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47 Cards in this Set
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CONTRACTS
Level 1 Tested Subjects |
Applicable Law: UCC v. CL
Formation Terms 3P Rights Conditions Performance Breach Remedies Fixtures |
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CONTRACTS
Level 2 Applicable Law: UCC v. CL |
Rule: Common Law
UCC Definitions: Goods Merchants Mixed Goods/Services K ---Predominate Factor Test ---Gravament of Injury Test |
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CONTRACTS
Level 2 Formation |
Offer *
Termination * Acceptance * *AGREEMENT Consideration Modification ---CL: Modification needs consideration. ---UCC: Good faith modification of K w/o consideration Defenses |
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CONTRACTS
Level 2 Terms |
Parol Evidence
UCC -- Parol Evidence -- Warranties |
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CONTRACTS
Level 2 3P Rights |
Third Party Beneficiary
Assignment Delegation |
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CONTRACTS
Level 2 Conditions |
Is there a condition?
Has it been excused? |
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CONTRACTS
Level 2 Performance |
Satisfied
Discharged ---Impossibility ---Impracticability ---Frustration |
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CONTRACTS
Level 2 Breach |
Major
Minor |
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CONTRACTS
Level 2 Remedies |
Damages
Restitution Specific Perform.-(IDFMD) ---Inadequate Legal Remedy ---Definite & Certain Terms ---Feasibility of Enforcement ---Mutuality ---Defenses |
1. Compensatory
.. a. Expectation - Put party in position had breach not occured .. b. Consequential - where a reasonable person would have foreseen at time of entering the contract 2. Liquidated .. a. Actual damages are difficult to ascertain at time contract was formed .. b. Amount agreed upon is a reasonable forecast of compensatory damages 3. Punitive Damages - Generally not available 4. Specific Performance - Generally NO .. a. Land and Unique goods .. b. Injunction preventing from working for competitor may occur 5. Restitution - Quasi Contract - Equity |
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CONTRACTS
Level 2 Fixtures - (UCC Art. 9) |
Proper Filing
Priority Rules |
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CONTRACTS
Level 3 - Formation Offer |
Manifestation of present intent to enter a bargain communicated in definite and certain terms to an identifiable offeree. An offer confers the power to create a contract by taking specific action.
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What constitutes an offer?
1. Offer - Creates the power of acceptance in the offeree . .a. A manifestation of a present intent to contract demonstrated by a promise, commitment, or undertaking . .b. Definite and Certain Terms . . . . . . (i) Vague terms defea - appropriate, fair, reasonable . .c. Communicated to offeree |
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CONTRACTS
Level 3 - Acceptance |
Unconditional assent to be bound by the offer.
***What are the basic rules of acceptance?*** ***What is the mailbox rule?*** |
1. Common Law - Mirror Image Rule
2. UCC . . a. Any acceptance is valid unless conditional on new terms . . b. Non-merchants - proposals . . c. Merchants - Become part unless . . . . . . (i) Materially alter . . . . . . (ii) Expressly limits acceptance . . . . . . (iii) Objects in reasonable amount of time . . d. Performance as if a contract exists 3. Prior Dealings - Silence may be acceptance 4. Unilateral - Starting creates an option Mailbox Rule: Acceptance is valid upon dispatch. 1. Mailbox rule - Exceptions . . a. Offer stipulates not accepted until receipt . . b. Option K . . c. Rejection-Accept - Whichever comes first |
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CONTRACTS
Level 3 - Consideration |
Promise or act in exchange for promise or act in which there is legal detriment.
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1. Bargain - Exchange something
. . a. Gift - no bargain . . b. Past Moral Consideration - promise to pay an unenforceable obligation is made in writing or partially performed 2. Legal Value . . a. Legal Detriment or Benefit . . b. Preexisting Duty - Is not a detriment, unless: . . . . . (i) New or different consideration promised . . . . . (ii) Owed to a third person . . c. Release from debt - If disputed or not due yet 3. Substitutes . . a. Promissory Estoppel / Detrimental Reliance . . . . . (i) Promise . . . . . (ii) Reliance that s reasonable, detrimental and foreseeable . . . . . (iii) Enforcement necessary to avoid injustice |
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CONTRACTS
Level 3 - Third Party Beneficiary |
Contract intended for the benefit of a third party.
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CONTRACTS
Level 3 - Third Party Beneficiary Assignment |
Present transfer of one's rights under a contract. Assignments are generally valid without consideration.
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CONTRACTS
Level 3 - Delegation |
Transfer of one's duties under a contract. Delegations are generally valid without consideration.
***What are the considerations when discussing delegation of duties?*** |
1. Delegation of Duties
. . a. Generally all can be delegated. Except . . . . . (i) Duties involving personal judgment and skill . . . . . (ii) Special person or attribute . . . . . (iii) Prohibited by contract . . b. Delegator is always liable |
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CONTRACTS
Level 3 - Conditions |
An event that must be excused or satisfied before a duty to perform becomes absolute.
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CONTRACTS
Level 3 - Conditions Excuse of conditions |
Non-occurrence of a condition may be completely excused, thereby triggering performance in the other party.
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CONTRACTS
Level 3 - Conditions Anticipatory Repudiation |
Definite and unequivocal language that a party intends not to perform. The aggrieved party can await performance or resort to breach remedies.
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CONTRACTS
Level 3 - Conditions Wrongful Prevention |
Anticipatory Repudiation by conduct - party prevents occurrence of a condition.
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CONDITIONS
Level 3 - Breach |
Unjustified failure to perform an absolute duty.
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CONDITIONS
Level 3 - Breach Major/Material Breach (Basis of Bargain) |
Non-breaching party does not receive the substantial benefit of his bargain.
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1. Material - No substantial benefit, 1/2,
. . a. Treat contract at an end . . b. Sue for damages 2. Minor . . a. Must still perform . . b. But still damages available |
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CONDITIONS
Level 3 - Fixtures |
Goods that have become so affixed to realty that they become part of the realty. Chattel interest may become subordinate to real property interest unless protected by Article 9.
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CONDITIONS
Level 3 - Fixtures Proper Filing |
Proper filing gives goods priority over competing real property interests.
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CONDITIONS
Level 3 - Fixtures Priority Rule |
A perfected security interest in fixtures has priority over conflicting interests.
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CONTRACTS
CL vs. UCC Offer |
CL:
-Terms ---Definite & Certain -Keep offer open ---Option K ---Reliance UCC: -Terms ---Quantity ---Gap Fillers -Merchant Firm Offer Rule |
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CONTRACTS
CL vs. UCC Acceptance |
CL:
-Unequivocal assent Mirror Image Rule UCC: -Any reasonable manner -2-207 -- Additional Terms -Issues ---Offer for prompt shipment - accepted by shipment or promise ---Nonconfoming - ---Acceptance + Breach ---Counteroofer with notice |
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CONTRACTS
CL vs. UCC Consideration |
CL:
Modification requires consideration UCC: Modification in good faith binding without consideration |
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CONTRACTS
CL vs. UCC Defenses |
CL:
-S of F ---Sufficient memo ---No written confirmation rule UCC: -S of F ---Liberalized ---Written Confirmation rule |
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CONTRACTS
CL vs. UCC Parol Evidence |
CL:
-See Rule UCC: -Liberalized |
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CONTRACTS
CL vs. UCC Breach |
CL:
-Substantial Performance UCC: -Perfect Tender Rule |
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CONTRACTS
Level 3 - Formation What are the 4 defenses to formation? |
1. Absence of Mutual Assent
2. Lack of Capacity 3. Statute of Frauds 4. K requires modification in writing - Only followed under UCC |
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CONTRACTS
Level 3 - Formation What is the defense of Absence of Mutual Assent? |
1. Absence of Mutual Assent
. . a. Mutual Mistake - Both thought cow could not calf . . . . . (i) Basic assumptions . . . . . (ii) Material adverse effect . . . . . (iii) Did not assume the risk . . b. Latent Ambiguities - Peerless - No K unless both had same meaning . . . . . (i) One party - binding based on what ignorant party believed . . c. Misrepresentation . . . . . (i) Fraudulent Misrepresentation - that causes reliance . . . . . (ii) Or unknown false info that is material . . d. Public Policy - Illegality |
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CONTRACTS
Level 3 - Formation What is the defense for lack of capacity? |
2. Lack of Capacity - Under 18, Mental, Intox, Duress
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CONTRACTS
Level 3 - Third Party Beneficiary When does a third party beneficiary arise? |
1. Third Party Beneficiary
. . a. Intended - Named in K . . b. Creditor or Donee . . c. Vested - Can sue for breach or modification . . . . . (i) Manifest assent in manner requested . . . . . (ii) Suit to enforce . . . . . (iii) Materially changes position . . d. Who Can Sue . . . . . (i) 3rd Party v. Promisor - Promisor can defend sim to promise . . . . . (ii) 3rd Party vs. Promisee - Only if creditor beneficiary . . . . . (iii) Promisee v. Promisor |
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CONTRACTS
Level 3 - Third Party Beneficiary When are assignments restricted? |
1. Generally all rights can be assigned except:
. . a. Would substantialy change the obligors risk . . b. An assignment of future rights to arise from future Ks 2. Non-Assignment Provisions . . a. Prohibit - does nothing, still allows obligor to sue . . b. Void - Prevents |
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CONTRACTS
Level 3 - Third Party Beneficiary What are the rights under an assignment? |
1. Irrevocable with consideration
2. Who can Sue whom . . a. Assignee v. Obligor - defense against assignor . . b. Assignee v. Assignor - Warrants that . . . . . (i) It exists . . . . . (ii) Not subject to defenses . . . . . (iii) Will not impair 3. Obligor has duty to pay assignee once notice of assigment 4. Multiple . . a. Gratuitous - Last in time wins . . b. Consideration - 1st wins, unless 2nd has no notice and collects 1st. |
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CONTRACTS
Level 3 - Formation How can an offer terminate? |
1. Termination of Offer
. . a. REvocation - But be careful of . . . . . (i) Option . . . . . (ii) Firm Offer . . . . . (iii) Detrimental Reliance . . . . . (iv) Unilateral K . . b. Rejection, Lapse of Time . . c. Termination by law . . . . . (i) Death . . . . . (ii) Destruction of Subject Matter . . . . . (iii) Illegality |
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CONTRACTS
Level 3 - Formation What is Consideration |
A bargained for exchange between the parties involving legal value.
1. Bargain - exchange something .. a. Gift - no bargain .. b. Past Moral Consideration - promise to pay an unenforceable obligation is made in writing or partially performed. 2. Legal Value .. a. Legal Detriment or Benefit .. b. Preexisting Duty - s not a detriment, unless: . . . . . (i) New or different consideration promised . . . . . (ii) Owed to a third person .. c. Release from debt - If disputed or not due yet 3. Substitutes .. a. Promissory Estoppel / Detrimental Reliance . . . . . (i) Promise . . . . . (ii) Reliance that is reasonable, detrimental and foreseeable . . . . . (iii) Enforcement necessary to avoid injustice |
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CONDITIONS
Level 3 - Statute of Frauds What is required for the statute of frauds? |
1. Statute of Frauds -- MY LEGS
.. a. Executor out of own pocket .. b. Surety .. c. Marriage .. d. Land .. e. Year .. f. Goods > $500 2. Reqs. .. a. UCC - Just quantity .. b. CL - Who and what 3. Defense .. a. Full performance .. b. Real Estate (2/3) Payment, Possession, Improvements |
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TERMS
Level 3 What are the considerations when discussing the terms of a contract? |
1. Interpretation of Terms
.. a. Course of Contract .. b. Course of Parties .. c. Custom in Industry 2. Mistake and ambiguous terms* 3. Parol Evidence Rule 4. Modification .. a. Additional Consideration under C.L. .. b. Good Faith under U.C.C. .. c. May need writing under Statute of Frauds |
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TERMS
Level 3 What is the Parole Evidence Rule? |
Evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary terms are barred.
Exceptions: 1. Used to show formation defects - fraud, duress, mistake 2. Intent regarding ambiguous terms 3. Collateral agreement that does not contradict and is closely related to main agreement |
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Performance
Level 3 What are the 3 areas to discuss when analyzing peformance? |
1. Condition
2. Discharge of Duties 3. Beach |
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Conditions
Level 3 What are conditions and how must they be satisfied? |
1. Types of Conditions
.. a. Express, implied, or constructive .. b. Precedent, concurrent, subsequent 2. Satisfaction of conditions - Strict Compliance |
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Conditions
Level 3 When are conditions excused? |
1. Excuse of Conditions
.. a. Inability or Unwillingness to perform . . . . . (i) Mere doubts . . . . . (ii) Suspend until adequate assurances of performance .. b. Anticipatory Repudiation . . . . . (i) Unequivocal . . . . . (ii) Must be unperformed duties on both sides . . . . . (iii) Results: . . . . . . . . . . . . (A1) Immediate breach, suspend, rescind, ignore . . . . . (iv) Can be treacted until non repudiating party relies . . . . . (v) Waiver . . . . . . . . . . . . (A1) May waive condition by saying will not insist on it . . . . . . . . . . . . (A2) Detrimental reliance makes estoppel |
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PERFORMANCE
Level 3 What is required for a discharge of duties? |
RAIN MI
1. Impossibility - Objective - Nobody could perform .. a. Death, Illegality, Destruction 2. Impracticability - Subjective .. a. Extreme and unreasonably difficult, unanticipated 3. Modification of K - Old K is canceled .. a. Similar to Accord and Satisfaction, except it is not conditional 4. Rescission .. a. Neither party has fully performed, partial in Bilateral is OK .. b. Mutual agreement to quit .. c. Third party beneficiary consent if present 5. Novation - Similar to delegaion, but there is consent on both sides .. a. Agreement to switch parties to contract by ALL parties 6. Accord and Satisfaction .. a. One party agrees to accept performance different than originally promised. .. b. Can recover either new or old duty if there is a breach |
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FORMATION
Level 3 What is the covenant of good faith and fair dealing? |
All contracts implicitly include the covenant of good faith and fair dealing. It says that both parties will attempt to act in a fair and honest manner.
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