BLAW exam 2 lectures

agreement

all parties to a contract must agree to be bound to the same terms

offer

one party extends a contractual offer to another party

acceptance

the receiving party accepts the contractual offer extended to them

consideration

bargained for exchange;” all parties must give/receive something of

value

contractual capacity

all parties to the contract have the legal ability to enter into the contract

legal object

the contract itself is in furtherance of something that is legal

lack of genuine assent

Defenses to Contract Formation/Enforcement

contract was never formed because parties did not enter

into it freely and on their own accord

lack of proper form

Defenses to Contract Formation/Enforcement

sometimes contracts must be in writing in order to be enforceable

common law

Sources of Contract Law'

varies by jurisdiction, but generally similar principles

UCC

Sources of Contract Law

applies only to contracts for the sale of goods

express contract

Express, Implied, and Quasi-Contracts

terms are clearly defined and established either orally or in writing

implied contract

Express, Implied, and Quasi-Contracts

parties’ conduct indicates contract has been created

1. Benefit conferred on defendant

2. Plaintiff reasonably expected to be paid for their benefit conferred

3. Defendant had an opportunity to reject the benefit but chose not to

quasi-contract

Express, Implied, and Quasi-Contracts

parties’ conduct indicates it would be unfair not to impose contractual

obligation to prevent unjust enrichment

1. Benefit is conferred on defendant

2. Defendant has full knowledge of benefit he is receiving

3. Defendant retains benefit and would be unjustly enriched without binding other party

statute of frauds

• Rooted in 1677 English “Act for Prevention of Frauds and Perjuries” requiring specific

types of contracts be in writing and signed by both parties

• Modern common law and many state laws require certain types of contracts to be in

writing in order to be enforceable

• Written contracts have more clarity and finality of terms and are less subject to disputes

or challenges

marriage

MY LEGS

Contracts made in consideration of marriage

• Mutual promise to marry doesn’t count (no consideration)

• Prenuptial agreements

year

MY LEGS

• Contract terms prevent possible performance in less than one year

• Impossibility (not unlikeliness) is required

• Life term is outside s/f because YOLO

land

MY LEGS

• Contracts related to an interest in land (and fixtures)

• Fixtures include anything attached to the land (trees, buildings, in-ground pools, etc.)

• Within: real property conveyances, leases, mortgages

• Outside: crop harvests, profit-sharing on real property, boundary disputes

executor

MY LEGS

• Executor of an estate promises to personally pay debt belonging to the estate

• Regular estate debts paid or promised by the estate are outside s/f

• Narrow provision and not commonly used

goods

MY LEGS

Goods worth over $500

• Value set by contract terms; not intrinsic value of the goods

• Key word is GOODS (not services or intangibles)

suretyship

MY LEGS

• Party outside an agreement promises to fulfill the obligations of an original party to an

agreement

• “Answer for the debt of another”

• Example: co-sign on a leas

identification, subject, consideration, terms

WRITTEN REQUIREMENTS

1. ________ of parties

2. _____ matter of the agreement

3. _______ exchanged

4. All relevant contractual ___

• Quantity of goods sold is required; buyer/seller, price, method of payment not necessary

5. Signature(s)

• At least of party against whom action is sought

• Can be enforceable against one side but not the other

• “Signature” given considerable leeway

intent, definite, communication

Required elements of an offer:

1. Manifestation of offeror’s ____ to be bound;

2. Reasonably ____ contractual terms; and

3. _____ of the offer to the offeree or

an authorized agent

negotiations, advertisements, auctions

Not an Offer

• Preliminary _____ – “would

you consider…”

• ______ (unless they are

“clear, definite, and explicit” see Lefkowitz v. Great Minneapolis Surplus Store)

• ____ – default is “with reserve” means purpose is to solicit offers; if “without reserve” then offer is already extended and purpose is to solicit acceptances

intent

Acceptance

• No set requirements for form acceptance; only require to show offeree's manifestation of

____ to be bound

true

(T/F) Acceptance can be shown by express word or implied action – either one generally

terminates offeror’s ability to revoke the offer

false

(T/F) Silence generally does constitute acceptance

consideration

“bargained for exchange” and means anything of value

illusory promise

Not Consideration

a promise to do something else without accepting the offer

past consideraiton

Not Consideration

if consideration has already been exchanged, it cannot be the

basis for a contract; past consideration can be modified to extend a valid contract

preexisting duty

Not Consideration

cannot use consideration that is something a party is already

obligated to do or has already been contracted to perform

liquidated debt

Partial Payment of a Debt

no dispute as to amount of money owed

unliquidated debt

Partial Payment of a Debt

good faith dispute as to whether money is owed or amount of money owed

does not

If debt is liquidated, partial payment of debt (does/does not) affect remaining debt balance

accord, satisfaction

If debt is unliquidated, parties can enter into an _____ and ___

• This means the parties can agree to have a set payment amount satisfy the entire

debt

capacity

Mental ability to understand rights and obligations established by contract, with presumptive ability to understand how to comply with terms of the agreement

disaffirmance

minors' right, until reasonable time after reaching age of majority, to disaffirm/void their contracts

necessaries

EXCEPTIONS TO MINORS’ RIGHT TO DISAFFIRM CONTRACT

•Contract for _______: contracts that supply minor with basic necessities of life (i.e., food, clothing, shelter, and basic medical services)

ratification

EXCEPTIONS TO MINORS’ RIGHT TO DISAFFIRM CONTRACT

______: acceptance of terms of contract (entered into as a minor) after reaching age of majority

express

minors

____ ratification: when, after reaching age of majority, an individual states (either orally or in

writing) their intent to be bound by contract they entered into while they were a minor

implied

minors

_____ ratification: when former minor takes action after reaching age of majority consistent with intent to ratify contract

necessaries

General rule: parents NOT liable for contracts entered into by their minor children, except contracts for ____

supervise

General rule: parents not liable for torts committed by their minor children, except failure to properly ____ child, causing others unreasonable risk of harm

voidable

RULES REGARDING INTOXICATION

• General rule: contracts made by intoxicated persons are _____ by the intoxicated party when the other party knew/should have known they were contracting with an intoxicated person

unfairly capitalized

RULES REGARDING INTOXICATION

• If intoxication merely causes person to exercise poor

judgment, contract not voidable unless other party ____ ____ on the impaired judgment

interpret behavior

RULES REGARDING INTOXICATION

• When intoxicated person becomes sober, contract can be ratified or disaffirmed (“voided”); however, courts will liberally _____ _____ that appears as ratification once intoxicated person becomes sober

undue influence

Persuasive efforts of dominant party, who uses special relationship to interfere with other's free

choice of terms

• Any relationship involving one party's unusual degree of trust in another may give rise to undue

influence

• Example: Boss is contracting with employee on an issue completely unrelated to work, and employee

is afraid to say no or negotiate because of fear of making boss mad

duress

Occurs when one party is forced into an agreement by a wrongful act of another

• Duress is not legal assent, as coercion interferes with contracting party's free will

• For courts to rescind agreement, injured party must prove duress left no reasonable alternatives

to contractual agreement

• Example: Lifeguard at public pool tells parent they must pay $5,000 for the lifeguard to dive in and

save their drowning child

precedent

TYPES OF CONDITIONS

condition _____: particular event that must occur for a party's duty to arise.

subsequent

TYPES OF CONDITIONS

condition _____: future event that terminates obligations of parties when it occurs

concurrent

TYPES OF CONDITIONS

______ conditions: each party's performance conditioned on simultaneous performance of the other

express

TYPES OF CONDITIONS

____ condition: condition explicitly stated in contract (usually preceded by words such as "if," "provided that," or "when")

implied

TYPES OF CONDITIONS

____ condition: condition not explicitly stated but is inferred from nature and language of contract

complete

TYPES OF PERFORMANCE

____ performance: when all aspects of parties' duties under contract are carried out perfectly

substantial

TYPES OF PERFORMANCE

_____ performance occurs when the following conditions have been met:

• Completion of nearly all terms of agreement

• Honest effort to complete all terms

• No willful departure from terms of agreement

anticipatory repudiation

party decides, before the actual time of performance, not to complete contract obligations

• May occur if market conditions change and one party realizes it will be unprofitable to fulfill contract

• Can occur either through express indication of intent or action inconsistent with intent to fulfill contract when performance due

mutual rescission

DISCHARGE BY MUTUAL AGREEMENT

____ ____: both parties agree to discharge each other from their contract

substituted contract

DISCHARGE BY MUTUAL AGREEMENT

____ _____: parties agree to substitute new contract in place of original contract

accord and satisfaction

DISCHARGE BY MUTUAL AGREEMENT

____ ____ _____: parties agree one party will perform duty differently from performance specified in original agreement and after new duty is performed, party's duty under original contract is discharged

novation

DISCHARGE BY MUTUAL AGREEMENT

_____: original parties and a third party agree that the third party will replace an original party and the original party will be discharged

monetary

LEGAL REMEDIES FOR BREACH OF CONTRACT

___ damages: include compensatory, punitive, nominal, and liquidated damages

compensatory

LEGAL REMEDIES FOR BREACH OF CONTRACT

_____ damages: damages designed to put plaintiff in position he or she would have been in had contract been fully performed

consequential

LEGAL REMEDIES FOR BREACH OF CONTRACT

_____ (special) damages: foreseeable damages that result from special facts and circumstances arising outside contract itself

• Damages must be within contemplation of parties at time breach occurs

punitive

LEGAL REMEDIES FOR BREACH OF CONTRACT

____ damages: damages designed to punish defendant and deter people from engaging in similar behavior in the future

nominal

LEGAL REMEDIES FOR BREACH OF CONTRACT

____ damages: small award (typically only $1 or $5) intended to signify that although no actual damages resulted from defendant's breach of contract, plaintiff was still wronged by defendant

liquidated

LEGAL REMEDIES FOR BREACH OF CONTRACT

_____ damages: damages for breach of contract specified in the contract itself (either as fixed amount or as formula for determining money due)

rescission

EQUITABLE REMEDIES (COURT-ORDERED ACTION) FOR BREACH OF CONTRACT

_____: termination of contract

restitution

EQUITABLE REMEDIES (COURT-ORDERED ACTION) FOR BREACH OF CONTRACT

____: return of any property transferred under contract

specific performance

EQUITABLE REMEDIES (COURT-ORDERED ACTION) FOR BREACH OF CONTRACT

____ _____ (specific enforcement): court order requiring

breaching party to fulfill contract obligations; usually awarded only

when monetary damages inadequate and subject matter of contract is

unique; generally not awarded in a contract for services

• Example: contract for sale of real estate when seller is in breach

injunction

EQUITABLE REMEDIES (COURT-ORDERED ACTION) FOR BREACH OF CONTRACT

____: order forcing person to do something or prohibiting from doing something (usually a prohibition against certain actions)

reformation

EQUITABLE REMEDIES (COURT-ORDERED ACTION) FOR BREACH OF CONTRACT

______: contract gets rewritten to reflect parties' actual agreement

quasi-contract

EQUITABLE REMEDIES (COURT-ORDERED ACTION) FOR BREACH OF CONTRACT

________: contract-like obligation imposed on party to prevent unjust enrichment

uniform commercial code

Definition: statutory source of U.S. contract law involving sale of goods

sales, leases

Article 2: ___

Article 2(a): ___

sale

UCC ARTICLE 2: DEFINITIONS

passing of title from seller to buyer for a price

goods

UCC ARTICLE 2: DEFINITIONS

tangible things that can be moved (for example, automobiles, furniture, electronics)

2

Applies to contracts for the sale of (movable, tangible) goods

UCC Article _ applies if the sale of goods is the predominant purpose of the contract

merchants

UCC ARTICLE 2

_____: buyers or sellers who:

• Deal in goods of the kind involved in contract, or

• By occupation, represent themselves as having knowledge and skill unique to goods involved in transaction, or

• Employ a merchant as a broker, agent, or other intermediary

• Are held to a higher standard of performance than nonmerchants under the UCC

2A

UCC ARTICLE __

Applies to contracts for the lease of goods

lease

UCC ARTICLE 2(A)

___: transfer of right to possession and use of goods for a specified term, in return for consideration

lessor

UCC ARTICLE 2(A)

_____: person who transfers right to possession and use of goods under lease

lessee

UCC ARTICLE 2(A)

___: person who acquires right to possession and use of goods under lease

manner sufficient

HOW SALES AND LEASE CONTRACTS ARE FORMED UNDER UCC

• Formation in general: contracts for sale or lease of goods may be made in any ___ ____ to show agreement

opem, mirror-image, mutual

HOW SALES AND LEASE CONTRACTS ARE FORMED UNDER UCC

Offer and acceptance:

•Offers valid even if terms left ___

• ___ rule does not apply (this is a common law principle)

• Consideration: ____ consideration required upon forming agreement

reasonable, receives, business, reasonable, specified

UCC AND OPEN TERMS

Interpretation under UCC of terms left open (“gap fillers”):

• Price: ____ price supplied at time of delivery

• Payment: due when buyer ____ goods

• Delivery: seller's place of ____

• Time for performance: must be performed within ___ time

• Duration of contract: termination allowed in good faith upon reasonable

notification

• Quantity: courts generally have no basis for determining a remedy. This

term generally MUST be ____ in the contract!

battle of forms

Recognized by UCC when parties are negotiating and offers and counteroffers are being exchanged

• If the last set of negotiations is not specifically rejected, then the last terms standing are the ones applicable to the final transaction

• UCC assumes terms found in the battle of the forms are part of the contract, whether expressly agreed to or not

parol evidence

UCC CONTRACTS/LEASES AND ADMISSIBILITY OF PAROL EVIDENCE

_____: oral/verbal evidence or non-contractual evidence used to attempt to prove, explain, or determine the obligations of a written contract

title

the legal right of ownership

good

___ title: acquired from someone who already owns the goods free and

clear; can only be acquired from someone who has legal right of ownership

void

____ title: not true title; no right of ownership whatsoever

• Example: purchase of stolen goods (either knowingly or unknowingly)

voidable

____ title: occurs in certain situations where contract between original parties would be void, but goods have already been sold to a third party

• In a voidable title transfer, the seller retains right to cancel the contract and reclaim the goods even after the transaction has taken place up until the goods have been resold to a bona fide purchaser for value

good title

General rule: if third-party purchaser makes good-faith purchase for

value, purchaser gets ___ __ if seller held good title or voidable title

simple delivery

TYPES OF SALES CONTRACTS

• ____ _____: buyer and seller contract, buyer gets goods at time of sale or sometime later by seller's delivery

• Title transfers to buyer when contract executed (which may be before

goods are transferred)

• Risk of loss transfers to buyer when buyer takes possession

• Buyer has insurable interest upon receiving title

common-carrier

TYPES OF SALES CONTRACTS

• ________ delivery: buyer and seller contract, seller then places goods with third party common carrier who is responsible for delivering the goods to buyer

shipment

TYPES OF SALES CONTRACTS - Common-carrier delivery

_____ contract: title transfers to buyer at time and place of shipment; buyer bears risk of loss while goods in transit

• This is the default, assumed contractual relationship unless otherwise

specified

destination

TYPES OF SALES CONTRACTS - Common-carrier delivery

____ contract: seller bears risk of loss until the goods are delivered to the stipulated destination.

• Contract must specify this term in order for it to apply

accept, reject, corrected

RISK OF LOSS UPON BREACH OF CONTRACT

Seller in breach (by failing to deliver goods):

• Buyer may ___ nonconforming goods as is or ___. the goods

(subject to seller's right to cure)

• Seller has right to cure defective delivery if possible

• Risk of loss remains with seller until buyer accepts goods or deficiencies ____