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139 Cards in this Set
- Front
- Back
Article 2
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Sale of Goods
(moveable, personal property) |
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Common Law
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All Other Contracts
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Article 2A
(Mississippi) |
Lease of Goods
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Contract
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Legally enforceable agreement
(1) Express (2) Implied |
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Express
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Created by the parties' words (oral or written)
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Implied
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Created of parties' conduct
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Quasi-Contract
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An equitable remedy that protects against unjust enrichment whenever contract law yields an unfair result.
**Remedy of last resort! |
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Bilateral Contract
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Offer can be accepted in any reasonable way
"flexible" |
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Unilateral Contract
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Offer can be accepted only by performance
Look for these fact patterns: (1) Offer expressly states "offer by performance" (2) Reward, contest, or prize |
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Contract Formation Analysis
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(1) Was there an offer?
(2) Was the offer terminated? (3) Has the offer been accepted? |
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Offer
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A manifestation of the intention to be bound
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Offer: Advertisements
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An advertisement is NOT an offer!
EXCEPTION: Unless it specifies the quantity |
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Offer Validity: Indefiniteness
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See if any of the tersm are too vage to enforce
Could be a requirements contract or open price |
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Requirements Contract
(Article 2) |
-Definite enough, even though there's no specific quantity mentioned.
**Quantity can be measured by need , but cannot deman quantity out of line from previous needs |
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Open Price
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Court will read in a reasonable price except in a contract for the sale of real property.
As long as NOT real property, Article 2 will FILL THE GAP |
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Offer Termination
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(1) Lapse
(2) Revocation (3) Rejection (4) Death of a Party Before Acceptance |
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Lapse
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An offer lapses:
(1) After a stated term OR (2) After a reasonable time has passed |
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Revocation
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An offer terminated when the offeror revokes the offer.
**An offer can be revoked any time before acceptance, either direct or indirectly. |
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Direct Revocation
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The offeror indicates directly to the offeree that he has changed his mind about the deal.
**Doesn't have to include direct language. |
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Indirect Revocation
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Offeror engages in conduct that indicates he's changed his mind AND the offeree is aware of the conduct.
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Revocation Exceptions
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(1) Option
(2) Foreseeable Reliance Before Acceptance (3) Starting to Perform a Unilateral Contract (4) Firm Offer [Art 2] |
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Revocation Exception: Option
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A promise to keep the offer open that is paid for.
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Revocation Exception: Foreseeable Reliance Before Acceptance
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RARE
Before accepting an offer, the offeree acts in reliance of the offer--this reliance is not protected usually.... EXCEPT a case (such as a contractor/sub contractor situation) where reliance on the offeror knows the offeree will have to rely. |
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Revocation Exception: Starting to Perform a Unilateral Contract
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Unilateral contract is started once the contracted work is began. Once the offeree begins the contract, revocation is not allowed.
HOWEVER, Mere preparation doesn't make offer irrevocable under this exception. [Could be a foreseeable reliance situation] |
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Revocation Exception: Firm [Article 2]
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In a sale of goods, if a merchant promises in a signed writing to keep an offer open, then the offer is irrevocable
[almost every business person is a merchant under Article 2's broad definition] **Offer firm for reasonable time (not more than 3 months) |
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Timing of Revocation
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Revocation of an offer is effective only on receipt.
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Rejection of an Offer
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An offer terminates when the offeree rejects it through:
(1) Counteroffer (2) Conditional Acceptance (3) Acceptance Varying the Offer |
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Counteroffer
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Operates as a rejection, but mere bargaining does not.
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Conditional Acceptance
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Operates as a rejection.
**Offeree cannot accept under conditional terms stating that they will accept "so long as" a condition is met. |
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Acceptance Varying Offer: Common Law
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Acceptance must mirror offer
"Mirror Image Rule" Cannot add or change any terms--this operates as a rejection! |
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Acceptance Varying Offer: Article 2
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*No Mirror Image Rule: the offeree's change or adding a term doesn't prevent acceptance
BUT Offeree's Term is Included only if: (1) Both parties are merchants (2) No material change AND (3) Offeror does not object within a reasonable time. *Article 2 wants to make it easier to contract for sale of goods. **If a term is customary it is NOT material. **Addition/Change can be kept out with an objection within reasonable time. |
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Death of a Party Before Acceptance
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Terminates a revocable offer.
However, if the offer falls under one of the irrevocable offers---it survives!! |
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Acceptance of the Offer
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Language of the offer controls.
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Starting Performance: Bilateral Contract
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Starting performance is acceptance of an offer to enter a bilateral contract and carries with it an implied promise to finish the job.
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Starting Performance: Unilateral Contract
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Starting performance is NOT acceptance of an offer to enter a unilateral contract; only completing performance is acceptance.
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Improper Performance: Common Law
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Simultaneous acceptance and breach.
Ex) Contract to to paint house and you paint it the wrong color. |
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Improper Performance: Sale of Goods
[Art 2] |
Simultaneous acceptance and breach unless seller is sending the goods as an accomodation to the buyer.
Ex. Sending goods to accomodate---buyer can accept or reject. |
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Silence as Acceptance
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Generally not considered acceptance.
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Timing of an Acceptance: Mailbox Rule
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Acceptance is effective when mailed (MAILBOX RULE)
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Exceptions to the Mailbox Rule
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(1) Offer language provides otherwise
(2) Irrevocable Offer (3) Offeror relies on overtaking rejection (4) Rejection sent first |
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Mailbox Rule Exception: Offer Provides Otherwise
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Offeror can override MB Rule with language in contract.
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Mailbox Rule Exception: Irrevocable Offer
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The offeree does not need the MB Rule to protect him against revocation---the offer is already irrevocable.
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Mailbox Rule Exception: Offeror Reliance on Rejection
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Where an acceptance is sent first, but rejection arrives first.
MB Rule still applies unless offeror relies on the rejection. Rejection 1st doesn't change. |
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Mailbox Rule Exception: Rejection Sent First
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The offeree doesn't need the MB Rule to protect him because he rejected the offer FIRST.
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Defenses Against Contract Formation
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(1) Lack of Capacity
(2) Ambiguity/Misunderstanding (3) Mistake (4) Lack of Consideration (5) Public Policy: Covenant no to Compete (6) Unconscionability |
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Formation Defense: Lack of Capacity
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**Minors, intoxication, mentally incompetent
An incapacitated D has the right to disaffirm the contract if he wants to avoid it. Exception: An incapacitated party is liable for necessaries but only a quasi-contract basis **Can be overcome by Implied Affirmation |
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Implied Affirmation
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Retaining the benefit of the contract without complaint after gaining (or regaining) capacity.
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Formation Defense: Ambiguity/Misunderstanding
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If there is an ambigous or misunderstanding in the contract, there is not a contract.
UNLESS One of the parties knows or has reason to know the true meaning of the term and doesn't divulge this tot the innocent party. **The innocent party's meaning governs! |
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Formation Defense: Mistake
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Mutual Mistake--MUST BE ABOUT A MATERIAL FACT
(note: this doesn't include value) Unilateral Mistake---is usually not a defense; one party's mistake is not fatal unless other party knew (or had reason to know) about the mistake. |
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Formation Defense: Lack of Consideration
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A "bargained for" legal detriment/benefit. Can bargain for a promise, performance, or even forbearance.
**Past consideration is not consideration at all (OKAY IN MS) |
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Adequacy of Consideration
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Irrelevant as long as there's a bargain.
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Contract Modification:Common Law
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New consideration is required to modify a contract.
**Performing a pre-existing duty is not enough [Pre-existing Duty Rule.] |
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Contract Modification: Article 2 Sale of Goods
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Consideration is not required to modify a contract, but you must show good faith.
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Lack of Consideration: Partial Payment of a Debt
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Depends on whether the debt is disputed.
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Lack of Consideration: Time Barred Debt
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A written promise to pay a debt, collection of which is barred by statute of limitations, is enforceable even without consideration.
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MS Statute of Limitations (Contracts)
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1 year: Unwritten employment contract
6 year: sale of goods 3 year: everything else |
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Promissory Estoppel
(as a substitute for consideration) |
Foreseeable reliance may makie a promise enforceable even without consideration.
(not a good first choice!) |
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Public Policy: Covenants Not to Compete
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Must be reasonable as to time, scope, and geographic area
MS: -"Not Favorites of the Law": burden of showing reasonableness is on the party who wants to enforce covenant -Not permitted for lawyers (but permitted for doctors) |
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Formation Defense: Unconscionability
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Shocks the conscience of the court.
(look for oppressive terms or unfair surprise at time of agreement; the fact that terms seem harsh later is irrelevant) (1) Substantive: terms of agreement are grossly unfair (2) Procedural: process by which agreement was reached was unfair (3) Judicial Power: if court invalidates part of a contract, it can enforce the rest. |
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Statute of Frauds: When is a writing required?
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Most oral contracts are enforceable. Only certain kinds of contracts need a writing to be enforced.
"within the SOF" (1) Interest in real property (2) Performance cannot be completed within a year (3) Sale of Goods for $500 or more (4) Lease of Goods for $1,000 or more (5) Suretyship (6) Contract Modifications MS law: if a contract can be fully performed within 15 mos from the date of agreement, no writing is required within SOF. |
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Suretyship
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A promise to "answer for" the debt of another.
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Contract Modification under the SOF
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Must be in writing only if the contract as modified (not the original contract) is within the SOF
**Under common law, clauses that prohibit oral modification are not enforceable (so you can always modify a contract orally under the common law, even if you have agreed not to) |
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SOF: Satisfactory Writing
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**Depends on the nature of contract
Article 2: Must contain a quantity term and be signed by party to be charged with breach Other contracts: Must contain all material terms and be signed by the defendant. |
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SOF Exceptions
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(1) Real Property
(2) One Year Prong (3) Sale of Goods for $500 or More (Article 2) (4) Suretyship |
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SOF Exception: Real Property
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(1) Leases of One Year or Less: legislative exception to ensure that short term-leases are not invalidated by the Statute of Frauds
(2) "Part Peformance': Requires two of three facts: (a) buyer is in possession of the property (b) made at least some payment (c) made improvements to the property |
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SOF Exception: Sale of Goods for $500+ (Article 2)
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(a) Goods Accepted or Paid for By Buyer [Note: This exception applies only to the goods accepted or paid for, not to the whole contract]
(b) Custom Made Goods: If seller has made a substantial start and the goods are not suitable for sale in the ordinary course of seller's business (c) Judicial Admission (d) Merchants' Confirmatory Memo |
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Merchants' Confirmatory Memo
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One party can use its own signed writing to satisfy the Statute of Frauds against the other party if:
(i) Both parties are merchants (ii) The writing claim a prior oral agreement (iii) The writing is signed and has a quantity AND (iv) There is no written objection within 10 days |
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Suretyship
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"Main Purpose" Exception
**If buy something on credit to use in performing contract--someone else promises to pay if you do not.--- as long as surety's main purpose was to benefit himself, no writing req'd |
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SOF: Reliance/Estoppel
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**Need a writing/Does not fall into an exception.
Ex. If someone orally agrees to employs for 2 years. Moves to another city in reliance on our agreement---if fired without cause, reliance is irrelevant. |
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Parol Evidence Rule
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Keeps out evidence of a prior agreement (either oral or written) that contradicts a later writing.
**A PER problem requires a writing, if not a writing---it's a SOF problem Subsequent Developments: PER has nothing to do with what happens AFTER an agreement is reduced to writing. |
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Exceptions to the Parol Evidence Rule
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(1) To correct a clerical error
(2) To establish a defense against formation (3) To interpret a vague/ambiguous term (4) To supplement a partially integrated writing [a final statement of the terms included, but not a complete statement of all terms agreed to] |
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Terms of Contract: Conduct
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Can explain all terms or fill in gaps.
(1) Course of Performance: what the parties did under this contract--the best evidence of what the parties intended (2) Course of Dealing: what they did under prior contracts with each other--more removed from this contract (3) Usage of Trade: what others in the trade do in similar contracts--furthest removed from this contract (in descending order of importance) |
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Seller's Warranties of Quality in a Sale of Goods
(Article 2) |
(1) Express Warranties
(2) Implied Warranties (a) Implied Warranty of Merchantability (b) Implied Warrant of Fitness for a Particular Purpose |
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Express Warranties
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Seller is liable for breach of express warranty.
Ex) Statements of fact, promises, descriptions of the goods, and the use of a sample or model are express warranties. **Opinion is NOT. **Must be the Basis of the Bargain: if buyer could have relied on the warranty, it was a basis of the bargain. However, a case applying MS law held that a buyer must prove ACTUAL DAMAGES in order to prevail. |
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Implied Warrant of Merchantability
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**Goods are fit for their ordinary purpose
Triggering Fact: Seller is a merchant who deals in goods of the kind (A dealer who has special knowledge about the particular goods involved) |
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Implied Warrant of Fitness for Particular Purpose
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**Goods are fit for buyer's particular purpose
Triggering Fact: Seller knows that buyer has a special purpose in mind and is relying on seller to select suitable goods (Seller does not have to be a merchant at all!) |
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Limitations on Warranty Liability in a Sale of Goods
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(1) Disclaimers
(2) Limitation of Buyer's Remedies (3) Privity of Contract (4) Choice of Law |
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Disclaimers
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Seller can disclaim implied, but not express warranties
Magic phrases: "as is" "with all faults" MS: Can't disclaim in MS. Seller is allowed to disclaim implied warranties with sales except with consumers. MS Code 11-7-18 |
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Limitation of Buyer's Remedies
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Seller can limit buyer's remedies for breach of any warranty (express or implied) if the limitation is not unconscionable
EXCEPTION: Limiting buyers remedies for personal injury from consumer goods is presumed to be unconscionable ("prima facie")---consumer protection clause {presumption is rebuttable, but hard to do} |
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Choice of Law
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MS Law governs disclaimers, limitation of remedies, and privity even if the parties have agreed otherwise.
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Risk of Loss in a Sale of Goods (Article 2)
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When goods are damaged before buyer gets them and neither buyer nor seller is to blame, who bears the risk of loss.
(a) If Seller bears ROL: Must provide new goods to buyer for no additional cost or be liable for breach of contract (b) If Buyer bears ROL: Buyer must still pay the contract price. Look for (in order): (1) Agreement: this controls! (2) Breach: breaching party bears ROL, even if loss is unrelated to breach. (c) Delivery by Common Carrier (d) Non-Carrier Cases |
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ROL: Delivery by Common Carrier
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ROL shifts to buyer when seller completes its delivery obligation.
(1) Shipment Contract: Seller must get the goods to a common carrier, make delivery arrangements, and notify buyer. (2) Destination Contract: Seller must get the goods to a specific destination (usually, where buyer is located) Note: look for shipment contract, where buyer bears ROL long before it actually gets teh goods! It's frequently tested because it's counterintuitive. |
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FOB: Free on Board
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MBE!!!!
Usually followed by the name of a city or place. ROL passes to buyer at the named location. If the city or place is where the seller is located, then it is a SHIPMENT contract. If it's anywhere else, it is a destination contract. |
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ROL: Non-Carrier Cases
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**Where buyer is to pick up or seller is to deliver goods. Answer depends on whether selelr is a merchant.
(1) If Seller is a merchant: Seller bears ROL until buyer takes possession of the goods (2) If Seller is not a merchant: Seller bears ROL until it "tenders" the goods |
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Option to Cure
(Article 2) |
A seller who fails to make perfect tender may have an option to cure. It usually depends on whether the tiem for performance has expired.
(a) NOT EXPIRED: Seller has an option to cure (b) EXPIRED: Seller does not have an option to cure unless buyer has shown flexibility in the past in acceptance of goods |
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Perfect Tender Rule
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Seller must deliver perfect goods in the right place at the right time. If tender is not perfect, buyer has the right to reject the goods.
(Article 2) |
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Installment Sales Contracts
(Article 2) |
**Requires or authorizes delivery in separate installments (otherwise, the goods have to be delivered in a single delivery)
*Buyer may reject for SUBSTANTIAL impairment--Perfect Tender Rule does not apply to an installment contract, so harder for buyer to reject. |
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Buyer's Acceptance of Goods
(Article 2) |
IMPLIED ACCEPTANCE
-When buyer keeps the goods without objection after having an opportunity to inspect. |
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Consequence's of Buyer's Acceptance of Goods
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(1) Timing: once buyer accepts, it is too late for buyer to reject
(2) Damages: a buyer who accepts non-conforming goods can still get damages |
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Buyer's Revocation of Acceptance of Goods
(Article 2) |
**A buyer cannot revoke acceptance of goods.
EXCEPTION: If the non-conformity substantially impairs the value of the goods ad was difficult to discover (it was a latent defect) |
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MS: Rules of Revocation of Acceptance
(Article 2) |
(1) Substantial is judged both objective and subjective standard. Must show substantial impairment of value to a reasonable person.
(2) MS is the only state where Seller can cure when Buyer tries to revoke |
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Consequence of Rejction/Revocation of Acceptance
(Article 2) |
(a) Return: buyer can return the goods to seller at seller's expense
(b) Refund: buyer can get back any money buyer has paid for the goods (c) Damages: buyer can get damages from seller for breach of contract |
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Buyer's Payment Obligation
(Article 2) |
Buyer can pay by check, but seller can refuse it. If seller refuses, buyer has an additional reasonable time to get cash.
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Performance of Common Law Contracts
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Under the common law, performance does not have to be perfect.
**Substantial performance is all that is required [ex. a party cannot commit a material breach] |
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Excuse: Other Party's Breach
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The other party's breach may provide an excuse for non-performance. Whether it does depends on the nature of the conduct.
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Other Party's Breach: Sale of Goods (Article 2)
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If seller's performance is not perfect in every respect, buyer has free reign. (Can accept all, reject all, or accept/reject some)
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Other Party's Breach: Common Law Contracts
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(a) Damages: available for any breach, whether it's material or not
(b) Excuse: Only a material breach provides an excuse for not performing. (c) Divisible Contracts |
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Divisible Contracts
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Where payment is to be made on a per unit basis, the breaching party can recover the contract price for any unit on which he has substantially performed.
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Anticipatory Repudiation
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Provides an excuse for non-performance unloess the repudiation is retracted.
(Contract with material breach) |
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Failure to Give Adequate Assurance
(Article 2) |
A party with reasonable grounds for being insecure about the other party's performance may request in writing adequate assurance that hte other party will perform in accordance with the contract.
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Later Agreements by the Parties
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(1) Rescission
(2) Modification (3) Accord & Satisfaction (4) Novation |
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Rescission
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An agreement to cancel the contract
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Modification
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An agreement to replace an existing contract with new one.
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Accord & Satisfaction
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Accord: agreement to accept performance in future satisfaction of an existing duty
Satisfaction: performance of the accord |
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Novation
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An agreement to substitute a new party for an existing one.
Look for consent of the parties on this issue For example: If A contracts to complete a task for C and A, B, and C later agrees that B will do the task--if B doesn't complete the task, A cannot sue C for completion--excused by novation. If C delegated task to B without consent of A, C is still liable. |
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Impossibility
(Seller's Excuse) |
At common law, a later unforeseen event that makes performance impossible may provide a seller with an excuse for non-performance.
In ARTICLE 2, it is called impracticability--seller's performance has become much more difficult. (1) Destruction of Something Necessary for Performance (2) Death/Incapacity of Essential Person (3) Supervening Governmental Regulation (4) Increase in the Cost of Seller's Performance (5) Force Majeure |
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Impossibility: Destruction of Something Necessary for Performance
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COMMON LAW: Destruction provides an excuse for non-performance
SALE OF GOODS (ART. 2): Adopts the same general rule as CL, but there are two tricks here (a) Unidentified Goods: seller is excused only if the damaged or destroyed goods had been "identified to the contract" (b) Risk of loss: a seller who bore risk of loss when goods were damaged or destroyed is excused by impracticability. |
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Impossibility: Force Majeure
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Act of God
UNDER ARTICLE 2!! This rarely works. Seller is excused only if the non-occurrence of the event was a basic assumption on which contract was made. MS: No basic assumption test, so this is more readily available to seller as an excuse. |
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Frustration of Buyer's Primary Purpose
(Buyer's Excuse) |
This is where the sole purpose of the Buyer's reason for contracting with Seller has been unforeseeably thwarted.
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Failure of an Express Condition
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Limits obligations created by other contract language.
**It does not create an independent obligation. Magic Words: "if", "as long as", "when", "provided that", "on condition that" and "unless" ***Strict Compliance Required |
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Failure of an Express Condition: Satisfaction Clauses
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"Satisfaction" is measured by a reasonable person standard unless the contract deals with art or matters of personal taste
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Types of Express Conditions
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[precendent, concurrent, and subsequent]
Tiger Woods agrees to let Derek Jeter use his golf clubs for $100/week. . . . if it rains on July 4: condition precedent as long as Derek is a Yankee: condition concurrent untill the Astros win the World Series: condition subsequent |
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Excusing Occurrence of a Condition
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Occurrence of a condition may be excused by the later action or inaction of the person who is protected by the condition
[EVERY condition protects someone] (a) Failure to Cooperate (b) Waiver (voluntarily giving up protection) |
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Non-monetary Remedies
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(1) Specific Performance
(2) Unpaid Seller's Right to Reclaim Goods |
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Failure of an Express Condition
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Limits obligations created by other contract language.
**It does not create an independent obligation. Magic Words: "if", "as long as", "when", "provided that", "on condition that" and "unless" ***Strict Compliance Required |
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Failure of an Express Condition: Satisfaction Clauses
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"Satisfaction" is measured by a reasonable person standard unless the contract deals with art or matters of personal taste
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Types of Express Conditions
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[precendent, concurrent, and subsequent]
Tiger Woods agrees to let Derek Jeter use his golf clubs for $100/week. . . . if it rains on July 4: condition precedent as long as Derek is a Yankee: condition concurrent untill the Astros win the World Series: condition subsequent |
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Excusing Occurrence of a Condition
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Occurrence of a condition may be excused by the later action or inaction of the person who is protected by the condition
[EVERY condition protects someone] (a) Failure to Cooperate (b) Waiver (voluntarily giving up protection) |
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Non-monetary Remedies
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(1) Specific Performance
(2) Unpaid Seller's Right to Reclaim Goods |
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Non-Monetary Remedies: Specific Performance
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Equitable remedy available only if monetary damages are clearly inadequate.
**Whether specific performance is available in a given case depends on the nature of the contract (real property or sale of goods or service contracts) |
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Specific Performance in Real Property Contracts
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Generally available because real property is considered unique (even if it's not)
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Specific Performance in Sale of Goods (Art. 2)
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Available only if the goods are unique or there are other proper circumstances
ex. inability to buy substitute goods in the market |
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Specific Performance in Service Contracts
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NOT AVAILABLE in service contracts, but injunctive relief may be available.
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Non-Monetary Remedies: Unpaid Seller's Right to Reclaim Goods
(Article 2) |
Not available under Article 2
EXCEPT: If buyer was insolvent when it received the goods AND seller demands return within 10 days after buyer receives them. EXCEPT 2: Seller can reclaim goods at any time if buyer misrepresented its solvency to seller in writing within 3 months before delivery. |
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Monetary Remedies
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(1) Punitive Damages: generally NOT awarded
(2) Liquidated Damages: upheld if damages were difficult to estimate and are a reasonable forecast of probable damages but cannot operate as a penalty (3) Expectation Damages: put an injured party in as good a position as full performance. GENERAL RULE. (5) Consequential Damages: damages special to the plaintiff that were reasonably foreseeable to breaching party at the time of the contract (not available under Art 2) (6) Avoidable Damages: an injured party cannot recover damages he could have avoided or mitigated with reasonable effort (7) Incidental Damages: cost to the injured buyer or seller of transporting/caring for goods after a breach and of arranging a substitute transaction |
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Monetary Remedies: Expectation Damages
(Common Law) |
Examples:
A agrees to paint H's house for $10,000. A breaches. H pays B $13,000 to paint. H can recover $3,000 from A to put him in the position of full performance. [10,000 would have paid minus the 13, 000 he had to pay] OR Same facts, except that H refuses to pay A after A begins the project. A has already spent $5,000 in supplies and expected to clear $1, 500 profit. A can recover $6,500 from H to coup the expenses and cover the profit. **REMEMBER the hand balancing test! |
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Monetary Remedies: Expectation Damages
(Article 2 Sale of Goods) BUYER'S DAMAGES |
(a) Cover Damages: cover price minus contract price if buyer covers in good faith (usual measure)
(b) Market Damages: market price minus contract price if buyer doesn't cover in good faith or doesn't cover at all (c) Loss in Value: value as promise minue value delivered if buyer keeps non-conforming goods. |
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Monetary Remedies: Expectation Damages
(Article 2 Sale of Goods) SELLER'S DAMAGES |
(a) Resale Damages: contract price minus resale price if seller resells in good faith (usual measure)
(b) Market Damages: contract price minus market price if seller does not resell in good faith or does not resell at all. (c) Lost profit: lost profit, if seller is a lost volume dealer (d) Contract Price: contract price if seller cannot resell the goods. |
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Entrustment
(Article 2) |
An owner who entrusts goods to a merchant who deals in goods of the kind has no rights against a bona fide purchaser.
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Third Party Beneficiary
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Two people enter a contract intending to benefit a 3rd party
3rd Party Beneficiary: person who is not party to a contract but has rights because the contract was intended to benefit him Promisor: party who promises to perform for the TPB Promisee: party who secures the promise |
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Intended Beneficiary
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the person to whom performance was to be given according to the contract. A incidental beneficiary just happens to benefit from the contract. Only an intended beneficiary has legal rights
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Donee Beneficiary
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If the promisee's purpose was to confer a gift on the TPB, the TPB is a donee beneficiary. If the promisee's purpose was to pay off a debt to the TPB, the TPB is a creditor beneficiary.
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Third Party Beneficary: Rescission and Modification
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The promisor and promisee can rescind or modify the contract until the rights of the TPB have "vested"
EXCEPTION: Contrary language in the contract controls. |
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Third Party Beneficiary: Liability
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(a) Promisor liable to 3rd party beneficiary
(b) Promisee liable to a creditor beneficiary (c) Promisor liable to promisee |
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Delegation of Duties
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Contractual duties may be delegated without the consent of the person to whom performance is owed (the "obligee")
Exceptions: (1) Contract Language Controls (2) Special Skill or Reputation |
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Delegation of Duties: Rights of the Obligee
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(A) Delegating Party Remains Liable
(b) A Delegate who gets consideration is liable. |
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Assignment of Rights
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Two people make a contract; later, one assignor transfers his rights to third party assignee. The party who owes the duty is the obligor.
**An assignment of rights transfers only rights. Assignment of an entire contract transfers both rights and obligations. **Must have language of present transfer **Consideration is not required |
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Restrictions on Assignments
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(a) Contract Language Controls
(b) Cannot substantially change duties of obligor |
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What is the dying declarations exception?
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Statements made under sense of impending death are admissible in a homicide or civil case if:
1) Declarant believed his death was imminent (need not actually die), AND 2) Statement concerned cause or circumstances of impending death, AND 4) Declarant now unavailable **Traditional rule: could only be used in homicide case and D must have actually died. |