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US — Contracts (AI set 1) — US law flashcards · caselaw · US
Contracts · Contracts
US — Contracts (AI set 1)
US contract law — offer, acceptance, consideration, the UCC vs. common law divide, breach, and remedies.
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Hamer v. Sidway — what does it establish about consideration?
A promisee's forbearance of a legal right (here, refraining from drinking, tobacco, and gambling) constitutes valid consideration, even if the promisor receives no tangible benefit. Hamer v. Sidway, 124 N.Y. 538 (1891) confirmed that consideration requires either a benefit to the promisor or a detriment to the promisee — not both.
UCC Article 2 vs. common law — which governs a contract for software customization services bundled with goods?
Courts apply the 'predominant purpose' test: if the contract's primary purpose is services, common law governs; if goods predominate, UCC Article 2 applies. UCC § 2-102 limits Article 2 to 'transactions in goods,' so a primarily service-based contract (even with incidental goods) remains under common law.
Parol evidence rule — when may extrinsic evidence vary a fully integrated written contract?
The parol evidence rule bars prior or contemporaneous oral or written agreements that contradict a fully integrated written contract. Extrinsic evidence is admissible only to show fraud, duress, illegality, lack of consideration, ambiguity, or to add terms to a partially integrated writing. Restatement (Second) of Contracts §§ 209–216 govern integration and the rule's scope.
Promissory estoppel — what elements must a plaintiff prove?
Under Restatement (Second) of Contracts § 90, promissory estoppel requires: (1) a clear and definite promise, (2) the promisor should reasonably expect the promisee to rely, (3) actual detrimental reliance, and (4) injustice can be avoided only by enforcement. Damages may be limited to reliance (out-of-pocket) losses rather than full expectation damages.
Conditions precedent — what is the effect of non-occurrence on the duty to perform?
A condition precedent is an event that must occur before a party's duty to perform arises; if the condition fails, the duty never becomes due and non-performance is not a breach. Restatement (Second) of Contracts § 224 defines a condition, and § 225 states that non-occurrence of a condition discharges the conditional duty.
Restitution damages — when are they awarded in a contracts case?
Restitution restores to the plaintiff the reasonable value of any benefit conferred on the defendant, preventing unjust enrichment — they are available even when expectation damages cannot be proved with certainty or where the contract is unenforceable (e.g., voidable for fraud). Restatement (Second) of Contracts § 371 measures restitution by the market value of the benefit or the increase in the defendant's wealth.
Bargained-for exchange: is a pre-existing legal duty valid consideration?
No. Under the pre-existing duty rule, a promise to do what one is already legally obligated to do is not valid consideration for a new promise. This rule is well-established in common law contract doctrine and prevents coercive contract modifications from being enforceable without fresh consideration.
Offer & acceptance under UCC § 2-207: what happens when a merchant's acceptance adds new terms?
Under UCC § 2-207 (the 'battle of the forms'), additional terms in an acceptance between merchants become part of the contract unless they materially alter it, the offer expressly limits acceptance to its terms, or the offeror objects within a reasonable time. This is a major departure from the common law mirror-image rule.
Expectation damages: what is the goal of the expectation measure in contract law?
Expectation damages aim to put the non-breaching party in the position they would have occupied had the contract been fully performed, including lost profits. As established in Hawkins v. McGee, a plaintiff may recover the benefit of the bargain — the difference between the promised performance and what was actually received.
Reliance damages: when are they preferred over expectation damages?
Reliance damages are awarded when expectation damages are too speculative to calculate with reasonable certainty — typically in new business ventures or novel contracts. The plaintiff recovers out-of-pocket expenses incurred in reasonable reliance on the defendant's promise, restoring the status quo ante rather than conferring the benefit of the bargain.
Material breach vs. minor breach: what is the key legal consequence of the distinction?
A material breach excuses the non-breaching party's remaining duties of performance and entitles that party to treat the contract as discharged and sue for total breach. A minor (partial) breach does not excuse the other party's performance but does allow a damages action for the partial failure.
Statute of Frauds — UCC § 2-201: what satisfies the writing requirement for a sale of goods ≥ $500?
Under UCC § 2-201, a contract for the sale of goods priced at $500 or more is unenforceable unless evidenced by a writing sufficient to indicate a contract was made, signed by the party against whom enforcement is sought. The writing need not contain all terms, but it must specify a quantity; price and other terms may be omitted or stated incorrectly.
Promissory estoppel under Restatement (Second) § 90: can it substitute for consideration?
Yes. Under Restatement (Second) of Contracts § 90, a promise is enforceable without consideration if the promisor should reasonably expect to induce action or forbearance, the promisee does in fact rely to their detriment, and injustice can be avoided only by enforcement. The remedy may be limited to reliance damages rather than full expectation damages.
Parol evidence rule: does it bar evidence of a prior agreement that contradicts an integrated written contract?
Yes. Where parties adopt a writing as the final and complete expression of their agreement (a fully integrated contract), the parol evidence rule bars extrinsic evidence of prior or contemporaneous agreements that would contradict or vary its terms. However, extrinsic evidence is admissible to show fraud, mistake, ambiguity, or to supplement a partially integrated writing with consistent additional terms.
Hamer v. Sidway — can an uncle's promise to pay for a nephew's abstinence be enforced without a writing?
In Hamer v. Sidway, the court enforced the promise even without a formal written contract because the nephew's forbearance from lawful activities constituted valid consideration, satisfying the bargained-for exchange requirement. The Statute of Frauds did not bar enforcement because the promise was not within any of the traditional categories (e.g., it was not a promise for the sale of land or goods ≥ $500, nor a multi-year obligation under the facts presented).
UCC § 2-204: can a contract for goods be enforceable even if the moment of making is uncertain?
Under UCC § 2-204, a contract for the sale of goods may be formed in any manner sufficient to show agreement, and an open or uncertain moment of formation does not prevent enforcement if the parties intended to make a contract and there is a reasonably certain basis for granting a remedy. This is a significant departure from common-law formality requirements for offer and acceptance.
Condition vs. promise: what is the legal effect of classifying a term as a condition rather than a promise?
A condition is an event whose occurrence or non-occurrence determines whether a party's duty to perform arises or is discharged; failure of a condition excuses performance without creating liability for breach. By contrast, breach of a promise gives rise to damages. Courts prefer to interpret ambiguous terms as promises rather than conditions to avoid forfeiture, as recognized in Restatement (Second) of Contracts § 227.
UCC § 2-306: is a requirements contract illusory for lack of a fixed quantity term?
Under UCC § 2-306, a requirements contract is not illusory even though no fixed quantity is stated, because the buyer's obligation to purchase actual good-faith requirements supplies the necessary consideration. The buyer must not tender or demand quantities that are unreasonably disproportionate to any stated estimate or to prior course of dealing.
Parol evidence rule: does it bar a party from introducing evidence of a condition precedent to effectiveness of the written contract?
No. Under the parol evidence rule, extrinsic evidence that the written agreement was never intended to become effective absent an oral condition precedent is admissible, because such evidence does not vary or contradict the writing — it negates the contract's very existence. This is a widely recognized exception codified in Restatement (Second) of Contracts § 217.