Formation of Contracts
What are the three requirements for a valid offer?
Intent to enter into a contract, reasonably definite terms, and communication to the offeree.
What is consideration?
A bargained-for exchange.
What does the Statute of Frauds generally require?
A writing signed by the party to be charged.
What is the general measure of contract damages?
Expectation damages.
When do an intended third-party beneficiary's rights vest?
Upon assent, reliance, or filing suit.
What are the four situations in which an offer cannot be revoked?
A firm offer under the UCC, an option contract, beginning performance of a unilateral contract, and reasonably foreseeable detrimental reliance (FOUR).
Name four things that are not valid consideration.
A gift promise, a moral obligation, past consideration, and an illusory promise.
What does the acronym MYLEGS represent?
Marriage contracts, contracts that cannot be performed within one year, land sale contracts, executor promises, goods worth $500 or more, and surety agreements.
What is the difference between incidental damages and consequential damages?
Incidental damages arise from responding to the breach, while consequential damages are foreseeable losses resulting from the breach.
What is the difference between an assignment and a delegation?
An assignment transfers contractual rights, while a delegation transfers contractual duties.
How does acceptance differ between common law contracts and UCC contracts?
Under common law, the acceptance must mirror the offer. Under the UCC, additional terms may become part of the contract unless they materially alter it, are objected to, or the offer limits acceptance.
How do contract modifications differ under common law and the UCC?
Common law requires new consideration. The UCC requires only good faith.
What are the four UCC exceptions to the Statute of Frauds for the sale of goods?
Merchant's confirmatory memo, specially manufactured goods, judicial admissions, and part performance.
When is specific performance generally available?
For contracts involving unique goods or interests in land.
Under the Parol Evidence Rule, when may consistent additional terms be admitted?
When the written agreement is only a partial integration.
What is the mailbox rule, and what are its two major exceptions?
Acceptance is effective when sent. The exceptions are option contracts (effective upon receipt) and when both a rejection and an acceptance are sent—the first one received controls.
What is the difference between substantial performance under common law and perfect tender under the UCC?
Common law generally requires substantial performance, while the UCC requires perfect tender unless an exception applies.
What are the two required elements of unconscionability?
Procedural unconscionability and substantive unconscionability.
When is a liquidated damages clause enforceable?
When damages were difficult to estimate at the time of contracting and the amount is a reasonable forecast of anticipated damages.
What five situations are not barred by the Parol Evidence Rule (FICCL)?
Formation defenses, interpretation of ambiguous terms, failure of a condition precedent, clerical errors, and later modifications.
A seller ships nonconforming goods. When is the shipment considered a counteroffer rather than both an acceptance and a breach?
When the seller ships the goods with an accommodation notice stating that the shipment is offered only as an accommodation.
When does a seller have an automatic right to cure a nonconforming tender under the UCC?
When there is still time remaining under the contract or the seller reasonably believed the buyer would accept the goods with or without a price allowance.
When is a unilateral mistake sufficient to make a contract voidable?
When the other party knew or had reason to know of the mistake.
What must a plaintiff prove to recover in restitution under a quasi-contract theory?
The plaintiff conferred a benefit on the defendant, reasonably expected payment, and the defendant would otherwise be unjustly enriched.
How do courts interpret contract terms when express language is unclear?
They look first to course of performance, then course of dealing, and finally trade usage. If necessary, the UCC supplies gap fillers.