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84 Cards in this Set

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Voidable if risk not borne AND (a) enforcement unconscionable or (b) other party had reason to know of mistake or mistake was his fault
Unilateral Mistake
Court can reform K at request of a party to express agreement except to extent that rights of third parties will be unfairly affected
Mutual Mistake (Reform K)
Misrepresentation is an assertion not in accord with the facts
Nondisclosure functions as an assertion that fact does not exist ONLY WHEN: (a) Disclosure necessary to prevent previous assertion from being misrepresentation, (b) Disclosure would correct a mistake of other party as to basic assumption and non-disclosure is thus acting in bad faith; (c) Disclosure will correct mistake as to contents or effect of writing; (d) other party is entitled due to relation of trust and confidence
(1) If assent is induced by improper threat which leaves no alternative, contract is voidable; (2) if threat is by third party, voidable unless other party has no reason to know of duress (in good faith) and relies materially on transaction
Duress and Improper Threats
Situations where a threat is improper
Duress and Improper Threats
If a contract or term is unconscionable at time contract is made, court can (1) not enforce contract (2) not enforce specific term or (3) limit application of unconscionable term
(1) Writing or writings constituting final expression of one or more terms of an agreement; (2) determined by court before questions of interpretation; (3) if a writing appears to be complete agreement, integrated unless evidence indicates otherwise
Integrated Agreements
(1) Completely integrated - adopted by parties as complete and exclusive statement of terms; (2) Partially integrated - anything other than completely; (3) determined by court before other questions
Integrated Agreements
(1) When a party to agreement assents to writing and has reason to believe that similar ones are regularly used to embody similar agreements, it is adopted as an integrated agreement; (2) Interpreted as treating alike all those similarly situated; (3) Where other party has reason to believe the assenting party would not do so if he knew the writing contained a particular term, the term is not part of the agreement
Form Contracts
(1) Interpretation directed to the meaning of the terms of the writing(s); (2) questions of interpretation left to trier of fact if credibility of evidence or choice of alternatives is at issue; otherwise it is a question of law
Integrated Agreements
(1) Discharges prior inconsistent agreements; (2) if completely integrated, discharges agreements within its scope; (3) a non-binding integrated agreement can render a term inoperative which would have been part of agreement if not integrated
Integrated Agreements
Prior or contemporaneous agreements or negotiations admissible as evidence to establish (a) integratedness of agreement; (b) nature of integratedness; (c) meaning of writing; (d) invalidating causes; (e) grounds for denying remedies
Parol Evidence Rules
A binding agreement makes such evidence inadmissible to contradict terms
Parol Evidence Rules
(1) Evidence of consistent terms is admissible to supplement NON-COMPLETELY INTEGRATED agreements; (2) Agreement is not completely integrated if it omits a term which is (a) agreed to for separate consideration or (b) a term which may NATURALLY BE OMITTED in the circumstances
Parol Evidence Rules
(1) Definition - Usage having such regularity o observance as to justify expectation that it will be observed; (2) Existence and scope of usage are questions of fact, unless embodied in writte trade code or similar writing, then question of law, (3) Unless otherwise agreed, trade usage applies
Usage (Trade Usage)
(1) Definition - sequence of previous conduct between parties that creates common understanding; (2) gives meaning or supplements agreement unless otherwise noted
Course of Dealing
(1) Interpret in favor of obligee unless the condition is within their control or they assumed the risk
Interpreting Contract Conditions
Manifestation of willingess to enter into a bargain; justifies others belief as such
Definition of an Offer
Manifestation of willingness to enter a bargain is NOT an offer if the addressor knows/reason that the person does not intend to make a bargain w/o further assent
Preliminary Negotiations
(1) Accord is a contract under which obligee promises to accept a stated performance in satisfaction of existing duty (discharges original duty), (2) Until performance, original duty is suspended unless there is breach of accord by obligor; obligee can then enforce either orginal duty or duties under the accord, (3) Breach by obligee does not discharge orginal duty, but obligor can sue for specific performance and damages for partial breach of accord
Accord & Satisfaction
(1) Offer can specify type of acceptance; (2) acceptance by any manner and by any reasonable medium unless otherwise indicated by language or circumstances
Forms of Acceptance Invited
Money damages remedy is inadequate when (1) damages cannot be proven with sufficient certainty, (2) money damages cannot be used to obtain a substitute (very unique item, shortage in the market) or (3) when the defendant is insolvent.
Specific performance
In case of doubt offer is interpreted as inviting acceptance either by promise to perform or by rendering performance
Invitation of Promise or Performance
(a) Expectation - as if contract was performed; (b) Reliance - as if contract was never made; (c) Restitution - restoration of benefit conferred
Types of Remedies
If loss is not proved with substantial certainty can recover for (a) diminution of market price caused by breach or (b) reasonable cost of completion or remedy if not disproportionate to lost value
Breach resulting in Defective or Unfinished Construction
There is a duty to attempt to mitigate damages to a reasonable extent
Mitigation of Damages
(1) Unforeseeable damages are not recoverable; (2) loss is foreseeable if it follows (a) in the ordinary course of events or (b) because of special circumstances known by breacher; (3) court can limit damages
Foreseeability of Damages
Damages that cannot be established with certainty by the evidence are not recoverable
Certainty of Damages
(1) Fixed damages must be reasonable in light of anticipated or actual loss and actual loss must be difficult to ascertain; (2) penalty clauses are not enforceable
Liquidated Damages
(1) Not available if damages are adequate to protect expectation interest; (2) Adequacy in regards to one term does not preclude specific performance for whole contract; (3) should not be refused because of a remedy besides damages
Specific Performance
Factors for determining adequacy of damages; (a) uncertainty; (b) difficulty in finding substitute; (c) uncollectible
Specific Performance
Power of acceptance of Options K NOT terminated by rejection, counteroffer, revocation or death/incapacity unless requirements are met for discharge of duty
Termination of Acceptance under Options K
There must be a benefit conferred
Restitution Damages
Damages measured by (a) reasonable value of benefit conferred or (b) extent of other parties increase in value of interests
Restitution Damages
(1) Power of accepted termionated by rejection absent offeror's contrary intention; (2) Intention not to accept offer is rejection unless offeree wants to take under advisement
(1) Definition - offer made by offeree relating to same matter as original offer and porposing different substitute bargain; (2) terminates offerees power of acceptance unless offeror manifests contrary interpretation
(1) Power of acceptance terminated at end of specified time or end of reasonable time
Lapse of Time
Offeree's power of acceptance terminated when he receives manifestation of intention not to enter into the proposed contract, or when he knows/reason offeror takes definite action inconsistent with intention to enter into proposed contract.
Communication of Revocation
(1) When offer invites acceptance by rendering performance and NOT promissory acceptance, option contract created when performance begins, (2) Offeror's duty of performance conditional on completion of invited performance
Option Contract Created by Part Performance
If communication delayed, period of acceptance is not extended, BUT if delay is due to fault of offeror and offeree unaware, contract can be created by acceptance within the period permissible if offer was properly dispatched
Effect of Delay in Communicating Offer
(1) If acceptance by performance allowed, no need to notify unless otherwise requested, (2) If offeree knows offeror has no means of learning of performance, duty of offeror is discharged unless (a) offeree exercises reasonable diligence to notify or (b) offeror learns of performance within reasonable time or (c) offer says notice not required
Acceptance by Performance and Need to Notify Offeror
A qualified acceptance is actually a counter offer
If time place and manner prescribed, must be complied, but if suggested, can use other method
Forms of Acceptance Invited
Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance. Such an acceptance operates as a promise to render complete performance.
Effect Of Performance By Offeree Where Offer Invites Either Performance Or Promise
Unless otherwise provided; (a) operative when accepted if made in a manner and medium ivited by offer whether or not it reaches offeror; (b) acceptance of option contract not operative until received by offeror
Time when Acceptance Takes Effect
Acceptance by instantaneous two way means governed by standard principles
Acceptance by Phone
Unless otherwise provided, medium is reasonable if used by offeror or customarily used in similar transactions at time and place offer is received
Reasonableness of Medium
Acceptance must be properly dispatched
Reasonableness of Medium
If received within time properly dispatched acceptance would have, acceptance regardless of proper dispatch
Reasonableness of Medium
Received when the writing comes into the possession of the addressee or someone authorized by them to receive or in another otherwise authorized means
Receipt of Revocation, Rejection or Acceptance
(1) Silence by acceptance by offeree only allowed (a) where offeree takes benefit of offered services with reasonable opportunity to reject them and knowledge that compensation expected; (b) where offeror has given reason to believe silence can manifest acceptance; (c) Where previous dealings indicate as such; (2) offeree who takes act inconsistent with offerors ownership of offered thing is bound
Acceptance by Silence
Effective as an offer to original offeror
Late/Defective Acceptance
A performance or return promise must be bargained for; (2)(3) says it is either an act, forbearance, or creation modification or destruction of legal relationship; can be given to a third party
What is consideration?
Performance of a legal duty is not consideration; consideration if different from what was required by that legal duty
Legal Duty Rule
An alternatives contract is not consideration FROM PROMISOR unless (a) each term would be consideration if bargained for OR (b) one alternative would be consideration AND it appears that the promisor will eliminate the alternatives that are not consideration
Illusory Promises/Mutuality
If there is consideration, no additional requirement
What is consideration?
(1) binding if debt would be enforceable except for SOL (2) facts operating as such a promise ((a) voluntary acknowledgment (b) voluntary transfer as part payment (c) statement that SOL will not be pleaded
Promise to pay debt barred by Stuatue of Limitations
Binding if made expressly and if made after proceedings initiated
Promise to pay debt barred by bankruptcy
(1) These promises are binding unless (a) condition was material to exchange or (b) promisor assumed risk of uncertainty of occurrence, (2) If this promise is made before time for condition has expired and condition is within control of promisee or beneficiary, promisor can make new duty subject to occurrence of that condition if (a) reasonable time, (b) not unjust
Promise to Perform Despite Non-Occurrence of Condition of Original Contract
(1) Binding to extent necessary to prevent injustice; (2) NOT binding (a) if promisor was not unjustly enriched by past consideration or (b) if value of new promise is disproportionate to past benefit received
Promise for Past Benefit Received
(1) Binding under standard terms; (2) if substantial reliance, binding to extent necessary to avoid injustice
Options Contract
Promise modifying existing duty is binding (a) if fair and equitable in view of unanticipated circumstances, (b) to extent provided by statute or (c) to extent that justice requires
Modification of executory (not performed) contract
A promise which…should reasonably expect to induce action or forbearance on the part of [promisee or third party]; binding if injustice can be avoided only by enforcing the promise; remedy limited as justice requires
The principle of Reliance
An action is taken seasonably if it is taken at or within the time agreed or, if no time is agreed, at or within a reasonable time.
Reasonable time
Terms with respect to which the confirmatory records of the parties agree or which are otherwise set forth in a record intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be supplemented by evidence of: (a) course of performance, course of dealing, or usage of trade (Section 1-303); and (b) consistent additional terms unless the court finds the record to have been intended also as a complete and exclusive statement of the terms of the agreement .
Parol Evidence - written agreement finality
K can be formed anywhere there is offer and acceptance, both parties know there is a contract, moment of formation is not required. Indefiniteness does not invalidate a K, as long as there is reasonably certain basis for giving appropriate remedy
Formation of K
an offer by merchant with an assurance to hold offer open cannot be revoked, no consideration is required, time not to exceed 3 months.
Firm offers
An offer shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances. An order for shipment shall be construed as inviting acceptance by prompt shipment or by a prompt promise to do so. - Where beginning of a requested performance is a reasonable mode of acceptance an offeror who is not notified of acceptance within a reasonable time may treat the offer as having lapsed before acceptance.
Offer and Acceptance – Formation of a K
Where K involves repeated occasions for performance, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of an agreement. Express terms and any course of performance shall be construed whenever reasonable as consistent with each other. When this is unreasonable express terms shall control and course of performance shall control course of dealing and trade usage.
Course of performance
An agreement modifying a contract needs no consideration to be binding. Modification must only meet the test of good faith. - Waiver affecting executory portion of K may be retracted unless retraction would be unjust due to reliance
Modification, Rescission and Waiver
If unconscionability is present, the court may refuse to enforce the contract, enforce contract without unconscionable clause, or may limit application of the unconscionable clause.
Unconscionable Contract or Clause
A term measuring the output quantity of the seller or purchase requirement of buyer, means such output or requirement as may occur in good faith. No quantity unreasonably disproportionate to any stated estimate or reasonable measure may be demanded. A buyer or seller must use best efforts to promote the sale.
Mutuality – Requirements and Outputs Contracts
Seller may resell the goods or the undelivered balance. If done in good faith and commercially reasonable manner the seller may recover the difference between the resale price and K price plus incidental and consequential damages
Damages – Breach by Buyer, Seller’s resale
Measure is difference between market price at the time and place for tender and the unpaid contract price plus any incidental damages less expenses saved in consequence of breach. If this measure is inadequate to put seller in as good a position as if K had been performed the measure is profit seller would have made plus incidental damages and costs reasonable incurred
Damages – Breach by Buyer, Seller’s non-acceptance or repudiation
Includes any commercially reasonable charges, expenses, or commissions incurred in stopping delivery, transportation, care and custody of good after breach. Or any costs in connection with return or resale of goods resulting from breach.
Damages – Breach by Buyer, Seller’s incidental damages
Buyer may recover the price as has been paid, is entitled to “cover” expenses, damages for non-delivery, or specific performance
Damages – Breach by Seller, Buyer’s Remedies in General
Buyer may “cover” in good faith and without unreasonable delay and recover from seller the difference between cost of cover and contract price, together with any incidental or consequential damages
Damages – Breach by Seller, Right to “Cover”
Measure of damages for repudiation or non-delivery is the difference between the market price at time when buyer learned of breach and the contract price plus incidental or consequential damages
Damages – Breach by Seller, Buyer’s Damages for non-delivery or repudiation
After accepted, a buyer may recover for any non-conformity of tender and the loss resulting in the ordinary course of events from breach in any manner reasonable. Measure for breach of warranty is difference at time and place of acceptance between the value as accepted and value if it had been as warranted. Incidental and consequential damages are also recoverable.
Damages – Breach by Seller, Buyer’s damages for accepted goods
Specific performance is permissible where goods are unique or in other proper circumstances such as uncertainty or insolvency of seller.
Damages – Breach by Seller, Buyer’s right to specific performance
Market price shall be determined according to price at the time when aggrieved party learned of repudiation. If evidence of prevailing price is not available the price prevailing at any reasonable time before or after the time described is appropriate, or any other commercially reasonable substitute may be used
Damages – Proof of Market Price
Reports in official trade journals or publications, newspaper or periodicals in general circulation published as reports of such market shall be admissible.
Damages –Admissibility of Market Quotations
“Paid in Full” on a full payment check will generally be enforceable if: (1) It was tendered in good faith as full satisfaction, (2) Contains a conspicuous statement as paid in full
Accord and Satisfaction by Use of Instrument