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Contracts Mnemonics

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Contracts Mnemonics CONTRACTS MNEMONICS 1) The ingredients for a valid contract are TACO: T – Definite TERMS, express or implied A – ACCEPTANCE of terms C – CONSIDERATION O – OFFER inviting acceptance 2) An offer expires when it gets TIRED: T – Reasonable TIME after an offer is made, or after expiration date expressly stated in an offer I – Mental INCAPACITY or death of offeror or offeree R – REVOCATION of an offer communicated to an offeree before acceptance E – EXPRESS or implied rejection communicated to offeror D – DESTRUCTION of the subject matter of the offer or intervening illegality terminates an offer by operation of law 3) Options can DIE by: D – DESTRUCTION of subject matter I – Intervening ILLEGALITY E – EXPIRATION of a stated option time extinguishes the option 4) In NY, a signed writing takes the place of consideration for POP: P – PRE–EXISTING duty O – Contract OPTIONS P – PAST consideration (which must be recited in the signed writing) 5) Generally, contracting parties are free to modify a 3rd party beneficiary (3PB) K, unless, prior to receiving notice of the K modification, the 3PB got MAD: M – MANIFESTED an assent called for in the 3PB K, at the request of one of the contracting parties (i.e., accepted a K offer arising from the 3PB K) A – Commenced a breach of K ACTION against the promisor, or D – DETRIMENTALLY relied on the K 6) Contract assignments may involve the ADA: A – ASSIGNMENT of a contractual right to collect money owed under the K D – DELEGATION of the performance required under the K A – ASSUMPTION of liability for performing the K ©2016 Pieper Bar Review 1 7) A gratuitous assignment becomes irrevocable, and a second assignee prevails over a prior assignee of the contract when J.P.N.C.: J – Recovers a JUDGMENT P – Gets PAID NC – Enters a NEW CONTRACT 8) Absent express language in a K prohibiting assignment, K rights are freely assignable, except those of SIR P: S – Where a STATUTE expressly prohibits the assignment of a K right (but if that claim is reduced to judgment, it is assignable) I – Where the assignment is coupled with an IMPROPER delegation of a duty under the K to a person unqualified to fulfill that duty R – Where the assignment increased the RISK to the other contracting party P – Where the services to be rendered are highly PERSONAL in nature (because that would materially alter the bargain) 9) In New York, by statute (see SIR P), you cannot assign a WASP: W – WORKER’S COMPENSATION A – ALIMONY or child support payments S – SPENDTHRIFT TRUSTS P – PERSONAL INJURY or wrongful death causes of action 10) Look at HAIL to determine whether a breach is material or immaterial: H – HARDSHIP on breaching party if total material breach is declared A – AMOUNT of benefit bestowed on non–breaching party I – Whether breach was INNOCENT L – LIKELIHOOD of full performance being achieved 11) Breach of contract defenses are I3 FU2MED & I S2IP: I – INFANCY I – INSANITY – INCOMPETENCY I – INTOXICATION F – FRAUD U – UNCONSCIONABILITY U – UNDUE INFLUENCE M – MISTAKE E – EQUITABLE DEFENSES D – DURESS I – IMPOSSIBILITY of performance S – STATUTE OF FRAUDS S – STATUTE OF LIMITATIONS I – ILLEGALITY P – PAROLE EVIDENCE RULE 12) Lack of contractual capacity arises from the 3 I’s: I – INFANCY I – INTOXICATION I – Mental INFIRMITY ©2016 Pieper Bar Review 2 13) SI2R M is a fraud: S – SCIENTER I – D lied with an INTENT to defraud the P I – P suffered an economic INJURY R – P justifiably RELIED on D’s misrepresentation M – D misrepresented a MATERIAL fact, which induced P to enter the K 13a)Badges of constructive fraud SHIFTS: S – SECRETLY done H – HASTILY done I – INADEQUACY of consideration F – Made to a FAMILY member or Friend T – TRANSFEROR continues to the control property S – SCIENTIFIC (knowledge) of the creditor’s claim, an inability to pay it after the transfer. 14) A unilateral mistake in calculating figures may allow the mistaken party the remedy of equity of rescission, if he calls the COPS: C – The computational mistake was COMMUNICATED to the other party before that person changed his/her position in reliance on those mistaken figures O – The mistake involved was one of ORDINARY negligence P – The mistaken party gave PROMPT notice of the mistake S – The mistake will impose SUBSTANTIAL hardship on the party if not corrected 15) The following SMART FLYS contracts must be in writing, subscribed by the party to be charged with the breach (i.e., must contain defendant’s signature): S – SURETY contracts M – MARRIAGE contracts A – ANSWER for debts discharged in bankruptcy R – REAL ESTATE contracts T – TESTAMENTARY promises (NY ONLY) F – FINDERS FEE arrangements L – LEASES longer than 1 year Y – Contracts not capable of complete performance within 1 YEAR S – UCC Article 2 SALES CONTRACTS for $500 or more 16) Use a COMB for promissory estoppel in NY: C – CHARITABLE pledges O – To avoid OUTRAGEOUSLY unconscionable results M – Oral MARRIAGE contracts B – Promises by gratuitous BAILEES to obtain insurance on bailed goods 17) There are 4 T–CUP elements for a constructive trust: T – TRANSFER of property in reliance on promise C – Existence of CONFIDENTIAL or fiduciary relationship U – UNJUST enrichment to transferee of property or to some third party, AND P – PROMISE, express or implied, to hold property for plaintiff’s benefit, which promise has been breached ©2016 Pieper Bar Review 3 18) A THUG may render an illegal contract enforceable, based on: T – TYPE of illegality & extent to which the public is harmed H – HARM that forfeiture would cause if contract was declared unenforceable due to illegality; ct looks to see whether contract has been substantially performed U – UNJUST enrichment (a windfall) to party asserting illegality defense G – Relative GUILT of each party 19) The theory of impossibility frequently involves the 4 Ds: D – DEATH D – DANGER to life/ill health D – DESTRUCTION of the subject matter of the law suit D – DELAYS, temporarily causing performance to become impracticable or impossible 20) OF MICE2 permits parole evidence: O – To establish an ORAL condition precedent to legal effectiveness of contract, provided it doesn’t contradict express term(s) of the contract F – A party cannot invoke the Parole Evidence Rule to shield that party from allegations of FRAUD or Misrepresentation M – To establish MUTUAL Mistake or claim for reformation of contract I – To establish ILLEGALITY C – To establish failure of CONSIDERATION E – To EXPLAIN ambiguous or missing terms E – To show that no ENFORCEABLE agreement was ever intended 21) Contract law does not allow damages recovery for CAPS: C – To recover consequential damages, unless they were within the CONTEMPLATION OF BOTH PARTIES when the contract was executed A – Damages that party could have AVOIDED P – Damages for PAIN & suffering or emotional distress resulting from a breached contract, even if such damages were foreseeable S – SPECULATIVE damages aren’t recoverable (all damages must be proven within a reasonable certainty) 22) Generally, parties can put whatever terms they’d like into a K, except for PLUS: P – Terms that violate PUBLIC POLICY L – Terms providing for an excessive amount of LIQUIDATED DAMAGES U – Terms that are UNCONSCIONABLE S – Clauses providing that one party can seek SPECIFIC PERFORMANCE in the event of a breach (the contract does NOT have to enforce these clauses) 23) Apply a TISSUE to a covenant restricting a former employee from competing: T – TIME restriction must be reasonable (usually two years or fewer) I – INABILITY of the employee to gain work elsewhere S – The geographic SPACE/SCOPE of the restriction must be as narrow as possible (must only be to the extent necessary to protect employer’s interest) SUE – The employee services must be SPECIAL, UNIQUE, or EXTRAORDINARY ©2016 Pieper Bar Review 4 SALES MNEMONICS 24) ICOP limits the Perfect Tender Rule: I – INSTALLMENT contracts C – Timely delivery was COMMERCIALLY IMPRACTIBLE by an event not contemplated by the parties. O – Delivery in good faith, OBJECTIVELY and reasonably believing the goods would be acceptable to the buyer P – PRIOR TO DELIVERY DATE set forth in the contract, conforming goods are delivered to replace the nonconforming goods 25) Additional terms will not be added to the contract when OCAN: O – The offeror OBJECTS to additional terms within a reasonable time C – The offer expressly CONDITIONS the agreement on accepting the terms in the offer as they are A – The additional terms materially ALTER the offer N – Either or both parties are NON–MERCHANTS 26) A J STRAW clause materially alters an offer if it would cause surprise or hardship to the offeror if the offeror was not made aware of its existence: J – Bestowing JURISDICTION on a particular court, or requiring offeror to consent to jurisdiction in particular state S – Shortening the STATUTE OF LIMITATIONS to sue for non–conforming goods T – Limiting TORT liability or limiting a buyer’s right to sue for consequential damages R – Altering UCC rules for RISK OF LOSS A – Adding an ARBITRATION CLAUSE (unless customary to do so in the trade) W – Adding a clause negating a WARRANTY (e.g., one of merchantability or fitness) 27) Exceptions to the Statute of Frauds requirement are SWAMP: S – Contracts for SPECIALLY manufactured goods W – WAIVER A – Judicial ADMISSION of contract M – “MERCHANT MEMORANDUM” P – PART PERFORMANCE 28) If a sales contract is silent on a topic, the UCC implies the following CIDER rules: C – Seller is not obligated to extend CREDIT to the buyer I – Buyer has the right to INSPECT the seller’s tendered goods
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