Contract Law

88 flashcards by MentisLibrary

Offer, acceptance, consideration, and everything that goes wrong afterward. Covers formation, defenses, breach, and remedies, with the UCC rule set side by side with the common law one so you always know which governs.

What are the three basic elements of an enforceable contract?
Mutual assent (offer and acceptance), consideration, and no valid defense to enforcement
When does the UCC govern instead of the common law?
When the contract is for a sale of goods, meaning things movable at the time of identification to the contract
How do courts decide which law governs a mixed goods-and-services contract?
Under the predominant purpose test, the whole contract is governed by whichever element predominates; a minority use the gravamen test and apply each body of law to the relevant part
What is an offer?
A manifestation of willingness to enter a bargain, made so that the offeree understands assent will conclude it, with reasonably certain terms
What are the four ways an offer can terminate?
Revocation by the offeror, rejection or counteroffer by the offeree, lapse of time, and operation of law such as death or incapacity of either party or destruction of the subject matter
What is the mailbox rule?
An acceptance is effective on dispatch, while rejections, revocations, and counteroffers are effective on receipt
If an offeree mails a rejection and then a faster acceptance, which controls?
Whichever the offeror receives first, and the offeree bears the risk; the mailbox rule does not apply once a rejection has been sent
What four devices can make an offer irrevocable?
An option contract supported by consideration, a UCC firm offer, promissory estoppel through justifiable reliance, and part performance of an offer for a unilateral contract
What is a UCC firm offer?
A signed written offer by a merchant assuring it will be held open is irrevocable without consideration for the stated time, or a reasonable time, but never more than three months
What is the mirror image rule?
At common law, an acceptance must match the offer exactly; any variation is a counteroffer that rejects the original offer
How does UCC 2-207 handle an acceptance with additional terms?
A definite and seasonable expression of acceptance forms a contract even with different or additional terms, unless acceptance is expressly conditional on assent to those terms
What is the last shot rule and what replaced it for goods?
At common law the party who sent the last form before performance dictated the terms; UCC 2-207(3) instead builds the contract from the terms both writings agree on, filled out by Article 2 gap fillers
What is consideration?
A bargained-for exchange in which each party incurs a legal detriment or confers a legal benefit sought by the other
Is past consideration valid consideration?
No. A promise made in return for something already given is not bargained for, though many courts enforce a promise renewed for a past benefit under the material benefit rule
What is the preexisting duty rule?
A promise to do what one is already legally bound to do is not consideration for a new promise
How does the UCC treat modification of a sales contract?
A modification needs no consideration; it needs only good faith
What is an illusory promise?
A promise whose performance is entirely optional for the promisor, so it is not consideration at all
What are the elements of promissory estoppel?
A promise the promisor should reasonably expect to induce action or forbearance, actual reliance of that kind, and injustice avoidable only by enforcement
What contracts must be in writing under the Statute of Frauds?
Marriage, contracts not performable within one year, land interests, executor promises to pay estate debts personally, sale of goods for 500 dollars or more, and suretyship
What are the four exceptions to the UCC writing requirement for goods?
Specially manufactured goods, judicial admission, part performance to the extent of goods accepted or paid for, and the merchant confirmatory memo not objected to within ten days
What is the parol evidence rule?
Prior or contemporaneous agreements may not be used to contradict a written contract the parties intended as final; a completely integrated writing also bars supplementary consistent terms
What kinds of evidence does the parol evidence rule never bar?
Evidence of fraud, duress, mistake, illegality, a condition precedent to effectiveness, subsequent agreements, and evidence offered to interpret an ambiguous term
What are the UCC gap fillers for a missing term?
Reasonable price at the time of delivery, delivery at the seller's place of business, payment due on delivery, and a reasonable time for performance
In what order do courts rank contract terms, course of performance, course of dealing, and usage of trade?
Express terms first, then course of performance, then course of dealing, then usage of trade
What is the objective theory of contracts?
Assent is measured by what a reasonable person in the other party's position would understand from outward manifestations, not by secret intent
When does a unilateral mistake make a contract voidable?
When the mistake concerns a basic assumption, has a material adverse effect, the mistaken party did not bear the risk, and either enforcement would be unconscionable or the other party knew of or caused the mistake
What is the difference between a mistake and a misunderstanding?
A mistake is an erroneous belief about existing facts; a misunderstanding is a latent ambiguity where each party attaches a different reasonable meaning, which prevents formation entirely
What are the elements of duress as a contract defense?
An improper threat that leaves the victim no reasonable alternative, which actually induces assent
What is undue influence?
Unfair persuasion of a party who is under the domination of the persuader or who by relationship is justified in assuming the persuader will not act against their welfare
What must a party prove for fraudulent misrepresentation?
A false assertion of material fact, made with knowledge of falsity and intent to induce reliance, plus justifiable reliance by the other party