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VA Bar Notecards

Additional Law Flashcards




Elements of an offer:
1. Present intent to be legally bound
- As interpreted by a reasonable listener
- Invitations to deal are NOT offers, and neither are most advertisements
2. Knowledge by the offeree
3. Essential terms:
- Common law: parties, subject matter, price, quantity
UCC: fills gaps, usually just requires parties, subject matter, and quantity (except for output or requirements contracts)
Ways to terminate an offer:
1. Lapse
2. Death or mental incapacity of offeror
3. Destruction or illegality of subject matter
4. Revocation (except with an option or partial performance); can be actual or constructive
5. Rejection
Mailbox Rules:
1. Acceptance is effective upon posting
2. Rejection following acceptance is generally invalid even if offeror receives rejection first, unless offeror detrimentally relies on the rejection; then offeree is estopped from enforcing the K
3. When acceptance follows rejection, whichever one is received first will control
4. Revocations are effective upon receipt
Counteroffers and mirror-image rule:
1. Common law: acceptance under different terms is a rejection and counter-offer; acceptance must mirror the terms of the original offer
2. UCC when both parties are not merchants: acceptance is valid under original terms, additional terms are treated as a proposal to amend the contract and must be separately accepted
3. UCC when both parties are merchants: Battle of the Forms - a contract exists under the new terms of the acceptance, unless the terms materially alter the agreement, the offer expressly limits the terms, or the offeror objects to the new terms within a reasonable time

NOTE: Under battle of the forms, if one of the three exceptions is met, there is still a contract, but under the original terms
VA distinctions on consideration:
1. Can be unilateral
2. No promissory estoppel/detrimental reliance
Requirements for contract modification:
1. Common law: consideration
2. UCC: good faith only
3. SOF: a contract that AS MODIFIED falls within the SOF must generally be in writing
Defenses to contract formation:
1. Mistake
2. Misunderstanding
3. Misrepresentation/fraud
4. Illegality
5. Undue influence/duress
6. Unconscionability
7. Lack of capacity
Ways to create an irrevocable offer:
1. Option for consideration
2. Firm offer by a merchant on a UCC K (must be written and signed, can't exceed 90 days)
3. Part performance on a unilateral K
4. Detrimental reliance (look for contractor/subcontractor relationships)
Contracts that fall within the SOF:
1. K made in consideration of marriage
2. Suretyship
3. A K that cannot be performed within one year
4. UCC sale of goods for $500 or more
5. Real property
How can the SOF be satisfied?
1. Writing signed by the party against whom it is being offered that names the parties and the essential elements of the deal
2. Full performance on a services K
3. Part performance on a goods K (but only for the quantity delivered and accepted)
4. Possession, payments, or improvements to the land on a real estate K
5. Judicial admission
6. Failure to object to a confirming memo within 10 days, if both parties are merchants

Note: If a manufacturer has made a substantial beginning on creating custom goods, they are exempt from the SOF
What is the parol evidence rule?
1. Can't introduce evidence of written or oral statements made before the K was signed in a fully integrated K (look for a merger clause)
2. Can only introduce non-contradictory extrinsic terms in a partially integrated K (UCC presumes partial-integration unless terms most definitely would have been included)
3. Extrinsic evidence can be used to clarify ambiguous terms

DOESN'T APPLY to proving defenses to K formation or to statements made AFTER the K is signed (that's a modification)
What is an express warranty?
1. A promise that affirms or describes the goods and that is itself part of the basis of the bargain
2. Seller's opinion doesn't count
3. The use of a sample or model creates an express warranty
What is an implied warranty of merchantability?
1. Promise that the goods are fit for ordinary commercial purposes
2. Only applies when the seller is a merchant who deals in the goods at issue
3. Can be disclaimed, if done very clearly (look for words like "as is")
What is an implied warranty of fitness for a particular purpose?
1. Seller promises that goods will be fit for a special purpose
2. Only triggered when the buyer relied on the seller's expertise and seller knew about the special purpose
3. Seller doesn't have to be a merchant
4. Can be disclaimed
What is the constructive condition of exchange?
1. An implied condition that say's one party's performance is conditioned on another side's performance
2. Common law: CCE only requires substantial performance and no material breach (but nonbreaching party can recover damages for deficiency)
3. UCC: requires perfect tender (perfect goods and perfect delivery, although seller has a chance to cure if there is time left on the K, or if there is an insubstantial impairment on one delivery of an installment K)
4. Express conditions must be strictly satisfied
What are the seller's responsibilities in a shipment K?
1. Get the goods to a common carrier
2. Make arrangements for delivery
3. Notify the buyer
What are the seller's responsibilities in a destination K (FOB)?
1. Get the goods to the buyer's business
2. Notify the buyer
Who bears the risk of loss when goods are damaged or destroyed before they reach the buyer?
1. Agreement controls, if there is a risk of loss provision
2. Any breaching party bears the risk, even if breach was unrelated to damage
3. If the goods are being shipped:
- Buyer bears the risk in a shipment K
- Seller bears the risk in a delivery K
4. If the goods are not being shipped:
- Seller bears the risk until goods are delivered if seller is a merchant
- Buyer bears the risk once goods are tendered if seller is not a merchant
What are the valid excuses to contract performance?
1. Impossibility
2. Death of a special person
3. Frustration of purpose (very rare)
4. Accord and satisfaction
5. Novation (like a delegation, except BOTH parties agree that a substitute person will take over obligations; only then is original promisor excused)
What are a non-breaching parties options when there is anticipatory repudiation by the other side?
1. Sue immediately, unless the non-breaching party has completed his entire performance; can't sue early in that case
2. Demand performance and see what happens
3. A party can retract a repudiation unless the other side has commenced a lawsuit for breach or acted in reliance on the repudiation
4. In a UCC K, reasonable grounds for insecurity allows a party to demand assurance of performance and treat a failure to respond as a repudiation (but if assurance is given, you have to wait until they actually breach)
How do you calculate expectation damages?
1. Difference between the value of performance with the breach to the value of performance without the breach
2. Goal is to put the nonbreaching party in the same position they would have been in had the K been performed as promised
3. Must be proven with reasonable certainty
4. Unforeseeable consequential damages are not recoverable
5. Breached-against party must take steps to mitigate (if you refuse, damages are calculated as though you did)
6. Seller who regularly sells a type of product can argue for lost volume profits (so no duty to mitigate)
How do you calculate reliance damages?
1. Put the party in the same position it would have been in had the K never been created
2. Groundhog Day damages
How do you calculate restitution damages?
1. Give the plaintiff an amount equal to the economic benefit conferred on the defendant
2. Can sometimes equal reliance damages, but not always
When are punitive damages allowed in K law?
1. Almost never
2. An agreement for liquidated punitive damages is only enforceable if the amount was reasonable at the time of the K (not clearly a punishment), and actual damages from breach would be hard to prove
When is specific performance usually a proper remedy?
1. Real estate
2. Unique goods
3. When a seller exercises his right of reclamation within 10 days over a buyer who was insolvent at the time of purchase

Note: Specific performance is never available for personal service Ks (although a court might grant an injunction preventing someone from working for a competitor)
Which third-party beneficiary has a right to sue, intended or incidental?
Delegation vs. Novation
1. In a novation, both parties agree that one side's obligations will be performed by a substitute, and the original party is excused from liability
2. In a delegation, one side assigns their duties, and is still liable for the breach of the delegatee
When does a hybrid contract fall under the UCC?
1. VA takes an all-or-nothing approach; entire K must be UCC or entire K must be services
2. UCC has the advantage of the implied warranty of merchantability
3. VA courts apply the predominant purpose test to decide whether a K is goods or services
Is past consideration or moral consideration valid in VA?
VA quirks on warranties:
1. "This item is of good quality" is an opinion, not an express warranty
2. Implied warranty of merchantability applies to both new and used goods
3. A warranty disclaimer in the body of the contract in the same size, font, etc., is not conspicuous enough to be effective

NOTE: Warranties only apply to UCC Ks, not real estate, etc.
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