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Contracts

K

ConceptElements
Ad does not equal offer unless: 1. Definite Intent to make offer 2. Explicit to terms it includes 3. Leaves no important terms unstated 4. Accounts for over acceptance
When is ad an obvious joke? If reasonable person thought yes, would not rise to K; if both parties subjectively think offer, then no.
What is an offer? Manifestation of willingness to enter unambiguous agreement that objectively seems to invite acceptance to K from the other party's unambiguous acceptance.
What is modern objective theory of if an offer was made? if a reasonable person would think an offer was made, BUT subjective truth trumps objective manifestation when parties agree --> the goal is to get to the intention of parties
What are the 4 ways to destroy an offer? Rejection, Revocation, Death, Lapse
What is the difference between indirect & direct revocation? Direct is when offeror tells offeree directly, and indirect is when the offeree learns from a reliable 3rd party that offeror has rescinded the offer, so long as the offeree has yet to accept it.
What is the mirror image rule? When offeree must comply w/ the terms specified in the offer w/o exception or variance in time, place, or manner.
What are the exceptions to the mirror image rule? 1. When the variation isn't really a variation. 2. when manner of acceptance is specified but any reasonably manner is appropriate within the meaning of the specification
In interpreting acceptance, which party is the language construed toward? Language is construed against the drafter unless they drafted as a matter of convenience. Courts do not want to punish a drafter who took the initiative to draft the offer if both parties were on equal footing.
Who determines the intent of the parties regarding the language of the contract? Jury
What is a bilateral contract? A bilateral contract is where there are unperformed obligations for both parties. Courts prefer to find bilateral contracts when the language is ambiguous, although if the offeror has not specified, the offeree may choose which kind it is.
What is an example of an offeree choosing a contract to be bilateral or unilateral? Offeror offers $20 for the washing of his car. Offeree can accept then and there, making a promise to do it (bilateral) or simply show up and wash the offeror's car (unilateral) where the full performance and acceptance are the same.
What is the mailbox rule for a regular contract? Where the acceptance made in the manner invited by the offer is completed as soon as it is put out of offeree's possession, without regard to whether it reaches offeror. Acceptance must be by same reliable medium or better. This also counts for e-mail.
What is the mailbox rule for a option contract? Where acceptance is under an option contract, the acceptance is not completed until received by the offeror.
What happens when the mailbox rule doesn't apply? Acceptance is only effective upon receipt by offeror.
What is consideration? When each party bargains for a desired benefit or detriment from each other that makes the contract legally enforceable.
What is a forbearance? A forbearance is when a party chooses not to sue for a past claim.
What is a release? A release is when a party gives up future claims against another party. The claim must have been valid (colorable) and the party must also have had a good faith belief that she has a colorable claim.
When is consideration actually a gift, and therefore invalid consideration? Generally, gifts do not count as consideration. If one party is not required to perform, then the other party's performance is simply a gift.
When consideration lists an illegal performance, does it count as valid consideration? If there's least one legal amongst the different considerations, then the entire thing is valid. But if the illegal considerations were required to perform, then the contract could still be upheld even if the party only performed the legal consideration.
Is a contract binding when with a minor? Contracts are not binding on either side until the minor has reached the requisite age. After that, the party has a reasonable amount of time to disaffirm the K, otherwise it becomes binding.
What is an illusory promise? When one of the parties makes a promise but retains full discretion not to uphold it.
Under PELDR, what is the first way to modify? PELDR states that to modify an existing contract, cannot demand more without consideration on both sides. Cts will look into the adequacy of the consideration since the new duty has to be more than a pretense of a bargain.
Under PELDR, what is the second way to modify? It's possible to modify w/ consideration on one side, but only when there's unanticipated circumstances, voluntary agreement, K not fully performed by both sides, and the mod is fair and equitable. Cts again will look into the adequacy of consideration.
If there is no K, how can a party still get a remedy? Through promissory estoppel.
What are the elements of promissory estoppel? For PE, there must have been a promise (such as an illusory promise), promisor reasonably expected reliance, reliance, injustice from reliance, and non-enforcement re: remedy.
What damages can you receive from PE? When using PE, the only remedy available is reliance damages, which is however much it costs to get the party back to where they were before the promise?
What types of Ks are subject to the SOF? MYLEGS: Marriage, longer than 1 year, land, executory, goods, surety
What are the requirements to comply with SOF? ID subject matter so its reasonably understood, essential terms, authentication, [K until party brings up SOF]
What are the exceptions to SOF? SWAPP: Specially manufactured goods, written merchants confirmation, admission under oath, partial performance, promissory estoppel
What are the 7 defenses? Unconscionability, undue influence, mistake, misrepresentation, concealment, nondisclosure, capacity. Only voidable by party asserting defense
Expand on MYLEGS: promises for marriage, any K that will be performed & completed more than a year, transfer of real estate, promises to pay debt of estate from executor's private funds, goods 500+, paying debt of another
Expand on exceptions to SOF: custom made & identifiable for an order, goods in kind/specialized knowledge sent w/i reasonable time, unless objected w/i 10 days, partially performed saves oral agreement, & PE
What is misrepresentation? When K had Material misrepresentation (fundamental, but false, to K) by A, assent to K by B, B induced by misrep, recipient relied on misrep; don't need intent/knowledge to mislead, $ offers not enough for reliance
What is nondisclosure? not telling someone something vital to decision of making K, BUT generally no liability unless: Fiduciary relationship or law imposes obligation to disclose
What is concealment? When purposefully hiding something, the elements must contain: (1) deliberate concealment (2) of a latent observation, (3) that's of sig. nature such that (4) justifies rescission as remedy
What is capacity? when a party lacks a certain attribute such that it renders them incapable of making a binding K
What is undue influence? When high pressure from dominant individual (obj) that takes unfair advantage (subj) of other's weakness. The Odorizzi factors help determine whether there was high pressure that caused an unfair advantage. But if K had been reached few days later, not UI
What are the Odorizzi factors (7)? Unusual place, unusual time, insist on finishing @ once, emphasis on consequences of delay, multiple persuaders, absence of 3rd party advisors, & no time to consult them
What is unconscionability? When something about the K "stinks in the nostrils of justice," that isn't necessarily right one way or another, but ct had to decide upon.
What can happen to K when unconscionability defense asserted? The term that is unconscionable can be stricken from K or the entire K can be rescinded.
What is a mistake? A mistake is when one or both parties has a belief of a fact of the K that's not true. There can be a bilateral or unilateral mistake. The adversely affected party can only void the K if they did not bear the risk of the mistake.
What is a bilateral mistake? A bilateral mistake is when a mistake was made by both parties at time of K, of basic assumption of which K was made, no risk of loss allocated to party seeking relief, and is voidable by adversely affected party.
What is a unilateral mistake? When a mistake was made by 1 party at time of K, of basic assumption of which K was made, no risk allocated to party seeking relief, and enforcement would be unconscionable OR other party has reason to know if mistake or his fault caused the mistake
When does the party bear the risk of the mistake? Party bears risk of mistake when (1) allocated by agreement, (2) knew had limited knowledge but treats ltd knowledge as sufficient OR (3) risk allocated by court
What is the parol evidence rule? The parol evidence rule determines whether courts will allow extrinsic evidence to be included in helping determine the meaning of the K.
What do you need to allow extrinsic evidence? If K not integrated, extrinsic evidence will be admitted. If K is integrated, court will allow any (little UCC) to supplement the K. If the evidence does not fit w/i the little UC, the court must determine whether the K is complete or partial using 3 jxs
What are the 3 little UCCs? Trade usage: which is any customs within a trade that do not contradict what's in K, COP, which looks to the multiple performances within the uncompleted K, and COD which looks at trends in prior similar Ks btwn the parties
What are the 3 approaches to determine complete/partial integrated agreement? Strict approach, UCC approach, RST approach
What is the strict approach for Parol Evidence? The strict approach looks only at the language of the written instrument and if it appears final, will be considered complete. If not, then partial.
What is the UCC approach for Parol Evidence? The UCC approach asks whether the parties "certainly" would have included the term at issue. If yes, then it means they purposely left it out, and it is thus complete. If no, then it is partial.
What is the Restatement approach for Parol evidence? The RST approach asks whether the term at issue would have naturally been left out of the K? If yes, then it is partial. If no, then it is complete.
What does a merger clause do? A merger clause is indication that the parties intended the agreement to be complete, but is not dispositive that it is complete. At most, the court will consider it in barring extrinsic evidence when weighing along with whichever jx approach is used.
What is the hierarchy of deference in Parol Evidence? The court will look to the written word first, then course of performance, course of dealing, and then trade usage. If all types are present, then use this hierarchy to determine what will
What is the good faith/fair dealing standard? In every term of a contract, there is an inherent nonwaivable obligation to do exactly what you agreed to do in the interests of expectations of other party. For one to argue a breach of good faith, the breach must be attached to a COA, not by itself.
When can one argue that the other party has not performed to their best efforts in the K? When parties have given exclusive rights to another, there's an implicit obligation of best efforts. Threshold is context specific, but trade usage may be brought in to determine what best effort is. Consideration of K is the obligation of best efforts.
What is a party arguing when arguing they have an excuse? The party is arguing that, although the contract is legally binding, the party should not have to perform for a particular reason.
What are the potential excuses one can argue? A party can bring up an excuse when, under unanticipated circumstances, it is impracticable for the party to complete their obligation to the contract, or when there has been a frustration of purchase such that the heart of the K cannot be achieved.
How do you argue impracticability? The party must argue that there was (1) an event unanticipated by both parties, that occurred after the K was made, (3) such that performance central to K (4) was made impracticable.
How do you argue frustration of purpose? The party must argue that (1) after the K was made, (2) the principally frustrated purpose was substantially frustrated by (3) an event both parties reasonably assumed wouldn't happen. Also the language of the K and circumstances that occurred cannot cont
How do you calculate damages? Under the Surplus Based Method, expectation damages are calculated according to the formula: Anticipated Benefit - Anticipated Cost - Actual Benefit + Actual Cost
What limitations are there to the surplus based method? The injured party is assumed to have mitigated damages using reasonable methods (regardless of whether they actually did). Damages must be reasonably foreseeable or result of circumstances known to and accepted by breacher. Ct can't speculate wildly.