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92 Cards in this Set

  • Front
  • Back
What law governs?
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
Offer
An offer is a commitment, communicated, to an identified offeree containing definite terms.
Merchants
Merchants are persons who regularly deal in goods of a particular kind or purport to have a special knowledge or skill
Three elements of an offer
Commitment
Communication
Definite Terms
Commitment
(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.
Communication
(2) Communication:

(a) To an identified offeree

(b) Oferree cannot accept until learning about it

(c) Offeree is the only party that can accept
Definite Terms
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
Irrevocable offers
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.
ALL OTHER OFFERS MAY BE FREELY TERMINATED, PRIOR TO ACCEPTANCE, SOME WAYS TO TERMINATE AN OFFER, INCLUDE:
ALL OTHER OFFERS MAY BE FREELY TERMINATED, PRIOR TO ACCEPTANCE, SOME WAYS TO TERMINATE AN OFFER, INCLUDE:
Three ways to terminate an offer
a) Revocation
b) Rejection
c) Operation of Law
-Death or incapacity
-Supervening illegality
-Destruction of subject matter
IF THE OFFER HAS NOT BEEN TERMINATED THE POWER OF ACCEPTANCE HAS BEEN CREATED IN THE OFFEREE
IF THE OFFER HAS NOT BEEN TERMINATED THE POWER OF ACCEPTANCE HAS BEEN CREATED IN THE OFFEREE
Acceptance
Offeree’s manifestation of assent to the terms of the offer
Method of acceptance for unilateral or bilateral contracts
(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
Acceptance by conduct
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.
Acceptance under UCC
(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
UCC 2-207: Where the words of acceptance contain a NEW OR ADDITIONAL TERMS
(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
UCC 2-207: Where the words of acceptance contain a DIFFERENT TERMS
(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.
Mail box rule
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
Acceptance rule
(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.
Consideration
(1) Promise must induce current performance in exchange (bargained for exchange)

(2) Detriment from promisor

(3) Promise binding not illusory (mutuality of the promise)
Pre-existing duty rule
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
Consideration substitute

Promissory Estoppel
(1) Promissory Estoppel: a gratuitious promise that invites detrimental reliance is binding to prevent injustice.
UCC consideration
(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
Defenses
Make the K unenforceable

SUMFIG

Statute of Frauds
Unconscionability
Mistake
Incapacity
Garbage: Infancy, mentally incompetent, intoxicated, illegality
Fraud
Formation defects
i) Invalid offer

ii) Invalid acceptance

iii) No consideration
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
Contract covered by SOF
G SMILEY:

Goods, Surety, Marriage, Intangible, Land, Executorships, Year
SOF: Surety/Guarantor
(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.
SOF: Real estate contracts
(2) Real Estate contracts

(a) Applies to:

(i) Sale
(ii) Mortgages
(iii) Easements
(iv) Leases for more than one year
Merchants
Merchants are persons that regularly deal in goods of a particular kind or purport to have special knowledge or skill
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.
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.
SOF: Marriage
(3) Marriage: any contract, that marriage is the reason for the agreement.

(a) Applies to:
(i) Pre-nuptial
(ii) Separation
(iii) Divorce decrees
SOF: Contracts that cannot be performed in one year
(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
SOF: Sale of goods for $500 or more
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
SOF: Intangible personal property for $5000 or more
(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
THEREFORE, THIS CONTRACT DOES NOT FALL WITHIN THE SOF AND THE ORAL CONTRACT IS ENFORCEABLE UNLESS OTHER DEFENSES EXIST
THEREFORE, THIS CONTRACT DOES NOT FALL WITHIN THE SOF AND THE ORAL CONTRACT IS ENFORCEABLE UNLESS OTHER DEFENSES EXIST
Fraud
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
Unconscionability
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
Incapacity
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
Mentally incompetent parties
ii) Mentally incompetent parties

(1) Where party has become adjudicated, agreement entered into are void

(2) Party that is not adjudicated, contracts are voidable
Duress
Duress: personal duress VOIDABLE; economic duress no defense
unless party caused himself
Intoxicated parties
Intoxicated parties

(1) Render contract voidable only when non-intoxicated party knew or should have known parties state of mind
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
ASSUMING NONE OF THE ABOVE DEFENSES APPLY THEN THERE IS AN ENFORCEABLE AGREEMENT
ASSUMING NONE OF THE ABOVE DEFENSES APPLY THEN THERE IS AN ENFORCEABLE AGREEMENT
Conditions
All contracts contain conditions; conditions must be excused or satisfied before obligations mature into K duties.
Condition precedent
Event expressed in the K that must occur before a duty matures
Ambiguity in K term:
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)
Condition concurrent
Event expressed in K that must occur at the same time, the duty is performed
Condition subsequent
After duty has arisen, obligation no longer becomes binding. (example)insurance agreement.
Express
statement specifically expressed in the K
Implied/Constructive Condition
Condition not expressed in agreement, interpreted in the agreement
Three rules implied/constructive condition
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
Excuse of conditions
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
Anticipatory Repudiation, acceleration of breach
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
Demand for adequate assurance of performance
Failure to provide requested assurance is considered a repudiation excusing conditions and accelerating a breach
Three ways to satisfy unexcused condition
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
CONDITIONS HAVE BEEN EXCUSED OR SATISFIED BEFORE DUTY OF PERFORMANCE MATURES
CONDITIONS HAVE BEEN EXCUSED OR SATISFIED BEFORE DUTY OF PERFORMANCE MATURES
Duty
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
Eight ways
Discharge of Duty
FAN FIMMI

Frustration of purpose
Accord & Satisfaction
Novation

Failure to excuse
Impractacability
Mutual recission
Modification
Impossibility
Frustration of purpose:
Frustration of purpose: an unforseen event at the time of formation frustrates the principle purpose for entering into a K.
Accord & Satisfaction
Parties to a K resolve a dispute by a compromise with additional consideration; accord is the agreement and the satisfaction is the performance.
Novation
When all parties to a K decide to create a new K, by substituting a new party for an orginal party.
Failure to excuse
Failure to excuse a condition subsequent: insurance policy required timely report following incident.
Impractacability
Unforseen event so severe and unassumed, unfair to require performance as written.
Modification
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.
Mutual recission
Parties eliminate or cancel a K, requires offer, acceptance and consideration
Impossibility
An event that is unforseen by both parties at the time of formation renders performance of K duty objectively not possible.
Remedies for breach
Goal is to put non-breaching party in as good a position as performance of duty would have had
Non-Code remedy formula
Expectancy damages: benefit of bargain
Incidental: to find substitute
Consequential D's: forseeable at formation
Less Damages that were avoidable
Liquidated damages
Specific amount of money recovery provided in K
(1) Difficult to ascertain amount
(2) The amount stipulated must be reasonable (not a penalty)
Quasi contract remedy
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
Specific performance
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
Equitable relief
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
Defenses to equitable action
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
Code remedies for sellers (B breaches)
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.
Code remedies for buyer (S breaches)
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
Breach of warranty
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.
IF EXPRESS/IMPLIED WARRANTIES ARE BREACHED BUYER CAN RECOVER DIFFERENCE IN VALUE AS WARRANTED
IF EXPRESS/IMPLIED WARRANTIES ARE BREACHED BUYER CAN RECOVER DIFFERENCE IN VALUE AS WARRANTED
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
2 types of intended TPBs
Donee: recieves promisor's performance as a gift

Creditor: when promisee owed debt and using promisor's performance to satisfy
TPB right's vest
TPB can enforce the promisor's promise, when learns of promise and assents (words and conduct)A
Name the 3 parties in an
assignment of K rights to 3rd party
Assignor
Obligor
Assignee
Is K assignable?
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
Proper methods of assignment
(1) Description of existing right

(2) Must be words of present transfer

(3) Obligor must recieve notice of assignment
What happens if there a multiple assignees?
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
Delegation of duties
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)
3 parties in a delegation of duty
Delegator (of duty)
Delegate (does duty)
Obligee (gets performance)
After valid delegation:
The delegator remains surety for performance

The obligee must accept performance from the delegate
What does the obligee become after delegation?
Third-party creditor beneficiary
Parol Evidence
If final written agreement, no prior oral or written negotiations or contemporaneous oral negotiations may be introduced to vary or contradict the writing.
Is the K a complete integration or partial integration?
Is decided by a reasonable person standard similarly situated have included prior or contemporaneous negotiations in the document