Contracts

All things movable at the time they are identified under the contract

One who regularly deals in goods of the kind or by his profession holds himself out as having special knowledge

1) Offeror clearly indicates that completion of performance is the only manner of acceptance
2) An offer to the public (e.g. reward)

1) Was there mutual assent?
2) Was there consideration?
3) Are there any defenses to creation?

Must describe LAND and PRICE. Deed description not required, as long as land is identifiable.

Quantity must be certain, except for requirements and output contracts

Generally OK, but tender or demand cannot be unreasonably disproportionate to 1) any estimate or 2) comparable prior outputs or requirements

Court will supply reasonable terms if parties left it open. Price for goods will be reasonable at time of delivery.

Fatal, unless part performance clarifies the term

Offer is too uncertain if a material term

Required for acceptance

Revocation

Offeree receives:
1) Correct information
2) from a reliable source
3) of acts of the offeror that indicates that the offer is revoked

When offeree receives it

Not allowed as long as there is separate consideration for the option

Non-revokable if:
1) A merchant
2) offers to sell goods in a signed writing
3) and gives assurances that it will be held open
If no specific time frame, then it is a reasonable period (not to exceed 3 months

If offeror could reasonably expect offeree to rely on offer, then considered an option contract for a reasonable length of time.

Irrevocable once performance begins, but offeree can back out at any time. BUT mere preparations are not sufficient (could still constitute detrimental reliance)

Constitutes acceptance, but notification may be necessary

When received by offeror

Not effective, unless offeror detrimentally relies on the attempted rejection

Can constitute a rejection

1) Death or insanity of either party
2) Destruction of the proposed subject matter
3) Supervening illegality

Not allowed, BUT option contract powers of acceptance are assignable

Generally not required right when performance begins BUT must give notice with a reasonable time after performance is completed UNLESS 1) Offeror waive notice or 2) Offeror should normally come to her attention

Unless specified, any reasonable manner is OK

Acceptance can be:
1) A promise to ship or
2) prompt shipment of the goods

Acts as acceptance AND breach UNLESS seller notifies that it is meant as an accomodation (Only applies if shipment is acceptance, if a promise was made, then it is a breach)

Common law: Not OK (mirror image rule)
Article 2: OK, new terms are proposals (Battle of the Forms)

Acceptance is effective at moment of dispatch UNLESS 1) an option contract or 2) sends a rejection, then an acceptance (then whichever arrives first governs) or 3) sends an acceptance, then a rejection (then acceptance governs)

May still be effective if actually received by the offeror

1) bargained-for exchange AND
2) must constitute a benefit to the promisor or a detriment to the promisee

Doesn't count as consideration UNLESS response to an emergency and saved person later agrees to pay

Generally insufficient to constitute consideration

1) The promisor should reasonably expect to induce action or forbearance
2) of a definite and substantial character
3) and such action or forbearance is actually induced

Voidable by affected party if:
1) Concerns a basic assumption
2) Has a material effect AND
3) The party seeking avoidance did not assume the risk

Not grounds to prevent formation UNLESS non-mistaken party had reason to know or knew. Then becomes VOIDABLE.

1) Neither party aware - no contract unless both sides applied same meaning
2) Both parties aware - no contract unless both side applied same meaning
3) One party aware - meaning is what other party thought

If party knew information was untrue, then voidable by innocent party if they actually relied on the misrepresentation

Voidable so long as innocent party justifiable relied on it and it is material

1) Information would induce a reasonable person OR
2) Knew the information would cause this specific person to agree

Voidable by minor, but must return any remaining goods. Must disaffirm within reasonable time after reaching age of majority.

Voidable, but can affirm during periods of lucidity.

Voidable, but can be affirmed once sober

Makes contract voidable BUT economic coercion is generally not enough (UNLESS threat to commit wrongful act and party can't protect herself)

Must be one or more writings that reflect the material terms AND is signed by the defendant

1) Promise by executor to pay estate's debts with own funds
2) Promises to pay debt of another
3) Promises in consideration of marriage
4) Interests in land
5) Performance that cannot occur within one year
6) Goods priced more than $500

Then plaintiff can sue for reasonable value of services rendered OR restitution of other benefits conferred

1) Hidden risk provisions
2) Contracts of adhesion
3) Clauses that release party from liability for its intentional wrongdoing
4) Limitations of remedies (e.g. repair is only remedy but repair is impossible)
Determined at time of contract

1) Does it look like a final expression?
2) Is there a merger clause?

1) Attack validity of formation
2) Interpreting ambiguous terms (but not changing them!)
3) Show that true consideration was never paid
4) Mistake

Terms in collateral agreement must:
1) not conflict with other document AND
2) be something that would not ordinarily be included in the other integration

Same as common law, except terms can be explained or supplemented by course of dealing, usage of trade or course of performance

1) Non-merchant involved - the offer terms govern
2) Merchants involved - the additional terms are included UNLESS it materially alters the contract, offer expressly disallows OR offeror rejects knew terms

Different terms in acceptance: Some courts allow them, other do not

Reasonable price at time of delivery

Then seller's place of business or home

A reasonable time

Time and place when buyer receives the goods

Buyer can select the assortment

1) Seller is merchant - risk of loss passes when buyer has physical possession
2) Seller is non-merchant - risk of loss passes on tender of delivery

1) No specific destination - risk passes when goods are delivered to the carrier
2) Specific destination - risk passes when tendered to buyer at the destination

Contract terms are those contained in last communication between parties

All sellers of goods warrant that the title is clean

All merchant sellers warrant no IP claims UNLESS buyer provided the specification

All merchant sellers warrant that they are fit for the ordinary purpose for which the goods are used

Any seller warrants that the goods will work for the buyers specific purpose if seller knows of that purpose

Become basis of the bargain, BUT mere statements of value or opinion are not enough

Must be:
1) Conspicuous AND
2) mention merchantability

Must be:
1) Conspicuous

Reasonable person ought to have noticed it

"As is", gives reasonable inspection if defect is revealable, course of dealing (rarely)

Very difficult to do

Allowed, as long as not unconscionable

Typically upheld

Any difference between value of actual goods and value of those that were as warranted

1) Rescind the contract
2) Revoke acceptance OR
3) Sue for damages
Usually equals purchase price

Not allowed under common law, OK under UCC

Not effective under common law, OK under UCC but if between merchant and non-merchant then non-merchant must sign this provision

1) Shipment contract - due when put in hands of carrier
2) Destination contract - due when goods reach the destination

Sufficient unless seller demands cash

Promise (promise, agree) is a commitment and if broken constitutes breach. A condition (provided, if, when) if unfulfilled releases party of any liability.

Event must occur before the absolute duty of performance arises

Parties must perform at same time (technically each is a precedent of the other)

Occurrence cuts off an already existing absolute duty

If mechanical, reasonable person test. If personal taste, good faith subjective test.

1) Each party's performance is conditioned on the other's performance
2) Cooperation and notice (especially when other party can't know a fact that triggers performance)
3) Concurrent obligation if possible, if not, then longer to complete must go first

Occurs when wrongful prevention of condition happens

OK, but breach must be material

1) Must be bilateral contract where both parties have yet to perform
2) Must be unequivocal
Repudiator can withdraw the repudiation UNLESS other party canceled or materially changed position because of repudiation

Innocent party can demand adequate assurances

Only applies to implied conditions, innocent party can get the small damages left over. Not considered a breach.

1) Performance is divided into two or more parts
2) Number of parts due from each party is the same AND
3) Each performance is the quid pro quo of the corresponding other performance
If so, then party is entitled to equivalent for each part BUT innocent party can get damages for uncompleted parts

When party indicates that it is waiving a condition. Waiver can be retracted until other party detrimentally relies on the waiver

When condition is broken, party must 1) terminate liability OR 2) continue under the contract

Best way to discharge the contractual duty

Occurrence of condition subsequent discharges legal obligation

When subject matter of the contract becomes illegal (supervening illegality)

1) Must be objective impossibility
2) Must occur after the contract is formed
Each party is then excused, but restitution is available

Merely suspends contractual duties

Only terminates the contract if the person was uniquely qualified to fulfill the contract

Duties are discharged BUT be careful of building hypo

1) Extreme and unreasonable difficulty or expense AND
2) Its non-occurrence was a basic assumption of the parties
UCC examples include: shortage of raw materials, war, strike, etc. BUT mere cost rising (even 50%) is not enough

1) Supervening act
2) that parties did not reasonably foresee
3) the purpose of the contract is almost completely destroyed AND
4) the purpose of the contract was contemplated by both parties at formation

Requires express agreement between the parties to rescind BUT heads up for third party beneficiary with a vested rights

Must:
1) have an offer of new consideration OR
2) have elements of promissory estoppel OR
3) manifestation of an intent by original offeree to make a gift of the obligation owed her

1) A previous valid contract
2) an agreement among all parties, including the new one
3) the immediate extinguishment of duties between original parties AND
4) a valid and enforceable new contract

Destruction of written contract not enough, UNLESS intent to make this the case

Must be:
1) in writing
2) supported by new consideration

Must immediately discharge old duties either expressly or impliedly

When one party agrees to accept a different performance, must be a different type or paid to a third party

Creditor can sue under accord agreement OR original agreement

Acts as an accord and satisfaction of a bona fide dispute over amount if it conspicuously states that it is for FULL SATISFACTION

Merges all transactions into one final payment

1) The amount of the benefit received
2) the adequacy of compensation
3) the extent of part performance
4) hardship
5) negligent or willful behavior
6) likelihood that breaching party will perform

Generally considered a minor breach if done within a reasonable time EXCEPT time is of the essence clause

Under UCC, goods must comply exactly with specifications

1) Buyer indicates to the seller that goods are conforming
2) Buyer fails to reject within a reasonable time OR
3) Buyer does any act inconsistent with the seller's ownership

Must hold them with care and follow instructions. If no instruction, can 1) reship the goods 2) store the goods 3) resell them and give money to seller

Allowed only if:
1) Accepted with reasonable belief that defect would be cured OR
2) difficult to discover defects. Must revoke before goods are changed.

More lenient, must substantially impair value and be un-curable

Can cure by:
1) giving reasonable notice of intention to cure and 2) tender conforming goods. Seller gets reasonable time after deadline if they thought goods would be accepted

Available only for land or unique goods. Never allowed for services contracts (but injunction is OK)

Must be:
1) Reasonably necessary to protect a legitimate interest
2) Must be of a reasonable geographic scope and duration AND
3) must not harm the public (doctors, etc.)

Usually measured by the price difference to get substitute performance (expectation). If this is too speculative, then cost of her performance (reliance).

Consist of losses than any reasonable person would have foreseen as a result of breach

These includes reasonable costs associated with the goods (shipping, insurance, storage, etc.)

Allowed with breach but no actual loss

Only allowed if:
1) Damages are difficult to measure at time of contracing AND
2) they are a reasonable estimate of damages.
Penalties are NOT allowed

Difference between the contract price and the fair market value

Full contract price, but employee must mitigate

Cost to replace the employee

Actual costs plus expected profits

Cost of completion plus compensation for the delay minus benefit received

Damages cannot be speculative

1) Employee must look for work
2) Seller must try to resell goods
3) Manufacturer has to stop making goods if buyer breaches
4) Builder can't continue work after owner breaches

Avoids unjust enrichment, equals the value of benefit conferred. NOT limited to contract price, so good option is "loser" contracts where work was undervalued.

1) Plaintiff conferred a benefit
2) with a reasonable expectation of being compensated
3) Defendant knew or should have known of that expectation and
4) would be unjustly enriched if he retained the benefit without paying

Contract terms are changed so that they conform to original intent of the parties. Clear and convincing evidence standard.

1) Is the beneficiary identified in the contract?
2) Does she receive performance directly?
3) Does she have a relationship with promisee?

1) Manifests assent to the promise
2) brings suit to enforce the promise OR
3) materially changes positions in justifiable reliance of the promise. Prior to vesting, they can be taken out of contract by other parties.

1) No ban on assignments AND
2) manifestation of intent to immediately transfer rights under the contract

Not allowed if new person sucks at the job. Both delegator and delegatee (if he assumed w/ consideration) can be sued.

1) Merchant who deals in goods of the kind can transfer in the ordinary course of business
2) Good faith purchaser for value who buys from a fraudulent buyer
3) Thieves cannot transfer good title, UNLESS they make substantial improvements