Chapter 13 - Contract Law

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Uniform Commercial Code (UCC): Original drafted by the National Conference of Commisioners on Uniform State Law, it governs commercial transactions and has been adopted by all states, entirely or in part

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Rescission: the act of canceling the contract and returning the parties to the positions they were in prior to the contract having been formed

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Warranty: a guarantee, made by the seller or implied by law, regarding the character, quality, or title of the goods being sold Implied Warranty of Merchantability: an implied promise that the goods being sold will be usable for the purpose for which they were sold

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Types of Contracts: - Bilateral (when a promise is exchanged for a promise) - Unilateral (a promise is exchanged for an act) -Express Contracts (formed through words, oral or written) -Implied-in-fact Contracts (are formed through conduct)
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Executed contract: meaning the contract has been signed Valid contract: having all the essential elements needed for a binding agreement Elements of a Binding Contract: 1. an offer must be made; 2. an acceptance must be given; 3. something of value must be exchanged

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Implied Warranty of Fitness: An implied promise that the good being sold will satisfy a special purpose Statute of Frauds: a statutory requirement that in order to be enforcable certain contracts must be in writing Parole Evidence Rule: an evidentiary rule that a written contract cannot be modified or changed by prior verbal agreements

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Requirments Contract: A contract in which one party agrees to buy all its requirments for a particular product from the other party

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substantial performance: although a breach of contract, performance of all the essential terms of the essential terms of the contract will entitle the breaching party to the contractual price minus any damages caused by the breach

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Output contract: A contract in which one party agree to deliver its entire output of a particular product to the other party
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material breach: such a grave failure to fulfill the contractual terms that the other party is relieved of all contractual obligations perfect tender rule: the requirment that the goods delivered exactly meet the contractual specifications Novation: when a 3rd party is substituted for 1 of the original parties Accord and Satisfaction: the agreement and then the performance of something different than originally promised Assignment: the transfer by one of the original parities to the contract of part or all of his or her interest to a 3rd party Delegation: the transfer by one of the original parties to the contract of his or her obligations to a 3rd party Specific Performance: when money damages are inadequate, a court may use this equitable remedy and order the breaching party to perform his or her contractual obligations

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Option Contract: a contract in which the buyer gives the seller consideration to keep the offer open for a stated period of time
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Merchant's firm offer: an offer made by a merchant in a signed writing that assures the buyer the offer will remain open for a specific period of time. It does not require consideration to be binding
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Mirror image rule: the reqirement that the acceptance exactly mirror the offer or the acceptace will be viewed as a counter-offer Quasi-Contract: Although no contract was formed, the courts will fashion an equitable remedy to avoid unjust enrichment Consideration: anything of value; it must be present for a valid contract to exist and each side must give consideration unconscionable contract: A contract formed between parties of very unequal bargaining power where the terms are so unfair as to "shock the conscience"

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Promissory estoppel: occurs when the courts allow detrimental reliance to substitute for consideration Voidable: a valid contract that can be set aside at the option of one of the parties disaffirm: the ability to take back one's contractual obligations necessaries: normally food, clothing, shelter, and medical treatment Void: a contract that is invalid even if it is not repudiated by either party Covenant Not to Compete: A promise not to compete within a given geographic area for a specific time period Adhension Contract: A contract formed where the weaker party has no realistic bargaining power. Typically a form contract is offered on a "take it or leave it" basis

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Mitigation of damages: the requirment that the nonbreaching party take reasonable steps to limit his or her damgages Cover: finding substitute goods Consequential Damages: indirect damages that must be forceeable to be recovered Liquidated Damages Clause: a contract provision that specifies what will happen in case of breach Contract Reformation: an equitable remedy that allows the courts to "rewrite" contract provisions

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Exculpatory Clause: a provision that purports to waive liability

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Generally the types of Contracts that must be in writing fall into one of the following categories:: 1. contracts involving land, inlcuding fixtures, and documents dealing with land, such as mortages and leases; 2. contracts that cannot be performed in one year; 3. collateral contracts, thoses that involve a 2ndary as opposed to a primary obligation, unless the main purpose is to secure a personal benefit; 4. promises made in consideration of marriage; such as prenuptial agreements; and 5. contracts for the sale of goods valued at $500 or more

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4 Requirments for defense based on fraud:: 1. an intent to decieve; 2. regarding material facts and 3. justifiable reliance facts and; 4. that causes harm