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Timestamp: 2013-05-25 00:02:30
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Jun 2007 Subjects: bar contracts exam mbe ohio Hated It
3rd side (hint) What are the 2 situation that a unilateral K will appear on the bar exam? * Deal open to the public that is in the nature of a reward or contest
* Offer states "acceptance by performance what is the difference between a unilateral and bilateral K? A unilateral K is an agreement to pay in exchange for performance, if the potential performer chooses to act (it is accepted by complete performance. A "unilateral" contract is distinguished from a "bilateral" contract, which is an exchange of one promise for another.
However, under the UCC and the 2nd restatement of K's, it is possible to form a bilateral contract by starting performance, and most contracts will be bilateral unless specifically indicated by the contract to be accepted only by performance.
The test for bilateral vs. unilateral contracts is to determine whether each party has both a right and a duty, or whether one party has a right and the other party has only a duty. To what type of contracts does article 2 of the UCC apply? Article 2 applies to contracts that are primarily for sales of goods. Determining whether Art. 2 applies relies on :
1. Type of transaction : sale
2. Subject matter of the transaction: goods -- tangible, personal property. What law is applicable to contracts that are a mixture of goods and services? When a contract is mixed goods and services contract, the court will look to which part of the K is the economically valuable part of the K to determine what law applies.
Where the prices are specified (ie 100 for goods, 400 for services) in the K in a mixed goods and services K, Art. 2 will apply to the goods portion of the K, and the common law will apply to the services portion of the K. What type of contract does Article 2A apply to? Article 2A applies to leasesof goods. What is the test for whether there was an offer? An offer is a manifestation of an intention to contract. The basic test is whether a reasonable person in the position of the offeree would believe that his or her assent creates a contract. The offer must contain all material terms; price and description are required for an offer to sell real estate. Price is not a required term for Article 2 sale of goods contracts, but quantity is a required term. Finally,for the offeree to have the power to accept an offer, the offeree must have knowledge of the offer, ie, it must be communicated to the offeree. How are ambiguous terms in supposed offers treated? Vague or ambiguous material terms do not create an offer under either common law or UCC. An "offer" to sell a car for a "fair price" is ambiguous and will be treated as a start of negotiations.
However, vagueness in an offer may be cured by part performance, and uncertainty can be cured by acceptance. The contract, rather than the offer, must be definite and certain in its terms. Is a contract for the sale of goods that phrases quantity of goods to be delivered in terms of "requirements" or "output" valid? Yes. A contract for the sale of goods can state the quantity of goods to be delivered under the K in terms of buyer's requirements (Requirements K) or seller's output.
There is consideration in such an agreement, because the promisor is suffering a legal detriment; he has parted with the legal right to buy (or sell) the goods he may need (or manufacture) from (or to) another source. What is the rule for a modification of a requirements K? A buyer may not increase the quantity of a requirements K in an amount that is unreasonably disproportionate. If a seller does so, the increase amount will be reduced. What is the rule for advertisements and price quotations as offers? Advertisements and price quotations are generally not offers. However:
1. Price quotations can be offers if in response to a specific inquiry.
2. An advertisement can be an offer if it is specific as to quantity and who can accept. How may an offer be terminated so that it is no longer able to be accepted? An offer can terminate by:
1. Lapse of time -- either time stated or "reasonable time" or
2. Words or conduct of offeror:
a. Unambiguous statement by offeror to offeree of unwillingness or inability to contract prior to acceptance, or b. unambiguous conduct by offeror indicating an unwillingness or inability to contract THAT OFFEREE IS AWARE OF.(correct information, coming from a reliable source)
c. If a public offer, by same or comparable publication.
3. Words/conduct of offeree (counteroffer, conditional acceptance, etc)
4. Death or incapacity of a party prior to acceptance.
5. Termination by destruction of subject matter-- terminates the offeree's power of acceptance
6. Supervening legal prohibition of the proposed contract. When is revocation of an offer effective? Revocation of an offer sent through the mail is not effective until received. An offer can not be revoked once it has been accepted. What are the situations in which an offer cannot be revoked? 1. An offer cannot be revoked if the offeror has promised to keep the offer open AND this promise is supported by consideration (an "option").
2. An offer cannot be revoked for up to 3 months if: (i) contract for sale of goods (ii) signed, written promise to keep offer open, and (iii) party is a merchant. A merchant is generally a person in business. 3. An offer cannot be revoked if there has been detrimental reliance by the offeree that is reasonably foreseeable.
4. The start of performance pursuant to an offer to enter into a unilateral K makes that offer irrevocable for a reasonable time to complete performance. The offeree must have embarked on performance for this rule to apply; mere preparations to perform do not count as the start of performance. What does a counteroffer do? A counteroffer terminates the intitial offer and becomes a new offer.
Generally, statements are counteroffers (I will only pay 100) , and questions (will you take 100) are bargaining. Bargaining does not terminate the offer. what are the methods of "indirect rejection" of an offer by offeree? The words or conduct of an offeree can terminate the offer by rejection of the offer. Here are the methods of rejection:
3. Additional terms in acceptance of a common law K (mirror image rule). What happens when there are additional terms in the acceptance under the UCC? Under Art. 2 of the UCC, acceptance with additional terms is generally trated as a "seasonable expression of acceptance", as long as the acceptance is not conditional upon the additional terms. When do "additional terms" in the acceptance become part of an Art. 2 K? If both parties are merchants, the general rule is that the addtional term is a part of the K. However there are 2 exceptions:
1. Not part of the K if materially changes the offer or
2. Not part of K if the offeror objects to the change. Who can accept an offer? Generally, an offer can be accepted only by 1. a person who knows about the offer 2. who is the person (or part of the class of persons) to whom the offer was made. Offers can not be assigned, but options are assignable. What are the methods of accepting an offer? See page 12, 13 , 14 of lecture handout. What are the methods of accepting an offer? See page 12, 13 , 14 of lecture handout. When is the mailbox rule inapplicable? 1.option deadline. Mailed acceptance of an offer held open by an option is effective when received.
2. when the offer otherwise provides
3. rejection, then acceptance: whichever arrives first controls
4. acceptance, then rejection: mailbox rule and K formed unless the rejection arrives first and is relied on by the offeror, then the offeree will be estopped from enforcing the K. What is consideration? Consideration is a bargained-for exchange between the parties and that which is bargained for must be of legal value, ie, must constitute a benefit to the promisor or a determent to the promisee. "Bargained for" is met where the promise induces the detriment, and the detriment induces the promise. what is the rule for past consideration? Generally, One cannot bargain for something that has already occurred. However, where one expressly asks for action, and anticipates that payment will be expected, a later promise to pay is legally enforceable.
**look to promissory estoppel if K is invalid for past consideration What is the preexisting contractual or statutory duty rule? Generally, performance of preexisting contractual or legal duty is not consideration. However, where there is an unforeseen difficulty so severe as to excuse performance, and the contracting party is paid an additional sum by an original party to the agreement or by a third party to perform the K in spite of the difficulty, the additional payment is valid consideration for forming an enforceable K.
Additionally, where the promisse give new or different consideration in addition to what she already owes i return for the promise she now seeks to enforce, there is consideration. Courts are anxious to avoid the pre-existing duty rule. When is part payment of a debt consideration for a promise to forgive the balance of the debt? If a debt is due and undisputed, then part payment is not consideration for release from the balance of the debt. But where the debt is in due and in dispute, partial payment is consideration for forgiveness of the balance. Early partial payment of an undisputed debt is also consideration for a promise to forgive the balance of the debt. What are the important substitutes for consideration? 1. Written promise to pay a debt barred by technical defense such as SOL is a consideration substitute. 2. Promissory estoppel What are the elements of promissory estoppel? Under the doctrine of promissory estoppel, a promise is enforceable to the extent necessary to prevent injustice if: The promisor should reasonably expect to induce action or forbearance of a definite and substantial character, and such action or forbearance is in fact induced. who lacks capacity to contract? 1. Infants under 18 (K voidable)
2. Mental incompetents: (K Voidable) lacks ability to understand the agreement
3. Intoxicated persons if the other party has reason to know .(voidable) What are K's by minors? K's by infants (minors) are voidable -- the infant forming the K has the right to disaffirm. However, there can be an implied affirmation by maintaining the benefit of the K after reaching an age of contractual capacity. What about a lack of contractual capacity and K's for neccessaries ? A person who does not have capacity is legally obligated to pay for things that are necessary such as food, clothing, medical or shelter, but such liability is based on quasi-contract law, not contract law. When is surrendering an invalid claim consideration? Surrendering an invalid claim can still be consideration if:
1. a reasonable person could believe the claim is well-founded.
2. It can be pursued in good faith. What is consideration? A bargained for exchange, plus detriment to the promisee or benefit to the promisor, or both. What must a writing contain to satisfy the SOF? 1. The K's subject matter
2. ID of the party sought to be charged
3. promise, by whom and to whom made, and essential terms and conditions
4. Signature of the party to be charged (party denying the K's existence.)
5. Recital of consideration. What types of K's are within the statute of frauds? 1. K's in consideration of marriage.
2. Promise by executor/admin to pay obligation of estate from his own funds.
3. Suretyship- promise to pay the debts of another if they fail to pay.
4. Service K's not capable of being performed w/in 1 year.
5. transfers of an interest in land lasting more than 1 year; fixtures; mortgages
6. Sales of goods for $500 or more.
7. Lease of goods with the payment totaling $1,000 or more. How is the SOF satisfied? 1. Performance
a.Services K-full performance by either party satisfies the SOF
b. Sale of goods K-part performance of a K for te sale of goods satisfies the SOF, but only to the extent of part performance. Specifically Manu. goods- if the K is for the sale of goods that are to be specifically manufactured, then the SOF is satisfied as soon as the seller makes a "substantial beginning" of making or obtaining the goods.
c. real estate transfer K-part payment + (possession or improvements on land)
2. Writing-Non UCC- Must contain all material terms and be signed by the party to be charged(D). UCC-writing must contain quantity term + signed by party to be charged (other situations, see page 30 of lecture handout)
3. Judicial admission of sale of goods agreement. What is the "equal dignity rule"? If a K is to be entered into by a party authorized to K for someone else, the authorization must be of "equal dignity", ie, in writing, if such K is within the SOF. When does a modified K have to be written? If the K, with the modification, is w/in the SOF, the modification agreement must be in writing. How are contract provisions requiring all modiifications to be in writing treated? 1. common law- K provisions requiring that all modifications be in writing are ignored
2. UCC-such provisions control uless waived. What happens if a K has illegal subject matter or illegal purpose. IF the subject matter is illegal, the agreement is void.
If the subject matter is legal, but the purpose is illegal, the agreement is enforceable only by the person who did not know of the illegal purpose (voidable). What is Duress? Improper threat by the Defendant, and no reasonable alternative for the P. In duress situations,K's are voidable and may be rescinded as long as they have not been affirmed. What is unconscionability? This doctrine, originally only appilcable to sales of goods, but 1. now a part of K law generally, 2. empowers a ct to refuse to enforce all or part of an agreement. The 2 basic tests are : 1. unfair suprise and oppressive terms, 2. tested as of the time the agreement was made 3. by the court.
In other words,the basi test is whether, in light of the general comerical background and needs of te particular parties, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time the K was formed. What is the Raffles v. Wichelhaus rule for latent Ambiguity? There will be no K if:
1. The parties use a material term that is open to at least 2 reasonable interpretations. 2. Each party attaches a different meaning to the term, and 3. neither party knows or has reason to know the meaning attached by the other.
Additionally, there will be no contract where both parties were aware of the ambiguity at the time of contracting, unless both parties in fact intended the same meaning.
If one party is aware of the ambiguity, the contract is given effect according to the interpretation of the party unaware of the ambiguity. What is the rule for mutual mistake of Material fact? There will be no K if:
1. Both parties are mistaken as to a 2. basic assumption of fact, that
3. Materially affects the agreed exchange
4. the party seeking avoidance did not assume the risk of the mistake. What is the rule for Unilateral mistake of material fact? Generally, no relief. Exceptions- palpable mistakes (obvious mistakes-no taking advantage of others), or if the other party to the K knows or should have known the mistake, the courts will grant relief to the mistaken party. What is the Ohio rule for K's based on agreements not to prosecute a crime Under Ohio K law, contracts based on agreements not to prosecute a crime are void and are themselves criminal. Exemptions: Bad checks, credit card fraud, theft- if offender agrees to make good on the loss. See pages 44-46 for Parol evidence rule. Lecture handout pages 44-46 What are the other sources of K terms, beyond the words of the parties? 1. Course of performance-same ppl,same contract,very persuasive
2. Course of dealing-same ppl, diff. K, somewhat persuasive
3. Custom and usage-different ppl, diff. deal.-not so persuasive. What happens in a UCC K when no place of delivery has been agreedd upon? Absent an agreement as to place of delivery, the place of delivery is the seller's place of business unless both parties knowthat the goods are some place else, in which that place is the place of delivery. Where there is an agreement as to place of delivery (UCC K), what does the seller have to do to complete its delivery obligation. 1. Shipment K- Where a K is a shipment K, the seller completes its delivery obligation when it 1. gets the goods to a common carrier (person in the business of transporting goods for others) and 2. makes reasonable arrangements for delivery and 3. Notifies the buyer.
Destination K: The other possiblity is that the K is a destination K, where the seller does not complete its delivery obligation until the goods arrive where the buyer is. (Most K with deliveyr obligations are shipment Ks)
FOB (city of seller)-shipment contract
FOB (city of buyer)-destination K Which party bears the risk of loss when goods have been damaged, not by the fault of buyer or seller? 1. Agreement by the parties controls. 2. Breach-breaching party is liable for any uninsured loss even though the breach is unrelated to the problem
3. Delivery by common carrier other than seller- risk of loss shifts from seller to buyer at the time the seller completes its delivery oblig.
4. No agreemet, no breach, no dlivery by carrier-risk of loss shifts from a merchant-seller to the buyer on the buyer's receipt of the goods; risk of loss shifts from a non-merchant seller when he or she tenders the goods. What does the use of a sample or model by a seller do? The use of a sample or model creates a warranty that the goods the buyer receives will be like the sample or model What is the implied warrany of merchantability? When a person buys any goods from any merchant(dealing in goods of that kind), a term is automatically added to the K by operation of law-that the goods are fit for the ordinary purpose for which such goods are used. What is the implied warrant of fitness? Where a buyer has a particular purpose, the buyer relies upon the seller to select suitable goods, and the seller has reason ot know of the buyer's purpose and his reliance, then there is an implied warranty that the goods are fit for the buyer's particular purpose. What happens hen there is a contractual limitation on Warranty liability? (eg, there are no warranties? Disclaimers of warranties eliminate implied warranties. Express warranties cannot be disclaimed. What is the rule for limitation of warranties (eg, warranty liability shall be limited to replacement parts) This is generally valid, even for express warranties, unless the limitation is unconscionable. Such limitation is prima facie unconscionable if breach of warranty on consumer goods causes personal injury. What is the standard for satisfying a condition? 1. Express conditions-generally, we require strict compliance w/ express conditions. Exception- condition baed on approval of one of the contracting parties is treated as satisfied if a reasonable person would approve, unless the subject is a matter that is inherently discretionary (art).
2. Constructive condition-require substantial performance. What is the rule for "divisible K's"? Where the performance of each party is divided into 2 or more parts under the K, and the number of parts due from each party is the saem, and the performance of each part by one party ks agreed on as the equivalent of the corresponding part from the other party (each performance is the quid pro quo of the other), a contract is "divisible", and a party may sue for performance by the other party after his/her completion of each "part" of the contract. How can an express condition e excused? 1. Estoppel (before the condition is to occur)/waiver (after the stated condition is to occur)
2.Failure to cooperate under a condition coupled wiht a covenant What is the Perfect Tender Rule? Under art. 2, the seller is obligated to deliver perfect goods, subject to limited exceptions (eg, cure) When is an Art. 2 seller who fails to make a perfect tender given a chance to cure? 1. Time for performance has not yet expired-can 'cure' before deadline.
2. Where the time for performance has expired, in limited circumstances the seller may cure if she had reasonable grounds for believing that the improper tender would be acceptable, perhaps with a money allowance When must a rejection of goods occur? Rejection of goods must occur before acceptance of the goods. If the goods are less than perfect, the buyer has the option to reject unless it is an installment sales K. What is an installment sales K? An installment sales K is a K that requires or authorizes (i) delivery in separate lots (ii) to be separately accepted. When does a buyer under an installment sales contract have the right to reject an installment? The buyer has the right to reject an installment only where there is a substantial impairment in the installment that can't be cured. what constitutes acceptance of good? 1. Express acceptance or
2.Implied accptance-retention after inspection w/out objection
Once buyer accepts the goods, he can no longer rejct them.
NOte: payment w/out inspection is not acceptance. What are the requirements for revocation of the accpetance of goods? The requirements for revocation are : 1. Nonconformity substantially impairs the value of the goods 2.Excusable ignorance of grounds for revocation or reasonable reliance on seller's assurance of satisfaction and 3. revocation w/in a reasonable time after the discovery of the non-conformity. How can a buyer pay for goods? 1. Cash, unless otherwise agreed
2. Buyer can pay by check, UOA, and
3. Seller does not have to accept chec, but that gives the buyer an additional reasonable time. When is a party's performance excused by reason of failure of condition? If a party's duty to perform is conditional, failure of the condition excuses the duty to perform. K to buy house conditioned on 5,000 appraisal. 4,300 appraisal obtained. Buyer's obligation to pay discharged by failure of the condition. When is a party's performance excused by the other party's breach? 1. Sale of goods-anybreach -> perfect tender rule
2. Common law K's-material breach only-minor breach, performance is still required, you then sue for damages. When is a party's performance excused by reason of the other party's anticipatory repudiation or inability to perform? Anticipatory repudiation is statement that the repudiating party will not perform, made prior to the time tat performance was due. Anticipatory repudiation by one party excuses the other party's duty to perform, and generally gives rise to an immediate claim for damages for breach. Anticipatory repudiation can be reversed or retracted so long as there has not ben a material change in position by the other party. If anticipatory repudiation is timely retracted, the duty to perform is reimposed, but performanced may be delayed until adquate assurance is provided. When can performance be excused by the parties' rescinding a K? Parties may rescind a K, thus excusing performance as long as the performance by one party is not yet complete. (partially performign party can get equitable relief). IF the K is completely performed by a party, the K may not be cancelled. What is accord and satisfaction? Accord is an agreement by the parties to an already existing K that the same parties will do somehting different that will extinguish or "satisfy" that existing obligation; satisfaction-is satisfaction of the accord. IF only accord-the accord suspends legal enforcement of the original obligation so as to provide time to perform the accord. If the acord is not performed, then the other arty can sue on either the original K or the accord. What is a novation? A novation is an agreemnt between both parties to an existing K to the substitution of a new party (same performance, different party). Novation excuses the K'ed for performance of the party who is substituted for or replaced. When is performance excused by reason of a later, unforeseen event? Performance of contractual duties (other than a contractual duty ot pay money) can be excused under impossibility or impracticability or frustration of purpose.
1. Something that happens after K formation but before the completion of K performance; 2. That was unforeseen
3 that makes performance impossible or commercially impracticable or frustrates the purpose of the performance What is recoverable for breach of K? 1. No punitive damages
2. liquidated damages (if test is satisfied)
3. Generally, the injured party is entitled to recover an amount that would put her in as good a position as if the K had been performed, plus any foreseeable consequential damages, plus incidental damages (cost of "dealing with the breach), minus avoidable damages What is the rule for liquidated damages? a K can stipulate damages or method of fixing dmages. A contract cannot provide for a penalty. Two general tests for deteriming whether a K provision is a valid liquidated damages clause or an invalid penalty:
1.@ time of K, the amt of possible damages from any later breach of K is difficult to determine and
2. @ time of K, the K provision is a reasonable forecast of possible damages. See page 65 for article 2 remedies. Page 65 of lecture handout What are the non-monetary remedies for breach of K, and when are they appropriate? Specific performance/injuction-
1. K's for sale of real estate-Specific performance is presumptive in breach of sale of real estate K's
2. Contract for sales of goods
-SP available where the goods are unique.
3. Contract for services-No SP, possible injunctive relief When is an unpaid seller entitled to reclamation? A seller has a right of reclamation where:
1. The buyer is insolvent at the time that it received the goods
2. The seller demands return of goods w/in 10 days of receipt, and
3. Buyer still has goods at the time of the demand. What are the rights of a good faith purchaser in entrustment? If an owner leaves her goods w/ a person who sells goods of that kind and that person wrongfully sells the goods to a third party, then such a good faith purchaser from the dealer cuts off rights of the oringial owner/entruster. What is required for the creation of a contract? 1. Was there mutual assent to the contract (offer and acceptance of the offer)?
2. Was there consideration or some substitute therefore?
3. Are there any defenses to creation of the contract? How may a unilateral contract be accepted? A unilateral contract is accepted by completion of the specified act. The offeree must act w/ knowledge of the offer and be motivated by it. What happens when an offeree is ignorant of contractual terms of a bilateral contract? The offeree's ignorance of certain contractual terms may be a defense to the formation of a bilateral contract. If the offeree objectively manifests her assent, she is boudn by all contract terms that a reasonable person would have noted and understood. A "blanket form recital" stating that the offeree has read and understood every provision and agrees to be bound thereby will not prevent a court from applying gthe objective standard. What is the definition of a "legal detriment" in the context of consideration?
What is the definition of "Legal Benefit" ??? Legal deteriment results if the promisee does something he is under no legal obligation to do or refrains from doing something that he has a legal right to do. Legal Benefit to the promiseeis a forbearance or performnce of an act by the promisee which the promisor was not legally entitled to expect or demand, but which confers a benefit on the promisor. Are "conditional promises" enforceable? Conditional promises are enforceable, no matter how remote the contingency, unles the "condition" is entirely within the promisor's control. What is the rule for "fraudulent misrepresentation" as a defense to K? If a party induces another to enter into a contract by using fraudulent misrepresentaion, the K is voidable by the innocent party if she justifiably relied on the fraudulent misrepresentation. This is "fraud in the inducement". What is "fraud in the factum"? If a party to a K was tricked into giving assent to the agreement under circumstances that prevented her from appreciating the significance of her action, the agreement cannot be enforced; it is void. What is the rule for "non fraudulent misrepresentation" as a defense to K formation? If a misrpresentation is NOT fraudulent, it is voidable by the innocent party if the inncoent party justiabily relied on the misrepresentation and the misrepresentation was material. Is "illegal purpose" of a contract a valid defense to formation of said K? If a K was formed for an illegal purpose, but neither the consideration nor the subject matter is illegal, the K is voidable by the party who did not know of the purpose, or knew but did not facilitate the purpose and the purpose does not involve "serious moral turpitude". What is the test for an intended vs. incidental beneficiary? To whom is performance to be given uaccording to the language of the contract? or Was the purpose of the promisee, according to the language of the K, to get the benefit for herself primarily or to confer a right on another directly? When may an "intended" 3rd party beneficiary enforce a contract? An "intended" beneficiary can enforce a conract only after his rights have vested. Vesting occurs after the beneficiary:
1. Manifests assent to the promise in a manner invited or requested by the parties;
2. Brings suit to enforce the promise; or
3. Materially canges position in justifiable reliance on the promise. Who may a third party beneficiary sue? The third party beneficiary need not elect between the promisor and te promisee. She may sue both, but may only obtain one satisfaction. A third-party donee beneficiary may not sue the promisee because the promisee's act is gratuitous. What is the test for an intended vs. incidental beneficiary? To whom is performance to be given uaccording to the language of the contract? or Was the purpose of the promisee, according to the language of the K, to get the benefit for herself primarily or to confer a right on another directly? When may an "intended" 3rd party beneficiary enforce a contract? An "intended" beneficiary can enforce a conract only after his rights have vested. Vesting occurs after the beneficiary:
3. Materially canges position in justifiable reliance on the promise. When may contractual rights be assigned? Generally, all contractual rights may be assigned. However, assignment of contractual rights is not permitted where assignment of rights would substantially change the obligor's duty, such as in personal serivce contracts of a unique nature and requirement and output contracts. For UCC K's, assignments off the right to receive goods under a requirements K or to sell goods under an output K may be valid under the code's good faith requirement. Additionally, where the assignment would substantially alter the obligor's risk, the assignment will fail. When must an assignment of a K be in writing ? 1.Wage assignments
2. Assignments of an interest in land
3. assignments of choses in action worth more than $5,000
4. Assignments intended as security interest under Article 9 of the UCC What is required for an effective assignment? 1. An adequate description of the right being assigned.
2. Present words of assignment
3. Consideration is not required. When is an assignment irrevocable? * When there is consideration given for an assignment, it is irrevocable
* Where the obligor has already performed, the assignment will be irrevocable
* If a token chose involving the rights to be assigned has been delivered (passbook, stock certificates, etc) -- (Here the assignor loses both the right and the power to revoke or assign; in all other irrevocable situations, he retains the power but not the right to revoke, and revocation will subject the assignor to liability for breach of K)
* Assignment of a simple chose in writing
* Estoppel How may a gratuitous revocable assignment be revoked? 1. Death of the assignor
2. Bankruptcy of the assignor;
3. Notice of revocation by assignor to either the assignee or obligor;
4.the assignor takes performance directly from the obligor; and 5. Subsequent assignment of the same right by the assignor to another reread assignment section Pages 40-45. Pages 40-45. What implied warranties is the assignor deemed to give to the assignee? the assignor is deemed to give sever implied warranties to the assignee, the breach of which will give rise to a cause of action:
1. Warranty not to defeat assigned right (where the assignment is irrevocable) - may proceed against the assignor if he wrongfully exercises his power to revoke
2. Warranty that right is not subject to defenses. What duties under a K may be delegated? As a general rule, all contractual duties may be delegated to a 3rd person. However, duties involving personal judgment and skill, involving special trust in the would-be delegator, or where delegation would change the obligee's expectancy, or where a K restricts either party's right to delegate duties, such duties are non-delegable. When will a conditional promise be excused? 1. If a party having a duty of erformance that is subject to a condition prevents the condition from occurring, she no longer has the benefit of the condition if the prevention is wrongful. ("wrongful" if the other party would not have reasonably contemplated or assumed the risk of this type of conduct.
2. An actual breach of the contract when performance is due will excuse the duty of counterperformance, only if the breach is material.
4. Prospective inability or unwillingness to perform
5. Excuse of condition by substantial performance
6. Excuse of performance by divisibility of contract
7. Waiver/Estoppel
8. Impossibility, impracticability, or Frustration What is anticipatory repudiation? Anticipatory repudiation occurs when a promisor, prior to the time set for performance of his promise, indicates that he will not perform when the time comes.
For anticipatory repudiation to excuse conditions of performance, the contract involved must be:
1. a bilateral K with unperformed duties on both sides;
2. Where the anticipatory repudiation is unequivocal. What options for remedy does a nonrepudiatiating party have? In the case of an anticipatory repudiation, the nonrepudiating party may:
1. treat the anticipatory repudiation as a total repudiation and sue immediately
2. Suspend performance and wait to sue until the performance date.
3. Treat the repudiation as an offer to rescind and treat the contract as discharged; or
4. Ignore the repudiation and urge the promisor to perform. What is "excuse of condition by prospective inability to perform?" Prospective failure of consideration occurs when a party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due. A reasonable person standard will be applied in judging such conduct. The effect of this prospective failure is to allow the inncoent party to suspend further performance on her side until she receives adquate assurances that performance will be forthcoming. Failure to obtain adequate assurances will excuse the nonrepudiating party's performance. What is the rule for "election waiver"? When a condition or a duty of performance is borken, the beneficiary of the condition or duty must maken an election; she may: 1. Terminate her liability or 2. continue under the K. If she chooses the latter course, she will be deemed to have waived the cndition or duty. This election waiver erqires neither consideration nor estoppel. If no consideration is given for the waiver, the condiiton must be ancillary or collateral to the main subject and purpose of the K for the waiver to be effective; one may not waive entitlement to the entire or substantially entire return performance. When will a contractual duty be discharged by impossibility? Contractual duties will be discharged where it has become ipossible to perform them. For this rule to operate, the impossiblity must be objective (unable to be performed by anyone)and must arise after the K has been entered into. When a K is discharged b/c of impossibility, each party is excused from duties arising under the contract that are yet to be fulfilled. Either party may sue for rescission and receive restitution of any goods delivered, paymetns made, etc. What is the test for impracticability? Modern courts will discharge contractual duties where performance has become impracticable. Where a party to perform under a K has encountered extreme and unreasonable difficulty and/or expense, and such difficulty was not anticipated, performance under the K is impracticable and may be discharged by the Court. Changes in price or degree or difficulty, unless extreme, does not amount to impracticability. When are contractual duties discharged by frustration of purpose? Frustration will exist if the purpose has become valueless by virtue of some supervening event not the fault of the party seeking discharge. If the purpose has been frustrated, a number of courts will discharge contractuall duties even though performance is still possible.
1. Supervening act or event leading to the frustration
2. At the time of entering into the K, the parties did not reasonably foresee the act or event occuring
3. THe prupose of the K has been completely or almost completely destroyed by this act or event
4. the purpose of the K was realized by both parties at the time of making the K. When may a unilateral K be rescinded? Where a contract is unilateral (where only one party owes an absolute duty),a contract to mutually rescind where one arty still has a duty to perform will be ineffective. For an effective rescission in a unilateral K situation where the offeree has already performed, the rescission promise must be supported by one of the following:
1. An offer of new consideration by the nonperforming party
2. Elements of promissory estoppel, such as detrimental reliance
3. Manifestation of an intent by the original offeree to make a gift of the obligation owed her. When must mutual rescission be made in writing? Mutual rescission may normally be effectuated Orally. However, where the subject matter is within the statute of frauds, or where the K is for the sale of goods and requires rescission in writing, a court will require a mutual rescission to be made in writing. Is consideration necessary for modification of a contract? Consideration is usually necessary for modification of a K; however if the modification is only a correction of an error in the original K, no consideration is necessary; also, no consideration is necessary for modification of a sale of goods K under the UCC. What is required for a valid Novation? A novation occurs where a new K substitutes a new party to receive benefits and assume duties tht hadoriginally belonged to one of the original parties under the terms of the old contract. A novation will serve to discharge the old contract; the elements are:
1. A previous valid K
2. An agreement amoung all parties, including the new party or parties to the new K;
3. the immediate extinguishment of contractual duties as between the original contracting parties and 4. a valid and enforceable new contract. What is "accord and satisfaction"? An accord is an agreement in which one party to an existing K agrees to accept, in lieu of the performance that she is supposed to receive from the other party to the existing contract, some other, different performance. The accord taken alone, will not discharge the prior K, but merely suspends the right to enforce it in accordance wiht the terms of the accord K. Satisfaction is the performance of the accord agreement; its effect is to discharge not only the original contract but the accord contract as well. What is "discharge by account stated?" An account stated is a K between parties whereby they agree to an amount as a final balance due from one to te other. this final balance encompasses a number of transactions between the parties and serves to merge all of these transactions by discharging all claims owed thereon. In other words, all rights as the the individual, original transactions are discharged and the new agreement is enforceable. An account stated is not necessarily express. It may be implied. Ready to get started?