K Final Study Guide
K= Contracts
SoF= Statute of Frauds
I. Application of law:
a. UCC applies to transactions in goods (movable, tangible, personal property) (pg. 134, 161,379)
b. Common Law applies to all other contracts (service, land, lease of goods, etc.) (pg. 134-135)
i. The Predominant Purpose Test: used to determine whether a K for both sale of goods and the rendition of services falls within the scope of Article 2 of the UCC. i.e. if a k is primarily for services, with the sale of goods being incidental, it will not fall within the scope of Article 2 of the UCC. (pg. 137)
1. Test: in determining the nature of the K, the Court will consider (1) the language of the K, (2) the nature of the business of the supplier, and (3) the intrinsic worth of the materials. (pg. 153)
c. CISG generally applies when the parties to a contract have places of business in d ifferent countries that are signatories to the CISG. (pg. 12 and 146)
II. Formation of a K
a. What is a K?
i. K: an agreement between two or more personas as to something that is to be done in the future by one or both of them. (pg. 2)
ii. Types of K:
1. Option K: (pg. 254) an offer which (at least for some specified, or perhaps “reasonable,” time period) they could delay accepting without losing the power of acceptance, even if the offeror should attempt to revoke it in the meantime. Option K review (pg. 255-262)
2. Unilateral K: pg. 58, 267
b. Formation of a K requires:
i. A bargain in which there is a manifestation of mutual assent to the exchange (offer and acceptance) and a consideration. (pf. 23)
1. Offer: a direct, complete proposal that a contract be entered into, providing for an exchange of defined performances. (pg. 34)
a. Advertisements are not typically treated as offers, but merely as invitations to bargain. (pg. 118)
i. Exception: * an advertisement can constitute an offer, and form a basis of a unilateral K, if it calls for performance of a specific act without further communication and leaves nothing for further negotiations. (pg. 118)
b. Orders are considered as offers to purchase. (pg. 162)
2. Acceptance: an unequivocal and unqualified assent to the terms of the offer that is communicated to the offeror (pg. 45)
a. Under the UCC: unless the offeror “unambiguously” indicates how acceptance should be made, an offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances. (pg. 146)
b. Under the UCC: acceptance will be considered a counter offer ONLY IF the acceptance is expressly made conditional on assent to the additional terms. (pg. 163)
c. Under the UCC: Battle of the Forms- between merchants, where a definite and seasonable expression of acceptance or a written confirmation is sent within a reasonable time, it operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, UNLESS acceptance is expressly made conditional on assent to the additional or different terms. (pg. 171)
i. *(pg. 171) Additional terms between merchants: become part of the uncontract UNLESS
1. the offer expressly limits acceptance to the term of the offer;
2. they materially alter the offer; or
3. notification of objection to them has already been given or is given within a reasonable time after notice of them is received.
3. Consideration:
a. an offeree’s performance or another promise in exchange for the offeror’s promise/offer (pg. 46)
b. a valuable consideration in the sense of the law may consist either in some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. (pg. 90)
c. Something which has been delivered before the promise is executed, and therefore, made without reference to it, cannot property be legal consideration (pg. 110)
d. Appreciation of past services or pleasure afforded the offeror is not sufficient consideration, like love, respect, affection for another, desire to do justice, fear of trouble, desire to equalize the shares in an estate, to provide for a child, or regret for having advised an unfortunate investment will support a promise. (pg. 111)
e. In ascertaining the presence of consideration, the courts will not “weigh” the consideration or insist on a “fair” or “even” exchange. (pg. 120-121)
i. However, gross inadequacy of consideration may be relevant to the application of other doctrines, such as fraud, mistake, lack of capacity, duress, or undue influence. (pg. 122)
f. Substitute to Consideration to enforce a K:
i. Promissory estoppel: applies to promises that are otherwise unenforceable and is invoked to enforce the promises so as to avoid injustice (pg. 116, 219, 240, 276)
ii. Elements for PE to be invoked: (pg. 239, 246)
1. A promise clear and unambiguous in its terms
2. A detrimental reliance on such promise by the person to whom the promise is made,
3. The reliance must be both reasonable and foreseeable; and
4. The party asserting the estoppel must be injured by his reliance/ AKA Injustice can be avoided only by enforcement of the promise.
iii. A Promise which the promisor should reasonably expect to induce action or forbearance on the part of the promise or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires. (pg. 219)
iv. In a PE analysis; the promise relied on by the promise need not be express by may be implied form a party’s conduct. (pg. 219)
v. When someone makes a promise to make a gift: such a promise is ordinarily enforced by virtue of the promisee’s reliance only if promisee’s conduct is foreseeable and reasonable and involves a definite and substantial change of position which would not have occurred if the promise had not been made. (pg. 220)
vi. Detrimental Reliance: the degree of detrimental reliance may be the most significant element in judicial determination that promissory estoppel should be invoked. (pg. 224)
4. No legal defenses or valid termination:
a. Valid termination:
i. Revocation of offer before acceptance by offeror – valid termination (pg. 258, 263)
ii. Rejection- valid termination (pg. 261)
1. Mailbox rule: (pg. 38-39)
iii. Counter-offer - valid termination (pg. 261)
iv. Death- valid termination (pg. 261)
b. Defenses to formation:
i. Fraud – legal defense
ii. Duress – legal defense
iii. Mutual mistake – legal defense
c. Defenses to enforcement of a K:
i. Statute of frauds – Legal defense (pg. 139)
III. Statute of Frauds: certain types of Ks to be in writing to be legally effective. (pg. 335)
a. Common Law K that must be in writing (pg. 336)
i. K of an executor or administrator to answer for a duty of his decedent
ii. A K to answer for the duty of another / suretyship provision
iii. K made up on consideration of marriage
iv. K for sale of an interest in land
v. K that is not to be performed within a year from the date the K is made
b. UCC Ks that must be in writing (pg.336)
i. K for the sale of goods for a price of $500
c. Elements to satisfy the statute of Frauds (pg. 336,
i. Writing that specifies the K terms
ii. Must be signed by the party against whom enforcement is sought,
iii. The quantity of goods is specified, AND
iv. No exception applies
d. UCC Exceptions to the Statute of Frauds that can apply and if they apply, the K is kicked out of the SoF requirement (AKA the K won’t have to be in writing and can be oral so long as it still meets the basic K formation elements)
i. Part Performance Exception: (pg. 350, 379)
1. where an oral K not enforceable under the SoF has been performed to such extent as to make it inequitable to deny effect thereto, equity may consider the K as removed from the operation of the SoF…(pg. 350)
a. K involving Land: Unequivocally referable: (pg. 351)-
i. when an outsider, knowing all of the circumstances of the case except for the claimed oral agreement, would naturally and reasonably conclude that a K existed regarding the land, of the same general nature as that alleged by the claimant. (pg. 351). The court will evaluate two factors in order to provide specific performance:
1. taking possession of the property
2. and making valuable permanent and substantial improvements to the property
ii. Admissions Exception: (pg. 380)
1. If the party denies that he made a K but admits facts that in the court’s view establish that such a K was indeed made, the SoF defense will be lost (pg. 380)
iii. Merchant/ Confirmation Exception (pg. 380-381): if the following elements are met, the SoF will not be a defense / AKA there will not need to be a K in writing.
1. Parties must be merchants
a. Merchant: someone who regularly deals in goods of a kind or holds herself out as having particular skills or knowledge involved in a transaction
2. One merchant must send a written “confirmation of the K” within a reasonable period of time after the oral K was formed,
3. The confirmation must be received by the other merchant who must have reason to know its contents, AND
4. The receiving merchant FAILS to object within 10 days
IV. Breach of K: pg. 9
a. A cause of action for breach of K must be established by pleading the following (pg. 95)
i. Existence of a K, including its essential terms,
ii. A breach of a duty imposed by the K, AND
iii. Resultant damages
b. If there is a breach, then the K does will not be enforced by the non-breaching party
c. For the sale of goods:
i. Purchaser of goods can reject non-conforming goods
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