10 Ch. Bilateral Contract - To accept the offer the offeree must only promise to perform. "promise for a promise" exists once promises are exchanged. Unilateral Contract - Offeree can only accept offer by completing the contract performance. "promise for an act" exists when act is performed. Contract - legally binding agreement between two parties who agree to perform or refrain from an act now or in the future. Formal Contract - Contracts that require a special form or method of creation to be enforceable. Contract under seal - type of formal contract, must be written and sealed. Executed Contract - Fully performed on both sides Executory Contract - Only partially performed. Express Contract - terms of the agreement are fully and explicitly stated in words, oral or written. Offeror (party who Makes offer)/ Offeree (party who offer is made to) Promisor (one making promise)/ Promisee(one whom promise was made to) Quasi Contract - contracts implied in law, fictional contracts created by courts and imposed on parties in interest of fairness (Court of Equity) Quantum Meruit - "as much he deserves" compensation owed under a contract in law. Unenforceable contract - valid contract rendered unenforceable by some statue or law. Voidable Contract - valid contract but one that can be avoided at the option of one or both parties. [Contracts made by minors are voidable by option of the minor] Void Contract - No contract at all, no legal obligation to parties.
Ch. 11 Acceptance - Voluntary Act (words or conduct) by offeree that shows agreement to offer. [Must be absolute, unconditional, and communicated] Counteroffer - Offeree rejects original offer and at same time makes a new offer. (Ex: Ill sell this to you for $10, no that's too high ill buy it for $8) Promissory Estoppel/Estop (Lawyer stop) - the offeror is barred from taking back offer. (ex: offeree acts in reliance of contract such as rent, offeror cant take back original offer later) Mailbox rule - Once acceptance deposited in mailbox it is out of offeree's possession and is valid when it is sent even if it is not received. Mirror image rule - Acceptance must match offer exactly. Any material change terminates. Offer - Promise or commitment to do or not do something in the future. Option Contract - Offeree promises to hodl and offer open for a specified period of time in return for a paument given by the offeree. If no time then reasonable time period is applied.
Ch.12 Accord and Satisfaction - (Amt of debt must be in dispute) Creditor accepts lessor amount than originally owed. Accord is agreement somewhat different than what the parties originally agreed. Satisfaction occurs when accord is executed. Consideration - The value given in return for a promise or performance. (Usually 1) something of legally sufficient value must be given in exchange. 2)Must be bargained for exchange) Forbearance - Refraining from an action that one has a legal right to undertake. Rescission - Unmaking of contract, returns parties to original positions. Look up: benefit detriment test/ bargain for exchange test/ illusory promise
Ch.13 Age of Majority - When person is no longer a minor (18). Blue Laws - Statutes relating to Sabbath, cant practice law or contracts on Sunday. Contractual Capacity - legal ability to enter into a contractual relationship. Disaffirmance - legal avoidance of contractual obligation, (minor must disaffirm entre contract if they want but not just part of it) Emancipation - Childs parent or legal guardian relinquishes the legal right to exercise control over the child. Minority status can be terminated. In pari delicto (equally at fault) - Contract is void. Necessaries - items that fulfill basic needs, food, shelter, medical services. Minor entering a contract for necessaries may disaffirm but remains liable for reasonable value of goods. Ratification - Act of accepting and giving legal force to an obligation that previously was not enforceable. (express - orally at maturity, impliedly acts out most of contract or uses good for extended period of time) Unconscionable - So unfair its void of conscience.
Ch.14 Innocent misrepresentation - Person makes statement they believe to be true but it misrepresents facts, not guilty of fraud. Negligent misrepresentation - Person fails to exercise reasonable care in uncovering or disclosing facts, or skill or competence that his or her profession requires. Treated as fraud even if not purposeful. Review Fraudulent Misrepresentation allows for punitive damages, others don't. (Equity rest) Review chart on pg. 289
Ch.15 Collateral promise (secondary promise) - one that is subsidiary to principle transaction or primary contractual relationship. Promise made by third party to assume debt of primary party. Parol evidence rule - if court finds that parties intended their written contract to be complete and their final embodiment of their agreement, a party cannot introduce in court evidence of an oral agreement or promise made before or at the time of the formation of contract. Prenuptial/Antenuptial Agreement - Agreements before marriage that define each partner's ownership rights in the other partner's property. Statute of Frauds - used to evaluate contracts required to be written. Party who punishment is enforceable upon must be signing. Contracts involving interests in land Contracts that cannot by their terms be performed within one year from the date of formation. Collateral (secondary) Contracts such as promises to answer the debt or duty of another and promises by the administrator of estate to pay a debt of the estate personally, out of her own pocket. Promises made in consideration of marriage. Under Uniform Commercial Code (UCC), contracts for goods over $500 ($5000 or more under 03 amendment to UCC) Doctrine of Severance - severed from land Main Purpose exception?
Ch. 17 Anticipatory Repudiation - Before either party has a duty to perform, one of the parties may refuse to carry out his obligations. It will thus discharge the no breaching party from performance Breach of contract - nonperformance of a contractual duty. Any breach allows nonbreacher the right to sue but only a material breach allows discharge. Minor breach only allows to be suspended. Commercial impracticability - Performance becomes much more difficult or expensive than originally thought. Must be extreme and not known by the parties when contract was formed. Concurrent conditions - Each party's absolute duty to perform is conditioned on the other party's absolute duty to perform. Only occurs when parties are to perform simultaneously. (Ex: Buyer agrees to pay for goods when they are delivered, both parties duty to perform are conditioned upon each other.) Tender - unconditional offer to perform by one who is ready, willing and able to do so. Neither can recover for breach in concurrent unless they first tender their part of the agreement. Condition Precedent - condition that must be fulfilled before a party's performance can be required. Ex: in real estate, buyer must fulfill ability to finance. Condition Subsequent - condition operates to terminate a party's absolute promise to perform. (Ex: if law firm
hires someone but says if they lose their license they are fired.) Discharge - terminate ones duties. (most common way is simply perform them). Discharge in Bankruptcy - After assets are fairly allocated to creditors following bankruptcy, ordinarily bars enforcement of most of the debtor's contracts by the creditors. Impossibility performance of - After a contract is made performance is impossible in the objective sense. Mutual Rescission - parties must make another agreement that also satisfies the legal requirements for a contract. Must be offer, acceptance and consideration. Normally if parties agree to rescind, their promises to not perform acts will be legal consideration for the 2nd contract of rescission. Novation - occurs when both of the parties to a contract agree to substitute a third party for one of the original parties. Requirements are A previous valid obligation An agreement by all the parties to a new contract The extinguishing of the old obligation (discharge of the prior party) A new contract that is valid. REMEMBER TO REVIEW CH.18 AND THE REMEDIES
CH.20 Choice-of-law Clause - Contractual provision designating the applicable law, typically included in international contract. Parties are allowed to choose the law that will govern their contract provided the law is one of a jurisdiction that relates to parties and business. Prior course of dealing - sequence of previous actions and communications between the parties to a particular transaction that establishes a common basis for their understanding. Usage of trade - any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction. Firm offer - merchant offeror gives assurances in a signed writing that the offer will remain open, merchant however can revoke offer without consideration. Lesse - one who acquires the right to the possession and use of goods under a lease. (party who is leasing the goods from the lessor). Lessor - one who sells the right to the possession and use of the goods under a lease. Merchant - is a person who deals in goods of the kind involved in sales contract. They by occupation hold themselves out as having knowledge and skill unique to the practices or goods involved. Also a person who employs a merchant as a broker, agent has the status of a merchant. Sales contract - contracts for sale of goods.
Tangible property (Chattel/goods) Output Contracts - seller agrees to sell and the buyer agrees to buy all or up to a stated amount of what the seller produces. Requirements Contract - buyer agrees to purchase and the seller agrees to sell all or up to the stated amount of what the buyer needs or requires. Implicit consideration in both cases because they both give up rights to buy or sell from others. UCC imposes a good faith limitation on both, actual quantity purchased or sold cannot be unreasonably disproportionate to normal or comparable prior requirements.
CH.21 Destination contract - seller is required to deliver the goods to a particular destination, usually directly to buyer. Title passes when the goods are tendered at destination. Documents of title - examples would be bill of lading or a warehouse receipt. When sale does not call for sellers shipment it depends on whether the seller must deliver a document of title. When document of title is required, title passes to buyer when and where document is delivered. Goods don't need to move. Fungible goods - goods that are alike naturally, by agreement or trade usage. Examples are oil in containers, apples, or wheat in packages. Good Faith Purchaser (GFPFVWON) - one who buys without knowledge of circumstances that would make a person of ordinary prudence inquire about the validity of the seller's title to the goods. If buyer is not a GFP, real owner can claim it, ex: surfer dude. Identification - designation of goods as the subject matter of a sales or lease contract. Title of loss cannot pass to the buyer from the seller unless goods are identified to the contract. Insurable interest - buyer or lessee has insurable interest in identified goods. The moment contract goods are identified by the seller or lessor, the buyer or lessee has a special property interest that allows the buyer to obtain necessary insurance coverage for those goods even before the risk of loss has passed. Shipment contract - Seller is required to authorize to ship goods by carrier. The seller is required only to deliver goods into hands of carrier, and title passes at the time and place of shipment.
Ch.23 Express Warranty - Seller or lessor can create by making representations concerning the quality, condition, description, or performance potential of goods. Arises when seller: indicates Goods conform to any declaration of fact or promise that the seller or lessor makes to the buyer or lessee about the goods. "ex: drill bits will easily penetrate this" Goods conform to any description of them. "crate contains 140 horsepower engine" then crate should contain
the item. Its an express warranty that the content of the goods sold conforms to the description. Goods conform to any sample or model of the goods shown to the buyer or lessee. Implied Warranty - one that the law derives by inference from the nature of the transaction or the relative situations or circumstances of the parties. Under UCC, merchants impliedly warrant that the goods they sell are merchantable, and fit for particular purpose. Implied Warranty of Merchantability - Is made in every sale or lease of goods made by a merchant who deals in goods of the kind sold. Implied Warranty of Fitness for a particular purpose - any seller (merchant or non-merchant) knows the particular purpose for which their buyer will use the goods and knows that buyers are relying on the skill and judgment of the seller or lessor to select suitable goods. Product Liability - Concept that manufacturers, sellers and lessors of goods can be held liable to customers or users for any physical harm or property damage that their goods may cause. REVIEW CHART ON PG. 455
Other Notes: UCC Definition of Terms Sales of Goods.... 2a = Lease of Goods (Doesn't change for land and pers services) 6) Bulk transfers of goods
Foreign vs. Natural Test If you find a substance found to be foreign in your product breach of contract, ex: glass in ice cream
Reasonable Expectations Test If you would not reasonably expect to find something in your good, breach. Ex: fishbone in whole-fish not a breach, but fishbone in can tuna a breach.
Cases: Webster vs. Blue Ship Tea Room Webster attempted to sue for breach of Implied warranty of merchantability after she choked on a fish bone found in her fish chowder which was recommended to her by the restaurant. After an appeal of Webster originally winning her case, the supreme court ruled that a fish bone was not a breach of implied warranty of merchantability. They decided when eating a good bowl of fish crowder one might expect to have to sift through a few bones.
Jones vs. Star Credit: Jones agreed to purchase a fridge for $900, but with credit charges the bill came to about $1200. The Max retail value of the fridge was determined to be $300 at the time. The law involved was from article 2 of the UCC involving Unconscionability. Although they did recognize that price could be different on credit, since Jones had paid over $600 for a $300 fridge, the court determined the original price was unconscionable and reformed the contract, an example of reformation in the court of equity.
T/F UCC only applies to merchants is FALSE
Julia Childs List Offer Acceptance Mutual Legal Consideration (bargain theory) Contractual Capacity Legal Subject Matter (wont enforce some promises against law) Signed Writing (Statute of Frauds)