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Law Governing  Contracts
Contracts for the sale of goods is governed by the UCC. Contracts for the sale of services is governed by common law.
Elements of Contract Formation
The prima facie elements of a contract are offer, acceptance (mutual assent), consideration  and no defenses to formation.
Offer Defined
1. An expression of promise or commitment to enter into a K.
2. Definitie and certain terms.
3. Communiacted to  the offeree.
(look to custom in the industry to make sure it's not a preliminary negotiation.
Termination of an Offer
Offer may be accepted as long as it has not been terminated. It may be terminated by:
1. An act of either party.
2. Operation of law.
Offeror's Power to revoke limited if:
1. There is an option K supported by consideration.
2. Firm offer under UCC (signed writing by a merchant--one who deals in the goods of the kind sold---promising to hold the offer open for some period of time.
3. Offeree detrimentally relied on  on the offer and the  offeror could reasonably have expected such reliance.
4. It's a unilateral K and the offeree embarked on performance
Offeree may reject by:
1. Expression
2. Counter offer (creates a new offer by the offer by the offeree)
3. Lapse of time--offeree's failure to terminate within a reasonable time  will terminat offer.
Rejection effective when?
Effective when received. Once an offer has been rejected the original offer is NOT valid.
Effect of rejecting an option
Rejection of an option does not terminate the offer; the offeree is still free to accept within the option period UNLESS the offeror has detrimentally  relied on the rejection.
Termination by operation of law...List the events.
1. Death or insanity of either party
2. Destrucion of subject matter
3. Supervening illegality
Elements of an acceptance
1. offeree with the power to accept
2. unequivical terms of aceptance
3. communiation of the acceptance.
Unequivocal acceptance under:

1. Common Law

2. UCC
1. Mirror image rule--Acceptance must mirrir the  offeror's terms, neither omitting nor adding terms (otherwise it's a counteroffer)

2. NO mirror image rule--an acceptance that deviates from the offer is NOT necesarily  a rejection)
Terms of the offer:

1. Nonmerchants

2. Merchants
1. if one or both parties is not a merchant the terms of the offer control. the new or different terms are considered PROPOSALS.

2. If both parties are merchants additional terms become part of the K unless  A)they materially  alter the agreement. B)offer expressly limits acceptance or C)Offeror object within a reasonable time.
Mailbox rule
If acceptance is by mail it is effective the moment of DISPATCH (If sent improperly it is effective upon receipt)

*TIP--only applies to acceptance --NOT rejection or revocation.
Limitations to Mailbox Rule
1. Does not apply if OFFER STIPULATES that acceptance is not  effective until received.
2. Does not apply to option K--aceptance effective upon receipt.
3.
Consideration defined
A bargained for exchange--Florida follows the minority and First Restatement view that either  benefit to one party or a detrient to the other party will suffice.
Substitution for consideration
Promissory estoppel or detrimental  reliance is a sufficient substitute. The following elements must be present:
1. Promisor should reasonaly expect her promise to  induce action or forebearance,
2. Of a definite and substatial character AND
3. Such action or forebearace is in fact induced.
Consideration for Modifications under the UCC
Consideration if not necessary to a good faith WRITTEN modification of a K
Defenses to formation
1. Lack of Mutual Assent
    * Mutual Mistake
    * Latent Ambiguity
    * Misrepresentation
    * Fraud
2. Lack of Consideration
3. Public Policy Defenses
    * Illegality of conideration or         subject matter.
4. lack of Capacity
    * age
    * intoxication
    * mental defect
    * duress/coercion

Defenses to Enforcement
1. Statute of Frauds

2. Unconscionability
Statute of Frauds defined
To be enforceable certain types of agreements must be in writing to b enforced...they include:
1. promise creating interest in land
2. promise that cannot be perfored w/i one year.
3. agreement for sale of goods for $500 or more.
4. Promise for consideration of marriage.
5. Surety-debt of another
6. Executors-paying estate debts out of pocket.
Acronym for different Statute of Frauds defenses.
MY LEGS

M-Marriage
Y-Year (within one year)
L-Land
E-Executor (administrator)
G-Goods ($500 or more)
S-Surety (debt or default of another)
Writing elements for Statute of Fraudes Defense
1. Identity of Parties
2. K Subject matter
3. Terms and conditions
4. Consideration
5. Signature of party to be charged (sig of both parties not needed)
Unconscionability defined
Whether the terms are so one-sided  as to be unconscionable under the circumstances at the contract was formed.
Third Party Beneficiaries

Intended v. Incidental
Only intended beneficiaries have contractual rights, not incidental benficiaries.
Elements of an intended beneficiary
1. Whether the benficiary if IDENTIFIED in the K.
2. Receives performance directly from promisor or
3. Has some relationship with promisee to indicate intent to  benefit.
Creditor Beneficiary v. Donee Beneficiary
There are two types of intended beneficiaries: Creditor and Donee
1. Creditor--a person to whom the  is owed by the promisee
2. Donee--a person the promisee intends to benefit gratuitiously
When does the beneficiary acquire contractual right?
3PB can enforce a K  only when his rights have vested. this ocurs when he:
1. Manifests assent to a promise in the manner requested by the parties
2. brings suit to enforce promise
3. materially changes position in justifiable reliance  on the promise.
 
**Prior to vesting the promisor and promisee are free to  modify or rescind the beneficiary's rights under the K.
Novation defined
Novation substitutes a new party for an original party to the K. It requires assent of all the parties an completely releases the original party.
Rules of contract construction

1. Ambiguities

2. What courts look at
1. Ambiguities are construed against the party preparing the K, absent evidence in the intentions of the parties.
2. Courts look at custom and usage in a particular business and in a particualr locale to determine the parties' intent when it is unclear--Courts generally try to reach a determine that a K is valid and enforceable.
Parole Evidence Rule
Evidence of a PRIOR OR COMTEMPORANEOUS  negotiation or agreement that contradicts modifiys or varies contractual terms is inadmissible if the written K is intended as the complete and final expression  of the parties
Merger Clause
A recital that the contract is complete on it's face---will strengthen the presumption that the written document is final.
Exceptions to the Parole Evidence Rule:

Evidence of the following is admissible....
1. Formation defects--Fraud, duress, mistake, illegality.
2. Condition Precedent
3. Parties intent regarding ambiguous terms.
4. Consideration problems
5. Prior valid agreement incorrectly reflected in the writing.
6. Collateral agreement
7.subsequent modifications
Breach Defined
To estabish breach a party must prove that the other party was under a present duty to  perform and that the duty  has neither been performed nor discharged.
Distinction between a promise and a condition
1. Promise--A commitment to do or refrain from doing  something. It may be conditional or nonconditional.

2. Condition--An event, the occurrence or nonoccurrence of which will create, limit, or extinguish the absolute duty to perform; it is a promise modifier.
Condition Precendent
Condition must occur before performance is due.
Condiction Concurrent
Conditions to occur at the same time.
Condition Subsequent
Condition cuts off already  exsting duty
Anticipatory Repudiation
also called an anticipatory breach, is a declaration by the promising party to a contract, that he or she does not intend to live up to his or her obligations under the contract.
Anticipatory Repudiation gives  the nonrepudiating party four alternatives:
1. SUE IMMEDIATELY and treat the K as totally repudiated.
2. SUSPEND OWN PERFORMANCE and wait until performance is due then sue.
3. Treat as offer to rescend and treat the K as discharged OR
4. Ignore repudiation and urge performance.
Types of Discharge:

Discharge by...
1. Performance
2. Condition subsequent
3. Illegality
4. Impossibility (death, incapacity, illegality or destruction of subject matter)
5. Impracticability (extreme and unreasonable difficulty or expense that was not anticipated)
6. Frustration of purpose:
      a)Supervening event
      b)that was not foreseeable at time of entering into the K
      c) which completely or almost completely destroys the purpose of K AND
      d) purpose was understood by both parties.
   
Dicharge by mutual recission
Duties may be discharged by mutual recission--where both parties agree to it.

EXCEPTION--Where a third party  beneficiary's rights have vested, a K will not be discharged.
Modifications under the UCC
Under the UCC a K modification is enforceable is made in good faith even without consideration. Modification of other Ks must have consideration.
Discharge by Novation
A duty may be discharged by novation--a new contract substituting a new party for one of the parties  to the original  contract
Elements are:
1. Previous valid K
2. Agreement among all parties
3. Immeditate extinguishment of old K
4. Valid new K
Disharge by Accord & Satisfaction

1. Accord

2. Satisfaction
1. Under an accord agreement, one party to a contract agrees to accept different performance from the other party than what was promised in the existing K (generally requires consideration).
2. Satisfaction is the performance of the  accord agreement.
 Material v. Minor Breach
A breach is material if, as a result of the breach, the nonbreaching party does not receive the substantial benefit of the bargain
Remedies for Material Breach
Nonbreaching party may:
1. Treat k as at an end AND
2. has immediate right to all remedies for breach if the entire K including total damages.
Exam Tip--Distinction between material and minor breach
A minor breach may allow the aggrieved party to  recover damages, but she still must perform under the K. If breach is material the aggrieved party need not perform.
Test for Materiality
1. Amount of benefit received by nonbreaching party
2. adequacy of compensation for damages to injured party
3. extent of part performance be breaching party
4. hardship to the breaching party
5. Negligent or willful behavior
6. Liklihood that the breaching party will perform.
Remedies for Breach of K:

List them
1. Damages
2. Specific Performance
3. Rescision and Restitution
Types of Damages
1. Compensatory
2. Nominal
3. Punitive
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