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147 Cards in this Set
- Front
- Back
[Intro]
Order of K Analysis |
- Applicable Law?
- Formation (Offer, offer rejection, acceptance) - Statute of Frauds - Terms - Performance - Excuse for nonperformance - Remedies - Third-party problems |
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[Applicable Law]
UCC Art. II applies to what? |
-Movable, sellable good (NOT services)
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[Applicable Law]
Is real estate covered by common law or Art. II? |
-Common law
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[Applicable Law]
What does Article 2A of the UCC cover? |
-Lease of goods (rental car)
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[Applicable Law]
If there is a "mixed deal" with both goods and services, does the UCC or common law apply? |
-It depends.
Test: All or nothing/most important test. Determine if the goods or the services is more important to the deal and apply those riles to the WHOLE disagreement over the K. |
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[Formation]
Definition of a contract |
-Legally enforceable agreement
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[Formation]
What creates an IMPLIED K? |
-Party's CONDUCT indicates intent to be bound
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[Formation]
What creates a QUASI-K? |
-Party is unjustly enriched (only get reasonable value of things conferred)
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[Formation]
Definition of a unilateral K |
-Promise for performance
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[Formation]
List the only 2 ways a K is unilateral |
- Reward/prize/contest
OR - Offer EXPRESSLY REQUIRES performance for acceptance |
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[Formation - Offers]
Definition of offer |
Objective manifestation of intention to contract
NOTE: ads are NOT offers UNLESS there is a quantity term |
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[Formation - Offers]
Test for quantity change in a Art. 2 requirements Ks |
Buyer CAN increase if reasonable in comparison to prior demands.
(Restated: CANNOT be unreasonably disproportionate) |
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[Formation - Termination of offer]
Four categories of terminations of offers |
- Lapse of Time
- Death of either party - Revocation (revocation means offerOR has terminated his offer) - Rejection (rejection means offerEE was terminated his ability to accept) |
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[Formation - Termination of offer: Death]
Exception to termination of K by death |
- Option K
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[Formation - Termination of offer: REVOCATION]
2 ways offerOR can REVOKE offer |
- Express, unambig. statement
OR - Unambig. conduct to which the offerEE ***IS AWARE*** |
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[Formation - Termination of offer: REVOCATION]
When does revocation of an offer sent via mail become effective? |
-when RECEIVED (when offerEE knows of revocation)
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[Formation - Termination of offer: REVOCATION]
3 situations when an offerOR CANNOT revoke in NY |
- Option K
- FORESEEABLE Detrimental reliance - UCC Firm Offer |
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[Formation - Termination of offer: REVOCATION]
Elements of an option K |
-Promise not to revoke
-Supported by consideration |
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[Formation - Termination of offer: REVOCATION]
What ALSO counts as an option K in NY? |
-Signed written promise not to revoke, EVEN IF NO $$$ PAID
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[Formation - Termination of offer: REVOCATION]
What is the only real example of where and offerEE's pre-acceptance FORESEEABLE detrimental reliance will prevent revocation of the offer by the offerOR? |
-Contractor's offer to sub-contractor
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[Formation - Termination of offer: REVOCATION]
Elements that make a unilateral K irrevocable in NY |
-In NY, offers for a unilateral K CAN STILL BE REVOKED, even if work already started!!!
-Unilateral K in NY is revocable until performance is FULLY COMPLETED |
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[Formation - Termination of offer: REVOCATION]
Elements of an Art. II firm offer |
- Offering party is a MERCHANT
- Signed, WRITTEN promise - Explicit STATEMENT will not to revoke offer *** No payment is required *NOTE: Max firm offer period is 3 months (if not stated, is for a reasonable time, max. of 3 mon.) |
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[Formation - Termination of offer: REJECTION]
Three ways an offerEE rejects an offer (terminating ability to accept) |
- Counteroffer
- Conditional Acceptance - Proposes new terms (mirror image rule) |
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[Formation - Termination of offer: REJECTION]
"Twist" to the Counteroffer termination of offer rule |
-Mere "bargaining" does not terminate
NOTE: look for a question |
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[Formation - Termination of offer: REJECTION]
Define conditional acceptance |
-When offerEE responds to an offer with "only if" ... or other condition
-Result is that terminates offer, and the new statement becomes an offer |
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[Formation - Termination of offer: REJECTION]
For common law Ks, what is the effect if the seller proposes new terms? |
-Acts as a rejection --- MIRROR image rule
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[Formation - Termination of offer: REJECTION]
Effect of additional terms in a sale of goods. |
-Sale of goods = UCC Art 2.
-New terms does NOT disturb the fact that a K is created, SO LONG AS the new terms are NOT stated as a conditional |
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[Formation - Termination of offer: REJECTION]
When do additional Art. II terms become part of the K? |
If ONE party is a merchant:
- Add'l term is mere proposal If BOTH parties are merchants: - Add'l term IS part of K, UNLESS: - - Martially changes - - Offeror objects |
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[Formation - Acceptance]
Define Acceptance |
Objective manifestation of intent to be bound
**NOTE: MAY be shown by conduct |
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[Formation - Acceptance]
Who can accept an offer? |
Only a person:
1 - to whom the offer was made, AND 2 - KNOWS about the offer at the time of "acceptance" (ex: can't get reward if didn't know about it) NOTE: CAN become aware of offer DURING performance and therefore accept |
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[Formation - Acceptance]
When can you assign an offer? |
Generally, NEVER -- except you can assign an OPTION
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[Formation - Acceptance: STARTING PERFORMANCE]
What is the effect of starting performance on a Bilateral K? Unilateral K? |
-Bilateral: constitutes acceptance (bound to complete)
-Unilateral: does NOT constitute acceptance untile job is FULLY COMPLETED (NOT bound to complete) *REMEMBER: In NY, the offerOR can also revoke at any time |
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[Formation - Acceptance: IMPROPER PERFORMANCE]
What effect if someone makes an IMPROPER PERFORMANCE under common law? under Art 2? |
-Common law: improper performance is an ACCEPTANCE and a BREACH
-Art 2: improper performance is an ACCEPTANCE and a BREACH **UNLESS goods are being sent as an accommodation |
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[Formation - Acceptance: TIMING]
The 4 mailbox rules |
- ALL communications other than acceptances are effect only WHEN RECEIVED
- Acceptance, GENERALLY, is effective when mailed - Rejection THEN accept = first in time - If option K; actual receipt of acceptance required |
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[Formation - Defenses against formation]
What are the 7 defenses against formation / reasons to NOT enforce a K? |
-Capacity
-Duress -Misrepresenation -Ambiguity -Mutual Mistake -Lack of consideration -Public policy |
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[Formation - Defenses against formation: CAPACITY]
What are the 3 categories of incapacity? |
-Minors (except in NY, edu loans 16+, or life insurance 14.5+)
-Intox -Mentally incomp. (ONLY IF other person has reason to know) |
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[Formation - Defenses against formation: CAPACITY]
Consequence of K with person who has incapacity |
Person with incapacity MAY void the L (K is voidABLE, not automatically void)
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[Formation - Defenses against formation: CAPACITY]
What 2 exceptions exist that still may require the incapacity person to be bound? |
1 - Affirmation by retaining benefits after becoming 18, OR
2 - Necessaries for food/shelter/medical case (NOTE: minor only has to pay for necessaries in quasi-K --- THERE IS NO REAL K) |
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[Formation - Defenses against formation: DURESS]
Define duress |
-"Bad Guy" = improper threat made to K
-"Vulnerable guy" = no reasonable alternative |
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[Formation - Defenses against formation: FRAUD/MISREPRESENTATION/NON-DISCLOSURE]
Elements of common law fraud |
-KNOWINGLY
-false statement -material fact -Induces K |
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[Formation - Defenses against formation: FRAUD/MISREPRESENTATION/NON-DISCLOSURE]
Define Misrepresentation |
-Person DOES speak
-False statement -Material fact -Induces K NOTE: party does not NEED to know of statement's falsity |
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[Formation - Defenses against formation: FRAUD/MISREPRESENTATION/NON-DISCLOSURE]
Reason for non-enforcement when someone does NOT speak |
Nondisclosure must be wrongful:
-Knowing -Concealment -Of material fact (EX: cover over termite damage) |
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[Formation - Defenses against formation: AMBIGUITY]
Test for Ambiguity, and result on the K |
There will be NO K if:
-Material term that is open to 2 or more interpretations -Each party attaches a diff. interpretation -Neither party has reason to know the term is open to two interpretations |
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[Formation - Defenses against formation: MISTAKE]
Define MUTUAL Mistake of Fact |
Mistake = NO speaker (whereas misrepresentation = words before K)
Test: -Both parties mistaken -Basic assumption of fact -MATERIALLY affects agreement, AND -Does not concern a risk that that one of the parties bears NOTE: this is usually a mistake about what a thing IS, rather than what a thing is WORTH |
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[Formation - Defenses against formation: MISTAKE]
When will a unilateral mistake work for voiding a K? |
-When the other party knew of the mistake and said nothing
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[Formation - Defenses against formation: LACK OF CONSIDERATION]
Consideration test? |
-Benefit and a detriment to both parties to the K
- Note: detriment can be in the form of forbearance (NOT doing something legally entitled to do) |
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[Formation - Defenses against formation: LACK OF CONSIDERATION]
!!!***In NY, when is past consideration an acceptable consideration substitute? |
Past consideration can be used if:
-New promise is in writing -The past consideration is explicitly stated -Past consideration can be proven -Writing is SIGNED by the promisor |
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[Formation - Defenses against formation: LACK OF CONSIDERATION - K modication]
What is the pre-existing duty rule for common-law Ks, and what are the 3 exceptions? |
- Rule: Not sufficient consideration to do what you're already required to do
EXCEPTIONS: - Slight addition/change in performance - Unforeseen difficulty - a DIFFERENT person pays you to do the same task required to do under a different K - ***IN NY***: signed writing |
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[Formation - Defenses against formation: LACK OF CONSIDERATION - K modification]
Pre-existing duty rule under Art. II |
-Trick question: No new consideration required to modify a sale of goods.
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[Formation - Defenses against formation: LACK OF CONSIDERATION - debts]
Rules for sufficient consideration for release of debt / K modification |
-If dept is DUE and UNDISPUTED in amount, there is NOT consideration.
BUT: -**IN NY**: promise to forgive in a signed writing is enough -if GOOD FAITH dispute in amount, there IS consideration |
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[Formation - Defenses against formation: LACK OF CONSIDERATION - debts]
Rule for collection of debt barred by statute of limitations. |
-Signed writing treated as a consideration substitute -- but the lower amount controls
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[Formation - Defenses against formation: LACK OF CONSIDERATION]
Promissory estoppel elements |
1 - Promise
2 - Reliance that is reasonably foreseeable 3 - Enforcement necessary to avoid injustice NOTE: only use when NO CONSIDERATION |
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[Formation - Defenses against formation: PUBLIC POLICY]
Test for when a court will invalidate/blue pencil a covenant not to compete |
-Must be reasoanble in:
--TIME, and --Geographic scope IN RELATION to the uniqueness of possession (won't restrict janitor almost ever) |
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[Formation - Defenses against formation: PUBLIC POLICY]
Test for when an exculpatory lcuase will be upheld in NY? |
-Exculpatory clauses, eliminating liability, will be UPHELD for mere negligence, but NOT gross negligence
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[Formation - Defenses against formation: PUBLIC POLICY]
Test for Unconscionability |
-Unfair surprise / one-sided
-Oppressive terms -Tested as of the time of the agreement NOTE: determined by the court - NOT a jury question |
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[Formation - Defenses against formation: PUBLIC POLICY]
Distinction of enforceable agreements concerning illegality |
-Illegal subject matter = void
-ONE PARTY'S illegal purpose, unknown to other party = valid K |
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[Formation - Defenses against formation: PUBLIC POLICY]
Exception to illegal subject matter rule |
-Exception: the illegality is merely the failure to obtain a license, and the license is for revenue-raising purposes only.
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[SOF]
When is the statute of frauds implicated? |
-When there is an ORAL agreement, and one party raises the defense that there never was an agreement.
-Basically, it means the K had to be in writing, else the other party has an defense and can avoid the K |
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[SOF]
SIX types of Ks that fall WITHIN the Statute of Frauds + 3 extra for NY |
***MY LEGS
M - Marriage Y - Year (>1 year) ('not capable' of being performed w/i 1 year) L - Land (note: leases of 1 year or less DO NOT need to be in writing) E - Executor promise to pay from own funds G - Goods > or EQUAL TO $500 S - Surety (promise to answer for debt for another) In NY: - Payment of discharged debt - Payment of a commission/finders fee - Art. 2A: LEASE of goods for $1000 or more over 1 year |
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[SOF]
What is the equal dignity doctrine? |
-If a K falls w/i one of the SOF categories, then a person executing the K on behalf of another MUST have WRITTEN authorization to sign the K
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[SOF]
When must a contract modification satisfy the S/F? |
-Only when the MODIFICATION is w/i the S/F (Ex: Original sale of goods = $400, and alleged modification to sell more-now totaling $800 = SOF IS now implicated)
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[SOF]
Effect of original written K term that does NOT allow oral K modifications |
-Common law: IGNORE requirement
-Art II: requirement is effective |
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[SOF - Land]
When does the SOF nevertheless NOT apply to a sale of land? |
-*DOCTRINE OF PART PERFORMANCE* -- if TWO out of the following THREE things are met, NO writing is necessary to overcome a SOF defense:
---SOME payment ---Improvement ---Possession |
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[SOF - 'not capable' of being performed w/i 1 year]
Is a lifetime K w/i the SOF? |
***For NY, a lifetime K does fall under the SOF< and therefore must be in writing (else the parties to the K have a SOF defense)
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[SOF - 'not capable' of being performed w/i 1 year]
What effect if K doesn't start until sometime in the future, and lasts exactly 1 year? |
-DOES implicate the SOF (does have to be in writing) b/c clock starts to run when agreement iS MADE, not when K takes effect
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[SOF - Surety]
What is the EXCEPTION to the writing requirement for a surety (answer for the debts of another)? |
-There is NO "main purpose" exception in NY!
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[SOF - Satisfaction of the SOF]
How to satisfy the SOF in a SERVICES (common law) K |
- ACTUAL FULL PERFORMANCE by EITHER party
OR - Writing w/: ---All material terms listed ---Signed by the person asserting the SOF defense (in order to defeat his S/F defense) |
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[SOF - Satisfaction of the SOF]
How to satisfy an Art 2A Lease of goods? |
Writng with:
-Stament that this is a lease -Quantity -Duration -Rental payments -Signed by the person asserting the defense |
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[SOF - Satisfaction of the SOF]
5 ways to satisfy the S/F in a sale of goods (Art. II) K. |
1 - Writing with:
---Quantity term ---Signed by the person asserting the defense 2 - Seller's part performance (satisfied to the extent of the part performance) 3 - Buyer's part performance/payment (satisfied for as many paid for) 4 - Seller's "SUBSTANTIAL BEGINNING" for specialty goods 5 - Merchant's confirmatory memo (see next question) |
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[SOF - Satisfaction of the SOF]
What is requires in an Art 2 K to satisfy the SOF in a Merchant's confirmatory memo? |
-Merchant can use a writing that is NOT signed by the person asserting the defense if:
--Both parties are marchants --Writing states a prior oral agreement w/ QUANTITY --Recipient does not object w/i 10 days |
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[Terms - Parol evidence rule]
What is parole evidence, and what does it implicate? |
-Implicates what was said BEFORE the K was reduced to writing (and can the court consider it)
-NOTE: Earlier WRITINGS can be parol evidence |
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[Terms - Parol evidence rule]
What is a merger clause? |
-K clause that states agreement is final
-NOTE: this is persuasive, but not conclusive |
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[Terms - Parol evidence rule]
What is integration |
-The written agreement that the court finds is the final agreement
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[Terms - Parol evidence rule]
Purposes for which you CAN introduce parol evidence |
- To show error in transcription
- To show a K defense (misrepresentation, fraud, duress, TO SHOW EXISTENCE OF A CONDITION PRECEDENT) - To EXPLAIN an abiguous term in the written K - To supplement a PARTIALLY-integrated writing (CANNOT be used to supplement a fully integrated K though) |
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[Terms - Parol evidence rule]
Purposes for which you CANNOT introduce parol evidence |
- To contradict written terms (except for errors in transcription)
- To show terms are consistent with prior agreements |
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[Terms - Order of enforcability]
What is the order in which courts will evaluate a K? |
1 - Actual performance
2 - Course of dealing (similar prior K w/ same ppl) 3 - Custom and usage (trade custom -- different but similar ppl) |
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[Terms - Art. 2 Warranties]
What is an express warranty? |
-Promise that describes or states facts -- NOT mere puffery ("top quality")
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[Terms - Art. 2 Warranties]
What is the implied warranty of merchantability and when does it attach? |
Defined: Goods fit for ORDINARY purpose for which such goods are used
Trigger: Seller is MERCHANT of that TYPE OF GOOD |
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[Terms - Art. 2 Warranties]
What is the implied warranty of fitness for purpose and when does it attach? |
Defined: Goods fit for buyey's PARTICULAR purpose
Triggers: -Buyer has a SPECIFIC PURPOSE; -Buyer's RELIANCE on seller to select suitable goods; AND -Seller KNOWS of buyer's reliance |
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[Terms - Art. 2A Warranties]
What ADDITIONAL warranty extists under UCC Art. 2A - Leases? |
-The "Finance lease warranty" applies a warranty of MERCHANTABILITY to leases of a good THROUGH AN INTERMEDIARY (ex: intermediary bank's lease)
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[Terms - Limitations of Art. 2 & 2A Warranties]
How a seller can disclaim implied warranties |
Disclaim either by:
-CONSPICUOUS language, OR -"As is" NOTE: Effective as to implied warranties of merchantability and fitness for purpose, but NOT for express warranties |
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[Terms - Limitations of Art. 2 & 2A Warranties]
Is a seller's statement of limitation of remedies effective? Exception? |
Yes, even for express warranties (unless unconscionable) ...
BUT - prima facie unconscionably is triggered if breach of warranty on CONSUMER GOODS causes PERSONAL INJURY |
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[Terms - Art. 2 Risk of Loss]
When does a risk of loss issue occur? |
When there is a destruction of goods in shipment w/o fault of the buyer or seller.
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[Terms - Art. 2 Risk of Loss]
order of analysis for 4 risk of loss rules |
1 - Agreement of parties controls
2 - Breaching party liable for ROL 3 - Shift ROL to buyer after seller completes delivery obligations (shipment/destination K) 4 - IF NO USE OF COMMON CARRIER AT ALL: 4a - If SELLER is merchant: shift risk of loss to buyer only after buyer's ACTUAL POSSESSION 4b - If SELLER is NOT a merchant: shift to buyer as soon as seller makes goods available (tender) -- does NOT have to be physical possession (ex: keys are in the car) |
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[Terms - Art. 2 Risk of Loss]
What is a shipment K? |
Seller obligations compled before ACTUAL delivery:
1 - S gets goods to common carrier 2 - S makes reasonable arrangements for delivery 3 - S notifies buyer of shipment |
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[Terms - Art. 2 Risk of Loss]
What is a destination K? |
Where Seller does not complete delivery obligation until goods arrive where buyer is
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[Terms - Shipment/Risk of Loss]
Interpret FOB (city) |
Where city = seller's city, then shipment K
Where city = buyer's city, then destination K |
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[Terms - Art. 2A Risk of Loss]
What is the general ROL rule for leased goods? Exception? |
-The LESSOR (ex: car dealer) bears the ROL even though goods possessed by lessee
-EXCEPTION: where there is a FINANCE LEASE (bank intermediary buyer), then the lessee (buyer) bears the ROL |
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[Performance - Art II]
What does less than perfect tender give rise to? |
-OPTION of buyer to REJECT the delivered goods
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[Performance - Art II]
If buyer receives non-conforming goods (goods not satisfying perfect tender), what may he do? |
REJECT and sue for damages
OR Retain the non-conforming goods and sue for damages [SENDING NON-CONFIRMING GOODS IS BOTH AN ACCEPTANCE AND A BREACH!] |
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[Performance - Art II]
2 situations where seller can cure when there has not been a perfect tender. |
-Can ALWAYS cure if he time for performance has not yet expired
OR -Seller's has tried to make a reasonable ACCOMMODATION and thought that the non-conforming goods would be acceptable |
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[Performance - Art II]
State the exception for perfect tender for installment Ks |
Buyer only has the right to reject an installment where, because of non-conformity with an installment, there was a SUBSTANTIAL IMPAIRMENT that CANNOT be cured
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[Performance - Art II]
What is the effect of acceptance of goods by the buyer |
Buyer CANNOT later reject goods that it accepts.
NOTE: buyer's payment WITH OPPORTUNITY TO INSPECT is an IMPLIED acceptance |
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[Performance - Art II]
Even if a buyer fails to REJECT the goods in timely manner, what other option does he have? |
Buyer MAY be able to REVOKE
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[Performance - Art II]
What is the test for REVOKING? |
- excusable ignorance OR reasonable reliance on seller's assurances;
- nonconformity SUBSTANTIALLY impair value of goods; AND - Revocation w/i reasonable time after discovery of nonconformity |
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[Performance - Art II]
If a buyer successfully revokes, what must he do with the goods he still has? |
Buyer must hold the goods and await instructions from the seller
IF seller doesn't make any instructions, then seller may: -Sell the goods for the benefit of the seller, AND -Withhold reasonable expenses AND a commission |
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[Performance - Art II]
What is the test for performance obligations under common law? |
Substantial performance / material breach = do not ave to complete your end of the K
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[Excuse for Nonperformance - Other party breached]
Test for excuse for non-performance at common law, and level of damages |
EXCUSED if: Other party fails to substantially perform/material breach
DAMANGES: Buyer may still have to pay for reasonable benefit in quasi-K NOTE: An otherwise breaching party is STILL entitled to full payment of the divisible K installments where there was a substantial performance of that division EVEN where there is a material breach of the whole K |
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[Excuse for Nonperformance - Other party breached]
Test for excuse for non-performance in a case of sale of goods, and level of damages |
EXCUSED if: Perfect tender rule (already covered) -- the seller's breach need not be material
DAMAGES: expectation (but the buyer is free to accept a partial tender) |
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[Excuse for Nonperformance - Anticipatory Repudiation]
What is anticipatory repudiation? |
Arises when a party makes an UNAMBIGUOUS statement or conduct indicating that:
-they will not perform, -PRIOR to time performance was due Result: Other party's duty to perform is EXCUSED, and may IMMEDIATELY sue for damages BUT NOTE: anticipatory reputation can be RETRACTED, if the other party hasn't made a material change in position. ... However, the party that did NOT repudiate can delay until there is adequate assurance |
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is rescission? |
When both parties agree to rescind/take-back the K
BUT, this requires that BOTH of the parties have not completed performance |
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is a modification? |
Substituted AGREEMENT, whereby the MERE MAKING of the new agreement excuses the old agreement
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is accord and satisfaction, GENERALLY? |
It's when there is a substituted PERFORMANCE
*HINT: on MBE, look for "Later, parties agree that IF X does something instead of original duty, THEN K will be satisfied." |
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is an accord? |
Accord is the terms of the substituted agreement with the new performance to be done
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is satisfaction? |
Satisfaction is when the accord (new performance) is performed, RESULTING IN EXCUSE of the original K
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[Excuse for Nonperformance - Replacement or cancellation of K]
What result if an accord is made, but not satisfied? |
The party that did perform may sue the non-performing party on EITHER the original K -OR- recover on the accord --- BUT NOT BOTH
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[Excuse for Nonperformance - Replacement or cancellation of K]
What is novation? |
Substituted PERSON
*NOTE: this requires that BOTH parties agree to the substitution!!!! [If done unilaterally - then it's merely a delegation and assignment] The result of a novation is to FULLY excuse the original contracting party in lieu of the new party |
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[Excuse for Nonperformance - Later Event]
What are the 2 terms for types of things that will excuse performance b/c of later unforeseen events? |
-Impossibility (common law)
-Impracticability (Art. 2) |
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[Excuse for Nonperformance - Later Event]
What are the THREE prerequisites to getting ANY of impossibility, impracticability |
1 - Something happens AFTER K, but before completion of K performance,
AND 2 - Unforeseen AND 3 - Without fault of either party |
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[Excuse for Nonperformance - Later Event]
Rule to remember re: risk of loss and impossibility/impracticability |
If risk of loss has already passed to buyer, and buyer only owes payment, THEN nonperformance (not paying) is NOT excused. (must still pay)
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[Excuse for Nonperformance - Later Event]
Is excuse for death considered impossibility? (and 1 exception) |
Death does NOT excuse (not impossibility b/c someone else can perform)
EXCEPT in Ks with person of special talents (specific actor, etc.) |
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[Excuse for Nonperformance - Later Event]
Result when later law makes performance of K illegal |
Excuse by IMPOSSIBILITY
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[Excuse for Nonperformance - Later Event]
What is frustration of purpose? |
When BOTH seller and buyer have mutual understanding of why K is made, a FRUSTRATION of the purpose EXCUSES THE BUYER
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[Excuse for Nonperformance - Conditions]
What level of satisfaction is needed to satisfy an express conditional? |
STRICT compliance (even if with matters of personal taste)
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[Excuse for Nonperformance - Conditions]
What are the 4 situations that will still require K to be fulfilled, even where the conditional was not satisfied? (Exceptions to the strict compliance with conditions rule) |
1 - Estoppel: Arises when detrimental reliance on other party not requiring condition be met BEFORE condition was to be satisfied
2 - Waiver: Arises when detrimental reliance on other party not requiring condition be met AFTER condition was to be satisfied 3 - Prevention: Party to be protected by the condition hinders or prevents the occurance of the condition 4 - Avoidance of forfeiture: Court usually will always try to avoid forfeiture |
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[Remedies - Nonmonetary]
When may a buyer get specific performance under the common law and under Art. 2? |
-Ks for the sale of land (EXCEPT if there is a later sale to a bona fide purchaser for value)
-Ks for sale of UNIQUE goods -NEVER specific performance for service K, BUT MAY get an injunction for breach of K not to compete IF limited in duration and geography |
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[Remedies - Nonmonetary]
What is reclamation and when may it be used? |
Definition: Right of an unpaid seller to get its goods back
Test: -Buyer insolvent at time it RECEIVED the goods, -Seller demands return of goods WITHIN 10 DAYS of buyer's receipt, AND -Buyer still has goods at time of demand |
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[Remedies - Nonmonetary]
What is entrustment, and what is its effect? |
Definition: Where owners LEAVES goods w/ a MERCHANT who sells goods of that kind and the seller wrongfully sells those goods to a bona fide third party
Effect: Person whose goods were sold may not later recover the goods from the bona fide purchaser |
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[Remedies - Monetary]
What is the overall policy reason for money damages in K cases? |
To compensate the P, not punish the D
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[Remedies - Monetary]
When will a K's liquidated damages clause be upheld? |
If:
-Damages difficult to estimate -K's liquidated damages clause is a reasonable forecast of the damages |
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[Remedies - Monetary]
What is the NORMAL measure of damages for a breach of K ? |
EXPECTATION + INCIDENTAL damages
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[Remedies - Monetary]
What are incidental damages? |
Costs incurred in finding replacement performance
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[Remedies - Monetary]
When faced with a K damanges question, what is the standard lines to state for money damages? |
Money damages should be awarded based on the premise to protect a party's EXPECTATIONS.
A party's expectation is that the other party will not breach. To calculate P's damages, you compare P's current position with the position P would have been in if the K had not been breached. |
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[Remedies - Monetary]
What is the measure of RELIANCE damages? |
Pay P by putting P in the same position AS IF K never occurred
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[Remedies - Monetary]
What is the measure of RESTITUTION damages, and when is it used? |
Awarded in Quasi-K cases
Pay P by putting DEFENDANT is same economic position, by requiring D pay P for his UNJUST ENRICHMENT. |
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[Remedies - Monetary]
What is the term for damages that the non-breaching party must AVOID? And where does the burden lie? |
Burden on D to show failure to MITIGATE or COVER
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[Remedies - Monetary]
What is the measure of damages in a sale of goods case where the BUYER breaches and the SELLER still has the goods AND the seller is successful in re-selling? |
-If successful in re-selling good to another party: K price - cover price when resold
-BUT, if lost volume seller, where good is of the types that seller keeps in his REGULAR INVENTORY, then gets lost profits |
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[Remedies - Monetary]
What is the measure of damages in a sale of goods case where the BUYER breaches and the SELLER still has the goods AND the seller is NOT successful in re-selling? |
-If NOT successful in re-selling good to another party: K price - market price at time and place of delivery
-[BUT, may sometimes also get provable lost PROFITS, even if seller never had to perform] |
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[Remedies - Monetary]
Test for Consequential damages, what what type of K this is available under |
Special damages that result from the other party's breach, for which the other party HAD REASON TO KNOW OF THE special circumstances AT THE TIME OF THE K
*ONLY available for common-law Ks |
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[Third-party Problems - 3rd Party Beneficiary]
What is a 3rd party beneficiary K? |
When 2 people K to benefit a 3rd person and the third person is MENTIONED IN THE K
(Ex: Life insurance) |
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[Third-party Problems - 3rd Party Beneficiary]
In 3rd party beneficiary cases, who is the promisor and who is the promisee? |
Promisor: Person who is making the promise that BENEFITS the 3rd party. (the guy buying life insurance)
Promisee: Person who is to perform for the 3rd party beneficiary (Ex: the insurance company) |
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[Third-party Problems - 3rd Party Beneficiary]
When have 3rd party beneficiary's rights vested (preventing the promisor and promisee from rescinding or modifying the K)? |
Vesting occurs when EITHER:
-Beneficiary assent in a manner provided in K, OR -Beneficiary brings suit to enforce promise, OR -Beneficiary has detrimental reliance on K |
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[Third-party Problems - 3rd Party Beneficiary]
Who can sue who? |
-3rd party bene. can sue promisee (insurance company)
-Promisor (guy who bough life insurance) can sue promisee BUT ... -3rd party bene CANNOT sue promisor - guy who bought the insurance (except to the extent that promisee obtained the K to substitute for a pre-existing debt, then 3rd party can sue promisee for the pre-existing debt) |
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[Third-party Problems - Delegation]
What is a delegation? |
Occurs when party to K transfers DUTIES under the K to a third party
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[Third-party Problems - Delegation]
Limitations on what can be delegated |
Delegations permitted unless either:
1- K explicitly prohibits delegations OR ASSIGNMENTS, 2- K calls for SPECIAL SKILLS, OR 3- Person to perform K has SPECIAL REPUTATION |
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[Third-party Problems - Delegation]
Who is liable if delegatee fails to perform? (2 rules) |
- Delegating party ALWAYS REMAINS secondarily liable
- Delegatee is liable ONLY IF he received consideration from delegator |
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[Third-party Problems - Assignment]
What is an assignment? |
An assignment is when, AFTER a preexisting K, a party transfers his/her RIGHTS under the K
(Ex: right to $) |
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[Third-party Problems - Assignment]
Example and effect of assignment PROHIBITION in a K |
Example: "rights are not assignable"
Effect: Assignee who does not know of the prohibition can STILL ENFORCE the assignment |
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[Third-party Problems - Assignment]
Example and effect of assignment INVALIDATION in a K |
Example: "all assignments under this K are VOID"
Effect: Even if assignee does not know of the clause, CANNOT enforce the assignment |
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[Third-party Problems - Assignment]
Common law bars to assignment |
Substantial change of the duties of the obligor will bar assignment
Ex: Now Batman has to patol a city twice as big NOTE: Change of right of WHO is paid is NEVER a substantial change |
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[Third-party Problems - Assignment]
What consideration requirements are there for assignment? |
Generally, there are NONE
BUT .. a gratuitous assignment CAN BE REVOKED |
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[Third-party Problems - Assignment]
Can a gratuitous assignment be revoked? |
Generally yes,
EXCEPT IN NY, a gratuitous assignment is IRREVOCABLE IF IN WRITING + SIGNED by the assignor |
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[Third-party Problems - Assignment]
What happens when a party (assignor) assigns his/her right to all benefits to an assignee? |
ONLY the assignee can now sue the obligor.
The Assignment has PERMANENTLY relinquished his rights to the benefit -- so he can't sue for them. Not a real party in interest) |
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[Third-party Problems - Assignment]
What are the Obligor's defenses to an assignee? |
Obligor can assert ANY defense he may have against the assignor
(Ex: assignor didn't complete the job, so you don't get paid) |
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[Third-party Problems - Assignment]
Does the obligor breach when it continues to pay the assignor instead of the assignee |
NO, if the obligor doesn't know of the assignor
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[Third-party Problems - Assignment]
Who wins when there are multiple GRATUITOUS assignments? |
The LAST in time
(Reason: treat earlier ones as revoked) |
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[Third-party Problems - Assignment]
Who wins when there are multiple assignments for consideration? and 1 exception. |
FIRST assignee in time who pays
EXCEPTION: -2nd-in-time assignee for consideration STILL prevails IF: ---Doesn't know of earlier assignment, AND EITHER: ------First to get payment from obligor, OR ------First to get judgment against obligor |