Study UCC Art 2 Flash Cards
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Pile Management Card
UCC Art 2
UCC Art 2
| UCC: thief generally cannot pass good title |
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EXCEPT: - money - negotiable instruments transferred to a holder in due course - buyer has made accessions (improvements) to goods - true owner is estopped from asserting title (b/c represented that thief had title) |
| UCC: warranties |
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- warranty of title against infringement - implied warranty of merchantability - implied warranty of fitness for a particular purpose (any seller who knows buyer is relying) - express warranties |
| UCC: remedies |
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depends on rejection/acceptance/revocation ACCEPTANCE: - indication after reasonable opportunity to inspect - failure to reject or seasonably notify - anything inconsistent with seller's ownership right of rejection: keep and sue for damages or reject and cancel or sue - single delivery: buyer may reject all, accept all, accept any and reject rest - installment: buyer may reject IF nonconformity subs. impairs value of that installment and cannot be cured; whole contract is breached if subs. impairs entire contract - formal reqs.: w/in reasonable time, seasonably notify - buyer's responsibility for goods after rejection: must reasonably hold; may reship, store, resell if seller gives no instructions - seller's right to cure: w/in original time by giving reasonable notice and making new tender of conforming goods which buyer must then accept (may extend time if seller reasonably thought buyer would accept nonconforming goods); defective shipment in installment contract may NOT be rejected if can be cured - revocation of acceptance: w/in reasonable time after buyer discovers (or should have) defect and before subs. change - buyer's right to specific perf.: unique goods |
| UCC: risk of loss |
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ABSENCE OF BREACH: - noncarrier case: --merchant seller: passes to buyer ONLY upon buyer taking physical possession --nonmerchant seller: passes to buyer upon tender of delivery (ready) -carrier case: --shipment contract: passes to buyer when good duly delivered to carrier --destination contract: passes to buyer when tendered to the buyer at destination effect of breach: risk of loss does NOT pass until defects cured or acceptance despite * "sale or return": remains on buyer during return * "sale on approval": does not pass to buyer until acceptance |
| UCC: performance of the contract |
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- noncarrier contract: seller must put/hold goods at buyer's disposition, POD is seller's place of business absent agreement - carrier contract: seller obligated to deliver for shipment or to particular destination --shipment contract: seller has NOT agree to tender at particular destination --destination contract: seller has agreed to deliver to destination --FOB contract: FOB point is delivery point --FAS contract: seller must deliver alongside vessel in manner usual to port/dock designated by buyer |
| Parol Evidence Rule |
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terms may NOT be contradicted by evidence of prior or contemporaneous oral agreement EXCEPT terms may be EXPLAINED or SUPPLEMENTED by: - consistent additional terms - course of dealing - usage of the trade or business - course of performance * NO req. that term be ambiguous before allowing explanation by course of dealing, usage of trade, or course of performance |
| UCC: contract modification |
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- by agreement of parties * NO consideration req. if in good faith - by operation of law |
| UCC: defenses to contract formation |
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STATUTE OF FRAUDS: goods $500+, qty, signed by party charged (sued) --merchants: confirmatory memo suff. if recipient does not object w/in 10 days --writing NOT req. for specially made goods IF seller has started perf., merchant's written confirmation, party admit, or contract is performed UNCONSCIONABILITY |
| UCC: battle of forms |
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mirror image rule abandoned ANY acceptance or written confirmation showing intent to contract is effective - a nonmerchant: terms of offer govern - btw merchants: additional terms incl. UNLESS materially alter original contract, offer expressly limits acceptance to offer's terms, or offeror objects w/in reasonable time * compare: non-goods: acceptance w/ additional terms is REJECTION + COUNTEROFFER - acceptance w/ different terms: split auth. - effect of performance despite response req. consent to new terms: contract consisting of agreed terms - court may supply reasonable missing terms EXCEPT: qty |
| UCC: merchants' offer |
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common law: offers generally revocable unless consideration given to keep open UCC: written offer signed by merchant giving assurance that it will be help open is IRREVOCABLE w/o consideration for stated period or reasonable time not more than 3 months |
| Breach of contract and available remedies |
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minor breach: damages, but other party must still perform VS. material breach: performance excused materiality tests: - amount of benefit received - adequacy of compensation for damages - extent of part performance - hardship to breaching party - negligent, willful behavior of breaching party - likelihood that breaching party will perform * timeliness must be essential REMEDIES: - damages (compensatory, consequential, nominal, punitive, liquidated): expectation, or reliance if expectation speculative; duty to mitigate; liquidated damages must be reasonable when est. (UCC: can consider actual damages) - specific performance (unique subject matter, NOT incl. services--may use injunction) * equitable defenses: laches (prejudicial delay in bringing action), unclean hands, sale to BFP - rescission - restitution (quasi-contract alternative) |
| Interpretation and enforcement of contract |
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- P must prove conditions precedent have been met - D must prove conditions subsequent have cut off duty (but court has discretion to shift burdens) conditions may be EXCUSED: - failure to cooperate - actual breach - anticipatory repudiation IF there are executory (unperformed) duties on both sides: nonrepudiating party may sue immediately, suspend performance and wait until performance due to sue, offer to rescind and treat contract as discharged, or ignore repudiation and urge performance (but can still sue); repudiation may be retracted until accepted or detrimentally relied on - prospective inability or unwillingness to perform (RPP standard); other party may suspend performance until adequate assurances made, failure to make assurances may be treated as repudiation - subs. performance: no forfeiture for unintentional minor breach of constructive condition (liable for damages) NOTE: in sale of goods, UCC "perfect tender rule" subject to right to cure - divisibility of contract (in installment contract: defect must impair entire contract in order to support total breach) - waiver (may be retracted unless relied on; if no consideration given, must be collateral or else treated as unenforceable gift; waiver does not cut off right to damages) or estoppel - impossibility, impracticability, frustration duty to perform may be DISCHARGED: - performance or tender of performance - condition subsequent - illegality - impossibility (e.g., death, unless services delegable; destruction of subject matter; law rendering subject matter illegal), impracticability, frustration - rescission (mutual: executory on both sides, uni: if adequate legal grounds) - partial discharge by modification (req. mutual assent) NOTE: UCC permits modification to sale of goods w/o consideration if in good faith - novation (req. new contract) - cancellation - release (req. in writing w/ new consideration or promissory estoppel) - substituted contract - accord (a party agrees to accept different performance, req. consideration) and satisfaction (discharges accord and original debt) - account stated (if >1 prior transaction) - lapse (discharges) - operation of law - running of Statute of Limitations (makes unenforceable) |
| Rules of contract construction and Parol Evidence Rule |
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- courts may look to custom when term unclear - terms construed against preparer party absent intent - PAROL EVIDENCE RULE: evidence of prior or contemporaneous negotiations and agreement that contradict, modify, or vary terms are INADMISSIBLE EXCEPT: --formation defects (fraud, duress, mistake, illegality) --existence of condition precedent --intent regarding ambiguous terms --consideration problems --prior valid agreement incorrectly reflected in the writing --collateral agreement IF it does not contradict, vary terms --subsequent modifications |
| Rights and duties of nonparties to contract |
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THIRD-PARTY BENEFICIARIES - intended (may be identified, receives performance, relationship to promisee): creditor or donee - incidental - req: manifest assent, bring suit to enforce, or materially change position in justifiable reliance - may sue: promisor (both), promisee (creditor only, or donee w/ detrimental reliance); promisee may sue promisor ASSIGNMENT OF RIGHTS - all rights may be assigned except there duty would be subs. changed, future rights in future contracts, where prohibited by law - no consideration req. - irrevocable if for consideration - gratuitous assignment is revocable unless obligor has performed, detrimental reliance, etc. - may sue: obligor, assignor (for wrongful revocation) DELEGATION OF DUTIES - all duties may be delegated EXCEPT involving personal judgment/skill, changes to obligee's expectancy, special trust, contractual restriction - req. manifestation of intent, oral or written - delegator remains liable on the contract for nonperformance * distinguish NOVATION: substitute of new party, req. assent of all parties and releases original party |
| Defenses to enforcement |
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STATUTE OF FRAUDS: agreement must be in writing if --promise by executor or administrator to pay debts out of own funds --promise to answer for debt or default of another --promises made in consideration of marriage --promises creating interest in land --promises that cannot be performed within 1 year --agreements for sale of goods for $500+ EXCEPT: specially manufactured, written confirmation of oral agreement between merchants, admission in pleadings that contract existed, partial payment or delivery made and accepted [marriage, >year, land, exec/admin, goods $500+, surety] REQS: --identity of parties --contract's subject matter --terms and conditions --recital of consideration --signature of party to be charged or agent SoF NOT applicable: --admission in court --sale of goods: part payment or acceptance and receipt of part of goods to that extent UNCONSCIONABILITY: at time made --sale of land |
| Requirement that no defenses exist: defenses based on lack of capacity |
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- <18 - insane - intoxicated - duress and coercion |
| Requirement that no defenses exist: defenses to formation |
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ABSENCE OF MUTUAL ASSENT - mutual mistake about basic assumption that has material adverse effect and adversely affected party did not assume the risk (NOT incl. mistake of value w/ exceptions) - unilateral mistake IF other party should have known - mistake by intermediary IF other party should have known - latent ambiguity: NO contract UNLESS both parties intended same meaning or binding on ignorant party's reasonable belief - misrepresentation: VOIDABLE if justifiably relied upon (or VOID if fraud in factum) ABSENCE OF CONSIDERATION PUBLIC POLICY DEFENSES: ILLEGALITY OF CONTRACT - illegal consideration or subject matter: void - illegal purpose: voidable |
| Consideration: elements |
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- bargain (bi:promises or uni:promise for act) - legal value "bargained for": --NOT a gift --may be act, forbearance --NO econ benefit req. --NO past or moral consideration (EXCEPT: new promise or if past act based on request) "value" --detriment generally req. --preexisting legal duty insuff. (w/ EXCEPTIONS) substitutes for consideration: promissory estoppel or detrimental reliance (if reasonably expected) |
| Unilateral contract |
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offeree must know of offer to accept it no duty to notify about starting performance unless specified |
| Acceptance |
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- offeree w/ power of acceptance - unequivocal terms of acceptance * - communication of acceptance * UCC: need not mirror unless conditional on new terms --a non-merchant: terms of offer govern --btw merchants: ADDITIONAL terms become part of contract UNLESS they materially alter the agreement or the offer expressly limits acceptance to offer terms or offeror objects w/in reasonable time to additional terms (additional terms ONLY become part of contract if offeror expressly assents) * distinguish DIFFERENT terms: may be treated as additional or replaced by UCC terms ** if offeror's form contains objection to new/inconsistent terms and offeree's responses proposes new terms and states that response is not acceptance unless offeror expressly consents, then NO CONTRACT arises UNLESS performance begins--contract consists of all terms agreed on + supplementary terms supplied by UCC acceptance: by any reasonable means - "mailbox rule" effective at dispatch unless specified otherwise; does not apply to option contract - rejection then acceptance sent: whichever arrives first - acceptance then rejection sent: acceptance, unless rejection arrives first and offeror detrimentally relies |
| Termination of offer |
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- by offeror: revocation (communicates or acts inconsistently and offeree receives info; if not supported by consideration, offer may revoked at will anytime) --limits: option contract, firm offer under UCC (signed writing by merchant), detrimental reliance; or offeree in unilateral contract has embarked on performance - by offeree: express rejection or counteroffer (=rejection + new offer) (effective when received) - lapse of time - by operation of law: death, insanity (need not be communicated), destruction of subject matter, supervening illegality |
| Offer requirements |
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- EXPRESSION OF PROMISE, undertaking, or commitment to enter into a contract - DEFINITE & CERTAIN TERMS (identification of offeree, definiteness of subject matter: real estate--land, price, sale of goods--qty, employment--duration; court may supply reasonable missing terms consistent w/ intent) - COMMUNICATED TO OFFEREE |
| Creation of a contract |
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- mutual assent (offer and acceptance) - consideration (or substitute) - no defenses to formation |
| Types of contract |
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classified by how formed and how accepted classified by formation - express (language, oral or written) - implied (formed by manifestations of assent) quasi-contract (implied in law): NOT a contract--way to avoid unjust enrichment classified by acceptance: - bilateral (exchange of promises) - unilateral (require exchange of act for promise): performance is only manner of acceptance or an offer to the public * void contract: w/o legal effect from start (e.g., to commit a crime) * voidable contract: party may elect to avoid or ratify (e.g., by a minor) * unenforceable contract: valid but for which a defense exists (e.g., Statute of Frauds) |
| Law governing contracts |
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common law for sale of goods: UCC Art. 2 + common law |
| Contract: definition |
| promise(s) for breach of which law gives a remedy, or performance of which law recognizes as a duty |
| Most important topics |
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- Statute of Frauds - Parol evidence rule - Money damages - Revocation of offer - Rejection of goods / revocation of acceptance of goods - Delegation / novation - Warranty - Third party beneficiary - Rejection of offer |
| life cycle of contract |
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- making deal - doing deal - excusing not doing deal - compensating if deal neither done nor excused |
| Disputes arising from a person's performing a contract they did not make: delegation of duties |
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(NOT novation because only 1 party acts) - hypo may include assignment and delegation - delegation for consideration where original performer still collects pay - "no assignments" incl. delegations - non-delegable duties: very special skills, special reputation, or by contract language - if delegatee does not perform: delegating party liable; delegatee liable ONLY if receives consideration |
| Third party problems: person trying to enforce a contract they did not make: assignment of rights |
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transfer of rights under a contract in 2 steps: - contract makes no mention of anyone else - then a party transfers rights to someone else NOTE: - consideration NOT required, but gratuitous assignment revocable - after assignment: assignee can recover from obligor - assignor for consideration has NO rights - payment by obligor to assignor is effective until obligor knows of assignment - assignor: makes warranty that right exists, but NOT of what obligor will do - multiple assignments: --gratuitous: last-in-time rule --assignee for value: first assignee wins UNLESS later assignee receives first and does not know LIMITATIONS: - language of PROHIBITION: makes assignment a breach of contract, but assignment is still valid: beneficiary w/o knowledge of limitation may still recover against promisor (who then may recover against promisee) - language of INVALIDATION: takes away both right to assign and power to assign (beneficiary has NO rights) COMMON LAW: even w/o limit, can NOT make assignment that substantially changes the obligor's duties |
| Third party problems: person trying to enforce a contract they did not intend to make: third party beneficiary |
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- intended beneficiary must be named in contract - assumption: donee beneficiaries (unless donee was already a creditor) - test: whether third party knows of and has relied on or assented as requested (rights have vested and contract cannot be canceled or modified without consent unless contract otherwise provides) * beneficiary can recover from promisor * promisee can recover from promisor (but not both!) * beneficiary can NOT recover from promisee EXCEPT: creditor beneficiary on pre-existing debt DEFENSES: promisor can assert defense that they would have against promisee against beneficiary |
| Excuse by reason of later contract |
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RECISSION (cancellation): req. that performance still remains - NO recovery if P's performance complete (maybe under quasi-contract) ACCORD & SATISFACTION (substituted PERFORMANCE): may recover on original or later agreement if not performed MODIFICATION (substituted AGREEMENT): NO recovery on original agreement! NOVATION (substituted PERSON): both parties agree to substitute of new party (same perf.) * distinguish from DELEGATION: does NOT require agreement of both parties and does NOT excuse |
| Excuse because of non-occurrence of a condition |
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express condition: based on language in contract does NOT create a new obligation (merely limits obligations) CONDITIONAL ACCEPTANCE (NOT a contract) vs. CONDITION (in contract) |
| Death after contract |
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contract NOT excused EXCEPT: - if deceased D is a special person (i.e., contract now cannot be performed) - subsequent law/regulation makes performance illegal (excuse by impossibility) - subsequent law/regulation makes understood purpose illegal (excuse by frustration of purpose) |
| Excuse of performance by reason of later, unforeseen event |
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later unforeseeable occurrence makes performance impossible, commercial impracticable, or frustrates purpose - focus on: which party arguing excuse and effect on post-contract occurrence on performance - focus on whether performance still reasonably possible NOTE: * seller's risk of loss/destruction: excuse still available but ONLY if impossible or impracticable to perform * buyer's risk of loss/destruction: NO excuse after risk has passed |
| Insecurity |
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w/ reasonable grounds for insecurity, P may make written demand adequate assurance - if commercially reasonable, P may suspend performance until adequate assurance given |
| Excuse of performance by reason of other party's anticipatory repudiation |
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unambiguous statement or conduct indicating that repudiating party will not perform prior to time performance due - generally gives rise to immediate claim for damages for breach unless claimant has already finished performance - may be timely reversed/retracted and duty to perform is reimposed IF adequate assurance given and $ put in escrow |
| Excuse of conditions (i.e., condition extinguished, so remaining contract obligations NOT excused) |
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- waiver/estoppel - prevention - avoidance of forfeiture (awarded by court to avoid excessive harm to party not protected by condition) * apply to conditions PRECEDENT & SUBSEQUENT |
| Excuse of nonperformance because of post-contract event |
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- other party's improper performance: damages recoverable for any breach, BUT material breach required to excuse other party's performance (NO subs. performance done) * COMMON LAW multiple-services contract: stopping <50% done is a material breach (use quasi-contract to recover) EXCEPT: divisible contract (if stated on per-service basis) vs. * UCC perfect tender rule: breach need NOT be material |
| Damages rules for sale of goods (Art. 2) |
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- seller breaches, buyer keeps: FMV or value as delivered (buyer gets benefit of bargain) - seller breaches, seller keeps: FMV at time of discovery of breach-contract price or replacement price-contract price - buyer breaches, buyer keeps: contract price - buyer breaches, seller keeps: contract price-FMV at delivery or contract price-resale price; may be lost profits * lost profits for lost volume seller |
| Consequential damages |
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damage that is special to particular P AND: D had reason to know of special circumstances LESS: avoidable damages (burden of pleading, proving avoidable damages is on D) w/ CERTAINTY limitation (may use reliance or liquidated damages) - P has duty to mitigate BUT D must prove - distinguishable from general damages (expectation) * common issue: whether liquidated damages too high (purpose is to fairly compensate P)--must be difficult to forecast and forecast must be reasonable |
| Incidental damages |
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ALWAYS recoverable - NO foreseeability req. - NOT based on replacement costs--based on costs in FINDiNG replacement |
| Expectation damages |
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NOT actual expectation--it is whatever amount good, etc., is worth in the absence of breach (i.e., may be higher/lower than actual expectation value) - if seller breaches (does not deliver), expectation = FMV of good, service, etc. at time of breach (comparable replacement) - if buyer breaches (fails to pay), expectation = contract price (even if goes up/down) |
| Remedies for breach |
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money damages: - EXPECTATION: costs + expected profit - reliance: put P in same pre-contract position - restitution: benefit to D awarded to P |
| Remedies: nonmonetary (in rem) |
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SPECIFIC PERFORMANCE/INJUNCTION (equitable remedy): real estate (unless sold to BFP), unique goods, NOT services (maybe injunction) RECLAMATION : right of unpaid seller to get goods back IF (i) buyer insolvent at time of receipt, (ii) seller demands return within 10 days (or reasonable time if buyer had made express representation of solvency before delivery), (iii) buyer still has goods at time of demand RIGHTS OF BUYER IN ORDINARY COURSE OF BUSINESS IN ENTRUSTMENT (if P leaves property with D who sells that good in OCB, then later BFP wins over original owner, P must sue D) |
| Remedies: money damages |
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EXPECTATION: expecting no breach (compare dollar value in / not in breach) CONSEQUENTIAL |
| Performance: common law vs. UCC |
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common law: subs. performance - if one party subs. performs, then other party must pay OR perform UCC: perfect tender - in sale of goods contract, if seller makes a perfect tender, then buyer must perform by paying contract price |
| Contracts: performance (UCC Art. 2 only) |
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- PERFECT TENDER (ONLY applies to sales of goods): gives buyer option to reject - REJECTION of goods (vs. rejection of offer!): buyer may reject all/non-conforming or retain and sue for damages (limited by cure, installment contract, and acceptance) - CURE (if seller has reasonable grounds to believe that improper tender would be acceptable or there is still time to fix) - INSTALLMENT SALES CONTRACT: requires or authorizes delivery of goods in separate lots to be separately accepted (not just installment payments); buyer may only reject where there is subs. impairment that cannot be cured (i.e., perfect tender not applicable) - ACCEPTANCE of the goods: cannot be later rejected (note: payment without opportunity for inspection is not acceptance, but keeping goods without inspection IS acceptance) - REVOCATION OF ACCEPTANCE of the goods: for nonconformity that subs. impairs value AND excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction AND revocation within a reasonable time after discovery of nondiscovery |
| UCC: terms of sales of goods contracts - warranties of quality |
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- express - implied warranty of merchantability: seller is a merchant (warranty is that goods are fit for ordinary purposes) - implied warranty of fitness for a particular purpose: buyer has particular purpose, relies on seller, seller has reason to know purpose and reliance - Art. 2A warranties on leases: lessor of personal property makes same warranties as seller (express, merchantability, fitness) BUT: in a "finance lease" the lessor (bank) is protected - privity (vertical, horizontal) * implied (but NOT express) warranties may be disclaimed (e.g., "as is") BUT: remedies may be limited for all warranties (test: unconscionability--prima facie case if breach of warranty on consumer goods causes personal injury) |
| UCC: terms of sales of goods contracts ("default" terms) - risk of loss |
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risk of loss (after contract entered into, goods damaged in transit and neither buyer nor seller is to blame) rules: - agreement controls - breaching party liable for any uninsured loss even though breach is unrelated to problem - delivery by common carrier other than seller: risk of loss shifts from seller to buyer at time that seller completes delivery obligations - no agreement, no breach, no delivery by carrier: --merchant seller: risk of loss shifts to buyer upon receipt of goods (physical possession) --non-merchant seller: risk of loss shifts when he tenders goods |
| UCC: terms of sales of goods contracts ("default" terms) - delivery obligations of seller of goods if delivery by common carrier |
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delivery obligation of seller if by common carrier: - SHIPMENT contract: seller must get goods to common carrier, make reasonable arrangements for delivery, notify buyer (seller completes delivery obligation BEFORE delivery is completed) - DESTINATION contract: seller does NOT complete delivery until goods arrive where buyer is |
| Conduct & course of performance |
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can be source of contract terms - course of performance (same people, same contract) - course of dealing (same people, similar contract) - custom & usage (similar people, similar contract) |
| Parol evidence rule |
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triggering facts: - written contract that court finds is the final agreement AND - oral statement made at time contract was signed OR earlier oral/written statements by parties to the contract offered to CONTRADICT the written deal - rule prevents admitting evidence of earlier agreement to contradict terms of written contract (EXCEPT: mistake in integration) - does NOT affect post-contract statements * does NOT apply to DEFENSES to contract (i.e., terms themselves NOT DISPUTED), explaining terms in written deal, adding to written deal (if partially integrated or additional terms would ordinarily be in a separate doc) |
| Contracts: terms: parties' word & parol evidence rule terms |
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parol evidence: words of parties that came before integration (put in writing); may be ORAL or WRITTEN issue: admissibility (NOT persuasive, etc.)--look at purpose for which it is offered: treat as evidence question terms: - integration: there is a written agreement that was intended to be final ("partial" or "complete": wrong answer!) - merger: contract clause that it is the complete/final agreement (persuasive, but not conclusive) - reformation: equitable action to modify written contract |
| Statute of Frauds: other reasons for not enforcement an agreement |
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- ILLEGALITY: subject matter - PUBLIC POLICY: e.g., exculpatory agreement that exempts intentional or reckless conduct from liability or a covenant not to compete without a reasonable need/time/limit - MISREPRESENTATION: false assertion + inducement--NO wrongdoing required!! (NOTE: damages=torts, misrepresentation=rescind contract) - NON-DISCLOSURE: wrongful - DURESS: physical or economic (requires: improper threat + no reasonable alternative/vulnerability) - UNCONSCIONABILITY: unfair surprise (procedural) + oppressive terms (substantive) when made * Art. 2A: court may grant relief from consumer lease even though no provision is unconsionable if there is unconscionable conduct in inducing/enforcing the lease - AMBIGUITY: (Peerless) material term w/ 2+ meanings, parties have different meanings, neither has reason to know - MISTAKE: (unilateral or mutual) incorrect belief as to facts not based on what other party has said or what contract says; requires: both parties mistake, basic assumption of fact, materially affects agreed exchange, and not a risk that party trying to get out of deal bears (distinguish "misunderstanding" which focuses on words in contract and "misrepresentation" which focuses on words before contract) GENERALLY: focus on process that led to agreement or language |
| Statute of Frauds: contract modification |
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writing required if deal with alleged change would be within SoF (otherwise not) * if agreement is in writing and requires that all modification be in writing: - common law: IGNORE the requirement - UCC: effective unless waived |
| Statute of Frauds topics |
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- defenses - authorization to act on behalf of another |
| Statute of Frauds: authorization to act on behalf of another |
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equal dignity: written proof of authority to act on behalf of someone else is needed - for periods of >1 yr (leases for 1 yr or less must be in writing) |
| Statute of Frauds: Art. 2 sale of goods |
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Art. 2: writing must indicate that there is a contract for sale of goods and contain qty term (NO requirement that the writing indicate the price) * must have writing signed by D in order to preclude D's defense to SoF EXCEPT: if merchant D fails to respond to merchant P's signed writing Art. 2A: lease of personal property: writing must (i) indicate that it is a lease, (ii) describe what is being leased, (iii) state duration of the lease |
| Statute of Frauds: satisfaction |
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may be satisfied by: - performance - writing (requirements: content (common law: who & what), identification of signor) - judicial admission |
| Statue of Frauds: writing |
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if anything other than sale of goods, then there is an ALL-MATERIAL-TERMS TEST (who & what) * alleged contract must be signed by person asserting contract |
| Statute of Frauds: sale of goods contract |
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- PART performance of sale of goods contract satisfies SoF ONLY to extent of part performance (i.e., defense still exists to extent of undelivered goods) * specially manufactured goods: - seller's substantial beginning negates defense to SoF * buyer's part performance: - multiple items: ANY payment satisfies SoF to extent of payment portion - single item: ANY payment satisfies SoF entirely |
| Statute of Frauds: satisfaction |
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- FULL performance by either party satisfies SoF - PART performance of a services contract does NOT satisfy SoF (but recovery under quasi-contract) |
| Statute of Frauds |
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special proof that contract exists: - performance - writing signed by person asserting that there was no such agreement issues: - is contract within SoF? - is SoF satisfied? - is there a SoF defense? SoF covers: - promises to guarantee the debts of another (suretyship) (i.e., if someone else does not pay--NOT mere promise to pay) * main purpose EXCEPTION: if main purpose of obligation allegedly guaranteed was to benefit the guarantor, then guarantee is not within SoF - promises by executor to guarantee personally the debts of decedent - promise in consideration of marriage - contract that cannot be performed within 1 year - specific time, >1 year from date of contract - transfer of interest in real estate (promise to sell property, easement, promise to lease) - sale of goods for $500 or more NOT covered: - tasks because capable of being performed within 1 year - contracts for life - promises to lease for 1 year or less * Art. 2A: leases < $1000 total |
| Capacity |
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- infant (under 18) - mental incompetents (lacks ability to understand agreement) - intoxicated persons (if other party has reason to know) consequences: - right to disaffirm (avoid contract liability) by person without capacity - implied affirmation by retaining benefits after gaining capacity (ratification) - quasi-contract liability for necessaries (person who lacks capacity is legally obligated to pay for necessaries, but agreed upon price does not control because not treated as true "contract"--it is the value of the benefit provided) |
| Consideration substitutes |
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- seals - written promise to satisfy an obligation for which there is a legal defense is enforceable without consideration - promissory estoppel (***MA): --promise --reliance that is reasonable, detrimental, foreseeable --enforcement necessary to avoid injustice |
| Consideration |
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- identify the promise-breaker - whether person asked for something in return - legal detriment forms of consideration: - performance - forbearance - promise to perform (EXCEPT illusory) - promise to forbear * adequacy of consideration NOT relevant! NOT consideration: - past consideration (EXCEPT expressly requested act AND expectation of payment) - COMMON LAW: preexisting contractual/statutory duty rule (EXCEPT: addition/change in performance, unforeseen difficulty so severe to excuse performance, third party promise to pay) vs. Art. 2: no new consideration required to modify sale of goods in good faith - partial payment is NOT consideration for release of debt IF it is due and undisputed |
| Formation |
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reasons agreement may not be legally enforceable: - lack of consideration - lack of capacity - statute of frauds - existing laws that prohibit performance of the agreement - public policy - misrepresentations - nondisclosure - duress - unconscionability - ambiguity in words - mistakes at time of agreement as to material facts |
| Acceptance: who may accept? |
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only person who knows of offer may accept (rewards) or person to whom offer is made offers cannot be sold or assigned BUT: options can be assigned/sold unless option otherwise proivde |
| Acceptance: seller of goods sends "wrong" goods |
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if seller sends wrong goods, it is treated as acceptance in breach EXCEPTION: accommodation--i.e., explanation (counteroffer and NO breach) |
| Acceptance: mail box rules |
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- people in different places - communicating in way that involves delay - miscommunication acceptance is effective when mailed (all other communications effective only when received--e.g., if rejection is mailed first, it controls if received before a later-mailed letter of acceptance) NOTE: cannot use mail box rule to reach an option deadline (must be received by deadline, not just mailed in time) |
| Acceptance: offeree promises to perform |
| always acceptance |
| Acceptance: offeree starts to perform |
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start of performance is always acceptance but NOT in unilateral contracts (require complete performance) |
| Acceptance: offeree fully performs |
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full performance is always acceptance BUT obligations under contract (excuse) turn on whether notice of performance is required: depends on what offer requires or whether offeree has reason to believe that offeror will not learn of acceptance |
| Acceptance: improper verbal response |
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common law: treated as counteroffer and acceptance, with additional term Art. 2: treated as new contract based solely on conduct and additional term is NOT part of contract |
| Art. 2-207 |
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"battle of the forms": additional terms still acceptance if at least one party is NOT a merchant, then additional term is merely a proposal; but if both parties are merchants, then additional term IS part of the contract (if does not materially change the offer) and the offeror must object * but if additional term is EXPRESS requirement, then no acceptance (conditional acceptance) |
| Revocation |
|
- requires offeree awareness - multiple offers are NOT revocation - revocation sent by mail is NOT effective until received - offer not revocable after acceptance offer is NOT revocable where: - OPTION (promise not to revoke that is paid for: irrevocable for period, then revocable--but NOT yet "revoked") - FIRM OFFER RULE (special Art. 2 rule): offer cannot be revoked for up to 3 months if (i) offer to buy/sell goods (e.g., not a house), (ii) signed, written promise to keep the offer open i.e., not revoke), (iii) party is a merchant (NO requirement of payment); court will fix time (3 months, or whatever reasonable) if not mentioned, but MUST include promise not to revoke - RELIANCE THAT IS REASONABLY FORESEEABLE AND DETRIMENTAL - START OF PERFORMANCE TO ENTER UNILATERAL CONTRACT (not incl. mere preparation--but it may trigger reliance rule) |
| Contract: termination |
|
offer cannot be accepted if it has terminated - LAPSE OF TIME (stated or reasonable) - DEATH of a party prior to acceptance (EXCEPT: option, part performance of offer to enter into unilateral contract) - WORDS/CONDUCT of offeror to offeree or inability known to offeree (revocation: requires offeree awareness; multiple offers are NOT revocation; revocation sent by mail is NOT effective until received; offer not revocable after acceptance) - REJECTION (may be indirect: counteroffer, conditional acceptance, mirror image rule: additional terms (but see 2-207); but bargaining preserves offer) |
| Advertisement |
|
NOT an offer EXCEPT: - if in the nature of a reward ("$100 to whoever uses product and gets sick") - if specific as to qty and expressly indicates who may accept ("X for sale, first come, first served") broad definition: e.g., store has $10-shirt sign up, YOU make OFFER when you hand over $10 and shirt for purchase because store has not made offer |
| Contracts: increase in requirements |
| buyer can increase requirements so long as increase is in line with prior demands--not unreasonably disproportionate |
| Outputs contract |
|
seller committing to sell all that it produces - enforceable because of exclusivity |
| Requirements contract |
|
buyer is committing to buy all requirements - enforceable because of exclusivity |
| Contract: offer |
|
manifestation of commitment - NOT about actual intent/"meeting of minds" - NOT required to contain all material terms, but price term required in sales contract EXCEPT for sales of goods (Art. 2 does not require price in offer) - vague/ambiguous MATERIAL terms NOT an offer under common law OR Art. 2 ("appropriate, fair, reasonable") |
| Contract formation |
|
- OFFER (manifestation of commitment) - TERMINATION OF OFFER - ACCEPTANCE (who/how responds) |
| Art. 2A |
|
applies to leases of GOODS (cars, equipment--NOT apartments, buildings) * NOT on MBE, but may be on MA similar to Art. 2 in controversies involving lessor/lessee; similar to Art. 9 in default by lessee or priority contests between lessor/third parties |
| UCC Art. 2 |
|
governs contracts that are primarily sales of GOODS; factors: - type of transaction (sale) - subject matter: goods (tangible, personal property) --NOT real estate, services --MIXED contracts: all-or-nothing-rule (Art. 2 applies IF more important part of contract is about goods) --contract DIVIDES payment: all-or-nothing does NOT apply--apply Art. 2 to good part * Revised Art. 2 is NOT on MBE or MA |
| Contracts law |
|
- common law (cases) - UCC Art. 2 |
|
Unilateral contract vs. Bilateral contract |
|
results from offer that expressly requires performance as only possible method of acceptance vs. all other contracts i.e., contract is bilateral UNLESS: - reward, prize, contest - offer expressly requires performance for acceptance |
| Quasi contract |
|
equitable remedy elements: - P has conferred a benefit on D, AND - P reasonably expected to be paid, AND - D realized unjust enrichment if P not compensated measure of recovery: - NOT K price - focus on value of benefit conferred (K price is a ceiling if P is in default) |
| Contract |
| legally enforceable agreement |
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