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58 Cards in this Set

  • Front
  • Back
Offer
- can be express or implied
- must have
1) intent
2) definite terms
3) communicated
Common Law governs
RISE
real estate
Insurance
services
employment
UCC governs
sale to consumers
Contract under UCC vs Common Law
Under Common law- must have all of the below
who, where, when, what, how.
Under UCC only quantity is enough.
Termination of Offer
There can be no termination without acceptance
3 ways of termination
-revocation
-rejection
-operation of Law
3 situations where you cannot revoke the offer or Offer is irrevocable
-when it is an option (the offeree gives consideration to keep the offer open)
-when it is a firm offer(UCC)
-Unilateral contracts( where one party begins performance-cannot revoke-must give other party to complete performance)
Common Law acceptance (mirror image rule)
Mirror Image rule

In RISE, cannot change anything.
Acceptance has to be in full- if changed, it is a counteroffer
Mail Box rule
Offers,rejection, revocation, counter offer only effective when RECEIVED.
Acceptance effective when DISPATCHED. If the mail gets lost, it is still a contract. So all offers have to mention that an acceptance has to received to be valid.
Any time there is a valid defense
the innocent party's duty to perform is discharged
Fraud (defense)
MAIDS
-Misrepresentation of a Material fact
-Actual and justifiable reliance on the misrepresentation
-Induce reliance on misrepresentation
-Damages
-Scienter
Detrimental reliance/Promissory estoppel- exception to Consideration and gift
A promise made by one party, detrimentally relied upon by another, can be enforced without consideration.
Defenses
1) fraud(MAIDS)
2) fraud in execution(void) /inducement(voidable)
3) innocent misrepresentation
4)duress (Physical harm- void, Economic harm- voidable)
5) undue influence
6)mutual mistake (avoid contract), non existence of subject matter- VIOD
7)Unilateral mistake(GR: not a defense unless other party knew or was supposed to know of it)
8)Illegal- VOID- Promise not to compete is illegal as it violates anti trust law BUT in employment and sale of business contracts-ok
9)minor may DISAFFIRM (except necessities) contract within a reasonable time after major- must return possession
10) intoxication
11)Mental Incompetency ( voidable) -but if adjudicated incompetent-VOID
12) Statute of limitations-4-6 years (measured from breach date)
13) Statute of Frauds- (MYLEGS contracts should be in writing)
14)Impossibility
15) Accord and satisfaction(new contract for old contract)
16)Novation(new party for old party)
17) conditions
18) prevention of perfomance
19) Parol evidence rule
20) unconscionability
Parol evidence rule
When you sign a contract there is a presumption that you, read it, understood it and agreed to all of it.
So the rule prohibits introducing evidence at the trial=
-it excludes evidence of prior or contemporaneous oral statements offered to vary the terms of fully written contracts
-it includes subsequent modifications
Inducement
plaintiff was deceived as to reason for the transaction
Fraud in inducement is voidable
Duress
resulting from physical threat is VOID
resulting from economic harm is VOIDABLE
taking advantage of another s economic condition is not duress
Breach at common Law (service only)
Substantial or material breach (intentional)-pay zero- non breaching party discharged
Minor breach-non breaching party NOT discharged-entitled to damages
Anticipatory repudiation(early breach)
the breaching party says in advance that he cannot perform
Non breaching party can
-sue
-await performance
-cancel contract
Damges
1)Compensatory
a)consequential
2)Specific performance (only with Land, unique item,NOT services)
3) Liquidated damages (enforceable if reasonable & not a penalty )
4) Punitive damages (NA for breach, only for fraud)
5) Rescission OR cancellation( restore to former position)
Exception for Rescission
Doctrine of substantial performance-(Services only)
-unintentional minor mistake (common law) has been made and the services has been performed, then monetary damages is the only remedy.

Not so in the case of goods (UCC) which requires perfect tender
Intended third party
-can enforce a contract.
- will be specifically named in the contract else will be an incidental beneficiary
-donee, creditor beneficiaries are intended beneficiaries
Who can intended 3rd party sue ?
-Creditor beneficiary can sue both promisor and promisee.
-Donee beneficiary cannot sue promisee
Assignment
- all contracts can be assigned, only if it does not increase the obligor's risk.
-only rights can be assigned, duties are delegated
-when a contract says "all" rights, it means both rights and duties
-creditor can assign his right to receive money to another , has to give notice to debtor
-not giving notice does not make the contract invalid
-need not be in writing
-right to receive personal services is not assignable
Exceptions to assignment
-right to insure
-personalized services
-offer
cannot be assigned
Option contracts can be assigned
Delegation
only duties can be delegated
Effect of delegation
-both parties liable UNLESS there is novation
Assumed mortgage vs subject to mortgage
both parties liable vs only one party liable
Consequential damages
-are recoverable for breach of contract only to the extent they are foreseeable.
-non breaching party must try to mitigate damages
conditions affecting performance
A contract can have conditions precedent, concurrent and subsequent
past consideration
is no consideration. If act promised has already been performed, then bargain element fails
Contracts entered into by a minor
-minor can disaffirm while a minor or within reasonable time of becoming a major.
- can buy a car use and disaffirm
-not applicable for necessities (cannot disaffirm)
-if he ratifies a contract before he becomes a major, can disffirm the same after becoming a major
Liquidated damages clause
is enforceable as long as the amount is reasonable approximation of damages AND NOT a penalty
advertisements
are not offers but invitation to negotiate
Oral evidence is permissible
when the contract is incomplete
-invalid
-ambiguous
-subject to a condition precedent
-modification is made after the contract is written
Statute of Frauds
Six contracts required to be in writing

-Marriage is consideration
-Y-contracts extending for more than a YEAR
-Land contracts
-Executors (contracts to pay estate debts)
-Goods sale of 500$ or more
-Surety contract
Specific performance
- used with land or unique items (patent)
- it is a court order that the breaching party perform
-cannot be used with personal service contracts
-when specific performance is available, the court can grant either specific performance OR compensatory damages
Firm Offer (UCC)
-irrevocable without consideration (unlike Common Law)
-seller or OFFEROR must be a merchant
-offer must be in writing
-offer must say that it will be kept open for a certain period of time
-cannot be more than 3 months
-applies only to GOODS
shipment of nonconforming goods (UCC)
- both an acceptance and a breach
exception- when if it comes with a notice of accommodation-it is counter offer
Auction is(UCC)
GR: "with reserve" - seller does not have to sell unless adequate bid is made.

without reserve
- goes to the highest bidder
-all the bidders are offerees
Output and requirement contracts
- is an exception to the GR that sales contract should have quantity
-output contract-buyer agrees to buy entire output of a factory
-requirement contract- seller agrees to supply all requirements of a factory without knowing exact quantity.
Statute of Frauds (UCC)
- 500$ of goods or more should be in writing
EXCEPTION-
SWAP
-Specially manufactured goods
-Written confirmation
-Admitted contracts in court
-Performed contract
Merchant's confirmatory memo rule (UCC)
written confirmation by the sender will bind the sender and the receiver if the receiver does not object within 10 days
Modification of contract in writing ? (UCC)
if the value > 500$ yes
Delivery GR(UCC)
Seller has no obligation to deliver. Delivery is a separate contract.
Risk of loss(UCC)
does not pass till goods are IDENTIFIED
- if the parties agree on when and where the risk will pass, their agreement governs
Risk of loss in case of no specific agreement (UCC)
they are divided into two
1) non carrier cases( buyer picks up)
2) carrier cases( seller ships by common carrier)
- it is not determined by who has the title
Risk of loss in non carrier cases (UCC)
depends on weather the buyer is a merchant or not
-merchant- risk passes on actual delivery
-non merchant-risk passes on tender of delivery
Risk in loss in carrier cases (UCC)
2 situations
-Shipment contract- risk passes on delivery to carrier
-Destination contract- risk passes at destination
-
Buyer's insurance (UCC)
When goods are identified, the buyer can insure the goods
Implied warranty of merchantability (UCC)
the seller SHOULD be a merchant
-"as is" or "with all faults" disclaims merchantibilty
Perfect tender (UCC)
the seller must make a perfect tender
-a perfect tender requires that goods must conform to all warranties
Auction (UCC)
-Bid is offer and fall of hammer is acceptance
-ALL auctions are WITH RESERVE which means, seller does not have to sell unless he gets adequate price
-WITHOUT RESERVE means seller HAS to sell to highest bidder.
Goods can be withdrawn if no bid is made within reasonable time
-
Warranty of title (UCC)
- is a guarantee from the seller that the goods are delivered free of all liens of which the buyer is unaware
- arises automatically in EVERY sale of goods, even a non-merchant
-need not be in writing
-can be disclaimed by specific language or circumstance
-CANNOT be disclaimed by general disclaimers.
Strict product liability (UCC)
IT is not a contract action but a TORT action.Plaintiff need NOT be a buyer- privity not required & negligence not necessary
-focus on product not seller
MUST PROVE
-product was defective when it left seller
-caused injury
-product was unusually dangerous
-seller deals in such goods
-the product reached the buyer without change in condition
To fulfill requirement of Perfect tender, the goods must conform to ALL Warranties
Express warranties

Implied warranties of Title ( can only be disclaimed by specific language)

Implied warranty of Merchantability ("As is" disclaims it)- can only be given by merchant

Implied Warranty of fitness for a particular purpose ("As is" disclaims it)
Statute of Fraud ( MYLEGS)
- contracts>500$ must be in writing
-should be signed by defendant to be enforceable

M- contract of marriage
Y- contracts that cannot be performed within a year
L- sale of Land
E-contract by executor
G-Sales of goods over 500
S- contract of suretyship
Exception to statute of fraud (SWAP)
S- specially manufactured
W- written memo by merchant
A-admitted in court
P-Contracts already performed
Defense of fraud
A contracting party can establish defense of fraud if he can prove

-M-misrepresentation of material fact
-A-Actual and justifiable reliance
-I-Induce plaintiffs reliance
-D-damages
-S-Scienter
Modification of which contract requires consideration ?
Common Law Contract (RISE)
NOT sale of goods- UCC