Formation Flashcards

Question

SOF defense

Answer 1

SOF is a statute designed to prevent fraudulent claims of the existence of a k. Makes it harder to have a false or fraudulent claim. Must have objective proof before claimant gets its day in court (other than just testimony that a k exists). Proof required of either performance or a writing signed by the ∆. SOF is in essence a barrier bw a litigant asserting a k claim and having a whole trial on whether a k even exists. But times have changed, courts have limited SOF a lot. Judges think they’re smart enough to tell whether there really was a k in the first place. Also judges want people to get their day in court. Mylegs: marriage, year, land, executors hip, goods over 500, suretyship

Answer 2

[suretyship]: promises to answer for the debts of another 1. the promise must be COLLATERAL to another’s promise to pay. remember: no new consideration is needed to modify to add a suretyship Main purpose exception: If the main purpose of the suretyship obligation is actually for the promisor’s own economic interest, then it is a main purpose, and not subject to statute of frauds. a. For ex: B is a painter who buys paint to paint C’s house, and C provides surety of the purchase. i. main purpose is to get C’s house painted. ii. means that we don’t need a writing. iii. no SOF defense.

Answer 3

ii. Service contract not “capable” of being performed within a year from the time of the k. 1. Specific time period, more than a year. a. for ex. must have in writing an agreement to work for 3 years. not capable to be finished within one year. b. BUT, if the 3-yr employment is capable of termination. i. yes w/in SOF, not capable of being performed in a year. ii. bc it may be terminated in any way (death also) but wont be performed until at least 3 years. 2. At a specific time, more than a year from a k a. for ex. jan 15 2017 contract to perform on dec 24, 2018. cannot be finished within year of date of the k. 3. Task (nothing said about time) – SOF doesn’t apply. “Not capable of being performed” within a year. “Capable” = theoretically possible with unlimited resources. a. for ex POSSIBLE to cut all trees on Ds lands 4. Lifetime—SOF doesn’t apply. a. theoretically possible they die within a year. could die in a year, then theyd have worked for life

Answer 4

Mylegs: marriage, year, land, executors hip, goods over 500, suretyship i. promises to answer for the debts of another [suretyship]: ii. Service contract not “capable” of being performed within a year from the time of the k. iii. Transfers of interest in real estate (with exception for leases of year or less) iv. Sale of goods for $500 or more,

Answer 5

1. if something is within SOF and there’s no writing, a court will grant the motion to dismiss unless ∆ has objective proof of agreement 2. UCC 2-201: If both parties are merchants, memo of the terms of sale sent by one party satisfies the SOF unless the other party objects within 10 days.

Answer 6

if an agreement is within SOF then the ∆ can file a MTD or MSJ based on a SOF defense. But π can still get her day in court by providing objective evidence of the k to satisfy concern of fraud. IF π succeeds, SOF is satisfied and no defense. BUT ∏ JUST GETS DAY IN COURT, DOESN’T WIN i. Performance: 2. Writing: 3. Delay in responding. 4. Judicial admission: 5. Estoppel:

Answer 7

1. SOF can be satisfied by performance. 5 rules for satisfaction of the SOF by performance vary depending on whether the k is a real estate k, services k, or sale of goods k a. Performance and transfer of real estate (performance rule 1) i. part performance satisfies SOF in transfers of real estate. Requires any two of the three 1. improvements to the land 2. payment 3. possession b. Performance and services ks i. Full performance by either party satisfies SOF ii. Part performance of a services k does NOT satisfy the SOF 1. can’t recover under k law. 2. BUT may recover under quasi-k law. a. only through equity c. Part performance and sale of goods contracts: i. Seller’s part performance—ordinary goods 1. part performance satisfies SOF to the extent of the performance a. delivered—no SOF defense b. undelivered—yes SOF defense. ii. Seller’s part performance—specially manufactured goods 1. if goods are specially manufactured, then SOF satisfied as soon as seller makes “substantial beginning” i.e. enough work that she is working on a custom made/ made to order

Answer 8

reqs of SOF can be satisfied by a writing. BUT not every writing satisfies reqs and reqs can be satisfied without a writing. a. SOF other than article 2 i. look at the contents of the writing or writings—all material terms test. must include 1. all material terms 2. must be signed AT LEAST by the ∆, i.e. the person who is asserting the SOF defense (doesn’t matter if the π signed) b. Article 2 of SOF: requirements to satisfy writing i. indication that there is a k for sale of goods and contain the quantity ii. must by signed by the ∆ 1. exception: txs bw two merchants where there is a delay in responding.

Answer 9

a. When one merchant receives a signed writing from another asserting a k to buy or sell stated # of goods, the recipient’s failure to timely respond that ther is no k provides objective evidence that satisfies the SOF. b. If one biz person gets a letter that looks like a one sided k, they’d answer the letter. failure to respond is basically the objective proof.

Answer 10

a. if the ∆ is asserting a SOF defense admits in a pleading or testimony that he entered an agreement with π (eg. we agreed but never put anything in writing) the purpose of the SOF is satisfied – no SOF defense.

Answer 11

a. some cases hold that the π reliance on the ∆ oral promise to put the agreement in writing, then the ∆ can estop the ∆ from asserting a SOF defense

Answer 12

i. Issue is when do the rules of law require that a person have written authorization in order to execute a K for someone else. ii. Rules of law require that the authorization must be in writing only if the k to be signed is within the SOF, i.e. the authorization must be of equal dignity with the k.

Answer 13

a. if deal with alleged change would be within SOF→ alleged modification must be in writing i. for ex. orig lease is 1 year, L claims it was later increased to 3 year. YES need written evidence of alleged modification ii. contra. orig lease for 3 years. T later claims they reduced lease from 3 years to one year. K law doesn’t require written evidence of the alleged modification. iii. k of wine for $600, later claim they reduced price to $3. NO NEED FOR WRITTEN EVIDENCE. 1. but may be hard to convince the court that the deal has been changed.

Answer 14

k says all modifications must be in writing i. Under common law, k provisions requiring that all modifications be in writing are not effective -> ignore k language. ii. Under UCC, k provisions requiring written modifications are effective unless waived.

Answer 15

a. Illegal subject matter—if subject matter is illegal, agreement is not enforceable. i. for ex. hit man ks b. Illegal purpose—if subject is legal, the agreement is enforceable if the π did not have reason to know of ∆’s illegal purpose i. for ex. D contracts with Delta for ticket from LA to Chi to go kill someone. if D doesn’t pay, Delta can recover.

Answer 16

a. Courts can refuse to enforce an agreement bc of public policy. Look for an exculpatory agreement that exempts intentional or reckless conduct from liability or a covenant not to compete without reasonable need or reasonable time and place limits.

Answer 17

i. a statement of fact before the k. FACT not opinon) ii. by one of the contracting parties or her agent iii. that is false iv. that is fraudulent or material v. AND that induces the k.

Answer 18

a. not tested as much as misrepresentations. typically don’t matter b/c no general obligation to disclose. b. Generally, person making a k has no duty to disclose what she knows. Look for fiduciary-like relationship or concealment as exceptions to the general rule. i. for ex rust on car so I paint whole thing orange. ii. or for ex. nondisclosure bw close friends.

Answer 19

a. Physical duress. - excused b. Economic duress 1) improper threat + 2) no reasonable alternative for the other party ii. ex of economic duress. 1. D and P have k to sell 100 pounds for 2k. D refuses performance until P pays 2500. P has no other source so agrees to pay. a. p can get out f the agreement to pay the additional 500 c. Undue influence i. special relationship bw the parties ii. improper persuasion of the weaker by the stronger

Answer 20

ii. empowers court to refuse to enforce all or part of an agreement. Two part test: 1. procedural unconscionability a. For ex: inconspicuous shifting of risk provisions of risk that is usually borne by one side to the other, esp if it’s in fine print ii. take it or leave it or contracts of adhesion, and no other option (for ex, there's no possible way to get a car bc all dealers have these kinds of ks.) iii. exculpatory clauses for intentional wrongful acts (negligent acts ok, as long as they are conspicuous) iv. limits on remedies—not unconscionable unless inconspicuous. d. Must also have great differences in bargaining power for something to be unconscionable. unfair surprise b. AND substantive unconscionability —harshness of the terms. must have both procedural and substantive. 2. must be unconscionable at the time the k was made. a. for ex. if something becomes unconscionable because of changed circumstances, then not unconscionable if unconscionable WHENMADE, court may i. refuse enforcement ii. enforce the remainder without the unconscionable clause iii. limit the application of a clause to avoid an unconscionable result.

Answer 21

a. no k if 1) material term with at least 2 reasonable meanings, 2) each party has different interpretation 3) neither party knows of the other's interpretation b. there must be a word in the k that has two different meanings!! i. for ex. k for cotton on the peerless. there are 2 peerlesses. neither knows there are two ships, one in October one in December. ii. But if one party knows there are two ships named peerless. 1. then there is a k. 2. that party has obligation to clarify the term. 3. we go with the version understood by the person who DIDN’T know of the two meanings

Answer 22

a. Unilateral mistake - generally no relief for mistake if you bear the risk (everyone bears risk of OWN mistake). - UNLESS (palpable mistake exception): the other party knows or had reason to know of the mistake 1. ex. big gap between offered prices in a bid c. Unilateral mistake and modification: if one party modifies but loses out because of modification--> cannot recover. b. Mutual mistake i. Relief for mutual mistake only if both parties are mistaken (not just uncertain) about existing facts. Even if both are mistaken, no relief if the person seeking relief bears the risk of the mistake Who bears the risk--> anyone who is cheapest cost provider of information (contractor v. homeowner for ex.) or if parties were consciously aware of ignorance. ii. ex. B buys cow from S and they both are certain it is barren, but a vet could have determined that it was fertile; 1. no relief: there is a mutual mistake but S assumed the risk (b/c could have determined whether it was fertile, so it was S’s own mistake) 2. relief possible if nobody could have determined the cow was fertile, and parties were justifiably certain it was not 3. Mistake in value does not equal a defense 1. the mistake that matters is that of the breaching party 2. the breaching party bears the risk of their own mistakes v. mutual mistake of material fact allows a rescission remedy

Answer 23

1. Modification of k terms: a. generally: k cannot be modified unless supported by new consideration. i. modification is due to circumstances that were unanticipated by the parties when the k was made c. UCC: allows good faith promises of new and different terms to be valid even without consideration. d. BUT if the NEW K falls within the SOF → must be in writing.

Answer 24

if one party has 1) extreme and unreasonable difficulty/ expense + 2) nonoccurence was a basic assumption of the parties (was this an unassumed risk?) b. UCC--> Seller discharged to the extent of impossibility or impracticability ii. Things like shortage of raw materials, or inability to provide because of war, strike, embargo or unforeseen shut down of major supplier. Catastrophic crop failures.

Answer 25

a. Mutual recission: express agreement to rescind. This is its own k supported by consideration. i. BUT if rights of 3rd party have already vested, the k cannot be discharged by mutual recission by the OR and EE 1. Unilateral k—for an effective recission, the recission must be supported by one of the following a. Offer of new consideration by the nonperforming party b. Elements f promissory estoppel c. Manifestation of intent by the original offeree to make a gift of the obligation owed her.

Answer 26

2. Partially performed bilateral k—usually enforced when bilateral k has been partially performed. Whether the party who has partially performed is entitled to compensation depends on terms of recission.

Answer 27

iii. can mutually rescind orally. Even if writing says can only be rescinded in writing, unless the k is under SOF, or is for sale of goos (UCC requires a written recission)

Answer 28

v. Contracts for marriage must be in writing | prenups and postnups

Answer 29

a. Express contract—formed by language, oral or written b. Implied in fact k—formed by manifestations oof assent other than oral or written language, i.e. by conduct c. Quasi-k or implied in law—constructed by courts to avoid unjust enrichement by allowing π to bring an action in restitution to recover the amount of the benefit conferred on the ∆

Answer 30

d. Direct rejection with words i. 3 methods of indirect rejection 1. counteroffer 2. conditional acceptance 3. additional terms (CL only)

Answer 31

1. general terminatin and creation of new offer. 2. counteroffers do not terminate options. even if a counteroffer for option, can still accept original offer 3. mere bargaining is NOT a counteroffer a. words of suggestion, asking questions about changing price

Answer 32

1. accept but then goes own to use conditions of acceptance a. for ex, I accept “if” “only if” “provided” “so long as” “but” or “on condition that b. CL: conditional acceptance is a rejection and counteroffer that can be accepted by conduct. i. new term becomes part of the k c. UCC: rejection but not a counteroffer that can be accepted by conduct. i. conditional acceptance is never an acceptance ii. if the other party sends the goods and the buyer pays for the goods, there’s a contract, but its based solely on the conduct of both parties. iii. new term is NOT included in the contract.

Answer 33

AKA : Mirror image rule. 1. CL: requires that a response to an offer that adds new terms is treated like a counteroffer rather than an acceptance. a. AND once you add terms/ change the k, the offer is dead. there’s indirect rejection. b. If language added by T was immaterial—facts must be clear it’s truly a minor change, AND it’s common law, then the change is ok. When there is acceptance but one party throws in another term, without conditioning acceptance on that term--> Can still form a k if sale of goods UCC 2-207. “Battle of the forms” : a. if there’s a response to an offer that adds additional or different terms, but doesn’t make the new terms a condition of acceptance—generally treated as an acceptance→ a seasonable expression of acceptance. Whether the parties are merchants is irrelevant. 2. Second: is the ADDITIONAL term a part of the k? a. Yes--> if both parties are merchants, + new term is not material AND not objected to d. Material change—anything that substantialy affets the economic benefits/ risks of the k. Or it changes the usual remedy for breach of k. i. Arbitration is a material change Battle of the forms rephrased. Additional term that is not conditional is added unless - there is a non-merhant - a party expressly objects - the term is material

Formation Flashcards

(57 cards)