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50 Cards in this Set
- Front
- Back
Distinguish between UCC and Common law of K's |
UCC 2 applies to all sales of goods, whereas the common law applies to all Ks for services. |
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What is a Merchant |
A merchant is a person who deals in goods of the kind sold, or who holds himself out as having skill/judgment peculiar to the goods/practices involved. |
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Merchant vs. Non-Merchant ROL |
If seller is not a merchant, ROL passes to the buyer on tender of delivery. |
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Tender of Delivery |
Requires that the seller put and hold conforming goods a the buyer's disposition for a time sufficient to enable buyer to pick them up. |
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Article 2 of the UCC Applies: |
When transaction is SALE, not gift |
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Article 2A of the UCC: |
Applies to lease of goods. In most controversies between lessee-lessor, Article 2A is similar to Article 2. In controversies involving default by the lessee or priortiy contests between lessor and 3rd parties, Article 2 is similar to Article 9. |
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K Formation: What is a K |
An agreement that is legally enforceable. |
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What is required of a valid K |
1) Offer |
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Valid K: Offer |
Valid offer: Requires |
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Valid K: OFFER: General Test for whether offer constitutes a valid offer |
Whether a reasonable person in the position of the offeree would believe that her acceptance creates a K. |
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Specific Offer Issues: |
1) Content: generally, offer is not required to contain all material terms, however, SOME terms are necessary: |
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Offer: Requirement/Output K's: |
Valid: |
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Offer: Context
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Generally, advertisements or price quotations are not offers (they are invitations for others to make offers)
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Offer: Context--Exception
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1)Price quotation can be an offer IF it is in response to a specific inquiry.
2) Advertisement can be an offer if it is specific as to quantity and indicates who can accept it: "One black alligator wrist-watch worth $700...$100 to the first woman in the door!" |
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Offer: Termination--4 Methods
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1) Lapse of time: Stated expiration date or "Reasonable time" (30 days is typically the reasonable time)
2) Revocation (words or conduct of offeror 3) Rejection 4) Death of Party prior to Acceptance. |
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Termination of Offer: Revocation
HOW |
Words or conduct of offeror.
HOW: Unambiguous statement by offeror to offerree of unwillingness or inability to K, or that offeree is aware of (e.g. S offers to B, then S offers to A. B hears the offer to A. S did not say anything to B, but B knows of S's unwillingness to sell, and therefore revocation is effective.) |
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Termination of Offer: Revocation
WHEN |
Revocation of offer sent through mail is not valid until it's received.
An offer CANNOT be revoked after it's accepted. |
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Termination of Offer: Revocation
Irrevocable Offers: |
Generally offers can be revoked freely at any time prior to acceptance, EXCEPT;
1) Option K (promise to keep offer open in exchange for consideration) 2) Offer cannot be revoked for up to 3 months where: --> K is for sale of goods --> Signed, written promise specifically to keep the offer open (3 mo. cap, even if written for longer) -->Party is a merchant. 3) Offer cannot be revoked if there has been detrimental reliance by offeree that's reasonably foreseeable. 4) Start of performance pursuant to an offer to enter into a unilateral K makes that offer irrevocable for a reasonable time to allow completion of performance. --> Unilateral K: O offers P $1000 if P will paint his house. P starts painting, O can't revoke the offer. |
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Termination of Offer: Rejection
Counteroffer: |
1) Counteroffer terminates the offer and becomes a new offer. Bargaining does not terminate the offer, (e.g. "will you take $1000? but counteroffer does "I'll only do it for $1200" does)
2) Conditional Acceptance: Terminates the offer and becomes new offer. 3) Indirect rejection: Additional terms 4) Common law: Mirror image rule. If offer and acceptance differ in terms, new "offer" is treated as a counteroffer rather than an acceptance. |
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Termination of Offer: UCC: Still Acceptance with Seasonable Expression of Acceptance
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A fact pattern where there is an offer to sell goods,and a response with additional terms is generally treated as an acceptance: "seasonal expression of acceptance" Two exceptions:
1) Additional term is not a part of the K if it materially changes the terms of the offer; or 2) If offeror objects to the change. If one or both parties is NOT a merchant, then the additional terms are treated merely as proposals to be accepted or rejected. |
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Termination of Offer: Rejection
Death of Party Prior to Acceptance: |
Generally death or incapacity of either party terminates the offer, except:
1) When the offer is about an option (express promise to keep an offer open with consideration) 2) There was part-performance of offer to enter into unilateral K (results from an offer that expressly requires perfornance as the only possible method of acceptance.) |
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Acceptance of an Offer:
Who can accept? |
Generally, offer can be accepted only by:
1) person who knows about offer (e.g. X sees Y's reward poster advertising a reward for whoever finds Y's lost dog. But, if X finds and returns the dog without knowing about the reward, no K.) 2) The person to whom the offer is made: Offers can't be assigned, although options can. |
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Methods of Accepting an Offer:
Starting Performance. |
1) Offeree starts to perform: Start of performance is acceptance of an offer to enter into a bilateral K, but is not acceptance of an offer to enter into a unilateral K.
a) Bilateral: Offer is open as method of acceptance so startof performance is acceptable. b) Unilateral: Offers require performance for acceptance, so that start of performance is not acceptance: Completion of performance is required. (Start of performance to an offer to enter into a unilateral K makes the offer irrevocable for a reasonable time to allw completion of performance. |
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Methods of Accepting an Offer:
Promise to Perform |
Most offeres can be accepted by a promise to perform (remember offers that expressly require performance for acceptance and reward offers require complete performance for acceptance.)
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Methods of Accepting an Offer:
Acceptance in the mail |
Under the UCC, if offer is invited through the mail, acceptance is effective when posted. (mailbox rule)
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Acceptance;
Exceptions to the Mailbox Rule: |
1) When offeree expressly provides other methods of acceptance in offer (even so, mailed acceptance effective on receipt.
2) Rejection, then acceptance: NO mailbox rule. The first letter to the offeror controls. 3)Option deadlines. When deadline is specified in an option, acceptance must be received by that date: No mailbox rule. |
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Acceptance; Special Situation
Seller of Goods sends Wrong Goods |
1) Generally, this will amount to acceptance and breach
2) Except: When goods come with Accomodation letter (Counteroffer and NO breach) |
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Acceptance: Offeree is Silent
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Silence is not acceptance except in very limited situations:
1) Specifies that silence is agreement: -"If you don't hear from me by Friday, I accept" |
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Consideration / Consideration Substitutes
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Consideration is a bargained for legal detriment (can't be a gift--look at each promise separately)
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Consideration: Forms & Adequacy
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1) Performance
2) Forbearance (not doing something you have a right to do) 3) Promise to perform 4) Promise to forbear Adequacy of consideration: Not relevant in K law: 1) Past consideration: usually NOT a consideration. 2) Except; Expressly requested and expectation of payment, (e.g A saves B's life. C is so grateful that he promises to pay $3000. (A sees B in danger, C knowing that A would be rewarded, asks a to save B after A saves B. C promises to ppay A $200. K. An expressly requested perfornance knowing that the other person is expecting payment. |
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Consideration:
Pre-Existing K or Statutory Duty (common law differs from UCC 2) Common Law |
CL: performance of pre-existing K or legal duty is NOT consideration.(except when there is unforeseen difficulty so severe as to excuse performance, or when 3rd party makes promise becuase 3rd party would NOT have pre-existing K/legal duty.
UCC: |
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Consideration:
Pre-Existing K or Statutory Duty (common law differs from UCC 2) UCC |
Does NOT have pre-existing legal duty rule. Good faith is the test for changes in an existing sale of goods K.
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Consideration: Partial Payment for promise to give balance of debt:
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1) where due and undisputed: If payment is due and undisputed, then the partial payment does not constitute consideration.
2) Not yet due, or disputed: Agree to take payment when it's not yet due or it's disputed MAY constitute consideration for release. |
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Consideration: Illusory Promise
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Generally: Illusive promise (a promise in which the promisor has not committed herself in any manner) NO consideration, NO detriment.
Except: What appears to be illusion creates a new obligation (e.g. A agrees to sell B a car, unless he gives a notice that he changed his mind by 12/1, where changin ghis mind by itself could be an illusory promise, by adding notice by 12/1 it adds new illusion. |
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Consideration Substitutes: Rule
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A written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration.
E.g. D owes C $1000. Legal action to collect this debt is barred by the SOL. D wrote to C "I know that I owe you $1000. I will pay you $600." C can collect the $600 because 1) written promise 2) to satisfy an obligation 3) for which there is a legal defense 4) New deal is enforceable without tconsideration |
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Consideration Substitutes
Written Realase of Claim for Breach of Sale |
Under 1-107, a written release of all or part of a claim for breach of a K for sale of goods is enforceable without consideration.
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Consideration Substitutes
Seal |
Not a consideration substitute.
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Consideration Substitutes
Promissory Estoppel |
Element;
1) Promise 2) Reliance that is reasonable, detrimental and foreseeable. 3) Enforcement necessary to avoid injustice. Comparison of Consideration and Promissory Estoppel: When nothing is in exchange, but statement is relied upon and is reasonable and foreseeable (e.g. X promises Y that X will not foreclose Y's mortgage. Y then paints her house. Is Y's painting of her house consideration for X's promise? No, as it's not in exchange for anything, however, it may be promissory estoppel and therefore a substitute for consideration in this case. |
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DEFENSES to Formation of K
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1) Capacity to K
2) SOF 3) Illegality, Misrepresentation, Duress 4) Unconscionability 5) Ambiguity 6) Mistake of Fact |
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DEFENSES to Formation of K
Capacity |
1) minor
2) mental incompetents: Lack ability to understand agreement. 3) intoxicated persons, if other party has cause to know. |
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DEFENSES to Formation of K
Consequences of Incapacity |
1) Right to disaffirm by person without capacity (party over 18 bound by K, but infant not)
2) Implied Affirmation: Person made agreement when under 18, person has gained capacity, person continues to get benefit from prior agreement: Creates implied affirmation and the K is enforceable. 3) Liability for Necessity: Even a person without capacity is required to pay for necessities (rent, utilities) Legal basis is on quantum meruit, not K law. Measure of promise is not based on K, but on value of the promise. |
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DEFENSES to Formation of K
SOF: When K falls into SOF: Promise in consideration of Marriage |
When K is within SOF:
1) Promise in consideration of marriage: Pre-nup. Not merely a promise to marry, but a promise to do something or refrain from doing something. |
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DEFENSES to Formation of K
SOF: When K falls into SOF:\When K falls into SOF: Promise by executor or adminstrator to pay obligations of estate from his own funds |
2) Promise by executor or administrator to pay obligation of estate from his own funds. Not merely a promise to pay estate's expenses, but promise to pay from personal funds (D's estate paying for D's funeral does NOT fall under SOF)
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DEFENSES to Formation of K
Other promises to answer for (Guarantee) debts of another: |
A claims that B said she woudl pay for the pain A delivered to C. Not SOF, because merely a promise to pay. NOt guaranteeing for B. (e.g. A said he woudl pay if B did not pay--THAT'S a guarantee)
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When K falls into SOF:
Service K not capable of being performed within a year: |
Specific time period: Ignore what happens, key is what MIGHT happen.
EX: A promises to employ B for three years. Fall under SOF. E.g. X agrees to serve Y for the rest of X's life. Exempt from SOF b/c capable of performance in under a year (X or Y could die tomorrow) NOT under SOF. |
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When K falls into SOF:
Transfers of Interests in Real Estate of a Term of more than a year |
in other words, rent out property for less than a year, no SOF
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When K falls into SOF:
UCC 2 Approach to SOF: |
CL: Sale of goods for $ 500 or more.
UCC: Sale of goods falls under the SoF regardless of the amount. |
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IF K falls into SOF, is SoF satisfied?
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SoF requirement that the alleged agreement is generally satisfied by either performance or by a writing. Depends on the type of K involved.
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IF K falls into SOF, is SoF satisfied?
By performance? |
1) Service Ks:
Full performance by either party satisfies the SOF. 2) Sale of Goods Ks: Ordinary Goods: Full performance by either party satisfies the SOF, but only to the extent of the partial performance. 3) Real Estate Transfer K: Full payment by buyer of real estate CAN satisfy the SOF/ Partial performance is generally any two of the following three: 1) Part payment 2) Possession and/or 3) Improvement |
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IF K falls into SOF, is SoF satisfied?
By Writing? |
SoF Other than UCC: Generally, to satisfy the SoF in writing, writing itself must contain all
1) material terms 2) Signed by the person to be charged (e.g. D) |