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Cloned from: Contracts and Sales

by fscott

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What are the elements for quasi contract?
a. Pl has conferred a benefit on def b. Pl reasonably expected to be paid c. Def would get unjust enrichment if Pl isn’t compensated
What is a unilateral contract?
Unilateral contract = offer that *expressly* required performance as the only method of acceptance
How do you know it a contract is bilateral?
It’s a bilateral UNLESS it’s (a) a reward, prize, or contest, OR (b) the offer expressly requires performance for acceptance
What law governs a contract of mixed subject matter (goods and non-goods)?
General Rule: “most important part” governs whole K (i.e. if service part is most important, CL governs) --Exception: if the K divides payment, then UCC applies to goods and CL to everything else.
What is an offer?
General test: it’s an offer if a reasonable person would consider the words/conduct to be a manifestation of intent to contract.
Are material terms required for something to be an offer? Exceptions?
General rule: material terms are NOT required for it to be an offer --Exception 1: in land Ks, CL requires price and description --Exception 2: For UCC sales, an ambiguous material term makes it NOT an offer (e.g. offer to sell a car at “a fair price” is an offer to deal)
What is a requirements/outputs contract?
Test: Such Ks are okay if quantity is expressed in terms of buyer’s requirements, seller’s output, or exclusivity (watch for: all, only, exclusively, and solely). E.g., offer to sell Buyer all the grits Buyer might want is NOT a proper offer.
On a requirements contract, is it okay to increase your requirements?
An increase in requirements is okay if it is not unreasonable disproportionate to prior demands
When is an advertisement an offer?
General rule: Never. --Exception: (a) reward or reward-like things and (b) advertisement specific as to quantity and expressly indicates who can accept (e.g., fur coat for $10 first come first serve)
What are the 4 ways to terminate an offer?
i. Method 1: Lapse of Time ii. Method 2: Death Before Acceptance iii. Method 3: Revocation by Offeror iv. Method 4: Rejection by Offeree
When does an offer terminate by lapse of time?
An offer dies after a time stated or reasonable time
How does death of a party affect an offer? Exceptions?
Rule: Death/incapacity of EITHER party before acceptance kills offer --Exceptions: (a) option Ks and (b) part performance of offer to enter into a unilateral K (such an offer is irrevocable after performance begins)
How can an offeror revoke an offer?
Rule: An offer is revoked upon EITHER 1) Unambiguous statement by offeror to offeree of unwillingness/inability to K 2) Unambiguous conduct by offeror that offeree knows of indicating unwillingness/inability to K
When does revocation of an offer become effective: when sent or received?
When received
What are the four types of irrevocable offers?
1) Options 2) Offers subject to UCC Firm Offer Rule 3) An offer subject to (a) reliance that is (b) reasonably foreseeable and (c) detrimental 4) A unilateral K where performance has begun
What is an option?
Option: requires (1) a promise not to revoke (2) in exchange for consideration
What is the UCC Firm Offer Rule?
Rule: An offer cannot be revoked for 3 months when (1) K for goods, (2) signed & written promise to keep the offer open, (3) offeror is a merchant
What if the firm offer rule applies, but no time period is set in the K?
If no period set, the ct will select a reasonable period up to 3 months.
When does a unilateral K become irrevocable? Is mere preparation enough?
The start of performance on a unilateral K makes the K irrevocable for a reasonable time to complete performance. But “mere preparation” to perform (i.e. buy paint for house painting) not enough.
What does an offer become irrevocable for reasons of fairness?
An offer cannot be revoked if there has been (1) reliance that is (2) reasonably foreseeable and (3) detrimental
What are the ways an offer can be indirectly rejected?
1) Counteroffer 2) Conditional Acceptance 3) Additional Terms
What is the effect of a counteroffer on the underlying offer?
i) Counteroffer becomes new offer and original offer dies ii) Mere “bargaining” (e.g. “would you take $10 less?”) is NOT a counteroffer
What is conditional acceptance and what is it's effect on an offer?
i) Same effect as a counteroffer (offer is dead) ii) Look for acceptance + if/only if/provided that/but/so long as --The key is that the speaker will ONLY accept on the stated conditions
What is the effect of additional terms on an offer?
i) CL only: A response that adds new terms is treated as a counteroffer. (Mirror Image Rule) ii) UCC Art 2-207: if conditions are not *required* for acceptance, then there IS an agreement.
Under UCC Art 2, when do additional terms become a part of a K?
a) Additional terms are part of the K if the parties are both merchants UNLESS either (1) the additional terms are a material change to the offer OR (2) the offeror objects b) Whether the change is “material” is always fact-specific (so it’s unlikely to be a bar question)
Who can accept an offer?
Only a person who (1) knows of the offer and (2) to whom it was made
What kinds of offers can be assigned?
Offers can generally not be assigned. Exception: options can be assigned (unless it says otherwise)
What happens if, in response to an offer: there is an improper response (e.g., additional terms) but parties act like a K exists?
1) CL: additional-terms type counteroffer is deemed “accepted” can become part of a K if parties act like the K exists (i.e. they perform) 2) UCC: the conduct creates a K, but the additional terms are rejected (unless the parties are merchants, and the additional terms are not material changes) 3) E.g.: buyer/lessee accepts K “only if” an arbitration clause is added. Offeror says nothing and performs. There is a K, but the arbitration clause only applies if we’re under CL.
What happens if, in response to an offer: offeree fully performs? Is notice required to the offeror?
1) Where the response to an offer is full performance, performance is definitely acceptance. But the question is whether notice is required. 2) Notice is required if EITHER (a) offer calls for notice OR (b) offeree has reason to believe offeror will not learn of acceptance
What happens if, in response to an offer: offeree starts to perform?
1) Bilateral K: Start of performance is acceptance (Starting to perform = implied promise to finish performing) 2) Unilateral K: Only full performance is acceptance (But remember that starting to perform makes the offer irrevocable)
What happens if, in response to an offer: offeree promises to perform?
If the offer doesn’t expressly require performance to accept, then a promise to perform is acceptance.
What are the 4 mailbox rules?
1) All communications EXCEPT acceptance are effective when received. 2) Acceptance is effective when mailed. 3) If a rejection is mailed before acceptance, then neither is effective until received. 4) The above rules have NO applicability to option Ks.
What happens if, in response to an offer: seller sends “wrong” goods?
General rule: sending the wrong goods establishes a contract and its breach. --Exception: accommodation (i.e. explanation): if you send the wrong goods and explain (e.g., “we’re out of red, hope you like blue”), then there is NO contract (and thus no breach)
What is consideration?
Consideration = “bargained-for legal detriment”
If there is no consideration, how can a person still get recovery?
Even where there is no consideration for a promise, so there is no contract, there might be promissory estoppel. [Requires: (1) promise, (2) reliance that is reasonable, detrimental, and foreseeable, and (3) enforceable necessary to avoid injustice]
When is past consideration deemed proper consideration?
General rule: it is NOT consideration. Exception: okay if expressly requested AND there was an expectation of payment (E.g.: you save someone’s life expecting to be paid; victim later promises to pay you $5k. That promise is enforceable.)
Can part payment be consideration for release from contract duties?
If debt is due and undisputed, then part payment is NOT consideration for release. --E.g., if debt isn’t due until next week, offering to pay half now IS consideration.
What is the only special CL rule for consideration?
The 'preexisting contractual/statutory duty rule' (Generally, doing what you are already obligated to do is not new consideration for a promise.)
What is the preexisting contractual/statutory duty rule? Exceptions?
CL ONLY: Doing what you are already obligated to do is not new consideration for a promise. a) Exception 1: Unforeseen difficulty so severe as to excuse performance b) Exception 2: Third party promises to pay
If there is an existing K, and one party offers to pay more and this is accepted, is the change valid?
CL: Generally not (preexisting contractual/statutory duty rule) UCC: If there is good faith, a change to an existing [sales] contract is okay.
Is a seal a proper substitute for consideration?
If there is a full defense to performing on the K, and you still promise to perform, is that promise valid?
Yes, if it's in writing. Rule: Written promise to pay an obligation for which there is a legal defense is a enforceable (I.e., if S/L has passed, but you still offer to pay half, that’s enforceable.) **Note: must be in writing!**
Hypo: The statute of limitations passes on your debt owed to your butcher. You call and tell him that you will still pay. Is this enforceable?
No, because it is not in writing. (Rule: *Written* promise to pay an obligation for which there is a legal defense is a enforceable.)
What is promissory estoppel?
Requires: (1) promise, (2) reliance that is reasonable, detrimental, and foreseeable, and (3) enforceable necessary to avoid injustice. If the elements are met, then even though there is NO consideration (and thus no contract), the promise is enforceable through estoppel.
Framework: What are the three questions to ask when the statute of frauds may be at issue?
1) Is the K 'within' the S/F? 2) If so, is the S/F 'satisfied'? 3) Is there a S/F defense?
What are the 6 contracts that are generally within the statute of frauds?
1) Promise to Answer for (Guarantee) the Debts of Another 2) Promise by Executor to Answer Personally for Debts of Decedent 3) Promise in Consideration of Marriage 4) Service Contract Not “Capable” of Performance ≤ 1 Year 5) Transfers of Interest in Real Estate (except leases ≤ 1yr) 6) Sale of Goods for ≥ $500
Hypo: Jack owes $100 to Lowe's. You promise to pay the debt. Is that within the Statute of Frauds?
NO. It needs to be not only a promise to pay, but a promise to pay *for another*. (I.e., you need to say, 'If he doesn't pay it, I will.') ii) Main purpose exception: if the main purpose of the promise to pay for another was to benefit the guarantor, then the S/F does NOT apply.
Generally promises to guarantee the debts of another are within the Statute of Frauds. What is the exception to this?
Main purpose exception: if the main purpose of the promise to pay for another was to benefit the guarantor, then the S/F does NOT apply. --E.g.: I offer to pay the debts of my house painter if he fails to pay the hardware store for the paint.
An executor promises to pay the decedant's debt out of the estate. Is this promise within the S/F?
No. Only a within the S/F if it is a promise by executor to answer *personally* for debts of decedent.
Must all contracts related to a marriage be within the Statute of Frauds?
No. Only a promise in consideration of marriage (I.e., prenuptial and postnuptial agreements) --Note: a mere promise to marry is NOT subject to the S/F
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