Contracts Essay Outline

question

7-step outline
answer

Governing Law Formation Defenses to Formation Terms Third Parties Performance Remedies
question

Governing Law
answer

Common Law UCC Article 2
question

Formation
answer

Offer Acceptance Consideration
question

Offer
answer

Promise, undertaking, or commitment to enter into a contract Certainty and definiteness in the essential terms Communication to offeree
question

Acceptance
answer

Manifestation of assent to the terms of the offer.
question

Consideration
answer

Bargained-for exchange of legal detriments Promissory Estoppel – detrmental reliance
question

Defenses to Formation
answer

Statute of Frauds Mistake or ambiguity Illegality Incapacity Unconscionable Fraud or duress
question

Statute of Frauds applicability
answer

Marriage Year, more than service contracts. Land interests Executor Goods over $500 Surety
question

Statute of Frauds requirements
answer

One or more writings signed by the person to be held liable reflecting the material terms of the contract. Noncompliance – results in unenforceability at the option of party to be charged Remedies – reasonable value of the services or part performance rendered or restitution of any other benefit.
question

Statute of Frauds exceptions
answer

No writing required with: Specially manufactured goods Goods received and accepted or paid for
question

Terms
answer

Interpretation Modification Parol Evidence
question

Parol Evidence
answer

A final integration will not consider contemporaneous or prior extrinsic evidence to vary the terms of the agreement.
question

Extrinsic Evidence Allowed
answer

Extrinsic evidence allowed for: Validity Interpretation Reformation Evidence that normally would be left out: not conflicting and commonly excluded items from written instrument.
question

Article 2 Parol Evidence
answer

Consistent additional terms may be added unless: 1) There is a merger clause 2) Courts find from the circumstances that the writing was intended as a complete and exclusive statement of the terms of the agreement. Contract’s terms may be explained or supplemented by: Course of dealing Usage of trade Course of performance
question

Interpretation
answer

Battle of the Forms Gap Fillers Delivery Terms
question

Battle of the Forms
answer

CL – Additional terms in an acceptance is a rejection and a counteroffer Article 2, 2-207 governs
question

2-207
answer

If both parties are not merchants, additional terms are not part of the contract without the offeror’s approval. If both parties are merchants: 1) If the offer limited acceptance to its terms, the contract is formed without additional terms. 2) If the additional terms materially altered the contract, the contract is formed without additional terms. 3) If the offeror objected to the new terms within a reasonable time, the contract is formed without the additional terms. 4) If not 1, not 2, and not 3, the contract is formed including the new terms.
question

Gap Fillers
answer

Article 2 fills gaps, but the quantity term is required. Price – reasonable price at the time of delivery Place – at seller’s place of business; if none, at her home. Time for shipment or delivery – a reasonable time Time for payment – time and place at which the buyer is to receive the goods
question

Delivery Terms
answer

Shipment contract – risk of loss passes when goods are delivered to the carrier. Destination contract – risk of loss passes when goods are tendered to the buyer at the destination CIF – price includes cost, insurance, and freight in a shipment contract. FOB – Seller bears risk and expense of getting goods to this location.
question

Modification
answer

Common Law Requires new consideration. Oral modification OK, even when contract requires written modification. UCC Reasonable modification OK. Written modification clauses enforceable. But, oral modifications may serve as a waiver when relied upon.
question

Common Law Performance
answer

Requires substantial performance
question

Article 2 Performance
answer

Requires perfect tender
question

Seller’s Article 2 Performance
answer

Seller must tender at a reasonable hour at his place of business, unless otherwise agreed. Seller must notify buyer of shipment in shipment contracts.
question

Buyer’s Article 2 Performance
answer

Delivery and payment are due with tender of delivery in noncarrier cases. OTW, payment is due when goods are received by the buyer. Buyer has a right to inspect before paying unless contract provides for COD.
question

Performance
answer

Conditions Discharge of Duty Breach
question

Condition defined
answer

1) Event or state that must occur or fail before a party has a performance duty OR 2) the same which releases a duty to perform. Discharges a liability, but is not a breach.
question

Condition types
answer

Precedent: must occur before an absolute duty of immediate performance arises in the other party. Concurrent: conditions that can occur together, and parties are bound to perform at the same time. Subsequent: cuts off an already existing absolute duty of performance
question

Excuse of condition
answer

Hindrance Breach Anticipatory repudiation Retraction of repudiation Inability or Unwillingness to Perform Substantial Performance Divisibility of Contract Installment Contracts Waiver or Estoppel
question

Discharge of Duty
answer

Performance or tender of performance Occurrence of condition subsequent Illegality Impossibility, Impracticability, or Frustruation Recission Modification of Contract
question

Breach
answer

when an absolute duty of performance has not been met and has not been discharged
question

Minor Breach
answer

Obligee receives the substantial benefit of her bargain. Does not relieve duty of performance, but does offset.
question

Material Breach
answer

Nonbreaching party may treat contract as at an end and has an immediate right to remedies for breach
question

Perfect Tender Rule
answer

If goods or delivery fail to conform to the contract in any way, the buyer may reject all, accept all, or accept any commercial units and reject the rest. Acceptance cuts off right to reject: 1) indication of conforming goods to seller, 2) failure to reject in a reasonable time, 3) any act inconsistent with seller’s ownership.
question

Revoking Acceptance
answer

Goods with a defect that substantially impairs their value and either: 1) she accepted them on the reasonable belief that the defect would be cured; or 2) she accepted them because of difficulty discovering defects or because of seller’s assurance that they conform. Additionally: must be within a reasonable time, and before any substantial change in the goods occurs
question

Remedies
answer

Specific performance Reclamation from insolvent buyer Recovery from insolvent seller Expectation Consequential Incidental Avoidable Reliance Liquidated
question

Specific Performance/injunction
answer

Look for an inadequate remedy at law or unclean hands. Specific performance not applicable to services, but injunctive relief is more appropriate. Court may have difficulty in administration of SP Laches defense may apply
question

Specific Performance Essay script
answer

California courts are reluctant to grant specific perofmarnce for two reasons: 1) history – there is an adequate performance at law 2) Problems of judicial administration.
question

Reclamation from insolvent buyer
answer

Buyer must have been insolvent at time of receipt Seller must demand return of goods with 10 days of receipt. (10 day rule becomes reasonable time if buyer expressed solvency.) Buyer still has goods
question

Buyer’s Recovery from Insolvent Seller
answer

Seller must become insolvent within 10 days.
question

Money Damages Essay Script
answer

1) The various California damages rules are based on protection of the expectation interest. 2) This means we put the plaintiff in the same money position as if there was no breach.
question

Money Damages
answer

Generally – expectation is dollar value without breach – dollar value with breach Sales of Goods – relevant facts 1) who breached 2) who has the goods 3) was there a replacement deal?
question

Article 2 Seller breach damages
answer

buyer keeps: FMV if perfect – FMV as delivered OR cost of repair seller has goods: market price at discovery of breach – K price OR reasonable replacement price – K price
question

Article 2 Buyer breach damages
answer

Buyer keeps the goods: for the K price Seller has the goods: K price – resale, unless seller cannot resell: seller can recover sale price and, in some situations, provable lost profits
question

Volume seller lost profits
answer

Even if a sale can be made to a new buyer, but for the breach by the original buyer, a volume seller might have made an extra profit of goods it keeps in volume.
question

Incidental damages
answer

Costs incurred with dealing with the breach – always recoverable.
question

Consequential damages
answer

Either general damages or loss special to the plaintiff. Recoverable when foreseeable
question

Avoidable damages
answer

No recovery for damages that could have been avoided without undue burden on P. Burden is on D to show.
question

Liquidated damages
answer

Fixed in contract. Valid when difficult to forecast when K was made and where provision is a reasonable forecast.

Get instant access to
all materials

Become a Member