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Contracts
Restatements and UCC's for Contracts I
68
Law
Graduate
12/09/2009

Additional Law Flashcards

 


 

Cards

Term
RS 1 Contract Defined
Definition

A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

 

Contract = manifestation of mutual assent (MMA) + enforceability

Term

RS 2: Promise, Promisor, Promisee, Beneficiary

 

Definition

(1) A promise is a manifestation of intention to act or refrain from acting in a specified way, so made to justify a promisee in understanding that a commitment has been made.

(2) The person manifesting the intention is the promisor.

(3) The person to whom the manifestation is addressed is the promisee.

(4) Where performance will benefit a person other than the promisee, that person is a beneficiary

Term

RS 4: How a Promise May be Made

 

Definition
A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct
Term
RS 3: Agreement Defined, Bargain Defined
Definition

An agreement is a manifestation of mutual assent (offer + acceptance) on the part of 2 or more persons.

 

A bargain is an agreement to exchange promises or to exchange a promise for a performance or the exchange of performances.

Term
RS 17: Requirement for a Bargain
Definition

(1) Formation of a contract requires a manifestation of mutual assent and a consideration

 

Term
RS 18: Manifestation of Mutual Assent
Definition
Manifestation of mutual assent to an exchange requires that each party either make a promise or begin or render a performance.
Term
RS 19: Conduct as Manifestation of Assent
Definition

(1) The manifestation of assent may be made wholly or parly by written or spoken words or by other acts or by failure to act.

 

(2) The conduct of a party is not effective as a manifestation of his assent unless he intends to engage in the conduct and knows or has reason to know that hte other party may infer from his conduct that he assents.

 

(3) The conduct of a party may manifest assent even though he does not in fact assent.  In such cases a resulting contract may be voidable because of fraud, duress, mistake, or other invalidating causes.

Term
RS 24: Offer Defined
Definition
An offer is a manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.
Term
RS 33: Certainty
Definition

An offer cannot be accepted to form a contract unless the terms of the contract are reasonably certain - there must be a basis for determining breach and for giving an appropriate remedy.

 

  • If one or more terms are left open or uncertain, the manifestation of intention may not be intended as an offer or acceptance.

Term
RS 22: Mode of Assent: Offer and Acceptance
Definition
Ordinarily, MMA takes the form of an offer followed by acceptance.  A MMA may be made even though neither offer nor acceptance can be identified, and even though the moment of formation cannot be determined.
Term
RS 26: Preliminary Negotiations
Definition
A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.
Term
RS 29: To Whom an Offer is Addressed
Definition

(1) The manifested intention of the offeror determines the person or persons in whom is created a power of acceptance.

 

(2) An offer may create a power of acceptance in a specified person or in one or more of a specified group or class of persons, acting separately or together, or in anyone or everyone who makes a specified promise or renders a specified performance.

Term
RS 27: Written Memorial is Contemplated
Definition
Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations.
Term

RS 35: Power of Acceptance

 

RS 36: Methods of Termination of Power of Acceptance

Definition

(1) An offer gives to the offeree a continuing power to complete a manifestation of mutual assent by acceptance of the offer.

(2) A contract cannot be created by acceptance of an offer after the power of acceptance has been terminated in one of the following ways.

 

(1) Rejection by offeree, (2) counter-offer, (3) lapse of time, (4) revocation by offeror, (5) death or incapacity of offeror or offeree.

Term
RS 38: Rejection by Offeree
Definition
Normally, if the offeree rejects the offer, this will terminate his power of acceptance.
Term
RS 39: Counter Offer
Definition
If the offeree makes a counter offer, her power to accept the original offer is terminated just as if she had flatly rejected the offer.
Term
RS 41: Lapse of Time
Definition
The offeror, as "master of his offer" can set a time limit for acceptance.  At the end of this time limit, the offeree's power of acceptance automatically terminates.
Term

RS 42-47: Revocation

 

RS 42: Revocation by Communication

Definition

The offeror is free to revoke his offer at any time before it is accepted (except in option contracts)

 

A revocation by the offeror does not become effective until it is received by the offeree.

Term
RS 25: Option Contracts
Definition
An option contract is a promise which meets the requirements for the formation of a contract and limits the promisor's power to revoke an offer.
Term
RS 37: Termination Under Option Contract (Exception)
Definition
Notwithstanding the above terminations of powers of acceptance, the power of acceptance under an option contract is NOT terminated by rejection or counter offer, by revocation, or by death or incapacity of the offeror, UNLESS the requirements are met for the discharge or a contractual duty.
Term
UCC 2-205: Firm Offers
Definition
An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such period of irrevocability exceed three months but any such terms of assurance on a form suppled by the offeree must be separately signed by the offeror.
Term
RS 30: Form of Acceptance Invited
Definition

(1) An offer may invite or require acceptance to be made by an affirmative answer in words, or by performing or refraining from performing specified act, or may empower the offeree to make a selection of terms in his acceptance.

 

(2) Unless otherwise indicated by the language or the circumstances, an offer invites acceptance in any manner and by any medium reasonable in the circumstances.

Term
RS 45: Option Contract Created by Part Performance or Tender
Definition

(1) Where an offer invites an offeree to accept by rendering a performance and does not invite a promissory acceptance, an option contract is created when the offeree tenders or begins the invited performance or tenders a beginning of it.

 

(2) The offeror's duty of performance under any option contract so created is conditional on completion or tender of the invited performance in accordance with the terms of the offer.

Term

RS 87(2): Option Contract

 

Definition
(2) An offer which the offeror should reasonably expect to induce action or forbearance of a substantial character on the part of the offeree before acceptance and which does induce such action or forbearance is binding as an option contract to the extent necessary to avoid injustice.
Term
RS 32: Invitation of Promise or Performance
Definition
In case of doubt an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses.
Term
RS 54: Necessity of Notification to Offeror
Definition

(1) No notice is required unless the offer requests such notification

 

(2) If an offeree accepts by rendering a performance has reason to know that the offeror has no adequate means of learning of the performance with reasonable promptness and certainty, the contractual duty of the offeror is discharged unless:

(a) the offeree exercises reasonable diligence to notify the offeree or of acceptance, or

(b) the offeror learns of the performance within a reasonable time, or

(c) the offer indicates that notification of acceptance is not required.

Term
RS 62: Effect of performance by offeree where offer invites either performance or promise
Definition

(1) Where an offer invites an offeree to choose between acceptance by promise and acceptance by performance, the tender or beginning of the invited performance or a tender of a beginning of it is an acceptance by performance.

 

(2) Such an acceptance operates as a promise to render complete performance.

Term
RS 69: Acceptance By Silence
Definition

(1) Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only:

(a) Where an offeree takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation.

(b) Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intends to accept the offer.

(c) Where because of previous dealings or otherwise, it is reasonable that the offeree should notify the offeror if he does not intent to accept.

 

(2) An offeree who does any act inconsistent with the offeror's ownership of offered property is bound in accordance with the offered terms unless they are manifestly unreasonable.  But if the act is wrongful as against the offeror it is an acceptance only if ratified by him.

Term
RS 61: Acceptance Which Requests Change of Terms
Definition
An acceptance which requests a change or addition to the terms of the offer is not thereby invalidated unless the acceptance is made to depend on an assent to the changed or added terms.
Term
RS 63: Time When Acceptance Takes Effect
Definition

Unless the offer provides otherwise, 

(a) an acceptance made in a manner by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offeree's possession, without regard to whether it ever reaches the offeror; but

(b) an acceptance under an option contract is not operative until received by the offeror.

Term
RS 64: Acceptance by Phone or Type
Definition
Acceptance given by phone or other medium of substantially instantaneous two-way communication is governed by principles applicable to acceptances where the parties are in the presence of each other.
Term
RS 65: Reasonableness of Medium of Acceptance
Definition
Unless circumstances known to the offeree indicate otherwise, a medium of acceptance is reasonable if it is the one used by the offeror or one customary in similar transactions at the time and place the offer is received.
Term
RS 200: Interpretation of Promise or Agreement
Definition
Interpretation of a promise or agreement or a term thereof is the ascertainment of its meaning.
Term
RS 202: Rules in Aid of Interpretation
Definition

(1) Words/conduct interpreted in light of all circumstances.

(2) Writing interpreted as a whole, all writings part of same transaction interpreted together.

 

(3) Unless different meaning manifested:

(a) Interpreted in accordance with general prevailing meaning.

(b) Technical terms or terms of art are given their technical meaning when used in a transaction of that field.

 

(4) Course of performance accepted is given great weight.

 

(5) When reasonable, manifestation of internet interpreted consistent with each other AND with course of performance and course of dealing, usage of trade.

Term
RS 201:  Whose Meaning Prevails
Definition

(1) Where the parties have attached the same meaning to a promisor agreement or a term, it is interpreted in accordance with that meaning.

 

(2) Where the parties have attached different meanings to a promise or agreement or a term, it is interpreted in accordance with the meaning attached by one of them if at the time the agreement was made:

(a) that party did not know of any different meaning attached by the other, and the other knew the meanings attached by the first party; or

(b) that party had no reason to know of any different meaning attached by the other, and the other had reason to know the meaning attached by the other, and the other had reason to know the meaning attached by the first party.

 

(3) Except as stated in this Section, neither party is bound by the meaning attached by the other, even though the result may be failure of mutual assent.

Term
UCC 1-205: Course of Dealing and Usage of Trade (Both can be used to interpret ambiguous terms)
Definition

Course of dealing - sequence of pervious conduct between the parties which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

 

Usage of Trade - Any practice or method of dealing having such regularity of observance in a place, vocation or trade, as to justify an expectation that it will be observed with respect to the transaction in question.

Term
UCC 2-208: Course of Performance or Practical Construction
Definition

(1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted without objection shall be relevant to determine the meaning of the agreement.

 

(2) The express terms of the agreement and any such course of performance, as well as any course of dealing and usage of trade, shall be construed whenever reasonable as consistent with each other; however, express terms trump both UoT and CoD.

 

(3) Such course of performance shall be relevant to show a waiver of modification of any term inconsistent with such course of performance.

Term
RS 34: Certainty and Choice of Terms; Effect of Performance or Reliance
Definition

(1) The terms of a contract may be reasonably certain even though it empowers one or both parties to make a selection of terms in the course of performance.

 

(2) Part performance under an agreement may remove uncertainty and establish that a contract enforceable as a bargain has been formed.

 

(3) Action in reliance on an agreement may make a contractual remedy appropriate even though uncertainty is not removed.

Term
RS 204: Supplying an Omitted Essential Term
Definition
When the parties to a bargain sufficiently defined to be a contract have not agreed with respect to a term which is essential to a determination of their rights and duties, a term which is reasonable in the circumstances is supplied by the court.
Term
UCC 2-306(1): Output and Requirements Contracts
Definition
An output or requirements contract requires the actual output or requirements be made in good faith, except that the quantity not be unreasonably disproportionate to any stated estimate or in the absence of an estimate, any normal comparable output.
Term
UCC 2-306(2): Exclusive Dealings
Definition
A lawful agreement by either the seller or the buyer for exclusive dealing in the kind of goods concerned imposes unless otherwise agreed an obligation by the seller to use best efforts to supply the goods and by the buyer to use best efforts to promote their sale.
Term
RS 211:  Standardized Agreements
Definition

(1) (Usually enforceable) Where a party to an agreement signs or otherwise manifests assent to a writing and has reason to believe that like writings are regularly used to embody terms of agreements of the same type, he adopts the writing as an integrated agreement with respect to the terms included in the writing.

 

(2) Such a writing is interpreted wherever reasonable as treating alike all those similarly situated, without regard to their knowledge or understanding of the standard terms of the writing.

 

(3) Where the other party has reason to believe that the party manifesting such assent would not do so if he knew that the writing contained a particular term, the term is not part of the agreement.

Term
UCC 2-207: Additional Terms in Acceptance or Confirmation
Definition

(1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

 

(2) The additional terms are to be construed as proposals for addition to the contract.  Between merchants such terms become part of the contract UNLESS:

(a) The offer expressly limits acceptance to the terms of the offer;

(b) they materially alter it; or

(c) Notification of objection to them has already been given or is given within a reasonable time after notice of them is received.

 

(3) Conduct by both parties which recognizes the existence of a contract is sufficient to establish a contract for sale although the writings of the parties do not otherwise establish a contract.  In such cases, the terms of the particular contract consist of those terms on which the writings of the parties agree, together with any supplementary terms incorporated under any other provisions of this act.

Term
RS 213: Effect of Integrated Agreement on Prior Agreements (Parol Evidence Rule)
Definition

(1) A binding integratd agreement discharges prior agreements to the extent that it is inconsistent with them.

 

(2) A binding completley integrated agreement discharges prior agreements to the extent that they are within its scope.

 

(3) An integrated agreement that is not binding or that is voidable and avoided does not discharge a prior agreement.  But an integrated agreement, even though not binding, may be effective to render inoperative a term which would have been part of the agreement if it had not been integrated.

Term
RS 209 - Integrated Agreements
Definition

(1) An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement.

 

(2) Courts must determine whether an agreement is integrated before applying PER.

 

(3) Where the parties reduce an agreement to writing which in view of its completeness and specificity reasonably appears to be a complete agreement, it is taken to be an integrated agreement unless it is established by other evidence that the writing did not constitute a final expression.

Term
RS 210 - Completely and Partially Integrated Agreements
Definition

(1) A completely integrated agreement is an integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement.

 

(2) A partially integrated agreement is an integreated agreement other than a completely integrated agreement.

 

(3) Courts must determine whether an agreement is completely or partially integrated before applying PER.

Term
RS 216: Consistent Additional Terms
Definition

(1) Evidence of a consistent additional term is admissible to supplement an integrated agreement unless the courts finds that the agreement was completely integrated.

 

(2) An agreement is not completley integrated if the writing omits a consistent additional agreed term which is

(a) Agreed to for separate consideration, or

(b) Such a term as in the circumstances might naturally be omitted from the writing.

Term
RS 214: Evidence of Prior or Contemporaneous Agreements and Negotiations
Definition

Agreements and negotiations prior to or contemporaneous with the adoption of a writing are admissible in evidence to establish:

(a) that the writing is or is not an integrated agreement.

(b) that the integrated agreement, if any, is completely or partially integrated;

(c) the meaning of the writing, whether or not integrated;

(d) illegality, fraud, duress, mistake, lack of consideration, or other invalidating cause;

(e) ground for granting or denying rescission, reformation, specific performance, or other remedy.

Term
UCC 2-202: Final Written Expression, Parol or Extrinsic Evidence
Definition

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented.

(a) by course of performance, course of dealing, or usage of trade, and

(b) by evidence of consistent additional terms unless the court finds the writing to have been intended also as a complete and exclusive statement of the terms of the agreement.

Term
RS 155: When Mistake of Both Parties as to Written Expression Justifies Reformation
Definition
Where a writing that evidences or embodies an agreement in whole or in part fails to express the agreement because of a mistake of both parties as to the contents or effect of the writing, the court may at the request of a party reform the writing to express the agreement, except to the extent that the rights of third parties such as good faith purchasers for value will be unfairly affected.
Term
RS 110: Class of Contracts Covered
Definition

(1) The following classes of contracts are subject to the Statute of Frauds, forbidding enforcement unless there is a written memorandum or an application exception:

 

(a) Land Contracts:sale of interest in land

 

(b) Suretyship: contract to answer for debt of another

 

(c) Contracts that cannot be performed within one year

(i) Effective from the time the contract is made until the time of full performance.

(ii) When an agreement CAN be performed within 1 year, but it may not, it does not fall within the Statute of Frauds (ie death)

 

(e) Executor-administrator: a contract of an executor or administrator to answer for a duty of his decedent.

 

(f) UCC 2-201 : Contracts for the sale of goods over $500.

Term
RS 125: Contract to Transfer, Buy or Pay For an Interest in Land
Definition

(1) A promise to transfer to any person any interest in land is within the SoF.

 

(2) A promise to buy an interest in land is within the SoF, irrespective of the person to whom the transfer is made.

 

(3) When a transfer of an interest in land has been made, a promise to pay the price, if originally within the SoF, ceases to be within it unless the promises price is itself in whole or in part an interest in land.

 

(4) Statutes in most states except from the land contract and one-year provisions of the SoF short term leases and contracts to lease, usually for a term not longer than one year.

Term
RS 139: Enforcement by Virtue of Action in Reliance
Definition

(1) A promise which the promisor show reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the SoF if injustice can be avoided only by enforcement of the promise.  The remedy granted for breach is to be limited as justice requires.

 

(2) In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are significant:

(a) availability and adequacy of other remedies, particularly cancellation and restitution;

(b) definite and substantial character of the action or forbearance in relation to the remedy sought.

(c) extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;

(d) reasonableness of the action or forbearance

(e)extent to which the action or forbearance was foreseeable by the promisor.

Term
RS 129: Action in Reliance; Specific Performance (Transfer of Land)
Definition
A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the SoF if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the part against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement.
Term
RS 130: Contract Not to be Performed Within a Year
Definition

(1) Where any promise in a contract cannot be fully performed within a year from the time the contract is made, all promises in the contract are within the SoF until one party to the contract completes his performance.

 

(2)When one party to a contract has completed his performance, the one year provision of the SoF does not prevent enforcement of the promises of the other parties.

Term
RS 131: General Requirements of a Writing
Definition

Unless additional requirements are prescribed by the particular statute, a contract within the SoF is enforceable if it is evidenced by any writing, signed by or on behalf of the party to be charged, which 

(a) Reasonably identifies the subject matter of the contract

(b) is sufficient to indicate that a contract with respect thereto has been made between the parties or offered by the signer to the other party, and 

(c) states with reasonable certainty the essential terms of the unperformed promises in the contract.

Term
RS 133: Memorandum Not Made as Such
Definition
Except in the case of a writing evidencing a contract upon consideration of marriage, the SoF may be satisfied by a signed writing not made as a memorandum of a contract.
Term
UCC 2-201(2) Writing Requirement
Definition

A writing satisfies the Sof if it is sufficient to indicate that a contract for the sale has been made between the parties and is signed by the party against whom enforcement is sough.

 

(1) Between merchants, the memorandum is also enforceable against the party who does not sign it, unless the recipient objects within 10 after receiving the confirmation.

Term
RS 71: Requirement of Exchange, Types of Exchange
Definition

(1) To constitute consideration, a performance or a return promise must be bargained for.

 

(2) A performance or return promise is bargained for it if it sought by the promisor in exchange for his promise and is given by the promisee in exchange for that promise.

 

(3) The performance may consist of

(a) An act other than a promise, or

(b) A forbearance, or

(c) The creation, modification, or destruction of a legal relation.

 

(4) The performance or return promise may be given to the promisor or to some other person.  It may be given by the promisee or by some other person.

Term
RS 86: Promise for Benefit Received
Definition

(1) A promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.

 

(2) A promise is not binding under (1):

(a) if the promisee conferred the benefit as a gift or for other reasons the promisor has not been unjustly enriched; or

(b) to the extent that its value is disproportionate to the benefit.

Term
RS 89: Modification of Executory Contract
Definition

A promise modifying a duty under a contract not fully performed on either side is binding:

(a) If the modification is fair and equitable in view of circumstances not anticipated by the parties when the contract was made, or

(b) To the extent provided by statute, or

(c) to the extent that justice requires enforcement in view of material change of position in reliance on the promise.

Term
UCC 2-209 
Definition
An agreement modifying a contract needs no consideration to be binding, however, there must be good faith, and any oral modification clause must be complied with.  A change in the market may qualify as good faith because the alternative is breach.
Term
RS 79: Adequacy of Consideration; Mutuality of Obligation
Definition

If the requirement of consideration is met, there is no additional requirement of

 

(1) a gain, advantage, or benefit to the promisor or a loss, disadvantage, or detriment to the promisee; or

 

(2) Equivalence in the values exchanged; or

 

(3) "Mutuality of obligation"

Term
Bargained for under RS 71
Definition
Consideration and the promise bear a reciprocal relation of motive.  The consideration induces the making of the promise and the promise induces the furnishing of the consideration.  It isnt enough that  the promise induces the conduct of the promisee or that the conduct of the promisee induces the making of the promise. Both elements must be present, or no bargain.
Term
RS 78: Voidable and Unenforceable Promises
Definition
The fact that a rule of law renders a promise voidable or unenforceable does not prevent it from being consideration.
Term
RS 90: Promise Reasonably Inducing Action or Forbearance
Definition
A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.  Remedy limited as justice requires.  Charitable subscriptions and marriage settlements do not require proof of actual reliance.
Term
RS 347: Expectation Damages
Definition

Goal is to put the injured party in the position he would be in if the contract had not been breached.  Give P the benefit of the bargain, including any profits he would have made from the contract.

 

Measured by:

(a) Loss in value to him of the other party's performance caused by the other party's failure or deficiency

(b) any other loss, including incidental or consequential loss, caused by the breach (not anticipated costs of performance), less

(c) any other cost or other loss that he has avoided by not having to perform.

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