Business Law Part 1

Browse-wrap License (software)

appears on website without requiring consumer to take an affirmative action like clicking "Agree." To be enforceable, must be conspicuous.

Nominal Damages

are a token sum, such as $1, given to a plaintiff for a technical breach of contract that does not cause any actual loss.

quantum meruit

"As much as he deserves"—the damages awarded in a quasi-contract case.

Bilateral executory accord

"I promise to discharge the debt you owe me upon delivery of your black mare if you promise to deliver the horse to me within a reasonable time."

Accord and satisfaction

"I promise to discharge the debt you owe me upon delivery of your black mare if you promise to deliver the horse to me within a reasonable time." What if the horse was delivered and accepted?

Letters of intent

-Not a valid offer-A letter that describes negotiation progress-Don't create any legal obligation

Mutual Mistake

= All parties misunderstands and thus Rescindable

Unenforceable Contract

A contract exists, but it cannot be enforced because of a legal defense. ex: contract is not written and should be

UCC Requires a Writing for the Sale of Goods of $500 or more

A contract for the sale of goods worth $500 or more is not enforceable unless there is some writing, signed by the defendant, indicating that the parties reached an agreement. •Specially manufactured goofs exception: •a seller orally agrees to manufacture a good for a buyer it is a contract as long as the seller specifically manufactured that product for that buyer. •Ex: Millie orders shirts for her sorority that is pink w her sorority letters on it for $1000 (>500). They then change their mind, but half of the shirts are already printed. Can she cancel order? No, she is responsible for the half that is already printed.

Compensatory or Specific Performance

A contracted to sell B a building for $1M. The contract required B to pay the entire amount at closing. A refused to sell the building at closing. B sued A. To what relief is B entitled?

Injunction

A court order that requires a person to do something or stop doing something.

Definite terms of the offer that are Communicated

A requirement of an offer is that it has to be communicated to the offeree -ex: Zach lost his dog fluffy and micah saves him and returns the dog, he then walks home and sees the flyer for the lost dog and a reward, micah cannot go back and ask for the money.

What if you do not comply with the Statute of Frauds?

A sales contract that does not satisfy the statute of frauds cannot be enforced in court (even though the parties may have a valid agreement, the SOF is a defense to enforcement). However, since the oral contract itself is not unlawful, it may be voluntarily performed by the parties.

Ambiguity under the UCC

A writing intended by the parties as a final expression of their agreement may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement, but may be explained by Course of Dealing or Usage of Trade or Course of Performance Example If the parties had ten previous agreements and payment was always made on the 30th day following delivery, that conduct could be used to interpret the meaning of a clause "payment due in 30 days" when the start of the 30 days is not specifically agreed to in the contract.

True

An offeror can continue to make offers to others within a given time period as long as the offeree has not accepted the offer

No, the Builder would not be able to sue Dev Corp. for the additional $2M since the Builder had a preexisting duty to build the building for $10M.

Builder contracts to build a 50 story building that includes a rooftop pool for Dev Corp. for $10M. Builder later tells Dev Corp. that he will not build the building for less than $12M. Since Dev Corp. does not have time to find a new builder before winter, Dev Corp. agrees to pay Builder the $12M. If Dev Corp. only pays Builder $10M, can Builder sue for breach of contract?

Valid

All necessary elements are present making the contract binding and enforceable.

good faith

All parties must perform their obligations under the code in ______

injunction.

An order forcing someone to do something, or refrain from doing something, is an

True

Article 2 does not displace what the parties have agreed to or other substantive law (such as consumer protection)

Discharge by Mutual Agreement

Both agree the contract was not up to par

True

Consideration can be in the Form of a Benefit Conferred or a Detriment Suffered

Output contract

Garden Supply Co. agrees to purchase all of the patio benches that Carpenter builds. This is an example of which of the following?

Past Consideration

Generally, a benefit conferred by the promisee in the past is no consideration for a promise that is made by the promisor in the present. ex: •Christian is Brtiney Spear's life coach and personal assistance - wants to work for Miley - Britney wants to thank him and says I will buy you a Tesla. When he waits for it, it doesn't come. Can he argue? No

Consideration is Found Where One Party Promises to do Something or Refrains from Doing Something

I will give you $10,000 if you refrain from smoking and drinking until you are 21. •Couldn't enforce it b/c she does not have a legal right to drink or smoke. •Marijuana - could she make contract to get paid if did not smoke? - yes if she is legally allowed to smoke in that state (even tho not federally legalized)

Danny

I, Danny, will pay you, Stephen, twenty dollars to wash my car who is the offeror?

SOF applies to Agreements that Cannot be Performed in 1 Year

If a Contract could be performed in 1 year then it does NOT have to be in writing. Ex. You can have off every Friday as long as you work here à Does not have to be in writing Ex. An employment contract for 3 years. •Malone goes to Millie and tells her I'll pay you $100500 for taking care of me for the rest of my life - need to be in writing ? - no /bc Millie could die tomorrow

True

The UCC treats transactions between merchants differently than transactions with non-merchants. -Merchants are subject to different standards and rules because they have special knowledge of the relevant commercial practices, and often need to have greater flexibility and speed in their transactions.

True

In the case of a merchant, good faith means observing reasonable commercial standards of fair dealing in the trade

No

Is a house a good under the UCC?

No because a reasonable person outside that situation using an objective standard would realize that malone was just angry and he didnt mean it.

Malone was driving a red corvet around the drillfield and he got to a crosswalk and it stalled out, so he got out and said i will sell this piece of shit to the first person who give me $10, Joe says heres 10? Did malone sell the car to joe?

Agreement

Meeting of the Minds Offer Acceptance

Restatement 2nd of Contracts

Not directly binding in any state but is persuasive

Uniform Commercial Code (UCC)

Not federal or state law! Article 2- Applies to the sale of goods

Disclaiming and Limiting Warranties

Oral Express Warranties can be disclaimed in a written disclaimer, but a Written Express Warranty in a sales contract cannot be contradicted by a disclaimer. Implied Warranty of Merchantability can be disclaimed if the word "merchantability" is mentioned and such disclaimer is conspicuous. Implied Warranty of Fitness for a Particular Purpose can be disclaimed through clear and conspicuous language. "As is" - All Implied warranties

Statute of Limitations in VA

Oral contracts = 3 years Contracts for the Sale of Goods under Article 2 of the UCC = 4 years Written contracts (non-UCC) = 5 years

Bilateral Contract

Parties exchange a promise for another promise any sales agreement, buyer agrees to pay in exchange for the product

Concurrent Condition

Parties must perform their respective duties simultaneously Ex. Buyer promises to only pay for the goods when they are delivered

No, if both parties agreed and it was not made in bad faith.

Tosan formed a K with Lukas, where Tosan would sell 5,000 tons of coal at $20 a ton. Before the coal was sold, price jumped per ton. Tosan asked Lukas if he would pay $25 per ton instead of the $20 previously contracted for. If Lukas agrees to pay $25 in order to get the coal shipped, can Lukas claim he is not contractually bound to the new amount because of lack of consideration?

Express Contract

The parties to a contract explicitly state all of the important terms to the contract •Stating what everyone is bringing to the table ex: Offer to sell bike for $100, buyer agrees to pay that price

True

To determine whether there was a bargained-for exchange, ask, "did the offeree make its promise or tender its performance in response to the offer?"

Modification Exception to the Preexisting Duty Rule

Under Common Law additional consideration is needed to modify a contract. Under the UCC, no new consideration is needed to modify a previous contract. However, both parties must agree and act in good faith when they modify the contract.

Discharge by Material Breach

You don't have to perform, if rachel breaches the contract

agreement

a mutual assent of parties ex: . Mike and Lauren going on a date are mutually assenting to go.

Enforceable Contract

a valid contract that can be enforced because there are no preexisting legal defenses.

True

contract law depends on state laws (every state law is different)

Permanent Injunction

final award by the court. Stop doing something pernmaently Restraining orders

warranty

is a contractual assurance that goods will meet certain standards.

Consideration

means that there must be bargaining that leads to an exchange between the parties.

Preliminary Injunction

prohibiting a party from doing something during the lawsuit. Ex: lawsuit brought against a plant, the plaintiffs in the environmental say that the plant is polluting the rivers and ponds around the area, and requests that the plant should be shut down.

Strict Performance

requires one to perform their obligations EXACTLY with NO deviation from the contract terms Time is of the essence (contracts) What if substantial performance is impossible, then strict performance. Ex: we are going to buy widgets from Rachel on noon on Oct 12, time is of the essence. It she delivers widgets at 12:30 breach of contract as it was under strict performance. Court does not like Strict performance contracts because life happens.

Defenses to Contract Formation

that make a contract "unenforceable" Capacity Legality Lack of Mutual Assent Form of Contract

usury laws

the maximum amount you can charge an entrance (for entering a contract)

Merchants under the UCC

(1) one who deals in a specific good or set of goods on a regular basis (e.g. manufacturer, wholesaler, retailer), or (2) one who holds themselves out as having specialized knowledge of goods (e.g. banks), or (3) someone who employs a merchant as their agent (e.g. boat broker) ex: A car dealership selling a car; A car salesman selling his own car to an individual when he represents his knowledge about the car

Minors

-Age of majority -Contracts entered into between a minor and an adult are voidable by the minor and binding on the adult -Minors cannot avoid contracts that: Are for necessities Are set by statutes (Ex. Insurance, Student loans)

UCC and its Treatment of an Acceptance with Contradictory Terms

-Applies to contracts between merchants -Ways to treat contradictory terms: "Knockout rule" = Contradictory terms will cancel each other out and the UCC would fill in the gaps -Offeror's terms govern -Offeree's terms govern ex: •Holly's company emails Chris' manufacturing facility - we need 1000 widgets and attached invoice w everything included. Chris then sends back w invoice without looking at the fine print.

Revocability of Firm Offers

-Applies to only those contracts for the sale of goods (UCC) where the offeror is a Merchant. -No consideration is paid by the offeree, rather the Merchant Offeror gives express assurance that the offer will be held open in a writing signed by the Merchant Offeror. -If no time period is stated in the Firm Offer, then it is held open for a reasonable time period, which is not to exceed 3 months. **If they give us a word in good faith then they have to keep that offer. ex: rain check

Termination by Operation of Law

-Death or mental incapacity of the Offeror terminates the offer. -Offeree does not have to know of the death or incapacity for the offer to terminate. -Does not revoke an option contract created before the incapacity Destruction of the subject matter terminates the offer. ex: •If Malone makes offer to Micah, and he dies, can she still accept offer? - No •If the option contract was created, then it will still be held up when you die.

Auctions

-Placing an item up for auction is not an offer - it is merely a request for an offer-The bids are the offers -When the hammer falls the auctioneer has accepted the offer -If hammer doesn't fall, offer is not accepted and can be rescinded Auction with Reserve- minimum price in auction Auction without Reserve- will be sold regardless of price ex: •If you are selling the item - you are the offeree, the auction is the agent, if you are bidding on an item you are offeror

Exculpatory Clause

-is a contractual provision that attempts to release one party from liability in the event the other party is injured. -"I agree to hold ______ and its employees harmless in the event that I am injured..." Generally, such clauses are unenforceable when they attempt to exclude: -Intentional or Gross Negligence (ordinary negligence may be ok) -Activities in the public interest (waivers of liability for medical treatment, public transportation, and other essential services) -Where the parties have unequal bargaining power Unless such clause is clearly written and readily visible (not buried in page 27 of a contract) •Liability waiver allows someone to essentially waive away negligence

Elements of an offer

1) Offeror must intend to enter into a present bargain -The offeror's words must be enough to convince a reasonable person (if they were the offeree) that an offer to enter the present contract had been extended. E.g.: "I'll pay you fifteen dollars to wash my car next Monday" vs. "I'd pay you to wash my car sometime, if I am in the mood." 2) definite terms of the offer must be communicated to the Offeree

Express Warranty is created in 3 ways:

1. By affirmation of fact (representation) or promise -Distinguish from the sellers Opinion and Puffery (Can the statement be proven true; Seller has greater experience; Defects are not obvious) Ex. 0 to 60 in 7 seconds; highest grade of commercial steel 2. By a description of the goods Oral or written (labels, brochures, tags, etc.) 3. By a sample or model

3 elements of a gift

1. Donor intends to transfer ownership of the property to the donee immediately 2. Donor delivers the property to the donee -Inter vivos gifts = made during ones life; irrevocable -Gift causa mortis = made in contemplation of impending death; is revocable anytime before person dies 3. Donee accepts the property

Statute of Limitations for Breach of a Warranty

4 years from time of delivery of the good Parties can contract for a shorter period of time, but no less than 1 year UCC requires that the buyer of goods notify the seller of defects within a reasonable time to give the seller time to cure the defects

Satisfaction

= Debtor pays and Creditor discharges original claim.

Accord

= Debtor promises to make a payment which the Creditor promises to accept

Click-wrap License (software)

= presents the consumer with the terms and conditions for use of the license on their computer screen and requires the consumer to click "Agree" before such software can be used. Generally enforceable

Fraudulent/Intentional Misrepresentation

= purposely misleading another party. Results in Rescission, possibly damages. Ex. Concealment of material facts (Zach wants to buy Millie's car that actually has more miles on them than he thought b/c Millie tampered w/ the odometer)

Undue Influence

= where a party in a dominant position interferes with a subservient party's ability to make their own decision

C (The CISG is an international treaty that applies to international sale of goods contracts between businesses in different countries. The US and Russia have each ratified the CISG, which means that the CISG is the applicable default body of law unless the parties have agreed to apply a different body of law through a choice-of-law clause. The choice-of-language clause only serves to select the language of the agreement. It does not specify what substantive law will govern a transaction. Much of international law is described as "soft law" meaning it is not legally binding but is still legally persuasive. "Hard law" refers to legally binding rules that are enforceable usually provided by treaties. As a means of comparison, the CISG is technically hard law for its signatory countries.)

A Russian supply company and a US distribution company enter into a contract regarding the sale of tea. The agreement contains a choice-of-language clause where the parties have agreed that English will be the official language of the contract. Each of the parties are members of nations that have ratified the United Nations Convention on Contracts for the International Sale of Goods (CISG). What is the correct default body of law to apply in the event of a dispute? a. International "soft law." b. Russian contract law. c. CISG principles unless the parties provided terms in their contract that address what is being disputed. d. Uniform Commercial Code.

True

A bargain results in one party gets a benefit and the other suffers a detriment.

Statute of Frauds (MY LEGS)

A contract must be in writing and signed if it falls within the Statute of Frauds Agreements made in the consideration of marriage Agreements that cannot be performed within one year An interest in land Agreements made by the executor of an estate Sale of goods for $500 or more Specially manufactured goods Acting as a surety

Since the breach is immaterial in relation to the value of the total contract, the homeowner must pay for and accept the house. The contractor must pay damages for the repair or replacement of the fixtures. She doesn't have pay to builder the full contract price

A contractor has just completed a work on a large house. Upon inspection, the homeowner finds that cheap water fixture were used throughout the house, although she explicitly required an expensive brand. Accordingly, she refuses to pay for or accept the home, attempting to void the contract. Can she?

Exceptions to the Parol Evidence Rule

A court will permit parol evidence if it determines that a written contract is: Incomplete, Ambiguous, Fraud, Misrepresentation or Duress was present, or the existence of a Condition Precedent ("I am not liable to perform my promise unless____.") Obvious clerical errors

Hybrid Contract

A homeowner contracts for the purchase and installation of a home security system. The homeowner is paying for the equipment as well as the seller's expertise and installation of the system. In case of a dispute, the court will have to examine whether the sales or the service element of the contract predominates.

Mitigation

A party may not recover for damages that could be avoided with reasonable efforts. Ex: Floodplain protection

Invitation to Bargain (Solicitation of Offers)

A person making an Invitation to Bargain does not intend to be bound as soon as it is accepted by the person to whom the statement is addressed. •It's all negotiation

Preexisting Duty

A promise to do something the promisor is already obligated to do is not consideration. ex: John offers a $10,000 reward for the recovery of his kidnapped daughter. Jane, a police officer assigned to the case recovers John's daughter. •Can jane demand the reward? No, b/c she is on duty officer who was assigned to the case. If she wasn't assigned to the case, from a diff state, etc. then maybe

Liquidated Damages

A provision stating in advance how much a party must pay if it breaches. Exclusive remedy. A court will generally enforce a liquidated damages clause if : (1) at the time of creating the contract it was very difficult to estimate actual damages, and (2) the liquidated amount is reasonable.

Predominant Factor Test

A totality of the circumstances test that asks whether the purpose of the contract is primarily for goods or services. Factors: -What is the language of the contract -The nature of the business of the supplier -Reasons the parties entered into the contract (what exactly have they bargained to receive) -Cost involved in contract (i.e. goods vs. services)

Mailbox Rule

Acceptance is generally effective upon Dispatch. Ex. Placing letter of acceptance in the mail. Offeror can protect himself by placing in the offer that, he must receive offeree's acceptance by a certain date or else the acceptance is not effective. -Revocation is generally effective upon receipt. Exception: Rejection is sent before an Acceptance ex: Holly wants to sell Chris car. She puts her offer in the letter, puts it in the mailbox. When Chris gets that letter, when does he accept it? He accepts it when he dispatches that letter into the mail drop box. •If mail is not delivered for the next 3-5 days. What if she makes the same offer to Malone, and then got acceptance. Holly can say "acceptance is only accepted upon my receipt of your acceptance letter. •If Chris says no thanks I don't want your car, drops rejection in the mailbox - rejection effective when Holly receives it •If he wakes up the next day and decides he wants the car after all, he needs to somehow get his acceptance to Holly before his rejection.

Termination

An Offeree cannot accept an offer that has been terminated. Termination of an offer occurs by: Revocation Rejection Expiration Operation of Law

Contract

An agreement between two or more persons that is enforceable ex: lease, terms and conditions of sale, job offer & acceptance, prenuptial, postnuptial agreements

requirements contract (In an output contract, a party agrees to buy all of a particular good that the selling party produces. Here, Garden Supply Co. has agreed to purchase all of the patio benches that Carpenter builds. In a requirements contract, a party agrees to buy all of a particular good that it requires from only the other party for the duration of the contract. In either an output contract or requirements contract, the parties are expected to act in good faith. This means that a buyer in a requirements contract cannot order twice the amount the seller has reason to expect from the buyer previously. Additionally, a seller in an output contract acts in bad faith when they try to increase production to take advantage of a buyer who has agreed to buy all the seller puts out (e.g. doubling seller's production capacity). Open UCC terms are terms that can be left open because the UCC provides for how to deal with these terms. Definite common law terms are terms that must be included in an offer under common law.)

An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires.

Accord and Satisfaction

An agreement to settle an unliquidated debt for less than the sum claimed by the creditor. -Original debt is discharged by Accord and Satisfaction. ex: •Christian sells horse to Holly. Holly says I don't have money can I pay you with my car? He agrees - accord

Executed Contract

An agreement where both parties have fulfilled all of their requirements under the contract

executory contract

An agreement where one or more of the parties has not fulfilled their obligations under the contract Ex: Paying for tutor at the start of the month, tutor is obligated to tutor after payment

SOF applies to an Executor of an Estate

An executor promise to use their own funds to pay a debt of the deceased must be in writing. Ex. I will pay you even though my fathers estate does not cover the debt

Consequential Damages (Expectation Interest remedy)

An injured party may recover such damages from the (defendant) only if the breaching party was aware of or should have foreseen them at the time the contract was formed. Speedy Trucking Co. contracts to deliver parts to Arc Manufacturing's plant without knowing that Arc is shut down and unable to operate because they are waiting for the parts. Will Speedy liable for consequential damages? o they didnt know

Payment for the Goods

An oral contract may be enforced if the buyer has made full payment. Wayne orders 500 plain black baseball caps at a price of $8 each from Pamela. The order was taken over the telephone and Wayne emphasized urgency. Pamela immediately shipped the 120 hats she had on hand and assured Wayne the remainder would be finished over the next two weeks. Wayne received the 120 hats and immediately distributed them at a charity event. Before the remaining hats were delivered, Pamela demanded payment but Wayne refused because the contract was oral. In the above Pamela and Wayne scenario, if the circumstances were changed so that Pamela agreed to ship only if Wayne sent payment, then Pamela, upon accepting the payment, would be required to perform the contract for the amount of payment received.

Admissions

An oral contract may be enforced if the party against whom enforcement is sought admits in court proceedings that a contract for sale was made. Discovery: depositions; interrogatories ex:•Franco enters oral agreement with cindy for purchase of bikes - due to supply chain issues, cindy wants out of the contract bc wants higher price - franco sues but she says cannot enforce oral agreements - if she admits under oath that she remembers they had that conversation to sell this many bikes for this price - then can sue. If she does not say under oath or found in discovery - no case

Receipt and Acceptance

An oral sales contract may be enforced if it can by shown that the goods were delivered by the seller and were both received and accepted by the buyer. If only part of the goods had been received and accepted, the contract may be enforced only insofar as it relates to those goods received and accepted.

Andy should assert a statute of frauds defense (Of the given answer choices, the statute of frauds defense is the best answer because this oral contract involved an interest in land. Without any written agreement, the parties failed to comply with the statute of frauds and the agreement is not enforceable. However, Andy could also argue there was no mutual assent. Promissory estoppel is not something for Andy to assert. Rather, a court would likely apply promissory estoppel to make the agreement enforceable if Andy had assured Mark that the statute of frauds did not apply to their agreement. A party admission is also not something for Andy to assert. Rather, a party admission would make the agreement enforceable if Andy admitted that he told Mark that Mark could select whichever 10 acres he chose. If Andy asserts the statute of frauds defense, he would not likely have to perform according to Mark's interpretation of the agreement.)

Andy and Mark are best friends. While toasting s'mores by a campfire during an annual camping trip, Andy tells Mark that he will sell 10 acres of pasture land to him for $5,000 per acre. Mark accepts Andy's offer. Mark later chooses the 10 acres that he wants and attempts to pay Andy for the property. Andy tells Mark that this deal was only for a specific 10 acres, not Mark's choice of the acreage. How should Andy proceed if Mark sues Andy for breach of contract regarding the property?

No, because Anna is not legally allowed to drink alcohol at 18. (Legal value must be present for a contract to be enforceable. Legal value is present where a party promises to do something, does something, or refrains from doing something that they were not already obligated to do. Anna did not have the legal right to drink since she is only 18, therefore she is not promising anything of legal value. However, if Anna had agreed to refrain from drinking when she was 21, her promise would be of legal value since she has the legal right to drink at 21 and is giving up something she has a legal right to do. Even if Anna doesn't drink alcohol, as long as she has the legal right to do so, promising not to exercise that right constitutes legally valuable consideration. The courts do not care about how much is being exchange (i.e. adequacy) just that the parties are exchanging something (i.e. sufficiency of consideration).)

Anna, an 18-year-old freshman in college, promises her parents that she will not drink any alcohol her first semester in exchange for her parents promise to buy her a car. Is this an enforceable contract?

Parol Evidence Rule

Any written or oral words outside the "four corners" of the written contract. Applies to both Common Law Contracts and the UCC Where two parties make an Integrated contract, neither party may use Parol Evidence to contradict, vary or add to its terms. Integrated Contract = A writing that the parties intend as the final, complete expression of their agreement. Ex. "This is a complete and integrated contract between the parties. The parties acknowledge that they have not relied on any representation, assertion, guarantee, warranty, or other assurance, except those set out in this Agreement." Rebuttable presumption of Integration

Revocability of Option Contracts

Applies to Common Law and the UCC (when the offeror is a Non-merchant) Offeror cannot revoke an offer from which the offeree has paid some consideration to hold the offer open for a period of time (if not for a stated period of time then a reasonable time period). •if Malone wants to buy Micah's thermos, she sells for $300, he gives her $5 and creates an options contract. •In the real world, where do we see options contracts? - Real estate,

True

At common law, a counteroffer = a rejection. It becomes a new offer aimed at the original offeror, who becomes the counter

UCC and its Treatment of an Acceptance with Additional Terms

Between Non-Merchants - Additional terms become proposals for inclusion into the contract Between Merchants - Additional (not different) terms become part of the contract UNLESS -Offeror's offer limits its acceptance to the terms of the offer -Additional terms materially alter the contract (even if such terms are materially altering, the court will still uphold a contract, just not with the materially altering terms) -Offeror objects within a reasonable time

No, said the North Carolina Supreme Court. The court held that boat repairing is in the public interest and that it is against public policy for a company in that business to use an exculpatory clause to escape liability for its own negligence. The clause was void and Brockwell won. Note that while most states would extend public policy to cover auto repairs, not all states would include boat repairs.

Brockwell left his boat to be repaired at Lake Gaston Sales. The boat contained electronic equipment and other personal items. Brockwell signed a form stating that Lake Gaston had no responsibility for any loss to any property in or on the boat. Brockwell's electronic equipment was stolen and other personal items were damaged, and he sued. Is the exculpatory clause enforceable

UCC

Buyer's remedy for a sellers breach: Buyer will be awarded the difference between the original contract and her cover (replacement) price (he had to go out there to buys widgets from Rachel for 50,000 more. instead of Nicole because she couldn't. Compensatory damage: $50,000 Seller's remedy for a buyers breach: Seller will be awarded the difference between the original contract price and the price she was able to obtain in the open market.

Parol Evidence Example

Carl agrees in writing to sell Betty a car for $1,000. Betty argues that Carl told her that she would only need to pay Carl $800. The parol evidence rule would generally prevent Betty from testifying to this conversation because the testimony ($800) would directly contradict the written contract's terms ($1,000).

Yes (GE made a "firm offer," governed by UCC §2‑205. When a merchant signs a written firm offer, the offer may not be revoked within that period or three months, whichever is less. Here the offer was for three months, so it is irrevocable.)

Consolidated Edison Co. of New York (Con Ed) sought bids from General Electric Co. (GE) and others to supply it with two huge transformers. Con Ed required that the bids be held open for 90 days. GE submitted a written bid and included a clause holding the bid open for 90 days. During that period, Con Ed accepted GE's bid, but GE refused to honor it. Is there a contract?

D (When contractors ask for bids from subcontractors, they are not making offers. Instead, the submitted bids are traditionally offers to perform the proposed contract according to the terms advertised by the contractor. In practice, subcontractors may have to fill out a provided bid form that states all of these terms. If a subcontractor's bid deviates from the terms advertised (e.g. price conditional on something or language that bidder reserves right to negotiate the contract afterwards), the offer is viewed as non-responsive and not accepted. If a general or prime contractor is themselves bidding on a project and they rely upon a subcontractor's bid, the subcontractor's bid (i.e. offer) may be deemed automatically accepted once the general or prime contractor is awarded the contract. In some instances, a general or prime contractor must give notice to a subcontractor they are relying upon their bids and a subcontractor can remove their bid from consideration (i.e. revoke) up until that time. The rules governing bids depends upon the state and the facts of each case. Here, it is likely the court would consider Oops LLC's communication to Contractor as an offer and not an acceptance.

Contractor recently accepted a job and is searching for subcontractors to complete the work. Contractor emails subcontractors with information regarding the project and detailing the work for which she would like completed. Oops LLC, a subcontractor, views this letter as an offer, and emails Contractor intending to do the job for a reasonable price. Oops LLC immediately rented equipment to do the job before Contractor was able to notify them they did not receive the contract. Oops LLC then sues Contractor for breach of contract. Who is likely to prevail in this suit? a. Oops LLC would prevail because Contractor failed to explicitly state their email was not an offer. b. Oops LLC would if Contractor failed to inform Oops LLC within a reasonably time they did not receive the contract. c. Oops LLC would prevail because Contractor's initial communication was an offer in which Oops LLC accepted. d. Contractor would prevail because Contractor's email to Oops LLC was not an offer. e. Contractor would prevail because the industry considers Contractor to be the dominant party.

No because Potter's email was a counter-offer which Cozy Café never accepted. (otter's email is a counter-offer regardless of whether this transaction involved the sale of goods or services. A counter-offer is a rejection of the original offer and is a new separate and distinct offer. Cozy Café did not accept Potter's counter-offer because a party's silence cannot constitute an acceptance. Cozy Café is under no obligation to respond to Potter's email but such would be practically advisable. This is not an option contract, which is an enforceable promise to keep an offer open.)

Cozy Café emails Potter and offers to pay $5 per mug. Potter emails Cozy Café back and says she will do it for $6 a mug and will have 50 ready by the end of the month unless I hear from you otherwise. Did Cozy Café and Potter reach an agreement?

UCC

Definite terms may be determined after the offer is accepted -Price, place of delivery, time ofdelivery, and time of payment are handled by the code, but quantity of goods is not covered automatically.

Expectation Interest (remedy)

Designed to put the injured party (plaintiff) in the position she would have been in had both sides fully performed their obligations. The court tries to give the injured party what he would have received if the contract had not been breached.

Reliance Damages

Designed to put the injured party in the position he would have been in had the parties never entered into a contract. Nicole is shipping widgets to Ryan, the widgets have to be refridgerated, and Ryan rents a refrigattor warehouse. The widget does not get delivered for two weeks later (delay). Nicole's delay can make Ryan say he was relying on the delivery of the widgets, so therefore Nicole needs to pay me for the rent of the two weeks,

Restitution Damages

Designed to return to the injured party a benefit that he has conferred on the other party, which would be unjust to leave with that party. When a court orders restitution, it orders the defendant to give up its gains to the claimant. Compensatory damages will be measured by the loss that B has suffered as a result of A breaching the contract. Restitution will be measured by the benefit that B has conferred upon A. Ex. Suing foreclosure rescue scammers Ex: A dispute arises after Nicole has dug the hole for the pool, very expensive project, Ryan wants to cancel the contract, but Ryan needs to pay her for the work she has done.

True

Discharge by Operation of Law Ex: pandemic

Terms of Use from Websites

Does NOT protect the User. They are constantly changing (but changes cannot be made unilaterally by company Ex. IOS updates have to be agreed to) As soon as you hit Accept, a Contract is formed. Ex. Twitters Terms of Use; Facebook Terms of Use; LinkedIn Terms of Use For Facebook - you give Facebook the right to use any content you post (broad IP License!) What about minors?!?!? Smart businesses require Users to pass through ToU to get to site or content. (visible and catches everyone)

Discharge by Performance

Doing what one agreed to do (Fully performed); or Being ready, willing and able to perform (tender performance: ready and willing to perform)

This case creates an issue of substantial performance. The court held that the low garage ceiling was a minor problem and would not defeat substantial performance. However, the cracked beams were very serious and might require major reconstruction. The water collecting in the patio could seep under the house and destroy the foundation. The freezing pipes posed a danger of bursting. The contractor had failed to substantially perform and was not entitled to his contract price. He was owed only the value of work completed, if any.

Evans built a house for Sandra Dyer, but the house had some problems. The garage ceiling was too low. Load-bearing beams in the "great room" cracked and appeared to be steadily weakening. The patio did not drain properly. Pipes froze. Evans wanted the money promised for the job, but Dyer refused to pay. House was unliveable.

True

Example Materially Altering Terms: -Clauses limiting/negating standard warranties -Clauses guaranteeing set delivery in trade where fluctuation Clause reserving seller's right to cancel contract on late payment -Clause increases monetary price far beyond reasonable levels Example non-altering terms -Clause providing reasonable interest for late payments -Clause setting reasonable time for complaints -Clause fixing standard interest rates -Clauses altering labeling, distributor address and shipping costs, etc.

SOF applies to Agreements for Land

Exception: Full Performance by the Seller Ex. Seller orally agrees to sell and delivers deed---> courts will require Buyer to perform Exception: Part Performance by the Buyer The buyer of land may be able to enforce an oral contract if she paid part of the price and either entered the land or made improvements to it Ex. Buyer paid 10% of purchase price

Price Quotes

Generally not an offer, but an invitation to bargain (solicitation of offers). ex: Corky Co. sends Be Cool Winery a catalog of specialty corks and their prices like they do every year to their regular customers. Be Cool Winery orders 10,000 at the quoted price in the cataloge. •Be cool winery are the offeror when they place their order, corky co is offeree e. ralph orders 1,000 yards of fabric, quoted in a catalog at $50/yard. Ralph makes the offer, but the fabric company can decline to sell at $50, or at any price for that matter

Promissory Estoppel [consideration is lacking]

If a promisor makes an oral promise that should reasonably cause the promisee to rely on it, and the promisee does rely, the promisee may be able to enforce the promise. (Justifiable reliance to ones detriment) Reliance has to have been Foreseeable and an Injustice would be done to not enforce the promise Ex. Accept an oral offer of a job in CA cindy sends portfolio to magazines, people magazine responds - wants to employ her for 3 years, pay 100K, help move, but she has to be there by Monday - cindy agreed - cindy goes sells everything, moves to Austin - gets there and they so oh nevermind - can she sue? - no because can't do 3 year contract in 1 year.

Mental Incapacity

If ones mental capacity is so deficient that he is incapable of understanding the nature and significance of a contract and may affirm or disaffirm when lucid.

Mirror Image Rule (Common Law)

If the offeree seeks to vary the offer either by addition, deletion or substitution of even the smallest change there is no acceptance, but a counteroffer/rejection. On Oct. 10, Sara offers to sell an office building to John for $1M if they can close by Nov. 1. John accepts Sara's offer, but in his written acceptance states that closing should occur on Dec. 1. •John is making a counteroffer, which acts as rejection for the other offer

Common Law

If within SOF definite terms need to be written down EX: time, place of delivery, price

Legality

Illegal consideration or subject matter renders a contract void and unenforceable -Contracts that are illegal by statute Ex. Usury; Price-fixing agreements contrary to antitrust laws; Bribes State required licensing (if a party does not have a required license [i.e. contractors, chauffeurs, etc] then the other party does not have to fulfill their side of the bargain [i.e. payment] -Contracts that violate public policy *Restraints on trade *Exculpatory clauses *Unconscionable contracts ex: •If Luke sold Christina weed but it was actually oregano - can't sue him b/c selling weed is illegal

Yes, because Building Co. has not committed themselves to doing anything and therefore no consideration will be deemed to have been exchanged. Elliot could renounce its own promise, or refuse any and all orders from Building Co. for "want of consideration."

In August, Building Co. negotiated with Elliot Steel for the purchase of prefabricated steel girders. The written agreement calls upon Elliot to sell such products at $800 per unit for so many units as Building Co. elects to order during the months of September and October. Is this Illusory?

Issues related to an Offeror's intent to enter into a bargain

Invitations to Bargain Price Quotes Letters of Intent Advertisements

Anticipatory Breach

Is committed by one party making it unmistakably clear that he will not honor the contract Before the time of the performance, one can breach the contract Right thing to do

Specific Performance

Is when the court forces the parties to perform their original contractual obligations, but only for those contracts that involve the sale of land or some other asset that is unique. Ex. A contracts to buy a rare painting from B. B decides to keep the painting. A does not want money, wants the painting itself. Can A ask the court for specific performance? Yes.

Likely by arguing the contract was unconscionable. (This is an example of an unconscionable contract because of the inequality of bargaining power between the parties combined with the limited time to review the contract. Plants-R-Us likely has a large team of corporate lawyers who drafted the contract in their favor. Ivy would not be able to sufficiently review the contract in the time provided. There is no suggestion of a lack of mutual assent.)

Ivy Growers is a small, family-owned plant nursery that grows a wide variety of plants. Plants-R-Us is a worldwide company that acquires plants from smaller growers and sells them to large box stores. Plants-R-Us approached Ivy Growers with an offer to pay Ivy to become one of its suppliers. Plants-R-Us presented a contract to Ivy, but said the offer was only good for one hour. Ivy initially accepts by signing the contract, but later discovers they cannot meet the terms in the contract. Can Ivy raise a defense to contract enforceability if they are sued by Plants-R-Us for breach of contract?

Executory, Bilateral, Express agreement

Jeff made the following offer to Shandra in an email: "I will pay you $5000 if you agree to remodel my office. Please let me know by tomorrow." The next day Shandra called Jeff and said that she would undertake the remodel. At this point, the contract is an:

Additional Terms between Non-Merchants Example

Joe tells Susan, "I'll sell you my Schwinn bicycle for $150," and Susan responds, "I'll take it. The tire pump is included." Susan has added an additional term in her acceptance. At this point, Joe and Susan have a contract for the sale of the bicycle for $150. Whether the tire pump is included is up to Joe; Joe is free to accept Susan's proposal or reject it, but his decision does not control whether or not a contract exists. There is a contract because Susan has made a definite statement of acceptance.

Oral contract for services that can be completed within 1 year •Enforceable b/c within 18 months - •Contract for services - not sale of goods - > $500 does not apply

John hired Laura to restore John's 1969 Ford Mustang for $1000. The terms of their oral agreement provided that Laura was to complete the work within 18 months.

John promised to mow Spencer's lawn to induce Spencer to promise in return to pay John $50 a week. Spencer responded to John's inducement by promising to pay John $50 per week if John mows Spencer's lawn.

John offers to mow Spencer's lawn once a week for $50, beginning May 1 and ending November 1. Spencer accepts John's offer. Where is the bargained-for exchange?

John = offers Emily = offeree- accepts offer when cashes the check or write John to state she accepts. If she doesn't do either of these she doesn't agree to the contract

John writes Emily and asks if she would be interested in selling an office building she owns in Manhattan for $1M. Emily responds in a signed letter to John, that she is looking for a figure closer to $2M. John sends a check for $2M. Is this an invitation to bargain?

Jon's parents will likely argue that the liability waiver is invalid because Jon, a minor, lacked capacity to enter into such an agreement.

Jon, who is 14 years old, decides to go ziplining with his 18-year-old cousins without telling his parents. Jon personally signs a liability waiver, without his parents knowing, releasing the ziplining company from liability for any injury resulting from Jon's participation in ziplining activities. Jon breaks his arm while ziplining. How should the ziplining company expect Jon's parents to proceed?

Common Law: No, because there was no new consideration; therefore, the parties have a pre-existing duty under the original contract. Simon is only responsible for the original contract price. UCC: The modification would be binding if Simon agreed and it was made in good faith. Unless there was a signed agreement requiring all modifications to be in writing and signed by both parties.

Julia constructs some custom machinery for Simon's factory. One week before delivery, Julia says her expences are too high and needs more money than what was originally agreed to. Simon agrees orally to an increase in price. If Simon refuses to pay Julia the increased amount, can Julia sue Simon for breach of contract?

No, because Kate's promise did not induce John to make his promise to move Kate's furniture. There is no bargained for exchange of promises. (There is no consideration b/c one is not contingent on the other - there is a lack of bargaining)

Kate promises to lend a valuable book to her friend John. One month later, before Kate has acted on her promise, John promises to help her in moving some furniture. Is there consideration?

b (Contracts can be modified by agreement of the parties and generally requires some additional consideration for the modification. Here, Tenant is paying an extra $25 per month to modify the contract. Contracts can be modified by operation of law because of events, such as unforeseen circumstances or destruction of the subject matter of the contract. Here, adopting a dog would not modify the agreement through operation of law. However, if the apartment burned down, then such could bring about modification by operation of law because the subject matter of the contract was destroyed. The modification is required to be in writing because it involves real estate and falls under the statute of frauds. However, whether the contract was in writing is not determinative of whether the contract can be modified by operation of law.)

Landlord entered into a contract with Tenant to allow Tenant to lease an apartment for 12 months for a specified price as long as Tenant does not have any pets. After living in the space for 4 months, Landlord agrees to let Tenant have a dog in the apartment if Tennant agrees to pay $25 more per month to lease an apartment. Is this a valid modification of the original contract under common law? a. Yes. The contract was modified by operation of law when Tenant adopted the dog. b. Yes. Contracts can be modified after formation by agreement of the parties. c. No. Contracts cannot be modified after formation by agreement of the parties. d. No. The modification must have been in writing to qualify as modification by operation of law.

Acceptance

Manifestation of assent to the offer. Offeror can specify the means of acceptance and its timeliness Authorized means of acceptance Silence is not acceptance. Ex. "If I do not hear from you by tomorrow, I will assume you accepted my offer." ex: •If Cosmo sends Zack magazines even tho Zack never got the subscription, then sends bills, he does not have to pay them

Incidental Damages (Expectation Interest remedy)

Minor costs incurred when the injured party responds to the breach. Ex. Flying to California to interview other singers; Storing nonconforming goods; Time spent looking for other parts

E (An offeror's words or conduct must show an intention by the offeror to be immediately bound by an offeree's acceptance. The intention of an offeror is determined by what a reasonable person standing in the shoes of the offeree would have understood the offeror's words and conduct to indicate. A court will not attempt to read the mind of the offeror to discover their subjective intent; instead, a court will focus upon how their words or actions would be interpreted by a reasonable third party (i.e. objective intent). If the facts stated Miriam later refused to go through with the sale because she was only joking, Barbara would have to show that a reasonable person would not have thought the offer was joke. Miriam could also raise the defense that she lacked capacity to enter into any agreement because she was intoxicated. However, the defense of intoxication is heavily scrutinized by courts so unless Miriam was exhibiting signs of intoxication, courts may be hesitant to release her from her obligations in the agreement. Barbara would not have to sign the contract in order to enforce it against another party who does sign the contract. Regardless, the question is only asking whether an offer was made and not whether the contract can be enforced.)

Miriam meets a former classmate Barbara at a bar. Miriam is planning to move and promises to sell her condo, which is valued at $1 million, to Jane for $100,000. Miriam writes the deal on a napkin and hands it to Barbara. Did Miriam make a valid offer? A. Unlikely, unless Barbara signed the napkin. B. Likely yes, since the napkin serves as a letter of intent. C. Unlikely, since a reasonable person would not have thought that anything written on a napkin at a bar could serve as a contract. D. Likely if Barbara reasonably believed Miriam intended to make an offer. E. Likely, yes since a reasonable person would view Miriam's words and actions as an intention to be bound by Barbara's acceptance.

What MUST be in writing under common law

Must be Signed by the defendant (party resisting enforcement of the contract), and Ex. Typed name, Electronic signature, X Must state with Reasonable Certainty the: name of each party, the subject matter of the agreement, and all of the essential terms (time for performance, quantity, price) of the promise. No Vague or Incomplete Agreements Ex. Employment contract

Offeror's intent to enter into a present bargain

Must enter into a"present bargain" even though the duties of performance may be performed in the future Ex. John says to Laura "next week, I will offer you an opportunity to buy my truck for $10,000" Ex. On October 5, John says to Laura, "If you will promise to pay me $10,000 on Nov. 1, I will let you use my beach cottage for 3 months starting on Dec. 1"

Discharge by Mutual Agreement

Mutual Rescission: cancel the contract Accord and Satisfaction: if we strike an aaccord, an alternative performance may be accepted I cant fill these widgets for you Rachel, but I can bring in Ryan to fill the widget order Novation of a party

Yes, because Nagel Anticipatorily Breached by telling Fields that he would not deliver the goods by the contracted date

Nagel and Fields entered into a contract in which Nagel was obligated to deliver certain goods by September 10. On September 3, Nagel told Fields that he had no intention of delivering the goods on or prior to September 10. May Fields successfully sue Nagel?

Void

No contract exists or it is without legal obligations. Ex. Illegal contract for Mike to sell Lauren marijuana would be void

Specially Manufactured Goods

No writing is required when the goods are specially made for the buyer and are of such an unusual nature that they are not suitable for sale in the ordinary course of the seller's business. Seller must have made a substantial beginning in manufacturing the goods or in procuring the goods if a distributor is the seller. Ex. Baseball hats, T-shirts

Meeting of the Minds

Objective Standard -Looks at the contract from the standpoint of a reasonable person when interpreting the formation of a contract. The subjective influences driving either party are ignored. Understanding -Are the terms understandable? Would a reasonable person understand the terms agreed to? -Intent -How would a reasonable person interpret the words and conduct of each party? Would a reasonable person conclude that both intended to enter into a contract, based on their actions? Legal Policy aims to ensure that no party is held to a contract that they did not know, or should not have reasonably known, existed

Output contract

Obligates the seller to sell all of his output to the buyer, who agrees to accept it.

Discharge by Material Breach

Occurs when one of the parties, without an excuse, fails to even substantially perform their obligations in an agreement.

Rejection

Offer terminates once the Offeree rejects the offer. ONLY THE OFFEREE CAN REJECT AN OFFER

Revocation

Offeror can revoke an offer at any time before it has been accepted. Revocation is effective once the Offeree receives it or is published. ex: I'll sell you an acre of land for $1 million, and gives until tomorrow to decided. Zack comes in and says I want to buy it. Micah comes in tomorrow and says she wants to buy it. Does Malone have to follow through with Micah? - No Revocation of offers extended to the public: Reasonable efforts" to communicate to the same audience that the offer was extended to. Revocation by Indirect Communication Ex. Offeree, before attempting to accept Offeror's offer to sell Blackacre, was informed by a reliable source that Offeror had sold Blackacre to another.

Not a contract (it is a good first of all and additional terms is not a mirror image of the offer so it is a rejection to the offer)

Offeror emails an offer to Offeree ordering 1000 widgets. Offeree emails her acceptance stating her intention of shipping the widgets and includes an additional term setting a standard interest rate for any late payments for the widgets. What happens if this was a contract under Common Law?

Non-merchants= No (The additional term becomes a proposal) Merchants = Becomes part of the contract except if the additional terms are considered "materially altering"

Offeror emails an offer to Offeree ordering 1000 widgets. Offeree emails her acceptance stating her intention of shipping the widgets and includes an additional term setting a standard interest rate for any late payments for the widgets. What would be the outcome if the Offeror and Offeree are non-merchants? Merchants?

Knockout Rule Example

Offeror's purchase order has a clause stating that the parties agree to arbitrate "all disputes arising out of or relating to" the contract and the Offeree's invoice may agree to arbitrate only disputes "involving breach of warranty claims." Since the terms vary, neither clause becomes part of the contract.

No, Dan can still offer to sell the saw to others within the 3 day time period as long as Jim hasn't yet accepted.An offeror can continue to make offers to others within a given time period as long as the offeree has yet to accept. If Jim accepted, then Dan's offer to Sam would terminate by operation of law. If Jim wanted to prevent Dan from offering the saw to others, then Jim should have created an option contract. An option contract is only created when the offeror promises not to revoke the offer. An option contract requires additional consideration to be enforceable and are commonly used in real estate transactions.

On Monday, Dan offers to sell a saw online to Jim for $120. Dan states that the offer is "good for 3 days." On Tuesday, Dan offers to sell the same saw to Sam for $120. Is Dan required to refrain from making offers to other parties, like Sam, until Jim's three-day decision period is over?

Unilateral Mistake

One party misunderstands General Rule - Does not trigger Rescission UNLESS: Other party knew of the mistake Mistake was merely a clerical error Mistake was so serious that the contract is made unconscionable

Intoxicated Persons

One who is so intoxicated as not to understand the nature and significance of his promise may be held to have made only a voidable promise if the other party had reason to know of the intoxication. •Courts take a very careful look and often will look at: did the other party know the party was being intoxicated? Luke is turning 21 - hes gonna go to sharkeys - then tots - Luke is not doing well - he goes and gets TWO rails - Christina sees him and drives him home. She sees his nice bike and gives him a natty light for it. The next day she comes back for the bike - his defense is that he lacked capacity to enter into a contract. (Interesting* if you act sober can't argue this no matter how drunk you are)

A claim for punitive damages, based on Liberty Mutual's bad faith in discouraging Parkinson from filing a claim for money to which she was entitled. The court awarded her $2,000 for uninsured motorist coverage and $40,000 punitive damages

Parkinson was injured in an auto accident by a driver who had no insurance. Parkinson filed a claim with her insurer, Liberty Mutual, for $2,000 under her "uninsured motorist" coverage. Liberty Mutual told her that if she sought that money, her premiums would go "sky high," so Parkinson dropped the claim. Later, after she had spoken with an attorney, Parkinson sued. What additional claim was her attorney likely to make?

Open terms under the UCC

Price - Unless specified by the parties, a Reasonable Price at the time of delivery Quantity (Requirement and Output) - Must be done in Good Faith and cannot be disproportionate to prior dealings Delivery - Unless otherwise specified at the sellers place of business; known location Time - For delivery, shipment, or any other action is at a Reasonable Time Payment - Unless otherwise specified, payment is due at the time and place buyer is to receive the goods; can inspect

He should, and did, seek restitution. Expectation damages will be unavailable since Racicky is bankrupt. Specific performance is impossible because Racicky does not own the land. Reformation is irrelevant. Simon gets restitution, since he has conferred a benefit on Racicky and it would be unjust for the defendant to keep it.

Racicky was in the process of buying 320 acres of ranch land. While that sale was being negotiated, Racicky signed a contract to sell the land to Simon. Simon paid $144,000, the full price of the land. But Racicky then went bankrupt, before he could complete the purchase of the land, let alone its sale. Which remedy should Simon seek: expectation, restitution, specific performance, or reformation?

Confirmation Memorandum Example

Ralph, a retailer, has orally agreed to purchase 1,000 pounds of T-bone steak from Jane, a beef wholesaler, for $2.79 per pound. Jane sends Ralph a signed memo that reads, "This is to confirm our telephone conversation earlier today. I will sell you 1,000 pounds of T-bone @ $2.79 per pound." This memo can be used by either Ralph or Jane to enforce the contract.

Owner will win since the contract cannot be enforced against him since he never signed the lease agreement.

Retailer negotiated a lease with the Owner of a building in downtown Blacksburg. Retailer drafted a lease accurately reflecting all of the terms of the agreement that included the parties, exact building, condition of the store, dates of the lease and the monthly rent. Retailer signed the lease and sent it to Owner on August 1. On August 20, Owner leased the same building to another tenant for more money. Retailer is suing owner for breach of contract. Who will win?

A (It is possible for parties who are in the process of negotiating terms of a deal to form a contract prior to any final document being drafted and signed. For this to happen, the parties must have manifested an intention (orally or through the exchange of multiple writings) to be bound by all the material terms that would have been included in a final writing. This often occurs by design, so one or both of the parties can begin performing their duties as soon as possible. A court will not enforce any agreement if one of the parties knows or has reason to know the other party views the agreement as incomplete until the parties execute a final written instrument.)

Sabrina had been negotiating the right to license the use of a patented technology owned by Anna. Before they had entered into a final written instrument containing the specifics of the licensure, but after they had agreed upon price and time of the licensure, Anna allowed Sabrina to begin utilizing the technology. Has Sabrina and Anna entered into an agreement? a. Likely, if the parties had reached an agreement on the material terms and manifested an intention to be bound despite the lack of a final written instrument. b. Likely, because this is not a sale but the mere licensure of intellectual property. c. Unlikely, since the parties have not yet signed the contract. d. Unlikely, because the parties have not reached a final agreement. e. Unlikely, because the parties have not agreed upon the specifics of such a licensure.

No

Sara offers to sell her home to Allen for $175K stating, "You may have fifteen days to accept this offer." Allen responds: "I will give you $10 if you will promise to hold that offer open for the next 15 days." Sara accepts the $10 from Allen. Allen has formed an Option Contract. Can Sara will revoke the offer of $175K during the option term?

Yes. In allowing Shandra to try the unit at the store as a model, the clerk would have expected Shandra to rely on the demonstration. A seller who takes advantage of a model warrants that the merchandise sold will be just as good. However, the clerk's statement would be mere puffery.

Shandra, a singer, went to Stereo Shop to purchase recording equipment for her home studio. The sales clerk shows her a $10K unit that records, edits, and makes records. The clerk says that it is "a terrific unit," and encourages Shandra to record a record at the store, which she does and is pleased with the clarity. However, once the unit is set up at Shandra's house, there is frequently static on the recording that requires Shandra to constantly rerecord. Did Stereo Shop breach an express warranty?

Capacity

Some are legally incapable of incurring binding contractual obligations. One who lacked capacity to enter into a contract can assert such as a defense thereby making the contract voidable at their election.

Condition Subsequent

Something must occur after a duty arises Ex. Insurance notice after duty arises with damage to house; Maintaining ones law license Ex: Rachel is under a contract for fire insurance, must be payments after a fire detroys her home.

Condition Precedent

Something must occur before a duty (that obligation to perform) arises Ex. Home inspection; Buyer approved for a mortgage; Painting appraised at $10; 1000 rushing yards Ex: professional football player must have to rush 1000 yards in order to gain $1,000,000 Ex: when someone buys a house that make a conditions like: I don't have to buy your house until a home inspection is complete and until I sell my house. Ex: I will pay you a million dollars for that painted as long as you appraise the painting beforehand to see if it is appraised for $1,000,000

Unlikely because Courts do not usually consider estimates as offers. (If there is no agreement, there is no contract. Estimates, like price quotes and advertisements are generally not considered offers. In fact an estimate is less likely to be considered an offer than an advertisement or price quote. Here, Stan received estimates to do the remodel but such estimates were not offers based upon the given facts. This question does not concern the sale of goods and whether Stan is a merchant is irrelevant.)

Stan wants to remodel his kitchen. He calls around to several contractors and receives several estimates to do the job. Stan received the lowest estimate from Contractor. However, when Stan calls to tell Contractor that he is hired, Contractor's price increases by 25%. Stan sues Contractor for breach of contract. Will Stan prevail?

Common law

State specific case law regarding contracts Pertains to all contracts EXCEPT for the sale of goods

No, if this is a liquidated debt. If there is a good faith dispute as to how much is owed and the creditor does cash the check, the student can rely upon the doctrine of Accord and Satisfaction. (Article 3 of the UCC) Unless the check must be sent to a special office (Ex. Credit card companies) Unless the creditor sends the debtor a check for the amount mistakenly cashed as an accord and satisfaction

Student writes a check for their monthly loan payment on their car. In the memo line, Student writes "payment in full for settlement of the entire loan." Is this an Accord and Satisfaction?

Personal Satisfaction Contracts

Subjective standard: used when assessing the work, involves feelings, taste, or judgment and the contract explicitly demands personal satisfaction Ex. Portrait She Hired Ryan to sculp a bust, and Ryan says he can do it for under 10,000 and then she says but it is up to my discretion and acceptance. Ryan finishes the sculpture and she doesn't like it, ryan will be less likely to be successful. Objective standard: judgment of the work must be reasonable

Goods

Tangible, movable items Does NOT include investment securities, copyrights Includes: Personal property attached to real estate if it can be removed without harm; Minerals or structures severed by seller; Growing crops or timber regardless of who severs them Born or unborn animals Food at a restaurant

No, because Taylor did not intend to transfer ownership immediately and he did not deliver the tickets.

Taylor says to Justin, "You have been a great friend. Im going to give you my tickets to the U2 concert." Is this a gift?

Battle of Forms

The UCC treats the offeree's additional terms to an offer differently than how it treats an offeree's terms that contradict the offeror's offer.

Exceptions to the UCC Requirement of a Writing

The absence of a writing does not always mean that a sales contract is not enforceable. Article 2 provides some exceptions for the enforceability of certain oral contracts: Specially Manufactured Goods Receipt and Acceptance of the Goods Payment was made for the Goods

Consideration is Found in Both Bilateral and Unilateral Contracts

The thing bargained for can be another promise (bilateral) or an action (unilateral) ex: I promise to sell you my book, if you promise to pay me $100. BILATERAL ex: If you cut my grass before it gets dark today, I will pay you $50. Unilateral

Other Ways to Escape the Preexisting Duty Rule as a Debtor

There is any new or different consideration: Debtor paying before the debt is due Debtor paying another at the direction of the creditor Debtor pays in stocks instead of cash

Compensatory Damages (Expectation Interest remedy)

They are the difference between the value of the performance that the plaintiff actually received and the value of the performance he had the right to expect. If no performance is rendered, the damages would be the value of the promised performance. Ex. A agrees to sing at B's concert for $100K. A then changes her mind and backs out of the contract. B then has to pay another singer $150K to replace A. What are B's damages? B's compensatory damages are $50,000 Is A liable to B if the concert's largest sponsor ($25,000) decides not to participate once A refuses to sing? Yes, A becomes liable only if A was aware that the sponser was only there for A. it is a consequence for the breach and compensatory damages may occur

Merchant Exception to the signature requirement

This exception allows merchants to create a Confirmation Memorandum of their oral agreement as written evidence of an agreement. Memorandum is a letter, fax, memo or possibly an email signed by one of the two merchant parties to an oral agreement. This memorandum can be used by either party to enforce the contract. A party must object in writing within 10 days Cindy in CA, franco in NY, hanging out in fl - drinking gin n tonic - strike up deal for 5000 bikes - they go back to CA and NY - cindy sends follow up email - if franco does not respond within reasonable time - then there is existing contract even if franco does not respond

Battle of the Forms (UCC)

Under the UCC, a change in the definite terms of an offer may not = a rejection by an offeree

What must be in a Writing/Record under the UCC

Under the UCC, the formation of a contract can be recognized even though one or more of the terms are left open so long as the parties clearly intend to contract. 2 requirements: Quantity (including subject matter of quantity, Ex. 3 widgets) Signature/Authentication of the defendant (Anything and everything - fingerprint, blood, eye scan, even your own emoji - as long as we can trace it back to that person.)

Implied Warranty of Merchantability

Unless excluded or modified, a warranty that the goods shall be merchantable (goods are fit for their normal purpose) is implied in a contract for their sale, if the seller is a merchant (one who routinely deals in these goods) with respect to goods of that kind. ex: sells a grill, grill should not catch on fire Ex. Manufacturer of scuba equipment ordered hoses from Supplier; Ladder

Wayne Pamela will not get paid for the 380 plain black hats not yet delivered

Wayne orders 500 plain black baseball caps at a price of $8 each from Pamela. The order was taken over the telephone and Wayne emphasized urgency. Pamela immediately shipped the 120 hats she had on hand and assured Wayne the remainder would be finished over the next two weeks. Wayne received the 120 hats and immediately distributed them at a charity event. Before the remaining hats were delivered, Pamela demanded payment but Wayne refused because the contract was oral. Who will win?

d (Duress occurs where a party makes a threat or commits an act that causes another party to enter into a contract. Here, Employee signed the non-compete agreement because Company threatened Employee with a bad reference. Undue influence occurs where a dominant party unfairly takes advantage of another party by persuading or tricking the servient party into entering into a contract that is not in its best interest. Here, Company did not trick Employee. Company expressly threatened Employee with a bad reference.)

When Employee was originally hired, Company did not require Employee to sign a non-compete agreement. Employee has worked for Company for several years, but decides to quit because she did not receive a promotion. Company tells Employee that before she quits, she must sign a non-compete agreement or else Company will not provide a favorable reference for Employee. Employee signs the agreement. This is an example of which of the following? A. Undue influence. Company is tricking Employee into signing a contract that is not in her best interest. b. Duress. However, Employee wouldn't be able to work for a competitor of Company anyway since she had worked for Company for more than one year. c. Undue influence. Company is using its position as Employee's former employer to exert undue influence over her ability to pursue new employment. d. Duress. Employee only signed the contract because she was afraid of Company's threats to provide a bad reference.

Expiration

When an offer specifies a specific time for acceptance, that period is binding. ex: "This offer ends Friday" - if you don't accept the offer by then, the offer terminates;"I need to know by noon tomorrow" -If no specific time period is stated, the offeree has a reasonable time to accept. Look at the subject matter of the contract

Surety Agreements

When one person agrees to pay the debt of another as a favor to that debtor, it is called a collateral promise. Exception: If the promisor makes the guarantee out of self-interest, the statute of frauds does not apply. Ex. Debtor owes money to Creditors A and B, Creditor B orally guarantees that Debtor will pay Creditor A which would enable Debtor to also pay Creditor B à Because Creditor B is acting in self-interest Creditor A can recover from Creditor B

Misrepresentation

Where a party makes an untruthful representation about a material fact of a contract.

Unforeseen Circumstances Exception to the Preexisting Duty Rule

Where an unforeseen circumstance or difficulty makes performance almost impracticable, the court will view the presence of the new more difficult task as being consideration. •Acts as reason to modify or even avoid a contract altogether - ex: covid will act as such provision •A lot of contracts will involve force majeure - unforeseen circumstances

Common law, Restatement 2nd of Contracts, Uniform Commercial Code (UCC)

Where do we get Contract Law?

Quasi-Contract

Where no enforceable contract exists, but court may impose an obligation anyway to prevent injustice. Plaintiff must prove: Plaintiff conferred a benefit on Defendant Plaintiff reasonably expected to be compensated for the benefit Defendant would be unjustly enriched from receiving the benefit

Illusory Promise (ahole rule)

Where one of the parties has not given any consideration and has an unfettered election to perform or not. (Where one party is bound/obligated and the other party is not.) If the party who so makes an illusory promise tries to enforce it, the opposing party can claim "want of consideration" as a defense. -one party is claiming to bring something to the table and then does not ex: Ex: moving company with a clause saying that they can cancel the contract at any time

Additional Work Exception to the Preexisting Duty Rule

Where the promisor agrees to do something above and beyond what he is already obligated to do. Builder offers to construct the rooftop pool out of imported tile from Italy for $500,000 above the originally agreed price of $10M. If Dev Corp. agrees to the extra money, they are obligated to pay Builder because Builder's additional work is valid consideration for Dev Corp.'s promise.

Implied Warranty of Fitness for a Particular Purpose

Where the seller at the time of contracting knows about a particular purpose for which the buyer wants the goods, and knows that the buyer is relying on the seller's skill or judgment there is (unless excluded or modified) an implied warranty that the goods shall be fit for the purpose. Ex. Retailer orders from Manufacturer "300 mountain bikes, for racing."

a (No magic words are needed to make an offer. Even if a communication uses the word "offer," it does not mean an offer is intended. Words or conduct that were deemed offers by a party in the past or are commonly viewed as offers within a particular industry will be viewed as an offer. All of the wrong answer choices invite negotiations and are viewed as preliminary negotiations. Preliminary negotiations usually begin with someone inquiring as to whether another is interested in selling or is willing to enter into negotiations. All back and forth communications between parties prior to an offer being accepted is considered part of preliminary negotiations.)

Which of the following would most likely be considered an offer: a. You can have it for $5,000. b. Could you do $5,000. c. We are asking $5,000. d. I would consider an offer of $5,000. e. I am looking for around $5,000.

Implied Contract

Words and/or conduct of the parties indicate that the parties intend to create an enforceable contract •Their actions or conduct indicate their agreement. Examples: ordering food a restaurant, restaurant is obligated to serve food, customer is obligated to pay

Ownership Rights in Social Media Sites

You can delete info from sites, but most ToU state, that if your shared/posted info is saved by another you lose the right to such info. Arbitration clauses and restrictions for class action in ToU from social media sites are ok - thus far.

Shrink-wrap License (software)

an end user agreement whereby the licensure conditions and terms (for use of license) are deemed accepted by the consumer opens the package. Advisable that consumer should be allowed to see these conditions and terms before purchasing; otherwise may be deemed unenforceable.

Advertisements

are generally not an offer and consequently are only invitations for offers, UNLESS the subject matter is for single or limited acceptance that has been communicated to the public at large. -ex: •A store has a limited quantity that is advertised (like black Friday) - ex. the first ten people through the door get discounted TV - that is an offer. ex: 100 reward for dog Zack loses Luffy; Micah sees Fluffy and saves him, takes him back to Zack. Does he have to pay her reward money? - Yes, that was an offer. ex: if advertisement that have items in stock, you order items, and there are no items in stock can they sue you for breach? - no, because not an offer that was accepted.

Option Contract

gives the offeree the opportunity to to purchase an item by a specific date at a predetermined price at a later date Ex: paying the offeror $10 to hold the contract open

Mistake of Fact

incorrect understanding of a contracts terms at the time the contract is entered.

Hybrid Contracts

involve both the sale of goods and the provision of services ex: . A contract calling for the construction of a house includes both services (skilled labor, design work) and goods (building materials)

statute of frauds

is a legal concept that requires certain types of contracts to be executed in writing. The statute covers contracts for the sale of land, agreements involving goods worth over $500, and contracts lasting one year or more.

Reformation

is a process in which a court will partially "re-write" a contract. Need to fix Ex. Sales of land where the property measurements are not accurate Ryan and Nicole entered into a contract for 1 mil, ryan ends a check for 1000, court adds three zeros back.

Express Warranty

is a statement by the seller relating to the goods quality, capacity or other characteristic that caused the buyer to purchase the goods. Ex. "This exterior paint will not fade for 2 years;" "This cloth is all wool" Ex. "Toyota vehicles last forever"

gift

is a transfer of property from one person (Donor) to another (Donee) without any consideration.

noncompete agreement

is legal and enforceable if it is ancillary to a legitimate bargain. (It must be a part of a larger agreement). Noncompete Agreements that are part of a contract for the sale of a business must be: -Reasonable in time (not too long) -Reasonable geographical area (not an unfairly large amount of area) -For an activity the agreeing party has done before Noncompete Agreements that are part of an employment contract must be: -Essential to the employer (Ex. Trade secrets; Customer lists -Fair to the employee (Ex. Never work for a competitor in this state) -Harmless to the general public

Bargaining

is obligating yourself in some way in order to induce the other party to agree. -You need an exchange of mutual obligations •Both parties have to be bringing something to the table •Bargaining part - my promise has to make •Legal detriment - parties have to be exchanging something of legal value

Unconscionable Contract

is one that a court refuses to enforce because of fundamental unfairness. This unfairness should "shock the conscious of the court." Ex. Contracts that require racial discrimination Two factors the court will look to: One party used its superior power to a contract on a weaker party The weaker party did not fully understand the agreement Adhesion Contracts = form contract that is given by one party to another on a "take it or leave it" basis. (Ex. Contracts given to a consumer who has no ability to negotiate or bargain)

Voidable Contract

is otherwise binding but may be voided at the option of one party. Ex. Fraud, Minor

ent Suffered

is the giving up of a right to do something (forbearance) or doing something one would normally not have done unless they were induced by anothers promise to do something in return. Ex. $ to work on my kitchen Ex. Ill pay you to run a marathon (you have suffered detriment by running a marathon)

remedy

is the method a court uses to compensate an injured party.

True

o When to use common law vs UCC for sales of goods? What law is applicable in hybrid contracts will depend on how the court classifies the contract

Counter-offeror

offeree comes back with an offer

Counter offeree

offeror that is now receiving the counter offer

Unilateral Contract

one party makes a promise, that the other may only accept through performance ex: Lauren tells Mike she will pay him $50 to wash car, he does and asks her to venmo ex: Reward for lost dog -go take the initiative. Somone asks me to wash the car and I just go and do it and ask for the payment.

Complete Performance

parties performed as agreed to What we strive for

Innocent Misrepresentation

party making the untruthful representation believed it to be true. Results in Rescission, but no damages. ex: •Zach sells Malone a zachacre for 1 mill dollars - says it is 100 acres. It is actually 90, but Zach rly thinks it's 100. Malone finds out it's only 90, says I'll pay you 900,000 instead

Negligent Misrepresentation

party making the untruthful representation may have believed it to be true, but a reasonable person in that party's position would have known otherwise. Results in Rescission, possibly damages.

Offeror

person proffering the offer. makes offer

Offeree

person to whom the offer is presented.

Substantial Performance

when one party has performed enough of its contractual obligations to receive full contract price MINUS the value of any defects. An immaterial breach of contract may accompany substantial performance Does not apply if the breaching party intentionally committed this immaterial breach Material breach: worst case scenario

Duress

where a party is forced into an agreement against their will Ex. Extortion, Economic Duress (unless you sign another contract with me, I will not perform under our first contract)

True

•* Exception - if cindy is providing bikes to franco - as many as he requires - typically orders 100, decides to double his order - cindy is not going to be able to hit that quota but she promised to provide him with all he requires - can he sue her? - no b/c she reasonably expected to fill a 100 bike order - she would be acting in bad faith. •Price

True

•Because we give merchants so much freedom for contracts, they have to act in good faith- act w honesty in fact

UCC (Uniform Commercial Code)

•Early on in history there was a concern that even though there are separate states, it would be difficult for businesses to enter contracts across state lines due to the differences in contract laws. So they made the

Price-fixing agreements

•Have to have license to enter into contract, if don't the other party doesn't have to hold up - (ex: Eli rewires Christina's warehouse - asks for payment, she can refuse to pay b/c he doesn't have license. Eli can get sued by the state. If she knew she could also be sued by the state)

True

•Not all agreements are legally binding •Not all contracts have to be in writing to be enforceable

SOF applies to Agreements made in the consideration of Marriage

•Prenuptial agreement •Essentially forecasting for the failure for such an important institution •Both parties have to have legal and other counsel or education on it •Society is built around the marital unit - ex: taxes based on marriage, debates around same-sex marriage How do we structure prenups? •Ex: If marriage ends after 1 year, he gets very little money, or if ends after 5 years gets little money - all depends on the terms of the parties.

READ

•Suretyship •Theres a difference between people being primarily lateral and secondarily lateral in an agreement •Example: you and roommates sign the lease - primarily liable - if not pay lease, landlord will come after everyone who signed. If you are secondarily liable, you are a guarantor - you can't come after them until mario pays. In college towns - parents who are guarantors are primarily liable •Suretyship •If they are a self interested surety then the agreement has to be in writing •Example: Cindy is a farmer - gets loan - bank worried that Cindy can't pay it back - needs someone to act as surety for Cindy - i.e. someone to act as guarantor to confirm Cindy can pay it back - call Malone - he says yes - this does not work because violates oral clause •Exceptions •Let's say same scenario 50,000 dollars - cindy calls Malone and asks for 10,000 - he says sure - bad winter so cindy calls bank again and they call Malone again for surety - they call Malone - he now has personal interest so he can orally agree to be suror. •Let's say cindy starts LLC (single member) - goes to bank to buy trucks for plumbing - needs 10,000 - llc is new no collateral or assets - how will bank cover the risk - they're gonna ask sindy to guarantee the loan - personal assets cannot be touched by bank if LLC goes under - by asking her to guarantee the loan, then they can come after Cindy as individual - happens extremely often.

True

•The most newly revised version of the UCC: •Sets the threshold for $5000 a year - there's fewer and fewer contracts to be enforceable in writing