Creation of Enforceable Contract
Consideration and Mutuality (define both)
Consideration: A bargained-for exchange with legal value
Mutuality: Both sides must be bound otherwise the contract is illusory
Defenses to Contract Formation/Enforcement
- Mistake
- Fraud and Misrepresentation
- Illegality of Consideration or Subject Matter
- Incapacity
- Statute of Frauds
- Unconscionability
Parol Evidence Rule (and exceptions to admissibility)
When parties intend that a writing is the final and complete expression of the bargain no prior or contemporaneous expressions are admissible to vary the terms of the writing
evidence outside scope of the rule may be admitted when it:
1) concerns validity
2) is used to interpret
3) shows true consideration paid
4) is used in an action for reformation
Express Warranty
Disclaimer given no effect
Noncarrier; merchant seller
Risk passes to buyer upon taking physical possession
Termination of Offer (name and describe each way)
- revocation by offeror: express or implied offeror
- rejection by offeree: express rejection, counteroffer, or lapse of a reasonable time
- termination by operation of law: death or insanity of either party, destruction of the subject matter, supervening illegality
Incapacity Defenses
- infancy
- mental incapacity
- intoxication
- duress
- undue influence
Common Law Additional Terms
Additional terms = rejection and counter offer
Warranty of Title
Specific language or circumstances putting buyer on notice that seller is not claiming title
Noncarrier; nonmerchant seller
Risk passes upon tender of delivery
Irrevocable Offers
- merchant's firm offer
- option contracts
- detrimental reliance
-performance has begun on a unilateral offer
Statute of Frauds (what's within)
Marriage
Year
Land
Executors and administrators
Goods ($500 or more)
Suretyship
UCC Additional Terms Rules
Non-merchants: a contract is formed but additional terms are not included
Merchants: a contract is formed and includes additional terms if:
1) the offer does not limit acceptance to its terms
2) the terms doe not materially alter the contract
3) the offeror does not object to the new terms within a reasonable time
Warranty of Merchantability
Disclaimed by:
1) conspicuous language mentioning merchantability OR
2) "as is", refusal to examine, or course of dealing
Risk passes on delivery to carrier
Common Law Acceptance Rule
There must be an acceptance of each and every term of the offer and nothing more (the mirror image rule)
Effect of Unilateral Mistake
Contract is voidable if non mistaken party knew or should have known of mistake
Common Law Modification (traditional and modern view)
Traditional: additional consideration needed
Modern: modification without consideration is permitted if it is fair and equitable and made under circumstances that were unanticipated by the parties when the contract was made
Warranty of Fitness for Particular Purpose
Disclaimed by:
1) language stating there are no warranties beyond those described without mentioning "fitness for a particular purpose" OR
2) "as is", refusal to examine, or course of dealing
Destination Cases
Risk passes on tender at destination
UCC Acceptance Rules
- an acceptance that adds terms to the offer is valid
- between merchants, additional terms in an acceptance become part of the contract unless they materially alter the contract, the offeror objects or the offer is limited to its terms (battle of the forms)
Contract is voidable by adversely affected party if:
1) mistake concerns basic assumption on which contract was made
2) mistake has material effect
3) party seeking avoidance did not assume risk
UCC Modification
- no consideration needed as long as it is in good faith
- must be in writing if, as modified, contract is for $500 or more
Damages for Breach of Warranty
Difference between value of goods tendered and the value as warranted
FOB Cases
Risk passes on delivery to FOB location