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120 Cards in this Set

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The mnemonic for possible issues: Armadillos from Texas play rap, eating tacos.
Applicable law
Formation of contracts
Terms of contract
Remedies for unexcused nonperformance
Excuse of nonperformance
Third-party problems
How is a unilateral contract formed?
Results from an offer that expressly requires performance as the only possible method of acceptance.
On the exam: bilateral contract unless what two situations?
1. Reward, prize, contest
2. Offer expressly requires performance for acceptance
What are the elements of quasi-contract?
1. P has conferred a benefit on D,
2. P reasonably expected to be paid,
3. D realized unjust enrichment if P not compensated
What is the measure of recovery for quasi-contract?
The value of the benefit conferred--NOT the K price. K price is a ceiling if P is in default.
When does the UCC apply?
Sales of gooods
What body of law applies to a real estate K?
common law
What body of law applies to a services K?
common law
What body of law generally applies when a deal includes goods and non-goods?
Generally, it depends on what is the more important part of the deal
What is the exception to the general rule that, in a mixed deal, the applicable law depends on the most important part of the deal?
When the contract divides payment between the separate parts, the UCC applies to the sale of goods part and the common law applies to the rest.
Under what circumstances is a price term required for an offer?
Sales contract for real estate
Is a price term required in an offer for sale of goods?
NO--can still be an offer even without price term
What is the result of vague or ambiguous material terms in an offer? What kind of terms are considered vague or ambiguous on the exam?
A communication with vague or ambiguous material terms is not an offer.

Ambiguous terms--appropriate, fair, reasonable (e.g. "fair price")
What degree of specificity is required in a requirements K or output K?
A K for the sale of goods can state the quantity of goods to be delivered under the K in terms of the buyer's requirements or the seller's output.

What restrictions exist on a buyer's increased requirements in a requirements K?
Increase must be in line with prior demands, not unreasonably disproportionate.
When is an advertisement an offer for K purposes?
1. If it is in the nature of a reward.

2. If it specifies quantity and expressly indicates who can accept.
List four ways that a K offer can be terminated
1. Lapse of Time--time stated or reasonable time
2. Death of a party prior to acceptance
3. Words or conduct of Offeror (revocation)
4. Words or conduct of the Offeree (rejection)
What is the effect of death or incapacity of either party on an offer? State the general rule and the exception.
General rule: Death or incapacity of either party after the offer but before acceptance terminates the offer.

Exception: Irrevocable Offers
How may an offer be revoked by words and by conduct?
Unambiguous statement by offeror to offeree of unwillingness or inability to contact.

Unambiguous conduct by offeror indicating an unwillingness or inability to contract that the offeree is aware of.
Do multiple offers work a revocation of an offer? Can I make the same offer to A and B?
Multiple offers do not work a revocation; the offer can be "shopped around."
List 4 situations in which an offer cannot be revoked.
1. Option--promise and consideration
2. UCC Firm Offer
3. Offer that has resulted in reasonable, foreseeable detrimental reliance.
4. Start of performance pursuant to an offer to enter into a unilateral K.
What is an option?
An offer that offeror has promised to keep open in exchange for consideration.
What is the UCC "Firm Offer Rule"?
An offer cannot be revoked for up to 3 months if
(i) offer to buy or sell goods;
(ii) signed, written promise to keep the offer open; and
(iii) offeror is a merchant
For exam purposes, what is a merchant?
Generally, a merchant is a person in business.
A offers a unilateral K; B starts performance. Can A revoke the offer, and if not, for how long must A leave it open?
NO--must leave open for a reasonable time to complete performance.
For exam purposes, what is the difference between start of performance and mere preparation?
No performance until it has definitely begun, e.g. the paint is being applied to the wall.

Any doubt? Say mere preparation.
What are three methods by which an offer may be indirectly rejected?
1. Counteroffer
2. Conditional acceptance
3. Additional terms
What is the effect of making a counteroffer? What is its effect on an option?
A counteroffer generally kills the offer.

Counteroffers DO NOT terminate options.
For exam purposes, how to distinguish between a counteroffer and mere bargaining?
Statement = counteroffer

Question = bargaining
What is the effect of conditional acceptance?
A conditional acceptance terminates the offer.
How to recognize conditional acceptance on the exam?
Look for a response to an offer with if, only if, provided, so long as, but, or on condition that.
What is the effect under the common law of adding additional terms in an acceptance?
Under common law, a response to an offer that adds new terms is treated like a counteroffer rather than an acceptance (mirror image rule).
UCC: Acceptance of offer includes additional terms but does not make the acceptance conditional on the new terms. Is there a contract?
Generally, such a response is treated as an acceptance, and a K is formed.
UCC: Acceptance of offer includes additional terms but does not make the acceptance conditional on the new terms. Are the additional terms part of the K?
Additional terms become part of the K only if:
(i) Both parties are merchants, and
(ii) The additional term is not objected to by offeror.
What may an offer control regarding the mode of acceptance?
The offer can control the method of acceptance, the time that a distance acceptance is effective, or whether the offeree must give notice that it has accepted by performance.
What is the general rule regarding acceptance by start of performance?
Start of performance is acceptance. Starting to perform is treated as an implied promise to perform and there is a bilateral K.
What is the exception to the general rule that start of performance is acceptance?
Unilateral K--Completion of performance is required for acceptance. Offers to enter into unilateral Ks cannot be accepted by a promise.
Which types of communications are effective only when received?
All communications other than acceptance.
(Offers, revocations of offers, rejections).
What type of communication is effective when mailed?
An acceptance (generally)
If a rejection is mailed before an acceptance is mailed, which is effective?
Neither is effective until received; i.e. the first one received is effective.
What is the primary limitation on the mailbox rule?
You cannot use the mailbox rule to meet an option deadline.
Is a rejection effective when the envelope is received or when the offeror actually knows what is in the envelope?
When the envelope is received; no knowledge by offeror is necessary.
UCC: What result when seller of goods sends the "wrong" goods?
General Rule: Acceptance and breach
What is the accommodation exception to the general rule that seller sending the wrong goods constitutes acceptance and breach?
Accommodation: If the seller sends the wrong goods with an explanation that "I hope these will serve your purposes instead," it's a counteroffer and no breach.
Who can accept an offer?
Generally, only a person who knows about the offer at the time she accepts who is the person to whom the offer was made.
Can an offer be assigned?
NO--except for OPTIONS, which may be assigned.
What is the three-step process for analyzing a consideration problem?
1. Identify the promise breaker
2. Ask whether that person asked for something in return for her promise
3. Look at the person trying to enforce the promise, and ask what requested legal detriment that person sustained.
Can a promise be consideration?
Oh hell yes.
What is an illusory promise?
A promise that doesn't really promise anything; allows promisor to get out of it. NOT CONSIDERATION
What is past consideration? What is the general rule regarding past consideration, and the exception to the rule?
Past consideration is something that was promised or occurred in the past. It is generally not consideration, UNLESS it was expressly requested by the promisor and the promisee expected payment.
How does the common law treat a preexisting contractual or statutory duty as consideration?
Under common law, doing what you are already legally obligated to do is not new consideration in exchange for a new promise, including K modification.
What are the exceptions to the common law rule regarding inadequacy of preexisting contractual or statutory duty as consideration?
1. Addition to/change in performance counts as consideration for new promise (e.g. sing a different song; paint a different room)

2. Unforeseen difficulty so severe as to excuse performance.

3. Third party promise to pay.
What consideration is requred to modify a K under the UCC?
New consideration is not required to modify a sale of goods K; good faith is the test for changes to an existing sale of goods K.
Can part payment serve as consideration for release? (i.e. promise to forgive balance of debt)
If the debt is due and undisputed, then part payment is NOT consideration for promise of release. If the debt is not due or is disputed, then part payment may serve as consideration for a promise of release.
List three consideration substitutes.
1. Seals--minority
2. Written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration. (think statute of limit'ns)
3. Promissory estoppel
What are the elements of promissory estoppel?
1. Promise
2. Reliance that is reasonable, detrimental, and foreseeable
3. Enforcement necessary to avoid injustice
Who lacks capacity to contract?
1. Infant--under 18
2. Mental incompetents--lack ability to understand agreement
3. Intoxicated persons IF other party has reason to know
What are the consequences of incapacity?
1. Right to disaffirm by person without capacity
2. Implied affirmation by retaining benefits after gaining capacity (ratification)
3. Quasi-K liability for necessities (NOT K law)
What are "necessities" for purposes of quasi-K law of incapacity?
food, clothing, medical care or shelter
What kinds of Ks are within the statute of frauds?
1. Promises to answer for debt of another
2. Service K not CAPABLE of complete performance within a year
3. Transfers of interest in real estate EXCEPT leases 1 yr or less
4. Sale of goods for $500 or more
5. Lease of goods for $1000 or more
What is a suretyship?
A promise, within the statute of frauds, in which A promises to pay if B does not--LOOK FOR A GUARANTEE
What is the "main purpose exception" to a suretyship that would otherwise be within the statute of frauds?
If the "main purpose" of the obligation allegedly guaranteed was to benefit the guarantor, then not even that guarantee is within the statute of frauds.
Does the staute of frauds apply to a task when there is nothing in the K about time?
NO--must assume unlimited resources to complete the task.
Does the statute of frauds apply to an obligation for life?
NO--life might end tomorrow
Does the statute of frauds apply to sale of an easement?
YES--transfer of interest in property
Two of these three things are necessary for performance to satisfy statute of frauds in a real estate transfer:
1. Improvements to the land
2. Payment
3. Possession
When does performance satisfy statute of frauds in a service K?
When either party has fully performed.

Part performance of a services K does NOT satisfy the statute of frauds.
Sale of goods K: Does seller's part performance satisfy statute of frauds?
Generally, yes--but only to the extent of the part performance; statute of frauds not satisfied as to remaining performance (e.g. undelivered goods)
What is the effect (vis-a-vis statute of frauds) of seller's part performance on a K for specially manufactured goods?
Statute of frauds is satisfied as soon as the seller makes a substantial beginning--has done enough work that it is clear that what she is working on is special/made to order.
What must be included in a writing to satisfy statute of frauds other than the UCC?
1. All material terms (who and what)
2. Signature by the person asserting the statute of frauds defense
What must be included in a writing to satisfy the UCC's statute of frauds?
Writing must indicate that there is a K for sale of goods and must contain the quantity term. Generally must be signed, with an exception.
What is the exception to the UCC rule that a writing must be signed by the person asserting the defense to satisfy its statute of frauds?
When a merchant fails to respond to another merchant. Merchant A receives a signed writing with a quantity term from Merchant B but does not respond within 10 days of receipt
What is the writing requirement under 2A for a lease of personal property to satisfy the statute of frauds?
Writing must
1. Indicate that it is a lease
2. Describe what is being leased
3. State the duration of the lease
How does judicial admission satisfy the statute of frauds? To what types of Ks does it apply on the exam?
If a defendant admits in pleading or testimony that he had an agreement, S of F is satisfied. Apply this only to sales of goods questions.
How does the statute of frauds apply to questions on the bar exam other than whether there is a statute of frauds defense to enforcement of an agreement?
1. Equal dignities rule: Agent authorized to enter a K within statute of frauds-->authorization must be in writing satisfying S of F

2. K modification--more detail on another flashcard
When do rules of law require written evidence of modification of a written K?
When the deal with the alleged change would be within the S of F, then the modification agreement must be in writing.
What if an agreement is in writing and requires that all modifications be in writing?
Common Law: Requirement not effective; ignore K language.

UCC: Requirement effective unless waived. (even if deal with modification is not within S of F)
What is the rule regarding illegal subject matter/illegal purpose?
If the subject matter is illegal, the agreement is not enforceable. If the subject matter is legal but the purpose is illegal, the agreement is enforceable ONLY by the person who didn't know of the illegal purpose.
On the exam, what facts indicate that a K should not be enforced as a matter of public policy?
An exculpatory agreement that exempts intentional or reckless conduct from liability, or
A covenant not to compete without a reasonable need or reasonable time and place limits
What facts give rise to a misrepresentation issue?
1. Statement of fact before the K,
2. by one of the contracting parties or her agent,
3. that induces the K,
4. that is false.

NO wrongdoing required (doesn't require intent to mislead).
When is nondisclosure grounds for rescission of a K?
Generally, a person has no duty to disclose. Only when disclosure includes wrongdoing. Look for fiduciary-like relationship or concealment.
What is the result of a mutual mistake of fact without assumed risk?
K may be rescinded.
What is the result of a unilateral mistake of material fact?
Generally, courts are reluctant to let a party avoid a K for unilateral mistake UNLESS the other party had reason to know of the mistake.
Describe the parol evidence rule for purposes of the bar exam.
The issue is whether evidence is admissible; purpose for which the evidence is to be introduced is often determinative. The essence of the rule is the exclusionary effect of written K on earlier (or contemporaneous) agreemeents as a possible source of terms of the K.
What is an integration for purposes of the parol evidence rule?
A written agreement that the court finds is the final agreement, triggers the parol evidence rule.
What is a partial integration?
An agreement that is written and final, but not complete.
What is a complete integration?
Written and final and complete.
What is a merger clause? What is its effect on the parol evidence analysis?
A K clause that states "this is the complete and final agreement."

A merger clause is persuasive, but not conclusive evidence that the written agreement is complete and final.
What is parol evidence?
Oral or written words of a party before integration.
What is reformation?
Equitable action to modify a written K to reflect actual agreement, often after admission of parol evidence.
The parol evidence rule prevents a court from ____________ or ______________ terms of a written K, regardless of whether is is a ________________ or ______________ integration.
Can a court consider parol evidence to determine whether there was a mistake in integration; i.e. a mistake in reducing the agreement to writing?
Can a court consider parol evidence in determining whether there is a defense to the enforcement of the agreement such as misrepresentation, fraud, or duress?
FUCK YES, regardless of whether the writing is a complete or partial integration.
Can a court consider parol evidence to resolve ambiguities in the written K?
HELL YES--regardless of wether the writing is a complete or partial integration.
Under what circumstances may a court consider evidence of earlier agreements as a source of consistent, additional terms?
If the court finds that
-The written agreement is only a partial integration, OR
-The additional terms would ordinarily be in a separate agreement.
What facts will most often trigger a statute of frauds question? A parol evidence question?
S of F--oral agreement, absence of writing

Parol evidence--writing; written agreement
What types of conduct can serve as a source of contract terms? List them in order from most persuasive to least persuasive.
1. Course of Performance--same parties, same K
2. Course of Dealing--same parties, different but similar K
3. Custom and Usage--different but similar parties, different but similar K
Under the UCC, what does the seller have to do to complete its delivery obligation by common carrier under a shipment K?
Seller's delivery obligation is complete when it (i) gets the goods to a common carrier, and (ii) makes reasonable arrangements for delivery, and (iii) notifies the buyer.
Under the UCC, what does the seller have to do to complete its delivery obligation by common carrier under a destination K?
Seller's delivery obligation is complete when the goods arrive where the buyer is.
How to tell if a K for sale of goods delivered by common carrier is a shipment K or a delivery K?
Shipment-FOB followed by city where seller is or where goods are

Delivery-FOB followed by any other city

Most Ks are shipment Ks
What facts give rise to a risk of loss problem?
1. After K has been formed but before buyer receives the goods;
2. goods are damaged or destroyed;
3. neither the buyer nor the seller is to blame.
What are the possible consequences in a risk of loss problem?
If on the buyer, he has to pay the full K price for the lost or damaged goods.

If on the seller, no obligation for the buyer; seller may be liable for nondelivery.
What is the first risk of loss rule to apply?
Agreement--agreement of the parties as to risk of loss controls.
What is the second risk of loss rule to apply?
Breach--breaching party is liable for any uninsured loss even though breach is unrelated to problem.
What is the third risk of loss rule to apply?
Delivery by common carrier other than seller--risk of loss shifts from seller to buyer at the time the seller completes its delivery obligations.
What is the fourth risk of loss rule to apply?
No agreement, no breach, no delivery by common carrier--risk of loss determined by whether SELLER is a merchant--shifts from merchant-seller to buyer on buyer's "receipt" of the goods; shifts from non-merchant seller to buyer on seler's "tender" of the goods
When have goods been "tendered" by a non-merchant seller?
When they are made available to the buyer.
Under a 2A lease of personal property, what is the general rule as to risk of loss?
Unallocated risk of loss is on the lessor UNLESS it is a finance lease.
What is an express warranty of quality?
Words that promise, describe, or state facts; or use of a sample or model. Distinguish from sales talk, which is more general, an opinion.
What is the implied warranty of merchantability? What is the triggering fact on the exam?
A warranty attaching to any goods sold by any merchant--states that goods are fit for ordinary purpose for which such goods are used.

Triggering fact--seller is a merchant; deals in goods OF THAT KIND
What is the implied warranty of fitness for a particular purpose? What is the triggering fact on the exam?
a. Triggering facts--Buyer has a particular purpose; buyer is relying on seller to select suitable goods; seller has reason to know of purpose and reliance.

b Warranty: goods fit for particular purpose
What are the 2A warranties on leases?
Implied warranty of merchantability on leases of goods. In finance leases, lessee must continue lease payments but can proceed against seller.
What is the effect of disclaimer on implied warranties? How can implied warranties be disclaimed?
Disclaimer eliminates implied warranties, but NOT express warranties. Disclaim by CONSPICUOUS language of disclaimer, or by selling "as is" or "with all faults."
How can contract terms limit warranty liability?
Limitation of remedies: Does not eliminate warranties; simply limits or sets recovery for any breach of warranty.
For what kinds of warranties may remedies be limited by contract provision?
Possible to limit remedies for any warranties, even express warranties.
What is the general test for when a K provision limiting warranty remedies is valid?
It is valid unless unconscionable.
When is a limitation of warranty remedies prima facie unconscionable?
When the breach of warranty on consumer goods causes personal injury.
What three things must I know about perfect tender for the bar exam?
1. Perfect tender applies only to sales of goods.
2. Perfect tender means that seller's performance must be perfect: perfect goods, perfect delivery.
3. Less than perfect tender by seller generally gives the buyer the option of rejecting the delivered goods.
What can a buyer do if seller of goods does not meet the perfect tender standard?
Buyer has option to retain and sue for damages or to reject "all or any commercial unit" and sue for damages.
In what situations may a seller "cure" imperfect tender?
1. Seller's reasonable ground to believe goods tendered would be acceptable, perhaps with a money allowance. Look for info in fact pattern about prior dealings with such an allowance.

2. Time for seller's performance has not yet expired.