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Contracts Outline Proper Order: Outline From Syllabus, Class Notes, Restatement or UUC Code/Rule, Cases, Hypotheticals

I.

What is Contract? A. A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty B. The State enforces contracts for a) moral and b) legal reason

Damages Damages are given when you breach in three possible ways 1) A failure without justification oto perform a contractual promise or bargain at the time agree; 2) a repudiation of the promise or bargain and 3) bad faith in the form of preventing or hindering the other party’s performance or failing to cooperate. Types of Damages – The purpose of it is to get a remedy, they cast a shadow Expectation Damages – Putting the plaintiff where she would be if the contract were fully performed (Forward looking) Restatement. Because you voluntarily agreed to a contract, it is generally expected to be because it made you better off than you were prior to contract. Therefore, expectation damages are preferred to reliance damages in a case. Sullivan v. O’Connor – Woman sues her plastic surgeon after he botches her nose after three surgeries. She is entitled to recover for the worsening of her condition through reliance damages Reliance Damages – Putting the plaintiff where she was ex ante or prior to the contract (Backward looking). Essentially reliance damages incorporate opportunity costs but how do you calculate how much an opportunity was worth? Opportunity Costs - Measure the value of the next best choice one gives up when pursuing a given option. Efficient Breach Principle – Expectation damages if gains to breacher exceed losses to nonbreacher. i.e. you breach because it is economically efficient, what you would pay for the breach of contract does not harm the profit you made by breaching. Curtice Brothers Co. v. Catts – Curtice contracted to buy Catt’s crop of tomatoes for his canning factory. The court held in favor of Curtice seeking specific performance damages because a) no

financial remedy would work here and b) Expectation remedies would still be inefficient because of the nature of the item in question. You can’t make someone perform a personal service unless its personal service between contracts with companies. Specific performance is generally unusual but there has to be very specific reason for supporting it. it is unclear how the company has been harmed by the loss Can order specific performance as a right conferred on the π to a breaching party to an act If it is easy to avoid giving unclear damages through specific performance you are more likely to get a judgment for it (??????) Hadley v.e. Under the principle of efficient breach – requires that you have an idea of the cost of the breach to the other party. . specific performance is given as an equitable remedy where the legal remedy is inadequate. You have to give enough information so that the price can be adjusted accordingly. don’t assume tha thtere is an unlimited amount of liability for them to help you. if you don’t say that you need it. Here. They ordered a new one but the order went out late. The Court also wanted to ensure that a farmer doesn’t breach contract every time the price for their crop goes up. Specific Performance Never available in a personal service contract because you cannot force a person to do something. in this case it was because it was unlikely to get tomatoes of the same quality at the same point in the season. Incalculable Expectation Damages > Specific or Reliance Damages Often unable to do i. The Court held that you get what you pay for. Baxendale – Hadley owned a mill but the shaft broke.e. Sometimes magnitude is uncertain i. can’t tell the doctor to keep doing the nose over or the court can’t tell if the order has been fulfilled. The π never commented to the shipper that they were losing business because they did not have the shaft. Foreseeability rule favors the talkative.

The Hadley Rule – benefits the consumers because they pay less. The concept of consequential damages in contract law relats to the concept of ex ante foreseeability which applies to things known before the contract buut not thing foreseeable at the time of the breach. the sellers because they don’t pay as much in damages and the market because if the alternative rule was adopted there would be cross sub. Dept. A court will not be responsive to higher damages to someone who spoke up about emotional distress Transaction costs.its not that one cost is more important than another its just that the more substantial loss in contract law tends to be pecuniary rather than non-percuniary therefore most parties don’t secure insurance on these claims because it is costly to do so and hard to quantify. 606 5th Ave. He doesn’t get to collect a windfall for what he would have gotten. Inchaustegui v. Emotional damages are not foreseeable in term of contract law otherwise it would be incorporated into their contract but there is no method to specify how upset someone will be if their contract is breached. Limited Partnership – The landlord bought a 3rd party claim against a sub tenant who did not put the landlord on his insurance information like he should have done. Bohac v. He wanted the court to pretend that he didn’t have any $ even though he suffered no losss. For those who pay more/less. of Agriculture – Bohac was fired for being a whistle blower and tries to get pecuniary damages for a nonpecunicary case since she is suing for wrongful termination which is a statute-based claim under the Whistleblower Act. your damages are limited to your actual injury. Employment is not an except to the Restatement because a) it is a large portion of contracts made and b) we don’t want to create a culture where this is possible Take away: There is a distinction between consequences and damages . Foreseeability Only disclose if you wish to be compensated. The landlord wants to collect for not only the $ he lost in the claim but also for if there had not been any insurance that he got . In contract.

NY Life Physician became ill and tries to claim disability through his insurance but it is denied. Normally you are not allowed to receive tort like damages under a contract claim. the people invoke decide the price of transfer in liability.e. Acquista v. Protection of Contract Rights . Liability Rules – Both protect entitlements Property rules generally require consensual transfer i. The court found that damages recoverable on emotional distress because not giving him the insurance within a certain time frame damaged him and now they are trying to put him as close as possible to before the breach of contract. He sues the company to get his insurance to cover him. There are exceptions to the Restatment covering emotional damages in contract claims such as a) if the claim relates to bodily injury and contracts related to insurance mean that someone is ill b) the willfulness of the breach – most of the time is does not matter why you breached the contract. The insurance industry is systematically under incentivized to payout even when it is not an efficient breach. In a property rule claim. The court sees themselves as choosing an individual tort or allowing for a more expansive opportunity for recovery. Liability Rules .Foreseeablity/Calculability to explain why some things are not recoverable.Only compensate for the taking of an item. someone can’t take your bicycle without your consent even if the resource would be better used by them In a functioning marking you can rest entitlements with someone who is interested in an item is relatively low however there may be a person who has a high value for that same item Specific performance approaches property rule protection. It is very costly to have an alternative rule and therefore property rule protection doesn’t work in certain circumstances. however in the case of the insurance companies behavior is culpable because a) reputational interest as an incentive (i. Property Rules v. you don’t want insurance companies to have a bad reputation) and b) any claimant that takes an insurance company is likely to be under-litigating because they’re trying to get their claim paid (broke and can’t afford good attorney) c) under normal tort claim the insurance company would pay the appropriate payout and interest but that is still not enough because it gives no incentive to not breach this way again.e.

Once there is an actual contract. . you can only sell the item to the other party.Bilateral monopoly – between two parties in a contract.