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269 Cards in this Set
- Front
- Back
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What are the 5 sections of K law?
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1. Applicable Law
2. Formation 3. Terms of K 4. Performance 5. Excuses for non-performance |
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What are the 3 points of Applicable Law?
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1. CL applies to the sales of service K, & UCC 2 applies to the sales of goods
2. CL 3. UCC applies when (a) sale (b) of good (c) if mixed (goods + services) then generally CL applies |
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What are the 4 points of K formation?
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Offer, acceptance, consideration, no defenses to formation
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What is a K?
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A K is an agreement that is legally enforceable
Elements ( offer, acceptance, consideration, no defenses to formation) |
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What is an Offer?
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An offer is a manifestation of intention to K
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When is an offer valid?
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For an offer to valid there must be:
1. intention to be bound 2. communicated to the offeree 3. w/ sufficient and definite material terms |
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What is the general test for a valid offer?
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Basic test: whether a reasonable person in the position of the offeree believes that his assent would create a K
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What are the 3 issues to watch for re:offers?
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1. Content
2. Context 3. Termination of offers |
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What are the 5 points of the content issue in offers?
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1. Gen. offers do not require to contain ALL material terms, however some terms are nec.
2. Sale of real estate: price + description 3. Sale of goods: no price req, but qt required 4. Vague & ambiguous terms do not create offers under both the CL and the UCC 5. A K for the sale of goods can state the qt of the goods to be delivered according to the buyer's reqr or the sellers output => unreasonable disportionate limitation (10% or less inc. is ok) |
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What are the 2 points for context re:offers?
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1. Ad and price qoutations are not offers, they are invitations to others to make an offer
2. Exception: (a) Price qoutes can be offer when in response to a specific inquiry (b) Ads can be an offer when specific to qt and who can accept |
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What are the 4 methods of terminating offers?
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1. Lapse of time
2. Revocation (words or conduct of the offeror) 3. Rejection (words or conduct of the offeree) 4. Death of either party |
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How does Lapse of Time terminate an offer?
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By stated expiration date or within a reasonable time (30days)
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How can you revoke an offer?
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1. By an unambiguous statement or conduct of the offeror to the offeree of unwillingness to K
2. Or the offeree is aware of the offeror's unwillingness to K |
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When can you revoke an offer?
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(i)Revocation of an offer sent through the mail is not effective until received.
(ii)An offer cannot be revoked after it has been accepted. |
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Which 4 offers cannot be revoked?
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1. Option K
2. Firm offers 3. Detrimental Reliance 4. State of performance for a unilateral K |
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What is an option k?
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Offeror has promised to keep the offer open (option) and this promise is supported by consideration
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What is a firm offer?
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An offer cannot be revoked for up to 3 months if:
(i)Contract is for sale of goods, (ii)Signed, written promise specifically to keep the offer open (3 months is ceiling even if written contract says 6 months), and (iii)Party is a merchant. Merchant is generally a person in business. |
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Explain detrimental reliance re: revocation?
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An offer cannot be revoked if there has been a detrimental reliance by the offeree that is reasonably foreseeable.
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Explain start of performance for uni K re: revocation?
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The start of performance pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete performance.
=>Performance, not mere preparation |
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What are the 3 ways to reject an offer?
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1. Counter offer
2. Conditional acceptance 3. Additional terms |
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What is the effect of a counter offer?
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counteroffer terminates the offer and becomes a new offer. (Bargaining does not terminate the offer)
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What is the effect of a conditional acceptance?
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A conditional acceptance terminates the offer and becomes a new offer.
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What is an indirect Rejection?
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Additional terms
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What is the effect of additional terms under the CL?
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Under the mirror image rule, an “acceptance” that adds new terms is treated like a counteroffer rather than an acceptance.
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What is the effect of additional terms under the UCC?
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Still an acceptance as a seasonable expression of acceptance.
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What two questions are raised concerning additional terms under the UCC?
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1. Is there a contracts?
2. Is the additional term part of the contract? |
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Is there a contract w/ additional terms under the UCC?
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Generally yes, because a response to an offer adds new terms and is treated as an acceptance as a seasonable expression of acceptance
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Is the additional term part of the K?
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Depends on whether both parties are merchants OR one or both parties are not a merchant
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What is the general rule if both parties are merchants re:additional terms under the UCC?
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If both parties are merchants, general rule is that the additional term is part of the K with two exceptions.
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What are the two exceptions when additional terms are not part of the contract when both parties are merchants?
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1. The additional term is not part of the K if it MATERIALLY CHANGES the offer
2. If the OFFEROR objects to the change |
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What is the rule if one or both parties are not a merchant? re:additional terms under the UCC
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The additional term is merely a proposal that is to be separately accepted or rejected.
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What are the exceptions to termination of K due to death or incapacity?
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Generally death or incapacity terminates the offer except:
1. When there is an option K 2. There was part performance in a unilateral K |
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What are the two points regarding ACCEPTANCE of OFFERS?
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1. Who can accept the offer?
2. Methods of accepting an offer |
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Who can accept an offer?
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1. A person who knows about the offer and
2. to whom the offer was made to |
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Can offers be assigned? Is there an exception?
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Offers cannot be assigned. Only option K's are assignable.
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What are the 4 methods of accepting an offer?
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1. Offeree starts to perform
2. Offeree promises to perform 3. Offeree sends his acceptance through the mail 4. Offeree/seller sends the wrong goods |
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How is offeree's start of performance acceptance?
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Start of performance is acceptance of an offer in a BILATERAL K.
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Is start of performance an acceptance in a unilateral K?
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No., because uni K require performance for acceptance so that start of performance is not acceptance.
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What is the effect of start of performance in a uni K?
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It only makes it irrevocable for a reasonable time to complete the offer i.e. the offeror is locked bit the offeree is not.
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What kind of offers can be accepted by a promise to perform?
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Almost all offers can be accepted w/ a promise to perform except for those that specifically require performance.
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When is acceptance valid through the mail?
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Generally if an offer is "invited" to be accepted through the mail, acceptance is effective when posted (mail box rule)
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What are the exceptions to the mail box rule? re:acceptance
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1. offer otherwise provides
2. Rejection, then acceptance. Whichever arrives first rules. 3. Option deadlines: mailbox rule is inapplicable when deadline is specified in an option. Acceptance must be received on the stated date. |
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How do we have acceptance when seller sells the wrong goods? re:acceptance
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If offeree sends the wrong goods it will amount to acceptance and a breach
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What happens if the offeree sends the wrong goods with an accommodation? re:acceptance
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If there is an accommodation (letter of explanation) then we have a counter offer but no breach.
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What happens if the offeree is silent? re:acceptance
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Silence is NOT acceptance unless the offer agrees that silence is acceptance.
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What is consideration?
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Consideration is a bargained for legal detriment
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Can gifts be consideration?
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No
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What are the forms of consideration?
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1. Performance
2. Forbearance 3. Promise to perform 4. Promise to forbear |
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What is performance? re: consideration
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Doing something you are not legally obligated to do
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What is forbearance?
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Not doing something not legally entitled to do
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Is adequacy of consideration important?
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No. Even a peppercorn will do.
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What is the effect of past consideration?
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Generally past consideration is not consideration.
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When is past consideration valid consideration?
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When action is expressly requested by A and there is an expectation of payment by B in return, of which A is aware.
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What is the preexisting statutory or contractual duty rule under the CL?
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There is no consideration in a pre existing duty
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What are the exceptions to the pre existing legal duty rule under the CL?
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1. When there is unforeseen difficulty so sever as to excuse performance
2. When a 3rd party makes the promise - this is because the 3rd. party wouldn't have a preexisting legal duty. |
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What is the preexisting legal duty rule under the UCC?
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The UCC does not have a preexisting legal duty rule. Good faith is the test for changes in existing sale of goods contract.
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What is an illusory promise?
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A statement that appears to assure a performance and form a contract but, when scrutinized, leaves to the speaker the choice of performance or non-performance, which means that the speaker does not legally bind himself or herself to act.
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Are illusory promises consideration?
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Generally, no. Because an illusory promise is a promise in which the promisor has not committed herself.
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What exception allows illusory promises to be consideration?
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When an illusory promise creates a NEW obligation.
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What are the consideration substitutes?
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1. Written promise to satisfy an obligation for which there is a legal defense
2. Written release of claim for breach of sale of goods K 3. Promissory Estoppel |
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What are the elements of the 1st. consideration substitute? (legal defense)
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1. written promise
2. to satisfy an obligation 3. for which there is a legal defense |
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What are the elements of Promissory Estoppel?
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1. Promise
2. Reliance that is FDR foreseeable, detrimental, reasonable. 3. Enforcement is nec. to void injustice. |
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What are the defenses to K formation?
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1. Capacity to K
2. SOF 3. DIM (Duress, Illegality, Misrep) 4. Unconcionability 5. Ambiguity 6. Mistake of Fact |
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Who lacks the capacity to K?
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1. Infant under 18
2. Mental incompetants i.e. they lack ability to understand the agreement. 3. Intoxicated persons if other party has reason to know of the intoxication. |
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What are the consequences of incapacity?
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1. Right to disaffirm
2. Implied affirmation 3. Liability for necessities |
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Who has the right to disaffirm?
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Any person w/o the capacity to K
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When does implied affirmation make the K enforceable?
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1. Person made the agreement w/o capacity
2. Person has gained capacity 3. Person continues to get benefit from prior agreement. |
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Why does person w/o capacity have liability for necessities?
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Legal base is on quorum merit, not K law. Thus, measure of promise is not based on K but the value of the promise.
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What is the purpose of SOF?
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Purpose is to provide proof that the alleged agreement was made
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When is a K within the SOF under the CL?
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M - promise in consideration of Marriage
Y - service K NOT capable of completion within a Year ( does not include life K) L - Leases/ transfers of interest in real estate, greater than a year E - promise by an Executor to pay obligation of the estate from his OWN funds G - promises to guarantee the debts of another S- Sale of goods for $500 or more |
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When is a K within the SOF under the UCC?
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All sales of goods fall under the SOF regardless of amount
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How is a SOF satisfied under the UCC?
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Proof that the alleged agreement was made is satisfied by either PERFORMANCE or WRITING. Depends on the type of K involved. Or by JUDICIAL ADMISSION ( look for admission in pleadings, discovery & testimony).
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What kind of agreements satisfy SOF by performance under the UCC?
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1. Service K
2. Sale of goods K 3. Real estate transfer K |
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What kind of performance satisfies the SOF under a services K ? re:UCC
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Full performance by EITHER party satisfies the SOF. Part performance does not.
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What kind of performance satifies the SOF under a sale of ORDINARY GOODS? re:UCC
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Generally, part performance of K for the sale of goods K satisfies the SOF ONLY to the extent of the part performance.
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What kind of performance satifies the SOF under a sale of SPECIALLY MANUFACTURED GOODS? re:UCC
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If the K is for the sale of goods that are to be specially manufactured, then the SOF is satisfied AS SOON AS the seller makes a "SUBSTANTIAL BEGINNING" of making the goods.
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What kind of performance satisfies the SOF in a real estate transfer K?
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Part performance by BUYER of real estate can satisfy SOF.
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What constitutes part performance by buyer in a real estate transfer K? re:SOF under the UCC
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Part performance is generally any two of the following:
1. Part payment 2. Possession 3. Improvement |
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Does full payment by buyer of real estate satisfy SOF under the UCC?
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No.
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How is SOF satisfied by writing under the UCC?
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Generally to satisfy the SOF in writing, writing must contain ALL:
1. Material terms which include who, what and quantity 2. Signed by the person to be charged ( the Defendent). |
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How else is SOF satisfied by writing under the UCC if both parties are merchants?
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If both parties are merchants, then the person who receives a SIGNED WRITING w/ QUANTITY term that claims there is a K, and the recipient fails to respond within 10 days of receipt.
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When do you have a SOF defense?
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We have a SOF defense to enforcement of the agreement when the SOF is NOT satisfied.
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When does a person need a written authorization in order to execute a K for someone else? re:SOF / related issue
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The authorization must be of equal dignity. i.e. it must be in writing if the K to be signed is within the SOF.
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When does a modification of a K have to be in writing? re: SOF / related issue
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If the K with the modification is within the SOF, then the modification must be in writing
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How are contract provisions requiring all modifications be in writing, interpreted under the CL? re: SOF/ related issue
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Under CL, K provisions requiring all modifications be in writing are ignored.
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How are contract provisions requiring all modifications be in writing, interpreted under the UCC? re: SOF/ related issue
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Under the UCC such provisions prevail unless waived.
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What is the distinction between illegal subject matter and illegal purpose? re:defenses to K formation
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If the subject matter of a K is illegal then the agreement is void. If purpose is illegal, then the K is enforceable by the person who did not know if the illegal purpose.
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What is misrepresentation? re: defenses to K formation
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Misrepresentation is false assertion of facts or concealment of facts.
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Misrepresentation as to the TERMS of the K makes the K ________
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Voidable (option to void the K)
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Misrepresentation as to the NATURE of the K makes the K _________
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Void.
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Give example of a hypo explaining fraud vs. material misrep re: usual issues concerning misrep
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If a seller truly believes that the house does not have termites, then it is material misrep & not fraudulent
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Is there misrep if the buyer relies on the inspector's statements and not the sellers? re: usual issues/misrep
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No. The seller does not have misrep
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What are the elements of duress?
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1. One party D with improper threat
2. One party P, with no reasonable alternative 3. The two parties enter into an agreement. => defense to K |
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What does the doctrine of unconscionability do? re:defenses to K
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The doctrine of unconscionability applies to all of K law, and empowers a court to refuse to enforce all or part of an agreement.
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What are the two basic tests of unconscionability? re:defenses to K
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1. Unfair surprise and oppressive terms
2. Tested AT THE TIME the agreement was made. 3. => By the court |
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What are the elements of ambiguity? re:defenses to K
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1. Parties use a material term that is open to atleast 2 reasonable interpretations
2. Each party attaches a different meaning to the term 3. Neither party knows or has reason to know of the meaning attached by the other. |
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What if one party know of the meaning attached by the other party to an ambiguous term of the K? re: defenses to K
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Then there is no defense of ambiguity and there is a K based on the interpretation of the ignorant party.
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What type of mistakes of facts are defense to K?
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1. Mutual mistake of material fact
2. Unilateral mistake of material fact |
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What is a mutual mistake of material fact in a K?
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1. Both parties are mistaken
2. about a basic assumption of fact 3. which materially affects the agreed exchange (as to what it is) |
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Is there a K if there is a mutual mistake of material fact?
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No
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What is a unilateral mistake of material fact?
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1. One party is mistaken
2. about a basic assumption of fact 3. Which materially affects the agreed exchange |
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What is the legal effect of a unilateral mistake of material fact?
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Courts are reluctant to allow a party to avoid a K because of a unilateral mistake with two exceptions.
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What are the two exceptions when court allows a party to avoid a K due to a unilateral mistake?
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1. Palpable mistakes: if the other party knows or should have known the mistake
2. Mistakes discovered before significant reliance by the other |
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What is the next step after determining that a valid K was formed?
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The next step is to determine the terms of the K.
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What do you consider when examining the terms of the K?
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1. Parol Evidence Rule
2. Other sources of terms 3. UCC Terms/ROL 4. Warranties of Quality |
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What is the Parol Evidence Rule?
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PER states that a written K as the source of K terms has an exclusionary effect on earlier or contemporaneous agreements as a possible source of terms of the K
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What triggers the PER?
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1. Written agreement that the court finds as final
2. Oral statement made at the time of the K 3. Earlier (not later) oral or written statements by the parties to the K |
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What is partial integration?
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Written and final agreement, but not complete
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What is complete integration?
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Written, final and complete agreement
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What is a merger clause?
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A contract clause that states "This is the complete and final agreement."
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Can earlier agreements be considered to resolve ambiguities in a written K, despite PER?
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Yes
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When does the ct consider earlier consistent and additional terms to resolve ambiguites? re:PER
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Only when the ct finds that the agreement was a partial integration
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When does the ct consider evidence of earlier agreements in an agreement that is completely integrated?
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If the writing is a complete integration, the ct considers evidence of earlier agreements for terms that would "naturally and normally" be in a sep agreement ( ads)
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Does PER allow a court from considering earlier agreements as a source of terms that are INCONSISTENT with the terms of the written K in a partial integration agreement?
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No
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Does PER allow a court from considering earlier agreements as a source of terms that are INCONSISTENT with the terms of the written K in a complete integration agreement?
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No
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When does a court consider evidnece of prior INCONSISTENT terms? re:PER
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For the limited purpose of determining whether there was a MISTAKE in integration. e.g. a mistake in reducing the agreement to writing
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What are the other sources of terms, besides words of the parties?
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1. Course of performance
2. Course of dealing 3. Custom and Usage |
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What is course of performance? re: terms of K
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same people, same K
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What is course of dealing? re: terms of K
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same people, different K
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What is custom or usage? re: terms of K
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What is accepted in the industry
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What do you consider when determining terms of the K under the UCC?
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1. Delivery obligations of the seller of goods
2. ROL |
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How do you determine the delivery obligations of the seller ABSENT an agreement as to the place of delivery? re: terms of K
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Absent an agreement as to the place of delivery, the place of delivery is the seller's place of business, unless, both parties know that the goods are some place, in which case that place is the place of delivery
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What if there is an agreement as to the place of delivery? re: terms of the K
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Then the next question is : what does the seller have to do to complete his delivery obligation?
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What do you look for to determine what the seller has to do to complete his delivery obligation if there is an agreement? re: terms of the K
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You look to see whether there is a shipment K or a destination K
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What is a shipment K? re: terms of K
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FOB followed by the city where the seller is
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How does a seller complete his delivery obligation un a shipment K? re:terms of K
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Seller completes his delivery obligation when
1. He gets the goods to a common carrier 2. Makes reasonable arrangement for delivery 3. Notifies the buyer |
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What is a destination K? re:terms of K
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FOB followed by the city where the buyer is
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When does the seller complete his delivery obligation in a destination K? re: terms of K
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Seller completes his delivery obligation only when the goods ARRIVE where the buyer is
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When do ROL issues arise? re: terms of K
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1. After the K has been formed but before the buyer receives the goods
2. The goods are damaged or destroyed 3. Neither the buyer nor the seller are to blame |
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What are the 4 ROL rules? re: terms of the K
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1. Agreement
2. Breach 3. Delivery by common carrier 4. No agreement, no breach, no delivery by a carrier |
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What is the ROL rule when there is an agreement? re: terms of the K
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The agreement of the parties controls
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What is the ROL rule when there is a breach?
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The breaching party is liable for an uninsured loss even though the breach is unrelated to the problem
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What is the ROL rule when there is a common carrier?
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ROL shifts from the seller to the buyer at the time the seller completes his delivery obligations
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What is the ROL rule when there is no agreement, no breach, no delivery by common carrier?
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Depends on whether the SELLER (not buyer is a merchant)
1. If the seller is a merchant then the ROL shifts on buyer's receipt of the goods. 2. If the seller is not a merchant, then the ROL shifts to the buyer when the seller tenders the goods. |
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What should you watch for in Warranties of Quality issues? re: terms of K
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PER issues
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What are the Warranties of Quality?
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1. Express Warranties
2. Implied warranty of merchantibility 3. Implied warranty of fitness |
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What are the express warranties?
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1. Words
2. Samples or models |
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What is implied warranty of merchantibility?
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When buying from a merchant, a term is automatically added to the K by operation of law, which is that the GOODS ARE FIT for the ORDINARY PURPOSE for which they are used.
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What is the triggering fact for an implied warranty of merchantibility?
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Seller is a merchant who deals in goods of THAT KIND
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What is the implied warranty of fitness?
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Goods are FIT FOR THE PARTICULAR PURPOSE
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What are the triggering facts of implied warranty of fitness?
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1. Buyer has a particular purpose
2. Buyer is relying on seller to select suitable goods 3. Seller has reason to know of buyer's purpose and reliance |
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What contractual limitations can you have on warranties? re:terms of K
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1. Disclaimers
2. Limitations of remedies |
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What is the effect of disclaimers? re: warranties/terms of K
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Disclaimers may eliminate IMPLIED warranties
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Can express warranties be disclaimed?
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No
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What is the common language for disclaimers?
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" As is" "with all faults" or conspicuous language mentioning "merchantibility"
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What is the affect of limitation of remedies?
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Limitation of remedies does not eliminate the warranty but simply limits or sets recovery for any breach of warranty
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Is it possible to limit remedies for express warranties?
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Yes
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What is the general test when limiting remedies for breach of warranties?
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The limit cannot be unconscionable (ct std)
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What is a prima facie case of unconscionable? re: warranties/limits on remedies
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If breach of warranty on consumer goods causes personal injury
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What is a performance condition?
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A condition is a part of a K, agreed to by both parties.
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What is the difference between a performance condition and a conditional acceptance?
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A conditional acceptance is part of the RESPONSE (not the offer), agreed to by the offeree ( not both parties)
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What are the different kinds of performance conditions?
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1. True condition
Two main conditions are Express Condition and Implied/constructive condition, which is further divided into: 1. Condition Precedent 2. Condition coupled w/ covenant 3. Concurrent/mutual condition 4. Condition subsequent |
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What is a true condition?
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an event beyond the influence of either party that affects the duty to perform
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What is an express condition?
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Created by the language of the contract
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What is constructive/implied condition?
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limitations created by rules of the ct.
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What is a condition precedent?
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some uncertain event must occur before the promisor is obligated to perform
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What is a condition coupled w/ covenant?
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An event that is to some extent within the influence of one of the parties to the K and that affects the duty to perform
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What is a mutual or concurrent condition?
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Parties to the K are to perform concurrently.
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What is a condition subsequent?
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Supporting obligation is terminated by happening of an uncertain event designated in the K
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What is the standard for satisfying an express condition?
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Strict compliance
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What is the standard for satisfying a constructive condition?
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Substantial performance
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What is the divisible K and substantial performance rule?
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If the K itself divides the performance of each party into the same number of parts with each part performance by one party serving as consideration for the corresponding part performance by the other , then the K is a divisible K and the substantial performance std is applied to each divisible part of the K
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What do you identify when determining whether an express condition can be excused?
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1. Who benefits from the condition
2. Statement made by the person giving up the benefit |
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How can an express condition be excuse?
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1. Estoppel
2. Waiver |
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How can an express condition be excused w/ an estoppel?
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Estoppel is based on a statement by the person PROTECTED by the condition BEFORE the conditioning event was to occur and REQUIRES a change of position
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How can an express condition be excused w/ a waiver?
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Waiver is based on a statement by the person PROTECTED by the condition AFTER the conditioning event was to occur and DOES NOT REQUIRE a change of position
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What hypo explains failure to cooperate under a condition coupled with a covenant?
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S contracts to sell her house to B for $10; K provides that the sale needs B to have a mortgage, B does not get a mortgage, S can sue B if B refuses to buy the house
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What are the UCC performance concepts?
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1. Perfect Tender
2. Cure 3. Rejection of goods 4. Revocation of acceptance 5. Requirements and Consequences of rej & rev 6. Buyer's pmt obligation |
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What is perfect tender? re: UCC performance std
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Generally the seller is obligated to deliver perfect goods
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What happens if the seller fails to deliver perfect goods? re: UCC performance concepts
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Seller will be given a chance to "CURE" i.e. a second chance.
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When is a seller given a chance to cure if he fails to deliver perfect goods?
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1. Time for performance has not yet expired
2. Time for performance has expired and then the statutory test is whether the seller has reasonable grounds for believing that the improper tender would be acceptable (perhaps with money allowance) - look for info on prior deals |
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Can the buyer reject the goods if the seller to deliver perfect tender?
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Yes. However, rejection of the goods must occur before acceptance.
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Is there any time a buyer cannot reject goods that are not perfect tender?
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Yes, if it is an installment sales K
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What is an installment sales K? re: perfect tender/rejection
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1. Delivery in separate lots
2. To be separately accepted |
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When does a buyer have a right to reject an installment? re: perfect tender
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Only where there is a substantial impairment in that installment that cannot be cured
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What are the 3 scenarios of acceptance of goods by the buyer? => UCC performance concept
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1. Express acceptance (acceptance)
2. Payment w/o inspection (not acceptance) 3. Implied acceptance (retention after inspection w/o objection)- 30 days |
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If a buyer accepts goods, can he later reject them? => UCC performance concept
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No, but in limited circumstances he can revoke them
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When can a buyer effect a cancellation of the K by revoking his acceptance of the goods? re: UCC performance concept
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1. Non-conformity substantially impairs the value of the goods
2. Excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction 3. Revocation within a reasonable time after discovery of non-conformity |
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What are the requirements for rejection of the goods or revoking acceptance of the goods? re: UCC performance
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1. Seasonably notify the seller
2. Hold the goods for the seller 3. Follow reasonable seller instructions |
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What are the consequences of rejection of the goods or revocation of acceptance? re: UCC performance
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1. Goods return to the seller
2. There is no buyer payment obligation |
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What is a buyer's payment obligation? re: UCC performance concept
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1. Generally the Buyer needs topay cash unless otherwise agreed
2. Buyer can pay by check 3. Seller does not have to take the check but that gives the buyer an additional reasonable time. |
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What are the excuses of non-performance (discharge)?
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1. Failure of Condition
2. Other party's breach 3. Excuse by anticipatory repudiation 4. Excuse by reason of later K 5. Excuse of performance by reason of a later unforeseen event |
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How does failure of a condition discharge performance?
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If the party's duty to perform is conditional, then failure of the condition naturally excuses the duty to perform
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What excuses are included in "Other Party's Breach?"
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1. Excuse in UCC - perfect tender
2. Excuse in CL - material breach |
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What is the excuse for non performance under the UCC?
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If the tender is less than perfect, the buyer can reject the goods and withhold payment ( the buyer is excused from paying)
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What is the excuse for non performance under the CL?
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Generally, CL requires only substantial performance. If 1 party substantially performs then the other party is required to perform.
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Will a minor breach consitute as an excuse for non-performance under the CL?
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No
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What is anticipatory repudiation?
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It is a statement that:
1. The repudiating party will not perform 2. Made prior to the time that performance was due |
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What are the effects of anticipatory repudiation?
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1. Anticipatory repudiation by one party excuses the other party's duty to perform
2. Generally gives rise to an immediate claim for damages for breach |
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Can anticatory repudiation be reveresed or retracted?
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Yes, so long as there has not been a material change in position by the other party
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What is the effect of timely retraction of the repudiation?
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The duty to perform is reimposed but performance can be delayed until adequate assurance is provided
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What later K allow for excuses for non performance?
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1. Rescission (cancellation)
2. Accord & satisfaction 3. Novation |
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When does rescission allow for an excuse of non performance?
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If one of the parties still has performance remaining (it's too late if one party has already completed the work)
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What is an Accord?
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Accord is an agreement by the parties to an already existing K that the same parties will do something different that will extinguish or satisfy the existing obligation
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What is satisfaction?
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Performance of the accord
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What is the effect of an accord?
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The accord suspends legal enforcement of the original obligation
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What is effect of no satisfaction?
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If the accord is not performed then the other party can sue either on the original K or the accord.
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What is a novation?
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Novation is an agreement between both parties to an existing K to the substitution of a new party - same performance different parties
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What is the effect of a novation?
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Novation excuses the the person replaced from any liability for non performance
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What is the difference between a novation and a delegation?
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A novation requires both parties to the original K and excuses the person replaced from any liability for non performance. A delegation DOES NOT require BOTH parties, and does NOT excuse the person replaced.
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Which contractual duties can be excused under impossibility , impracticability or frustration of purpose?
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All contractual/performance duties can be replaced under impossibility EXCEPT for the contractual duty to pay money
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What are the elements of impossibility of purpose? re:excuses for non performance
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1. Something that happens AFTER K formation but BEFORE completion of K performance
2. That was unforeseen 3. And makes performance impossible or commercially impractical or frustrates the purpose |
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What are the common examples that result in impossibility of purpose?
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1. Under the CL: Death of a party
2. Under the UCC: Damage or destructiom of the subject matter of the K 3. Subsequent law or regulation that rules the K illegal after formation |
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What is the remedy for breach of K?
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Liquidated Damages
that are stipulated (fixed) |
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Are punitive damages a remedy for breach of K?
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No. Punitive damages are generally not recoverable since a K cannot provide for a penalty
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What are the 2 general tests to determine whether a K provision is a valid liquidated damages clause or an invalid penalty provision?
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1. At the time of the K, the amount of possible damages from any later breach of K is difficult to determine
2. At the time of K, the K provision is a reasonable forecast of possible damages |
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What are the damage rules for ordinary K under the CL?
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1. Generally the injured party is entitled to recover an amount that would put her in as good a position as if the K had been performed
2. PLUS foreseeable consequential damages 3. PLUS incidental damages 4. MINUS avoidable damages |
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What foreseeable consequential damages are recoverable?
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The consequential or special damages that were in reasonable contemplation of both parties at the time of the K
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What are incidental damages?
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Costs a party incurs in dealing with breach
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What are avoidable damages?
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Losses that could have been avoided by appropriate steps. (not recoverable)
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Who has the burden of proof to show that the damages were avoidable?
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The defendant
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What are the situations in which we apply damage rules under the UCC?
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1. When a seller breaches, and buyer keeps the goods
2. When the seller breaches and the seller keeps the goods 3. When the buyer breaches and the buyer has the good 4. When the buyer breaches and the seller has the good |
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What is the damage rule under the UCC when the seller breaches and the buyer keeps the goods?
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Buyer will get fair market value if perfect MINUS fair market value as delivered
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What is the damages rule when the seller breaches and the seller keeps the goods?
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Buyer gets market price at time of discovery of breach MINUS contract price/replacement price MINUS contract price
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What is the damages rule when the buyer breaches and the buyer keeps the goods?
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Seller gets the K price
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What is the damages rule whenthe buyer breaches and the seller has the goods?
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Seller can get:
1. Contract price - market price at time and place of delivery AND 2. Some situations seller can get provable lost profits |
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What is a quasi K?
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implied-in-law contract: is a fictional contract created by courts for equitable, not contractual purposes. A quasi-contract is not an actual contract, but is a legal substitute for a contract formed to impose equity between two parties.
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What is the damages rule for a quasi K?
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Unjust enrichment: A general equitable principle that a person should not profit at another's expense and therefore should make restitution for the reasonable value of any property, services, or other benefits that have been unfairly received and retained.
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What are the nonmonetary remedies?
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1. Specific performance/injunction
2. Adequate assurance of future performance 3. Reclamation 4. Stopping goods in transit or recovering goods in storage |
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What is specific performance/injunction?
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is an order of the court which requires a party to perform a specific act, usually what is stated in a contract.
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When is specific performance commonly used?
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Commonly used in the form of injunctive relief concerning
1. confidential information 2. real property 3. Sale of unique goods like antiques, art, custom made goods |
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Can you get specific performance for K for services?
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No - because that would be involunatry servitude
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When can you get adequate assurance for future performance?
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1. One party to the contract learns something after the K that gives him reasonable grounds for insecurity about the other party's performance
2. That party can then make a written demand for adequate assurance |
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What is reclamation?
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Right of an unpaid seller to get his goods back
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What are the key elements of reclamation?
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1. The buyer must be insolvent at the time that he received the goods
2. The seller demands the goods within 10 days of receipy 3. Buyer still has the goods at the time of seller's demand |
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What are the rights of a good faith purchaser in entrustment?
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1. if the owner leaves her goods with a person who sells goods of that kind
2. And that person wrongfully sells the goods to a third party 3. Then that third party good faith purchaser cuts off rights of the original owner/entruster |
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What do you take into consideration in 3rd party problems?
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1. Identify a problem as a 3rd party beneficiary problem
2. Use the vocab of 3rd party beneficiary law 3. Deal with the efforts to cancel or modify a 3rd party beneficiary K 4. Figure out who can sue whom 5. Assert any available defenses |
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How do you identify 3rd party beneficiary problems?
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You look for 2 parties contracting with the intent to benefit a third party
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What vocabulary do you need to know for 3rd party beneficiary problems?
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1. Third party beneficiary
2. Promisor 3. Promisee 4. Intended/incidental 5. Creditor/donee |
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Who is a 3rd party beneficiary?
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Someone not a party to the K but can enforce the K which was made for her benefit
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Who is promisor? A promisee?
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1. Promisor: The person making the promise that benefit the third prty ( Sherry)
2. Promisee: The entity/person who obtains the promise that benefits the 3rd party (the insurance co) |
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Who is an intended beneficiary?
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The 3rd party beneficiary named on the contract (me)
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Who is a creditor or a donee?
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It is the intended 3rd party beneficiary.
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What is the difference between a creditor and a donee 3rd party beneficiary?
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1. For creditors, look for facts showing debt to party by the 3rd party beneficiary
2. For donees, it will be just the names 3rd party beneficiary (me) |
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How do you deal w/ efforts to cancel or modify a 3rd party beneficiary K?
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The test is whether the 3rd party knows of and assents to the K. If the 3rd party has assented to the K, then her rights have vested and the K cannot be cancelled or modified w/o her consent UNLESS the K otherwise provides
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How do you figure out who can sue whom? re: 3rd party problens
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1. 3rd party (creditor) beneficiary can sue promisor
2. Promisee can sue promisor |
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Can a donee beneficiary sue the promisor?
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No
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When can a creditor beneficiary sue the promisor?
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When he knows about and assents to the K
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Can a thirs party beneficiary sue on behalf of the promisee?
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No
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What are the available defenses in 3rd party beneficiary problems?
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Any defenses between the promisor and the promisee can be used by the promisor when sued by a 3rd party beneficiaru
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What are the elements of assignment? How do you identify an assignment?
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1. Contract between only 2 parties
2. One of the party's later transfers his rights (not duties) under that K to a 3rd party Definition: Assignment of rights under a contract is the complete transfer of the rights to receive the benefits accruing to one of the parties to that contract. |
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What is the common vocabulory in assignment questions?
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1. Assignor
2. Assignee 3. Obligor |
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Who is an assignor?
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Party who transfers his rights to another
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Who is an assignee?
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He is the one to whom the rights have been transfered to.
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Who is an obligor?
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The other party to the contract
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Can an assignee sue to enforce the K?
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Yes
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What are the limitations on assignments?
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1. Contract Provisions
2. Common Law |
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What kind of K provisions put limitations on assignments?
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1. A provision that prohibits assignments
2. Provisions that invalidate the assignment ( All assignments are void) |
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What is the effect of a provision in a K that prohibits assignments?
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It takes away the right to assignment but not the power to assign which means taht the assignor is liable for breach of K but an assignee who does not know of the prohibition can still enforce the assignment
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What is the effect of a provision in a K that invalidates the assignment
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It takes away both the right to assign and the power to assign so that there is a breach by the assignor and no rights in the assignee
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What limitation does common law impose on the right to assign?
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Even if the K does not in anyway limit the right to assign, the CL bars an assignment that SUBSTANTIALLY changes the duties of the OBLIGOR. Only assignment of the right to payment is permitted, but other performance rights are not.
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What is the requirement for assignment?
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Language has to be present " I assign" not " I will or I promise to assign"
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Is consideration required for assignments?
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Generally, no.
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What are the rights of assignee?
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1. Assignee can sue the obligor
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What are the rights of the obligor?
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Obligor has the same defenses against assignee as he would against assignor
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Till when is payment by obligor effective to assignor?
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Until the obligor knows of the assignment
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Till when is a modification agreement between the obligor and the assignor effective?
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It is effective till the obligor finds out about the assignment
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What are the rights of the assignor?
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Assignor remains liable unless there is an agreement to the contrary
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What is a multiple assignment?
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Occasionally, an unscrupulous assignor will assign the exact same rights to multiple parties (usually for some consideration). In that case, the rights of the assignee depend on the revocability of the assignment, and on the timing of the assignments relative to certain other actions.
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What is the effect of multiple assignments under the CL?
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if the assignment was donative, the last assignee is the true owner of the rights. However, if the assignment was for consideration, the first assignee to actually collect against the assigned contract is the true owner of the rights.
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What is th effect of multiple assignments under the modern rule?
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Under the modern American rule, now followed in most U.S. jurisdictions, the first assignor with equity (i.e. the first to have paid for the assignment) will have the strongest claim, while remaining assignees may have other remedies
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What is delegation?
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occurs when one party transfers his duties or liabilities under a contract to another. A delegation and an assignment can be accomplished at the same time, although a non-assignment clause also bars delegation.
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Are contractual duties delegable?
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Generally, contractual duties are delegable
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What are the limitations on delegation?
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1. K prohibits delegations or prohibits assignments
2. Contract calls for very special skills 3. Person to perform the K has a very special reputation |
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What are the requirements of delegation?
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Essentially there are no requirements
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Do you need consideration for delegation?
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No
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What is the effect of no consideration for delegation?
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The delegatee has no legal obligation if there is no consideration ( otherwise he does).
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Do you need the consent of the other party to the original K for a delegation?
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No
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What are the consequences of delegation
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1. Delegating party remains liable.
2. Delegatee liable to obligee only if he receives consideration from the delegating party |
