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31 Cards in this Set
- Front
- Back
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The majority of contract law stems from… |
Common law and Article 1 and two of the Universal Commercial Code (UCC). |
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Under article 1 of the Universal Commercial Code, common law contracts apply to… |
… Sales of goods "unless displaced by particular provisions" of Article 2. |
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When does Article 2 apply? |
Generally, Article 2 of the UCC applies in the sale of goods. Article 2 does NOT apply to contracts involving real estate or services. The UCC applies to everyone whatever the $ amount of consideration. BEWARE OF MIXED DEALS! |
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Is past consideration invalid? |
No, past consideration is not valid consideration a common law. |
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What is an option? |
An option is a promise to keep an offer open for a period of time. At common law, a valid option must be supported by consideration. However the UCC uses a different rule: The Merchant Firm Offer rule. |
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What is the Merchant Firm Offer rule? |
This rule is the UCC version of the option rule. An offer by a merchant, in a signed writing, which by its terms gives assurance that it will be held open is irrevocable during the times stated. If there is no specific time stated the period of irrevocability may not exceed 90 days. The offeror must be a merchant. |
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What is implied acceptance? |
Implied acceptance can be considered actual acceptance. |
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What is a counter offer? |
A counter offer is the same as a rejection of the first offer. |
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What happens when the offer is agreed upon but then is modified when the offeror signs it? |
If the offeree, accepts the offer and at the same time makes a material alteration, there is a contract under the terms of the original offer. If there is an acceptance with the nonmaterial change then that nonmaterial change is included into the contract, unless the offeror objects within a reasonable amount of time. |
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What is the material change to a contract? |
Material changes are changes that affect the money exchanged, remedies, breach of contract or any liabilities between the parties. |
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Please define the UCC Perfect Tender Rule. |
The perfect tender rule states that a seller must deliver perfect tender to a buyer. If a seller does not deliver perfect tender the buyer has special remedies to rectify the situation. |
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What can a buyer do if a seller does not deliver perfect tender? |
The buyer can timely reject the goods and sue for damages. The buyer could also accept the goods and pay the purchase price. The buyer can also accept any conforming units and reject the rest. |
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What can save the seller if there has been a delivery of nonconforming tender? |
The one thing that can save the seller if there has been a delivery of nonconforming tender is if that delivery comes with a notice of accommodation. The notice of accommodation is considered a counter offer and the buyer cannot bring a lawsuit. |
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What is a unilateral contract? |
Once a unilateral contract performance begins, the offer cannot be canceled. |
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What is a surety contract? |
A surety contract is the promise to pay the debt of another. It must be put in writing in order to be enforceable. |
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What is the Main Purpose Exception? |
This is the exception to the enforceability of a surety contract. If we can establish that the guarantor, the person that is promising to answer for someone else's debt, is going to benefit from that promise, then the contract comes out of the statute of frauds and becomes enforceable. |
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What is a mutual mistake? |
When both parties are mutually mistaken about the contract terms. If the mutual mistake goes to the heart of the agreement, this is grounds for rescission. |
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What is a unilateral mistake? |
When only one party is mistaken about the terms of the contract. Unilateral mistakes will not prevent contract formation. However, if the non-mistaking party knows or has reason to know of the other party's mistake, they will not be permitted to take advantage. |
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What is the parole evidence rule? |
It stands introducing evidence of prior or contemporaneous oral arguments that vary or modify the terms of a complete and totally integrated contract. There are lots of exceptions! |
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What is the Merchant Confirmatory Memo exception? |
When a contract is more of the $500 and both parties are merchants, if under a reasonable amount of time after entering into an oral argument, a merchant sends a written confirmation of that oral agreement, it binds the sending merchant immediately. If the recipient merchant does not object to the contents of that writing within 10 days of receipt, it binds the recipient as well. |
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When can a third-party beneficiary's rights be vested? |
Three ways… 1. When a third-party beneficiary learns of the contract and ascends to it 2. when the third-party beneficiary learns of the contract and relies on it 3. when the third-party beneficiary lines of the contract and immediately brings a lawsuit to enforce their rights |
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Please explain what contract vesting means. |
Vesting means that the third party has the power to benefit from the contract. Prior to the contract vesting, the parties can do whatever they want to the contract. For example they can cancel it, modify it etc. but once a contract is vested, the parties can't do anything to it without the approval of the third-party beneficiary. |
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Under the UCC code, what is a buyer's standard remedy? |
Cover price minus contract price |
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Are contracts assignable? |
Yes all contracts are assignable except unique personal service contracts and long-term requirement contracts. Assignments can be oral or in writing. It can be over consideration for gratuitous. |
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What is a gratuitous assignment? |
A gratuitous assignment is usually revocable unless there is some evidence of reliance. Assignments for value are irrevocable. |
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What is an accord? |
An accord is a new assignment that arises out of a good faith dispute between parties who are already under contract. |
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What is satisfaction? |
Satisfaction is the performance of an accord. |
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Please explain the doctrine of impossibility. |
The doctrine of impossibility is a unique personal service contract. If you are too sick to do the job you are excused for that period of time and you will not be liable for any damages unless the contract provides otherwise. |
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What is the condition precedent? |
An act or an event that must occur first before a party is under a duty to perform. |
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What is the basic principle of contract for damages? |
The basic principle of contract damages is to put the nonbreaching party in the position it would have been had the contract been performed. |
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What is the lost-profits doctrine? |
If there is a volume seller, apply the lost profits doctrine. Under the UCC, the seller's standard, the remedy equals the contract price minus the resale price. |
