Term
|
Definition
1: has an enforceable K been formed
2: has the K been performed or has performance been excused
3: what are the remedies for breach |
|
|
Term
| Requirements for a binding K |
|
Definition
| Mutual assent (offer and acceptance), consideration, and lack of valid defenses |
|
|
Term
|
Definition
| the outward appearance of words and actions matter, not secret intentions. Ask whether the offeror displays an objectively serious intent to be bound and look for situations of anger and humor |
|
|
Term
|
Definition
| Common law applies to real estate and services. The UCC Article 2 applies to goods |
|
|
Term
| What happens when a K has elements of both the common law and the UCC |
|
Definition
Rule 1: all or nothing rule; cannot be in two universes at the same time, so the K must fall into one class or another. Exception for divisible or mini Ks
Rule 2: predominant purpose rule: look at the main purpose for entering into the K |
|
|
Term
| Bilateral K v unilateral K |
|
Definition
Bilateral K: return promise is requested
Unilateral K: return act is requested |
|
|
Term
|
Definition
| objective manifestation of a willingness by offeror to enter into agreement that creates power of acceptance in offeree |
|
|
Term
| Offer: Statement is an offer only if: (intent) |
|
Definition
1) person to whom it's communicated could reasonably interpret it as an offer
2) expresses present intent to be legally bound by a K (opinion doesn't count: how much do you think X is worth; Maybe Y; I accept) |
|
|
Term
|
Definition
| offeree must know of the offer in order to accept |
|
|
Term
| Offer: How does an K fail for indefiniteness |
|
Definition
| if the offer is not certain and definite in its terms |
|
|
Term
| Offer: Term requirements under the common law |
|
Definition
| The essential terms (parties, subject matter, price, quantity) must be covered in K |
|
|
Term
| Offer: Term requirements under the UCC |
|
Definition
| K is formed if both parties intend to K and there is a reasonably certain basis for giving the remedy. The UCC fills the gap of silent terms. Generally only need parties, subject and quantity. Don't need price. Don't need a specific quantity if it is an output or requirements K |
|
|
Term
| Offer: Language requirements |
|
Definition
| Offer must contain words of promise, undertaking, or commitment, and be targeted to a number of people who could actually accept. Don't need specific offerree if it is a contest offer/reward offer |
|
|
Term
| Offer: invitation to deal |
|
Definition
| advertisements are only an invitation to receive offers, but may qualify as an offer if sufficiently specific and limit who can accept or if associated with a stated reward. Think: do they give the power of acceptance to the other side |
|
|
Term
|
Definition
Lapse of time
Death/mental incapacity
Destruction/illegality
Constructive revocation
Revocation
Rejection by offeree |
|
|
Term
| Termination of offers: Lapse of time |
|
Definition
| Specified termination date or reasonable period of time if none stated. There can be a revival of the offer by offeror |
|
|
Term
| Termination of offers: death/mental incapacity |
|
Definition
| offer terminates unless offer for option K |
|
|
Term
| Termination of offers: constructive revocation |
|
Definition
| offeree learns that the offeror has taken an action that is absolutely inconsistent with a continuing ability to K |
|
|
Term
| Termination of offers: revocation |
|
Definition
| offer can be revoked any time prior to acceptance, even if it states that it will be open for a specific amount of time. Not effective until communicated. Revocation sent by mail not effective until received. |
|
|
Term
| Termination of offers: rejection by offeree |
|
Definition
Offeree must clearly convey to offeror that he no longer intends to accept the offer.
Mailbox rule: rejection usually effective upon receipt
Counteroffer: acts as rejection of original offer and creates new offer |
|
|
Term
| Limitations on revocation (irrevocable offers) |
|
Definition
Option K
Promissory estoppel
Partial Performance
UCC firm offer rule |
|
|
Term
| Limitations on revocation: option K |
|
Definition
| offeree must generally give consideration for option to be enforceable. Even if option $ goes toward purchase price, it is still an option because it counts as secondary consideration |
|
|
Term
| Limitations on revocation: promissory estoppel |
|
Definition
| if offeree detrimentally relies on offer it may become irrevocable |
|
|
Term
| Limitations on revocation: partial performance |
|
Definition
| cannot revoke once offeree has begun performance, but offeree does not need to complete performance, unless it is a bilateral K |
|
|
Term
| Limitations on revocation: UCC firm offer rule |
|
Definition
1) if offeror is a merchant or any business person, 2) assurances are made that offer will remain open, and 3) authenticated writing that is signed by the merchant
Lasts: for reasonable time but no more than 90 days |
|
|
Term
| Termination of offers: Note |
|
Definition
| May trick you by saying there was an option K or firm offer that has expired and offeror has not terminated it. However, the reasonable amount of time rule will still protect the offer if a reasonable amount of time has not passed. |
|
|
Term
| Termination of general offers |
|
Definition
| revocable only by notice given at least the same level of publicity as the offer. Effective even if potential offeree acts in reliance on the offer, but look out for detrimental reliance |
|
|
Term
|
Definition
objective manifestation by the offeree to be bound by the terms of the offer
Generally: must communicate acceptance to other parties in order for it to be effective
If it is unclear whether offeror wants return promise or performance, law will accept either, so offeree's action will constitute a creation of K |
|
|
Term
|
Definition
Exchange of promises that render both enforceable
Commencement of performance operates as promise to render complete performance |
|
|
Term
|
Definition
Promise to do something by one party in return for act of the other party. Starting to perform is not enough, but will make offer irrevocable for a reasonable period of time to complete performance. Offeree must be aware of offer before acting.
Offeree need only give notice of acceptance if offerer wouldn't learn of requested performance with reasonable certainty and promptness and offeror's duty is discharged if no notice given in that circumstance unless: 1) offeree exercises reasonable diligence to give notice, 2) offeror learns of performance within reasonable time, or 3) offer indicates notice of acceptance is not required. |
|
|
Term
| Acceptance: offer to buy goods for immediate shipment |
|
Definition
Buyer's request that goods be shipped is inviting acceptance by either seller's promise to ship or by prompt shipment of goods.
Nonconforming goods shipped: both an acceptance and a breach, unless seller seasonably notifies buyer that goods are an accommodation (counteroffer) and buyer may accept/reject |
|
|
Term
|
Definition
| Applies only to acceptance of bilateral K. Effective upon posting and not receipt. Does not matter if the acceptance gets lost in the mail because the K is formed when sent |
|
|
Term
| Acceptance: mailbox rule: acceptance following rejecting |
|
Definition
| Mailbox rule does not apply when acceptance is sent following a rejection. First one received will prevail and offeror need not read the communication |
|
|
Term
| Acceptance: mailbox rule: revocation |
|
Definition
|
|
Term
| Acceptance: mailbox rule: irrevocable offer |
|
Definition
| Mailbox rule does not apply. Acceptance must be received by offeror before offer expires |
|
|
Term
| Acceptance: means of acceptance |
|
Definition
| Unless offeror specifies, offeree can accept in any reasonable manner/means |
|
|
Term
| Acceptance: means of acceptance: silence |
|
Definition
| Not acceptance unless offeree has reason to believe offer could be accepted by silence (other party said you could accept by silence and you intended to accept by silence) OR previous dealings made it reasonable to believe that offeree must notify offeror if he does NOT intend to accept OR unilateral rewards offer or contests |
|
|
Term
| Acceptance: means of acceptance: implied-in-fact Ks |
|
Definition
| can communicate acceptance without writing or speaking (ex: walking into salon to get a haircut, sitting down, having them cut hair, etc. This would be an implied-in-fact K) |
|
|
Term
| Counteroffers and mirror-image rule: common law |
|
Definition
| Follows mirror image rule: acceptance must mirror the terms of the offer, so any modification of or addition to the terms act as rejection and a new counteroffer. Conditional acceptance terminates the offer and acts as a new offer from original offeree. |
|
|
Term
| Counteroffers and mirror-image rule: UCC |
|
Definition
| Does NOT follow the mirror-image rule. Acceptance containing additional terms or modifications are generally treated as acceptance. Don't need all parties to be merchants, just need the sale of goods. |
|
|
Term
| Counteroffers and mirror-image rule: UCC: both parties are not merchants |
|
Definition
| Definite and seasonable expression of acceptance or written confirmation that is sent within a reasonable time is acceptance, except when acceptance is expressly condition on assent to new/different terms, then it is treated as proposed additions to the K that must be separately accepted by the offeror |
|
|
Term
| Counteroffers and mirror-image rule: UCC: both parties are merchants |
|
Definition
Battle of the forms:
Additional terms: (last shot rule) are automatically included in the K unless:
1) terms materially alter the original K
2) offer expressly limits acceptance to terms of the offer
3) offeror objects to the new terms within a reasonable time after notice of new terms is received
If one of these exceptions is met, original terms of offer control
Different terms: (knock-out rule) different terms in offer/acceptance nullify each other and the court uses Article 2's gap-filling provisions to patch the holes in the K |
|
|
Term
| Counteroffers and mirror-image rule: confirming memo |
|
Definition
| if there is a verbal K with a confirming memo with additional terms, the confirming memo acts as acceptance; look at mirror-image rule or UCC rule to determine whether the additional terms become a part of the K |
|
|
Term
|
Definition
| To constitute sufficient consideration, must be bargained-for in exchange for the promise, promise must induce the detriment, and detriment must induce the promise. Consideration can be a return promise to do or refrain from doing something, or performance of or refraining from doing some act. |
|
|
Term
| Consideration: FL distinction |
|
Definition
| Florida provides that consideration can be satisfied by either a benefit, legal detriment, or both |
|
|
Term
|
Definition
To distinguish a gift from valid consideration, ask whether the offeree could reasonably believe the intent of offeror was to induce the action. If yes, then there is consideration and the promise is enforceable.
Promissory estoppel: if promisor/donor knows that promise to make a gift will induce substantial reliance by promisee and failure to enforce it would cause substantial injustice, promise is enforceable |
|
|
Term
|
Definition
| Subjective value: benefit to promisor does not need to have economic value; if the promisor wants it, giving of it will constitute adequate consideration. No peppercorn |
|
|
Term
| Consideration: preexisting duty rule |
|
Definition
Common law: does not qualify as consideration unless the promisor gives something in addition to what is owed, or varies preexisting duty in some way.
Exception for third party: third-party promise contingent upon performance of another party's contractual obligation is sufficient consideration. Florida follows this exception. |
|
|
Term
| Consideration: past consideration |
|
Definition
| Modern trend towards enforcing past promises when necessary to prevent injustice, unless promisee intended act to be a gift |
|
|
Term
| Consideration: modification: common law |
|
Definition
| Must be supported by consideration and agreements to modify Ks are enforceable if: 1) rescission of existing K and entering into new K, 2) unforeseen difficulties arise and one party agrees to compensate other party for them, 3) new obligations arise on both sides. |
|
|
Term
| Consideration: modification: UCC |
|
Definition
| Requires only good faith, no consideration is necessary. Modified K must generally satisfy the SOF. Provision prohibiting oral modification is valid and binding but may be waived if neither party has relied on it. |
|
|
Term
| Consideration: accord and satisfaction |
|
Definition
Accord: one party to a K agrees to accept different performance from the other party than what was promised in the existing K. Once the creditor accepts the lesser amount offered by the accord, original K is discharged
Generally, consideration is required for accord to be valid
Satisfaction: performance of the accord agreement and will discharge both the original and accord K. Original K no discharged until satisfaction is complete |
|
|
Term
| Consideration: illusory promises |
|
Definition
| not legally binding because it is vague or promisor can choose whether or not to honor it (ex: I promise to buy X for Y on Z date if I feel l like it on Z; there is no way I can breach) |
|
|
Term
| Consideration: voidable/unenforceable promises |
|
Definition
| can still constitute consideration |
|
|
Term
| Consideration: requirement and output Ks |
|
Definition
Requirements K: buyer agrees to buy all that he requires from X
Output: seller agrees to sell all that she manufactures to Y
There is consideration because promisor suffers legal detriment and there is good faith required under UCC |
|
|
Term
| Consideration: legal claim settlement |
|
Definition
| promise not to bring legal action or assert a claim/defense serves as consideration as long as there is an honest belief in the validity of the claim and a reasonable basis for that belief |
|
|
Term
| Consideration: promises binding without consideration |
|
Definition
Pay a debt barred by SOL
Perform voidable duty
Material benefit rule
Promissory Estoppel |
|
|
Term
| Consideration: promises binding without consideration: pay a debt barred by SOL |
|
Definition
new promise to pay debt after SOL has run is enforceable
FL distinction: in FL, for a promise to pay a debt after SOL has run to be enforceable, it must satisfy the SOF and be in writing and signed by the party to be charged |
|
|
Term
| Consideration: promises binding without consideration: perform voidable duty |
|
Definition
| new promise to perform voidable duty is enforceable if it doesn't suffer from an infirmity rendering it voidable |
|
|
Term
| Consideration: promises binding without consideration: material benefit rule |
|
Definition
| when a party performs an unrequested service for another party, the modern trend permits the performing party to enforce the promise of payment for material benefits received to extent necessary to prevent injustice (unless donative intent) |
|
|
Term
| Consideration: promises binding without consideration: promissory estoppel |
|
Definition
| promise is binding if: 1) promisor should reasonably expect it to induce action on the part of the promisee or a third person, 2) promise does induce such action, and 3) injustice is only avoided by enforcement of the promise |
|
|
Term
| Enforceability: void v. voidable v. unenforceable |
|
Definition
Absence of essential element may render a K void, voidable or unenforceable
void: entire transaction is null as if no K existed
voidable: operates as valid K until/unless one party takes steps to avoid it
unenforceable Ks: valid K that cannot be enforced if one party refuses to carry out its terms |
|
|
Term
|
Definition
| no valid offer, acceptance, or consideration OR no "meeting of minds" due to mistake or misunderstanding, misrepresentation or fraud, undue influence or duress, or lack of capacity |
|
|
Term
| Defenses to formation: mistake: unilateral |
|
Definition
One party is mistaken as to essential element of K, but either party can enforce K on its terms
Mistaken party can void K if he didn't bear risk of mistake and either: 1) mistake would make enforcement of K unconscionable or 2) non-mistaken part failed to disclose or caused the mistake. Must be absence of serious prejudice to other party to rescind K |
|
|
Term
| Defenses to formation: mistake: mutual |
|
Definition
Both parties are mistaken as to an essential element. Must be substantial difference between deal as contemplated and actual deal with no intent by parties to bear risk of that element. K generally voidable by party adversely affected. Neither party can avoid K if reformation available to cure mistake
Reformation: court can reform writing except to extent that rights of third parties who relied on K would be unfairly affected |
|
|
Term
| Defenses to formation: misunderstanding |
|
Definition
Both parties believe they are agreeing to the same material terms, but in fact they agree to different terms. When neither party knows, there is no K if material term is involved. When one party knows, a K is formed based upon meaning of material term as understood by unknowing party. If both parties know terms ambiguous at time of K formation, then no K unless both parties intended same meaning.
Wavier: one party can choose to enforce the K according to the other party's understanding |
|
|
Term
| Defenses to formation: misrepresentation: fraudulent misrepresentation |
|
Definition
1) knowingly, 2) without confidence in the assertion, and 3) when a person making the assertion knows that no basis exists for the assertion (note: does NOT need to be of a material fact)
FL: 1) person makes a false statement concerning a material fact; 2) that the person knows is false; 3) with the intent of inducing another to act on it; and 4) party acting in reliance on representation was injured as a result
FL: recipient may rely on truth of representation, even though its falsity could have been determined had she made an investigation, unless she knows the representation to be false or its falsity is obvious to her |
|
|
Term
| Defenses to formation: misrepresentation: nondisclosure |
|
Definition
| nondisclosure of known fact is tantamount to an assertion that a fact does not exist, if: 1) disclosure is necessary to prevent a previous assertion from being a misrepresentation or fraudulent; 2) disclosure would correct a mistake of the other party as to a basic assumption and the failure to disclose would constitute lack of good faith and fair dealing; 3) disclosure would correct a mistake of the other party as to the contents or effect of a writing evidencing their agreement; or 4) the other party is entitled to know the fact because of a confidential or fiduciary relationship. |
|
|
Term
| Defenses to formation: misrepresentation: effect |
|
Definition
Fraud in the factum (execution): fraudulent misrepresentation prevents party from knowing character/essential term of transaction, so no K is formed and apparent K is void unless reasonable diligence would have revealed K's true terms
Fraud in the inducement: fraudulent misrepresentation is used to induce another to enter into a K; K voidable by adversely affected party if she justifiably relied on the misrepresentation |
|
|
Term
| Defenses to formation: misrepresentation: negligent misrepresentation |
|
Definition
| Renders K voidable by adversely affected party who justifiably relied on material misrepresentation. Requires: 1) misrepresentation of a present fact; 2) that is material; 3) that was justifiably relied on (note: here you DO need a material fact, unlike with fraudulent misrepresentation) |
|
|
Term
| Defenses to formation: misrepresentation: cure of misrepresentation |
|
Definition
| K is not voidable if facts are cured before deceived party has avoided the K |
|
|
Term
| Defenses to formation: misrepresentation: avoidance/reformation for misrepresentation |
|
Definition
| when content/legal effect of K is misrepresented, deceived party can avoid K or reform it to express what was represented |
|
|
Term
| Defenses to formation: undue influence |
|
Definition
defined: unfair persuasion of a party to assent to a K
unfair persuasion: 1) one party justifiably assumes other party is acting in his welfare, or dominant/dependent relationship, or 2) persuasion of one party seriously impairs the free and competent judgment of the other party
confidential relationship: dominant party has the burden of proving K was fair
third party undue influence: victim may void K unless non-victim party to K gave value or materially relied on K in good faith and without knowledge of undue influence
Damages: restitution available |
|
|
Term
| Defenses to formation: duress |
|
Definition
defined: improper threat that deprives party of a meaningful choice
improper threat: 1) threats of criminal or civil action that are made in bad faith; or 2) threat to breach K in violation of good faith and fair dealing
deprivation of meaningful choice: person has no reasonable alternative such that the threat induced his assent
effect on K: K is void when duress is through physical compulsion and voidable in other instances |
|
|
Term
| Defenses to formation: capacity to K |
|
Definition
infancy: under 18: voidable by infant but not by adult (except for reasonable value of necessaries)
mental illness: K is void for one who is adjudicated mentally incompetent, but only voidable if there has been no adjudication
guardianship: K is void for individuals under guardianship (except for reasonable value of necessaries)
intoxication: K is voidable by intoxicated party if she was unable to understand nature/consequences of K and other party knew of intoxication
corporate incapacity: K is voidable when corporation acts ultra vires (beyond one's legal authority) |
|
|
Term
|
Definition
Illegality
Unconscionability
Public Policy |
|
|
Term
| Defenses to enforcement: illegality |
|
Definition
| K is unenforceable if consideration/performance under K is illegal. K is void if it contemplates illegal conduct. If one party is justifiably ignorant of facts making K illegal or lacks illegal purpose he can recover (assuming guilt of other party). Examples: usurious Ks, Ks for commission of a tort or crime, or Ks in restraint of trade |
|
|
Term
| Defenses to enforcement: unconscionability |
|
Definition
K is unconscionable when it is so unfair to one party that no reasonable person in the position of the parties would agree to it
Hidden, complex boilerplate language can be unconscionable, as well as adhesion Ks |
|
|
Term
|
Definition
P confers benefit on a D and the P has a reasonable expectation of compensation and court implies K to prevent unjust enrichment.
Requires: 1) P conferred measurable benefit on D; 2) P acted without gratuitous intent; and 3) unfair to let D retain benefit |
|
|
Term
| Warranties in sale-of-goods Ks (UCC): express |
|
Definition
| any promise/affirmation that is part of the basis of the bargain, unless it is merely the seller's opinion. The use of a sample or model will create a warranty that the goods the buyer is to receive will be like the proffered sample or model. Disclaimers that conflict with the express warranty are ignored. |
|
|
Term
| Warranties in sale-of-goods Ks (UCC): implied warranty of merchantability |
|
Definition
1) implied whenever seller is a merchant, 2) goods must be fit for their ordinary purpose
Warranty can be disclaimed by use of: as is, with all faults, or similar language that can be oral or written |
|
|
Term
| Warranties in sale-of-goods Ks (UCC): implied warranty of fitness for a particular purpose |
|
Definition
implied whenever the seller has reason to know that the buyer has a particular use for the goods and the buyer is relying on the seller's skill to select the goods
Can be disclaimed by general language that must be in writing and be conspicuous
Note: seller does not need to be a merchant |
|
|
Term
|
Definition
Impracticability
Frustration of purpose
Rescission
Release
Destruction/damage to identified goods |
|
|
Term
| Discharge: impracticability |
|
Definition
Available if: 1) performance becomes illegal after K is made, 2) specific subject matter of K is destroyed, 3) performing party to the K dies or becomes incapacitated (for a personal services K), or 4) performance becomes impracticable.
Elements for #4: 1) unforeseeable event has occurred, 2) non-occurrence of event was basic assumption on which K was made; and 3) party seeking discharge is not at fault
Not a defense if a party assumed the risk or if it is only impracticable due to the K not being as profitable
Partial impracticability: if seller is able to deliver some of the goods, they must be apportioned among all of the buyers with whom the seller has contracted, but the buyer may refuse to accept and cancel K
Particular source: if K specifically identifies a source, and source of supply fails, performance is discharged
If, without the fault of either party, the agreed-upon delivery facilities or method of transportation or payment become unavailable or commercially impracticable, any commercially reasonable delivery method may be tendered and must be accepted. |
|
|
Term
| Discharge: frustration of purpose |
|
Definition
applies when: unexpected events arise that destroy one party's purpose in entering into K, even if performance of K is not rendered impossible
Frustrated party entitled to rescind K without paying damages
Unexpected event need not be completely unforeseeable, but must be so severe it's not within assumed risks inherent under the K |
|
|
Term
|
Definition
applies when: cancelling of K so as to restore parties to their positions before K was made. Grounds for rescission must have existed at the time the K was made (think: duress, fraud, mistake, etc.)
Rescission is also possible by mutual agreement of the parties: surrender of rights under the original K is consideration for rescission
Third party beneficiaries: K not discharged by mutual rescission if third-party rights have already vested |
|
|
Term
|
Definition
writing that manifests intent to discharge another party from an existing duty
common law: release must be supported by consideration
UCC: written waiver or renunciation signed/delivered by aggrieved party is enough, do not need consideration |
|
|
Term
| Discharge: destruction/damage to identified goods |
|
Definition
destruction: goods identified when K made are destroyed without fault of either party before risk of loss passes to buyer, then K is avoided, both parties are discharged, and neither party is in breach. If risk of loss has passed to buyer, K is not avoided or buyer can choose to take goods at reduced price
Goods damaged but not destroyed: K avoided or buyer can choose to take goods at reduced price without any other claim against seller |
|
|
Term
| Third-party beneficiary Ks |
|
Definition
when two parties K with the understanding and intent that performance by one of the parties is to be rendered to a third person
Promisor can raise any defenses against third party that he had against original promisee |
|
|
Term
| Third-party beneficiary Ks: intended and incidental beneficiaries |
|
Definition
intended beneficiary: one to whom the promisee wishes to make a gift of the promised performance or to satisfy an obligation to pay money owed by promisee to beneficiary has the right to bring an action on the K
Incidental beneficiary: one who benefits from a K even though there is no contractual intent to benefit that person does not have a right to enforce the K |
|
|
Term
| Third-party beneficiary Ks: vesting of beneficiary's rights |
|
Definition
| Rights of an intended beneficiary vest when the beneficiary: 1) detrimentally relies on the rights created, 2) manifests assent to the K at one of the parties' request, or 3) files lawsuit to enforce the K |
|
|
Term
|
Definition
Not allowed when it materially increases duty or risk of obligor or materially reduces obligor's chance of obtaining performance. Need present intent to transfer the right immediately. If assignment is for consideration, irrevocable. If no consideration, revocable unless there has been performance or reliance. Assignee takes all of the rights of the assignor as the K stands at the time of the assignment, but takes subject to any defenses that could be raised against the assignor. Subsequent assignment of the same rights revokes any prior revocable assignments (unless second assignee had notice).
If K prohibits assignments: assigning party has breached the K but 3rd party can still recover from the guarantor. If K invalidates assignments, then 3rd party cannot recover because there was never a right to assign |
|
|
Term
|
Definition
| Generally allowed, except when other party to K has substantial interest in a specific individual's performance (like personal service K involving special skill) or it is prohibited by the K. When obligations are delegated, delegator is not released from liability, so he is still liable if delegatee doesn't perform, unless there was a novation |
|
|
Term
| Statute of frauds: requirements |
|
Definition
| 1) be in writing, 2) be signed by the party to be charged, 3) contain the essential elements of the deal |
|
|
Term
| Statute of frauds: types of Ks that apply |
|
Definition
Marriage (any agreement in consideration of marriage)
Suretyship (K to answer for debt/duty of another)
One year (K that cannot be performed within one year after K is made)
UCC: when K for sale of goods is at least $500
Real property (interest in property) |
|
|
Term
| Statute of frauds: types of Ks that apply: UCC |
|
Definition
applies when K for the sale of goods is at least $500. The memo must indicate that a K has been made, identify parties, contain a quantity term, and be signed by the party to be charged.
Exceptions: writing not required for: specially manufactured goods, part payment, receipt and acceptance (seller delivers goods accepted by buyer), judicial admission, or failure to object to memo within 10 days when both parties are merchants |
|
|
Term
| Statute of frauds: types of Ks that apply: FL distinctions |
|
Definition
also includes:
1) subscriptions to newspapers, periodicals, other publications;
2) K to charge health care provider any guarantee, warranty, or assurance as to results of any medical, surgical or diagnostic procedure performed by licensed physician, osteopathic physician, chiropractor, podiatrist, or dentist,
3) K satisfying a debt or obligation for less than the full amount
4) prevents a debtor from enforcing a credit agreement (e.g. a loan) against a debtor unless the agreement is in writing and signed by both the debtor and the creditor |
|
|
Term
| Statute of frauds: FL point of law: construction Ks and indemnification |
|
Definition
construction K involving any construction, repair, or demolition of real property or its attached structures between owner and architect, engineer, general contractor, subcontractor, etc. that contains indemnity provision must contain monetary limitation on the extent of the indemnification that bears reasonable commercial relationship to the K. Monetary limitation must not be less than 1M per occurrence, unless parties otherwise agree.
Indemnification claims do not include claims or, or damages from gross negligence, or willful, wanton, or intentional misconduct of the indemnitee, its officers, directors, agents, or employees, or for statutory violation or punitive damages except to the extent statutory violation or punitive damages are caused by or result from acts or omissions of indemnitor or its contractors, etc. |
|
|
Term
|
Definition
| prevents introduction of prior extrinsic evidence that contradicts terms of written K |
|
|
Term
| Parol evidence: total v. partial integration |
|
Definition
total integration: complete expression of all terms of the parties' agreement; parties cannot introduce extrinsic evidence of prior/contemporaneous understandings or negotiations
partial: if writing sets forth only some terms, then parties are permitted to introduce supplementary extrinsic evidence of other terms that are consistent with writing (not contradictory) |
|
|
Term
| Parol evidence: intent of the parties |
|
Definition
common law: four corners rule: can only look to writing itself for intent
second restatement: if an extrinsic term of agreement would naturally be omitted from a writing, then the term can be introduced so long as it isn't contradictory
UCC: assumes written K is only a partial integration and allows any outside terms |
|
|
Term
| Parol evidence: when it isn't applicable |
|
Definition
1) Communications occurring after the execution of the written K
2) Parties are raising an excuse
3) Establishing a defense
4) Proving condition precedent to existence of the K
5) Interpreting/clarifying ambiguity in K (plain meaning v. context)
6) Evidence of subsequent agreements
7) UCC - supplementing even apparently unambiguous terms by evidence of trade usage or course of dealings
For #7: Order goes
1) Express terms
2) Course of performance (sequence of conduct that is relevant to understanding an agreement between the parties if: 1) the agreement involves repeated occasions for performance by a party, and 2) the other party accepts performance without objection and with knowledge of the course of performance. )
3) Course of dealing (sequence of conduct concerning previous transactions between the parties that can reasonably establish a common basis of understanding for interpreting their conduct)
4) Trade usage (any practice or method of dealing in the particular business or industry that is practiced with such regularity so as to justify an expectation that it will be practiced in the instant case.) |
|
|
Term
| Conditions and performance: condition |
|
Definition
defined: future and uncertain event that must take place before rights or obligations are created, destroyed, or enlarged
failure of a condition relieves a party of the obligation to perform |
|
|
Term
| Conditions and performance: express condition |
|
Definition
| K includes words like "on condition that" or "provided that". Must be complied with fully and substantial performance will not suffice |
|
|
Term
| Conditions and performance: implied condition |
|
Definition
| Those deemed to be part of the K because agreement suggests that parties truly intended that condition but failed to expressly include it, or because fairness requires its inclusion. Only substantial performance is required |
|
|
Term
| Conditions and performance: condition: timing |
|
Definition
condition precedent: condition precedes the obligation to perform
condition subsequent: condition excuses the duty to perform after a particular event occurs |
|
|
Term
| Conditions and performance: condition: satisfaction |
|
Definition
requires aesthetic taste of individual: if not satisfactory based on good faith, person not liable on K
non=aesthetic performance: judged against reasonable person standard |
|
|
Term
| Conditions and performance: disputes about performance: substantial performance |
|
Definition
Does not apply to expression conditions or UCC
Party who substantially performs can recover on K even though full performance hasn't been tendered
Damages: K price minus any amount it will cost the other party to obtain complete performance as promised
Even if no substantial performance, potential recovery through restitution for breaching party |
|
|
Term
| Conditions and performance: disputes about performance: strict performance (perfect tender rule) |
|
Definition
Applies to UCC
Seller must transfer ownership and tender goods conforming to warranty obligations. Substantial performance is insufficient
Transferring ownership: automatic warranty of good title, rightful transfer, and goods free of security interest in which buyer is unaware. Actual knowledge of security interest nullifies warranty of title.
Tendering goods: must be in accordance with K provisions or with UCC if K is silent on tender
Buyer's obligation: once conforming tender is made, buyer obligated to accept and pay K price; rejection = breach
Buyer's right to inspect before payment: general right to inspect goods that are tendered, delivered, or identified to the K for sale, unless K provides otehrwise |
|
|
Term
| Conditions and performance: disputes about performance: installment Ks |
|
Definition
Note: although it can divide performance into parts, there can be a binding, express condition that full performance be complete before full payment is due
common law: various units of performance divisible into distinct parts; recovery limited to amount promised for the segment of K performed; damages recoverable for breach of other segments
UCC: goods delivered in multiple shipments, each to be separately accepted; perfect tender rule does not apply; right to reject determined by substantial conformity standard; buyer can only reject if nonconformity substantially impairs value to buyer and cannot be cured; buyer may cancel K only if nonconforming tender substantially impairs the value of the entire K |
|
|
Term
| Conditions and performance: suspension/excuse of conditions |
|
Definition
1) waiver: party whose duty is subject to a condition can waive a nonmaterial condition by words or conduct
2) wrongful interference: if party whose duty is subject to a condition wrongfully interferes with occurrence of that condition, condition is excused and interfering party has absolute duty to perform per implied duty of good faith and fair dealings
3) estoppel: once a party waives a condition, he can be estopped from using that condition as a defense if the other party reasonably relies on the waiver |
|
|
Term
| Breach of K and remedies: breach of K |
|
Definition
once a duty to perform exists, nonperformance is a breach unless duty is discharged
common law: 1) material breach (does not receive substantial benefit) allows non-breaching party to withold any promised performance and to pursue remedies for breach, including damages, 2) minor breach (breaching party has substantially performed) non-breaching party is entitled to pursue remedies for nonmaterial breach (damages) but must perform under the K
UCC: seller must strictly perform all obligations under K or be in breach. Material breach only applies to installment Ks or when parties stipulate it in K |
|
|
Term
| Breach of K and remedies: anticipatory repudiation: common law |
|
Definition
Promisor repudiates before time of performance arises/elapses. Repudiation must be clear and unequivocal through words or acts.
Nonbreaching party's options: 1) treat repudiation as a breach or 2) ignore repudiation and demand performance of promisor, but suspend any performance by promisee if it would increase promisor's damages. If date of performance has not passed, must wait for actual breach before filing suit
Retraction of repudiation: can be retracted until promisee acts in reliance on repudiation, accepts repudiation, or commences action for breach of K
Unilateral Ks: anticipatory repudiation does not apply |
|
|
Term
| Breach of K and remedies: anticipatory repudiation: UCC |
|
Definition
| Occurs when there has been an unequivocal refusal of buyer/seller to perform or when party fails to provide adequate assurances within 30 days of demand for them. Either party can demand assurance of performance if there are reasonable grounds for insecurity about the other party’s ability or willingness to perform. Once such assurances are requested, performance may be suspended until they are provided. Failure to give adequate assurances within a reasonable time, not exceeding 30 days, can be treated as repudiation. Between merchants, the reasonableness of grounds for insecurity and the adequacy of any assurance offered are determined according to commercial standards. The acceptance of any improper delivery or payment does not preclude an aggrieved party from demanding adequate assurance of future performance. |
|
|
Term
| Breach of K and remedies: expectation damages |
|
Definition
Intended to put injured party in same position as if K had been performed. Arise naturally/obviously from breach. Must be foreseeable and proven with reasonable certainty
Measurement = market value of performance - K price
Partial performance: work performed + expectation damages for work not yet performed
Defective performance for construction Ks: cost of construction by another builder - K price
Defective performance for sale of goods: value of goods as warranted - actual value of the tendered nonconforming goods |
|
|
Term
| Breach of K and remedies: consequential damages and foreseeability |
|
Definition
Reasonably foreseeable losses to non-breaching party that go beyond expectation damages (e.g. loss of profits). Damages are foreseeable and recoverable if they are natural and probable consequences of breach or if they were contemplated by the parties at K formation. Dollar amount must be proven with reasonable certainty
D's defense: P's losses would have occurred regardless of D's breach
UCC breach of warranty: limitation on consequential damages for personal injury in the case of consumer goods is prima facie unconscionable, but limitation when loss is commercial is not unconscionable |
|
|
Term
| Breach of K and remedies: liquidated damages |
|
Definition
| An amount contractually stipulated as a reasonable estimation of actual damages upon breach. Enforceable if: 1) parties intended to agree in advance to damages that might arise from breach; 2) stipulated amount was reasonable at time of K and bears some relation to damages that might be sustained; 3) actual damages would be uncertain and difficult to prove |
|
|
Term
| Breach of K and remedies: incidental damages |
|
Definition
| commercially reasonable expenses incurred as a result of other party's breach |
|
|
Term
| Breach of K and remedies: punitive damages |
|
Definition
Rarely available in K actions, but may be if conduct constituting breach is also recoverable under tort theory.
FL: punitive damages only awarded in cases of intentional conduct or gross negligence and are capped at either three times the compensatory damages or 500k |
|
|
Term
| Breach of K and remedies: nominal damages |
|
Definition
| when no damages are alleged/proven |
|
|
Term
| Breach of K and remedies: mitigating damages |
|
Definition
| Party to a K must avoid or mitigate damages to the extent possible by taking steps to not involve undue risk, expense, or inconvenience. Non-breaching party held to standard of reasonable conduct in preventing loss. Failure to mitigate reduces damages that may be recovered by non-breaching party |
|
|
Term
| Breach of K and remedies: restitutionary damages |
|
Definition
| Restores to a party the benefit conferred to the other party. Measured by either the reasonable value of the D obtaining that benefit from another source or increase in the D's wealth from having received that benefit. If P has not substantially performed and is in breach, P not permitted to recover. If D has benefitted from P's performance, P can recover for benefit conferred less the d's damages for the breach. Permitted when nonbreaching party has partially performed a below-market-price K |
|
|
Term
| Breach of K and remedies: reliance damages |
|
Definition
| Reasonable, out-of-pocket expenses incurred by non-breaching party. Recoverable if non-breaching party incurs expenses in reasonable reliance upon the promise that the other party would perform. Party cannot recover both reliance and expectation. |
|
|
Term
| Breach of K and remedies: specific performance |
|
Definition
allowed when damages are an inadequate remedy. Factors to determine: 1) difficulty of proving damages with reasonable certainty, 2) hardship to D, 3) balance of the equities, 4) practicality of enforcement, 5) mutuality of agreement
real property: specific performance granted because RP is considered unique
UCC: may be granted when goods are rare or unique
equitable defenses: laches (prejudicial delay in bringing the action) or unclean hands (non-breaching party guilty of some wrongdoing in the transaction) |
|
|
Term
| Breach of K and remedies: UCC: buyer's remedies |
|
Definition
failure to tender goods: 1) damages: market price - K prices + incidental and consequential damages; 2) cover: buyer may purchase similar goods elsewhere and recover replacement price - K price; 3) specific performance for unique goods; 4) replevin: buyer can obtain undelivered goods from seller if at least partial payment is made or unable to effect cover
nonconforming tender: buyer has right to accept or reject all or part of the goods (and the right to inspect before making that decision). 1) rejection: buyer can reject goods if he gives notice to seller within a reasonable time and before acceptance, and is entitled to a return of any payments made or to seek same remedies as if no tender was made, 2) acceptance: buyer accepts goods by expressly stating acceptance, using the goods, or failing to reject the goods, 3) right to cure: seller has right to cure defective tender if time of performance under K has not yet elapsed or seller had reasonable grounds to believe that buyer would accept despite the nonconformity |
|
|
Term
| Breach of K and remedies: UCC: seller's remedies |
|
Definition
1) right to price upon acceptance: price due after goods are physically delivered to the buyer and buyer has had opportunity to inspect
2) right to reclaim goods: from insolvent buyer if he makes a demand within 10 days after buyer receives goods
3) stoppage of goods in transit: permitted if buyer breaches or is insolvent
4) wrongful rejection by buyer: seller can resell the goods, or recover the price, and also collect incidental damages and lost profits |
|
|
Term
| Breach of K and remedies: risk of loss: unidentified goods |
|
Definition
if goods are damaged/destroyed and there is no breach, risk of loss is on seller until he satisfies delivery obligation, which then shifts risk to buyer.
Goods to be shipped by third-party carrier: 1) if shipment K: if it doesn't specify it is a shipment K; risk of loss passes to buyer when seller gives possession of goods to the carrier and makes proper contract for their shipment; 2) destination: risk of loss passes to buyer when seller tenders at the place specified in the K
held by a bailee and are transferred without being moved: risk of loss generally passes to buyer on buyer's receipt of a negotiable document of title covering goods or on acknowledgment by bailee of buyer's right to possession of goods
all other cases: (buyer picks up goods from seller, etc.) risk of loss passes to buyer upon taking of physical possession if seller is a merchant, otherwise it passes on tender of delivery |
|
|
Term
| Breach of K and remedies: risk of loss: identified goods |
|
Definition
| seller is excused if goods are totally destroyed without the seller's fault prior to risk of loss being shifted to the buyer |
|
|
Term
| Breach of K and remedies: risk of loss: effect of breach of K |
|
Definition
seller's breach: if seller delivers nonconforming goods, risk of loss remains on the seller until buyer accepts or there is a cure
buyer's breach: if buyer breaches/repudiates after goods have been identified buy before risk of loss shifts, then risk immediately shifts to buyer (to extent of lack of insurance coverage by seller) |
|
|
Term
| Breach of K and remedies: SOL on breach of sales K |
|
Definition
| 4 years after c/a accrues. C/a accrues when breach occurs, regardless of whether aggrieved party knows. Parties may reduce 4 year limitation period to not less than one year, but they may not extend it. |
|
|
