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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
[Applicable Law]

UCC Art. II applies to what?
-Movable, sellable good (NOT services)
[Applicable Law]

Is real estate covered by common law or Art. II?
-Common law
[Applicable Law]

What does Article 2A of the UCC cover?
-Lease of goods (rental car)
[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.
[Formation]

Definition of a contract
-Legally enforceable agreement
[Formation]

What creates an IMPLIED K?
-Party's CONDUCT indicates intent to be bound
[Formation]

What creates a QUASI-K?
-Party is unjustly enriched (only get reasonable value of things conferred)
[Formation]

Definition of a unilateral K
-Promise for performance
[Formation]

List the only 2 ways a K is unilateral
- Reward/prize/contest
OR
- Offer EXPRESSLY REQUIRES performance for acceptance
[Formation - Offers]

Definition of offer
Objective manifestation of intention to contract

NOTE: ads are NOT offers UNLESS there is a quantity term
[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)
[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)
[Formation - Termination of offer: Death]

Exception to termination of K by death
- Option K
[Formation - Termination of offer: REVOCATION]

2 ways offerOR can REVOKE offer
- Express, unambig. statement
OR
- Unambig. conduct to which the offerEE ***IS AWARE***
[Formation - Termination of offer: REVOCATION]

When does revocation of an offer sent via mail become effective?
-when RECEIVED (when offerEE knows of revocation)
[Formation - Termination of offer: REVOCATION]

3 situations when an offerOR CANNOT revoke in NY
- Option K
- FORESEEABLE Detrimental reliance
- UCC Firm Offer
[Formation - Termination of offer: REVOCATION]

Elements of an option K
-Promise not to revoke
-Supported by consideration
[Formation - Termination of offer: REVOCATION]

What ALSO counts as an option K in NY?
-Signed written promise not to revoke, EVEN IF NO $$$ PAID
[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
[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
[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.)
[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)
[Formation - Termination of offer: REJECTION]

"Twist" to the Counteroffer termination of offer rule
-Mere "bargaining" does not terminate
NOTE: look for a question
[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
[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
[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
[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
[Formation - Acceptance]

Define Acceptance
Objective manifestation of intent to be bound

**NOTE: MAY be shown by conduct
[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
[Formation - Acceptance]

When can you assign an offer?
Generally, NEVER -- except you can assign an OPTION
[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
[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
[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
[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
[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)
[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)
[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)
[Formation - Defenses against formation: DURESS]

Define duress
-"Bad Guy" = improper threat made to K

-"Vulnerable guy" = no reasonable alternative
[Formation - Defenses against formation: FRAUD/MISREPRESENTATION/NON-DISCLOSURE]

Elements of common law fraud
-KNOWINGLY
-false statement
-material fact
-Induces K
[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
[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)
[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
[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
[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
[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)
[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
[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
[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.
[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
[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
[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
[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)
[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
[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
[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
[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.
[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
[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
[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
[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)
[SOF]

Effect of original written K term that does NOT allow oral K modifications
-Common law: IGNORE requirement
-Art II: requirement is effective
[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
[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)
[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
[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!
[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)
[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
[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)
[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
[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
[Terms - Parol evidence rule]

What is a merger clause?
-K clause that states agreement is final

-NOTE: this is persuasive, but not conclusive
[Terms - Parol evidence rule]

What is integration
-The written agreement that the court finds is the final agreement
[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)
[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
[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)
[Terms - Art. 2 Warranties]

What is an express warranty?
-Promise that describes or states facts -- NOT mere puffery ("top quality")
[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
[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
[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)
[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
[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
[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.
[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)
[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
[Terms - Art. 2 Risk of Loss]

What is a destination K?
Where Seller does not complete delivery obligation until goods arrive where buyer is
[Terms - Shipment/Risk of Loss]

Interpret FOB (city)
Where city = seller's city, then shipment K

Where city = buyer's city, then destination K
[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
[Performance - Art II]

What does less than perfect tender give rise to?
-OPTION of buyer to REJECT the delivered goods
[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!]
[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
[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
[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
[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
[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
[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
[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
[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
[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)
[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
[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
[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
[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."
[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
[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
[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
[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
[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)
[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
[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)
[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.)
[Excuse for Nonperformance - Later Event]

Result when later law makes performance of K illegal
Excuse by IMPOSSIBILITY
[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
[Excuse for Nonperformance - Conditions]

What level of satisfaction is needed to satisfy an express conditional?
STRICT compliance (even if with matters of personal taste)
[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
[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
[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
[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
[Remedies - Monetary]

What is the overall policy reason for money damages in K cases?
To compensate the P, not punish the D
[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
[Remedies - Monetary]

What is the NORMAL measure of damages for a breach of K ?
EXPECTATION + INCIDENTAL damages
[Remedies - Monetary]

What are incidental damages?
Costs incurred in finding replacement performance
[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.
[Remedies - Monetary]

What is the measure of RELIANCE damages?
Pay P by putting P in the same position AS IF K never occurred
[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.
[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
[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
[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]
[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
[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)
[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)
[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
[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)
[Third-party Problems - Delegation]

What is a delegation?
Occurs when party to K transfers DUTIES under the K to a third party
[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
[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
[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 $)
[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
[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
[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
[Third-party Problems - Assignment]

What consideration requirements are there for assignment?
Generally, there are NONE

BUT .. a gratuitous assignment CAN BE REVOKED
[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
[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)
[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)
[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
[Third-party Problems - Assignment]

Who wins when there are multiple GRATUITOUS assignments?
The LAST in time

(Reason: treat earlier ones as revoked)
[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