What is a contract?

A legally enforceable agreement?

What are the 3 components of a contract?

Offer + acceptance + consideration = contract

What is a merchant?

(1) One that holds themselves out as having particularized skill and/or knowledge specific to the goods that are the subject of the contract.

OR

(2) A party who regularly deals in the kind of goods sold.

What are the requirements for a Merchant's firm fixed offer under the UCC?

(1) Offer is made by a merchant

(2) The offer is made in a signed writing

(3) The writing assures that the offer will be held open

(4) NOTE: No consideration is required

What is an offer?

A promise undertaking a commitment to be bound by a contract by the terms communicated.

What are the 3 elements of an offer?

(1) Definite terms

(2) An expression of willingness to form a contract

(3) based on the offer, the offeree could reasonably believe that their acceptance would form a contract.

What is acceptance?

An act or assertion (verbal, writing, non-verbal) that indicates a present willingness to be bound by the terms of the offer.

What are the 2 main elements of acceptance?

(1) unequivocal assent to the terms of the offer

(2) adequately communicated to the offeror

When are offers revocable?

Generally offers are revocable up until there is a valid acceptance.

What is an option contract?

A contract under which the offeree trades consideration for the offeror's promise to not revoke the offer for a period of time.

What are the requirements necessary to avoid a contract because of mutual mistake?

(1) the party seeking to void the contract has not assumed the risk

(2) The mistake relates to a material aspect of the contract

(3) the mistake relates to a basic fact upon which the contract was created.

What are the requirements necessary to avoid a contract based on frustration of purpose?

A (1) supervening event (2) that was unforeseeable to the parties at the time of contracting (3) destroys the purpose of the contract, and (4) the parties knew of the purpose at the time of contracting.

What are the 3 ways in which a 3rd party's interest in a contract vests?

(1) The 3rd party learns of the contract AND relies on it.

(2) The 3rd party learns of the contract AND agrees to it.

(3) The 3rd party learns of the contract AND sues based on it.

What are 2 instances in which a contract is not delegable or assignable?

(1) Unique personal service contracts

(2) long-term output contracts

Is consideration needed for a firm fixed offer to be valid under the UCC?

No. Consideration is not needed.

What are the requirements of a firm fixed offer by a merchant under the UCC?

(1) signed writing

(2) writing assures the offer will be held open

(3) no consideration needed.

Under what circumstances does a written confirmation after an oral negotiation satisfy the statute of frauds and create a binding contract?

(1) Both parties are merchants

(2) One of the merchants confirms in writing within a reasonable time period

(3) the receiving party does not take exception or disavow the confirmation within 10 days (the 10-day rule . . . Check your mail).

What effect does a novation have?

Novation discharges the former contract.

What are the requirements of a novation?

(1) there is agreement between all former and new contracting parties.

(2) the previous contract was a valid contract

(3) the parties agree that rights and duties under the former contract are terminated

(4) the new contract is valid.

Seller offers to sell buyer any number of 10,000 lots of subdivided land at a fixed price. The buyer decides to buy 1 lot. What is the effect on the offer for the remaining 9,999 lots.

The acceptance of 1 lot implicitly rejects the remaining 9,999 lots.

I.e., the buyer has cannot subsequently accept any further lots at the fixed price without the seller making another offer.

What are the 2X primary theories for damages to land?

(1) Cost to Restore Theory

(2) Difference in Value Theory

What is the cost to restore theory?

Damages = the cost to restore the land to its original condition.

What is the difference in value theory?

Damages = the difference in market value of the land.

Regarding the cost to restore and difference in value theories, there is a split in authority between

(1) if the cost to restore is substantially larger than the difference in value, then some courts apply the difference in value calculation

(2) However, some courts simply apply the cost to restore theory.

In general, why are expectation damages awarded?

Upon breach without a valid defense, the non-breaching party is entitled to expectation damages.

What is the purpose of expectation damages?

Expectation damages are intended to place the injured party in the same position they would be in had the breaching party performed in accordance with the terms of the contract.

What are consequential damages?

Any damages that go beyond the standard or express measure of damages.

What are the 2 requirements for consequential damages to be recoverable?

(1) The damages must have been foreseeable to the breaching party

(2) The damages must be reasonably certain or ascertainable.

With respect to consequential damages, what does "foreseeable" mean?

At the time of contract formation, a reasonable person in the position of the breaching party (or parties) would know that the consequential damages would likely occur as the consequence of their breach.

What is a cost avoided? How does a calculation for cost avoided affect a damages award?

Cost avoided are costs saved as the result of the contract not being performed.

Cost avoided must be deducted from damage awards.

What is required for a non-breaching party to obtain avoidable damages?

Non-breaching parties may only recover avoidable damages if they make reasonable efforts to mitigate avoidable costs.

What happens if the non-breaching party fails to mitigate?

The non-breaching party's damage award is reduced by the amount that could have been avoided by reasonable mitigation efforts.

If two parties, X and Y, have multiple and distinct contracts with one another (K1, K2, K3, K4), and X repudiates one of the contracts, how may Y respond with respect to all of the contracts?

Y can suspend performance on the contracts and demand further assurances that X will perform.

What happens if X fails to provide further assurances?

Upon failure of X to provide assurances, Y can cancel the contract and seek damages.

If a contract is formed violation of a valid license, what is the effect on the contract?

The promise to perform the contracts is not enforceable as long as . . .

(1) the licensing requirement has a regulatory purposes

(2) public policy is served

What is an "account stated" ?

Parties come to an agreement about what final amount is due once performance is completed.

This applies to at least 2 and perhaps multiple acts of performance, and reduces the amount owed to a single number.

What is the effect of account stated?

The previous obligations under the contract are discharged and a new contract is formed.

Must an account stated be in writing?

No.

What is the parole evidence rule?

Evidence of agreements and promises made prior to an express contract at issue may not be used to alter or contradict express terms.

When does the parole evidence rule apply?

When the contract is fully integrated?

What is a fully integrated contract?

A contract that is intended to be the complete and final agreement among the contracting parties.

What is a partially contract?

When the contract does not completely describe the understandings and obligations of the parties under the contract.

How does a partially integrated contract affect the parole evidence rule?

If only partially integrated, prior or contemporaneous agreements to the contract may be used to supplement or interpret the contract, but MAY NOT contradict express terms.

What are the instances in which the statute of frauds applies?

M arriage Y year

L and E xecutor G goods over $500 S urety

Is a writing required to rescind a contract covered by the statute of frauds?

Generally, no.

When IS a writing required to rescind a contract covered by the statute of frauds?

Trick question. Never. A writing is not needed to rescind contracts.

However, modifications will require a writing.

What are the requirements of a contract for a sale of goods under the UCC for greater than $500?

Must be:

(1) in writing

(2) writing indicates that there is an agreement / contract

(3) quantity is specified directly (or may be incorporated by reference)

(4) signed by the party to be charged

What is the part performance exception?

Part performance removes the statute of frauds requirement if . . .

(1) Goods have been paid for or accepted

OR

(2) The goods are custom (specifically manufactured)

What is warranty of merchantability?

A warranty that states that goods are "fit" for the ordinary purpose of those goods.

When is warranty of merchantability implied?

It is implied in ALL UCC sales of good unless expressly disclaimed and disclaimer is accepted.

The buyer must agree to the disclaimer.

Under the UCC, is additional consideration required to modify a contract?

The UCC does not require additional consideration to modify an existing contract.

However, the modification must be made in good faith.

Under the common law, is additional consideration required to modify a contract?

Yes. Additional consideration, something of value or a detriment, must be given for a modification to be enforceable.

What damages are appropriate when a seller is ABLE to resell goods after a breach by the buyer?

Damages Award = (Contract price) - (resale price)

What damages are appropriate when a seller is CANNOT resell goods after a breach by the buyer?

Damages Award = (Contract price) - (market price) + (incidental damages) + (foreseeable consequential damages)

What is restitution?

When a contract is breached or otherwise failed, and one of the parties receives a benefit of the bargain, the other party may still be able to recover the value of the benefit given.

If one contracting party repudiates the contract before the time of performance is due, does the other party have to wait until performance is due to sue for damages?

No. The non-breaching party can immediately sue after the repudiation.

They could also choose to wait or request further assurances.

An advertisement is generally considered . . .

Not an offer. It is an invitation to receive offers.

What is the general exception the rule that advertisements are invitations for offers?

When an advertisement indicates that acceptance may be given by performance.

A unilateral contract.

When is "good faith" sufficient to make a contract modification binding?

Under the UCC, "good faith" is acceptable.

Under the common law, additional consideration is required.

If a contract contains a merger clause, when will course-of-dealings evidence still be admissible?

When the course-of-dealings evidence supplements of explains an ambiguous term in the contract.

Are minors liable for "necessities" they receive as a minor after reaching the age of majority?

Yes, under quasi-contract theory.

If a minor is liable for "necessities" what is the measure of damages?

The reasonable value of the "necessities", not the contractual price.

At what point in time are the buyer's damages measured?

When the buyer learns of the breach.

At what point in time are the seller's damages measured?

When the goods are delivered or services are rendered (time of delivery).

What are the 3 main theories under which the BREACHING party may possibly receive damages?

(1) substantial performance

(2) divisible contracts

(3) restitution

What is the "main purpose" exception?

The statute of frauds does not apply when one promises to pay the debt of another if in doing so their main purpose is to benefit themselves (secure an economic advantage for themselves).