Contracts: Example Flash Cards

Overview Acronym: Love For Dogs: Treat Every Rover Terrifically

#1 WHAT LAW APPLIES? Common Law vs. UCC Article 2 #2 FORMATION OF CONTRACT: Offer/Termination/Acceptance/Consideration #3 DEFENSES: Capacity, Ambiguity, Mistake, Unconscionability, Duress, Statute of Frauds, etc. #4 TERMS: Parol Evidence Rule, UCC terms—Warranties, Perfect Tender #5 EXCUSE FOR NONPERFORMANCE: Material Breach, Impossibility, Frustration, Conditions #6 REMEDIES: Specific Performance, Expectation Interest, Liquidated Damages #7 THIRD-PARTY PROBLEMS: Beneficiaries, Assignments, Delegations

J.Lo orally agreed to work for Columbia Pictures for five years for $10 million per film. After "Gigli" bombed, Columbia refused to pay her for the film. The Statute of Frauds bars J.Lo from enforcing the contract. Can she recover from Columbia? (2) How much can she recover in restitution?

1) No, not under the contract because of Statute of Frauds 2) Can recover reasonable fair market value. Vs. Restitution (Quasi-Contract) Protects against unjust enrichment whenever contract law yields an unfair result. Restitution is the remedy of last resort.

On January 1, I offer to sell Gates my Prius for $8,000. The next day, while giving Barbri lectures, I exclaim, "I do not want to sell my Prius to Bill Gates." Can Gates still accept? (2) If I sell my Prius to Jeff Bezos on January 4, can Gates still accept my offer? [TRICK Q!] (3) Bezos tells Gates he bought the Prius from me. Can Gates still accept my offer?

1) Yes, he has no awareness of attempted revocation. 2) Yes, because Gates still has no awareness. Bexo still gets car, but Gates can sue for breach. 3) No, Gates now has offeree awareness. Revocation An offer terminates when the offeror revokes the offer. General Rule An offer can be revoked any time before acceptance. Direct Revocation The offeror indicates directly to the offeree that he has changed his mind about entering the deal. Vs. Indirect Revocation*** The offeror engages in conduct that indicates she's changed her mind and the offeree is aware of the conduct.

CONDUCT AS A SOURCE OF TERMS

1st) Course of Performance How parties performed under previous installments of this contract. (X: S and B contract for the sale of 100 "chickens" a month for 12 straight months. The first 3 shipments under this contract are broilers, not stewing foul.) This course of performance under these first 3 installments can help interpret what the word "chicken" means in month 4. Course of performance is the best evidence of what the parties intended. 2nd) Course of Dealing What parties did under prior contracts with each other. (X: S sent stewing chickens to B in last year's contract.) That can help determine what the word "chicken" means in the current contract, but is less important than the current course of performance. 3rd) Usage of Trade What others in the trade do in similar contracts (less important than #1 and #2). (X: Other people in the chicken industry interpret the word "chicken" to mean chickens up to 6 pounds, including broilers or fryers.) That trade custom can help determine what "chicken" means in the current contract, but is the least important evidence of what the term means.

I promise to pay you $100 to not read romance novels by E. L. James for the next 2 months. You don't read her novels. Is there consideration for my promise to pay you $100? (2) But what if you would not have read her novels anyway?

2AA: Yes, forbearance can constitute consideration. 2: Yes.

Snooki helps JWoww move into her new home. Later, JWoww promises to pay Snooki $300 for helping her move. JWoww now refuses to pay. Was there consideration for JWoww's subsequent promise to pay Snooki $300?

2BB: Nope, this is past consideration, which doesn't work.

We agree that I will pay you $300 for your Billy Joel "Greatest Hits" CD. The CD is only worth $20 but I desperately want it to complete my Billy J collection. Is there consideration for my promise to pay you $300 for it?

2CC:Yes, a peppercorn would suffice.

Beyoncé contracts to sing at the Coachella Music Festival for $20,000. On arrival, she demands $30,000. Coachella agrees. After Beyoncé performs, Coachella refuses to pay her the extra $10,000. Is there consideration for Coachella's promise to pay Beyoncé the extra $10,000? (2) What if Beyoncé agrees to sign autographs for an hour in exchange for the extra $10,000? (3) What if the modification is fair in light of an unanticipated change in circumstances? (4) What if the promise to pay the extra $5,000 is made by Kanye West, not by Coachella? [TRICK Q!]

2DD: No, she did not do anything extra. No new consideration. 2) Yes, there is new consideration. 3) Yes, it is enforceable. 4) Promise is enforceable, this is the third party exception. Contract Modification*** Issue: Is There Consideration to Enforce the Modification? Common law rule differs from Article 2. Common Law New consideration is required to modify a contract. Performing a preexisting duty is not enough ["Preexisting Duty Rule"].

Donna Karan contracts to sell a dress to Heidi Klum for $4,000. Later, they agree to increase the price to $4,500. Is Heidi's promise to pay the extra $500 enforceable?

2EE: Yes Vs. Sale of Goods (Article 2) Modifications—Need NO Consideration Consideration is NOT required to modify a contract for the sale of goods, but you must have Good Faith.

I offer my Prius to Beyoncé for $8,000 and promise I will keep my offer open for a week. Can I revoke? (2) I promise to keep my offer open for a week if Beyoncé pays me $100. She pays the $100. Can I still revoke?

2F: Yes, no consideration for promise 2) No, consideration on both sides. Four Exceptions Where an Offer Cannot Be Revoked: 1. Option A promise to keep the offer open that is paid for.

You owe MasterCard $3,000. The debt is due and undisputed. You and MasterCard orally agree that if you pay $2,000, MasterCard will forgive the rest of the debt. If you pay $2,000, can MasterCard recover the $1,000 balance?

2FF: Yes, Partial payment of a debt that is undisputed means no consideration. Partial Payment of a Debt that Is Due and Undisputed = No Consideration

CarMax makes a written offer on CarMax letterhead to sell a 2011 Tesla Roadster. The offer states that CarMax will not revoke for two weeks. Can CarMax still revoke its offer? (2) What if the writing provides that CarMax will not revoke the offer for six months? (3) What if CarMax promises not to revoke its offer, but does not state a time period? (4) CarMax makes a signed, written offer to sell a 2011 Tesla Roadster. Can CarMax still revoke? [TRICK Q!]

2G: No, firm offer rule. 2) Can't go that long, 3 month ceiling on merchant firm offer rule. 3) Still entitled to protection for reasonable time period. Not more than three months. 4) Yes. No promise to hold offer open. 2. Firm Offer (Article 2) In a sale of goods, if a merchant promises in a signed writing to keep an offer open, then the offer is irrevocable. Note: Under Article 2, the terms "merchant" and "signed" are broadly defined.

MasterCard is barred by the statute of limitations from collecting the $3,000 you owe them. You write MasterCard: "I know I owe you money. I will pay you $2,000." Must you pay MasterCard $2,000?

2GG: Yes, but only the $2,000 Time-Barred Debt as an Exception to the Consideration Rule A written promise to pay a debt, collection of which is barred by statute of limitations, is enforceable even without consideration.

I offer to sell you a machine. Before accepting, you have an expensive foundation custom-made to fit the machine. Can I still revoke my offer?

2H: Yes, because the offeror expects the offeree to accept before reliance takes place. 3. Foreseeable Reliance Before vs. After Acceptance Very rare!

Grandpa promises to give his granddaughter $2,000 as a gift. In reliance, Granddaughter quits her job as a bookkeeper. Then Grandpa dies and his estate reneges. Was there consideration for Grandpa's promise to give Granddaughter the $2,000? (2) Can Granddaughter enforce Grandpa's promise on any other ground?

2HH: No 2) Yes, promissory Promissory Estoppel as a Substitute for Consideration Foreseeable reliance may make a promise enforceable, even without consideration!

Subcontractor S submits a bid to do the plumbing work on a school project for $10,000. General Contractor G relies on S's bid in computing its own bid, and wins the overall school building project. Can S still revoke its offer?

2I: (Note: Bids are offers) No, because foreseeable detrimental reliance. 3. Foreseeable Reliance Before vs. After Acceptance Very rare!

Meg Ryan offers me $10,000 to paint her house. Her offer states that it can be accepted only by painting the house. I start painting the house. Can Meg still revoke? (2) What if I had ordered paint, but not yet started painting the house? Could Meg still revoke?

2J: No, start of performance pursuant to a unilateral contract suspends ability to revoke. 2) Yes, this is mere preparation to perform. BUT, forseeable detrimental reliance may make offer irrevocable. 4. Starting to Perform a Unilateral Contract

Monday: I offer to sell my Prius to J.Lo. Tuesday: I mail her a revocation. Wednesday: J.Lo accepts my offer. Thursday: She receives my revocation. Is my revocation effective?

2K: No, revocation only effective on recept. Timing of Revocation A revocation is effective on receipt [no Mailbox Rule].

Disney sends Bill Clinton an offer to appear in the film, "Waiting to Inhale." Bill agrees on the condition that he gets top billing. Is there a contract?

2M: No, this is a conditional acceptance. It is a rejection and counteroffer.

Landlord sends Tenant a signed lease that says nothing about pets. Tenant adds, "Tenant may keep a pet," signs the lease and returns it to Landlord. Has Tenant accepted Landlord's offer?

2N: No, Tenent has violated mirror image rule. Common Law Acceptance must mirror the offer ("Mirror Image Rule"); if the offeree adds terms, it is a rejection!

B makes a written offer to buy 100 widgets from S. The offer does not mention any warranties. S's written acceptance disclaims all warranties. Is there a contract? (2) Does the contract include S's disclaimer? (3) What if S had not disclaimed all warranties, but had merely added "Monday delivery"? (4) What if B had responded that Monday delivery was not convenient?

2O: Yes, this is Article 2, no mirror image rule. 2) Nope, it's a material change. 3) Monday delivery counts, as it is not a material change. 4) Buyer can keep out additional term. Vs. Sale of Goods (Article 2) No Mirror Image Rule*** The offeree's adding or changing a term does not prevent acceptance under Article 2. However.... Offeree's Term Is Included Only If: Both parties are merchants Not a material change and No objection to it within a reasonable time.

Gates's offer states that I can accept only by painting the house [= unilateral]. I start painting the house. Have I accepted the offer so that I am bound to finish the job? (2) BUT: Once I start painting, can Gates still revoke? [Recall Brooklyn Bridge Hypo]

2R: No 2) No Unilateral Contract Starting performance is not acceptance; only completing performance is acceptance.

Jay Inslee offers me $10,000 to paint his house green. I paint it purple. Have I accepted?

2S: Yes, but I have breached the contract. Improper Performance as Acceptance Simultaneous acceptance and breach.

B orders a Beyoncé CD from S. S ships a Lady Gaga CD instead. Has S accepted B's offer? (2) What if S includes a note saying, "I'm out of Beyoncé, but am sending Gaga as an accommodation"?

2T: Yes 2) The seller is making a counteroffer. Improper Performance as Acceptance Simultaneous acceptance and breach.

I leave a note on your outline at the break: "I offer to sell you my Prius for $8,000. If I don't hear from you by 9 tonight, you've accepted." You say nothing. Have you accepted my offer?

2U: No. General rule: Silence is NOT acceptance. But recall the "custom creates duty to speak" exception (eel skins case).

On July 1, Elon Musk offers to sell his original Tesla Roadster to Mark Zuckerberg for $1 million. On July 2, Zuckerberg mails an acceptance. On July 3, he receives a letter revoking the offer. Result? (2) What if the acceptance got lost in the mail?

2V: Contract formed on July 2 2) Totally irrelevant. Even if the letter never arrives, acceptance was formed. General Rule Acceptance is effective when mailed ("Mailbox Rule"). [Policy: Protects the offeree against revocation once she has mailed an acceptance.]

Elon Musk offers to sell his original Tesla Roadster to Mark Zuckerberg for $1 million. His offer states, "Your acceptance must be received by July 9." On July 9, Zuckerberg mails his acceptance. Musk receives it on July 11. Is Musk bound?

2W: No, offer-or can override mailbox rule. Exceptions to Mailbox Acceptance Rule Offer States Otherwise

Elon Musk offers to sell his Tesla Roadster to Mark Zuckerberg for $1 million. Zuckerberg pays Musk $3,000 to hold the offer open until July 9 [= option K]. On July 9, Zuckerberg mails an acceptance. On July 11, Musk receives it. Is Zuckerberg's acceptance effective?

2X: No, no mailbox rules for acceptances under options. Irrevocable Offer—NO Mailbox Protection

Elon Musk offers to sell the Roadster to Mark Zuckerberg for $1 million. Zuckerberg mails a rejection letter on July 8 and then mails an acceptance letter on July 9. Is Musk bound?

2Y: Depends. Whichever arrives first, but no mailbox rule. Rejection Sent First, then Acceptance

Bill Gates promised to sell Jeff Bezos a puppy in exchange for his promise to pay $400. Bezos now refuses to pay. Was there consideration for Bezos's promise to buy the dog?

2Z: Yes. Definition of Consideration "Bargained-for legal detriment/benefit." Can be a promise in exchange for a promise (the usual case), performance or even forbearance.

I agree to sell my 2010 Toyota Prius to 17-year-old Justin Bieber. Bieber later refuses to go through with the deal. Can I enforce the agreement against Bieber? (2) I believe Bieber is 18 because he told me he was 18. Does that matter? (3) If I refuse to convey the Prius, can Bieber enforce the agreement against me? [TRICK Q!]

3A: No, younger Bieber has a lack of capacity 2: No Bieber's age is all that matters, usually. 3: Yes, minor can still go through, one only cares about the defendant's capacity. An incapacitated defendant has the right to disaffirm the contract (she does not have to disaffirm, but she can if she wants to avoid the contract).

What if Bieber does not disaffirm the contract and continues to use the Prius after he turns 18?

3B: Has accepted the contract.

I rent Bieber a place to live (a "necessary") for $20,000 a month. Does Bieber have to pay?

3C: Yes, but only for the reasonable value of the apartment. Exception to Incapacity Defense An incapacitated party is liable for necessaries (i.e., food, shelter, clothing, or medical care), but only for their reasonable value, not the contract price.

B and S contract for the delivery of cotton on the ship "Peerless." B means the ship sailing in October. S means the ship sailing in December. Is there a contract?

3D: No, each party had a reasonable misunderstanding. No contract, and no remedy. Material ambiguity.

Alex Rodriguez agrees to sell Serena Williams a baseball bat for $100,000. Neither was aware the baseball bat had been destroyed two days earlier. Does Serena still have to buy the bat? (2) A-Rod agrees to sell Serena a baseball bat for $100,000. Both believe it was used by Babe Ruth. After the agreement, they learn that it was not. Does Serena still have to buy the bat? (3) What if the baseball bat was one of Babe Ruth's, but is worth only $50,000? [TRICK Q!]

3E: No. Mutual mistake about a material fact. 2) No, mutual mistake about the existence about the subject matter. 3) Contract still enforcable. Mistake not material, it's only a mistake about value.

At the time of their agreement, Serena believed Babe Ruth was the original owner of the baseball bat, but A-Rod did not. Later, Serena learns she was wrong. A-Rod did not misrepresent it. Does she still have to buy the bat?

3F: Yes, unilateral mistakes are not a defense, as long as A-Rod did not misrepresent it.

Ms. Williams rents to own a bunch of different items from a Washington, D.C. electronics shop—a TV for $300, a phone for $400, and a stereo for $500. After she has paid off $1,100 of the total $1,200 price tag, she misses her final installment payment, and the Seller repossesses everything in accordance with its rights under the fine print cross-collateralization clause of the contract that it made her sign in blank. Can Ms. Williams avoid the harsh consequences of this contract?

3G: Yes. unfair surprise and oppressive terms, are (4) tested as of the time the agreement was made (5) by the court. This doctrine, originally applicable only to sales of goods but (1) now a part of contracts law generally (2) empowers a court to refuse to enforce all or part of an agreement. The two basic tests, (3) unfair surprise and oppressive terms, are (4) tested as of the time the agreement was made (5) by the court.

D has a contract to supply 1,000 radar sets to P in 2020. D refuses to perform this contract until P agrees to buy 4,000 erector sets in 2021. P has no other source of radar sets and so agrees. D delivers the radar sets in 2020. Can P get out of the agreement to buy 4,000 erector sets in 2021?

3H: Yes, example of economic duress. Bad guy makes wrongful threat to breach the contract. Elements of Economic Duress "Bad guy"—makes an improper threat "Vulnerable guy"—no reasonable alternative

Piper claims that Alex promised to relinquish claims to her assets if she agreed to marry her. Is this promise within the SOF? (2) Vs. Pete Davidson alleges that Ariana Grande promised to marry him. Is this promise within the SOF?

3I: Yes; contract in consideration of marriage. 2: Nope 1. Marriage Contracts in consideration of marriage are subject to SOF, but NOT a promise to marry!

Edward Scissorhands alleges that on February 1, 2020, W orally agreed to have Edward cut down all the trees on his ranch. Is this agreement within the SOF? (2) What if Edward doesn't actually finish the job until August 1, 2021?

3J: No 2) Doesn't make a difference, still no. Contracts which cannot possibly be competed in 1 year or less are subject to SOF—look at dates!

ABC orally agrees to employ Chris Harrison as host of the Bachelor for the rest of his life. Is a writing required? (2) What if ABC orally agreed to employ Chris Harrison for three years?

3K: No, because Chris Harrison could die before a year is up. 2) Yes, that would require a writing. Contracts which cannot possibly be competed in 1 year or less are subject to SOF—look at dates!

On May 1, 2020, Club Galaxy orally agreed to have Enya perform at its New Year's Eve Bash on December 31, 2021. Is their oral agreement enforceable? [TRICK Q!]

3L: No, it must be written. Enya cannot perform within one year. Contracts which cannot possibly be competed in 1 year or less are subject to SOF—look at dates!

Billy Ray Cyrus alleges that Lil Nas X orally agreed to sell him the Oldtown Road Ranch for $4,000,000. Is this within the SOF? (2) Cyrus alleges that Lil Nas X orally agreed to lease him a cabin for the next 2 years on the Oldtown Road Ranch. Is that covered by SOF? (3) Cyrus alleges that Lil Nas X orally agreed to have him build a fence around Oldtown Road Ranch. SOF? (4) Lil Nas X authorizes an agent to sell the ranch. Must the agent's authorization be in writing?

3M: Yes, it is. 2) Yes, most transfers of interests of land for more than a year subject to SOF 3) No, this is not a land sale or transfer of an interest. 4) Yes. Authorization must in writing if underlying deal must be in writing. 3. Land Sale/Transfer of an Interest in Real Property

Bill Gates orally agreed to buy a computer from Calandrillo for $500. Is a writing required? 2) What if price was $400?

3N: Yes, sale of goods for $500 or more. 2) No

Bill Gates agrees to have me paint his house for $10,000. Jeff Bezos chimes in, "If Gates doesn't pay you, I will." Is Bezos's promise to pay me within the SOF? (2) I have no contract with Gates. Bezos tells me, "Paint Gates's house and I will pay you $10,000." Is Bezos's promise to pay me within the SOF?

3O: Yes, this is a surety 2) No, because it is not a surety. It is merely a promise to pay money. 6. Suretyship A promise to "answer for" (i.e., guarantee) the debt of another person. But watch out: not a mere promise to pay $$

Ariana Grande contracted in writing to buy 20 tubes of hair gel for $20 each from L'Oréal [20 x $20 = $400]. L'Oréal claims that they and Grande later agreed to modify the contract to make it 40 tubes [40 x $20 = $800]. Does the modification have to be in writing? (2) What if L'Oréal instead claimed the number of tubes was later reduced to 10 [10 x $20 = $200]? (3) Same facts, except the original written contract prohibited oral modification. What result?

3P: Yes, because new contract would be a sale of goods for more than 500 dollars. 2) No, because as modified, the new deal is a sale of less than 500 dollars. 3) Modification now has to be in writing. Parties can write in their own statute of frauds, but only under Article 2. Not in common law. Contract Modification & Interaction with SOF The modification must be in writing only if the contract as modified (not the original contract) is within the Statute of Frauds.

"I agree to buy 20 dumbbells from Muscle Memory Products for $500. /signed/ Arnold Schwarzenegger." If Muscle Memory Products sues to enforce the contract, will this note satisfy the SOF against Schwarzenegger? (2) What if, instead, the note read: "I agree to sell 20 dumbbells to Schwarzenegger for $500. /signed/ Muscle Memory Products." Can Muscle Memory use this note to satisfy the SOF against Schwarzenegger?

3Q: Yes, has quantity and defendants signature 2) No, because there is no Schwarzenegger signature. WHAT IS AN ADEQUATE WRITING TO SATISFY THE SOF? Depends on the nature of the contract. Sale of Goods (Article 2) Must contain a quantity and be signed by party to be charged with breach [i.e., the defendant].

Fox News signs this letter: "We agree to employ Judge Judy as an expert legal consultant for three years at a salary of $45 million per year. /signed/ Rupert Murdoch." A month later, Fox fires Judy without cause. Judy sues Fox for breach. Does the letter satisfy the SOF against Fox? (2) Same facts, except Judy quits after one month. Fox sues Judy for breach. Does the letter satisfy the SOF against Judy?

3S: Yes, it answers "who" and "what. 2) No, signature of party to be charged is missing.

Bill Gates alleges that Jeff Bezos orally agreed to sell him Bezos's Mercer Island mansion for $4,000,000. Gates has paid Bezos the entire $4,000,000. Does Gates's full payment satisfy the SOF?

3T: No, because that's just 1 out of three. Need 2 out of 3: 1) some payment, 2) possession, and/ or 3) improvements EXCEPTIONS to SOF (i.e., where you don't need a Writing) Carved out where there is less chance of fraud 1) Land Sale/Real Property Exceptions to SOF a. Leases of One Year or Less Legislative exception to protect tenants b. "Part Performance" of Real Estate Sale K Need 2 out of 3: 1) some payment, 2) possession, and/ or 3) improvements

Sesame Street orally agrees to employ Big Bird for two years for $50,000. Big Bird works for two years, but Sesame Street refuses to pay. Does Big Bird need a writing to satisfy the SOF? (2) But: What if Sesame Street fires Big Bird after only three months?

3U: No, Because there is full performance by Big Bird. 2) Not enforceable, only partial performance. 2) Full Performance of Service K Satisfies the SOF, but Part Performance Does Not

Tom Brady orally agrees to buy 50 regularly-inflated footballs for $100 each. Seller takes Brady's check for $2,000 for the first 20 footballs and cashes it. Seller refuses to deliver any footballs. Brady sues Seller for breach. Does Seller have a SOF defense? (2) Brady orally agrees to buy a boat for $50,000. Seller takes a $10,000 deposit from Brady. Seller does not deliver the boat. Brady sues. Does Seller have a SOF defense?

3V: No and yes. No SOF fraudes defense for balls already paid for. But there will be SOF defense for the rest of the balls. 2) No, because a boat cannot apportion a boat in the same way. The deposit takes the whole contract out of the statute of frauds. 3) Sale of Goods for $500 or More (Article 2 SOF) a. Goods Accepted or Paid for by Buyer

Vera Wang Design Studios sends Victoria's Bridal Shop a signed letter "confirming our earlier oral agreement over the phone for the sale of 9 gowns for $2,700." Victoria's Bridal Shop does not respond. Will Vera Wang's letter satisfy the SOF against Victoria's?

3W: Yes. Special Merchant Confirmatory Memorandum Rule. One party can use its own signed writing to satisfy the SOF against the other party if: Both parties are merchants; Writing claims agreement & has quantity; and There's no written objection within 10 days.

I buy paint on credit from Home Depot to paint Bill Gates's house. Gates orally promises to pay Home Depot if I don't pay [= suretyship]. Can Home Depot enforce Gates's oral promise against him?

3X: Yes, the main purpose exception to the suretyship rule. If the main purpose exception to suretyship rule. Main purpose is to benefit himself. 4) Suretyship: the "Main Purpose" Exception Takes Us Outside of SOF

Jennifer Lopez signs a lease for the Grand Ballroom at the Beverly Hills Hotel for her wedding. J.Lo claims she could select any ballroom and has a fax from the Beverly Hills Hotel sent before the written lease supporting her claim. If J.Lo asks the court to reform [rewrite] the contract, can she get the fax into evidence?

4A: No. Keeps out evidence of a prior or contemporaneous agreement (either oral or written) that contradicts a later writing. Parol Evidence Rule (P.E.R.) Keeps out evidence of a prior or contemporaneous agreement (either oral or written) that contradicts a later writing.

Before J.Lo signed the lease, the manager told her the Grand Ballroom was soundproof. It's not. J.Lo seeks rescission because of this misrepresentation. Can J.Lo get this evidence in?

4B: Yes, because evidence is being offered to establish a defense. Exceptions to the Parol Evidence Rule [so the evidence gets in]: 1) Correct a Clerical Error (e.g., a typo) 2) Establish a Defense Against Formation

J.Lo signs a lease for a ballroom. J.Lo says it was specifically for the Grand Ballroom. J.Lo has a fax from the Beverly Hills Hotel sent before the written lease supporting her claim. Can the court consider the fax?

4C: Yes, this is to determine what a ballroom is. 3) Interpret a Vague or Ambiguous Term—Parol Evidence Is Okay

The lease says nothing about sleeping arrangements. J.Lo claims that before signing the lease, the manager promised to "throw in the bridal suite for free." Can J.Lo get this promise into evidence? (2) But: What if the written lease also said: "This contract is limited to the terms herein" [a "merger clause"]?

4D: Yes, if it was a partial integration. 2) Parol evidence not admissible, because it is a merger clause. Okay Partial integration = A final statement of the terms included, but not a complete statement of all terms agreed to

After signing the written lease, the manager promised J.Lo that the Hotel would "throw in the bridal suite for free." Does the P.E.R. prevent J.Lo from getting this promise into evidence?

4E: No, this does not concern Parol evidence.

Which of the following are express warranties? (1) "This ring is solid 24 carat gold" (2) "This computer is guaranteed for 2 years" (3) Seller uses a sample or model [TRICK Q!—don't say it's "implied"] (4) All parts of my widgets are "top notch" or "best quality"

4F: 1) Yes 2) Yes 3) Yes 4) No Express Warranty Describe the goods, promise facts about the goods, showing a sample or model, but NOT an "opinion."

You buy a bicycle from Big Wheel Cycles. Is there an implied warranty of merchantability? (2) Big Wheel Cycles sells you a delivery van. Is there an implied warranty of merchantability?

4G: Yes 2) No, because Big Wheel Cycles does not typically sell delivery vans. 1. Implied Warranty of Merchantability Definition The goods are fit for their ordinary purpose.

A contract for a machine provides that "all parts are guaranteed for two years" [express warranty]. What if it also provides that "all warranties are disclaimed"? (2) A contract provides for the sale of a machine "as is" or "with all faults." [= magic words] The contract says nothing else about quality. Are there any implied warranties under this contract? (3) A contract says that there are "NO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS" instead of using a "magic" phrase. Are there any implied warranties?

4H: Express warranty survives the attempted disclaimer. 2) Nope, those words are magic words and get rid of the disclaimers. 3) No, as long as the disclaimer was conspicuous. A seller can disclaim implied warranties, but not express warranties.

You buy an oven for your home from Al's Kitchen Appliances. The contract provides: "All parts are guaranteed for two years" [= express warranty] and "Al's liability is limited to replacement parts" [= "limitation of remedy"; not a "disclaimer"]. A year later, a defect in the oven causes a fire that destroys your kitchen. Can you get damages from Al's? (2) What if you were also injured in the fire?

4I: Probably not, because remedies can be limited as long as they are not unconscionable. 2) No, this would be unconscionable. Vs. Limitation of Buyer's Remedies General Rule Seller can limit buyer's remedies for breach of any warranty (express or implied) as long as the limitation is not unconscionable. Exception Limiting buyer's remedies for personal injury in the case of consumer goods is presumed to be unconscionable.

Starbucks Seattle contracts to ship coffee to Central Perk in New York City. Rats answer the call of nature inside the coffee containers while they are in transit. The contract is silent on who bears the risk and neither party is to blame for the rats. Who has the Risk of Loss if Starbucks shipped the coffee after the contract deadline?

4J: Starbucks bears the risk of loss, even if the breach does not lead to the loss. Starbucks still breached.

What if the coffee was shipped FOB Seattle? (2) What if it's any other city (e.g., FOB New York)?

4K: That's a shipment contract. Sellers obligations are to get the goods to a common carrier and notify the buyer. 2) Destination contraction. Seller bears the risk of loss until coffee arrives.

Chryssa contracts to buy a floor model couch from Costco. She's to pick it up at the loading dock. Before she does, the couch is ruined by yuppie kids jumping all over it. Does Chryssa still have to pay? (2) Chryssa contracts to buy a couch at a garage/ estate sale. Owner tells her where it is located in the back bedroom and how to pick it up. Before Chryssa picks up the couch, it's ruined by bargain hunters jumping all over it. Does Chryssa still have to pay?

4L: No, this is a merchant seller, who bears the risk of loss until the buyer comes into possession of the goods. 2) Yes, this is a non merchant seller, and the risk passes to the seller once the goods are tendered.

Seller contracts to deliver 50 purple tee shirts to Buyer. Seller delivers 49 purple and 1 gold tee shirt instead. What are Buyer's rights?

4M: Buyer has the right to reject the goods. 1) Perfect Tender Rule Seller must deliver perfect goods in the right place at the right time. If tender is not 100% perfect, buyer has the right to reject the goods.

Same facts, except the contract provides for delivery no later than June 6. Seller delivers 49 purple and 1 gold tee shirt on May 5. Buyer rejects them. Does Seller have an option to cure?

4N: Yes, because the time has not expired. 2) Option to Cure (a "Second Chance") A seller who fails to make perfect tender may have an option to cure. Whether seller has that option usually depends on whether the time for performance has expired. a. Time Has Not Expired Seller has the option to cure.

Same facts, except Seller delivers the 49 purple and 1 gold tee shirt on June 6 (the deadline). Buyer rejects them. In the past, Buyer had accepted gold tee shirts instead of purple ones. Does Seller have the option to cure even though the contract deadline has passed?

4O: Yes, because there is reasonable grounds for thinking that improper tender would have been acceptable. Vs. b. Time Has Expired Seller does not have an option to cure unless there is "reasonable grounds" for thinking that her improper tender would have been acceptable.

Barbri contracts to buy 3,000 donuts from Krispy Kreme Donuts, with Krispy Kreme to deliver 100 donuts here by 9 a.m. each of the 30 days the bar review course meets. Installment contract?

4P: Yes Definition of Installment Contract Requires or authorizes seller to deliver in separate installments (otherwise, seller must deliver the goods in a single delivery).

One day, Krispy Kreme delivers only 99 donuts at 9:01 a.m. What are BARBRI's rights?

4Q: Cannot reject, because it is not a substantial impairment. Rejection Under Installment K Perfect Tender Rule does not apply to installment contracts, so it's harder for buyer to reject. Buyer may reject only for substantial impairment.

Lonzo Ball contracted to buy new sneakers from Nike. He paid before the shoes arrived at his home. Did Lonzo impliedly accept the sneakers by paying for them in advance? (2) The sneakers arrived at Lonzo's L.A. house more than three months ago, but he's been too busy helping his dad set up basketball leagues in Europe to open up the box. Has Lonzo impliedly accepted the sneakers?

4R: No, merely paying not acceptance, must have reasonable opportunity to accept. 2) Yes, because he had reasonable opportunity to accept. Implied Acceptance*** Buyer keeps goods after having an opportunity to inspect them.

In July, B buys a sleeping bag from S. The contract provides that the sleeping bag is insulated for temperatures as low as 10 degrees. B uses the sleeping bag for various warm weather camping adventures throughout the summer. When B goes camping in October, she learns that the sleeping bag is not insulated for temperatures as low as 10 degrees. Can B reject the goods? (2) Can B revoke her acceptance of the goods?

4S: No 2) Probably, but she must indicate extreme ignorance, and that it was not easily detectable. General Rule A buyer cannot revoke acceptance of goods. Exception If the non-conformity substantially impairs the value of the goods and was difficult to discover (i.e., it was a latent defect).

I contract to sell Bill Gates my 2010 Toyota Prius. Our contract requires him to pay me by 5 p.m. Sunday. Gates gives me a personal check at 5 p.m. Sunday. If I refuse his check, is Gates in breach?

4T: No, Gates has additional reasonable time to come up with cash. Cash unless otherwise agreed. A check is okay, but seller can refuse it. But that gives buyer an additional reasonable time to come in with the cash.

Seller contracts to sell 50 purple tee shirts to Buyer. Seller delivers 49 purple tee shirts and one gold tee shirt. What can Buyer do?

5A: 3 options: 1) reject all, 2) accept all, or 3) reject some & accept the rest 5.1 OTHER PARTY'S BREACH May provide an excuse depending on the nature of the contract. Sale of Goods (Article 2) If seller's performance is not perfect in every respect ["Perfect Tender Rule"], buyer has pretty much free reign. 3 options: 1) reject all, 2) accept all, or 3) reject some & accept the rest

I hire Martha Stewart to decorate my house. She finishes, except for one bathroom. What are my rights? (2) What if Martha quits after decorating only one room? (3) What if the contract required me to pay Martha $25,000 for each room she decorated?

5B: This is only a minor breach. Can get damages, but my obligation to pay is still there. 2) That is a material breach. That excuses me under the contract. I can sue for damages right away, and I don't have to go ahead with any of the contract performance obligations. 3) This is a divisible contract. Breach rule is on a room by room basis. She is still entitled to $25,000. Vs. Common Law Contracts Damages Injured party can recover damages for any breach of contract, whether the breach is material or not. Excuse But only a material breach provides an excuse to suspend innocent party's performance.

Martha contracts to decorate my house, payable on completion. After Martha starts the job, I tell her I am not going to pay [= "Anticipatory Repudiation"]. What are Martha's rights? (2) What if I tell Martha the next day that I've changed my mind, and will pay her as promised [= "Retraction"]?

5C: She has the right to suspend her own performance obligations, and she can immediately sue for breach. 2)This is a retraction. A repudiation can be retracted, as long as it hasn't been relied on.

Calandrillo contracts to buy computer chips from Bill Gates. Calandrillo learns from other buyers that Gates's recent deliveries have contained lots of defective chips. What can Calandrillo do? (2) If Gates does not provide Calandrillo with adequate assurance, what are my rights against him? (3) Gates contracts to sell Calandrillo goods on credit. Later, Gates learns that Calandrillo has failed to make payments to other suppliers. Can Gates demand that I pay cash?

5D: Reasonable grounds to be insecure. Buyer can request adequate assurance that chips will not be defective. 2) Buyer can treat this as an anticipatory repudiation of contract. Excuses buyer from performing under contract. 3) No, cannot use inadequate assurance as an excuse to rewrite contract. A party with reasonable grounds for being insecure about the other party's performance may, in writing, request adequate assurance that the other party will perform in accordance with the contract.

John contracts to do yardwork for Gabrielle. Before John does the work, he and Gabrielle agree to rescind the contract. If John does not perform, can Gabrielle sue him for breach of contract?

5E: No, this is a recission. Each party must have some performance remaining, howevor. a. Rescission A mutual agreement to cancel the contract.

John borrows $500 from Gabrielle and promises to repay her with interest. Later, Gabrielle agrees to discharge the debt now if John promises to do her yardwork for a year. John makes the promise. What are Gabrielle's rights if John does not do the yardwork as promised?

5F: She can only go after him on the new yardwork deal. An agreement to replace an existing contract with a new one. A modification takes effect immediately (i.e., excuses original obligations immediately).

John borrows $500 from Gabrielle and promises to repay her with interest. Same facts, except they agree that only if John does the yardwork for a year, then Gabrielle will discharge the debt. What are Gabrielle's rights if John does not do the yardwork as promised?

5G: She can now sue him for not doing the yardwork, or the original $500 debt. This is an unsatisfied accord. c. Accord/Satisfaction An accord is an agreement to accept a different performance in future satisfaction of an existing duty. The duty is suspended by the accord, but is not excused until the accord is satisfied (performed).

John contracts to do yardwork for Gabrielle. Later, John, Calandrillo, and Gabrielle agree that Calandrillo will do the work instead. If Calandrillo does not do the work, is John liable for breach? (2) John and Calandrillo agree that I will mow the lawn without getting Gabrielle's consent. If I don't do the work, is John liable for breach?

5H: No, his duties are excused by novation. Novation: An agreement to substitute a new party for an existing one. 2) Yes, this is just a delegation. An agreement to substitute a new party for an existing one.

Caldwell leases his music hall to Taylor for a concert to be held on June 1. The hall burns down on May 26. Is Caldwell excused from performing?

5I: Yes, impossibility is an excuse. Destruction of subject matter of K provides an excuse for nonperformance.

Kourtney contracted to sell her BMW to Khloe for $50,000. After risk of loss passed to Khloe, the car was destroyed by a fire. Is Kourtney excused from performing due to impracticability? [TRICK Q!]

5J: Courtney doesn't need any excuse, because risk of loss had already passed to buyer. Sale of Goods (Article 2) Same rule, but two trick questions. Risk of Loss*** A seller who bore risk of loss when goods were damaged or destroyed is excused by impracticability.

Buyer contracts to buy 500 computers from Seller. After the contract is formed but before delivery, fire destroys one of Seller's warehouses. Thousands of computers are destroyed. Is Seller excused from performing?

5K: Maybe. If the computers destroyed had already been set aside for buyer, then yes. If not, then no. Seller is excused only if the goods that were damaged or destroyed had been "identified to the contract."

Calandrillo buys a 2010 Toyota Prius for $8,000 from his next door neighbor. The price includes a free lesson on making it up hills. Article 2 or not?

Article 2

4.6 PERFORMANCE OF COMMON LAW CONTRACTS

Performance does not have to be perfect. Substantial performance is all that is required [i.e., a party cannot commit a material breach]. Relatively easy—just look to the terms of K to see what performance obligations are, and make sure there is "substantial performance" = meets the essential purpose of the K Vs. "Material" Breach not okay => excuses the innocent party's performance obligations (see Hypo 5B)

6) Consequences of Rejection/Revocation of Acceptance

Return Buyer can return the goods at seller's expense. Refund Buyer can get back any money buyer has paid. Damages Buyer can get damages for breach of contract.

4. Non-Carrier Cases (e.g., buyer picks up or the seller delivers)

Risk of Loss depends on whether the seller is a merchant. Merchant-Seller Seller bears Risk of Loss until buyer takes possession of the goods. Vs. Non-Merchant-Seller Risk of Loss passes sooner: buyer bears Risk of Loss once seller "tenders" the goods (makes them available to buyer).

Delivery by Common Carrier (e.g., UPS, Amtrak)***

Risk of Loss shifts to buyer when seller completes its "delivery obligations." 1st possibility: Shipment Contract Seller must get the goods to a common carrier, make delivery arrangements, and notify buyer. 2nd possibility: Destination Contract Seller must get the goods all the way to a specific destination (usually, where buyer is located).

Scully mails Mulder a signed note: "I accept your offer." Does the note satisfy the SOF?

Vs. Common Law Contracts: Writing must have all material terms and be signed by the defendant.

Jeff Bezos buys a toupee from Calandrillo for $400. Does Article 2 apply?

Yes

Bill Gates offers me $10,000 to paint his house, but does not specify how to accept [= bilateral]. I start painting. Have I accepted Gates's offer so that I am bound to finish the job?

Yes Bilateral Contract Starting performance is acceptance and carries with it an implied promise to finish the job.

Tesla offers to buy all its requirements of batteries from Solar City for six years for $10,000/battery. Is that a valid offer? (2) Solar City accepts Tesla's offer. For the last three years, Tesla has ordered 100,000 batteries a year. Can Tesla require Solar

Yes. Article 2 lets the quantity be measured by buyer's needs. 2) No. Buyer cannot unreasonably increase buyer's demands. Open Price Term in Sales K—UCC vs. Common Law Court will read in a "reasonable" price for sale of goods but not in common law.

RISK OF LOSS IN A SALE OF GOODS

Issue When goods are damaged before buyer gets them and neither buyer nor seller is to blame, who bears the Risk of Loss? If Seller Bears Risk Seller must provide new goods to buyer for no additional cost, or be liable for breach. Vs. If Buyer Bears Risk Buyer must still pay the contract price even though goods are destroyed!

On January 1, I offer to sell Bill Gates my 2010 Toyota Prius for $8,000. My offer does not contain a termination date. Can Gates accept my offer on December 31?

No, more than a reasonable time has passed. 4 Methods of Termination: 1) Lapse of Time 2) Revocation 3) Rejection 4) Death

Angelina Jolie hires Lindsay Lohan to babysit her kids. Does Article 2 apply?

No.

Bill Gates contracts to buy Greenacre. Does Article 2 apply?

No.

Chris Harrison e-mails Hannah Brown a job offer that states, "You can accept this offer only by reporting for work on Monday." Hannah e-mails back, "I accept!" Has she accepted the offer?

No. Language of the Offer Controls the Manner of Acceptance

Jeff Bezos offers to sell his house to Bill Gates for $500,000. Gates responds, "I will only pay $490,000." Bezos refuses. Can Gates later accept Bezos's $500K offer? (2) What if Gates had responded, "Will you take $490,000?"

No. Counteroffers kill original offer. Gates could still accept. Not a rejection counteroffer, it is mere bargaining.

The Yankees advertise tickets in the NY Post: "Incredible offer! Ticket special for $19." Offer?

No. No quantity. Definition of Offer A manifestation of an intention to be bound (as judged by a "Reasonable Person"/Objective standard). Advertisements An ad is not an offer unless there's a quantity.