New York Bar Exam - Contracts

Front 1

What is a contract?

Back 1

A contract is a promise, the breach of which the law gives a remedy.

Front 2

What law generally governs contracts?

Back 2

Common Law

Front 3

What is the exception to the rule that common law generally governs contracts?

Back 3

Contracts for the sale of goods are governed by Art 2 of the UCC, as well as common law. Art 2 prevails where they conflict.

Front 4

What are the classifications for contract formation?

Back 4

Contracts may be express or implied.

Front 5

What are the classifications for contract acceptance?

Back 5

Contracts are either bilateral or unilateral.

Front 6

What is an express contract?

Back 6

An express contract is one formed by written or oral language.

Front 7

What is an implied contract?

Back 7

One formed by manifestations of assent other than oral or written language (eg: conduct)

Front 8

What is a quasi-contract?

Back 8

Where an agreement does not qualify as a contract, a quasi-contract may be used to avoid unjust enrichment.

Front 9

What is a bilateral contract?

Back 9

A contract that requires an exchange of promises. (contracts generally fall here)

Front 10

What is a unilateral contract?

Back 10

A contract that:
1) Clearly indicates that performance is the only manner of acceptance, OR
2) Is an offer to the public clearly contemplating acceptance by performance.

Front 11

What are the 3 types of unenforcable contracts?

Back 11

Void; Voidable; Unenforceable.

Front 12

What is a void contract?

Back 12

One without any legal effect from the beginning. (eg: contract to committ crime)

Front 13

What is a voidable contract?

Back 13

One that a party may elect to avoid or ratify (eg: a contract by a minor)

Front 14

What are the 3 elements required to create a contract?

Back 14

1) Mutual assent
2) Consideration
3) No defense to formation

Front 15

What is mutual assent?

Back 15

Offer and acceptance.

Front 16

What is the standard for determining whether mutual assent is present?

Back 16

Objective standard (eg: did the words or conduct manifest a present intention to enter into a contract?)

Front 17

What are the 3 elements of an offer?

Back 17

1) expression of promise, undertaking, or commitment to enter into a contract
2) definite and certain terms
3) communicated to the offeree

Front 18

What factors help distinguish a priliminary negotiation from an offer?

Back 18

1) language
2) surrounding circumstances
3) prior relationship of parties
4) method of communication
5) industry custom
6) degree of definiteness of terms

Front 19

Are advertisements ussually offers?

Back 19

No. They are usually invitations to deal.

Front 20

What are the essential terms that must be in a contract?

Back 20

1) Identification of the offeree (all contracts)
2) Identification land and price terms in RE transaction
3) Quantity in a contract for the sale of goods
4) Duration of employment in an employment contract

Front 21

What happens when a contract is missing terms?

Back 21

Certain missing terms may be supplied by the court if consistent with the parties' intent.

Front 22

What happens if the contract terms are vague?

Back 22

A vague term may defeat formation unless acceptance or part performance makes the term clear.

Front 23

What is the effect of an offer providing a material term will be agreed on in the future?

Back 23

Formation fails.

Front 24

What are the 4 ways offers are terminated?

Back 24

1) Revocation
2) Rejection
3) Lapse of time
4) By operation of law

Front 25

How may the offeror revoke an offer?

Back 25

1) Directly communicating the revocation to the offeree
2) Acting inconsistently with continued offer openness and the offeree is aware of this info.

Front 26

When is revocation effective?

Back 26

Effective when recieved

Front 27

How may offers originally made by publication be revoked and when is it effective?

Back 27

Only by use of comparable means of publication and effective when published

Front 28

When can an offer be revoked?

Back 28

Generally, offers can be revoked at will prior to acceptance (even if the promised not to revoke for a period of time)

Front 29

When is on offeror's power to revoke limited?

Back 29

1) There is an option contact supported by consideration
2) There is a firm offer under the UCC.
3) The offeree has detrimentally relied on the offer and the offeree could have reasonable expected it.
4) The offeree has begun performance on a unilateral contract.

Front 30

What is an option contract?

Back 30

The party with the power of acceptance has given consideration for the offer's irrevocability.

Front 31

What is the NY rule regarding revocation?

Back 31

If an offers is in writing, signed by the offeree, and states it is irrevocable, the offer is not revocable for the stated period or reasonable period even when not supported by consideration.

Front 32

What is a firm offer?

Back 32

A signed writing by a merchanct promising to hold open the offer for some period of time.

Front 33

How long can a firm offer be held open?

Back 33

At most 3 months.

Front 34

What is the effect of an offeree starting performance on a unilateral contract?

Back 34

This is ussually construed as an option contract giving the offeree reasonable time to complete performance.

Front 35

How may an offeree reject an offer?

Back 35

1) Expressly
2) By making a counter offer (more than a mere inquiry)

Front 36

What is the total effect of a counteroffer?

Back 36

It is both a rejeciton and a new offer.

Front 37

When is rejection effective?

Back 37

When received.

Front 38

What is the effect of rejecting an option?

Back 38

Rejection of an option does not terminate the offer. The offeree can still accept in the option period if offeror did not detrimentally rely.

Front 39

When does lapse of time constitute a rejeciton?

Back 39

If the offeree fails to accept within the time specified by the offer OR within a reasonable time in none was specified.

Front 40

What events will terminate an offer by opperation of law?

Back 40

1) Death or insanity of either party;
2) Destruction of the proposed contract's subject matter;
3) Supervening illegality

Front 41

When will death or insanity not terminate an offer?

Back 41

When the offer is of the kind the offeror could not terminate (eg: option contract)

Front 42

What are the 3 elements of a valid acceptance?

Back 42

1) An offeree with the power of acceptance;
2) Unequivocal terms of acceptance;
3) Communication of acceptance.

Front 43

Who may accept?

Back 43

1) The person to whom the offer was addressed;
2) A member of the class to whom the offer was addressed.

Front 44

Can the right to accept an offer be assigned?

Back 44

No, but option contracts supported by consideration can be assigned.

Front 45

What form must acceptance take at common law?

Back 45

Acceptance must mirror the offer terms (otherwise it may be a counter offer).

Front 46

What form must acceptance take under the UCC?

Back 46

An acceptance need only indicate intention to enter into a contract and not be made conditional on the acceptance of new or different terms.

Front 47

Under the UCC, what is the effect of new or different terms in the acceptance?

Back 47

1) Where one of the parties is a non-merchant, the terms of offer control and New terms are proposals.
2) Between merchants, new terms become part of the contract unless they materially alter the agreement, the offer expressly limits acceptance to the offer's terms, or the offeree rejects to the terms in a reasonable time.
3) Different terms usually get "knocked out"

Front 48

Under the UCC, what is the effect of new terms that will materially alter the agreement?

Back 48

They do not prevent contract formation, but only become part of the contract if the offeror expressly assents to inclusion.

Front 49

Under the UCC, what is the effect of different terms that will materially alter the agreement?

Back 49

Some courts treat them like new terms, others use the knock-out rule

Front 50

What is the standard for communication of acceptance?

Back 50

Objective.

Front 51

What means may be used for acceptance?

Back 51

Any reasonable means may be used unless the offer unambiguously limits acceptance to particular means.

Front 52

What is the mailbox rule?

Back 52

If acceptance is by mail or similar means it is effective upon dispatch if properly addressed and stamped.

Front 53

What are the limitations on the mailbox rule?

Back 53

1) Does not apply if the offer stipulates that acceptance is not valid until received.
2) Does not apply if an option contract is involved.

Front 54

What happens if the offeree sends a rejection and an acceptance?

Back 54

Whichever arrives first is effective.

Front 55

What happens if the offeree sends an acceptance and then a rejection?

Back 55

The acceptance is effective unless rejection arrives first and the offeror detirmentally relied upon it.

Front 56

What happens if acceptance is transmitted by unauthorized means?

Back 56

It is effective if actually received by the offeree while the offer is still open.

**ie, no mailbok rule.

Front 57

Under what circumstance may an offer be accepted without communication?

Back 57

An executory contract may be formed without communication where
1) there is an express waiver of communication in the offer;
2) the offer requires an act as an acceptance; OR
3) the offer silently take the offered benefits.

Front 58

What is the role of consideration?

Back 58

A contract is only enforcable if supported by consideration or a substitute.

Front 59

What are the 2 elements of consideration?

Back 59

1) Bargained-for-exchange
2) Legal value

Front 60

What constitutes a bargained-for -exchange?

Back 60

The parties must exchange promises in bilateral contract or a promise for an act in unilateral contract.

Front 61

Is there a bargain involved when one party gives a gift?

Back 61

No. But an act or forbearance by the promisee will be sufficient if it benefits the promisor.

Front 62

Must the exchange have economic value?

Back 62

No. Peace of mind or gratification in exchange for something may be enough to establish a bargain.

Front 63

Can past or moral consideration satisify the bargain requirement?

Back 63

Generally, it cannot.

Front 64

What are the exceptions for past or moral consideration?

Back 64

1) Past obligation unenforcable because of a technical defense will be enforcable if a new promise is made in writing or is partially performed;
2) A new promise to pay for past act performed at the promisee's request will be enforceable.

Front 65

What is the NY rule regarding past consideration?

Back 65

It is binding if:
1) The promise is in writing;
2) The past consideration is expressly stated;
3) The consideration can be proven; and
4) The writing is signed by the promisee.

Front 66

Will courts inquire into the adequacy of consideration?

Back 66

Generall not, unless it is token or sham consideration.

Front 67

Can a pre-existing legal duty constitute sufficient consideration?

Back 67

Generally not.

**Different from past consideration because not act is yet to be performed.

Front 68

When can a preexisting legal duty constitute valid consideration?

Back 68

1) New or different consideration is offered;
2) The promise is to ratify a voidable obligation;
3) The duty is owed to a 3rd person rather than the promisor;
4) There is an honest dipute about the duty; or
5) The are unforseen circumstances sufficient to discharge the party.

Front 69

What is the UCC rule regarding contract modification?

Back 69

A good faith agreement to modify needs no consideration to be binding.

Front 70

How can preexisting debts be discharged?

Back 70

Although payment of a smaller sum than due on existing debt is generally not sufficient consideration for a promise to discharge, court will try to avoid this result through the exceptions.

Front 71

Can forbearance to sue constitute valid consideration?

Back 71

Yes, provided the claim is valid or the claimant in good faith believed the claim valid.

Front 72

What is the requirement of mutuality?

Back 72

Consideration must be given on both sides of the contract.

Front 73

What is an illusory promise?

Back 73

A promise that is unenforcable because only one party is bound to peform.

Front 74

What are some examples of courts implying promises to infer mutuality?

Back 74

1) Requirements and output Ks
2) Conditional promises, unless the condition is entirely in promisor's control
3) K's where a party has the right to cancel if it is somehow restricted (eg: notice)
4) Voidable Promises
5) Unilateral and option Ks

Front 75

When is a promise to chose among several alternative means of performance no illusory?

Back 75

1) every alternative involves legal detriment to the promisor;
2) At least one alternative involve legal detriment and the power to chose rest with the promisee or 3rd party; or
3) A valuable alternative is actually selected.

Front 76

What are the 4 substitutes for consideration?

Back 76

1) Promisory estoppel or detrimental Reliance.
2) Modification under UCC
3) Promises to pay legal obligation barred by law.
4) Seal.

Front 77

What is promissory estoppel?

Back 77

A substitute for consideration where
1) the promisor should reasonably expect her promise to induce action or forebearance,
2) of a definite and substantial nature, and
3) such action or forbearance is in fact induced

Front 78

What is UCC rule regarding modification?

Back 78

Consideration is not necessary to a good faith written modification.

Front 79

What is the rule regarding promises to pay legal obligations barred by law?

Back 79

If a legal obligation is not enforcable under law, a new promise to fulfill the legal obligation is enforceable if in writing.

NOTE: Only enforceable according to the new terms, not the original terms.

Front 80

What the NY rule regarding seals?

Back 80

In NY and many other states, as well as under the UCC, a seal is no longer a substitute for consideration.

Front 81

What are the 2 defenses to contract formation?

Back 81

1) Absence of mutual assent (mistake and misrep);
2) Public policy defenses.

Front 82

When does mutual mistake constitute absence of mutual assent?

Back 82

Where
1) The mistake contains a basic assumption on which the contract was made;
2) Mistake has a material adverse effect on the agreed upon exchange; and
3) The adversely affected party did not assume the risk of mistake.

Front 83

How does a party assume risk?

Back 83

When the party knows that their assumption is doubtful, they are deemed to assume the risk that their assumption is wrong.

Front 84

Can a mistake in value constitute the defense of mistake?

Back 84

No. Courts presume parties assume the risk of determing value.

Exception where the parties rely on a 3rd party to determine value

Front 85

When can a unilateral mistake constitute an absence of mutual assent?

Back 85

Where the nonmistaken party knew or should have known of the mistake, the contract is voidable by the mistaken party.

Front 86

Can a mistake by a transmitting intermediary constitute an absence of mutual assent?

Back 86

Not unless the party receiving the message should have been aware of the mistake.

Front 87

What is misrepresentation?

Back 87

A party induces another to enter into a contract by using fraudulent misrepresentation or by using nonfraudulent material misrepresenation.

Front 88

What is the effect of misrepresenation?

Back 88

The contract is voidable by the innocent party if he justifiably relied on the misrepresentation.

Front 89

When is public policy (illegality) a defense to contract formation?

Back 89

1) If the consideration or subject mater is illegal, the contract is voidable.
2) If the purpose is illegal, the contract is voidable by a party who was either unaware of the purpose OR aware of the purpose but did not facilitate the purporse and the purpose does not involve serious moral turptitude.

Front 90

What are the defenses based on lack of capactity?

Back 90

1) Infancy (except for contracts involving that party's necessities).
2) Insanity
3) Intoxication (If the other party knew of the intoxication)
4) Duress.

Front 91

What is the effect of a lack of capacity defense?

Back 91

The contract is voidable by the party that lacked capacity.

Front 92

What constitutes duress?

Back 92

Usually requires more than one party's taking economic advantage of another.

Front 93

Can an infant affirm his contract?

Back 93

Yes, upon reaching the age of majority. Failure to disaffirm in reasonable time after turning 18 constitutes affirmance.

Front 94

What are the NY exceptions to infants' lack of capacity?

Back 94

Infants cannot void contracts in the following situations:
1) 14.5 years or older who contracts for life insurance;
2) Educational loans by those 16 or older;
3) All contracts by 18 year olds;
4) Realty contract related to marital home; and
5) Contracts for artistic or athletic services.

Front 95

What are the defenses to enforcement?

Back 95

1) Statute of frauds
2) Unconscionability

Front 96

When is the statute of frauds applicable?

Back 96

MY LEGS

M - Marriage
Y - Year
L - Land
E - Executor
G - Goods
S - Surety

Front 97

What are the requirements of the statute of frauds?

Back 97

The writing must contain the following:
1) Identity of the parties sought to be charged
2) Id of the contract's subject matter
3) Terms and conditions
4) Recital of the considerations
5) Signature of the party to be charged.

Front 98

Must the writing for statue of frauds be a full-fledge contract?

Back 98

No and it need not even be on one piece of paper.

Front 99

Who needs to sign the writing to satisfy the SOF?

Back 99

Only the party to be charge (ie the party being sued).

Front 100

What are the exceptions to the SOF?

Back 100

1) For a sale of goods, part payment or acceptance of part of the goods take the contract of of the statute to the extent of the partial payment or acceptance.
2) For a sale of land most states do not apply the statute if performance unequivocally indicates that the parties contracted for sale.
3) Courts occasionally use promisory estopel to remove the contract where it would be inequitable to allow the SOF to defeat a meritorious claim.

Front 101

What is the additional NY coverage of the SOF?

Back 101

The following K are also included:
1) Promise to pay discharged debt;
2) Assignment of insurance policy or promise to name beneficary
3) Contracts to pay commission or finders fee, unless w/ atty, auctioner, or RE broker.

Front 102

What is the additional NY exception to the SOF?

Back 102

SOF not applicable where there has been part performance under a lease.

Front 103

What is the enforcement defense of unconscionability?

Back 103

A contract may be void where the clauses are so one-sided as to be unconscionable. (tested at the time the K was made)

Front 104

Can nonparties rights or duties in connection with the contract?

Back 104

Yes

Front 105

What is the typical 3rd party beneficiary situation?

Back 105

The promisee contracts with the promisor that the promisor will render some performance to the 3rd party beneficiary.

Front 106

What is a the difference between an intended and an incidental 3rd party beneficiary?

Back 106

Only the intended beficiaries have contractual rights.

Front 107

How do you distinguish incidental form intended 3rd party beneficiaries?

Back 107

Consider whether the beneficiary:
1) Is identified in the contract;
2) Receives performance directly from the promisor; OR
3) Has some relationship with the promisee to indicate intent to benefit.

Front 108

What are the 2 types of intended beneficiaries?

Back 108

1) Creditor beneficiary, a person who is owed a debt by the promisee
2) A donee beneficiary, whom the promisee intended to benefit gratuitously.

Front 109

When does the beneficiary acquire contractual right?

Back 109

Only when his rights have vested.

Prior to vesting the promisee and promisor are free to modify or rescind the beneficiary's rights.

Front 110

When does a beneficiary's rights vest?

Back 110

When the beneficiary:
1) Manifests assent to a promise in the manner requested by the parties;
2) brings a suit to enforce the promise; Or
3) materially changes position in justifiable reliance on the promise.

Front 111

Can an intended beneficiary sue the promisor?

Back 111

Yes, but the promisor may raise any defense against the promisor it had against the promisee.

Front 112

Can an intended beneficiary sue the promisee?

Back 112

1) Creditor beneficiary can sue the promisee.
2) Donee beneficiary can only sue the promisee if grounds for a detrimental reliance remedy exist.

Front 113

What is the typical situtation where a party assigns his rights to a 3rd party?

Back 113

X and Y contract with each other. Y (assignor) assigns his rights to X's (obligor) peformance to Z (assignee).

Front 114

What contract rights may be assigned?

Back 114

Generally all contract rights may be assigned.

Front 115

What are the exceptions to assignment?

Back 115

1) Assignment would substantially change the obligor's duty or risk;
2) An assignment of future rights to arise from future contracts; or
3) Assignment prohibted by law.

Front 116

What is the effect of a "no assignment" provision?

Back 116

Clause prohibiting the assignment of the contract will be construed as prohibiting assignment of the assignor's duties.

Front 117

What is the remedy for breach of a "no assignment" provison?

Back 117

Does not bar assignment, but merely gives the obligor the right to sue for damages. Unless the contract provides that attempts to assign will be void.

Front 118

What is necessary for an effective assignment?

Back 118

1) The assignor must manifest an intent to immediately and completely transfer his rights;
2) The right assigned must be adequately described.

Front 119

Is a writing necessary for an effective assignment?

Back 119

No.

Front 120

Is consideration required for assignment?

Back 120

No.

Front 121

What is the NY rule for assignment not supported by consideration?

Back 121

It is irrevocable if in writing and signed by the assignor.

Front 122

Is assignment for consideration revokable?

Back 122

An assignment for consideration is irrevocable.

A gratuitous assignment is irrevocable if:
1) The obligor has already performed;
2) a token chose is delivered;
3) A simple chose is put in writing; OR
4) The assignee can show detrimental reliance on the gratutitous assignment.

Front 123

How may a revocable assignment be terminated?

Back 123

1) Death or bankrupty of the assignor;
2) Notice of revocation to the assignee or obligor
3) The assignor taking performance directly from the obligor; OR
4) Subsequent assignment of the same rights by the assignor to another

Front 124

What is the effect of assignment?

Back 124

Establishes privity of contract between the obligor and assignee while exstingushing privity between the obligor and assignor.

Basically once the assignment is effective, only the assignee is entitled to performance.

Front 125

Can the assignee sue the obligor?

Back 125

Yes, as the assignee is a real party in interest.

Front 126

What defenses can the obligor raise against the assignee?

Back 126

Any defense inherent in the contract.

Can't raise defenses the assignor might have against the assignee.

Front 127

Can the assignee sue the assignor?

Back 127

Yes, for:
1) Wrongfully exercising the power to revoke an irrevocable assignment;
2) Where the obligor successfully asserts a defense against the assignor in an action brought by an assignee.

Front 128

To what extent is the assignor liable for the obligor's performance?

Back 128

The assignor will not be liable if the obligor is incapable of performance.

Front 129

What is the additional NY rule for successive assignments of the same rights?

Back 129

It has an additional exception, whereby the assignment of a construction contract (or money due thereunder) is not valid until filed.

Front 130

What happens if there have been successive assignments of the same rights?

Back 130

The first irrevocable assignment will prevail.

Front 131

What are the exceptions to the first assignment rule?

Back 131

If the subsequent assignee has paid value and taken without notice, he may prevail where
1) he gets the first judgment against the obligor;
2) he gets the first payment of claim from the obligor;
3) he gets token delivery of a token chose;
4) he is a party to novation releasing the assignor; or
5) he can proceed on estoppel theory

Front 132

What is the typical delegation situation?

Back 132

Y (obligor/deligator) promises to perform for X (the obligee). Y then delegates his duty to Z (delegate).

Front 133

What duties may be delegated?

Back 133

Generally all duties.

Front 134

What are the exceptios to the general rule regarding what duties may be delegated?

Back 134

1) Duties involve personal judgment and skill;
2) Delegation would change the obligees expectancy;
3) A special trust was reposed in the delegator; or
4) There is a contractual restriction.

Front 135

What are the requirements for effective delegation?

Back 135

Delegator need only manifest a present intention to make a delegation.

Front 136

Is the deligator discharge from liability on the contract?

Back 136

No. The obligee may sue the delegator for nonperformance by the delegate.

Front 137

Whats is the modern rule regarding the effect of the words assigning "the contract" or "all my rights under the contract"?

Back 137

They are usually construed as including an assumption of the duties by the assignee, unless contrary intention appears.

Front 138

How are contracts to be construed?

Back 138

As a whole and according to the ordinary meaning of words.

Front 139

How are ambiguties construed?

Back 139

Against the party preparing the contract, absent evidence of the intent.

Front 140

What is the parole evidence rule?

Back 140

Evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary contractual terms is inadmissible if the written contract is intend as complete and final.

Front 141

What is a merger clause?

Back 141

A recital that the contract is complete on its face. (strengthens presumption that the written document is final)

Front 142

What are the exceptions to the parole evidence rule?

Back 142

Evidence of
1) Formation defects
2) Existence of a condition precedent
3) The parties intent regarding ambiguous terms
4) A prior valid agreement which is incorrectly reflected in the writing
5) A collateral agreement that does not contradict the main contract and is not so closely connected as to be part of the main contract.

Front 143

When can nonperformance constitute a contractual breach?

Back 143

1) When a present duty to perform has arisen; and
2) That duty has not been discharged.

Front 144

When does a present duty to perform arise?

Back 144

There is an absolute promise or all conditions have been met or excused.

Front 145

What is a promise?

Back 145

A commitment to do or refrain from doing something. (may be conditional or unconditional)

Front 146

What is a condition?

Back 146

An event (other than the passage of time) the occurence or nonoccurrence of which will create, limit, or exstingusih the absolute duty to perform.

Front 147

How is a provision interprated to be a promise or a condition?

Back 147

When unclear, the basic test is the intent of the parties as judged by:
1) the words of the agreement,
2) prior practices
3) business customs.

Front 148

Do court generally prefer promises or conditions?

Back 148

In doubtful situations the court perfers a promise, because a promise will suport the contract.

Front 149

Why is the distinction between a promise and condition so important?

Back 149

Failure of a promise gives rise to breach, whereas failure of a condition relieves a party of the obligation to perform.

Front 150

Can a provision be both a promise and a condition?

Back 150

Yes. eg, where the 2nd party's duty to pay is conditioned on the 1st party's performance of her promise.

Front 151

What is a condition precedent?

Back 151

A condition that must occure before performance is due.

Front 152

What is a condition concurrent?

Back 152

Conditions to occur at the same time.

Front 153

What is a condition subsequent?

Back 153

Condition that cuts off already existing duty and excuses performance.

Front 154

When are conditions excused?

Back 154

1) When a party wrongfully prevents a condition form occuring;
2) An actual, material breach by one party, excuses the others duty of counter performance;
3) Anticipatory repudiation;
4) When a party has reasonable grounds to believe the other party will be unable to perform;
5) Substatial performance;
6) Divisibilty of contract;
7) Waiver or estoppel

Front 155

What is anticipatory repudiation?

Back 155

A party's unequivocal communication that they will not perform their duty under the contract.

Front 156

What are the remedies for anticipatory repudiation where the contract is unilateral or not executory?

Back 156

The non-repudiating party must wait until the time originally set for performance.

Front 157

What are the remedies for anticipatory repudiation where the contract is bilateral and executory?

Back 157

1) Treat the contract as reputiated and sue immediately;
2) Suspend his own performance and wait until the performance is due to sue;
3) Treat the repudiation as an offer to rescind and treat the contract as discharged;
4) Ingore the repudiation and urge preformance.

Front 158

Can repudiation be retracted?

Back 158

Yes, until the other party has accepted or detrimentally relied on it.

Front 159

In what ways may a duty to perform be discharged?

Back 159

1) Performance or tender of performance;
2) Condition subsequent;
3) Illegality;
4) Impossibility, Impracticability, or Frustration;
5) Rescission;
6) Modification of contract;
7) Novation;
8) Cancellation;
9) Release;
10) Substituted contract;
11) Accord and satisfaction;
12) Account Stated;
13) Lapse;
14) Operation of law;
15) Statue of limitations;

Front 160

What is discharge by impossibility?

Back 160

Object standard that nobody could have performed according to the terms of the contract. (eg; death, destruction of subject matter, etc).

Front 161

What is discharge by impracticability?

Back 161

Discharge where a party encounters extreme and unreasonable difficulty/ expense that was not anticipated.
**must be above and beyond normal risk
**distinguish from mistake

Front 162

What is discharge by frustration?

Back 162

Discharge where there is
1) A supervening event;
2) That was not reasonably foreseeable at the time of contracting;
3) Which almost completely destroys the purpose of the contract; and
4) The purpose was understood by both parties.

Front 163

What is discharge by recission?

Back 163

Where a contract is executory on both sides and both parties agree to rescind.

Front 164

Can there be mutual recission where the rights of a 3rd party beneficiary have already vested?

Back 164

No.

Front 165

What is partial discharge by modification?

Back 165

A duty may be discharged partially by modification of the K if there is mutual assent and consideration.

** consideration is not necessary where the modification is only a corrcetion or for a modification for the sale of goods.

Front 166

What is discharge by novation?

Back 166

Discharge where there's a new contract substituting a new party for one of the parties to the original contract.

Front 167

What are the elements of novation?

Back 167

1) A previous valid contract;
2) Agreement among all parties including the new parties;
3) Immediate extinquishment of the contractual duties between the original parties; and
4) a valid new contract.

Front 168

What is an accord?

Back 168

An agreement where one party to a contract agrees to accept perfomance different from that originally promised.

Front 169

Does an accord require consideration?

Back 169

Yes, consideration can be less than that of the original contract if it is of a different type.

Front 170

When is pariial payment of an original debt sufficient consideration for an accord?

Back 170

1) When it is made in good faith; and
2) There is a bona fide dispute to the claim.

Front 171

What is satisfaction?

Back 171

Performance of the accord which discharges both the accord and the original debt.

Front 172

When is a breach material?

Back 172

When the non breaching party does not receive the substantial benefit of his bargain.

Front 173

What remedies are available for a material breach?

Back 173

1) May treat the duty to counter perform as discharged; and
2) Has an immediate right to all remedies for breach of the entire contract.

Front 174

What is the remedy for a minor breach?

Back 174

The aggrieved party may recover damages but must still perform under the contract.

Front 175

What is the effect of a minor breach coupled with anticipatory repudiation?

Back 175

It is treated as a major breach.

Front 176

What is the test for materiality?

Back 176

Courts look at
1) The amount of benefit received by the nonbreaching party;
2) Adequacy of compensation for damages;
3) Extent of part performance by the breaching party;
4) Hardship to the breaching party;
5) Negligent or willful behavior of the breaching party; and
6) Liklihood that the breaching party will perform the remainder.

Front 177

What is the effect of lack of timely performance?

Back 177

Generally not a material breach if performance is rendered within a reasonable time.

Front 178

What is the effect of a "time is of the essence" provision?

Back 178

Failure to perform on time is a material breach.

Front 179

What are the remedies for breach of contract?

Back 179

1) Damages
2) Specific preformance
3) Rescisson
4) Restitution

Front 180

What are compensatory damages?

Back 180

Damages designed to put the nonbreaching party into as a good a position as they would have been had the other party fully performed.

Front 181

What are the 2 types compensatory damages?

Back 181

Standard measure and consequential

Front 182

What are the standard measure of damages?

Back 182

Usually the expectation damages that would permit the plaintiff to buy a substitute.

**May also cover reliance (the cost incured by performing)

Front 183

What is the standard of certainty need for standard measure damages?

Back 183

The damages must be reasonably certain. (eg, lost profits for a business that can't open on time are usually too speculative).

Front 184

What are the standard measure damages for sale of goods?

Back 184

1) Breach by seller = K price - replacement price
2) Breach by buyer = K price - resale price.

Front 185

What are the standard measure damages for sale of land K?

Back 185

K price - fair market value.

Front 186

What are the standard measure damages on employment contracts?

Back 186

1) breach by employer = full K price - wages earned elsewhere.
2) breach by employee = costs to replace the employee.

Front 187

What are standard measure damages on construction contracts?

Back 187

1) breach by owner = profits from K + cost expended.
2) breach by the builder = cost of completion + reasonable compensation for delay.

Front 188

What are consequential damages?

Back 188

Damages awarded in addition to standard measure, which will be given if a reasonable person would have forseen such damages would result from the breach.

Front 189

Who bears burden of proving forseeability of consequential damages?

Back 189

The plainfiff bears the burden where "special circumstances" are involved.

Front 190

When will a liquidated damages provision be valid?

Back 190

1) The damages were difficult to ascertain at the time the contract was formed; and
2) the agreed upon amount was a reasonable forecast of compensatory damages.

Front 191

Can liquidated damages be recovered when there ar no actual money damages?

Back 191

Yes, so long as the requirements are met.

Front 192

What happens when the nonbreaching party fails to mitigate damages?

Back 192

Recovery will be reduced by the amount that might have been avoided by mitigation.

Front 193

When can a party sue for specific performance?

Back 193

When the legal remedy would be inadequate. (basically when the subject matter is rare or unique).

Front 194

Is specific performance available for services?

Back 194

No.

Front 195

What is recission and restitution?

Back 195

A nonbreacher may rescind and sue for damages at law or in equity.

If benefit has already been transfered to the breacher, the non-breacher is entitled to restitution.

Front 196

When is quasi-contractual relief proper?

Back 196

When no contractual relief is available.

Front 197

What must be shown to recover quasi-contractual relief on a faild contract?

Back 197

That the failed contract resulted in unjust enrichment of one of the parties.