FINAL EXAM ACC 473
adhesion contract (Contrary to Public Policy)
(one that is written exclusively by one party and presented to the other on a take-it-or-leave-it basis)
if person is sufficiently intoxicated to lack mental capacity
-entered into by an intoxicated person can be either voidable or valid
Requirements of the Offer
1. Offeror must have a serious intention to be bound by the offer 2. The offer's terms must be reasonably certain, or definite 3. The offer must be communicated to the offeree.
Option Contract
A type of irrevocable offer that is held open for a specified period of time in return of consideration.
ASSIGNEE VS DELEGATE
ASSIGNEEE LOSES LIABILITY AS SOON AS SOLD. DELEGATOR (ORIGINAL AND DELEGATED) BOTH ARE LIABLE. SUCKS TO SUCK FOR DELEGATION.
Licensing Statutes (Contrary to Statute)
All states require that certain professionals (e.g., physicians) obtain a license from the state.
False
An intoxicated person who enters into a contract can void it True or False
"Mirror Image" Rule
At common law, any change in terms automatically terminates the offer and substitutes the counteroffer.
Death or Incompetence of the Offeror or Offeree
Automatically terminates the offer unless it is an irrevocable offer, then recovered from the estate.
D. Valid
Bosley bets Finster on the outcome of the SuperBowl. Gambling on sports events is illegal in their state. Before he game is over, Bosley's attempt to withdraw form the bet is
C. return the car and pay for the same
Ewa, a 16 year old minor, buys a car from Downtown Autos and wrecks it. To disaffirm the contract and satisfy a duty of restitution, Ewa must
Where Intent May Be Lacking
Expressions of opinion, Statements of future intent, Preliminary negotiations, or invitations to negotiate, Advertisements, Live and online auctions, Agreements to agree, Preliminary agreements
B. is reasonable in term son geographic area and time
Franz signs a covenant not to complete with his employer, Gifts 'n More corp. This covenant is enforceable is it
Silence as Acceptance
Generally, silence (or inaction) cannot constitute acceptance but there are exceptions
Prior Dealings
If the offeror and offeree have prior dealings, the offeree has the duty to reject or risk being bound by his silence
D. valid and enforceable
Jaime sells his business to Isabella and, as part of the agreement, promises not to engage in a a business of the same kind, within 30 miles for 1 year. This promise is
Contractual Capacity
Legal ability to enter into a contractual relationship
D. Leigh does not know that Klausen is required to have a license
Leigh contracts with Klausen, a financial planner who is required by the state to have a license. Klausen does not have a license. Their contract is enforceable if
D. unenforceable
Luke is an unlicensed contractor in a state that requires a license to protect the public from unauthorized contractors. Kirkpatrick hires Luke to build an office building. This contract is
REVOCATION/COUNTEROFFER
MUST BE IN HAND. ACCEPTANCE CAN BE EFFECTIVE if sent via US mail.
Agreement
Offer and Acceptance Makes contract valid
Revocation
Offer can be withdrawn by the offeror anytime before offeree accepts the offer, unless the offer is irrevocable.
Discriminatory Contracts (Contrary to Public Policy)
Party promises to discriminate on the basis of race, color, national origin, religion, gender, age, or disability are contrary to both statute and public policy, and unenforceable
Exceptions to silence as acceptance
Prior Dealings, Acts Consistent with Acceptance
Definiteness of Terms
Requirements of the Offer; must express: Identification of the parties, Object or subject matter of the contract, Consideration to be paid, Time of payment, delivery, or performance
Communication
Requirements of the Offer; must express; The offer must be communicated to the offeree
True
Some states impose a duty of restitution on minors who disaffirm contracts True or False
D. void
Vincenzo is adjudged mentally incompetent. Sophia is appointed to act as Vincenzo's guardian. Vincenzo signs a contract to sell his house. The contract is
B. enforceable only if Konrad understood its legal consequence
While intoxicated, Konrad agrees to sell his warehouse for half its assessed value. The contract is
Illegal contract (licensing) (Contrary to Statute)
a contract with an unlicensed practitioner is usually is unenforceable
contract for necessaries
are food, clothing, shelter, medicine, and hospital care- anything to maintain a person's status. ma disaffirm but may be liable for the reasonable value
Usurious contracts (Contrary to Statute)
are illegal and may be void in their entirety, although most states simply limit the interest the lender is permitted to collect
Irrevocable offers
cannot be revoked
liquidated damage
cell phone termination plan. you have to cover what you owe in SPECIFIC AMOUNT.
incompetent persons not adjudged mentally incompetent by a court (valid)
may be valid if the person had capacity at the time the contract was formed, such as during a lucid interval
executory contract
neither party can enforce it; if it has been executed, neither party can recover damages.
doing business as an adult
some states prohibit minors who engage in business as adults from disaffirming related contracts
Substantive unconscionability
when contracts—or portions of contracts—are oppressive or overly harsh.
Scienter
("guilty knowledge") is an intent to deceive
when is quasi contract used?
- when i have built part of house when contract was fake (partial perforamnce on unenforceable contract) - alternative instead of suing. allows party to recover value of partial performance.
Elements of consideration
-"Legally sufficient value" -"Bargained for exchange"
Intoxication
-A condition in which a person's normal capacity to act or think is inhibited by alcohol or some other drug -entered into by an intoxicated person can be either voidable or valid
Fraudulent Misrepresentation Elements
-A misrepresentation of a material fact must occur. -There must be an intent to deceive. -The innocent party must justifiably rely on the misrepresentation -To collect damages, a party must have been harmed as a result of the misrepresentation
Minors' Obligations on Disaffirmance
-All states' laws permit minors to disaffirm contracts but differ on the extent of a minor's obligations on disaffirmance. -hold that the minor need only return the goods subject to the contract -if goods are damaged, minor to restore the adult party to the position she or he held before the contract was made.
Requirements of Quasi Contract
-Benefit was conferred to the other party. -Party conferring benefit reasonably expected to be paid. -The benefit was not volunteered. -Receiving benefit without paying for it would result in unjust enrichment
Special Provisions in International Contracts
-Choice of Language. -Choice of Forum (country). -Choice of Law. -Force Majeure Clause.
Exceptions to the Parol Evidence Rule
-Contracts subsequently modified. -Voidable or void contracts. -Contracts containing ambiguous terms. -Incomplete contracts -Prior dealing, course of performance, usage of trade. -Contracts subject to orally agreed-on conditions precedent. -Contracts with an obvious or gross clerical error
Most Common Remedies
-Damages. -Rescission and Restitution. -Specific Performance. -Reformation
Justifiable Reliance on Misrepresentation
-Deceived party must have -Reliance is not justified if the innocent party knows the true facts or relies on extravagant statements
Covenants Not to Compete in Employment Contracts
-Employees cannot work for competitors or start competing businesses for a specified period of time after termination of employment. -legal in most states if the specified period of time (of restraint) is not excessive and the geographic restriction is reasonable
Misrepresentation by Silence
-Latent defects -Common and statutory law create a duty to speak in certain situations (e.g., where one is aware of a serious defect or serious risk of injury). -When parties are in a fiduciary relationship, failure to disclose material facts may be fraud.
Requirements to Establish Promissory Estoppel
-Must be a clear and definite promise -Promisee must justifiably rely on the promise -Promisee reasonably relied on the promise by acting or refraining from some act -The promisee's reliance was definite and resulted in a substantial detriment -Justice will be served by enforcing promise
Types of situations that may allow for discharge of contractual obligations
-One party to a personal contract dies or becomes incapacitated prior to performance. -The specific subject matter of the contract is destroyed -When a change in law renders performance illegal
Parents' Liability
-Parents are not usually liable for contracts made by minor children acting on their own. -Businesses normally require parents to cosign any contract made with a minor
quantum meruit
-Party conferring benefit can recover -"as much as she deserves"
Agreements that lack consideration
-Preexisting Duty -Past consideration -Illusory Promises
Discharge by Novation requirements
-Previous valid obligation. -Agreement by all parties. -Extinguishment of all old obligations. -New valid contract.
Promissory Estoppel (detrimental reliance):
-Recovery if reliance on promise of another
Open Quantity Terms exceptions
-Requirements Contract -Output Contract
Statute of Frauds Exceptions
-Specially Manufactured Goods -Admissions -Partial Performance
Rights That Cannot Be Assigned
-The assignment is prohibited by statute. -The contract is personal. -The assignment significantly changes the risk or duties of -the obligor. -The contract prohibits assignment. 4 exceptions to contract prohibiting assingment: 1. right to receive funds. 2. real estate 3. negotiable 4. sale of good
If Both Parties Are Merchants unless conditions arise
-The original offer expressly limited acceptance to its terms. -The new or changed terms materially alter the contract
Unilateral Mistakes of Fact contract, is usually enforceable with two exceptions
-The other party to the contract knows or should have known that a mistake of fact was made. -The error was due to an inadvertent, substantial mathematical mistake and not gross (extreme) negligence
Rescission
-The unmaking of a contract that returns the parties to their pre-contract positions -New Contract
Assignments
-Transfer of contractual rights is an assignment -Transfer of contractual duties is a delegation
Preexisting Duty Exceptions
-Unforeseen difficulties -Rescission -New Contract
Duties That Cannot Be Delegated
-When special trust has been placed in the obligor or performance depends on the personal skill or talents of the obligor -When performance by a third party will vary materially from that expected by the obligee -When the contract expressly prohibits delegation.
A mistake of value (or quality)
-a mistake about the future market value or quality of the object of the contract. - cannot be rescinded
Communication of Acceptance
-an offeree need not notify the offeror of performance unless the offeror would not otherwise know about it
persons adjudged mentally incompetent by a court
-any contract made by that person is void -The court will appoint a guardian who will represent the mentally incompetent individual and enter into binding legal obligations on his or her behalf
Form of the Assignment
-assignment can take any form, oral or written -statute of fraud assignments and wages in contracts required in writing
lack of voluntary consent (assent)
-be used as a defense Mya lack: -Mistake. -Fraudulent Misrepresentation. -Undue Influence. -Duress.
Types of Damages
-compensatory -consequential -punitive -nominal
Minor's right to disaffirm
-express his or her intent, through words or conduct, not to be bound to the contract -must disaffirm the entire contract, not merely a portion of it. -the minor may disaffirm; any adult party to the contract remains bound unless and until the minor's disaffirmance releases her
gambling contracts (most) (Contrary to Statute)
-illegal and unenforceable—even in states where certain forms of regulated gambling are permitted. -All states regulate gambling
Effect of Illegality
-illegal contract is void and both parties are usually considered to be in pari delicto (equally at fault)
Scienter exists if a party
-knows that a fact is not as stated; makes a statement that she/he believes is not true; -makes a statement recklessly, without regard to whether it is true or false; or -says (or implies) that a statement is made on some basis when it is not
Exceptions to a Minor's Right to Disaffirm
-misrepresentation of age -doing business as an adult -contracts for necessaries
Effect of a Delegation
-obligee must accept performance from the delegatee -Valid delegation of duties does not relieve the delegator of obligations under the contract. -The obligee can usually sue the delegatee and the delegator for nonperformance.
Injury to the Innocent Party
-rescind contract-No proof of injury is required -recover damages-Proof of injury is universally required
Equitable remedies
-rescission and restitution, -specific performance, -reformation
Pattern-of-Conduct Exception
-that waives successive breaches can operate as a continued waiver.
Bilateral (Mutual) Mistakes of Fact Rescind
-when both parties are mistaken about the same material fact -When the parties reasonably interpret a term differently
undue influence in certain siutations
. if you're lawyer and you write yourself in their will, it's undue influence. in the law of contract, the doctrine that will render a contract at least voidable if a person is reasonably considered to be in a position of trust (used non-technically) in relation to another person and abuses that trust.
types of damages
1. compensatory 2. consequential 3. punitive 4. nominal
things that don't need writing requirements under Statue of Frauds
1. custom goods 2. admissions (breaching party admits DURING COURT) 3. partial performance (oral contract if payment made or goods accepted
most common remedies
1. damages 2. rescission and restitution 3. specific performance 4. reformation
ORDER OF INTERPRETATION
1. express terms 2. course of performance 3. course of dealing 3. course of custom 4. usage in trade
The requirments of Quasi contracts for remedy
1. party has conferred a benefit on other party 2. Party conferred benefit with reasonable expectation of being paid 3. Party did not act as a volunteer for benefit 4. Party would be unjustly enriched if they retained benefit without paying for it
Effect of an Assignment
1. rights of the assignor are extinguished 2. assignee has a right to demand performance from the obligor 3. assignee's rights are subject to defenses the obligor has against the assignor
When beneficiary rights vests
1. the third party materially alters position in justifiable reliance 2. the third party files a suit on the promise or 3. third party manifests assent to the contract
3 exceptions to statue of frauds
1. unique manufac goods 2. what/? 3. partial performance
WRITING THAT satisfies statute of frauds is
1. writing says parties intended contract 2. signed by party against whom enforcement is saught (the bad people)
quasi contract
2 parties without obligations to each other but court creates. e.g. For example, consider a pizza that is delivered to the wrong address. The pizza has already been paid for. If the individual does not correct the delivery man and instead keeps the pizza, the court system could issue a quasi contract that would require the individual to pay back the amount of the pizza to the party that paid for the pizza. The contract is used to prevent any party from benefiting from the situation at the other party's expense; the restitution required under the contract is to make the situation fair.
offer (what is not?)
8 different things that were not offers (statement of opinion, negotation)
Ambiguity (unclear)
: intent cannot be determined, lacks provision on disputed term, term has more than one meaning, uncertainty about a provision
Employment Contracts (Mitigation of Damages)
: A person who was wrongfully terminated owes a duty to take a similar job if one is available
Acts Consistent with Acceptance
: If the offeree has an opportunity to reject an offer but does not, it is implied that he has accepted the goods or services and agreed to compensate the offeror according to the terms of the offer.
Click-On Agreements
A binding contract can be formed by clicking on a box indicating "I Accept" or "I Agree." Contract can be formed via Web site or software.
Requirements Contract
A buyer and seller agree that the buyer will purchase all of the goods of a designated type that the buyer needs, or requires, from that seller.
A novation expressly or impliedly Discharge by Settlement Agreement
A compromise that arises out of a genuine dispute over the obligations under an existing contract will be recognized at law
True
A condition can trigger the performance of a legal obligation True or False
False
A contract does not need to contain reasonably definite terms to be enforced true or false
True
A contract entered into under undue influence is voidable True or False
D. is not effective
A contract for a sale of goods between Laramine and Michelle provides that the right to receive damages for its breach cannot be assigned. This clause
False
A contract for a transfer of an interest in land needs not be in writing to be enforceable True or False
True
A contract in which the stronger party dictates the terms is a adhesion contract True or False
False
A contract that calls for the performance of an illegal act may be enforceable True or False
True
A contract that cannot by its own terms be performed within a year must be in writing to be enforceable True or False
The One-Year Rule
A contract that cannot, by its own terms, be performed within one year from the date it was formed must be in writing - if objectively impossible during the one-year period, the contract must be in writing to be enforceable
Informal Contract
A contract that does not require a specified form or method of formation in order to be valid.
True
A contract that exculpates one party for negligence will usually be held unconscionable True or False
Executed
A contract that has been fully performed by both (or all parties).
Executory
A contract that has not been fully performed by one or more parties.
Integrated Contracts
A contract that is intended to be the complete and final statement of the terms of the agreement.
Formal Contract
A contract that requires a special form or method in order to be enforceable.
Contracts to Commit Crimes
A contract to commit a crime is unenforceable and void
Frustration of Purpose
A contract will be discharged if supervening circumstances make it impossible to attain the purpose both parties had in mind when they made the contract.
Valid Contract
A contract with agreement, consideration, contractual capacity, form, and legality
False
A contract with an unlicensed practitioner is always enforceable True or False
Void contract
A contract with no legal or binding effect
True
A counteroffer terminates an offer true or false
Extrinsic Evidence
A court may interpret ambiguous terms against the party who drafted the term or ...
"Plain Meaning" Rule
A court will enforce a contract according to its obvious terms when it is clear and unequivocal.
Goods and Services Combined
A court will generally use the predominant-factor test to determine whether it is primarily for the sale of goods or the sale of services.
Written Contract Incorrectly States the Parties' Oral Agreement
A court will reform a contract when two parties enter into a binding oral contract but make an error when attempting to put the terms into writing.
False
A covenant not to compete is never enforceable True or False
Bankruptcy
A discharge in bankruptcy usually prevents creditors from enforcing most of the debtor's contracts.
True
A lender who makes a loan at a rate above the lawful maximum commission usury True or False
Usury (Contrary to Statute)
A lender who makes a loan at an interest rate above the lawful maximum commits
False
A material breach of contract does not excuse the nonbreaching party from further performance True or False
True
A minor may disaffirm a contract entered into with an adult True or False
Bilateral (Mutual) Mistakes of Fact
A mistake by both contracting parties about one or more material facts generally entitles (but does not compel) either party to rescind
Unilateral Mistakes of Fact
A mistake made by only one of the parties that does not generally give the mistaken party any right to relief from the contract.
False
A parent is always liable for a minor's contract True or False
Delegations
A party can transfer duties through delegation
True
A party can treat a contract as discharged if the other party materially alters without consent True or False
Substantial Performance
A party in good faith that performs -performance must not vary greatly from what was promised -must create substantially the same benefits
Innocent Misrepresentation
A person makes statement she/he believes to be true but actually misrepresents facts -can rescind, not seek damages
Promise
A person's declaration that he will perform or refrain from performing some present or future act
False
A promise on which a promisee justifiably relies to his or her detriment will not be enforced unless it is in writing True or False
False
A promise to answer for the debt of another must always be in writing to be enforceable True or False
True
A promise to do what one already has a legal duty to do is not legally sufficient consideration True or False
primary obligation
A promise to pay another person's debt that is not conditioned on the person's failure to pay (or perform)
secondary obligation
A promise to pay another's debt only if that party fails to pay
True
A promise to perform subject to obtaining financing is a condition precedent True or False
Condition
A qualification in a contract based on a possible future event
True
A right to the payment of money may be assigned True or False
Collateral Promises
A secondary promise is one that is ancillary (subsidiary) to a principal transaction or primary contractual relationship. -cosigning
False
A seller has no duty to disclose a defect that he or she knows of but of which a buyer is unaware True or False
Duration of an Ongoing Contract
A single contract may not indicate how long the parties are required to deal with each other, and in this situation, either party may terminate
Statute of Frauds
A statute requiring that certain types of contracts be evidenced by a signed writing (or its electronic equivalent) in order to be enforceable
Statutes of Limitations
A suit for breach of contract must be filed within the time permitted by applicable law
Incidental Beneficiaries
A third party who benefits from the performance of a contract, but whose benefit was not the reason the contract was formed
True
A unilateral mistake does not generally afford the mistaken party a right to relief from the contract True or False
Promises Made in Consideration of Marriage
A unilateral promise to make a monetary payment or give property in consideration of a promise to marry must be in writing
Voidable contract
A valid contract that can be legally avoided, canceled, or annulled by one of the parties.
What Constitutes a Writing?
A writing can consist of any order confirmation, invoice, sales slip, check, fax, or e-mail—or a combination of these items
Sufficiency of the Writing
A writing, including an e-mail or other electronic record, will be sufficient to satisfy if it: -Indicates that the parties intended to form a contract. -Is signed by the party (or agent of the party) against whom enforcement is sought -The contract normally will not be enforceable beyond the quantity of goods shown in the writing -identify and describe the goods leased and the lease term
Fully integrated contract
A written agreement whose terms are intended to be the final expression of parties' intentions and cannot be contradicted by prior or contemporaneous agreement
II. Discharge by performance
A. Accomplished by tender (unconditional offer to perform by a person ready, willing, and able to do so) 1. Once tendered, party has done everything possible to carry out contract; refusal to perfom by other party gives tenderer right to sue for breach of contract B. Complete performance - performed exactly as agreed, no question as to whether performed 1. All expressly stated conditions fully occur; aka strict performance C. Substantial performance - performs substantially all terms in good faith 1. Must not vary greatly from promised performance 2. Must create substantially the same benefits as those promised a. Intentional failure is breach 3. Effect on duty to perform: other party's duty remains absolute a. Can sue for minor deviations but must still continue to perform 4. Measure of damages - limited to cost to bring contract into compliance a. If cost is unreasonable, value between performance rendered and performance that would have been rendered D. Performance of satisfaction of another - work must satisfy party or a third party 1. When contract is personal - obligation is conditional, must satisfy party specified in contract a. Only excused if party expresses dissatisfaction to avoid payment or otherwise 2. Reasonable person standard - satisfies performance unless expressly stated otherwise E. Material breach of contract - nonperformance or does not even meet substantial performance 1. Excuses other party from performance; can sue for breach a. If minor, duty is suspended until performance resumes unless major difficulties arise F. Anticipatory repudiation - refusal to carry out obligation before duty to perform occurs 1. Until non-breaching party treats as a breach it can still be retracted 2. Treated as a present material breach; non-breaching party should not have to remain ready for retraction and should be given opportunity to seek similar contract to minimize loss
III. Settlement of claims
A. Accord and satisfaction - debtor offers to pay less than owed and creditor accepts 1. Accord: agreement, Satisfaction: performance (typically payment) a. No satisfaction w/o accord; debt must be in dispute for A/S to occur 2. Liquidated - A/S cannot take place; debt has been ascertained, fixed, or determined a. Debt still legally owed; debtor gave no consideration to satisfy balance of creditor 3. Unliquidated - debt is no settled, fixed, or determined a. A/S occurs, acceptance is considered valid consideration B. Release - one party forfeits right to pursue legal claim and bars further recovery 1. Must be made in good faith (honesty), accompanied by consideration, and signed in writing C. Covenant not to sue - substitutes contractual obligation for another type of action 1. Not barred from recovery; party can still sue if the other party does not perform
III. Discharge
A. By agreement - mutually by parties to discharge agreement 1. Can be contained in contract or in the form of a new contract B. By mutual rescission - both parties agree to return to original position and cancel/terminate contract 1. Requires offer, acceptance, and consideration of another agreement to replace 2. Original promises serve as consideration for second contract 3. Can be made orally or in writing (in sales, UCC requires written rescission) C. By novation - parties agree to substitute a third party for original party 1. Requires a valid obligation with an agreement by all parties to a new, valid contract 2. Extinguishes old obligation (discharge of prior party) D. By settlement agreement - when genuine dispute over obligations arises over an enforceable contract 1. Between original parties, compromise/settlement substituted as new contract 2. Expressly or impliedly revokes and discharges obligations of prior contract E. By accord and satisfaction 1. When accord made (promise to perform different than promise) a. Suspends original obligation, does not revoke (can sue for nonperformance
III. International contracts
A. CISG - does not apply to consumer sales; neither UCC or CISG applies to service contracts 1. If UCC and CISG conflict, CISG applies (is a US treaty and therefore supreme law) B. Mirror image rule - UCC does not require; acceptance with additional terms does not negate formation 1. CISG does not require unless additional terms materially alter the contract a. Material terms include price, quantity, time, place, liability, etc. (almost everything) C. Irrevocable offers - under UCC merchant's firm offer irrevocable, even without consideration if in writing 1. Under CISG, offer can become irrevocable without consideration or writing if: a. Offeror orally stated offer to be irrevocable b. Offeree reasonably relies on the offer as being irrevocable D. Writing requirement - UCC requires for over $500 1. CISG states contract of sale can be proved by any means E. Time of contract formation - UCC, common law: acceptance effective on dispatch 1. CISG: effective on its receipt by offeror, but irrevocable when sent F. Special provisions - avoiding disputes due to international contracts 1. Choice of language clause - designates official language in which contract is interpreted 2. Choice of forum clause - determines jurisdiction (does not have to be within regions of parties) 3. Choice of law clause - what law will govern relationship 4. Force Majeure clause - "act of god" clause to excuse liability; includes other unforeseen events
I. Uniform Commercial Code
A. Comprehensive coverage of UCC 1. Facilitates commercial transactions by governing laws of sales and contracts clearer 2. Single integrated framework for commercial transactions ordinarily arising in commercial transactions B. Sale of goods (Article 2) - sets requirements for sales contracts and duties of parties 1. Modifies common law of contracts to apply to sales contracts a. When UCC provision addresses a conflict, it prevails b. Common law prevails when no provision is present 2. Sale of goods only a. If subject matter is dispute of goods, UCC governs b. Does not deal with property, services, or intangibles 3. Rules can vary if buyer or seller is a merchant C. Goods - items of property that are tangible and movable 1. Goods associated with real estate do not fall within Article 2 unless those items are severable a. Ex: timber, minerals, etc. (regardless of who severs them from the land) 2. Goods and services combined - predominant factor test determines if contract is primary purpose a. If mix contract primarily for goods, all disputes (even for service) decided under UCC D. Merchant status - special business standards imposed due to commercial expertise 1. Merchants deal in goods of the kind involved in that sales contract 2. Merchants, by occupation, hold themselves out as having knowledge of involved goods 3. Persons who employ a merchant has the status of merchant in that transaction
I. Conditions and performance
A. Conditions - qualifications in a contract based on possible future events 1. Occurrence (or nonoccurrence) triggers performance of obligation or terminate existing 2. In contracts, usually just referred to as "conditions" as opposed to specific ones B. Conditions precedent - condition must be fulfilled before duty to perform can be required 1. I.e. physical exam for insurance, appraisal before buying property, etc. C. Conditions subsequent - terminates the promise to perform, occurs after duty arose 1. I.e. failing drug test gets your contract terminated D. Concurrent conditions - when each qualification is conditional on the other's 1. Only exist when contract expressly or impliedly calls for simultaneous performance of duties E. Express - provided for by the parties' agreement (if, provided, after, when, etc.) F. Implied - understood but not expressed; are necessarily inherent in actual performance
I. Assignments and delegations
A. Contract of privity 1. Private agreement between two parties who alone have rights and liabilities of it a. Third parties do not typically have rights B. Assignments - transfer of contractual rights to a third party after contract is made 1. Especially important in business financing (transfers of loan payments) a. Ex: Banks sell right to collect mortgage payments for a fixed fee 2. Assignor - assigns rights to a third party (assignee receives) 3. When rights are assigned unconditionally, rights of the assignor are extinguished a. Obligor owes obligation, obligee receives b. Obligee can pursue enforcement in court 4. Assignee's rights are subject to same defense assignor had 5. Form can be oral or written, must follow statute of frauds when needed C. Rights that cannot be assigned 1. When assignment is prohibited by statute 2. Contract is for personal services unless all that remains is monetary payment a. When legal action involves personal rights, they are considered personal by nature and cannot be assigned 3. When contract prohibits assignment - assignment clause depends on how phrased a. Exceptions to assignment clause that prohibits assignment: i Cannot prohibit right to receive funds ii Cannot prohibit assignment of rights in real estate (against public policy) Considered restraints against alienation iii Assignment of negotiable instruments (notes, checks, etc.) iv Right to receive damages for breach of contract or payment of an account in sale of goods 4. When assignment changes the risk or duties of another significantly D. Notice of assignment - must notify the obligor of the assignment; two major issues: 1. Priority - if same right assigned to two different people, who gets priority to the righ? a. Typically first in time, but many states also say to the first assignee to give notice 2. Discharge by performance to wrong party - if obligor performs assignment to assignee before being notified
III. International statute of frauds
A. Contracts for International Sale of Goods (CISG) - does not incorporate Statute of Frauds provisions 1. Article 11: states that "a contract for sale need not be concluded in or evidenced by writing and is not subject to any other requirements as to form a. Accords with legal customs of most nations, which have mostly repealed fraud provisions
V. Adhesion contracts
A. Defined - dictated by party with overwhelming bargaining power 1. Written exclusively by one party, presented as "take it or leave it" 2. Second party given no opportunity for negotiation B. Standard form - fine print provisions that shift risk normally taken by that party to the other 1. Must be proven to be unconscionable to avoid enforcement a. UCC typically only applies unconscionability to sale of goods, though some states have not adopted
III. Third party beneficiaries
A. Intended third party beneficiary -performance rendered to or benefit a third party 1. Original parties to contract must agree 2. Promisor - in bilateral both commit so courts determine to avoid beneficiary suing wrong party 3. Types of intended beneficiaries: a. Creditor - benefits from a payment of debt b. Donee - when promise is made to give a gift to a third party i Most commonly in life insurance c. Most do not fit into one of these, so courts usually only distinguish between intended and incidental 4. When rights of intended beneficiary vest (have taken effect, cannot be taken away) a. Third party materially changes position in justifiable reliance on the promise b. Third party brings a lawsuit on the promise c. Third party demonstrates consent to the promise at the request of promisor or promise i i.e. sending letter indicating they are aware and consent B. Incidental - receives unintentional benefit from contract even though that benefit is not reason made 1. Party has no expressed rights in the contract; any party not deemed intended is deemed incidental and cannot sue to enforce contract 2. If party is expressly designated in contract, if performance is rendered directly to third party or third party can control details, they are intended
IV. Discharge by operation of law
A. Material alteration of contract - one party has no knowledge or consent regarding changes 1. Innocent party can treat as terminated or discharged B. Statutes of limitations - oral usually 2-3yrs, 4-5 for written 1. 10-20 years to file for recovery awarded in judgments 2. Breach: 4yrs after cause of action accrued a. Contract can reduce to one year but cannot extend C. Bankruptcy - prevents creditors from enforcing most of debtor's contracts 1. Liquidates and allocates a debtor's assets to creditors in fair and equitable fashion D. Impossibility of performance - supervening events (not reasonably foreseeable) 1. Three situations: death or incapacitation, subject matter destroyed, or law renders illegal 2. Objective impossibility cannot be done by anyone 3. Subjective impossibility can't be done by that party (subjective; does not discharge) 4. Temporary impossibility - suspends performance until impossibility ceases a. Gross lapse in time or change in circumstances can lead to discharge E. Commercial impracticability - performance becomes significantly costly or difficult 1. Must not have been known by parties when contract was made F. Frustration of purpose - supervening event makes it impossible to obtain intended purpose when contract was made 1. Typically involves event that decreases value of what a party receives
II. Formation of sales contracts
A. Offer - common law requires unqualified acceptance 1. Under UCC, verbal exchanges, correspondence, and actions can constitute contract even if the moment of its making is undetermined B. Open terms - common law requires definite terms (essential terms can be ascertained) 1. Under UCC, contracts will not fail for indefiniteness even if terms are open, so long as: a. Parties intended to make a contract b. Reasonably certain basis for the court to grant an appropriate remedy 2. Open price - courts determine reasonable price at time of delivery if parties have not agreed on one a. Determined in good faith (honesty and in fact, commercial reasonableness) 3. Open payment - due at time and place buyer is to receive goods if no terms specified 4. Open delivery - takes place at seller's place of business (residence if no business) or known location of goods 5. Duration of ongoing contracts - reasonable notice before termination required 6. Options and cooperation - seller has right to make shipping arrangements in good faith using commercial reasonableness a. Buyer can specify when sales contract omits terms relating to assortment of goods 7. Output and requirement contracts - implicit consideration because right to buy or sell forfeited 8. Merchant's firm offer - when merchant-offeror gives assurances in a written, signed writing that offer will remain open a. Irrevocable without necessity or consideration C. Acceptance - either by prompt promise to ship or by prompt/current shipment of conforming or nonconforming goods 1. Prompt shipment of nonconforming goods constitutes both acceptance and breach a. Breach does not apply if seller seasonably notifies buyer that nonconforming goods are an accommodation 2. Communication of acceptance - UCC requires notification within reasonable time a. Offeror can treat as offer offeree having lapsed if not notified by beginning performance 3. Additional terms - UCC indicates definite acceptance if it includes terms additional or different to original offer a. If one or both are nonmerchants, contract does not include additional terms b. When both are merchants, additional terms automatically become part unless: i Original offer expressly limits acceptance to those terms ii New or changed terms materially alter the contract iii Offeror objects to new or changed terms within reasonable time 4. Condition on assent - regardless of merchant status a. Offeree's response not acceptance if it contains additional terms and is conditioned to the offeror's consent to those terms b. Additional terms - courts may strike terms if parties don't agree i Still constitutes contract but those terms stricken from the contract D. Consideration - UCC does not require a contract modification to be supported by new consideration 1. Must still be made in good faith, must be in writing in some situations 2. If consumer buying from merchant, consumer must sign separate acknowledgement of any prohibition of modification E. Statute of frauds - contracts of sale over $500 or more required to be in writing to be enforceable 1. Sufficiency - indicates intent and is signed by the party or their agent 2. Merchant rules -if writing indicates terms and receiving merchant has reason to know of it contents, signature not needed if not objected to within reasonable time (10 days) 3. Exceptions - cannot repudiate oral contract if: a. Specially manufactured goods have been substantially started, cannot be resold, or are specially manufactured for a particular buyer b. Admission in pleadings made c. Partial performance - if payment made and goods received = partial performance i Enforceable at least to the extent that performance took place F. Parol evidence - fully integrated contracts cannot be contradicted by parol evidence, but partial can: 1. Course of dealing - prior actions that establish a common basis for their understanding a. UCC feels this may give particular meaning or supplement or qualify terms 2. Usage of trade - practices regularly observed as to justify an expectation by the parties 3. Course of performance - conduct that occurs under particular agreements a. Parties themselves best know what they meant so how it's carried out is best indication 4. Rules of construction for interpreting contracts - consistent with each other whenever reasonable G. Unconscionability - UCC can evaluate any contract or clause to determine and can either refuse to enforce, enforce remainder without unconscionable part, or limit application of unconscionable term
II. Parol Evidence Rule
A. Parol evidence - common law rule regarding admissibility of oral evidence 1. If a court finds written agreement represents final agreement, parol evidence denied B. Exceptions to oral evidence: 1. Evidence contract was subsequently modified, oral or written a. May not be enforceable 2. Contract was voidable or void a. Especially if fraud occurred b. With ambiguity, oral evidence admissible to determine meaning 3. Incomplete contracts: used to "fill in gaps" 4. Prior dealing (course of performance/usage of trade) a. When buyers/sellers have consistent dealings, customary practices develop b. Shows how parties have acted in past transactions c. Can also be used for clarifying ambiguity 5. Condition precedent - condition required to be fulfilled before performance a. Allowed if oral precedent doesn't conflict with what is written 6. Obvious or gross clerical error - clearly does not represent the agreement of the parties a. Parol evidence admissible to correct these errors C. Integrated contracts - written contract is intended to be final statement of terms 1. Extraneous information not included in contract is excluded 2. Completely integrated - contains all terms agreed upon 3. Partially integrated - contains some, but not all a. Evidence of consistent additional terms admissible to supplement written agreement 4. Excludes evidence that conflicts with written, only parol evidence that adds to terms of a partial integration allowed
II. Agreements that lack consideration
A. Preexisting duty - when legal duty to do already exists 1. If a party is bound by contract, that duty cannot serve as consideration for a second contract 2. Unforeseen duties - when extraordinary changes arise not foreseen at the time contract was formed a. Court must decide if modification of contract is fair and equitable in view of circumstances 3. Rescission - the unmaking of a contract so as to return the parties to positions they occupied before the contract was made a. Often done to make new contract at same time B. Past consideration - promises in return for actions that have already taken place 1. Bargained-for exchange missing, therefore unenforceable a. Past consideration = no consideration 2. Noncompete agreements (covenants not to compete) often not enforced a. Employment not sufficient consideration C. Illusory promises - terms express uncertainty, indicating promise is illusory 1. Said to be without consideration and therefore unenforceable a. Option-to-cancel contracts - promisor has option to cancel i If before performance begins, it is illusory ii If after, it is valid b. Uncertainty of performance i Requirements contract: buyer agrees to buy all it requires ii Output contract: buyer agrees to buy all seller produces
IV. Exceptions to consideration
A. Promissory estoppel (detrimental reliance) - person has reasonably and substantially relied on the promise of another; can be enforced even if no consideration is present 1. If requirements are met, promisor will be estopped (prevented) from asserting consideration as a defense: a. Must be a clear and definite promise b. Promisor should have expected promisee would rely on promise c. Promisee reasonably relied on promise by acting or refraining from act d. Promisee's reliance was definite and resulted in substantial detriment e. Enforcement is necessary to avoid injustice 2. Application of doctrine: originally applied to gifts and donations, but courts began applying to business B. Statute of limitations - if debtor promises to pay even though recovery is barred by statute, it is still enforceable (needs no consideration); extends limitation period 1. Can be considered extended via agreement, partial payment, etc. C. Charitable subscriptions - originally not enforceable (no bargained-for consideration) 1. Now applicable through estoppel to prevent inequity (promise reasonably relied on donation)
IV. Contract provisions limiting remedies
A. Provisions - designed to limit recovery of damages for certain breaches (or no recovery at all) 1. UCC allows sales contracts to limit remedies B. Enforceability - depends on type of breach excused by provision 1. Generally not enforceable if it excludes intentional injury or fraud 2. Not enforceable if it excludes acts deemed illegal, contrary to public policy 3. Negligence may have some liability if bargaining position roughly equal
III. Undue influence
A. Requirement - free will is overcome by party, therefore agreement lacks voluntary consent B. One party dominates - unfair influence by guardians, caretakers, etc. 1. Presumption of undue influence in regards to fiduciaries, lawyers, etc.
IV. Duress
A. Requirement - threatened act must be wrongful or illegal 1. Forces party into agreement, blackmail, extortion a. Must render party incapable of exercising their free will 2. Serves as a defense to enforcement and grounds for rescission B. Economic duress - extreme economic need not typically sufficient for duress 1. Exception could occur if situation prevents reasonable alternatives
II. Fraudulent misrepresentation
A. Requirements - same as torts 1. However, to collect damages, party must have been harmed; otherwise can only rescind and be restored to original position at time contract was formed 2. Misrepresentation by conduct - specific action to conceal fact material to contract a. Statement of opinion/prediction not typically fraudulent 3. Misrepresentation of law - relief typically not allowed (buyer should know laws) a. Exception: fraudulent party is in a profession requiring special knowledge 4. Misrepresentation by silence (omission) - no obligation to volunteer info a. Only required to disclose if problem cannot be reasonably expected to be discovered i Latent defect, fiduciary relationship, etc. B. Intent to deceive 1. Scienter - guilty knowledge; knowing that facts were falsely represented 2. Innocent misrepresentation - don't know misrepresentative, so not fraud a. Party can rescind but not seek damages (no intent to deceive) 3. Negligent misrepresentation - often considered scienter a. Not purposeful, but culpable ignorance supplies intent C. Reliance on misrepresentation 1. Reliance - must be reasonable and justifiable a. Obvious misrepresentation or equal knowledge of facts not justifiable b. Misrepresentation must be an important factor in inducing the party into contract i If contract would have occurred regardless, not relevant D. Injury to party - not required to rescind; party can be restored 1. Courts may also award punitive or exemplary damages in cases of gross negligence or fraud
II. Equitable remedies
A. Rescission - rescinding party must give prompt notice when other party is in breach 1. Restitution - required for a rescission; must return property/goods to other party a. If consumed, equivalent dollar amount required B. Specific performance - not granted unless legal remedy is inadequate (item not replicable) 1. All land is unique, so specific performance applies 2. Personal service generally refused; considered involuntary servitude C. Reformation - parties have imperfectly expressed agreement in writing 1. Allows court to rewrite contract to reflect true intentions of parties a. Most often when fraud or mistake occurs b. Can also be when covenants to not compete are excessive or written contract does not properly reflect oral agreement D. Recovery in quasi contract 1. Requirements - when one party has partially performed under unenforceable contract a. Party has conferred a benefit on the other party b. Party conferred a benefit with the reasonable expectation of being compensated (paid) c. Party did not act as a volunteer in conferring benefit d. Party receiving benefit would be unjustly enriched if they retain benefit without paying for it
I. Writing requirements
A. Statute of fraud - what types of contracts must be in writing 1. Originally, parties in contract could not testify, so third parties had to 2. Act for Prevention of Frauds and Perjuries established 1667 a. Required contracts to be signed in writing to provide basis for enforceability B. Current state legislation - can be written or electronic; statutes of states vary 1. Must be signed regardless of form 2. If made orally when required to be written, contract is voidable C. What requires written contract: 1. Contracts involving interest in land a. Land is real property and includes all physical objects permanently attached to soil i Buildings, fences, trees, etc. b. Requires written evidence for transfer of other interests (leases, etc.) i Also includes option to buy 2. Contracts that can't, by their terms, be performed within one year of formation a. Required because memory of contract terms not reliable after 1 year b. Begins day after contract formed in writing c. If oral, must be objectively established objectively impossible (as opposed to likely) to perform within 1 year to be enforceable i Oral contract for lifetime employment does not fall within statute ii Theoretically, employee can die within one year so can be performed 3. Collateral contracts (secondary) a. Made by third party to assume obligation if party does not perform b. Primary obligations: promise to pay another person's debt not conditioned on failure i Does not need to be in writing to enforce c. Secondary: assumes obligation due to failure i Third party becomes guarantor; must be written to be enforceable ii If made to secure personal benefit, considered "main purpose" and need not be in writing iii Also includes guarantee of debt to forestall litigation 4. Promises made in consideration of marriage a. Unilateral: must be in writing i Also includes prenuptial agreements 5. Contracts for sale of goods $500 or more (UCC) a. Need only state quantity term b. Other terms can be omitted or imprecise as long as they adequately reflect both parties' intention D. Exceptions to writing - when made orally 1. Partial performance - court can grant specific performance if parties cannot be returned to original position prior to performance a. Indicates unmistakable belief that contract exists 2. Admissions - one party admits under oath at any stage that contract exists a. Only enforceable to the extent of admission 3. Promissory estoppel - justifiable reliance must have been made to detriment a. Must be no way to avoid injustice except for enforcement 4. Special UCC exceptions - sales contracts a. Oral contracts between merchants confirmed by memo E. Sufficiency of writing - contract, memorandum, or record 1. Signature (even initials) can be anywhere 2. One document can incorporate another by expressly referring to it a. Several documents can constitute one if attached (stapled, same envelope, etc.) 3. Must contain essential terms, not every term (quantity, etc.) a. Most states also require naming of parties and identify subject matter to reasonable certainty 4. Because only one party needs to sign, may only be enforceable by one party
III. Waiver of breach
A. Waiver - knowing relinquishment of legal right to require full performance 1. Nonbreaching party may be willing to accept defective performance a. Typically allowed if benefit is still possible 2. Waiver does not waive subsequent, additional, or future breaches 3. B. Pattern-of-conduct exception - can extend to subsequent performance if a reasonable person would conclude that similar defective performance is acceptable 1. Nonbreaching party must give notice that full performance required in the future 2. Party who has rendered defective performance remains liable for damages caused by breach
Mailbox Rule
Acceptance is effective when offeree uses authorized means of acceptance.
Provisions for online offers
Acceptance of Terms Payment Return Policy Disclaimer of liability Limitations on Remedies Privacy policy disput resolution
Rescission
Action to undo or cancel a contract to return non breaching party to position they were in before. They must do restitution
False
Adhesion contracts are always enforced True or False
Requirements of a valid contract
Agreement consideration contractual capacity legality assent/consent/mistake form
Complete Performance
All conditions are satisfied
False
All promises are legal contracts true or false
False
All rights can be assigned True or False
Liquidated Debt
Amount has been ascertained, fixed, agreed on, settled, or exactly determined. -no consideration
True
An agreement is normally evidenced by an offer and an acceptance true or false
Shrink-Wrap Agreements
An agreement whose terms are expressed inside the box containing the goods Party opening box agrees to terms by keeping merchandise
False
An assignment is not effective without notice True or False
False
An e-record is considered received under the UETA only if a person is aware of its receipt
E-Signature
An electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record
False
An executory contract cannot be rescinded True or False
Goods
An item of property that is tangible and movable
Termination by Action of the Parties
An offer can be terminated by action of the parties by revocation, by rejection, or by counteroffer
Termination of Offer
An offer can be terminated either by action of the parties or by operation of law
Definiteness of Terms:specific terms
An offer can require specific terms to make the contract definite
True
An oral contract that should be in writing to be enforceable may be enforceable if it has been partially performed True or False
The "Main Purpose" Rule
An oral promise to answer for the debt of another is covered by the Statute of Frauds unless the guarantor's main purpose is to secure a personal benefit -type of contract does not need to be in writing -stocks cue on test
Unenforceable contract
An otherwise valid contract that is rendered unenforceable by some statute or law
Tender of performance
An unconditional offer to perform.
6. True
An unconscionable contract is a contract so one-sided and unfair, at the time it is made, that enforcing it would be unreasonable True or False
False
An unenforceable contract is a valid contract that can be avoided by at least one of the parties to it true or false
Underlying Policy
Any breach entitles the nonbreaching party to sue for damages. Only a material breach discharges the nonbreaching party from the contract
Statute of Frauds (UCC Article 2)
Any modification that makes a sales contract come under Article 2's writing requirement usually requires a writing to be enforceable -Sales contracts for goods priced at $500+ and lease contracts requiring total payments of $1,000+ must be in writing to be enforceable
Usage of Trade
Any practice or method of dealing that are so regularly observed in a place, vocation, or trade.
True
Article 2 of the UCC governs sales of goods True or False
With sale of land what happens to the buyer if they decide to breach?
Awarded difference between contract price and market rate of land
What happens if the owner breaches construction contracts before contract,during contract, or during performance?
B4 contract: Contractor recovers profits made on contracts During Contract:Contractor recovers profits made on contract & costs After Contract: recovers contract price plus interest
Release
Bars any further recovery beyond the terms stated in the release.
False
Before either party to a contract has a duty to perform, if one party refuses to do so, there is nothing the other party can do. True or False
C. Jade has made an invitation seeking offers
Before opening her new sports merchandise store, Jade places an ad in the newspaper showing cross-training shows at certain prices. Within hours of opening for business the store is sold out some of the shoes. In this situation
Creditor Beneficiary
Benefits from a contract in which promisor promises the promisee to pay a debt the promisee owes to the third party -sue the promisor
A. a covenant not to sue
Blakely has a cause to sue Carly in a tort action, but agrees not to sue her if Carly will pay for the damage. If Carly fails to pay, Blakely can bring an action against her for breach of contract. This is
A. both parties are released form it
Bo's contract with Chris is voidable. If the contract is avoided ...
C. a binding contract that includes the terms
Broadband Co. agrees to sell software to Ally from Braodbands website. to complete the deal, Ally clicks on a button that, with reference to certain terms, states, "I agree" . The parties have
B. the lease
Builders Supply Co. sells two construction cranes to Contractors Inc., which leases one crane to Design Work Corp. and gives the other to Equipment, Inc. Article 2A of the UCC applies to
Requirements Contract
Buyer agrees to purchase—and the seller agrees to sell—all or up to a stated amount of what the buyer requires.
B. it becomes illegal for Carlotta to provide the service
Carlotta contract with Darlene to act as her personal financial planner. Carlotta's duties under this contract will be discharged if
C. rescind the contract and obtain restitution of the $1000
Cavendish contracts to deliver Bagels & More's products to its customers for $1500, payable in advance. Bagels pays the money, but Cavendish pails to perform. Bagels can
Penalty Provision
Certain amount to be paid on a breach to penalize the breaching party
Liquidated damages
Certain dollar amount be paid in an event of future default or breach
C. incidental beneficiary
Chelsea enters into a contract with Donato that indirectly benefits Emily, although neither Chelsea nor Donato intended that result. Emily is
B. computers and computer accessories
Chips n' Digits Electronic, Inc., sells computers and some computer accessories, to persons who order them. Chips n' Digits is a merchant with respect to
D. under no circumstances
Clark sells Lena a parcel of land, claiming that it is "perfect" for commercial development. She later learns that it is not zoned for commercial uses. Lena may rescind the contract
Damages
Compensate party for harm sufferred due to wrongful act
Compensatory Damages
Compensate the nonbreaching party for the loss of the bargain and replace what was lost because of the wrong or damage
True
Complete performance occurs when a contact's conditions fully occur True or False
Conditions Precedent
Condition that must be fulfilled before a party's performance can be required -absolute duty to perform -Restatement
Additional Terms May Be Stricken
Conduct by both parties that recognizes the existence of a contract is sufficient to establish a contract for sale
Implied (In Fact) Contract
Conduct creates and defines the terms of the contract, can be mixed with express
True
Consequential damages are foreseeable damages that arise from a party's breach of contract True or False
Completely integrated contract
Contains all of the terms of the parties' agreement
Partially integrated contract
Contains some of the terms that the parties agreed on but not others.
Disaffirmance within a Reasonable Time (for minor)
Contract can be disaffirmed at any time during minority, or for a reasonable period after minor is emancipated.
If One Party Is a Merchant
Contract is formed according to original terms of the offer and does not include any additional terms in the acceptance
Accord
Contract to perform existing contractual duty not yet discharged
true
Contracts are interpreted as a whole true or false
Mental Incompetence
Contracts made by mentally incompetent persons can be void, voidable, or valid
Contracts in Restraint of Trade (Contrary to Public Policy)
Contracts that tend to reduce competition for the provision of goods or services in a market
Unconscionable Contracts or Clauses (Contrary to Public Policy)
Contracts whose bargains are so oppressive that the courts relieve innocent parties of part or all of their duties
Economic waste
Cost of repairing or completing the performance, outweighs the benefit to the owner
Fraud or Mutual Mistake Is Present
Courts order reformation most often when fraud or mutual mistake is present
construction contracts
DONT WORRY ABOUT CONSTRUCTION CONTRACDTS
True
Damages are designed to compensate non breaching party for the loss of a bargain True or False
Breach by owner (Construction Contracts)
Damages depend on whether breach was before, during, or after construction was completed
Remedies for non breaching parties(5)
Damages,rescission/restitution,specific performance, and reformation
A. even if Edwina was not aware of Dan's help
Dan, a doctor, renders aid to Edwina, who is inured. Dan can recover the cost of from Edwina....
D. not materially increase Francine's risk or duty
Dana assigns to Evon a contract to buy a used car from Francine. To be valid, the assignment must
A. $1000
Dani pays Esteban $1000 to design an intranet for her business office. The next day, Eli tells Dani that he has accepted a job with e-services Inc, and cannot design her network, but he does NOT return her payment. Dani can recover
C. Yes, b/c Dave sought it in exchange for his promise, and Lee gave it in exchange for that promise.
Dave offers to buy a book owned by Lee for $40. Lee accepts and hands the book to Dave. The transfer and delivery of the book constitute performance. Is this performance consideration for Dave's promise?
D. Yes, because performance always constitutes consideration
Dave offers to buy a book owned by Lee for $40. Lee accepts and hands the book to Dave. The transfer and delivery of the book constitute performance. Is this performance consideration for Dave's promise?
Accord and Satisfaction
Debtor offers to pay a lesser amount than the creditor purports to be owed.
Objective Theory of Contacts
Def:circumstances that determine the intent of the parties. it has objective facts
Voluntary Consent
Defenses to enforceability; All parties must voluntarily consent to the contract.
Form
Defenses to enforceability; Some types of contracts must be in writing.
B. may rescind their contract to the extent that it is executory.
Delite Pastries, Inc. Contracts with Elon to deliver it's product. Later, the parties decide to cancel their contract. They
D. not avoid the contract
Denna and Mai enter into a contract. Dennae later tells Mai that if she does not perform her part of the deal, Denna will sue her. Mai can
Penalties
Designed to penalize, generally unenforceable
Sale of Goods (Compensatory Damages)
Difference between contract and market price
Standard Measure (Compensatory Damages)
Difference between value of promised performance and value of actual performance
C. rejected the offer and made a counter offer
Dill offers to buy from Connie a used computer, with a monitor and printers, for $400. Connie says, "OK, but $200 more for the mentor and printer" Connie has
A. both parties has claims against each other
Dion contracts to build a store for Ellis for $500,000, with payment to be installments of $50,000 as the work progresses. Dion finishes the store except for a cover over a compressor on the roof. A cover can be installed for $500. Ellis refuses to pay the last installment. If Dion's breach is not material
Choice-of-Law Clause
Dispute settlement provision; Disputes will be settled in accordance with law of particular jurisdiction.
Forum-Selection Clause
Dispute settlement provision; Location or jurisdiction where disputes will be resolved.
NO
Does an agreement modifying a contract for the sale or lease of goods need consideration?
Yes
Does an agreement to modify a sales or lease contract without consideration have to be in writing to enforceable?
Mitigation of Damages
Duty of innocent injured party to reduce the damages that he or she suffered. -depends on the nature of the contract. RENTAL AGREEMENT: 12 months, you paid 2. you owe 10 months. duty to mitigate: reduce damages. employment. mr germ is a lawyer. if he fires himself, can he collect unemployment? no. he has to find something similar to previous employment. if you've been wronged by your employer, you have to find employment similar (cut your losses)
E-Signature Exclusions
E-SIGN does not apply to all documents including court papers, divorce decrees, evictions, foreclosures, health insurance terminations, prenuptial agreements, and wills.
D. win, unless the liquidated damages clause is determined to be a penalty
Eagle manufacturin, Inc., contracted with digital repair service to maintain Eagle's computers. A "liquidated damages clause" provides that digital will pay eagle $500 for each day that digital is late in responding to a service request. if digital is 3 days late in responding, and Eagle sores o enforce this clause, Eagle will
C. the offer is made by Eagle (a merchant) in a signed writing
Eagle products Inc., assures Fine Retail Corp., that its offer to sell its products at a certain price will remain open. This is a firm offer only if
Economic Duress
Economic need on its own is usually not sufficient enough to constitute duress. -But if a party creates a need for an item and then exacts a very high price for the item from another party
D. front street bank only
Eiger borrows $1000 from front street bank. Gisselle orally promises the bank that she will repay the debt if Eiger does not. This promise is enforceable by
A. are extinguished
Ellen assigns to Fern her rights under a contract with Gibby. Ellen's rights under the contract
Reformation
Equitable remedy allowing a contract to be rewritten to reflect the parties' true intentions.
Specific Performance
Equitable remedy that calls for the performance of the act promised in the contract. -cases: sale of land, contracts for personal services
D. a sale
Ernestine pays a discount city store $1500 for a 3D LED HD-TV. Under the UCC, this is
Parol Evidence
Evidence outside the contract such as evidence of the parties' prior negotiations
Enforceability of Limitation-of-Liability Clauses
Exclusion of liability for fraudulent or intentional injury, illegal acts, acts that are contrary to public policy, or violations of law will not usually be enforced
Incidental Damages (Compensatory Damages)
Expenses cause directly by breach of contract
Incidental damages
Expenses caused directly by a breach of contract e.g. Luna doesn't give car for $1,000. so Mr GErm is entitled to $1,000 plus costs.
Rules of Construction
Express terms, course of performance, course of dealing, and usage of trade must be construed to be consistent with each other whenever reasonable
Breach of Contract
Failure to perform what a party is under duty to perform.
B. the objective theory of contracts
Fay claims that she and Gio entered into a contract. The intent to enter into a contract is determined with reference to ...
Electronic Signatures in Global and National Commerce Act (E-SIGN)
Federal statute recognizing the validity of electronic contracts, records, and signatures
C. a novation
Finnegan and Ewan want to dribble to replace Finnegan as a party to their contract. They can best accomplish this by agreeing to
Consequential (Special) Damages
Foreseeable damages that result from a party's breach of contract -Breaching party knew, would cause the nonbreaching party to suffer additional loss. Mill has 2 shafts. Courier had no idea this was the only shaft. is courier responsible? no! it wasn't forseeable.
Consequential Damages
Foreseeable damages that result from breach of contract
D. undue influence
Fran is an 80 year old widow with no business experience. Fran's nephew Mark urges her to sell some of her stock at a price below market value to Tim, Mark's "business" partner. Fran, relying on Mark, agrees to sell the stock to Tim. She may avoid the contract on the ground of
assignments to remember
GIVE NOTICE. YOU GOTTA LET PEOPLE KNOW THAT IT HAPPENED OR OTHERWISE Mr GERM COULD HAVE PAID AND THE GUY GOES TO USA.
C. Legally sufficient
Gayla questions wether there is consideration for her contract with Julius. Consideration has two elements- there must be a bargained for exchange and the value of whatever is exchanged must be
B. 700,000
General construction contracts to build a store for Home Stores for $1 million. In mid-project, Home repudiates the contract, and General stops working. General incurred costs of $600,000 and would have made a profit of $100,000. General's measure of damages is
A. consistent additional terms only
Gina and Hootie dispute the interpretation of an ambiguous clause in their contract. In a suit to determine the meaning of the clause, the court may accept evidence of
B. mutual agreement to rescind
Gina enters a contract with Han. Before either party performs, rescission of their contract requires
I HIRE NFL STAR
HE SENDS WATER BOY. CONTRACT CAN SAY NO DELEGATION ALLOWED!
D. is the consideration that creates hillcrest's obligation to pay Gerard
Hillcrest office company promises to pay Gerard $1000 to repair the roof on Hillcrest's building. Gerard fixes the roof. The act of fixing the roof
A. quasi-contractual recovery
Hunter orally agrees to build three barns for Glade. She builds the first barn, but Glade fails to pay. As a remedy for the breach, he may recover
subjective impossibility
I simply cannot do it
XIV: Capacity and Legality
I. Contractual capacity - the legal ability to enter a contractual relationship A. Age of majority - typically 18, though exceptions exist (marriage, operating business as adult, etc.) B. Minors - can enter into legal contracts except where laws forbit (alcohol, etc.) 1. Minority can be terminated through petition for emancipation a. Minor can petition court to be treated as an adult 2. Voidable by minor at any point; intent to avoid through disaffirmance must be clearly manifested a. Adult entering contract with minor is bound; only minor can disaffirm C. Disaffirmance - the legal avoidance or setting aside of a contractual obligation 1. Must disaffirm entire contract (no partial), 2. Obligations - states differ a. Must return consideration, can recover full value (even if damaged) i Some states require minor makes adult party whole b. If reaching majority, must be within reasonable time, otherwise contract can be considered ratified and therefore enforceable 3. Exceptions a. Marriage contracts, enlisting in armed service (public policy) b. Misrepresentation of age c. Contracts for necessaries - food, shelter, etc. i Only enforceable to the value needed, not charged 4. Ratification - act of accepting and giving legal force to an obligation not previously enforceable a. Occurs when reaching majority i Explicit - states orally in writing that they intend to be bound ii Implied - indication of intent (such as continued use, etc.) b. Executed are often considered ratified, whereas executory are disaffirmed 5. Parents' liability - not normally liable a. Co-signing holds them liable even if child avoids b. Can be held liable for torts, especially if they had knowledge or encouraged D. Intoxication - even if voluntary, it can be voidable 1. Enforceable if it can be proved they understood terms despite intoxication (ex. writing out terms, etc.) 2. Can disaffirm during or within a reasonable time after becoming sober; must return consideration a. Contracts for necessaries are voidable but can be liable in quasi contract 3. Ratified if fail to disaffirm or continues to use E. Mental incompetence - voidable, void, or valid 1. If a court previously judged a person mentally incompetent, contract is void a. Only appointed guardian can enter into obligations on their behalf 2. If person not judged incompetent but was at time, it is voidable a. Person must not have had capacity to understand nature, purpose, and consequences 3. If person had capacity at the time contract was formed, it is valid a. Common with those with lucid intervals due to age, disease, etc.
choice of language, choice of form, choice of majeur
IGNORE THESE, HE WON'T TEST US ON THIS. HE JUST TALKED ABOUT IT TO LET US KONW. NOT ON EXAM!!!!!
if you receive counter offer
IT IS REJECTION AND NEW OFFER.
D. unenforceable due to the preexisting duty rule
Idle contract corp. begins constricting a building for Haute Apartments, Inc. In mid-project, Idle asks for$150,000 more, claiming an increase in ordinary business expenses. Haute agrees. This agreement is
False
If a contract for a sale of goods is missing a term, it will not be enforceable True or False
True
If a delegatee fails to perform, the delegator must do so True or False
Statements of opinion Exception
If a naïve purchaser relies on an opinion from an expert, the innocent party may be entitled to a rescission or reformation
True
If a party admits in pleadings that a contract was made, it may be enforceable even if it was oral True or False
Admissions (exception to statute of frauds)
If a party against whom enforcement of an oral contract is sought "admits" under oath that a contract for sale was made, the contract will be enforceable
False
If a person believes a statement to be true, he or she cannot be held liable for misrepresentation True or False
Promissory Estoppel (exception to statute of frauds)
If a person justifiably relies on another's promise to his or her detriment, a court may estop (prevent) the promisor from denying that a contract exists
False
If both parties are mistaken as to the same material fact, neither party can rescind the contract True or False
Performance Can Be Discharged
If the lapse of time/the change in circumstances surrounding the contract makes it substantially more burdensome for the parties to perform the promised acts
Substitute Method of Acceptance
If the offeree accepts the offer by a substitute means, the acceptance may still be effective if the substituted method serves the same purpose as the authorized means.
Open Price Term
If the parties have not agreed on a price, the court will determine a "reasonable price at the time for delivery"
B. Fraud
In offering to install a 3D projection system in Phoenix's movie theater, Quimby deliberately misstates what he has done and what he can do. In reliance, Phoenix contracts for Quimby's services. Quimby's statement is
True
Inadequate consideration may indicate fraud, duress, or undue influence True or False
Application of the Doctrine
Initially applied to situations involving the promise of gifts or donations to a charity on which the charity detrimentally relies. -to hardship or inequitable cases
Material Alteration
Innocent party is discharged after -of contract terms.
B. not enforceable if the enforcement would be unfair or oppressive
InteliSource, a chain of computer stores, presents its customer Hubert with a form contract on a take it or leave basis to finance his purchase. The contract is
Objective impossibility
It can't be done
D. a penalty clause
Jake agrees to sell an office building to Ivy. Their contract provides that if Jake fails to close the deal on a certain day, he will pay a fee equal to half of the price of the finished building. This is
C. whether is it oral or in writing
Jane agrees to make kitchen cabinetry for Henny, who tells Enoch that she will guarantee payment for whatever supplies Jane orders from Enoch for the shelves, Henny's promise is enforceable
C. $2000
Jay agrees to sell an acre of Land to Cliburn for $5000. Jay fails to go through with the deal, when the market price of the land is $7000. If Cliburn cannot obtain the land through specific performance, he may recover
A. before jay's promise, Karen had already performed he requested act
Jay is seeking to avoid performing a promise to pay Karen $150. Jay is claiming a lack of consideration on Karen's part. Jay will win if he can show that
C. whether it is oral or in writing
Jeb and Keri enter into a contract for Jeb's sale to Keri of 7 telescopes for $500 each. After Keri takes possession, but before she makes payment, this contract is enforceable
A. if Larue manifests assent to it or materially alters her position in justifiable reliance on it
Joe and Kit enter into a contract that intentionally benefits Large. Larue's rights under this contract will vest
What happens if both the contractor and the owner breach contract?
Judge strikes a fair balance in awarding damges
A. enforce, limit, or refuse to enforce the contract or the disputed clauses
Kelly enters a contract with Jersey Appliances, Inc. In later suit, Kelly claims that a clause in the contract is unconscionable. If the court agrees, it may
Waiver
Knowing relinquishment of a legal right to require satisfactory and full performance.
Intent to Deceive
Knowledge on the part of the misrepresenting party that facts have been falsely represented. -scienter
C. puffery
Krista persuades Jonna to contract for her company's services by asserting that her employees are the "best and the brightest." Krista's statement is
B. a condition precedent
Kyle and Liu contract for the sale of 500 computers. The agreement states, "the obligations of the parties are conditional on Liu obtaining financing from Main Street Bank by August 1" this is
A. nothing
LaRue sells to Milly ten share of NHance Corp. Stock. Milly believes that it will increase in value, but it later drops in price. From LaRue, Milly can most likely recover
Rental Agreements (Mitigation of Damages)
Landlord must use reasonable means to find a new tenant if previous tenant defaults on rent and abandons the premises
D. more priority than prior dealing, course of performance, and trade usage
Laura enters into a contract with Midge for landscaping design services. The contract's express terms have ...
Elements of consideration
Legally sufficient value 1. Can consist of: a. A promise to do something with no prior legal duty to b. Performance of an action otherwise not obligated to take c. Refraining from an action one can legally undertake (forbearance) 2. Bilateral contracts = promise for promise 3. Unilateral - promise for performance (or forbearance) B. Bargained-for exchange - provides basis for bargain between contracting parties 1. Item of value must be given by promisor (offeror) in return for promise, performance, or forbearance by promisee (offeree) C. Adequacy - how much consideration given (fairness of bargain) 1. Courts do not question solely based on comparative value a. Parties decide worth; need not be direct economic/financial value 2. Only when large disparity exists (can indicate fraud, duress, etc) a. Unconscionable consideration - so shockingly inadequate it raises concern
C. sent
Leo offers to sell mona a video game player. Mona sends an acceptance via the mail. This acceptance is effective when it is ..
A. reformation
Les agrees to deliver two tons of copper to Metalworks Inc. The contract states that delivery is to be within "15" days when the parties intend "50" days. If metalworks will not amend the contract, Les may obtain
A. before Kim accepts the offer
Lexi offers to sell her car to kim, stating that the offer will stay open for 30 days. Lexi may revoke the offer
False
Liquidated damages are uncertain in amount True or False
sales contrcat for goods over $500+
MUST BE IN WRITING TO BE ENFORCEABLE
D. not enforce the agreement
Mac's services station agrees to buy an unspecified quantity of ethanol from NuFuel Corp. Nufuel breaches the contract. Mac's can most likely
C. unless Mall objects to the new terms within a reasonable period of time
Mall Stores Corp., sends its purchase order form to Neat Displays Inc., for shelving. Neat responds with its own form. Additional terms in Neat's form automatically became part of the parties' contract
A. at least five years
Marci orally promises to work for Lions Share Oil Co., whose representatives orally promises to employ Marci at a rate of $1000 a week. This contract must be in writing to be enforceable if Marci promises to work for
A. determines the facts
Mariah enters into an implied-in-fact contract wit Noel. The parties' conduct
D. A promise
Marlon "declares that something will or will not happen in the future". This is ...
A. determine a reasonable price
MediQuip corp. and LiquiClean Products inc., enter into a contract for a sale of goods that does not include a price term. In a suit between MediQuip and LiquiClean over this contract and the price, a court will
C. Jozie
Mia has a right to receive payment under a contract with Neil. Without notice, Mia assigns the right first to Jozie and then to Pace. In most states, the party with priority to the right would be
B. the doctrine of promissory estoppel
Mikayla promises to pay Lauren too work for her. Lauren agrees and quits her job, but Mikayla does not hire her. Mikayla is liable to Lauren based on
Charitable Subscriptions
Modern view is to make exceptions to the general rule by applying the doctrine of promissory estoppel
B. Fundamental public policy in the U.S. (any individual can enter)
Molecular vision inc. and Nano products corporation enter into a contract to market jointly developed biotech products. The freedom to enter into contracts is...
Coverage of the UCC
Most comprehensive codification of the broad spectrum of laws involved in a total commercial transaction
Reasonable Person Standard
Most other contracts need to be performed only to the satisfaction of a reasonable person unless they expressly state otherwise.
C. a sales slip signed by Band Together
Music rental and sales co. contracts with Band together Inc. to buy 26 trombones and on assortment of other musical instruments. the contract is most likely enforceable against band together if music rental and sales offers as proof of the agreement
Does article 2 cover intangibles?
NO. article 2 only covers sale of goods. everything else, property service intangilbe is covered under common law
B. only if oC takes reasonable steps to return any benefit received
NSI and OC agree to follow a certain security procedure in transacting business. NSI fails to follow procedure and for this reason, does not detect an error in its deal with OC. OC can avoid the effect of the error ...
Nominal damages
No damage of financial loss resulted from breach
Nominal Damages
No financial loss. when you waste time by suing mcdonald's for a $1.
10. False
No oral contract is enforceable under the UCC True or False
True
No special form is required to create a valid delegation of duties True or False
False
Nominal damages establish that a defendant acted wrongfully True or False
Effect on the Contract
Non-waiving party remains liable for damages, but contract continues.
D. palucci, or if palucci doesn't perform, Norm
Norm signs a contract to provide lawn-mowing services to Orin. Norm delegates his duty under the contract to Palucci. Orin can compel performance from
True
Objective impossibility discharges the contract True or False
Material Breach of Contract
Occurs when performance is not substantial.
Unilateral contract Irrevocable
Offer cannot be revoked once performance has begun.
Lapse of Time
Offer terminates by law when the period of time specified in the offer has passed. If none then end of a reasonable period of time.
Unilateral contract
Offeree can accept the offer only by completing the contract performance ("a promise for an act").
Bilateral contract
Offeree must only promise to perform ("promise for a promise")
A. the parties intent as expressed in their contract
Ogden enters into a contract with Pam to review her financial status. They later dispute the meaning of their contract. If the terms are unclear, the rules of contract interpretation will give the effect to...
B. an assignee
Olinka and Nadine sign a contract under which Olinka agrees to repair Nadine's computer for $150. Later, they agree that Nadine will pay the $150 directly to Olinka's creditor, Mainstay Bank. The bank is
B. $2000
Olivia contracts with Pinky to buy a credenza for $1500. Olivia tells Pinky that if the goods are not delivered on Monday, she will lose $2000 in business. Pinky ships the credenza late. Olivia can recover
A. was discharged on May 15
On May 1, Ula agrees to work for Vital Corp. for 4 months beginning June 1. On May 15, Vital tells Ula that it doesn't need her after all. Ula's duty to work for Vital
True
On a breach of contract, a non breaching party has a duty to mitigate damages True or False
True
On rescission, the parties essentially return to the positions they were in before the contract True or False
Notice of Assignment
Once assignment is made, assignee should notify the obligor of the assignment
the original obligation is only suspended until the accord agreement is fully performed.
Once the accord has been made
Performance Normally Is Only Delayed
Once the temporary event ends, parties ordinarily must perform the contract as originally planned.
True
Only intended beneficiaries acquire legal rights in a contract True or False
Admissions
Oral contract is enforceable if there are admissions by breaching party during court proceedings
Special Exceptions under the UCC
Oral contracts for customized goods may be enforced in certain circumstances.
Specially Manufactured Goods
Oral contracts for specially manufactured goods will be enforced.
False
Oral contracts that are not enforceable under the UCC include those for customized goods True or False
A. enforceable
Owen hires Paula under a contract that reserves to Owen the right to cancel the contract on 30 days notice at any time after Paula begins work. This promise is
creditor beneficiary
PRIME EXAMPLE OF THIRD PARTY BENEFICIARY. LIFE INSURANCE. I PAY INSURANCE SO THAT OTHERS (THIRD PARTY) BENEFIT WHEN I DIE.
Unliquidated Debt
Parties give up right to contest amount in dispute, and thus consideration is given.
Commercial Impracticability
Parties may be excused from performance if it becomes more difficult or expensive than the parties originally expected at contract formation
Discharge by Mutual Rescission
Parties must make another agreement that also satisfies the legal requirements for a contract -Under UCC, contracts must be in writing
Assignor
Party assigning rights to third party
Consequences of waiver of breach
Party that waived the breach cannot take later action on it
Sale
Passing of title from seller to a buyer for a price (payable in cash, goods, or services)
False
Past consideration is consideration True or False
Satisfaction
Performance of accord
A. after having had an opportunity to read the agreements
Plasticorp. INC. includes a shrink-wrap agreement with its product. A court would likely enforce this agreement if a buyer used the product...
C. neither
Polyhedron engineering co. Omega Imaging Corp. enter into an oral contract for the sale of warehouse. Before Omega takes possession, this contract is enforceable by
Preexisting Duty
Promise to do what one already has a legal duty to do does not constitute legally sufficient consideration.
Illusory Promises
Promisor has not definitely promised to do anything (no promise at all). -Option-to-Cancel Clauses -Requirements Contract Output Contract
Express condtions
Provided in the parties' agreement, usually preceded by words such as "If" or "Provided."
Exculpatory Clauses
Provisions stating that no damages can be recovered
Limitation-of-Liability Clauses
Provisions that affect the availability of certain remedies. -UCC provides that remedies can be limited in a contract for the sale of goods
Punitive Damages
Punish or deter future conduct. Awarded for a tort not the contract breach. damages may be available when an action causes both breach of crontract and tort.
True
Punitive damages are usually not awarded in breach of contract actions True or False
False
Quasi-contractual recovery is possible only when there is an enforceable contract True or False
B. may not be denied legal effect
Rapido delivery company and stateside trust inc. attempt to enter into a contract in electronic form. Under the Electronic Signatures Global and National Commerce Act (E-sign act), b/c this contract Is in electronic form it,
Anticipatory Repudiation
Refusal of one party to carry out his or her contractual obligations before either party has a duty to perform. -treated as a material breach
Counteroffer
Rejection of original offer and the simultaneous making of a new offer.
Exculpatory Clauses (Contrary to Public Policy)
Release a party from liability in the event of monetary or physical injury—no matter who is at fault
D. only rescind the contract
Ren contracts with Salvatore under what Ren later learns to have been misrepresented facts. Ren has not yet suffered an injury. Ren can
Intention
Requirements of the Offer; Contract is judged by what a reasonable person in the offeree's position would conclude about the offer.
False
Rescission is not available in a case involving fraud True or False
True
Rescission is the unmaking of a contract and the parties return to their pre-contract positions True or False
D. only if performance is rendered directly to Tim OR only if there is an express designation in the contract OR only if Tim has the right to control the details of performance
Rhonda and Shirley sign a contract. Tim a third party is an intended beneficiary to the contract
D. a rescission
Ric and Skye contract for the sale of Ric's business. Skye makes a down payment, and Ric gives her the keys to one of his stores. Before the contract is fully performed, however, they agree to return the money and keys and cancel the sale. This is
False
Rights under personal service contract normally can be assigned True or False
C. received because Stu is not acting reasonably
Rod contracts to repair Stu's building for $30,000 payment is to be made "on satisfaction of Tina, Stu's architect". Stu tells Tina not to approve the repairs. Rod sues Stu for $30,000. Rod will
A. an express contract
Rowan calls Shary on the phone and agrees to buy her laptop computer for $500. This is...
A. enforceable to at least the extent of $500
Rugged boots Inc., and Strata Co. orally agree to a sale of 100 pair of hiking boots for $5000. Rigged gives Strata a check for $500 as a down payment. At this point, the contract is
A. as a matter of public policy
Sam leases real property from Regina under an agreement that includes an exculpatory clause. This class is likely unenforceable
A. an accord and satisfaction
Sandra and Terry want to discharge their obligations under a prior contract by executing and performing a new agreement. They must execute and perform
A. bar further recovery form sawyer
Sawyer causes an accident in which Reese is injured. Reese accepts Sawyer's offer of $5000 to release Sawyer from further liability. Later, Reese learns that his injuries are more serious than he realized. The release will
Output Contract
Seller agrees to sell—and the buyer agrees to buy—all or up to a stated amount of what the seller produces
What happens when the seller breaches a sale of land?
Seller must do specific performance and award buyer a parcel of property
Displaying the Offer online
Seller's Web site should include hyperlink to page with full contract.
Partnering Agreements
Sellers and buyers who frequently do business together agree on the terms for subsequent online agreements
Course of Dealing
Sequence of actions and communications between the parties to a particular transaction that establishes a common basis for their understanding
Article 2—The Sale of Goods
Sets requirements for sales contracts as well as duties and obligations of the parties involved in the sales contract -lease contracts also -not real property (real estate), services, or intangible property
C. Sham rock or Leif
Sham Rock Mining and Sales Co. agrees to hire Leif as a sale representative for 6 months. Their contract is oral. This contract is enforceable by
C. the assignment will materially alter risk
Sharon insures her warehouse under a policy with Riders Insurance Co. Sharon assigns the policy to Polly, who also owns a warehouse. Rider's best argument against the assignment of the policy is that
Signature of the party to be charged
Signatures can be anywhere in the writing and can consist of a typed name or even just initials
C. $1500 plus incidental damages
Soda Fountain Supplies corp. contracts to sell to Tasty Malts Inc., six steel mixers for $5000. When Soda fountain fails to deliver, Tasty Malts buys mixers from Dairy Appliance co., for $6500. Tasty Malts' measure of damages is
Contracts Contrary to Public Policy
Some contracts are not enforceable because of the negative impact they would have on society.
Covenants Not to Compete
Some courts reform the terms by making them reasonable and then enforcing the entire contract as reformed. -Other courts throw out the entire restrictive covenant as illegal.
Legally Sufficient Value
Something of legal value must be given in exchange for a promise. "Something": - A promise to do something that one has no prior legal duty to do -The performance of an action that one is otherwise not obligated to undertake -The refraining from an action that one has a legal right to undertake (called a forbearance
Liquidated Damages
Specific amount agreed to be paid as damages in the event of future breach -provisions are enforceable
Sale of Land (Compensatory Damages)
Specific performance
False
Specific performance is the usual remedy when one party has breached a contract for a sale of goods True or False
B. Executory on Thespian's part
Speedy delivery Inc. agrees to deliver paper to Thespian Script Co., which promises to pay for the service. Speedy delivers the paper. This contract is ..
True
State e-signature laws are not uniform true or false
Promises to Pay Debts Barred by Statute of Limitations
Statutes of limitations in all states require a creditor to sue within a specified period to recover a debt. -promise by a debtor to pay a previous debt , is enforceable—no additional consideration is necessary
Contracts Contrary to Statute
Statutes often set forth rules specifying what may be included in contracts and what is prohibited.
A. rcc can avoid the contract because subprime knew of the errors
Subprime propperties LLC, asks for bids on a construction project. Subprime estimates the cost will be $200,000. Most bids are about $200,000, but restoration construction co. (RCC) bids $150,000. In adding figures, RCC mistakenly omitted a $50,000 item. Because subprime has reason to know of the mistake
Covenant Not to Sue
Substitute contractual obligation for some other type of legal action based on a valid claim.
Discharge by Novation
Substitution of a new third party for one of the original parties.
Impossibility of Performance
Supervening events may make it objectively impossible.
Can parties in sales contracts agree on different terms from those stated in UCC?
TRUE. YES. general rule: UCC controls over common law
Unconscionability
The UCC allows a court to evaluate a contract or any clause in a contract, and if the court deems it to have been unconscionable at the time it was made,
False
The UCC governs sales of services and real estate True or False
Contracts for the Sale of Goods
The Uniform Commercial Code (UCC) requires written evidence or an electronic record of a contract for the sale of goods priced at $500 or more -only needs to state the quantity term
Unequivocal Acceptance
The acceptance cannot impose new conditions on—or change the terms of—the original offer.
Output Contract
The buyer and seller agree that the buyer will purchase from the seller all of what the seller produces, or the seller's output.
Course of Performance
The conduct that occurs under the terms of an agreement
Donee Beneficiary
The contract is made for the express purpose of promisor giving a gift to a third party -can sue the promisor
Measure of Damages
The cost to bring the object of the contract into compliance with its terms—if that cost is reasonable under the circumstances
if contract is Unconscionable
The court can: -Refuse to enforce the contract. -Enforce the remainder of the contract without the unconscionable part. -Limit application of the unconscionable term to avoid an unconscionable result
Intended versus Incidental Beneficiaries
The courts focus on intent—as expressed in the contract and implied by the surrounding circumstances to determine: -The reasonable person test. -Performance rendered directly to TPB. -TPB's right to control contract details. -TPB expressly designated as beneficiary
Limitations on Quasi-Contractual Remedy
The enriched party is not held liable in certain situations
Adequacy of Consideration
The fairness of the bargain. -Courts typically will not consider adequacy -When Voluntary Consent May Be Lacking
When the Rights of an Intended Beneficiary Vest
The intended third party beneficiary cannot enforce a contract against the original parties until have taken effect and cannot be taken away
Bargained-for-Exchange
The item of value must be given or promised by the promisor (offeror) in return for the promisee's promise, performance, or promise of performance a gift does not have this element
Disaffirmance
The legal avoidance, or setting aside, of a contractual obligation
Breach by contractor (Construction Contracts)
The measure of damages is the cost of completion
False
The mirror image rule does not require an acceptance to match an offer to create a contract true or false
Potential for Discharge by Performance to the Wrong Party
The obligor can discharge his or her obligation by performance to the assignor (the obligee) until the obligor has notice of an assignment
Authorized Means of Acceptance
The offer specifies (expressly or impliedly) how acceptance should be made
Rejection
The offeree's rejection of the offer (in words or conduct) terminates the offer
False
The only writing sufficient to satisfy the Statute of Frauds is a printed form, with the heading "contract" signed at the bottom by all parties True or False
False
The parol evidence rule permits the introduction at trial of evidence of the parties' negotiations or agreements that contradicts or varies their contract True or False
Effect on Duty to Perform (Substantial Performance)
The parties must continue performing under the contract.
False
The party who makes an assignment is the assignee True or False
When the Contract Is Personal
The performance must actually satisfy the party specified in the contract, and only the personal satisfaction of the party fulfills the condition.
Privity of Contract
The principle that a contract is a private agreement between the parties who have entered into it
Priority Issues
The question of who has priority (the right to the performance by the obligor) arises if the right is assigned to two different persons
Express contract
The terms of the agreement (oral or written) are explicitly stated, can be mixed with implied
False
Third parties do not have rights under the contracts to which they are not parties True or False
Misrepresentation of Law
This will usually not excuse the innocent party, unless the speaker is a member of a profession that requires greater knowledge of the law than possessed by the average citizen.
True
Threatening a civil suit does not normally constitute duress True or False
waiver of breach
To accept defective performance without complaints
Function of Contract Law
To assure the parties to private agreements that the promises they make will be enforceable.
If Both Parties Are Merchants
To avoid the "battle of the forms," the additional terms automatically become part of the contract between merchants
False
To be enforceable, a contract for a sale of goods priced at $300 or must must be in writing True or False
Covenants Not to Compete and the Sale of an Ongoing Business
To be enforceable, geographic restrictions must be reasonable and must be effective only for a reasonable period of time after the sale is completed.
MY LeGS
To be enforceable, the following types of contracts must be in writing and signed: Marriage More than 1 year Land rEal property Gurantees (cosigning) Sale of Goods more than $500
True
To commit fraud, one party must intent to mislead another True or False
False
To rescind a contract for fraud, a plaintiff must prove that he or she suffered an injury True or False
Restitution
To rescind a contract, the parties must make restitution by returning to each other goods, property, or money previously conveyed
B. fraud
To sell his house to rosemary, sage does not tell her that the foundation was built on unstable pilings. rosemary may later avoid the contract on the ground of
C. ratifying the contract before tom reaches the age of majority
Tome is a minor who enters into a contract with Diane. All of the following are effective methods for Tom to ratify the contract EXCEPT:`
D. operation of law
Town delivery service contract with Pizza! Pie! to deliver its goods to customers. This contract will, like most contracts, be discharged by
Complete performance Substantial performance
Two basic types of performance
deal in good faith
UCC
True
Under the UCC, a sale occurs when the title passes from a seller to a buyer for a price True or False
False
Under the UCC, an agreement modifying a contract needs new consideration to be binding True or False
8. False
Under the UCC, an offer to buy goods can be accepted only by a prompt shipment of the goods True or False
True
Under the UETA, a contract is enforceable even if it is in electronic form
B. a subsequent oral agreement
Under written agreement, Rosalie sells a motel to Felix, When Rosalie removes the furniture, Felix sue. The court decided the written agreement includes everything the parties intended. Which of the following agreements about the furniture are admissible?
Implied conditions
Understood to be a part of the contract, depending on the purpose
B. warehouse and value storage
Warehouse Inc., orally contracts for a lease of its storage facilities to Value Storage Co. Value storage Pays part of the price, takes possession, and makes permanent improvements to the property. The contract is most likely enforceable against
objective facts
What a party said when entering into the contract. How the party acted or appeared. The circumstances surrounding the transaction.
Obligations of parties are discharged
What if conditions are not satisfied?
Conditions Subsequent
When a condition operates to terminate a party's absolute promise to perform, after the time of absolute performance was due -Restatement
Presumption of Undue Influence in Certain Situations
When a contract enriches the dominant party in a fiduciary relationship, the court will often presume that the contract was made under undue influence.
negligent Misrepresentation
When a party does not exercise reasonable care in uncovering or disclosing facts—or use the skill and competence required by his or her business or profession. -equal to scienter -culpable ignorance
Fraudulent Misrepresentation
When an innocent party is induced to enter into a contract by a misrepresentation of material fact. -may void
When specific performance is available?
When damages(usually moetary) are inadequate as a remedy
Conditions Concurrent
When each party's performance is conditioned on the other party's performance or tender -perform duties simultaneously
Open Delivery Term
When no delivery terms are specified, the buyer normally takes delivery at the seller's place of business -the seller has no place of business, the seller's residence is used
When Quasi Contract Is Used
When one party has partially performed under a contract that is unenforceable -alternative to suing for damages
Options and Cooperation with Regard to Performance
When the contract contemplates shipment of the goods but has no shipping arrangements, the seller has the right to make these arrangements.
Partial Performance (exception to statute of frauds)
When the contract has been partially performed, a court may grant specific performance, an equitable remedy that requires performance of the contract according to its precise terms
Open Payment Term
When the parties do not specify payment terms, payment is due at the time and place at which the buyer is to receive the goods
Option-to-Cancel Clauses
When the promisor has the option to cancel the contract before performance has begun, the promise is illusory.
UCC controls
Who controls the conflict between a common law contract rule and the state statutory law?
Courts Must Decide
Who decides whether performance was substantial on a case-by-case basis?
True
With notice of an assignment, an assignee can compel an obligor to perform True or False
SPECIAL TRUST
YOU HIRE SOMEONE AND MATERIAL DIFFERENCE.
True
a contract is formed when two parties agree to perform an act in the future true or false
there are too many open terms
a court may find that the parties did not intend to form a contract.
False
a covenant not to sue always bars further recovery True or False
quasi contract 2
a fictional contract imposed on parties by a court in the interests of fairness and justice you steal someone else's order of pizza party who got scammed can "get as much as he deserves"
Quasi contract
a legal theory under which an obligation is imposed in the absence of an agreement. -created by courts to obtain justice and prevent unjust enrichment -Party conferring benefit can recover in quantum meruit
intended third party beneficiary (TPB)
a person whom the original parties to the contract intended to benefit at the time of contracting
False
a promise has no legal value as consideration True or False
True
a promisor is a person who makes a promise true or false
False
a quasi contract arises from a mutual agreement between two parties true or false
Waiver of Breach and Subsequent Breaches
a single waiver will not waive subsequent, additional, or future breaches, especially if unrelated to initial breach.
False
a unilateral contract is accepted by a promise to perform true or false
promise to ship
acceptance
Communication of Acceptance: unilateral contract
acceptance is evident and notification is not necessary
Mode and Timeliness of acceptance: bilateral contracts
acceptance is timely if made before offer is terminated
Conforming goods
accord with the contract's terms
6 forms of contract
agreement, consent, legality, and form the 6 things of contract
material alteration
altering contract without consent
rescission
an action to undo a contract
contract
an agreement formed by two or more parties who agree to a promise (or set of promises).
True
an executed contract is one that has been fully performed true or false
False
an oral contract is an implied contract true or false
Partial Performance
an oral contract is enforceable IF payment has been made or goods have been accepted.
breach in contract
any breach means i can sue. only material breaches say i can walk away (if minor, i can't walk away i just wait until breach is fixed)
Quasi contracts
are fictional contracts that the courts impose on the parties "as if" the parties had entered into an actual contract.
Express terms interpretation
are given the greatest weight, followed by course of performance, course of dealing, and custom and usage of trade—in that order.
Adhesion contracts
are written exclusively by one party and presented to the other party on a take-it-or-leave- it basis. -standard form contracts
Undue influence
arises from relationships in which one party can greatly influence another party and overcome that party's free will.
acceptance
as long as properly dispatched, acceptance is good on dispatch.
Goods Associated with Real Estate
as minerals, gas, or oil often do fall within the scope of Article 2 (UCC 2-107) if severance is to be made by the seller -also, sale of growing crops or timber to be cut
exception to exception under assignments
assignment in real estate, negotiable instruments, something under UCC receivign damages (DONT WORRY ABOUT UCC)
consideration is?
bargained for!
unconciouble contract
bargains so appressive, courts relieve innocent parties to be free. e.g. bargain is to pay us 80 million dollars. big bang roommate theory
quasi contract
benefitted party was expected to be paid and did not volunteer. if you get sex without paying for it that would be unjust enrichment!
contractual capacity
binds a party, the minimum
Shipment of nonconforming goods
both an acceptance and a breach unless seller seasonably notifies the buyer that the nonconforming shipment is offered as an accommodation (favor) to buyer, not an acceptance to a contract.
discharge by novation
both parties agree to substitute a new third party for one of the original parties
In pari delicto
both parties at fault. think drug deal example.
Restitution
both parties must do this to each other by returning goods, property, or funds previously conveyed.
material breach of contract
breach is material when performance is not at least substantial
misrepresentation
by law, silence,
terminate offer
by revocation up until acceptance. you cane revoke until accepted. option contract.
sufficency of the writing
can be memo, electronic record, signatures don't have to be at the end
one party breaches, good enough this time around, ramifications
can breaching breqch next time around or does non-breaching party have to accept breach.
right to cancel
cancel at anytime, no notice
Tangible property
car, can be touched or seen.
D. none of the choices
casual investors inc. contracts with formal properties to buy one of formal's office buildings. The contract is most likely enforceable against formal if casual offers as proof of the agreement
Uniform Commerical Code
codification of laws that are involved in commercial transaction
Communication of Acceptance: bilateral contract
communication of acceptance is necessary because of mutual exchange of promises
Types of Damages (Remedies)
compensatory,consequential(Cover losses), Punitive(punish), and Nominal(recognize wrong)
condition precedent
condtion BEFORE performance must be got
course of performance
conduct between the parties concerning performance of the particular contract
requireemnts and ouput contract
consideration is not necessary
True
consideration is the value given in return for a promise True or False
Consideration in bilateral contracts
consists of a promise in return for a promise.
Conditioned on Offeror's Assent
contains additional or different terms, it is conditioned, it is not an acceptance
Article 1 (General Provisions)
contains definitions and general principles applicable to commercial transactions [UCC 1-304]
Sources of contract law
contract law is common law, which governs all contract except sales and leases.
effective legality
contract void, courts won't help either party. you give $1K to drug dealer for fake weed. court will not help you.
Disaffirmance for necessaries (intoxication)
contracts are voidable, but the intoxicated person is liable in a quasi contract for the reasonable value of the consideration received.
Prior Dealings between Merchants
contracts between merchants, courts consider the parties' prior dealings
mental incompetencne
contracts can be void, voidable, or valid! void contract. mentally competent. court rules you are retarded and you have guardian. VOID
Standard form contracts
contracts that are preprinted and give the adhering party no opportunity to negotiate the terms of the contract
illegal
contracts to pay for a vote; YOU CANNOT ENFORCE ILLEGAL CONTRACTS. CAN'T SUE DRUG DEALER. UNENFORCABLE!
when is reformation ordered?
court orders when fraud or mutual mistake present
specific performanc
court says you must DO x, y, and z. will not offer specific performance bc that would be slavery.
covenants not to compete
courts reform by making reasonable and then enforcing contract. others just throw out entire illegal stuff!
compensatory damage
covers direct losses actual damages, injured party is compensated for any monetary damage from breach of duty compensate loser party for loss and replace what was damaged
time is of the essence
date is mere suggestion on contract unless it says time is of the essence
frustration of purpose
decreases value of what party receives under the contract
Article 1 (General Provisions of UCC
definitions and general principles
if a personal understand the legal consequences (intoxication)
despite intoxication, contract is usually enforceable.
special rules merchants
determine if someone is merchant: 1. deal with goods of kind 2. hold them selves out 3. someone hires expert to help him out
Compensatory damages for sale of goods
difference between contract price and market price
Standard measure of compensatory damages
difference between value of breaching party promised performance and value of actual performance
standard measure
difference between value of promised performance and value of actual performance
nonconforming goods
do not accord with the contract's terms
contracts for international
do not worry!!! DO NOT WORRY
past consideration
doctor performs operation and afterwards. already made bargain, the money that i promised did not induce them to do anything differently. after the fact, no past consideration
dude props up stock
doesn't have to be in writing because main purpose is to benefit yoursle.f
consequential (special damages)
domino delivery boy. you take car to dealer but they don't give back for 2 weeks even though they promised. you sue, you win damages since car is very important to you and bc of them you lose delivery money.
rescission of executory contract
enforcable even if oral agreement (you can make another agreement)
Reformation
equitable remedy used when the parties have imperfectly expressed their agreement in writing
if times is not expressed as vital
even if i delay in doing the work i still get right to payment!
usage of trade
evidence of the way the issue in question is customarily dealt with in the type of business involved
Effect of Legality
exceptions to rule: -justifiable ignorance of the facts; -being a member of a protected class who may enforce an otherwise illegal contract (even if the other party cannot) -withdrawing from an illegal agreement before any illegality occurs. -a contract that was entered into due to fraud, duress, or undue influence -severable (or divisible) contracts that consist of distinct parts which can be performed separately
contract provision
exculpatory clauses, ???
I. Damages A. Compensatory - covers loss of bargain to make party whole 1. Only applies to actual damages that arise directly from breach 2. Standard measure - difference between value of performance and value of actual a. Reduced by any loss avoided 3. Incidental - expenses caused by breach (such as having to hire someone else) 4. Sale of goods - difference between market price and contract price a. When buyer breaches and seller has not yet produced goods, damages equal lost profits 5. Sale of land - all land considered unique, remedy is specific performance (bargained
for land) a. If buyer breaches, remedy is difference between contract price and market price of land i Only used when specific performance not available (i.e. land sold) b. If seller breaches and but not deliberately, some states limit damages to refund of down payment and expenses (title fee, escrow, etc.) 6. Construction - varies by time (before, during, after performance) of breach and by which party a. By owner - can occur at all stages i If breach occurs before performance, contractor can only recover profit (not materials, labor, etc.) ii If during, can recover profit plus costs already incurred iii If after, can recover price plus interest b. By contractor - measure of damages is cost of completion if breach occurs before completion i If contractor finishes late, measure of damages is equal to loss of use ii Economic waste - occurs when cost of completion far outweighs benefit to owner c. By both - courts attempt to find balance for equitable remedy B. Consequential - special damages caused by circumstances beyond the contract 1. Ex: failing to produce goods knowing they will be immediately used or re-sold, courts may award loss of profits 2. Breaching party must have knowledge of consequences (foreseeability) C. Punitive - generally not awarded in breach lawsuits unless breach also causes a tort D. Nominal - no actual damage or loss incurred; injury "technical" only 1. Awarded mainly to establish wrongdoing from a legal standpoint E. Mitigation of damages - party who suffers loss has a duty to minimize loss 1. Rental agreements - landlord must actively try to lease property if breach occurs 2. Employment contracts - if wrongfully terminated, employee has to actively search for a similar position of employment F. Liquidated damages vs penalties 1. Liquidated damages - contractual provisions that designate a specific amount to be paid in the event of a future breach 2. Penalties - designed only to penalize breaching party, not to make innocent party whole 3. Enforceability of penalties and liquidated damages - two requirements to meet: a. Was it apparent that damages would be difficult to estimate when contract was entered into b. Was the amount a reasonable estimate (not excessive)
duress
force into an agreement
fraudulent misrepresentation
fraud, lying for money, has to be damages or harm. you go into car dealer and salesman lies 6 ways to sunday to you but you walk out, no damages. you can't sue someone for just lying. you can only sue if someone lies and it causes you harm
Offer
general contract law, a binding contract is formed at the moment when a definite offer is met by an unqualified acceptance
article 1 of UCC
general provisions: definitions/general principles
Minors (Contractual Capacity)
general rule is that a minor can enter into any contract that an adult can, except contracts prohibited by law for minors
Statements of opinion
generally are not subject to claims of fraud
Merchant's Firm Offer
gives assurances in a signed writing that the offer will remain open. -is irrevocable for reasonable period of time and no consideration is necessary -must be written
conforming goods
go with contract. i buy computers. conforming goods is computers. nonconforming would be if i was sent iPhones.
sale of goods
goods areticle 2
Convention on Contracts for the International Sale of Goods (CISG)
governs international sales contracts between citizens of countries that have ratified the convention (agreement).
offer
has to be definite
firm offer
has to be written and signed
e contracts
have to match written counterparts.
exculpatory clause
i can do whatever i want in this contract and you can't do anything about it. GENERALLY NOT LEGAL, AVOID OR VOID THE CONTRACT
promissory estoppel
i promise to hire you as my aide but you flake. you moved across country; you dentrimetally relied on my promise, i will be liable. difference is enforcement is necessary to avoid injustice (not fair)
mirror image rule
i wanna buy X? i will sell X if it differs, it's not mirror image and it is COUNTER OFFER
i can tell you
i'm shipping it or i'm sending what you're ordeing
True
if a contract does not require a certain time for performance, a reasonable time will be implied True or False
UCC states sales with open terms will nOT fail for indefinitess
if both are true: 1. parties intended to make contract 2. reasonably certain basis for court to grant appropriate remedy
False
if both parties are mistaken as to the market value of their contract, either party can rescind it True or False
sale of goods
if buyer breaches, market + contract price if seller breaches, specific performance
in non compete clauses.
if contract is over broad, in terms of time and geographic scope, court can come in and re-write it
parole evidence
if everything set in, fully integrated. don't look outside contract.
contract that is goods + service
if more goods based then UCC
open delivery
if no delivery, buyer takes delivery at seller's place if contract contemplates shipping, seller has right to make arrangments
Supervening Illegality
if offer is illegal Legislation or court decision automatically terminates a previously valid offer or renders a contract unenforceable THINK PIE
merchants special rule
if one merchant sends confirmatory memo within reasoanble amount of time afterwards we have .a contract unless you object in 10 days. ANSWER YOUR MAIL RULE
measure of damages of uncomplete contract
if the damage is not reasonable (100 billion dollars), measure of damages is difference of value in actual performance and complete performance
Destruction of the Subject Matter
if the object breaks. If it occurs before acceptance of the offer, then the offer is canceled
Open Quantity Terms
if the parties do not specify a quantity, no contract is formed and there is no basis for determining a remedy.
intoxication
if ur drunk, u disaffirm contract, you sshould be able to get over. tiger in the bathroom, chickens. you can't make contract while you're dunk?
chartible subsccriptions
if you promise to give money to charity, it's gift. charity relies on it because they build a hospital. they need to be able to rely on gifts. a charity. lack consideratoin but courts will enforce them
enforcement of limited liability
if you tryna limit fraud, you can. hey imma shoot you, you signing this says if can. this is a no go!
True
if, in a contract, a promisor does not definitely promise to do anything, the promise is illusory True or False
A contract to do something that is prohibited by federal or state statutory law
illegal, void from the outset, and unenforceable.
misrepresentation of age
in most states minor can still disaffirm, semester prohibit this
statue of frauds
in writing if $500 or more
misrepresentation has occurred
innocent party must show that misrepresentation of a material fact has occurred by words or actions
Ratification (intoxication)
intoxicated person may ratify a contract expressly or impliedly once sober
Consideration in unilateral contracts
involve a promise in return for a performance (an action).
age of majority
is eighteen years in almost all states. Some states provide for the termination of minority on marriage
Contracts Involving Interests in Land
is not enforceable unless it is in writing -real property and includes all physical objects that are permanently attached to the soil
Statute of Frauds Purpose
is to prevent harm to innocent parties by requiring written evidence of agreements concerning important transactions.
time is "of the essence"
it becomes a condition precedent to performance.
focus on what
it takes to have agreement
frustration of purpose
king's coronation. i hire flat to watch parade. it never happened. Unlike impossibility and impracticability, both of which involve duties, frustration of purpose, or "frustration of contract," specifically involves the reason for the contract. Jack Appleseller contracts to buy a commercial building to rent out, and, while the sale is pending, the building is condemned by the city as unsafe for any use. Mr. Appleseller can back out of the purchase without obligation. For example, Louise leases a storefront shop from Bob in order to sell exotic snakes to the public. The lease term is set for five years. After two years into the business venture, laws are passed making it illegal to sell exotic snakes within the United States. Louise might then be excused from the final three years of the lease, as Bob knew the specific purpose of the lease was to sell exotic snakes. With the ban on the snakes, Louise no longer has a reason to continue with the lease unless she desires to do so. On the other hand, Bob may also be able to end the contract and lease the property to another business.
mistakes
lack of voluntary consent.
kill offer?
lapse of time, death or incompetenance
statutes of limitations
lawsuit must be filled within time for breach
article 2A
leases NOT ON EXAM
liquited vs penalties
liquidated damages: generally ok if apparent it would be difficult to estimate and reasonable estimate and not excessive.
special rules for merchant
luna has 10 days until writing is binding. germ can't use contract until 10 days. LUNA MUST CHECK HER MAIL BEFORE 10 DAYS.
Promisor
makes the promise
discharge by accord
making a new agreement made to resolve a contract dispute
incompetent persons not adjudged mentally incompetent by a court (voidable)
may avoid a contract if at the time of contracting, that person (1) did not know he was entering into a contract or (2) lacked the mental capacity to understand its nature, purpose, and consequences
if you determeined to be incompetent
mentally ytou can't form a contract
impossibility
mining, the mine blows up. Impossibility means that some specific duty under the contract has become impossible to fulfill under any reasonable circumstances. For example, John pays Bob $5,000 to paint his house in January, but the house burns down in December before the payment is made. This excuses John from the contract legally since it is no longer possible for the house to be painted. Bob has no recourse to seek damages in a legal lawsuit because this issue falls under the doctrine of impossibility.
Mitigation of damages
mitigates or reduces damages they suffered
consideration is
motif that causes someone to jion agreement
QUANTITY OF GOODS
must be expressly stated!!! not open termed.
gaurantees, land, or sale of goods more than $500
must be in writing?
Other contracts (essential terms)
must include the identity of the parties, subject matter, consideration, and essential terms -Sales of land must state the price and description with sufficient clarity
e-contract
must meet the same requirements (except as to form) as a traditional contract.
agreement
mutual assent; manifest the agreement together offer, then acceptance
intnagilbe
negotiable instruments, patents, etc.
merchant firm offer
never longer than 3 months. levi email X amount of time. offer irrevocable (CANNOT CHANGE) and no consideration necessary. offer in writing and signed by offeror.
if both parties are merchants
new/changed terms materially alter contract. IF ONLY ONE MERCHANT, NO ADDITIONAL TERMS. if offeree (being offered) agrees to additional terms, it is not acceptance regardless of whether parties are merchants (if conditioned by offeror
Past consideration
no consideration because the bargained-for exchange element is missing. Can't bargain for the past
illusory promise
no promise at all
open quantity
no quantity, no contract. 2 exceptions: 1. requirements: buyer purchases all 2. output: seller agrees to sell all production
mitigation
non breaching party has duty not to let damages rack up. landlord can't just let the expenses rack up; they gotta find someone that will take the lease. employee; you got fired, you have to go find a similar job
punitive damage
not awarded.
can limitation of liability be enforced?
not enforced if fraud, intentional injury, illegal, contract to public policy, or violations of law
Emancipation
occurs when a child's parent or legal guardian relinquishes the legal right to exercise control over the child
Misrepresentation by Conduct
occurs when a party takes specific action to conceal a fact that is material to the contract.
mistake of fact
occurs when the parties entered into a contract with different understandings of one or more material facts relating to the contract's performance. -makes contract voidable
Acceptance
of an offer to buy, sell, or lease goods generally may be made in any reasonable manner and by any reasonable means.
under UCC if offeror not notified
offeror (giving offer) can treat offer as having lasped before acceptance
Procedural unconscionability
often involves inconspicuous print, unintelligible language ("legalese"), lack of an opportunity to read the contract or ask questions about its meaning, or a disparity in bargaining power between the two parties such that the weaker party's consent is not voluntary.
Special Rules for Merchants
one of the merchants sends a signed, written memorandum containing essential terms to the other merchant within a reasonable time
One Party Dominates the Other
one party may have the opportunity to dominate and unfairly influence another party
False
only a liquidated debt can serve as consideration for an accord and satisfaction True or False
waiver
only works for current breach, not others especially if unrelated
open delivery term
open quality term ALMOST NEER!!! IF NO QUANTITY, the contract fails. we can't provide adequate remedy. two exceptions
offer for UCC comes in play
open terms. common law has to be definite. UCC does not fail for indefiniteness
reformation when written contract is wrong compared to oral
oral agreement written wrongly on paper so reformation ordered by court
Assignee
part receiving rights
complete performance
party performs as agreed
ancitipatory repudiation
party refues to do their part of contract!
in particiapiotino
party will not perform contract before performance is due. we have contract until tomorrow. we will not perform it.
Intangible property
patents and copyrights, has only conceptual existence.
restitution
pay back contract
PENALTIES DAMAGE
penalizing other party is not generally enforceable.
satisfaction contracts
performing to the satisfaction as another. the picture vs the roof
obligee
person to whom a duty or obligation is owed
obligor
person who is obligated to perform the duty
Termination by Operation of Law
power to offer to transform the offer to binding, legal obligation can be terminated thru: 1. lapse of time 2. destruction of the specific subject matter of the offer 3. Death or Incompetence of the Offeror or Offeree 4. supervening illegality of the proposed contract
conditions precedent, subsequent, current
precedent: i will hire you to be my driver once you get license. must be done first. subsequent: you can live in my house until you get married.
course of dealing
previous conduct between the parties
procedural, substative
procedure: putting it together. substative: the stuff of the contract
limitation of liability clause
provision in a contract stating that one of the parties is not liable for damages in case of breach only really enforcable for negligence if both parties have equal bargain
essential terms
quantity, signed by party to be charged, names of parties, subject matter, consideration
reformation
re write contract, the court does this.
pattern-of-conduct exception
reasonable person. pattern of conduct waives the other breaches. effect on contract: party in fault still liable for damage but contract continues
promisee
receives the promise
equitable remedies
recision: unamke contract
mailbox rule
rejection, revocation, counteroffer all have to be received in hand!!!!!
remedy
relief provided for innocent party when other party breaches
equitable remedy
relief requested by plaintiff from defendant that is usually designed to prevent some future harm
Specific Performance
remedy calls for performance of act promised in contract
Limited liability clauses
remedy for breaches are limited to certain replacement,repair or refunds
substantial vs complete performance
remember house example. i leave out outlet. i leave out entire second floor. won't be close.
damages and remedies
remember if someone is non breaching you are entitled to damages
Article 2 - Sale of Goods
requirements for sales contracts, also duties/obligations involved for parties. article 2A covers similar issues for lease contract
what has to be in writing?
sale of goods: quantity, most states require the parties, the subject matter, essential terms
article 2 of UCC
sale of goods; sets sales contract requirements duties/obligations of parties in sale
contracts restrain trade
sales of a business. non compete for an employee. 2 main issues: reasonableness of time and reasonableness of geography. not more than a year and geography is specific to what you're talking about
intent to decieve
scientor: Scienter is a legal term that refers to intent or knowledge of wrongdoing. This means that an offending party has knowledge of the "wrongness" of an act or event prior to committing it.
additional terms
sell car for $10K. buyer says add seat cover. seat will fall out of contractd. non-merchant: additional terms falls out. if both merchants, contract for car with seat covers. ??? additonal terms part of contract except 3 times. exceptions: if i limit to terms, i reject if nick come back and wantws seat cover, nick's term
option contract
seperate consideration! can't be revoked until option expires.
condition
something that has to happen
misrepresentation
sometimes by conduct, or statement of opinion
sale of land 2
specific performance BREACH NOT DELIBERATE, STATES WILL LMIT BUYER'S DAMAGES TO DOWN PAYMENT ONLY
sale of land
specific performance for equitable remedy
Time for Performance
specific time is stated, the parties must usually perform by that time -If no time is stated in contract, reasonable time is implied
compensatory damages in-depth
standard measure: - incidential damages: expesnes cause directly by breach sale of goods: difference between contract and market price sale of land: specific performance Specific performance is an order of a court which requires a party to perform a specific act, usually what is stated in a contract. It is an alternative to awarding damages and is classed as an equitable remedy commonly used in the form of injunctive relief concerning confidential information or real property
state collarary to E-SIGN
states use UETA to make e-signs work!!! this is all that will be on exam!!!!!!!!
discharge by operagion of law
statue of limiataitons, bankruptcy, impossibility
statue of frauds
statue that requires certain contracts to be in contract. refers to the requirement that certain kinds of contracts be memorialized in a writing, signed by the party to be charged, with sufficient content to evidence the contract.
Express ratification
takes place when the individual has reached the age of majority and states orally or in writing that she/he intends to be bound by the contract
Implied ratification
takes place when the minor—on reaching the age of majority— indicates an intent to abide by the contract
goods
tangible property, has to be movable. land, anything attached to land nO GO
Unconscionability
technically only applies to the sale of goods
subsequently modify if void
terms are ambiguious (bimonth, biweek)
Parol evidence
testimony or other evidence of communications between the parties that is not contained in the contract itself
Disaffirmance (intoxication)
that person must disaffirm while still intoxicated or within a reasonable time after becoming sober
Ratification
the act of accepting and giving legal force to an obligation that previously was not enforceable.
restitution
the act of restoring something to its original state
Accord
the agreement under which one of the parties undertakes to give or perform, and the other to accept, in satisfaction of a claim, something other than what was originally agreed on.
sale of lands
the back 40 doesn't cut it???
recession
the cancellation of a contract in order to return the parties to their pre-contract position.
II. Legality
the contract must be formed for legal purpose A. Contracts contrary to statute 1. To commit a crime - void and unenforceable a. If statute renders illegal after formation, contract discharged by law 2. Usury - charging loans at a rate above maximum level a. Most states limit interest to ceiling; can sue for principal recovery but not interest b. Many states exempt rates on corporate loans to facilitate business transactions or for those unable to receive credit otherwise 3. Gambling - any scheme involving paying valuable consideration for chance to receive property a. Regulated gambling mostly enforceable 4. Licensing statutes - a. Unenforceable if license's purpose is to protect public from unauthorized practitioners (lawer, doctor, etc.) b. Enforceable by other party if unlicensed (practitioner has no recourse) B. Contracts contrary to public policy - immoral acts, etc. 1. In restraint of trade - anticompetitive clauses a. Typically violates antitrust laws, negative for economy so often unenforceable i Only recognizable if restraint is reasonable and contained in ancillary clause 2. Noncompete clauses (covenants to not compete) a. In sale of business - valid if reasonable and will prevent actions detrimental to the business b. In employment - must be reasonable period of time and within reasonable geography i In many states, employee must receive consideration for it to be valid c. Both must protect legitimate business interest, no greater than necessary i Can also be reformed rather than voided 3. Unconscionable contracts/clauses - does not apply to foolish decisions, only grossly unfair a. Procedural - buried in legalese, inconspicuous print, disparity in bargaining power b. Substantive - deprive benefit, leave without remedy, overly harsh terms c. Exculpatory - release party from liability "no matter what" i Enforceable when they do not indemnify misconduct or equal bargaining position d. Discriminatory contracts 4. Contracts to commit tortious acts - considered fraudulent misrepresentation and unenforceable C. Effect of illegality - courts will not aid either party 1. Both parties considered "in pari delicto" - equally at fault a. If executed, no party can recover, if executory, cannot be enforced 2. Exceptions a. Justifiable ignorance of fact (illegality) - didn't know b. Member of protected class (statute designed to protect) c. Withdrawal from an illegal agreement - can recover value if not yet performed and find out illegality d. Through fraud or under duress or undue influence D. Severable (divisible) contracts - separate consideration for each part performed 1. If parts are illegal, legal parts still enforceable a. Indivisible - must be performed completely
Breach by both owner and contractor (Construction Contracts)
the courts attempt to strike a fair balance in awarding damages.
Gambling(Contrary to Statute)
the creation of risk for the purpose of assuming it.
True
the doctrine of promissory estoppel requires a clear and definite promise True or False
Minor Breach
the nonbreaching party's duty to perform may be suspended until the breach has been remedied
delegator
the party delegating the duties.
delegatee
the party to whom the duties are delegated
Consequences of a Waiver of Breach
the party waiving breach cannot take any later action on it
Remedy
the relief provided for an innocent party when the other party has breached the contract
False
the uniform electronic transactions act (UETA) is a federal law true or false
rescission
the unmaking of a contract by the mutual agreement of the parties
Consideration
the value given in return for a promise (in a bilateral contract) or in return for a performance (in a unilateral contract)
Acceptance
the voluntary statement or act from the offeree that indicates his/her assent (agreement) to the terms of the offer.
False
there are no irrevocable offers true or false
False
there is no time limit for a party to file a suit against another based on a breach of contract True or False
If the contractor breaches contract...
they must pay the cost of completion
assignments/delegations
third party benefiicaries
Satisfaction
this occurs when an accord is executed. there can be no satisfaction without an accord
Subsequent precedent concurrent
three types of condtions
Reasons for Waiving a Breach
to obtain whatever benefit is still possible out of the contract.
commercial practicability
too expensive. For example, John's company signs a contract with the city to remove all of the gravel in a specific area. After surveying the area, the company quickly learns that a large portion of the gravel is underwater and removing it will cost the company 20 times more than was originally agreed to. The company could claim impracticability since the cost to remove the gravel underwater will be far too great.
II. Delegation
transfer of contractual duties to a third party after contract is made A. Delegations - transfer of duties through an assignment 1. No special form needed as long as delegator expresses intent B. Duties that can't be delegated 1. Duties personal in nature - specifically if trust has been placed in someone for their skill a. Ex. pay a doctor to do your surgery, he cannot delegate it out to someone else 2. When performance will vary materially than expected 3. When contract prohibits delegation C. Effects of delegation - if enforceable, oblige must accept performance from delegate 1. Obligee can legally refuse performance of duty cannot be delegated a. Valid delegation does not relieve delegator of obligations b. Obligee can sue both D. Assignment of "all rights" - can create both assignments of rights and delegation of duties 1. Courts still hold assignor liable
delegation
transfer of duties
assignment
transfer of rights. can be done without everyone's permission. i owe this due $5,000. i transfer the right of the owes to you.
tender of performance
unconditional offer to perform
adhesion contracts
unconsionability, written exclusively by one party. take it or leave it. mobile phone contracts; you want an iphone this is it! no other choice
UCC
under common law: services/law contracts
True
under the UETA, a name typed at the bottom of an email note can qualify as an e-signature true or false
True
under the plain meaning rule, a court will enforce a contract in which the writing is clear and unequivocal true or false
disaffirmance
undo a contract?
acceptance of offer
unequivocal, silence = not acceptance!
mistakes of fact unilateral, bilateral
uni: one party is mistaken. you're out of luck. if both parties are mistaken, you can rescind or unmake the contract
undue influence
usually confidential relatonship, fudiciary duty. it's lawyer doing wills, the kids usually happens to older generations. one person dominates another
consideration
value given in return for a promise if it's bilateral or performance in a ulateral contract
Subsequent Breaches
waiver extends only to the matter waived and not the whole contract nor to future breaches
discharge by mutual decision
we both back out contract
acceptance UCC
we do acceptance by either prompt proise to ship or prompt shipment of confirming or non-confirming goods
nonbreaching party must resume performance of contractual obligations.
what happens Once the minor breach is cured?
Assignments of "All Rights"
when an assignment is made in a contract, the implication is an assignment of ALL rights and duties.
court asks two questions for liquidated damages
when contract was formed, was it apparent that damages would be difficult to estimate in the event of a breach? was the amount set as liquidated damages a reasonable estimate and not excessive?
performance and discharge
when is contract over, how is it performed
Waiver
when non breaching party accepts defective performance
When Quasi Contracts are used
when party has partially performed under a contract that is unenforceable. Party may recover fair market value
True
when the language in a contract has more than one meaning, it will be interpreted against the party who drafted the contract true or false
True
whether or not a party intended to enter into a contract is determined by the objective theory of contracts true or false
Merchant
who has special business expertise and is not a casual buyer/seller. -Deals in goods of the kind in the sale. -Holds herself out as having special expertise, knowledge, or skill. -A person who employs a merchant as a broker, agent, or other intermediary
Open Terms
will not fail for indefiniteness if both the following are true: -The parties intended to make a contract. -There is a reasonably certain basis for the court to grant an appropriate remedy
Contracts covered by UCC (essential terms)
writing must include a quantity term. -other terms need not be stated exactly, if they adequately reflect the parties' intentions
Sufficiency of the Writing
written contract, a written memorandum, or an electronic record that evidences the agreement and is signed by the party against whom enforcement is sought
option contract
you can revoke offer anytime up til accepteence unless option. under UCC, you make irrevocable by buying it. no sepereate consideration needed. merchant's firm offer
minors
you create a contract, yo ucan VOID it. you are on hook for necessaries such as food. (age 18)
voidable contract (mental)
you haven't been found retarded by court but you have times of incompetence. if you make contract while incompetent, it is voidable. if you make a contract during period of lucidity (not incompetent) it is a valid contract.
accord and satisfaction
you owe 10K on credit card. imma give you 7K only, as long as dispute that's okay
