1
Q
Methods of Contract Formation
A
- express (oral or written)
- implied-in-fact (conduct)
- quasi-contract (prevents unjust enrichment)
2
Q
Unilateral Contract
A
one promise; contract is not formed until the other party has performed
3
Q
Bilateral Contract
A
two promises
4
Q
Executory vs. Executed Contracts
A
Executory - remain to be performed
Executed - performed all of the duties
5
Q
Items to which common law pertains
A
R eal estate
I nsurance
S ervices
E mployment
6
Q
Three Common Elements in a Contract
A
- agreement made up of offer and acceptance
- consideration
- no defenses
7
Q
Offer Requirements
A
- intent
- definiteness and certainty
- communication to the offeree
8
Q
Which theory does contract law follow?
A
Objective theory
9
Q
Are advertisements considered offers?
A
Generally, they are considered invitations to make offers; exception when the number of offerees is explicitly mentioned
10
Q
Terms must be definite and certain. What does this mean for UCC and for Common Law?
A
UCC - only quantity needs to be definite
Common - all aspects must be definite
11
Q
If the offeree has no knowledge of the offer, can he/she accept?
A
no knowledge, no acceptance
12
Q
Three Methods to Terminate Offer
A
- rejection
- revocation
- automatic (process of law)
13
Q
When can an offeror revoke an offer?
A
any time before acceptance by communicating to the offeree
!*can even revoke an offer when a promise was made to keep it open (unless it is an option)
14
Q
Limitations on Offeror’s Power to Revoke an Offer
A
- option contract
- unilateral contracts
- Merchant Firm Offers (rain checks)
15
Q
Methods to Reject Offer
A
- express
2. counteroffer
16
Q
Counteroffer vs. Mere Inquiry
A
Counteroffer = rejection
Mere inquiry = no rejection and valid offer remains
17
Q
When is a rejection effective?
A
when it is received
18
Q
Is silence taken as acceptance or rejection?
A
rejection
19
Q
Termination by Operation of the Law
A
- death or incompetency
- destruction of subject matter
- illegality
20
Q
What happens to an acceptance if it is invalid?
A
it becomes a counteroffer
21
Q
Does Common Law or the UCC use the Mirror Image Rule?
A
Common Law
22
Q
Mailbox Rule
will be on exam
A
*generally, acceptances are effective when dispatched
EXCEPTION: offeror can opt-out by saying acceptances must be received on a certain date
23
Q
The Mailbox Rules makes what effective on dispatch?
A
acceptances ONLY
*revocations, rejections, and counteroffers are effective on receipt
24
Q
Consideration Elements
A
- something of legal value given by each party
2. bargained for exchange
25
Elements of Legal Value
1. need not have monetary value
2. need not flow to party
3. courts will generally not inquire into adequacy
4. preexisting legal duties generally do not suffice
26
When will courts consider adequacy in contracts?
unconscionable and is at arm's length
27
How to make modifications enforceable under Common Law and UCC?
Common - give consideration
| UCC - good faith and both sides agree
28
Do gifts count as consideration?
No
| EXCEPTION: promissory estoppel
29
Promissory Estoppel
* promise must be
1. reasonably relied upon
2. detrimental
30
Are most contracts with defenses void or voidable?
voidable
31
What type of damages are unique to fraud?
punitive damages
32
Do opinions count as material facts?
No
| *statements of value are usually opinions
33
Fraud in the Execution vs. Fraud in the Inducement
```
Execution = void
Inducement = voidable
```
34
Innocent Misrepresentation
lacks only scienter in comparison to fraud
35
Duress
```
Physical = void
Economic/Social = voidable
```
36
Undue Influence
abuse a position of trust or confidence
37
Mutual Mistake
voidable
| Nonexistence of Subject Matter = void
38
Unilateral Mistake
*usually is not a defense UNLESS it is a material fact and the other party knew or should have known it was a mistake
39
Illegality
void
40
Illegality - Licensing and Non-compete
Licensing
* protect the public = void
* revenue = voidable
Non-compete
* reasonably needed for business purpose
* geographically limited
* limited in duration
41
Two Actions Minors can Do with Contracts
disaffirm and ratify
42
Minors and Contract Disaffirmation
* generally must return the items
| * cannot disaffirm necessities
43
Mental Incapacity
```
incapable = voidable
adjudicated = void
```
44
Statute of Limitations under Common Law
4-6 years starting from the date of the breach
45
Statute of Frauds
```
M arriage
Y ear (CANNOT be performed in one year)
L and and leases
E xecutor to pay estate debts out of personal funds
G oods over $500
S urety (pay someone else's debts)
```
46
Exceptions to Statute of Frauds
* contracts possible to complete in one year
| * full performance by one party
47
What writing suffices for statute of frauds?
multiple written documents will suffice
48
Impossibility as a Defense
*destruction of subject matter
49
Accord & Satisfaction vs. Novation
Accord & Satisfaction = new contract, same parties
| Novation - old contract, substituted party
50
3 Types of Conditions that Can Affect a Party's Duty to Perform
1. conditions precedent
2. conditions concurrent
3. conditions subsequent
51
Prevention of Performance is a Breach
*nonbreaching party is excused from performance
52
Parol Evidence Rule
* prohibits any oral or written statements that are prior or contemporaneous to the written contract and contradict the writing
* subsequent is okay
* fraud, duress, or mistake is okay for all types of evidence (EXCEPTION)
53
What determines whether or not a contract is subject to the Statute of Frauds?
*the contract as it stands with modifications
54
Unconscionability as Defense
*substantially superior bargaining power
55
Type of Breach to Allow Remedies under Common Law
must be material or substantial
56
Anticipatory Repudiation
1. sue immediately
2. wait and sue
3. cancel the contract
57
Damages under Common Law
1. Compensatory Damages (money to obtain substitute performance)
* *Consequential Damages (reasonably foreseeable)
2. Specific Performance
* *used with land or unique items
3. Liquidated Damages
* *must be reasonable and not punitive
Specific Performance OR Compensatory Damages
58
Are punitive damages available for breach of contract?
No
59
Rescission or Cancellation
*returns parties to their original positions
60
Quasi-Contract Damages
*avoids unfair enrichment
61
Limitations on Monetary Damages
1. foreseeability
| 2. mitigation
62
Third-Party Rights
1. Intended beneficiaries have privity while incidental beneficiaries do not
63
Examples of Intended Beneficiaries
1. Donee Beneficiaries
| 2. Creditor Beneficiaries
64
Assignment of Rights and Delegation of Duties
* assignment or rights
* delegation of duties
* assignment of contract (includes both)
65
Exceptions to what cannot be assigned or delegated
1. changes the obligor's risk or involves specialized personal services
2. cannot assign offers but can assign option contracts
66
Delegation Effects
*both parties are liable unless there is novation
67
Assumed Mortgages vs Property Subject to Mortgage
* assumed = both parties liable
| * subject to = person who too subject to the mortgage is not personally liable
68
Assignment of a Creditor's Right for A/R
* can assign even if the contract says you can't
| * not effective unless the debtor receives notice
69
Implied Warranties of Assignor
*assignor has these rights
70
Defenses for Assignment & Delegation
*obligor can use defenses they could have used against the assingor
71
Merchants
*deals in goods or has special knowledge of the goods
72
Obligation of Good Faith
* everyone = good faith
| * merchants = reasonable standards of fair dealing in the trade
73
Firm Offer Requirements
```
(rain check)
1. seller must be merchant
2. offer must be in writing and signed
3. offer must give assurances it will be kept open
(3 months or 90 days)
```
74
Promise to Ship vs Prompt Shipment
Promise - bilateral
| Prompt - unilateral
75
Shipment of Nonconforming Goods
*acceptance AND breach
76
Notice of Accommodation
*counteroffer
77
Promise to Ship and Ships Nonconforming Goods
*breach, not an accommodation
78
Auctions
1. bid is the offer
2. with reserve
3. without reserve
79
Exception to Rule Requiring only the Specific Quantity
1. output and requirements contracts
80
Modifications to UCC Contracts
*only requires good faith
81
Statute of Limitations for UCC
4 years from date of breach
82
Statute of Frauds Exceptions for UCC
S pecially manufactured goods
W ritten confirmation (10 days limitation)
A dmitted to the court
P erformed contracts
83
Delivery and Risk of Loss are NOT Dependent on
title
84
How to Determine Risk of Loss
1. goods must be identified
2. contract states when title transfers
3. If not....
* *Noncarrier
* **non-merchant - tender of goods
* **merchant - delivery of goods
* *Carrier
* **Shipment Contract
* **Destination Contract
85
Types of Shipment Contracts
* FAS - free along side
| * CIF - cost, insurance, and freight
86
Breach and Effect on Risk of Loss
breach = risk remains with the seller
87
Risk in Sale on Approval
*risk on seller until approval
88
Risk in Sale or Return
* buyer has risk until returned
| * also known as sale on consignment
89
Insurable Interest
* seller = as long as he owns the goods
| * buyer = goods are identified
90
Title Passing
1. pass as parties agree
2. upon delivery
3. Buyer rejects goods and title revests with seller
91
Warranties
1. express warranties
2. implied warranty of title (must SPECIFICALLY disclaim)
3. implied warranty of merchantability (easy to disclaim)
4. implied warranty of fitness for a particular purpose (easy to disclaim)
92
Are warranties breach of contract or tort liability?
breach of contract
93
Warranty protection is/is not limited by privity?
is not limited by privity; anyone injured can sue
94
Tort Liability under UCC
Negligence
1. duty of care
2. breach
3. causation
4. damages
Strict Products Liability
1. product was defective
2. product was dangerous
3. product caused
4. damages
95
Strict Liability Additional Conditions
* privity not required
| * negligence no necessary
96
Remedies under UCC
Anticipatory Repudiation
*sue, wait and sue, cancel contract
Demand Assurances
*refusal = anticipatory repudiation
Duty to mitigate still exists
97
Seller's Remedies under UCC
1. cancel and sue for damages
2. withhold delivery and stop goods in transit (reclaim after 10 days)
3. right to resell and sue for damages
4. full contract price (special items)
5. liquidated damages ($500 or 20%)
98
Buyer's Remedies under UCC
1. reject any nonconformity (perfect tender rule)
* *seller's right to cure
* *right to inspect before payment (unless it is Cash On Delivery)
2. cancel or rescind
3. sue for damages
* *for accepted nonconforming goods
* *for rejected or undelivered goods
4. specific performance
5. insolvency of seller: deposit + identified = pay and take goods
99
Entrusting and Voidable Title
GR: true owner can recover stolen goods from third parties
EXCEPTIONS:
1. Entrusting: watch for repair and accidentally sold
2. Voidable title: accepting a bad check
100
Copyrights
* author's life + 70 years
| * reproduce, prepare derivative works, distribute copies, perform or display the work publicly
101
Copyrights and Fair Use Doctrine
1. criticism and comments
2. news reporting
3. teaching
102
Copyrights and Transferring Rights
must be in writing
103
Copyrights and Protection
*need not prove fault (can be unintentional) or have used entire work
104
Copyright Remedies
*civil and criminal
105
Patents
*20 years
1. useful
2. not obvious to a person skilled in the area
3. novel
106
Patents and Transferring Rights
must be in writing
107
Patent Remedies
*only civil
Becker REG
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