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111 Cards in this Set

  • Front
  • Back

The two universes of contracts?

Common law and UCC

Common law contract deal with...


UCC contracts deal with...

sale of goodies

Two approaches to mixed contracts

1. "All or nothing" = pick either CL or UCC

2. "Predominant purpose" = what plays bigger role/main reason for K

Four things to remember when determining if an enforceable contract has been formed

Agreement (offer/acceptance)


Defenses to formation

Statute of Frauds

(All Contracts Do Suck)

Offer (definition)

manifestation of willingness to enter into K (by offeror) that creates power of acceptance (in offeree)

Offer and acceptance are governed by a _______ test

Objective. Outward appearance of actions and words matter, not secret intentions

Does offeror have objectively serious intent to be bound?

Are expressions of opinion an offer?


Must an offer be directed to someone specific?


All ______ terms must be covered in a common law contract agreement


What are the "essential" terms in the common law?

Parties, subject, price, quantity

In the UCC, what are the "essential" terms?

Parties, subject, quantity

*need not include price

6 ways to revoke an offer

1. Express revocation

2. Constructive revocation (offeree learns that offeror acted inconsistent with ability to K)

3. Offeree rejects

4. Offeree makes a counter-offer

5. Offeror dies

6. Reasonable amount of time passes (varies depending on K)

4 ways in which an irrevocable offer can arise

1. Option

2. Firm offer

3. Offeree has started performance (unilateral offer)

4. Detrimental reliance

Option contract

Giving consideration to keep the offer open

ex. Offer to sell house for $1M. Also pay $100 in exchange for you not revoking offer for a week

*essentially a second K

Firm offer

Offeror must be merchant

Must be written, contain explicit promise not to revoke, and signed by merchant (offeror)

Lasts as long as stated, or for a reasonable time not longer than 90 days

Offeree started performance

Unilateral offer to contract can't be revoked if offeree started performance

ex. John Foster/Hamoudi

Unilateral offers can only be accepted by ______


Detrimental reliance

Offeree reasonably and detrimentally relies on the offer in a foreseeable manner

Shows up a lot in contractor/subcontractor

Acceptance (definition)

manifestation of a willingness to enter into agreement by the offeree

Governed by the objective test

Offeree must accept per the rules of the offer

If seller tries to accept by shipping wrong goods, the UCC treats this as?

Acceptance plus breach

Must you know about an "open to all offer" in order to accept?

Yes sir

Mailbox rule

Acceptance by mail is valid when SENT

Does not apply:

-if offeree sends something else (ex. revocation)

-to other types of communication (ex. revocation)

-to option contracts

-unclear if applies to email

What if you reject by mail, and then change your mind and send an acceptance by mail? Both letters arrive same day.

Whatever is opened first

When is acceptance by silence cool?

-Unilateral reward offers

-unilateral offers when parties are geographically close so that they would see performance has occurred

-past history of silence serving as acceptance

-offeror says that acceptance must come via silence

Implied in fact contracts

Communicate acceptance without writing/speaking

ex. Haircut example

Common law counter offer rule

Mirror image rule

UCC 2-207 counter offer rule

If acceptance doesn't match terms exactly, offer can still count as acceptance

"definite seasonable expression of acceptance"

When will new terms in acceptance under UCC 2-207 come into the contract?

-Parties are merchants

-New time does not materially alter deal

-Initial offer did not expressly limit acceptance to its terms

-Offeror does not object within reasonable time to the new term

(seems like new terms rarely come in)

Consideration (definition)

exchange of promises involving legal detriment of benefit

(bargained for exchange)

Is there benefit to promisor? OR detriment to promisee? (Need only one)

Do gift promises and conditional gifts count as consideration?


Is not doing something that you're legally entitled to do deemed to be consideration?


Pre-existing duty rule (common law)

A promise to do something you're already obligated to do is NOT consideration

Modification under the UCC?

Must be made in good faith

Don't need consideration

Promissory estoppel (reliance)

1. Promise is made that would be reasonably expected to induce reliance

2. Promisee does take detrimental action in reliance on that promise

3. Injustice can be avoided only by enforcing the promise

Quasi-contract (definition)

Situation when you would've made a contract but you couldn't

Look for situation when one party conferred benefit on another party and would be fair to pay for that benefit

Quasi-contract elements

-P confers measurable benefit on D

-P would reasonably expect to get paid

-Would be unfair to let D keep benefit without paying

Seven defenses to contract

1. Misunderstanding

2. Incapacity

3. Mistake

4. Fraud/misrepresentation/nondisclosure

5. Duress

6. Illegality

7. Unconscionability


-Parties use material term open to two or more reasonable interpretations

-Each side attaches different meaning

-Neither party knows/should know of the confusion



Mentally ill

Contract voidable (incapacitated party can disaffirm)

Two standards for mentally ill

1. Person can't understand nature/conseq of actions (other side doesn't have to know)

2. Person cannot act in reasonable manner (if other side knows)

Mistake (general definition)

Belief not in accord with present fact

Mutual mistake

Lets adversely affected party rescind if:

-mistake of fact existing at time deal is made

-mistake relates to basic assumption of K and has material impact on deal

-impacted party did not assume risk of mistake

Unilateral mistake

Lets adversely affected party rescind if:

-prove all elements of mutual mistake

-other side knew/had reason to know of/caused the mistake


Statement at time of contracting that is not true

Must show:

-misrepresentation of present fact

-material OR fraudulent

-made unders circumstances in which it is justifiable to rely on representation

Fraud in the execution

Trick someone into signing something they don't know is a K


Other party doesn't learn the truth, but you just remain quiet

Usually don't have to tell other side all material facts

-BUT have to if there's a special relationship (fiduciary) or active concealment


Improper threat depriving party from making meaningful choice to contract

Economic duress - one party makes threats to induce another party to K/modify a K

Undue influence

Puts intense pressure on someone who seems weak-minded or susceptible to high pressure sales tactics



-but K to further criminal act (that is not itself illegal) is OK


"Shocks the conscience"

Procedural - defect in bargaining process itself (ex. hidden term) or absence of meaningful choice

Substantive - ripoff terms

Statute of Frauds (five types of Ks)



One year

UCC $500+

Real property

(My Steelers Over Ur Ravens)

Main purpose exception

If main purpose in agreeing to pay debt of another is for the surety's own economic advantage, not in SOF world

How can SOF be satisfied?

Performance or writing

Does part performance of service K satisfy SOF?


SOF: a writing signed by _________ will satisfy SOF

the party against whom enforcement is sought

Part performance of a real estate K

Two of the three:

1. Possession

2. Payment

3. Improvements to land

Can part performance on a UCC goods contract satisfy SOF?

Yes, but only for quantity delivered/accepted

Do custom-made/specially manufactured goods need to be in writing?


Do judicial admissions and failure to object to confirming memo satisfy SOF?


(failure to object = both must be merchants)

A deal in SOF world, and requirements are met. Now parties want to modify deal. Must they also satisfy SOF?

Not automatically...only if modification has to be in SOF

Parol evidence rule

Applies to prior or contemporaneous statements (oral or written)

Complete integration vs. Partial integration

Complete - contract expresses all terms of agreement (look for merger clause)

Partial - written and final writing, but not all terms included

Does the UCC presume a writing is complete or partial?

Partial (unless parties would have certainly included a disputed term in the writing)

In what situations does the PER NOT bar earlier evidence?

-Evidence relevant to a defense

-Even if totally integrated, party can introduce evidence of second, separate deal

-Prior communication to interpret ambiguous term

Express warranty

Promise that affirms/describes goods and is part of basis of the bargain (unless seller's opinion)

ex. model goods

Implied warranty of merchantability

Seller is merchant

Goods are fit for ordinary commercial purposes

Can disclaim if conspicuous

Implied warranty of fitness for a particular purpose

Buyer relies on seller's expertise to select special type of good to be used for a special purpose

Seller implies this, unless disclaimed (so long as conspicuous)

Express conditions

Created by K language

"provided that", "on the condition that" etc.

Must be strictly satisfied (unless somehow excused)

Can parties waive express conditions?

Yes, by words or conduct

Can also be waived if other party wrongfully interferes/hinders condition (good faith standard)

Constructive Condition of Exchange

One party's performance is conditioned on other side's performance

Does the CCE have to be satisfied perfectly?

No. Substantial performance is OK so long as not material breach

can't be willful

Divisibility of K

If K is divisible, will be broken down into mini contracts to determine if there's been substantial performance

UCC rule for performance

Perfect tender

-perfect goods

-perfect delivery


If seller fails to tender perfect goods and time remaining on K OR seller had reasonable grounds to believe the buyer would accept replacement, then seller has a chance to cure

Installment contract and perfect tender

Can only reject specific delivery when substantial impairment in installment that can't be cured

Shipment contract

FOB seller's place of business

Seller must:

1. get goods to common carrier

2. make arrangements for delivery

3. notify buyer

Destination contract

FOB buyer's place of business

Seller must get goods to buyer's business and notify buyer

Risk of loss

1. See if parties have dealt with ROL in K

2. If not, ask if either has breached (if yes, then they bear risk of loss, even if unrelated)

3. If no breach, then ask what type of K it was:

shipment = ROL during delivery with buyer

destination = ROL during delivery rests with seller

If seller is merchant (ROL)

Risk of loss stays with seller until buyer receives goods if merchant

If not merchant, ROL moves to buyer when seller tenders the goods


-Performance becomes illegal after K formed

-Subject of K is destroyed

-Services with special person and that party dies/incapacitated

-but only if it's more expensive, not impossible/impracticable

(look for hindering ABILITY to perform, not just cost)

Death after contract

Usually doesn't relieve obligations

Estate is on the hook for obligations

Frustration of purpose

Performance can still occur, but something happened to undermine entire reason for K

Event must be extreme and not previously allocate to one of the parties


Can both parties agree to just walk away from K?


Accord and satisfaction

Parties to earlier K agree that performance will be satisfied instead by something else

accord = new performance

satisfaction = excusing of initial obligation

What happens if accord is not performed?

Other side can sue on either original obligation or new promise


Both parties agree that substitute person will take over K obligations

if valid, original promisor is relieved of obligation

Anticipatory repudiation

Other side says they won't perform before performance is due

Can either:

1. Treat repudiation as breach and sue immediately (but if payment is only thing left to do, cannot sue early)

2. Ignore, demand performance, see what happens

Can a party retract their repudiation?

Yes so long as other side hasn't commenced a lawsuit or acted in reline on repudiation

UCC and anticipatory repudiation

Reasonable grounds for insecurity about other side's performance allows you to demand for adequate assurance of performance

if party fails to respond within reasonable time, then you can treat this as repudiation

Expectation damages

typical remedy in K law

goal is to put party in position they would've been in had the K been performed

Value of performance without the breach minus value with the breach

Three limits on expectation damages

1. Must be proven with reasonable certainty

2. Unforeseeable consequential damages are not recoverable unless breaching party had reason to know about possibility of these unforeseen damages

3. Breached-against party must try to mitigate damages

General damages

Types of losses almost anyone would suffer from breach

ex. incidental damages (cost of storing rejected goods, finding new buyer, replacement vendor)

Consequential damages

Losses unique or special to this plaintiff

Lost volume profits

Basically award the profit they would've made, even if they resold the product

Reliance damages

Goal to put party back in the position they would've been in had the contract never been formed


Goal is to give P an amount equal to the benefit that P has conferred on D

Liquidated damages

must be:

-reasonable at time of contracting

-actual damages from breach would be uncertain/difficult to prove

Punitive damages

almost never allowed in K law

Specific performance

If money damages won't do

Presumptively available for real estate

Look for unique goods

Right of reclamation

Equitable right of unpaid seller to reclaim goods when buyer is insolvent

1. Buyer must be insolvent at time of receipt of goods

2. Seller must demand return of goods within 10 days of receipt

3. Buyer still has the goods

Third party beneficiary

Intended and incidental

Ask whether the initial parties intended to convey enforcement rights in the event of a breach

Do intended and incidental beneficiaries have right to sue?

Intended has right to sue

Incidental doesn't

Creditor beneficiary

Promisee strikes deal with promisor in order to repay some earlier debt to third party

Donee beneficiary

No preexisting obligation, but promisee clearly intends to confer gift of enforcement on third party

When will a third party NOT lose enforcement rights? (these cause enforcement rights to vest)

-beneficiary detrimentally relies on the rights (similar to promissory estoppel)

-beneficiary manifests assent to the K/rights

-beneficiary files lawsuit to enforce K


Transfer of rights under K

Assignment is almost always ok, unless K prohibits or invalidates it

a. If contract prohibits assignment?

b. If contract invalidates assignment?

a. Assigning party has breached deal when he makes the assignment, but third party can still recover

b. Third party cannot recover (because this right is invalidated, so there's no power or right to assign)

What happens if someone assigns same rights twice?

Assignment without consideration = last assignment controls

Assignment with consideration = first assignment with consideration controls


"outsource" duties to someone else

Generally ok, so long as K doesn't prohibit and as long as the party doesn't have special interest in having a specific person perform

Is delegatee liable for breach?

No, unless received consideration from delegating party