COB 318 Exam 3 McCarthy JMU

Contract Elements (5) (COCAL)

Offer

Acceptance

Consideration

Capacity

Legality

Offer Elements (3)

1) Definite Terms- Parties + Specific goods/services + communicated

2) Termination = revoke, reject, counter, time-lapse, subject matter destroyed, offerer dies, law changes

3) Communicated

Acceptance (4) (MEMB)

1) mirror image rule

2) mailbox rule

3) bilateral/ unitlateral contracts

4) express authorization

Consideration

Value = money, item/good, promise to act, promise not to act (forbearance, Homer v. Sidway)

Illusory consideration

pre-existing duty

past consideration (Baugh v. CHC)

Capacity (3)

If a party lacks capacity, contract is voidable

1) Minors

2) mental incompetence

3) involuntary intoxication

legality (4)

Illegal = void

1) gambling

2) unlicensed professional

3) unconscionable

4) K in the restraint of trade

Statutes of fraud (What needs to be written down for a contract) (4) (PRS1)

1) Prenups

2) real estate

3) sales of goods >$500

4) K > 1 year

5 ways you can carry out your contract duties

1) Strict (complete) performance

2) Substantial performance

3) Timeliness of performance

4) Discharge by agreement

5) Discharge by operation of law

Strict Performance

1) all material terms

2) exactly as agreed upon

Substantial performance (3)

1) good faith effort

2) Minor deviation

3) Substantially the same outcome

Timeliness of performance

Minor delay is not a breach Unless there is a time of the essence clause.

Discharge by Agreement (5) (SMANC)

1) mutual recession

2) novation

3) settlement

4) accord and satisfaction

5) covenant not to sue

Discharge by operation of law (5) (SCIBM)

1) material alteration

2) statute of limitations

3) Bankruptcy

4) Commercially impracticable

5) Impossibility of performance

Elements to Involuntary Consent (4) (DUMF)

1) Mutual mistake of material fact

2) Fraudulent misrepresentation

3) Duress

4) Undue Influence

Fraudulent Misrepresentation (MIJA)

1) Misrepresentation of material fact

2) Intent to decieve

3) Justifiable reliance

4) Actual Harm

Duress

- Threats or Psychological pressure to force contract

- Threat of force and extortion

Third party contractual rights (DAT)

1) Assignment

2) Delegation

3) Third party beneficiaries

Delegation

non-delegation clause

"personal contact"

Damages (5) (CCPNL)

1) Compensatory damages

2) Consequential Damages

3) Punitive damages

4) Nominal Damages

5) Liquidation damages

Equistiable remedies. (2)

2 situations where money is not a remedy for contracts.

1. Specific performance

2. Reformation

Uniform Commercial Code Article 2

Commercial sale of goods

UCC "sale"

risk of loss

passing of title

UCC "Goods"

Tangible and movable

Does not pertain to IP

UCC "merchant" (4) (DHEP)

1) person

2) Deal

3) Hold out (having knowledge and skill about specific things)

4) employ others

Merchant offer (2)

1) irrevocable until stated deadline

2) reasonable timing

UCC offer (3)

Blank Terms

1) missing price

2) payment timing

3) delivery terms

UCC Acceptance (2)

1) any reasonable manner

2) reasonable means (Shipping goods)

Mirror image rule

A common law rule that requires that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer for a valid contract to be formed.

DOES NOT APPLY TO MERCHANTS

Battle of forms (2)

new terms incorporated into contract unless:

1) materially altered contact

2) offering merchant objects in reasonable time

UCC performance (both parties)

1) Good faith

2) observe reasonable commercial standards

UCC sellers performance obligations (4)

1) Need perfect tender, unless:

a) cure

b) substitute carrier

c) commercially impractical

d) destruction of goods

Perfect tender of conforming goods

producing goods exactly as you agreed upon

If the tender goods are "non-conforming" in any way, the buyer has a choice: (3)

- Accept the goods despite non-conformity

- Reject the goods outright

- Accept some of the goods, and reject the others

Exceptions to the Perfect Tender Rule (4)

1. Cure

2. Substitution of Carriers

3. Destruction of expected goods

4. Commercial Impracticability

UCC buyer performance obligations

You have to accept perfectly tendered (conforming) goods

Buyer has absolute inspection rights (check every box of ham if you want)

Can (and should) inspect the tendered goods in any reasonable manner

Beware of "Implied acceptance". This is failure to reject and using the goods. (Ex- You didn't check the ham boxes and you started to use it. You can not take it back now)

Pay for perfectly tendered goods in the way agreed upon the contract

Contract law review

Contracts for the sale of goods in excess of $500 must be in writing

implied acceptance

1) failure to reject

2) use of the goods purchased

UCC statutes of Fraud (5) (oral contracts)

1) Oral K b/w merchants:

a) if one party memorialized in writing

b) oral K for specialty manufactured goods

c) After substantial start

d) Oral K if one party admits to the K

e) oral K with partial performance (deliver and pay for some goods)

Cavent Emptor

buyer beware (McFarland v. Newmann)

Sellers remedies for breach (2)

1) buyer accepts but refuses to pay--> sue

2) buyer informs that they wont pay (anticipatory repudiation)--> withhold deliver, cover, sue

Buyers remedies for breach (4)

1) seller delivers non-conforming goods--> reject/move on or reject/cover/sue

2) seller goes bankrupt --> sue to recover

3) seller refuses tender unique goods --> specific performance

4) Seller delivers "difficult to discover" non-conforming goods --> revoke/accept/sue

Title warranties (GLI)

1) warranty of good title

2) against liens

3) against infringement

Express warranties (promises) (3)

1) statement of fact about production

2) samples and floor models same quality as others

3) Description and labels

Implied warranty (3) (MFT)

implied warranty of:

1) merchantability

2) fitness for particular use

3) a trade custom

Strict product liability (3) (MDI)

1) manufacturer defect

2) design defect

3) inadequate warning

Defense to strict product liability (4) (KMCC)

1) known or voluntary risk taking

2) misuse of product

3) commonly known danger

4) comparative negligence

Chapter 7 Bankruptcy

1) applies to all persons

2) excludes banks and insurance companies

8 steps to liquidation bankruptcy (PCRAETDD)

1) petition the court to declare bankruptcy

2) Court review. Means test

3) order of relief

4) automatic stay

5) Estate in property

6) Court appointed trustee takes control

7) Distribute the liquidation remainder

8) Discharge of remaining debts

Exception to automatic stay

Child support

Exception to estate in property

You can keep your house (homestead exception), car, a certain amount of personal items/ property up to $12,500, and your trade tools up to $2,300.

Distribution the liquidation remainder (3)

1) Secured creditors

2) Unsecured creditors

3) Domestic support, courts, lawyers

Order to pay back unsecured creditors (7)

1. Domestic support

2. Courts

3. Lawyers

4. Unpaid salaries

5. Back Taxes

6. General creditors

7. Discharge of remaining debt (Focus on this), Except - you are never discharged of domestic support and back taxes. Student loans can discharge in bankruptcy if you can prove paying them back would be an "undue hardship")

Exceptions to liquidation bankruptcy

1) domestic support payment

2) back taxes

Involuntary liquidation (3)

1) Owe >$15,250

2)not paying debts

3) actively evading creditors

Chapter 11 Reorganization (5) (applies to business entities and high net-worth individuals )

1) File petition (court review debts + easy approval)

2) Debtor is possession

3) Debtor and creditor negotiate a payment plan

4) Each "class" of creditor approves

5) discharge debt

Chapter 12 Bankruptcy

Family, Farms, and Fisheries

Chapter 13 Bankruptcy- applies to individuals on "fixed incomes" (2)

1) negotiate a 3-5 year repayment plan

2) 5+ years, debts discharge

Termination of an offer prior to acceptance (7)

1. Revoke

2. Reject

3. Counter Offer

4. Time-lapse. "You have to accept my offer by —-". Some people do not put a deadline. Otherwise, it would be a reasonable period of time.

5. Subject matter destruction.

6. Offeror dies

7. The law changes