You are on page 1of 17

Contracts

Contracts
I. Vocabulary
A. Contract:
1. Legally enforceable
2. agreement

B. Quasi Contract
1. Not a contract
2. Contract rules do no apply
3. Equitable remedy
4. Any time we get an inequitable result using contract rules, we use quasi contract
5. Example
a. P conferred a benefit on D and
b. P reasonably expected to be paid
c. D realized unjust enrichment
d. Recovery will be the benefit conferred to D.

C. Bilateral Contract: results from an offer that is open as to the method acceptance
D. Unilateral Contract:
1. Requires performance as the only method of acceptance
2. Reward, prize, contest
3. Ofer expressly requires performance for acceptance

II. Applicable Law
A. Common Law: case law as developed by the courts
B. Article 2 of the UCC
C. Examples
1. Services: Common Law
2. Real Estate: Common Law
3. Sale of Goods: Article 2 of UCC
a. all goods
b. any price
c. doesn’t have to be with businesses or merchants
4. Mixed Deal: More important part
a. Part good and part services
i. If Goods are more important than services, UCC applies to both goods and services
ii. If services are more important, only common law
iii. Exeption: contract divides payment between goods and services, UCC applies to the
good and common law applies to the services

III. Article 2A of UCC
A. Applies to the lease of goods
B. Similar to Article 2
C. Similar to Article 9 when
1. default by lessee or
2. Priority contest between lessor and third parties

Formation of a Contract

IV. Level one: Offer
A. Manifestation of an intention to contract, words or conduct showing commitment.
B. Test: Would a reasonable person (offeree) believe assent creates a contract?
1. offer need not contain al material terms
2. Price
a. must contain price: common law
b. no price requirement: Article 2

1

promise to keep the offer open b. Reasonably foreseeable that offeree would detrimentally rely b. subcontractor cannot revoke 4. first served” V. written promise to keep offer open. offeree must be aware of conduct c. Can be an offer if its nature is of a reward b. “solely” b. Not unreasonably disproportionate limitation ii. offer to buy or sell goods b. Options a. Exception: No vague or ambiguous price terms ii. Unambigous statement of unwillingness or inability to contract i. supported by payment of other consideration 2. Mailbox Rule: Revocation of an offer sent through the mail is not effective until received by the offeree d. Ex. Unambiguous conduct of unwillingness or inability to contract i. reasonable time lapse 2. not revoke c. Buyer can increase so long as in line with prior demands C. Revocation/Terminiation of Offer 1.Contracts i. Words or Conduct of Offeror a. Irrevocable Offers 1. $10. “1 fur coat. fari price. time state or b. Detrimental Reliance a. “only”. Firm Offer Rule (Article 2) a. offeree must be made aware (Sharon Stone must be in the shower with Epstein) ii. Level two: what happens after the initial communication A. Start of Performance 2 . “exclusevely”. Valid terms: “All”.reasonable price 3. Offer cannot be revoked after it has been accepted B. only up to three months even if terms say longer 3. first come. General contractor submits a bid based on subcontractor’s bid and General Contractor is awarded the bid. Example: “appropriate price. Increases i. advertisements are not offeres 2. Advertisments 1. “X promises 100 pound reward to anyone who …. Can be if specific as to quantity and expressly indicates who can accept c. Exceptions a. Lapse of Time a. signed.. party is a merchant (business person) d.” ii. Amount/output a. Awareness that the same offer has been made to another does not revoke the original offer b. Examples i.

Original offeror denied.Contracts a. 4. “so long as”. Death of a Party Prior to Acceptance.additional term is part of contract . 1. acceptance that adds new terms is treated like a counter offer b. Offeree Rejection 1. Additional terms (UCC Article 2) a. performance is the acceptance. Both parties are merchants . however. Person to whom the offer was made a. Exception: Bargaining does not kill the offer look for i. Exception: If offeree adds new terms and offeror begins to perform. consider a seasonable expression of acceptance c. Level three: who responds and how does she respond. Exceptions: a. Who Accepts offer 1. Counter offers kill the offer (common law and UCC) a. “provided”. Notice of Offeree to Offeror i. offeror sends keys to the building. response with additional terms but No expressed language saying new terms are a condition of acceptance. “if”. Words accepted “only by performance” c. Conditional Acceptance (common law and UCC) a. option b.Exceptions • additonal term is not part of contract if it material changes the offer • not part of contract if offeror objects to the change D. part performance of offer to enter into unilateral contract VI. ex. offers cannot be assigned b. b. Methods of Accepting an Offer 1. does trigger deterimental reliance C. i. One party not a merchant . exception: Options can be assigned i. Death or incapacity of either party after the offer but before the acceptance terminates the offer 2. response with additional terms with expres language saying new terms are a condition of acceptance i. look at what offer requires ii. Mirror Image Rule: Common law. Ex. Person who know about offer 2. “Will you take …?” ? indicates bargaining 2.new term is out ii. Offeree fully performs a. Additional terms (common law only) a. offer to buy or sell goods b. did offeree have reason to believe that offero will not learn of acceptance 3 . unless the option says it cannot be assigned B. A. “I will only pay …” b. the new terms become part of the new contract. offer of a unilateral contract. offeree sends back lease with new terms. Exception: Mere preparation is not start of performance. Counter-offer is the new offer. ex. “on condition that” treat this as a counter-offer 3. Offeror sends lease. i. “but”.

general rule: communication is effective when received b. c. offeror is legally obligated. 2. Exception: addition to or change in performance 4 . No consideration. Acceptance (by seller) and Breach (by seller) i.B. Preexisting contractual duty a. L sends lease with increased terms.Contracts . I promise to pay you $100 if you stop smoking. promise to perform is not acceptance 4. Consideration A. 4. sending different items with an explanation creates a counter offer ii. Legal detriment a. however. One promise for another promise. Offer requires acceptance “only by performance” Offeree is not contractually obligated to complete contract. Offeree sends acceptance and then receives revocation from offeror: Contract ii. Offeree starts to perform a. Offeree promises to perform a. T paints apartment. Past Consderation a. delay in communication) a. ex. A promises to buy B’s house if he feels like it. B. asked for in exchange for her promises b. Offeree sends rejection and then sends acceptance: Depends which gets there first 5. Types of Consideration and Consideration Substitutes 1. always a wrong answer on the multi-state b. ex. I owe you $100. Conflicting Communications (distance contracting. Exception: Expressly requested and there is an expectation of payment.000. Even a peppercorn is adequate 3. Exeption: if offer expressly requires performance. she chose the unilateral format of contract. No consideration: L promises to re-lease apartment at same rate.4 3. then the first received. Seller of Goods sends Wrong Goods a. not acceptance in a unilateral contract ex. Common Law. unless offeree sent a rejection first. Exception: Illusory promises don’t work. i. A saves B life and B promises to pay A 1. Adequacy of Consideration a. No consideration. seller creates the contract by shipping the wrong goods ii. most offers can be accepted by a promise to perform b.watch for geography 2. a. no breach VII. A promises to buy B’s house and B promises to sell the house to A. contract is breached by sending the wrong goods b. You stop smoking. Compare to V. doing what you are already legally obligated to do in not new consideration for a new promise to pay you more to do merely that. holds true in bilateral contracts ii. not consideration b. Accomodation (explanation) Exception i. Need new consideration for contract modification i. Must be bargained for a. general rule: start of performance is acceptance treated as an implied promise i. 2. Exception: Acceptance is effective when it is sent. Definition 1. Consideration.

other party can hold 18 year old liable 3. clothing. no contract liability. Intoxicated People – If other party has a reason to know B. written promise is not new consideration b. Exception 2: unforeseen difficulty so severe as to excuse performance iii. Infants. 2. a. Possiblity of early termination is irrelevent. don’t need a writing. Quasi-contract Liability for Necessaries a. Part Payment as consideration for a promise to forgive the balance of debt a. Implied Affirmation a. Consequences of Incapacity 1. Employment contract for three years i. Promissory Estoppel (Detrimental Reliance). Statute of Frauds A. capacity of a plaintiff is irrelevent b. So contracts for more than one year with a 30 day termination agreement is still within the Statute of Fruads 5 . Promise by Executor or Administrator to Pay the Debt of the Decedent Personally 3. Child contracts. Can collect on the new written promise 7. however. IX. promise ii. Elements i. Good faith is the test. a. Don’t have to pay the agreed upon rate but the value of the benefit conferred. Answer for: Guarantee to pay debts if they don’t pay i. Written Promise to Pay Debt Barred by a Technical Defense such as the Statute of Limitation.Contracts ii. Due and undisputed: no consideration b. Main Purpose Exception: if you can show that the alleged guarantor was the benefee of the transaction. only quasi-contract. Seals do not serve as consideration 8. those with incapacity can hold the person with capacity liable 2. medical care. UCC: No pre-existing legal duty rule. reasonable reliance (detrimental and foreseeable) iii. Service Contract not capable of being performed within a year from the time of the contract (more than a year) a. Not yet due or undisputed: Early payment will serve as consideration 6. The most important Consideration Substitute b. Not within the Statute of Frauds. 4. a. Incapacitants must pay for food. Right to Disaffirm by person without capacity a. and shelter. Enforcement is necessary to avoid injustice VIII. Promise to creditors to answer for the debts of another. “Within” the Statute of Frauds: Is it subject to the Statute of Frauds? 1. Not a promise to marry. 5. Promise in Consideration of Marriage. Exception 3: third party promise to pay b. Capacity A. No capacity 1. turns 18. b. Mental Incompetents – lacks ability to understand the agreement 3. Retaining the benefits after gaining capacity b. Serves as a substitute for consideration c.under 18 2.

there is not a Statute of Frauds Defense a. Performance a.full or part payment . Transfers of Interest in Real Estate a. Sale of goods for $500 or more a.Statute of Frauds is satisfied as soon as seller makes a “substantial beginning” to make the product . Signatures 6 . always within the statute of frauds B. Life time agreement are not within the Statute of Frauds. Specially Manufactured Goods Exception . Two of the following three Satisfies the Statute of Frauds .Plaintiff may recover under quasi contract b. Part performance of a contract for the sale of goods satisfies the Statute of Frauds but only to the extent of the part performance .Contracts b. who ii. One year employment starting next month. Writings a.Look for custom made or made to order fact patterns c. what b. All materials Test (Services) i. Full payment alone does not satisfy the statute of frauds 3. Leases of a year or less: not within the statute of frauds 6. Easements: within the statute of frauds b. Terminology: If Statute of Frauds is satisfied. Sale of Goods i.Delivered Goods: no Statute of Frauds defense . Service Contracts i. c. Remember. 5.possession . although something may not apply within the UCC statute of frauds (is less than 500) the sale of goods is still subject to all of the rest of the UCC. Can the contract be completed within a year? If contract made for a date more than one year in the future.improvements ii. Questions may ask: i. Within the Statute of Frauds d. Person could die within a year.Defendant will have a Statute of Frauds defense . Tasks are not subject to the Statute of Frauds: If theoretically possible with unlimited resources. Agreement to build a house on property: not within the statute of frauds ii. Leases of goods with payments totaling $1000 or more a. full performance by either party satisfies the statute of frauds ii. Exceptions: i. Performance and Transfers of Interest in Real Estate i.Plaintiff cannot recover under contract law . “Is the Statute of Frauds satisfied?” or synomonously ii. e. “Is there a Statute of Frauds defense?” 2. Selling property: withing the statute of frauds c.Undelivered Goods: Statute of Frauds defense ii. How is the Statute of Frauds satisfied? 1. it is within the statute of frauds. Part performance of a services contract does not satisfy the Statute of Frauds . 7.

Economic Duress 7 . Misrepresentation. if contracting party does not know of the illegal purpose. Can be a Torts question or Contracts question a. innocent. honest. Illegality 1.” C. no writing needed 2. Torts question: all about one guy trying to recover money damages from the other i. c. Authorization to enter into contract for someone else 1. Must be signed by the person who is asserting the Statute of Frauds defense in order for that defense to fail. we agreed. states the duration of the lease 4. Statute of Frauds can be satisfied if one party fails to respond and reject regardless of the fact that there is not a signature. Illegality. Satisfies the Statute of Frauds b. Imagine the agreement with the alleged change b. UCC 2A Requirement (leases of personal property) i. misrepresentation is a basis for rescinding D. indicate that it is a lease ii. Judicial Admission of Sale of Goods a. Duress A. even honest. Public Policy. misrepresentations will not allow recovery ii. 2. Does the modifying agreement have to be in writing to satisfy the statute of frauds? a. valid contract. Public Policy 1. UCC Requirments (goods) i. Duress 1. if no. Contracts exempting intentional or reckless conduct from liability not enforceable 2. must be at least negligent b. Illegal Subject Matter: no enforcement of contracts with illegal subject matter 2. Misrepresentation or Fraudulent Concelement 1. Illegal Purpose: there can be other contracts for the purpose of completing a contract with illegal subject matter. Contract Modification 1. innocent. if yes. must be in writing ii. Equal Dignity Rule D. Contracts: one guy wants out of the deal i. Proof of Authorization must be in writing only if the contract to be signed is within the Statute of Frauds. Signatures (UCC) i. Common Law: Ignore that requirement b. assume the person did not sign. B.Contracts i. Both parties must be merchants ii. UCC: requirement is effective unless it is waived X. How many is the only question. If does not say so in the question. What if original contract require that all modifications to the contract be in writing? a. but we never put it in writing. Ex. who and what and even purchase price not needed d. Covenants not to compete without a reasonable need or reasonable time or place limits. Is alleged change within the statute of Frauds? i. describe what is being leased iii. Sometimes unenforceable C. e. “Yes your Honor.

Mutual mistake about what something is: unenforceable contract D. Underlying premise is that final written version of the contract is more reliable than anything that might have been said or written earlier 8 . Overview 1. courts grant relief to the mistaken party b. Mutual Mistake of Material Fact 1. No relief 2. not a risk that either party bears C. not basic 2. never the jury C. Unfair Surprise 2. XII. Two basic tests 1. materially affects the agreed exchange d. if there is unconscionable conduct in inducint or enforcing the lease. parties use a material term that is open to at least two reasonable interpretations 2. improper threat to break an existing contract b. Misunderstanding A.Contracts a. buyer beware E. oppressive F. Mistakes discovered before significant reliance by the other party Terms of the Contract XIV. Vulnerable guy can get out of the contract XI. Now part of general contracts law D. No contract if 1. if the other party to the contract knows or should have known of the mistake. Empowers courts to refuse to enforce all or part of an agreement E. each party attaches a different meaning to the term 3. There will be no contract if a. both parties mistaken b. Exception a. not material 3. neither party knows or has reason to know the term is open to at least two reasonable interpretations B. no reasonable alternative to get what is needed in the original contract c. Under 2A: A court may grant relief from a consumer lease even though no provision of the lease is unconsciounable. Mistake about what something is worth: enforceable contract 1. If one party knows of the other interpretation. need bad guy. Unconscionability A. there will be a contract under the terms of the unknowing party XIII. Tested as of the time the agreement was made B. basic assumption of fact c. Unilateral Mistake of Material fact 1. vulnerable guy. Mistake of Fact Existing at Time of the Contract A. Distinguish from misunderstanding which focuses on words in contract and misrepresentation which focuses on words before the contract B. Parol Evidence Rule A. Always decided by the court. purpose for which the evidence is to be introduced is often determinative 3. Evidence rule in the sense that issue is whether court can consider evidence and 2.

before integration b. same people but different similar contract b. b. Triggering the Statute of Frauds: Absence of a written agreement XV. Court can use parol evidence to resolbe ambiguities in the written contract 4. additional term would ordinarily be in a separate agreement E. Defense Exception: Court may consider the earlier words to determine if there is a defense to the enforcement of the agreement such as misrepresentation. same contract b. exclusionary effect of written contract on earlier or contemporaneous agreements as a possible source of terms of the contract B. not parol evidence 2. Conduct and Course of Performance A. Contradicting the written deal a. Delivery Obligations of Seller of Goods 9 . prevents a court fro considering ealrier agreements as a source of terms that contradict the terms of the written contract.” 5. Getting out of the Written Contract a. Triggering Facts 1. 3. Exceptions: i. Comparison of Parol Evidence Rule and Statute of Frauds A. Importance of written contract as source of contract terms. different but similar people and different but similar contract b. Triggering the Parol Evidence Rule: Written agreements B. Parol Evidence: words of parties a. Least pursuasive XVI. Note: Evidence post contract are admissible. Course of Performance a. Partial Integration: written and final. or duress. same people. Course of Dealing a. Oral statement made at the time the contract was signed OR earlier oral or written statements by the parties to the contract D. Court may not consider parol evidence as a source for additional terms b. Adding to the written contract a. ageement was only a partial integration ii. Vocabulary 1. Written contract that court finds is the final agreement AND 2. Integration: written agreement that court finds is the final agreement. fraud. Less pursuasive 3. Admissiblity Rules 1. Custom and Usage a. Merger Clause: contract clause such as “this is a complete and final agreement. Clarifying what the terms mean through 1. but not complete 3.Contracts 4. oral or written 6. Complete Integration: written and final and complete 4. Reformation: equitable action to modify written contract to reflect actual agreement C. Exception: Mistake in Intergration: may consider evidence to determine whether there was a mistake in integration. triggers the parol evidence rule 2. most pursuasive 2. mistake in reducing the agreement to writing c. Explaining a Term in the Written Deal a. UCC for Term in Sale of Goods Contracts (Default Terms) A.

an opinion i. Delivery Obligations of seller if delivery by “Common Carrier” a. Guaranteed to operate for two years: warranty iv. opinion iii. shifts to buyer upon reciept of the goods b. if seller is a merchant (business person) i. seller is a merchant (does not include anyone in any business) limited to a person who deals in goods of that kind b. Determining whether Shipment or Destination Contract i. if seller is not a merchant i. it gets the goods to a common carrier ii. No agreement. b. Delivery by a common carrier a. Breaching party is liable for any uninsured loss even though breach is unrelated to the problem 4. or state fact or for use of a sample or model. Any agreement of the parties controls 3. no common carrier a. Fact Pattern a. Top quality: no warranty. Unallocated risk of loss is on the lessor C. Risk of Loss 1. shipment contracts: Seller completes obligation when i. Most are shipment contracts ii. Distingish from sales talk which is more general. seller is obligated to notify the buyer b. No breach. 2A Leases of Personal Property a. Express a. Warranty: Goods are fit for ordinary purposes 3. risk of loss shifts from the seller to the buyer at the time the seller competes its delivery obligations 5. All steel: warranty ii. No place of delivery has been agreed upon a. Implied Warranty of Merchantability a. Destination Contracts i. describe. FOB: Free On Board (city) . Warranties of Quality 1. buyer relies on seller to select suitable goods 10 . buyer has a particular purpose b. Sellers showing buyer a sample: warranty 2. Seller does not complete delivery obligation until the goods arrive where the buyer is c.Contracts 1. words that promise. after contract formed but before received by buyer b. sellers place of business b. goods are damaged c.if city is where seller is. or goods are: shipment contract . risk of loss on tender (makes the goods available) 6. Implied Warranty of Fitness for a Particular Purpose a.if city is any other: destination contract B. unless everyone knows that the goods are some where else 2. neither buyer nor seller is to blame 2. seller makes reasonable arangements for delivery iii.

Limitations of Remedies a. buyer can retain and sue for damages or b. Cure i. follow reasonable seller instructions iv. Warranty: goods are fit for particular purpose 4. reject all or any commercial unit and sue for damages i. not the lessor i. Lessor of personal property makes the same warranties as a seller i. Contractual Limitation On Warranty Liability 1. Disclaiming implied warranties of merchantability and fitness i. Common Law A. Installment Contract 11 .Contracts c. mentioning merchantability 2. Disclaimer a. express warranties generally cannot be eliminated or disclaimed d. Must occur before acceptance of the goods a. does not eliminate warranties b. “as is” . even express warranties c. if breach of warranty on consumer goods causes personal injury ii. hold the goods for seller iii. Test: Unconsciounability i. express ii. merchantability iii. Look to the terms of the contract XVIII. second chance given to seller to make the contract correct . seasonably notify seller ii. no buyer payment obligation 2. Rejection of the Goods 1. There are no warranties b. or “with all faults” ii. Places limits on how much can be recovered for breach of warranties. Limitations a. Finance Lease: warranties made by the supplier to the lessor are enforceable by the lessee against the supplier. goods go back to seller v. Sale of Goods A. eliminates implied warranties c. Perfect Tendor 1. 2A Warranties on Leases a.seller had reasonable grounds to believe that the goods delivered would be satisfactory • prior dealings between buyer and seller • time for performance has not yet expired b. seller has reason to know of purpose and reliance d. ex. fitness b. The seller is obligated to deliver perfect goods B. lessee cannot stop paying the lessor D. Conspicuous language of disclaimer. warranty will not prevent the seller from being liable for the personal injury Performance of a Contract XVII.

Pay with credit card before delivered iii. exception: no specific performance if seller sells property to a third party 3. never get specific performance b.Contracts i. Nonmonetary Remedies A. revocation within a reasonable time after discovery of nonconforming nature of goods .ex. Acceptance i. if buyer accepts.retention after opportunity for inspection . however. lack of adequacy of remedy at law (monetary damages) 2. discover that the sleeping bag does not insult for 10 degrees could allow buyer to revoke acceptance of the sleeping bag iv. no buyer payment obligation Remdies for unexcused Non-performance XIX.delivery in separate lots . he cannot later reject them ii.to be separately accepted • buyer can reject only where there is substantial impairment • in that installment can’t be cured c. can get injunctive relief (negative specific performance) i.general rule. seasonably notify the seller v. payment without opportunity for inspection is not acceptance . Services Contracts a. hold the goods for seller vi. goods back to seller viii. Unclean hands. seller demand return of goods within 10 days of receipt (becomes a reasonable time rule if before delivery there had been an express representation of solvency by the buyer 4. excusable ignorance of grounds for revocation or reasonable reliance on seller’s assurance of satisfaction iii. Buyer must have been insolvent at the time the goods were received 3. custom made 4. Reclamation 1. 1 month is acceptance . prevent party from performing for a competative party B. right of an unpaid seller to get it goods back 2. only if goods are unique i. Implied Acceptance . Contracts for sale of Real Estate a.example10 degree sleeping bag purchased in July and used all summer cannot be rejected. work of art iii. Contracts for the sale of goods a. contract requires or authorizes . if in November.look for time between delivery and complaint d. Equitable remedy. nonconformity of goods substantially impairs the value of the goods and ii. Buyer still has goods at time of demand 12 . follow reasonable seller instructions vii. Specific Performance 1. antiques ii. Revocation of Acceptance of the Goods i.

Liquidated 8. she expects the other person will perform without breaching. Business sells to Customer 4. that person wrongfully sells the goods to a third party 3. Lost volume seller iii. thief sells to Business 3. Buyer Breaches. “Money damages in this state are based on compensating the plaintiff by protecting expectation interest. Fair market value if perfect tendor minus fair market value of goods as delivered 2. profit margin. Additions and Limitations 1. fact pattern: 1) contract to buy regular inventory. Incidental Damages: a. Put the defendant in the same economic position as if the contract had never happened b. 3) a later sale at exactly the same price as the first sale. Usually a percentage.” Use that on an essay question 2. Avoidable 7. market price at time of discovery of breach minus contract price or b. cost incurred in dealing with the breach (cost in finding a replacement) b.Contracts C. 2) breach by buyer. Reliance a. seller keeps the goods a. Seller Breaches. put plaintiff in same economic position as if contract had never happened 3. buyer is responsible for the contract price 4. We place the person in the same position she would have been in had there not been a breach. Such a good faith purchaser from dealer cuts off rights of the original owner/entruster 4. when a person makes a contract. Buyer Breaches. Limitation of remedies B. most difficult concept in money damages ii. O can recover from Customer 5. contract price minus resale price and in some situations c. Theft 1. Rights of Good Faith Purchaser in Entrustment 1. Incidental 5. Left with a conversion claim against the person who sold the goods D. Owner leaves her goods with a person who sells goods of that kind 2. always recoverable 13 . Thief steals from owner 2. Look at how the defenadant benefitted from the work done and make him pay for it. Seller Breaches. Consequential 6. Vocabulary 1. provable lost profits i. Restitution a. buyer keeps the goods a. 4. Expectation: a. You never get good title from a thief XX. contract price minus market price at time and place of delivery or b. seller has the goods a. repalcement price minums contract price 3. Provable lost profit. Damages Rules for the Sale of Goods (protection of the expectation interest) Aritcle 2 1. C. Buyer has the goods a. As if the contract had been performed b. Money Damages for Breach of a Contract A.

Daily damages are more flexible and presumptively valid Excuse of Non-Performance of Contract Because of Something that Happened After the Contract Was Made XXI. Common Law 1. mutually agreed upon promise modifier 2. Less Avoidable damages a. Only a material breach by one party excuses the other party from performing 3. however. Article 2. Other Party’s Improper Performance A.Contracts 2. no recovery for damages that could have been avoided without undue burden on the plaintiff b. Language in the contract 3. when i. Reasonable certainty test b. Whether a breach was material or not is a fact question a. Certainty limitation (must establish damages with certainty) a. damages were difficult to forecast at the time the contract was made ii. Usually one single number for damages fails the reasonable forcast test iv. subject to f. may recover in quasi-contract c. Cosequential Damages (special damages. When given number based performance and less than half are completed. Look for a fact patten involving a new business or a new business activity which would make it unclear what the damages would be 5. i. Validity: often concern that the provision is too high i. Burdens of pleading and proof is on the defendant 4. if b. so long as e. Liquidated Damages. Condition: 1. damages arising from Plaintiff’s special circumstances b. Limits or excuses obligations of other language in the contract 6. recoverable only if the Defendant had reason to know at the time of the contract 3. Damages can be recovered for any breach 2. material breach test is applied on a unit by unit test ii. until 14 . unless h. not merely language in response to an offer 4. Non-Occurrence of a Condition A. in the event that g. Divisible contract Exception: similar to b but this time. provision is a reasonable forcast iii. Words such as a. plaintiff cannot recover for the percentage completed under contract law. contract price is on an apartment basis. contract law recovery can occur B. material breaches are major screw ups b. only if c. provided that d. consider it a material breach. only to this plaintiff) a. language does not create a new obligation 5. ii. Contract provision regarding damages a. i. Perfect Tender Rule XXII.

It receives adequate assurance if it is “commercially reasonable to suspend performance” E. still some performance remaining from each of the contracting parties 2. Inability to Perform A. No basis for recovering damages but is a basis for excuse B. Made prior to the time when the perfomance was due D. Excuse by Reason of Later Contract A. agreement by parties to an already existing obligation 15 . Unambiguous statement or conduct indicating B. Will not be excused for not performing on the main agreement of the contract unless the covenant was a material breach. not in the contract C. Only that person can can give up or waive the condition XXV. Recision (cancellation) a. there has been a bartered for item 2. C. the duty to perform is reimposed 2. party learns that the bartered for item has been sold. If so. Covenant (Duty/Promise): Additional language promising to do something else. destroyed. Standard for Satisfying an Express Condition A. Anticipatory Repudiation A. Consider this with anticipatory repudiation also but A. Accord and Satisfaction (substitute performance) a. Strict Compliance. Insecurity A. Words are ambiguous B. Excusing a Condition A. Accord i. Anticipatory repudiation by one party excuses the other party’s duty to perform E. instead of money. Strict Compliance with conditions B. The other party can suspend performance until D. That the repudiating party will not perform C. Anticipatory repudiation can be reversed or retracted so long as ther has not been a material change in position by the other party.Contracts j. Language of only one party 2. No basis for excuse but basis for recovering damages XXIII. if the repudiation is timely retracted. Before the contract. Same as anticipatory repudiation but arises in a fact pattern where 1. on condition that 7. Hint: look for this in sale of goods problems XXVIII. Identify the person who benefits from the condition B. But give one party “reasonable grounds for insecurity” C. but performance can be delayed until adequate assurance is provide XXVI. excuses performance XXIV. There was an original contract and a second contract is made 1. 1. If you see language as outlined in 6a-6j. or is gone XXVII. Conditional Acceptance: Conditional language in response to an offer 1. Can recover for contract damages related to the breach of the convenant 1. Performance Condition: Contract language offering more if certain performaces are met D. It also generally gives rise to an immediate claim for damages for breach unless the claimant has already finished her performance F.

Impracticability. 16 . Later Law makes performance illegal i. not excused for payment E. can’t be done C. Something happens after contract formation but before completion of contract performance and 2. delegation holds the original party and the obligator liable for non-performance XXIX. Impossiblity. no obligation to estate 2. to the substitution of a new party iii. no excuse because seller can come up with 100 more bags of grits. performance c. The new party is liable for non-performance c. Impracticability: subjective: can only be done with exteme and unreasoanble difficulty and expense D. Later Law makes mutually understood purpose of contract illegal i. Excuse of Performance by Reason of a Later. Notes 1. Death after a contract does not make a person’s contract obligations disappear a. makes perfromance impossible or commiercially impracticable or frustrates the purpose of performance B. destruction. Definition i. that was unforeseen 3. to accept a different performance in satisfaction of the existing obligation b. grits destroyed. Seller contracts to sell 100 bags of grits. the other party can sue on either the original obligation or the accord 3.Contracts ii. agreement between both parties to an existing contract ii. same performance. Later Law and Regulations a. Satisfaction i. Once risk of loss passes to buyer. Modification (substitute agreement) a. Builders are not excused from building a house if it burns down. Compared to Delegation i. different party b. 3. Impossibility: objective. builder bares the risk 2. agreement by parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation 4. If the accord is not performed i. or Frustration of Purpose 1. excuse by frustration of purpose Third Party Problems XXX. The substituted party is not liable for non-performance ii. Exceptions: 1. liability i. Novation a. excuse by impossibility b. Unforeseen Event A. exception: “Special” person performance exception.

Contracts 3. 17 .