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65 Cards in this Set
- Front
- Back
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Quasi-contract
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1. When there is no formal agreement between the parties
2. Evidence of unjust enrichment |
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Requirements contracts
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Quantity is not required in a requirements contract
Because quantity will be measured by the buyer's needs NB: Quantity will be measured by buyer's good faith needs |
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Option contracts
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Promise to keep an offer open for a period of time
At common law, options had to be supported by consideration Under UCC, the firm offer rule applies IF the offeror is a merchant |
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UCC Firm Offer Rule
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An offer by a merchant, IN A SIGNED WRITING, which by its terms gives assurance that it will be held open, is irrevocable during the time stated.
If no time is stated, the period of irrevocability, may not exceed 90 days (three months) |
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Unilateral contract
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Can only be accepted by performance
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Counteroffer
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Ends the original offer; operates as a rejection
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Battle of the Forms (UCC 2-207)
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If the offeree (usually the seller) accepts the offer and at the same time makes a material alteration or adds an additional term, we have a contract under the terms of the original offer. If there is an acceptance with a non-material change, then that non-material change is incorporated into the contract, UNLESS the offeror objects within a reasonable period of time, and then the change is out. A material change is one that substantially affects the economic risks or benefits or one that changes the usual remedy for breach of contract.
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Mirror Image Rule (Common Law)
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an offer must be accepted exactly without modifications. The offeror is the master of his own offer. An attempt to accept the offer on different terms instead creates a counter-offer, and this constitutes a rejection of the original offer.
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Non-Conforming Goods (perfect tender rule)
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Under the UCC, a seller must deliver Perfect Tender to the buyer. If seller fails, it is considered both acceptance of the offer and simultaneously, a breach of the contract. Buyer has one of three options: 1. Accept goods and pay contract price, 2. Timely reject the goods and sue for damages, 3. Accept any commercial units and reject the rest. NB: If delivery comes with notice of accommodation, delivery will be construed as a counteroffer that buyer can accept or reject, but not sue for damages on.
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Statute of Frauds
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MYLEGS - Marriage
Year Land Executor Goods ($500) Suretyship |
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Main Purpose exception to suretyship in Statute of Frauds
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If main purpose of guarantor in making the promise is to BENEFIT HIMSELF, then the promise does NOT have to be in writing.
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Illusory promise/no consideration
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Giving up something you do not have the legal right to do
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Mutual mistake
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When both parties are mistaken. If it goes to the essence of the agreement, it is grounds for rescission.
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Unilateral mistake
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General rule: Will not prevent contract formation. However, in all unilateral mistake situations, if the nonmistaken party knows or has reason to know of the other party's mistake, they will not be permitted to take advantage of the mistaken party and snap up the benefit of the bargain.
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Modifications (Common Law)
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Needs to be supported by new consideration, because of the pre-existing duty rule; can be oral or in writing
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Modifications (UCC)
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Good faith modifications are allowed, regardless of whether or not supported by consideration; can be oral or in writing
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Parol Evidence Rule
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You cannot introduce additional evidence to explain or modify the material terms of a complete and totally integrated written agreement; prior or contemporaneous agreements are barred
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Exceptions to Parole Evidence Rule
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PER will not bar evidence of FRAUD, ILLEGALITY, UNDUE INFLUENCE, MISTAKE, A CONDITION PRECEDENT, CONSIDERATION OR LACK THEREOF, TRADE USAGE/INDUSTRY PRACTICE, COURSE OF DEALING BETWEEN THE PARTIES
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Ten day rule exception to Statute of Frauds under the UCC
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Both parties MUST BE merchants; If contract is oral and involves goods worth $500 or more, it is enforceable IF there is a subsequent writing from the sender. If merchants sends this writing, it is enforceable against him. If recipient does not object w/in ten days of receipt, it is enforceable against him as well.
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Vesting of 3rd party beneficiary's rights
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Rights vest when: 1) when 3rd party learns of the contract AND assent to it, 2) when they rely on it, or 3) when a 3rd party brings a lawsuit to enforce the contract (prior to vesting, two contracting parties can do anything)
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Defenses to 3rd party beneficiary claims
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Any defense that the defendant can raise against the original contracting party can be raised against the 3rd party beneficiary
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FOB
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Free On Board; Shipping term; Always followed by Seller's place of business, Buyer's place of business, or point of destination; When it says Seller's place of business, Buyer bears the risk of loss if goods are damages or destroyed during transit; If it reads Buyer's place of business, seller bears risk until goods get to buyer; If point of destination, Seller bears risk until goods reach destination, then it shifts to Buyer.
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Assignments and Delegations
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All contracts are assignable and delegable, except unique personal service contracts and long term requirements contracts; Assignments may be gratuituous or for value (but gratuitous assignments are revocable; assignments for value are irrevocable); Can be oral or in writing
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Accord and Satisfaction
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Accord arises when two parties who already have a contract, agree to a different type of a deal. Usually arises when there is some type of good faith dispute between the parties. The Satisfaction is the performance of that accord. NB: If you do not perform under the accord, you can be sued under the terms of the original agreement or under the terms of the accord.
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Does an Accord discharge the initial obligation
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No. It suspends it.
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Anticipatory Repudiation
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If it is a clear statement of an intent not to perform, then you can treat it like a breach (cancel the contract) and sue immediately for damages. Expressions of doubt will not support anticipatory repudiation. If it is a non-material (minor) breach, you can only sue for damages, but cannot cancel the deal.
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Getting out of a personal service contract
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In a unique personal service contract, if you are too sick (injured, etc.) to do the job, you are excused for that period of time and are not liable for contract damages, UNLESS the contract provides otherwise
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Condition precedent
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An act or event which must occur first before a party is under a duty to perform; if the condition does not occur, it is not a breach, just a failure of a condition (esp. if due to poor weather, act of god)
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Liquidated Damages clauses
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Allowed if two factors are met: 1) damages are difficult to ascertain at the time of entering the contract, and 2) the provision is a reasonable forecast of compensatory damages; Court will compare the amount of damages foreseeable at the time of contract formation and the provision itself.
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Time is of the essence clauses
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Usually courts don't give these much weight (they are boilerplate), but when it is clear that parties MEAN IT, or when there is a reason for it, courts will enforce. If there is some UNFAIR ADVANTAGE, court will ignore it.
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Lost Profits
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Look for volume sellers; If you have a volume seller, then appropriate remedy for him is lost profits
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Usual remedy for non-breaching seller under the UCC
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Contract price MINUS resale price
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Key to Accords and Satisfactions
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There must be a dispute as to the amount owed!
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Third party creditor beneficiary
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A third party is a creditor beneficiary of a contract if the promisee's primary intent in contracting is to discharge an obligation to the third party
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How a third-party beneficiary's rights vest
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1) when he learns and assents in a way invited or requested by the parties; 2) when he brings suit to enforce it; 3) materially changes position in justifiable reliance on the promise
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Impossibility
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Excuses parties from duties YET to be performed; performing party may still recover in quasi-contract UNLESS one party assumed the risk at the onset. (ex. contractor hired to work on house. Flood washes house away. No one anticipated this. Neither party need perform rest of K, but contractor can get value of services prev rendered in quasi-k)
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Rejection vs. Acceptance: What to do when acceptance is mailed and then offeree phones in rejection (before acceptance is received)
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First, mailbox rule applies to acceptance. Since it was sent first, it will bind the parties, UNLESS the offeror relied on the rejection.
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Divisibility of contracts
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The test: A contract is divisible if 1) performance is divided into mulple parts in the contract, 2) the number of parts due from each party is the same and *3) the performance of each part by one party is the agreed-upon equivalent of the corresponding part from the other party
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Exceptions to SOF - Sale of Goods $500 or more
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When goods are ACCEPTED and when goods are UNIQUE
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What the buyer can do when the seller will not accept goods returned because they were nonconforming
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A buyer who has rejected goods as nonconforming is entitled to any prepayment, or, if the seller refuses to refund, to resell the goods and apply the proceeds to what is owed him from the seller. The buyer is entitled to offset expenses of selling and get its money back
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What happens when a seller learns that a buyer is insolvent during the execution of a goods contract
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If a buyer is insolvent, UCC permits the seller to refuse to deliver except for cash, including payment for all goods previously delivered under the contract.
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Modifying sale of goods contracts under the UCC
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NO consideration is needed for a good faith modification; NB: Consideration IS needed for modification of non-goods contracts!!
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Assignments of requirement contracts
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Generally, the right to receive goods under a requirements contract is not assignable because the obligor's duties could change significantly. However, the UCC allows the assignment of requirements contracts if the assignee acts in good faith not to alter the terms of the contract.
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Getting oral contracts for the sale of goods over $500 out of the statute of frauds
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In a deal BETWEEN MERCHANTS, a writing CONFIRMING THE DEAL sent by ONE party will bind BOTH parties, unless the other party objects in writing within 10 days. If he does not object, it therefore will not matter whether the "party to be charged" has signed the writing.
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Waiving the implied warranty of merchantibility in sale of goods contracts
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In every sale of goods, unless expressly disclaimed, there arises a warranty that the goods will be merchantable, which means that they will be fit for the ordinary purposes for which such goods are used. To be effective, a disclaimer MUST be part of the offer and acceptance process or must be agreed to by the buyer as a modification.
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What happens to the mailbox rule when offeree sends rejection followed by acceptance
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The mailbox rule does not apply. We look at whichever was RECEIVED FIRST. It does not matter whether it was opened or not.
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Anticipatory repudiation - FOUR options for the nonbreaching party
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1) treat repudiation as a breach and sue immediately; 2) suspend his own performance and wait to sue until the performance date; 3) treat repudiation as an offer to rescind and treat the contract as discharged; 4) ignore the repudiation and urge the promisor to perform
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Getting a contract discharged for IMPRACTICABILITY
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Contractual duties will be discharged for impracticability if, in performing, the party encounters extreme and unreasonable difficulty or expense and its nonoccurrence was a basic assumption of the parties. Most courts recognize performance as impracticable if it will jeopardize the promisor's life or health or that of others
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Insolvency - What happens when a seller learns buyer is insolvent when goods are in shipment? Can the seller cancel?
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NOT if the buyer is promising to pay cash.
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When is specific performance right CUT OFF in a breach of contracts action for unique goods
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When a BFP has bought the goods in between
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When a creditor breaches an accord agreement
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If a creditor breaches an accord agreement, the debtor has the OPTION of either raising the accord agreement as an equitable defense in the creditor's action and asking that it be dismissed OR waiting until he is damaged (until the creditor is successful in an action on the original contract) and then bringing an action at law for damages for breach of the accord contract.
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Impracticability
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A party's duty to perform may be discharged where performance would be impracticable, where a party encounters extreme and unreasonable difficulty and/or expense, and such difficulty was not anticipated. The facts giving rise to impracticability must be such that their nonoccurrence was a basic assumption on which the contract was made.
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When a buyer can get out of a requirements contract
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Under the UCC, a shutdown by a requirements buyer for lack of orders may be permissible if the buyer is acting in good faith
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When a builder breaches during construction
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Nonbreaching party gets cost of completion plus compensation for any damages caused by the delay in completing the building. Most courts however, will allow the builder to offset or recover for work performed to date to avoid unjust enrichment of the owner. If substitute performance is readily available, damages are measured by the UNPAID CONTRACT PRICE minus the COST OF COMPLETION.
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Implied in fact contract
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A contract formed by manifestations of assent other than oral or written language, i.e. by conduct. The manifestations of mutual assent are analyzed objectively under contract law. Even if there is no subjective meeting of the minds, the parties will be bound if their conduct objectively appears to manifest a contractual intent.
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Anti-assignment clauses in sale of goods contracts
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Unless the circumstances indicate the contrary, a prohibition of assignment of the contract bars ONLY the delegation of the assignor's performance.
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Formation: Auctions - with reserve
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Auctioneer is NOT offeror. The Bidder is the offeror; This is the GENERAL RULE. Auctioneer can withdraw the auction at any time until he announces completion of the sale.
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Formation: Auctions - WITHOUT reserve
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If publicized as without reserve (absolute auction), the auctioneer is the offeror and the highest bid is the acceptance
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Lapse: Face to face rule
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If offer is face to face, offer lapses when we part company
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Mirror-image rule
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At common law, acceptance must be a mirror image of the offer
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Death
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Death revokes an offer but NOT an existing contract; An option contract survives death!
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Mailbox rule and option contracts
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MB Rule does NOT apply to option contracts! Acceptance is only effective upon receipt!
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Silence as acceptance
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General rule: Offeror may not impose silence as a means of acceptance upon the offeree; Exceptions - mutual agreement (includes prior dealings between the parties);
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Unsolicited goods rule
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Exercising dominion and control in order to gain a benefit therefrom; TN - Unsolicited merchandise worth less than $50 is considered to be a gift whether or not it comes through the U.S. Mail
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Battle of forms
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1) Written acceptance operates as acceptance even though it contains additional or different terms, unless acceptance is made conditional ON ASSENT to new terms. 2) Between merchants, changes are considered AGREED UPON unless a) the original offer expressly stated that acceptance must be limited to original terms, b) the changes materially alter the K or c) the offeror objects w/in a reasonable time. 3) Conduct of parties can establish a K. Conduct by both which recognizes the existence of a K is sufficient to establish a K for sale, even though writings don't do it. In such a case, the terms consist of the writings plus any gap fillers.
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