BLAW 3050 Exam 2 Study Guide

Damages for reliance interest

compensates a plaintiff for expenses made based on relying on the defendant's promises

Damages for expectation interest

compensates a plaintiff for what he expected to get out of the contract

Mutual Mistake

defense is raised by someone trying to avoid their obligation under a contract. The defense states that both parties to the contract relied on a mistaken assumption when entering the contract, thereby making it void. A mistaken assumption is a fact that both you and the other party believed to be true at the time the contract was signed. However, due to whatever circumstance, this fact is no longer true. As a result, you can no longer perform the contract as you originally intended. For example, contracting to dig a hole in someone's backyard, and discovering later that just below ground level exists solid rock.

Damages for restitution interest

entitles the plaintiff to the return or replacement of whatever he had given the defendant pursuant to the contract

Material Breach

A material breach occurs in one or two situations. Either (1) a party fails to give substantial performance or (2) a party fails to comply strictly with an express condition. Express conditions are conditions that, according to the contract's language, must be strictly performed before the other party's performance under a contract is due.

fraud in the inducement

Fraud in the inducement is contract fraud, occurring when one party uses trickery or deceit to persuade the other party to act to their own advantage. When fraud in the inducement occurs, two things have happened: One party was misled about the facts; AND Those "facts" were used to make a decision.

Third Parties and Contracts

If a contract is breached, who could successfully assert a claim? 1. The original parties to the contract 2. Assignees; and 3. Third parties who the contracting parties intended to benefit

Contract Remedies

When one party to a contract breaches the contract by failing to perform his contractual duties, the law provides a remedy for the injured party. Before awarding monetary damages, the following three requirements must be met: 1) the plaintiff has the burden of proving financial losses with reasonable certainty 2) the plaintiff is only permitted to recover losses that were foreseeable to the defendant at the time the parties entered the contract 3) the plaintiff has the duty to mitigate damages

Parol Evidence

a contract law doctrine that prevents parties to a written contract from presenting "extrinsic" evidence of terms in a contract that contradict, modify, or vary the terms of a written agreement, when that written agreement is considered complete and finalized

Intended Beneficiaries

a third party who one or both contracting parties intended to benefit. The promisee is the person to whom a promise is addressed, and the beneficiary is a person other than the promisee who will benefit by performance of the promise. Intended beneficiaries are either creditor beneficiaries, where the intent of conferring the benefit is to satisfy a debt owed by the promisee, or donee beneficiaries, in which case the promisor is agreeing to give a gift to the third party. A creditor beneficiary has a legal action against both the promisor and the promisee, whereas a donee beneficiary has a legal action against the promisor only.

Intellectual Property

a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights and for which one may apply for a patent, copyright, trademark, etc.

Negligence

occurs when a person fails to act as a reasonable and prudent person would act. Negligence exists when four conditions are met: (1) the defendant must have owed the plaintiff a duty; (2) the defendant must have breached the duty by acting in a particular manner or failing to act as required; (3) the breach of that duty must be the actual, as well as the legal, cause of the plaintiff's injury; and (4) the breach must cause a harm or injury that the law recognizes and for which money damages may be awarded by a court.

Copyright

provides the right to prevent others from copying an original work of authorship, such as a book, film, or musical recording.

Trademark

provides the right to prevent others from using a confusingly similar symbol to identify competing products or services. Only McDonald's, for example, can use the Golden Arches to identify its fast-food restaurants.

Patent

provides the right to prevent others from using an invention, such as a new drug or a more efficient lightbulb.

Delegation

the transfer of a duty. Most contractual duties can be delegated without permission of the other party, such as assignment of rights. An exception is the obligation to perform personal duties. Until performance is completed, the original obligor is still responsible for performance.

Assignment

the transfer of a right. A party transferring a right is called the obligee or the assignor. The party to whom the right is transferred is called the assignee. Assignments of contractual rights are not permitted if (1) the assignment would significantly change the obligor's responsibilities, (2) it is prohibited by statute, or (3) the original contract precludes assignments.

Trade Secrets

virtually any secret and valuable business information, such as a product formula, customer list, or undisclosed software code, can be protected as a trade secret. The formula for Coca-Cola is perhaps the most famous trade secret.

Exceptions to the Statute of Frauds

1) Promissory estopped 2) Part performance 3) Merchant's memo for sales of goods 4) Specially manufactured goods 5) Admission in court proceedings

Damages Types

1) expectation interest 2) reliance interest 3) restitution interest

Statute of Frauds

A state statute under which certain types of contracts must be in writing to be enforceable. The following types of contracts are subject to Statute of Frauds rules: 1) Marriage 2) Suretyship. Suretyship involves the assurance by one party to pay the debt of another. 3) Executor's and administrator's agreement to pay personally for the defendant's debt 4) Interest in land 5) Contracts that cannot be performed within one year 6) Contracts for the sale of goods costing $500 or more

Incidental Beneficiaries

A third party who benefits from the performance of a contract, but whose benefit was not the reason the contract was formed. Intended beneficiaries have legal standing to enforce the promises made for their benefit; incidental beneficiaries do not.

unconscionable contracts

Contracts that contain terms that unfairly burden one party and unfairly benefit the other. Procedural unconscionability refers to unconscionability during negotiations and contract formation. Substantive unconscionability refers to unconscionability of the contract's terms or the contract as a whole.

Discharge

Discharge of a contract means termination of a contract. It is the act of making a contract or agreement null. a. Excuses from Performance: Impossibility Impossibility refers to performance that becomes impossible after the contract is made. In such circumstances, the parties' performance is excused. b. Excuses from Performance: Commercial Frustration The doctrine of commercial frustration excuses a party from performance if the principal purpose of the contract is substantially frustrated due to no fault of the party. c. Excuses from Performance: Terrorism and Other Force Majeure Conditions From the French for "superior force," a force majeure clause excuses a party from performance if performance is prevented due to any one of a list of extraordinary events. d. Excuses from Performance: Waiver Sometimes, one party may choose to release the other from its obligation to perform or may waive its right to demand performance by the other party.

Strict Liability

Situations in which the law states that we have an absolute duty to make something safe, regardless of whether we are at fault or not. Whenever a person undertakes an extremely hazardous activity and it is foreseeable that injury may result, that person can be held "strictly liable" if injury does result, whether or not that person was at fault. Strict liability is imposed without regard to fault.

Substantial Performance

Substantial performance is a doctrine, whereby one party under a contract can still recover for damages if he substantially performed his duties under the contract even though that individual failed to comply with the contract in some way.

Puffery

is an exaggerated or extravagant statement made for the purpose of attracting buyers to a particular product or service. It is commonly used in connection with advertising and promotional sales testimonials. The Federal Trade Commission defines puffery as a term referring to exaggerations of the quality of a product. Puffery is often employed by businesses to "puff up" the image of their product. Statements or terms of puffery are usually subjective opinions rather than objective representations of facts. It is assumed that most consumers would recognize puffery as an opinion that cannot be verified. Most reasonable persons would not take puffery literally. The difference between puffery and factual representations is the degree of specificity of the claim. Puffery contains broad, general claims, as in the motto "The Best Chicken in the West".

Reformation

is the name for the remedy that allows courts to change the substance of a contract to correct inequities that were suffered.