CONTRACTS

OFFER & ACCEPTANCE

1. Must have mutual assent meeting of the minds a. Duty to Read: A party is bound by his objective indication of assent, despite the lack of a subjective agreement due to his failure to read i. This includes clicking I Agree on a website 2. Offer requires (1) manifestation of willingness to enter into a bargain, (2) clear and definite, (3) so made as to justify another person that his assent to that bargain is invited and will conclude it. a. Reasonable Person distinguishes offers from invitation to negotiate (i.e. advertisements) b. Factors for (2): completeness of bargain, context, prior dealings, etc. c. Option Ks: requires a signed writing stating purported consideration and the exchange is on fair terms within a reasonable time only revocable by time lapse i. Part Performance in Option K (45): Commencement of performance creates an option, which suffices for consideration, can argue it was mere preparation d. UCC: Defines goods to include movable things other than money and various intangible rights Must deal mainly with goods NOT exclusively i. UCC Offer: any manner inviting acceptance reasonable under circumstances (MUST BE BETWEEN MERCHANTS) 1. UCC Firm Offers (Steady Offers): requires (1) signing a writing (2) assurance offer will be open (3) by a merchant, with a 3 month limit, rejects common law need for consideration e. Not Offer: Offer made as joke or offeree knows or should know offeror lacks intent or knowledge of other partys mistake may be construed as no offer i. Preliminary Negotiations/ Invitation to Deal ii. Advertisements f. Termination of Offer: A contract can only be terminated by: i. Rejection Silence cannot constitute acceptance ii. Counteroffer Terminates original offer iii. Offerors Death or Mental Disability If offeror dies or is rendered mentally disabled 1. If mental disability manifests after acceptance, the contract is still binding iv. Revocation Offeror has power to revoke anytime before acceptance (NOT in Options though) 1. Must be communicated to offeree 3. Acceptance requires (1) manifestation of assent (cannot be an imposed duty to reject offer) (2) showing express commitment to the terms of the offer a. Must be accepted in the manner specified offeror is master of the offer b. Mirror Image Rule: Acceptance is valid only if it mirrors the offer (however in unilateral contracts, substantial compliance may still bind the other party) c. UCC Perfect Tender Rule: Performance must mirror the terms specified in the contract exactly or else contract is invalid. (NO SUBSTANTIAL COMPLIANCE) d. Methods of Acceptance: i. If no method specified, language is ambiguous or only suggests a method, any reasonable method suffices ii. Part-Performance Rule: In unilateral contracts, constitutes an implied promise to complete the performance specified in the contract, thus commencement of performance= acceptance 1. Otherwise an offer in a unilateral contract can be revoked before performance begins iii. Notice is necessary for a bilateral contract

1. For a unilateral contract, ONLY necessary if the offeror has no adequate means of learning of the performance iv. Mailbox Rule: accepted on dispatch as long as it is addressed and posted correctly 1. If incorrectly labeled, acceptance is effective upon receipt if late v. UCC Acceptance: any manner sufficient to show agreement

CONSIDERATION
1. Consideration requires (1) a legal detriment and (2) a bargain for exchange, option contracts and modifications require consideration a. Not Consideration: i. Conditions of a gift (and gifts themselves), courts are disinclined to enforce gifts ii. Moral Benefit/ Altruism Form of past consideration 1. EXCEPTION: Moral Obligation can be argued iii. Past Consideration 1. Officious Acts imposing a benefit on someone, then demanding payment, the imposed is victimized rather than unjustly enriched iv. Sham/ Nominal Consideration may NOT be consideration, however generally is valid for option contracts and courts do not delve into the adequacy of consideration a. Batsakis v Demotsis Demotsis received 500,000 Drachma in exchange
for $2,000, which was only worth $25. However, although it wasnt an even exchange the drachma were worth more to her b/c of her financial hardship in Greece.

v. Illusory Promises An agreement that depends on the wish, will or pleasure of a party will NOT be enforced vi. Pre-Existing Duty Rule: No consideration if one party already has an obligation to perform as specified in the contract 1. UCC Version: Pre-Existing Duty doesnt apply to the sale of goods, must act in Good Faith. b. Not Requiring Consideration (Promise is enforceable) i. Material Benefit (minority rule) is when a promise is made after a material benefit (moral obligation) is received requires no consideration, policy of wealth generating ii. Promise to pay past debts, for benefits received (or if statute of limitations ran out) requires no consideration iii. See Promissory Estoppel

PROMISSORY ESTOPPEL
1. Promissory Estoppel is an alternative means for remedy for a normally unenforceable contract that requires (1) a promise (2) that reasonably induces action or forbearance, (3) the promise must have induced a reasonable reliance on such action and forbearance, and (4) injustice can only be avoided by enforcing the promise a. Option Contracts (Reliance on option without consideration): An offer is binding as an option if the offeror should reasonably expect to induce action on part of the offeree before acceptance and does induce such action. i. James Baird Co. v Gimbel Bros. Promissory estoppel cannot be asserted to make an b. Promises made in negotiations can be enforced when a party makes a pre-contractual commitment on which the other party reasonably relies i. When one party places a nave faith in someone who is indifferent to their welfare, the other partys naivet may be outweighed by the others underhandedness.
option K binding where the offer is not meant to become binding until consideration is received

i. Pops Cones, Inc v. Resorts International Hotel, Inc. Pops Cones tried to relocate to
Resorts boardwalk and Resorts executive director assured her that the proposal was going to be approved. Resorts gave her a counteroffer and was assured that they would finalize the deal. Pops let her lease run out on her old shop and then Resorts withdrew their offer. Pops was entitled to reliance damages.

b. Charitable Pledges may be enforced if donative intent is clear and the charity reasonably relied on the donation (King v. Boston University) c. UCC Application: Promissory Estoppel can be invoked under the UCC in 2 instances: i. Legal Formality prevents promise made good for consideration unenforceable (i.e Statute of Frauds) ii. Contract that falls short of becoming effective due to an omission in agreement

UNJUST ENRICHMENT
1. Unjust Enrichment (Quasi-Contract) is a contract implied in law (no words) that requires (1) a benefit to be conferred from the other party, (2) that party must have knowledge of the benefit (3) and accepted or retained that benefit, (4) the circumstances are such that it would be inequitable for that party to retain the benefit without paying for it a. The movant must have unofficiously intended to charge for it and must have not imposed it on the recipient In between gratuitous and officiousness b. Protection of Anothers Life or Health: A person who obtains or performs services necessary to protect ones health has a claim of restitution if the circumstances justify intervention without a prior agreement (Credit Bureau Enterprise v. Pelo)

MORAL OBLIGATION (PROMISSORY RESTITUTION)

1. Moral Obligation is aimed at the enforcement of a promise with past consideration, if a person was subject to legal obligation that has since become enforceable, a subsequent promise to revive that obligation will become enforceable a. A debt barred by statute of limitations can be enforceable if someone subsequently promises to pay the debt b. A debt discharged by bankruptcy can be enforceable if someone subsequently promises to pay c. A voidable debt can usually be avoided by the debtor based on some contractual defect, but if he promises to pay anyway it is enforceable d. Contracts entered into by minors are enforceable if it was for necessary goods or services e. Material Benefit Rule (86): If a person receives a material benefit from another, other than gratuitously, a subsequent promise to compensate the person for rendering such a benefit is enforceable i. The material benefit rule requires (1) the promisor to be unjustly enriched by a prior benefit received from the promise (2) the benefit was not a gift (3) the promisor makes a promise in recognition of the benefit (4) and the promises value is not disproportionate to the benefit 1. Webb v McGowin Webb sacrificed himself by throwing himself off a ledge with a
75 lb. wood block to save McGowin from being seriously injured or killed. McGowin subsequently promised to pay him for the services rendered. Here, Moral Obligation was sufficient to support the subsequent promise.

STATUTE OF FRAUDS
1. Statute of Frauds requires a contract within its scope may not be enforced unless it is in writing and signed i. The writing must (1) be signed (electronic or company seal okay) (2) identify the parties and material terms (3) can be multiple papers pieced together (one must be signed and refer to the same transaction) b. Suretyship requires writing if it is (1) a promise to creditor to answer debt or duty of another, (2) a promise that is secondarily liable and (3) creditor (obligee) must know of have reason to know of suretyship i. Novation is a substituted contract, stepping into the shoes of the initial promisee and becoming primarily liable for the debt, THIS IS NOT A SURETYSHIP ii. Main Purpose Rule Exception states if the promisors primary purpose in making a promise of suretyship is for his own interest, then no writing is required c. Land requires writing if the contract is for the sale of interest in land and includes leases over a year and mortgages BUT DOES NOT INCLUDE contracts incidentally related to land (contract to buy a building) i. Part Performance Exception states oral contracts for transfer of interest in land does not require a writing if (1) payment is made to show performance (2) possession is taken as evidence of the oral contract (3) improvements made to show reliance ii. Reliance regarding sale of land must refer to the contract that such party would not have acted if there was no oral contract d. One Year requires a writing if the contract cannot be performed within 1 year after the contract is made, if possible to be performed in 1 year then no writing required i. Death: The one year provision only applies to performance, not to discharge (when employee dies), courts generally resists 1 year rule and may view discharge as possibility of performance under a year. TRIGGER Lifetime Contracts e. UCC Sale of Goods over $500 requires writing, also note that modifications can knock something over or under $500 benchmark i. Exceptions 1. Specially manufactured goods do not require a writing if seller had made substantial commitments regarding the goods 2. If payment was made and goods have been accepted then no writing is required 3. Confirmation exception: writing does not have to be signed by the party to be charged if deal is (1) between merchants (2) a written confirmation signed by sender is sent within a reasonable time (3) the receiving party has reason to know of the contract and (4) does not object in 10 days f. Executor/ Administrator contracts require a writing when an estate assumes liability to a creditor of the decadent for a debt incurred before their death g. Marriage contracts require a writing when the prospective spouse agrees to a marriage settlement (Pre-nuptials) h. EXCEPTIONS: i. Judicial Admission states that if someone admits the existence of contract in pleadings they cannot invoke Statute of Frauds as a defense to enforcement ii. Promissory Estoppel Exception states that a promise reasonably expected to induce reliance and does, then that promise may preclude a necessary writing (promisees conduct must corroborate the existence of a contract)

INDEFINITENESS & INTERPRETATION

1. Indefiniteness will render a contract invalid if material term of agreement is (1) unduly indefinite and (2) incomplete terms indicate parties did not intend a contract, subsequent performance can cure indefiniteness, courts can supply missing terms by interpretation and construction (reasonable price, delivery at sellers place, reasonable time, payment due at delivery) a. Agreements to agree (Irresolution) are usually indefinite at common law, but UCC allows agreements to agree as long as the parties intended to form a contract i. Terms left for future determination can be (1) settled objectively by reasonable standard (2) or a formula can be set in advance b. Vagueness requires interpretation when a word is stated so obscurely that one cannot reasonably determine its meaning c. Ambiguity requires interpretation when (1) a word has more than one meaning, (2) there is a misunderstanding on that word (more reasonable meaning usually prevails) i. If there are two reasonable understandings No contract! ii. If one party is at fault for misunderstanding Favor innocent! d. Objective Standard may use a reference to allow a missing term to be subsequently included by the courts and make contract enforceable e. Employment Contracts are terminable at will, if no time is specified in the contract f. Reliance/ Restitution applies to contracts that are too indefinite, reliance on such contracts usually take form of part performance and can demand expectation damages rather than just reliance damages g. UCC: a contract does not fail for indefiniteness as long as parties intended to make a contract, court fills in terms with gap fillers i. Gap Fillers (NOT ONLY IN UCC) are legally implied terms to supplement and clarify language (only supplement NOT override) 1. Employment contract w/ no duration at will 2. Rights not personal can be transferred 3. No sequence of performance performances must be made concurrently 4. Implication of minimum warranties 5. No price assumed reasonable 6. No payment terms COD expected 7. No time period reasonable time 8. Good Faith is always implied (best efforts in negotiation) h. Good Faith is required in contract negotiations however (1) no promises are made until the final agreement is reached nor (2) does either party have a duty to persist negotiations or pursue consensus (FORK: sometimes it may be implied in Good Faith to continue to negotiate to resolve outstanding terms) i. Comes into play when (1) contract does not provide a term necessary to fulfill parties expectations (business efficacy) (2) when bad faith served as a pretext for the exercise of a contractual right to terminate (3) When contract gives discretion to a party to determine performance ii. Approaches: 1. UCC Honesty in fact and observance of reasonable standards of fair dealing 2. Summers Good faith is avoidance of bad behavior 3. Patterson Protecting the reasonable expectation of the parties 4. Van Alstine Near absolute priority to terms in contract 5. Spirit of the Contract Good Faith is fulfilling the spirit of the contract; Bad Faith is looking to the letter to get around its spirit

i.

If interpretation fails, Construction will go beyond available facts to find, not necessarily what the parties meant but what they probably should have meant in making the manifestations that were made j. TEST: To interpret a disputed term in a contract, the court will consider: (1) language of contract (2) preliminary negotiations (3) trade usage (4) legal standard (5) course of performance (6) maxims k. Principles of Interpretation i. Modified Subjective View is the restatement (201) majority rule which states that (1) if both parties attach the same meaning to a term, the meaning stands no matter how idiosyncratic (2) if they dont attach the same meaning, then the party who knew or should have known the other partys meaning is bound to that meaning (3) if neither party knew, probably no contract (no meeting of the minds) 1. Minority views are Purely Subjective View (what parties actually interpreted) and Objective View (reasonable person) l. Maxims of Interpretation i. Words should be give ordinary meaning unless there is a good reason to be interpreted otherwise ii. Ut res magis valeat quam pereat If between a meaning that would invalidate the contract and one that would validate it, choose validating meaning iii. When agreement consists of both boilerplate and negotiated terms, negotiated prevails iv. Ejusdem Generis When specific and general words are connected, the general word is limited by the specific one, so that it refers to like things 1. Example, No skateboards, rollerblades or other means of locomotion would include wheelchairs and motorbikes, if the common denominator is 2 wheels, but not camels v. Noscitur a sociis If a word is ambigious it can be qualified by words that it is used in a series with vi. Expresso unius est exclusion alterius When a thing of one kind is expressed, the implication is that other things of the same kind are excluded vii. Contra proferentum When one party has drafted the contract with unclear language, the term will be construed against him

PAROL EVIDENCE RULE

1. Parol Evidence Rule applies where an agreement is recorded in writing and one of the parties proffers evidence to prove a term that is not contained in the writing or expand on a term in the writing (ONLY COVERS TERMS ALLEGEDLY AGREED PRIOR AND CONTEMPORANEOUS TO THE WRITTEN CONTRACT; subsequent agreements are not covered by the rule and parol evidence can be admitted) 2. IS THIS AGREEMENT INTEGRATED? (NO ADMIT PAROL EVIDENCE/ YES MAYBE) 3. HOW INTEGRATED IS THE AGREEMENT? a. Total Integration is when no term can exist beyond those set out in writing, usually totally integrated when a (1) Merger Clause exists or a (2) No Oral Modification Clause is present (which states no modification will be binding unless written and signed by both parties; difficult to enforce because courts dont think people can orally restrict their rights to modification) i. Parol evidence can still be admitted; but limited to clarify ambiguous or vague terms b. Partial Integration is when the contract is not a complete and final record of the agreement; parol evidence may be admitted to supplement writing (parol evidence must still be consistent with current contract; CANNOT CONTRADICT!)

c. How Do We Determine Integration? i. Four Corners Approach The full agreement is contained within the four corners of the paper it is on; parol evidence only admitted to interpret sole ambiguous terms ii. Corbins Contextual Approach The court considers all of the proffered evidence to determine its relevance to the parties intent and then applies the parol evidence rule to exclude evidence that contradicts the meaning of the agreement 4. ARE THERE APPLICABLE EXCEPTIONS? a. Collateral Agreement is when a parallel agreement exists in relation to the contract, but is an independent agreement and not part of the contract in dispute; will be admissible as parol evidence b. Ambiguity or vagueness is wording can admit parol evidence even if contract is fully integrated c. Oral condition to the contract will probably be admitted as parol evidence (Oral condition precedent, is a condition that triggers the effectiveness of a contract) d. Equitable remedy, when circumstances require a reformation of the writing (term was omitted by mistake) e. Evidence offered to prove invalidity (i.e. mistake, fraud, duress) f. UCC states that consistent terms should be admitted unless it seems they would have been in the contract if they were supposed to 5. UCC HERMENEUTICAL CIRCLE: The UCC presumes that merchants intend to contract in light of their own markets customary practices, so to interpret merchant contracts courts may treat as parol evidence (1) course of performance (2) course of dealing (3) trade usage a. Expressed Terms in the contract itself b. Course of Negotiations c. Usage of Trade is viewed by (1) determining if the market has a well-established custom (does not have to be a custom of great longevity, can be contemporary usage)(2) if the movant/ defendant a member of that trade? (3) Usage should not be employed if specifically mentioned to be excluded in writing i. Nanakuli Paving and Rock Co. v Shell Oil Co. Nanakuli entered into two long term
contracts to purchase its requirements of asphalt from Shell Oil. Expected price protection in the contract due to trade usage. Court held, trade usage and course of performance would be implied into contracts, if they do not contradict expressed terms.

d. Government Regulations are viewed by conclusiveness e. Course of Performance is viewed by determining if the parties acted like the contract was in action post performance f. Course of Dealing is viewed by prior dealings between the same parties; this may also include analogous contractual relationships in the market (Nanakuli Paving) 6. INSURANCE CONTRACTS a. Doctrine of Reasonable Expectations will usually be invoked if there is a dispute involving an insurance contract; here, the objectively reasonable expectations of applicants and intended beneficiaries regarding that terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations (Policy behind this is fairness and most people dont read the entire contract) i. There are three views: Liberal (always invoke), Moderate (invoke if ambigious term is present), Conservative (never invoke; undermines contract law)

REGULATION OF IMPROPER BARGAINING (makes contract voidable)

1. Misrepresentation is an assertion not in accord with the facts a. Fraudulent Misrepresentation occurs when an assertion is made (1) with knowledge of falsity and (2) an intent to mislead (3) about a material aspect of the contract (FORK:

Sometimes only need materiality for negligent or innocent misrepresentations) (4) which justifiably induces (FORK: objective v subjective) the other party to enter into the contract and (5) causes injury (Not barred by Parol Evidence Rule) i. Signatures: When a signature is procured through fraud, the defrauded party is not held to the agreement (Park 100 Investors v Kartes) ii. TYPES: 1. Affirmative False Statement 2. Concealment Deliberate conduct to hide a fact 3. Nondisclosure (silence) Only fraudulent if other party has a duty to disclose a. Duty to Disclose Rule is where the seller of a home is aware of facts materially affecting the value of the property, he must disclose such facts i. WHEN TO DISCLOSE? 1. Prevent previous assertion from being fraudulent 2. Needed to correct a good faith mistake 3. Needed to correct a mistake of the other party 4. The other party is entitled to a fact due to the trust or confidence they have with the other party ii. DISCLOSURE TESTS 1. Florida Test Anything materially affecting the value of the 2. California Test Includes that it must be observable to the diligent buyer (stricter) b. Negligent Misrepresentation is made (1) without a deliberate intent to mislead but (2) person failed to act with due care in ascertaining and communicating the truth (3) relating to a material fact of the contract c. Innocent Misrepresentation is made (1) without a deliberate intent to mislead (2) based on an erroneous belief in good faith (3) relating to a material fact of the contract 2. Duress is when a party (1) makes a threat (physical, personal, financial) (2) that is improper (beyond legitimate rights) and (3) it must induce the apparent assent (4) that leaves no other reasonable alternative but to agree a. Economic Duress is when one party (1) voluntarily accepts the terms of another (2) the circumstances permitted no other evidence and (3) appeared to be the result of coercive acts of the act party (4) FORK: the threatening party must have caused the financial hardship (Posner View) [Other view is that the threatening party only has to know of the financial hardship and take advantage, not cause it] b. Duress may be a good defense for contract modification if the consideration requirement is already satisfied 3. Undue Influence is when (1) one party is unusually susceptible (2) the other party over persuades them (No need for fiduciary relationship, but Odorizzi suggests that the weak party must be justified in thinking the stronger party will protect their welfare) (3) relief is only available when the weaker party can show the dominant party abused their power by unfair persuasion [Not duress because duress requires improper threat; UI requires vulnerable party] 4. Unconscionability is the absence of meaningful choice by one party resulting in contract terms unreasonably favorable to the other party a. Requires both (1) Procedural Unconscionability (unfairness in bargaining process, adhesion contracts) and (2) Substantive Unconscionability (unfairness in resulting contract) unless one is particularly strong i. Counterarguments against adhesion contracts reasonable alternatives in the marketplace or despite reading the clause, victim would have agreed anyway
property that the seller knows are NOT readily observable

5. Contracts Against Policy are either illegal contracts (even if agreed upon) or contracts that harm to public interest outweigh the benefits to the public and parties a. In Pari Delicto Rule Takes into account the relative fault and guilt of the parties in both illegal contracts and contracts that violate policy 6. Mistake is a (1) belief not in accord with the facts (2) about a material fact existing at the time the contract was executed (3) that occurred notwithstanding the exercise of reasonable care, so (4) enforcement would be unconscionable and (5) the other party can be placed in status quo a. EXCEPTIONS: i. Error is judgment is not a mistake ii. An incorrect prediction of future events is not a mistake iii. A mistake of fact must be distinguished from a mistake of meaning (misunderstanding) iv. A mistake of law could qualify as fact (Ignorance of the law is no excuse) b. Mutual Mistake is when (1) parties share an error in fact (2) that was a basic assumption of the contract (3) the mistake must have a material effect on the agreed upon exchange (4) the adversely affected party must have not bore the risk (USUALLY NO CONTRACT B/C NO MEETING OF THE MINDS) c. Unilateral Mistake is when (1) one party makes an error in fact (2) that was a basic assumption of the contract (3) has a material effect on the contract (4) the mistaken party has not bore the risk of the mistake and (5) the equities favor relief i. Usually the mistaken party wont recover unless the other party should have been put on notice by the mistake ii. Doctrine of Conscious Ignorance is when one party knows something may materially affect their agreement but does not take steps to investigate. This party may not claim mistake due to this doctrine 7. Impracticability applies when (1) an event occurred after the formation of the contract, where the nonoccurrence was a basic assumption of the contract (2) the effect of the event renders the partys performance impracticable (3) the party seeking relief was not at fault in causing occurrence and (4) the party seeking relief must not have bore the risk of the event (Developed from Impossibility which is seldom used in modern courts) 8. Frustration of Purpose applies when (1) an unexpected supervening event (2) substantially destroys (3) the principle purpose of the contract (4) where the nonoccurrence of the event was a basic assumption of the contract and (5) the party was not the cause or bore the risk of the supervening event a. Force Majeure Clause is a provision that may state that parties have an excuse to avoid the contract is performance is prevented or delayed by circumstances beyond the control of the party seeking excuse (however, redundant and still sends you back to the above defenses to improper bargaining) b. Karl Wendt Farm Equipment v International Harvester Co. Wendt entered into a contract
with Harvester and the market hit a recession so Harvester sold off its equipment to companies that wouldnt work with Wendt. Court held that a mere economic loss is not sufficient to excuse performance on grounds of impracticability or frustration of purpose

CONDITIONS & PROMISES

9. A condition must be an (1) uncertain event (2) with some element of futurity and (3) can be an occurrence or nonoccurrence a. Express Conditions are subject to strict compliance when the language of the contract articulates the intent to make performance contingent on the event b. Implied (in fact) Conditions are less strict on term construction and are implied by interpretation (not barred by parol evidence rule)

c. Construed Conditions are implied by law, not by fact because parties never discussed or expressed this intent to each other (i.e. Good Faith) d. Promissory Conditions not only indicate the occurrence of an event but guarantee the event will take place (if the condition is not satisfied by the promisor BREACH) 10. Doctrine of Constructive Conditions hold that the fulfillment of a promise in a bilateral contract can be construed to be a condition of the other partys performance even in the absence of an express provision to that effect 11. Doctrine of Substantial Compliance holds that a plaintiff who has failed to perform a constructive condition in some immaterial aspect may still recover if the other party breached (i.e. $298 v. $300) [EXCEPTION: Willful Transgressor Effect Any party who willfully breaches wont recover] (CONSIDERED A NON-MATERIAL BREACH) [CANNOT USE IF PROMISE IS EXPRESSED B/C THEN STRICT COMPLIANCE APPLIES] 12. HOW CAN I AVOID A CONDITION? a. When other party has a duty to facilitate condition (breaches good faith) b. Obstructive conduct by other party (breaches good faith) c. Estoppel allows avoidance of a condition if one party induces the other party to reasonably believe the condition has been fulfilled or not necessary then the other party relies on that to his detriment (usually for more material aspects of contract) d. Waiver allows avoidance of a condition when the other party expressly agrees to perform even if the condition is not satisfied (this waiver can be retracted prior to the due date of the conditions fulfillment provided the other party does not act in reliance on the waiver first) e. Forfeiture allows a court to use its discretion to decline the full enforcement of one partys legal rights, if that enforcement would have a disproportionately harsh impact on the other party (229: Will allow a court to disregard an express condition of a technical nature, where strict enforcement is unfair)

BREACH & REPUDIATION

1. Breach is any non-performance by the obligor, can breach by reneging, indicating an intention to breach or messing up performance 2. HOW DO WE DETERMINE IF A BREACH IS MATERIAL? a. Factors are (1) if it defeats the entire purpose (essence) of the contract or defeats the expectations / benefits of the non-breaching party (2) the extent of partial performance (3) the likelihood to cure the breach (4) willfulness of breach (unless willfull breach is of trivial aspects) (5) degree of hardship 3. Material Breach allows a claim for damages and discharge of obligations (after opportunity to cure fails), non-breaching party may choose to treat as partial breach (sue for damages and let contract continue or suspend performance and wait for cure) or treat as total breach (terminate and sue for damages) 4. Non-Material Breach allows a claim for damages later but non-breaching party must still perform 5. Anticipatory Breach (Repudiation) applies if a party expressly repudiates before performance, a repudiation requires (1) a clear manifestation of an intent not to perform the contract on the date of performance (2) intention must be definite and unequivocal (expressed, written, implied or oral) (3) doubtfulness and indefinite statements are not enough to constitute anticipatory repudiation (ALTHOUGH THIS IS A BREACH IT HELPS PARTY ANTIPATE A BREACH AND MITIGATE THEIR OWN DAMAGES) a. Retraction: Can be retracted before the repudiated partys next performance is due unless the aggrieved party has already materially changed his position in reliance on the repudiation or considered the repudiation final i. UCC states no other act of reliance is necessary to constitute repudiation final if the aggrieved party indicates its finality

b. Assurance is when one party (merchants under UCC) reasonably suspects an anticipatory breach from new facts, he has a right to suspend performance and demand adequate assurance of future performance before calling off the contract, failure to provide assurance will be a BREACH (HOWEVER, IF YOU ASK FOR TOO MUCH ASSURANCE BREACH) i. UCC states if a party has reasonable ground for insecurity regarding the others performance, may make a written demand asking for adequate assurance

DAMAGES
1. Expectation Damages are designed to put the non-breaching party in the position they would have been in if the contract has been fulfilled 2. Reliance Damages are designed to put the non-breaching party in the position they were in before the contract was entered into (erase the whole mess) [Often awarded if: Damages are too speculative or promissory estoppel claim] 3. Restitution Damages are designed to make the breaching party disgorge the unjust enrichment they have incurred from the non-breaching party (Movant may recover more money than actually lost b/c (1) damages here are not limited by the profit or loss under the contract and (2) the measure of services=reasonable market value) [Breaching party can recover if non-breaching party conferred a benefit Part-Performance] 4. Specific Performance (Injunction) is usually used in unique situations when legal remedies are not adequate [Cannot be used to make someone refrain from doing something (Reier Broadcasting v Kramer)] 5. Consequential Damages is an injury to a person or property directly resulting from the breach of the contract a. Foreseeability of Loss Test (351) To recover consequential damages the damages (1) must flow naturally from the breach (2) both parties must be aware of the damages and not assume the risk of those damages at the time of the contract Cause of Action Remedial Goal Principal focus of remedy Breach of Contract Benefit of bargain
Expectation Damages

Promissory Estoppel Enforcement of promise

Reliance Damages

the sum of money needed to place the plaintiff in the same position they would have been in

Reimbursement of expenses and losses unless justice requires fuller enforcement

Unjust Tort Enrichment Restoration Redress of injury of enrichment Restitution The sum of Disgorgement money needed to of the value return plaintiff of what was to the status quo received ante- to compensate for loss or injury caused by defendants

UCC LAND
6. UCC applies to the transaction of goods (versus buying information) a. Goods include all things movable and tangible other than money or services, it also includes unborn young of animals and growing crops b. Merchant is one who deals in goods of the kind or by occupation had knowledge or skill relating to the goods involved, arguable and courts split on whether farmers are merchants c. Good Faith is honesty and using reasonable commercial standards of fair dealing in the trade

7. Offer can be in any manner reasonable under circumstances, but retains the common law rule that the offeror is the master of the offer a. Firm Offers do not require consideration if (1) created by a merchant (2) in a signed writing (3) giving assurance it will be held open, if no time stated then a reasonable time with a max of 3 months 8. Acceptance can be in any manner sufficient to show agreement (including conduct) and by any medium reasonable in the circumstances, an offer to buy goods for prompt shipment can be accepted by promise or conduct upon receipt of shipment a. Accomodations: following an order or offer to buy goods for prompt shipment, a promise to ship can be acceptance, but not if seasonably notifies it is an accommodation b. Notice required in a reasonable time when beginning a requested performance, otherwise offerer can treat the offer 9. Indefiniteness not indefinite if parties intended to make a contract (but need a reasonably certain basis to give remedy), can agree to agree later 10. Modification no consideration needed and no pre-existing duty rule, a good faith modification will suffice (can argue that the modification was opportunistic and not in good faith), modification of a minor term may be oral, a contract in writing cannot be orally rescinded or modified if original writing did not allow it 11. Statute of Frauds requires a signed writing for the sale of goods over $500, writing must (1) indicate a sale of goods made between parties, (2) signed by party charged, and (3) can omit (or incorrectly) terms but must specify a quantity (not enforceable beyond this written quantity), if a contract as modified falls under SoF, the modification must be in a signed writing a. EXCEPTIONS i. Specially manufactured goods do not require a writing if seller had made a substantial commitment regarding specially manufactured goods for the buyer, generally designed to provide relief for sellers not buyers ii. Estoppel does not require a writing if a party admits in pleading or testimony that a contract for sale was made iii. Payment and acceptance no writing required if payment has been made and goods have been accepted iv. Confirmation Exception: a writing does not have to be signed by the party to be charged if deal is (1) between merchants (2) written confirmation signed by sender is sent within a reasonable time of the oral contract, (3) the receiving party has reason to know of the contents, and (4) does not object in 10 days 12. Parol Evidence Rule: the written terms intended by the parties as the final expression of their agreement cannot be contradicted by evidence of any prior agreement or contemporaneous oral agreement, UCC uses the certainly would have been included test (Natural Inclusion Test) a. Extrinsic Evidence may be supplemented by (1) course of deal, trade usage, or course of performance, and (2) evidence of consistent additional terms unless the writing was intended also as a complete and exclusive statement of terms 13. Warranties are a kind of guarantee or promise by a seller of goods that they will have certain characteristics, applies when accepted goods do not conform to the contract a. Express Warranty requires (1) an affirmation of fact/promise, description of goods, sample or model (2) relating to the goods, and (3) representations become part of basis of bargain b. Implied Warranty of Merchantability is an implied warranty that goods are (1) of fair average quality and (2) will be fit for the ordinary purposes for which goods are used (merchantable) (3) and applies if the seller is a merchant with respect to that type of good