20K for the cars and S never delivers to T, B CAN recover from S for breach of K

BUT both B and T cannot recover from S
What defenses are possible in 3rd party beneficiary Ks?
if the 3rd party beneficiary sues the promisor, the promisor can assert any defense that he would have had if sued by the promisee

Ex: the check S gets from B bounces. S does not give cars to T. T sues for breach of K. S has a defense – B never paid him
What is an assignment?
when an original K is between 2 parties and one of the parties later transfers rights under that K to a third party
Define:

- assignor
- assignee
- obligor
assignor - Party to the K who later transfers rights under the K to another

assignee - Not a party to the K. Able to enforce the K because of the assignment

obligor - Other party to the K
On Jan 15th, Batman contracts with Gotham to provide security services for one year; the K provides that Batman is to be paid $30K. Batman later transfers his rights to Robin

what is this?
This is an ASSIGNMENT
On Jan 15th, Batman contracts with Gotham to provides security services for one year. The K provides that Gotham will pay Robin $300K for Batman’s services.

what is this?
This is A 3RD PARTY BENIFICIARY NOT AN ASSIGNMENT
What does a prohibition on assignment mean?
Takes away the RIGHT to assign but not the POWER to assign which means that the assignor is liable for breach of K but an assignee who DIDN'T KNOW of the prohibition can still enforce the assignment
What is invalidation of an assignment?
Takes away BOTH the right to assign and the power to assign so that there is a breach by the assignor and no rights in the assignee

K states, “all assignments of rights under this K are void”
What if the K is silent regarding assignability?
Common law STILL bars an assignment that SUBSTANTIALLY CHANGES the duties of the obligor!

Assignment of right to payment – never a substantial change

Assignments of right to K performance other than right to payment – usually substantial change on the bar exam
Is consideration required for an assignment?
Consideration is NOT required but gratuitous assignments can be revoked
What are the 5 rights of assignees?
1 - Assignee CAN recover from the obligor

2 - Assignor for consideration CANNOT recover from obligor

3 - Obligor has SAME defenses against assignee as it would have against assignor

4 - Payment by Obligor to assignor is effective until obligor knows of the assignment

5 - Implied Warranties of assignor in an assignment for value (aka not given to donee – not a gratuitous assignment)
Batman contracts with Gotham to provide security services for one year for $30K and assigns his rights under the K to Robin. B performs the K and when Gotham refuses to pay Robin - what can Robin do?
Robin CAN sue and collect from Gotham for breach of K
After assigning the K w/ Gotham to Robin for $10 and doing all of the work himself, can Batman collect from Gotham?
No because an assignment for consideration can’t be revoked
X signs a note promising to pay Y $1000. Y assigns the note to Z for $800. X was an infant when he signed the note and refuses to pay Z.

What can Z do?
Z can recover from Y
E assigns the right to royalties to S for $1000. E then releases his right from W from any obligations to pay royalties.

What can S do?
S can collect from E for breach
What happens when there are multiple assignments and they are all gratuitous?
Last in time rule – last assignee generally wins
What happens when there are multiple assignments and they were for consideration?

What is the exception?
First in time rule - first assignee for consideration wins

Does not matter if the second assignee was the first to notify the obligor


VERY limited exception:
- A subsequent assignee takes priority over an earlier assignee for value ONLY IF HE BOTH
1 - Does not know about the earlier assignment AND
2 - Is the first to obtain – payment, judgment, novation, OR indicia of ownership
What is a delegation?
Party to a K transferring work under that K to a third party
P contracts to paint O’s house for $1000. P and X agree that X will paint O’s house.

identify the parties
X = delegatee,
O = obligee,
P = delegating party
What is the difference between an assignment and a delegation?
Assignment = the transfer by a party to a K of his *rights or benefits* under the K to a 3rd party who wasn’t a party of the K

Delegation = the transfer by a party to a K of his *duties or burdens* under the K to a 3rd party who was not a party to the K
Which duties are delegable?
General contractual duties are delegable
Which duties are NOT delegable?
delegation prohibited if:

i. K prohibits delegations or prohibits assignments OR

ii. “personal services K” calls for VERY SPECIAL skills (movie star, athlete)
what happens if 3rd party delegate does not perform?
i. Delegating party always remains liable

ii. Delegatee liable only if she receives consideration from delegating party
P contracts to paint O’s house for $1000. X then agrees with P that she will do the painting because P is a good friend. X does not do the work.

Remedy?
O can recover from P ;
P can’t recover from X ;
O can’t recover from X
P contracts to paint O’s house for $1000. P and X then agree that X will do the work and P will pay X $900. X doesn’t do the work.

Remedy?
O can recover from P ; P can recover from X ; O can recover from X
(mailbox rule) If a rejection is mailed before an acceptance is mailed, what happens?
then neither is effective until received