BLAW Exam 2 Slides

-

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

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

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

The contract itself is legal

Lack of Genuine Assent - contract was never formed because parties did not enter into it freely and on their own accord

Lack of Proper Form - Sometimes contracts must be in writing

Common law - varies by jurisdiction, but generally similar principles

Uniform Commercial Code ("UCC") - applies to contracts for the sale of goods

Terms are clearly defined and established either orally or in writing

A contract that comes about simply from actions of the parties.

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

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

a state law that requires that certain contracts be in writing

- Rooted in 1677 English "Act for Prevention of Frauds and Perjuries"
- Written contracts have more clarity and finality of terms and are less subject to disputes or challenges
- "Within" vs. "Outside" s/f

Marriage
Year
Land
Executor
Goods
Suretyship

- Contracts made in consideration of marriage
- Mutual promise to marry doesn't count (no consideration)
- Prenuptial agreements
- Engagement gone bad

- Contract terms prevent possible performance in less than one year
- Impossibility (not unlikeliness) is required

- 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

a person or institution appointed by a testator to carry out the terms of their will.

- 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 worth over $500
- Value set by contract terms; not intrinsic value of the goods
- Key word is GOODS (not services or intangibles)

- 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 lease

-

1. Identification of parties
2. Subject matter of the agreement
3. Consideration exchanged
4. All relevant contractual terms
5. Signatures

1. Manifestation of offeror's intent to be bound
2. Reasonably definite contractual terms
3. Communication of the offer to the offeree or an authorized agent

- Preliminary negotiations
- Advertisements
- Auctions

- Revocation by Offeror
- Rejection by Offeree
- Death/Incapacity of Offeror
- Destruction/Subsequent Illegality of Subject Matter of Offer
- Lapse of Time/Failure of Condition(s) Specified in Offer

- No set requirements for form acceptance; only require to show offeree's manifestation of intent to be bound
- Silence generally does not constitute acceptance except in rare circumstances
- Mirror Image rule (common law) v. gap-fillers of missing terms (UCC)

- Something of value exchanged for something else of value
- Mutual exchange of consideration is required in every contract
- Courts rarely weigh the adequacy of consideration

- Illusory promises
- Pre-existing duties
- Past consideration

A debt that is due and certain in amount.

A debt that is uncertain in amount.

- Accord and Satisfaction

-

established by contract, with presumptive ability to understand how to comply with terms of the agreement.

Natural persons over the age of majority (18 in most states) are presumed to have the full legal capacity to enter into binding legal contracts

- Minors
- Special Needs
- Drunk

Contract can be disaffirmed at any time during minority, or for a reasonable period after minor is emancipated (reaches the age of majority).

1. misrepresentation of age
2. liability for necessaries
3. insurance
4. loans

- Parents are not liable for contracts entered into by their minor children, except contracts for necessaries.
- Parents not liable for torts committed by their minor children, except failure to properly supervise child, causing others unreasonable risk of harm.

Contract is void if illegal subject matter or for being illegal to perform.

a promise the courts will require the parties to obey

Persuasion that is less than actual force but more than advice and that induces a person to act according to the will or purposes of the dominating party.

- Did dominant party rush other party to consent?
- Did dominant party gain undue enrichment from the contract?
- Was nondominant party isolated from other advisers at time of contract?
- Is contract unreasonable, in that it overwhelmingly benefits dominant party?

- 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.

-

Performance

Happening of condition or its failure to occur

Material breach by one/both parties

Mutual Agreement

Operation of law

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

future event that terminates obligations of parties when it occurs.

Conditions that must occur or be performed at the same time; they are mutually dependent. No obligations arise until these conditions are simultaneously performed.

A condition specifically and explicitly stated in a contract and usually preceded by words such as conditioned on, "if", provided that, or "when."

condition not explicitly stated, but inferred from nature and language of contract.

A breach that occurs when a party renders inferior performance of his or her contractual duties.

An assertion or action by a party indicating that he or she will not perform an obligation that the party is contractually obligated to perform at a future time.

- Once contract anticipatory repudiated, non-breaching party discharged from obligations under contract and can sue immediately for breach of contract.

both parties agree to discharge each other from their contract.

Parties agree to substitute new contract in place of original contract

an agreement made and executed in satisfaction of the rights one has from a previous contract

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

-Alteration of Contract
-Bankruptcy
-Tolling of Statute of Limitations
-Impossibility of Performance
-Objective Impossibility
-Subjective Impossibility

Obligation on non-breaching party (plaintiff) to use reasonable efforts to minimize damage resulting from defendant's breach of contract

Damages:

1) Compensatory - direct loss from breach of contract
2) Consequential - indirect foreseeable consequences
3) Liquidated - Damages agreed to in advance in case of breach
4) Punitive - the purpose is to punish
5) Nominal - Small amount to show a wrong took place

Recession, Restitution, Specific Performance, Injunction, Reformation, Quasi-contract

Plaintiff conferred benefit on defendant

Plaintiff reasonably expected to be compensated for benefit conferred on defendant

Defendant would be "unjustly enriched" from receiving benefit without compensating plaintiff

Introduction to Sales and Lease Contracts

Section of law that governs the sale of goods

Applies to contracts for the sale of goods

passing of title from seller to buyer for a price

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

buyers or sellers who:
- deal in goods of the kind involved in the contract
- employ a merchant as a broker, agent, or other intermediary
- By occupation, represent themselves as having knowledge and skill unique to goods involved in transaction.

Applies to contracts for the sale of goods

transfer of right to possession and sue of goods for a term, in return for consideration

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

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

- Formation in general: contracts for sale or lease of goods may be made in any manner sufficient to show agreement.
- Offer and acceptance:
Offers valid even if terms left open.
Mirror-image rule does not apply.
- Consideration: mutual consideration required upon forming agreement.

-Price: "Reasonable price" at time of delivery
-Payment: When buyer receives goods
-Delivery: Seller's place of business
-Time for Performance: "Reasonable" time
-Duration of Contract: "Reasonable" period of time, with termination allowed in good faith, and upon notice
-Quantity: Contract fails for lack of definiteness

- 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.

Evidence outside of a written contract

Title, Risk of Loss, and Insurable Interest

Legal right of ownership

Acquired from someone who already owns the goods "free and clear"

Not true title; e.g., the title held by someone who knowingly or unknowingly purchased stolen goods.

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

buyer and seller contract, buyer gets goods at time of sale or sometime later by seller's delivery.

buyer and seller contract, seller then places goods with common carrier who is responsible for delivering the goods

Performance, Obligations, and Remedies for Breach of Sales and Leases

In transaction between merchants, the UCC also imposes obligation of reasonable commercial standards of fair dealing (commercial reasonableness)

States if goods or tender of delivery fail in any respect to conform to contract, buyer/lessee has right to:
- Accept the goods
- Reject entire shipment
- Accept part and reject part

-industry standards
-past dealings between parties
-agreement between parties
-seller's/lessor's right to cure
-excuse from performance when identified goods destroyed through no fault of parties
-"substantial impairment" (as it relates to revocation of acceptance and installment contracts)
-commercial impracticability

Delay in delivery or non-delivery may not, in court's discretion, constitute breach if performance made impracticable because contingency has occurred that was not contemplated when parties reached agreement

fulfill expectations and intentions of parties to agreement and give them "benefit of the bargain" they have already negotiated

failure to honor a contract or contract term.

usually recovery of purchase price or lease payments due; sometimes lost profit

sellers/lessors allowed to sell the goods to another buyer or dispose of goods when buyer is in breach and goods not delivered

Must demonstrate good faith, pay a reasonable sum for the substitute, act without delay, and purchase reasonable substitutes.

Buyer must:

- Demonstrate "good faith" in obtaining substitute goods

- Pay reasonable amount for substitute goods

- Act without "unreasonable delay" in purchasing substitute goods

- Purchase goods that are reasonable substitutes

damages specified in contract before breach occurs

usually requires seller or lessor to deliver particular goods identified in the contract.