Multi-State Contracts And Art. 2

Front 1

Contract

Back 1

Legally enforceable promise or legally enforceable agreement

Front 2

Quasi-K

Back 2

An equitable remedy (not a K, so K rules don't apply)

Elements of Quasi-K
1. P conferred a benefit on D
2. P reasonably expected to be paid; and
3. D receives unjust enrichment if P isn't compensated

Hint 2

If K rules lead to a result of questionable fairness, look at whether a quasi-K remedy would be appropriate

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M/d for Quasi-K

Back 3

Value of benefit conferred (not necessarily K price)

Front 4

Unilateral K

Back 4

Offer expressly req. performance as the only method of acceptance

Front 5

Bilateral K

Back 5

Offer can be accepted by a promise or performance

There's a strong presumption that a K is bilateral; to be unilateral, K must EXPRESSLY req. performance as acceptance or be a reward, prize or contest

Front 6

Common law vs. Art. 2

Back 6

Art. 2 applies to the sale of goods; when K involves services or real property, --> common law applies

Front 7

Scope of Art. 2
(goods vs. services; hybrid Ks)

Back 7

Goods = tangible personal property

For mixed goods/services Ks, whether Art. 2 applies is all-or-nothing; look at primary purpose of the K

Hint 7

[*EXCEPTION: if K divides payment then Art. 2 to part that is for the sale of goods and common law applies to the rest]

Front 8

Offer (definition, general rule)

Back 8

Manifestation of an intention to make a K; words or conduct showing commitment;
Test is whether a reasonable person in offeree’s position would believe that his or her assent creates a K

Hint 8

Factors to decide whether it's an offer
1. Language - "I would consider selling" = mere invitation to offer
2. Context/Circumstances - in lawyer's office more likely an offer
3. Method of Communication - ads are invitations
[*EXCEPT: Ads can be offers if they're rewards or specify quantity and indicate who can accept. e.g. 1 fur coat, $10, first come first serve]

Front 9

Missing terms in offer, general rule

Back 9

General rule: Offer does not need to contain all terms; test is for "reasonable certainty"

i.e. Is there a reasonably basis for determining existence and breach?

Front 10

Missing Price term in offer, rules

Back 10

Common law - for real estate, price and description are req. for the communication to constitute an offer

Art. 2 - no price req., communication is an offer if the parties so intend; gap-filler = if offer is silent as to price, price is the reasonable price at time of delivery

Front 11

Vague or ambiguous term in offer, rule

Back 11

Not an offer

Watch for words like "fair, reasonable, appropriate"

e.g. S offers to sell B his car for a "fair" price --> no offer
[but vagueness can be cured by part performance that clarifies the vague term or by acceptance of full performance]

Front 12

Merchant, definition

Back 12

Merchant = one who regularly deals in goods of the kind sold or who o/w holds himself out as having special knowlege or skills as to the goods or practices involved

Front 13

Express K vs. Implied in fact K

Back 13

Express K = formed by language (oral or written)

Implied in fact K = Formed by manifestations of assent other than oral or written (e.g. by conduct)

Front 14

Void vs. Voidable Ks

Back 14

Void = K that is w/o legal effect from the beginning (e.g. an agreement to commit a crime)

Voidable - one that one or both parties can elect to avoid (e.g. by raising a defense that makes it voidable, such as infancy or mental illness)

Front 15

Missing quantity term in offer, rule

Back 15

For sale of goods, offer must contain a quantity term that is certain or capable of being made certain

Front 16

Requirements and Output Ks, definition and how to identify them

Back 16

Look for words of exclusivity such as "all, solely, only"

K for sale of goods can state quantity of goods in terms of requirements or output

Req. K = buyer's exclusivity
Output K = seller's exclusivity

Hint 16

Increase in req.:
B can increase req. as long as the increase is in line w/prior demands, not unreasonably disproportionate

Front 17

Four Methods of Terminating Offers

Back 17

An offer can only be revoked before acceptance

Four methods:
1. Lapse of time (time stated or reasonable time; delay of 1 month or more, offer likely lapsed)
2. Death of a party prior to acceptance (general rule: death or incapacity terminates an offer; EXCEPTION: irrevocable offers)
3. Words or conduct of offeror (i.e. revocation of offer)
a. Unambiguous words or conduct by offeror of inability or unwillingness to make K that offeree is aware of; and
4. Rejection (incl. counter-offers, conditional acceptance, acceptance which incl. add'l terms (depending),

Hint 17

Multiple offers do not operate as a revocation of offer

Front 18

When revocation becomes effective

Back 18

If sent through the mail, --> effective when received
If by publication --> effective when published

Front 19

Four Types of Irrevocable offers

Back 19

1. Options - if the offeror has promised not to revoke or promised to keep the offer open AND the offeror's promise is supported by consideration, --> the option is irrevocable during the stated period

2. Firm offer rule (special Art. 2 rule) - Under Art. 2, offer cannot be revoked for up to 3 months if there is an express, signed written promise to keep the offer open AND the offeror is a merchant

[merchant in this context means a person w/general business experience or expertise]

3. Detrimental Reliance - offer cannot be revoked if there is reliance that is reasonably foreseeable and detrimental

[*NOTE - just b/c an offer is revocable, does not mean it's revoked.
e.g. Option to keep offer open for 7 days supported by payment by offeree, offeree wants to accept 10 days later. The option was revocable, but it was not automatically revoked]

Hint 19

4. Start of Performance - for offer to enter into a unilateral K, offer cannot be revoked after start of a perf. for a time reasonable to complete perf.
[*NOTE: mere preparation to perform does not make the offer irrevocable]

[*NOTE: An offer for a bilateral K may be accepted by starting perf. The beginning of perf. would make a K and make revocation of the offer impossible (but it may req. offeree to notify offeror about the start of perf.]

Front 20

Four Methods of Rejecting an offer

Back 20

Methods of rejection:
1. Counter-offer (*NOTE: bargaining is not a counter-offer; e.g. S offers to sell Blackacre for $10K, B says "will you accept $9K?" It's not a counter-offer, just negotiation.)

2. Conditional Acceptance - look for words such as: "if, only if, provided, so long as, but, on condition that"

3. Direct rejection

Hint 20

4. Additional terms - depends on whether common law or UCC applies:

Common law - mirror image rule, if the acceptance adds or changes any term, it operates as a rejection

UCC - if response to an offer contains an add'l term --> there is a K, as long as the acceptance isn't expressly conditioned on offeror accepting the add'l or different term

Front 21

Add'l term in acceptance to offer becoming part of K under Art. 2

Back 21

If either party is not a merchant, add'l term is not part of K, it is merely a proposal.

If both parties are merchants, add'l term is part of K unless it materially changes the K or the offeror objects to the add'l term.

Front 22

Time when rejection takes effect

Back 22

A rejection is effective when received by the offeror

Front 23

Rejection of an option

Back 23

A rejection of an option does not terminate the offer. The offeree can still accept w/in the option period unless the offeror has detrimentally relied on the offeree's rejection.

Front 24

Acceptance

Back 24

Manifestation of assent to the terms of the offer

Generally, only a person to whom an offer was addressed has the power of acceptance
[*EXCEPTION: if the offeree has paid consideration to keep the offer open (e.g. option K) the right to accept is transferable.]

Front 25

Acceptance of Offer for Unilateral K

Back 25

Can only be accepted by full perf. (although beginning perf may make the offer irrevocable for a reas. time)

Front 26

Offers to buy goods for current or prompt shipment

Back 26

Art. 2 provides that S can accept by shipping or promising to ship

Hint 26

If S ships non-conforming gods, shipment is an acceptance and a simultaneous breach, unless S seasonably notifies B that the shipment is intended only as accommodation

Front 27

Acceptance, Common Fact Patterns: Improper verbal response, but later conduct indicating a K

Back 27

Common law - Improper verbal resp. is a counter-offer, later conduct operates as an acceptance

Art. 2 - If improper resp. is a conditional acceptance, it kills the offer and is NOT a counter-offer; But conduct by both parties can still establish a K.

Hint 27

Hypo: S offers to sell suits, B accepts conditioned on an arbitration agreement

Art. 2 applies b/c it's a K for sale of goods, B's resp. is conditional --> kills offer & is not a counter-offer but if S sends the suits and B accepts them and pays, --> offer & acceptance by conduct.

The add'l term is not part of the K. [K is based solely on conduct and terms that appeared for the first time in the cond'l acceptance are not part of K.]

Front 28

Acceptance, Common Fact Patterns: Offer made by words, Offeree fully performs w/o responding in words

Back 28

Rule: Full perf. is always acceptance, even w/o notice

[*NOTE: but sometimes lack of notice will excuse perf. of other party. If offeror lives in one place and offeree performs somewhere else --> lack of notice]

Front 29

Acceptance, Common Fact Patterns: Words of offer, partial perf. as acceptance

Back 29

General rule: start of perf. is acceptance [*EXCEPT: for offer to enter into unilateral K]

Hint 29

Offer of unilateral K, start of perf. makes offer irrevocable for reas. time. But offeree can walk away w/o finishing b/c he/she hasn't accepted yet; they are not legally obligated to finish

Front 30

Acceptance, Common Fact Patterns: Words of offer, words of acceptance

Back 30

Probably a K (except offers to enter into unilateral Ks)

Front 31

Acceptance, Common Fact Patterns: Offeror and offeree are in different places and communications involve delays

Back 31

General rule: communications are only effective when received

*EXCEPTION: Mailbox rule - Acceptances are effective as soon as they are sent

Hint 31

*EXCEPTION to the mailbox rule - if offeree sends a rejection before an acceptance, neither is effective until received

*EXCEPTION: You can't use the mailbox rule to meet an option deadline (e.g. option expires July 4 at 5pm, if offeree sends acceptance at July 4, 4:30 pm, it must be rec'd by deadline, or offer becomes revocable and offeror can choose to revoke

Front 32

Acceptance, Common Fact Patterns: Offer to buy goods w/o verbal response by S, but S sends wrong goods

Back 32

It's an acceptance and a breach, unless S notifies B that the shipment is intended only as an accomodation.

Front 33

Reasons for not enforcing agreement

Back 33

1. Lack of consideration
2. Lack of capacity
3. Statute of Frauds defense
4. Other reasons (illegality, public pol'y, misrepresentation, duress, non-disclosure)
5. Unconscionability
6. Ambiguity
7. Mistake of fact existing at time of K

Front 34

Consideration elements

Back 34

1. Bargained for exchange; and
2. Benefit to promisor or detriment to promisee

incl. performance, forbearance (not doing something you're legally entitled to do), promises to perform, promises to forbear

Front 35

Adequacy of consideration

Back 35

Courts do not inquire into the adequacy; "mere peppercorn = enough"

Front 36

Past Consideration

Back 36

Past consideration is insufficient to make promise enforceable

e.g. Apu saves Lisa's life, Homer promises him $, no consideration for Homer's promise

[*EXCEPTION: If promisor asks for someone to take action knowing they would expect to be paid, --> promise is enforceable.

e.g. Homer sees Lisa's in danger, asks Apu to save her knowing he will expect to be paid, --> Homer's promise is enforceable

Front 37

Consideration, Pre-existing duty rule

Back 37

Under common law, doing what you're already legally obligated to do is not new consideration for a new promise

Under Art. 2 - No pre-existing duty rule, no consideration req. to modify K, GF is the test to make changes to an existing sale of goods K

Hint 37

New consideration -

If there's any change to old consideration, it's sufficient (e.g. performer agrees to change the songs he's supposed to play at a concert, although not the number of songs, --> sufficient)

If there's an unforeseen difficulty so severe as to excuse perf., promisee's agreement to perf. as agreed is new consideration
(e.g. The sound system where Lil Jon is to perform is inoperative, the promoter agrees to pay him more $, the promise is enforceable b/c Lil Jon's perf. would have been excused)

If a 3rd party agrees to pay for something the promisee already had an obligation to do, the 3rd party's promise is enforceable

Front 38

Consideration, Part payment as consideration for release from debt

Back 38

If debt is due and undisputed, part payment is NOT consideration for release

If debt is not yet due (early pymt), then there's a new detriment and new consideration, so the agreement for release is legally enforceable

Front 39

Consideration substitutes

Back 39

1. Seals (majority rule is that this is not a substitute for consideration)
2. Written promise to satisfy an obligation for which there is a legal defense (e.g. Statute of Limitations) is enforceable w/o consideration
3. Promissory estoppel/Detrimental reliance

Front 40

Promissory estoppel/Detrimental Reliance Elements

Back 40

1. Promise
2. Reliance that is reasonable, detrimental and foreseeable
3. Enforcement necessary to avoid injustice

Hint 40

E.g. L promises not to raise rent on new lease, T paints house, L raises rent

T's painting house is not consideration b/c L did not bargain for it, but it's promissory estoppel & L's promise is enforceable

Front 41

Three steps to determine whether there's consideration:

Back 41

1. Identify the promise-breaker
2. Ask whether that person asked for something in return (bargained for exchange)
3. Look at the person trying to enforce the promise and ask whether he/she sustained a legal detriment

Front 42

Ds who lack capacity

Back 42

1. Infants (under 18)
2. Mental Incompetents; and
3. Intoxicated persons (if other person has reason to know of intoxication)

Front 43

Consequences of incapacity

Back 43

1. Right to disaffirm by person w/o capacity (only D's capacity is relevant)
2. Implied affirmation by retaining benefits after gaining capacity (aka "ratification)
e.g. P buys car when he's 17, turns 18 and keeps car, his promise to pay can be enforced
3. Quasi-K liability for necessaries (food, shelter, medical care, and clothing)

Front 44

Hypo: T is mentally incompetent, signs a lease to pay $400/month for an apt. L's other tenants rent similar apts for $300.

Back 44

T's promise to pay $400 is not legally enforceable as a K, D's who lack capacity cannot make Ks), but there is a basis for req. T to pay for the apt under a theory of quasi-K liability.

Front 45

Statute of Frauds - Scope

Back 45

1. Promises to answer for (guarantee) the debts of another (suretyship)
i.e. a promise to pay if someone else does not [*EXCEPTION: see side 3]
2. Promises by executor to answer personally (guarantee personally) for the debts of the decedent
3. Promises in consideration of marriage (e.g pre and post-nuptial agreements)
4. Service K not capable of being performed w/in a year from date of making K
5. Transfers of interest in real estate [*EXCEPTION, see side 3]
6. Sale of goods for $500 or more
7. Lease of goods for $1K or more (total pymts = $1K or more)

Hint 45

*EXCEPTION to guarantee -
Main purpose exception: if primary purpose was to benefit the guarantor, then the guarantee is not w/in the SofF
e.g. Conviser Ks w/X for X to paint his house; X buys paint at hardware store and Conviser promises store he will pay if X does not, --> not w/in the SofF b/c paint was being used to benefit Conviser

*EXCEPTION to real estate x-fer: lease of real estate for 1 yr or less

Front 46

Service Ks not capable of being perf. w/in a year

Back 46

Std "not capable" is pretty strict; if time is not specified, question is whether it is theoretically possible w/unlimited resources to complete the task w/in 1 year

*EXCEPTION: SofF does not apply to lifetime deals

Hint 46

e.g. P claims D promised to employ her for 3 years, but K could be term. on 30 days' notice
-->SofF applies, b/c it could not be PERF. in 1 yr (doesn't matter that it could be term. in 1 yr)

e.g. Kenny G was hired by Club Putz on 1/15/2009 to perf. a concert on 12/24/2010
-->SofF applies (more than 1 yr after date of making K)

e.g. P claims O agreed to hire her to work for one year, starting next month
--> SofF applies, same reason

e.g. P claims O hired her to work for the rest of her life, she's only 21 and in great health
-->SofF doesn't apply

Front 47

Methods of Satisfying SofF

Back 47

1. Writing signed by party against whom enforcement is sought; or
2. Perf.

Front 48

Using perf. to satisfy SofF w/service K

Back 48

Full perf. by either party satisfies SofF
Part perf. does not satisfy SofF

Front 49

Using perf. to satisfy SofF w/goods K

Back 49

Ordinary goods - part perf. satisfies SofF, but only to the extent of part perf.

Specially manufactured goods - if S has made a substantial beginning, --> SofF satisfied

Front 50

Using perf. to satisfy SofF in real estate transfer

Back 50

SofF can be satisfied if B has done any 2 of the following:
1. Payment,
2. Improvement, or
3. Possession

Front 51

Reqs. of SofF writing

Back 51

Common law (no sale or lease of goods) - Writing must contain all material terms & signed by party asserting a SofF defense

UCC sale of goods (Art. 2) - Must indicate there is a K for the sale of goods, be signed by the party against whom enforcement is sought, and incl. quantity [*EXCEPTION see side 3]

UCC lease of goods (Art. 2A) - 1) writing must indicate there is a lease, 2) describe subject matter of lease, and 3) state duration of lease

Hint 51

Under common law "All material terms" = Who and what

*EXCEPTION for Art. 2 SofF: Writing does not have to be signed by D if: D is a merch, and has failed to resp. to a writing from another merch. w/in 10 days

Front 52

Satisfying SofF by Judicial Admission

Back 52

If D admits in pleadings or testimony that he entered into an agreement w/P, SofF is satisfied and there is no SofF defense