1The four ingredients for a valid contract are TACO:
• TERMS (express or implied)
• ACCEPTANCE of terms
• CONSIDERATION
• OFFER inviting acceptance
2An offer expires when it's TIRED:
• T: reasonable TIME after an offer is made, or expiration date expressly stated
• I: Mental INCAPACITY or death of offeror/offeree
• R: REVOCATION communicated to an offeree before acceptance
• E: EXPRESS or implied rejection communicated to offeror
• D: DESTRUCTION of the subject matter of the offer or intervening illegality terminates an offer by operation of law
3An offer expires when it's TIRED:
• T: Reasonable TIME
• I: Mental INCAPACITY or death
• R: REVOCATION communicated before acceptance
• E: EXPRESS or implied rejection communicated
• D: DESTRUCTION of the offer's subject matter, or intervening illegality terminates offer by operation of law
4Options can DIE by:
• D: DESTRUCTION of subject matter
• I: intervening ILLEGALITY
• E: EXPIRATION of a stated option time extinguishes the option
5In NY, a signed writing takes the place of consideration for POP:
• P: PRE-EXISTING duty
• O: contract OPTIONS
• P: PAST consideration (which must be recited in the signed writing)
6Generally, contracting parties are free to modify a 3rd party beneficiary (3PB) K, unless, prior to receiving notice of the K modification, the 3PB got MAD:
• M: MANIFESTED an assent called for in the 3PB K, at the request of one of the contracting parties
• A: commenced a breach of K ACTION against the promisor, or
• D: DETRIMENTALLY relied on the K
7Contract assignments may involve the ADA:
• ASSIGNMENT of a contractual right to collect money owed under K.
• DELEGATION of performance required under K.
• ASSUMPTION of liability for performing K.
8A gratuitous assignment becomes irrevocable, and a second assignee prevails over a prior assignee of the contract when J.P.N.C.:
• Recovers a JUDGMENT
• Gets PAID
• Enters a NEW CONTRACT
9Absent express language in a K prohibiting assignment, K rights are freely assignable, except those RIPS:
• R: Where it increased the RISK to the other party
• I: coupled with IMPROPER delegation of a duty under K to a person unqualified to fulfill that duty
• P: services are highly PERSONAL in nature (because that would materially alter the bargain)
• S: STATUTE expressly prohibits the assignment of K right (but if that claim is reduced to judgment, it is assignable)
10I FU MED & IS IP over the fifteen defenses for contract breach.
• (1) INFANCY
• (2) INSANITY
• (3) INCOMPETENCY
• (4) INTOXICATION
• (5) FRAUD
• (6) UNCONSCIONABILITY
• (7) UNDUE INFLUENCE
• (8) MISTAKE
• (9) EQUITABLE defenses
• (10) DURESS
• (11) IMPOSSIBILITY of performance
• (12) STATUTE of FRAUDS
• (13) STATUTE of LIMITATIONS
• (14) ILLEGALITY
• (15) PAROLE EVIDENCE RULE
11Parol Evidence Mnemonic: VACCINES
(1) Validity of K (fraud, duress)
(2) Add'l consistent terms (UCC) trade use / COD
(3) Conditions precedent (oral)
(4) Consideration not paid
(5) Interpretation of ambiguities
(6) Naturally omitted terms
(7) Entitlement to reformation
(8) Subsequent modifications
12When does an Offer become Irrevocable?
POUF
(1) Promissory Estoppel
(2) Offer to Option K
(3) Offer to Unilateral K
(4) Firm Offer (UCC) (MERCHANTS)
13Affirmative Defenses to Contract Formation
AI DIM SUM
(1) Ambiguity in words of K
(2) Incapacity
(3) Duress
(4) Illegality
(5) Mistake
(6) Statute of Frauds
(7) Unconscionability
(8) Misrepresentation
14Lack of contractual capacity arises from the 3 I's:
INFANCY
INTOXICATION
INFIRMITY (mental)
15SIMIR is a fraud:
S - SCIENTER
I - DF lied with an INTENT to defraud
M - DF misrepresented a MATERIAL fact, which induced PL to enter the K
I - PL suffered an economic INJURY
R - RELIANCE on DF's misrepresentation
16Types of K conditions
Express
Implied in fact (inferred from intent)
17When might the Statute of Fraud (requiring that a contract is written down and signed, to be enforceable) apply?
MY LEGS
Marriage
Year limit
Land, sales or otherwise
Executor of a Will
Goods over \$500
Surety of another's debts
18When do new terms come in under UCC?
Merchant Acceptance - no material change, no objection, offer expressly limits acceptance to terms
Otherwise need separate acceptance or new consideration (if diff from K, Knockout Rule)
19When do new terms come in under CL?
Mirror Image Rule
20Badges of constructive fraud SHIFTS:
• S: SECRETLY done
• H: HASTILY done
• I: INADEQUACY of consideration
• F: made to FAMILY member or Friend
• T: TRANSFEROR continues to control property
• S: SCIENTIFIC (knowledge) of the creditor's claim, an inability to pay it after the transfer.
21A unilateral mistake in calculating figures may allow the mistaken party the remedy of equity of rescission, if he calls the COPS:
• C: COMMUNICATED mistake to the other party before they changed their position in reliance on the mistaken figures
• O: mistake was of ORDINARY negligence
• P: mistaken party gave PROMPT notice of mistake
• S: mistake will impose SUBSTANTIAL hardship on the party if not corrected
22The following SMART FLYS contracts must be in writing, subscribed by the party to be charged with the breach (i.e., must contain DF's signature):
• S: SURETY contracts
• M: MARRIAGE contracts
• A: ANSWER for debts discharged in bankruptcy
• R: REAL ESTATE contracts
• T: TESTAMENTARY promises (NY ONLY)
• F: FINDERS FEE arrangements
• L: LEASES longer than 1 year
• Y: contracts not capable of complete performance within 1 YEAR
• S: UCC Article 2 SALES CONTRACTS for \$500 or more
23Use a COMB for promissory estoppel in NY:
• C: CHARITABLE pledges
• O: to avoid OUTRAGEOUSLY unconscionable results
• M: oral MARRIAGE contracts
• B: promises by gratuitous BAILEES to obtain insurance on bailed goods
24There are 4 T-CUP elements for a constructive trust:
• T: TRANSFER of property in reliance on promise
• C: existence of CONFIDENTIAL or fiduciary relationship
• U: UNJUST enrichment to transferee of property or to some third party,
and
• P: PROMISE (express or implied, to hold property for PL's benefit, which promise has been breached)
25A THUG may render an illegal contract enforceable, based on:
• TYPE of illegality & extent to which the public is harmed
• HARM forfeiture would cause if contract was declared unenforceable due to illegality; ct looks to see whether contract has been substantially performed •
• UNJUST enrichment (a windfall) to party asserting illegality defense
• GUILT of each party
26The theory of impossibility frequently involves the 4 Ds:
• DEATH
• DANGER to life/ill health
• DESTRUCTION of lawsuit's subject matter
• DELAYS, causing performance to become impracticable or impossible
27OF MICE permits parole evidence to:
• O: establish an ORAL condition precedent to legal effectiveness of contract, provided it doesn't contradict the contract's express term(s).
• F: can't invoke parole evidence rule to shield party from allegations of FRAUD or misrepresentation
• M: establish MUTUAL mistake or claim for reformation of contract
• I: establish ILLEGALITY
• C: establish failure of CONSIDERATION
• E: EXPLAIN ambiguous or missing terms
• E: show no ENFORCEABLE agreement was ever intended.
28Contract law doesn't allow damages recovery for CAPS unless they were within the:
• CONTEMPLATION OF BOTH PARTIES when contract was executed
• AVOIDABLE damages
• PAIN & suffering or emotional distress resulting from a breached contract, even if such damages were foreseeable
• SPECULATIVE damages aren't recoverable (all damages must be proven within a reasonable certainty)
29Generally, parties can put whatever terms they'd like into a K, except for PLUS:
• P: violating PUBLIC POLICY
• L: excessive amount of LIQUIDATED damages
• U: UNCONSCIONABLE terms
• S: clauses providing that one party can seek SPECIFIC PERFORMANCE in the event of a breach (the contract DOESN'T have to enforce these clauses)
30Does a contract have to enforce clauses providing that one party can seek SPECIFIC PERFORMANCE in the event of a breach.
No, it doesn't have to enforce SPECIFIC PERFORMANCE in a breach.
31Apply a TISSUE to a covenant restricting a former employee from competing:
• T : TIME restriction must be reasonable (usually two years or fewer)
• I: INABILITY of the employee to gain work elsewhere
• S: geographic SPACE/SCOPE of the restriction must be as narrow as possible, to the extent necessary to protect an employer's interest.
• SUE: employee services must be SPECIAL, UNIQUE, or EXTRAORDINARY
32ICOP limits the Perfect Tender Rule:
• I: INSTALLMENT contracts
• C - timely delivery was COMMERCIALLY IMPRACTIBLE by event not contemplated by parties.
• O: delivery in good faith, OBJECTIVELY and reasonably believing goods would be acceptable
• P: PRIOR TO DELIVERY DATE set forth in the contract, conforming goods are delivered to replace the nonconforming goods.
33Additional terms will not be added to the contract when OCAN:
O - offeror OBJECTS to additional terms within a reasonable time;
C - offer expressly CONDITIONS the agreement on accepting the terms in the offer as they are;
A - additional terms materially ALTER offer;
N - either or both parties are NON-MERCHANTS
34JSTRAW clause materially alters an offer if it would cause surprise or hardship to the offeror if the offeror was not made aware of its existence:
J - bestowing JURISDICTION on a particular court, or requiring offeror to consent to jurisdiction
S - shortening STATUTE OF LIMITATIONS to sue for non-conforming goods
T - limiting TORT liability or limiting a buyer's right to sue for consequential damages
R - altering UCC rules for RISK OF LOSS
A - adding an ARBITRATION CLAUSE
W - adding a clause negating a WARRANTY
35SWAMP exceptions to the Statute of Frauds requirement:
S - contracts for SPECIALLY manufactured goods
W - WAIVER
A - judicial ADMISSION of contract
M - "MERCHANT MEMORANDUM"
P - PART PERFORMANCE
36If a sales contract is silent on a topic, the UCC implies the following CIDER rules:
C - seller isn't obligated to extend CREDIT to the buyer
I - buyer has the right to INSPECT the seller's tendered goods
D - seller's tender of DELIVERY is implied to be at seller's place of business, unless both parties know that the goods are located elsewhere
E - buyer and seller must EXCHANGE performance concurrently
R - RISK OF LOSS is on the party in the best position to bear that risk
37SOAL-V and SORE-V affect risk of loss:
SOAL V - SALE ON APPROVAL LATE VESTING (goods held by the buyer are not subject to claims of the buyer's creditors)
SORE V - SALE OR RETURN EARLY VESTING (title and ROL vest immediately in the buyer, even though the buyer has a right to rescind the K)
38SORE V - SALE OR RETURN EARLY VESTING
Title and ROL vest immediately in the buyer, even though the buyer has a right to rescind the K.
39SOAL V - SALE ON APPROVAL LATE VESTING
Goods held by the buyer are not subject to claims of the buyer's creditors.
40SPARKLE Remedies are available to a seller:
S - STOPPING goods in transit
P - suing for entire contract PRICE
A - demanding ASSURANCES
R - RE-SELLING goods to another buyer
K - KEEPING part of a breaching buyer's deposit, never more than \$500
L - suing for LOST Profit
E - EXERCISING right to reclaim goods delivered to insolvent buyer
41Nine ways to terminate an Offer
Don't offer IDLE CIDER that's expired.
(1) Incapacity of offeror
(2) Death of offeror
(3) Lapse of time
(4) Express or implied rejection
(5) Counteroffer
(6) Intervening illegality
(7) Destruction of contract's subject matter
(8) Effective termination under mailbox rule
(9) Revocation communicated to offeror before acceptance effective
42Contracts - Applicability of Statute of Frauds
a fake ORGASM violates the statute of frauds
(1) One year or longer
(2) Real estate
(3) Goods over \$500 or intangibles over \$5000
(4) Administrator / executor of estate promising to cover costs
(5) Surety agreements (guarantees on behalf of another, unless purpose is self-serving)
(6) Marriage agreements (prenuptials)
43CID'S WAR Remedies available to a buyer:
C - COVER
I - INCIDENTAL & consequential damages;
D - DAMAGES for lost benefit of the bargain, or for the price paid;
S - SPECIFIC PERFORMANCE on a contract for unique goods;
W - Breach of WARRANTY;
A - ACCEPTANCE revocation;
R - REJECTING non-conforming goods;
44A sales contract contains M FEET warranties:
M - warranty of MERCHANTABILITY
F - warranty of FITNESS for a particular purpose
E - warranty against ENCUMBRANCES
E - EXPRESS warranties
T - warranty of TITLE
45Express warranties are SAD:
S - SAMPLE or model, which is the basis of the bargain
A - written or oral AFFIRMATION of fact or promise made by the seller relating to the goods
D - DESCRIPTION of the goods in advertisements, brochures, or catalogs
46A PL's claim against a seller for a defective good can be based on one or more overlapping but different PINE theories of liability:
P - Torts theory of strict PRODUCTS liability
I - Contract theory for breach of IMPLIED warranty
N - Torts theory of NEGLIGENCE
E - Contract theory for breach of an EXPRESS warranty
47G.P.S. LAMP as a defenses against a breach of warranty:
G - GOVERNMENT military contract defense
P - Federal PREEMPTION
S - STATUTE OF LIMITATIONS
L - LACK of timely notice to a seller
A - ASSUMPTION of risk (can be asserted against any PINE claim)
M - Unforeseen MISUSE of a product
P - Lack of PRIVITY of contract
48Strict products liability is imposed on a regular seller of a DUD Product:
D - DEFECTIVE, and
U - UNREASONABLY
D - DANGEROUS
49When asserting a strict products liability claim, PL must prove that a DIM dangerous defect in the product proximately caused a physical injury:
D - DESIGN defect
I - INADEQUATE warning
M - Mistake in the MANUFACTURING process
50Defense to Contract formation:
Making Mistakes IIS DUM.
Misrepresentation (fraud),
Mistake,
Incapacity,
Illegality,
Statute of Frauds
Duress,
Unconscionability,
Misunderstanding.
51Contracts Standard Money Damages = CIDER
CIDER is gross, get your money back.
C: Consequential Damages
I: Incidental Damages
D: Duty to Mitigate
E: Expectation Damages
R: Reliance Damages
52While you should get your money back for CIDER, what should you get for non monetary damages for Real (property), Rare (goods), and Restrictions (injunctions for service Ks)?
SRRR
SRRR - Specific Performance, Rescission, Reformation, Reclamation.
53Look at HAIL to determine whether a breach is material or immaterial
H - HARDSHIP on breaching party if total material breach is declared
A - AMOUNT of benefit bestowed on non-breaching party
I - whether breach was INNOCENT
L - LIKELIHOOD of full performance
5412 Defenses to Contract Enforcement:
DAMN CUP MUSIC
Duress
Ambiguity
Mistake of fact
Non-disclosure
Consideration
Unconscionability
Public Policy
Misrepresentation
Undue influence
Statute of frauds
Illegality
Capacity