Consideration
A bargain-for-exchange of legal value
Bargain-for-exchange
Quid Pro Quo: A promise is motivated by your return promise.
Legal Value
a benefit to the promisor and detriment to the promisee
Promissory Estoppel
a promise that a promisor would understand to induce reliance and it would actually induce reliance and causes detriment that can only be resolved if the promise is kept.
Material Benefit Rule
if the condition is a benefit to the promisor then it is not a gift.
Past Consideration
is no consideration. It can not support a contract because they already did it.
Defenses to Formation
- Effect of Misunderstanding
- Capacity
- Statute of Fraud
- Parol Evidence Rule
Effect of Misunderstanding
there is no contract when both parties have different meanings to their promise but both parties are aware or both parties are aware
There is a contract when you have one innocent party and one guilty party. And you use the meaning attached by the innocent party.
A promise to pay indebtedness
a new promise to pay your debt you have to have it in writing and pay some of it
Capacity
- Infancy: If you are under the age of 18 then you can get out of a contract if you:
a. give all their stuff back
b. tell them before or at a reasonable time after your 18th birthday
c. make it clear you no longer want to be in the contract
EXCEPTION: Necessity: if you are poor you can not get out of a necessity contract that has to do with shelter, food, education, clothing
Ratification is when you are after 18 and you make a payment or something to continue ratifying your contract than you no longer can claim capacity
Fraud: A kid can get out of fraud because this is what the rule is trying to protect them from - Mental Illness
Traditional Cognitive Test
a.. Did this person understand the nature and consequences of the transaction?
b. Was the illness diagnosed by a doctor?
Modern Volitional Test
a. But for
b. the other person had reason to know of the mental illness
3. Intoxication
a. But for
b. the other person knew the person was intoxicated.
Agreements made do not have to be in writing unless they fall under the…
Statute of Fraud
There are 6 ways to fall under the Statute of Fraud
1. Promise by an executor or administrator to pay debt out of their own estate
2. Promise to pay the debt of another
3. Promises made on condition of marriage
4. Promise for sale of land
5. Promise that will not be performed within one year of the making of the contract
6. Promise for the sale of goods over $500
What is the First sufficient writing under the UCC?
2-201(1) In writing it has to have
- Quantity
- Subject Matter
- Signature from the person denying the contract
What is the second sufficient writing under the UCC?
2-201(2) In writing
- Be between merchants
- within a reasonable time of the oral agreement a written agreement is sent
- party has to know of the items received
- the receiver has 10 days to deny it after being received
What is the third sufficient writing under the UCC
It does not have to be in writing or signed
2-201(3)A
the seller specifically manufactured it for the buyer than it is sufficient
or
2-201(3)B
if the person denying the contract states in court or gives a testimony that a contract was made than it is sufficient writing
or
2-201(3)C
If there was a payment made for the goods.
What is a sufficient writing for Statute of Fraud under Common Law
- Subject Matter
- Show a contract was made between both parties
- State with reasonable certainty the essential terms made in the contract
- Signed by the person denying the contract.
Parol Evidence Rule
If an agreement was fully intergraded then no outside evidence will be allowed. If the agreement is partially intergraded than only consistent additional terms can be shown in court.
The intergration test
If the proposed evidence is consistent with the agreement does it fall under one of the following:
- Naturally Inclusive test: would it have been something that a reasonable person would naturally have been in the agreement. Then it can not be shown in court.
- Naturally Omission test: would it have been a term that would naturally be discussed in an outside agreement. Then it will be allowed in court.
- Merger clause: everything that is already in the agreement is all that they were wanting to include therefore no other evidence is allowed.
UCC Parol Evidence Rule
Hierarchy Terms
- Course of performance: how have the parties been acting in this agreement.
- Course of Dealing: how have the parties acted in past agreements
- Trade Usage: how everyone else in the industry acts.
Modification of Statute of Fraud agreements
Majority Rule: every contract modification must be in writing
Minority Rule: the only modifications that are required to be in writing are the ones required in UCC 2-201
1. Subject matter
2. Quantity
3. Signature
Interpretations
When there are more than one meaning
First question the court must decide is if the word is ambiguous if no then the judge just gives the word the meaning. If the judge does say it is ambiguous then the judge leaves it for the jury to decide.
UCC Gap Filler
you only need to know the Quantity the rest is reasonable.
Open Price term (UCC GAP FILLER)
Reasonable price made in good faith
- output: sell all you produced in good faith
- Requirements: all product needed i will get from just you.
Delivery in Single lot or several lots (UCC GAP FILLER)
unless otherwise stated delivery of goods must be in one single delivery. And if otherwise stated multiple deliveries price can be apportioned.
Absence of specified place for delivery (UCC GAP FILLER)
place for delivery if not stated is seller’s place of business or if no business seller’s residence. if the parties know of where the goods are then the goods are there.
