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92 Cards in this Set
- Front
- Back
What law governs?
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a)Common law governs transactions that involve services, real estate or sale of intangible property
b)UCC applies to transactions involving goods that are moveable and tangible |
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Offer
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An offer is a commitment, communicated, to an identified offeree containing definite terms.
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Merchants
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Merchants are persons who regularly deal in goods of a particular kind or purport to have a special knowledge or skill
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Three elements of an offer
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Commitment
Communication Definite Terms |
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Commitment
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(1) Commitment: Under the objective theory of contracts, would a reasonable person believe the offeror intends on entering a contract
(a) Commitment is also evaluated by considering the following factors: (i) prior course of dealings (ii) custom of the industry (iii) any other circumstances (iv) speaker’s actual words. |
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Communication
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(2) Communication:
(a) To an identified offeree (b) Oferree cannot accept until learning about it (c) Offeree is the only party that can accept |
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Definite Terms
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ii) Definite Terms:
(1) UCC (a) Must state quantity (b) Court will impose a reasonable quantity in a dispute, but cannot be disproportionate to prior course of dealing between the parties (2) Common Law (a) Minority Opinion: Offer must state all material terms with certainty to be valid (b) Majority: Offeror must address the subject matter with certainty to be valid |
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Irrevocable offers
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Irrevocable offers
1) Merchant Firm offer: Provides that an offer made in writing between two merchants will be held irrevocable for time stated (if no time stated no longer than three months). (2) Option contract: Where an offeree pays to keep an offer open for agreed upon time (3) Unilateral contract: Temporary irrevocability due to part performance (4) Promissory Estoppel: requires a promise that results in detrimental reliance and injustice that only can be avoided by enforcing the promise. |
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ALL OTHER OFFERS MAY BE FREELY TERMINATED, PRIOR TO ACCEPTANCE, SOME WAYS TO TERMINATE AN OFFER, INCLUDE:
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ALL OTHER OFFERS MAY BE FREELY TERMINATED, PRIOR TO ACCEPTANCE, SOME WAYS TO TERMINATE AN OFFER, INCLUDE:
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Three ways to terminate an offer
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a) Revocation
b) Rejection c) Operation of Law -Death or incapacity -Supervening illegality -Destruction of subject matter |
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IF THE OFFER HAS NOT BEEN TERMINATED THE POWER OF ACCEPTANCE HAS BEEN CREATED IN THE OFFEREE
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IF THE OFFER HAS NOT BEEN TERMINATED THE POWER OF ACCEPTANCE HAS BEEN CREATED IN THE OFFEREE
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Acceptance
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Offeree’s manifestation of assent to the terms of the offer
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Method of acceptance for unilateral or bilateral contracts
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(1) Unilateral contract acceptance: can only be accomplished by full performance of the act requested
(2) Bilateral contract acceptance: can be accomplished by return promise> using correct method that is as speedy or faster as offer or legally dependable (1) Evaluated by the objective theory of contracts, would a reasonable person believe the offeree wants to enter into a contract and: (a) Prior course of dealings of the parties (b) Custom of the industry (c) Any other circumstance (d) Offeree’s statement |
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Acceptance by conduct
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Acceptance by conduct
(1) If conduct is specified in offer, must be performed (2) Offer cannot impose silence as a method of acceptance, however offeree can suggest silence. |
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Acceptance under UCC
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(1) Performance: If performance will take time then notice is required
Unless: non-conforming goods not acceptance if seller sends as an accomadation (2) Promise |
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UCC 2-207: Where the words of acceptance contain a NEW OR ADDITIONAL TERMS
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(1) One party is a merchant; then additional items are a mere proposal
(2) Both parties are merchants, new terms automatically become part of the contract unless: (a) Exceptions (i) Offer was iron clad (ii) Offeror rejects the new term (iii) New/additional terms are a material alteration to the contract |
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UCC 2-207: Where the words of acceptance contain a DIFFERENT TERMS
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(1) Some courts treat different terms same as new and additional terms
(2) Knock-out Rule: Conflicting terms in offer/acceptance are “knocked-out” under assumption that both parties would object. Court would impose a reasonable term to replace “knocked-out” term: gap fillers. |
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Mail box rule
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Effective on delivery if properly delivered with prepaid postage and address, unless:
(1) Offer requires reciept of acceptance (2) Receipt before end of option K (3) Accept then reject - mailbox applies unless rejection received first and acts on it. (4) Reject then accept-no mailbox & 1st there prevails |
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Acceptance rule
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(i) Acceptance rule: Acceptance is valid unless offeror receives rejection first and acts on notification and changes position in reliance.
1. Race – Rejection then acceptance whichever is received first. |
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Consideration
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(1) Promise must induce current performance in exchange (bargained for exchange)
(2) Detriment from promisor (3) Promise binding not illusory (mutuality of the promise) |
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Pre-existing duty rule
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Pre-existing duty rule: where there is a pre-existing duty, promise is not enforceable because, no new detriment, unless
(1) Accord in satisfaction: When a dispute between parties results in resolution containing a secondary promise. (2) Unforseen difficulties that are severe enough to discharge contract duties, new promise is enforceable. induced current bargained for exchange |
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Consideration substitute
Promissory Estoppel |
(1) Promissory Estoppel: a gratuitious promise that invites detrimental reliance is binding to prevent injustice.
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UCC consideration
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(1) Consideration substitutes
(a) Merchant firm offer: signed offer made irrevocable for time stated but not longer than three months (b) Modification under code contract effective as long as made in good faith |
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Defenses
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Make the K unenforceable
SUMFIG Statute of Frauds Unconscionability Mistake Incapacity Garbage: Infancy, mentally incompetent, intoxicated, illegality Fraud |
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Formation defects
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i) Invalid offer
ii) Invalid acceptance iii) No consideration |
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Statute of Frauds
Definition Ways to satisfy |
Def.
(1) Under SOF, certain contracts must be evidenced by writing to be enforceable K is unenforcable not void Ways to satisfy (1) Produce a writing that ID's parties subject matter, consideration, and signed by party to be charged. (2) Part/Full performance |
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Contract covered by SOF
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G SMILEY:
Goods, Surety, Marriage, Intangible, Land, Executorships, Year |
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SOF: Surety/Guarantor
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(1) Guarantor or Surety: contract to answer for the debt of another
(a) Collateral Promise: (example)adult to guarantee on behalf of a minor (b) Promise must not be for the main purpose of benefiting the offeror; If the promise is for the main purpose of benefiting the offeror does not have to be in writing. |
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SOF: Real estate contracts
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(2) Real Estate contracts
(a) Applies to: (i) Sale (ii) Mortgages (iii) Easements (iv) Leases for more than one year |
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Merchants
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Merchants are persons that regularly deal in goods of a particular kind or purport to have special knowledge or skill
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SOF: Real estate contracts
Part performance |
Part performance: party seeking performance of the agreement must show has possession of real estate, in addition to either making improvements of the property and/or making payment for all or part of purchase price.
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SOF: Real estate contracts
Agent Equal Dignity |
(c) Agent Equal Dignity Rule: agent’s authority to enter into real estate contracts on behalf of principle must be in writing in order for contract between principle/buyer to be enforced.
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SOF: Marriage
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(3) Marriage: any contract, that marriage is the reason for the agreement.
(a) Applies to: (i) Pre-nuptial (ii) Separation (iii) Divorce decrees |
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SOF: Contracts that cannot be performed in one year
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(4) Contracts that cannot be performed in one year
(a) Measured from date agreement is formed (not date agreement states scheduled to begin) (i) Less than one year not protected by SOF |
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SOF: Sale of goods for $500 or more
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Sale of goods $500 or more in writing and also:
(1) Commence manufacture of specially man. goods. (2) Merchant confirming memo and no objection within 10 days (3) Admit to K existence in judicial context |
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SOF: Intangible personal property for $5000 or more
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(6) Intangible personal property for $5000 or more
(a) Example stocks and bonds (7) Executor or administrator of decedents estate promising to personally pay debts out of personal funds |
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THEREFORE, THIS CONTRACT DOES NOT FALL WITHIN THE SOF AND THE ORAL CONTRACT IS ENFORCEABLE UNLESS OTHER DEFENSES EXIST
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THEREFORE, THIS CONTRACT DOES NOT FALL WITHIN THE SOF AND THE ORAL CONTRACT IS ENFORCEABLE UNLESS OTHER DEFENSES EXIST
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Fraud
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Fraud: in the execution (don't know K) totally VOID; in the
inducement (deceived as to s/matter) VOIDABLE by defrauded party - can enforce it wants |
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Unconscionability
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Unconscionability: At formation terms unfair/oppressive to 1
party (Ct decides) Blue Pencil Rule: can do anything to make fair, sever or rewrite clause or void entire K |
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Incapacity
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Incapacity (lack of K'l capacity)
a. VOIDABLE by 1 lacking cap. & can expressly or impliedly affirm if capacity ceases but always obligated for necessaries (based on living standard) b. Infants under 18; adjudicated mental incompetent totally VOID; unadjudicated can affirm if lucid; intoxicated MAJ require other to know to make K VOIDABLE |
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Mentally incompetent parties
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ii) Mentally incompetent parties
(1) Where party has become adjudicated, agreement entered into are void (2) Party that is not adjudicated, contracts are voidable |
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Duress
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Duress: personal duress VOIDABLE; economic duress no defense
unless party caused himself |
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Intoxicated parties
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Intoxicated parties
(1) Render contract voidable only when non-intoxicated party knew or should have known parties state of mind |
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Mutual mistake
Unilateral mistake |
Mutual Mistake: VOID K - no meeting of minds (usually s/matter
or quality of s/matter doesn't exist) b. Unilateral Mistake: 1 party mistaken as to MATERIAL fact of K; no defense for uni mistake unless other knew/should have -> Can be unilateral mistake as to perf. (air condtnr), value or person w/ whom you're dealing |
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ASSUMING NONE OF THE ABOVE DEFENSES APPLY THEN THERE IS AN ENFORCEABLE AGREEMENT
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ASSUMING NONE OF THE ABOVE DEFENSES APPLY THEN THERE IS AN ENFORCEABLE AGREEMENT
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Conditions
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All contracts contain conditions; conditions must be excused or satisfied before obligations mature into K duties.
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Condition precedent
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Event expressed in the K that must occur before a duty matures
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Ambiguity in K term:
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Ambiguity in K Term: material term susceptible of more than 1
meaning (fruit); No K unless both intend same meaning or only 1 knows there's ambiguity (enforced non-knowing 1's way) |
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Condition concurrent
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Event expressed in K that must occur at the same time, the duty is performed
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Condition subsequent
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After duty has arisen, obligation no longer becomes binding. (example)insurance agreement.
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Express
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statement specifically expressed in the K
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Implied/Constructive Condition
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Condition not expressed in agreement, interpreted in the agreement
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Three rules implied/constructive condition
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One parties performance takes longer that the other, the longer is implied or constructive to the shorter
If one parties performance proceeds the others, 1st is considered a constructive condition to the 2nd. Simultaneous performances, both constructive conditions to each other |
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Excuse of conditions
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FAVE W
Failure to cooperate: when party fails to cooperate or prevents condition to occur, without condition that party's duty to perform is mature. Anticipatory Repudiation: an uniquivocal intention not to perform agreement. Voluntary Disablement: repudiation by conduct one party puts themselves in a position that they cannot perform. Estoppel: Prior to condition was supposed to occur, party communicates that will perform irregardless. Waiver: After condition was supposed to occur, party states will perform anyway |
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Anticipatory Repudiation, acceleration of breach
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If repudiation occurs before the other party has performed, suit can occur immediately, breach acclerated
If repudiation occurs after the other party has performed, party must wait agreed amount of time to sue Repudiation can be retracted, unless aggrieved party has cancelled and changed position in reliance |
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Demand for adequate assurance of performance
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Failure to provide requested assurance is considered a repudiation excusing conditions and accelerating a breach
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Three ways to satisfy unexcused condition
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Complete satisfaction: Must happen perfectly for all expressed conditions or single delivery of goods under UCC
Substantial satisfaction: for all constructive conditions, the aggrieved can deduct costs of completion Doctrine of divisibility: Divisible K is one parties have divided performance into separate units; substantially complete each 1 gets paid |
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CONDITIONS HAVE BEEN EXCUSED OR SATISFIED BEFORE DUTY OF PERFORMANCE MATURES
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CONDITIONS HAVE BEEN EXCUSED OR SATISFIED BEFORE DUTY OF PERFORMANCE MATURES
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Duty
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A party must discharge the duty or perform the duty or they will be in breach. Performance can be complete, substantial or occur through the doctrine of divisibility
Performing Absolute Duty (not discharged) (WAYS SAME AS SATISFYING UNEXCUSED CONDITION) 1. Completely required for: a. All express terms (room size exactly) and b. Implied terms for single delivery of goods under Code -> BUT: S can cure up to perf. time or have addt'l time if thought tender going to be acceptable (b/c w/in industry norm) 2. Substantial Perf.: all non-expressed or non-single delivery K terms 3. Doctrine of Divisibility: substant'lly completing each unit K. Remedies for Breach 1. Non-Code a. Basic Remedy: put non-breaching party in as good a position as perf. of duty would have & ADD (1) Consequential damages reas. foreseeable when K'd (Hadley v. Baxendale) (lost rentals); and (2) Incidental Damages to find substitute LESS -> damages owner could mitigate if acted difft/sooner |
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Eight ways
Discharge of Duty |
FAN FIMMI
Frustration of purpose Accord & Satisfaction Novation Failure to excuse Impractacability Mutual recission Modification Impossibility |
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Frustration of purpose:
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Frustration of purpose: an unforseen event at the time of formation frustrates the principle purpose for entering into a K.
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Accord & Satisfaction
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Parties to a K resolve a dispute by a compromise with additional consideration; accord is the agreement and the satisfaction is the performance.
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Novation
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When all parties to a K decide to create a new K, by substituting a new party for an orginal party.
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Failure to excuse
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Failure to excuse a condition subsequent: insurance policy required timely report following incident.
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Impractacability
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Unforseen event so severe and unassumed, unfair to require performance as written.
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Modification
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Change ore eliminate duties under original agreement
Common Law:consideration needed UCC: No consideration needed if involves the sale of goods, as long as modification is made in good faith, however SOF remains an issue. |
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Mutual recission
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Parties eliminate or cancel a K, requires offer, acceptance and consideration
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Impossibility
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An event that is unforseen by both parties at the time of formation renders performance of K duty objectively not possible.
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Remedies for breach
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Goal is to put non-breaching party in as good a position as performance of duty would have had
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Non-Code remedy formula
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Expectancy damages: benefit of bargain
Incidental: to find substitute Consequential D's: forseeable at formation Less Damages that were avoidable |
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Liquidated damages
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Specific amount of money recovery provided in K
(1) Difficult to ascertain amount (2) The amount stipulated must be reasonable (not a penalty) |
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Quasi contract remedy
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No K exists, but:
(1) Reliance damages for party that has incurred a cost b/c of another (2) Party is entitled to conferred benefit |
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Specific performance
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Court order that compels breaching party to perform
(1) Plantiff must establish legal remedy is inadequate (2) Court order must be feasible/no court supervision (3) Mutuality of remedy: D and P must be able to obtain specific perf. - NO personal service, however negative injunction prevents party from working in a spec. region/reas. time |
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Equitable relief
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Plantiff wants court to complel D to do or refrain from something.
(1) Recission: terminate rights/liabilities - When fraud K is voidable/void (2) Restitution: return parties to the status quo to disgorge enrichment |
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Defenses to equitable action
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Doctrine of laches: P has delayed for an unreasonable time that has casued prejudice to the defendent.
Unclean hands: P acts wrongly in a manner that relates to subject manner |
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Code remedies for sellers (B breaches)
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During manufacturer: Seller can do anything reasonable
During transit of goods: Seller can stop goods and recover the goods If sent to an insolvent buyer: reclaim goods within 10 days Resale of goods with notice to buyer unless perishable; gets difference in K price and resale price Market price damages: Difference K price and market price at tender Lost volume seller can seek lost profit Action for the price> where goods are unique seller can require buyer purchase goods adn pay the price. |
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Code remedies for buyer (S breaches)
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Returning of goods:
(1) rejection of any non-conforming (2) revocation of acceptance if discover defective goods after acceptance After goods have been returned: (1) Cover: purchase reasonable substitute w/o reasonable delay Difference: Cost of cover - K price (2) Difference in market price at breach less contract price (3) Specific performance: when goods are unique (4) Breach of warranty |
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Breach of warranty
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Express warranty: from description of goods, seller makes a promise, that is a affirmation of fact
Implied W's: Implied warranty of title: S owns has right to transfer title Implied warrantly of merchantability: goods fit and safe for ordinary purposes - made by S that deals in goods of a particular kind Implied warranty of fitness for a particular purpose: S knows B relying on skill to select/deliver goods for particular purpose. |
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IF EXPRESS/IMPLIED WARRANTIES ARE BREACHED BUYER CAN RECOVER DIFFERENCE IN VALUE AS WARRANTED
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IF EXPRESS/IMPLIED WARRANTIES ARE BREACHED BUYER CAN RECOVER DIFFERENCE IN VALUE AS WARRANTED
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2 types of
Third party beneficiary |
Incidental: no K rights just benefit
Intended gets rights, intended b/c identified in K, promisor must intend to give TPB the benefit of the promise performance |
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2 types of intended TPBs
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Donee: recieves promisor's performance as a gift
Creditor: when promisee owed debt and using promisor's performance to satisfy |
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TPB right's vest
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TPB can enforce the promisor's promise, when learns of promise and assents (words and conduct)A
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Name the 3 parties in an
assignment of K rights to 3rd party |
Assignor
Obligor Assignee |
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Is K assignable?
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Not if:
(1) K prohibits: assignor has a validly assigned right, but may be responsible for damages (2) Legal restriction (3) Personal services K not assignable if assignment substantially change obligor's performance. (4) Substantial change in obligor's performance as in a reqmts. K |
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Proper methods of assignment
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(1) Description of existing right
(2) Must be words of present transfer (3) Obligor must recieve notice of assignment |
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What happens if there a multiple assignees?
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If any gratitious assignment automatically revoked, unless
(1) a writing is delivered (2) Token Chose: Demonstrate right has been assigned (3) Estopple: detrimental reliance Otherwise 1st w/valid unrevoked assignment unless subsequent w/o knowledge of others gets (a) paid (b) judgement (c) token chose from obligor (d) Novation w/obligor |
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Delegation of duties
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Most duties are delegable, except:
(1) K prohibits (2) Prohibited by law (3) Personal services (4) Substantially changes character of perf. (output Ks or time/place change) |
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3 parties in a delegation of duty
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Delegator (of duty)
Delegate (does duty) Obligee (gets performance) |
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After valid delegation:
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The delegator remains surety for performance
The obligee must accept performance from the delegate |
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What does the obligee become after delegation?
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Third-party creditor beneficiary
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Parol Evidence
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If final written agreement, no prior oral or written negotiations or contemporaneous oral negotiations may be introduced to vary or contradict the writing.
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Is the K a complete integration or partial integration?
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Is decided by a reasonable person standard similarly situated have included prior or contemporaneous negotiations in the document
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