A contract is a promise that the law and the courts will enforce.
Mutual assent requires both an offer and acceptance and is two people agreeing to the same thing at the same time.
An offer is the manifestation of a present contractual intent as to the time, price, subject matter, quantity, and parties and communicated to the offeree.
A merchant is a person who deals in the goods of kind or by his occupation, holds himself out as having knowledge or skill peculiar to practices or goods involved in the transaction
Option Contract under Common Law
An option contract is a paid for offer and can't be revoked.
An acceptance is the voluntary unequivocal assent to the terms of the offer and communicated to the offeror. Unless indicated otherwise, an offer is good upon dispatch.
UCC 2-206 Acceptance
An acceptance can be made by a prompt promise to ship or shipment of conforming goods or shipment of non-conforming goods, unless the shipment of non-conforming goods are shipped as an accommodation. If it is an accommodation, then it is a counter-offer.
UCC 2-207 Additional Terms
UCC 2-207 states that a definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agree upon, unless acceptance is expressly made conditional on assent to the additional or different terms.
The additional terms are construed as proposals for addition to the contract. Between merchants, such terms become part of the K unless: 1) The offer expressly limits acceptance to the terms of the offer, 2) they materially alter it; or 3) notification of objection to them has already been given or given withing a reasonable time after notice of them is received.
Restatement 90: Promissory/Equitable Estoppel
A promise which the promissor should reasonably expect to induce action or forbearance on the part of the promisee or third party, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.
Consideration must be bargained for and given exchange and must be a legal detriment to the promisee (offeree).
Under Common Law, it requires consideration and mutual assent. Modernly, under UCC 2-209, no consideration is required, but must be in writing.
Statute of Frauds (SOF)
SOF states that certain K's must be in writing. To satisfy SOF, the K must be in writing and signed by the D.
States that sale of goods of $500 or more must be in writing unless:
1) Goods are specially manufactured
2) Defendant admits to the K
3) Goods have already been paid for (part performance) and accepted or which have been received and accepted
If oral, not enforceable, unless the MAIN PURPOSE to incur the obligation as backup is for guarantor to receive a benefit (if main purpose doctrine applies, no need for writing).
Bilateral K's which can't be performed within one year
Bilateral K's which can't be performed within one year must be in writing.
Any interest in real property greater than one year must be in writing.
Defenses to the formation of a K
3) Intoxication and Insanity
5) Disparity of Exchange
7) Economic Duress
8) Adhesion K
Parol Evidence Rule (PER)
Absent fraud, accident, or mistake, prior or contemporaneous extrinsic evidence is not allowed to contradict a fully integrated written agreement.
PER- Williston Test
The Williston test (majority view) analyzes whether the parties who are situated as the parties to this contract would have naturally and normally included the extrinsic evidence or extrinsic matter into the writing. Would the parties normally put this extrinsic evidence into the writing? If yes, the evidence is not admitted. If no, then the evidence is admitted.
PER- Four corners test
The Four Corners Test/Plain meaning test: looks at the face of the document, to determine if the document appears integrated. If the document is fully integrate without ambiguity, then no extrinsic evidence is heard. If the document is not fully integrated or there is ambiguity, then they will hear the evidence & consider whether the parties would have naturally left it in or keep it out. If there is a merger clause, the presumption is much stronger that there is a fully integrated document.
PER- Credible evidence test
If the "offered" evidence is credible, then it will be allowed. Under this view, all evidence is heard, but if it is not credible, it is thrown out under the PER. If there is a merger clause, the clause strengthens the presumption that all negotiations were merged in the written document, but doesn't prohibit the hearing of the evidence.
Is a clause in the written agreement stating that all other understandings between the parties, written or oral, are inadmissible to contradict this agreement.
Third Party Beneficiary Contract (3PBK)
A contract between the original contracting parties intended to benefit a third party. The Restatement 1st recognizes a donee, creditor and intended beneficiary. The restatement 2nd recognizes only intended and incidental beneficiaries.
is one who receives a gift
is on who receives a discharge of an obligation
is not getting a gift or having an obligation discharged and has no rights to the K.
When 3rd Party's rights vest
Under common law- 3p rights vest upon knowledge and assent.
Under Rest. 1st- a donee beneficiary's rights vest immediately while the creditor beneficiary's rights vest upon reliance.
Under Rest. 2nd- a 3p right's vest upon reliance, assent and bringing suit.
An assignment is a present transfer of contractual right which operates to extinguish the right in the assignor and sets it up in the assignee.
What can/can't be assigned?
-Future rights on future Ks are assignable, but not enforceable at law.
-Anything that would vary the risk of the obligor is not assignable.
-Can't assign personal service K in which there is reliance on skill of original contract party.
What assignments are irrevocable?
Assignments for consideration are irrevocable.
What assignments are revocable?
Gratuitous assignments are revocable. Automatically revoked by subsequent assignment of same right.
Is a transfer of contractual duties. Even though the duties have been delegated, the delegator is still responsible.
All parties consent in excusing/releasing a party from liability.
Is an undertaking no matter how expressed that something will or will not happen.
A condition is a fact or event, the happening or non-happening of which creates or extinguishes an absolute duty to perform. If a condition has been excused or satisfied, the promise is now absolute.
9 ways to excuse a condition
1) Major breach
3) Divisibility & severability
4) Substantial performance
5) Anticipatory repudiation
6) Prospective inability
by party holding (being protected by) the condition.
Divisibility & severability
where the K can be divisible into equal parts and will only excuse constructive conditions, not express conditions
This principle is relevant when a contractor's performance is in some way deficient, through no willful act by the contractor, yet is so nearly equivalent that it would be unreasonable for the owner to deny the agreed upon payment. If a contractor successfully demonstrates substantial performance, the owner remains obligated to fulfill payment, less any damages suffered as a result of the deficiencies in workmanship by the contractor. Rest. 241, will only excuse constructive conditions, not express conditions.
the unequivocal renunciation of a contract obligation before performance is due. Where the party indicates that he will refuse to perform, this is called an "anticipatory repudiation" of the contract. Until the repudiating party's next performance is due, he can retract his repudiation unless the aggrieved party has since the repudiation cancelled or materially changed his position or otherwise indicated that he considers the repudiation to be final.
If party indicates that he would like to perform but will be unable to do so, this is an indication of "prospective inability to perform" but not repudiation; however, the consequence is still that the other party may suspend performance.
when an obligor whose duty is conditional promises to perform despite the no-noccurrence of the condition or despite a delay in its occurrence.
lead other guy into thinking you are going to waive it.
sabotage condition from occurring. This is always a major breach.
created by language of the parties and included in the K. A breach of an express condition is a major breach.
Implied in fact condition
imposed by courts, but if parties would have thought of them, they would have put them in the contract.
Implied in law condition (Constructive Conditions)
created by the courts to determine order of performance when parties fail to specify it.
Constructive condition precedent
the thing that takes longer must be performed first
Constructive condition concurrent
whenever some time is fixed for performances and both are capable of simultaneous or near simultaneous performance, each party's performance is constructive condition current to the other.
Duty can be discharged in 12 ways
1) Intervening illegality
2) Accord and satisfaction
3) Rescission (mutual & unilateral)
6) Economic Impracticability
7) Frustration of purpose
8) Occurrence of condition subsequent
9) Written release in CA, no consideration needed
12) Account stated
Bonafide Purchasher of Value (BPFV)
A BPFV is one who gave consideration for the assignment and does not know about prior assignments.
A gratuitous assignment may be made irrevocable by:
1) Performance (obligor pays assignee)
2) Detrimental reliance
3) Putting it in writing
4) Delivery of a token chose- a chose is a thing, item or object. Once token is delivered, then assignment is irrevocable.
it becomes objectively impossible to perform. For such a defense to be raised, performance must not merely be difficult or unexpectedly costly for one party; there must be no way for it to actually be accomplished.
at common law, if the cost of performing was astronomically disproportionate, performance may be discharged. Where that duty has become unfeasibly difficult or expensive for the party who was to perform. The doctrine of impracticability comes into play where performance is still physically possible, but would be very burdensome for the party whose performance is due.
Frustration of Purpose
Frustration of purpose occurs when an unforeseen event undermines a party's principal purpose for entering into a contract, and both parties knew of this principal purpose at the time the contract was made.
is a form of mutual release.
offering to do it and the other party refuses.
actual statement of account.
Restatement 241 to determine if it is a major or minor breach
1) Extent to which the injured party will be deprived of a benefit;
2) Extent to which the injured party can be adequately compensated;
3) Extent to which the breaching party will suffer a forfeiture;
4) Likelihood that breaching party will cure his failure;
5) Extent to which breaching party's action were intentional.
UCC 2-609- Right to Adequate Assurance of Performance
When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance & until he receives such performance may if commercially reasonable suspend any performance for which he has not already received the agreed return. Failure to provide adequate assurance within a reasonable time (not exceeding 30 days) is a repudiation of the K.
UCC 7-12 "Cover"
After a breach, a buyer may "cover" by making good faith and without unreasonable delay any reasonable purchase of or contract to purchases goods in substitution for those due from the seller. The buyer may recover fro the seller the difference between the cover and the contract price together with any incidental or consequential damages.
resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
resulting from the seller's breach include any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and injury to person or property proximately resulting from any breach of warranty.
UCC 2-613 Casualty to Identified Goods
where the K requires for its performance goods identified when the contract is made, and the goods suffer casualty without fault of either party before the risk of loss passes to the buyer, then
a) if the loss is total the K is avoided; and
b) if the loss is partial or the goods no longer conform to the contract, the buyer can demand inspection and treat the contract as avoided or accept the goods and sue for damages.