Term
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Definition
| All things moveable at the time they are identifies as the goods to be sold under the contract |
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Term
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Definition
One who regularly deals in goods of the kind sold OR who holds himself out as having special knowledge or skills as to practices or goods involved.
ANYONE IN BUSINESS |
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Term
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Definition
| Not contract. Remedy to avoid unjust enrichment |
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Term
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Definition
| Exchange of mutual promises. Each party is promisor and promisee. |
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Term
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Definition
Offeror requests performance rather than a promise.
Two situations: (1) rewards; (2) indicates completion is the only manner of acceptance. |
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Term
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Definition
Void = Without any legal effect
Voidable = one or both parties may elect to avoid
Unenforceable = Otherwise valid but may not be enforceable due to a defense extraneous to contract formation |
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Term
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Definition
1. Mutual Assent
2. Consideration
3. Defenses? |
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Term
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Definition
A communication that creates a reasonable expectation in offeree that offerror is willing to contract with terms.
LOOK FOR: 1. communication 2. certain/definite terms 3. a promise/undertaking |
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Term
| Offer Communication Rule of Thumb |
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Definition
| The broader the offer the more likely that the offer is a solicitation |
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Term
| Certain and Definite Terms Test |
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Definition
| Are enough terms provided that the offer is capable of being enforced? |
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Term
Essential Terms for Offers
(UCC/Land/Services) |
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Definition
UCC: good at issue and quantity
Real estate: Land description and Price
Services: nature of work |
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Term
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Definition
A seller promises to sell to a certain buyer all of the goods that the seller produces and the buyer agrees to buy that amount.
Duty of good faith = no unreasonably disproportionate quantities |
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Term
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Definition
1. Does not prevent the formation of a contract if i
2. it appears that the parties intended to make a contract and 3. there is a reasonably certain basis for giving a remedy
See Certain and Definite Terms Test |
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Term
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Definition
| An offer may be terminated by either party or by operation of law. |
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Term
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Definition
| A revocation is the retraction of an offer by the offeror. |
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Term
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Definition
1. Can be directly to the offeree
2. OR, if offeree receives correct information from a reliable source
Effective when RECEIVED |
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Term
Limitations on Powers to Revoke
(list 4 exceptions) |
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Definition
Generally, can be revoked at will.
1. Option contract
2. Merchant Firm Offer Rule
3. Detrimental Reliance
4. Part Performance (unilateral contract) |
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Term
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Definition
1. Merchant
2. Offers to sell goods in a signed writing
3. writing assures it will be held open for 10 days
THEN, offer is NOT revokable for lack of consideration |
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Term
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Definition
Unilateral contracts: offer is irrevocable once performance has begun (probably bilateral too). Must provide reasonable time for completion.
BUT, offeree is not bound to complete.
Not preparation, but preparation could trigger detrimental reliance |
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Term
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Definition
A statement that by the offeree that she does not intent to accept the offer.
More than a mere inquiry (reasonable person standard)
Effective when RECEIVED
REMINDER: Lapse of Time |
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Term
| Termination of Offer by Operation of Law |
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Definition
Death or insanity of either party
Destruction of subject matter
Supervening Illegality |
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Term
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Definition
| A manifestation of assent to the offer. |
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Term
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Definition
1. Generally, to whom offer is addressed.
2. Offeree must know of offer |
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Term
| Acceptance of offer for unilateral contract |
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Definition
Acceptance does not occur until performance is COMPLETE. (See Partial Performance)
Offeree is generally not required to notify offeror, but must notify within a reasonable time upon completion |
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Term
| Acceptance of a bilateral contract |
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Definition
Generally, acceptance must be communicated
Bilateral contracts invite acceptance in any reasonable manner |
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Term
| Offer to buy GOODS for current or prompt shipment |
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Definition
Construed as inviting a promise to ship or by current or prompt shipment of conforming or nonconforming goods
Shipping noncoforming goods is an acceptance and breach unless seller notifies buyer that it is an accomodation.
Buyer can reject accomodation
Accomodation is only available if shipping is acceptance (i.e. no promise to ship) |
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Term
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Definition
Traditional contract law requires an absolute and unequivocal acceptance of each and every term.
Otherwise, rejection and counteroffer
Applies to everything other than goods |
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Term
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Definition
| = rejection of the offer. |
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Term
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Definition
Acceptance by mail or similar dispatch creates acceptance at the moment of dispatch.
Exceptions
-offer terms
-option contract
-rejection then acceptance (what arrives first)
-acceptance then rejection (rejection first + detrimental reliance) |
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Term
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Definition
1. Bargained for exchange of legal value
2. Must constitute benefit to promisor or detriment to promisee |
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Term
| Technical Defense Exception to Consideration |
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Definition
1. Where a past obligation is unenforceable
2. If a new promise is made or partially performed
3. That obligation is enforceable |
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Term
| Past Benefit Exception to Consideration |
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Definition
1. Past act benefited promisor
2. Act was performed at promisor's request or in response to emergency
3. A subsequent promise to pay will be enforceable |
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Term
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Definition
Performing or promising to perform an existing legal duty is insufficient consideration.
Exceptions:
1. New or different consideration
2. Promise to ratify a voidable obligation
3. Duty is owed to a third person
4. Honest dispute
5. Unforeseen circumstances
6. Goods = good faith |
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Term
| Forebearance to Sue as Consideration |
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Definition
| A promise to refrain from suing on a claim may constitute consideration if the claim is valid or if there is a good faith basis. |
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Term
| Promissory Estoppel or Detrimental Reliance |
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Definition
1. Promisor should reasonably expect to induce action or forebearance
2. Of a definite and substantial character
3. And such action or forebearnace is in fact induced
4. As justice requires
= No consideration is needed |
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Term
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Definition
1. Absence of Mutual Assent
(mistake, ambiguous contract language; misrepresentation)
2. Absence of consideration
3. Illegality |
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Term
| Mutual Mistake of Existing Facts |
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Definition
If both parties entering into a contract are mistaken about existing facts relating to the agreement, the contract may be voidable by the adversely affected party.
1. Basic assumption on which the contract is made
2. Mistake has a material effect on the exchange
3. The party seeking avoidance did not assume the risk
NOT, mere mistakes in value |
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Term
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Definition
Will not prevent formation of the contract
UNLESS, nonmistaken party knew or had reason to known of the mistake
THEN, contract becomes voidable |
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Term
| Ambiguous Contract Language |
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Definition
Neither party aware = no contract unless both parties intend same meaning
Both parties aware = no contract unless both parties intend same meaning
One party aware = binding contract based on what ignorance party reasonably believed to be meaning of ambiguous words |
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Term
| Fraudulent Misrepresentation |
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Definition
Voidable by innocent party relied on the fraudulent misrepresentation.
Can be inferred from conduct |
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Term
| Non-fraudulent misrepresentation |
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Definition
| Even if not fraudulent, contract is voidable by the innocent party if the party JUSTIFIABLY RELIED on a MATERIAL misrepresentation. |
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Term
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Definition
Subject matter of contract is illegal = void
Exceptions:
1. Plaintiff is unaware of illegality
2. Plaintiff is not as culpable as defendant
3. Illegality is failure to obtain a license
If purpose is illegal, contract is voidable by party who is unaware of purpose. |
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Term
| Legal Incapacity to Contract |
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Definition
1. Minors: can disaffirm at any time. Must return anything of value that still remains.
*Affirms within a reasonable time of reaching majority*
2. Mental Incapacity: voidable if cannot understand the nature and significance of the contract.
3. Intoxicated persons: voidable if other person had reason to know of intoxication. |
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Term
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Definition
Voidable
Improper threat
Economic duress:
1. party threatens to commit a wrongful act that will seriously injure finances
2. there are no adequate means available to prevent the threatened loss. |
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Term
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Definition
1. Undue susceptibility to pressure by one party
2. Excessive pressure by the other party |
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Term
Statute of Frauds
(Writing Requirement) |
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Definition
One or more writings signed by the person sought to be held liable on the contract that reflect material terms of contract
Signed by the party to be charged
REMEMBER, SOF must be raised by a party
IN ALTERNATIVE, could sue for QUASI CONTRACT |
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Term
Statute of Frauds
(Agreements) |
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Definition
Marriage as consideration
Year or longer (incapable)
Land
Executor and estate expenses
Goods $500+
Surety relationships |
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Term
| Partial Performance Doctrine (land) |
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Definition
Partial performance UNEQUIVOCALLY INDICATES that the parties have contracted for the sale of LAND
2/3 suffice:
1. possession
2. payment
3. valuable improvements |
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Term
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Definition
Again, goods for a price of $500 or more
Enforceable up to quantity of goods shown in writing
Exceptions:
1. Specially manufactured goods
2. Admissions in Pleadings or Court
3. Payment or Delivery of Goods
4. Merchant Confirmatory Memo Rule |
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Term
| Merchant Confirmatory Memo Rule |
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Definition
1. Merchants
2. Sends written confirmation within reasonable time
3. Other party has reason to know of contents
4. Does not object in writing within 10 days of RECEIPT |
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Term
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Definition
Allows a court to refuse to enforce a provision or an entire contract to avoid unfair terms.
Examples:
1. Inconspicuous risk shifting provisions
2. Contracts of Adhesion
3. Exculpatory clauses
4. Limitations on remedies (essential purpose test)
Time contract was FORMED
Remedy: 1. entire contract unenforceable 2. enforce remainder of contract 3. limit the application of clause to avoid unconscionable result |
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Term
| General Rules of Contract Construction |
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Definition
1. Contracts will be construed as a whole
2. Courts will construe words with their ordinary meaning
3. Written or typed provisions will prevail over printed
4. Courts will look to usage and custom
5. Courts will try and reach valid and enforceable K
6. Ambiguities are construed against draftor |
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Term
Parol Evidence Rule
(Integration) |
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Definition
When parties to a contract express their agreement in writing with the intent that the writing be a final expression of their bargain
More complete = more likely to be an integration
Merger clause: states that agreement is complete on face |
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Term
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Definition
| When parties to a contract express their agreement in writing with the intent that it embody the final expression of that bargain, ay other expressions made prior to/contemporaneous with the writing are inadmissible to VARY the writing |
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Term
| Extrinsic Evidence Outside Parol Evidence Rule |
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Definition
Attacking Validity (formation defects / conditions precedent)
Interpretation (meaning of terms)
True consideration
Reformation
Subsequent Modifications |
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Term
| Collateral Agreements and Naturally Omitted Terms |
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Definition
Collateral = related to subject matter but not part of primary promise
Naturally omitted terms:
1. does not conflict with integration
2. it concerns a subject that similarly situated parties would not ordinarily be expected to include in instrument |
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Term
| UCC and Parol Evidence Rule |
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Definition
Corbinian
Can add consistent additional terms unless
1. Merger clause
2. courts find that writing was intended as complete and exclusive statement of agreement
Course of dealing, usage of trade, and course of performance can be used to explain or add to contract |
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Term
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Definition
Arises when acceptance does not match offer
Nonmerchant = terms of offer govern
Merchants + Additional Terms = Included, unless
1. materially alter the original terms of offer
2. offer expressly limits acceptance
3. offeror had already objected or objects within reasonable time
Different Terms
1. Knockout and use gap fillers
2. Treat different terms as additional terms |
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Term
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Definition
Price = reasonable time of delivery
Place of delivery = seller's place of business
Shipment = Due in reasonable time
Payment = time and place buyer is to receive goods
Assortment = at buyer's option |
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Term
| Risk of loss in Non-carrier case |
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Definition
Merchant = time of physical possession
Nonmerchant = risk of loss passes to buyer upon tender of delivery |
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Term
| Risk of loss in carrier case |
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Definition
Default: shipment contract.
Shipment contract: risk of loss passes when goods are delivered to common carrier
Destination contract: risk of loss passes when goods reach destination |
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Term
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Definition
C.I.F. = cost, insurance, and freight (shipping)
C.F. = cost and freight (shipping)
F.A.S. = free alongside. boat (shipping)
F.O.B. = free on board. location. risk passes at location. |
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Term
| Effect of Breach on Risk of Loss |
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Definition
Defective goods: If goods are so defective that buyer can reject, risk of loss does not pass until acceptance or cure.
Revocation of acceptance: risk of loss is treated as being on seller from beginning |
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Term
| Warranty of Title and Warranty Against Infringement |
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Definition
Title: any seller warrants that the title transferred is good
Infringement:
1. Merchant regularly dealing in goods of the kind sold
2. automatically warrants that goods are delivered free of claims |
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Term
| Implied Warranty of Merchantability |
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Definition
Implied in every sale by a merchant who deals in goods of that kind
Fit for ordinary purposes for which such goods are used
Absolute liability: does not matter that seller knew of defect |
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Term
| Implied Warranty of Fitness for a Particular Purpose |
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Definition
1. ANY seller has reason to know of the particular purpose for which goods are to be used AND
2. Buyer is relying on seller's skill and judgment to select, AND
3. Buyer in fact relies on skill or judgment |
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Term
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Definition
Any description, sample, or model that forms the basis of the bargain.
NOT PUFFERY: a statement relating merely to the value of the goods |
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Term
| Disclaimer: Implied Warranty of merchantability |
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Definition
Can be general or specific
Specific: Must mention merchantability and be conspicuous
General: as is, without faults |
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Term
| Disclaimer: Implied Warranty of fitness for a particular purpose |
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Definition
Specific: conspicuous writing
General as is without faults |
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Term
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Definition
| So written displayed or presented that a reasonable person against whom it is to operate ought to have noticed it |
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Term
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Definition
1. Before entering contract
2. Buyer examined the goods or a sample or a model as fully as desired
3. Or refused to examine
4. There is no warranty as to defects that a reasonable exam would reveal |
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Term
| Disclaimer: Damage Limitations |
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Definition
| Upheld as long as limitation is not unconscionable |
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Term
| Damages for Breach of Warranty |
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Definition
| General: difference between goods tendered and value of goods as warranted |
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Term
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Definition
Common law: cannot modify without consideration
UCC: valid without consideration
A written contract can be modified orally (BUT SOF)
Common law: no modification clauses are not effective
UCC: No modification clauses effective |
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Term
| Performance at Common Law |
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Definition
A party's basic duty is to substantially perform all that is called for in the contract
Compare with perfect tender rule |
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Term
| Tender of Delivery: noncarrier |
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Definition
Seller must put and hold conforming goods at the buyer's disposition for a time sufficient for the buyer to take possession.
Seller must give buyer notice to enable possession
Default: seller's place of business |
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Term
| Tender of Delivery: shipment |
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Definition
Put goods in hands of a reasonable carrier
Tender documents required for buyer to take possession
Promptly notify buyer of shipment |
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Term
| Buyer's obligation to pay |
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Definition
Non carrier cases: sale is for cash and the price is due with tender of delivery
By carrier: price is due when buyer receives goods
Shipment = when given to carrier
Destination = when reaches buyer |
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Term
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Definition
| A promise is a commitment to do or refrain from doing something |
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Term
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Definition
Either an event or that must occur before a party has a duty to perform or event that releases a party from duty to perform.
Conditions are promise modifierrs |
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Term
| Express condition: Promisor's satisfaction |
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Definition
Issue: explicit contractual provision
Mechanical/fitness/utility/marketability: reasonable person standard
Personal satisfaction = personally satisfied (must be honest) |
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Term
| Constructive Condition of Performance |
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Definition
| Duty of each party to render performance is conditioned on the other party either rendering his performance or making a tender of performance |
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Term
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Definition
| If both performances can be rendered at the same time, they are constructively concurrent, thus each is a precedent to the other. |
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Term
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Definition
1. Failure to cooperate
2. Actual breach
3. Anticipatory repudiation
4. Prospective unwillingness to perform
5. Substantial performance
6. Waiver or estoppel
7. Impossible/impractical/frustration of purpose |
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Term
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Definition
Promisor prior to the time set for peformance of his promise, indicates that he will not perform when the time time comes.
Must be unequivocal |
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Term
| Effect of anticipatory repudiation |
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Definition
Four alternatives:
1. Treat as a total repudiation and sue
2. Suspend own performance and wait to sue until performance is due
3. Treat the repudiation as an offer to rescind
4. Ignore the repudiation and urge performance |
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Term
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Definition
Repudiating party may withdraw repudiation before next performance is due unless other party has materially changed position in reliance on repudiation or has indicated that repudiation is considered final.
Must include assurances justifiably demanded |
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Term
| Prospective unwillingness to perform |
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Definition
Not unequivocal
Effect: other party can suspend performance until adequate assurances are received.
Can be retracted |
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Term
| Substantial performance (common law) |
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Definition
Courts generally apply this as a constructive condition
Breach is minor and unwillful
Damages for breach are offset
Other party's performance becomes due |
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Term
| Excuse by Divisible Contract |
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Definition
Divisible contract:
1. performance of each party is divided into two or more parts
2. the number of parts due from each party is the same
3. each performance is quid pro quo |
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Term
| Divisible contract: sale of goods |
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Definition
Installment contract
Price can be apportioned and demanded for each loss unless contrary intent appears |
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Term
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Definition
Party indicates waiver
And the other person detrimentally relies on waiver.
Waiver may be freely retracted before reliance |
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Term
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Definition
| When a condition or duty of performance is broken, a party may elect to continue under the contract |
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Term
| Waiver in installment contracts |
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Definition
| If beneficiary has waived condition on one installment, beneficiary can still insist on strict compliance in future installments by giving notice. |
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Term
| Discharge by Impossibility |
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Definition
Contractual duties will be discharged if it becomes objectively impossible to perform them after the contract is formed.
Partial = partial impossibility
Temporary = suspends |
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Term
| Impossibility: Death or physical incapacity |
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Definition
Death or incapacity of a person necessary to effectuate the contract
1. Personal services
2. Unique services |
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Term
| Impossibility: Destruction of subject matter |
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Definition
A contractor's duty to construct a building is not discharged by destruction of the work in progress
Contrast with a contract to REPAIR or REMODEL
Test: is it necessary for contract? |
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Term
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Definition
1. EXTREME AND UNREASONABLE
2. difficulty and or expense
3. Nonoccurence was a basic assumption of parties |
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Term
| Impracticability: UCC (examples) |
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Definition
1. shortage of raw materials
2. war
3. embargo
4. unforeseen shutdown of major supplier
5. catastrophic crop failure |
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Term
| Discharge by Frustration (payor) |
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Definition
1. There is some supervening act
2. At the time of contracting, the parties did not reasonably foresee the act
3. the purpose of the contract has been completely or almost completely destroyed
4. the purpose of contract was realized by both parties |
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