Blaw mizzou exam 2

contract

A promise or a 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.

covenant not to compete

A contractual promise of one party to refrain from conducting business similar to that of another party for a certain period of time and within a specified geographical area.

What are the elements of a contract

agreement, consideration, contractual capacity, legality

What does the agreement consist off

An offer by the offeror and a acceptance by the offeree

Consideration

something of value exchanged for something else of value

Contractural Capacity

the legal ability to enter into a contractual relationship

What is a defense to the enforcement of a contract related to consent?

Lack of genuine assent

What are some examples of lack of genuine assent?

Fraud, duress, undue influence, misrepresentation

What is a defense to the enforcement of a contract related to form?

Lack of proper form requirements

What statute requires certain contracts to be in writing?

Statute of Frauds

What is the objective theory of contracts?

A theory under which the intent to form a contract is judged by outward, objective facts.

What factors are considered in the objective theory of contracts?

What the party said when entering into the contract, how the party acted or appeared, and the circumstances surrounding the transaction.

How is intent judged under the objective theory of contracts?

By a reasonable person's interpretation of the outward, objective facts.

Does the objective theory of contracts consider a party's subjective intentions?

No, it does not consider the party's own secret, subjective intentions.

Bilateral contracts

promise for a promise

unilateral contracts

promise for an act

express contracts

the terms of the agreement are fully and explicitly stated in words, oral or written

Implied contracts

obligations that are understood without verbally expressed terms

what are the three conditions for an implied-in-fact contract

1. The plaintiff provides some property or service to the defendant

2. The plaintiff expected to be paid for such property or service, and a reasonable person in the position of the defendant would have expected to pay for it

3. The defendant had an opportunity to reject but did not

quasi-contracts

a court-imposed contractual obligation to prevent unjust enrichment

valid contract

A contract that results when elements necessary for contract formation (agreement, consideration, legal purpose, and contractual capacity) are present.

Unenforceable Contract

A valid contract rendered unenforceable by some statute or law.

void contract

A contract having no legal force or binding effect.

voidable contract

A contract that may be legally avoided at the option of one or both of the parties.

What types of contracts are voidable

Ones with minors, parties got taken advantage of,

Executed contract

A contract that has been completely performed by both parties.

Executory Contract

A contract that has not yet been fully performed.

Formal contract

A contract that by law requires a specific form, such as being executed under seal, to be valid.

What are the four types of formal contracts

1. contracts under seal

2. recognizances

3. letters of credit

4. negotiable instruments

Contract under seal

A contract that has a seal certifying its legality. Such contracts require no consideration for them to be legal.

A recognizance

when a person acknowledges in court that he or she will perform some specified act or pay a price upon failure to do so

A letter of credit

an agreement by the issuer to pay another party a sum of money on receipt of an invoice and other documents

Negotiable instruments

unconditional written promises to pay the holder a specific sum of money on demand or at a certain time

informal contract

A contract that does not require a specified form or formality in order to be valid.

simple contract

the same as a informal contract

plain-meaning rule

if a writing, or a term in question, appears to be plain and unambiguous on its face, we must determine its meaning from just "the four corners" of the document, without resorting to outside evidence, and give the words their ordinary meaning

What advantages do written contracts have over oral

They have everything written down to reference

The statute of frauds

1. It attempts to ease contractual negotiations by requiring sufficiently reliable evidence to prove existence

2. To prevent unreliable oral evidence from interfering with a contractual relationship

3. To prevent parties from entering into contracts with which they do not agree

What is the first type of contract within the scope of the statute of frauds?

Promises made in consideration of marriage.

What is the second type of contract within the scope of the statute of frauds?

Promises made in consideration of marriage.

What is the third type of contract within the scope of the statute of frauds?

Contracts that involve the sale of land

What is a related category of contracts that must be in writing under the UCC?

Contracts for the sale of goods totaling more than $500.

secondary obligations

A promise to pay another's debt only if that party fails to pay

primary obligation

A promise to pay another person's debt that is not conditioned on the person's failure to pay (or perform)

what is the difference between primary and secondary obligations

Primary obligations are not within the statute of frauds and, therefore, need not be in writing to be enforceable. Secondary obligations, as we've seen, are within the statute and need to be in writing.

Circumstances in Which the Statute of Frauds Applies (MY LEGS)

M Marriage Contracts made in consideration of marriage

Y Year Contracts whose terms prevent possible performance within one year

L Land Contracts related to an interest in land

E Executor Contracts in which the executor promises to pay the debt of an estate with the executor's own money

G Goods Contracts for the sale of goods totaling more than $500

S Suretyship Contracts involving secondary obligations or suretyships

Parol Evidence Rule

A substantive rule of contracts under which a court will not receive into evidence the parties' prior negotiations, prior agreements, or contemporaneous oral agreements if that evidence contradicts or varies the terms of the parties' written contract.

merger clause

A clause in a written agreement within the statute of frauds which states that the written agreement accurately reflects the final, complete version of the agreement.

warranties

assurances by one party that the other party can rely on its representations of the fact

Express warranties

a material term of the sale or lease contract

Express warranties made by the seller can be established in the following ways:

1. An affirmation of fact or promise made by the seller to the buyer that relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.

2. A description of the goods that is made part of the bargain creates an express warranty that the goods shall conform to the description.

3. A sample or model that is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

puffing

Exaggerated or superlative comments or opinions.

Warranties of title

1. Good title

2. No liens

3. No infringements

Implied Warranty of Merchantability

A warranty that goods being sold or leased are reasonably fit for the ordinary purpose for which they are sold or leased, are properly packaged and labeled, and are of fair quality. The warranty automatically arises in every sale or lease of goods made by a merchant who deals in goods of the kind sold or leased.

Implied Warranty of Fitness for a Particular Purpose

1. The merchant knows why the buyer is buying the item

2. The buyer is relying on the merchant for advise

Implied warranty of trade usage

Warranty that arises as result of generally-accepted trade practices

Warranty Rights of third parties

1. Seller's warranties extend to the buyer's household members and guests.

2. Seller's warranties extend to any reasonable and foreseeable user.

3. Seller's warranties extend to anyone injured by the good.

how can a buyer waive implied and express warranties?

1. failing to examine goods for which an express warranty was created by a sample or model

2. Failing to comply with the sellers request to inspect the goods

What are the elements of an offer

(1) serious intent by the offeror to be bound to an agreement, (2) reasonably definite terms, and (3) communication to the offeree

Intent

The courts interpret the parties' words and actions the way a reasonable person would interpret them

Preliminary negotiations

an invitation to negotiate or expressing interest is not an offer because it does not express any willingness to be bound by an acceptance

Auction with reserve

An auction in which the seller retains the right to refuse the highest bid and withdraw the goods from sale. Unless expressly stated otherwise, an auction is an auction with reserve.

Auction without reserve

An auction in which the seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid.

How can an offer be terminated

Revocation The offeror can revoke the offer at any time unless the offeree entered into an option contract with the offeror.

Rejection The offeree can reject the offer.

Counteroffer If the offeree offers a counteroffer, the original offer is terminated.

Death or incapacity If the offeror becomes incapacitated or dies, the offer immediately terminates.

Illegality If the subject matter of the offer becomes illegal, the offer immediately terminates.

Lapse of time The offer will expire after a reasonable amount of time, which depends on the subject matter of the offer, unless a specific time condition is given.

An option contract

The offeree gives the offeror something of value in exchange for a promise not to revoke the offer for a stated period of time

Detrimental reliance

On the offer may also form the basis for the court's not allowing the offeror to revoke an offer

Silence as a form of acceptance

Cannot be used UNLESS:

-previous behavior would indicate it acceptable

-Receiving benefits with a reasonable amount of time to deny such benefits

Mirror-image rule

says that the terms of the acceptance must mirror the terms of the offer. If they do not, no contract is formed

Article 2 of the UCC pertains to what

The sale of goods

Article 2(A) pertains to what

The lease of goods

What are goods as defined by the UCC

All tangible things, which are movable at the time of identification

What about real estate in regards to Article 2

Items taken from real estate may be treated as goods. Minerals, clay, and soil

Consumer Lease

A lease that has a value of $25,000 or less and exists between a lessor who is regularly engaged in the business of leasing or selling and a lessee who leases the goods primarily for a personal, family, or household purpose.

Finance lease

a three-party transaction consisting of a lessor, a lessee, and a supplier

Offer

1. Made in writing

2. Gives assurances that it will be irrevocable for up to three months despite lac of consideration for the irrevocability

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 the mirror image rule apply to the UCC?

There is no mirror image rule under the UCC!!!

Partial-performance exception

In some cases the court may grant specific performance of an oral contract to transfer an interest in land when the contract has been partially performed (purchaser has paid part of the price, taken possession, and made permanent improvements) whether the court will allow relief usually is determined by the degree of harm that would be suffered if the court does not enforce the contract

Parol Evidence Rule

1. additional terms that are consistent with the terms in the agreement

2. Evidence that helps the court interpret the agreement including previous conduct of the parties regarding the contract in question

Four factors of sales and leases

1. express terms

2. Course of performance

3. Course of dealing

4. Usage of trade

CISG

Contracts for the International Sale of Goods

Good title

title acquired from someone who already owns the goods free and clear

Void title

no title can be transferred

Voidable title

Occurs in certain situations in which contract between original parties would be void, but goods have already been sold to third party

How can a buyer get a voidable title

- The buyer has deceived the seller regarding identity

- The buyer has written a bad check

- The buyer has committed criminal fraud

- A minor

Entrustment

The transfer of goods to a merchant who ordinarily deals in that type of goods. If the merchant subsequently sells them to a good-faith third-party purchaser, the buyer acquires good title to the goods.

Simple delivery Contract

type of contract in which purchased goods are transferred to the buyer from the seller either at the time of the sale or at some time later by the seller's delivery

Common carrier delivery contract

a type of contract in which purchased goods are delivered to the buyer via an independent contractor, such as a trucking line

Goods-in-bailment contract

This type of contract occurs when the purchased goods are in some kind of storage under the control of a third party, such as a warehouseman.

Conditional sales contract

A conditional sales contract occurs when the sale itself is contingent on approval

Simple delivery contract

1. Title transfers to the buy on the goods being identified to the contract

2. risk of loss transfers to the buyer when the buyer takes possession

3. insurable interest is created in the buyer when the goods are identified to the contract

tender of delivery

the moment the goods were available for the buyer to take

shipment contracts

require that the seller ship the goods to the buyer via common carrier→title passes to the buyer at the time and place of shipment→buyer bears the risk of loss while the goods are in transit

Destination contract

requires that the seller deliver the goods to the destination stipulated in the sales contract

Sale-on-approval

The seller allows the buyer to take possession of the goods before deciding whether to complete the contract by purchasing the good

Sale-or-return contract

a contract in which the buyer and seller agree that the buyer may return the goods at a later time

What is the most common way a seller can be in breach of contract

When they fail to deliver goods

What can a buyer do if the seller does not provide the goods

1. Accept the nonconforming goods

2. reject the goods

When is the buyer usually in breach

When they do not want to pay

When do origin and shipment contracts transfer risk

When the product leaves