Level 333
Level 334

Contracts & Sales


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Definition for a Contract (6 elements)
This a legally enforceable, binding agreement where there is a legal basis for enforcing the promise, through bargained-for consideration, which requires:
It is
What is an Offer (2 to 3 elements, with CL and UCC distinctions)
Under the CL, What counts as definite and certain terms?
Under the CL, this is established where the K states
MAILBOX Rule and Post-Rejection Acceptance
This rule DOES NOT APPLY IF
When is an Offeror's revocation of his offer EFFECTIVE?
This takes effect only UPON RECEIPT by the offeree.
MB Rule and the Medium for communicating the offer and/or acceptance
If the acceptance is via an "instantaneous two-way communication," such as telephone or traceable fax,
Definition for BARGAINED-FOR Consideration
This requires a deal in which
Legal Detriment is..
This is where the parties bargain for each person's detriment to do something they legally entitled to do or refrain from doin, in exchange for a promise from the other party, such that
What is a Gift
This a promise that does not induce the recipient to suffer a detriment or make a promise in bargained-for exchange.
Distinguish between gift and consideration by:
Test for this distinction is whether the offeree could have reasonably believed that the intent of the offeror was to induce the action.
What is a MODIFICATION? and what does CL requires vs. what UCC requires?
A modification is an alteration to the original terms of the K.
These are still binding in this circ:
What are the types of Promises that are Binding EVEN W/OUT Consideration?
Construction Contracts and Promissory Estoppel
Under this theory, an agreement to AVOID revoking a sub-bid offer is ENFORCEABLE against the SUB-CONTRACTOR
Void K and is...
this exists where the entire transaction is a nullity, as if no K existed between the parties
Voidable Ks are:
This operates as a valid K, UNLESS AND UNTIL one of the parties takes steps to void that K.
Unenforceable Ks are
This is a valid K
These can be asserted by someone in breach of K by either
Name the K Defenses to FORMATION and the effect of such K defense
Name the K Defenses to ENFORCEMENT
This defense is where party asserts the manner in which a K was formed should bar its enforcement.
Defenses to LIABILITY (i.e. Enforcement under the K)
Here, the party assert there is some supervening event or change in circs AFTER K formation. RESULT: The K's party should be discharged from his duty to perform his contracted promise. And Is not li…
Delegation
The Transfer of DUTIES AND OBLIGATIONS under a K
A K that falls within this rule scope is UNENFORCEABLE unless
Statute of Frauds; definition and elements, and which Ks fall within SOF
Parol Evidence Rule
generally prevents a party to a written contract from presenting prior extrinsic evidence that contradicts the terms of the contract as written.
This is where:
Definition of a Breach of Contract an the CL test for whether a Breach is Material or Minor
Possible where:
Retraction of Repudiation under CL
Definitiotn of K Remedies
Meant to compensate the nonbreaching party for actual economic losses.
Definition for Loss in Value
the difference between the performance that the non-breaching party should have received under the contract and what was actually received, if anything.
Defintion of other loss
consequential and incidental damages, if any.
Definition of cost avoided
is the additional costs that the non-breaching party can avoid by rightfully discontinuing performance under the contract as a result of the other party's breach.
Definition of loss avoided
the beneficial effect of the breach due to the non-breaching party's ability to salvage or reallocate resources that otherwise would have been devoted to performing under the contract.
partial performance (reliance damages?)
generally recover for work performed, plus expectation damages for the work not yet performed.
Economic waste
hen the amount of damages awarded is disproportional to any economic benefit or utility gained as a result of the award.
Incidental Damages
awarded to the non-breaching party as compensation for commercially reasonable expenses incurred as a result of the other party's breach. In the sale of goods, such damages may include the cost of inspecting, transporting, ca…
Nominal Damages
B/c Damages do not need to be alleged in a cause of action for breach, and if no damages are alleged or none are proved, THEN the plaintiff is still entitled to a judgment for "nominal" damages (e.g., one dollar).
Mitigating Damages
A party to a contract must avoid or mitigate damages to the extent possible by taking such steps as to not involve undue risk, expense, or inconvenience. The non-breaching party is held to a stan…
Restitutionary Damages
restore to the plaintiff whatever benefit was conferred upon the defendant prior to the breach.
Reliance Damages
recovered if a non-breaching party incurs expenses in reasonable reliance upon the promise that the other party would perform., REGARDLESS of whether the breaching part or defent benefits from the non-breaching party's expenditures.
Specific Performance
Trigger: When damages are AN INADEQUATE REMEDY, can pursue this equitable remedy. 1) The test for whether damages are inadequate:
Equitable defense like:
Defenses against non-breaching party's suit (where formation and enforceability are not at issue)
Remedies under UCC - for the buyer
These depend on the nature of the seller's conduct AT THE TIME Seller's performance is required per the K agreeement:
Declaratory Judgment
This is an adjudication of the rights and duties of a party under K when
Remedies for Conversion
This is FMV of the goods At the time of the buyer's dominion and control over the goods
When does the Common Law govern Contract quesiton?
This law governs contracts concerning interests in real estate, or Services.
When does the UCC govern a contract
This law governs contracts, among ANY parties, involving sale of goods.
ALL or NOTHING RULE
WHere a contract is mixed with goods and services or real estate,
Divisible K
where there is K that is easily separated into legal and illegal parts so that recovery is available on the legal part(s) only.
Predominant Purpose Test
Under this test, we ask whether the good or the service play a bigger role, in order to determine whether it is either the Common Law, or the UCC that is applicable to the given contract.
This test evaluates :
What is the OBJECTIVE Test?
and what is NOT a defense to their enforcement?
a contract under which a buyer agrees to buy all that he will require of a product from the other party
THese are
Common fact pattern that test the creation of power of acceptance
Who is a merchant?
Under the UCC, this party is a businessperson who REGULARLY deals in the SPECIFIC TYPE of good at issue.
Requirements for Firm Offer (4 elements)
Under the UCC, this is valid as IRREVOCABLE Offer if:
and one effect on question of whether offeree breached.
This serves as a bar to revoking an offer under a Uni K (agrement for a promise that seeks acceptance via return performance, because a uni K limits acceptance only to performance, not a return promise.
Detrimental Reliance
This creates an irrevocable offer where
Unilateral Offers v. Bilateral Offers
Which one depends on the offeror's manifestation of what type of offer he makes (ie. acceptance via
WHen does Acceptance Plus Breach exist??
Under UCC, This tricky circ occurs where
What is the MAILBOX rule?
Between dispatch of the communication of acceptance and the receipt of such comm to offeror
Other form of Acceptance: Implied-in-act Contracts
This is acceptance where you communicate acceptance WITHOUT writing or speaking, but rather through gestures or actions.
Under the CL's MIRROR IMAGE RULE
How common law treats a COUNTER OFFER (i.e. the proper rule)
How UCC treats "counteroffers"
Under UCC, there is an abandonment of the Mirror Immage Rule, and replacement of that rule with UCC 2-207
UCC 2-207- To determine whether a "definite and seasonable acceptance" was created.
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 offere…
Under UCC 2-207, ALL of the following must exist:
Under UCC, New terms in purported acceptance control ONLY IF exist the ALL of the following circs (i.e. they must be true)
BUT the parties still act as if ther is an agreement?
If those two circs exist, then ONLY the terms that BOTH writings AGREE ON will become part of the K
...a written confirmation which is sent within a reasonable time operates AS AN ACCEPTANCE ..)
When these three circs exist, just work through the same steps (below) for UCC 207(2), to ascertain whether THE NEW TERMS IN this (i.e. the writer's purported acceptance) will govern the Contract:
Nominal Consideration
While courts ordinarily do not evaluate the adequacy of consideration, the court WILL NOT permit this sort C becasue it is understood as "a pretense of consideration." It must still be within a RANGE…
Illusory Promise
Where
Past Consideration
NOT C, you already rendered the legal detriment, or already conferred the benefit.
This can be C if
Promising not to sue (e.g. setlement of legal claim)
Exception to the CL's "NO mod without C, or else PED applies" approach"
Exceptions include a change in performance, a third party promising to pay, or unforeseen difficulties that would excuse performance.
SUCH a promise is BINDING as K MOD IF
Is promising partial payment for release from a debt obligation binding?
Mod under UCC
B/c no PED followed, this is allowed under UCC WITHOUT ADDTL C, so long as
Reliance Theory or Promissory Estoppel
Under CL, the theory of reliance or promissory estoppel can be a basis for promisorry liablity, even in absence of consideration, where
Moral Obligation Plus Subsequent Promise (the "Half Theory")
This is suggesting that a moral obligation plus a subsequent promise to pay can be binding.
Majority view towards a SEAL on a document.
ONLY in minority view, a seal on a doc acted as C subst.
Misunderstanding
This a defense to K formation, provided:
Incapacity
This is a Defense to K formation where:
Mistake
This is a belief, that is NOT in accord with a PRESENT fact.
MUTUAL Mistake (5)
This is a mistake affecting both parties, that lets the ADVERSELY AFFECTED PARTY RESCIND, IF:
UNILATERAL MISTAKE
THis is a msitake that lets the adversly affected party rescind IF:
Definition of Misrepresentation
A statement that, at the time of K formation, IS NOT TRUE, and that statement be either intentional (fradulent) OR accidental.
To assert defense of MISREP
note: 2 flavors (WITHIN the elements0
Fraud in execution
This is when you trick someone into signing something that she doesn't even know is a contract.
Nondisclosure - (akin to Fraudulent Misrep)
The other party doesn't learn the truth about something, but now you just remain quiet. Normally, you need not tell the other side about all material facts related to the deal.
ECONOMIC duress
Under CL, this arises where one party makes threats to INDUCE another party to contract (or modify a contract).
Undue Influence
Arises when
Illegality
Here, where the K is illegal itself, then NOT enforceable.
Void against Public POlicy
In situations that are NOT formally illegal, but present some other policy ocncern (e.g. a BROAD exculptaroy K; Surrogacy Ks, at least in NY).
Unconscionability
Here a court looks at whether the deal SHOCKS the conscience of the court. There are two type of this: Procedural and Substantive.
Procedural Unconscionability
A defect in the bargaining process itself, such as a hidden term (surprise) or an absence of meaningful choice (no other contracting option);
Substantive Unconscionability
A rip-off in some term of the contract.
EXCEPTION to the Suretyship SOF req.
If the main purpose in agreeing to pay the debt of another is for the SURETY'S OWN economic advantage, then the SOF does NOT apply.
TEST for Satisfyng SOF
This can be met either by:
Services Contracts
Under CL's SOF, Full PERF of this type of K, BY EITHER PARTY, DOES MEET THE SOF.
Real Estate exception to SOF -
Here Part Performance will serve as exception for such Ks where at least two of
Under SOF and Agency Law,
SOF and Agency Law - Equal Dignity Rule
MODIFICATION and SOF
If you are modifying a deal that was already subject to SOF, then the TEST for whether the MOD itself need to meet SOF is:
PER under UCC
Under UCC, this rule presumes a writing is only at most a partial integration, UNLESS, the parties would have CERTAINLY included a disputed term in the writing.
LEGAL DEFINITION OF A Warranty
This is a promise about a term of the K, and that term explicitly shifts risk to the party making the promise.
Express Warranty
A promise that affirms or describes the goods and that itself is part of the basis of the bargain, BUT NOT MERELY the seller's opinion
triggered only when
Implied Warranty of Merchantibility
Implied Warranty of Fitness for a Particular Purpose
This warranty is triggered when a buyer relies on a seller's expertise to select a special type of good that will be used for a special purpose.
Conditions
This is another way to shift risk by:
Express Conditions
created by language in the contract.
Test for assessing satisfaction of COnditions
Depends on Natures of the performance
Waiver of Conditions
The party receiving protection can do this by either words or by conduct
and when are either triggered.
The contract cannot be performed AT ALL
Excuse (Discharge) from Performance
Under CL, a promisor may not be liable for nonperformance IF some supervening event or change in circs arises AFTER the formation of the K, where either such event or change discharges the promisor's …
Accord and Satisfaction
An excuse where the parties to an ealrier contract agree that performance will be satisfied instead by the completion of a differnet performance.
Impracticability - Definition and elements
Under the Restatement 2d of Contracts and the UCC, this defense exists and allows the asserting party to be excuesed from performance if
PARTIAL Impracticability
Under UCC, this exists where the condition does not prevent a seller from delivering SOME of the goods.
Frustration of Purpose
This condition exists where unexpected events arise that destroy one party's PRINCIPAL PURPOSE (i.e. the MAIN REASONS) for forming the K, even if the performance of that K is not impossible.
Rescission
Under CL, this is where the non-defaulting party cancels or rescinds the contract. To do this:
release
To let go of something, to drop something (like a bomb from a plane).
Under UCC, if the following exists:
ANother excuse or discharge ground - DESTRUCTION (not merely damage) to IDENTIFIED Goods
MONEY DAMAGES
The typical remedy in K law, includes
These Damages requires:
Three Limits on EXP Damages
Consequential Damages
Unique losses special to the plaintiff.
General Damages
Type of loss that anyone would ordinarily suffer from a breach (e.g. incidental damages from fixing prob caused by the breach; cost of of storing rejected goods
(i.e. NO RUNNING UP THE DAMAGES!)
Under this CL - NBP must take:
Lost Volume Profits
Where the seller is a retailer who sells certain goods or services ALL the time (and had lots of product, but FEW buyers), then instead of seeking EXP damages, the seller seeks this instead,…
Here, the BUILDER (NBP) CANNOT "RUN UP THE DAMAGES"
Where there is Incomplete Performance (e.g. Construction Ks, where paying party breaches in a partially built K)
Alternative measure of EXP D, and the trigger?
Instead of cost to complete damages, use the Diminution in Market Value where
Liquidated Damages
These are set out in the K as an EXPLICITLY negotiated amount due upon breaches.
Punitive Damages
These damages are rarely awarded, unless the breach amount to some extraordinary wrongdoing that amounts to tort liablity (e.g. wanton and willful misconduct, like fraud)
Equitable Relief (3 types
Under CL, this is the exception to the general rule of awarding an NBP money damages. However, where money damages are considered not adequate, OR the K transaction is for a unique good or prope…
Who is a 3PB?
Generally, third parties to a K cannot sue to a contract, unless they have this statute. This is a non-contractual party who seeks to sue the promisor, and is an intended beneficiary (has righ…
Creditor Bs and Donee Bs
Two types of INTENDED Bs (i.e. and 3PBs)
What is a CREDITOR B?
This is a 3PB where the promisee strikes a deal with promisor in order to repay at some earlier debt to the third party.
What is a DONEE B?
Where there is NO preexisting obligation, BUT the promisee clearly intends to confer a gift of enforcement on a third party.
Depends on whether
Can the initial counterparties revoke or modify away the third-party's right to enforce the contract?
Teh beneficiary DETRIMENTALLY RELIED onthe rights
When does a 3PB VEST, and thus NOT lose enforcement rights:
Assignment
Transfer of rights under a K. usually seen
If the K states that rights are NOT assignable:
Then here, assess whether K prohibits assignments, or INVALIDATES
Where If K rights are ASSIGNED TWICE?
Depends on whether the assignee has paid consideration for the rights
(hint: Last in time)
HERE, the LAST assignment controls
(but not the exception: "Later in time")
HERE, the FIRST assignment for consideration will typically hold
Buyer's Recovery under UCC for goods not delivered
Under UCC, Art 2, this party can recover the return of any payments made on the goods he purchsed from the other party
UCC's Perfect Tender Rule
Under the UCC, the common law's doctrine of substantial performance is abandoned and replaced with this rule, and its delineated exceptions.
RISK OF LOSS - Trigger and then the steps of analysis
FIRST, Triggered by a GOODS K, and subsequent damage or destruction of the goods before the buyer receives them
This doctrine is satisfied where:
What is the Doctrine of Subst Perf's requirements (note: Only CL applicable, NOT UCC)
constructive condition of exchange
Generally a part to a K cannot recover until performance is tendered to the other party. Where an EXPRESS condition is not provided, then courts may read in THIS IMPLIED condition that deems pone par…
Which has more weight when determining the term of a contract that governs the parties?
The evidence of an EXPRESS term, is always GREATER THAN evidence of trade usage or custom in this situation.
Requirements K
For such a K, the K MUST expressly grant a party to the right to NOT do something that they otherwise agreed to under the K.
A mere statement of intention cannot manifest this form of assent to a Contract.
What is NOT an acceptance (other than a counteroffer or a rejection of an offer)
This party must exercise GOOD-FAITH, because the court will imply it if there's a dispute.
If there are conditions in a contract, and the party subject to the conditions ASSENTED to them?
Level 335