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ALWAYS ASSUME A K HAS ALREADY BEEN FORMED CONDITION – is an event, the occurrence or nonoccurrence of which determines if or when a party must perform. TYPES OF CONDITIONS • Express • Implied in Fact • Constructive
Mere passage of time is NOT a condition. A condition cannot be breached; it fails. The court can infer the parties intent concerning the order of performances from their: o Conduct o Surrounding circumstances o Sense of contract (implied in fact condition)
EXPRESS CONDITIONS • condition on which the parties have agreed explicitly or implicitly. • When a party’s duty is subject to an express condition, strict compliance with the condition is ordinarily required before the performance will be due. Condition v Promise Promise – also called a covenant, a contractual undertaking, breach of which leads to liability for damages or equitable relief. • Where it is doubtful whether words create a promise or an express condition, they are usually interpreted as creating a promise, thereby avoiding forfeiture. o Words of CONDITION are “provided that”, “on condition,” “is not liable”,” “shall be void,” “shall be a condition,” “as soon as,” and “after.” o Words of PROMISE are “promise to”, “agree to”, “shall/ not (do something)”, “is/ not to do (do something)”, Guidelines to distinguish Condition from Promise 1. Construe to avoid forfeiture 2. Construe the clause against the drafter. 3. When in doubt make it a promise. 4. Don’t construe as condition unless language requires. Forfeiture – the resulting denial of compensation where the nonoccurrence of a condition of an obligor’s duty causes the Oee to lose his right to the agreed exchange after he has relied substantially on the expectation of that exchange, by preparation or performance. Elements of forfeiture • Nonoccurrence of condition • Oee loses right to exchange • Oee relied on exchange by performance of preparation § 261 Interpretations of Doubtful Words as Promise or Condition Where it is doubtful whether words create a promise or an express condition, they are interpreted as creating a promise; but the same words may sometimes mean that one party promises a performance and that the other party’s promise is conditional on that performance.
In resolving doubts as to whether an event is made a condition of an obligor’s duty, an interpretation is preferred that will reduce the obligee’s risk of forfeiture, unless the event is within the obligee’s control or the circumstances indicate that he has assumed the risks. The provisions of a contract will not be construed as conditions precedent in the absence of language plainly requiring such construction. o HOWARD v. FEDERAL CROP INSURANCE CORP, Federal Crop Insurance Corp. D claimed that Howard's violation of a condition precedent negated its obligation to pay. , the offending clause did not specify that Howard's D agreement not to destroy evidence of an asserted claim constituted a condition precedent to FCIC'S D obligation to pay. Thus, a condition precedent will generally not be found. accordingly, summary judgment in FCIC's D favor was improperly granted. Reversed and remanded. The nonoccurrence of a condition prevents the promisee from acquiring a right or deprives him of one but subjects him to no liability. Promissory condition – when an event is both a promise and condition, you don’t get the agreed exchange but must pay damages. o JONES ASSOCIATES v. EASTSIDE PROPERTIES; After Jones prepared a feasibility study and plat application for Eastside's property, the parties disputed whether payment to Jones was conditioned on approval of the plans by the county. The language of the agreement between Jones and Eastside is ambiguous. The approval of the county was out of the control of both of the parties. Therefore, since there was no evidence that Jones assumed the risk of disapproval, and nonperformance by Eastside would result in forfeiture to Jones , the provision should be interpreted as a promise. Jones is entitled to performance under the contract as long as it can prove that the necessary requirements were performed. Reversed and remanded.
Implied Conditions • A breach of an implied condition in a contract between master and servant may, as a matter of law, justify voiding the contract. o BRIGHT v. GANAS; Ganas was to have received $20,000 under a testamentary contract with his employer, Darden, conditioned on Ganas's serving the employer faithfully until Darden's death. Upon Darden's death his executor, Bright , refused to award Ganas the $20,000 on the theory that Ganas had not served Darden faithfully. There are cases so flagrant and manifestly contrary to the implied conditions arising from the relationship between master and servant that they can be decided by the court as matters of law. This is such a case. Reversed. Conditions Precedent - v - Conditions Subsequent • Conditions Precedent – Duty Condition must occur before performance is due. o If condition occurs performance is due. o Triggers liability o Burden of Proof on P o Example: Agreement to buy Blackacre for $100,000 unless zoning is changes. If zoning is changed, no duty to pay $100,000 or transfer deed.
o o o o
Conditions Subsequent – Condition cuts off already existing If condition occurs duty to perform is excused Terminates liability Burden of Proof on D If proof is nonexistent whoever has the BOP loses.
P entered into agreement with D to franchise monogram shop. COA reversed saying he did not act reasonably.Matters that involve fancy. or judgment. Gardner promised to pay an extra 25 cents a gallon for whale oil if a certain amount of oil came into port by October 1. In pleading the performance or occurrence of conditions precedent. COMMON TYPES OF EXPRESS CONDITIONS • Satisfaction Clauses • Pay When Paid Clauses • Time of the Essence Clause Satisfaction Clauses Standards • Objective . • To determine look to the intent of parties. the court found for Gray .000 “if my house is sold by April 1. If a party to a contract can avoid his duties under the contract on the happening of a certain event. Therefore. K calls for subjective standard 3. INC. he didn't sustain his burden of proof.• • o Example: An agreement to pay $10. • Always presume objective.000 deposit back. Self was a subcontractor for Gulf. The court held that since Gardner was going to be able to avoid some of his duties under the contract if more whale oil came into port this year than in the previous year. Individual taste. P had a later clause added that states that the contract is conditioned on whether or not he found suitable financing. UNLESS 1. operative fitness. or mechanical utility. o The obligor is required to act in good faith and can avoid the contract if he is reasonably dissatisfied. then a subjective standard is applied. A denial of performance of occurrence shall be made specifically and with particularity. GARDNER. GC in turn did not pay the subcontractors sighting provision in K that . personal use. convenience 2. • To determine look to language. • Subjective . He checked with a couple places got rejected gave up and demanded $25. and was hired to work on a project.Where the satisfaction clause requires satisfaction as to such matters as commercial value or quality. Gardner was bound by his promise to pay 85 cents a gallon for the whale oil unless a subsequent condition occurred and that promise remained in force until he could show the happening of the condition. Where objective standard is impractical 4. that party has the burden of proof as to the happening of that event. o GRAY v. Pay When Paid • If the condition is precedent there is no liability to pay. dissatisfaction cannot be claimed unreasonably. • If the provision is a time term/promise need to pay within reasonable time.. o GULF CONSTRUCTION V SELF. Where satisfaction is judged by a 3rd party (Supersedes all others) o HUTTON V MONOGRAMS PLUS. he had the burden of proof to show the happening of that event.” No payment unless house is sold by April 1. It was necessary for Gardner to show that the vessel in question had come to anchor or had been moored and since he could only show that the vessel was coming towards the port on October 1. it is sufficient to aver generally that all conditions precedent have been performed or have occurred. TC awarded. The company who hired the GC to do the project breached and did not pay GC.
On appeal it was held that ordinarily. or (b) accept the whole. the inclusion of dates in construction contracts does not make time of the essence. While two of the contracts called for completion dates and forfeitures for non.000 books. D failure to perform gives rise to several remedies. Affirmed. and that P has substantially performed and was due the entire invoiced amount. o CARTER v. with respect to the recovery granted P. D eventually terminated the contracts on the basis of delay and withheld approximately $10. the buyer may (a) reject the whole. o PRINTING CENTER OF TEXAS.. o Substantial performance does not apply. v. or (c) accept any commercial unit or units and reject the rest. However the provision constituted a promise not a condition precedent because it was a time term. it was not proper for D to withhold payment. INC. if the goods or the tender of delivery fail in any respect to conform to the contract.completion on schedule. or 20% of the amount billed to it by P who sued. under a promise for additional work which was never fulfilled by D. • In hybrid contracts break K down to determine what is predominate goods or services. Goods V Services • Does not apply to goods because of UCC 2-601 the Perfect Tender Rule. Since most of the delays in this case were due to the actions of D. o If there is a rejection it must be in good faith. Subject to the provisions of this Article on breach in installment contracts (Section 2-612) and unless otherwise agreed under the sections on contractual limitations of remedy (Sections 2-718 and 2-719). Buyer's Rights on Improper Delivery. Limitations on Perfect Tender Rule • Rejection of goods for non-conformity.states they will be paid once the GC has been paid. The trial court also held that P could recover for work performed without compensation on a quantum meruit basis. Trial court found that many of the delays were occasioned by acts of D. INC. Carter entered into four written agreements with Sherburne Corp. • TOTE clauses make timely performance an express condition precedent. Two of the contracts called for completion dates and forfeitures for non-completion on schedule. contended that it rightfully rejected the books . GC had to pay subcontractors. Time of the Essence • Where time is of the essence. in contracts where time is not of essence. SUPERMIND PUBLISHING CO.000. because deadlines can be missed.. SHERBURNE CORP. P also performed work for D outside of the contracts. • Differ from deadlines. • Quantum Meruit – is payment for value of services rendered minus what it would cost to have someone else do it § 2-601. without compensation. a failure to complete the work within the specified time will not terminate the contract but will subject the contractor to damages for delay. Additionally. one of which is quantum meruit. • Time may be made of the essence of a K by a stated it in the K. performance on time is a constructive condition of the other party’s duty. • T(I/N)OTE for construction contracts unless stated in K. for performance of various construction projects. In Supermind's action against Printing Center for refund of a deposit made under a written contract to print 5.
In this case. The evidence shows that did not signify to that the truck conformed.C. On appeal it was held that Colonial argues that the missing spare tire did not constitute a substantial impairment in the value of the car. but such acceptance does not occur until the buyer has had a reasonable opportunity to inspect them. Reversed. v. off-center cover art. and inadequate perforation are not fit for sale to the public. after repositioning the snowplow attachment as directed and having the truck serviced by . Northern took possession from Capitol of a truck. signifies to the seller that they are conforming or that he will retain them despite their nonconformity. his timely revocation of acceptance was proper. the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery. Inc. has failed to carry its burden to prove that rejected the books in bad faith. A jury could reasonably conclude that books with crooked or wrinkled pages. (1) Where any tender or delivery by the seller is rejected because non-conforming and the time for performance has not yet expired. or (c) does any act inconsistent with the seller's ownership. . and that rejected in bad faith. D’s occupation required that he travel extensively. but if such act is wrongful as against the seller it is an acceptance only if ratified by him. INC. provides that acceptance of goods occurs if the buyer. and that no spare tire was available. o • • § 2-508. NORTHERN CONCRETE PIPE. renounced the sale the following day upon discovering that the car had no spare tire. INC.upon delivery because the books failed in all respects to conform to the contract. Cure by Seller of Improper Tender or Delivery. D’s concern with safety is evidenced by his ordering aspecial package which included special tires.C. (1) Acceptance of goods occurs when the buyer (a) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity. but stopped payment on the check for the purchase price a few days later when. . CAPITOL DODGE SALES v. PTR ends when goods are accepted. the truck continued to overheat. Reversed. after a reasonable time to inspect them. after a reasonable time to inspect them.. who bought a car from Colonial Dodge. however. 2-608 o COLONIAL DODGE. they were minor. (2) Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute a conforming tender. § 2-606. On appeal it was held contended that if nonconformities existed. On appeal it was held that the U. and D testified that he was afraid of a flat tire on a Detroit freeway during the early morning hours. MILLER. signifies to the seller that they are conforming or that he will retain them despite their nonconformity. or (b) fails to make an effective rejection (subsection (1) of Section 2-602). or that it would accept the truck despite its nonconformance. Miller . Evidence is sufficient to support the jury's finding that the books did not conform to the contract. Affirmed. Replacement. What Constitutes Acceptance of Goods. acceptance of goods occurs if the buyer. the relevant statute provides that a buyer may revoke acceptance of goods whose non-conformance impairs their value to him. 2-606 PTR ends when acceptance is revoked a buyer may revoke acceptance of goods whose nonconformity substantially impairs their value to him. Printing Center's contentions that the alleged nonconformities should be classified as minor are inappropriate. Since the non-conformity substantially impaired the value of the vehicle to D.
§234 Order of Performances (1) Where all or part of the performances to be exchanged under an exchange of promises can be rendered simultaneously. Revocation of Acceptance in Whole or in Part. . unless the language or the circumstances indicate the contrary. but that is supplied by the court to ensure fairness. a court may use a constructive condition. (2) Except to the extent states in subsection (1) where the performance of only one party under such an exchange requires a period of time. or (b) without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller's assurances. performance of the other is due. • Example Agreement to pay $100. • Substantial Performance/ Measure of Recovery • Perfect Tender Concurrent – Condition are to occur at the same time. his performance is due at an earlier time than that of the other party. Money and deed exchanged in same transaction. Conditions of Exchange . • Concurrent • Precedent • Divisible v Entire Contract Conditions of Performance – what’s good enough. o Only substantial (not strict) compliance with constructive conditions is generally required. they are to that extent due simultaneously. their performance cannot be simultaneous. (1) The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it (a) on the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured. unless the language or the circumstances indicate to the contrary. • If one condition has occurred.determines who goes first. o Used to fill in the blanks concerning the timing of performances. o Where the intent is unclear. where the performance of one party requires a period of time and the performance of the other party does not.§ 2-608. CONSTRUCTIVE CONDITIONS • a condition that was not agreed upon by the parties. (2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which is not caused by their own defects. (3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them. e. It is not effective until the buyer notifies the seller of it. o HYPO: If X has promised to build a bridge for Y. o Geared toward bilateral contracts and concurrent exchange.000 for Blackacre. the court may find that the completion of the bridge is a constructive condition of exchange to Y’s promise to pay for the construction.
preserves K o If the breach is material. Weigh the purpose to be served 2. Willfull trangression o Material Breach – less than substantial performance Total breach terminates K o Minor Breach – substantial performance Partial breach. therefore. Quantum Meruit – reasonable value of services rendered minus what it would cost to have someone else do it. - - Independent K – both parties performance is separate from the other. o KINGSTON V PRESTON. can treat it as a total breach or as a partial breach. . o If the performance was substantial (minor breach). she can only treat it as a partial breach. o When K is Independent Real Estate Leases Child Support Language makes promise independent Dependent K – parties performance is joined. and. the other party is not liable to an action.Precedent – the performance of one depends on the prior performance of another. till this prior condition is performed.fulfillment of the obligations agreed to in a contract. Cannot be more than K price. o if the breach is minor. then the breaching performer can recover the contract price. Part Performances as Agreed Equivalents If the performances to be exchanged under and exchange of promises can be apportioned into corresponding pairs of pert performances so that the parts of each pair are properly regarded as agreed equivalents. Desire to be gratified 3. o If performance is less than substantial cannot sue for damages but may sue under Quantum Meruit. Kingston's personal worth was negligible. with only slight variances from the exact terms and/or unimportant omissions or minor defects o Does NOT apply to express conditions o Cardozo Factors 1.Substantial Performance . Kingston agreed to give sufficient security for his payments. Preston D agreed to sell his business to Kingston . Conditions of Performance . minus damages for the breach o No real measure of substantial performance. Kingston failed to provide sufficient security. Divisible v Entire Contract . and thereafter Preston D refused to sell. Cruelty of enforced adherence 5.Can K price be apportioned into equal parts § 240. The condition to provide security is precedent and Preston’s promise to sell is dependent upon this. he is not required to perform until the other party has performed. Excuse for deviation 4. a party’s performance of his part of such a pair has the same effect on the other’s duties to render performance of the agreed equivalent as it would have if only that pair of the performances had been performed.
etc. Illness and death.Restatement § 229: To the extent that the non-occurrence of a condition would cause disproportionate forfeiture. o Implied condition of cooperation is present. - Elements 1.Impossibility § 271 Impracticability As Excuse For Non-Occurrence Of A Condition Impracticability excuses the non-occurrence of a condition if the occurrence of the condition is not a material part of the agreed exchange and forfeiture would otherwise result.Breach of a contract subsequent to formation but prior to the time performance is due.AVOIDING CONDITIONS . Forfeiture would occur o Excuses a breach and a condition o Must be unforeseen and unavoidable o Prevents conditions from occurring o Ex. a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange. • Must occur before law day( date of performance of K) • Making unreasonable demands forms anticipatory repudiation . ANTICIPATORY REPUDIATION . .intentional relinquishment of a known right o Estoppel – foreseeable detrimental reliance o Waiver + reliance = estoppel . .Election – party adopts a course of action showing that they will ignore or not enforce the condition precedent. . AND b) Its existence or occurrence forms no essential part of the exchange for the promisor’s performance.Conditions can be avoided for the following reasons o Interpreted as promise o Excuses Prevention Extreme Forfeiture Waiver Estoppel Election Impossibility Prevention . Can not come back and try to enforce the condition.Waiver and Estoppel – o Waiver . .when part is prevented from performing by the other party. Condition not material 2.Extreme Forfeiture Restatement §302: A condition may be excused without other reason if its requirement a) Will involve extreme forfeiture or penalty.
an offer of performance. U. . but has legal rights to enforce the contract or share in proceeds because the contract was made for the third party's benefit. § 2-609 governs the demand for assurances and states that a written demand for adequate assurances may be made after there is reasonable grounds for insecurity regarding performance by the other party. • Application to Money Payments o The doctrine of anticipatory repudiation does not extend to unilateral contract. Effect Of Insolvency (1) Where the obligor's insolvency gives the obligee reasonable grounds to believe that the obligor will commit a breach under the rule stated in § 251.condition of having more debts (liabilities) than total assets which might be available to pay them § 252. §250.C. o In a unilateral contract for payment of installments. or adequate security. • A 3PB contract may exist even if the beneficiary is not names. one of more defaults will not amount to an anticipatory breach of the rest of the installments. 1. (2) A person is insolvent who either has ceased to pay his debts in the ordinary course of business or cannot pay his debts as they become due or is insolvent within the meaning of the federal bankruptcy law. or (b) A voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach. so long as the beneficiary is identifiable or in existence when the time for performance arrives.Guarantees. When a Statement or an Act is a Repudiation A repudiation is (a) a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach under § 243.A plaintiff may bring suit for breach of contract prior to the time for performance of the contract if the defendant has repudiated the contract. security. o A party who has breached the contract may not demand assurances from the other party before suspending performance. the obligee may suspend any performance for which he has not already received the agreed exchange until he receives assurance in the form of performance itself. Retracting Repudiation o A repudiator is able to retract UNLESS Reliance by victim (acting in mitigation) Filing suit by victim Formal cancellation of the K • THIRD-PARTY BENEFICIARIES . Can terminate the K now 2. • • Insolvency . Can sue now 3. or not yet in existence. o A party who has breached the contract may not demand assurances of performance from the other party.a person who is not a party to a contract. Can mitigate( make less sever) Prospective Inability to Perform • Assurance . not identifiable.C. o The majority rule is that a plaintiff may only recover accrued and unpaid installments under a disability policy.
the benefits to that party must be immediate and primary. contending that it was a third party beneficiary. or which is unenforceable because of the Statute of Frauds. for Berman's breach of his promise to his dying wife. (2) Such a promise as is described in Subsection (1a) is a gift promise. because agreement was made for her benefit as a gift. One cannot claim to be a third party beneficiary of a contract involving a municipality. thereby erasing Holly's debts to Lawrence. Here. Every contract involving a city should be for the benefit of the public. Rensselaer Water Co.Classification of 3PB’s • First Restatement (most commonly used) § 133. H. so H. Berman died without making such a provision for Seaver . . Moch was no greater than benefit to the public at large.R. • Lawrence v Fox. and such incidental benefits are not sufficient to confer third party benefit status. on her death bed. Such a promise as is described in Subsection (1b) is a promise to discharge the promisee's duty. Seaver now brings suit against Ransom . • Seaver v Ransom. except as stated in Subsection (3): (a) a DONEE beneficiary if it appears from the terms of the promise in view of the accompanying circumstances that the purpose of the promisee in obtaining the promise of all or part of the performance thereof is to make a gift to the beneficiary or to confer upon him a right against the promisor to some performance neither due nor supposed or asserted to be due from the promisee to the beneficiary. Her husband induced his dying wife to sign a will leaving all property to him by promising that he would leave a certain amount in his own will to Seaver . Seaver .R. (b) a CREDITOR beneficiary if no purpose to make a gift appears from the terms of the promise in view of the accompanying circumstances and performance of the promise will satisfy an actual or supposed or asserted duty of the promisee to the beneficiary. Fox did not pay Lawrence and Lawrence brought this action for breach of Fox’s promise to Holly." This principle.R. During a fire on the premises owned by H. To hold otherwise would extend limitless liability to city contractors. v Rensselaer Water. . Rensselaer Water did not supply sufficient water to save the building. Moch Co. "[In the case of] a promise made to one for the benefit of another. the benefit to H. contracted with the City of Rensselaer to furnish the city with water. Can one claim to be a third party beneficiary of a contract involving a municipality merely by virtue of being a resident of that municipality? No. Moch Co. as executor of Berman's estate. is in fact a general principle of law (c) an INCIDENTAL beneficiary if neither the facts stated in Clause (a) nor those stated in Clause (b) exist.R. One Mrs. And Incidental Beneficiary (1) Where performance of a promise in a contract will benefit a person other than the promisee. Moch sued under the contract. Definition Of Donee Beneficiary. One Holly owed Lawrence $300. Beman. Holly loaned $300 to Fox in consideration of Fox’s promise to pay the same amount to Lawrence. • H. Creditor Beneficiary. which has been long applied in trust cases.R. he for whose benefit it is made may bring an action for its breach. Is a third party precluded for want of privity (a person in a contractual relationship) of contract from maintaining an action on a contract made for his benefit? No. or a right of the beneficiary against the promisee which has been barred by the statute of Limitations or by a discharge in bankruptcy. Niece allowed to recover as done. that person is. wished to leave some propertyto her niece. Mr. Moch was not a third party beneficiary.
he cannot make it. Fraud. Yes. Professor Chalk asks Professor Podium to fill in for him. Intended and Incidental Beneficiaries. 2. Lack of mutual assent (K-I). Duress. there was a substitution but not a discharge. (2) An incidental beneficiary is a beneficiary who is not an intended beneficiary. Professor Chalk has a speaking engagement. Mistake. Defenses Against The Beneficiary (1) A promise creates no duty to a beneficiary unless a contract is formed between the promisor and the promisee. • Second Restatement Novation – an agreement by which 1 party is substituted for another and a discharge of the 1st person’s duty by agreement of offering. Other Beneficiaries 1. and Unconscionability • . and not the beneficiary under the trust. or (b) The circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. If named in K 3. Professor Podium does not show up. Undue Influence. Statute of Frauds (K-I). Lack of consideration (K-I). Fox does not perform can Lawrence seek recovery from Holly. Ex.(3) Where it appears from the terms of the promise in view of the accompanying circumstances that the purpose of the promisee is to benefit a beneficiary under a trust and the promise is to render performance to the trustee. Novation A novation is a substituted contract that includes as a party one who was neither the obligor nor the obligee of the original duty. If performance will be rendered to them Defenses • Formation of Defenses § 309. Misunderstanding. One who would reasonably rely on promise. The University where he was to speak is happy with the replacement and agreed to allow him to speak in his stead. can the University recover from Professor Chalk? Yes. Agreement to substitute is not an agreement to discharge. Illegality. is a beneficiary within the meaning of this Section. Elements (1) Substitution (2) Discharge All parties must have agreed § 280. (1) Unless otherwise agreed between promisor and promisee. and if a contract is voidable or unenforceable at the time of its formation the right of any beneficiary is subject to the infirmity. Fox’s promise to pay Lawrence on Holly’s behalf. Ex. Ex. this agreement was made absent a novation because there was no novation. a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) The performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary. Incapacity. the trustee. § 302. Holly is still liable.
– Assignment . before he receives notification of the discharge or modification. the beneficiary can assert a right to the consideration so received. • Once the contract has been assigned. • Requires reliance for creditor. • Right – to be owed a contract obligation. Occurrence of a condition subsequent. then there is an assignment of the right to payments. ASSIGNMENT AND DELEGATION • Concepts – Obligor – The original contracting party whose obligation is assigned. Nonoccurrence of a condition precedent. Application to Mortgages • Promise to assume the mortgage – the buyer of the property understands a personal liability to make the payments. materially changes his position in justifiable reliance on the promise or brings suit on it or manifests assent to it at the request of the promisor or promisee. • If money is owed. Vivien is no liable for the mortgage. public policy. • Automatic for donee.• Post Formation of Defenses (2) If a contract ceases to be binding in whole or in part because of impracticability. • Assignee – the person to whom the assignment is made.the act of transferring a right to another. Material breach. Ex. • Assignor – the person who makes the assignment. . Frustration of purpose. • Purchase “subject to” the mortgage – the buyer of property makes the mortgage payments but does not assume the liability of the mortgage. • 2nd Restatement § 311. Variation Of A Duty To A Beneficiary (1) Discharge or modification of a duty to an intended beneficiary by conduct of the promisee or by a subsequent agreement between promisor and promisee is ineffective if a term of the promise creating the duty so provides. or present or prospective failure of performance. • Rights are assigned. non-occurrence of a condition. (4) If the promisee receives consideration for an attempted discharge or modification of the promisor's duty which is ineffective against the beneficiary. the promisor and promisee retain power to discharge or modify the duty by subsequent agreement. Ex. who assumed the mortgage. the right of any beneficiary is to that extent discharged or modified. defaulted. she sold her equity in the home to Vivien. Ex. Mutual rescission (until vesting occurs) Vesting • 1st Restatement • The original contracting parties are free to modify the contract to the detriment of the third party beneficiary until the moment when the beneficiary’s rights vested. Vivien took over Scarletts mortgage subject to the mortgage. the assignee cannot ask for more than what the assignor received. (2) In the absence of such a term. The promisor's duty is discharged to the extent of the amount received by the beneficiary. Scarlett is liable. (3) Such a power terminates when the beneficiary. Impossibility. Scarlett was having issues making the mortgage payments. Anticipatory repudiation.
the following rules apply: (a) Subject to paragraph (b) and except as otherwise provided in Section 9. The promise is enforceable by either the assignor or the other party to the original contract. (a) performance by the person delegated varies or would vary materially from performance by the person named in the contract as the one to perform. • Duty – to owe a contract obligation • Delegator – The person who delegates a duty. Delegation of performance does not relieve the delegating party of any duty to perform or liability for breach. – Novation . indicate the contrary. • Transferor – the person who transfers A&D. (3) An assignment of “the contract” or of “all my rights under the contract” or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances. • Nor rights to be assigned under a K with delectus personae. and an attempted delegation is not effective. Delegation of Performance. – § 160. and there has been no such assent to the delegation. § 2-210. (1) If the seller or buyer assigns rights under a contract. . Assignment of Rights. – Assumption . as in an assignment for security. it is also a delegation of performance of the duties of the assignor.the act of taking over a debt as part of payment for property which secures that debt. (c) The other party may treat any delegation of duties as creating reasonable grounds for insecurity and may without prejudice to its rights against the assignor demand assurances from the assignee under Section 2. all rights of the seller or the buyer may be assigned unless the assignment would materially change the duty of the other party. A contractual term prohibiting the delegation of duties otherwise delegable under paragraph (a) is enforceable. Delegation Of Performance Of A Duty Or A Condition (3) Performance or offer of performance by a person delegated has the same legal effect as performance or offer of performance by the person named in the contract. or impair materially that party's chance of obtaining return performance. What can be assigned? Delegated? – Rights and duties under an executory bilateral contract may be assigned or delegated – Except • that duties under a personal service contract may not be assigned • Nor rights delegated where performance by the delegatee would vary substantially from the performance of the original party.• Delegation – the act of transferring a duty to another. • Transferee – the person to whom A&D is transferred. increase materially the burden or risk imposed on that party by the contract.an agreement by which 1 party is substituted for another and a discharge of the 1st person’s duty by agreement of offering.406 or as otherwise agreed.609. • Delegatee – The person to whom a duty is delegated. (b) Acceptance of a delegation of duties by the assignee constitutes a promise to perform those duties. unless. – Transfer – When there is both assignment and delegation. (a) A party may perform its duties through a delegate unless otherwise agreed or unless the other party has a substantial interest in having the original promisor perform or control the acts required by the contract. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of its entire obligation may be assigned despite an agreement otherwise.
or a payment intangible may discharge its obligation by paying the assignor until. the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.] Unless an account debtor has made an enforceable agreement not to assert defenses or claims. Payment Intangibles. and defenses. restricts. or (b) judgment against the obligor. (5) An assignment is gratuitous unless it is given or taken . § 9-406. an account debtor on an account. • Gifts § 332.407. or the creation. payment intangible. claims. or requires the consent of the account debtor or person obligated on the promissory note to the assignment or transfer of. attachment. a gratuitous assignment is irrevocable if (a) the assignment is in a writing either signed or under seal that is delivered by the assignor. chattel paper. (3) A gratuitous assignment ceases to be revocable to the extent that before the assignee's right is terminated he obtains (a) payment or satisfaction of the obligation. Discharge of Account Debtor.303 and 9. Chattel Paper. or promissory note. Restrictions on Assignment of Accounts. [Term restricting assignment generally ineffective.(4) Unless the circumstances indicate the contrary. (a) [Discharge of account debtor. but not after. the account. § 9-404. authenticated by the assignor or the assignee. and subject to subsection (h). Notification of Assignment. (a) [Assignee's rights subject to terms. or (b) the assignment is accompanied by delivery of a writing of a type customarily accepted as a symbol or as evidence of the right assigned. Rights Acquired by Assignee. and (2) any other defense or claim of the account debtor against the assignor which accrues before the account debtor receives a notification of the assignment authenticated by the assignor or the assignee. (4) A gratuitous assignment is irrevocable to the extent necessary to avoid injustice where the assignor should reasonably expect the assignment to induce action or forbearance by the assignee or a subassignee and the assignment does induce such action or forbearance. that the amount due or to become due has been assigned and that payment is to be made to the assignee. perfection. a gratuitous assignment is revocable and the right of the assignee is terminated by the assignor's death or incapacity. chattel paper. and subject to subsections (b) through (e). After receipt of the notification.] Subject to subsections (b) through (i).] Except as otherwise provided in subsection (e) and Sections 2A. by a subsequent assignment by the assignor. or (c) a new contract of the obligor by novation. or enforcement of a security interest in. a term in an agreement between an account debtor and an assignor or in a promissory note is ineffective to the extent that it: (1) Prohibits. (2) Except as stated in this Section. a prohibition of assignment of “the contract” is to be construed as barring only the delegation to the assignee of the assignor's performance. exceptions. Claims and Defenses Against Assignee. or by notification from the assignor received by the assignee or by the obligor. effect of notification. and Promissory Notes Ineffective. Revocability Of Gratuitous Assignments (1) Unless a contrary intention is manifested. Identification and Proof of Assignment. the rights of an assignee are subject to: (1) all terms of the agreement between the account debtor and assignor and any defense or claim in recoupment arising from the transaction that gave rise to the contract. the account debtor receives a notification.
(2) Unless otherwise agreed. – Defenses – whatever defenses could be used against the assignor can be also used against the assignee. Partial Assignment (1) Except as stated in Subsection (2). (3) Unless the obligee agrees otherwise. • Not related to K. no legal proceeding can be maintained by the assignor or assignee against the obligor over his objection. a promise requires performance by a particular person only to the extent that the obligee has a substantial interest in having that person perform or control the acts promised. – Setoff • Deducting a certain amount from recovery. – Modifications • Any modifications to the original K have to be in good faith. The manifestation may be made to the other or to a third person on his behalf and.(a) in exchange for a performance or return promise that would be consideration for a promise. Defense would argue it was in bad faith. Mode Of Assignment In General It is essential to an assignment of a right that the obligee manifest an intention to transfer the right to another person without further action or manifestation of intention by the obligee. Creation of third-party rights – 3PB has claim as assignee or delegatee only if assignee or delegatee assumed duty. an assignment of a part of a right. neither delegation of performance nor a contract to assume the duty made with the obligor by the person delegated discharges any duty or liability of the delegating obligor. § 326. or otherwise. can recoup damages from assignee because related to K. Delegation Of Performance Of Duty (1) An obligor can properly delegate the performance of his duty to another unless the delegation is contrary to public policy or the terms of his promise. may be made either orally or by a writing. have gym K and gym manager runs over your dog. unless all the persons entitled to the promised performance are joined in the proceeding. running over dog not related to K so setoff allowed only if it happened before receipt of assignment. except as provided by statute or by contract. • Ex. or (b) as security for or in total or partial satisfaction of a pre-existing debt or other obligation. • Assignments for Consideration § 324. (2) If the obligor has not contracted to perform separately the assigned part of a right. or unless joinder is not feasible and it is equitable to proceed without joinder. notice is not required. as an amount. is operative as to that part to the same extent and in the same manner as if the part had been a separate right. – Recoupment • Recovery for incidents related to K • Assignee is always subject to recoupment because take assignment subject to K. Had K with gym and got weight dropped on foot. • Limitations – UCC § 2-210 § 318. • Ex. • • . whether the part is specified as a fraction. – Would normally be creditor under 1st Rst and intended beneficiary under 2nd Rst.
and not closely connected to the agreement. – Can be avoided by rejecting delegatee performance or protesting. • May see No Oral Modification (N.O. PAROL EVIDENCE RULE • The rule: Parol evidence cannot be used to prove terms additional to or inconsistent with an integrated (define) contract. – Restatement Waltz: after the general assigning there is a presumed assumption of the duty which in turns creates 3PB rights. she can sue Vera because she was never discharged sjust substituted. (2) A binding completely integrated agreement discharges prior agreements to the extent that they are within its scope. – Integrated – final representation of agreement • Can be Partial or complete • Partial integration allows for additional terms but not inconsistent terms. § 213.) clauses but these do not hold up in court. and Diana agrees to the substitution.M. • Problem 107 – Hiram told Jane after the contract had been formed that she could use a different kind of nail.Ex. Effect Of Integrated Agreement On Prior Agreements (Parol Evidence Rule) (1) A binding partially integrated agreement discharges prior agreements to the extent that it is inconsistent with them. § 164. – • (2) Acceptance by the assignee of such an assignment is interpreted. She can sue Carla as a 3PB because she was the 3PB of the K between Carla and Vera. his action is interpreted. Interpretation Of Words Purporting To Assign A Bilateral Contract. as an assignment of the assignor's rights under the contract and a delegation of the performance of the assignor's duties. Carla never shows up. purports to assign the whole contract. Diana can chose who to sue. subsequent modifications. PE accepted because of oral agreement to use different nails was said after formation. – 2nd Rst is the same but does not apply to land Implied Novation – applies if and only if the delegator delegates his duty and the repudiates any remaining liability and Obligee accepts without protest and knowing delegator has repudiates. Effect Of Acceptance Of The Assignment (1) Where a party to a bilateral contract which is at the time wholly or partially executory on both sides. Carla agrees to fill in . • • The exceptions: Parol evidence can be used with – – subsequent modification • A modification to K after formation. • Complete integration does not allow for any additional or inconsistent terms. asked friend Carla to fill in for her. as both an assent to become an assignee of the assignor's rights and as a promise to the assignor to assume the performance of the assignor's duties. • Oral agreements can alter written when: • The agreement must be in form a collateral one • It must not contradict express or implied provisions of the written contract . – collateral agreement • Collateral – something separate and distinct. in the absence of circumstances showing a contrary intention. Vera is to dance for Diana’s company but gets better offer after signing K. in the absence of circumstances showing a contrary intention. – Parol Evidence – evidence of oral or written agreements or negotiations that are prior to or contemporaneous with a writing intended to the the complete or partial integration of the parties final agreement.
or usage of trade.. the manifestations of intention of the parties to a promise or agreement are interpreted as consistent with each other and with any relevant course of performance. and then hand over to jury. (2) A writing is interpreted as a whole.Corbinian approaches • Willistonian: 4 Corners rule. and all writings that are part of the same transaction are interpreted together. (3) Unless a different intention is manifested. if it looks ambiguous on face then it is. (b) technical terms and words of art are given their technical meaning when used in a transaction within their technical field. Rules In Aid Of Interpretation (1) Words and other conduct are interpreted in the light of all the circumstances.• • It must be one that parties would not have ordinarily be expected to embody in the writing – agreement supported by separate consideration – terms additional to (but not inconsistent with) a partial integration • if K includes integration of merge clause then it is complete. will allow evidence of the circumstance surrounding under C – Standards of preference between conflicting terms § 202. (4) Where an agreement involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other. • Corbin View – take the circumstances around the K into consideration to determine whether partial or complete. course of dealing. (5) Wherever reasonable. • Corbinian: look to the circumstances of the K to interpret ambiguous clauses Rules of interpretation – Interpretation by judge or jury? • Judge. and when facially unambiguous and contains an express integration clause. • Four corners test (Williston) – look at K as completed embodied within the 4 corners of the page. who will first look at it under what ever school of thought. – construction terms: • usage of trade – the custom within the industry • course of dealing – the parties conduct in past dealings • course of performance – what the parties do while performing • Inconsistent Terms: • Williston – look for harmony in the K • Corbin – look to see if there is head on conflict – Avoidance – attempting to get evidence in that would avoid the K – Reformation – condition precedent to formation of the contract – ambiguity Evidence of ambiguity (“Ambiguity is in the eye of the bewildered”) – Willistonian -vs. it is interpreted in accordance with that meaning. any course of performance accepted or acquiesced in without objection is given great weight in the interpretation of the agreement. May then allow evidence to clear up ambiguities under W. (a) where language has a generally prevailing meaning. and if the principal purpose of the parties is ascertainable it is given great weight. • . • Integration and merger clause – statements that this written K is a final and complete representation of the parties’ agreement.
(b) express terms are given greater weight than course of performance. hence. MISUNDERSTANDING & MISTAKE • Misunderstanding – where there was no meeting of the minds. Raffle v Wichelhaus. Standards Of Preference In Interpretation In the interpretation of a promise or agreement or a term thereof. and the other has reason to know the meaning attached by the first party. a meaning that serves the public interest is generally preferred. but at different times. a latent ambiguity arose. if different meanings were intended there is no contract if the ambiguity relates to a material term. Raffles contracted to sell cotton to Wichelhaus to be delivered from Bombay at Liverpool on the ship "Peerless. and effective meaning to all the terms is preferred to an interpretation which leaves a part unreasonable. § 206. unlawful. each named "Peerless" arriving at Liverpool from Bombay. Consequently. and course of dealing is given greater weight than usage of trade. separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated. When there is an ambiguity. Judgment for defendants. there was no meeting of the minds and no binding contract. no contract has been formed." Unknown to the parties was the existence of two different ships carrying cotton. the following standards of preference are generally applicable: (a) an interpretation which gives a reasonable. or there is ambiguity about a material issue. (c) specific terms and exact terms are given greater weight than general language. or b) each party knows or each party has reason to know the meaning attached by the other. However. Did a latent ambiguity arise showing that there had been no meeting of the minds. or of no effect. . (2) The manifestations of the parties are operative in accordance with the meaning attached to them by one of the parties if (a) that party does not know of any different meaning attached by the other. it is given the meaning that each party intended it to have. Interpretation Favoring The Public In choosing among the reasonable meanings of a promise or agreement or a term thereof. While the contract did not show which particular "Peerless" was intended. Interpretation Against The Draftsman In choosing among the reasonable meanings of a promise or agreement or a term thereof. • § 20. § 207. that meaning is generally preferred which operates against the party who supplies the words or from whom a writing otherwise proceeds. and usage of trade. the moment it appeared two ships called "Peerless" were sailing from Bombay to Liverpool with a load of cotton. course of performance is given greater weight than course of dealing or usage of trade. Effect Of Misunderstanding (1) There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and (a) neither party knows or has reason to know the meaning attached by the other. course of dealing. and the other knows the meaning attached by the first party. lawful. and parole evidence was admissible for the purpose of determining that both parties had intended a different "Peerless" to be subject in the contract. no contract? Yes. or (b) that party has no reason to know of any different meaning attached by the other.§ 203.
when in fact she had considerable value as a breeder. Does a mutual mistake of a material. Here. The mistake must have occurred regardless of the exercise of ordinary care 4. refused to deliver it. the mutual mistake must not only be as to some material fact. The only reasons for rescinding a sale and revesting title in the vendor are that the vendee has committed some fraud in procuring the sale. The cow was sold for beef. . • A party is to bear the risk of a mistake when he is aware at the time of formation that he has limited knowledge to the facts the mistake relates to. o Rescission – an equitable decree by which the contract is simply cancelled. The parties would not have made the contract if they knew that the cow was capable of breeding. • Other damages fall where they may. It is generally required that the bidder give prompt notification of the mistake and his intention to withdraw • Sherwood v Walker. mutual mistake affords no basis for rescission of a contract of sale. • Relief is usually denied to the erroneous party. and since neither knew its intrinsic value. Neither party realized the stone was a diamond worth $700. • Typically remedied by allowing either party to rescind. (No Relief) Where a party later finds out he under or overpaid he is not entitled to rescission.where both parties are mistaken. there is no contract. A barren cow is a different creature than a breeding one. and the vendee has committed no fraud. Belief not in accordance with facts Shared or common mistake Goes to the substance of K Mutual Mistake . the stone was open to the investigation of both parties. Unilateral Mistake – where the mistake was made by only one party. The mistake must relate to the substance of the consideration 3. Affirmed. • Wood v Boynton. or that there has been a mistake made by the vendor in delivering an article other than the article sold. Where both parties to a sale are mistaken as to the nature and value of the article sold. or a shared or common mistake that goes to the substance of the contract. and contrary to the existing facts. In the absence of such circumstances. And there was no pretense of any mistake as to the identity of the thing sold. Where the thing actually delivered or received is different in substance from the thing bargained for and intended to be sold. Here. may the vendor rescind the sale? No. Ignorance – where both parties are ignorant to the mistake. • Can Rescind under following 1. As a result. having sold a cow to Sherwood in the mistaken belief that it was barren. However. underlying fact afford a basis for rescission of a contract for the sale of personal property? Yes. but must also affect the substance of the whole consideration. When the sale was made. the mistake was as to a crucial. The mistake is of such consequence that enforcement would be unconscionable 2. there was no contract formed. material fact. It must be possible to place the other party in the status quo 5. but the thing sold was the same as the thing delivered. they both fraud or mistake has here been made out. there was no fraud since both parties were ignorant as to the stone's true value. The Walkers . : Boynton purchased an uncut stone from Wood for $1. • Restitution of consideration is usually ordered by the court.• • Mistake – belief not in accordance. • The mere presence of a mutual mistake does not always afford relief to the party adversely affected by the mistake.
in this case to deed the whole house on lot 5 to Ewing . Therefore. omission. BOP is on person seeking reformation. An unintentional mistake by one party allows that party to rescind the agreement. Judgment reversed and remanded for proceedings consistent with this opinion.• 1st Baptist Church v Barber. Barber's miscalculation in computing the bid price was an unintentional error about a fact material to the contract. Does a mistake by one party to a contract allow the agreement to be rescinded? Yes. Ewing's deed can only be reformed if such relief will not prejudice the rights of Bailey . Barber submitted a construction bid to First Baptist which contained a miscalculation. Even if the mistake was caused by negligence. it was a unilateral mistake which allows for rescission of the contract. First Baptist was not prejudiced since they stood to lose only the advantage of Barber's mistake. the contract may be avoided if the opposing party would not be prejudiced. State of Mind: Misunderstanding Conscious Ignorance Mistake in Formation Mutual Mistake Result: No contract No relief Rescission Unilateral Mistake Generally No relief If other party (1) knew of or (2) caused the mistake. causing Barber to withdraw the bid. Barber's summary judgment motion granted. The trial court found for Bailey and Erhardt. Where there is mutual mistake. Ewing filed a counterclaim against Bailey and third party Erhardt. Ewing shared this belief. • The BOP is greater than what is required to bring an ordinary civil suit. personal representative of the estate. parol evidence is admissible to show what the true intent was. or error. to reform the deeds. Even if the error could be considered negligent. Ewing and Ernhardt made a mutual mistake as to the boundary of lot 5. > Rescission or (3) facts fit "mistaken bidder" profile Mistake in Expression FRAUD Broken into • Fraud Reformation . if Bailey is a bona ride and innocent purchaser.the correction or change of an existing document by court order. Arises with a mistake in expression. Erhardt clearly intended to sell the whole house on Lot 5 and believed the boundary line was somewhere east of its subsequently determined "true" location. The mistake must involve a fact material to the contract and must be an unintentional act. • Reformation . Thus. • Bailey v Ewing. However. Ewing appealed. Bailey brought suit to eject Ewing from a disputed piece of land between their properties. Did the trial court err in ruling that any mistake concerning the location of the boundary line was a unilateral mistake by Ewing? Yes.
• Elements o Wrongful act or threat o No reasonable alternative . • Election of Remedies – can only get either damages or rescission cannot get both. • Silence §161. o Actionable for the following reasons: 1. Justification o Can be intentional and innocent o Must be a statement of fact and not opinion Exceptions: • Where there is a fiduciary relationship (relationship based on trust). 3. o Rescission is the usual remedy. Elements 1. evidencing or embodying an agreement in whole or in part. An assertion is made to a party who later finds it to be untrue. 2. Fiduciary relationship. OR • Where the parties do not in general deal at “arm’s length”. Where silence will let a dangerous condition go undiscovered. OR • Where there has bee some artifice of trick employed by representor. OR • Where the representee does not have equal opportunity to become apprised of the truth or falsity of the fact represented. which has the effect of inducing that party into the contract. • Punitive Damages – can receive if there was a fiduciary relationship or there was intentional fraud.• • Duress Undue Influence Fraud • Misrepresentation . Reliance 4.a false statement of fact made by one party to another party. o Statements made by persons of superior knowledge are considered fact. Party A knows Party B is laboring under a misconception and says nothing. When Non-Disclosure Is Equivalent To An Assertion A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only: (a) Where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material. Where the other person is entitled to know the fact because of a relation of trust and confidence between them. (c) Where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing. 4. where there is no reasonable alternative. Intentional or Material 3. (b) where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. o D must know that P would not have gone through with transaction had they known the truth. Duress – to compel someone to do something based upon a wrongful act or threat. • Concealment – where D takes affirmative steps to conceal a problem. Misrepresentation 2.
• Undue susceptibility • Dominant strength – Confidential relationship – putting trust in someone else – BOP on D to prove there was no undue influence\ – Duty to place P’s needs above own – No confidential relationship Avoiding K Illegality . no QM. What constitutes an alternative is a question of fact. Wrongfulness depends on the facts in each case. relationship. consent to K. no recovery o Non Compete Clauses Not enforceable • Except • Ancillary (secondary) to sale of business • Ancillary to Employment K o Unless o Unique talents. clothing.• Economic Duress exist where: o One party involuntarily accepted the terms of another. or conduct. knowledge. or ability o Area of injunction is reasonable o Time period is reasonable Not applicable to lawyers and doctors Blue pencil – when a judge rewrites non-compete clauses to what is reasonable. o Circumstances were result of coercive acts of the other party. • Intoxication – person asserting defense must have been so intoxicated they could not comprehend actions. active in military • Mental Infirmity – a K signed by someone who has been declared mentally infirmed judicially is void. and shelter Married. o Circumstances permit no other alternative. • Cant blue pencil Employment Ks Incapacity • Minors – may disaffirm o Except for Ks for necessaries. no recovery unless state has CL marriage. o Lack of License No license. . Undue influence – unfair or improper persuasion of one person by another who has attained a position of domination or power. emancipated.K or clause involved is void as a matter of public policy. Unconscionability – When a contract is too unfair to enforce. food. transaction. • No QM because K is illegal • Broken into: o Violation of Law No recovery for guilty party o Cohabitation No rights.
or it may enforce the remainder of the contract without the unconscionable term. should the unconscionable contract provision. a court should refuse to enforce such a contract on the ground that it is unconscionable. • Damages cannot be awarded • Court can refuse to enforce the K. • Must exist at K formation. American Oil sued Weaver for indemnification for damages that occurred on premises leased by Weaver from American Oil . May a court refuse to enforce an unreasonable contract. should be unenforceable on the grounds that the provision is contrary to public policy.unconscionability that derives from the process of making a contract rather than from inherent unfairness or unreasonableness in the terms of the contract. Williams began purchasing items from Walker. in light of the general commercial background of a particular case. a retail furniture company.Thomas in 1957. Walker-Thomas filed this action to replevy (i. she bought a stereo set there. be unenforceable on the grounds that the provision is contrary to public policy? When a party can show that a contract is in fact an unconscionable one. When a party can show that a contract is in fact an unconscionable one. purpose. the court may refuse to enforce the contract.e. When she defaulted on a payment soon thereafter. • § 2-302. or the contract as a whole if the provision is not separable. (Walker-Thomas) . or may enforce the remainder of the contract without the unconscionable term. until all items were paid for. even though no evidence of fraud can be produced? Where. Unconscionable Contract or Term (1) If the court as a matter of law finds the contract or any term of the contract to have been unconscionable at the time it was made. or limit the application of unconscionable terms. Scott v Cingular. the unconscionable contract provision. and effect to aid the court in making the determination. the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting. began using a standard form contract for all credit transactions which contained. from terms that are found to be one-sided. § 208. or may so limit the application of any unconscionable term as to avoid any unconscionable result. to repossess all items contemporaneously being purchased by the buyer at the time of the repossession. (2) If it is claimed or appears to the court that the contract or any term thereof may be unconscionable. upon default by a purchaser. or overly harsh. Unconscionable Contract or Term If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract. • Procedural . or it may so limit the application of any unconscionable term as to avoid any unconscionable result. alleging provider had overcharged consumers by unlawfully adding roaming charges and hidden • • . enforce the remainder of the K w/o the unconscionable term. Plaintiffs brought class action against cellular telephone service provider. Walker-Thomas Furniture Co. Weaver v American Oil. with each installment payment spread pro-rata over all items purchased (even where purchased separately and at different times). pursuant to certain clauses contained in a standard form contract. unjust. In 1962. or the contract as a whole if the provision is not separable.unconscionability of a contract that arises from the terms of the contract and esp. a clause by which the company reserved the right. inter alia.. repossess) all items she had purchased (and was still paying for) since 1957. • Substantive .Matter of law. it appears that gross inequality of bargaining power between the parties has led to the formation of a contract on terms to which one party has had no meaningful choice. This clause was accompanied by one which stated that all credit purchases made from Walker-Thomas were to be handled through one account. • Williams v Walker-Thomas.
2. Impossibility • GR is not an excuse. violated Washington State public policy and therefore was substantively unconscionable. but Caldwell could not perform when the hall burned down without his fault. for the purpose of a viewing sight for King Edward VIl's coronation procession. which waiver prohibited class action litigation and class action arbitration. Was the performance prevented 3. a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance. Rose died before K was formed but neither party knew. The Superior Court. London. Frustration of Purpose o Factors 1. Taylor expended money in preparation and for advertising. class action waiver in arbitration clause of standard subscriber contract for cellular telephone service. • It the event occurs before then it is mistake. J. Pro-rata recovery for partial performance • Krell v Henry. o Ex. In contracts in which the performance depends on the continued existence of a given person or thing. Allison. the duties of performance are constructively conditioned upon the attainment of that object. • Taylor v Caldwell. Joan B. Further performance excused 3.. . • Exceptions 1. When K was formed was the event unforeseeable and a material adverse change (MAC) to K. What is the foundation of the K 2.charges. is a condition implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance? In contracts in which the performance depends on the continued existence of a given person or thing. Direct review was granted. causing a delay of the coronation upon which Henry refused to pay a £50 balance for which Krell sued. are the duties of performance constructively conditioned upon the attainment of that object? Where the object of one of the parties is the basis upon which both parties contract. • If it occurs after K formation use impossibility. granted provider's motion to compel individual arbitration. for £100 per day. King County. for four days. An agreement that violates public policy may be void and unenforceable. Henry paid a deposit of £25 to Krell for the use of his apartment in Pall Mall. Taylor contracted to let Caldwell's hall and gardens for four fetes and concerts. • Farmers are discharged from duty from the destruction of the crop. Where the object of one of the parties is the basis upon which both parties contract. The King became ill. Perishment of thing or person where the K is for its continued existence.
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