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Contracts: over view
Armadillos From Texas Play Rap, Eating Tacos
Applicable Law
Formation of Contracts
Terms of Contract
Remedies for unexcused nonperformance
Excuse of nonperformance
Third Party Problems
Unilateral contract
results from an offer that expressly requires performance as the only possible method of acceptance.
Vocab: Bilateral contract
All other offers, usually a offer that is silent as to acceptance. Bilateral contracts are going to be all contracts no involving reward, prize, and something that offers an exclusive performance for acceptance.
Vocab: Quasi Contract
The Quasi Contract is something that is not deemed as a contract, but offers equitable relief in a court of equity.
Law you are Responsible for:
UCC = contracts for the sale of goods apply this law.

Common Law: All other contracts not involving the sale of goods

UCC 2A: covers Leases of Goods
Second issue:
Formation of a contract
Look first for an agreement then second determine weather the agreement is legally enforceable.
Initial Communications: Offers
offers are manifestations of commitment the test is weather a reasonable person in a position of the offeree would believe that his or her assent creates a contract
Look for missing price and terms in sales contracts (real estate)
Offers UCC sale of goods
Under the UCC goods don't have to have a set price in the offer. But only is between a merchant that sells the goods and a buyer of said goods
UCC Offers
Watch for vauge or ambiguous material terms of the contract are not an offer under the common law or UCC.
Requirements or Output Contracts
Look for all, only, exclusively, solely in these contracts, b/c they don't have to specify amount because they are buying all the output of the seller.
Requirements or Output Contracts: Increases in needs
A buyer can increase requirements so long as the increase in in line with prior demands, and is not unreasonably disproportionate limitation on increases.
Advertisement Offers
generally Advertisements are not offers they are invitations to entertain offers. It can be an offer if it is a reward or if it specifies quantity and expressly indicates who can accept.
Termination of Offers
-Lapse of time= time stated or reasonable time (90 days)
-Death of a party prior to acceptance: death of incapacity of either party after the offer but before acceptance terminates offer
-Words or conduct of offeror (revocation) can be revoked by an unambiguous statement by offeror to offeree of unwillingness or inability to contract; Unambiguous conduct by an offeror indicating an unwillingness to contract that offeree is aware of. (sold it already)
Irrevocable Offers
OPtion contracts: cannot be revoked b/c a person paid for the option to be left open
UCC Firm offer Rule: an offer cannot be revoked for up to 90 days if it is an offer to buy goods, signed written promise, and the party is a merchant.
Offer can't be revoked if there has been reliance that is reasonably foreseeable and detrimental to the offeree.
The start of Performance pursuant to an offer to enter into a unilateral contract makes that contract irrevocable for a reasonable time to complete performance. Mere preparation does not count to make the offer irrevocable
Termination of Offers: Rejection
Counteroffers, conditional acceptance of additional terms (Does not apply to UCC sale of goods contracts).
Counteroffer: terminates the initial offer and gives a counteroffer creating a new offer. (not to be confused with bargaining which is not as firm as a counter offer)
Termination of Offers: Conditional acceptance
it terminates the offer. look for responses that follow accept as: if, only if, provided, so long as, but, or on condition that.
Termination of Offers:
Mirror Image Rule
under common law, a response to an offer that adds new terms is treated like a counter offer rather than an acceptance. You must assent to the same offer that was sent to you initially.
Termination of Offers:
Under the UCC
Under the UCC Art. 2 you can accept with additional terms as long as they are not terms that are material, and both parties are merchants and is not objected to by the offeror.
Acceptance of an Offer
look to the offer to see how the terms of the offer are to be accepted. The offer controls the method of acceptance. The start of performance on a bilateral contract is considered acceptance. But for UNILATERAL CONTRACTS Performance is the acceptance.
Mailbox Rules
All communications other than Acceptance are effective when received, but acceptance is generally effective when mailed. if a rejection is mailed before an acceptance is mailed then neither is affective untill received you cannot use the mailbox rule to beat the time limit of an option contract.
Who can Accept and offer?
can only be accepted by a person that knows about the offer at the time they accept (rewards) who is the person the offer was made. OFFERS CAN'T BE ASSIGNED UNLESS AN OPTION OTHERWISE PROVIDES.
Consideration is what is bargained for in the initial agreement. Issues in Consideration= What was bargained for, legal detriment, promise as consideration, adequacy of consideration, past consideration, and preexisting contractual or statutory duty rule.
Article 2 Considerations
You can change the consideration to modify the sale of goods if the modification is in good faith.
Reasons you are unable to enforce an agreement:
Defendant or promisors lack of capacity.
Infant under the age of 18
Mental incompetence- lacks the ability to understand agreements
intoxicated persons, if other person has reason to know.
Consequences to contracting with a person that lacks capacity
that person has a legal right to disaffirm by person without capacity and avoid legal consequences.
The Statute of Frauds (SOF)
was designed to prevent fraudulent claims of the existence of a contract. SOF makes it harder to make such a False or fraudulent claim by requiring the claimant have proof that a contract exists before he gets his day in court. It is a barrier to getting into court.
What satisfies the SOF?
Proof that there is performance, or a writing signed by the person who is asserting that there was no such agreement.
Contracts that fall within the SOF
- Promises to Answer for the debts of another (almost always wrong) a guarantee of a person to pay if someone does not.

- Services not capable to be preformed within 1 year from the time of the contract. Also specific time more than a year from date of contract the SOF applies
- Tasks (nothing said about time) Then the SOF does not apply because any task it capable of completion with unlimited resources.
- Contracts for Life are not within SOF
- Transfers on intent in Real estate is within the SOF
- Sale of goods for 500 or more is within the SOF
- lease of Goods for 1k or more.
The main purpose exception
If the main purpose of the obligation allegedly garanteed was to benefit the guarantor, then not even that guarantee is within the SOF. ( so if you give a guarantee to do something but you are the main beneficiary of the guarantee then the guarantee is within the SOF.
How can you satisfy the SOF?
You can again use the proof of performance that will verify the SOF:
1. Transfer of Real Estate- part performance satisfies (2 of 3 improvements to the land, payment, and possession)
2. Full performance by either party.
3. Part performance of a services contract does not satisfy, but UCC part performance of a contract for the sale of goods satisfies the SOF.
4. Delivered goods if the other party keeps the delivered goods then it is considered that the SOF is satisfied.
5. Undelivered goods if the goods have yet to be delivered then the SOF is not satisfied.
6. Sellers Part performance of Specially manufactured goods, the SOF is satisfied when the seller makes a substantial beginning this means that the sell has doe enough work that it is clear that what she is working on is specially manufactured.
How can you satisfy the SOF?
Writings can satisfy the SOF, but remember that not everything is satisfied by writings and that the requirements of the SOF can be satisfied w/o.
Look at the contents of the writing or writings that have the material terms (the Who and the What to be bargained for)
Look also at who signed the writings, because if it has been signed by the person who is assering the SOF defense then they have no SOF defense.
UCC Rule Satisfying the SOF
Look at the contents of the writing, and who signed it the writing must have the what and the how many. Generally the writing must be signed by the person who is asserting the defense, but with the UCC when based on the persons failure to respond to signed writings. Both parties must be merchants and the person who receives a signed writing with a quanity terms that claims there is a contract fails to respond within a 10 day time period.
Authorization to enter into contract for someone else.
Rules of law require that the authorization must be in writing only if the contract to be signed is within the SOF (the authorization must be of equal dignity with the contract)
Contract Modifications
Look at the deal with the alleged changes, and determining weather the deal with the alleged change would be within the SOF. IF THE DEAL WITH THE MODIFIED TERMS WOULD BE WITHIN THE SOF THEN THE AGREEMENT MUST BE IN WRITING.
If the agreement requires all modifications be in writing?
Under common law contract provisions requiring that all modifications be in writing are no effective- Ignore contract language.
Under UCC contract provisions requiring written modifications are effective unless waived.
Other reasons for not enforcing an agreement
Illegality: if it subject matter or the action is for a illegal purpose no need to perform
Public Policy: look for an exculpatory agreement that exempts intentional and or reckless activity from liability or a covenant not to compete. w/o a reasonable need or reasonable time.
Misrepresentation: Statement of fact before the contract, by one othe contracting parties, or her agent, that is false
Nondisclosure: has no duty to disclose what he knows, so there is a wrongdoing requirement for nondisclosure. (look for fiduciary-like relationship or concealment)
Duress: economice and or physical not tested very much.
Empowers the court to refuse to enforce all or part of an agreement. The basic tests: Unfair surprise, and oppressive terms are tested as some of the time the agreement was made by the court. UCC 2a: if unconscionable conduct in including and enforcing the lease
Ambiguity in words of agreement
There will be no contract if: parties use a material term that is open to at least two reasonable interpretations, Each party attaches different meaning to the term, Neither party knows or has reason to know the term is open to at least two reasonable interpretations.
Mistake of Fact
mutual mistake or material fact and not assumed risk, Unilateral mistake of material fact. Generally courts have been reluctant to allow a party to avoid a contract for a mistake made by only one party.
Parol Evidence Rule
the Parol evidence rule is like an evidence rule in the sense that the issue is whether evidence is admissible and purpose for which the evidence is to be introduced is often determinative. (the final written contract is more reliable than anything said or written earlier.
Parol Evidence Rule; Vocab
Integration: Written agreement that court finds is the final agreement triggers the Parol Evidence Rule
Partial integration: written and final, but not complete.
Complete integration: written and final and complete
Merger clause: contract clause such as this is the complete and final agreement.
Parol Evidence: words of party, before integration (before agreement was put in written form), Oral or written.
Reformation: equitable action to modify written contract to reflect actual agreement.
Facts Triggering the Use of the Parol Evidence Rule
Changing and or contradicting terms in the writen deal regardless of whether the writing is a complete or partial integration. the Parol Evidence rule prevents the court from admitting evidence of earlier agreements for the purpose of contradicting the terms in the written contract.
Mistake in integration
You can use the previous terms to make sure the agreement was reduced to writing properly.
getting out of a written deal
the parol evidence rule does not prevent a court from admitting evidence of earlier words of the parties for the limited purpose of determining whether there is a defense to the enforcement of the agreemtn such as a misrepresentation, fraud, or duress.
Explaining term in the written deal
it does not prevent a court from admitting evidence of earlier agreements to resolve ambiguities in the written contract.
Adding to the written deal
The Parol evidence rule prevents a court from bringing in evidence of earlier agreements as a source of consistent additional terms unless the court finds that it was only a partial integration or that the additional terms would be in a separate agreement.
Conduct and course of performance
conduct can also be a source of contract terms.
Course of performance: same people, same contract
Course of dealing: same people, but different but similar contract.
Custom and usage: different but similar people, different but similar contract
UCC sale of goods contracts (default terms)
Delivery obligations of the seller when shipped by common carrier: Shipment contract= get the goods to the common carrier, and makes reasonable arrangements for delivery and notifies the buyer.
Destination Contracts: The other possibility is that the contract is a destination contract which means the seller does not complete its delivery obligations until the goods arrive where the buyer is.
FOB followed by city where the seller is or where goods are means shipment contract; FOB followed by any other city means destination contract.
Risk of Loss
After the contract has been formed but before the buyer receives the goods the goods are damaged or destroyed and neither the buyer nor the seller is to blame.
Risk of Loss rules
1. Agreement: the agreement of the parties control (too easy)
2. Breach: breaching party is liable for any uninsured loss even though the breach is unrelated to the problem.
3. Delivery by common carrier other than seller: the ROL shifts from the seller to the buyer at the time that the seller completes delivery obligations (Gets the stuff loaded on the common carrier and and gives notice to the other party)
4. No agreement, no breach, no delivery by a carrier: the determining factor is whether the seller is a merchant. ROL shifts from a merchant seller to the buyer on the buyers receipt of the goods. ROL shifts from a non merchant seller when he or she "tenders" the goods
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