Contract

Governing Law: 1)Contracts for sale of goods are govenrned by Article 2 of the UCC; 2) Goods are all things moveable at the
time they are identified to the contract; A merchant is one who deals in goods of the kind sold or who by his occupation holds
himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction. Formation: Formation
requires mutual assent, consideration, and no defenss to creation or encoforcement of contract. Offer: An offer is 1) an
expression of willingness to enter into a contract; 2) with certain and definite terms; 3) communicated to an offerree A sale of
goods contract requires a quantity term that is either certain or capable of being made certain. Acceptance: 1) An
acceptance is a manifestation of assent to the terms of an offer; 2) Under the UCC, an acceptance is valid even if it includes
additional or different terms. Additional Terms: (1) If the parties are merchants, additional terms in the acceptance are
included in the contract; 2) unless, they materially alter the original terms of the offer, the offer expressly limits acceptance to
the terms of the offer, or the offeror objects to the additional terms with a reasonable time. Mailbox rule: Acceptance by mail is
effective at the moment of dispatch, provided that the mail is property addressed and stamped, thus a valid contract formed
upon dispatch. Consideration: Consideration is a bargained-for-exchange involving legal value. To support a contract there
must be consideration on both sides of the agreement (mutual obligation). Defenses- SoF- A contract for the sale of goods for
a price of $500 or more is within the SoF and, to be enforceable, generally must be evidenced by a writing signed by the party
being sued. 1) The statue requires only a signed writing by the party to be charged, that identifies the subject matter, indicates
the parties intended a contract, and states essential terms. A written offer suffices for this purpose, and 2) the only essential
term in a sales contract is quantity. Breach: Under the perfect tender rule of the FCC, a party has a right to reject goods if the
goods or their delivery fail to conform the contrary in any way. Material or minor breach: If the non-breaching party gains the
substantial beneft of the bargain despite the defective performance, the breah is minor; 2) meaning the aggrieved party is not
relieved of their duty to perform but is entitled to damages. In determining whether a breach is material, the court will look not
only at whether there was material breach of a particular provision, but also at the totality of the deviations from the contract
terms. Courts generally consider 1) the extent the non-breaching party receives the benefits; 2) the extent the non-breaching
party can be compensated; 3) the hardship to the breaching party 4) the extent the breach was negligent or wilful; 5) the extent
to which the breaching party has performed and the likelihood of full performance. Condition Precedent: A condition
precedent is one that must occur (and be strictly met) before an absolute duty of immediate performance arises in the other
party. No condition: Provision that performance is due “when” or “upon” an event occurs is often interpreted by the court as
merely stating a time for payment rather than a condition Unilateral Rescission: Rescission is a remedy whereby the original
contract is considered voidable and the parties are left as though a contract had never been made. Failure of timely
performance: If a promise is express in the contract, generally literal compliance is required. When dates are included in a
contract, including construction contracts, courts do construe time to be of essence unless otherwise clearly stated. Time is of
the essence: Failure to perform at the stated time is not a material breach unless 1) the nature of the contract is such that
performance at the agreed time is vital or 2) the contract contains a time is of the essence clause. Misrepresentation: A
contract is voidable by the innocent party if the innocent party justifiably relied on the misrepresentation and the
misrepresentation was material. Material misrepresentation: A misrepresentation is material if 1) it would induce a reasonable
person to agree, or 2) the maker knows that for some special reason it is likely to induce the particular person to agree, even if
a reasonable person would not. Fraudulent misrepresentation: False assertion 1) if a party induces another to enter into a
contract by using false assertion of fact; 2) that the maker either knows or believes is false or has no basis for, 3) the contract is
voidable by the innocent party if they justifiably relied on the misrepresentation. Justifiable Reliance- The innocent party is not
entitled to relief if the reliance was unreasonable under the circumstances A seller is typically not liable for any defects, but
exceptions exist for fraud, concealment and failure to disclose serious, known and non-obvious defects. Non-disclosure: 1)
without concealment usually considered a misrepresentation only if it is material or fraudulent and 2) falsely denying knowledge
of a fact can be considered a misrepresentation. The “As is” disclaimer Contract of sale and deeds of real property carry no
implied warranties of quality or fitness, and a seller is liable for defects only in cases of misrepresentation, concealment and
non-disclosure. Parol Evidence Rule: When a writing is intended to be the final expression of the parties’ bargain, any other
expressions- written or oral- made prior to the writing, as well as any oral expressions contemporaneuous with the writing, are
inadmissible to vary the terms of the writing. 1) When it is attacking the validity of a contract, rather than trying to alter the
terms, extrinsic evidence is outside the scope of the parol evidence rule; thus 2) formation defects, such as fraud, may be
shown by extrinsic evidence. Anticipatory Repudiation- When, before performance is due, a party is unequivocally indicates
that they will not perform when the time comes, the other party may treat the repudiation as a total breach. For the doctrine to
apply, there must be bilateral contract with executory (unpeformed) duties on both sides. Excuse: An actual breach (or
repudiation) excuses the duty of coutnerperformance: Prospective inability to perform: 1) When a party has reasonable grounds
to believe that the other party will be unable or unwilling to perform when performance is due, that party may suspend their
performance until they receive adequate assurances that the party will perform and 2) if adequate assurances arent made, the
demanding party may treat the failure to provide assurance as a repudiation. REMEDIES Damages: REJECT
Standard measure: Under the UCC, when a buyer wrongfully rejects goods, the seller is entitled to either the difference
between the contract price and the market price or the difference between the contract price and the resale price of the
particular goods, plus incidental (but not consequential) damages, if any, less expenses saved as a result of the breach.
Basic Damages consist of the difference between contract price and either the market price or the cost of buying replacement
goods, plus incidental and consequential damages, if any less expenses saved as a result of the seller’s [Link] Profits
Measures: 1) if a seller can obtain or manufacture as many goods as they can sell, the seller is a lost volume seller. But for the
buyer’s breach, the seller would have made two sales instead of one; 2) The lost profits is meausured by the contract price with
the breaching buyer minus cost to the [Link] or DAMAGED Under the UCC, if the goods have been lost or damaged at a
time when the risk of loss was on the buyer, the seller may maintain an action against the buyer for the full contract price.
Specific Performance- Rule: 1) If the legal remedy is inadequate, the non-breaching party may seek specific performance; 2)
the legal remedy generally is inadequate when the subject matter of the contract is rare or unique. Replevin: Under the legal
remedy of replevin, if a buyer is unable to secure adequate substitute goods, the buyer may recover the goods identified to the
contract from a seller who refuses to tender the goods. Legal and equitable remedies involve differing amounts of court
discretion and different differences. If a buyer cannot buy substitute goods, the buyer may choose either specific performance
or replevin. Risk of loss- Destination Contract: Rise of loss is determined by the contract’s claim. Rule 1): In a carrier case, the
risk of loss depends on whether the contract is a shipment or destination contract; 2) If the contract requires the seller to ship
the goods but does not require the delivery to a particular destination, it is a shipment contract and risk of loss passes to the
buyer when the goods are delivered to the carrier; 3) If the contract requires the seller to deliver the goods to a particular
destination, the risk of loss passes to the buyer when the goods are tendered to the buyer at the destination.
FOB Rule: 1) The letters FOB are always followed by a location, and the risk of loss passes to the buyer at the named location;
2) The seller bears the risk and expense of getting the goods to the name location. Destruction of subject matter argument
Rule: If the contract’s subject matter is destroyed or the designated means for performing the contract are destroyed,
contractual duties may be discharged for impracticabiltiy; Requirements for dischanrge of a contract for impracticabiltiy: 1) the
nonoccurence of the event was a basic assumption of the parties in making the contract, and 2) neither party has expressly or
impliedly assumed the riks of the event occuring.