UCC-Specific
When is UCC applied?
Contracts for the sale of goods; between merchants
What is the Mailbox Rule?
Unless offer requires something different, an acceptance forms a K as soon as the acceptance is out of the offeree's possession, even if communication of acceptance never reaches Offeror.
What is the Statute of Frauds?
makes certain categories of contracts enforceable only if there is a sufficient, signed writing
Promissory Estoppel Rule
(1) An unambiguous promise is enforceable, as justice requires, if:
(2) the promise induced promisee to detrimentally rely;
(3) that type of reliance was reasonable; and
(4) that type of reliance was foreseeable to Promisor.
A grandmother wanted to motivate her 16-year-old grandson, who had recently gotten out of juvenile detention, to stay out of trouble. They verbally made a deal that if the grandson did not commit any more crimes, the grandmother would give him $5,000 for his 18th birthday. The promise of $5,000 induced the grandson to refrain from any further criminal activity.
Is the grandmother’s promise enforceable either as a contract or under the doctrine of promissory estoppel?
A. Not enforceable as Promissory Estoppel or Contract
B. Enforceable only as K
C. Enforceable only as Promissory Estoppel
D. Enforceable as either K or PE
A. Not enforceable as either
The grandmother’s promise is not enforceable either as a contract or under the doctrine of promissory estoppel. Pre-existing duty rule provides that an act or forbearance is not consideration if the party already has a legal obligation to perform the act or forbearance. Further, under the statute of frauds, a contract that cannot be performed within one year must be in a signed writing in order to be enforceable. Here, the grandson’s part of the deal was a promise to obey the law, which he had a pre-existing duty to do. Therefore, the grandson’s promise was not valid consideration that would make the parties’ contract enforceable. Further, the grandson was only 16 at the time the parties entered this agreement, and he would need to obey the law from that point until he was 18 years old. This means that it would take over one year for the grandson to perform his side of the agreement. Because this agreement would take more than a year and was not in writing, it is also unenforceable under the statute of frauds.
Under UCC, is a K for the sale of goods binding without new consideration?
How is a contract to modify a prior contract enforceable?
When each Party takes a legal detriment and requires in exchange what it seeks from the other Party.
Categories of Ks under SoFs
(MY LEGS)
1. Ks in consideration of marriage;
2. Ks where performance is required to take greater than 1 year to perform;
3. Ks for sale of Land;
4. Surety promises by executor to pay debt of estate;
5. Ks for Sale of Goods at $500 or more;
6. Suretyship promises
Material Benefit Rule
(1) A promise made (2) in recognition of a (3) non-gifted material benefit (4) previously received by Promisor to Promisee is enforceable as justice requires.
A man whose home had been burglarized offered a reward for anyone who could provide information leading to the arrest of the person who burglarized his house. A neighbor who had witnessed the burglary gave information to the police, which led to the burglar’s arrest. The neighbor was unaware that the man had offered a reward.
Is there a valid contract between the man and the neighbor?
A. No, because there was no reciprocal promise
B. No, neighbor cannot accept an offer he didn't know existed
C. Yes, man received benefit of offered services
D. Yes, man made offer and neighbor accepted by rendering performance
B. No, neighbor cannot accept an offer he didn't know existed
In order to form a valid contract, there must be an offer and acceptance. The offeree must be aware of the offer in order to accept it. If the offeree is not aware of an offer, he cannot accept even if he does what the offeror has requested. Here, the neighbor was unaware of the offer of a reward and therefore cannot accept the offer and form a contract.
When is Battle of the Forms used?
In a business exchange where standard forms conflict on additional or different terms proposed at formation
Three types of invalid offers
(1) made in jest
(2) preliminary negotiations
(3) advertisements unless reasonably certain promise
What is the difference between a sufficient writing under UCC and specific writing under Common Law?
UCC: Describe quantity of goods sol
Common law: describe essential terms with reasonable certainty
What events terminate an Offeree's power to accept?
(1) Offeree made a counteroffer;
(2) Offeror (directly or indirectly) revoked the offer;
(3) The period of time to accept has ended/lapsed;
(4) Offeree rejected the offer;
(5) A Party's subsequent death or legal incapacity
A recent law-school graduate was hired by a law firm and entered into a contract that detailed the terms of the parties’ agreement. Shortly after starting employment, the graduate entered into a contract with a car dealership to purchase a new car. The graduate also hired a residential cleaning service to clean her apartment and signed a six-month service contract. At the end of her first year of employment, the graduate received a sizeable year-end bonus, which she used to enter into a contract to purchase investment real estate.
Which of the following contracts would be governed by Article 2 of the Uniform Commercial Code (UCC)?
A. Graduate's employment contract
B. Graduate's K to purchase car from dealership
C. Graduate's K with cleaning service
D. Graduate's K to purchase land
B. Graduate's K to purchase car from dealership
UCC governs sale of goods
Merchant Firm Offer Rule
An offer by a (1) merchant to buy or sell (2) goods in a (3) signed writing which (4) gives assurance that the offer will be held open is NOT revocable during time stated, or (5) if no time is stated, for a reasonable time. However, (6) period of irrevocability cannot exceed 3 months.
Mirror Image Rule of Acceptance
Acceptance of an offer is the (1) offeree's communication of unequivocal and unconditional assent (2) to the offer's terms without the slightest variation
Common Law-Specific SoF Exception to Sale of Land
If a Party has taken substantial steps in reliance on an oral land contract, it may be enforced despite lack of writing.
What is an option contract?
An option contract is where consideration is typically money paid to the Offeror by the Offeree to keep an offer open for a specific amount of time.
A plaintiff brought a breach-of-contract action and sought relief on alternative grounds. First, the plaintiff sought to enforce the contract on the ground that it was a valid contract. Alternatively, the plaintiff sought damages on the ground of promissory estoppel.
Which of the following is NOT required in order for the plaintiff to prevail on the ground of promissory estoppel?
A. A finding that D made a promise to P
B. A finding the agreement was supported by consideration
C. A finding P acted, or refrained from acting, as a result of promise
D. A finding P reasonably relied on D's promise
B. A finding the agreement was supported by consideration
Consideration not required under PE; all other are
1: Offer limits acceptance to terms of offer
2: Terms materially alter K
3: Offeror objects
Three types of damages
(1) Expectation damages
(2) Reliance damages
(3) Restitution damages
UCC-Specific Exception to SoF (Sale of Goods)
If a written confirmation satisfies the SoF as to sender and is sent within a reasonable time and not objected to within 10 days, this satisfies SoF as to both Parties, even without recipient's signature
When is a K modification due to Unanticipated Circumstances enforceable?
While (1) both Parties are still mid-performance, any K modification (2) due to unanticipated circumstances is enforceable if it is (3) mutually assented to by all Parties, (4) procedurally equitable, and (5) substantively equitable
A woman was concerned with her brother’s addiction to cigarettes. The woman told her brother that if he abstained from smoking cigarettes for the next year, she would give him half ownership of a piece of land that she owned. The brother never told his sister that he accepted her proposal but did stop smoking cigarettes for a year.
Did the parties’ actions satisfy the four elements of contract formation at common law?
A. No, b/c abstaining from smoking for a year is not valuable consideration
B. No, b/c brother never told sister he was accepting her proposal
C. Yes, for a unilateral K
D. Yes, for a bilateral K
C. Yes, for a unilateral K
Here, the sister made an offer of property to her brother if he would stop smoking for a year. The brother accepted this offer by performance, rather than promise. In other words, he did not promise her that he would stop smoking for a year in return for her promise of property, but actually stopped smoking for a year. The brother’s act of not smoking for a year constitutes consideration, which can take the form of forbearance, or not doing something that one would otherwise be allowed to do. Therefore, all the elements of a unilateral contract exist under common law.