Contracts

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Author:
johncburt
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193441
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Contracts
Updated:
2013-02-14 01:10:50
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Contracts
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Contracts Bar Review
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  1. Contract Formation - Basic elements(3)
    • 1. Offer
    • 2. Consideration
    • 3. Acceptance
  2. Contract Formation - Offers that Cannot be Revoked (3)
    • 1. Option Contract
    • 2. UCC - Firm Offer
    • 3. Detrimental Reliance
  3. Contract Formation - Four was to Acceptance  (4 types)
    • 1. Express: Promise for a Promise
    • 2. Start of Performance: (substantial step) - Bilateral
    • 3. Complete Performance: Unilateral
    • 4. Mail Box Rule:
    • 5: UCC: Accept Goods - If wrong goods, must reject or it is an acceptance (can still sue)
  4. Contract Formation - UCC Acceptance - How does a changed term affect the offer
    • 1. Both Merchants
    • 2. Deemed Accepted
    • 3. New term not K term if material
    • 4. New term is K term if not material and not objected to
  5. Contract Formation - Acceptance - Mailbox rule (4)
    • Mail, fax, email: Generally, acceptance is made, the minute mailed. Exceptions:
    • 1. Rejection 1st, then acceptance, 1st received.
    • 2. If Acceptance 1st, then rejection, then it is an acceptance
    • 3. Option K - No mailbox rule
  6. Contract Formation - UCC Acceptance - Mirrior Image Rule - If wrong product, what can buyer do, what can seller do
    • Deemed accepted with a breach.
    • Can reject because of mirrior image rule.
    • Accomidation Rule: S can cure breach b4 time to deliver
  7. Contract Formation - What is Consideration (general)
    Bargained for and causes legal detriment
  8. Contract Formation - What is not consideration (5)
    • 1. Past consideration: if services performed prior to K
    • 2. Pre-existing Duty: If already a K, an offer to perform for more money is not consideration - unless you had formally been excused from performance
    • 3. UCC - No pre-existing duty rule, just good faith
    • 4. Part payment for debt does not discharge a debt unless in dispute
    • 5. Gift
  9. Contract Formation - When Consideration is not necessary (3)
    • 1. Written promise to pay debt of another
    • 2. Release of Claim - UCC written release for breach of sales K
    • 3. Promissory estoppel: promise, detrimental and foreseeable reliance, injustice
  10. Contract Formation Defenses - Statute of Frauds - When do you need a writing (7)
    • 1. Service K not capable of performance in a year
    • 2. Sale of Goods: $500 or more
    • 3. Sale of Services: potential can't be finished in a year
    • 4. Transfers of property: more than a year
    • 5. Marriage: Promises in consideration of marriage
    • 6. Executor of estate: to pay debts from his own money
    • 7. Guarantee to pay debts of another if he does not pay - not a promis to pay, but a guarantor (co-signer) -unless personal benefit
  11. Contract Formation Defenses - SOF - What does the writing need for goods/services
    • 1. Services - Who and what, signed by D
    • 2. Goods - Material Terms - Only need quantity (P must reject in 10-Days or it is a K)
  12. Contract Formation Defenses - SOF - How can you satisfy w/o writing for service k/goods/RProp
    • 1. Service K: Full performance by either party 
    • 2. UCC: Only requires part performance - but only enforceable up to part performed
    • 3. Real Estate: requires 2 of 3: a) full payment; b) possession; c) substantial improvements
  13. Contract Formation Defenses - Reasons why a K might not be enforceable (8)
    • 1. Capacity
    • 2. SOF
    • 3. Illegality
    • 4. Fraud
    • 5. Durress
    • 6. Unconcienability
    • 7. Ambiguity
    • 8. Mistake of Fact
  14. Contract Formation Defenses - What Capacity is required to form a K
    • a. Lacks Capacity: Under 18, intoxicated, incompetent
    • b. Consequences: Can disafirm
    • c. Implied affirmation: if continue under K
    • d. Necessity: Quasi-K if liability for necessity
  15. Contract Formation Defenses - SOF - Type of writing required for UCC vs. Common law
    • 1. Common Law: All essential terms
    • 2. UCC: Only quantity and signed by 1 party (if other does not respond in 10 days)
  16. Contract Formation Defenses - SOF - When do you need a writing to modify the K or have an agent sign for you
    • 1. Modification: If K falls under SOF or modification would make it fall under SOF then must be in writing
    • 2. Authorization: If someone siging for you, authorization must be in writing if the K falls under SOF
  17. Contract Formation Defenses - Fraud 2 types
    • 1. Void: if you did not know you were siging K
    • 2. Voidable if fraudulent inducement
  18. Contract Formation Defenses - What kind of Durress is required
    Personal or physical duress makes K voidable, but not economic duress
  19. Contract Formation Defenses -What makes a K Unconcionable 2-prong test
    • Judge decides: Two-part Test
    • 1. Unfair Suprise
    • 2. Oppressive Terms
  20. Contract Formation Defenses - When is a K ambiguous and not enforceable
    • No K if:
    • 1. Term is open to more than 1 reasonable interpretation
    • 2. Each party attaches meaning
    • 3. Neither knows of the others meaning
  21. Contract Formation Defenses - What type of Mistake of Fact is a defense to K formation
    • 1. No K if: both parties mistakenly made a basic assumption that materially alters the purpose of the K
    • 2. Unilateral mistake: Can't avoid K unless other party knew of your mistake
  22. Parol Evidence (Rule)
    When Parties have a written agreement, cannot bring a prior or contomporaneous agreement to change the terms
  23. Parol Evidence - When can you use parol evidence (3)
    • Prior Agreements admissable if:
    • 1. Type of term not normally in the K
    • 2. PE admissable to explain words in the K
    • 3. PE can be used to show K not enforceable, like mutual mistake
  24. Parol Evidence - When does the UCC allow parol evidence (3)
    • 1. Course of Performance
    • 2. Past Dealings
    • 3. Custom and Usage
  25. UCC Terms - What will the UCC imply if not in K (4)
    • 1. Delivery
    • 2. Risk of Loss
    • 3. Warraties of Quality
    • 4. Limitations on Liability
  26. UCC Terms - What are the two different Delivery terms
    • 1. Shipment K (is SC if K does not specify) when S delivers to a common Carrier (UPS) AND notifies Buyer
    • 2. Destination K (FOB) Free on Board, followed by a city
  27. UCC Terms - Delivery - If K does not state who is liable for delivery if Seller is a merchant
    Seller remains liable until B receives the the goods. Like S sells a used stove to B.
  28. UCC Terms - Warrantees of Quality - Express what does it need to be more than
    (Express is written or Verbal)Needs to be more than puffing
  29. UCC Terms - What are Implied Warrantees of Merchanability FOP
    When you buy from a MERCHANT- Term automatically implied that goods are fit for ordinary purpose
  30. UCC Terms - Warrantees - What does S need to do to make a warrantee of Fit for a particular purpose
    If S knows B is relying on S, the goods must meet the purpose that B is buying for
  31. UCC Terms - Warrantees - What are 3 ways  Warantees will not be enforced Limitations
    • 1. Statute of Limitations
    • 2. Privity (some states)
    • 3. Buyer's examination - no implied warrantees if B could have seen the defects when delivered and should have rejected them
    • 4. Disclaimer
  32. UCC Terms - Warrantees - What warrantees can/cannot Disclaim (3)
    • 1. Cannot Disclaim Express Warrantees
    • 2. Can Disclaim Implied Warrantees
    • 3. Can disclaim by sell "As Is" or "With all Faults"
  33. UCC Terms - Warrantees - How can you Limit the Liability for breaching a Warantee
    Can limit liability, like to replacement only.  But, cannot disclaim personal injury
  34. UCC - Performance - What is the Perfect Tender rule
    D must deliver goods exactly like the K calls for
  35. UCC - Performance - When/how can B Reject of Goods and what are the exceptions
    • 1. Buyer can reject all goods and sue
    • 2. Buyer can accept goods and sue
    • 3. Exceptions: a) Cure; b) Installment K; c) Accept 
    • 4. Must take care of rejected goods
  36. UCC - Rejection - What situations is S allowed to Cure violation of the mirrior image rule (3)
    • 1. If time for delivery has not lapsed
    • 2. If course of dealings, B has accepted same products b4
    • 3. Installment K
  37. UCC - Rejection - What is Installment K and what can/cant B reject
    Requires delivery of goods in seperate lots and seperately accepted.

    B can only reject the breached installment if cannot be curred. Cannot reject all instalments.
  38. UCC - What is/isn't Acceptance under UCC
    • 1. Once accepted, cannot later reject
    • 2. Payment w/o opportunity to inspect is not acceptance
    • 3. Must timely reject
    • 4. Retention of goods is acceptance
    • 5. (Even if Accepted can sue on breach of warrantee)
  39. UCC - Revokation of Acceptance - When can you revoke your acceptance
    • 1. Can revoke acceptance, if in a reasonable time you discover the latent defect that substantially impairs the value of the goods.
    • 2. Effect is the same as rejection
  40. Remedies for unexcused performance - When will Specific performance be ordered (2)
    • 1. Real property unless subsequent (BFP)
    • 2. Rare Items (antiques, paintings)
  41. Remedies for unexcused performance - When B breaches, what circumstance can S get the goods back (3 requirements)
    • 1. B must have been insolvent when purchased
    • 2. S demands return within 10-days
    • 3. B still has goods
  42. Remedies for unexcused performance - What damages does S get if B breaches a service K
    After mitigation to put P in the same position he would have been if K performed. Example: if he charged $1000 and expected $200 profit, he only gets $200
  43. Remedies for unexcused performance - If S breaches for sale of goods, what damages can B get
    • 1. B can get the diff between K price and Replacement
    • 2. Or FMV - K price
  44. Remedies for unexcused performance - Money Damages - When can a Seller recover Lost profit for volume
    If S breaches and B mitigates by selling for the same price to B2, S can still recover because he lost in volume, only had 1 sale when he expected 2.
  45. Remedies for unexcused performance - What do you need to prove to get Consequential Damages
    These are damagages that are foreseeable because S knew of B's unique circumstances (like his factory will be closed until S performs)
  46. Remedies for unexcused performance - When is liquidated Damages ok/not ok
    Only if reasonably related to the type of damages B would have sustained, not punitive damages
  47. Excuse for Non-performance - Do you need to perform if a Condition subsequent did not occur
    If something needed to occur and did not, then excused. (terms like "if and only if")
  48. Excuse for Non-performance - If one person does not perform does the other party need to perform UCC and services
    • UCC - No perfect tender, do not need to pay
    • Common Law: if other has substantially performed, need to pay them
  49. Excuse for Non-performance - When dose Anticapatory Repudiation occur and what can you do
    • 1. If Repudiation is clear (unambiguous), made prior to time performance was due, can sue b4 time to perform
    • 2. If services performed and buyer says won't pay, wait until the due date to pay has lapsed.
    • 3. Retraction of repudiation is ok if other party has not made a material change in position
  50. Excuse for Non-performance - What can you do if you have Insecurity of the others ability to perform
    • If party through acts makes it unclear if he will or can perform:
    • 1) Give written notice demand assurance
    • 2) Give a reasonable time for them to give assurance
  51. Excuse for Non-performance - What happens under UCC and Common law if there is an Improper Performance by S
    • UCC: Perfect tender B does not need to pay S
    • Common Law: S needs to pay if there is substantial performace.  S does not need to pay if B made a substantial breach (like painting house purple instead of white)
  52. Excuse for Non-performance - Later K - What does it mean to Rescind a K
    The parties can agree to rescind the K and eachothers requirements to perform
  53. Excuse for Non-performance - Later K - What is an Accord and Satisfaction
    • 1. "Accord" New Agreement
    • 2. "Satisfaction" performance under the New Agreement

    i.e. B agrees to take S car instead of the $1,000 he owes him (new consideration)
  54. Excuse for Non-performance - In a service K when is there a Novation or just a Delegation
    • 1. Novation: both parties agree that B can have another person finish the job.  B is no longer liable.
    • 2. Substitution: B only sub-contracts the work, B is still liable
  55. Excuse for Non-performance - Later, What are three Unanticipated Evens that will let you out of a K
    • 1. Impossability
    • 2. Impracticability
    • 3. Frustration of Purpose
  56. Third Party- Problems - Who are the parties involved in an assignment (3)
    • 1. Assignor: Party who transfers rights
    • 2. Assignee: The 3rd Party Bene
    • 3. Obligor: Person that needs to pay 3rd party
  57. Third-Party Problems - 3rd Party Beneficiary - When do his rights Vesting and can a 3rd Party Bene sue for breach 
    • 1. Vested: Vesting occurs when 3rd party learns of the K and relies on it.  Once vested can sue the Obligor (person supossed to pay the 3rd party.
    • 2. Non-Vested: a non-vested beneficiary cannot sue, unless he was a pre-existing creditor
  58. Third-Party Problems - 3rd Party Beneficiary - Can you assign rights under a K if the K Prohibits it or Invalidates it 
    • 1. Prohibition: If K says no assignments, but A assigns payment to B, who does not know about prohibition, B can still sue. (if you dont know, its prohibition)
    • 2. Invalidation: If K says the assignment will be "Invalid", then B cannot sue for payment even if she did not know
  59. Third-Party Problems - 3rd Party Beneficiary - When Can/cant you revoke an assignment
    • 1. Can revoke gratuitus assignment
    • 2. Cannot revoke when consideration is paid for the assignment
  60. Third-Party Problems - 3rd Party Beneficiary - Which parties can sue each other: Assignee, Assignor, Obligor
    • 1. Assignee v. Oblgor (obligor has same defenses he would have had against Assignor)
    • 2. Assignor cannot sue Obligor if Assignee paid consideration
  61. Third-Party Problems - 3rd Party Beneficiary - What Does/not Assignor Warrant to Assignee (4) 
    • 1. That he has the right to assign
    • 2. That the right assigned is not currently subject to any defenses by Obligor
    • 3. That he will do nothing to interfere with the assignment
    • 4. DOES NOT warrant what the Obligor will do after the assignment
  62. Third-Party Problems - 3rd Party Beneficiary - iF Multiple Assignments which assignee gets the assignment (2)
    • 1. Gratuitous Assignee: Last person assigned wins
    • 2. For Consideration Assignee: The 1st assignment wins. Unless (very limited) 2nd does not know of 1st and 2nd is the first to get paid or get a judgment
  63. Third-Party Problems - What is an Assignment and what is a Delegation
    • 1. Assignment: is transferring the benefit under a K
    • 2. Delegation: is transferring responsibilities under K
    • * Sometimes bar calls both an Assignment
  64. Third-Party Problems - What can/cant be Deligated
    • Generally all responsibilities can be delegated, except:
    • 1. If the K prohibits it
    • 2. If requires special skill or reputation (artist)
  65. Third-Party Problems - Once an obligation is deligated who is liable
    • 1. Delagator - Always remains liable
    • 2. Delagatee - Only liable if he receives consideration

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