TOPIC
(generally more strict; “old-school”)
FORMATION +
DEFENSES
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Terms: need essential à parties, subject
matter, price & quantity
Revocation: written revocation received
when it comes into possession of person
addressed or authorized to receive (or
rejection)
Option Contract: independent promise to
keep an offer open for a specified period
of time. Must give separate consideration
to be enforceable.
Counteroffer: is a rejection and creates a
new offer
Mirror-image rule: acceptance must
match terms of offer or else à
counteroffer / rejection
Consideration: Pre-existing duty rule à
promise to perform a preexisting legal
duty does not qualify as consideration b/c
promisor already bound to perform. Same
goes for past consideration
Modification: must be supported by
consideration! Agreements to modify may
be enforceable under certain cirs (p. 14 of
OL)
(sale of goods only & more liberal)
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Terms: only need quantity. UCC “fills
gap” for missing terms based on
reasonability (unless, SOF applies for
goods over $500. Then, need parties,
signature etc.)
Revocation: written notice received
when (i) it comes to person’s attention
or (ii) duly delivered in a reasonable
form @ acceptable place
Firm Offer: (no consideration needed!)
Need: (i) merchant offeror, (ii)
assurance that offer is to remain open
and (iii) assurance signed in writing by
offeror
Nonconforming goods: (UCC only!!)
generally both an acceptance of offer
and a breach unless sent with an
“accommodation notice”, then it is a
counteroffer that can be accepted for K
or rejected for no K.
Additional Terms: not automatically a
rejection. Just need “definite and
seasonable expression of acceptance
sent w/I a reasonable time even with
addt’l or diff terms”, unless it is
“expressly conditioned upon assent to
addt’l or new terms.” Then would be
counteroffer. (UCC 2-207)
o TWO STEP ANALYSIS!! First,
was there a valid
acceptance? If so,à valid K.
(see above definition)
o Second, do the new terms
come in? will come in if: (i)
both paries merchants, (ii) no
material alteration o/ deal,
(iii) initial offer did not
expressly limit acceptance to
those terms and (iv) offeror
does not reject/object w/I a
reasonable time.
Different terms: most use “knock-out”
rule à contradictions just knock e/o
out and UCC fills inany remaining gaps
reasonably.
Modification: need only good faith!
Warranties: UCC protects express and
implied warranties of goods (goods
must be fit for their ordinary purpose
unless disclaimer. See OL p. 30)
o Merchantability: implied
whenever seller is a
merchant.
o Fitness for particular
purpose: implied that goods
DISCHARGE
THIRD-PARTY
BENEFICIARIES
ASSIGNMENT OF
RIGHTS
STATUTE OF
FRAUDS
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Release: generally must be supported by
consideration to discharge duty
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Integration: “Four-corners rule” à stay
w/I document itself for evidence of intent.
If detailed ct probably conclude totally
integrated. Merger clause evidences
integration.
o [[2nd RSTMT approach: if
extrinsic term would naturally be
omitted from a writing, then can
be introduced so long as does
not contradict the writing. ]]
o
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PAROLE EVIDENCE
RULE
CONDITIONS AND
PERFORMANCE
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Doctrine of substantial performance:
states that a party will satisfy the CCE
(constructive condition of exchange) if
there is not a material breach
o Substantial performance only works
to satisfy CCE if the failure is not
willful
o If required to pay anyway (b/c only a
minor issue) can recover damages.
Measuredby cost to complete
performance (or sometimes lt’d to
diminution in value)
o Material breach? à maybe quasicontract theory
o Fail express condition à usually no
recovery!
Divisibility: if contract clearly divisible,
broken down into mini-contracts to
determine whether substantial
performance has occurred
are fit for certain purpose
whenever seller has reason
to know buyer has a
particular use for goods and
is relying on seller’s skill to
select the goods. (can be
disclaimed by writing that is
conspicuous)
Release: right or claim can be
discharged w/o any consideration by a
written waiver or renunciation signed
& delivered by aggrieved party.
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Integration: UCC presumes
that a written contract is only
a partial integration and
allows any consistent terms
unless a court concludes
parties “certainly” would
have excluded from contract.
Usually can bring in outside
evidence.
Trade Usage / Course of Dealings:
(allowed outside of original document)
If terms ambiguous or inconsistent w/
course of dealings, trade usage then
hierarchy is: (1st) express terms > (2nd)
course of dealings > (3rd) trade usage
Perfect Tender: perfect goods &
perfect delivery
o If not perfect and time left on
contract, or seller had reasonable
grounds to believe buyer would
accept a replacement, must give
seller chance to cure.
o Leeway for installment contracts
(piece by piece)
Risk of Loss: if goods damaged before
buyer gets them:
o 1st à contract will control if it
speaks to this
o 2nd If no K, & someone has
breached, breaching party bears
risk even if totally unrelated to
delivery damage
o 3rd If no breach & if shipment
contract à risk lies with buyer
but if destination contract à risk
lies with seller
o 4th, in all other cases where seller
is merchant, risk of loss stays w /
buyer until buyer receives goods.
If seller is not a merchant, risk of
loss moves to the buyer when the
seller tenders the goods
BREACH AND
REMEDIES
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Material Breach: allows the nonbreaching
party to withhold any promised
performance & pursue remedies for the
breach including damages.
o Minor breach à nonmaterial
breach remedies.
o Minor breach + anticip. Rep à
material breach
Expectation Damages: value of
performace w/o breach compared to
value of performance w / breach.
GENERAL FORMULA: loss in value + other
loss – cost avoided – loss avoided.
o Construction: diff b/t contract
price abd cisr if construction by
another company plus any
progress payments and comp.
for delay in completion.
o Real Estate: diff b/t contract
price & market value
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Material Breach: only comes into play
in installment contracts or when
parties provide for it in their contract.
GENERAL RULE is that seller must
strictly perform all obligations under
contract or be in breach!
Sale of Good Contract Damages:
measured by diff b/t contract price and
market value of goods (or cost of
cover)