cob 318: exam 3 mccarthy

contract

what is a legally enforceable agreement between parties

five elements needed to have a valid contract

1. offer

2. acceptance

3. consideration

4. capacity to make the decision

5. legality

three elements do we look at to make sure an offer (which is one element necessary for a valid contract) is valid

1. objective intent

2. definitive terms

3. communicated

objective intent

offer is the act of objectively making an offer --> see if it's a serious offer because people all the time try to make it seem like they are joking)

Lucy v Zehmer

two families hated each other.

A deal was written and signed on a napkin when one of them was drunk but it still was a valid contract and one guy had to turn over his farm to the other.

objective intent

Panhandle Realty v Olin

where someone said that he didn't actually decide to rent because he didn't have the money because of a financial crisis. because an objective person would look at the contract and say it was real it was valid

objective intent

what are the 5 elements that courts require a contract to have for it to be considered definitive terms for validating a offer

1. parties

2. specific work

3. specific goods/item

4. payment details

5. timing

what are 7 ways to terminate the offer prior to acceptance

1. revoke

2. reject

3. counteroffer

4. time lapse

5. subject matter is destroyed

6. offeror dies

7. law changes

offer

the promise to do or to refrain from doing some future act

Venture Associates v Zenith Data Systems

validating an offer on a contract where if not given specific terms then the court cannot enforce it

definitive terms

acceptance

when the recipient of the offer agrees to the terms presented either through words, actions, or written

consideration

value exchanged for value (both parties have to sacrifice)

mirror image rule

which rule under the acceptance element to ensure a valid contract states that acceptance has to be unequivocal (EXACTLY THE SAME)

ex: cannot agree to $15 but ask for $15.01

mailbox rule

which rule under the acceptance element to ensure a valid contract states that the contract is valid upon dispatch NOT receipt

express authorization

which rule under the acceptance element to ensure a valid contract gets rid of all ambiguity because there has to be a specify terms of acceptance

ex: can only accept this in person, at this time, wearing x, doing x

bilateral contracts

there is a promise to do something in the future for an exchange to promise to do something in the future

what percentage of contracts are bilateral

99.5%

unilateral contracts

where you can only accept the contract by fully performing the action

ex: wanted dead or alive

Hamer v Sidway

where a nephew sued his uncle because he stopped drinking, smoking, and gambling for years because his uncle told his he would pay him $5k. when he turned 21 his uncle said he was joking but a court found that this was valid because the nephew did sacrifice and did what the uncle asked him to do

consideration

somebody who entered the contract was incapacitated

what does it mean when a contract is voidable

legality

which element needed to have a valid contract is that you cannot make a contract that involves illegal acts or acts that violate public policy

what will happen to a contract if it is lacking legality

it will be void (it does not exist anymore)

what does it mean for a contract to be void

it does not exist anymore, essentially it is cancelled)

what are some ways that a contract could be voidable (someone who entered the contract was incapacitated)

minor enters contract, mental incompetence, involuntary intoxication (willingly getting drunk is NOT an excuse)

Brown & Brown v Johnson

which case goes with the legality element for a contract in restraint of trade where the non-compete clause for this employee was too extreme and it was found not valid

what does it mean for common law statute of frauds

these has to be in writing

what are the four statute of frauds meaning that these contracts MUST be in writing

1) prenuptial agreements

2) real estate contracts

3) sale of goods greater than $500

4) contract spanning more than one year

discharged

when the action in the contract is performed

what are the five ways for a contract to be discharged

1) strict performance

2) substantial performance

3) timeliness of performance

4) discharge by agreement

5) discharge by operation of law

strict performance (complete performance)

which way for a contract to be discharged is where both parties carry out all material terms exactly as they both agreed

substantial performance

which way for a contract to be discharged is where you look for a good faith effort and minor deviation and substantially the same outcome

what three elements are looked at for substantial performance

good faith effort + minor deviation + substantially the same outcome

Jacobs & Young v Kent

which case goes with substantial performance for how a case gets discharged where the builder put a pipe in the house that was different than the one that the owner wanted. the owner got mad but the builder tried to find the correct pipe and when he couldn't then he got a better pipe so he exercised good faith effort + it was only a minor deviation + it basically had the same outcome

timeliness of performance

which way for a contract to be discharged says that a minor delay does not equal a breach of contract unless there is a "time of essence" clause

discharge by agreement

which way for a contract to be discharged is where both parties agree that it isn't working out as they wanted so the agree to discharge the contract

what are the 5 ways to discharge by agreement

1) mutual recission

2) discharge by novation

3) settlement

4) accord & satisfaction

5) covenant not to sue (extension)

mutual recission

which way to discharge by agreement is where both parties agree to end the contract

discharge by novation

which way to discharge by agreement is where there is a substitute a new party in the contract

settlement

which way to discharge by agreement is where monetary is less than you were expecting but willing to negotiate

accord & satisfaction

which way to discharge by agreement is replacing the consideration (which is typically the payment)

--> swapping out money (instead of cash will offer free lessons in something)

discharge by operation of law

which way for a contact to be discharged is where the law negates the duty or ability to perform

what are 5 ways for a contract to be discharged by law

1) material alteration

2) statute of limitation

3) bankruptcy

4) commercial impracticability

5) performance impossible

material alteration

which way for a contract to be discharged by law is where one party changes something on the contract that matters

ex: adding a 0 to the cost

statute of limitation

which way for a contract to be discharged by law is where the time limit by law runs up

what is the statute of limitation for a contract in Virginia

5 years

bankruptcy

which way for a contract to be discharged by law is where the judge erases your obligation under the law to your contractual obligation

commercial impracticability

which way for a contract to be discharged by law is where something has happened that affects the contract in a certain way such that it makes it impracticable

performance impossible

which way for a contract to be discharged by law is where sometimes the law makes performance impossible

Kolodin v Valenti

which case goes with performance impossible where a manager couldn't perform his contract because of a restraining order the artist had against him

what are the 4 methods of involuntary consent

1) mutual mistake of material fact

2) fraudulent misrepresentation

3) duress

4) undue influence

mutual mistake of material fact

which method of involuntary consent is when both parties where mistaken about some fact in the agreement that actually matters

ex: two different import ships with the same name which led to a mix up on times

fraudulent misrepresentation

which method of involuntary consent is where there is misrepresentation of a material fact with intent to deceive that party about the material fact and justifiable reliance and actual harm/damages

ex: thought you were buying a car that had never been in an accident because that's what the seller told you

duress

which method of involuntary consent involves threats of pressure/force; blackmail and extortion

ex: gun to head

undue influence

which method of involuntary consent is where one party exerts so much influence over another that it makes the other party lose their free will

--> often happens with the elderly

what are 5 types of damages/remedies for breach of contract

1) compensatory damages

2) consequential damages

3) punitive damages

4) nominal damages

5) liquidation damages

consequential damages

which type of damages/remedies for a breach of contract is where the party that breaches the contract is on the hook for all financial outcomes that could occur

--> duty to mitigate your losses under common law

punitive damages

which type of damages/remedies for a breach of contract under common law is where the damages are extreme

ex: an insurance company is defaulting on a minor technicality and will not help a family pay for their child's brain surgery

what is the dollar amount for nominal damages in common law

$1

liquidation damages

which type of damages/remedies for a breach of contract under common law is where fixed late payment for missing a time of the essence clause

equitable remedies

what type of remedy under common law is applied in situations where money won't fix the situation

what are the two types of equitable remedies under common law

1) specific performance

2) reformation

what does UCC stand for

Uniform Commercial Code

what is the definition of sale under the UCC

passing of title (who bears the "risk of loss")

Nautilus Insurance v Cheran Investment

which case goes with the definition of sale under the UCC where a bar burns down after the guy has bought it but two months into 24 months of payment. the man who bought the bar and only paid 2 months gets al insurance money because contact was silent meaning the title passed at the signing

under the UCC if a contract is silent when does the title pass

at the signing

what are three ways to be a merchant under the UCC

1) person who deals in specific goods

2) holds out as having knowledge

3) skill about specific goods and employer of merchants

when does a firm offer only exists under the UCC

offer is made by a merchant, have to ask them if it is a firm offer and if they say yes then the offer is irrevocable until stated time

what is reasonable time under the UC

3 months

what do you have to do with a firm offer under the UCC

SAY IT IS A FIRM OFFER

what is the definition of offer under the UCC

some indefinite terms are okay because the court will fill in the blanks if it can have "reasonable certainty" about what would be filled in

what are some things that the courts can fill in for a UCC offer

missing price (market price), missing payment timing (upon receipt of goods), missing delivery terms (pick up at seller's)

what is the definition of acceptance under the UCC

can accept via any reasonable manner and by any reasonable means

(if someone makes you an offer and you never respond to them but ship them the goods then it is a valid contract --> aka shipping is acceptance)

does the mirror image rule apply between two merchants

no

what is the wrinkle to the definition of acceptance under the UCC

if nonconforming goods are sent then it is acceptance and breach

ex: 500lbs of va ham and 500lbs of black forest ham

what are the general duties of all parties under the UCC for performance

good faith and observe reasonable commercial standards

what is the duty of the seller under the UCC performance

perfect tender

what does it mean for the duty of the seller under the UCC performance to deliver perfect tender

deliver/make available "conforming goods"

what are the 4 exceptions to the perfect tender rule

1) cure

2) substitute

3) commercially unreasonable

4) destruction of goods

what are the options the buyer has if the seller delivers non-conforming goods

can accept, can reject, or can do both

what are the 2 duties of the buyer for performance under the UCC

1) accept perfectly tendered goods

2) pay for perfectly tendered goods

what are the four exceptions to when an oral contract is okay under the UCC

1) between merchants if one memorialized in writing

2) oral k for specifically manufactured goods, after substantial start to manufacture (ex: golf clubs for specific person based on their measurements)

3) oral contracts where one part admits to the k

4) oral k with "partial performance" (partially performing the k means its valid)

under the UCC what are the seller's remedies (buyer is the weasel)

the buyer accepts the goods but refuses to pay

what will the seller ALWAYS do when the buyer is the weasel under the UCC (seller's remedies)

sue for compensatory damages

what three things could the seller do under the UCC when the buyer engages in Buyer Anticipatory Repudiation

1) withhold delivery

2) cover (mitigate loss --> sell to a different school)

3) sue for difference

what are the buyers remedies under the UCC when the seller delivers nonconforming goods

1) reject + move on

or

2) reject + cover + sure

specific performance

what are the buyers remedies under the UCC when the seller refuses to tender unique goods

what are the buyers remedies under the UCC when the seller goes bankrupt

sue to recover insolvency

what are the buyers remedies under the UCC when the seller delivers "difficult to discover" non-conforming goods (not fraud but smells like fraud)

can sue if you discover the non-conforming goods in a "reasonable time" AND you notify the seller in "reasonable time"

Fitl v Strek

what case deals with the difficult to discover non-conforming goods under the UCC where a guy bought a baseball card for a lot of money but 2 years later found out it was worth nothing and he sued the guy who sold it to him and it was found that 2 years was a reasonable time for a baseball card

what are 3 types of warranties under the UCC

1) title warranties

2) express warranties

3) implied warranties

what are the 3 promises that a Title Warranty under the UCC makes

1) warranty of good title

2) warranty against liens

3) warranty against infringement

warranty of good title

I have valid ownership of the item and the right to transfer it

warranty against liens

promises that there is no third party security interests

warranty against infringement

which promise of a title warranty under the UCC promises that there is no intellectual property infringement against your item

express warranties

overt promise that compelled you to buy it

implied warranties

caveat emptor (buyer beware) and was the rule in the US until 1960s

when did the caveat emptor (buyer beware) stop applying in the United States under implied warranties under the UCC

1960s

McFarland v Newman

what case goes with caveat emptor for implied warranties under the UCC where a man bought a horse that was stamping its foot a lot and it died shortly after but the court said that this guy should've looked more into it and "buyer beware"

strict product liability

a legal doctrine that holds manufacturers, distributors, and retailers responsible for defective products, regardless of whether they were negligent

what are 3 aspects of strict product liability

1) manufacturing defects

2) product design defects

3) inadequate warning