Contracts Outline (Bar exam July 2021) PDF

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quick outline for bar contracts florida 2021 (taking July term) mostly based off the barbri lectures and class notes...

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Cont r act sOut l i ne

I.

FORMATION:

1.Offer – Specific terms Revoking – By person who made offer -

Direct= inform the other person. Other person “loses power to accept” Indirect= person finds out from a third person offeror made a deal with someone else. Person “loses power to accept” Versus Rejecting – By person who received offer

Offers are REVOCABLE until time of acceptance, UNLESS: OPTION CONTRACT = Offeror promises to keep contract open for an amount of time. Either stated time or reasonable amount of time. *** Needs additional consideration in order to make it irrevocable. If there is no additional consideration, offer is still good, but it is just not irrevocable, it is just a normal offer. ** Option contracts are between “lay people” = regular joes. FIRM OFFER = an offer with a merchants, on or two, looks like an option contract, but it requires a signed writing by the seller to be irrevocable *does not need extra consideration, just the writing UNILATERAL CONTRACT = A promise for performance. The moment one person begins performance, the offer becomes irrevocable. You cannot change your mind once performance begins. But you do not need to pay until job is done. Ex: I promise to pay you 20 dollars to clean my car. BAR TIP: Always look for the OFFER first. Many times people are just talking but nothing has happened.

2. Acceptance –Manifestation of intent to accept How to Accept: Person can accept in any reasonable they choose, words, actions, etc, as long they express their intent to accept. -

Unless, the offeror specifies the manner in which acceptance much take place. (e.g., if you want my car you have to come over tomorrow at 3 pm with a check that says JETS JETS JETS! In memo section).

Mailbox Rule – Acceptance is effective when sent (not when read or received). -

Exception to Mailbox Rule – Letter of rejection is sent first. Then guy changes his mind and sends letter of acceptance. Whichever letter arrives first wins. *Note that if there are two letters but the first is acceptance, default rule applies and acceptance effective when sent

3.Consideration – Bargained for exchange -

Did they make a deal? I gave you something and you gave me something = there is consideration.

Types of Consideration Questions:   

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Default Rule – Bargained for exchange. A peppercorn. Gift – The promise to give a gift is NOT enforceable. The giving of a gift IS consideration. Past/Moral consideration – Moral: You did a good deed. After the act, someone promises you consideration for it. o if you ask someone to do something for you, it is consideration. If you do something and then ask for compensation, it is not consideration. Accord and Satisfaction—when there is an agreement to settle for a lesser amount that is owed o Two Hypos o Hypo #1: Debt is “undisputed”  Debtor mails a check for half of that, “paid in full,” and creditor cashes  Creditor can still sue for the other half, the “paid in full” notation is garbage o Hypo #2: the parties negotiate for a lower amount and come to some agreement / compromise / settlement  Debtor mails check paid in full and creditor cashes  the parties are DONE cannot sue for more  Ex: Collection agencies settlement Promise not to sue A promise not to sue, even if plaintiff legally has the right, is enforceable as consideration

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II.

Promise to pay a debt A promise to pay a debt that has already been discharged by either (a) declaring bankruptcy, or (b) discharged by the statute of limitations, is enforceable

THIRD PARTY BENEFICIARY – Two people make a contract and some third benefits. They are trying to sue to enforce.

Issue spot when there is an additional party after the original two. Intended – original parties express their intent to benefit them. May have rights IF they have already vested. When do rights Vest = 1. When one or both of original party informs 3rd party. 2. When 3rd party learns of the benefit and begins to rely. Incidental- By chance would have benefited, but original parties didn’t intend that. NEVER have a claim, even if he relied. Bar tip: Some questions will be about original parties changing their mind BEFORE the intended 3d party learns of his rights.

III.

Assignments and Delegation

ASSIGNMENT – One party ASSIGNS away their rights in the contract DELEGATION – One party DELEGATES their duty under the contract Rule #1 Assignments and Delegations are valid whenever, no notice or consent needed. Rule #2 Other party must accept performance or assignment to 3d party Rule #3 If the new party breaches, BOTH can be sued, unless there has been a novation i.e., a “release,” then only the new guy can be sued Rule #4 The new party cannot change the terms of the original contract because they only acquire whatever rights and obligations were in the original contract Exceptions: 1. There can be no assignment or delegation when the nature of the original contract is for a unique or special skill a. Can’t even delegate to someone of the same level of expertise 2. The parties agree there shall be no assignment, and one party assigns it anyway, the assignment is STILL VALID, BUT the party can be sued for breaching the agreement not to assign

3. The parties agree there shall be no delegation, then there can be NO delegation 4. “VOID” : If the parties agree any assignment and/or delegation is “void” that is strictly enforced and there can be no assignment or delegation.

IV.

STATUTE OF FRAUDS – Certain types of contracts need to be in writing

M= Marriage Y= Year. Contracts that cannot be performed in less than one year must be in writing. L= Land. Any conveyance of land must be in writing. E= Executor. Any agreement naming someone an executor must be in writing. G= Guarantor (or Surety). Any time you are guaranteeing the debt of someone else, it must be in writing. S= Sale of Goods $500 or more. Exception: Part performance: The contract has been party performed and does not need to be in writing. -

Land sale contract: party has made some amount of payment and taken possession or made performance. Sale of Goods: If there has been some delivery of goods and some payment

V.

PAROL EVIDENCE – After a contract is formed, one party tries to admit

Oral evidence in the contract that happened either (1) prior to, or (2) contemporaneously while making the contract. ASK: Is the Contract integrated? Final or Completely integrated contract: Parole evidence is not admitted UNLESS it is only coming in to clarify an ambiguity 1. They will tell you the contract contained a merger clause that says “This shall be the final agreement between the parties and cannot be modified orally” 2. The judge determined that this is a final/completely integrated contract

Partial integration: If it is not final, it is partial and parole evidence is admissible UNLESS it contradicts a material term of the contract BAR TIP: 90% of the time it will be partially integrated

EXCEPTIONS Parole evidence will always be admissible (1) To prevent fraud or duress (2) To prove the existence of a condition precedent (3) In sale of goods to show “custom or trade” BAR TIP: 99% parole evidence will be coming in either because it is usually a partially integrated contract, or even if it is final there is an exception that will apply

VI.

CONDITIONS –Something happens which either requires a party to do something or relieves a party of duty to perform “Only if,” “Unless,” “Except” …

Condition Precedent The condition must occur before the day of the contract vs. Condition Subsequent The condition occurs on the day of the contract vs. Condition Concurrent The condition occurs on the day of the contract

***** WAIVER of Condition: Party eliminates the requirement and says just perform anyway. Ex: There is a condition too difficult to accomplish, and one party says don’t worry about it.

VII.

REMEDIES: a.

LEGAL = Money

Expectation damages (default) – Put non-breaching party in the position they would have been in had the contract been performed. UCC = Liquidated Damages = Damages calculated at the time the contract is entered, because if we wait until the party breaches the damages would be too difficult to determine.

*Enforceable as long as they are reasonable and not a penalty ** 10% or less of the value of the contract is always reasonable ***most commonly arise in the form of a down payment or deposit or a late fee

b.

EQUITABLE REMEDIES -No adequate remedy at Law

Specific Performance – Someone has to perform = when the item or subject matter of the contract is unique *Land is always considered unique Injunction – Stop someone from performing Recission – put parties in position they were in PRIOR to the contract *appropriate when there is no meeting of the minds: - Mistake: Parties were mistaken and not in the same page - Misrepresentation: Someone lied so there is no meeting of the minds

VIII.

MODIFICATION – Changing a material term of the contract

COMMON LAW: Services or land contracts; Need Additional consideration UCC – Sale of goods; No Consideration needed, only GOOD FAITH *Tip: Modification assumes there is a contract formed already. Do not confuse with counteroffer. Modification there is a contract already and then someone tries to change it.

IX.

NON-CONFORMING GOODS – Buyer MAY reject, MAY accept, MAY accept in part, reject in part

“Nonconforming” = This is not what I wanted or ordered. Exceptions: (1) If nonconforming goods are delivered PRIOR to the contract day, and seller says he CAN cure, he must be given the opportunity to CURE (2) If nonconforming goods are delivered on the day of contract, but seller has a reasonable belief the buyer would accept anyway, the seller must be given an opportunity to CURE within a REASONABLE amount of time

(3) Installment contracts: Like a subscription. If one installment is nonconforming, that is not a total breach of the contract, UNLESS that one nonconforming installment substantially impairs the value of the entire contract.

X.

ANTICIPATORY REPUDIATION –

Anticipatory repudiation: Prior to the contract day, one party unequivocally refuses to perform.

Remedy: Party can either a) sue immediately for total breach of contract, or b) can wait and see if other party performs, or c) can automatically start looking for someone else to enter in the contract (if ither party shows up, you can work with them, but you do not have to)

*BAR HYPO/TIP: If party says they are unsure if they can perform: “it doesn’t look good” “I don’t know” that is NOT repudiation If there is no repudiation but the party’s communication makes the other party insecure that they will not be able to perform, the insecure party can demand assurances If party responds to assurances in a reasonable amount of time then insecure party must wait to see if the party performs. If the party does not respond in a reasonable amount of time, the other party can sue for total breach.

XI.

PROMISSORY ESTOPPEL –

Promissory estoppel: A promise or statement which induces another party to rely to their detriment Detrimental reliance: someone did something they were not ordinarily going to do, they did something because of what someone said, the other parties’ words made them act *BAR TIP: this is not the same as consideration. Consideration is in play when there is negotiation going on, vs. promissory estoppel someone just said something that made someone “get off the couch and go do something”

DEFENSES XII.

IMPOSSIBILITY vs. IMPRACTABILITY –

Impossibility: Objectively, no one could perform this contract. Common hypo: Item in contract is destroyed, item becomes illegal Impractability: Due to unforeseen circumstances, performance, while possible, has now become too difficult or unfair Common hypo: It is now too expensive is *BAR TIP: some fluctuation in price is foreseeable

XIII. MISTAKE Unilateral mistake– One party is mistaken about a fact or element of the contract NOT a defense to contract breach, UNLESS the other party knew of the mistake, and is therefore taking advantage of the mistake. Mutual mistake – both parties were mistaken about a basic assumption of the contract IS a defense to breach, will get rescission. XIV.

INFACY / AGE

Infancy rule: A contract entered into with a minor under the legal age is voidable at the option of the minor 

Hypo #1: Two contracts, one was entered into when kid was at 16, and the other one at 18, the contract entered into at 18 is enforceable. Pick the contract price when the kid is of age.

RISK OF LOSS Shipment contract (DEFAULT): Once it is passed off to UPS or FedEx, risk of loss shifts to buyer Destination (“FOB”) Contract: Risk of loss stays with Seller until it reaches the destination...