BLAW exam #3

mutual assent

( fancy way of saying offer and acceptance ) Parties typically demonstrate mutual assent via an OFFER and ACCEPTANCE One party makes a proposal by words or conduct to the other party, who agrees by words or conduct to the proposal Contract exists if both parties' actions indicate a recognition by each of them of the existence of a contract Courts apply an objective standard to determine assent

to prove Voluntary assumption of risk

( plaintiff express or implied consent to encounter a known danger) DEFENDENT must show that: 1. Plaintiff actually knew and appreciated the particular risk or danger the defect created; 2. Plaintiff voluntarily encountered the risk while realizing the danger; and 3. Plaintiff's decision to encounter the known risk was unreasonable

Implied warranties

(CONDUCT/ACTION) created by cirumstances under which the sale is made -Based on the situation Not found in the language of the sales contract or in a specific statement or promise by the seller Arises out of the circumstances under which the parties enter into their contract and depends on factors such as the type of contract or sale enter into, the seller's merchant or nonmerchant status, the conduct of the parties, and the applicability of other statutes

express warranties

(WORDS) created by a statement of fact or promise made by the seller to the buyer with respect to the quality, description, condition, or performability of the goods Statement of fact or a promise that relates to the goods, a description of the goods, or a sample or model of the goods ORAL OR IN WRITING

essentials of an offer

(need not take any particular form to have a legal effect) It must -Be communicated to the offeree -Manifest an intent to enter into a contract and -Be sufficiently definite and certain

Statement regarding the value......

(or seller'sopinion or reccommendation) DOES NOT create a warranty UNLESS: - seller states price the goods were purchased from (former owner) -- they give market figure relating to the sales of similar goods -andddd when an exper seller has an opinon (ex: gemologist for diamonds talks about value)

advertisements

- no offer when merchant announces that they have goods for sale, describes the goods, and quotes prices (invites public to make offers to buy the goods) seller is not free to advertise goods at one price and then raise the price

Sources of express warranties

-oral representations -contract documents -catalogs -brochures -specifications -plans and blueprints -product manuals -correspondence -inspection reports -appraisals -packaging and. labels -package inserts -material safety Data sheets -advertisements -models and samples

12 requirements of strict liability in tort

1. Defendant was engaged in the business of selling a product such as the defective one; 2. Defendant sold the product in a defective condition; 3. Defective condition made the product unreasonably dangerous to the user or consumer or to their property; 4. Defect in the product existed when it left the defendant's hands (already defective when it was sold); 5. Plaintiff sustained physical harm or property damage by using or consuming the product; and 6. Defective condition was the proximate cause (forseeable) of the injury or damage (reason why we are hurt is because of the defective cause) 7. Does not depend upon a contract 8. No notice of the defect is required to have been given by the injured user or consumer 9. Does not require reliance by the injured user or consumer on any statements made by the manufacturer or seller 10. Not subject to disclaimer, exclusion, or modification by contractual agreement (Cant say disclaimer... its dangerous... still liable) 11. Not limited to persons in the buyer-seller relationship 12. Liability for injury to person and damage to property, not commercial loss

In a warranty action, the buyer must prove (4):

1. Warranty existed 2. Warranty has been breached 3. The breach of the warranty proximately caused the loss suffered 4. Notice of the breach of warranty was given to the seller

Uneforceable contract

A valid contract rendered unenforceable by some statute or law. (statute of frauds) if breached, law provides no remedy ex: if contract should habe been in writing to be enforced, you cant enforce it

acceptance of offer

Acceptance of offer is essential to the formation of a contract Once an effective acceptance has been given , the contract is formed Acceptance of an offer for a bilateral contract is some evert act by the offeree that manifests their assent to the terms of the offer If offer is for a unilateral contract, acceptance is the performance of the requested act with the intention of accepting

conditional acceptance

Accepts the offer but expressly makes the acceptance contingent upon the offeror's assent to additional or different terms

Lefkowitz v. Great Minneapolis Surplus Store (ads example)

Ads in the newspaper that included the quantity of items, price, place, and because it said first come first served, --> it was a specific person. Ads were a binding offer. First three ppl in line for store get fur coat for $1 Store has policy that they only sell fur coats to women Store making the offer to first three ppl saturday morning He accepted the offer with dollar Valid binding contract Breech of contract

output contract

Agreement of a buyer to purchase sellers entire output for stated period Ex: michelin tires partner with fords and now if you want those tires you have to by a ford

requirements contract

Agreement of a seller to supply a buyer with all their requirements for certain goods Ex: shall carpets are guaranteeing that whatever hotels need they get .... Constant demand Hilton hotels have consistency

contracts

Allow us in business to predict the future! We crave certainty... contracts are binding If you promise to enter a contract and do not Called breech of contract: not criminal law but civil law!

Implied Warranty of Fitness for a Particular Purpose

Applies to ANY seller, whether they are a merchant or not Arises if at the time of contracting the seller had reason to know the buyer's particular purpose and to know that the buyer was relying on the seller's skill and judgement to select suitable goods Buyer need not specifically inform the seller of their particular purpose; it is sufficient if the seller has reason to know it Specific purpose not ordinary purpose ex: you try skiing for first time, go to buy skis, store gives you water skis, Anytime seller knows or should know why your buying product they have an obligation to sell you what you need

Notice of Breach of Warranty rule

Buyers are required to notify the seller of any breach of warranty, express or implied, as well as any other breach, within a reasonable time after they have discovered the breach or should have discovered it If the buyer fails to notify the seller of any breach within a reasonable time, they are barred from any remedy against the seller

Statutory Irrevocability

Certain offers are made irrevocable by statute

definition of a contract

Contract is a binding agreement that the courts will enforce Promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law, in some way, recognizes a duty All contracts are promises; not all promises are contracts

bilateral contract

Contract is formed by an exchange of promises Each party is under a duty to the other 1. Promisor 2. Promisee When unclear, courts presume bilateral

buyer/plaintiffs conduct and breach of warranty rule

Contributory negligence of the buyer is no defense to an action against the seller for breach of warranty Voluntary Assumption of Risk!!!

counteroffer

Counteroffer is counterproposal from the offeree to the offeror that indicates a willingness to contract but on terms or conditions different from those contained in the original offer Operates as a rejection and a new offer Inquiry about the possibility of obtaining different or new terms is not a counteroffer and does not terminate the original offer -conditional acceptance

death or incompetency

Death or incompetency of either the offeror or offeree ordinarily terminates the offer On the death or incompetency of the offeror, the offeror no longer has the capacity to enter into a contract; thus, all outstanding offers are terminated Death or incompetency of the offeree also terminates the offer

Quasi Contract-- Contract implied in law

Definition: obligation, not a contract, that is imposed to avoid injustice "Prevent unjust enrichment." "An almost contract" Requirements: Court will impose a quasi-contract (1) the plaintiff confers a benefit upon the defendant (2) the defendant knows or appreciates the benefit, and (3) the defendant's retention of the benefit is inequitable Remedy: plaintiff recovers the reasonable value of the benefit they conferred upon the Defendant Ex: guy paints outside of house instead of inside It would be unjust to be enriched through the benefit of what its worth to paint a house Cant be more than what you agreed to pay for They have to pay It has to be better than it was before... even if it was not ideally what you want

design defect

Despite the product being produced as specified, the product is dangerous or hazardous because its design is inadequate Design of the product is evaluated based on the dangers that the manufacturer could have known at the time they produced the product Example: ford pinto made as they designed but the design made it blow up when getting rear ended

destruction of subject matter

Destruction of the specific subject matter of an offter terminates the offer

Disclaimer of warranties

Disclaimer must be positive, explicit, unequivocal, and conspicuous (bold, underlined, caps, SEEN EASILY) Seller cannot provide an express warranty and then disclaim express OR implied warranties Court will invalidate disclaimers it considers unconscionable

contracts must be absent of invalidating conduct such as

Duress, undue influence, misrepresentation, or mistake

examples of implied warranty of merchantibility

Ex: should not buy a warranty for a product that is from a merchant .... If u buy a computer it should work, if you buy a coat it should keep you warm, the product should do what it is supposed to do Only buy if its a special product that requires help or service down the line that you can or would benefit from calling up Even a computer without a warranty should still work after a year and you can bring it in for breach if broken

In RE L.B Trucking Inc. implied warranty example

Farmer wants to buy herbicides Herbicide sales person comes out to talk to farmer... Farmer says i dont know anything about them give me cheapest Theres water based and nitrogen based, you need water based which is cheaper - seller Guy sprays nitrogen base instead... kills ALL crops What breach of warranty was here: Promised water ... gave nitrogen (express) Killed plants instead of helped - didnt meet its ordinary purpose (implied warranty of fitness for a particular purpose) Herbicide should work (implied warranty of merchantability) Herbicide sued farmer... farmer went bankrupt... couldnt pay herbicide company Herbicide co. sued for breach of contract

Firm offers under the UCC

Firm offer is a written promise not to revoke an offer for a specified period of time Merchant is bound to keep an offer to buy or sell goods open for a stated period (or if no time is stated, a reasonable time) not exceeding three months if the merchant gives assurance in a signed writing that the offer will be held open Enforceable even if no consideration is given to the offeror for that promise

Communication of Acceptance

For bilateral contracts, the offeree's acceptance must be communicated to the offeror. For unilateral contracts, notice of acceptance to the offeror is typically not required, unless the offeree has reason to know that the offeror has no adequate means of learning of the offeree's performance with reasonable promptness and certainty, then the offeree must make reasonable efforts to notify the offeror of acceptance or lose the right to enforce the contract.

bouton vs byers (promissory estoppel case)

Girl was law professor ... good job Dad told her to quit her job and work for him and he will give her the farm when he dies Dad transfers the property to someone else before he dies If its a transfer involving land it needs to be in writing to be enforceable She sued She goes to court for promissory estoppel: "I relied on my dads oral promise and quit my job" Court enforced the promise Actions prove communication... she quit her job

Montz v. Pilgrim Films & Television, Inc.

Guy pitches ghost hunters show to production companies all over the world They all said no One company starts the same show even tho they denied him Was there a contract? The only way art /creativity works are that if you have an idea and someone takes it they need to be paid... its an implied contract in this field/industry!!!

Kelso V. Bayer Corp

Guy uses neo synephrine every day for many years to help nasal problems Had to get surgery and suffered for years ; made sinuses worse Says on the box: do not use this product for more than three days straight This is straightforward; would a reasonable consumer get it? YES

basis of the bargain

If Statements, promises, descriptions, samples, or models are part of the buyers assumption underlying the sale, reliance by the buyer is presumed Statements or promises made by the seller subsequent to the sale may become express warranties Goal in sales: sell the product with the least words possible... more words more promises... once you make sale STOP TALKING Statements made after the sale create warranties Ex: we will probably have it to you by tuesday... creates warranty Ex: SAY instead: this product CAN ship by this date... or APPROXIMATELY

preliminary negotiations

If a communication creates in (the mind of a reasonable person in the position of the offeree) an expectation that their acceptance will conclude a contract, then the communication is an offer. If it does not, then the communication is a preliminary negotiation. statement that may indicate a willingness to make an offer is not in itself an offer offeror must demonstrate an intent to enter into a contract, not merely a willingness to enter into a negotiation

voluntary assumption of risk

If the buyer discovers a defect in the goods that may cause injury and nevertheless proceeds to make use of them, they will not be permitted to recover damages from the seller for the loss or injuries caused by such use

Buyer's examination or refusal to examine (and implied warranties)

If the buyer inspects the goods before entering into the contract, implied warranties do not apply to defects that are apparent on examination No implied warranty on defects that an examination ought to have revealed when the buyer has refused to examine the goods

stipulated provisions in the offer

If the offer specifies a means of communication to be used by the offeree, then the acceptance must conform to that specification Rule that an acceptance is effective when dispatched or sent does not apply in cases in which the offer provides that the acceptance must be received by the offeror (effective moment here is when the offeror receives the acceptance)

sherrod v kidd (duration of offers)

Kid bit my dog Went to arbitration Arbitration renders $16,000 award for kid who was bit Family accepted the offer for $25,000 Arbitration is binding Original offer was terminated When the arbitrator rendered a new decision of $16,000... the offer expired Settlement on the courthouse steps

statute of repose

Laws limit the period for which a manufacturer is liable for injury caused by a defective product Typically 6 to 12 years After the time period has elapsed, a manufacturer ceases to be liable for such harm

promisory estoppel

Legal equivalent of a hail mary in football (doesnt usually work, last minute try, sometimes works) Definition: doctrine enforcing some non-contractual promises Requirements: The promise made under circumstances that should lead the promisor reasonably to expect that the promise would induce the promisee to take definite and substantial action, and the promisee does take such action Remedy: Court will enforce the promise to the extent necessary to avoid unjustice Example: 'In the interest of fairness and justice, I ask that you enforce this contract BECAUSE i relied on the promise

subsequent alteration

Liability exists only if the product reaches the user or consumer without substantial change in the condition in which it was sold

merchant sellers (& liability)

Liability is imposed only upon a person who is in the business of selling the product involved Does not apply to an occasional seller Strict liability also applies to the manufacturer of a component that is used in a larger product if the manufacturer of the finished product has made no essential change in the component

unreasonably dangerous

Liability only applies if the defective product is unreasonably dangerous to the user or consumer Unreasonably dangerous product is one that contains a danger beyond that which would be contemplated by the ordinary consumer who purchases it with common knowledge of its characteristics Example: Not whisky, but whisky gasoline Not tobacco, but tobacco with marijuana Not butter, but butter with poisonous fish oil in it the threats are beyonf their intended purpose

Implied Warranty of Merchantability

Merchant seller: makes an imterm-15plied warranty of merchantability of goods that are of the kind in which they deal Provides that the goods are reasonably fit for the ORDINARY purposes for which they are used, pass without objection in the trade under the contract description, and are of fair, average quality

Strict liability in tort (merchant sellers)

Merchant sellers are liable for personal injuries and for property damage that result from selling a product in a defective condition, unreasonably dangerous to the consumer, even though the seller has exercised all possible care in the preparation and sale of their product Focus on the product, not the conduct of the manufacturer

Requirement of a contract

Mutual Assent: parties to a contract must manifest by words or conduct that they have agreed to enter into a contract - offer and acceptance Consideration: each party must intentionally exchange a legal benefit or incur a legal detriment as an inducement to the other party to make a return exchange Legality of Object: purpose of a contract must not be criminal, tortious, or againts public policy Capacity: parties must have contractural capacity

promissory estoppel w/ irrevocable offer

Noncontractual promise may be enforced when it is made under circumstances that should lead the promisor reasonably to expect that the promise will induce the promisee to take action in reliance on it

Manufacturing defect (or production defect)

Occurs when the product is not properly made It fails to meet its own manufacturing specifications Ex: Samsung phone batteries not properly made; blew up

Duration of offers

Offer confers upon the offeree a power of acceptance, which continues until the offer terminates Ways in which an offer may terminated other tha by acceptance (offers can only be terminated BEFORE acceptance): -Lapse of time -Revocation -Rejection -Counteroffer -Death or incompetency of the offeror or offeree -Destruction of the subject matter to which the offer relates -Subsequent illegality of the type of contract the offer proposes

offer

Offer is a definite undertaking or proposal made by one person to another indicating a willingness to enter into a contract Offeror: person making the proposal Offerree: person to whom the proposal is made When it is received the offer confers on the offeree the power to create a contract by acceptance, which is an expression of the offeree's willingness to comply with the terms of the offer Outstanding offer creates no rights or duties until it is accepted

effective moment

Offer, a revocation, a rejection, and a counteroffer are effecitve when they are received Acceptance is generally effective upon dispatch -Mailbox rule-- even sitting in the mailbox Unless the offer specifically provides otherwise, the offeree uses an unauthorized means of communication, or the acceptance follows a prior rejection

Silence as acceptance

Offeree is generally under no legal duty to reply to an offer Silence or inaction does not indicate acceptance of the offer By custom, usage, or course of dealing, however, the offeree's silence or inaction may operate as an acceptance, and a contract is formed

communication w/ offer

Offeree must know about the offer Offeror must communicate the offer in an intended manner --Communication must be made or authorized by the offeror Offer need not be communicated by words --Conduct from which a reasonable person may infer a proposal in return for either an act or a promise amounts to an offer Offer may be made to the general public --No person can accept such an offer until and unless they know that the offer exists

Revocation

Offeror generally may cancel or revoke an offer at any time prior to its acceptanc Notice may be given by any means of communication and effectively terminates the offer when received by the offeree Offer made to the general public is revoked only by giving the revocation publicity equivalent to that given to the offer Notice of revocation may be communicated indirectly to the offeree through reliable information from a third person that the offeror has disposed of the property they have offered for sale or has otherwise placed himself in a position indicating an unwillingness or inability to perform the promise contained in the offer

lapse of time

Offeror may specify the time within which the offer is to be accepted (Unless otherwise terminated, the offer remains open for the specified time ---Upon the expiration of that time, the offer no longer ecists and cannot be accepted ---Any purported acceptance of an expired offer will serve only as a NEW OFFER) If the offer does not state the time within which the offeree may accept, the offer will terminate after a reasonable time ---Determining a reasonable time is a question of fact, depending on the nature of the contract proposed, the usages of business, and other circumstances of the case

unilateral contract

Only one of the parties has made a promise Results from the exchange of a promise either for performing an act or from refraining from doing an act

option contracts

Option is a contract by which the offeror is bound to hold open an offer for a specified period of time Must comply with all of the requirements of a contract, including the offeree's giving of consideration to the offeror

express and implied contracts

Parties to a contract may indicate their assent either in words or by conduct implying such willingness Express contract: parties must manifest assent in words (oral or in writing) Implied in Fact Contract: contract formed by conduct Both contracts are equally enforceable

Defective Condition (Plaintiff proof)

Plaintiff must prove a defective condition in the product Plaintiff must show that, at the tine that they were injured, the condition of the product was not substantially changed from the condition in which the manufacturer or seller sold it

promise versus breach definitions

Promise manifests or demonstrates the intention to act or to refrain from acting in a specified manner Breach is a failure to properly perform the agreement

Rejection

Rejection of an offer is a manifestation by the offeree of their unwillingness to accept Offeree is at liberty to accept or reject the offer as they see fit Communicated rejection terminates the power of acceptance Rejection may consist of express language or may be implied by language or conduct

article 2 of the Unifform commercial code (UCC)

Sale of personal property (goods) Sale consists of the transfer of title to goods from seller to buyer for a price Present sales and contracts to sell goods at a future time Goods are tangible personal property

Description, sample, and model

Seller can create an express warranty by USE OF A DESCRIPTION of the goods that becomes a part of the basis of the bargain. --(warrants that the goods shall conform to description.) When a SAMPLE or model is a part of the basis of the bargain, the seller expressly warrants that the goods sold shall conform to the sample or model. -Sample is a good that is actually drawn from the bulk of goods that is the subject matter of the sale. -Model is offered for inspection when the subject matter is not at hand; it is not drawn from the bulk.

plaintiff's conduct (& seller defense)

Seller cannot defend a strict liability lawsuit on the basis of a plaintiff's negligent failure to discover a defect or to guard against its possibility In comparative negligence states, damages may be apportioned

Failure to warn

Seller is under a duty to warn of a product's possible danger, to provide adequate directions for its safe use, and to package the product safely Duty to give a warning arises from a foreseeable danger of physical harm that could result from the normal or probable use of the product from the likelihood that, unless warned, the user or consumer would not ordinarily be aware of such danger or hazard Cannot escape liability with a warning if the product could have been made or designed safer in a cost-effective manner (2 cents a cup is fine... but if $2, consumer price would go up a lot)

Steinberg V chicaago medical school

Student sues for breach of contact because he had really good background and thought he was denied because of his family's income: They thought they would not donate Legal subject matter - yes Everyone has capacity - yes Mutual assent - offer was $15 from applicant- they reviewed it — so yes They did offer something of value- $15, and the school performed a service They do have a binding contract... When you put out there "this is how we will review applications" ... express warranty They dont have on there that they consider their family's income Applicant won!!!

T/F sellers are not required to warranty goods

TRUE

Definiteness

Terms of a contract, all of which are usually contained in the offer, must be clear enough to provide a court with a reasonable basis for determining the existence of a breach and for giving an appropriate remedy Where the courts have intended to form a contract, the courts will attempt to find a basis for granting a remedy The more terms that the parties leave open, the less likely it is that they intended to form a contract

authorized means

Where the language in the offer or the circumstances do not otherwise indicate, an offer to make a contract shall be construed as authorizing acceptance in any reasonable manner. Authorized means is usually any reasonable means of communication.

irrevocable offers of Unilateral contract

Where the offer contemplates a unilateral contract - promise for an act- injustice to the offeree may result if revocation is permitted after the offeree has started to perform the act required in the offer and has substantially but not completely accomplished it (--If offerer does not know of the offeree's performance and has no adequate means of learning of it within a reasonable time, the offeree must exercise reasonable diligence to notify the offeror of the performance)

Belden, Inc. v. American Electronic Components, Inc.

Wires start breaking when supplier changes insulation in wall.. No longer reaches requirements of quality controls Breach of warranty that they will reach requirement of quality controls Course of dealing: businesses working together time and time again, the same quality the same standards are expected each time... CREATES A WARRANTY.... CREATES EXPECTIATIONS

Open Terms

With respect to agreements for the sale of goods, the UCC provides standards by which the courts may determine omitted terms, provided the parties intended to enter into a biding contract output Offer for the purchase or sale of goods may leave open particulars of performance to be specified by one of the parties Any such specification must be made in good faith and within limits set by commercial reasonableness

lien

a claim on property by another for payment of debt

when can a warranty of title be excluded by a disclaimer

by specific language or certain circumstances

executed contracts

contract that has been fully carried out by all of the applicable parties

executory contract

contracts that are partially or not entirely performed by one or more of the parties

warranty title

created by existence of a sale "think ownership" Title conveyed is good and its transferable, and Goods are subject to no security interest or other lien of which the buyer did not know at the time of contracting

Warranties

creates a duty on the part of the seller to ensure that the goods that they sell will conform to certain qualities, characteristics, or conditions

product liability

deaths , injuries, and property damage from consumer product incidents cost the Unites States more than $800 billion annually - U.S Consumer Product Safety Commission Test your products to ensure that they are safe and properly designed Include proper warning labels and instructions

voidable contract

defective, but the law permits one or more of the parties to avoid the legal duties the contract creates if contract is voided, both parties no longer have legal duties under the agreement ex: when u enter into a contract with a minor the minor gets power and can choose to void it but adults are bound

when can an implied warranty of fitness for a particular purpose be excluded with a disclaimer

disclaimer must be in writing and conspicuous

void contract

does not meet all of the required elements of a binding contract -no contract =no legal effect

both output and requirements contracts are enforceable by the application of an objective standard based upon the ______

good faith (acting with honesty and integrity) of both parties -ex: if your michelin tires, you have to make roughly the same amount as you have in the past

material terms

include the parties, subject matter, price, quantity, quality, and time of performance.... Quantity is most important to UCC

ads may constitute an offer if

it contains a definite promise of something in exchange for something else and confers a power of acceptance on a specified person or class of persons

valid contract

meeets all of the requirements of a binding contract

misuse or abuse of the product

occurs when the injured party knows, or should know, that they are using the product in a manner the seller did not contemplate Misuse or abuse must not be foreseeable by the seller If foreseeable, seller must take measures to guard against it ex: Tide pods- once tide finds out that ppl are using products in different way (eating it)... have to put warning labels ex: remove child before washing shirt label

buyer may ____ acceptance of goods but either way ______

reject/revoke buyer may recover damages: personal injury, damage to property and economic loss

statute of frauds

some contracts in order to be enforceable must be in the expressed WRITTEN form to be valid (most oral agreements are binding and enforceable)

merchant seller

store or seller than routinely sellst that type of product Ex: firestone tires is merchant for tires, not cereal Ex: Walamrt merchant for everything When you buy from merchant you get warranty automatically!!!

tort reform

the cap More than half of the states have limited the punitive damages that a plaintiff can collect in a product liability lawsuit -defects can only occur during manufacturing

when can an implied warranty of merchantibility be excluded or modified by a disclaimer

the language of disclaimer or modification must mention MERCHANTIBILITY and in, the case of a writing, be conspicuous

general ads are not offers bc

they dont contain a promise and they leave unexpressed many terms that would be necessary to the making of a contract

intent

to have legal effect, an offer must manifest an intent to inter into a contract intent of an offer is determined objectively from the words or conduct of the parties -- based upon what a reasonable person in the other party's position would have believed -beware of jokes, excited utterances, and invitations for offers

common law

what contracts are primarily governed by (state) its everything outside the scope of UCC (Employment contracts service contracts, insurance contracts, contracts involving real property, and contracts for the sale of intangible such as patents and copyrights)