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155 Cards in this Set
- Front
- Back
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Out of the following three things, reliance, restitution, and expectation, can one expect to get the most remedies from on average?
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Expectation
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Say the conditions of the following: mandatory, default and optional provisions
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mandatory: may not be displaced, default: apply unless displaced, optional; apply only if invoked
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When does the UCC govern contracts?
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First, there must be a sale of goods; second there must be a specific provision of UCC applicable
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What is the definiteness, consideration and statute of frauds for law of sales?
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open terms permitted if parties intend to make a contract, consideration is not required, and quantity term is the statute of frauds
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What are the five types of names given to contracts?
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executory/executed; valid/unenforceable/voidable/void; unilateral/bilateral; formal/informal; express/implied
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When is there a transition from executory to executed contract?
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one both parties perform
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Bilateral contract
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When both parties promise to perform an act
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Unilateral contract
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When one party promises another party something in return; the other party does not make a promise and is under no legal obligation to perform
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Formal Contract
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validity based on form: sealed contact, negotiable instrument, letter of credit, recognizance
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Informal Contract
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valid if agreement meets all of the requirements of a binding contract
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Express Contract
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An agreements that is stated in WORDS either orally or in writing
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Implied Contract
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An agreement that is inferred from the conduct of the parties
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What six things have to be satisfied in what order for a contract to be valid?
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mutual assent (Y), consideration (Y), capacity (Y), Invalidating contract (N), subject matter legal (Y), statute of frauds satisfied (Y)
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Promissory Estoppel
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When a noncontractual promise plus detrimental reliance by the promisee will result in an enforceable promise
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What type of promises are the following: contract, promissory estoppel and quasi contract?
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contractual; noncontractual; noncontractual, void, unenforceable, or invalidated
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What type of requirements are needed for the following: contract, promissory estoppel and quasi contract?
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all the essentials of a contract; detrimental and justifiable reliance; benefit conferred and knowingly accepted
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What types of interests protected are the following: contract, promissory estoppel and quasi contract?
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expectation, reliance, restitution; reliance; restitution
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What type of remedies are the following: contract, promissory estoppel and quasi contract?
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equitable, compensatory, reliance, restitution; promise enforced to the extent necessary to avoid injustice; reasonable value of benefit conferred
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What things can terminate a revocable offer?
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lapse of time, revocation, rejection, counteroffer, death, destruction of subject matter, subsequent illegality
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What are the open terms not permitted under the UCC and Restatement?
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subject matter and quantity
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What are the open terms permitted under the UCC and Restatement?
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quantity (output or requirement), price, quality, time, and payment
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What terms must be included under Common Law for a contract?
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subject matter, quantity, price, quality, time and payment
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What things can create irrevocable offers?
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option contracts, firm offers under U.C.C, other statutes, offers of unilateral contracts, promissory estoppel
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Option contract
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contract binding an offeror to keep an offer open for a specified time (includes stocks, land, derivates, etc.)
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Firm offer
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offer to buy or sell goods bya merchant in a signed writing that gives assurance that it will not be terminated for up to three months
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Statutory irrevocability
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offers made irrevocable by statute such as preincorporation stock subscriptions
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when can a unilateral contract not be revoked?
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offer may not be revoked for a reasonable time after offeree begins to perform requested act
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promissory estoppel as an irrevocable offer
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noncontractual promise that binds offeror to keep an offer open when the offeree foreseeably and reasonably relies if offeree will suffer injustice if it is revoked
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What has to be satisfied in order for a contract to be formed (assuming all other requirements if a binding contract)
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there has been a definite and certain offer communicated; the offeror has not revoked the offer; the offeror has not received a rejection or counteroffer; there has been no lapse of time, death, incompetency, destruction of subject matter, or subsequent illegality; and the acceptance is effective
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How does an offeree accept a unilateral contract?
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offeree's performance of the requested act or forebearance
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When is acceptance effective and what is the effect of this?
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when it is SENT by the offeree,not received; offeror does not like this since he/she is unaware until it is received if contract is effective
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What two things satisfy consideration?
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Sufficient legal detriment or legal benefit + bargained mutually agreed upon exchange
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What four things will make legal detriment legally sufficient
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doing, promising to do, refraining from doing, promising to refrain from doing: all four of these are things that which the person was under no prior legal obligation to either do or to refrain from doing. (the refraining part refers to forebearance)
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Illusory Promise
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a promise worded so that the fulfillment of the promise is left to the election of the promisor (this is not consideration)
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What kind of consideration is required for a modifying contract of an original contract under common law, Restatement and UCC?
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common law: consideration is required...Restatement: consideration is required unless modification is fair and equitable in light of facts not anticipated when contract was made...UCC: no consideration required if modification is made in good faith
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What is good faith for a non-merchant?
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honesty in fact in the conduct or transaction concerned
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What is good faith for a merchant?
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honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade
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If yes to A's promise is to pay an obligation (1) barred by the statute of limitations (2) discharged in bankruptcy or (3) that is voidable, what consideration is needed
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A's promise is binding without consideration
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A's promise is subject to the UCC and is a (1) modification of a sales contract, (2) renunciation of a claim, or(3) firm offer by a merchant...say what occurs if Yes and No
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Yes: A's promise is binding w/o consideration under the U.C.C...No: A's promise is not binding
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What six things fall under the statute of frauds? (*Hint MYLEGS)
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suretyship, executor, marriage, land, sale of goods and not performed within one year
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T/F...contracts within statute of frauds have to be in writing?
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TRUE
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What happens in a suretyship? What are some exceptions?
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A surety (party C) promises to pay debt if principal(party A) does not to creditor (party B)...main purpose rule, original promise, or promise made to debtor
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What are some exceptions for executor-administrator?
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main purpose rule, original promise, or promise made to debtor
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What are some exceptions for marriage?
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mutual promise to marry
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What are some exceptions for land?
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past performance plus detrimental reliance, seller conveys property
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What are some exceptions for one year?
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full performance by one party, possibility of performance within one year
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What are some exceptions for sale of goods?
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admission, specially manufactured goods, and delivery or payment and acceptance
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What does the Parol Evidence Rule state?
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When a contract is expressed in a writing that is intended to be the complete and final expression of the rights and duties of the parties, the parol evidence rule excludes prior oral or written negotiations or agreements of the parties or their contemporaneous oral agreements that vary or change an integrated written contract
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What does the Parol Evidence Rule act on (time frame)?
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the past and present, not anything in the future
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What the three kinds of relationships one can have when dealing with two parties?
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arm's length transactions, confidential relationships, fiduciary relationships
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What are examples of fiduciary relationships?
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trustee-beneficiary, agent-principal, partner-partner(ship), director-corporation
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What are examples of confidential relationships?
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parent-child, physician-patient, spouse-spouse, guardian-ward
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What are some examples of invalidating conduct?
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duress, undue influence, fraud, and misrepresentation
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What are the two types of duress and state whether void or voidable?
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physical duress (void) and threats (voidable)
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What is undue influence and is it void or voidable?
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use of a dominant position based on a confidential relationship to take unfair advantage of the other party (voidable)
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What are the two types of fraud and is it void or voidable?
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execution (void) and inducement (voidable)
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What are the two types of misrepresentation and is it void or voidable?
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negligent (voidable) and innocent (voidable)
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What is the type of fault for fraudulent, negligent and innocent misrepresentation?
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scienter; without due care; without knowledge but with due care
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For the graduated standards of conduct what are the five levels of relationships from least serious to most?
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arm's length, contracting parties (UCC), contracting parties (Restatement) and Merchants (UCC), confidential relationships, and fiduciary relationships
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What are the damages for fraudulent, negligent, and innocent misrepresentation?
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benefit of bargain, out of pocket, out of pocker
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Out of pocket damages
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value given - value received (falls in the realm of restitution, giving back what received)
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Benefit of bargain damages
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value represented - value received (the value had the seller's statement been true)
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Can A recover property from C (good faith purchaser, this includes minors in transactions other than a sale of goods) if there is a void transfer of property from A to B?
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Yes
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Can A recover property from C (good faith purchaser, this includes minors in sales of goods) if there is a voidable transfer of property from A to B?
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No
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Once an invalidating conduct has ceased, what can happen by the wronged party?
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he can either ratify the contract or disaffirm it (if doesn't disaffirm in time, contract is ratified)
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What is the liability for minors in executory and executed contracts in the majority?
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the minor may disaffirm the contract when he chooses (in most cases except when necessaries are used)
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What is a regulatory licensing statute?
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a statute intended to protect public against unqualified persons (unenforceable)
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What is a revenue licensing statute?
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statute intended to raise money and not to protect public against unqualified persons (enforceable)
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What is procedural and substantive unconscionability?
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procedural is unfairness in the bargaining process, substantive is grossly unfair terms in the contract; both are unenforceable
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What is the requirement for unconscionability?
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if a term of a contract is unconscionable at the time the contract is made
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What are the three remedies for unconscionability?
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refuse to enforce contract, enforce the conscionable part of contract, or limit application of the unconscionable term
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What three injuries can be sustained from product liability?
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economic loss (most common), personal injury, and property damage.
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What is the seller's duty for product safety?
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comply to the terms in the contract as well as pay for any foreseeable injuries and social costs
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How is an express warranty created? How is it disclaimed?
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affirmation of fact, promise, description or sample...usually not possible
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Out of express warranty, innocent misrepresentation and fraudulent misrepresentation, which is the easiest to prove?
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express warranty
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How is a warranty of title created? How is it disclaimed?
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seller contracts to sell goods...specific language or circumstances giving buyer reason to know that seller does not claim title
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How is a warrant of merchantability created? What is warranted? How is it disclaimed?
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merchant sells goods...fit for ordinary purposes...must mention merchantability, if in writing must be conspicuous, as is sale, buyer examination
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How is a warrant of fitness created? What is warranted? How is it disclaimed?
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seller knows buyer is relying upon seller to select goods suitable for buyer's particular purpose...fit for particular purpose...no specific words necessary in writing and conspicuous, as is sale, buyer examination
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Magnuson-Moss Act
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says implied warranties may not be disclaimed if a consumer product and a written warranty
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What is vertical privity? What is horizontal privity?
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who may be sued...who may sue
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What is the weakest protection under horizontal privity for a buyer?
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personal injury to buyer's family, household or guest
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Are the following defenses to product liability allowed under warranty: disclaimer, privity, notice, contributory negligence, comparative negligence, assumption of risk
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disclaimer (yes), privity (yes), notice (yes), contributory negligence (no), comparative negligence (some), and assumption of risk (yes)
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Are the following defenses to product liability allowed under strict liability?: disclaimer, privity, notice, contributory negligence, comparative negligence, assumption of risk
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disclaimer (no), privity (no), notice (no), contributory negligence (no), comparative negligence (most), and assumption of risk (yes)
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For product liability for strict liability in tort, what is answer to the following: condition of goods creating liability, disclaimer, notice to seller, who may sue, compensable harms, who may be sued.
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defective condition...not possible in consumer transaction...not required...any user or consumer of product...personal injury, property damage...seller who is engaged in business
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How could one limit uncertainty of proof in regards to remedies?
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include a liquidated damages clause in contract
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How could one deal with unforeseeability in regards to remedies?
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a party could acknowledge certain damages that may occur
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What does the expectation interest state?
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person put in as good of a position had the contract been performed
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What does the reliance interest state?
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person reimbursed for loss caused by reliance and put in a position had contract not been made
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What does the restitution interest state?
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person is reimbursed to a position they were before the contract had been made
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When are equitable remedies available?
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when there are no adequate legal remedies
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What is the equation for compensatory damages?
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(value of promised performance) - (value of actual performance) + (incidental and consequential damages) - (loss avoided by injured party)
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What is the foreseeability of contract damages?
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damages resulting in ordinary course of events + damages resulting in special circumstances if breaching party had reason to know of these circumstances
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What are the limitations on damages?
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certainty of damages (only recover for loss that is established with reasonable certainty) + mitigation of damages (only recover for loss the couldn't have been avoided by reasonable effort)
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What is the equation for reliance damages?
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(expenses incurred in preparation) + (expenses incurred in performance) + (foregoing other opportunities)
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What is the equation for restitution damages?
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(value of benefit conferred) - (value of benefit received)
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What is specific performance and when can it be used?
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court decree ordering breaching party to render promised performance of contractual obligations (real property and unique personal property)
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What are the three remedies in equity?
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specific performance, injunction, and reformation
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What is an injunction and when can it be used?
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court order prohibiting party from doing a specific act or engaging in specific conduct (restrictive covenant and exclusive personal services)
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What is reformation and when can it be used?
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court order correcting a written contract to conform with original intent of the contracting parties (mutual mistake and fraud)
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When does the UCC govern contract law?
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if it is a sale of goods and if there is a specific provision of the UCC available
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If A and B enter into a contract, under what six conditions, will both A and B be discharged?
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failure of a condition, substituted contract, mutual rescission, accord and satisfaction, subsequent illegality, impossibility
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If A and B enter into a contract, under what five conditions will A be discharged?
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A fully performs, B materially breaches, B materially alters contract documents, A and B substitute C for A, A discharged in bankruptcy
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Which five types of agreements can raise questions of public policy?
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restraint of trade, exculpatory clauses, unconscionable contracts, tortious conduct, and corrupting public officials/legislative process
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What two situations to restraint of trade usually occur?
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sale of a business and employment contracts
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What are some exceptions to the strict rule of unenforceability of contracts?
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party withdrawing before performance, party protected by statute, party not equally at fault, excusable ignorance, and partial illegality
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In which contractual situations is restitution available?
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party injured by breach, party in default, statute of frauds, and voidable contracts
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What three separate contracts are made by a substitute contract?
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original, contract of rescission, then the substitute contract
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What promises to perform prior unenforceable obligations without consideration are there?
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promise to pay debt barred by the state of limitations, promise to pay debt discharged in bankruptcy and voidable promises
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Original Promise
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if the promisor makes an original promise by undertaking to become primarily liable, the statute of frauds does not apply
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Main Purpose Doctrine
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where the main purpose of the promisor is to obtain an economic benefit for herself that she did not previously have, the the promise comes within this exception of the statute of frauds
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What are some exceptions to the UCC provision under the statute of frauds?
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admission, specially manufactured goods, and delivery or payment and acceptance
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What test is used to assess duress?
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subjective
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What are the requisites for fraud in the inducement?
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a false representation of a fact that is material and made with knowledge of its falsity and the intention to deceive and which representation is justifiably relied on
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Arm Length's Transaction
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one in which the parties owe each other no special duties and each is acting in his or her self-interest
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When is a misrepresentation material?
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it would be likely to induce a reasonable person to manifest assent or the maker knows that it would be likely to induce the recipient to do so
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Exculpatory clauses
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these excuse one party from liability for one's own tortious conduct
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T/F...contractual incapacity excuses a minor from an obligation to pay for necessaries
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FALSE
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What must the buyer prove when bringing a warranty action?
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a warranty existed, the warranty has been breached, the breach of the warranty proximately cuased the loss suffered, and notice of the breach of warranty was given to the seller
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What constitutes an effective disclaimer?
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positive, explicit, unequivocal and conspicuous
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What are the three types of defective condition?
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manufacturing defects, design defects, and failure to warn
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When does strict liability in tort apply to a product?
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If it is defective and is unreasonably dangerous to the user or consumer
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What test is used to determine whether the breaching party had reason to foresee the consequences?
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objective
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anticipatory repudiation
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when someone announces before the due date of a performed duty that the person will not be able to perform said duty;
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What can the person who can perform during an anticipatory repudiation do? (2 things)
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sue immediately or wait and see if the person who tried to repudiate can actually fulfill the original promise
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Under what type of impossibility excuses the promisor from liability for breach of contract?
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objective
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What is the statute of frauds for contract law?
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all material terms
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In what scenario does notice of acceptance of a unilateral contract have to happen?
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if the offeror has no adequate means of learning of performance
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If both an acceptance and a rejection or sent within a similar span, which one is effective?
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whichever one the offeror accepts first
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Are unauthorized means of sending an acceptance authorized under the following conditions: exclusive means; upon receipt; exclusive and upon receipt
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never; received if timely; never
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Is performance to perform a preexisting obligations sufficient consideration?
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NO
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What is the acronym used for the statute of frauds?
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MYLEGS
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If there is a written confirmation between merchants that is sufficient against sender to which recipient has not objected in writing, how many days does this last for?
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10 days
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In which situations does the Parol Evidence Rule does not apply?
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a contract that is partly written and partly oral; a clerical error that obviously does not represent the agreement of the parties; the lack of contractual capacity of one of the parties; a defense of some invalidating cause; a condition precedent; a subsequent mutual rescission or modification of contract; explaining ambiguous terms in a contract; a separate contract
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What has more power with a contract, something typed out or handwritten?
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handwritten
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What is the injury component of fraudulent, negligent, and innocent misrepresentation?
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yes for damages, no for rescission
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What does it mean when there is are adjudicated incompetent persons?
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person is under guardianship by court in order to preserve and control his party; thus anything this person does is VOID
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What does it mean when there is a nonadjudicated incompetent person?
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person who is unable to understand the nature and effects of her acts (voidable)
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What has a larger scope and duration between sales of business and employment contracts?
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sales of business
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For product liability for merchantability, what are the condition of goods creating liability, disclaimer, notice of seller, who may sue, compensable harms, and who may be sued?
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not fit for ordinary purposes, possible subject to UCC and Magnuson-Moss Act, required within reasonable time, depends upon state, harms (personal injury, property damage, economic loss), seller who is a merchant
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What leads to reliance, restitution, and expectation damages not being as good as actual performance?
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delay, inconvenience, transactions costs, uncertainty of proof, and unforeseeability
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What are the essentials of an offer?
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1) must be communicated to the offeree; 2) manifest an intent to enter into a contract; and 3) be sufficiently definite and certain
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What is a reward an example of? (what kind of contract)
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unilateral contract
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In a bilateral contract who gets the potential legal benefit or legal detriment (offeror and offeree, used once a piece)
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offeror; offeree
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What are some promises made enforceable by statute?
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contract modifications, renunciations, and firm offers
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What are the five types of mistakes that the law recognizes?
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mutual mistake, unilateral mistake, assumption of risk of mistake, effect of fault upon mistake, and mistake in meaning of terms
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What does it mean that an incompetent person is liable on the principle of quasi contract for necessaries?
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the amount of recovery being the reasonable value of the goods or services
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What are the three major types of warranties?
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warranty of title, express warranty and implied warranty
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In what situation would going for reliance damages rather than compensatory damages be beneficial?
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when a person is unable to establish lost profits with reasonable certainty
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What type of services can an injunction be used for?
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unusual and extraordinary
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How do Implied-in-Law conditions differ from express and implied-in-fact conditions?
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(1) it is not contained in the language of the contract or necessarily inferred from the contract and (2) it need only be substantially performed
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What is the most frequent method of discharging a contractual duty?
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discharge by performance
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Discharge
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termination of the contractual duty
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What does an uncorrected material breach by one party do for the other party?
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operates as an excuse for nonperformance by the other party and discharges this party from any further duty under contract
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What does a non material breach by one party do for the other party?
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the other party has no excuse not to perform, but can be rewarded money damages
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If a party substantially, but no completely, performs one's obligations under a contract, what will the common law allow one to do?
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obtain the other party's performance, less any damages the partial performance caused
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