comm law - K

Contract

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

Contract Elements

Mutual rights/duties created by 2 or parties

All Ks are based on promises but not all promises create a K - this is why the law must give a remedy for a breached contract

Contracts Governed by

State Common Law & State Statutory Law

State common law

Restatement (second) of K's - lists all the K laws used by majority also lists alternatives

State Statutory law

Uniform Commercial Code, Article 2

Covers Ks for the sale of goods by a merchant and customer & between merchants

exception to state common law

Contract Law

Future

Torts

past (owes me...)

Property Law

what is present (ownership right now)

Bilateral K

promise to hire & promise to work (promise for a promise)

Unilateral K

promise for an act (show up & do it)

Expressed K

all terms are clearly set forth in writing or spoken words

Implied K

not established by words or writing but by conduct of parties behavior/conduct (context of situation)

Implied K Elements

1) P provided some property or service to the D

2) P expected to be paid for service/property and a reasonable

3) person in the position of the D would have expected to pay for such property/service but this did not

4) D had opportunity to reject the property/service but this did not

Quasi K (Implied-in-law)

A court imposes a contracted obligation; not a true K

Quasi K purpose

to prevent one party from being unjustly enriched if the law does not impose a K like compensation

Quasi K Req

1) Benefit was bestowed on the D

2) D appreciated (got value) the benefit

3) P reasonably expected compensation

4) Because of the circumstances under which D received the benefits would be unjust enrichment to the D if she/he is allowed to keep the benefit and not compensate the P

Valid K

every part of K is legit

Unenforceable K

law changed to subject of K so can't be enforced

Void K

Has no legal effect and neither party is liable

Voidable K

when either party can withdraw from the K and remain obligated

Executed K

all conditions on K satisfied

Executory K

ongoing (ex: lease every month)

Mutual Assent

Offer & Acceptance

when conversation becomes legal obligation

Offer Essentials

1) Objective Intent

2) Certain and definite

3) Communication to the Offeree

Objective Intent

Intent to make offer is of object intent (objective theory of K)

Would a reasonable person in the position of offeree think that a binding promise was made?

Certain and definite (main terms)

serves as evidence of intent to K and gives Court basis for dealing with breach

Certain and Definite Core Terms

Parties

Subject matter

Price/considerations

Certain and Definite Supporting Terms

Payment (how often? How much?)

Duration

Conditions

Certain and definite UCC

UCC - offers don't have to have all the terms (open terms - as long as parties entered K in good faith the term will be filled in by UCC)

Certain and definite Ads

invitations to negotiate

Advertisement Exceptions

when advertisement is clear, definite, and leaves nothing open (can be offer)

Ex: $5 for coats at 3-5 PM

Communication to the Offeree

Can't accept offer that you've never heard of

Validity of Offer

Until Accepted or Terminated

Action of the Parties (Termination)

1) Revocation by Offeror

2) Rejection by Offeree

3) Counteroffer

Revocation by Offeror

effective when received by offeree, not when sent

(offeror is the master of his/her own offer - can revoke any time they want + offeror doesn't have to tell offeree if revoked)

Revocation by Offeror Exceptions

1) Option Contracts

2) Firm Offers Under the Code

3) Statutory Irrevocability

4) Irrevocable Offers of Unilateral Contracts

5) Promissory Estoppel

Option Contracts

offeror is bound to hold open offer for specified period of time when consideration is given (something of value: $, property)

Firm Offers Under the Code

Under UCC (firm offers) - merchant is bound to keep an offer to sell/buy a good open for a stated period of time if he/she promises to do so in writing

State statutes

Statutory Irrevocability

law (statute) makes an offer irrevocable for a certain period of time, even if the offeror wants to revoke it

Bids

Irrevocable Offers of Unilateral Contracts

When offeree starts to perform action is irrevocable

Acceptance doesn't occur until they finish act

Ex: $100 to cut lawn

Rejection by Offeree

effective when received by offerer, not when sent

Counteroffer

effective when received by offeror

Operation of Law (Termination)

1) Lapse of time

2) Death or incompetence of the offeror or offeree

3) Destruction of the subject matter of the offer

4) Subsequent illegality of the type of K proposed by the offer (casinos)

Acceptence

Mirror Image Rule + Mailbox Rule

Mirror Image Rule

acceptance must mirror the offer terms

Unequivocal - clear, definite "yes"

Silence (mirror image rule)

can not be used as acceptance

Silence Exceptions

1) Benefit of services

2) Prior dealings

3) Offer says silence = acceptance + offeree intends it

Benefit of services (silence)

You knowingly accept services and had a chance to reject

Prior dealings (silence)

Past pattern where silence = acceptance

Mailbox Rule

Acceptance is valid when it is sent (not received)

1) Properly addressed to offeror

2) Beyond the sender's control

Mailbox Rule Excpetions

1) Option K

2) Improper Dispatch

3) Offer specifies otherwise

4) Rejection sent first, then acceptance

Mutual Assent Created by law

binding agreement even if the parties did not actually (subjectively) agree, because the law imposes assent based on conduct or fairness

Multiple Promisors

jointly reliable for liability

Ex: Landlord can sue any or all roommates if one roommate does not pay their share

Multiple Promisors Alt

an agreement with the landlord that addresses your percent of the liability

Private sector employment termination

at will employer can fire you for any reason and for no reason (they don't have to tell you why)

Private sector employment termination Alt

1) Agreed reasons for termination

2) For specified terms (ex: can still fire you but will have to pay you for remaining 5 years)

3) Agreed conditions at termination

Promise of notice at/before termination

Pay fired employee severance for specific number of months

Sales of Service/Service Agreements

1) Provider has to perform with reasonable care

2) Customer must pay reasonable value (customary price)

Sales of Service/Service Agreements Alt

Express warranty - guaranty that the care is going to work

Pricing

1) bid (a promise to do the work at a fixed price, not an estimate)

2) hourly-rates

Sales of real property

Seller promises only "good title" (= title reasonably free from doubt)

Exception: statues that lay out guarantees

Sales of real property Alt

Warranties (structure & soundness), foundational - has liability

Sales of goods

Old Default - Caveat Emptor (let buyer be aware)

New Default - 2 implied warranties on the sale of goods

Sales of goods (new default)

Implied warranty of fitness for a particular purpose

Implied warranty of Merchantability

*under UCC

Implied warranty of fitness for a particular purpose

Applies when buyer has specific purpose in mind and seller knows of that purpose and recommends a product based on it

Ex: sleeping bag that can keep warm (can sue if not true)

Implied warranty of Merchantability

Every good and food that we buy comes with this

Every good has to be fit for its ordinary purpose and It's properly labeled

Magnuson Moss Warranty Act (fed law)

Magnuson Moss Warranty Act

Remedies: Repair, refund, replace

Can sue 1) allow to be in consumer's jurisdiction, 2) Fed Court, 3) pay attorney fees

Make manufacturer's honor warranty

Statute of Limitations: 4 years

Sales of goods Alt

get your warranty

Consideration

The exchange of something of value given by each party

Legal Sufficiency of Consideration

Legal Benefit

Legal Detriment

Legal Benefit

promisee/or obtains something of value when he/she had no prior legal right to obtain

Legal Detriment (not harm)

something that promisee/or was previously under no legal obligation to do or refrain from doing

Agreements Lacking Consideration (Unenforceable)

1) Preexisting duty

2) Past consideration

3) Gratuitous Promise

4) Illusory Promise

Preexisting duty

Final K parties want to modify before it is completed so both parties must present new consideration for the modification of K to be valid

*Modifications under the UCC do not require new consideration

Past consideration

Can't use what you already did as consideration for a new future contract

Gratuitous Promise

gift (nothing in exchange)

Illusory Promise

promisor keeps door open

I will do X IF Y happens, If I feel like it

Agreement lacking consideration (enforceable)

1) Unforeseen Difficulties

2) Promissory Estoppel

3) Contracts Implied-in-fact (conduct)

4) Contracts Implied-in-law (QUASI-Contracts)

Unforeseen Difficulties

1) A K must be performed under burdensome conditions

2) Those conditions were not anticipated nor even within the 3) contemplation of the parties at the K

4) Promisee agrees to pay what is fair and reasonable

5) Exception to preexisting duty rule

Contracts Implied-in-law (QUASI-Contracts)

Court imposes obligation to prevent unjust enrichment

Ex: doctor treats patient and patient does not agree to pay but must

Legality of Object

The purpose of a contract must not be criminal, tortious, or otherwise against public policy

Capacity

Children

Mental disability

Children (under 18 years old)

Lack ability to understand K

Children Exception

If you enter K under 18 years old but then turn 18 years old and make a payment on the K (ratification -> valid K)

Mental disability

Adjudicated (formal diagnosis and judge approves) - VOID

Non-adjudicated - VOIDABLE

BOK FI

1) Valid K exists

2) Conditions were performed by non-breaching party (P)

3) Promise broken by party who failed to comply/perform as indicated by K

Who can sue for breach

1) C/L Precedent - parties only

2) 3rd Party beneficiary (ex: mistress)

3) Assignees (give up legal right)

Privity

a relationship with each other created under the contract

Asignees

Can sign away a right but NOT delegate a duty

ex: landlord + subtenant

BOK FII

1) Novation

2) Conduct Invalidating Consent

3) Statute of Frauds

4) Statute of Limitations

5) Res Judicata

Novation

3rd party K in which a new party takes over the rights and duties of the original party to an original agreement and that original party released from liability

Ex: landlord allows subtenant to assume duties of tenant

Conduct Invalidating Consent

1) Duress

2) Undue Influence

3) Fraudulent Misrepresentation

4) Non-fraudulent Misrepresentation

5) Mistakes

*non-voluntary

Duress

1) Physical

2) Economic

*aware it's against your will

Physical Duress

physical force compelling someone to agree to a K

VOID

Economic Duress

Improper threats

Using economic coercion leaving a victim with no reasonable alternative then to agree with the more powerful party

Economic Duress Proof

1) was there a wrongful threat or application of pressure

2) was there a lack of an alternative

3) was the pressure significant cause inducing the P to the K

4) did other party gain an advantage by causing financial distress

Undue Influence

One person is taken advantage of his/her dominant position in a relationship based on trust unduly influence the other party - to the point of interfering with that person's ability to make his/her own decisions - VOIDABLE

Ex: elderly and caregivers

Undue Influence Factors

1) was dominant party rushing other party to consent

2) did dominant party gain undue enrichment

3) was non-dominant party isolated from advisors at the time of the agreement

4) did the result of the exchange overwhelmingly benefit the dominant party

Fraudulent Misrepresentation

1) false representation of a material fact (lie)

2) made with scienter

3) justifiably relied on

4) causing injury

Types of Fraud

Fraud in the execution

Fraud in the inducement

Fraud in the execution

Misrepresentation about nature of document

VOID

Fraud in the inducement

Misrepresentation about subject matter of K which serves to induce the party to enter the K

VOIDABLE