LEGL4400 Test 2

Term
1 / 143
Writing issues in contracts
Click the card to flip 👆
Terms in this set (143)
Writing issues in contracts
contracts DON'T HAVE TO BE WRITTEN TO BE VALID; some have to be written to be enforceable in court
Parol Evidence Rule
if there is a written contract between the parties, then prior or contemporaneous (as the parties are entering into the contract) written/oral evidence will not be permitted to be given in court if it will vary or alter the terms of the contract; applies only once parties choose to commit their contracts to writing
Exception to Parol Evidence Rule
use of evidence to explain a term in a contract or to show that fraud was involved in the contract
Statute of Frauds
requires certain contracts to be in writing to be enforceable; created in 1677; part of ou common law
Purpose of Statute of Frauds
to prevent lying under oath or an attorney knowing a client is lying under oath (perjury and subornation of perjury)
MY LEGS
contracts required in writing under Statute of Frauds; Contract made in consideration of MARRIAGE, Contract incapable of being performed within a YEAR from the time it is made, Contract for an interest in LAND, Contract of an EXECUTOR to be personally liable for the decedent's debts, Contract for sale of GOODS of $500 or more (UCC-only rule), Contract to act as a SURETY for the debt of another
Writing difference in TIME PERIOD for Statute of Frauds
if it's clear "you have 2 years," put it in writing; if it's vague like "up to 2 years," you don't have to write it; general rule is one year
Time for performance begins
when the contract is entered into
Contracts "for life" or "lifetime"
don't have to be in writing b/c technically it could be performed in under a year
Land agreements have to be written, except for
rental agreements for a year or less (can be oral)
Land rule exception, 3 requirementsif the party moves onto the property, pays part of the price and makes improvementsExceptions to $500 or more ruleAdmissions in court documents, Part performance (only up to the amt performed), Specially manufactured goods, Written confirmation between merchantsContracts for goods must be written if the total is$500+Suretysomeone who agrees to pay a debtor's debt if the debtor does not payBeauregard v. Miles BackgroundAn attorney was sued by a former client for a breach of fiduciary action (failure to act in the best interest of the client; wife was included in lawsuit even though she never agreed to pay for his legal feesBeauregard v. Miles IssueWhether, under the Statute of Frauds, the wife could be held liable for her husband's legal fee debt if she had not signed an agreement stating that she would be responsibleBeauregard v. Miles Decision/reasoningwife can't be held irresponsible b/c she didn't put it in writing so it isn't enforceable under the statute of fraudsMain Purpose Doctrinean exception to the writing requirement for suretyagreements exists if the main purpose of the surety agreement is not to benefit the debtor, but instead is to benefit the suretyStatute of Frauds Writing Requirement for UCC contractscontain some indication of what the agreement is, be signed by the party being sued and it must have a quantityStatute of Frauds Writing Requirement for Restatement contractsmust contain the main provisions of the agreement, including the parties and what is being agreed to and it must be signed by the party being suedFirst requirement of a valid contractmutual assent; parties agree on exactly what their contract will entail; meeting of the minds2 parts of mutual assentoffer and acceptance, each with their own requirementsthe opening act that begins the creation of a contractofferOfferis a proposal given by the offeror to the offeree that if accepted, creates the contract; can't sue for breach without thisWho has complete control over the offerofferor; means they can write whatever as long as it's legal3 requirements for a valid offer(1) definiteness of terms, (2) intent to create an offer, and (3) communication of the offer to the offeree by the offeror (or her agent)Definiteness of termsaddresses whether the proposal by the offeror has sufficient details to be considered an offer to enter into a contract; terms of the offer must be definite so that the parties understand precisely what they are committing to do by entering into the contractWhy do we need definiteness of termscourt needs to understand exactly what is involved so it can craft an appropriate remedy (if they go to court)Less precise the terms of the offeror's communication to the offereethe more likely it is that the communication will be taken as something other than an offer and acceptanceReward offersexception to the fact that communications to the public usually aren't definite enough to be offers; specific in that they give definite details as to how the offer must be accepted, what will be given for the requested deed, and who qualifies for the reward and howOffers to the public lackdefinitenessWhat is required to accept a reward offerknowing about the reward; one cannot accept an offer one knows nothing aboutAre ads offers?usually no, lack definiteness b/c they're made to the public at large; if it is sufficiently definite it may constitute a valid offerPrize drawingsconsidered offers when one simply enters the raffleDefiniteness of terms under restatementat a minimum the offer must describe what the offer is about and include the quantity, the quality, and the price of the subject matter of the offerDefiniteness of terms under UCC versus Restatementmore relaxed than Restatement; allows gap-filling; the contract will be given effect as long as intent to create a contract and a minimum of terms necessary to discern the contract is presentDefiniteness of terms under UCCmust contain the subject matter of the contract and the quantity to be purchased or sold; without them the court would have no idea what is involved in the sale and how much a party intended to buy or sellSection 2-308 of the UCCplace of delivery will be the seller's place of business, or if he or she has none, it is the seller's homeSection 2-310 (a) of the UCCprovides that payment is due at the time goods are to be received by the buyerSection 2-305states that the price will be a reasonable price at the time of delivery.Under UCC all terms must bereasonable and filled in, in good faith, using honesty in factException to requirement to include quantity in a contractUCC only concept; occur in requirement and output contracts and offers that include a minimum and maximum parameterRequirement contractscontracts that agree that the seller will provide the buyer with all of the goods a buyer requires during a certain time periodOutput contractbuyer agrees to purchase all the output that a seller has produced for a certain time period; exact quantity term cannot be filled in for such offers, as the parties do not yet know what the quantity will beWay to ensure definiteness of termsprecision in the offerGap fillingeven if the parties do not include certain terms, or the parties agree to determine them later and neglect to do so, the contract will be given effect as long as intent to create a contract and a minimum of terms necessary to discern the contract is presentQuantity/requirement contacts can not havean exact quantity b/c the parties do not yet know what the quantity will beWhy are quantity/requirement contacts valid offersUCC permits gap-filling and requires missing terms to be added in good faith; allowed to fill in with an amount reasonably proportionate to the estimate or prior outputCourt's guide for quantity fillingproduction in a previous time periodMinimum/maximum ruleUCC quantity issue; if the offeree accepts any amount within the parameters of the min and max amounts provided in the offer, it is acceptable to the offeror; viable basis for a contract b/c it gives the courts a range for filling the termKey characteristics of an offerdefiniteness of terms, intent, communicationIntentofferor must have necessary intent to create an offer rather than something else; determined by what is actually manifested by the offeror, must be clear that an offer is being madeObjective intentterms an offeror expresses to the offeree orally or in writing; governing factorSubjective intentcontract terms an offeror has in his or her mind and does not express to the offereeSources of offer confusionunilateral/mutual mistakes, mutual ignorance, offers made in jest or angerMistakea belief that is not consistent with factsUnilateral mistakea mistake made by one party to the contract about a material aspect of the contractMaterial aspectsomething that is important to the contract and serves as a basis for a party entering into a contract; ex. Car operating when you turn ignition keyWho pays for the mistakecourt generally doesn't make non mistaken party pay unless there is reason to believe they knew a mistake was being made and wanted to take advantage of it; court generally allows the unmistaken party's belief to govern and relief is given to the nonmistaken partyMutual mistakea mistake made by both parties to the contract, but neither realizes they're making a mistake; if parties wish, contract will not be given effect and neither will be held liable for breach b/c there is not mutual assent meeting of the mindsMutual mistakes may relate toexistence of the subject matter of the contract, the law applicable to the situation, the quality or quantity of the subject matter, or even the location of the subject matter of the contractRaffles v. Wichelhaus backgroundpartis entered a contract for cotton arriving on ship "Peerless" from Bombay, India; each ship has different quality of cotton; each was referring to a different ship with the same name, sailing out of Bombay at different times; seller had better cotton in mind without realizing there were 2Raffles v. Wichelhaus issuewhether the agreement that was based on a mistake where neither was aware is the basis for undoing the contractRaffles v. Wichelhaus decisionestablishment of mutual mistake as a basis to undo a contract; b/c result is that neither party gets what they wantMutual ignoranceboth parties to a contract know they do not know something about a term of the contract but decide to contract anyway; true even if it is discover that the subject matter is quite different than either party thought, contract stands unless it is discovered that they actually knew what it wasWhy does mutual ignorance stand as a contractthey could've put effort into figuring out what the item was, but chose to contract anyway...minds have technically met in some weird ignorant sort of way i guess ?If a seller sells something unknown to an ignorant buyer and later discovered its worth, can they sue for breachno, du eto mutual ignorance; no one is taking advantage of the other; could've investigated further but chose not toIf a seller sells something unknown to a knowing buyer and later discovered its worth, can they sue for breachseller can sue; buyer would not be making a mistake, so they'd be using their superior knowledge to take advantage of the sellerWhat does the court say about offers made in jest/angercourt will generally determine that the requisite intent to create an offer was not present, and therefore no contract resultedWhat would validate an offer made in jestputting it in writingMuriel and Albert agreed that Albert would pay $3,500 for the damage that his son, Clarence, 16, did to Muriel's garage when the garage collapsed after Clarence did some work for Muriel rearranging the garage to make extra money for a car he wanted to buy. When Muriel had an appraiser come in, it turned out that the garage had structural defects that caused the collapse rather than anything that Clarence did. Albert demands the return of his money and Muriel refuses to give it to him. Albert may have a case for return of his money because ofA unilateral mistake of factCommunication requirementthe offer must be communicated to the offeree/their agent in order for the offer to be effective; not sufficient for the offeree to simply hear about the offer and attempt to accept it- offer must be communicated to intended offeree, and they are the only one that can accept it7 situations sufficient to terminate an offerdestruction of subject matter, death of a party, rejection by the offeree, revocation by the offeror, incompetency, illegality, lapse of stated or reasonable timeWhen is there a valid offeronce it's clear that the offer has definite terms, the offeror intended to create an offer, and the offer is communicated to the offereeWhat is the termination period for an offertime between the time the offer is made and acceptanceDestruction of subject matterIf, after the offer is given but before it is acted upon, the subject matter of the offer is destroyed through no fault of the parties, the offer is terminated; there is no contract and it can not be enforced in courtHurricane Harvey in 2017 relates todestruction of subject matter; all that time offers had be made on boats, homes, etc. but the offerees could no longer say yes b/c the storm wiped out so muchDeath of a partyIf either the offeror or offeree dies after the offer is made, but before it is accepted by the offeree, the offer is terminated and no longer existsWay to get around the death of a party rulecreating an option contractOption contractlegally binding commitment between offeror and offeree for the offeror to hold an offer open for an agreed time period in exchange for consideration from offeree; asking the offeror not to revoke the offer for a certain period of time and giving the offeror something of value to keep the offer open; can't revoked during that time periodAn option contract isa separate contract ABOUT an offer, not the offer itself; works to buy the offeree time before they accept/reject; doesn't dictate what the decision must beAmount paid for the option contract is up to theofferor; can also decide whether they want to give it or notAn option contract does not meanthe offeree must acceptRejection by the offereeterminates offer; offeree saying no to an offer; can be indirect or directExample of indirect rejectionNick puts an offer out to sell his car to Lauryn and Lauryn doesn't answer but buys another carMirror Image RuleRestatement only; regarding acceptance; Restatement rule that all terms of the acceptance must be identical to offeror's termsMirror Image 2 qualificationsunequivocal and unconditionalUnder the Mirror Image Rule, if the response changes the offer in any way,it is deemed a counteroffer, turning the offeree into the offeror, and terminating the original offerMere Inquiryoffrees can ask questions about an offer without terminating it; to clarify offer or explore its terms; established by Comdisco, Inc. vs Zerox Corporation so that mirror image doesn't stifle negotiations; can ask about offer but NOT CHANGE itWho has complete control over an offerofferorWho has complete control to reject an offeroffereeCounteroffers under the UCCofferee must indicate that it is a counterofferAcceptance with varied termsUCC allowed concept; does not mirror original offer; If the terms are changed, an acceptance with varied terms does not terminate an offer by rejection as would happen under the RestatementUnder the UCC, even if terms are varied, an acceptance creates a contract ifthe acceptance is definite and seasonable and not conditioned on the offeror's being required to accept the offeree's new termsRevocation of an Offertermination done by offeror; taking the offer back directly or indirectlyMerchant firm offerlimitation on offeror's power to revoke an offer; UCC only; created if the merchant gives an offeree, in a signed writing, assurances that the offer will be held open for a specified period (which cannot exceed ninety days)Merchant firm offer cannot exceed90 daysDifference between merchant firm offer and option contractthe offeree doesn't have to give anything in exchange for this agreement4 requirements for a merchant firm offeroffer must come from a merchant, be in writing, give assurances that the offer will be held open for a specified time, or if none is given, a reasonable time not to exceed ninety days, must be signed by offeror or his agentIf the 4 requirement of a merchant firm offer are not metyou need extra consideration to keep the offer open, like an option contractWhen would an option contract occur under UCCwhen the offeror is not a merchant or no assurances that the offer will be kept open are given in writing—or simply if the parties wish to have an option contractUnilateral offer upon which performance has begunexception to offeror's power to revoke; unilateral offer and the offeree substantially begins to perform the requested act; contract is formed once action is completedStatutory Irrevocabilityby law, some offers can't be revoked;Examples of Statutory Irrevocabilityincluding bids to perform government projects and pre incorporation stock subscription agreements irrevocable for six months if the state has adopted the Section 6-20 of the Revised Model Business Corporation ActIncompetencyway to terminate an offer; if either of the parties becomes mentally incompetent before the offer is accepted, the offer is terminatedCompetencyparties know and understand the legal repercussions of their actions in entering into an agreement with each otherContinuing guaranty relationshiplegal relationship in which one party makes an ongoing commitment to be responsible for the debts of another; court held that since each shipment is a new contract, and eventually the buyer was deemed incompetent, the delivery couldn't be acceptedIllegalityway of termination; If, after the offer is made, it becomes illegal to have contracts of that type any longer, then the offer is thus terminated and ceases to existLapse of stated or reasonable timeoffer termination; If the offer specifies a time within which the offer must be accepted and if the offeree fails to accept within that time, the offer is terminatedIf no time for acceptance is statedlapse of reasonable time under the circumstances will terminate the offer; court decides what is "reasonable"Reasonable time is based onsubject matter of the offer and circumstances surrounding the transaction (and volatility)DDRRRIILthe terminators; death of either party, destruction of the subject matter, revocation by the offeror, rejection by the offeree, incompetence of either party, illegality of the subject matter, lapse of stated or reasonable timeAcceptanceonce offer is valid and has not been terminated; can be direct or indirect; saying yes to the offer or doing some act that indicates acceptance; results in creation of a contractRequirements for acceptancemust conform to the type of offer given, must be accepted within the time stated in the offer or reasonable timeBilateral acceptanceacceptance is accomplished by the offeree giving a return promise to the offerorUnilateral acceptanceacceptance is accomplished by the offeree performing the act requested by the offerorDefault type of acceptancebilateral acceptanceMailbox RuleDeposited Acceptance Rule; an acceptance by the offeree is effective when it is sent if it is sent the way the offeror requested (or similarly to the offeror's offer)When are rejections effectivewhen received by the offerorAcceptance after a prior rejectionIf the offeree rejects and the offer and then changes their mind, whatever is received first by the offeror is effectiveWhen does the Mailbox rule not applywith an acceptance after a prior rejection; makes acceptance NOT effective when it is sent, but rather, when it's receivedEffective Dates Regarding Contracts- OfferEffective when received by the offereeEffective Dates Regarding Contracts- RejectionEffective when received by the offerorEffective Dates Regarding Contracts- RevocationEffective when received by the offereeEffective Dates Regarding Contracts- AcceptanceEffective when sent if sent correctly (Mailbox Rule)Effective Dates Regarding Contracts- Acceptanceafter prior rejection, First to be received by offeror is effectiveRestatement acceptanceuses the Mirror Image Rule; must be unconditional and cannot change the offeror's terms in any way or its deemed a counteroffer that terminates the originalUCC acceptancemore lenient;Battle of the Formsterms in offeree's written acceptance form conflict with terms in offeror's written offer form but does not result in counteroffer terminating the original offer; offerors commit transactions to writings on their company's preprinted forms that often have terms favorable to the offeror's interests; reason for creation of a more lenient UCC acceptanceAcceptance with varied termscreated to avoid Battle of the Forms; if an offeree indicates acceptance but changes an offer in some way in the acceptance, acceptance is the default position under the UCC and rejection is the default under the Restatement3 requirements for acceptance with varied terms(UCC only) definite acceptance (clear that offeree wants to enter into an agreement), seasonable acceptance, not conditionedSeasonable acceptancethat the offeree responded to the offer in a timely fashion, either as requested by the offeror in the offer or within a reasonable time if no time for a response was requestedWhy can't the offeree condition her acceptance on the offeror having to accept varied terms?b/c the offeror has sole control over the original offerDifferent termschange what is in the offer; become proposals for addition to the contractAdditional termsleaves the terms in the offer but adds something elseProposals for addition to the contractproposals the offeree wishes to include in a UCC contract that were not part of the original offer; must be negotiated into the contract by the parties; if not, they're not part of the contract and the original offer standsHow to avoid a contract with the terms proposed by the offerorreject and counter; if they give a definite and seasonable acceptance without it being conditioned, then they're bound to the offeror's termsInquiry on additional termsquestion of whether or not parties are merchants; nonmerchants revert to rules for different erms; if between merchants, additional terms are automatic (unless one of 3 conditions occurs)Conditions where additional terms don't become part of the contract automatically for merchants (only one has to occur)offeror had originally limited the offer to its terms, offeror voiced an objection to the offeree's additional terms within a reasonable time after receiving them from the offeree; offeree's terms materially alter the offeror's terms; if this happens, revert to the different term rules!Material alterationschanges made to an offer by the offeree that substantially change the offer; up to court to decide what constitutes thisAre the offeree's varied terms different or additional? If different,there is a contract and the varied terms become proposals for addition to the contract that must be negotiated into the contract by the parties or the offeror's original terms apply.Are the offeree's varied terms different or additional? If additionalyes there is a contract, but is the contract between merchants or nonmerchants?