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Contracts

Finished but look to Equity cards & outline as to REMEDIES sections

QuestionAnswer
Contract 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
Common Law Common Law generally governs
Article 2 Applies when a contract involves the sale of good Goods= all things movable at the time they are identified as the goods to be sold under the contract. Does not apply to the sale of real estate, services, intangibles, or to construction contracts
Article 2: Merchants v. Nonmerchants Merchant= one who regularly deals in goods of the kind sold or who otherwise by his profession holds himslef out as having special knowledge or skills as to the practices or good involved.
Types of Contracts: As to Formation Express Contract=formed by language, oral or written Implied= formed by manifestations of assent other than oral or written language, i.e. conduct Quasi-Contract or Implied in Law Contract= They are construed by the court to avoid unjust enrichment.
Type of Contract: As to Acceptance Bilateral Contract- Exhange of Mutual Promises Unilateral-Acceptance by performance= the offeror-promisor promises to pay upon completion of the requestd act by the promisee. Once act is completed, K formed.
Unilateral Contract: Modern View Traditional unilateral contract occurs in only 2 situations: 1) when the offeror clearly indicates that completion of performance is the only manner of acceptance; and 2) where there is an offer to the public, such as a reward.
Type of Contract: As to Validity Void K= one that is totally without any legal effect form the beginning Voidable K= one that one or both parties may elect to void Uneforceable= agreement that is otherwise valid but which may not be enforceable due to a defense extraneous to K formatio
Creation of a Contract Was there in fact a K?? Ask: 1) was there mutual assent (offer and Acceptance)? 2) was there consideration or some substitute for consideration? 3) Are there any defenses to creation of the K?
Mutual Assent: Offer An offer creates a pwr of acceptance in the offeree and a corresponding liability on the part of the offeror. For communication to be an offer, it must create a reasonable expectation in the offeree that the offeror is willing to enter into a K
Offer: Reasonable Expecation 1) was there an expression of a promise, undertaking, or commitment to enter into a K? 2) Were there certainty and definiteness in the essential terms? 3)Was there communication of the aboce to the offeree?
Reasonable Expectation: Promise, Undertaking, or Commitment There must be INTENT to enter inot a K. Look to: Language, surrounding circumstances, prior practice and relationship of the parties, and Method of communication (Broad Communications = solicitation of an offer; Ad= invitations for offers
Reasonable Expectation: Definite and Certain Terms Req'ts for certain types of Ks: 1. Real Estate Trans= MUST identify the land and the price terms. 2. Sale of Goods= the quantity being offered must be certain 3. Services= nature of work to be performed is required.
Reasonable Expectation: Definite and Certain Terms; Missing Terms One of or more terms left out does not prevent the formation of a K if it appears that the parties intended to make a K and there is a reasonably certain basis for giving a remedy. Court can supply reasonable terms -Except in K for real prop
Reasonable Expectation: Definite and Certain Terms; Vague Terms The presumption that the parties' intent was to include a reasonable term cannot be made if the parties have include a term that makes the K too vauge to be enforced. Uncertainty can be cured by Part Performance or acceptance of full performance.
Termination of an Offer -Termination by Acts of Parties -Termination by Operation of Law
Termination of an Offer: Acts of Offeror Revocation= the retraction of an offer. An offeror may revoke: directly comm the revocation to EE. Revoked indirectly if offeree receives: 1) correct infor 2) from reliable source 3)acts of OR indicate no longer wish to make offer. -Effective when rec.
Limitation on Offeror's Power to Revoke Offers can be revoked at will by the offeree, even if he has promised not to revoke for a certain period, except in: -options -Merchant's Firm Offer -Detrimental Reliance -Part Performance
Options An option is a distinct K in which the offeree gives consideration for a promes by the offeror not to revoke an outstanding offer.
Merchant's Firm Offer Under Art 2 1 If a merchant 2 offers to sell goods in a signed writing 3 the writing gives assurances that it will be held open; the offer not revocable for lack of consideration during time stated, or if no time stated, a reasonable time (not to exceed 3 mons)
Detrimental Reliance When offeror could reasonably expect that offeree would rely to her detriment on offer, and offeree does so rely, offer will be held irrevocable as an option contract for a reasonable lenght of time.
Part Performance: Unilateral Contract Offers an offer in unilateral K irrevocable once performance has begun. OR must give OE reasonable time to complete performance -OE not bound to complete performance -preps to perform=sub. preps to perform don't make offer revocabable, may be Det Rel.
Part Performance: Offer indifferent as to manner of acceptance Most offers are indfferent as to manner of acceptance, thus bilateral k may be formed upon the start of performance by OE. Once OE begins performance, the K is complete and revocation becomes impossible.
Termination of Offer: Acts of Offeree 1. Rejection 2. Lapse of Time
Rejection 1. Express Rejection= statement by the OE that she doesn't intend to accept offer 2. Counteroffer as Rejection= made by OE-same subject matter as orig offer but different terms. -Effective when received by OR -Rejection of Option- no termination of off
Lapse of time an offer may be terminated by the EE's failure to accept within the time specified by the offer or, if no deadline was specified, within a reasonable time.
Termination of an Offer: By Operation of Law 1. Death or insanity of either party 2. Destruction of the propsed K's subject matter 3. Supervening illegality
Acceptance -manifestation of assent to terms of offer -generally, only person to who offer is addressed has pwr of acceptance, member of class to which it was offered -pwr to accept can't be assigned unless pd consid to keep offer open -offerree must know of offe
Acceptance of Offer for Unilateral Contract -offer to for unilateral K is not accepted until performance is completed -offeree not req'd to give offeror notice that he has begun requested perfromance but is req'd to notify w/in a reasonable time after performance is completed
No notice req'd when: 1)offeror waived notice; or 2)the offerees performance would normally come to the offeror's attention w/in a reasonable time
Acceptance of Offer for Bilateral Contract -accepted either by a promise to perform or by the beginning of performance -must be communicated to offeror unless offer provdies it need not be communicated
Method of Acceptance -unless otherwise provided, an offer is construed as inviting acceptance in any reasonable manner and by any medium reasonable under the circumstance
Offers to buy goods for current or prompt shipment -construed as inviting acceptance either by a promise to ship or by current or prompt shipment of confroming or nonconforming goods
Shipment of Nonconforming Goods -an acceptance creating a bilateral K a well as a breach of the K unless the seller seasonably notifiles buyer that a shipment of nonconforming goods is offered only as an ACCOMODATION
Acceptance must be Unequivocal -absolute and unequivocal acceptance of each and every term of the offer (mirror image rule) -Common Law-any different terms inthe acceptance make the response a rejection and counteroffer
Article 2: Battle of the forms provision -the proposal of add'l/different terms by offeree in a definite and timely acceptance doesn't constitute a rejection and counteroffer, but rather is effective as an acceptance, unless acceptance is expressly made conditional on assent to add'l/diff terms
Art 2: Conditional Acceptance -when acceptance made expressly conditional on the acceptance of new terms, it's a rejection of offer.
Mailbox Rule -K at moment of dispatch unless: 1)offer stipulates accept not effective til rec'd 2)option K 3)OE sends rejection then acceptance, whichever arrives 1st 4)offeree sneds acceptance then rejection, accept effective unless rejection arrives 1st
Auction Contract -UCC -sale by auction complete when auctioneer announces by fall of hammer -auction sale is w/ reserve unless goods are explicitly w/out reserve -w/reserve=auctioneer may w/draw goods @ any time until he announces completion of sale
Consideration Elements: 1)there must be a bargained for exchange btwn the parties; and 2)that which is bargained for must be considered of legal value or it must constitute a benefit to the promisor or a deteriment to the promisee
Bargained For Exchange -req's the promise to induce the detriment and the deteriment induce the promise -act or forbearance by promisee is sufficient if it benefits promisor
Past or Moral Consideration -generally, not enforceable -Exceptions: 1)where past oblig is uneforceable cuz of technical defense, will be enforceable if new promise is made in writing or is partially performed
Legal value -crts req that party incur detriment (doing something he is not legally obligated to do or by refraining from something he has legal righ to do)
Pre-existing duty -Generally not consid -Exceptions: 1)new or different consid promised 2)promise is to ratify voidabel obligation 3)duty is owed to 3rd party rather tahn promisor 4)honest dispute as to duty; or 5)unforseen circumstances sufficeint to discharge party
Mutual and Illusory Promises -consid may exist on both sides of contract -if only one party is bound to perform, the promise is illusory and will not be enforced
Consideration: Promissory Estoppel or Detrimental Reliance -promise enforceable to prevent injustice if: 1)promisor should reasonably expect to induce action or forbearance 2)of a defininte & substantial character 3)& such action/forbearance is in fact induced
WY: Consideration: Legal Value -follows 2nd Rest & departs from use of benefit/detriment test -crts look to whether something was bargained for and given in exchange
WY: Pre-existing Duty -if add'l provisions of agrmt were contemplated in parties original understanding, even if they were not set out in detail, no new consid is req'd to support such provisions
WY: Promissory Estoppel/Detrimental Reliance -applies in employment K situations -EE can bring breach of K if EE can prove: 1)existence of clear & definite agrmt 2) proof that party urging doctrine acted to its detriment in reasonable reliance on agrmt adn 3)the equities support enforcement of agrm
Defenses -K may be unenforceable because there is a defense: 1)to formation of K 2)because there is a defect in capacity 3)because a defense to enforcement of certain terms exists
Defenses to Formation -Mutual mistake of Existing Facts -Absence of Consideration -Public Policy Defenses
Absence of Mutual Assent nsmission) -Ambiguous Contract Language -Misrepresentation
Mutual Mistake as to Existing Facts -both parties mistaken about existing facts k is voidable by adversely affected party if: 1)mistake concerns basic assumption on which K is made 2)mistake has material effect on agreed-upon exchange 3)party seeking avoidance didn't assume risk of mista
Unilateral Mistake -if only one party is mistaken about facts relating to agrmt, the mistake will not prevent formation of K -if nonmistaken party knew or had reason to know of mistake made by other party, the K is voidable by mistaken party
Mistake by Intermediary (transmission) -when there is a mistake in the transmission of an offer or acceptance by an intermediary, the prevailing view is that the message as transmitted is operative unless the other party knew or should have known of mistake
Ambiguous Contract Langauge -K includes term w/ 2 possible meanings: 1)neither party aware-no K unless both parties intended same meaning 2)both parties aware-same as above 3)One party aware-binding K based on what the ignorant party reasonably believed to be the meaning
Misrepresentatin -Fraudulent Misrep (fraud in the inducment) -Nonfraudulent Misrep
Fraudulent Misrepresentation -if party induces another to enter into K by using fraudulent misrpe the K is voidable by innocent party if she justifiably relied on the fraudulent misrep -can be inferred from conduct
Nonfraudulent Misrepresentation -even if misrep not fraudulent, K voidable by innocent party if justifiably relied on material misrep -Material if: 1)info asserted would induce reasonable person to agree or 2)maker of misrep knew info asserted would cause a particulare person to agree
Absence of Consideration -if the promises exchagned at the fromation state lack the elements of bargain or legal detriment, no contract exists. -one of the promises is always illusory
Public Policy Defenses to Contract Formation -If consid or subject matter of K is illegal the K is void -Exceptions: 1)P is unware of illegality while D knows of illegality 2)parties not in pari delicto (one party not as culpable as other) 3)illegality is failure to obtain license when license..
for revenue-raising purposes rather than for protection of the public -if only purpose behind K is illegal, K is voidable by party who was 1)unaware of purpose or 2)aware but didnt facilitate the purpose and purpose doesnt involve serious moral turpitude
Defenses Based on Lack of Capacity -Legal Incapacity to Contract -Duress and Undue Influence
Legal Incapacity to Contract -Contracts of Infants (minors) -Mental Incapacity -Intoxicated Persons
Contracts of infants (minors) -infants generally, lack capcity to enter into K binding on themselves -contractual promises of an adult made to an infant are binding on adult
Contracts of Infants: Dissaffirmance and Affirmance -May disaffirm K any time before reaching age of majority. Must return anything rec'd under K that still remains at time of disaffirmance -May affirm either expressly or by conduct (failing to disaffirm K w/in reasonable time after reaching age of maj)
Intoxicated Persons -so intoxicated that he doesn't understand the nature & significance of promies may be held to have made only a voidable promise if the other party had reason to know of the intoxication -intoxicated person may affirm K upon recover
Duress -voidalbe and may be rescinded as long as not affirmed -common type of duress occurs when a party's assent is procured by an improper threat.
Economic Duress -w/holding somethinhg someone wants/needs is economic duress if: 1)party threatens to commit a wrongful act that would seriously threaten the other contracting partys prop or finances and 2)there are no adequate means available to preven threatened loss
Undue Influence -Elements: 1)undue susceptibility to pressure by one party; and 2)excessive pressure by other party -often arise when dominant party is in a confidential or caregiver relationship w/ influenced party
WY: Economic Duress -voidable test for determining existence of econimic duress: 1)a party involuntarily accepts the terms of another 2)circumstances permit no reasonalbe alt other thant to agree w/ terms or face serious financial hardship
3)these circs are result of coercive acts of the other party; and 4) the party alleging duress is the victim of a wrongful act
Defenses to Enforcement -Statute of Frauds -Unconscionability
Staute of Frauds -K covered by SoF (req's writing signed by parties to be bound): MY LEGS 1)marriage 2)(w/in one) Year 3)Land 4)Executor (or adminstrator) 5)Goods (for $500 or more) 6)Surety
SoF: Writing Req't -SoF doesn't req that the K be in writing, it req's only that there be one or more writings signed by the person sought to be held liable on the K that refelect the material terms of the K -key: there must be something in writing evidencing material term
Sof: Signature Req't -need not be handwritten, can be printed or typed -initials or letterhead & electronic sig-sufficient -only party to be charged must sign (person to be sued)
SoF: Interest in Land -covers not only agrmts for sale of real prop but also: 1)leases for more than one year 2)Easemetns for more thatn one year 3)Fixtures 4)minerals (or the like) or structures if they are to be severed by they buyer; and 5)mrtgs & most other security l
SoF: Goods priced at $500 or more Writing NOT required -Specially manufactured goods -Admissions in Pleadings or Court -Payment or Delivery of Goods
Unconscionability -allows crt to refuse to enforce a provsision or an entire contract to avoid "unfair" terms usually due to some unfairness in the bargaining process
Effect of Unconscionable Clause -crt may: 1)refuse to enforce K 2)enforce the remainder of the K w/out the unconscionable result; or 3) limit the application of any clause so as to avoid an unconscionable result
WY: Statute of Frauds: Promissory Estoppel -WY has accepted a leadership role among the state in invoking equitable principles to avoid injustice -WY S.Crt has ruled that the equitable doctrine of promissory estoppel can defeat the operation of the SoF
G/Rs of Contract Construction -Ks construed as a whole -Crts construe words according to their "ordinary" meaning unless its clearly shown they were meant to be used in a technical sense -if provisions appear inconsistent, written/typed provisions will prevail over printed provision
-crts generally look to see what custom & usage is in the particulr business & in the particular locale where the K is either made or to be performed -its important to note that crts generally try to reach a determination that a K is valid & enforceable
-Ambiguities in a K are construed agasint the party preparing the K, absent evidence of the intention of the parties
Parol Evidence Rule -parties to K express agrmt in writing w/ intent that it embody the final expression of bargain any other expressions, written/oral, made prior to writing, as well as any oral expressions contemporaneous w/ the writing, are indadmissible to VARY term
Is Writing an "integration"? -Is the writing intended as a final expression? The more complete the agrmt appears to be on its face, more likely it is that it was intended as an integration -Is writing a complete or parital integration?
Is Writing an "integration"? Who makes decision? -majority view is that the question as to whether an agrmt is an integration is one of fact to be decided by the judge, not the jury
Is Writing an "integration"? How determination is made 2 tests: Corbin and Williston
Corbin Test -takes into acct specific circumstances of transaction involved (strangers, lrg transactin) & asks whether parties like these, situated as they are, would naturally & normally include in their writing the extrinsic matter that is sought to be introduced
Williston Test -crts don't take into acct the particular circumstances of the transaction; instead they look only at the face of the written agrmt & decide whether contracting parties (in general) would include the term sought to be proved. If so, evid is excluded
Parole Evidence: Art 2 Rule -may add consistent add'l terms unless: 1)there is a merger clause 2) the crts find from all of the circumstances that the writing was intended as a complete and exclusive statement of the terms of the agreement
Parole Evidence: Art 2 Rule -terms may be explained or supplemented by the following, whether or not ambiguions: 1)parties' course of dealing 2)a usuage of trade 3)the parties' course of perfromance
Article 2: Battle of the forms -a K can be formed even though terms of the acceptance don't match the terms of the offer -Art 2 has specific rules for determining what terms are included in K in such a case, & these rules depend on whether both parties to transaction are merchants
Article 2: Battle of the forms: Contracts involving Nonmerchants -if any party to K is not a merchant, add'l or different terms are considered to be mere proposals to modify the K that do NOT become part of the K unless the offeror expressly agrees
Article 2: Battle of the forms: Contracts Between Merchants -BOTH parties are merchants, add'l terms in accept incl'd unless 1)materially alter orig terms of offer 2)offer expressly limits acceptance to terms of offer; or 3)offeror has objected to particular terms/objects w/in reasonable time after notice is re
Article 2: Battle of the forms: Contracts Between Merchants -Split in auth over whether terms in the accept that are DIFFERENT from terms to offer will become part of K -treated as add'l -some follow "knockout rule" which states: conflicting terms in offer & acceptance are knocked out of the K, gaps filled by UC
Art 2: Supplemental "gap filler" terms: Price if 1)nothing has been said as to price 2)price left open to be agreed upon by parites & they fail to agree; or 3)price is to be fixed in terms of some standard set by 3rd person/agency & its not set then the price is a reasonable price @ time for delivery
Art 2: Supplemental "gap filler" terms: Place of Delivery -if the place of delivery is not specified, the place usually is the seller's place of business, if he has one, otherwise, it is the seller's home
Art 2: Supplemental "gap filler" terms: Time for Shipment/Delivery -if the time for shipment or delivery is not specified, shipment/delivery is due in a reasonable time
Art 2: Supplemental "gap filler" terms: Time for Payment -if the time for pymt is not specifice, pymt is due at the time and place at which the buyer is to receive the goods
Art 2: Supplemental "gap filler" terms: Assortment - K provides assort of goods to be delivered & doesnt specify which party chooses, assort is @ buyers option. -if party who has right to specify assort doesnt do so seasonably, other party excused from deal & may:proceed in reas manner or treat as breach
Art 2: Delivery Terms and Risk of Loss: Non Carrier Case -sale in which it appears that parties didn't intend goods to be moved by common carrier -if seller=merchant, risk of loss passes to buyer only when she takes physical possession -if seller not a merchant, risk of loss on buyer upon tender of delivery
Art 2: Delivery Terms and Risk of Loss: Carrier Case -a sale in which it appears that the parties intended the goods to be moved by carrier -2 types of of carrier cases: shipment K and destination Ks
Shipment Contracts -if K authorizes or req's seller to ship goods by carrier but doesn't req him to deliver them at a particular destination -risk of loss passes to the buyer when the goods are delivered to the carrier -absence contrary agrmt, art 2 presumes K as shipment
Destination Contract -if K req's seller to deliver goods at a particular destination, risk of loss passes to buyer when goods are tendered to the buyer at the destination
Common Delivery Terms: C.I.F. and C.& F. -"cost, insurance, and freight" & "cost and freight" -terms mean that the price in the K includ the price of goods, cost of shipping them to buyer and (in C.I.F.) cost of purchasing insurance for beneift of the buyer -ALWAYS shipment Ks
Common Delivery Terms: F.A.S -"free alongside" -used only when goods are to be shipped by boat -risk of loss passes to the buyer once the goods are delivered to the dock
Common Delivery Terms: F.O.B -"free on board" -these words are always followed by a location -risk of loss passes to buyer @ named location -seller bears risk & expense of getting goods to the named location -Ks can be either shipment or destination Ks, depending on location name
Effect of Breach on Risk of Loss -goods so defective that buyer has right to reject, risk of loss doesn't pass to buyer until defects are cured/she accepts goods in spite of defect -if buyer rightfully revokes accept, risk of loss is treated as having rested on seller frm the beginning
Risk in Sale or Return -for the purposes of determining risk of lose a sale or return k is treated as an ordinary sale and the previous rules apply -if goods are returned to seller, risk remains on buyer while goods in transit
Sale on Approval -in a sale on approval, risk of loss doesn't pass to buyer until she accepts
Art 2 Warranties -K for sale of goods automatically include warrant of Title and: 1)against infringment 2)Implied warranty of merchantability 3)Implied warranty of fintess for particular purpose 4)express warranties
Warranty of Title -any seller of goods warrants that the title transferred is good, that the transfer is rightful, and that there are no liens or encumbrances against the title of which the buyer is unaware at the time of contracting -automatic
Warranty Against Infringement A merchant seller regularly dealing in goods of the kind sold warrants that goods are deliv'd free of any patent/trademark/copyright/similar claims -but a buyer who furnishes specifications for goods to seller must hold seller harmless against such claim
Implied Warranty of Merchantability: when given? -implied in every K for sale by a merchant who deals in good of the kind sold, there is a warranty that the goods are merchantable -Note that the serving of food or dring for consumption on premises is a sale of goods subject to this warranty
Implied Warranty of Merchantability: Elements -to be merchangable, goods must at least be "fit for the ordinary purposes for which such goods are used"
Implied Warranty of Merchantability: Sellers Knowledge -it makes no difference that the seller himself didn't know of the defect or that he could not have discovered it -implied warranties are not based on negligence but rather an absolute liability that is imposed on certain sellers
Implied Warranty of Fitness for a Particular Purpose -implied in K for sale of goods whenever 1)any seller has reason to know particular purpose for which goods are to be used & that buyer is relying on seller's skill/judgt to select suitable goods; & 2)the buyer in fact relies on sellers skill/judgt.
Express Warranties -affirmation of fact/promise made by seller to buyer, any descrip of goods, & any sample/model creates express warranty if statement/descrip/sample/model is part of basis of bargian -for it to be, it need only come @ such a time that buyer couldve relied
Disclaimer of Warranty of Title -only by specific language or by circumstances that give the buyer notice that seller doesn't claim title or that he is selling only such rights as he or a 3rd party may have
Disclaimer of Implied warranty of Merchantability -can be specifically disclaimed or modified only by mentioning merchantability -if sales K is in writing, disclaimer must be conspicuous
Diclaimer of Warranty of Fitness for Particular Purpose -can be specifically disclaimed only by a conspicuous writing -a written disclaimer, according to the stat, is sufficient if it says, i.e. "there are no warranties which extend beyond the descrip on the face hereof"
Conspicuous Defined -conspicuous when its "so written, displayed or presented that a reasonable person against whom its to operate ought to have noticed it" -its in larger type than surrounding txt, in contrasting type/font/color, or its set off from txt by marks
Modification of Contract Terms -generally, k cannot be modified unless the modification is supported by new consideration, but under UCC promises of new and diff terms by parties to a sale K are valid w/out consid
Modification of Contract Terms -written K can be modified orally -sale of goods-modificatin must be in wrting if K as modified falls w/in SoF
WY: Parole Evidence Rule -Supplementing, Explaining, or Contradicting Terms -evidence used to establish: 1)separate, distinct K 2) a condition precedent 3)fraud 4)mistake 5)repudiation, is admissilbe to vary the terms of a completly integrated writing
WY: Modification of Contract Terms -if agrmt is req'd to comply w/ SoF any material modif of that agrmt must also conform to Stat -exception for parties who have changed their position by performing an oral modif so that it would inequitable to permit other party to put forth claim/defens
Performance at Common Law -party's basic duty at common law is to substantially perform all that is called for in K
Performance Under Article 2 -generally req's perfect tender -obligation of good faith "honesty in fact and the observance of reasonable commerical standards of fair dealing
Performance Under Article 2: Sllers obligation of Tender and Delivery: Non-carrier case in proper tender of delivery, seller(S) must put & hold conforming goods @ buyer's(B)disposition for time sufficient for B to take possession -S must give B notice reasonably nec'y to enable B to take possession of goods (tender must be @ reasonable ho
Performance Under Article 2: Sellers obligation of Tender and Delivery: carrier case: Shipment k -seller need not see that the goods each the buyer, but need only: 1)put goods into hands of reasonable carrier and make a reasonable K for thir transportation to buyer 2)obtain & promptly tender any documents req'd by K or usage of trade or....
otherwise necessary to enable buyer to teak possession; and 3)promplty notify buyer of the shipment
Performance Under Article 2: Sllers obligation of Tender and Delivery: carrier case: Destination Contract -if k req's seller to tneder delivery of goods at a particular destination, seller must, at the destination put and hold confroming goods at the buyers disposition
Buyers obligation to Pay: Delivery and Payment -Non-carrier case: a sale is for cash and the price is due concurrently w/ tender of delivery -by carrier: price ie due only at the tie and place at which the buyer receives the goods
Buyers Obligation to Pay: Pymt by Check -sufficient unless seller demands cash and gives buyer time to get i -if check given, buyers duty to pay is suspended until the check is either pd or dishonored
Buyers Obligation to Pay: Installment Contracts -in an installment K (one that req's or authorizes delivery in separate installments), the seller may demand pymt for each installment if the price can be so apportioned, unless a contrary intent appears
Buyers Obligation to Pay: Buyers Right to Inspect -Buyer has a right to inspect the goods before she pays unless the K provides for pyment C.O.D or otherwise indicates that the buyer has promised to pay w/out inspecting goods
Conditions -A K may provide that a party doesn't have a duty to perrom unless some condition is fulfilled -in that case, the party's fialure to perform is justified if the condition was not fulfilled
Promise -a commitment to do or refrain from doing something -if promise is unconditional, the failure to perform according ot its terms is a breach of K
Condition -means either: 1)an event or state of the world that must occur or fail before a party has a duty to perform; or 2)an event or state of the world the occurence of nonoccurence of which releases a party from his duty to perfrom -a promise modifier
Condition Precedent -one that must occur before an absolute duty of immediate performance arises in the other party
Conditon Concurrent -those that are capable of occurring together, and that the parties are bound to perform at the same time
Condition Subsequent -one the occurrence of which cuts off an already existing absoluty duty of performance
Express Conditions -express statement providing that either: 1) a party doesn't have a duty to perform unless some event occurs or fails to occur or 2)if some event occurs or fails to occur, obligation of a party to perform one or more of his duties under the K is suspened
Constructive (implied) Conditions -the duty of each party to render performance is conditioned on the other party either rendering his performance or making a tender of his performance
Constructive Condition of Cooperation -the obligation of one party to render performance is impliedly conditioned on the other party's cooperation in that performance
Condition of Notice -most commonly applied where a party could not reasonably be expected to know a fact that tiggered the duty to perform unless such notice was given
Have Conditions been Excused? -duty of immediate performance (of conditional promise) doesn't become absolute until condtions 1)have been performed; or 2) have been legally excused. -Excuse of condition by: -Hindrance/failure to cooperation -actual breach -anticipatory repudiation
Excuse of Condition by Hindrance or Failure to Cooperate -if party having duty of performance that is subject to a condition prevents the condition from occuring, the condition will be excused if the prevention is wrongful
Excuse of Condition By Actual Breach -an actual breach of K when performance is due will excuse the duty of counterperformance -Note, however that counterperformance will be excused at common law only if the breach is material -a minor breach may suspend this duty, but it will not excuse i
Excuse of Condition by Anticipatory Repudiation -Anticipatory repudiation occurs if a promisor, prior to the time set for performance of his promise, indicates that he will not perform when the time comes -the following are met, this anticipatory repudiation will serve to excuse condition:
Executory Bilateral Contract Req't -Anticipatory Repudiation applies only if there is a bilateral contract w/ executory (unperformed) duties on both sides
Req't that Anticipatory Repudiation be Unequivocal -an anticipatory repudiation stems from words or conduct of the promior unequivocally indicating that he can't or will no perform when the time comes
Effect of Anticipatory Repudiation (AR) -norepudiating party has 4 alter: 1)treat AR as a total repudiation & sue immediately 2)suspend his own performance & wait to sue until performance date 3)treat R as an offer to rescind & treat K as dicharged; or 4)ignore R & urge promisor to perform
Retraction of Repudiation -repudiating party may at any time before next performance is due w/draw his repudiation unless the other party has canceled, materially changer her position in reliance on R, or otherwise indicated that she considers repudiation final
Excuse of Condition by Prospective Inability or Unwillingness to Perform -prosepective failure of condition occurs when a party has reasonable grounds to belive that the other party will be unable or unwilling to perform when performance is due
Excuse of Condition by Substantial Performance -Generally, the condition of complete performance may be excused if the party has rendered substantial performance -the other party's duty of counterperformance becomes absolute -typcially only with constructive conditions
Excuse of Condition by "divisibilty" of Contract -if K is divisible and a party performs one of the units of the K, he is entitled to the agreed-on equivalent fo that unit even if he fails to perform the other units
What is a "divisible" Contract 3 tests must be satisfied: 1)performance of each party divided into 2 or more parts under K 2)# of parts due from each party is the same; & 3)performance of each part by 1 party is agreed on as the equivalent of the corresponding part from other party
Exuse of Condition by Waiver or Estoppel -one having the benefit of a conditin under a K may indicate by words or conduct that she will not insist on that conditions being met -consideration is not req'd for a valid waiver of condition -Estoppel, election waiver
Estoppel Waiver -whenever a party indicates she is "waiving" a condition before it is to happen, or she is "waiving" some performance before it is to be rendered, and the person addressed deterimentally relies on waiver, crts will hodl this to be a binding waiver
Election Waiver -when condition or duty of performance is broken, the beneficiary of the condition or duty must make an election; she may 1)terminat her liability or 2)continue under the K -chose to continue=wll be deemed to have waived condition or duty
Conditions that may be waived -if no consideration is given for the waiver, the condition must be ancillary or collateral to the main subject & purpose of the K for the waiver to be effective -one cannot waive entitlement to the entire or substantially entire return performance
Waiver in Installment contracts -if waiver not supported by consideration, the beneficiary of the waived condition can insist on strict compliance w/ the terms of the K for future installments by giving notice that he is revoking waiver
Excuse of Condtion by Impossibility, Impracticability, or frustration
Has the abolute duty to performance been discharged? Discharge by: performance/tender of performance/occurence of condition/subsequent/illegality/impossibility/impracticability/frustration/Rescission/modification of K/novation/cancellation/release/subst'd K/accord & satisfaction/acct stated/lapse
Discharge by Perforamnce or Tender of Performance -full and complet performance -GF tender of performance made in accordance w/ contractual terms will also discharge
Discharge by Illegality -if the subject matter of the K has become illegal due to a subsequently enacted law or other govt'l act, performance will be discharged -"supervening illegality" -Note: if illegality existed at time of agrmt, no K formed
Discharge by Impossibility -impossible to perform duties -must be objective -impossibility must arive after the K has been entered into -each party is excued from duties
Partial Impossibility -if performance to be rendered undewr K become only partial impossible, the duty may be discharged on to that extent -remainder of performance may be req'd according to K terms
Temporary Impossibility -suspends contractual duties; it doesn't discharge them -when performance once more becomes possible, the duty "springs back" into existence unless burden on either party to K would be substantially increased or different from that originally contemplate
Quasi-Contractual Recovery -if party partialy performed befroe impossiblity arose, that party will have a right to recover in quasi-contract at the K rate or for the reasonable value of his performance if that is a more convenient mode of valuation
Impossibility: Specific Situations -Death or Physcial Incapacity -supervening illegality -subsequent destruction fo K's subject matter or means of performance
Discharge by Impracticability -Test: that the party to perform has encountered: 1) extreme and unreasonable difficulty and/or expense; and 2) its nonoccurence was a basic assumption of the parties
Discharge by Impracticability: Contracts for the sale of Goods: Events sufficient for discharge -shortage of raw materials -inability to convert them into sellers product because of contingencies such as war, strick, embargo, or unforeseen shutdown of a major supplier -catastrophic local crop failur
Discharge of Frustration -exits if the purpose of the K has become valueless by virtue of some supervening event not the fault of the party seeking dischrage
Elements Necessary to Establish Frustration 1)supervening act/event leading to frustration 2)@ time of entering K, parties didnt reasonably foresee act/event occuring 3)purpose of K has been completley/almost destroyed by act/event; and 4)purpose of K was realized by both parties @ time of makin
Discharge by Rescission -Mutual or unilateral
Mutual Recission -discharged by express agrmt btwn parties to rescind -agrmt to rescind is itself a binding K supported by consideration, namely giving up by each party of her right to counter performance from the other -K must be executory on both sides
Mutual Recission: Unilateral Contract -effective recission, where OE has already performed, recission promise must be supported by: 1)offer of new consid by nonperforming party 2)elements of promissory estoppel 3) manifestation of intent by original OE to make gift of obligation owed
Mutual Recission: Partially Performed Bilateral Contracts -a mutual agrmt to rescind will usually be enforced when a bilateral K has been partially performed -whether the party who has partially performed will be entilted to compensation depends of the terms of the recission agrmt
Unilateral Recission -results when 1 of the parties to K desires to rescind it but other desires that K be performed according to its temrs. -for this type to be granted, the party desiring recission must have adequatae legal grounds: mistake/misrep/duress/failure of consid
Partial Discharge by Modification of Contract -if a k is subsequently modified by parties, this will serve to discharge those temrs of the original K, not entire K -must be mutually assented to -Consideration is necessary to modify K (not for sale of goods)
Discharge by Novation -occur when a new K substitutes a new party to receive benefits and assume duties that had originally belonged to one of the original parties under the terms of the old K
Elements for valid Novation 1)a previous valid K 2)an agrmt among all parties, includ the new party to the new K 3)the immediate extinguishment of contractual duties as btwn original contracting parties; and 4)a valid & enforceable new K
Discharge by Cancellation -the destruction/surrender of a written K will not usually, by itself, discharge the K. -if parties manifest their intent to have these acts serve as a discharge, it will usually have this effect if consideration or one of its alternatives is present
Discharge by Release -a release and/or K not to sue will serve to discharge contractual duties -must be in writing and supported by new consideration or promissory estoppel elements
Discharge by Substituted Contract -occurs when the parties to a k enter into a 2nd K that immediately revokes the 1st K expressley or impliedly -intent governs
Discharge by Accord -accord=an agrmt in which 1 party to an existing K agrees to accept, in lieu of the performance that she is supposed to receive from the other, some other, different performance -must be supported by consid -merely suspends right to enforce
Satisfaction -the performance of the accord agrmt -its effect is to discharge not only the original K, but also the accord K as well
Discharge by Account Stated -a k btwn parties whereby they agree to an amt as final balance due from one to the other -this final balance encompases the number of transactions btwn the parties and serves to merge all of these transaction by discharging all claims owed
Discharge by Lapse -if duty of each party is a condition concurrent to other's duty, it is possible that on the day set for performance, neither party is in breach and their contractual obligatins lapse -lapse after reasonable time if doesn't state time is "of the essence"
Effect of runnig of Statue of Limitations -if SoL on an action has run, it is generally held that an action for breach of K may be barred -only judicial remedies are barred -running doesnt discharge duties
Effects of Minor breach -obligee gains the substantial benefit of her bargian depsite obligors defective performance -doesnt relive aggrieved party of her duty; gives her right to damages
Effect of Material Breach -obligee doesn't receive substantial benefit of her bargain -nonbreaching party 1) may treat K as at an end and 2)will have immediate right to all remedies for breach of entire k, including total damages`
Determinig Materiality of breach crt looks at: 1)amt of benefit rec'd by nonbreaching party (NBP) 2)adequacy of compensation for damages to injured party 3)extent of part performance by breaching party (BP) 4)hardship to 5)negligent or willful behavior of BP; and 6)likelihood that BP will perform
Perfect Tender Rule: sale of goods Art 2 -if goods or their delivery fail to conform to the K in any way, the buyer generally may reject all, accept all, or accept any commerical units and reject the rest
Right to reject cut off by acceptance -buyer accepts when: 1)after reasonable opportunity to inspect, she indiactes to seller that they conform to req'ts 2)fails to reject w/in reasonable time after delivery of goods 3)doesnt any act inconsistent w/ sellers owership
Buyers Responsibility for goods after rejection -after rejecting goods in possession buyer has obligation to hold them w/ reasonable care @ sellers disposition and to obey any reasonable instructions as to rejected goods -no instructions in reasonable time, buyer may reship goods, store them, or resel
Buyers right to revoke acceptance if goods have a defect that substantially impairs their value to her and: 1)she accepted them on reasonable belief that defect would be cured and it hasn't been; or 2) she accepted because of the difficlty of discovering defects or cuz seller's assurance
Revocation of acceptance must occuer 1)w/in reasonable time after buyer discovers/should discover defects; and 2)before any substantial change in goods occurs that is not caused by a defect presnt at the time the seller relinquished possession
Exceptions to Perfect tender Rule -installment Ks: can only be rejected if nonconformity substantially impairs value of installment and can't be cured
Exceptions to Perfect tender Rule: Sellers right to cure -seller can cure by notice and new tender w/in time for performance -right to cure beyond contract time
Buyers Measures for total breach Benefit of bargain (market price - K price) or cover (cost of reasonable replacement of goods - K price) (+) incidental (+) foreeseable consequential damges (-) expenses saved
Sellers Measures for total breach Benefit of bargain (K price - market price) or; lost profit (K price - cost of goods) or Action for Price (K price) (+) incidental damages (-) expenses saved
Construction contract: breach by owner Before completion= Expected profit (+) costs expended After Completion=COntract price
Construction contract: Breach by Builder Costs of completion (+) Damages from delay (+) quasi-k recovery for benefit conferred by builder
General Issues to think about: Armadillos from Texas play rap, eating tacos 1. Applicable Law 2. Formation of K 3. Terms of K 4. Performance 5. Remeides for unexcused nonperformance 6. Excuse of nonperformance 7. Third-party problems
Created by: sachav3