CONTRACTS - Flashcards on page 1
CONTRACT and AGREEMENT Contract: a promise or a set of promises for the breach
of which the law gives remedy...(Rest.1).
Agreement: a manifestation of mutual assent, usually termed
a “bargained-for-exchange” of promises or performance by
the promisee.
Note: assent is measured by a more objective standard,
focusing on the manifested words or conduct of the parties. The
old “meeting of the minds” test is now used only with the issue
of “Mutual mistake”.
OFFER
Offer: a manifestation of a willingness to enter into a
bargain, so made as to justify another person in understanding that his assent to that bargain
is invited and will conclude it (Rest 24).
Test: objective standards. Ask: could another person
reasonably believe that by assenting to the terms of the offer an
enforceable bargain will be concluded?
Elements:
1. Present Contractual Intent
2. Certainty and Definiteness
3. Communication to the Offeree
Effect: creates the power of acceptance.
CONTRACTS - Flashcards on page 2
PRELIMINARY
Rest 26: no offer is created if the person to whom it is
NEGOTIATIONS
addressed knows or has reason to know that the person
making it does not intend to conclude a bargain until he has made a further manifestation
of assent.
Likely situations:
_ Expression of Future Intent
– Requests for Quotations
– Invitation to Negotiate
– Advertisements, circulars, price quotes
– there must ordinarily be some language of
commitment or some invitation to take action
without further communication...for there to be
an offer (Rest. 26, comment b).
Note: also no offer for “words made in jest” and social
arrangements. “Domestic relation” contracts only if actual
performance.
CERTAINLY & DEFINITENESS Terms of offer must be reasonably certain and
definite.
Must provide a basis for determining the existence of a breach
and for giving an appropriate remedy.
An offer must be certain and definite as to:
1. Parties
2. Subject matter
3. Time and Manner of Performance
4. Price
More definiteness required when specific performance is
sought.
For U.C.C. transactions in goods, only the quantity must be
stated. Other terms can be explained or supplied by course of
dealing, usage of trade, course of performance, or “gap filing”
provisions on time, price, delivery, etc. (e.g., see 2-305,
2-308, 2-309).
CONTRACTS - Flashcards on page 3
COMMUNICATION to OFFEREE
An offer must be communicated to an offeree.
The offeror is the master of his offer, but the objective
reasonable person test is used to determine to whom the offer is
made.
General offers may be accepted by any member of the general
public.
Offeree must know of offer (especially for private rewards).
Exception: rewards made by a governmental body. Government
agents (police, firemen) cannot collect rewards.
OFFER TERMINATORS
By Act of the Parties
By Operation of Law
Offers Terminated by Acts of the Parties
Revocation of the Offer
Counter-offer
Rejection
Offers Terminated by Operation of Law
Lapse of Time
Death or Incapacity
Impossibility and Illegality
Note: offers can also be terminated by the terms of the offer
itself.
CONTRACTS - Flashcards on page 4
REVOCATION OF OFFERS
the proposed contract.
Definition: communication of intention not to enter into
Effective upon receipt, terminates the offer, and takes away
the power of acceptance.
A revocation after acceptance is ineffective.
Indirect revocation: effective if 1) offeror has taken definite
action inconsistent with continuing the offer, and 2) offeree
acquires reliable information to that effect (something more
than mere rumor).
General offers can be revoked with public notice equal to that
given the original offer.
Revocation of offers is limited by:
1. “Firm offer” rules, and
2. Unilateral contract rules (Rest.45).
FIRM OFFERS
Under common law, known as option, always
revocable unless supported by consideration.
Modern position is the same – with the notable exception of
firm offers made by merchants in writing for sale of goods
(U.C.C. 2-205).
2-205
Offers by merchants in a signed writing are not
revocable during the time stated, or if no time is stated,
for a reasonable time. In no event can time exceed three
months without consideration. Forms supplied by
offeree must be separately signed by offeror.
Note: under Rest. 87(1) a firm offer in writing which recites a
purported consideration is irrevocable.
CONTRACTS - Flashcards on page 5
OPTION CONTRACTS
Unilateral contracts are treated as option contracts
under
(Unilateral Contracts)
Rest. 45. They invite acceptance by performance alone
– not promises. Note: presumption is that an offer is for a bilateral contract (Rest. 32)
Until the beginning of performance, offeror retains the
power to revoke the offer.
Distinguish between beginning performance and simply
preparing to begin. Preparations alone could give rise to a
reliance argument [Rest. 87(2)], providing for damages as
justice requires.
Major consequences:
1. the inability to revoke the offer once performance
has begun, and
2. the fact that no contract is formed until
performance is complete.
COUNTER-OFFERS
Under common law, an acceptance had to be a mirrorimage of an offer. Any variation was held to be a counter-offer and deemed to be a
rejection of the offer (and therefore an offer terminator).
Mirror-image rule retained under Rest. 39, but true counteroffers must be distinguished from acceptances which request
changes or additional terms (Rest. 61).
Acceptance which request changes will conclude a contract
unless acceptance of the changes or additional terms is
required.
Changes or additional terms are often deemed “proposals for
addition to the contract” – leaving the acceptance as valid
(U.C.C. 2-207).
CONTRACTS - Flashcards on page 6
REJECTION
offer.
Definition: any manifestation by the offeree not to accept an
Serves to terminate original offer and power of
acceptance.
Test for rejection: objective – could the offeror reasonably
interpret the offeree’s response to be a rejection?
No revival of acceptance after a rejection.
LAPSE OF TIME
When offer provides for time of acceptance, power
of acceptance is lost when the specified time has expired.
If time for acceptance is not expressly stated, power of
acceptance is terminated at the end of a reasonable time (Rest.
41), depending on all the circumstances existing when the offer
and attempted acceptance is made.
Likely situations to raise lapse of time as an offer terminator
include:
1. rewards for criminals (the statute of limitations
period controls),
2. direct negotiations (end of conversation),
3. offers by mail or telegram (reasonable time),
4. speculative or volatile markets (short time).
CONTRACTS - Flashcards on page 7
DEATH and INCAPACITY
of
(As Offer Terminators)
Death or Incapacity of either party terminates power
acceptance (Rest. 2d 48).
Incapacity includes infancy, legal guardianship, mental
illness, and intoxication.
Major exception:
1. option contracts – part performance
suspends
offeror’s power to revoke,
2. options supported by consideration, and
3. 2-205 firm offers by merchants in writing.
Impossibility due to destruction of the subject matter or
supervening legal prohibition are also offer terminators. After
acceptance, impossibility becomes a defense.
ACCEPTANCE
Definition: a manifestation of assent to the terms of the
offer in a manner invited or required.
Manner of Acceptance: usually, any reasonable
manner,
but a particular mode of acceptance may be required by the
offer itself.
In case of doubt, the offeree may chose to accept either by
promising to perform, or by rendering the requested
performance (Rest. 32).
Methods of Acceptance:
1. By promise to perform, or
2. By performance
CONTRACTS - Flashcards on page 8
ACCEPTANCE BY PROMISE
Promise is effective upon dispatch (the mailbox rule)
if mailing is a proper means of acceptance.
Things to consider:
1. did offeror invite acceptance by return
promise?
2. was the promise really an acceptance (or a
counter-offer, or an acceptance with proposals for
addition to the contract)?
3. did the offer terminate before the acceptance was
dispatched?
4. was the promise of performance sufficient
consideration?
Promises are sufficient consideration if:
1. bargained-for, and
2. actual promised performance would be
consideration if performed.
ACCEPTANCE
Performance is usually an alternative method of
BY PERFORMANCE
acceptance. It is required by the offer only in
unilateral contracts, otherwise a mere promise will suffice.
Important to remember:
1. With unilateral or option contracts, part
performance is not an acceptance (distinguish
from “mere preparations”). Prevents the offeror
revoking the offer.
from
2. Where offer invites acceptance by either
performance or promise (bilateral contract
offers),
the tender or beginning of performance is deemed
to be an acceptance (Rest. 62) and also
operates as
an implied promise to complete performance. Note:
distinguish this from option
contracts under Rest. 45.
CONTRACTS - Flashcards on page 9
CONSIDERATION
Definition: a bargained for performance or returned
promise (Rest.71). Can take the form of an act, a forbearance to act, or a promise to act or
to forbear.
Two elements must be shown:
1. it must be bargained for (each side gets
something they would not otherwise be legally
entitled to), and
2. it must have legal value (benefit/detriment
test).
Adequacy: no equivalence required under modern law
(Rest.79). Gross inadequacy can be used to show lack of
capacity, fraud, duress, unconscionability, and mistake.
Good faith compromises are consideration (Rest. 74).
THINGS NOT CONSIDERATION
not consideration for a contract include:
Traditional categories of promises which are
1. nominal or sham consideration,
2. illusory promises,
3. promises to make a gift,
4. pre-existing legal duty, unless
a. it is at all doubtful, or
b. is subject to honest dispute, or
c. includes a performance in addition to or
different from the duty.
5. output and requirements contracts (under
common law only, now valid under 3-306).
Aleatory promises (fortuitous events) have consideration.
Conditional promises have consideration only if the condition
is possible.
CONTRACTS - Flashcards on page10
PROMISES NOT REQUIRING
CONSIDERATION
90).
Consideration is not required for promises:
1. reasonably inducing detrimental reliance (Rest.
2. charitable subscriptions {Rest. 90(2)};
3. to pay past indebtedness if indebtedness is still
enforceable or would be except for the statute of
limitations
(a writing may be required, Rest.82, see also
Rest.86);
4. to pay indebtedness discharged in bankruptcy;
5. to perform a voidable duty (Rest. 83, 85);
6. for benefits received {only to the extent necessary to
avoid injustice, Rest. 86(1) and (2) };
7. Modifying duties under the U.C.C. or modifying
executory contracts (Rest. 89),
8. option contracts for land reciting a purported
consideration (Rest. 87).
PROMISSORY ESTOPPEL
Rest. 90:
1. a promise which the promisor would reasonably
expect to induce action or forbearance.
2. promisee’s (or 3rd party’s) justifiable reliance to
his detriment.
3. resulting injustice which requires a remedy.
Statute of frauds is not applicable.
Likely situations include:
1. charitable subscriptions [ no particular reliance
need be shown, Rest.90(2) ]
2. marriage settlements
3. promised gifts including reliance
4. sub-contractor bids
5. promise of franchise
CONTRACTS - Flashcards on page11
QUASI- CONTRACTS
Contracts implied by law in situations where one party
has conferred a benefit on another with the reasonable expectation of receiving something in
return (as opposed to the intention of making a gift).
Used to prevent unjust enrichment. Measured by the amount
of benefit conferred or the reasonable value of services
performed.
Applied to:
– unconscious victims for medical attention,
– minors and insane persons receiving the
necessities of life.
Distinguish from implied-in-fact contracts: those deemed to
exist because of the actual conduct of the parties.
DEFENSES TO FORMATION
SAD FILM
1. Statute of Frauds
2. Adhesion Contracts and Unconscionability
3. Duress
4. Fraud
5. Illegality
6. Lack of Capacity
7. Mistake
CONTRACTS - Flashcards on page 12
STATUTE OF FRAUDS
Procedural defense which prevents other party from
going forward in court unless there is some writing, signed by the party being sued,
sufficient to show that a contract has been made.
Writing required with:
1. Sale of goods over $500 (2-201), or intangibles
over $5,000
2. Guaranteeing another’s debts.
3. Land sales and leases for more than one
year.
4. Contracts which cannot be performed in 1
year.
If the contract is subject to the Statute of Frauds, always look
for some writing or an exception, such as fraud, part
performance, or estoppel.
STATUTE OF FRAUDS
provision
Goods (U.C.C. 2-201)
U.C.C. 2-201 is the controlling Statute of Frauds
for transactions in goods over $500.
Rule: a contract for the sale of goods over $500 is not
enforceable unless there is some writing sufficient to indicate
that a contract was made, signed by the party to be charged. No
contract can be enforced beyond the quantity stated in that
writing.
Exceptions:
1. Between merchants, a written confirmation is
enforceable
against the party receiving it if that party has
reason to know
of its contents and does not object to it
within 10 days.
2. specially manufactured goods not suitable for resale.
3. admissions of contracts in pleadings or other court
testimony.
4. goods for which payment has been made and accepted or
which have been received and accepted.
CONTRACTS - Flashcards on page 13
LACK OF CAPACITY
ILLEGALITY
LACK OF CAPACITY
Parties my lack capacity because they are minors, mentally
incompetent, or temporarily incapacitated by drug or
drink.
Effect: makes contract voidable by the party lacking capacity.
ILLEGALITY
Illegality at the time of the offer terminates the offer.
Supervening illegality after acceptance is an excuse to
performance under the doctrine of commercial impracticability
(2-615 and Rest. 281).
FRAUD
party.
Deceit of a material nature, relied on by the defrauded
Silence can work as fraud if there is a duty to speak (such as a
fiduciary relationship).
No general duty to speak, but once you do, you must tell all
material facts.
Fraud begets the equitable remedy of rescission (sometimes
reformation), or tort damages for deceit.
Could be an international tort, worthy of punitive damages.
CONTRACTS - Flashcards on page 14
DURESS
Duress is physical or economic compulsion.
Contracts or modifications made under duress are voidable,
and give rise to rescission.
For economic duress to be found, the assent must be induced
by “improper threat” and no reasonable alternative to
performance must be found.
Improper threats include threatened activity that is a crime or
tort, threats that are breaches of good faith and fair dealing, or
threats where the resulting exchange is not on fair terms (Rest.
174, 175).
Note: differs from “undue influence”, which requires a
relationship of domination or trust (Rest. 177).
MISTAKE
Mutual mistake of fact: if material, it results in an
unenforceable contract because of lack of mutual assent.
Mutual mistake in integration: mistake in reducing the intent
of the parties to writing.
Unilateral mistake: will not make contract unenforceable
unless the mistake was material and obvious to the other
party or if enforcement would be unconscionable. Ask: should
the mistaken party bear the risk?
Mistakes in transmission: fall on the party responsible for
the transmission unless the mistake was obvious to the other
party.
Remedies: rescission if material mistake of fact; reformation
for minor mistakes in integration.
CONTRACTS - Flashcards on page 15
UNCONSCIONABILITY
Designed to prevent enforcement of one-sided
contracts, oppressive contracts, and those creating unfair surprise.
Unconscionability can occur during the bargaining itself
(procedural) or simply because of the terms (substantive).
For unconscionable goods contracts (U.C.C 2-302): look to
see if the bargaining process or the terms were one-sided or
oppressive. Courts are permitted to:
1. cancel the entire contract,
2. enforce contract minus the unconscionable
provision(s), or
3. Reform contract to make it conscionable.
Not likely with contracts ‘between merchants”.
PAROL EVIDENCE RULE
Applies only to contracts evidenced by a final
writing. Does not apply to oral contracts, contracts without a final writing, or modifications.
Prevents the introduction of any prior or contemporaneous evidence to contradict a final
writing.
Permits introduction of prior and contemporaneous evidence
to explain or supplement a final (but incomplete) writing.
Terms can be implied, explained, or supplemented by
surrounding circumstances, course of dealing, and usage in
trade.
Prevents introduction of all extrinsic evidence (other than
course of dealing and usage of trade) to supplement if final
writing is found to be a “complete and exclusive statement of
the agreement”.
Note: parol evidence can always be used to establish defenses
to formation, to show that parties did not intend writing to be
final, and to explain written terms.
CONTRACTS - Flashcards on page 16
IMPLIED TERMS &
even
GAP FILLERS
Things that explain and supplement express terms,
when a writing is complete, include:
1. prior course of dealing,
2. usage of trade, and
3. course of performance.
U.C.C. “Gap fillers” (supply missing terms):
2-305 - reasonable price (if parties intended to form a
contracts and leave the price open),
2-306 - output and requirements contracts,
2-308 - place of delivery,
2-309 - reasonable time.
U.C.C 2-207
Overrules the mirror-image rule of common law.
Provides that exchanged memoranda which show agreement
on essential terms are effective to establish that a contract was
made, unless acceptance was expressly conditioned on
acceptance of only one party’s terms.
Between merchants: terms mentioned in either party’s
memorandum become terms of the contracts unless:
1. they contradict each other,
2. they are objected to in a reasonable time,
3. they materially alter the basic agreement.
If a non-merchant is involved, additional terms are merely
“proposals for addition” to the contract. Conduct can be used to
establish the terms of the contract if the writings do not. Terms
then are those on which writings do agree plus U.C.C gap
fillers.
CONTRACTS - Flashcards on page 17
MODIFICATIONS
Modifications at common law: required
consideration. The “pre-existing duty rule” would not support modifications bases on
performance of or a promise to perform a pre-existing duty.
Modern law: requirement for consideration remains, but
courts have created numerous exceptions.
Exceptions:
1. executory contracts - modifications enforced if
fair and reasonable to the extent justice requires
(Rest. 89).
2. waiver and estoppel.
Note: modifications to sale of goods contracts are governed by
U.C.C. 2-209.
U.C.C. 2-209
Modifications for sale of goods are governed by
U.C.C. 2-209
No consideration is necessary to modify a sale of goods
contract.
Parties can stipulate that all modifications must be in writing.
The Statute of Frauds is applicable if the contract as modified
is within its provisions (find a written modification or an
exception as provided by U.C.C. 2-201).
If modifications are oral, consider using waiver and estoppel.
A waiver of the writing requirement for modification can be
retracted unless the retraction would be unjust in view of a
material change of position in reliance on the waiver.
CONTRACTS - Flashcards on page 18
ACCORD & SATISFACTION
ACCORD: a contract to settle a claim which is either
liquidated and undisputed or the subject of a good faith dispute. When subject of a good faith
dispute, a resulting “compromise and settlement” is valid.
If the claim is to a liquidated and undisputed sum, the obligor
must furnish new consideration for the obligee’s promise to
accept the proposed satisfaction.
Performance under the original contract is suspended during
accord period.
SATISFACTION: performance of the accord.
Failure to perform permits non-breaching party to sue either
on original contract or on the accord.
ANTICIPATORY BREACH
Anticipatory breach occurs with a direct or indirect
communication of intention not to perform a material obligation. (Repudiation of an
obligation which would not be a total breach if it occurred is not a ground for anticipatory
repudiation).
When “intent not to perform” a material obligation is clear, the
non-breacher may:
1. treat it as a repudiation,
2. suspend his own performance, and/or
3. seek additional assurances.
When “intent not to perform” is questionable, non-breacher
should seek written “additional assurances”.
If assurances not given within 30 days, breach has occurred;
non-breacher can seek damages (U.C.C. 2-609).
CONTRACTS - Flashcards on page 19
CONDITIONS
Rest. 224: an event, not certain to occur, which must
occur before performance under a contract becomes due. Intention of the parties is the
test as to whether a contract is conditional. Examples include satisfaction and “time of
essence” clauses.
Types: precedent, concurrent, and subsequent. Merely a
chronological classification.
Key distinction: promise vs. condition. If a promise,
performance is not excused unless the event is material. If
found to be a true condition, performance may be suspended or
excused if event fails to occur.
Concepts to use: substantial performance (used in construction
contracts); “the law abhors a forfeiture”; divisible contracts;
preference at modern law for finding a promise vs. condition
(Rest. 227); unjust enrichment; quantum meruit.
EXCUSES
Circumstances Which Excuse Performance
A. Conduct by the other party which amounts to:
1. anticipatory breach (repudiation),
2. material breach in a service contract and
substantial breach in installment contract.
B. Events beyond the good faith control of either party:
3. failure of an express condition,
4. impracticability or supervening illegality,
5. frustration of purpose
CONTRACTS - Flashcards on page 20
IMPRACTICABILITY
IMPRACTICABILITY (replacing the older
“impossibility” concept) excuses a seller’s performance when there is an event, the nonoccurrence of which was a basic assumption to the contract, which makes performance
“commercially impracticable”.
Mere rise in price is not sufficient, but when coupled with an
unforeseen event such as war, embargo, crop damage, etc., the
seller is excused from performing unless he clearly assumed the
risk. Seller must allocate to regular suppliers to the extent
possible (see 2-614 & 615).
Casualty to goods before risk of loss has passed is an excuse,
as is supervening illegality.
FRUSTRATION OF PURPOSE excuses a buyer’s
performance where the object of the contract for one party is
the basis upon which both parties contract.
CONTRACT REMEDIES
1. Monetary Damages
2. Specific Performance
3. Rescission
4. Restitution
5. Reformation
6. Relief “as justice demands” (Rest.90)
Generally, no punitive damages or emotional distress awards.
Bad faith breach of insurance agreements are the exception.
Trend to permit such damages if action can be phrased in tort or
fraud.
Attorney fees only if provided for in contract. Liquidated
damages only if reasonable and not a penalty.
CONTRACTS - Flashcards on page 21
MONETARY DAMAGES
General damages: (expectancy interest) are
compensatory in nature, designed to put injured party in the position he would have been in
had the other party fully performed. Measured by the difference between the contract price
and the fair market value of the goods, or other means of cover (e.g. repair).
Consequential damages: are special damages which flow
from a breach, such as loss of profits or physical injury
proximately caused by breach. “Reason to know” is required,
and consequentials cannot be recovered if avoidable by
“cover or otherwise”. Must be foreseeable according to
Hadley vs, Baxendale and may include incidental reliance
expenses.
Incidental damages: losses incidental to breach (e.g., cost of
discovery of breach, inspection, costs of storing defective
goods, costs to effectuate a cover.)
SELLERS’
STATUTORY REMEDIES
(U.C.C.)
Sellers’ Statutory Remedies include:
1. Resale.
2. Damages (difference between contract price and
resale price or market price).
3. Loss of profits (if goods are fungible).
4. Action for the price.
5. Stopping goods in transit.
CONTRACTS - Flashcards on page 22
BUYERS’
STATUTORY REMEDIES
(U.C.C.)
Buyers’ Statutory Remedies include:
1. Commercially reasonable cover.
2. Damages (difference between contract price and
value of goods as delivered).
3. Incidental expenses.
4. Consequential damages.
5. Specific performance (for goods, if unique or in
“other proper circumstances”).
LIQUIDATED DAMAGES Liquidated Damages are those damages set by the parties to
the contract. Often used when damages are hard to anticipate or hard to ascertain.
Limitation: must be reasonable in light of anticipated or
actual harm, difficulties of proof, or inconvenience or nonfeasibility of otherwise obtaining an adequate legal remedy.
Unenforceable if found to be a penalty (usually judged at the
time of the making of the contract). Sometimes judged in light
of the actual damages suffered.
Could be found to be the exclusive remedy if the parties so
intended.
CONTRACTS - Flashcards on page 23
RESCISSION
A cancellation of the contract either by court order or
by mutual agreement of the parties. Usually used with material mistake (mutual or
unilateral, fraud, or material breach).
Restoring the parties to the pre-contract position is required
(restitution).
Rescission (Avoidance) occurs during formation with:
1. Lack of Capacity
2. Fraud, Duress, Undue Influence
3. Mistake
4. Statute of Frauds violation (in some states)
Rescission (Avoidance) occurs during performance:
1. Impossibility, Impracticability, Frustration
2. Material Breach
3. Failure of a Material Condition
RESTITUTION
Restitution is based on a theory of unjust enrichment.
Requires parties to return to the other person the value of the
benefits that were unjustly obtained.
When used:
1. Mistake
2. Quasi-contracts
3. Material breaches where breaching party’s
partial performance has benefitted the injured
4. Rescissions caused by defects in formation or
defaults in performance.
party.
CONTRACTS - Flashcards on page 24
REFORMATION
An equitable remedy used in three situations:
1. unconscionable contracts,
2. contracts involving mistake,
3. contracts involving fraud.
Appropriate if rescission is too harsh and there are reasons of
justice which require the contract to go forward with some
modification.
Most appropriate with minor mistakes where writing does
not reflect the true agreement of the parties (scrivener’s errors).
Contract is enforced as reformed.
THIRD PARTY BENEFICIARY A person who receives rights when a contract is
formed between two other parties. Rights spring directly from the contract itself. Privity
is not necessary. No special formalities required.
1. Intended (primary): contract made primarily for the
benefit of the 3rd party. Creditors and donees are primary
beneficiaries when a major purpose of the contract was
benefit them.
Can sue if rights are vested, i.e., 3rd party:
1. assented to contract,
2, relied on contract, or
3. brings suit before modification.
After vesting, parties cannot alter 3rd party rights, but
can raise all contract defenses.
2. Incidental: any 3rd party not a primary beneficiary. No
rights on original contract.
to
CONTRACTS - Flashcards on page 25
NOVATION
Novation is an agreement by the original contracting
parties to substitute a new or different person as a party to the contract.
Mutual consent is required.
Must specifically provide for extinguishing any obligations of
the substituted party on the original contract.
ASSIGNMENT OF RIGHTS
The transfer of a contractual right or benefit.
Operates to extinguish the assignor’s rights by giving those rights exclusively to the
assignee. Assignor remains liable, even after assignment.
Always assignable unless the assignment:
1. materially changes the duty of the other
party,
2. increases his risk, or
3. impairs chance of return performance.
Personal service contracts, insurance contracts, and contracts
where personal credit is involved are not assignable.
Can occur only after contract has been formed. No
formalities or consideration are required.
Prohibition against “assignment and delegation” read to bar
only delegation.
CONTRACTS - Flashcards on page 26
DELEGATION OF DUTIES
duties owed under the contract.
An authorization to some third party to perform
Any duty is delegable unless the delegee’s performance
would materially vary from the performance of the original
party.
No formalities required, just present intent.
A valid delegation does not excuse delegating party from his
duty to perform, but makes liability secondary to those of the
delegee.
Personal service contracts are non-delegable.
Clauses prohibiting assignment and delegation read to mean
only a prohibition of delegation.
U.C.C. SECTIONS (To Know)
1-102: libel construction to promote purposes
1-103: displaces common law, can be supplemented
1-106: remedies liberally construed
1-203: good faith required – honest-in-fact
2-104: defines merchants
2-201: statue of frauds and exceptions
2-204: liberal understanding of offers and indefiniteness
2-205: firm offers by merchants in writing
2-206: acceptance in any reasonable manner
2-207: additional terms of the contract
2-208: express terms, course of dealing, etc.
2-209: modifications for sales of goods
2-302: unconscionability
2-305: reasonable price if intended
2-306: output, requirement, and exclusive dealing
contracts
2-308: place of delivery
2-309: reasonable time is the standard
2-319: F.O.B. contracts and risk of loss
End