Contract Law for Law Students

Contract Law for Law Students

memorize.aimemorize.ai (lvl 286)
Section 1

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What is consideration?

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Cards (212)

Section 1

(50 cards)

What is consideration?

Front

Promises or acts that are agreed on involving an obligation on each party (mutuality) to perform something that they were not otherwise required to perform; a bargained-for exchange of performances-- bargained-for legal benefit and detriment-- that the parties to the contract were not otherwise legally obligated to perform, i.e., legal detriment. This bargained-for exchange transforms an agreement into a legally enforceable contract. . occurs in four forms: • performance, • forbearance, • promise to perform, and • promise to forbear. that which motivates someone to do something.

Back

When can an offer be accepted or not accepted?

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While alive or pending and not when the offer has been: 1. revoked by the offeror; 2. rejected by the offeree; or 3. terminated by law due to a) death of a party; b) destruction of the subject matter; or c) illegality

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What are unliquidated damages?

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Damages that cannot be determined by a fixed formula and must be established by a judge or jury. Debt where there is a legitimate dispute over the amount of the debt or the liability for the debt.

Back

What is an offer and how is it made?

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The beginning of a contract where the offeror indicates his intention to enter into an agreement in a way that the offeree can accept by simply assenting to the stated intention. A promise to perform conditional on receiving acceptance. . Must be accepted while alive.

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How are offers terminated?

Front

1. revocation by the offeror; 2. rejection by the offeree; 3. termination by law .

Back

What are three important performance issues that should be expressly addressed in every contract?

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• commencement of performance • extent of performance • excuse for nonperformance (#1, 31) .

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What is the preexisting duty rule?

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If a party already has a legal obligation to perform an act, that same act cannot constitute valid consideration. There would be no bargained-for exchange. . The rule that if a party does or promises to do what the party is already legally obligated to do--or refrains or promises to refrain from doing what the party is already legally obligated to refrain from doing--the party has not incurred a detriment. . . . the promise does not constitute adequate consideration for contractual purposes. The rule that a party cannot offer as consideration a promise or performance that they are already obliged by law to do or to refrain from doing because such an offer would not be a promise or performance that incurs detriment and that is subject to bargained-for exchange. .

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What is a Consideration Substitute?

Front

Used where traditional consideration is lacking and the law supplies a substitute. Most commonly in the form of promissory estoppel: detrimental reliance which is a legal fiction [Also termed a substitute for consideration] .

Back

What is mutual assent (or consent)?

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Meeting of the minds wherein the parties manifest their intention to enter into a contract. This manifestation consists of a valid offer and a valid acceptance. Merged and edited agreement, approval, permission; especially, verbal or nonverbal conduct reasonably interpreted as willingness. The requirement of assent; which is fundamental to the formation of a binding contract, implies in a general way that both parties to an exchange shall have a reasonably clear conception of what they are getting and what they are giving up.

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What is a counter-offer?

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A counter-offer is an offer to an initial offer that constitutes, through implied rejection, a termination of the initial offer. A response to an offer that does not precisely mirror that offer is a counteroffer, not an acceptance.

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What is an accord and satisfaction?

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an agreement between contracting parties to substitute a new and different contract for the original one. accord is the new contract; satisfaction is the performance of the accord (#1, 68, 22). . an agreement between the parties that something shall be given to, or done for, the person who has the right of action, in satisfaction of the cause of action. There must benot only agreement ("accord") but also consideration ("satisfaction"). The new agreement is the accord and the discharge is the satisfaction (Black's). .

Back

What is a illusory promise?

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a noncommittal promise that fails to clearly obligate the promisor and therefore lacks consideration [geb]. . a promise that fails to clearly obligate the promisor to perform.

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What is the past consideration rule?

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Consideration that precedes a promise to perform or forbear from performing is not sufficient consideration because it was not given in exchange for a present promise. a promise made for a past act that was not bargained for and therefore has no real value. Confers no benefit on the promisor and no detriment to the promisee in respect to his promise. It is some act or forbearance in time past by which a man has benefited without incurring any legal liability.

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What is the mailbox rule?

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An acceptance is effective or valid upon posting, that is, when it is dispatched or mailed. acceptance is valid on dispatch (Beckman, lecture 8/1/2013) .

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What comprises a valid offer?

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A valid Offer composed of: a) a promise to enter into a contract is expressed b) in clear and certain terms c) communicated to the offeree

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Who can reject an offer?

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the offeree.

Back

Define implied condition.

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a condition that is not stated in a contract but that the law [imputes] as an existing condition based on the reasonable assumption of the parties that this condition was a part of the bargain in the contract (implied-in-fact conditions) or that the condition is imposed as a matter of public policy (implied-in-law conditions) (#1 edited, 32). . a condition that is not expressly mentioned, but is imputed by law from the nature of the transaction or the conduct of the parties to have been tacitly understood between them as part of the agreement. (Black's). .

Back

What is an acceptance and what are the methods of acceptance?

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when an offeree assents to or agrees to an offer, which creates an agreement. Can be by: • performance, • promise, and, • in limited cases, by silence.

Back

What are some miscellaneous defense issues re: formation?

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- adhesion contract - exculpatory clauses - disclaimers - warranties .

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What is an offer for a unilateral contract?

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A promise (offer) is offered in exchange for performance (acceptance). The initial offer is composed of: a) the expression of a promise to enter into a contract b) in clear and certain terms c) communicated to the offeree acceptance is by performance, that is, by completion of the requested act. Offeror cannot revoke the offer once it has been relied upon by the offeree. Offeror must allow completion; otherwise, subject to restitution damages.

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What law applies to: Services Land Goods

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• Common law (state case law) for services; • Common law (state case law) for land sales; and • Uniform Commercial Code for goods (UCC Article 2). .

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What are the exceptions to the mailbox rule?

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1. the offer states otherwise--the offer governs; 2. rejection by offeree, then acceptance--whichever arrives first governs; 3. acceptance by offeree, then rejection--whichever arrives first governs but rejection requires detrimental reliance by offeror; 4. option contract deadlines (#1, p. 17).

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What is the preemption doctrine?

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Federal substantive law supplants state law, but, both state and federal courts have concurrent jurisdiction of actions arising under that law. Will not be on test.

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What is a condition with respect to contract law?

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a future and uncertain event on which the existence or extent of an obligation or liability depends; an uncertain act or event that triggers or negates a duty to render a promised performance; an event that qualifies as a duty under a contract (Black's).

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What three forms do contracts take?

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• express contracts: formed by written or spoken language • implied contracts: formed by conduct . • quasi-contracts: a legal fiction, they are formed by law as a consideration substitute to avoid unjust enrichment ; not formed by mutual agreement of the parties.

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What is detrimental reliance?

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[a type of quasi-contract or consideration substitute created by law] where one party to a contract reasonably acts or refrains from acting to their detriment [and to the benefit of the other party] based on the promises of that other party to the contract. [Also termed promissory estoppel. . reliance by one party on the acts or representations of another, causing a worsening of the first party's position. . . . may serve as a substitute for consideration and thus make a promise enforceable as a contract. [Also termed consideration substitute or promissory estoppel.] .

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What is not consideration?

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- Past consideration - Pre-existing duty - Illusory Promises - Donative Promises .

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What are liquidated damages?

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a form of damages agreed to in advance of a breach and set forth in the contract based on a formula of the parties predicting a reasonable amount of compensation to be awarded (#1, 73, also see p. 22). Liquidated debt must correspond closely to actual damages suffered and must not appear to be punitive (8/8/13 lecture). Liquidated debt is a debt where the amount of the debt and the liability for the debt is not disputed (#1, 22). . an amount contractually stipulated as a reasonable estimation of actual damages to be recovered by one party if the other party breaches. If the parties to a contract have properly agreed on liquidated damages, the sum fixed is the measure of damages for a breach, whether it exceeds or falls short of the actual damages (Black's). .

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What is a quasi-contract?

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a legal fiction formed by law to avoid unjust enrichment exemplified by promissory estoppel, aka detrimental reliance. The court imposes this contract as a remedy whereby detrimental reliance becomes a consideration substitute. Unjust enrichment is mandatory for the imposition of this quasi-contract . quasi-contract: implied-in-law contract: an obligation created by law for the sake of justice; specifically, an obligation imposed by law because of some special relationship between the parties or because one of them would otherwise be unjustly enriched. An implied-in-law contract is not actually a contract, but instead is a remedy that allows the plaintiff to recover a benefit conferred on the defendant. Also termed contract implied-in-law, quasi-contract, constructive contract (Black's). .

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What are the defenses to formation?

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- duress - illegality - lack of assent - lack of capacity - lack of consideration - mistake - statute of frauds - unconscionability .

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What are the key three elements of a contract?

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• Mutual assent • Consideration • No defenses to formation .

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What is a valid acceptance for a bilateral contract?

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composed of: a) an offeree who has the power of acceptance; b) his acceptance is unequivocal [and identical to the offer], and c) his acceptance is communicated to the offeror acceptance in a bilateral contract occurs when the offeree makes a promise to perform the requested act.

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What does mutuality of consideration mean?

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consideration must flow in both directions (#1, p. 23). .

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What is the mirror image?

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The acceptance to an offer must mirror or be identical [and unequivocal ] to the terms of the offer made or the acceptance will be deemed to be a rejection and counteroffer. If the offeree reserves the right to the original offer while making a counteroffer, there is generally no rejection. The statement "I would like to consider your offer, but would you consider . . . .." may be treated as a reservation. . Does not apply to UCC contracts.

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What is illegality as a defense to forming a contract?

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a contract cannot be formed when any of the following are illegal: 1. subject matter of the contract; 2. purpose of the contract; or 3. consideration of the contract.

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What does a Contract Require?

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Requires: Mutual Assent, Consideration, aka "Bargained-for Exchange of promises", and No Defenses to Formation.

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What are the two kinds of promises that determine when performance in a contract begins?

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absolute promises and conditional promises . absolute promise to perform: a promise to perform without any preconditions to performance (#1, 31). . conditional promise to perform: a promise that performance will or will not commence based on the occurrence of an underlying event or condition (#1, 31). A promise that is conditioned on the occurrence of an event other than the passage of time. A conditional promise is not illusory as long as the condition is not entirely within the promisor's control (Black's). .

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What is promissory estoppel?

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a court-imposed halt on the imbalance of a situation created by a person's reliance on a promise that lacked consideration. [geb] . [a type of quasi-contract or consideration substitute created by law] where one party to a contract reasonably acts or refrains from acting to their detriment based on the promises of the other party to the contract. [aka detrimental reliance]. (#1, 70) . the principle that a promise made without consideration may nonetheless be enforced to prevent injustice: a) if the promisor should have reasonably expected the promisee to rely on the promise, and b) if the promisee did actually rely on the promise to his or her detriment.

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What are the characteristics of consideration?

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• bargain-for exchange; • mutuality; • value; • benefits and detriments; • stake in the agreement..

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Who can accept offers?

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A person can accept an offer if the offeror has created a power of acceptance in them. This means that any person can accept an offer if he knows of the offer and he is the party to whom the offer was made. .

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What is the adequacy of consideration rule?

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the amount or equality of consideration does not affect its legal adequacy so long as it is: • not grossly disproportionate compared to the other side's consideration; • not a gift--or donative promise; • not illusory--that is, must be binding; • not based on a "preexisting duty"; or • not based on a past consideration. (#1, p. 20, glossary; geb) .

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What are the cautions to the mailbox rule?

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1. No good lawyer ever lets the mailbox rule take effect. 2. NEVER draft a contract that doesn't specify: a) The means of acceptance, that is, valid on receipt, and b) The means of delivery, that is, by fax, USPS, or UPS same-day delivery, and NEVER by email. c) The deadline for receipt. 3. There is no defense to the mailbox rule if it takes effect.

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What is a valid acceptance for a unilateral contract?

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By a completion of an act: when the offeree performs--that is, completes--the requested act.

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What is a Contract?

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A contract is a legally enforceable agreement composed of a promise or promises that have been agreed on and that create both rights and duties for the parties to the agreement.

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What is a donative promise?

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A promise to make a gift lacking any value and consideration. The promisor makes a promise in response to which the promisee or offeree promises nothing; hence, the promisor has made a NONBINDING donative promise. .

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What is an offer for a bilateral contract?

Front

A promise (offer) is offered in exchange for a promise (acceptance). The initial offer is composed of: a) the expression of a promise to enter into a contract b) in clear and certain terms c) communicated to the offeree

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Who can revoke an offer?

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The offeror.

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Define express condition.

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a condition stated or communicated in a contract (#1, 32). . a condition that is the manifested intention of the parties (Black's). .

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How are the three forms of contracts classified?

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classifications are: • bilateral • unilateral.

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What is the difference between an express and an implied condition?

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express condition: A condition stated or communicated in a contract (#1, 32). a condition that is the manifested intention of the parties (Black's). a condition, which manifest parties' intentions, stated or communicated in a contract [geb]. . implied condition: A condition that is not stated in a contract but that the law [imputes] as an existing condition based on the reasonable assumption of the parties that this condition was a part of the bargain in the contract (implied-in-fact conditions) or that the condition is imposed as a matter of public policy (implied-in-law conditions) (#1 edited, 32). A condition that is not expressly mentioned, but is imputed by law from the nature of the transaction or the conduct of the parties to have been tacitly understood between them as part of the agreement. (Black's). .

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Section 2

(50 cards)

What is a 'Joint Drafting' clause

Front

"The parties agree that both parties drafted this contract with adequate access to legal advice." used to avoid a decision against a single drafter where ambiguity or vagueness arises. (Beckman lecture, 7/25/2013)

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Define damages.

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the legal remedy by which money is ordered paid for a breach of contract (#1, 10). . money claimed by, or ordered to be paid to, a person as compensation for loss or injury (Black's). .

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What are compensatory damages?

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the same as general damages or expectation damages (#1, 49). . monetary damages directly related to breach-based losses; intended to make "whole" the non-breaching party as though performance had occurred and to place them in the position they would have been had the contract not been breached. Examples include lost profits, customers, good will, future losses, etc. (#3, slide 5, #1, 49). damages sufficient in amount to indemnify the injured person for the loss suffered (Black's) .

Back

How are monetary damages defined?

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the legal remedy by which money is ordered paid for a breach of contract (#1, 10)

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What are the three requirements necessary to establish frustration of purpose?

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1. the purpose of the contract was understood by both parties; 2. an unforeseeable supervening event occurred; and 3. the event destroyed the purpose of the contract. (#1, 44)

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Under an absolute promise, when is performance due?

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at the time specified in the contract. (#1, 34)

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What is the "parol evidence rule"?

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under this rule, any statements, agreements or negotiations occurring prior to or contemporaneous with the execution of a written contract are not admissible to amend or contradict contract terms when the written contract was intended by the parties to be a complete and final expression of their agreement. The final written contract merges and incorporates all agreements among the contracting parties under the "integration clause." (#1, 45) . the common-law principle that a writing intended by the parties to be a final embodiment of their agreement cannot be modified by evidence of earlier or contemporaneous agreements that might add to, vary, or contradict the writing. This rule usually operates to prevent a party from introducing extrinsic evidence of negotiations that occurred before or while the agreement was being reduced to its final written form (Black's). .

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Define "impossibility" with respect to contract performance.

Front

circumstances where contract performance, in whole or part, has objectively become impossible to perform (#1, 71). . a fact or circumstance that excuses performance because: (1) the subject or means of performance has deteriorated, has been destroyed, or is no longer available; (2) the method of delivery or payment has failed; (3) a law now prevents performance; or (4) death or illness prevents performance. Increased or unexpected difficulty and expense do not usually qualify as an impossibility and thus do not excuse performance (Black's). .

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What are the general rules for contract construction?

Front

1. inconsistent contract provisions favor typewritten provisions over handwritten provisions. . 2. ambiguities or vagueness in contract provisions are construed against the preparer of the contract, unless evidence to the contrary exists. . 3. courts prefer to construe contracts to uphold their validity and enforcement in conformance with the intent of the parties. . 4. contract terms are construed as "a whole," meaning the intention of the parties to the contract, which is the paramount standard under which all contracts are viewed, is determined by viewing the entire contract, not by considering a provision out of context. . 5. contracts are construed based on custom and usage in the relevant commercial community. (#1, 45) ..

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What is the "perfect-tender rule"?

Front

in a contract for the sale of goods, under the UCC, the seller must tender (be prepared to perform) exactly what was agreed upon or the seller may be in breach. Limited exceptions exist that may allow the seller an opportunity to cure any defect (#1 edited, 35). . the principle that a buyer may reject a seller's goods if the quality, quantity, or delivery of the goods fails to conform precisely to the contract. Although the perfect-tender rule was adopted by the UCC (§2-601), other Code provisions—such as the seller's right to cure after rejection—have softened the rule's impact (Black's). .

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Define material breach.

Front

a breach that seriously and significantly impairs the performance received by the non-breaching party (#1, 73). . a breach that entitles the non-breaching party to sue for damages immediately (Black's). . a breach that seriously impairs the performance received by and reasonable expectations of the non-breaching party and that entitles that party to sue for damages immediately [geb]. .

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Define breach.

Front

a failure to adequately and/or timely perform pursuant to a contract (#1 edited, 69). . a violation or infraction of a law or obligation (Black's). .

Back

Define an implied-in-fact condition.

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when the law [imputes] that the condition exists based on the reasonable assumption of the parties that such condition(s) were a part of the bargain in the contract (#1, 32). . a contractual condition that the parties have implicitly agreed to by their conduct or by the nature of the transaction. (Black's). .

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What are expectation damages?

Front

also termed compensatory or general damages (#1, 49) . the standard measure for general damages. . . . that will compensate the plaintiff for his "expectations" in entering into the contractual relationship in issue usually involving: • costs of obtaining adequate substitute performance; and • loss of profits (#1, 49). compensation awarded for the loss of what a person reasonably anticipated from a transaction that was not completed (Black's). .

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What are the various ways conditions to promises can be excused making the promises absolute?

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• substantive performance (I am excused from performing when I have completed performance). . • actual breach (I am excused from performing if you fail to substantially perform). . • anticipatory breach (I am excused from performing if you clearly indicate by words or conduct in advance of performing that you will not perform). . • prospective unwillingness or inability to perform (I am excused from performing if I reasonably believe you are unwilling or unable to perform). . • refusal or failure to cooperate (I am excused from performing if you fail or refuse to cooperate in fulfilling a condition). . • impossibility, impracticability, or frustration of purpose (I am excused from performing if it is impossible or impracticable to perform, or if the purpose for which I entered into the contract has been frustrated). . • divisibility of contract terms (In a contract of divisible parts I am excused from performing if my performance progress is not matched by your performance progress). . • waiver and estoppel (I am excused from performing if you waive a condition to performance and I then rely on that waiver and proceed to complete my part of the bargain as if the waived condition never existed). (#1, 36). .

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What are consequential damages?

Front

the same as special damages (#1, 49, 125) . monetary damages indirectly related to and flowing from the breach; damages based on special circumstances of the contract known and foreseeable to the breaching party at the time of formation.. Hadley v. Baxendale (1864). Examples include increases in finding and obtaining goods, services, etc. (#3, slide 6, #1, 49). . damages . . . that are alleged to have been sustained in the particular circumstances of the particular wrong, and they must be specifically claimed and proved to have been sustained (Black's). . damages [that] compensate the claimant for the quantifiable monetary losses suffered by the plaintiff. For example: • lost earnings (both historically and in the future); • extra costs, repair or replacement of damaged property; • loss of irreplaceable items; • additional domestic costs, and so on. They are seen in both personal and commercial actions. [C]an include direct losses--such as amounts the claimant had to spend to try to mitigate problems--and consequential or economic losses resulting from lost profits in a business (wiki). .

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What is the difference between a material and a minor breach?

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substantial performance usually results in a minor breach while insubstantial performance results in a material breach (#1, 35). . a material breach usually results from insubstantial performance; a minor breach usually results from substantial performance [geb]. . Consider the following in weighing materiality: • extent to which injured party will be deprived of expected benefit; • extent to which injured party can be adequately compensated for the benefit deprived; • extent to which the failing party will suffer divestiture of property without compensation; • likelihood of failing party curing failure; • extent to which the behavior of the failing party comports with good faith and fair dealing (Black's) .

Back

What is a "time is of the essence" clause and what type of breach occurs when a timing condition is not met under that clause?

Front

an express condition that requires performance within a certain time frame, the failure of which amounts to material breach [geb]. . unless timing of performance was made an express condition of the contract, e.g., "time is of the essence," the failure to perform on time is not a material breach, if performed within a reasonable time (#1, 35). . in any agreement where the performances are to be rendered within or by certain time frames, this clause must be included to insure all legal remedies will be available should there be a time-related breach (#2, Study Guide, 14). . a contractual provision making timely performance a condition (Black's). .

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Define estoppel.

Front

a legal theory that prevents another from denying facts where an unfair advantage may result. This refers to promissory estoppel, where a party is prevented from denying a promise to perform based on lack of consideration when the other party has reasonably relied on that promise, resulting in unjust enrichment (#1, 71). . 1. a bar that prevents one from asserting a claim or right that contradicts what one has said or done before or what has been legally established as true. 2. a bar that prevents the re-litigation of issues. 3. an affirmative defense alleging good-faith reliance on a misleading representation and an injury or detrimental change in position resulting from that reliance (Black's). . Black's definition #3 corresponds to Beckman. .

Back

How is damages defined?

Front

the legal remedy by which money is ordered paid for a breach of contract (#1, 10). . money claimed by, or ordered to be paid to, a person as compensation for loss or injury. "Damages are the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for the wrong"--F. Gahan (Black's) .

Back

What are general damages?

Front

the same as compensatory damages or expectation damages (#1, 49). . monetary damages that the law presumes follow from the type of wrong complained of (Black's). . sometimes styled hedonic damages, compensate the claimant for the non-monetary aspects of the specific harm suffered. This is usually termed 'pain, suffering and loss of amenity'. Examples of this include • physical or emotional pain and suffering; • loss of companionship; • loss of consortium; • disfigurement; • loss of reputation; • loss or impairment of mental or physical capacity,; • loss of enjoyment of life, etc. . this is not easily quantifiable, and depends on the individual circumstances of the claimant. (wiki) .

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What effect does a material and a minor breach have on the non-breaching party?

Front

if the breach is minor, the non-breaching party must continue performing under the contract, but may immediately file suit. . if the breach is material or if the breach is minor but the non-breaching party reasonably believes that the breaching party intends not to perform in the future (referred to as anticipatory repudiation or anticipatory breach), the non-breaching party may cease performing under the contract and treat the breach as a total breach and immediately file suit for damages. In the alternative, the non-breaching party may elect to continue performing under the contract while pursuing the lawsuit. This is referred to as an election of remedies. (#1, 34) . what constitutes a reasonable belief? What evidence in words or conduct of the breaching party must the non-breaching party present to convince the court that his belief in the breaching party's anticipatory breach was reasonable? .

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What are the kinds of monetary damages?

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• compensatory (aka general or expectation); • expectation (aka compensatory or general); • general (aka compensatory or expectation); • consequential (aka special); • special (aka consequential); • incidental; • nominal or token; • punitive or exemplary; (#1, 49) • reliance; • restitution. (#1, 51) .

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What is the substantial performance doctrine?

Front

where a performance has been largely or significantly completed, leaving the unfinished performance to constitute a minor breach (#1, 77). . the rule that if a good-faith attempt to perform does not precisely meet the terms of an agreement or statutory requirements, the performance will still be considered complete if the essential purpose is accomplished, subject to a claim for damages for the shortfall. (Black's). . cf. perfect-tender rule under UCC

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Define "impracticability" with respect to contract performance.

Front

a contract defense that asserts that although performance is still possible, the unforeseen circumstances are that performance could only be accomplished through unreasonable costs or efforts (#1, 72). . 1. a fact or circumstance that excuses a party from performing an act, especially, a contractual duty, because (though possible) it would cause extreme and unreasonable difficulty. For performance to be truly impracticable, the duty must become much more difficult or much more expensive to perform, and the difficulty or expense must have been unanticipated. . 2. the doctrine by which such a fact or circumstance excuses performance (Black's). .

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What are punitive or exemplary damages?

Front

monetary damages intended to punish the breaching party. These damages are uncommon unless the conduct involved was willful or egregious warranting punishment (#1, 50). Examples include damages resulting from fraud or misrepresentation, often intentional torts (#3, slide 8). . . . . not awarded to compensate the plaintiff, but to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff (wiki). .

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What is a 'No Defenses' clause

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"There are no defenses against the formation of this contract. The parties affirm that there is: • Mutual assent with valid offer and valid acceptance; • Consideration with a bargained-for exchange of promises bearing reasonable benefit and reasonable detriment to the parties; • Capacity in age and mental competence of the parties; • No personal duress bearing on the parties in the formation of the contract; • No illegal provision known to the parties; • No mistake known to the parties; • No violation of the statute of frauds in that all agreements and understanding are integrated in the formation of this written instrument; and • The bargained-for exchange is conscionable and in keeping with custom and usage in this commercial community." [geb with general guidance from Beckman lectures] .

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What is a breach of contract?

Front

the failure to provide performance under the terms of the contract when required to do so (#1,10); when there is a valid and enforceable contract and a party to that contract has breached the terms of the contract by failing to perform under the contract when an absolute duty to perform arises (#1, 48); a failure to timely and/or adequately perform pursuant to a contract (#1, 69); a violation of contract terms, which can be material or minor (#3, slide 2). . violation of a contractual obligation by: • failing to perform one's own promise, • repudiating it, or • interfering with another party's performance (Black's). .

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Define condition concurrent.

Front

if a condition occurs at the same time as performance, it is a condition concurrent. Here, each party promises to perform simultaneously (#1, 33). . a condition that must occur or be performed at the same time as another condition, the performance by each party separately operating as a condition precedent; a condition that is mutually dependent on another, arising when the parties to a contract agree to exchange performances simultaneously. Also termed concurrent condition (Black's). . when a condition is mutually dependent on another condition and performance is exchanged simultaneously by the parties [geb]. .

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What are incidental damages?

Front

monetary damages incident to or connected to a breach typically involving reimbursement for expenses regardless of foreseeability. Examples include such unexpected costs as increases in shipping, insurance, storage, marketing, etc. to obtain substitute goods (#3, slide 7 and #1, 52). . . . . include the costs needed to remedy problems and put things right. The largest element is likely to be the reinstatement of property damage. Take for example a factory which was burnt down by the negligence of a contractor. The claimant would be entitled to the direct costs required to rebuild the factory and replace the damaged machinery (wiki). .

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What are the exceptions to the parol evidence rule that allow the introduction of parol (or external) evidence?

Front

1. where contract terms are ambiguous; 2. where a condition precedent to the contract is alleged; 3. when fraud, duress, etc. is alleged; 4. where there is a consideration problem; 5. where the written contract incorrectly reflects a valid prior agreement; 6. where a valid, related collateral agreement exists; and 7. where there were subsequent modifications to the contract (#1, 45-6). .

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What are special damages?

Front

the same as consequential damages (#1, 125) . monetary damages indirectly related to and flowing from the breach; damages based on special circumstances of the contract known and foreseeable to the breaching party at the time of formation.. Hadley v. Baxendale (1864). Examples include increases in finding and obtaining goods, services, etc. (#3, slide 6, #1, 49). . damages . . . that are alleged to have been sustained in the particular circumstances of the particular wrong, and they must be specifically claimed and proved to have been sustained (Black's). . damages [that] compensate the claimant for the quantifiable monetary losses suffered by the plaintiff. For example: • lost earnings (both historically and in the future); • extra costs, repair or replacement of damaged property; • loss of irreplaceable items; • additional domestic costs, and so on. They are seen in both personal and commercial actions. [C]an include direct losses--such as amounts the claimant had to spend to try to mitigate problems--and consequential or economic losses resulting from lost profits in a business (wiki). .

Back

Identify the conditions that arise before, during, and after performance

Front

• condition precedent • condition concurrent • condition subsequent .

Back

Define anticipatory repudiation.

Front

synonymous with anticipatory breach: where one party repudiates (refuses to perform), by words or conduct, the contract before the time set for performance (#1, 68). Affirmative and unconditional repudiation by one party will excuse the condition that the other party must perform. The repudiating party has the right to retraction so long as the non-repudiating party has not detrimentally relied on the repudiation. The repudiating party may retract in unequivocal terms at any time prior to the time due for performance by the repudiating party (#1 edited, 37). . a breach of contract caused by a party's anticipatory repudiation, i.e., unequivocally indicating that the party will not perform when performance is due.) Under these circumstances, the non-breaching party may elect to treat the repudiation as an immediate breach and sue for damages. Also termed breach by anticipatory repudiation; constructive breach (Black's). . repudiation must be unequivocal by words or conduct; likewise, retraction must be unequivocal by words and conduct [geb]. .

Back

What contributes to a breach?

Front

• when an absolute duty or unconditional promise to perform arises and performance is not tendered (non-performance); • repudiation; • frustration of purpose (#3, slide 2). .

Back

Define anticipatory breach.

Front

where one party repudiates (refuses to perform), by words or conduct, the contract before the time set for performance (#1, 68). Affirmative and unconditional repudiation by one party will excuse the condition that the other party must perform. The repudiating party has the right to retraction so long as the non-repudiating party has not detrimentally relied on the repudiation. The repudiating party may retract in unequivocal terms at any time prior to the time due for performance by the repudiating party (#1 edited, 37). Also termed anticipatory repudiation. . a breach of contract caused by a party's anticipatory repudiation, i.e., unequivocally indicating that the party will not perform when performance is due. Under these circumstances, the non-breaching party may elect to treat the repudiation as an immediate breach and sue for damages. Also termed breach by anticipatory repudiation; constructive breach (Black's). . repudiation must be unequivocal by words or conduct; likewise, retraction must be unequivocal by words and conduct [geb]. .

Back

Define waiver.

Front

voluntarily and intelligently (knowingly) giving up a legal right under a contract (#1, 78). . the voluntary relinquishment or abandonment--express or implied—of a legal right or advantage. The party alleged to have waived a right must have had both knowledge of the existing right and the intention of forgoing it (Black's). . a voluntary, knowingly aware, and intentional relinquishment of a legal right under a contract [geb]. .

Back

What are the various ways that a party's performance can be considered to be satisfied and discharged?

Front

• performance • accord and satisfaction • account stated • condition subsequent • contract modification • frustration of purpose • illegality • impossibility • impracticability • novation (substituted party) • release (covenant not to sue) • rescission • substituted contract (#1, 40) .

Back

Define condition precedent.

Front

if a condition must be satisfied prior to a party's performance, it is a condition precedent. The performance is not due until the event or condition has occurred (#1, 33). . an act or event, other than a lapse of time, that must exist or occur before a duty to perform something promised arises. If the condition does not occur and is not excused, the promised performance need not be rendered. The most common condition contemplated by this phrase is the immediate or unconditional duty of performance by a promisor (Black's). .

Back

Define absolute duty.

Front

a duty to which no corresponding right attaches. . according to John Austin's legal philosophy, there are four kinds of absolute duties: • duties not regarding persons (such as those owed to God and to lower animals); • duties owed to persons indefinitely (that is, to the community as a whole); • self-regarding duties (such as the duty not to commit suicide); and • duties owed to the sovereign (Black's). .

Back

Define condition subsequent.

Front

a condition on performance that occurs after performance has commenced. If the condition occurs, performance is ended since it was originally conditioned on the occurrence or non-occurrence of the event (#1, 33). . a condition that, if it occurs, will bring something else to an end; an event the existence of which, by agreement of the parties, discharges a duty of performance that has arisen (Black's). . a condition of performance occurring after performance begins, the occurrence of which ends performance [geb]. .

Back

What are nominal damages?

Front

token, minimal awards when a breach, often technical, was proven but specific damages were not (#1, 50, 52). Often sought more in an effort to get an interpretation of the law than to compensate (Beckman, lecture 8/15/2013). Example: a landlord sues tenant for breach of lease because he moved out early without paying rent due. Landlord can prove little or no actual loss since the apartment was re-leased the following day (#3, slide 9). .

Back

What are the three forms of remedies for breach of contract?

Front

• legal remedy: monetary damages for breach of contract; • equitable remedy: equitable relief, also termed non-monetary damages; • equitable damages: reliance and restitution damages in the absence of a valid contract, also termed , or equitable and legal remedy, or quasi-contract. (#1, 48). . • monetary damages (legal damages) and • equitable damages (equitable and legal remedy) (#3, slide 2). • equitable relief, also termed equitable remedy, non-monetary relief .

Back

Define election of remedies.

Front

if the breach is material or if the breach is minor but the non-breaching party reasonably believes that the breaching party intends not to perform in the future . . . the non-breaching party may elect to continue performing under the contract while pursuing the lawsuit (#1, 34). . a claimant's act of choosing between two or more concurrent but inconsistent remedies based on a single set of facts (Black's). .

Back

What is an absolute duty to perform?

Front

arises when a condition to performance has been performed, satisfied, or excused. (#1, 36) . a duty to which no corresponding right attaches (Black's) .

Back

What factors decide if a breach is material or not?

Front

• extent of the performance by the breaching party; Insubstantial performance weighs toward material breach; substantial performance toward minor breach. . • extent of hardship to the breaching party; Minor hardship weighs toward material breach; major hardship toward minor breach. . • behavior (negligent or intentional) of the breaching party; Intentional behavior weighs toward material breach; negligent behavior toward minor breach. . • likelihood the breaching party will complete the remaining performance under the contract; Low likelihood weighs toward material breach; high likelihood, minor. . • extent of benefit received by the non-breaching party; Little benefit weighs toward material breach; big toward minor. . • extent to which damages will adequately compensate the non-breaching party (#1, 35) Inadequate compensation weighs toward material breach; adequate toward minor (Beckman, 8/8/2013 lecture). .

Back

Under a conditional promise, when is performance due?

Front

at the time specified in the contract once the condition has been: • satisfied or accomplished, or • excused (#1, 34) .

Back

Define an implied-in-law condition.

Front

when the law [imputes] that . . the conditions are imposed as a matter of public policy (#1, 32). . a condition contained in an essential contractual term that, though omitted by the parties from their agreement, a court has supplied as being reasonable in the circumstances; a condition imposed by law [public policy] to do justice. Also known as a "constructive condition" (Black's). .

Back

What are equitable damages?

Front

damages paid when both breach of contract and tort law apply to a breach and the remedy called for is either restitution or reliance in the absence of a valid contract in which case both monetary and non-monetary remedies may be ordered (Beckman, lecture 8/15/13) .

Back

Define constructive condition.

Front

a condition is an implied condition when it is not stated in the contract, but when the law [imputes] that the condition exists based on the reasonable assumption of the parties that such condition(s) were a part of the bargain in the contract (implied-in-fact conditions) or that the conditions are imposed as a matter of public policy (implied-in-law conditions) (#1, 32). . a condition contained in an essential contractual term that, though omitted by the parties from their agreement, a court has supplied as being reasonable in the circumstances; a condition imposed by law to do justice. Also termed implied-in-law condition; condition implied by law; condition implied in law (Black's). . NOTE: Beckman & Black's differ here. .

Back

Section 3

(50 cards)

What are speculative damages?

Front

damages that cannot be reasonably ascertained or that are so uncertain to occur that the court will not remedy [geb]. . since the law will not award speculative damages, if damages cannot be reasonably ascertained from the contract, a non-breaching party may only recover those damages resulting from their reliance on the contract (#1, 49) . damages that are so uncertain to occur that they will not be awarded (Black's). .

Back

Under what circumstances can rescission be considered a legal remedy?

Front

if the remedy is sought in connection with the return of property that was acquired as a result of illegality, fraud, or mistake (#1, 54) .

Back

If a breach is minor, how may the non-breaching party treat the breach?

Front

the non-breaching party may not cease performing under the contract but may seek damages for the breach (#1, 48) .

Back

What is a donee beneficiary?

Front

a third-party beneficiary to a TPB contract to whom one of the contracting parties--the promisee--was making or attempting to make a gift (#1, 70). .

Back

When does restitution occur?

Front

• non-breaching party sues based on a total or material breach of contract seeking a legal remedy; • breaching party sues, usually based on at least part performance, seeking legal remedy and equitable remedy; and • an unenforceable contract exists seeking equitable remedy. either party may recover benefits conferred on the other. underlying theory: unjust enrichment and quasi-contract (#1, 52) .

Back

Under what circumstances can rescission be considered an equitable remedy?

Front

if the remedy is sought based on a claim that the contract was void due to illegality, fraud, or mistake (#1, 54) .

Back

Does rescission include restitution for benefits?

Front

it may or may not (#1, 54) .

Back

What is a third-party beneficiary contract?

Front

third-party beneficiary contracts contain performances flowing to the third party who acquires legal rights among the parties whereby some benefit of performance flows to the third party from the promisor at the expense of the promisee, and in which the third party may sue for nonperformance from the promisor but not the promisee, absent detrimental reliance (#1, 57) . 'A' (promisee) contracts with 'B' (promisor) to perform for the benefit of 'C' (intended third-party beneficiary). . a contract that directly benefits a third party and that gives the third party a right to sue ANY of the original contracting parties for breach (Black's). [Beckman does not agree that the third party acquires a right to sue ANY of the original parties. Some are suable, some are not. See cards addressing the right to sue.]

Back

What is a personal service?

Front

an economic service involving either the intellectual or manual personal effort of an individual, as opposed to the salable product of the person's skill (Black's).

Back

What are all the various role designations in third-party contracts?

Front

designations include: • promisee: the party who provided for and intended the benefit to flow to the third party; • promisor: the party obliged to render performance to the third party; • intended beneficiary; the party acquiring beneficial rights as either a donee or creditor beneficiary;. • donee: beneficiary to whom the promisee gratuitously provides a benefit; • creditor: beneficiary to whom the promisee intends to repay a debt (#1, 60-1). . • assignor: in an assignment, the original contracting party who assigns contract rights to a third party; • assignee: in an assignment, the third party to whom the contract rights are transferred; • obligor: in an assignment, the other original contracting party who is obliged to render performance to the assignee (#1, 60-1) . • delegant/delegator: in a delegation, the original contracting party who delegates their duties to perform to a third party; • delegatee: in a delegation, the third party who accepts the transferred duties; • obligee: in a delegation, the other original contracting party for whom the delegatee must perform. (#1, 60-1) . • obligor: in surety bonding, the surety company that guarantees to the project owner (obligee) that the principal (constructor) will render performance. In this case, the obligor is also the promisee in that the surety provides for and intends the benefit to flow to the third-party beneficiary, in this case the project owner (obligee). • obligee: in surety bonding, the project owner to whom the surety company (obligor) guarantees the performance of the constructor (principal). In this case, the obligee is also the third-party beneficiary who acquires the rights to be protected by the surety's guarantee on the constructor's (principal's) performance. • principal: in surety bonding, the constructor whose performance is guaranteed by the surety company (obligor) for the benefit of the project owner (obligee). In this case, the principal is also the promisor who is obliged to render performance to the third-party beneficiary, that is, the project owner (obligee). (#6, 16) . • incidental beneficiary: a person who receives an unintended benefit from, but who acquires no rights in, the TPB contract (#1, 60-1). .

Back

What is reformation?

Front

an order reforming or amending a contract to reflect the original intent of the parties (#3, slide 12).

Back

Under what conditions can attorneys' fees be recovered in breach of contract cases?

Front

recoverable when: • expressly agreed to in the terms of the contract; or • allowed by statute (#1, 51) .

Back

What are the three primary ways that third-party contracts are formed?

Front

• third-party beneficiary contracts • assignment created contracts • delegation created contracts .

Back

What kind of contract cannot have specific performance ordered?

Front

personal services contracts cannot have this form of equitable relief ordered because of constitutional prohibitions against involuntary servitude. also, in an employment contract where a party fails to perform under a contract. the law considers other remedies such as damages, covenants not to compete, injunctions and so on as adequate (#3, slide 12 and #1, 53). . • performance consists of a personal service; • the contract was made for no consideration; • mutuality was lacking in the initial agreement of the contract; • the contract is too vague to be enforced; • the contract was terminable at will; (meaning either party can renege without notice); • the contract required constant supervision; • the claimant has misbehaved (unclean hands); • the contract was unconscionable; • specific performance would cause severe hardship to the defendant; • specific performance is impossible. (wiki). .

Back

What is replevin?

Front

an order for the return of property (#3, slide 12).

Back

What are equitable remedies?

Front

the non-monetary remedies, such as: • specific performance; • injunctions; • replevin; • reformation; • rescission; • declaratory judgment The plaintiff's "duty to mitigate" applies to all damages (#3, slide 11). . these remedies may be sought with damages (#1, 53).

Back

Name each type of remedy for each loss from among the various monetary damage or equitable relief alternatives for this example: . The tenant breached a lease by nonpayment of rent. The landlord suffered: • loss of income; • loss of income caused by the need to borrow money and pay interest in order to pay utilities. • payments to his attorney to file suit; Also, the landlord requests an order declaring that there is no "grace period" to pay rent.

Front

• compensatory damages (monetary); • consequential (aka special) damages (monetary) but only if expressly agreed to in the contract or allowed by statute; • monetary but only if expressly agreed to in the contract or allowed by statute; • declaratory judgment (equity) from the judge. (Beckman, lecture 8/15/2013) .

Back

What is rescission?

Front

an order canceling a contract (#3, slide 12). .

Back

Which form of remedy does not include the right to a jury trial?

Front

equitable relief (#1, 54) .

Back

How do the terms 'equitable damages' and 'equitable relief' differ? .

Front

generally speaking, the former term applies to cases in which breach of contract and tort or the absence of a valid contract and tort occur calling for restitution or reliance remedies wherein both monetary and equity remedies can be applied, depending on the circumstances. Otherwise, strictly speaking, 'damages' refers to legal (monetary) remedies and 'relief' refers to equity (non-monetary) remedies (Beckman, lecture 8/15/2013) .

Back

While punitive damages are not normally recoverable under breach of contract cases, under what circumstances can punitive damages be awarded in breach of contract cases?

Front

• willful tort; • fraud; • misrepresentation; • breach of fiduciary duty; or • insurance company bad faith in refusing to settle a claim (#3, slide 8; #1, 50) .

Back

Define damages.

Front

the legal remedy by which money is ordered paid for a breach of contract (#1, p. 10). "damages are the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for the wrong." F. Gahan, The Law of Damages (1936). (Black's) .

Back

A sells B a rare 1957 Thunderbird. B fails to make payments according to the contract. What remedies are available to A?

Front

'A' can seek: • damages for breach, and • an order of replevin for the return of the property (#1, 53) .

Back

What form of damages did Hadley v. Baxendale establish in law?

Front

consequential damages, decided in 1864 (#1, 49) .

Back

What are injunctions?

Front

a court order requiring either that an action stop, a prohibitory order, or that an action commence, a mandatory order. (#3, slide 12).

Back

What are the limitations of the reformation remedy?

Front

the courts cannot: • create contracts where there were none; • reform incomplete contracts; and • clarify ambiguous terms this remedy corrects a subsequent written contract to accurately set forth an earlier oral agreement (#1, 54) .

Back

Who is the promisee in a TPB contract?

Front

the party to the contract who provided for and intended the benefit or performance to run in favor of the third party (#1, 58).

Back

A, a franchisor, has a franchise contract with B in which A agrees not to award any other franchises within 200 miles of B's franchise. A violates the agreement. What remedy is available to B?

Front

'B' can seek a prohibitory injunction against 'A' (#1, 53).

Back

What is equitable relief?

Front

non-monetary remedies; when a contract has failed for some reason or where there is no contract at all, but someone would be unjustly enriched if the court did not impute or impose a contract (#1, 10, 48) .

Back

What is a pre-contractual liability?

Front

an offer of a gift (#1, 51).

Back

What is specific performance?

Front

the defendant is ordered to do what was agreed to. (#3, slide 12) . may be ordered for: • land, • works of art, • contracts involving unique properties . May not be order for an employment contract where a party fails to perform (#1,53).

Back

What are reliance damages?

Front

damages that may also be awarded in the absence of an enforceable contract. . . . reliance damages are also used as an alternative to standard general damages . . . where general damages are insufficient. reliance damages are measured based on monetary losses resulting from reasonable reliance. unjust enrichment is not required to recover these damages (#1, 51) . monetary damages based on losses suffered by one's reasonable yet detrimental reliance on what others did or said. Example: a plumber who bought and began installing in a law firm's restroom where no contract was formed. The plumber relied on the attorney's comments that he had a possible job depending on the senior partner's approval (#3, slide 10). .

Back

What is declaratory judgment?

Front

an order that declares the contractual rights and obligations of the parties. also termed declaratory relief (#3, slide 12 and #1, 54). . this remedy is often sought by parties seeking clarification of contract terms in an effort to avoid prospective breaches (#1, 54) .

Back

What is a third-party beneficiary?

Front

anyone who acquires an interest in a contract arising from a performance in the contract that will "benefit" them (#1, 57).

Back

What is a creditor beneficiary?

Front

a party to whom one - the promisee - owes a debt in a TPD contract (#1, 70). . a third-party beneficiary of a contract who is owed a debt [by the promisee] that is to be satisfied by another party's [promisor's] performance under the contract (Black's). . a creditor beneficiary has the right to sue the promisee or the promisor but is limited to one satisfaction of the judgment (#1, 59) .

Back

A agrees to service B's car with a tune-up and oil change. A performs the tune-up but fails to perform the oil change. What forms of recovery are available where no payment has been made by B?

Front

'A' can claim restitution for the tune-up due to part performance, a benefit conferred. 'B' can claim damages (legal or equitable?) for failure to perform the oil change (#1, 52) .

Back

What are restitution damages?

Front

reimbursement for monies expended and unjust enrichment resulted (#1, 52) . damages available where: • where the non-breaching party has suffered a loss; and • compensatory damages are inadequate; and • unjust enrichment has been conferred on the breaching party (#1, 51). . a monetary remedy that is measured according to the defendant's gain rather than the plaintiff's loss (wiki). .

Back

Which form of remedy includes the right to a jury trial?

Front

legal remedy (#1, 54) .

Back

Who is the intended beneficiary in a TPB contract?

Front

the person(s) to whom the contracting parties intended the benefit to run. There are two types of intended beneficiaries: creditor and donee. This form of beneficiary has acquired legal rights in the TPB contract (#1, 58).

Back

What is the primary question in assessing a breach?

Front

is it material or minor? (#1,48) .

Back

What kind of damages can be recovered where wholesaler S contracts with retailer B to sell B 1000 widgets at $5 per widget, knowing B intends to resell the widgets at retail for a profit and where, subsequent to breach, B loses profits, must find substitute goods, and must pay shipping and storage?

Front

• compensatory (general) damages from S for B's loss of profits; and • consequential damages from S for B's cost of acquiring substitute goods • incidental damages from S for B's cost of shipping and storage (#1, 50) .

Back

What is the non-breaching party's duty to mitigate?

Front

each party to a contract must make all reasonable efforts to minimize the extent of damages under whatever theory damages are being sought. if a party fails to mitigate damages, the award of damages may be amended to an amount that would have been incurred if the party had in fact minimized or mitigated his losses (#1, 54) . a non-breaching party's or tort victim's duty to make reasonable efforts to limit losses resulting from the other party's breach or tort. Not doing so precludes the party from collecting damages that might have been avoided (Black's). .

Back

Under what conditions can interest be recovered in breach of contract cases?

Front

recoverable when: • expressly agreed to in the terms of the contract; or • allowed by statute (#1, 51) .

Back

What types of damages can a non-breaching party sue for when the value of goods and services have been conferred on the breaching party?

Front

compensatory OR restitution damages [where compensatory damages are inadequate] can be sued for when the value of goods and services have been conferred on a breaching party (#1, 52) .

Back

Who can the donee beneficiary sue if they do not receive the intended performance?

Front

the promisor in the original contract, subject to any defenses the promisor may have against the promisee. this applies to both creditor or donee beneficiaries. . absent detrimental reliance, the intended beneficiary, when a donee, may NOT sue the promisee; when a creditor and regardless of reliance, the beneficiary has recourse against both promisee and promisor (#1, 59) .

Back

Who is the promisor in TPB contract?

Front

the party who is obligated to render the performance to the third party (#1, 58).

Back

What kind of damages can be recovered where S has a contract with B to sell 1000 widgets for $5000 and S fails to deliver the widgets causing B to lose a $3000 profit?

Front

compensatory damages, but only to the extent that those damages can be reasonably ascertained based on the non-breaching party's reliance on the contract (#1, 49 paraphrase) .

Back

What are liquidated damages?

Front

a formula agreed on by the parties in advance and set forth in the contract by which damages that are difficult to ascertain at the time of formation can be specified in the event of breach. these damages must be a reasonable forecast of actual damages suffered to avoid unjust enrichment (#1, 51, paraphrase) .

Back

What is a third party in contract law?

Front

anyone who acquires an interest in a contract arising from a performance in the contract which will either benefit them, as in the cases of a beneficiary contract or an assignment, or impose duties upon them, as in the case of a delegation. [geb] . in a third-party beneficiary contract, the third party is a person who acquires legal interests or rights in a contract as a donee or creditor when the original contracting parties have agreed that some performance under the contract will be rendered to or flow to that person, that is, for the benefit of the third party (#1, 57). . in an assignment, the third party is the assignee to whom contract rights are transferred and for whom the obligor, an original contracting party, is obligated to render performance (#1, 60). . in a delegation, the third party is the delegatee to whom duties are transferred for performance benefitting the obligee, who is an original contracting party (#1, 61). .

Back

If a breach is material, how may the non-breaching party treat the breach?

Front

the non-breaching party may cease performance and sue; may treat the breach as a total breach, ending the non-breaching party's performances and entitling the non-breaching party to all remedies and complete damages under the contract (#1, 48) .

Back

Section 4

(50 cards)

Economic duress generally is a defense to a contract. true or false

Front

false. personal duress is a defense to a contract; economic duress is not.

Back

What landmark case established the notion that a contract that benefits a third party can create enforceable rights in other parties, thus recognizing the rights of third-party beneficiaries?

Front

Lawrence v. Fox, decided in 1859

Back

What is an express warranty?

Front

a warranty expressly set forth in the contract (#1, 29).

Back

What are the four essential elements of equitable (promissory) estoppel?

Front

1) the party to be estopped must know the facts; 2) the party being estopped must intend that his conduct shall be acted upon or the acts must be such that the party asserting the estoppel has a right to believe it is so intended; 3) the party asserting the estoppel must be ignorant of the true facts; 4) the party asserting the estoppel must rely on the conduct of the party being estopped to his detriment (Fuller, Lon L., Melvin Aron Eisenberg, and Mark P. Gergen. Basic Contract Law: Concise Edition. 9th ed. St. Paul, MN: West Academic Publishing, 2013. legal.)

Back

What is a delegant or delegator?

Front

the original contracting party who delegates or transfers their duties to perform under the contract to a third party (#1, 60).

Back

When do third-party rights vest?

Front

• when the third party manifests his or her assent to a promise in a manner requested by the parties; • when the third party significantly changes his or her position in reliance on the benefit to be received; or • when the third party commences suit to enforce the third-party rights under the contract (#1, 59-60) .

Back

In a delegation, who may an obligee sue for nonperformance?

Front

since the delegator remains liable, absent a release by the obligee, the obligee may sue the delegator (delegant) for any nonperformance by the delegatee. . If the delegatee accepted the delegation with consideration, the obligee may sue the delegatee for nonperformance (#1, 62).

Back

What is a warranty of fitness for a particular purpose?

Front

a warranty that goods are fit for a specific purpose requested by the buyer which the seller understood and which the seller provided with the understanding that the buyer would use the goods for that purpose (#1, 29) .

Back

What is an assignment?

Front

a transfer of one's rights under a contract (#1, 68). . designations (see graphic): • promisee is the assignor; • promisor is the obligor; and • beneficiary is the assignee. . after transfer, the obligor's duty to perform goes to the assignee.

Back

When do assignments create third-party contracts?

Front

when a party to a contract transfers all or part of their rights under that contract to a third party (#1, 60).

Back

What is an assignee?

Front

the person receiving the transfer of rights under an assignment (#1, 68)

Back

In a surety bonding third-party contract, who is the principal?

Front

the party whose performance is guaranteed by the obligor. in a contract between the surety and the constructor [construction company], the principal is the constructor. in a contract between the surety and a subcontractor, the principal is the subcontractor (#6, 16) .

Back

Who is the obligee?

Front

the original contracting party for whom the delegatee must perform (#1, 61) . the primary (creditor) beneficiary of a surety bond to whom payment by the surety (promissor) is guaranteed if the obligor (promisee) defaults (#5, 8, 244) .

Back

Who can a creditor beneficiary sue if they do not receive their intended performance?

Front

the intended beneficiary, when a creditor, may sue and assert claims for nonperformance against the promisee and promisor on existing debt but is limited to one satisfaction of judgment. (#1, 59).

Back

In surety bonding, what are the role designations among surety, constructor, project owner and subcontractors when subcontractors are required to be bonded?

Front

subcontractor: principal and promisor constructor: obligee and third-party beneficiary surety: obligor and promisee project owner: not a party to this contract; therefore, no direct role . the benefit of the subcontractor's performance flows to the constructor, that performance having been guaranteed by the surety (#6, 16)

Back

What is an assignor?

Front

the person who is assigning the rights under an assignment (#1, 68).

Back

When do delegations create third-party contracts?

Front

when a party transfers their duties under a contract to a third party to perform, often referred to as an "appointment" of a third party. delegations are subject to the assumption of duty doctrine.

Back

What constitutes a valid assignment?

Front

any manifestation by the assignor of an immediate intent to completely transfer all or part of his rights under the contract. No consideration required. . assignments without consideration are revocable; assignments with consideration are irrevocable (#1, 61).

Back

What is the doctrine of assumption of duties?

Front

the delegatee must assent to the delegation of duties to him (#1, 62). . the process of agreeing to accept legal obligations (Richards, Edward. "Public Health Law Map - Beta 5.7." LSU Law Center, http://biotech.law.lsu.edu/map/Glossary.html).

Back

How was this third-party contract created? . After Jon contracts with Alan to remodel his son's home, Alan hires Billy's Construction Company to do the remodel to Jon's son's home. .

Front

this third-party contract is formed by delegation when Billy's Construction Company accepts the duties of Alan, one of the original contracting parties, who retains responsibility for performance under the contract. If Billy did not accept any consideration from Alan for assuming responsibility, then responsibility remains with Alan. If Alan gave Billy some consideration in exchange for assuming responsibility for the delegation then Billy assumes responsibility for performance. . Jon's son, the third party of the original contract, becomes the promisor (second party) in the new delegation contract while Jon remains the promisee (first party). Billy's Construction is now the third party in the delegation. Jon's son, retains the legal rights vested in the original contract. Jon's son has recourse against Alan if no consideration passed; and against both Alan and Billy's if consideration did pass (#3, slide 18). If Jon sues Alan or Billy and wins, he is entitled to only one satisfaction of judgment. .

Back

When doing an assignment, when is the consent of the other party to the contract required?

Front

when the assignment: • involves future contracts; • significantly affects the obligor, that is, substantially changes or increases the obligor's duty to perform; • rights are nonassignable by law; or • is barred by contract terms. (#1, 61; #3, slide 16). .

Back

When was this third-party contract created? . Jon contracts with Alan to remodel his son's home. .

Front

The contract is fully formed when Jon's son's manifests his assent to the promises exchanged between Jon and Alan wherein performance, that is, benefit, under the contract will be rendered to or flow to Jon's son whose third-party rights vest when he assents; hence, this contract is a donee beneficiary contract (#3, slide 18; #1, 57). .

Back

What is an incidental beneficiary?

Front

a party who receives an unintended benefit from a TPB contract but acquires no rights. (#1, 58, 72). .

Back

What happens to privity of contract when an assignment occurs?

Front

a valid assignment acts to create a privity of contract between the assignee and the obligor while terminating and releasing the preexisting privity (relationship) between the assignor and the obligor (#1, 61)

Back

Is there mutual assent when Jack agrees with Jennifer to wash her car when he has time.

Front

No. Jack has made an illusory promise, a noncommittal promise that fails to clearly obligate the promisor.

Back

Who is the obligor?

Front

the original contracting party who is obligated to render performance to: • the assignee in an assignment (60); or • the obligee prior to a delegation (63) (#1, 60, 63).

Back

Express warranties can never be disclaimed. true or false.

Front

false. express warranties can only be disclaimed if the disclaimer is consistent with and does not affect the stated warranty. otherwise, disclaimers of express warranties are disallowed and unenforceable as both a conflict in terms and as unconscionable (#1, 29) .

Back

How was this third-party contract created? . Jon, Alan, and Cody (Jon's son) all agree that Alan can be replaced by Taylor Construction Company since Alan is moving to Australia.

Front

no third-party contract is formed. this new contract is a novation in which one of the original parties to the contract is fully replaced by another who acquires all the benefits and detriments of the original third-party contract, which remains in force (#3, slide 18). .

Back

A party may assign their duties under a contract to a third party. true or false

Front

false. A party may assign RIGHTS or delegate duties under a contract to a third party; a party may not assign duties and delegate rights under a contract to a third party.

Back

When doing a delegation, when is the consent of the other party to the contract required?

Front

when the delegation: • involves personal skills, talents, or judgments; • involves special trust relationship between the original contracting parties; • significantly affects the performances expected by the obligee; • is barred by contract terms. (#3, slide 17, #1, 62)

Back

An employee assigns her wages for four months she receives from her employer to a bank for a loan repayment. . What are the TPB designations of each party?

Front

the employee, 'A', is the assignor; the employer, 'B', is the obligor; and the bank, 'C', is the assignee . This TPB contract was created when the assignee accepted the assignment (#1, 60). .

Back

How can a contract bar a party from doing an assignment or delegation?

Front

by including a no assignment or no delegation clause in the contract

Back

When is this third-party contract created? . Alan asked Jon to send $500 from what Jon owes him to the IRS to pay Alan's taxes for the prior year.

Front

when Jon, as promisor, agrees to pay the IRS on behalf of Alan, the promisee, monies owed by Alan to the IRS, the third party contract is formed where the IRS becomes the third-party creditor beneficiary. In the moment of that agreement the IRS acquires legal rights in the contract between Alan and Jon. . Third-party rights vest for the IRS when the it commences suit to enforce the its rights under the contract. the IRS has recourse against both Alan and Jon in the event of breach (#3, slide 18) but is entitled to only one satisfaction of judgment.

Back

In a surety bonding third-party contract, who is the obligee?

Front

the party to whom the benefit of the surety's (obligor's) guarantee of performance is intended to flow, in a bond contract between the surety and the constructor, the obligee is the project owner; in a contract between the surety and a subcontractor, the obligee is the constructor (#6, 16) .

Back

What is a warranty of merchantability?

Front

a warranty that goods purchased from a merchant are for their ordinary purposes (#1, 29). .

Back

What is a delegation?

Front

the transfer of duties to a third party, whereby one party, the delegator (delegant) transfers to another, the delegatee, their duty to perform for the obligee under a contract, subject to the assumption of duties doctrine (#1, 62,70). . designations (see graphic): • promisee is the obligee; • promisor is the delegator; and • beneficiary is the delegatee. . delegatee must accept the delegation for it to be valid under the assumption of duties doctrine

Back

What principal in law did Fisher v. Poole (1982) establish in law?

Front

promissory estoppel (aka equitable estoppel) (#1, 23). .

Back

What is privity of contract?

Front

the existing legal relationship between the two original contracting parties (#1, 58).

Back

In an assignment of rights, who may the assignee sue for nonperformance?

Front

the assignee may sue, as a real party-in-interest, the obligor, the original party to the contract obliged to perform, for any failure to perform. the obligor may generally assert any defenses against the assignee that are available to the assignor (#1, 61).

Back

What is a delegatee?

Front

the party who receives the transferred duties (#1, 61).

Back

What is a disclaimer?

Front

a contract term intended to eliminate warranties. implied warranties can be eliminated by disclaimers; express warranties cannot, except if the disclaimer is consistent with and does not affect the stated warranty.

Back

The first electrician delegates his duty to install ceiling fans for a homeowner to a second electrician. . What are the TPB designations of each party?

Front

the homeowner, 'A', is the obligee; the 1st electrician, 'B', is the delegator; and the 2nd electrician, 'C', is the delegatee . This TPB contract was created when the delegatee assented to the delegation (#1, 60). .

Back

Who can a incidental beneficiary sue if they do not receive their intended performance?

Front

no one. This form of beneficiary acquires no rights in the TPB contract (#1, 58).

Back

A landlord contracts with a plumber to fix a tenant's faucet. Based on lease obligations, what are the TPB designations of each party?

Front

the landlord, 'A', is the promisee; the plumber, 'B', is the promisor; and the tenant, 'C', is the creditor beneficiary . This TPB contract was created in the original lease agreement with the reasonable assumption that the landlord would hire workers to perform on its behalf (#1, 60). .

Back

What constitutes a valid delegation?

Front

requires that the delegator (delegant) manifest a present intention to transfer all or part of his duties to perform under the contract. also, the delegatee must accept the delegation. The delegator remains liable for performance unless the delegatee has accepted the delegation with consideration (#1, 62) .

Back

What is a warranty?

Front

a guarantee relating to the goods and services of other subject matter of the contract. warranties can be express or implied (#1, 29) .

Back

A two-year lease agreement is usually valid. true or false

Front

false. The Statute of Frauds requires that land sale transactions be in writing (#1, 77). in determining what constitutes an interest in land for purposes of the Statute of Frauds, the test applied is generally that furnished by the law of Property, Restatement Second §127, which reads "leaseholds are included . . . ."

Back

In a surety bonding third-party contract, who is the obligor?

Front

the party to the contract who provided for and intended the benefit or performance to run in favor of the beneficiary (third-party, obligee, and project owner). in a contract between the surety and a constructor, the obligor is the surety; in a contract between the surety and a subcontractor, the obligor is the surety again (#6, 16) .

Back

How do assignments and delegations differ from novations?

Front

a novation: • requires the consent of all parties in order to substitute a new party; • transfers both the rights and the duties of the contract to the substitute party; • releases the original party for whom the substitution is made. . assignors generally do not need the other party's consent, unless required by contract. . delegators are not released by the delegation of duties and remain liable for the performance of the delegatee, unless the delegatee accepted the delegation with consideration. . in short, novations release the original party from duties while delegations do not. novations extinguish the rights of the original party while assignments do likewise (#1, 63, 74) .

Back

What is an implied warranty?

Front

a warranty not expressly stated in teh contract but implied and found to exist by the courts where such warranties would be a normal and reasonable expectation of the parties. typical implied warranties are the warranty of merchantability and the warranty of fitness for a particular purpose (#1, 29) .

Back

Section 5

(12 cards)

What principal in law was established by Taylor v. Caldwell (1863)?

Front

A party's duty, under a contract is discharged if performance of the contact involves particular goods, which without fault of either party are destroyed, rendering performance impossible or impracticable.

Back

What principal in law was established by Simmons v. US (4th Cir. 1962)?

Front

If someone knows of an outstanding offer, they may accept the offer by rendering performance even if the performance is done for other reasons. If someone does not know of an outstanding offer and renders performance in the shadow of ignorance, then no offer has been accepted, no contract formed, and no obligation to perform by the offeror exists. (#1, 16) .

Back

What principal in law was established by Minneapolis et. al v. Columbus Rolling Mill Co. (1886)?

Front

The offeree can also reject an offer by making a counter-offer to the offeror. The effect of the counter-offer is to reject the original offer and make a new offer. A conditional acceptance or an acceptance with additional terms is treated like a counter-offer, in effect, rejecting the original offer (#1, 14) .

Back

What principal in law was established by Lingenfelder v. Wainwright Brewery Co (Mo. 1891)?

Front

A promise to pay a man for doing that which he is already under contract to do is without consideration. A change, or modification to an original contract, upon new or different considerations is binding. (#1, 20) .

Back

What principal in law was established by Davis v. Jacoby (Cal. 1934)?

Front

contracts are either bilateral or unilateral contracts, based on how the contract is accepted or entered into (#1, 9) .

Back

What principal in law was established by Kanavos v. Hancock Bank and Trust Co., (Mass. 1895)?

Front

The ability of one party to perform under a contract with concurrent obligations is relevant to the question of a repudiating party's liability for damages in an action for breach of contract (#1, 33) .

Back

What principal in law was established by Vincenzi v. Cerro (Conn. 1982)?

Front

The following materiality standards are used to assess substantial performance and the excuse of conditions: • substantial performance; • prospective unwillingness or inability to perform; • anticipatory repudiation; • actual breach; • refusal or failure to cooperate; • waiver and estoppel; • impossibility, impracticability, or frustration of purpose; • divisibility of contract terms. (#1, 36) .

Back

What is quantum meruit?

Front

Latin: 1. the reasonable value of services; damages in an amount considered reasonable to compensate a person who has rendered services in a quasi-contractual relationship. Quantum meruit is still used today as an equitable remedy to provide restitution for unjust enrichment.

Back

What principal in law was established by Leftkowitz v. Great Minneapolis Surplus Store (Minn. 1957)?

Front

In order for a promise to constitute an offer, the promise must indicate a commitment to enter into a contract on terms and conditions that are sufficiently definite and certain. An offer needs to identify who the offeree is and contain clear, specific material terms to the contract that will allow the contract to be enforceable (#1, 12) .

Back

What types of contracts are covered by the Statute of Frauds?

Front

• contracts to answer for the debt of another; • contracts creating an interest in land (including leases of property for over one year); • contracts that cannot be performed within one year of the date of agreement; • contracts in consideration of marriage; • contracts for the sale of goods for $500 or more, with certain exceptions set forth in the UCC; • contracts by estate representatives to answer personally for the estate's debts (#1, 25)

Back

What kind of writing will be sufficient to satisfy the Statute of Frauds?

Front

- The Statute does not require the memo to be in a single document. The agreement may be pieced together out of separate writings connected with one another. Signed and unsigned writings may be read together, provided that they clearly refer to the same subject matter or transaction. (Crabtree v. Elizabeth Arden Sales Corp. 305 N.Y. 48, 110 N.E.2d 551 (1953).) - Oral testimony is admitted to show the connection between the documents and to establish the acquiescence, of the party to be charged, to the contents of the unsigned document. (Beckwith v. Talbot, 95 U.S. 289, 24 L.Ed. 496.) - The memorandum need not presently exist. Even if it has been lost or destroyed the Statute of Frauds writing requirement is satisfied so long as it once existed. At a minimum the memorandum must state with reasonable certainty: (a) the identity of both contracting parties; (b) the subject matter of the contract so that it can be identified either from the writing or if the writing is not clear by the aid of extrinsic evidence; (c) the essential terms and conditions of all the promises constituting the contract and by whom and to whom the promises are made. (Rest.2d §131) .

Back

What principal in law was established by Marchiondo v. Scheck (N.M. 1967)?

Front

This case stands for the proposition that an offer may not be revocable after performance has begun (#1, 16).

Back