MGMT 643 Exam 3

quantum meruit

"as much as he deserves;" reasonable under the circumstances

if the parties to the contract expressly reserve the right to cancel, rescind, or modify the contract...

...the intended 3P beneficiary is subject to any change, rescission, or cancellation

Specially manufactured goods contracts are enforceable without writing if (3)

1. A contract for goods to be specially manufactured for a particular buyer 2. When the goods are not suitable for resale in the ordinary course of business 3. And the seller has begun production

Consumer lease

1. A lessor who regularly engages in the business of leasing or selling 2. A lessee (except an organization) who leases goods for personal or household purposes 3. Total lease payments are less than $25,000

A writing is necessary if (2)

1. Agreement of the parties provides that any modification must be in writing 2. Any modification that brings the contract under the SoF must be in writing

Merchant

1. Deals in goods of the kind involved in the sales contract 2. Holds himself out, bc of his occupation, as having knowledge and skills peculiar to the business or goods involved in the transaction 3. Employs other people who are merchants to act on his behalf

If construction is unreasonable, the order of priority is (4)

1. Express terms 2. Course of performance 3. Course of dealing 4. Usage of trade

Warranty of title must be (3)

1. Good title 2. No liens 3. No infringements

Merhcant's firm offer

1. Made by a merchant 2. Signed and in writing 3. Remain open for a stated time period 4. No consideration required 5. Irrevocable in the period stated

Open price term

1. Price must be reasonable at time of delivery 2. Act in good faith

Exceptions to the UCC statute of frauds (3)

1. Specially manufactured goods 2. Admissions 3. Partial performance

Types of warranties (4)

1. Warranty of title 2. Express warranties 3. Implied warranty of merchantability 4. Implied warranty of fitness for a particular purpose

discharge by operation of law (4)

1. alteration of the contract 2. statutes of limitations 3. bankruptcy 4. impossibility/impracticability

effects of assignments (2)

1. an assignee takes only the rights that the assignor originally had 2. an assignee takes the claim, subject to all defenses available against the assignor

exceptions to rule of privity (3)

1. assignments 2. delegations 3. third party beneficiary contracts

exceptions to the enforceability of anti-assignment clauses (4)

1. can't prohibit the right to receive funds 2. anti-assignment in real estate is usually prohibited b/c it's against public policy 3. can't prohibit assignment of negotiable instruments 4. right to receive damages for breach of contract in a sale of goods

types of damages (4)

1. compensatory 2. consequential/special 3. punitive 4. nominal

degrees of performance (3)

1. complete/strict 2. substantial 3. satisfaction of another

types of conditions (5)

1. condition precedent 2. condition subsequent 3. concurrent condition 4. express 5. implied-in-fact

two requirements of statute of frauds

1. contract must be in writing 2. must be signed by the party against whom enforcement is sought (the party being sued)

specific performance is common in (2)

1. contracts for sale of land (unique) 2. contracts for personal services

contracts that must meet statute of frauds requirements (5)

1. contracts involving interests in land 2. contracts that cannot be performed within 1 year 3. collateral promises 4. promises made in consideration of marriage 5. contracts for the sale of goods

parole evidence is admitted to show (7)

1. contracts subsequently modified 2. the contract was void/voidable 3. the meaning of vague or ambiguous language 4. the writing is incomplete 5. a prior course of dealings, course of performance, or usage in a trade 6. the contract was subject to orally agreed-upon conditions 7. obvious or gross typographical or clerical errors

types of objective impossibility (3)

1. death, serious illness, or incapacitation of a party who was supposed to render personal services 2. destruction of subject matter of contract 3. change in law making performance illegal

effects of delegation (2)

1. delegator is NOT relieved of liability 2. obligee must accept performance from delegatee unless the duty is one that cannot be delegated

types of 3P INTENDED beneficiary contracts (2)

1. donee 2. creditor

two step process for compensatory damages

1. establish contract and breach 2. prove the breach caused the damages

reformation is used when (3)

1. fraud or mutual mistake is present 2. written contract incorrectly expresses an oral agreement 3. covenants to not compete

types of 3P beneficiary contracts (2)

1. intended 2. incidental

discharge by agreement (4)

1. mutual recission 2. novation 3. substituted agreement 4. accord and satisfaction

exceptions to the statute of frauds (3)

1. partial performance 2. admissions 3. promissory estoppel

duties that cannot be delegated (4)

1. personal duties that depend on the skill or talents of the obligor 2. when special trust has been places in the obligor 3. when performance by a 3P will materially vary from performance expected by obligee 4. when the contract expressly prohibits delegation.

requirements of a novation (4)

1. previously valid obligation 2. an agreement by all parties to a new contract 3. extinguishing of the old obligation (discharge of prior party) 4. a new contract that is valid

problems that arise when no notice of assignment is given (2)

1. priority of creditors 2. performance may be rendered to the assignor

contracts that can be mutually rescinded (2)

1. purely executory--oral and written are enforceable 2. executed by one side--the party who performed will need new consideration for the original rescission to be enforceable

contracts involving interests in land (2)

1. real property (land & anything attached to it) 2. other land interests like mineral and oil rights/leases, rental house leases, and easements

factors to consider when determining if someone is an incidental 3P beneficiary (4)

1. reasonable person standard 2. whether performance is rendered directly to the 3P 3. whether the 3P has the right to control the details of performance 4. whether the 3P is expressly designated as a beneficiary of the contract

equitable remedies (3)

1. rescission and restitution 2. specific performance 3. reformation

parts of an assignment (3)

1. the assignor assigns his rights to a 3P assignee 2. the assignor's rights are extinguished upon assignment 3. the assignee may enforce the contract against the other party (obligor)

reasons to justify the anticipatory repudiation rule (2)

1. the non-breaching party could incur more damages if they have to wait until the contract due date to pass before they can sue 2. gives the non-breaching party the ability to cover at least some of their losses through a contract elsewhere

a promise is within the statute of frauds and must be in writing if (2)

1. the promise if made to the creditor by a person who is not presently liable for the debt or who does not have a present duty to perform 2. the liability of the guarantor is secondary and collateral to that of the principal debtor

a court may use the doctrine of promissory estoppel/detrimental reliance to permit permit recovery under an oral contract (normally not allowed under SoF) if (2)

1. the reliance as foreseeable to the party making the oral promise 2. injustice can be avoided by enforcing the promise

discharge definition (3)

1. to terminate contract duties 2. to be finished with contract duties 3. to no longer be required to perform duties

options for unaware party under material alteration of contract (3)

1. treat the contract as discharged 2. enforceable under original terms 3. enforceable under new terms if they think they are fair

rights that cannot be assigned (3)

1. when a statute expressly prohibits assignment 2. the right to receive personal/confidential services cannot be assigned without the consent of the person performing the services 3. when the assignment will materially increase or alter the risk of the obligor

liquidated penalties clauses are enforceable if (2)

1. when the contract was formed it was clear that damages would be hard to estimate 2. the amount set as damages is reasonable

statute of limitations for oral contracts

2-3 years

statute of limitations for written contracts

4-5 years

Texas Deceptive Trade Practices Act (DTPA)

Consumer fraud statute, laundry list of deceptive practices, can use it to enhance your remedy in an ordinary breach of contract/breach of warranty case, treble damages, attorney's fees and cost of court

Unconsionability

Contracts or sever able contract provisions which are grossly unfair or one-sees under the circumstances at the time will not be enforced

Express warranties

Created by the seller who makes factual representations concerning the quality, condition, description, or performance potential of the goods (1) conform to an affirmation or promise of fact (2) description of the goods (3) sample or model

Rules of construction

Express terms, course of performance, course of dealing, and usage of trade, which do not contradict each other are construed together

Merchantable food

Fit to eat on a basis of reasonable expectation

Implied warranty of merchantability

Goods that are merchantable if the goods are reasonable fit for the ordinary purposes for which they are used

Unborn animas, rare coins, and other forms of money

Goods, treated as commodities

Implied warranty of fitness for a particular purpose

Made by a seller who has reason to know the particular se for which the buyer is purchasing the goods and that the buyer relies on skill and judgement of the seller in selecting suitable goods

Consideration is not necessary for a modification if

Made in good faith

Partial performance

Payment for the goods or receipt and acceptance of goods by the buyer or the extent of performance

Acceptance of new terms when buyer or seller is a non-merchant

The new or additional terms are viewed as a proposal and do not become part of the contract; contract is formed under the offeror's terms

Acceptance of new terms when buyer and seller are merchants

The new/different terms become part of the contract except if (1) the offer expressly limits acceptance to only its terms (2) material change in the offer (3) the offer objects to the new terms within a reasonable time

Open terms

The parties intended to make a contract and there is a reasonably certain basis for the court to grant a remedy

Contracts for specially manufactured goods

Treated as contracts for the sale of goods

The serving of food and beverages

Treated as contracts for the sale of goods

T/F: courts are ruling that a fax copy of the document satisfies the SoF requirement

True

goods; NOT real property, services, or intangible personal property

UCC article 2 deals with __, but not __.

Goods v. Services

When contracts combine goods and services, the courts disagree but try to determine which factor is predominant

oral contracts

__ are enforceable if they can be performed within one year

uniform commercial code (UCC)

a comprehensive statute that provides a consistent and integrated framework of rules to deal with all phases of an entire commercial transaction for the sale and payment of goods

substituted (settled) agreement

a compromise that arises out of a genuine dispute over the obligation under an existing contract; new terms to a an old contract

express condition

a condition that is clearly stated and provided for in the contract by the parties

implied-in-fact condition

a condition that is not expressed by the parties but is understood or inferred from the contract; courts may infer these conditions from the purpose of the contract or by the intent of the parties

condition precedent

a condition that must be fulfilled before a party's performance can be required; if the condition does not occur, the parties are discharged from their contractual obligations

condition subsequent

a condition that terminates a party's absolute promise to perform; it extinguishes contractual duty so the parties are discharged

rule of privity

a contract is a private agreement and traditionally only the parties to the contract have rights and duties under it

donee beneficiary

a contract is made for the express purpose of giving a gift to a 3P.

Jacobs & Young, Inc. v. Kent (1921)

a contract to build a house called for a very specific brand and type of pipes. the builder could not find those exact pipes, and tried to get in touch with the homeowner to discuss what to do, but could not reach them. the builder decided to go with an alternative pipe that was of similar value and quality. this change is only discovered by the owner after the walls etc. have been put in and the house is almost finished. the owner doesn't want to pay the builder and sues for breach of contract. the court finds that this was substantial performance and the owner is required to fulfill his end and pay the builder.

quasi-contract

a legal theory under which an obligation is imposed in the absence of an agreement

statutes of limitations

a party who has a cause of action must bring his/her action of lawsuit within a specified time period

not discharged; liable for damages for breach of contract

a party who totally fails to perform is __ and is __. the other party is discharged.

incidental 3P beneficiary

a person who is to receive an incidental benefit from the performance of a contract who may not enforce the contract if there was no intent to confer a benefit upon him/her

condition

a possible future event, the occurrence or non-occurrence of which will trigger the performance of a legal obligation or terminate an existing obligation

anticipatory repudiation is treated as __.

a present material breach of contract

estate debts

a promise by an executor or administrator of the estate of a deceased person to personally pay a debt of the deceased's estate must be in writing to be enforceable

collateral promise

a promise made by a 3P to assume a debt or obligation of a primary party to a contract if that party does not perform

primary obligation

a promise to pay another person's debt or obligation that is not conditioned on the person's failure to pay or perform

bankruptcy

a release of a debtor from most debts and contractual obligations; partial payment will not revive the obligation

the creditor beneficiary can enforce the promisor's promise __.

after the rights have vested

the donee beneficiary can enforce the promisee's promise __.

after the rights have vested.

penalties clause

an amount that is supposed to be paid when there is a breach but it's designed to punish one party, not to make the other party "whole"

specific performance

an equitable remedy that requires performance according to its precise terms

reformation

an equitable remedy used when the parties have imperfectly expressed their agreement in writing; allows the courts to rewrite the contract to reflect the parties' true intentions

accord

an executory contract to perform some act in order to satisfy an existing contractual obligation

commercial impracticability

an extreme change in circumstances which makes performance substantially more difficult or ↑cost; a reasonable person could not have foreseen this

temporary impossibility

an occurrence or event that delays performance until the impossibility ceases; when impossibility has ceased, parties must perform the original contract unless the lapse of time and change in circumstances make the contract substantially more burdensome to perform

subjective impossibility

an opinion; performance is harder but still possible; "impossible for me but not for anyone;" not a reason to get our of a contract

tender of complete performance

an unconditional offer to perform by a party who is ready, willing, and able to do so; discharged if not accepted

frustration of purpose

an unforeseen event that makes it impossible to obtain the purpose both parties had in mind when forming a contract; ↓value

partial performance

an unmistakable indication that one party believes there is a contract

also apply to delegations

anti-assignment clauses can __.

incidental damages

are caused directly by the breach

other "things attached" to realty but capable of severance without material harm to the land

are considered goods (under the UCC) regardless of who severs them

after

assignments and delegations occur __ the contracts is made

under the SoF

assignments do not need to be in writing unless they are __.

unilateral rescission

available when fraud, mistake, duress, undue influence, misrepresentation, or lack of capacity is present

UCC article 4

banks providing mechanisms for transferring and collecting commercial paper

novation

both parties agree to substitute a 3P for one of the original parties

mutual recission

both parties agree to undo the contract but also must make another agreement that satisfies the legal requirements of a contract (offer, acceptance, consideration)

a writing

can consist of any order confirmation, invoice, sales slip, check, fax or email, or such items in combination

purpose of statute of frauds

certain types of contracts are more likely to have fraud involved so this tries to protect against this

material breach

contract is discharged, no further duty to perform, party can sue immediately for breach

material alteration of the contract w/o consent

contract is voidable by party who was unaware of the change

standard measure of compensatory damages: sale of land (if buyer is in breach)

contract price - market price

standard measure of compensatory damages: sale of goods

contract price - market price at time of delivery

UCC article 2A

contracts for leases

UCC article 2

contracts for the sale of goods

contracts for the sale of goods

contracts for the sale of goods worth $500+ must be in writing and have the signature of the charged party to be enforceable

the one year rule

contracts that by their own terms cannot be performed within one year; SoF applies and must be fulfilled

a reasonable person standard applies to

contracts where satisfaction relates to operative fitness, marketability, merchantability, or mechanical utility

obligation

delegation does not relieve the delegator of the ___ to perform in the event the delegatee fails to perform

standard measure of compensatory damages: construction contracts

depends on who breached and when on the timeline of the contract the breach occurred

tort damages

designed to make up for harm incurred

performance was possible within one year

even if performance actually takes more than one year, an oral contract is enforceable as long as __.

T/F: an incidental 3P beneficiary has the right to sue to enforce a contract

false

T/F: weather is an example of temporary impossibility

false b/c it can generally be foreseen

promise to pay must be made to the creditor

for a promise to pay to be a collateral promise and not a gift, __.

consequential (special) damages

foreseeable damages that result from end result of the breach of contract (special circumstances beyond the contract itself); indirect damages

signature

full signed name, initials, mark, thumb prints, etc.

discharge by performance

full, complete performance in the manner prescribed by the contract

intended beneficiary

has rights to and may enforce contractual promises, even though they are not a party to the contract

timing

helps determine if it's a 3P beneficiary contract or not

parole evidence rule

if a contract is complete and final, neither party can present evidence of prior negotiations, prior agreements, or contemporaneous oral agreements

no parole evidence is allowed

if a court finds that a contract is complete and final, __.

UCC article 9

if credit is being extended to buyers of goods

absolute - damages

if performance is substantial, the other party's duty to perform remains __ for the deviation

liability of delegation

if the delegatee fails to perform, the obligor may (1) hold the delegatee liable if there has been an assumption of duty or (2) hold the delgator liable

"main purpose rule" exception

if the main purpose or leading objective of the secondary promisor is to protect his/her own interest or to secure a personal benefit, an oral contract is enforceable (SoF doesn't apply)

an oral contract is enforceable

if the time of performance is of uncertain duration but depends on some contingency that may occur within one year, __.

admissions

if you admit to a contract or partial contract, then it is enforceable to the amount admitted

damages

in contract law, are designed to compensate the non-breaching party for the loss of the deal, and put them back in the same place they would be if the contract had gone through

complete, integrated agreement

in general, a written instrument is ordinarily regarded as the __.

price and description of the property

in some states, including Texas, the writing for contracts for the sale of land must include __.

personal contracts

involve personal taste, preferences, aesthetics, fancy, or comfort

consideration

is not requires for valid assignments

the main question in Orr v. Orr

is the daughter an intended 3P beneficiary of her parents' divorce agreement?

contract for the sale of minerals, etc.

is under the UCC (aka sale of goods) if the severance is to be made by the SELLER

notice of assignment

it is not legally necessary to give __.

if the buyer has the right to remove a structure, then

it's realty covered under common law

waiver of breach

knowingly giving up the rights to full satisfactory performance; acceptance of a breach; usually done to try to receive whatever amount of the benefit is left/still possible

objective impossibility

literally impossible to do; courts require this to discharge/get out of a contract

compensatory damages

loss of the bargain; direct damages including incidental damages

complete performance

no breach, contract is discharged; strict compliance with any express conditions

delegation; must be aware

novation is not the same as __ because in a novation, everyone involved in the contract __ of the novation.

merely suspended until the accord agreement is fully performed

once an accord is made, the original obligation is __.

UCC articles 3 and 5

payments for goods using commercial paper

substantial performance

performance which does not materially vary from the performance that is promised in the contract but is slightly less that that which could reasonably be expected; duty to perform continues, but party can recover damages

creditor beneficiary

promisor tells a creditor that they will pay a debt owed by the promisee

punitive damages

rare; done to send a message and make someone hurt financially; an attempt to deter wrongdoing

time for performance

reasonable, unless specified in the contract "time is of the essence"

anticipatory repudiation of contract

refusal by one party to perform a contract in advance of the due date; if a party repudiates a contract, the other party is discharged from performance and may sue immediately

severance

removal

anti-assignment clauses

restrictions on the power to assign contract rights operate only against the parties; these restrictions are not effective to prevent assignment by operation of law

restitution

returned any goods, property, or funds previously conveyed; if goods have been consumed, restitution must be made in an equal $ amount

vest

rights have taken effect and cannot be taken away

limitation of liability clauses

similar to exculpatory clauses, except they are generally more reasonable and only seek to limit some aspects of liability, not completely take it away

reasons that 3P intended beneficiaries rights vest (2)

so the original contracting parties cannot modify, alter, change, rescind, or terminate the contract when the beneficiary (1) demonstrates manifest assent to the contract or (2) materially changes his/her position in detrimental reliance on the contract

liquidated penalties clause

specifies a certain dollar amount to be paid in the event of a future default of breach

goods

tangible and movable (in the course of business) items of personal property

parole evidence

testimony or other evidence of communication between the parties that is not contained in the written contract itself

third party beneficiary contracts

the 3P is a stranger to the contract; the 3P makes no promises and gives no consideration to the promisor; the intention of the contract is to confer a benefit upon the 3P beneficiary

statute of frauds

the __ is a defense to the enforcement of an oral land contract

minor, non-material breach of contract

the breaching party is liable for damages if the breach is not cured. the non-breaching party is not discharged and is required to perform

mitigation of duties

the injured party has a duty to reduce their exposure to risk by trying to reduce damages; ex: employment and house rental

breach of contract

the nonperformance of a contractual duty

assignor

the party that gives up rights to a 3P

assignee

the party that receives rights from a 3P

sale

the passing of title from a seller to a buyer for a price

concurrent condition

the performance of each party is dependent on the simultaneous performance of the other party; mutual dependence

satisfaction

the performance or execution of the accord agreement

recission

the process by which a contract is cancelled or terminated and the parties return to the positions they were in beforehand

contract for the sale of a structure is under the UCC (aka sale of goods) if

the severance is to be made by the SELLER

UCC article 7

the storage and shipment of goods

delegation

the transfer of DUTIES to a 3P

assignment

the transfer of RIGHTS to a 3P

signed by the party against whom enforcement is sought (or his/her agent)

the writing must be __.

assignment of all rights

this wording may create an assignment and a delegation (normally interpreted this way by the courts); the assignor remains liable if the assignee fails to perform contractual obligations

T/F: penalties clauses are not generally enforceable

true

T/F: the law favors the free assignability of contracts

true

a sale of growing crops or timber

under the UCC (aka sale of goods) regardless of who removes them from the land BUT the sale must only be for the crops/timber and not the land they're on

quantity and signature of the party against whom enforcement is sought

under the UCC, a writing needs only __.

oral modifications

under the parole evidence rule, __ may not be enforceable

promises made in consideration of marriage

unilateral promises to pay money or give other property in exchange for promises to marry and prenuptial agreements must be in writing and signed in order to be enforceable

standard measure of compensatory damages

value of breaching party's promises - value of actual deliverance

nominal damages

very small (as little as $1); used to show that the law has been violated by the defendant in a way that money can't measure

Orr v. Orr

when a man and woman divorce, they set up an agreement with specifications on what types of college they would pay for for their kids. their college-aged daughter is following those instructions and yet her dad won't pay. she sues and wins because the court finds that she is an intended 3P beneficiary to this part of her parents' divorce agreement. dad has to pay.

material breach of contract

when performance is not at least substantial

reasonableness

when performance is to a 3P with superior knowledge or training, most courts use a __ standard.

conditional; actually satisfy the party specified in the contract

when the subject matter of a contract is personal, the obligation is __ and performance must __.

gone; less

with an accord and satisfaction, the original amounts are __ and the creditor gets __.

the day after the contract is made

with the one year rule, the year begins to run from __.