0104Contracts and Salesshort.docx

0104Contracts and Salesshort.docx

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0104ContractsandSalesshort

Contracts&Sales（34Qs）-25%ofUCCArt2,75%fromCOMMONLAW

MiniReview

1.Skills

a）IfUCCapplies,markthequestionwith“C”avoidingconfusionbetweencommonlawandUCCrules.

b）Highlightingthefollowing:

✧Offerandacceptancelanguage

✧Date

✧Locating3rdparty

2.Nonominaldamagesifactualdamagesareawarded.

3.Commercialimpracticability

a）unforeseenproblematthetimeofexecutionofK

b）noassumptionofsuchunforeseenrisk

4.InstallmentK

I.General

A.Vocabulary

1.Contract–legallyenforceableagreement（agreementaloneisn’tenough,thenlooktoseeifitislegallyenforceableandifthereareanydefenses）

a.ExpressK–communicatedbylanguage（oralorwritten）

-E.g.:

XpromisestopaintY’scar,inreturnforY’spromisetopayX$100

b.ImpliedK–contractimpliedbasedatleastinpartonconduct

-E.g.:

XfillshiscaratY’sgasstation–thereisKforpurchase&saleofgas

2.Quasi-K（restitutionaryrecoveryatlaw）–equitableremedytoavoidunjustenrichmentQuasi-contractisanequitableremedythatapplieswhenevertheapplicationofcontractlawyieldsanunfairorinequitableresult.Quasi-contractisnotlimitedbycontractrules,butisgovernedbyequitableconcepts.Itprotectsagainstunjustenrichment.

a.NotgovernedbyKlaw–governedbyequitableconcepts

b.AnytimetheproperapplicationofKrulesproducesanunfairresult,wemovetoQuasi-K

（i）Elements–Phasconferredabenefit&reasonablyexpectedtobepaid,ANDDrealizedunjustenrichmentifPnotbecompensated

（ii）E.g.:

XcontractswithYtobuildahouseforY–Xbecomesill&can’tcontinueaftercompleting1/3ofwork–Xcan’tsueink,butmayrecoverforbenefitconferredonY

c.Measureofrecovery–Kpriceisnotthemeasureofrecovery.Yougetthereasonablevalueofthebenefitconferred,notthecontractprice.

d.NOTE:

thisisonlyavailableasaremedyfortotalbreach,NOTforpartialbreach

3.TypesofContracts-Allcontractsarebilateralunlesstheoffersaysitcanbeacceptedonlybyperformance.

a.BilateralK–requireanexchangeofpromises.Offerthatcanacceptedinanyreasonableway

b.UnilateralK–requireanexchangeofanactforapromise;2types（allotherK’sarebilateral）:

（i）Offerexpresslyrequiresperformanceforacceptance（e.g.offer…acceptedonlyby…）

（ii）Offertothepublic（e.g.,reward,prize,contest）

4.Void,voidable&unenforceableK’s:

a.VoidK–onewithoutanylegaleffectfromthebeginning（e.g.,anagreementtocommitacrime）

b.VoidableK–onethatapartymayelecttoavoidorratify（e.g.,aKbyaminor）

c.UnenforceableK–oneotherwisevalidbutforwhichsomedefenseexistsextraneoustoformation（e.g.,StatuteofFrauds）

5.CreationofanenforceableKrequires:

a.Mutualassent–（i）offer（i.e.,promise）&（ii）acceptancebeforetermination

b.Consideration–（i）bargained-for-exchangeofsomethingoflegalvalue,or（ii）substituteforconsideration（i.e.,promissoryestoppel,detrimentalreliance,orgoodfaithmodificationunderUCC）,&

c.Nodefensestoformation–including（i）mistake,（ii）lackofcapacity（voidableK）,（iii）illegality（voidK）,or（iv）specificperformance

B.ApplicableLaw

1.Commonlaw–usethisforservice,realestate,employment,etc.（NOTsalesorleaseofgoods）

2.UCCArticle2–appliestoK’sthatareprimarilysalesofgoods（mostrulesaresameascommonlawrules）

a.Goods–tangible,movablepersonalproperty（NOTrealproperty）

b.NOTE:

mixeddealofgoods&services

（i）Generalruleisthatit’sallornothing,dependingonwhichismoreimportant（primary）

（ii）BUT,ifthepartieshavedividedthepaymentinto2parts,then&onlythencanyouuseArticle2forpartofthedeal,&commonlawfortheotherpart

3.UCCArticle2A–appliestoleasesofgoods（NOTleaseofrealproperty）

a.lessor&lesseecontroversies:

Article2AissimilartoArticle2

b.Defaultbylesseeorprioritycontestsb/wlessor&3rdparties:

Article2AissimilartoArticle9

4.Differencesb/wcommonlaw&UCC:

CommonLaw

UCC

optionKrequiresconsiderationor

promissoryestoppel

merchant’sfirmofferisirrevocable

withoutconsideration

acceptancemustbeabsolute&unequivocal;

otherwise,itwillbetreatedasarejection&

counteroffer（“mirrorimagerule”）

proposalofadditionaltermsdoesnotconstitute

rejection;termsmaybecomepartofK

（“battleoftheforms”rule）

K’scannotbemodifiedwithoutconsideration

modificationssoughtingoodfaitharebindingwithoutconsideration

ruleofsubstantialperformance

（performanceneednotbeperfect）

perfecttenderrule（withexceptions）

II.MutualAssent–Offer&Acceptance

A.Offers

1.Definition–amanifestationofcommitment

2.Requirements:

a.Anexpressionofpromise,undertakingorcommitmenttoenterintoaK–consider:

（i）Languageused;（ii）surroundingcircumstances;（iii）priorrelationshipoftheparties;

（iv）Methodofcommunication（broaderthecommunicatingmedia,lesslikelyitisanoffer）;

（v）Customintheindustry;（vi）degreeofdefiniteness&certaintyofterms

-NOTE:

pricequotationsareNOToffersUNLESSitisaresponsetoaspecificinquiry

b.Definite&certaininitsterms–dependson:

（i）Identificationofofferee–mustbesufficientlyspecifictojustifytheinferencethattheofferorintendedtocreateapowerofacceptance

（ii）Definitenessofsubjectmatter–（i）realestate,land&price;（ii）saleofgoods,quantitymustbecertainorcapableofbeingcertain,（iii）employmentk,duration

（a）Vagueterms–NOofferbecausemaydefeatformation;unlessacceptanceorpartperformancemakesthevaguetermclear

-Disqualifyingterms–“appropriate”,“fair”,“reasonable”

-Highlyindicativeterms–“all”,“only”,“solely”

（b）Missingpriceterms

-UCC（SaleofGoods）–offerstillvalideventhoughKsaysnothingaboutprice,it’sstillvalidK（reasonabletermssuppliedbycourtifthosetermsareconsistentwithparties’intent）

-CommonLawK–NOoffer

（c）Requirements/outputK’s（UCC）–arevalid,eventhoughthere’snoquantityterm（thebuyercanincreaserequirementssolongastheincreaseisinlinewithpriorrequirements;RULEOFTHUMB:

amoderateincreaseisabout10%）

c.Communicatedtotheofferee

-NOTE:

invitationstodeal

（i）Offersfollowedbyadditionalterms–mustconsideradditionalterms

（ii）AdvertisementsareNOToffers;unless（i）theyarespecificastoquantity&（ii）indicatewhocanaccept（e.g.,“1blackhat,worth$140–1stcome,1stserve”）

B.TerminationofOffers

1.TerminationbyOperationofLaw:

a.Deathofapartypriortoacceptance–deathorincapacityofeitherpartyterminatestheoffer

-EXCEPT:

（i）optionsK,&（ii）partperformanceofoffertoenterintounilateralK

b.DestructionoftheproposedK’ssubjectmatter;or

c.Superveningillegality

2.TerminationbyLapseofTime–timestatedORreasonabletime（RULEOFTHUMB:

1month）

3.Revocation–terminationbyOfferor（bywordsorconduct）

a.Methodofrevocation

（i）Statementbyofferortoretractoffer;OR

（ii）Conductbyofferorunambiguouslyindicatingchangeofmind,ANDofferee’sawareness（here,needtolookatboththeofferor&offeree）

b.Whenrevocationiseffective

（i）Timeofreceipt（contrasttothemailboxruleforacceptances）BUTpublicationofrevocationiseffectivewhenpublished

（ii）BeforeAcceptance–oncebuyeraccepts,it’stoolateforthesellertorevoke

c.Limitations–offeror’spowertorevoke:

（i）OptionK–offerorpromisedtokeepofferopenANDoffereepaidforthatpromise（consideration）:

（a）E.g.:

SofferstosellBhiscar,&BpaysS$10forhispromisetokeeptheofferopenforaweek–Scan’trevokeforaweek

（b）Rejectionofoptionbeforeendofoptionperiod–doesNOTterminatethepowertoaccepttheoffer,UNLESStheofferordetrimentallyreliesonupontherejection

（c）Oralpromisesnottorevoke（illusorypromise）–offerorstillretainstherighttorevokeoffer

*NYDistinctions–OptionK&Revocation

Bystatute,ifofferisinwriting,signedbytheofferorandstatesthatofferisirrevocable,thentheofferisNOTrevocableforstated/reasonabletime,evenwithoutconsideration

（ii）

“Firmofferrule”underUCC（SalesofGoods）–offercanNOTberevoked（upto3months&NOneedforconsideration）if:

（a）Offerorisamerchant（onewhoregularlydealsingoodsofkindorwhohasspecializedknowledgeofthebusinesspracticesinvolved）,AND

（b）Written&signedofferthatpromisestokeeptheofferopenforsomeperiodoftime

-E.g.:

S,ausedcardealer,offerstosellBacarfor$400–Spromisesbysignedwritingtokeeptheofferopenfor6months（Courtcutsoffto3months;evenokayiftimeperiodnotstated）

（iii）Detrimentalreliance–offercannotberevokediftherehasbeendetrimentalreliancebytheoffereethatisreasonablyforeseeable

（iv）UnilateralKPartPerformanceRule–offerNOTrevocableforareasonabletimeinwhichoffereecancompleteperformance:

（a）MerepreparationisNOTpartperformance–BUTcanarguedetrimentalreliance

（b）BUT,partperformanceisNOTacceptance,completeperformancerequiredforacceptance

-NOTE:

inbilateralK,partperformanceisacceptanceofoffer

*NYDistinctions–UnilateralK

PartperformancedoesNOTmakeofferirrevocable（revocableuntilperformancecompleted）

4.Rejection–terminationbyOfferee（bywordsorconduct）–3methodsofindirectrejection:

a.Expressrejection

b.Counteroffer–（i）terminatestheoffer&（ii）becomesanewoffer

（i）Ifacounteroffermade,thenNOexpressK,UNLESSthatcounterofferitselfhasbeenaccepted

（ii）Distinguished