Term
| Requirements for formation of a K |
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Definition
| 1) mutual assent manifest through offer and acceptance, 2) consideration, 3) capacity |
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Term
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Definition
| CL: must be certain and definite, including SM, Price, and Q; UCC: Open terms may be filled by gap fillers except for Q, but it can be measured by output req |
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Term
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Definition
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Term
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Definition
| Seeks performance. Rst 1st: K formed once the performance has begun and both OR and OE can be in breach at this point. Rst 2nd: Option K is formed upon performance and offer is irrevocable but OE is not bound to complete performance. |
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Term
| Limits on OR's power to revoke the K |
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Definition
| 1) valid option K, 2) firm offers under the UCC, 3) Part performance in a unilateral K, 4) Return promise in a bilateral K, 5) promissory estoppel |
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Term
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Definition
| OE indirectly receives 1) correct info 2) from a reliable source and 3) about acts of the OR indicating that the OR no longer intends to make an offer |
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Term
| NC: Protection of gen-K reliance on sub-K |
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Definition
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Term
| Termination of the power of acceptance by OE |
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Definition
| 1) Rejection of the offer, 2) Counteroffer |
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Term
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Definition
| Rst: O became irrevocable upon the beginning of performance so death has no effect on the K; NC: Death of OR revokes the offer, but OE may be able to recover in reliance |
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Term
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Definition
| Held by OE, cannot be assigned; Can only accept the offer with knowledge thereof |
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Term
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Definition
| Acceptance is effective upon dispatch unless an option K, which is effective upon receipt. If OE sends rejection after acceptance, A controls but may get reliance damages. If reject and then accept, depends on which one is received first. |
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Term
| Shipment of nonconforming goods |
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Definition
| Acceptance and breach at the same time UNLESS S states it is an accommodation, and shipment becomes a counteroffer. |
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Term
| Manner of acceptance in sale of goods |
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Definition
| Any manner and by any medium reasonable in the circumstances |
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Term
| When can silence = acceptance |
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Definition
| When OE silently takes offered benefits especially when prior dealings between the parties OR trade practices known to both that create a reasonable commercial expectation that silence represents acceptance |
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Term
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Definition
| CL: mirror image rule; UCC: K will be formed despite add'l terms but add'l terms will only become part of the K if both parties are merchants and 1) terms do not constitute a material alteration, 2) offer expressly limited acceptance to its own terms or 3) order has already objection to the term w/in a reasonable time |
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Term
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Definition
| A promise to perform a preexisting legal duty will only be enforced if 1) there new or different consideration promised, 2) ratifying a voidable obligation 3) preexisting duty is owed to a third person not the PR, 4) honest dispute to the duty, 5) unforeseen circumstances; UCC: modification may be made without add'l consideration so long as in good faith and with mutual assent |
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Term
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Definition
| Accord = is there acceptance of the offer to settle AND Satisfaction - is there consideration to support the promise to take less |
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Term
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Definition
| Enforceable no matter how remote the contingency so long as the condition is not entirely within the PR's control |
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Term
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Definition
| A promise to select among alternative courses is illusory unless 1) each alternative involves some legal detriment to the PR OR 2) power to select rests in the PE or 3P and at least one alternative has a legal detriment |
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Term
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Definition
| **ONLY for MBE. 1) promise that might reasonably induce action or forbearance, 2) person to whom promise was mad reasonably relied 3) injustice can be avoided only by enforcing the promise and 4) remedy may be limited as justice requires |
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Term
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Definition
| Most states, BUT NOT NC, have an action against the minor in tort for fraud, etc. NC says the cause of action for misrep = enforcing the K with the minor. |
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Term
| Restitution for incapacitated Ks |
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Definition
| Minor still liable in restitution for the reasonable value of the necessities. |
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Term
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Definition
| NC rule- allows the injured party to setoff from what the adult returns to the minor what the minor could reasonably return to the adult |
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Term
| NC rule for minors who are artists, IP, athletes, etc. |
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Definition
| Minor may disaffirm a K unless ER obtained prior ct approval of the K. ER also required to set aside 15% of minor's gross in a trust fund for benefit of minor |
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Term
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Definition
| Age, insanity or mental incapacity, intoxicated or drugged persons |
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Term
| What is subject to the SOF |
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Definition
| 1) interest in land, 2) sale of goods for a price of $500 or more, 3) leases of personal property where the total consideration is over $1,000, 4) promise to pay the debt of another, 5) Long term K, NC: does not have this, 6) K in consideration of marriage, 7) Covenant not to compete, 8) NC: promise to lend money, commercial loan commitment by a bank for a loan that exceeds $50,000 |
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Term
| Interests in land subject to SOF |
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Definition
| 1) A lease of real property for longer than a year; NC > 3 years, 2) easement of a real property that is to last longer than a year, 3) mortgage on real property or deeds of trust |
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Term
| Part performance exception |
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Definition
| Oral K may be enforceable if part of the K has already been partly performed. NOT IN NC (but equitable estoppel). Seek an unjust enrichment claim. |
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Term
| Exceptions for sale of goods of $500 or more subject to SOF |
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Definition
| 1) Specially manufactured goods, 2) admission in court or pleading, 3) part performance to the extent the goods have been accepted and paid for |
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Term
| Exception to SOF req for paying debts of another |
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Definition
| Main purpose rule: if the main purpose of the promise is the pecuniary interest of the PR |
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Term
| Does terminating the K count as performance? |
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Definition
| Majority rule: NO. Minority: Yes, and therefore no writing would be required if it was possible that the K would be terminated within a year. |
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Term
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Definition
| If already employed when agree to CNC, ER must give EE consideration for this new promise IN WRITING. Subject to reasonable restriction in TIME, TERRITORY, TYPE |
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Term
| What does the court do when the CNC is unenforceable? |
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Definition
| Three different approaches: 1) Throw out the entire CNC, 2) Blue pencil rule: require the unreasonable part to make it reasonable, 3)NC: cross out approach. Cross out unreasonable portions and uphold what is left-- will not rewrite. |
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Term
| Under the CL, what must a writing contain to satisfy SOF? |
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Definition
| All essential terms of the K. 1) Identify the parties, 2) identify the SM of the K, 3) terms and conditions relating to the deal that must be satisfied, 4) consideration, and 5) signature of the party we are trying to hold to that agreement |
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Term
| Under UCC, what must the writing contain to satisfy SOF? |
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Definition
| 1) Something to indicate that a K for sale has been made, 2) Quantity must be specified, 3) signature of the party to be charged unless both are merchants and no objection within 10 days |
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Term
| Can you use promissory estoppel to get around SOF violation? |
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Definition
| Majority: enforce the K to the extent that justice so requires. Minority: PE cannot be used to make an oral K enforceable without SOF. NC: equitable estoppel precludes denial of the K |
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Term
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Definition
| Prevents a party from introducing extrinsic evidence that may alter or add to the written terms of the K. Applies to extrinsic evidence occurring before or at the time of the making of the K, not anything after or to prove a modification. |
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Term
| What writings does the parol evidence rule apply to? |
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Definition
| A final integration. If the writing is a complete integration, then no parol evidence may be introduced. If the writing is a partial integration, then parol evidence may be introduced for the limited purpose of supplementing the writing, but NOT to contradict. |
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Term
| When will the parol evidence rule not apply? |
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Definition
| 1) Resolve ambiguities, 2) Fraud, 3) Collateral agreements if the agreement would not naturally be included in the primary agreement, 4) conditions precedent to the K to show effectiveness of the K, not an add'l term, 5) UCC (usage of trade) |
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Term
| When is an express warranty created under the UCC? |
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Definition
| 1) Specific statements by seller of fact, promise, or description of goods but NOT seller's opinion, 2) Seller's conduct, such as showing a sample of the goods. To prove breach of express warranty, plaintiff must have relied on it. |
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Term
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Definition
| Implied warranty of merchantablity- goods are fit for their ordinary purpose. Seller must be a merchant in goods of this kind. 2) Implied warranty of fitness for the buyer's particular purpose in using the goods. Seller must have reason to know of B's special purpose for the goods and that B is relying on S to furnish suitable goods. No merchant requirement. |
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Term
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Definition
| Can disclaim implied warranties but not express by "as is" or "with all fault" |
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Term
| Limitation on Buyer's remedies |
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Definition
| S can limit B's remedies for breach of any warranty if the limitation is not unconscionable |
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Term
| NC Products Liability Statute |
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Definition
| No SL. Can sue seller or manufacturer. P can be buyer or buyer's EEs. Can only sue for PI, death, property damage, NOT economic loss. SOL is 3 years after damage/injury or 12 years after purchase (max). |
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Term
| Defense in NC Products Liability |
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Definition
| Article 2, use of goods contrary to express and adequate instructions, goods altered or modified without seller's consent |
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Term
| Risk of loss of the product |
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Definition
| Hierarchy: 1) Agreement, 2) Breaching party, even if the loss is unrelated to the breach, 3) delivery by common carrier: shifts to B when S completes its delivery obligations, 4) non-carrier cases: Seller = merchant, upon B taking possession; Seller is not a merchant, upon tender of delivery to B, 5) finality of sale: sale or return = B until B returns; sale on approval = S until B approves |
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Term
| Risk of loss in Delivery by Common Carrier |
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Definition
| 1) Shipment K: S must get the good to a carrier, make the delivery arrangements, and notify buyer of the arrangements. 2) Destination K = S must get goods to a specific destination, usually B's place of business. Parties must indicate destination K or a shipment K will be presumed. |
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Term
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Definition
| made by one party at time K is entered into. Relief is not allowed UNLESS the nonmistaken party knew about the innocent party's mistake or had reason to know of the other's mistake, then the K is voidable |
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Term
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Definition
| Rescission is allowed for mutual mistake of material fact if at the time of the K 1) mistake by both parties about a basic assumption upon which the K was made, 2) the mistake has to have a material effect and 3) the party seeking to avoid or rescind the K did not bear the risk of the mistake. Mistake of value or opinion is not actionable. |
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Term
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Definition
| At the time the K is formed, the agreement appears clear, but later facts arise that make it obviouse that the agreement can be interpreted in more than one way. If both parties were aware or unaware of the ambiguity, the K will not be enforceable unless both parties thought the same thing. If one party is aware of the ambiguity, K is enforced according to the intentions of the innocent party |
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Term
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Definition
| Procedural (some problem in the bargaining process that led up to the K's formation) AND substantive (unfair terms) |
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Term
| Can third party beneficiaries bring suit? |
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Definition
| Intended beneficiaries can; incidental cannot. Intended = creditor beneficiary and donee beneficiary |
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Term
| When do a third party beneficiary's rights vest? |
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Definition
| 1) Manifests assent in the manner invited or required, 2) sues to enforce the promise OR 3) materially changes her position in justifiable reliance |
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Term
| What are a 3PB rights against the promisor? |
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Definition
| Can sue the PR on the K. PR can use any defense PR would have against PE. If PR made an absolute promise to pay, PR cannot assert the PE's defenses. If PR only promised to pay what the PE owes the 3PB, then PR may use PE's defenses. |
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Term
| What are the 3PB rights against the promisee? |
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Definition
| A creditor beneficiary can sue PE on the existing obligation between them and can sue the PR, but can only recover against one or the other. A donee beneficiary has no right to sue the PE unless they detrimentally relied. |
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Term
| Does the promisee have any rights against the promisor if there is a 3PB? |
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Definition
| Can sue for failure to keep promise. Normal remedy is specific performance because PE has not suffered any damage. |
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Term
| Under the UCC, when is the seller liable to a 3P? |
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Definition
| NC: Warranties extend to anyone in B's family or household or to a guest if reasonable to expect that person would use the good. Seller cannot exclude or limit the scope of privity. |
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Term
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Definition
| (Of rights). Gratuitous: no consideration from AE to AR in return for the assignment; revocable by the AR unless obligor has already performed, a token of the rights has been delivered to the AE, the assignment is in writing, or there is detrimental reliance. Assignment for consideration is irrevocable. |
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Term
| What K rights are not assignable? |
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Definition
| 1) rights that would materially affect the rights and duties of the obligor (requirements K) 2) rights under a nonexisitng K, 3) contractual prohibition of assignment "of contract", 4) contractual prohibition of assignment of rights under a K |
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Term
| Prohibition of assignment of K |
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Definition
| CL: "assignment is void" or notice to AE of nonassignment clause bars. UCC: "bars assignment of the K" = bars only a delegation of duties, not an assignment of rights under the K |
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Term
| Obligor's defenses against suit brought by Assignee |
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Definition
| Any defense against the AE that O would have had against the AR except personal defense unless the defense arose before O had notice of the assignment |
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Term
| Successive assignment of the same right |
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Definition
| CL: if the first assignment is revocable, then the second assignment with consideration serves to revoke it. If it is irrevocable, first assignee prevails. UCC: priority rules |
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Term
| When is the delegator excused from his duties under the K? |
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Definition
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Term
| What duties cannot be delegated? |
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Definition
| If the performance requires special skills or the original party to the K has a special reputation, or the K specifically prohibits delegation |
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Term
| When do the assumption of duties follow an assignment of rights? |
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Definition
| UCC and Rest 2nd provide that an assignment of rights carries with it a delegation of duties. Under the Rst 2nd, if the AE accepts the assignment, then they have assumed the duties |
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Term
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Definition
| One of the original parties to K is discharged from the K and a third party is substituted in his place. |
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Term
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Definition
| Benefit of the bargain/expectation damages. Put the victim in as good a position as she would have been in had the K been fully performed. Remedy limited by the plaintiff's duty to mitigate damages and must prove damages with certainty. |
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Term
| Consequential or special damages |
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Definition
| Must be reasonably foreseeable at the time of contracting |
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Term
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Definition
| Generally not awarded in K because we want to encourage efficient breaches of K. Exception: If the SM of the K is so personal in nature that special injury or mental anguish could be foressen at the tiem of King |
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Term
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Definition
| Victim of the breach cannot recover for damages she could have reasonably mitigated or avoided |
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Term
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Definition
| Owner breaches: K price - expected profit plus the costs incurred to date. Contractor breaches by failing to finish the job: Cost of the cover price - cost of the K price. Contractor breach by unsatisfactory performance: cost to complete in accordance w/ K OR diminished MV of the property |
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Term
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Definition
| 1) One person has conferred a benefit on the other, 2) this person has a reasonable expectaion of being compensated, 3) the person conferring the benefit was not a volunteer, 4) if D is allowed to retain the benefit without compensating P, he would be unjustly enriched |
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Term
| Enforceability of liquidated damages |
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Definition
| Must 1) have been difficult to ascertain at the time the K was formed, 2) the amount agreed upon must be a reasonable forecast of compensatory damages in the case of a breach, 3) provision must not be intended to act as a penalty. Can still get actual damages if the liquidated damages clause is not enforceable. |
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Term
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Definition
| Suit in equity. Money damages must be inadequate (if they cannot buy a substitute performance because a substitute is not available. Ex: K for the sale of land, goods that are unique). NOT available for service Ks because supervision and enforcement problems and smells of involuntary servitude. |
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Term
| Buyer's damages under UCC |
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Definition
| 1) Cover damages: Cover price - K price, 2) Market damages: Market price - K price (usually used if B does not cover in good faith or does not cover at all), 3) Loss in value: value as promised- value delivered (if B decides to keep nonconforming goods) |
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Term
| Seller's damages under UCC |
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Definition
| 1) Resale damages: K price - resale price, 2) Market damages: K price - market price 3) Lost profit (dealer in mass good exception), 4) K price (unique order) |
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Term
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Definition
| Cost to the injured B or S of transporting and/or caring for goods after breach and the costs of arranging a substitute transaction |
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Term
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Definition
| Available only to B. If foreseeable at the time of the K (lost profits, damages to reputation, etc) |
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Term
| Mitigation principle in UCC |
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Definition
| Victim does not have to arrange a substitute transaction and may still get market damages BUT cannot get consequential damages |
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Term
| Right to reclaim goods if S is unpaid |
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Definition
| No general right to reclaim. May reclaim if B is insolvent when B receives the goods and S demands return within 10 days thereafter. S may reclaim at any time if B misrepresented its solvency to the seller in writing within three months before delivery |
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Term
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Definition
| One that must occur before an absolute duty of immediate performance arises in the other party |
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Term
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Definition
| A condition whose occurrence cuts off an already existing absolute duty of performance |
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Term
| Burdens of proof of conditions on the K |
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Definition
| P has burden of proving conditions preceding the P's ability to recover; D has the burden of proving conditions that would discharge its duty to pay |
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Term
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Definition
| Estoppel- before the condition has failed to be fulfilled; Election- after the condition has failed |
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Term
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Definition
| Essential purpose of the K has been met; a constructive condition that precedes the other party's duty to pay. Substantial performance = PE gets the full K price, but PR may counterclaim for damages suffered as a result of the wrong pipe being used |
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Term
| Perfect Tender Rule under UCC |
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Definition
| S's failure in any respect to deliver the goods in conformity with the K gives the B the opportunity to reject all the goods, or in any combination. Exception: Installment Ks-- can reject an installment if there is a substantial impairment in that installment that cannot be cured, but can reject the entire K only if a defect in an installment substantially impairs the value of the entire K. |
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Term
| S's opportunity to cure a defect in the performance |
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Definition
| If the time for performance has not expired, S has the option to cure and must do so before the time for performance expires. If the time has already expired, S will only have an option to cure if S had reasonable grounds to believe that nonconforming tender would be acceptable to B |
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Term
| Excuses for nonperformance |
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Definition
| Substantial performance, acceptance of goods, anticipatory repudiation, impossibility, prospective inability to perform, frustration of purpose |
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Term
| Acceptance of goods as an excuse for nonperformance |
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Definition
| Implied when B keeps the good without objection after having a reasonable opportunity to inspect. If goods are accepted, B loses the right to reject. If nonconforming goods are accepted, B can still get damages for S's breach. |
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Term
| Revocation of acceptance of goods |
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Definition
| Generally cannot, but if there is a latent defect that substantially impairs the value of the goods, then revocation may be permissible. Options after revocation: 1) return the goods to S at S's expense, 2) refund, 3) damages |
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Term
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Definition
| Unequivocal; mere doubts about ability to perform are not enough. Nonbreacher may: 1) be excused from further performance, 2) sue immediately for damages OR 3) ignore repudiation and urge performance |
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Term
| Prospective inability to perform |
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Definition
| Ask for adequate assurances of performance. If no assurance w/in reasonable time, may consider the K repudiated |
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Term
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Definition
| Performance need not be literally impossible, just excessively burdensome because a later unforeseen event substantially affects S's ability to perform the K or the cost o f S's performance. Increase in price will almost never excuse performance. |
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Term
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Definition
| S excused only if damaged or destroyed goods had been identified to the K |
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