LSU BLAW 3201 Exam 3 Fry

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Limitations on Remedies: Loss of Power of Avoidance: Delay

"Reasonable time" depends on all the circumstances. (E.g., a defrauded purchaser of stock cannot wait unduly to see whether the market price of the stock will appreciate enough to justify retaining the stock.)

sale of goods provisions

(1) sufficient to indicate that a contract has been made between the parties, (2) specifying the quantity of goods to be sold, and (3) signed by the party against whom enforcement is sought or by her authorized agent or broker.

Restitution: Situations Where Available Party in Default

(Party in default is entitled to) any benefit conferred in excess of the loss caused by the breach. (E.g.: A agrees to sell $160k worth of land to B. B makes a partial payment of $15k but then repudiates the contract. Then A sells the land to C for $155k. B can recover in restitution her $15k that she paid, less the $5k damages she caused B by breaching.)

Restitution: Situations Where Available Party Injured by Breach

(Party is entitled to restitution if) the other party totally breaches the contract by nonperformance or repudiation. Does not apply when the only defaulted obligation is money. (So it's available to a buyer who prepaid, but not to a credit seller.)

Remedies in Equity

(Remedies in equity are used) only in cases in which there is no adequate remedy at law. Includes specific performance, injunction, and reformation. (They're discretionary; only available if monetary damages are inadequate--i.e., when damages based on the expectation interest, reliance interest, or restitution interest will not adequately compensate the injured party.) (Can be granted even if there are provisions for liquidated damages, or provisions prohibiting equitable relief, as long as the denial of this relief would cause unreasonable hardship to the injured party.)

Statute of Frauds: Contracts Within the Statute of Frauds General Contracts Provisions

(To work with the statute of frauds, it can be formal or informal, but) the writing(s) or record must... 1. Specify the parties to the contract. 2. Specify the subject matter and essential terms of the promises 3. Be signed by the party to be charged or by her agent (can be initials, typewritten, printed...) (Does not even need to exist anymore; can even just reference an oral agreement that was made, to say that you're rescinding it.)

Remedies for Misrepresentation: Tort Law: Damages for Nonfraudulent Misrepresentation: If Innocent

(When the misrepresentation is neither fraudulent nor negligent,) damages are limited to the "out of pocket" measure

Promise of executor/administrator answering personally for a duty of the decedent whose funds they're administering: Rules

- Applies when an executor/administrator promises to answer personally for duty of the decedent. Not enforced unless in writing. - Executor: Decedent had a will and chose a certain person. - Administrator: Decedent had no will, appointed by court. - If paid from decedents assets, no writing needed.

Explain the effect of an intoxicated person entering into a contract

- Can disaffirm only if the other party knew of the intoxication - in some states, can disaffirm if he or she can return the consideration

One issue before the court in the First State Bank of Sinai v. Hyland case was:

- Intoxicated/Incompetent Persons - a. Whether the contract between Hyland's father (Mervin) and the Bank was void due to alcohol-related incapacity. -Mervin had been committed to an alcoholic treatment hospital twice during the event. Yet he paid $900 interest check for Randy as his co-signed; as well as paid his notes to Bank. -Trial court granted summary judgement to Mervin Hyland based on his "intoxicated state" -Appeals Court Results: Mervin accepted obligation (ratified) of consigner when paid the interest check. This affirmed the note to Bank -- Decision REVERSED and remanded

Zelnick v. Adams - Minors: Liability for Necessaries -Supreme Court of Virginia

- Jonathan Adams (minor) - Zelnick (lawyer); -Trials Court: granted Jonathan's motion for summary judgement and ruled that the contingency fee agreement (1/3) was void. They stated he contract was not binding on Jonathan because he was a minor and the case of necessaries did not apply. Yet held Zelnick was entitled to a $60K fee. Both appealed - Supreme Court: decided trial court erred in stating "contract was conducted while he was in his minority and he's not bound bound to it" they also hold that "the case is of necessaries" Trial court decision REVERSED and remanded. should they find the new evidence in favor of Zelnick they will need to establish reasonable value of services rendered.

One issue before the court is the In Re The Score Board, Inc. case was:

- Minors: Ratification - d. Whether Kobe Bryant, by his actions, ratified a contract with Score Board after reaching the age of majority. -Judgement in favor of Score Board; contract found to exist based on Bryant's actions of depositing the $10,000 check and his actions following in accordance with the contract. -Bryant's motion denied

Contracts Within the Statute of Frauds

- Promise to answer for duty of another - Promise of executor/administrator answering personally for a duty of the decedent whose funds they're administering - Agreements upon consideration of marriage - Agreements for transferring an interest in land - Agreements not to be performed within one year - Contracts for Sale of Goods*

Promise of executor/administrator answering personally for a duty of the decedent whose funds they're administering: Exceptions

- Since this is a specific application of the suretyship provision, all the exceptions from that provision apply to this one.

Compare and contrast a contract being void and voidable because of lack of capacity

- Void - contract is no longer enforced - Voidable - Has potential to become Void, One or more can choose to avoid the contract -Economic Duress -Fraud in the inducement

Contractual Capacity

-A binding agreement requires that the parties to the agreement have contractual capacity. -Everyone is regarded as having such capacity unless the law, for public policy reasons, holds that the individual lacks such capacity.

Minors

-Definition - persons who are under the age of majority (usually 18 years). -Liability on Contracts - a minor's contracts are voidable at the minor's option. -Disaffirmance - avoidance of the contract; may be done during minority and for a reasonable time after reaching majority. -Ratification - affirmation of the entire contract; may be done upon reaching majority.

***4 kinds of contractual discharge***

..concerns the termination of contractual duties. -performance by the parties -material breach by one or both of the parties -agreement of the parties -operation of law

what are 3 ways to discharge a contract

1) by performance, both tender performance of their obligations 2) also have discharge by agreement 3) both parties go separate ways -)Ex) enter into deal to buy a home, I pay you and get the house, it's a happy ending = discharged

What are the (5) Situations to Which the Rule Does Not Apply?

1. A contract that is not an integrated document. 2. Correction of a typographical error. 3. Showing that a contract was void or voidable. 4. Showing whether a condition has in fact occurred. 5. Showing a subsequent mutual rescission or modification of the contract.

What are the (3) Statute of Frauds?

1. A contracts within the Statute of Frauds. 2. Compliance with the Statute of Frauds. 3. Effect of Noncompliance.

Contractual situations in which restitution is available:

1. As an alternative remedy for a party injured by breach 2. For a party in default 3. For a party who may not enforce a contract because of the statute of frauds 4. For a party wishing to rescind (avoid) a voidable contract

Under the Sale of Goods, Writing(s) or Records must be what (3) things?

1. Be sufficient to indicate that a contract has been made between the parties. 2. Be signed by the party against whom enforcement is sought or by her authorized agent. 3. Specify the quantity of the goods to be sold.

The most common judicial remedies available for breach of contract are...

1. Monetary damages 2. The equitable remedies of specific performance and injunction 3. Restitution

The 4 Common Types of Contractual Discharge

1. Performance by the parties 2. Material breach by one or both of the parties 3. Agreement of the parties 4. Operation of law

Statute of Frauds: Contracts Within the Statute of Frauds 5 kinds of contracts that commonly fall within most State statutes

1. Promises to answer for the duty of another 2. Promises of an executor or administrator to answer personally for a duty of the decedent whose funds he is administering 3. Agreements upon consideration of marriage 4. Agreements for the transfer of an interest in land 5. Agreements not to be performed within 1 year (i.e. that cannot be performed within 1 year)

Under General Contract Law, the writing(s) or record must do what (3) things?

1. Specify the parties to the contract. 2. Specify the subject matter and essential terms. 3. Be signed by the party to be charger or by her agent.

Interests Protected by Contract Remedies: Contract remedies are available to protect 1 or more of these interests of the injured party:

1. The expectation interest 2. The reliance interest 3. The restitution interest

Since remedies in equity are discretionary rather than a right, they will not be granted where...

1. There is an adequate remedy at law 2. It is impossible to enforce them (e.g. if a seller has already conveyed the subject matter of the contract to an innocent 3rd person) 3. The terms of the contract are unfair 4. The consideration is grossly inadequate 5. The contract is tainted with fraud, duress, undue influence, mistake, or unfair practices 6. The terms of the contract are not sufficiently certain, OR 7. The relief would cause unreasonable hardship

reasons that it is best to get a contract in writing even if its not required

1. easy to prove 2. forces you to fully think through the agreement 3. helps clarify terms (recollection can change over time)

true, because of statutes of limitation.

A and B enter into a contract on January 1 of this year. A's friend C tells A, "The law generally restricts the time within which an action can be brought by either party to a contract." C's statement is: a. false. b. true, because of statutes of limitation. c. true, because of the law of repudiation. d. true, because of covenants not to sue.

liquidated damages.

A commercial building construction company and Sub Shop, Inc. have a contract, which calls for the construction company to build a building with the completion by May 1. If the building is not completed by that date, the contract calls for the construction company to pay $150 per day in damages. The $150 per day is: A. liquidated damages. B. nominal damages. C. an illegal penalty. D. punitive damages.

What is a condition? Give an example of each of the following: condition precedent, condition concurrent, and condition subsequent.

A condition is an event whose happening or nonhappening affects a duty of performance under a contract. Condition precedent: If Masako is to buy Cary's land for $50,000 provided Masako can obtain financing in the amount of $40,000 at 8% interest, obtaining the financing at 8% interest is a condition precedent. Condition concurrent: If Justin has contracted to sell Liz a watch for $25, with delivery and payment to take place at the same time, the obligation to pay for the watch is a condition concurrent to the obligation to turn over the watch to Liz. Condition subsequent: Where goods are sold under terms of "sale or return," the buyer has the right to return the goods to the seller within a stated period, but is under an immediate duty to pay the price unless credit has been agreed upon. The duty to pay the price is terminated by a return of the goods, which operates as a condition subsequent.

A thirty-six-year-old man under a court-ordered guardianship for mental incompetency.

A contract by which of the following is void? a. A fourteen-year-old girl. b. A thirty-six-year-old man under a court-ordered guardianship for mental incompetency. c. A thirty-year-old woman who, because of intoxication, is unable to understand the nature and consequences of signing the contract. d. A twenty-five-year-old woman who is unable to understand the nature and effect of signing a contract because of a mental illness.

The term "year" in the contract is ambiguous, and the parties can bring in parol evidence to clarify their intent.

A contract contains a provision that states it will be effective for a "year." The plaintiff in a lawsuit claims that a "year" is obviously 12 months. The defendant claims that the contract meant a 10-month school year. a. Parol evidence cannot be used to explain the term, because the plain meaning of a "year" is 12 months. b. Parol evidence cannot be used to explain the term, because it is an integrated document. c. The term "year" in the contract is ambiguous, and the parties can bring in parol evidence to clarify their intent. d. Parol evidence cannot be used, because the contract contains an express term that could have been changed by the parties prior to the contract's execution.

creates an express condition which must be met before Walter's duty to pay arises.

A contract contains the provision, "Walter Hamilton promises to pay Faye Weeks $1,200 for a 2003 V-6 motor provided that Phelps' Garage approves the quality of the motor." This provision: a. makes the contract unenforceable since Walter's promise is illusory. b. creates an express condition which must be met before Walter's duty to pay arises. c. cannot create an express condition because it lacks the necessary words "on condition that." d. cannot be valid since it makes Walter's duty to pay dependent upon the opinion of a third party.

Incompetent Persons: Mental Illness or Defect

A contract entered into by a mentally incompetent person (one who is unable to understand the nature and consequences of entering the contract) is voidable. Incompetent party can disaffirm even if the other party didn't know he was incompetent. Second type: a person understands, but has a mental condition impairing his ability to act in a reasonable manner. Either party may be liable in restitution (to avoid unjust enrichment). Like minors and wards, incompetent persons are liable for necessaries furnished to him, on the principle of quasi contract. An incompetent can ratify or disaffirm when he becomes competent or while lucid.

Mental Illness or Defect

A contract entered into by a non-adjudicated mentally incompetent person (one who is unable to understand the nature and consequences of his acts) is voidable.

Intoxicated Persons

A contract entered into by an intoxicated person (one who cannot understand the nature and consequence of her action) is voidable. Can be ratified when the intoxicated person becomes sober. Must act quickly to disaffirm and generally offer to restore the consideration received. Intoxicated persons are also liable in quasi contract for necessaries furnished during incapacity. See Case 14-4 First State Bank of Sinai v. Hyland

Statute of Frauds: Contracts Within the Statute of Frauds Sale of Goods

A contract for the sale of goods for the price of $500 or more must be evidenced by a writing or record to be enforceable. (Exceptions: - Admission - Specialty manufactured goods - Delivery or payment acceptance)

Person Under Guardianship

A contract made by a mentally incompetent person placed under guardianship by court order is void

liquidated damages.

A contractor and Buckingham, Inc. have a contract, which calls for the contractor to build a building with the completion of it by June 15. If the building is not completed by that date, the contract calls for the contractor to pay $100 per day in damages. The $100 per day is: a. punitive damages. b. nominal damages. c. liquidated damages. d. an illegal penalty.

Under what circumstances will a court specifically enforce a contract involving personal services?

A court will not specifically enforce a contract for personal services.

Liability for Tort Connected with Contract

A different result arises, however, when the minor departs from the terms of the agreement, as by using a rental automobile for an unauthorized purpose and in so doing negligently causing damage to the automobile. In that event, most courts would hold that the tort is independent, and the adult can collect from the minor. Such a situation would not involve the breach of a contractual duty, but rather the commission of a tort while performing an activity completely beyond the scope of the rental agreement.

Explain what may constitute a material breach and list the relevant factors in determining if a material breach exists.

A material breach is an unjustified failure to perform substantially the obligations promised in a contract. The key is whether, despite the breach, the aggrieved party got substantially what he bargained for. The Restatement lists a number of relevant factors: (a) the extent to which the injured party will be deprived of the benefit he reasonably expected; (b) the extent to which the injured party can be adequately compensated; (c) the extent to which the party failing to perform will suffer forfeiture; (d) the likelihood that the party failing to perform will cure his failure; and (e) the extent to which the behavior of the party failing to perform comports with standards of good faith and fair dealing. An intentional breach is generally held to be material.

When can a minor disaffirm a contract?

A minor can disaffirm (legal avoidance, or setting aside, of a contractual obligation) a contract at any time during minority or within a reasonable time after they reach majority.

Minors: Liability for Necessaries

A minor is liable for the reasonable value of necessary items (those that reasonably supply a person's needs). Contractual incapacity does not excuse a minor from an obligation to pay for necessaries (food, shelter, medicine, clothing, etc.)--not for the price but for the reasonable value. Can include things like school supplies too--anything necessary to the "position and condition" of the infant. Still, minors are not liable unless the item is actually furnished to him, used, or consumed by him. See Case 14-3 Zelnick v. Adams

Liability For Tort Connected with Contract

A minor is not liable in tort if a tort and a contract are so intertwined that to enforce the tort, the court must enforce the contract.

Disaffirmance

A minor may disaffirm a contract at any time before reaching the age of majority. Moreover, a minor generally may disaffirm a contract within a reasonable time after coming of age as long as she has not already ratified the contract. A notable exception is that a minor cannot disaffirm a sale of land until after reaching her majority. In most States, determining a reasonable time depends upon such circumstances as the nature of the transaction, whether either party has caused the delay, and the extent to which either party has been injured by the delay. Some States, however, statutorily prescribe a time period, generally one year, in which the minor may disaffirm the contract.

Minors: Liability on Contracts Restitution

A minor who has disaffirmed a contract is entitled to restitution. This issue arises when either or both parties have performed (partially or fully). After disaffiramnce, the minor is entitled to restitution from the other party for any benefit the minor has conferred. Courts are divided on whether the minor is LIABLE for restitution. Most courts only require minors to return property received from the other party. (E.g., in those states, a minor who disaffirms the purchase of a car they wrecked need only return the wrecked car.)

Liability on Contracts

A minor's contract is not entirely void and of no legal effect; rather, it is voidable at the minor's option. The exercise of this power of avoidance, called a disaffirmance, ordinarily releases the minor from any liability on the contract. On the other hand, after the minor becomes of age, she may choose to adopt or ratify the contract, in which case she surrenders her power of avoidance and becomes bound.

Minors: Liability on Contracts

A minor's contracts are voidable at the minor's option (unless the contract has been ratified).

Material Breach

A nonperformance that significantly impairs the injured party's rights under the contract. This discharges the injured party from any further duty under the contract. An intentional breach of contract will generally be considered material.

Restitution: Situations Where Available Voidable Contracts

A party who has avoided a contract is entitled to restitution for any benefit conferred on the other party. (A party who has rescinded or avoided for lack of capacity, duress, undue influence, fraud in the inducement, nonfraudulent misrepresentation, or mistake is entitled to this restitution.) (Generally, but not always, the party seeking restitution must return any benefit received under the agreement.

Limitations on Remedies: Loss of Power of Avoidance

A party with the power to avoid a contract (for lack of capacity, duress, undue influence, fraud misrepresentation, or mistake) may lose that power by... - Affirming the contract - Delaying unreasonably in exercising the power of avoidance - Being subordinated to the intervening rights of 3rd parties

Executor

A person appointed by a testator to carry out the directions and requests in his will and to dispose of the property according to his testamentary provisions after his decease. The female designation is executrix. A person appointed by the court in an intestacy situation is called the administrator(rix).

Administrator

A person appointed by the court to manage the assets and liabilities of an intestate (a person dying without a will). A person named in the will of a testator (a person dying with a will) is called the executor. Female designations are administratrix and executrix.

Intoxicated Persons

A person may avoid any contract that he enters into if there other party has reason to know that the person, because of his intoxication, is unable to understand the nature and consequence of his actions, or unable to act in a reasonable matter Such contracts are voidable, although they may be ratified when the intoxicated person regains his capacity. Most courts require that to avoid a contract, the intoxicated person must act promptly to disaffirm (24 hours) and generally must offer to restore the consideration he has received.

Decedent

A person who has died

All of the above.

A power of avoidance held by a party may be lost if: a. the contract is affirmed. b. there are unreasonable delays in exercising the power. c. the rights of third parties intervene. d. All of the above.

Preventative (Injunctive) Relief

A prohibition enjoining the defendant from engaging in certain conduct or acts that infringe upon the plaintiff's rights.

Punitive Damages

A punishment for intentional, willful, wanton, or malicious conduct. The public policy is to deter such conduct by the defendant and others. Generally not recoverable for a breach of contract. However, if the issue is intentional misrepresentation or fraud they are recoverable because that action is in tort and not in contract.

Restitution

A restoration to the plaintiff of any benefit the defendant may have gained from his misconduct. The measure of recovery is the amount of the unjust gain or enrichment.

nominal damages.

A small damage amount fixed without regard to the amount of loss is known as: A.) reliance damages. B.) out-of-pocket damages. C.) nominal damages. D.) incidental damages.

Monetary Damages: Nominal Damages

A small sum awarded where a contract has been breached but the loss is NEGLIGIBLE or UNPROVED.

Michael Silvestri v. Optus Software Inc

A subjective tests of performance governs an employer's use of a satisfaction clause in an employment contract UNLESS language in the contract suggests that the parties intended an objective standard

Statute of Frauds: Compliance with the Statute Sale of Goods: Written Confirmation (Between Merchants)

A written confirmation that is sufficient against the sender is also sufficient against the recipient unless the recipient gives written notice of his objection within 10 days. (So like, if you enter into an oral contract with another merchant, and they send you a letter acknowledging it, you're bound by that unless you object to it within 10 days of receiving it.)

can be used by the parties to clarify their intent because the term "year" in the contract is ambiguous.

A written, integrated contract contains a provision that states it will be effective for a "year." The plaintiff in a lawsuit claims that a "year" is obviously 12 months. The defendant claims that the contract meant a 10-month school year. Parol evidence: a. cannot be used to explain the term, because the plain meaning of a "year" is 12 months. b. cannot be used to explain the term, because the contract is an integrated document. c. can be used by the parties to clarify their intent because the term "year" in the contract is ambiguous. d. cannot be used, because the contract contains an express term that could have been changed by the parties prior to the contract's execution.

Breach

A wrongful failure to perform the terms of a contract, that gives rise to a right to damages by the injured party.

accord

A(n) ____ is a contract between a promisee and a promisor by which the promisee agrees to accept and the promisor agrees to render a substituted performance in satisfaction of an existing contractual duty. a. accord b. mutual rescission c. material alteration d. novation

novation

A(n) ____ is a substituted contract that involves an agreement among three parties to substitute a new promisee in place of an existing promisee, or to replace an existing promisor with a new one. a. accord b. satisfaction c. novation d. mutual rescission

One-Year Provision: Mackay v. Four Rivers Packing Co.

According to Mackay, Four Rivers offered him a long-term employment contract in March of 2000 to continue working as a field man up to the time of his retirement.

Minors: Liability for Necessaries: Zelnick v. Adams

Adams went to Zelnick's office the next day, July 19, 1996, where Zelnick explained that the gross amount of the estate was very large.

Limitations on Remedies: Loss of Power of Avoidance: Affirmance

Affirmance occurs when the party, with full knowledge of the facts, either declares his intention to proceed with the contract or takes some other action from which such intention may be reasonably inferred. (In the case of incapacity, duress, or undue influence, affirmance is effective only after the circumstances that made the contract voidable cease to exist.) Affirmance relinquishes the affirming party's right to rescind/avoid the contract.

Minors: Liability on Contracts Ratification

Affirmation of the entire contract. Surrenders the power of avoidance and makes the minor bound to the contract. May only be done once the minor has reached majority. This makes the contract binding "ab initio" (from the beginning). I.e., it makes it as if the contract had been binding from its inception. Final, and cannot be withdrawn; validates the entire contract, not parts of it. 3 ways it can happen: - Express language - Implied from conduct (e.g. continuing as an adult to use property you purchased as a minor) - Failure to disaffirm in a timely manner See Case 14-2 In Re the Score Board, Inc.

Specially Manufactured Goods: Kalas v. Cook

After the buyer's death, the executor of her estate refused to pay for the last deliveries of these materials to the buyer.

Discharge by Operation of Law: Statute of Limitations

After the statute of limitations has run, the debt is NOT discharged, but the creditor cannot maintain an action against the debtor.

injunction.

Alfie enters into a contract to give Ezra the right of first refusal on a tract of land owned by Alfie. Alfie subsequently offers the land to Frank without first offering it to Ezra. An appropriate remedy for Ezra to seek would be: A. reformation. B. punitive damages. C. injunction. D. liquidated damages.

One-Year Provision: Mackay v. Four Rivers Packing Co.

All employees, including Mackay, were laid off at this time because one of the owners of Four Rivers filed suit to prevent the company from conducting business.

Minor

Almost without exception, a minor's contract, whether executory or executed, is voidable unless the contract has been ratified. A minor, also called an infant, is a person who has not attained the age of legal majority. At common law, a minor was a person who was under twenty-one years of age. Today the age of majority has been changed in nearly all jurisdictions by statute, usually to age eighteen. Thus, the minor is in a favored position by having the option to disaffirm the contract or to enforce it. The adult party to the contract cannot avoid her contract with a minor. Even an "emancipated" minor, one who because of marriage or other reason is no longer subject to strict parental control, may avoid contractual liability in most jurisdictions. Consequently, businesspeople deal at their peril with minors and in situations of consequence generally require an adult to cosign or guarantee the performance of the contract. Nevertheless, most States recognize special categories of contracts that cannot be avoided (such as student loans and contracts for medical care) or that have a lower age for capacity (such as bank account, marriage, and insurance contracts).

Statute of Frauds: Contracts Within the Statute of Frauds Sale of Goods exceptions: Admission

An admission in pleadings, testimony, or otherwise in court makes the contract enforceable for the quantity of goods admitted.

When will a court enforce a liquidated damage clause? When will a court refuse to enforce one?

An agreement setting forth liquidated damages will be enforced if it is reasonable in light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages will be considered void as a penalty.

Condition Precedent

An event that must / must not occur before performance is due. (Conditions precedent are quite common in contract law.)

Conditions Precedent

An event that must or must not occur before performance is due

Conditions Subsequent

An event that terminates a duty of performance

Condition Subsequent

An event that terminates the duty of performance. (E.g., returning goods terminates the duty to pay the price for them.) (These occur very infrequently in contract law.)

Conditions

An event whose occurrence or nonoccurence affects a duty or performance -EXPRESS CONDITIONS -IMPLIED-IN-FACT CONDITIONS -IMPLIED-IN-LAW CONDITIONS

Condition

An event whose occurrence or nonoccurrence affects a duty or performance.

Express Conditions

An express condition is explicitly set forth in language. No particular form of words is necessary to create an express condition, as long as the event to which the performance of the promise is made subject is clearly expressed. Examples of such phrases are "provided that," "on condition that," if," "subject to," "while," "after," "upon," or "as soon as." Basic Rule is that they must be fully and literally performed before the conditional duty to perform arises. However, when application of the full and literal performance test would result in a forfeiture, the courts usually apply to the completed proportion of the condition a substantial satisfaction test.

Statute of Frauds: Contracts Within the Statute of Frauds Sale of Goods exceptions: Specially Manufactured Goods

An oral contract for specially manufactured goods is enforceable.

Anita has no recourse against Bryan, because she agreed to the subjective standard.

Anita, who is a tailor, agrees to sew a suit for Bryan, who promises in return to pay Anita $500 for the suit if he is satisfied with it. Anita completes the suit, which fits Bryan perfectly. Nevertheless, he says that he is not satisfied and refuses to accept or pay for it. Bryan is honest in his dissatisfaction, but he is unreasonable. a. Bryan must pay for the suit even if he is dissatisfied. b. This is an illusory contract, because only Anita is bound. c. Bryan's approval is an objective standard. d. Anita has no recourse against Bryan, because she agreed to the subjective standard.

disaffirm, but she has to return the makeup that is not used up.

Ann, a minor, disaffirmed her agreement to buy $127 worth of cosmetics from Facial Glo Company. She had used up all the eye shadows, lipsticks, and powders. The general rule is that she may: a. disaffirm, but she must pay the asking price of the cosmetics used. b. disaffirm, but she has to return the makeup that is not used up. c. not disaffirm without paying the value of used makeup. d. not disaffirm because she has used the goods.

This contract is void.

Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. a. This contract is valid. b. This contract is voidable. c. This contract is void. d. This contract is voidable only at the option of Anna.

Hochster v. De La Tour Type

Anticipatory Breach

Höchster vs. De La Tour

Anticipatory Repudiation: action by one party prior to the date of performance; anticipate - rejection of idea Hochester contracted with De La Tour to serve as a guide on his three-month trip to europe beginning June 1, at an agreed-upon salary. *On May 11 De la tour notified Hochester that he wouldn't need his services and refused to pay Hochester at all. Hochester claims breach of contract. Court said Hochester was injured because he couldn't look for other employment and he planned for the trip. De la tour can't complain that Hochester sued. Judgment for plaintiff, Hochester.

Perfect Tender Rule

Any deviation from the promised performance in a sales contract under the Uniform Commercial Code constitutes a material breach of the contract and discharges the aggrieved party from his duty of performance

Parol evidence: definition

Any evidence (oral or in writing) which is outside the written contract and not incorporated into it, either directly or by reference. (Basically evidence of prior negotiations or agreements; not admissible when a written contract states it is the complete and final expression.)

Timing of Disaffirmance for Minors

Any time before reaching age of majority plus a reasonable time; States differ on the extent of a minor's obligations when the minor disaffirms a contract. Most states require the minor to return any consideration (goods) in the minor's possession or control. A number of states are now holding that the minor has a duty of restitution, meaning the minor has to place the party back to their original position.

In Re the Score Board (minor's ratification)

Appellant: Kobe Bryant (17 yrs old) Debtor: Scoreboard inc.

Berg v. Traylor (Minors: Disaffirmance)

Appellants: Traylor's mom and her minor son Craig Appellee : Sharyn Berg (Craig's personal Manager) All over some unpaid commission under a contract between the 3 and unpaid loans from Berg Artist's Manager's agreement: 99' (Craig was 10) Momma signed his name for him Berg gets 15% of all money earned Craig lands on Malcom in the middle 4 months before the contract with Berg is done. Momma says that she can't afford the 15% anymore Berg informs that they are in breach of contract. Berg gets loooooaaadeeddd $$$ The agreement clearly expressed that even if Craig GTFO, momma would remain liable. Meanwhile, the court realized that no one was paying attention to lil Craig. The court said that it was their responsibility to protect the right of ya boi, and to discourage adults from making contracts with infants. Berg update: 1.) She argues that a minor may not disaffirm an agreement signed by a parent... uh WRONG 2.) She argues that he couldn't disaffirm because it was for his and his family's necessities. If #2 were to be true then the contract would need to 1.) Support the minor and family. 2.) the things have been furnished to the minor or family. 3.) Or the contract is entered into by the minor when not under the care of a parent or guardian able to provide for the minor or the minor's family. Final Ruling: HOWEVER, just because Craig got off this contract, momma is still liable. Flipped the rolling for Craig and Affirmed for momma meshiel.

Conditions: Express Condition Satisfaction of a Contracting Party: Objective Satisfaction Standard

Applied to objective satisfaction. Asks whether a reasonable person ought to be satisfied; whether or not the promisor is satisfied is irrelevant.

Conditions: Express Condition Satisfaction of a Contracting Party: Subjective Satisfaction Standard

Applied to subjective satisfaction. If the promisor in good faith is dissatisfied, the condition has not occurred.

Statute of Frauds: Contracts Within the Statute of Frauds One-Year Provision

Applies to contracts that CANNOT be fully performed within one year. (Must be in writing.) (Exceptions: - Full performance by one party - Possibility of performance within one year)

Executor-Administrator Provision

Applies to promises to answer personally for a duty of the decedent

Statute of Frauds: Contracts Within the Statute of Frauds Suretyship Provision

Applies to promises to pay the debts of others. (A promise to answer for the duty of another.) (Must be in writing to be enforceable, since it falls under the statute.) (Exceptions: - Main purpose rule - Original promise - Promise made to debtor)

Statute of Frauds: Contracts Within the Statute of Frauds Land Contract Provision

Applies to promises to transfer any rights, privileges, powers, or immunities in REAL (not personal) property. Must be in writing. (Agreements for the transfer of an interest in land. Includes mortgages and leases.) (Exceptions: - Part performance plus detrimental reliance - Seller [fully] conveys property & - Short-term leases AKA <1 year - Contract to build a building on land - Contract to do work on the land - Contract to insure building on the land)

Subjective Satisfaction

Approval based upon a party's personal opinion

Objective Satisfaction

Approval based upon whether a reasonable person -would be satisfied

Oral contracts

Are in every way as enforceable as a written contract (unless otherwise provided by statute)

Arnold's duty to deliver the chairs is discharged by the destruction of the factory.

Arnold and Doug make a contract for Arnold to manufacture five leather chairs of a specified design. Prior to their manufacture, the factory is destroyed in an accidental fire that is no one's fault. The chairs are available from other sources. a. Arnold must supply the chairs, even if he must buy them elsewhere. b. Arnold's duty to deliver the chairs is discharged by the destruction of the factory. c. Arnold has materially breached the contract if he fails to deliver the chairs. d. Both (a) and (c).

Disaffirmance

Avoidance of a contract.

$3,500.

Barbara, an antique dealer, intentionally represents the value of an antique chest of drawers, as $6,000 when she has reason to know the value is considerably less. Margaret agrees to buy it for $5,500. It is worth $2,500. In a state that uses the "benefit-of-the-bargain" rule, Margaret's damage award would be: a. $3,500. b. $3,000. c. $500. d. $2,500.

No, because Barry does not have a writing signed by Champs Tee Shirts

Barry's Sport Shop calls Champs Tee Shirt Company to order 200 designer tee shirts at $2 per shirt. The next day, Barry decides he can easily sell 100 more. Before the order is filled, he calls to change the order to 300 tee shirts. Champs sends 200. Can Barry force Champs to send the additional 100? a. No, because there is no consideration for the extra 100 shirts b. No, because Barry does not have a writing signed by Champs Tee Shirts c. Yes, because this is a subsequent modification of the original contract d. Yes, because Champs Tee Shirts is a merchant within the meaning of Article 2 of the UCC

specific performance.

Bartow signed a contract to coach baseball for Washington High for a period of three years. After two years he is offered and accepts an assistant coach position at State University. Contract law will NOT allow Washington High to ask for: A.) specific performance. B.) payment of compensatory damages. C.) an injunction. D.) liquidated damages.

Reliance Damages

Based on the cost to the promisee of his reliance on the promise. These put the party in a position he would have been in had the contract not been entered into at all. These include damages for preparation of contract performance. The contract price is always a limit to reliance damages and reliance damages are not allowed to exceed expectation damages. These do not include damages for the costs of entering into the contract.

satisfaction.

Bill recently borrowed $50 from Ricardo for a couple of weeks. Bill, still short of cash, tells Ricardo, "I will wash and wax your car in exchange for the $50 I owe you." Ricardo tells Bill, "OK, that's great!" Ricardo's performance of his new duty will be a(n): a. accord. b. novation. c. rescission. d. satisfaction.

Capacity

Binding promises/agreements require that the parties have contractual capacity. The 3 classes/conditions that make people limited in their capacity to contract are... 1. Minors 2. Incompetent persons 3. Intoxicated persons

Blevins can enforce the contract for 300 widgets, but not for 400 widgets.

Blevins, Inc. calls the Widget Corporation of America to order 400 widgets at $2 a widget. Widget accepts the oral order and then sends out an order confirmation form, with the pre-printed name Widget Corporation of America on the top of the form. The form states that an order has been received for "300" widgets and that it will be filled promptly. a. The order acceptance form fails to meet the writing requirement in the UCC, because it isn't signed. b. Blevins can enforce the contract for 300 widgets, but not for 400 widgets. c. If Blevins signs and returns the form, it will be able to sue for the extra 100 widgets later. d. The contract is enforceable for 400 widgets, because it has been partially performed.

What are the ways in which both parties can be discharged from performance?

Both Earl and Bev are discharged if: there is the failure of a condition; there is a mutual rescission of the contract; Earl and Bev make a substituted contract; there is a reaching of an accord and satisfaction; there is subsequent illegality of the contract; or the contract becomes impossible to perform.

Minors: Ratification: In Re the Score Board, Inc.

Bryant was obligated to make two personal appearances on behalf of Debtor and provide between a minimum of 15,000 and a maximum of 32,500 autographs.

Minors: Ratification: In Re the Score Board, Inc.

Bryant was to receive a $2.00 stipend for each autograph, after the first 7,500. Under the agreement, Bryant could receive a maximum of $75,000 for the autographs.

Specific performance

Busby contracts to build a house for Connell. Busby finishes approximately half of the house and quits. Connell files suit against Busby. Which remedy is not available to her? a. Compensatory damages b. Specific performance c. Special damages d. Incidental damages

Modification or Rescission of Contracts within the Statute of Frauds

By extension, an oral rescission is effective and discharges all unperformed duties under the original contract. For example, Linda and Donald enter into a written contract of employment for a two-year term. Later they orally agree to rescind the contract. The oral agreement is effective, and the written contract is rescinded. Where, however, land has been transferred, an agreement to rescind the transaction constitutes a contract to retransfer the land and is within the statute of frauds.

specific performance.

Carolyn agrees to sell Marianne an antique handmade lace tablecloth for $1,500. When Carolyn discovers that her cousin wants it too, she breaks the contract with Marianne. Marianne can ask the court to order: A.) nominal damages. B.) specific performance. C.) restitution. D.) equitable rescission.

Berg vs. Traylor

Case 14-1 Berg v Traylor I. Facts Appellants Moshiel and Craig signed an agreement with Berg in order for Craig to have a manager, Berg would get commission of 15 percent of all gross monies Craig made. In 2001 Meshiel disaffirmed the agreement with Berg, right after Craig obtained a role in a show. Berg proceeded with a lawsuit and was awarded with money for commissions and interest also repayment of personal loans and future earnings. Meshiel appealed the case. II. Issue Should the case be disaffirmed because a minor is in contract? III. Decision Craig was able to disaffirm the case and arbitration award was reserved. IV. Reason The court found no basis for Meshiel to avoid her independent obligations under the agreement. **Also the court found that Craig was entitled to and did disaffirm the agreement (because he was a child)**, which among other things required him to arbitrate his disputes with berg. Minors: Disaffirmance Meshiel Traylor and her minor son Craig vs. Sharyn Berg - Craig's manager. Berg entered into a two-page "artist's manager's agreement" with Meshiel and Craig, who was then 10 years old. Meshiel signed and wrote Craig's name on the signature page designated "artist". Craig did not sign. Berg was to act as Craig's exclusive personal manager in exchange for a commission of 15% of all gross monies or other consideration paid to him as an artist during the three-year term of the agreement, as well as income from merchandising or promotional efforts or offers of employment made during the term of the agreement, regardless of when Craig received such monies. Agreement said that any action Craig "may take in the future pertaining to disaffirmance of the agreement" would not effect Meshiel's liability for any commissions due to Berg. After trailer was chosen to be on Malcom in the Middle, they sent a letter to Berg saying they wouldn't pay her anymore and didn't need her Berg filed suit for breach of agreement, breach of implied covenant of good faith and fair dealing, breach of an oral loan agreement, conversion and declaratory relief Arbitrator awarded Berg commissions and interest, repayment of personal loans, and interest and attorney fees Appealed Trial court entered judgement in favor of Berg Appellate court found Craig was entitled to and did disaffirm agreement, which, among other things, required him to arbitrate his disputes with Berg Judgement was reversed as to Craig and affirmed as to Meishel

Cheryl may disaffirm this executory contract.

Cheryl, age 16, ordered a new dress to wear to the school prom. She has contracted to pay $500 when the dress arrives. Before the dress arrives, Cheryl decides that the dress is too expensive and now wishes to cancel the order. a. Cheryl must pay $500 for the dress because the dress was specially ordered for Cheryl. b. Cheryl must pay $500 for the dress because clothing is classified as a necessity. c. Cheryl may disaffirm this executory contract. d. Cheryl must accept the dress and pay the reasonable value of the dress.

Chris can hold Wyandott to the order.

Chris receives a printed form in the mail from Wyandott Heating indicating that he has placed a telephone order for a $600 heater. He doesn't recall placing the order. Which of the following is correct? a. Wyandott can hold Chris to the order. b. Chris can hold Wyandott to the order. c. Neither party is bound, because there is no signed writing. d. Chris is bound if he makes no objection within 10 days.

Northern Corporation v. Chugach Electrical Association

Commercial impracticability will excuse (unforeseen and unjust hardship) will excuse performance (NOBODY COULD COMPLETE THE CONTRACT)

Both (a) and (b); they are not mutually exclusive.

Conditions may be classified: a. by how they are imposed. b. by when they affect a duty of performance. c. Both (a) and (b); they are not mutually exclusive. d. Neither (a) nor (b).

Concurrent Conditions

Conditions that are to take place at the same time

Concurrent Conditions

Conditions that are to take place at the same time. (In the absence of an agreement to the contrary, the law assumes that the respective performances under a contract are concurrent conditions--e.g., delivery of a deed and payment of the deed's price.)

Monetary Damages: Reliance Damages

Contract damages placing the injured party in as good a position as she would have been in had the contract NOT been made.

compensatory damages.

Contract damages that put the injured party in as good a position as if the other party had performed are: a. compensatory damages. b. incidental damages. c. consequential damages. d. liquidated damages.

Statute of Frauds: Contracts Within the Statute of Frauds (The) Rule

Contracts "within" (subject to) the statute of frauds must be evidenced by a writing (to be enforceable). (These contracts can still be performed just as oral contracts IF the parties are willing to perform. The statute relates only to the proof/evidence of a contract.)

Incompetent Persons: Person Under Guardianship

Contracts made by a person placed under guardianship by court order are void. Guardians are appointed by courts to control and preserve the property of the ward/adjudicated incompetent. A party can still recover for necessaries provided to the ward. Also, the ward's contracts can be ratified by the guardian, or the ward after termination of the guardianship. See Case 14-4 First State Bank of Sinai v. Hyland

Rule

Contracts within the Statute of Frauds: ____: contracts within the statute of frauds must be evidenced by a writing to be enforceable.

What is the rule for contract within the Statute of Frauds?

Contracts within the statute of frauds must be evidenced by a writing to be enforceable.

Liquidated Damages

Contractual provisions for payment of a stipulated sum of money upon breach of the agreement will be upheld if the amount bears a reasonable relationship to the anticipated loss, and both parties agreed at formation that the actual damages would be difficult to ascertain.

Remedies in Equity: Specific Performance

Court decree ordering the breaching party to render promised performance. (Always granted for breach of contract for the sale of real property.) (Tends to happen in rare cases with sale of personal property where the property is rare or unique--famous painting, a patent, copyright, heirloom, etc.) (Is not enforced for personal services.)

Remedies in Equity: Injunction

Court order prohibiting a party from doing a specific act. (E.g. to enforce covenants not to compete.) (Exclusive personal services can be enforced by injunction, as long as the probable result will not deprive the employee of other reasonable means of making a living. E.g., if A is contracted to sing for B at specific times, and A contracts with C to sing for them instead at the same times, a court can enforce injunction, preventing A from singing for C.)

Monetary Damages: Limitations on Damages: 2: Certainty of Damages

Damages are not recoverable beyond an amount that can be established with reasonable certainty. (Commonly, this is challenging when you are attempting to prove lost profits. Therefore, it's common to use a liquidated damages clause when that situation could occur.)

Monetary Damages: Compensatory Damages: Incidental Damages

Damages arising directly out of a breach of contract. (E.g. costs incurred to acquire the nondelivered performance from some other source.)

preparing to perform.

Damages for reliance include expenses for: a. lost profits. b. injury to the person. c. preparing to perform. d. punishment of the breaching party.

Monetary Damages: Compensatory Damages: Consequential Damages

Damages not arising directly out of a breach but arising as a foreseeable result of the breach. (Lost profits and injury to person/property resulting from defective performance.)

injunction.

David enters into a contract to give Edward the right of first refusal to purchase a tract of land owned by David. David subsequently offers the land to Fred without first offering it to Edward. An appropriate remedy for Edward to seek would be: A.) injunction. B.) liquidated damages. C.) reformation. D.) punitive damages.

Mackay v. Four Rivers Packing Co.

Defendant Four Rivers Packing Company operated an onion packing plant and hired Plaintiff Stuart Mackay as the company's "field man." Plaintiff had been in the onion business for decades and knew many onion farmers. Four Rivers through its general manager Randy Smith (Smith) offered Plaintiff a job that involved purchasing enough onions to keep Four Rivers' packing shed stocked at a price that Smith would set. Plaintiff contended that Smith offered him a long-term employment contract. From 2000 to 2002, financial and managerial setbacks made it difficult for Four Rivers to operate its business, and for Plaintiff to acquire onions at prices set by Smith in order to keep the sheds stocked. In 2003, Four Rivers laid Plaintiff off. Plaintiff filed suit in 2004 alleging breach of the employment contract. At trial following a remand, Four Rivers contended that the parties had not entered into an employment contract for any specified term. A jury would return a verdict in favor of Plaintiff. In a special verdict form, the jury found that the parties had entered into a long term contract of "up to ten years, or such time as the Plaintiff retired." Four Rivers timely appealed, challenging jury instructions given at trial and the sufficiency of the evidence. Upon review of the trial record, the Supreme Court found that the trial court properly instructed the jury and that the evidence presented was sufficient to support the verdict. The Court affirmed the trial court's judgment against Four Rivers. ** Believe Mackay's allegation that the contract was to last until retirement. Since Mackay COULD HAVE retired WITHIN ONE YEAR, this contract is OUTSIDE IDAHO'S STATUTE OF FRAUDS provision.**

Mackay V. Four Rivers Packing Subject: One Year Provision

Defendant Four Rivers Packing Company operated an onion packing plant and hired Plaintiff Stuart Mackay as the company's "field man." Plaintiff had been in the onion business for decades and knew many onion farmers. Four Rivers through its general manager Randy Smith (Smith) offered Plaintiff a job that involved purchasing enough onions to keep Four Rivers' packing shed stocked at a price that Smith would set. Plaintiff contended that Smith offered him a long-term employment contract. From 2000 to 2002, financial and managerial setbacks made it difficult for Four Rivers to operate its business, and for Plaintiff to acquire onions at prices set by Smith in order to keep the sheds stocked. In 2003, Four Rivers laid Plaintiff off. Plaintiff filed suit in 2004 alleging breach of the employment contract. At trial following a remand, Four Rivers contended that the parties had not entered into an employment contract for any specified term. A jury would return a verdict in favor of Plaintiff. In a special verdict form, the jury found that the parties had entered into a long term contract of "up to ten years, or such time as the Plaintiff retired." Four Rivers timely appealed, challenging jury instructions given at trial and the sufficiency of the evidence. Upon review of the trial record, the Supreme Court found that the trial court properly instructed the jury and that the evidence presented was sufficient to support the verdict. The Court affirmed the trial court's judgment against Four Rivers. Believe Mackay's allegation that the contract was to last until retirement. Since Mackay COULD HAVE retired WITHIN ONE YEAR, this contract is OUTSIDE IDAHO'S STATUTE OF FRAUDS provision.

Mackay V. Four Rivers Packing Subject: One Year Provision

Defendant Four Rivers Packing Company operated an onion packing plant and offered Plaintiff Stuart Mackay a long-term contract as the company's "field man." Four Rivers laid Plaintiff off after financial set backs. Plaintiff filed suit alleging breach of the employment contract. At trial following a remand, Four Rivers contended that the parties had not entered into an employment contract for any specified term. A jury would return a verdict in favor of Plaintiff. In a special verdict form, the jury found that the parties had entered into a long term contract of "up to ten years, or such time as the Plaintiff retired." Four Rivers timely appealed, challenging jury instructions given at trial and the sufficiency of the evidence. Upon review of the trial record, the Supreme Court found that the trial court properly instructed the jury and that the evidence presented was sufficient to support the verdict. The Court affirmed the trial court's judgment against Four Rivers. Believe Mackay's allegation that the contract was to last until retirement. Since Mackay COULD HAVE retired WITHIN ONE YEAR, this contract is OUTSIDE IDAHO'S STATUTE OF FRAUDS provision.

Case 14-2 In Re the Score Board, Inc.

Defendant/apellant: Kobe Bryant Plaintiff/appellee: Debtor (The Score Board Inc.) Topic: minors' ratification Verdict: Bryant's appeal of the Bankruptcy Court's finding of a valid and enforceable contract is DENIED. Bryant is considered to have ratified the contract.

Case 15-3 Kalas v. Cook

Defendant/appellant: Cook (executor of buyer's estate) Plaintiff/appellee: Kalas (owner of print shop) Topic: specially manufactured goods Verdict: this case falls within the exception for specially manufactured goods; therefore it did not have to be in writing to be enforceable. AFFIRMED.

Case 14-3 Zelnick v. Adams

Defendant/appellant: Mildred Adams Plaintiff/also appellant: Zelnick (attorney) Topic: minors' liability for necessaries Verdict: REVERSED and REMANDED. Trial court erred; the doctrine of necessaries does not apply (to the legal services Zelnick provided), and therefore no award should have been made to Zelnick.

Case 14-1 Berg v. Traylor

Defendant/appellee: Craig's former personal manager, Sharyn Berg Plaintiffs/appellants: Meshiel Traylor and her minor son Craig Traylor Topic: minors' disaffirmance Verdict: judgment REVERSED as to Craig and AFFIRMED as to Meshiel. Craig is not liable for the obligations he disaffirmed; Meshiel still is.

Case 17-1 Silvestri v. Optus Software, Inc.

Defendant/x: Optus Softare Plaintiff/x: Michael Silvestri Topic: express conditions--satisfaction Verdict: REVERSE and REMAND. The Appellate Division erred in saying that the employer must meet an objective standard for satisfaction to invoke the right to terminate in a satisfaction clause. Here, subjective satisfaction is sufficient, and Optus had a right to terminate Silvestri.

Case 15-1 Rosewood Care Center, Inc. v. Caterpillar, Inc.

Defendant: Caterpillar (who wanted Rosewood to admit their employee, Cook) Plaintiff: Rosewood Care Center, Inc. (skilled nursing facility) Topic: suretyship / main purpose rule Verdict: REMAND; the question whether the main purpose of the promisor is to promote a pecuniary advantage is a question for the trier of fact. Similarly, so is the question of whether Caterpillar's promise was suretyship.

Case 17-4 Northern Corp. v. Chugach Electrical Association

Defendant: Chugach Plaintiff: Northern Topic: impossibility Verdict: AFFIRM trial court's conclusion that the contract was impossible (commercial impractical, in this case) and thus Northern's duty is discharged.

Case 17-2 Hochster v. De La Tour

Defendant: De La Tour Plaintiff: Hochster (tour guide) Topic: anticipatory breach Verdict: judgment for Hochster. An anticipatory breach is a breach, and De La Tour can be immediately sued for it.

Case 15-2 Mackay v. Four Rivers Packing Co.

Defendant: Four Rivers Plaintiff: Mackay Topic: one-year provision Verdict: VACATE the district court's order granting summary judgment against Mackay and REMAND. Mackay alleged the contract would last "until retirement"; since he could have retired within 1 year, the contract falls within the Statute, and oral agreement is sufficient.

Case 14-4 First State Bank of Sinai v. Hyland

Defendant: Randy Hyland (borrower, whose dad Mervin was cosigner) Plaintiff: First State Bank of Sinai Topic: intoxicated persons / incompetent persons Verdict: Trial court erred in saying that Mervin's obligation to the Bank is void. It was voidable, but he failed to disaffirm, and his payment of the interest ratified the contract. REVERSED and REMANDED.

Monetary Damages: Punitive Damages

Designed to punish the defendant, and are generally NOT recoverable for a breach of contract (unless the conduct constituting the breach is also a tort for which the plaintiff may recover punitive damages.) (CONTRACT damages are to compensate the plaintiff for losses sustained; PUNITIVE damages are to punish the defendant for willful, wanton or malicious conduct.)

What is a discharge by agreement of the parties? List and summarize the situations where a contract is discharged by such an agreement.

Discharge by agreement of the parties occurs when the parties to the contract agree to discharge each other from performance under the contract. The parties may do this by rescission, by substituted contract, by an accord and satisfaction, or by novation. Mutual rescission is an agreement between the parties to terminate their respective duties under the contract; it is a contract to end a contract. A substituted contract is a new contract accepted by both parties in satisfaction of their duties under the original contact. An accord is a contract by which an obligee promises to accept a stated performance in satisfaction of the obligor's existing contractual duty. The performance of the accord is a satisfaction, and it discharges the original duty. A novation is a substituted contract that involves an agreement among three parties to substitute a new promisee for the existing promisee or to replace the existing promisor with a new one.

What is a discharge by operation of law? Name situations where a contract is discharged by operation of law.

Discharge by operation of law is the termination of contractual duties by operation of law rather than through the actions of one or both of the parties to the contract. Discharge by operation of law may occur by reason of subsequent illegality, impossibility of performance, destruction of the subject matter, and bankruptcy. The running of the period of the statute of limitations does not operate to discharge the obligation, but it bars the creditor's right to bring an action.

Discharge by Operation of Law

Discharge that happens not because of action of a party, but rather because of the operation of law.

Donald has expressly ratified the contract.

Donald, a minor, makes a contract with Albert, an adult, to buy a computer. One week later, Donald has his eighteenth birthday and shortly thereafter tells Albert he will pick up the computer next week. a. Donald has expressly ratified the contract. b. The contract must be renegotiated, because Donald was a minor when it was made. c. Donald can change his mind and avoid the contract, because it was made when he was a minor. d. The contract is void ab initio, because Donald was a minor at the time it was made.

receive a "clear and conspicuous" statement informing them of their right to withdraw consent to receiving electronic records.

E-Sign provides consumers must: a. evidence their consent on paper to conducting transactions with electronic records after being informed of the types of hardware and software required. b. receive a "clear and conspicuous" statement informing them of their right to withdraw consent to receiving electronic records. c. receive a "clear and conspicuous" statement informing them of their right to have the record provided only in electronic form. d. All of the above.

ensures that the electronic form of Internet and e-mail agreements will not make them unenforceable because of the statute of frauds.

E-Sign: a. preempts the Uniform Electronic Transactions Act. b. requires persons to agree to use or accept electronic records or electronic signatures, provided they are informed of the types of hardware and software required and they have the required equipment. c. defines the included transactions narrowly. d. ensures that the electronic form of Internet and e-mail agreements will not make them unenforceable because of the statute of frauds.

Limitations on Remedies: Loss of Power of Avoidance: Rights of 3rd parties

E.g., if A transfers property to B in a transaction that is voidable by A, and B then sells the property to C (a good faith purchaser) before A exercises her power of avoidance, A loses the right to recover the property. (The 1 exception is sale that is NOT goods, by a minor who subsequently wishes to avoid the transaction, in which the property has been retransferred to a good faith purchaser. The 3rd party here does not have the usual rights of a 3rd party and must return the property.)

Earl and Bev enter into a contract. What are the ways in which only one party (for example, Earl) can be discharged from performance?

Earl is discharged if: he fully performs; Bev materially breaches; there is an anticipatory repudiation by Bev; Bev materially alters the contract; Earl and Bev agree to substitute a third party for Earl; or Earl is discharged in bankruptcy.

Restitution

Effect of NonCompliance: ____ is available in a quasi contract for benefits conferred in reliance on the oral contract.

Promissory Estoppel

Effect of NonCompliance: ____ oral contracts will be enforced in cases in which the party seeking enforcement has reasonably and justifiably relied on the promise and the court can avoid injustice only by enforcement.

Full Performance

Effect of NonCompliance: ____ statute does not apply to executed contracts.

the contract is tainted with fraud, duress, undue influence, mistake, or unfair practices.

Equitable remedies will not be granted where: a. the terms of the contract are fair. b. the consideration is adequate. c. the terms of the contract are sufficiently certain. d. the contract is tainted with fraud, duress, undue influence, mistake, or unfair practices.

bankruptcy law

Even though all creditors have not been paid in full, a discharge under the __________ eliminates ordinary contract claims against the debtor.

Express Conditions

Explicitly (stated clearly) in language. Using words such as provided that, on condition that, while, after, upon, as soon as -SATISFACTION -SUBJECTIVE SATISFACTION -OBJECTIVE SATISFACTION

Silvestri V. Optus Software Type

Express Conditions: Satisfaction

Silvestri v. Optus Software, Inc.

Express Conditions: Satisfaction Optus, a small computer software company, hired Silvestri as its director of support services. Silvestri's two-year employment contract contained a clause that reserved to the company the right to terminate his employment for dissatisfaction. 9 months into the contract Silvestri was terminated under the satisfaction clause. Filed suit saying it was unreasonable Trial court granted summary judgment to the company. Appellate division reversed, holding that an employer must meet an objective standard for satisfaction in order to invoke a right to terminate. Is the satisfaction subjective or objective?** Supreme Court of NJ concluded that a **subjective assessment of satisfaction applies and the trial court's grant of summary judgment to the company was appropriate **Avellino said he terminated Silvestri because he failed to "exhibit the leadership and management skills necessary to perform his duties to the company's satisfaction" and cited complaints received from customers, etc.** Judgment of Appellate division is reversed and remanded for entry of summary judgment in favor of defendants, the company

Conditions: Express Condition Satisfaction of a Third Party

Express condition making performance contingent upon approval by a party outside the contract. (Different from objective satisfaction of a contracting party, because the satisfaction is left up to a 3rd party not involved in the contract, rather than a hypothetical reasonable person.)

Conditions: Express Condition Satisfaction of a Contracting Party

Express condition making performance contingent upon one party's approval of the other's performance. May be subjective (personal taste, opinion, judgment) or objective (mechanical fitness, utility, marketability). See Case 17-1 Silvestri v. Optus Software, Inc.

Satisfaction

Express condition, one party's approval of the other's performance

What is the difference between implied-in-fact and express conditions?

Express conditions are explicitly set forth in language. No particular form is required. Implied-in-fact conditions are similar to express conditions in that they must fully and literally occur and in that the parties understand them to be part of the agreement. They differ in that implied-in-fact conditions are not stated in express language. Rather, they are necessarily inferred from the terms of the contract, the nature of the transaction, or the conduct of the parties.

Priorities of Conflicting Rules

Express terms are given greater weight than course of performance, course of dealing and usage of trade. Course of performance is given greater weight than course of dealing or usage of trade, and course of dealing is given greater weight than usage of trade.

With regard to the interpretation of a contract, what priority is given to each of the following items? (a) Course of dealing (b) Usage of trade (c) Express terms (d) Course of performance

Express terms prevail. Course of performance controls course of dealing and course of dealing controls usage of trade.

Rosewood Care Center, INC v. Caterpillar, inc. Subject: Suretyship/ Main Purpose Rule

Facts: On January 3, 2002 Caterpillar contacted HSM Management Services. They are the management service for . Caterpillar's employee in charge of medical care told HSM that Cook must be admitted to Rosewood. The cost would be covered one hundred percent by Caterpillar and to just send the bill. HSM then faxed a letter to Rosewood confirming their conversation and they both parties signed the contract. In the end, they ultimately refused to pay for services rendered to Cook. Issue: A complaint was filed and Caterpillar moved to dismiss the breach of contract count. The trial court granted Caterpillar's motion to dismiss the breach of contract and thus barred Rosewood's claims. Ruling: The appellate court reversed and remanded

Rosewood Care Center, INC v. Caterpillar, inc. Subject: Suretyship/ Main Purpose Rule

Facts: On January 3, 2002 Caterpillar contacted HSM Management Services. They are the management service for Rosewood and a skilled nursing facility. Caterpillar wanted Rosewood to admit Cook on a fixed rate basis. Rosewood denied. Caterpillar's employee in charge of medical care then told HSM that Cook must be admitted to Rosewood. The cost would be covered one hundred percent by Caterpillar and to just send the bill. HSM then faxed a letter to Rosewood confirming their conversation and they both parties signed the contract. Caterpillar, continued to orally "authorize" care for Cook. In the end, they ultimately refused to pay for services rendered to Cook. Issue:A complaint was filed and Caterpillar moved to dismiss the breach of contract count. The trial court granted Caterpillar's motion to dismiss the breach of contract and thus barredRosewood's claims. Ruling: The appellate court reversed and remanded

Rosewood Care Center, Inc. v. Caterpillar, Inc.

Discharge by Breach

Failure of a party to perform to terms of the contract, gives rise to a cause to damages by the injured party -MATERIAL BREACH -SUBSTANTIAL PERFORMANCE -ANTICIPATORY REPUDIATION -MATERIAL ALTERATION OF WRITTEN CONTRACT

Fay is still liable because selling the skis amounts to a ratification.

Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the age of majority. The next day, she sold them to Sharon and disaffirmed the contract. What result? a. Fay is still liable since she had to disaffirm before her 18th birthday. b. Fay is still liable because selling the skis amounts to a ratification. c. Fay is not liable because she disaffirmed the contract. d. Fay is not liable because skis are not necessaries.

One-Year Provision: Mackay v. Four Rivers Packing Co.

Four Rivers operates an onion packing plant near Weiser, Idaho. Randy Smith, the general manager of Four Rivers, hired Stuart Mackay as a field man during the summer of 1999 to secure onion contracts from growers in the area.

In a majority of jurisdictions, Marsha may get her money back even if she cannot return the merchandise.

Fourteen-year-old Marsha bought $120 worth of video games and DVDs at a local store, using her own money. Her parents insisted that she return the items and get her money back. Which of the following is true? a. If there is a conflict, the store's return policy will override Marsha's right of disaffirmation. b. In most jurisdictions, Marsha may get her money back only if she has not opened or damaged the merchandise in any way. c. In a majority of jurisdictions, Marsha may get her money back even if she cannot return the merchandise. d. In most jurisdictions, Marsha may get some of her money back but she must pay the reasonable value of the goods if that differs from the contract price.

The payment of the $20,000 and the delivery of the deed are mutually dependent and, in the absence of an agreement to the contrary, are concurrent conditions.

Fred contracts to sell a certain tract of land to Maria for $20,000, but the contract is silent as to the time of delivery of the deed and payment of the price. a. The payment of the $20,000 and the delivery of the deed are independent of each other. b. The delivery of the deed is a condition subsequent to the payment of the $20,000. c. The payment of the $20,000 and the delivery of the deed are mutually dependent and, in the absence of an agreement to the contrary, are concurrent conditions. d. The payment of the $20,000 is a condition precedent to the delivery of the deed.

Statute of Frauds: Contracts Within the Statute of Frauds Electronic Records

Full effect is given to electronic contracts and signatures. (Ensured by UETA and E-Sign.) (E-Sign excludes... 1. Wills, codicils, and testamentary trusts 2. Adoptions, divorces, and other matters of family law 3. The UCC other than sales and leases of goods)

Implied-in-Fact Conditions

Fully and literally occur, and so the parties understand them to be part of the agreement; not stated in expressed language

None of the above

Garrett ordered 100 pieces of 2 x 6 lumber from his supplier and paid upon delivery. Later, when he unpacked the lumber, he discovered that the supplier had delivered 2 x 4 lumber. After being notified, the supplier picked up the lumber, apologized, and gave Garrett his money back. The response the supplier made to rectify the breach is: a. an injunction. b. mitigation. c. liquidation of damages. d. None of the above

Consequential Damages

General damages are those that naturally result from the wrong. The defendant is in effect on notice that these will be claimed from the fact that a complaint has been filed. They do not have to be specially pleaded.

Zelnick v. Adams

Grandfather will hired lawyer wanted to disaffirm out did not need lawyer. Contractual incapacity does not excuse a minor from an obligation to pay the reasonable value of a necessary

Hochster V. De la Tour

Guy hires another guy to be his tour guide in Europe, but cancels on him. As a result of that, he gets sued. The court sides with the tour guide

Hochster V. De la Tour

Guy hires another guy to be his tour guide in Europe, but cancels on him. As a result of that, he gets sued. The court sides with the tour guide Subject: Anticipatory Breach

Marge will not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.

Harry said to Marge, "I have a ring once owned by Marilyn Monroe. Would you like to buy it for $500?" Marge pays for the ring, but the next day a friend tells her that Harry had recently purchased the ring at a local department store. Marge enjoys wearing the ring and wears it constantly for twelve months. Finally, she goes to Harry and says, "Here is the ring you lied about. Give me my $500." Most likely: a. Marge will get her money back since Harry's representation was fraudulent. b. Marge will not get her money back since she should have investigated the facts about the ring more carefully. c. Marge will get her money back since she is a good faith purchaser of merchandise. d. Marge will not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.

Intoxicated Persons/Incompetent Persons: First State Bank of Sinai v. Hyland

He had been drinking heavily throughout this period, and in fact had been involuntarily committed to an alcoholism treatment hospital twice during the time of these events.

may be discharged, but Henry is not.

Henry hires Ace Roofing to put a new roof on his house. When Ace comes, Henry refuses to let them on the roof, saying that he has a headache and doesn't want to listen to pounding. The next day, Henry still has a headache and he refuses to allow them on the roof. The day after, the baby is sleeping and Henry refuses to allow them to work. After four weeks of this, Ace: a. may be discharged, but Henry is not. b. may be discharged, and so would Henry. c. can sue for damages, but must perform when Henry is ready. d. has no choice but to keep coming back each day until Henry is ready.

Expectation Interest

His interest in having the benefit of his bargain by being put in a position as good as the one he would have occupied had the contract been performed The sum restores the injured party to the economic position they expected from performance of the promise

out-of-pocket and consequential damages, but not punitive damages.

Howard needs a truck to pull a 2,000-pound trailer. Gordon tells Howard, "My truck will pull a 2,000-pound trailer with ease." Relying on Gordon's statement, Howard buys the truck, but it will not pull a 2,000-pound trailer. If Gordon did not intend to deceive and Howard sues for nonfraudulent misrepresentation, he can recover: A.) punitive damages, but not out-of-pocket damages. B.) out-of-pocket and consequential damages, but not punitive damages. C.) out-of-pocket damages plus punitive damages. D.) nominal damages, because Howard should have known the capacity of the truck.

Jana loses the right to recover the property if the transfer involved goods.

If Jana, a minor, transfers property to Scott and Scott sells the property to a good faith purchaser for value before Jana avoids the transfer: a. Jana loses the right to recover the property if the transfer involved goods. b. Jana can recover the property as long as the property was a sale of goods. c. Jana can recover the property whether it was real or personal property. d. the good faith purchaser of goods for value receives a voidable title.

Minors: Liability for Tort Connected With Contract

If a tort and a contract are so intertwined that to enforce the tort action the court must enforce the contract, the minor is NOT liable in the tort. (E.g., a minor rents a car from an adult, obliging him to exercise reasonable care; he negligently damages the car and so breaches the contract. He would be protected from action because he has contractual immunity, and a tort recovery would be essentially enforcement of the contract.)

Material Breach of Contract

If one party materially breaches, the other party is excused from performing; may sue for damages. Minor breaches allow non-breaching party to sue for damages but do not excuse performance.

example of modification

If parties enter into an oral contract to sell for $450 a motorcycle to be delivered to the buyer and later, prior to delivery, orally agree that the seller shall paint the motorcycle and install new tires and that the buyer shall pay a price of $550, the modified contract is unenforceable.

Discharge by Operation of Law: Impossibility Subsequent Illegality

If performance becomes illegal or impractical as a result of a change in the law, the duty of performance is discharged.

Limitations on Remedies: Election of Remedies

If remedies are not inconsistent, a party injured by a breach of contract may seek more than one kind of remedy.

Statute of Frauds: Contracts Within the Statute of Frauds Suretyship Provision Exceptions: Main Purpose Doctrine

If the primary object (of the promise) is an (economic) benefit to the surety, the promise is NOT within the statute. (I.e., it would not be required to be written to be enforceable.) See Case 15-1 Rosewood Care Center, Inc. v. Caterpillar, Inc.

Original Promise

If the promisor makes an ____ by undertaking to become primarily liable, then the statute of frauds does not apply.

If agreed to by both debtor and creditor, in which of the following situations will a smaller sum be unable to discharge a larger debt?

If the smaller sum is paid when the larger sum would ordinarily be due, but the debtor is on the verge of insolvency

Northern Corp V. Chugach Electrical Assc. Type

Impossibility

Northern Corp. v. Chugach Electrical Association

Impossibility: Destruction of Subject Matter North entered into contract with Chugach to repair and upgrade the upstream face of Cooper Lake Dam. Contract required Northern to obtain rock from a quarry site on the opposite end of the lake and transport it to the dam during the winter across the ice on the lake. In december, water overflowed on the ice, preventing the use of the road. (impossibility) Northern complained of the unsafe conditions but Chugach insisted on performance. In march, one of Northern's trucks broke the ice and sank More difficulties happened. two more trucks broke and drivers died. northern ceased operations and said it considered the contract terminated for impossibility of performance Chugah said Northern was still bound to perform Supreme Court of Alaska said Northern's duty was discharged because of impossibility. Affirm court's conclusion that the contract was impossible of performance

Minors: Disaffirmance: Berg v. Traylor

In 2004, Berg filed suit against Meshiel and Craig for breach of the agreement, breach of the implied covenant of good faith and fair dealing, breach of an oral loan agreement, conversion and declaratory relief.

disaffirmance of an agreement by a minor does not operate to terminate the contractual obligations of the parent who signed the agreement.

In Berg v. Traylor, the court stated that: a. Craig was not entitled to disaffirm the agreement in question. b. while no specific language is required to communicate an intent to disaffirm, express notice to the other party is necessary. c. disaffirmance of an agreement by a minor does not operate to terminate the contractual obligations of the parent who signed the agreement. d. None of the above.

Impossibility: Northern Corp. v. Chugach Electrical Association

In March 1967, one of Northern's loaded trucks broke through the ice and sank.

Minors: Liability for Necessaries: Zelnick v. Adams

In March 1998, Jonathan's father brought a bill of complaint for declaratory judgment against Adams and Zelnick, on Jonathan's behalf, to have the contract with Zelnick declared void. Upon reaching the age of majority, Jonathan filed a petition to intervene, wherein he disaffirmed the contract.

Minors: Liability for Necessaries: Zelnick v. Adams

In May 1997, Zelnick filed a bill of complaint for declaratory judgment, accounting and other relief on Jonathan's behalf to have Jonathan recognized as the grandchild and "issue" of Hylton Sr. for the purposes of the will and trusts.

Ratify

In a broad sense, the confirmation of a previous act done either by the party himself or by another; as, for example, confirmation of a voidable act. In the law of principal and agent, the adoption and confirmation by one person, with knowledge of all material facts, of an act or contract performed or entered into in his behalf by another who at the time assumed without authority to act as his agent.

Electronic Signatures in Global and National Commerce

In addition, Congress in 2000 enacted the ____; which uses language very similar to the UETA, makes electronic records and signatures valid and enforceable across the United States for many types of transactions in or affecting interstate or foreign commerce.

Express terms

In determining the meaning of a contract under the UCC, which of the following will have first priority? a. Course of performance b. Course of dealing c. Usage of trade d. Express terms

Stan orally agreed to sell his house to Humphrey and Humphrey made a down payment. Humphrey wanted it ready for his family quickly, so he had a new roof put on, new carpeting installed, and renovated the kitchen. Stan now thinks the place looks great and has decided not to sell. A business law student told him he could refuse to sell because the agreement was oral. Can he? Explain.

In general, the statute of frauds would require that a promise to convey land be written. However, under the part performance exception, courts will enforce the sale because of Humphrey's detrimental reasonable reliance. He acted on Stan's promise by substantially improving the property; therefore promissory estoppel will prevent Stan from repudiating.

Parol Evidence Rule p Supplementing, Explaining, or Contradicting Terms

In interpreting and enforcing a contract, questions often arise as to whether the written instrument is the complete embodiment of the parties' intention. Where the parties express their agreement in a writing with the intent that it embody the final expression of their bargain, the writing is an "integration." Any other expressions--written or oral--made prior to the writing, as well as any oral expressions contemporaneous with the writing, are inadmissible to vary the terms of the writing.

the facts and circumstances of the case.

In most states, whether the time within which a minor disaffirms a contract constitutes a reasonable time is determined by: a. state statute. b. the UCC. c. the facts and circumstances of the case. d. mcommon law, without regard to the unique facts of the case at hand.

encourages and gives full effect to electronic contracts.

In states that have adopted it, the UETA: a. encourages and gives full effect to electronic contracts. b. gives full effect to emergency transactions. c. supplements and covers all of the UCC. d. covers wills, codicils, and testamentary trusts.

Mervin ratified his voidable contract by conduct, making it a fully valid legal obligation.

In the First State Bank of Sinai v. Hyland case, the Supreme Court of South Dakota held: a. Mervin's obligation on a promissory note was void due to his alcohol-related incapacity. b. Mervin ratified his voidable contract by conduct, making it a fully valid legal obligation. c. the alcohol intoxication of a party to a contract does not affect the contract's enforceability. d. Mervin could only use express language to ratify a contract formed while he was incapacitated by alcohol use.

All of the above.

In which of the following cases will an oral contract for the sale of goods of $750 be enforceable without a writing? a. The goods are to be specially manufactured for the buyer and the seller has made a substantial beginning of their manufacture. b. A party admits in an answer to a complaint in a lawsuit that the contract was made. c. Delivery and acceptance of the goods has been made. d. All of the above.

All of the above are situations where restitution is available.

In which of the following situations is restitution available as a remedy? a. As an alternative remedy for a party injured by breach b. For a party in default c. For a party who may not enforce the contract because of the statute of frauds d. All of the above are situations where restitution is available.

Both (a) and (c).

In which of the following situations will a court grant specific performance? a. In a case involving breach of contract for the sale of real property. b. In contracts for personal services. c. Where goods are unique or rare. d. Both (a) and (c).

Where the minor wishes to affirm part of a contract and disaffirm another part of the same contract

In which of the following situations would a minor be unable to disaffirm a contract which he had made? a. Upon restoring the consideration received in a situation involving a fully executed contract b. Where the minor wishes to affirm part of a contract and disaffirm another part of the same contract c. During the time of his minority or for a reasonable time thereafter d. None of the above.

Define incidental damages and give an example.

Incidental damages are damages that arise directly out of the breach, such as costs incurred to acquire the nondelivered performance from some other source. Example: Agnes employs Benton for nine months for $20,000 to supervise construction of a factory, but fires him without cause after three weeks. Benton, who spends $350 in reasonable fees attempting to find comparable employment, may recover $350 in incidental damages, in addition to any other actual loss he may suffer.

Interpretation of Contracts Rules of Interpretation

Include... - Words and conduct are interpreted in light of all circumstances; the principal purpose is given great weight. - A writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together. - Language that has a commonly-accepted meaning is interpreted in accordance with that meaning. - Technical terms and words of art are given their technical meaning. - Manifestations of intention of the parties are interpreted as consistent with each other and with any relevant course of performance, course of dealing, or usage of trade. - An interpretation that gives a reasonable, lawful, and effective meaning to all the terms is preferred over an interpretation that leaves a part unreasonable, unlawful, or of no effect. - Specific terms and exact terms are given greater weight than general language. - Separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated. - Express terms, course of performance, course of dealing, and usage of trade are weighted in that order. - Where a term or promise has several possible meanings, it will be interpreted against the party who supplied the contract or the term. - Where written provisions are inconsistent with typed or printed provisions, the written provision is given preference; typed provisions are given preference to printed provisions. - If the amount payable is set forth in both figures and words and the amounts differ, the words control the figures.

Monetary Damages: Limitations on Damages: 3: Mitigation of Damages

Injured party may not recover damages for loss that he could have avoided by reasonable effort (and without undue risk, burden, or humiliation.) (E.g., if A repudiates B's contract to manufacture goods for A before B starts, B can't recover for losses in making the goods that he could've just chosen not to make.) (Also includes making reasonable efforts to mitigate your damages after a wrongful termination, by seeking other reasonable employment.)

Fraud

Intentional misrepresentation of material fact by one party to another, who then consents to enter into a contract in justifiable reliance on the misrepresentation

First State Bank of Sinai v. Hyland Type

Intoxicated Persons/Incapacitated Persons

First State Bank of Sinai V Hyland Subject: Intoxicated/Incompetent persons

Intoxicated Persons/Incompetent Person's Bank sued Hyland holding him responsible for payment of a promissory note that he cosigned with his son. The son got his father to sign it while he was drunk one night, defaulted, and declared bancruptcy. The circuit court ruled that Hyland was not responsible because he was drunk when he signed and doesn't remember the note. Bank appealed. The Supreme Court of South Carolina reversed the decision and sent it back to the trial court for further proceedings. The Supreme Court said that the contract was not legit until the father paid $900 in interest on the note after hearing of the default. The father, who didnt remember the note, now paid interest on the note therefore acknowledging his responsibility to pay. Had the father stopped the contract once he found out about it, then the contract would have been voided. Hyland's obligation on the note was voidable; his subsequent failure to disaffirm (lack of rescission, cancellation) and his payment of interest (ratification) then transformed the voidable contract into one that is fully binding upon him

First State Bank of Sinai V Hyland Subject: Intoxicated/Incompetent persons

Intoxicated Persons/Incompetent Person's Bank sued Hyland holding him responsible for payment of a promissory note that he cosigned with his son. The son got his father to sign it while he was drunk one night, defaulted, and declared bancruptcy. The circuit court ruled that Hyland was not responsible because he was drunk when he signed and doesn't remember the note. Bank appealed. The Supreme Court of South Carolina reversed the decision and sent it back to the trial court for further proceedings. The Supreme Court said that the contract was not legit until the father paid $900 in interest on the note after hearing of the default. The father, who didnt remember the note, now paid interest on the note therefore acknowledging his responsibility to pay. Had the father stopped the contract once he found out about it, then the contract would have been voided. Mervin's obligation on the note was voidable; his subsequent failure to disaffirm (lack of rescission, cancellation) and his payment of interest (ratification) then transformed the voidable contract into one that is fully binding upon him

First State Bank of Sinai v. Hyland

Intoxicated Persons/Incompetent Person's Bank sued Hyland holding him responsible for payment of a promissory note that he cosigned with his son. The son got his father to sign it while he was drunk one night, defaulted, and declared bancruptcy. The circuit court ruled that Hyland was not responsible because he was drunk when he signed and doesn't remember the note. Bank appealed. The Supreme Court of South Carolina reversed the decision and sent it back to the trial court for further proceedings. The Supreme Court said that the contract was not legit until the father paid $900 in interest on the note after hearing of the default. The father, who didnt remember the note, now paid interest on the note therefore acknowledging his responsibility to pay. Had the father stopped the contract once he found out about it, then the contract would have been voided. Mervin's obligation on the note was voidable; his subsequent failure to disaffirm (lack of rescission, cancellation) and his payment of interest (ratification) then transformed the voidable contract into one that is fully binding upon him

First State Bank of Sinai v. Hyland

Intoxicated when signed contracts for son. An intoxicated party ratifies a contract by not disaffirming it when she is not intoxicated and learns of its existence and by making interest payments on it when she is not intoxicated

Statute of Frauds: Effect of Noncompliance Restitution

Is available in quasi contract for benefits conferred in reliance on the oral contract. (I.e., if you act in reliance on a contract that was unenforceable under the statute of frauds, you may recover in restitution the benefits you conferred in this reliance.) (E.g., if L and E have an oral contract for L to sell land to E, the contract is unenforceable. However, if E pays a portion of the price as a down payment and L repudiates the contract, E can recover in restitution that portion.)

Statute of Frauds: Effect of Noncompliance Oral Contract within Statute of Frauds

Is unenforceable.

Liability for Tort Connected with Contract

It is well settled that minors are generally liable for their torts. There is, however, a legal doctrine providing that if a tort and a contract are so "interwoven" that the court must enforce the contract to enforce the tort action, the minor is not liable in tort. Thus, if a minor rents an automobile from an adult, he enters into a contractual relationship obliging him to exercise reasonable care and diligence to protect the property from injury. By negligently damaging the automobile, he breaches that contractual undertaking. But his contractual immunity protects him from an action by the adult based on the contract. Can the adult nonetheless recover damages on a tort theory? By the majority view, he cannot. For, it is reasoned, a tort recovery would, in effect, be an enforcement of the contract and would defeat the protection that contract law affords the minor.

Parol Evidence Rule - Purpose

Its name notwithstanding, the parol evidence rule is generally not regarded as a rule of evidence but rather as a rule of substantive contract law. It is designed to carry out the apparent intention of the parties and to facilitate judicial interpretation by having a single clean source of proof (the writing) on the terms of the bargain.

courts will treat the promises to deliver the deed and to pay the $5,000 as mutually dependent. Anthony's duty to pay is conditioned upon Janice's delivery of the deed and Janice's duty to deliver the deed is conditioned upon Anthony's payment or tender of $5,000 to Janice.

Janice contracts to sell a certain tract of land to Anthony for $5,000, but the contract does not state a time for delivery of the deed and payment of the price. In this situation: a. the contract will be considered void for lack of essential terms. b. the law will imply that the respective performances are independent of each other and may occur whenever "reasonable under the circumstances." c. courts will treat the promises to deliver the deed and to pay the $5,000 as mutually dependent. Anthony's duty to pay is conditioned upon Janice's delivery of the deed and Janice's duty to deliver the deed is conditioned upon Anthony's payment or tender of $5,000 to Janice. d. Janice's duty to deliver the deed and Anthony's duty to pay the $5,000 are "implied-in-fact" conditions.

Both (b) and (c) above are correct.

Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was made on April 1 with the trip to begin on June 1. On May 1, Kevin notified Jim that he had changed his mind and would be unable to make the trip. He also refused to pay Jim any compensation. a. Because the contract is executory, Jim has suffered no damages, and Kevin has no obligation to pay any compensation. b. Kevin has anticipatorily repudiated the contract and is liable to Jim for damages. c. Jim is discharged from his duty to serve as guide, and he may bring suit immediately against Kevin. d. Both (b) and (c) above are correct.

Zelnick v. Adams Subject: Minors- Liability for necessities

Jonathan is 9 years old and his mother hires a lawyer when his grand father dies so he can receive distributions from charitable trusts. Since she couldn't afford the hourly fee, she requested legal services on her son's behalf on a contingency fee basis. Zelnick, the lawyer, accepts 1/3 contingency fee. May 1997, per Zelnick's effort, Jonathan became entitled to inheritances from his grand father Cecil D. Hylton. March 1998, Jonathan's father on behalf of Jonathan claims that the contract between Jonathan and Zelnick to be void. ." The lower court granted the motion, and entitled Zelnick only of hourly fee summing up to $60,000. Both appeals to this ruling. In the higher court, this ruling is reversed and remanded. Reasoning: A minor's contract is not voidable when the contract is considered something for necessaries.

Zelnick v. Adams Subject: Minors- Liability for necessities

Jonathan is a 9 year old child when his biological grand father died. His mother had to hire a lawyer to claim that Jonathan is entitled to receive distributions from the charitable trusts. Since she couldn't afford the hourly fee, she requested legal services on her son's behalf on a contingency fee basis. Zelnick accepts this offer. Both parties agree on one third of contingency fee. May 1997, per Zelnick's effort, Jonathan became entitled to inheritances from his grand father Cecil D. Hylton. March 1998, Jonathan's father on behalf of Jonathan claims that the contract between Jonathan and Zelnick to be void. He further argues that 1997 suit was unnecessary because the trusts could not distribute any funds until the years 2014 and 2021 and the issue was not "ripe for determination." The lower court granted the motion, and entitled Zelnick only of hourly fee summing up to $60,000. Both appeals to this ruling. In the higher court, this ruling is reversed and remanded. Reasoning: A minor's contract is not voidable when the contract is considered something for necessaries. Per precedent case of Bear's Adams' vs. Bear, when things supplied fall into the class of necessaries the contract is not voidable. The provision of legal services related to prosecuting personal injury actions, protecting an infant's liberty, security, or reputation are considered contracts for necessaries.

Zelnick v. Adams Subject: Minors- Liability for necessities

Jonathan is a 9 year old child when his biological grand father died. His mother had to hire a lawyer to claim that Jonathan is entitled to receive distributions from the charitable trusts. Since she couldn't afford the hourly fee, she requested legal services on her son's behalf on a contingency fee basis. Zelnick accepts this offer. Both parties agree on one third of contingency fee. May 1997, per Zelnick's effort, Jonathan became entitled to inheritances from his grand father Cecil D. Hylton. March 1998, Jonathan's father on behalf of Jonathan claims that the contract between Jonathan and Zelnick to be void. He further argues that 1997 suit was unnecessary because the trusts could not distribute any funds until the years 2014 and 2021 and the issue was not "ripe for determination." The lower court granted the motion, and entitled Zelnick only of hourly fee summing up to $60,000. Both appeals to this ruling. In the higher court, this ruling is reversed and remanded. Reasoning: A minor's contract is not voidable when the contract is considered something for necessaries. Per precedent case of Bear's Adm'x vs. Bear, when things supplied fall into the class of necessaries the contract is not voidable. The provision of legal services related to prosecuting personal injury actions, protecting an infant's liberty, security, or reputation are considered contracts for necessaries.

Zelnick v. Adams

Jonathan is a 9 year old child when his biological grand father died. His mother had to hire a lawyer to claim that Jonathan is entitled to receive distributions from the charitable trusts. Since she couldn't afford the hourly fee, she requested legal services on her son's behalf on a contingency fee basis. Zelnick accepts this offer. Both parties agree on one third of contingency fee. May 1997, per Zelnick's effort, Jonathan became entitled to inheritances from his grand father Cecil D. Hylton. March 1998, Jonathan's father on behalf of Jonathan claims that the contract between Jonathan and Zelnick to be void. He further argues that 1997 suit ws unnecessary because the trusts could not distribute any funds until the years 2014 and 2021 and the issue was not "ripe for determination." The lower court granted the motion, and entitled Zelnick only of hourly fee summing up to $60,000. Both appeals to this ruling. In the higher court, this ruling is reversed and remanded. Reasoning: A minor's contract is not voidable when the contract is considered something for necessaries. Per precedent case of Bear's Adm'x vs. Bear, when things supplied fall into the class of necessaries the contract is not voidable. The provision of legal services related to prosecuting personal injury actions, protecting an infant's liberty, security, or reputation are considered contracts for necessaries.

Kalas v. Cook Outcome

Judgement affirmed in favor of Kalas, said that goods were specially manufactured goods that could not have been resold

Northern Corp V. Chugach Electrical Assc. Outcome

Judgement affirmed in favor of Northern Corp, said that Northern had tried multiple times to complete the contract and had lost lives doing so, and therefore the contract was clearly impossible to complete under the terms contracted

Silvestri V. Optus Software Outcome

Judgement affirmed in favor of Optus, said that satisfaction clauses are based off opinion and personal judgement and subject to subjective standards and Silvestri signed a satisfaction clause

In Re the Scoreboard Outcome

Judgement affirmed in favor of company, The lower court ruled there was a contract (Debtor accepted), and denied the motion. Bryant appeals, but the higher court affirms. Bryant continues to perform the contract when he entered into the age of majority, which proves that he ratified the contract.

First State Bank of Sinai v. Hyland Outcome

Judgement reversed in favor of Bank, Mervin's obligation on the note was voidable and his subsequent failure to disaffirm (lack of rescission) and his payment of interest (ratification) then transformed the voidable contract into one that is fully binding upon him.

Rosewood Care Center v. Caterpillar Outcome

Judgement reversed in favor of Rosewood, said that Caterpillar received their debt for their own benefit

Hochster v. De La Tour Outcome

Judgment reversed in favor of Hochster, said that just because De La Tour got out of the contract prematurely doesn't make him not liable for compensation

Suretyship/Main Purpose Rule: Rosewood Care Center, Inc. v. Caterpillar, Inc.

Just requested that Cook be admitted to Rosewood for skilled nursing care and therapy and stated that the cost of Cook's care would be 100 percent covered and paid directly by Caterpillar to Rosewood with a zero deductible and no maximum limit.

In Re The Score Board

Kobe Bryant case. Ratification of a contract may be implied from a person's conduct after the person attains his majority

Traylor has a son who is an actor, and they sign a contract with berg to be his manager. After a few years, they terminate the contract, and Berg sues. The original ruling is that Berg wins and she gets the money. It gets appealed and and craig(traylor) wins Subject: Minors- Disaffirmance

Kobe Bryant is 17 and signs a contract with this company saying he'll sign x amount of autographs and for x amount of cash. Kobe declines and sends a counteroffer, but is signed and misplaced. Although Kobe never saw or knew of the agreement, it was considered affirmed through nonverbal assent. Kobe kept but with the obligations of the contract and deposited money from the company. Kobe tried to say it wasn't a contract, and he was denied Subject: Minors- Ratification

In re the score board case

Kobe bryant is 17 and signs a contract with this company saying he'll sign x amount of autographs and for x amount of cash. Kobe declines and sends a counteroffer, but is signed and misplaced. Although kobe never saw or knew of the agreement, it was considered affirmed through non verbal assent. Kobe kept but with the obligations of the contract, and deposited money from the company. Kobe tried to say it wasnt a contract, and he was denied Subject: Minors- Ratification

Monetary Damages: Limitations on Damages

Law imposes the limitations of... 1. Foreseeability 2. Certainty, AND 3. Mitigation on monetary damages, to ensure the damages are compensatory and not speculative (and don't include loss that could've been avoided by reasonable efforts on the part of the injured party.)

Kalas V. Cook Subject: Specially manufactured goods

Long-standing oral agreement that print shop manufactured and delivered written materials designed by the buyer for the buyer's use and sale. After buyer's death, executor of estate refused to pay for the last deliveries of the materials to the buyer. Does statute of frauds bar enforcement of the oral agreement? Kalas, owner of print shop, filed complaint against defendant, Cook, executor of the estate of the Buyer. Trial court said the transaction was a sale of goods. Court rendered judgment in favor of plaintiff in amount of $24,599.38. Defendant appealed. In 1997, Kalas was told she would have to vacate the property by the end of the calendar year. She closed her business. Kalas and Simmons agreed that the materials would be delivered on an accelerated basis. Simmons died and plaintiff submitted claim against the estate. ***On appeal, the defendant (Cook) argues that the oral contract was invalid because writing was required by UCC Oral agreements for sale of goods over $500 are unenforceable. However, it's enforceable if the goods are "specially manufactured". The goods were specially manufactured. Judgment of the court is affirmed

Kalas V. Cook Subject: Specially manufactured goods

Monetary Damages: Compensatory Damages: Loss of Value

Loss of Value = (value of promised performance by breaching party) - (value of actual performance by breaching party) In addition to loss of value, the injured party may also recover for all losses actually suffered (subject to the limitation of foreseeability), including INCIDENTAL and CONSEQUENTIAL damages.

Monetary Damages: Compensatory Damages: Cost Avoided

Loss or costs the the injured party avoids by not having to perform.

No, the parties expected the hardship and provided for it in their contract

Louis agreed to provide all the apples that Cindy's Cider Mill will need at $3 per bushel unless weather conditions require additional labor to be hired. The rate would then be $3.50 per bushel. A freeze warning required Louis to hire 100 additional overtime workers, raising the cost per bushel to $4.75. Louis wants to get out of his contract. Can he? a. No, the parties expected the hardship and provided for it in their contract b. No, there is no hardship c. Yes, the contract is impracticable d. Yes, the freeze is a supervening event

Whether Zach will have to pay for the drapes depends upon whether as a reasonable man he ought to be satisfied.

Lynn, who is a tailor, agrees to sew a pair of drapes for Zach's living room. Zach promises to pay Lynn $300. Lynn completes the drapes using material selected by Zach, but Zach is not satisfied and refuses to pay for them. a. Whether Zach will have to pay for the drapes depends upon whether as a reasonable man he ought to be satisfied. b. The standard applied here is a subjective standard of satisfaction. c. The condition of satisfaction is an implied-in-law condition. d. The condition of satisfaction is an express condition.

keep $10,000 of Lynne's down payment.

Lynne agrees to buy Harriette's farm for $100,000 and puts $20,000 down. Then Lynne learns she is allergic to hay and repudiates the contract. If Harriette can sell the farm one month later for $90,000, she may: a. keep Lynne's $20,000. b. keep $10,000 of Lynne's down payment. c. not keep any of the down payment money. d. sue for specific performance.

No, if Mark's father bought it without knowing that Mary was a minor.

Mary, age 17, sold Mark, age 22, the briefcase she got for graduation. Mark's father liked it and bought it from him. If Mary decides to disaffirm the contract, will Mark's father have to return the briefcase to her? a. Yes, the briefcase is not a necessary. b. Yes, if Mark's father still has it. c. No, her contract was with Mark and he cannot return goods he does not have. d. No, if Mark's father bought it without knowing that Mary was a minor.

Parol Evidence Rule: Supplemental Evidence

May be admitted; examples of supplemental evidence for a written contract include... Course of Dealing: a sequence of previous conduct between the parties. Usage of Trade: practice engaged in by the trade or industry. Course of Performance: conduct between the parties concerning performance of the particular contract. Evidence of Consistent Additional Terms

Meg's contractual duty is discharged due to objective impossibility.

Meg has contracted to paint a portrait of Julio, but dies before completing the portrait. Which of the following is correct? a. Meg's executor must find a capable artist to complete the work to Julio's satisfaction. b. Meg's contractual duty is discharged due to objective impossibility. c. A novation must be entered between Julio and a third person in order to discharge Meg's duty under the contract. d. Meg's contractual duty is discharged due to subjective impossibility.

Intoxicated Persons/Incompetent Persons: First State Bank of Sinai v. Hyland

Mervin responded that he was not liable since he had been incapacitated by liquor at the time he signed the note.

Miller is not discharged, but must substitute wheat or pay damages to the bakery for breach of contract.

Miller has a contract to sell 1,000 bushels of wheat to a bakery. The wheat is stored in a grain elevator and has become infested with insects. What is the consequence? a. Miller is discharged from performance because of impossibility. b. Miller is discharged because of frustration. c. Miller is not discharged, but must substitute wheat or pay damages to the bakery for breach of contract. d. Miller is discharged if he can prove that he did not cause the damages to his wheat.

specific performance.

Miller made a contract to sell his condominium to Jefferson for $80,000. Two days later Miller changed his mind after discovering that he could have sold the property to another buyer for an additional $20,000. Jefferson sues and asks the court to have the property conveyed to him at the price of $80,000. Jefferson is seeking: a. restitution. b. punitive damages. c. specific performance. d. valid tender.

Explain the usual effect of a minor entering into a contract

Minority (age of majority) makes the contract VOIDABLE, with the minor having the option. Disaffirmance must take place before the minor attains majority or within reasonable time

Explain the effect of a minor who misrepresents his or her age entering into a contract

Minors who misrepresent their age are not protected

Zelnick v. Adams Type

Minors: Liability for Necessaries

In Re the Scoreboard Type

Minors: Ratification

Berg v. Traylor Type

Minors: disaffirmance

Remedies for misrepresentation

Misrepresentation that induces a party to enter into a contract may give rise to remedies under... - The law of restitution - Contract law, AND - Tort law

All of the above.

Most states have statutes requiring which of the following contracts to be evidenced by a writing to be enforceable? a. Contracts to make wills. b. Contracts for the sale of securities. c. Contracts for the sale of personal property for more than $5,000. d. Contracts creating certain types of security interests. e. All of the above.

Intoxication

Most states provide that contracts entered into by certain intoxicated persons (due to drugs or alcohol) are voidable by that person

Goods

Movable personal property (Includes growing crops and unborn animals)

Professor Glass is hired by Towers University to teach business law at a salary of $3,000 per month. After school has been in session for two months, the Business Administration Building is destroyed by fire. The University refuses to pay him any further salary, claiming they are discharged from their obligation of performance. Is the University discharged from its obligation of performance? Is Professor Glass discharged from his obligation of performance? Explain, citing the legal principles involved.

Neither party is discharged from performance. The University will argue that it is discharged based upon impossibility of performance. However, that is not a very persuasive argument, because they could arrange to have Professor Glass's classes held in another building without undue hardship.

Express Conditions: Satisfaction: Silvestri v. Optus Software, Inc.

Nine months into the contract, Silvestri was terminated under the satisfaction clause by the chief executive officer of Optus, Joseph Avellino.

Richard agrees to supply Henry with all his needs of specially made shampoo for Henry's beauty salon. Henry believes that Richard is a representative of a famous hair products company, but he finds a letter to a competitor written by Richard two days before the agreement is signed proving that Richard is a fraud. Richard says that this letter may not be admitted to court since the contract is wholly integrated. Is he correct?

No, prior and contemporary evidence is excludable, but only if it changes the terms of the contract. Here the evidence is admitted for the purpose of proving fraud in the inducement.

Material Breach

Nonperformance that significantly impairs the injured party's rights under the contract, and discharges the injured party from any further duty under the contract -PREVENTION OF PERFORMANCE -PERFECT TENDER RULE

Impossibility: Northern Corp. v. Chugach Electrical Association

Northern complained of the unsafe condition of the lake ice, but Chugach insisted on performance.

Implied-in-Law Conditions

Not in the language of the contract and need only be substantially performed, also called a constructive condition

Statute of Frauds: Contracts Within the Statute of Frauds Suretyship Provision Exceptions: Promise Made to Debtor

Not included in the suretyship provision. (I.e., if the promise to pay the debt is made to the debtor instead of the creditor, it does not need to be in writing to be enforceable.)

Contract Remedies

Occurs 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 Impossible for remedy to equal promised performance

Anticipatory Breach: Hochster v. De La Tour

On April 12, 1852, Hochster contracted with De La Tour to serve as a guide for De La Tour on his three-month trip to Europe, beginning on June 1 at an agreed-upon salary.

Minors: Disaffirmance: Berg v. Traylor

On January 18, 1999, Berg entered into a two-page "Artist's Manager's Agreement" (agreement) with Meshiel and Craig, who was then 10 years old. Meshiel signed the agreement and wrote Craig's name on the signature page where he was designated "Artist." Craig did not sign the agreement.

Suretyship/Main Purpose Rule: Rosewood Care Center, Inc. v. Caterpillar, Inc.

On January 20, "Sue" from Dr. Just's office telephoned HSM and confirmed approval for Cook's transfer from the hospital to Rosewood.

Suretyship/Main Purpose Rule: Rosewood Care Center, Inc. v. Caterpillar, Inc.

On January 3, 2002, Caterpillar contacted HSM Management Services (HSM), the management agent for Plaintiff, Rosewood Care Center, Inc. (Rosewood), a skilled nursing facility.

Suretyship/Main Purpose Rule: Rosewood Care Center, Inc. v. Caterpillar, Inc.

On January 30, Sue reconfirmed, via telephone, Caterpillar's authorization for Cook's care and treatment in accordance with the January 10 agreement, except that Sue now advised HSM that Cook was precertified for two weeks of care instead of the original four weeks.

Yes, because the job offer is for longer than one year from March 1

On March 1, Sara, a student, received a telephone call from ComputerChip, Inc. offering her a job for one year beginning on June 15, after completion of the school year. According to the personnel manager, she will have to move to California and be ready to start work at 8:00 a.m. on June 15. Should Sara ask for a letter confirming the telephone conversation if she accepts the offer immediately? a. Yes, because the job offer is a collateral promise b. Yes, because the job offer is covered by the parol evidence rule c. Yes, because the job offer is for longer than one year from March 1 d. No, because the job offer is for one year from June 15

Anticipatory Breach: Hochster v. De La Tour

On May 11, De La Tour notified Hochster that he would not need Hochster's services. He also refused to pay Hochster any compensation. Hochster brings this action to recover damages for breach of contract.

anticipatory repudiation.

On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform on December 31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is a(n): a. material alteration. b. anticipatory repudiation. c. nonmaterial breach since the statement is made before December 31. d. accord.

Mackay v. Four Rivers Packing Co. Type

One Year Provision

The Possibility Test

One Year Provision: ____ the criterion is whether it is possible, not likely, for the agreement to be performed within one year.

Full Performance by One Party

One Year Provision: ____: makes the promise of the other party enforceable under majority view.

Computation of Time

One Year Provision: ____: the year runs from the time the agreement is made.

Prevention of Performance

One party's interference with or prevention of performance by the other; constitutes a material breach and discharges the other party to the contract

Discharge by Breach: Material Breach Prevention of Performance

One party's substantial interference with, or prevention of, performance by the other. Constitutes a material breach and discharges the other party to the contract.

Integrated contract

One that is contained in a certain writing(s) to which the parties have assented as the statement of the complete agreement/contract between them. If a writing contains a "merger clause" (clause saying it is intended to be complete and final) it is generally considered proof of an integrated contract, or at least evidence of it.

Full Performance by One Party

One-Year Provision: ____: makes the promise of the other party enforceable under majority view.

Mackay v. Four Rivers Packing

Onion Packing job, rehired promised until retirement orally, then fired. If it is possible to perform fully a contract within one year, the contract does not fall within the statute of frauds

Statute of Frauds: Rescission of Contracts within the Statute

Oral agreement to rescind a (written or oral) contract is effective, EXCEPT when land has been transferred, and so a new contract to retransfer the land must be created, and would therefore be within the statute. For goods (UCC) the decisive point is the price AFTER modification. (E.g., a $450 motorcycle cannot be enforceably orally agreed to include some extra features and be sold for $550, because the UCC requires sales of goods over $500 be written in contracts.)

Statute of Frauds: Contracts Within the Statute of Frauds Modification or Rescission of Contracts within the Statute of Frauds

Oral contracts modifying existing contracts are unenforceable if the resulting contract is within the statute of frauds.

Modification or Rescission of Contracts within the Statute of Frauds

Oral contracts modifying previously existing contracts are unenforceable if the resulting contract is within the statute of frauds. The reverse is also true: an oral modification of a prior contract is enforceable if the new contract is not within the statute. Thus, examples of unenforceable oral contractual modifications include an oral promise to guarantee additional duties of another, an oral agreement to substitute different land for that described in the original contract, and an oral agreement to extend an employee's contract for six months to a total of two years. On the other hand, an oral agreement to modify an employee's contract from two years to six months at a higher salary is not within the statute of frauds and is enforceable.

Statute of Frauds: Modification of Contracts within the Statute

Oral contracts modifying previously existing contracts are unenforceable, if the resulting contract is within the statute. Oral modification of a prior contract IS enforceable if the new contract is NOT within the statute. EXAMPLES OF UNENFORCEABLE CONTRACTS: oral promise to guarantee additional duties of another, an oral agreement to substitute different land for that described in the original contract, and an oral agreement to extend an employee's contract for six months to a total of two years. ENFORCEABLE: oral agreement to modify an employee's contract from two years to six months at a higher salary is not within the statute of frauds and is enforceable.

Statute of Frauds: Effect of Noncompliance Promissory Estoppel

Oral contracts will be enforced where the party seeking enforcement has reasonably and foreseeably relied on the promise and the court can avoid injustice only by enforcement.

Explain what the parol evidence rule is and when it is used.

Parol evidence is oral or written evidence outside a written contract and not incorporated into it directly or by reference. When a contract is expressed in a writing that is intended to be the complete and final expression of the rights and duties of the parties, parol evidence of prior oral or written negotiations or agreements of the parties, or contemporaneous oral agreements that vary the written contract, are not admissible. The parol evidence rule is a rule of substantive law that defines the limits of a contract.

Discharge by Agreement of the Parties

Parties to a contract can, by agreement, discharge each other from performance. They can do this by... 1. Rescission 2. Substituted contract 3. Accord and satisfaction 4. Novation

Percy may keep the mobile home but is only liable for the reasonable value of the mobile home.

Percy, age 17, purchased a used mobile home from a mobile home dealer for $20,000. This price, however, was twice the reasonable value of the mobile home. One month later, Percy wishes to disaffirm the contract. If the mobile home is considered a necessary, then: a. Percy can disaffirm the contract based on the wrongful act of the dealer. b. Percy can disaffirm the contract because the minor can live in an apartment rather than a mobile home. c. Percy may keep the mobile home but is only liable for the reasonable value of the mobile home. d. Percy must keep the mobile home and abide by the original terms of the contract.

Commercial Impracticability

Performance is rendered unjust by a supervening event not caused by her own fault.

Executor or administrator

Person appointed by a court to carry on (subject to order of court) the administration of the estate of a deceased person. Can be chosen in a person's will.

Minors

Persons who are under the age of majority (usually 18 years.) AKA infant.

Marge will have to pay Phil for all but the gift taxes.

Phil, the tax accountant, promises to do Marge's individual federal, state, local, and gift taxes for the year. He completes all but the gift taxes. Under the substantial performance doctrine: a. Marge will not have to pay Phil. b. Marge will not have to accept the work. c. Marge will have to pay Phil for all but the gift taxes. d. Marge will have to pay Phil the contract price.

Monetary Damages: Limitations on Damages: 1: Foreseeability of Damages

Potential loss that the party now in default had reason to know of (reasonably foresee) when the contract was made. Test for foreseeability is objective, based on what loss the breaching party had reason to foresee. (Basically: when you breached the contract, you knew these damages would probably result.)

Liability for Misrepresentation of Age

Prevailing view is that a minor may disaffirm the contract

Remedies in Equity: Reformation

Process in which the court "rewrites" or "corrects" a written contract, to make it conform to the true agreement of the parties. Granted when parties agree on a contract but write it in a way that inaccurately reflects their actual agreement.

Statute of Frauds: Contracts Within the Statute of Frauds Suretyship Provision Exceptions: Original Promise

Promisor must be SECONDARILY, not primarily, liable. (I.e., must be promising to pay for someone else's debt; there must be some other person who the creditor has contracted with.)

Statute of Frauds: Compliance with the Statute Sale of Goods

Provides general method of compliance for all parties and an additional one for merchants. (For sales of $500 or more.) Writing(s) or record must... 1. Be sufficient to indicate that a contract has been made between the parties, 2. Be signed by the party against whom enforcement is sought or by her authorized agent, AND 3. Specify the quantity of goods to be sold (Oral contracts are okay when there is an ADMISSION in court; when there are SPECIALLY MANUFACTURED GOODS for a buyer; or for whatever portion of the goods/payment has already been accepted.) See Case 15-3 Kalas v. Cook

Compensation Damages

Purpose: place the injured party in a position as good as the one he would have held had the other party performed. Compensatory damages equal (the loss of value) - (loss or cost avoided by the injured party) + (incidental damages) + (consequential damages). (Compensate injured party for the injury sustained, and nothing more.) (Protects the injured party's expectation interest, AKA the value she expected to derive from the contract.)

Restitution

Purpose: restore the injured party to the position she was in before the contract was made. Returns to the aggrieved party the consideration/value he gave to the other party. (Also means the party seeking restitution must return what he has received from the other party.)

Randy may not recover the vehicle from Mr. Smith.

Randy, a minor, buys a new four-wheel drive truck from the Jones Dealership. Randy sells this truck to his cousin, Steve, who is an adult. Steve conveys this vehicle to Arthur Smith. Arthur does not personally know Steve or Randy. Which of the following expresses the status of this situation? a. Randy may recover the vehicle from Mr. Smith. b. Randy may not recover the vehicle from Mr. Smith. c. Randy may hold Steve liable in tort. d. Randy may recover the reasonable value of the vehicle from Mr. Smith but not the vehicle itself.

All of the above.

Ratification can occur in which of the following ways? a. Through express language b. As implied from conduct c. Through failure to make a timely disaffirmance d. All of the above.

What are the ways in which a minor may ratify a contract? What are the ways in which a minor may disaffirm a contract? What is the effect of a minor misrepresenting age in order to enter into a contract? Explain, citing various sources of law.

Ratification may be express, implied from conduct, or may be through the failure to make a timely disaffirmance. Ratification makes the contract binding from the beginning. Ratification, once effected, is final and cannot be withdrawn. The minor can ratify the contract only as a whole, both as to burdens and benefits. A minor's contract is voidable at his option; he thus has the power to avoid liability. He may exercise his power to disaffirm a contract through words or conduct showing an intention not to abide by it. By the prevailing view in this country, the minor who misrepresented his age may disaffirm the contract. Some states, however, prohibit disaffirmance if a minor misrepresents her age and the adult, in good faith, reasonably relied on the misrepresentation. Other states not following the majority rule either (a) require the minor to restore the other party to the position she occupied before making the contract, or (b) allow the defrauded party to recover damages against the minor in tort.

Monetary Damages: Liquidated Damages

Reasonable damages agreed to in advance by the parties to a contract (in a provision of the contract.) Will be enforced if it amounts to a reasonable forecast of the loss that may/does result from the breach. If not, it is unenforceable as a penalty (a contractual provision designed to deter a party from breaching and punish him for doing so). Must be compensatory, not punitive. (If a liquidated damage provision is unenforceable, the injured party is still entitled to ordinary remedies for breach of contract.)

Recission

Refers to the contractual situation in which party agree to terminate their respective duties under the contract

be treated as a repudiation, excusing the tendering party from further duty of performance under the contract.

Refusal of a tender of performance by one party to a bilateral contract will: a. be treated as a repudiation, excusing the tendering party from further duty of performance under the contract. b. not discharge either party from further duty of performance under the contract. c. be considered a condition subsequent. d. None of the above.

None of the above.

Requirements for a memorandum that satisfies the statute of frauds include that the writing: a. must be a single document. b. must not contain an attachment. c. needs to be notarized. d. None of the above.

Restitution is available in all of the above cases.

Restitution is available when: A.) Elizabeth agrees to sell an acre of land to Vanessa, and after Vanessa makes a partial payment Elizabeth wrongfully refuses to transfer title. B.) Lawrence makes an oral contract to provide physical training for Lee for fourteen months and Lee discharges Lawrence after six months. C.) Gilbert uses undue influence to induce Cynthia to sell him an antique chair for $10. D.) Restitution is available in all of the above cases.

What must the minor do upon disaffirmance?

Return the goods subject in the contract if they still have them. (even if the goods have been damaged, the minor can disaffirm and receive a refund for the purchased price In certain states the minor has to restore the adult party to the position they held before the contract was made

Berg v. Traylor Outcome

Reversed for Craig and affirmed for meshiel, said that an adult (M) can't get out of a contract by using her son's disaffirmance but a minor (C) can

Mackay v. Four Rivers Packing Co. Outcome

Reversed in favor of Mackay, said that oral contract could possibly have been completed within a year

Robert may disaffirm and get his money back.

Robert is 17 years old. He lies to Bouyers Auto in order to induce it to sell him a new pickup. Bouyers falls for this lie and sells him the pickup. In most jurisdictions, which of the following is correct? a. Robert may disaffirm and get his money back. b. Robert may not disaffirm since he lied. c. Robert must restore Bouyers to its position before contracting with him. d. Robert will receive his money less depreciation.

Marty doesn't plant any flowers, shrubs, or grasses.

Russell promises Marty $1,500 if he will completely landscape Russell's yard. Which of the following would discharge Russell's obligations to pay under this contract? a. Marty leaves a one-foot strip of land barren. b. Marty doesn't begin work on the landscaping until after he finishes two other jobs. c. Marty doesn't plant any flowers, shrubs, or grasses. d. Russell isn't satisfied with Marty's design.

Suretyship Provision: Surety, Creditor, Principal Debtor

SURETY: promisor CREDITOR: promisee PRINCIPAL DEBTOR: the third person The surety promises to the creditor to perform the duties of the principal debtor, if the principal debtor does not perform.

Specially Manufactured Goods

Sale of Goods: ____: an oral contract for specially manufactured goods is enforceable.

Delivery or Payment Acceptance

Sale of Goods: ____: validates the contract only for the goods that have been accepted or for which payment has been accepted.

An oral statement such as this is not enforceable because this promise is within the statute of frauds.

Sam, a shopkeeper, dies unexpectedly at the age of 46. His lifelong business associate, Paul, is appointed the administrator of the estate. Sam had a personal debt of $8,000 which he owed to Art's Appliance Store. Paul says to Art, "If there isn't enough money in the estate, I'll personally see that the bill is paid." Which of the following is correct a. The oral statement is enforceable because Paul is the administrator. b. An oral statement such as this is not enforceable because it is outside the statute of frauds. c. An oral statement such as this is not enforceable because this promise is within the statute of frauds. d. The oral statement is enforceable because it is a collateral promise.

Collateral

Secondarily liable; liable only if the party with primary liability does not perform.

What are the three exceptions to the writing requirement found in Article 2?

Section 2-201(3) contains three exceptions to the writing requirement found in 2-201(1). No writing is required when the goods are specially manufactured, the goods are not suitable for resale in the ordinary course of business, and where the seller has made a substantial beginning on their manufacture or has made commitments for their procurement. No writing is necessary when the contract is admitted in pleadings or testimony in court. No writing is necessary where the goods have been paid for or where they have been received and accepted.

Express Conditions: Satisfaction: Silvestri v. Optus Software, Inc.

Silvestri filed this action, contending that the company's dissatisfaction was objectively unreasonable and that therefore his termination was a breach of the employment contract.

for a sale of land by her is not effective until after she reaches the age of majority.

Sixteen-year-old Laura's disaffirmance of a contract: a. for a sale of land by her is not effective until after she reaches the age of majority. b. is only effective if expressed in words in the particular form required by statute. c. can only be effective if she is an "emancipated" minor. d. must take place after she reaches the age of majority, regardless of the type of contract, since only then does she have capacity.

Kalas v. Cook type

Specially Manufactured Goods

Kalas vs. Cook

Specially Manufactured Goods Long-standing oral agreement that print shop manufactured and delivered written materials designed by the buyer for the buyer's use and sale. After buyer's death, executor of estate refused to pay for the last deliveries of the materials to the buyer. Does statute of frauds bar enforcement of the oral agreement? Kalas, owner of print shop, filed complaint against defendant, Cook, executor of the estate of the Buyer. Trial court said the transaction was a sale of goods. Court rendered judgment in favor of plaintiff in amount of $24,599.38. Defendant appealed. In 1997, Kalas was told she would have to vacate the property by the end of the calendar year. She closed her business. Kalas and Simmons agreed that the materials would be delivered on an accelerated basis. Simmons died and plaintiff submitted claim against the estate. ***On appeal, the defendant (Cook) argues that the oral contract was invalid because writing was required by UCC Oral agreements for sale of goods over $500 are unenforceable. However, it's enforceable if the goods are "specially manufactured". The goods were specially manufactured. Appellate court concludes that it does fall under the exception for specially manufactured goods. Judgment of the court is affirmed.***

Kalas v. Cook

Specially manufactured goods, died before getting all. An oral contract for the sale of goods is enforceable if the goods in question are specially manufactured

When will a court specifically enforce a contract?

Specific performance is available in contracts involving the sale of personal property where the goods are rare or unique, such as for a famous painting, an original manuscript, a patent or copyright, or a rare relic or heirloom. It is also available in case of breach of contract for the sale of real property.

Specific Relief

Specific remedies: This entails a recovery of the thing wrongfully obtained by the defendant from the plaintiff. A defendant is ordered to perform his promise. This gives the plaintiff precisely what is bargained for.

Steve may simply return the vehicle and get his money.

Steve purchases a four-wheel drive truck from Belk Auto Sales. Steve is only 17 years of age. He wrecks the vehicle and attempts to disaffirm the contract and have Belk repay him all that he has paid. In the majority of jurisdictions, what would happen? a. Steve would be out of luck. b. Steve must have the truck repaired. c. Steve will receive his money less the depreciation in value of the vehicle. d. Steve may simply return the vehicle and get his money.

Anticipatory Repudiation

Suggests that occasionally a party may, before they are required to perform, announce that they intend NOT to perform their contractual obligation.

Course of Performance

Supplemental Evidence: ____ conduct between the parties concerning performance of the particular contract.

Usage of Trade

Supplemental Evidence: ____ practice engaged in by the trade or industry.

Course of Dealing

Supplemental Evidence: ____ previous conduct between the parties.

Promise Must Be Collateral

Suretyship Provisions: ____: promisor must be secondarily, not primarily, liable.

Main Purpose Doctrine

Suretyship Provisions: if the primary object is to provide an economic benefit to the surety, then the promise is not within the statute.

Promise Made to Debtor

Suretyship Provisions: the suretyship provision does not apply to promises made to the debtor.

Rosewood Care Center v. Caterpillar Type

Suretyship/Main Purpose Rule

Discharge by Performance: Tender

Tender is an offer by one party to perform her duty. Refusal of tender may discharge the duty (in a bilateral contract).

Discharge by Performance

Tender: an offer by one party (who is ready, willing, able to perform) to the other party to perform his obligation -DISCHARGE: termination of a contractual duty -PERFORMANCE: fulfillment of a contractual obligation resulting in a discharge

Intoxicated Persons/Incompetent Persons: First State Bank of Sinai v. Hyland

The Bank agreed to a second extension, again on the condition that Mervin act as cosigner.

perfect tender rule.

The Code greatly alters the common law doctrine of material breach by adopting what is known as the: a. perfect tender rule. b. anticipatory repudiation rule. c. prevention of performance rule. d. discharge by operation of rule law.

Uniform Electronic Transactions Act (UETA)

The ____ gives full effect to electronic contracts, by considering electronic records to fulfill the writing requirement.

Minors: Disaffirmance: Berg v. Traylor

The agreement expressly provided that any action Craig "may take in the future pertaining to disaffirmance of this agreement, whether successful or not," would not affect Meshiel's liability for any commissions due Berg.

Minors: Ratification: In Re the Score Board, Inc.

The agreement granted Debtor the right to produce licensed products, such as trading cards, with Bryant's image.

What are the basic requirements of a writing within the statute of frauds in Article 2 of the UCC?

The basic statement of the rule found in UCC Section 2-201 requires a writing sufficient to indicate that a contract has been made between the parties, specifying the quantity of goods to be sold, signed by the party against whom enforcement is sought in contracts for the sale of goods for a price of $500 or more.

ratification of a contract upon attaining majority.

The case of In Re The Score Board, Inc. involved the issue of: a. a minor's liability for misrepresentation of age. b. whether an incompetent person's contracts are void or voidable. c. ratification of a contract upon attaining majority. d. liability for necessaries.

Implied-in-Law Conditions

The contingency is not contained in the language of the contract (expressed or implied-in-fact) but instead imposed by law. AKA a "constructive condition." Unlike express or implied-in-fact conditions, it need only be substantially performed. (E.g., if A agrees to buy land from B, and the contract doesn't mention the time of delivery of the deed and payment of the price, the law will imply that those performances are not independent of each other. Law implies that the promises are mutually dependent and hold that each action is conditioned on the other.)

Implied-in-Fact Conditions

The contingency is understood by the parties to be part of the agreement, though it is not expressed. However, just like express conditions, they still must fully and literally occur. (E.g.: A contracts B to paint A's house any color A desires. It is implied in fact that A will inform B of the desired color before B begins to paint, and before B is subject to the duty of painting the house.)

Impossibility: Northern Corp. v. Chugach Electrical Association

The contract required Northern to obtain rock from a quarry site at the opposite end of the lake and to transport the rock to the dam during the winter across the ice on the lake.

Compare the contractual liability of an intoxicated person to that of a person who is mentally ill. How are their situations similar? How are they different with regard to capacity?

The contracts of a person who is mentally incompetent and is under a court-ordered guardianship are void. If a person is mentally incompetent but is not under guardianship, his contracts are voidable. A person may avoid any contract that he enters into if the other party has reason to know that, because of intoxication, he is unable to understand the nature and consequences of his actions or is unable to act in a reasonable manner. Either with mental illness or intoxication, voidable contracts may be ratified when the person regains capacity. A court is more strict with contracts a party enters while intoxicated since the condition is voluntary.

What remedy did the court award in the Madison Square Garden case? Why didn't the court award specific performance in this case?

The court awarded an injunction. A court will not compel a person to render personal services, but it will specifically enforce a negative covenant (an agreement not to do something) by an injunctive order where damages are not readily ascertainable.

Statute of Frauds: Contracts Within the Statute of Frauds One-Year Provision: The Possibility Test

The criterion is whether it is possible (not "likely") for the agreement to be performed within one year. (So, even if it's extremely unlikely and difficult, if it can physically be performed within one year, an oral promise is sufficient. This includes employing someone "for life", because it's possible that they die within a year.) See Case 15-2

Remedies for Misrepresentation: Tort Law: Damages for Nonfraudulent Misrepresentation: If Negligent

The deceived party may recover general damages (under the "out of pocket" rule) and consequential damages.

Executor-Administrator Provision

The executor-administrator provision applies to the contractual promises of an executor of a decedent's will, or to those of the administrator of his estate if the decedent dies without a will, to answer personally for a duty of the decedent. An executor or administrator is a person appointed by a court to carry on, subject to order of court, the administration of the estate of a deceased person. If the will of a decedent nominates a certain person as executor, the court customarily appoints that person. If an executor or administrator promises to pay personally a debt of the decedent, the promise must be in writing—or in proper electronic form—to be enforceable. For example, Brian, who is Ann's son and executor of her will, recognizing that Ann's estate will not provide funds sufficient to pay all of her debts, orally promises Curtis, one of Ann's creditors, that he, Brian, will personally pay all of his mother's creditors in full in return for valid consideration from Curtis. Brian's oral promise is not enforceable. This provision does not apply to promises to pay debts of the deceased out of assets of the estate.

disaffirmance.

The exercise of the power to avoid a contract is known as: a. ratification. b. disaffirmance. c. ab initio. d. restitution.

Disaffirmance

The exercise of this power of avoidance, called a ______________, ordinarily releases the minor from any liability on the contract.

What interests of an injured party are protected by contract remedies?

The following interests are protected by contract remedies: a. Expectation interest: an interest in having the benefit of the bargain by being put in a position as good as if the contract been performed; b. Reliance interest: interest in being reimbursed for loss caused by reliance on the contract by being put in a position as good as the one as if the contract had not been made; c. Restitution interest: interest in having restored any benefit conferred on the other party.

Silvestri V. Optus Software inc

The guy is fired from this company because he is doing a bad job. There us a clause in his employment contract allowing him to be fired for poor quality. The court rules in favor of the company, it is subjective and they can fire him Subject: Express Conditions- satisfaction

The reliance interest

The injured party's interest in being reimbursed for loss caused by reliance on the contract, by being put in a position as good as the one he would have been in, had the contract not been made. Protected by the contract remedy of reliance damages.

The restitution interest

The injured party's interest in having restored to him any benefit that he has conferred on the other party. Protected by the contract remedy of restitution.

The expectation interest

The injured party's interest in having the benefit of his bargain by being put in a position as good as the one he would have occupied had the contract been performed. Protected by the contract remedies of... - Compensatory damages - Specific performance - Injunction

Zelnick v. Adams Outcome

The lower court granted the motion, and entitled Zelnick only of hourly fee summing up to $60,000. Both appealed to this ruling. In the higher court, this ruling is reversed and remanded. A minor's contract is not voidable when the contract is considered something for necessaries. The provision of legal services related to prosecuting personal injury actions, protecting an infant's liberty, security, or reputation are considered contracts for necessaries.

benefit-of-the-bargain

The majority of states follow the ____ rule in awarding damages for fraud. a. benefit-of-the-bargain b. out-of-pocket c. liquidated d. restitution

Anticipatory Breach: Hochster v. De La Tour

The man who wrongfully renounces a contract into which he has deliberately entered cannot justly complain if he is immediately sued for a compensation in damage by the man whom he has injured: and it seems reasonable to allow an option to the injured party, either to sue immediately, or to wait till the time when the act was to be done, still holding it as prospectively binding for the exercise of this option, which may be advantageous to the innocent party, and cannot be prejudicial to the wrongdoer.

Monetary Damages

The most commonly granted judicial remedy for breach of contract. Only awarded for losses that are... - Foreseeable - Established with reasonable certainty, AND - Unavoidable

All of the above.

The parol evidence rule does NOT apply to: a. a typographical error that obviously does not represent the agreement of the parties. b. evidence showing one of the parties to the contract lacks contractual capacity. c. All of the above. d. None of the above.

The parol evidence rule does not apply to either (a) or (b).

The parol evidence rule does not apply to: a. a typographical error that obviously does not represent the agreement of the parties. b. evidence showing one of the parties to the contract lacks contractual capacity. c. The parol evidence rule does not apply to either (a) or (b). d. The parol evidence rule applies to both (a) and (b).

Course of Dealing

The parties' course of dealing may be used to explain a contract. A course of dealing is a sequence of conduct concerning previous transactions b/n the parties to a particular transaction that may be regarded as establishing a common basis of their understanding.

Specially Manufactured Goods: Kalas v. Cook

The plaintiff alleged that the defendant, in breach of the obligations contained in an oral contract with Simmons for the sale of goods, had refused to pay for goods delivered to her.

Minors: Liability for Misrepresentation of Age

The prevailing view is that a minor may disaffirm the contract (that he has entered into by misrepresenting his age). Some states prohibit disaffirmance; some states require repayment and some allow the defrauded party to recover damages.

reformation.

The process whereby a court "rewrites" or "corrects" a written contract to make it conform to the true intentions of the parties is: a. injunction. b. reformation. c. specific performance. d. rescission.

Collateral

The promise made by a surety is collateral, meaning "secondarily liable"; the surety is not liable unless the primary party (principal debtor) does not perform.

Remedies for Misrepresentation: Restitution

The remedy is rescission (avoidance) of the contract by the deceived party. Sometimes, when appropriate, courts also require restitution (see earlier part of chapter).

restitution.

The return to the aggrieved party of the consideration, or its value, which he gave to the other party is: a. injunction. b. restitution. c. specific performance. d. reformation.

Statute of Frauds: Effect of Noncompliance Full Performance

The statute does not apply to executed contracts. (Full performance by one party makes a contract enforceable.)

Electronic Signatures in Global and National Commerce Act.

The statute enacted by Congress which makes electronic records and signatures valid and enforceable for many transactions affecting interstate or foreign commerce is the a. UETA. b. UCC, Article 2E. c. Electronic Signatures in Global and National Commerce Act. d. Interstate and Foreign Commerce Electronic Transactions Act.

Define the statute of frauds and give an example.

The statute of frauds is a law requiring that certain designated types of contracts be in writing to be enforceable. The original, English statute became law in 1677. Examples: Types of contracts required to be in writing to be enforceable include contracts to pay the debt of another, contracts that cannot possibly be performed within one year, contracts in consideration of marriage, contracts of an executor of an estate to personally pay a debt of the estate, and agreements for the transfer of an interest in land.

Specially Manufactured Goods: Kalas v. Cook

The trial court held that the transaction between the plaintiff and the deceased was a sale of goods as that term is defined in [UCC] §2-105.

Northern Crop. V. Chugach Electrical Association

The trucking company is hired to transport these rocks in Alaska. They keep trying to drive the trucks over a frozen lake, but the trucks keep falling in. They try it on the roads, but it cant work out so they say they cannot complete the contract. It goes to court and the court rules that the contract was impossible

Northern Crop. V. Chugach Electrical Association

money damages.

The usual remedy for breach of contract is: a. injunction. b. specific performance. c. punitive damages. d. money damages.

Statute of Frauds: Contracts Within the Statute of Frauds One-Year Provision: Computation of Time

The year runs from the time the agreement is made. (Not from the time performance is to begin.) (If a contract for one year of work has work starting 3 days after it is made, IS within the statute. If the contract allows one year of work to start the day after it is made, it is NOT within the statute.)

Nominal Damages

These damages are awarded when the plaintiff's rights are violated but no measurable or actual loss is sustained.

Parol Evidence Rule: Situations to Which the Rule Does Not Apply

These happen because the rule is a rule of substantive law, defining the limits of a contract. - A contract that is not an integrated document - Correction of a typo - Showing that a contract was void or voidable - Showing whether a condition has in fact occurred - Showing a subsequent mutual rescission or modification of the contract (- Explaining ambiguous terms in the contract)

Statute of Frauds: Contracts Within the Statute of Frauds Marriage Provision

This applies to promises made in consideration of marriage but NOT to mutual promises to marry. (E.g., two people are bound by an oral agreement to marry each other. They would need the promise in writing if one of them promised a farm to the other, conditioned on them marrying.)

Statute of Frauds: Contracts Within the Statute of Frauds Executor-Administrator Provision

This applies to promises to answer personally for duties (debts) of decedents. Must be in writing. (E.g., if the executor realizes the decedent's estate will not sufficiently pay off the decedent's debts, the executor can agree in writing to do so themselves.) (Exceptions: - Main purpose rule - Original promise - Promise made to debtor)

Express Conditions: Satisfaction: Silvestri v. Optus Software, Inc.

This is a breach of contract action. Defendant Optus Software, Inc. ("Optus" or "the company"), a small computer software company, hired plaintiff Michael Silvestri as its Director of Support Services, responsible for supervising the provision of technical support services to the company's customers.

Discharge by Breach: Unauthorized Material Alteration of Written Contract

This is a material and fraudulent alteration of a written contract by a party to the contract. This discharges the entire contract.

Discharge by Agreement of the Parties: Substituted Contract

This is a new contract accepted by both parties, in satisfaction of the parties' duties under the original contract. (Essentially, rescinding the old contract and replacing it with a new one. This immediately discharges the old duty and imposes new obligations.)

Discharge by Breach: Material Breach Perfect Tender Rule

This is a standard under the UCC that a seller's performance under a sales contract must strictly comply with contractual duties and that any deviation discharges the injured party.

Discharge by Agreement of the Parties: Accord and Satisfaction

This is a substituted DUTY under a contract (accord) and the discharge of the prior contractual obligation, by PERFORMANCE of the new duty (satisfaction). (Basically, obligee promises to accept a stated performance, in satisfaction/in place of the obligor's existing contractual duty--such as painting my house instead of repaying me the $500 you owe me.)

Discharge by Agreement of the Parties: Novation

This is a substituted contract involving a new third-party promisor or promisee. (It is an agreement among 3 parties. It replaces one of the original 2 parties with a new party. Discharges the duty of the party that is "swapped out.")

Discharge by Agreement of the Parties: Mutual Rescission

This is an agreement between the parties to terminate their respective duties under the contract. (Literally: a contract to end a contract.) (When one party has already fully performed, a mutual rescission may not be binding at common law. This is because the consideration in mutual rescission is giving up the rights one had under the contract.)

Discharge by Breach: Anticipatory Repudiation

This is an inability or refusal to perform, BEFORE performance is due, that is treated as a BREACH, discharging the nonrepudiating party from performance and allowing them to bring suit immediately. (However, the nonrepudiating party can also simply wait to see if the repudiating party retracts and performs anyway; if they do so before the nonrepudiating party materially changes her position in reliance on the repudiation, or before she indicates that she considers the repudiation final, the repudiating party is discharged by performance. If not, there is a material breach.) See Case 17-2 Hochster v. De La Tour

Discharge by Breach: Substantial Performance

This is performance that is incomplete, but that does not defeat the purpose of the contract. It does NOT discharge the injured party, but it does entitle him to damages. (The person who performed only substantially can still collect from the other party, less any damages caused by their own failure to abide by the contract.)

Interpretation of Contracts

This is the ascertainment of the meaning of a promise or agreement (or a term of the promise or agreement) (While the written words/language of the written contract can't be changed by parol evidence, the ascertainment of the meaning can be.)

Discharge by Operation of Law: Impossibility Objective Impossibility

This is when no promisor is (would be) able to perform. It generally discharges the promisor. (I.e., something it would be impossible for anyone to do. "The thing cannot be done.") (This includes inability due to the death or incapacity of person contracted to render personal services--e.g. a singer contracted to perform getting a severe cold, or a musician unable to perform due to a hand injury.)

Discharge by Operation of Law: Impossibility

This is when performance of the contract cannot be done.

Discharge by Operation of Law: Impossibility Subjective Impossibility

This is when the particular promisor (but not all promisors) cannot perform. It does NOT discharge the promisor. (E.g., impossibility due to this particular promisor's financial inability or lack of competence. "The thing can be done, but not by me.")

Discharge by Operation of Law: Impossibility Frustration of Purpose

This is when the principal PURPOSE of a contract cannot be fulfilled because of a subsequent event (an event that occurred after the formation of the agreement). Remaining duties to render performance are discharged, unless the party has assumed the risk. (In these situations, though the duty could still feasibly be performed, the purpose would not be the same anymore. E.g., if you rent a hotel to view the coronation, but the prince becomes sick and doesn't show. You could still rent a hotel, but that's not the point you were going to rent it for.)

Discharge by Operation of Law: Bankruptcy

This is where discharge is available to a debtor who obtains an order of discharge by the bankruptcy court.

Discharge by Operation of Law: Impossibility Commercial Impracticability

This is where performance can be accomplished only under unforeseen and unjust hardship. This excuses nonperformance. (The hardship must be severe enough to make performance impractical. Also, the nonoccurrence of the event must have been a "basic assumption" made by both parties when entering the contract, with neither party assuming the risk of it occurring.)

Express Condition

This is where the contingency is explicitly set forth in language.

Discharge by Operation of Law: Impossibility Availability of Restitution

This is where the party who has performed may be entitled to restitution. Can happen when impossibility, subsequent illegality, frustration, or impracticability apply, and the contract has been partially or wholly performed (by a party).

Statute of Frauds: Contracts Within the Statute of Frauds One-Year Provision: Full Performance by One Party

This makes the promise of the other party enforceable under majority view (when one party to a contract has fully performed).

Statute of Frauds: Contracts Within the Statute of Frauds Sale of Goods exceptions: Delivery or Payment and Acceptance

This validates the contract only for the goods that have been accepted or for which payment has been accepted.

Discharge by Operation of Law: Impossibility Destruction of Subject Matter

This will discharge the contract if it occurs without the promisor's fault. It is an excusable impossibility--it discharges the duty. (However, it only applies when the subject matter is specific enough that there is no other way to supply it--if you agree to supply an office chair but all of yours are destroyed in a fire, you can go buy a different one to supply. But if you agree to sell a specific chair and it is destroyed by fire, that is considered destruction of subject matter.)

Incidental Damages

Those costs incurred in finding substitute performance, even for unsuccessful attempts.

Violet may not disaffirm the contract.

Tim, who is a minor, enters into a contract with Violet, who is an adult. Which of the following is correct? a. Violet may not disaffirm the contract. b. Violet may disaffirm the contract at any time. c. Violet may disaffirm the contract when Tim becomes an adult. d. Tim may ratify the contract at any time during his minority.

Explain three limitations on monetary damages.

To accomplish the basic purposes of contract remedies, the law imposes on monetary damages the limitations of foreseeability, certainty, and mitigation. The limitation of foreseeability is intended to ensure that damages can be taken into account at the time of contracting. The test of foreseeable damages is objective. Damages are not recoverable for loss beyond an amount that the injured party can establish with reasonable certainty. This limitation is intended to ensure that damages are compensatory and not speculative. The third limitation, mitigation of damages, is the doctrine that the injured party may not recover damages for loss that he could have avoided with reasonable effort and without undue risk, burden, or humiliation.

Parol Evidence Rule - Is the Writing an "Integration"?

To be an integration, the writing must be intended as a final expression and it must be determined whether the writing is a complete or partial integration

No, his contractual immunity protects him from legal action by Rosa.

Todd, a minor, rents an automobile from Rosa, an adult. Todd damages the vehicle when he negligently backs into a pole. Under the majority view, can Rosa recover damages from Todd? a. Yes, Todd breached his duty to exercise reasonable care and diligence to protect the automobile. b. Yes, although Todd is a minor, it is well settled that minors are generally liable for their torts. c. No, minors generally cannot be held liable for their torts. d. No, his contractual immunity protects him from legal action by Rosa.

Berg V. Traylor

Berg vs Traylor

Berg v. Traylor - Minors: Disaffirmance -Court of Appeal, Second District, Division 2, California

Traylor- Appellants (respondant) Berg- Appellee, (plaintiff) - Berg (manager of Craig (a minor)) filed suit for break of agreement, break of implied covenant. - Arbitration awarded in Berg's favor for $578,570.15 -Traylors (Craig and Meshiel) appeal Arbitration judgement -[Trial Court issued judgement in favor of Berg against Meshiel and Craig consistent with arbitrator's award] -Appellant Court: Judgement affirmed for Meshiel and reversed for Craig. -- a minors disaffirmance does not release the contractural obligations of the parent.

True

True or False: "Discharge" has to do with the termination of contractual duties.

False

True or False: A breach of contract always discharges the injured party from performance under the contract.

False

True or False: A change in Sal's financial condition, making it impossible for him to fulfill a contractual obligation, would be considered objective impossibility, which would discharge his contractual duty.

False

True or False: A collateral promise is an undertaking to be primarily liable for the principle debater's debt

True

True or False: A condition may be inserted into a contract to terminate the duty to perform

True

True or False: A condition may be inserted into a contract to terminate the duty to perform.

True

True or False: A contract may condition the duty to accept and pay for the performance of the other party upon the approval of a third party

True

True or False: A contract may condition the duty to accept and pay for the performance of the other party upon the approval of a third party.

False

True or False: A contract to pay for lawn care services costing $1,500 would have to be in writing to be enforceable.

True

True or False: A material breach by the seller will discharge the buyer from his obligations under a contract.

False

True or False: A mental illness or defect of one of the parties to a contract automatically makes a contract void.

False

True or False: A novation is an agreement between two parties to have one substitute for the other in a contract.

True

True or False: A part performance exception to the statute of frauds in many states requires both that the transferee has paid at least a portion of the purchase price and has either taken possession of the real estate or has started to make valuable improvements on it

True

True or False: A party to a contract that is unenforceable because of the statute of frauds may be able to recover in restitution

True

True or False: A person may be able to avoid a contractual agreement even though she understands what she is doing but cannot control her behavior, thereby failing to act in a reasonable or rational way.

True

True or False: A person taking a prescription medication will be treated the same as an incompetent under the cognitive ability test.

True

True or False: A person under guardianship by court order has no contractual capacity.

False

True or False: A person who has made a financially unsound contract may be relieved from performance under the doctrine of commercial impracticability.

True

True or False: A usage of trade is a practice or method of dealing, regularly observed and followed in a place, vocation, or trade.

False

True or False: ABC Corp. is building a new office tower. Ace Plumbing Supplies refuses to provide plumbing materials on credit to the plumbing subcontractor on the building. ABC promises Ace that it will pay for the materials if the subcontractor does not. ABC's promise is unenforceable unless in writing.

True

True or False: After the coronation of Edward VII did not take place on the scheduled date and parties who had entered into contracts in anticipation of the event filed numerous suits, the doctrine of frustration of purpose was added to the law of contracts.

False

True or False: After the purchaser and seller fully perform a verbal contract to sell land, either party may cancel the contract if it was not in writing.

False

True or False: All furniture, television sets, and appliances purchased by a minor for her apartment would be considered necessaries.

False

True or False: All states agree that a minor who has fraudulently misrepresented her age when entering into a contract has no power to disaffirm the contract.

False

True or False: Although a contract to purchase an undeveloped lot must be in writing to be enforceable, a contract to run power lines over someone else's lot need not be.

True

True or False: An accord and satisfaction discharges an existing debt.

False

True or False: An action to recover damages for breach of contract may be maintained only if the plaintiff has sustained or can prove an injury or loss resulting from the breach.

False

True or False: An employee's promise of providing ordinary personal services may be enforced by an injunction against serving another employer.

False

True or False: An example of language creating a suretyship as meant under the statute of frauds would be the following: "If my business partner does not write out the check for the supply bill for our company, I will."

True

True or False: An implied-in-law condition and constructive condition are the same.

True

True or False: An incompetent person who lacks understanding of a contract and its consequences can avoid it even if the other party had no reason to know of the incompetent's mental condition.

True

True or False: An intentional breach of contract is generally held to be material.

True

True or False: An obligee's promise to accept a stated performance in satisfaction of the obligor's existing contractual duty creates an accord.

False

True or False: Any unauthorized alteration of the material terms in a written contract discharges the entire contract

True

True or False: At its discretion, a court may grant the equitable remedy of injunction against breach of a contractual duty where damages would be inadequate.

True

True or False: Belinda has a household insurance policy, which requires that she notify the insurance company within thirty days of any loss before she is eligible to receive payment for her loss. The notification requirement is a condition precedent to the insurance company's obligation to perform, even though the notification must occur subsequent to the loss.

False

True or False: Beth, at age 17, sells an antique pin she inherited. Even if the buyer resells the pin to someone who did not know that it was purchased from a minor, Beth can recover the pin from the third person if she changes her mind about wanting to sell it.

False

True or False: Breach of a contractual promise and failure of a condition have fundamentally the same effect.

True

True or False: By the majority view, a minor need only return any property he has received from the other party if the minor wishes to disaffirm the contract. He has no duty to return the property in the same condition in which he received it.

True

True or False: Clara types a letter to David setting forth the terms of a contract between the two of them that falls within the statute of frauds. At the end of the letter, she types her name but does not sign her signature to it. If David wants to use the letter to satisfy the writing requirement, he may do so.

True

True or False: Concurrent conditions occur when mutual duties of performance are to take place simultaneously.

True

True or False: Consequential damages include lost profits and injury to person or property resulting from defective performance.

True

True or False: Cora and Bruce have an executory contract for the sale of some goods. Cora files for bankruptcy and is then discharged by the bankruptcy court. Cora has no obligation to perform under the contract.

False

True or False: Costs incurred to acquire a non delivered performance from some other source are consequential damages.

False

True or False: Courts of equity will grant specific performance of contracts for personal services.

True

True or False: Courts treat contracts of incompetents and intoxicated persons essentially the same, except they are stricter with intoxicated persons because of intoxication's voluntary nature.

True

True or False: Courts will usually uphold a liquidated damage clause that represents a reasonable approximation of the damages where the actual amount would be very difficult to determine.

False

True or False: Darrell goes to lunch with an office equipment salesman. After drinking two beers and eating a Reuben sandwich, Darrell signs a contract to purchase a $1200 machine for the office. Two hours later, he has second thoughts and decides a different machine might be a better buy, so he calls the salesman and wants to disaffirm the contract based upon intoxication. Darrell can avoid the contract on this basis.

False

True or False: Delay will have no effect on the power of avoidance.

True

True or False: Disaffirmance may be either express or implied.

True

True or False: Discharge by performance is the most frequent method of discharging a contractual duty

False

True or False: Emancipated minors have no ability to avoid contracts based upon their minority.

False

True or False: Equitable remedies are available any time the plaintiff chooses them over money damages.

False

True or False: Equitable remedies result in money awards to the plaintiff.

True

True or False: Even if a party has the power to avoid a contract for lack of capacity, duress, or undue influence, the party will lose that power by affirming the contract.

True

True or False: Except in the case of a contract to transfer land, a minor can disaffirm a contract before attaining majority or within a reasonable time thereafter.

False

True or False: Forrest has a contract with Denzel to construct a new condominium complex. The contract provides that Forrest must furnish a certificate of occupancy and conformity with the local fire code before Denzel has an obligation to pay. The furnishing of the certificate is an implied in fact condition subsequent to the construction of the building.

False

True or False: If Carrie, age 14, contracted to buy a fur coat by mail, the coat manufacturer would not have to send it since the contract was void.

True

True or False: If Kenneth signs an employment contract for one year but is fired without cause after two months and spends $500 in reasonable fees trying to find a comparable job, he may recover $500 in incidental damages.

True

True or False: If a person is adjudicated insane and placed in care of a guardian, that person's contracts are void.

True

True or False: If a person with a mental condition that impairs her ability to act in a reasonable manner enters a contract that is grossly unfair, the contract is voidable

False

True or False: If a tort and a contract are so connected that to enforce the tort action the court must enforce the minor's contract, the court will enforce the contract and the minor will be liable in tort

False

True or False: If there is a novation, the original promisor remains liable to the original promisee if the new promisor fails to perform.

False

True or False: In a contract to sell necessaries to a minor, these goods and services are limited to medical care, food, and shelter.

False

True or False: In all substituted contracts there must be an agreement among three parties where a new promise is substituted for an existing promise or a new promisor is substituted for an existing promisor

False

True or False: In an employment agreement with Karl, Arnold promises to work for Karl for the rest of his life. This promise must be in writing to be enforceable.

False

True or False: In building a $30,000 addition to the Murphys' house, the contractor used the wrong flooring, causing the Murphys $2,000 in damages. Under the substantial performance doctrine, the contractor's performance is substantial and therefore he is entitled to the contract price of $30,000, but if the deviation from the specifications were considered material, the Murphys would not have to pay for the addition.

False

True or False: In general, a contract made by a mentally incompetent person is void when no guardian has been appointed.

False

True or False: In general, if a minor lies about her age in order to induce the seller to contract with her, she cannot disaffirm that contract.

True

True or False: In general, minors have liability for their torts.

True

True or False: In most states, minors who fraudulently misrepresented their age at the time a contract was entered into may nevertheless disaffirm the contract.

True

True or False: In order to induce a car dealer to sell her son a car on credit, Mary promises that she will pay for the son's car if the son defaults on his monthly payments to the dealership. Mary's promise must be in writing or have a sufficient electronic record.

False

True or False: In order to prove that a person with a mental defect lacks the necessary capacity to enter into a contract, it must be shown that the person is permanently insane.

False

True or False: In relation to damages, the test of foreseeability is subjective.

False

True or False: In rescinding an executory, bilateral contract, no consideration is furnished.

True

True or False: In some states, minors are liable for contracts involving bank accounts and student loans and cannot avoid these contracts even though they can avoid other types of contracts.

False

True or False: In the Rosewood v. Caterpillar case, the issue was whether Caterpillar acted as a guarantor or surety of the contract in question.

True

True or False: Intoxicated persons are liable in quasi contract for necessaries purchased during their incapacity.

False

True or False: Jessica at the age of 15 entered into a contract to sell five acres of land to her uncle. She may disaffirm this contract at any time before reaching her majority.

True

True or False: Jim promises to marry Cynda if Cynda will buy him a new Ferrari for his birthday. This promise must be in writing to be enforceable.

False

True or False: Kris, age 17, who looks 18 or older, makes a contract to buy a car from Maisie, who is the age of majority. Maisie finds out Kris's age. Maisie may avoid the contract even if Kris did not misrepresent his age.

False

True or False: Liquidated damages are an equitable remedy.

False

True or False: Lou and David have an executory contract that is supposed to be performed on June 1. On May 1, David indicates that he has no intention of performing the contract as agreed. Lou must wait until June 1 before he can pursue any remedies for breach of contract against David.

False

True or False: Lydia makes a contract to purchase a used car on her seventeenth birthday. Six months later, her ratification of the contract can be effectively implied by her continuing payments.

True

True or False: Marie owes Nathan $300 and the parties agree that Marie will paint Nathan's house in satisfaction of the debt. The debt is not discharged until Marie performs the substituted agreement by painting Nathan's house.

True

True or False: Mark agrees to a three-year employment contract with State University as long as they become accredited after one year. This contract contains a "condition subsequent."

True

True or False: Michael is 17 years old and earns extra money by repairing cars. Nathan, who is 21, brings his car to Michael for repairs, and Michael ruins the brake system of the car because of his inexperience. If Nathan sues Michael for negligence in performing the auto repair contract, in most states Michael will have no liability, because the tort of negligence and the auto repair contract are connected.

False

True or False: Michael, a minor, rents a car to attend the senior prom at his high school. He signs an agreement stating that he will not take the car more than 100 miles from the rental agency. At 2:00 a.m., after he has had a few beers, his friends talk him into driving 200 miles to Chicago for the weekend. On the way, the car is involved in a minor traffic accident that damages the vehicle. Because the tort of negligence is related to the rental contract for the vehicle, Michael has no liability to the rental agency.

True

True or False: Most types of contracts are valid without being written

True

True or False: Oral contracts, within Statute of Frauds is unenforceable.

True

True or False: Persons who lack mental capacity at the time they enter into a contract may avoid liability under the agreement.

True

True or False: Ratification of a contract, once effected, is final and cannot be withdrawn.

True

True or False: Restitution can be obtained where a voidable contract is avoided.

True

True or False: Robert and John entered into a contract. If Robert agrees to a rescission of the contract, he will be unable to sue John for damages.

True

True or False: Sally goes away to college at 17, lives on her own, and pays her own rent and electric bills. If she makes a contract to buy a television set, in most jurisdictions, she may assert her minority status and set aside the contract.

False

True or False: Sean had two beers and felt tipsy. He made a deal with Yoko to buy her stereo. He can avoid the contract because of lack of capacity.

True

True or False: Seventeen-year-old Teresa wants to disaffirm her student loan agreements. Most states will not allow her to avoid such contracts.

False

True or False: Sixteen-year-old Todd's parents provide adequate food, lodging, and clothing for him, but he sees a sweater he wants and purchases it. In all states, the sweater is considered a necessary since it is an item of clothing.

True

True or False: Specific performance is an equitable remedy.

True

True or False: Substituted contracts discharge the original duties immediately.

False

True or False: The "perfect tender rule" would allow a buyer to keep merchandise that deviates from the contract without having to perform himself

False

True or False: The English statute of frauds and the Code's provision differ in language but have the same basic legal effect: an oral contract for certain identified situations is void.

False

True or False: The Restatement and the Code have made the traditional test of objective impossibility more stringent by requiring that the performance must be actually or literally impossible.

False

True or False: The UCC is substantially the same as the common law with regard to the doctrine of material breach of contract

True

True or False: The UCC permits an oral agreement for the sale of goods to be enforced against a party who admits to the contract in court, even though the statute of frauds requires the agreement to be in writing.

False

True or False: The basic remedy for misrepresentation is restitution.

False

True or False: The code and the restatement have no provisions for discharge of contactual duties in cases involving commercial impracticability

True

True or False: The doctrine of necessaries applies in the same way to minors and mental incompetents.

True

True or False: The executor-administrator provision applies to promises of an executor of a decedent's will to the decedent's creditors.

True

True or False: The law assumes that respective performances under a contract are concurrent conditions, unless there is an agreement to the contrary.

True

True or False: The main purpose doctrine is an exception developed by the courts to the suretyship provision.

True

True or False: The parol evidence rule applies only to integrated contracts, meaning those in which the parties have assented to the written agreement as the statement of the complete agreement between them

True

True or False: The parol evidence rule does not prevent the use of evidence that a party would like to use to establish the defense of fraud, duress, or undue influence

False

True or False: The parol evidence rule is an exclusionary rule of evidence

True

True or False: The parol evidence rule only applies to written contracts

False

True or False: The parol evidence rule prohibits introduction of all evidence that would result in modifying written contracts

True

True or False: The parol evidence rule would allow evidence to be introduced to explain what the parties meant by the term "serrated"

False

True or False: The statute of frauds generally requires that both parties sign the writing

False

True or False: The statute of frauds has to do with fraud in the inducement of a contract

False

True or False: The statute of frauds requires all contracts that can be fully performed within one year of their making to be in writing or proper electronic form.

False

True or False: The suretyship provision has been interpreted to include promises made to a debtor.

True

True or False: The suretyship provision rule within the statute of frauds applies to cases involving one party's promising to perform the duty of another party to yet a third party.

False

True or False: The test under the one-year provision of the statute of frauds is based on the likelihood that the contract will be completed within one year.

True

True or False: The test under the one-year provision of the statute of frauds is whether the terms of the contract make it possible for performance to occur within one year.

False

True or False: The world "parol" literally means release

False

True or False: There is no duty under the UCC to mitigate damages.

False

True or False: There is only one way to completely and legally discharge a contract.

True

True or False: To avoid a contract, an intoxicated person must act promptly, upon regaining capacity, to disaffirm.

False

True or False: To fully compensate plaintiffs in breach of contract cases, courts always award punitive damages commensurate with the losses the plaintiffs have suffered.

True

True or False: Tom's bank is threatening to repossess his car. Tom's mother promises the bank to pay Tom's obligation if Tom defaults. This promise must be in writing (or have a sufficient electronic record) to be enforceable.

True

True or False: Under the Code, a person buying goods from a minor has the power to transfer valid title to the goods to a good faith purchaser for value.

True

True or False: When a breach of contract occurs, the nonbreaching party is required to take reasonable steps to lessen or mitigate the damages that he may sustain.

False

True or False: Where a party has been induced by fraud to enter a contract, the Restatement of Torts permits the injured party to recover out-of-pocket damages but expressly excludes recovery of benefit-of-the-bargain damages.

Misrepresentations Regarding Age

Under common law, a minor who misrepresented his/her age would still have the right to disaffirm the contract; Some states still allow for the minor to disaffirm the contract entirely. Some statutes prohibit disaffirmance. Many states, though, prohibit disaffirmance of executed contracts unless the minor can return the consideration received.

Remedies for Misrepresentation: Contract Law

Under contract law, the deceived party can either affirm and enforce the contract or disaffirm and seek rescission. Includes affirmation with damages, rescission, reformation and warranty. (Rescission as a contract remedy is functionally the same as rescission in restitution.) (The equitable remedy of reformation may also be available.) (If a misrepresentation satisfies the requirements of breach of warranty, then compensatory damages may be recovered.)

Written Confirmation

Under the Sale of Goods, ____ between merchants. One that is sufficient against the sender is also sufficient against the recipient unless the recipient gives written notice of his obligations with ten days.

The quantity of the goods

Under the UCC statute of frauds, which of the following terms must be included in a writing in order to satisfy the writing requirement? a. The price of the goods b. The quantity of the goods c. The signatures and names of the buyer and the seller d. The time and place for delivery

course of performance

Under the UCC, ____ refers to the manner and extent to which the respective parties to a contract have accepted successive tenders of performance by the other party without objection. a. course of dealing b. usage of trade c. course of performance d. integrated document

usage of trade

Under the UCC, a(n) ____ is a practice or method of dealing, regularly observed and followed in a place or vocation or trade. a. course of dealing b. usage of trade c. course of performance d. integrated document

course of dealing

Under the UCC, a(n) ____ is a sequence of previous conduct between the parties to an agreement which may be fairly regarded as establishing a common basis of understanding for interpreting their conduct under the contract. a. course of dealing b. usage of trade c. course of performance d. integrated document

Modification or Rescission of Contracts within the Statute of Frauds

Under the UCC, the decisive point is the contract price after the modification. If the parties enter into an oral contract to sell for $450 a motorcycle to be delivered to the buyer and later, prior to delivery, orally agree that the seller shall paint the motorcycle and install new tires and that the buyer shall pay a price of $550, the modified contract is unenforceable. Conversely, if the parties have a written contract for the sale of two hundred bushels of wheat at a price of $4 per bushel and later orally agree to decrease the quantity to one hundred bushels at the same price per bushel, the agreement, as modified, is for a total price of $400 and thus is enforceable.

Minor

Under the age of legal majority (usually eighteen).

Subsequent oral or written agreements modifying the original agreement

Under the parol evidence rule, which of the following types of evidence may be used to vary or contradict the written agreement? a. Prior oral or written agreements b. Contemporaneous oral or written agreements c. Subsequent oral or written agreements modifying the original agreement d. Both (a) and (b).

Remedies for Misrepresentation: Tort Law

Under tort law, the deceived party may leave the contract in place, and recover damages for the loss caused by the other party's misrepresentation. (Availability and amount of damages depends on whether the misrepresentation is fraudulent or nonfraudulent.)

frustration of purpose doctrine

Unless one of the parties contractually assumes the risk, the ____ discharges a contract if supervening circumstances make fulfillment of the purpose which both parties had in mind impossible. a. bankruptcy law b. frustration of purpose doctrine c. perfect tender rule d. subjective impossibility doctrine

Usage of Trade

Usage of trade may be used to explain a contract. A usage of trade is a practice or method of dealing, regularly observed in a particular business setting so as to justify an expectation that it will be followed in the transaction in question.

Restitution: Yes; Specific Performance: Yes

Vladimir entered into a contract to buy Daniel's collection of rare stamps. Vladimir mailed payment of $10,000 for the stamps to Daniel, but now Daniel tells Vladimir, "I'll never part with these stamps." Are the following remedies available to Vladimir? a. Restitution: Yes; Specific Performance: Yes b. Restitution: Yes; Specific Performance: No c. Restitution: No; Specific Performance: Yes d. Restitution: No; Specific Performance: No

must reach the age of majority and ratify the contract as a whole.

Wanda at age 17 purchased an expensive stereo system from Stereo Sales. If Wanda wishes to ratify this contract, Wanda: a. must reach the age of majority and ratify the contract as a whole. b. may do so by express notification at any time before reaching the age of majority. c. may at any time keep the stereo but avoid any remaining debt owed on the stereo. d. may do so at any time by express or implied action before or after reaching the age of majority.

What Article of the UCC governs sales of goods? a. 1 b. 2 c. 3 d. None of the above.

The leading object rule

What is another name for the main purpose doctrine? a. The collateral promise rule b. The possibility test c. The leading object rule d. The suretyship provision

All of these are correct.

What is the capacity of a person adjudicated incompetent by a court order? a. A merchant might be able to recover the fair value of any necessaries. b. The person's own contracts are void. c. The guardian may be able to ratify contracts made by the ward. d. All of these are correct.

Breach or Nonperformance of Contract VS. Failure or Nonhappening of Condition

When a breach or nonperformance occurs, the promisor is subject to liability. Happening/non-happening of a condition does not subject either party to liability.

There is no uniform rule. States differ, and depending upon the state, any of the above could be correct.

When a minor falsely advises the other party that he is of the age of majority and based upon that misrepresentation, the other party in good faith enters into a contract with the minor: a. the minor has lost his right to disaffirm the contract because of the misrepresentation. b. the adult party can recover damages from the minor in tort. c. the minor is required to restore the other party to the position occupied before the making of the contract. d. There is no uniform rule. States differ, and depending upon the state, any of the above could be correct.

Discharge by Performance

When a promisor exactly performs his duty under a contract, he is no longer subject to that duty.

Specific performance and restitution

When an injured party is required to elect remedies, which of the following would be mutually exclusive? a. Restitution and liquidated damages b. Specific performance and compensation for incidental damages c. Specific performance and restitution d. Incidental and consequential damages

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.

Parol Evidence Rule: The Rule

When parties express a contract in writing that they intend to be the complete and final expression of their rights and duties (AKA make an "integrated contract"), (parol) evidence of their prior oral or written negotiations or agreements of their contemporaneous oral agreements that vary or change the written contract are NOT admissible. (Where the rule applies, evidence is not admissible.)

Rosewood Center v. Caterpillar

When the MAIN PURPOSE or LEADING OBJECT of the suety is to advance its own pecuniary or business interests, the promise does not fall within the statute

Course of Performance

Where a contract involves repeated occasions for performance by either party and the other party has the opportunity to object to such performance, any course of performance accepted or acquiesced to is relevant in determining the meaning of the contract.

Restitution: Situations Where Available Statute of Frauds

Where a contract is unenforceable because of the statute of frauds, a party may recover the benefits conferred on the other party in reliance on the contract.

Remedies for Misrepresentation: Tort Law: Damages for Fraud: Out-of-Pocket Damages

Where general damages = difference between the value given and the value received. (Allowed by a minority of States. Comparable to a combination of reliance and consequential damages under contract law.)

Remedies for Misrepresentation: Tort Law: Damages for Fraud: Benefit-of-the-Bargain Damages

Where general damages = difference between the value of the fraudulent party's performance as represented and the value the defrauded party received. (Allowed by the majority of States. Comparable to expectation damages under contract law.)

Case 15-3 Specially Manufactured Goods Kalas v. Cook

Where: Appellate Court of Connecticut, 2002 In accordance with a long-standing oral agreement, a print shop manufactured goods for the buyer's use and sale. After buyer's death, buyer's executor refused to pay for the last deliveries. Q: Does the statute of frauds (codified in the UCC) bar enforcement of this oral agreement? Plaintiff: Kalas (owner of print shop) Defendant: Cook (executor of buyer--Simmons--'s estate) Trial court said the agreement was a sale of goods, and therefore not precluded by the statute of frauds. Conclusion: we agree with trial court. Seller is entitled to be paid (even though it was only an oral agreement) because these goods were specially manufactured for (only really usable to) Cook. AFFIRMED.

Case 14-1 Minors: Disaffirmance Berg v. Traylor

Where: Court of Appeals, Second District, Division 2, California, 2007 Appellants: Meshiel Traylor and her minor son Craig Appellee: Sharyn Berg (Craig's former personal maanger) Appealing: judgment confirming arbitration award in favor of Berg for unpaid commissions under contract and unrepaid loans from Berg They had signed an agreement with Berg in 1999 giving her 15% of everything paid to Craig as his agent; a few months after getting his Malcolm in the Middle role, they wrote saying they no longer required her services in September; Berg responded a few days later saying they were in breach of agreement Berg filed suit in 2004 for breach of agreement. Arbitration in 2005 awarded over $550,000 to Berg. Defendants filed a petition with the State trial court to vacate the arbitration award. Court judged in favor of Berg. We say: someone who provides a minor with goods and services does so at their own risk. The agreement did say that Meshiel should remain obligated for commissions, regardless of whether Craig disaffirmed the agreement. Meshiel remains liable under the agreement and resulting judgment. Craig does not. The counsel, arbitrator, and trial court repeatedly and systematically ignored Craig's interests in the matter. Craig was entitled to and did disaffirm the agreement, including the arbitration agreement. Craig's portion of the arbitration must be reversed. However, disaffirmance of a minor does NOT terminate the contractual obligations of the parent who signed the agreement. Meshiel remains liable. Conclusion: REVERSED as to Craig and AFFIRMED as to Meshiel.

Case 17-2 Anticipatory Breach Hochster v. De La Tour

Where: Queen's Bench of England, 1853 Plaintiff: Hochster (tour guide) Defendant: De La Tour (tourist) On April 12, Hochster was contracted by De La Tour to serve as a tour guide on Tour's 3-month trip to Europe, beginning June 1. On May 11, De La Tour notified Hochster that he would not need him anymore, and refused to pay. Hochster brings this action to recover damages for breach of contract. It's logical that Hochster may have turned down employment opportunities scheduled for the time he was supposed to be with Tour. "The man who wrongfully renounces a contract into which he has deliberately entered cannot justly complain if he is immediately sued for a compensation in damage by the man whom he has injured." Conclusion: judgment entered in favor of plaintiff Hochster.

Case 17-4 Impossibility Northern Corp. v. Chugach Electrical Association

Where: Supreme Court of Alaska, 1974 Northern Corp was contracted by Chugach to repair and upgrade the Cooper Lake Dam. The contract required Northern to obtain rock from a quarry site and transport it across the ice on the lake via trucks. Water overflowed on the lake; Northern complained it was unsafe, but Chugach insisted on performance. One of Northern's loaded trucks broke through the ice and sank. After continued difficulties, Northern ceased operations with the approval of Chugach. Chugach then asked them again; Northern tried again, resulting in the sinking of 2 trucks and deaths of the drivers. Northern ceased again and notified Chugach that it considered the contract terminated for impossibility. Northern filed suit to recover the cost incurred in attempting to complete the contract. Question: was the contract (objectively) impossible to perform? Trial court said it was impossible. Chugach argued that Northern could have transported the rock by other means; however, the contract specified the use of trucks across ice. Northern's duty is discharged for impossibility, or at the very least commercial impracticability. It could only be done at excessive and unreasonable cost. Conclusion: AFFIRM court's decision that the contract was impossible of performance.

Case 15-1: Suretyship / Main Purpose Rule Rosewood Care Center, Inc. v. Caterpillar, Inc.

Where: Supreme Court of Illinois, 2007 Plaintiff: Rosewood (a skilled nursing facility) Defendant: Caterpillar There was some confusion between Rosewood and Caterpillar over what amount of its employee (Cook)'s bills would be covered by Caterpillar. Cook was admitted as terms seem to continue to change. Caterpillar did not object to receiving bills or advise Rosewood that the treatment was not authorized, but ultimately refused to pay. Rosewood filed action against Caterpillar seeking reimbursement for services provided to Cook. Caterpillar moved to dismiss, saying the promise to pay for Cook was not enforceable because the statute of frauds would require it to be. Trial court granted dismissal; Rosewood appealed. Apellate court reversed and remanded. We recall that paying the debt of another (suretyship) is unenforceable unless in writing (bc it's under the statute of frauds). MAIN PURPOSE/LEADING OBJECT RULE: Rosewood argues that it does NOT have to be in writing bc of this rule, arguing that the main purpose it to subserve/advance Caterpillar's pecuniary interests. We cannot determine that; the purpose of their promise should be determined by the trier of fact. Rosewood also argued that suretyship was not created and rather that Caterpillar contracted directly with Rosewood and received benefits in return. We also cannot determine that; it must be determined by the trier of fact. Accordingly, we REMAND.

Case 17-1 Express Conditions Silvestri v. Optus Software, Inc.

Where: Supreme Court of New Jersey, 2003 Defendant: Optus (small software company) Plaintiff: Michael Silvestri (Director of Support Services at Optus) Optus hired Silvestri with a 2-year contract containing a "satisfaction clause" giving them the right to terminate his employment for failure to perform to the company's satisfaction. He was terminated under this clause 9 months in. Silvestri filed this action, claiming the clause was objectively unreasonable, making his termination a breach of the employment contract. Trial court granted summary judgment to the company. Apellate Division reversed, holding that employers should follow an objective standard for satisfaction to invoke such a clause. Question: is the employer's satisfaction here subject to objective, or subjective evaluation? A subjective standard is typically applied to satisfaction clauses in employment contracts. This is NOT the same as an employment-at-will relationships (wherein the employer can terminate an employee for any reason or no reason unless prohibited by law or public policy). There must be an honest dissatisfaction with the employee's performance. Conclusion: we find that (absent language to the contrary), subjective assessment is appropriate. Applying the subjective test of performance, the trial court (not the appellate court) was right to grant summary judgment to Optus. Appellate Division judgment is REVERSED and REMANDED for entry of summary judgment in favor of defendants.

Case 14-4 Intoxicated Persons/Incompetent Persons First State Bank of Sinai v. Hyland

Where: Supreme Court of South Dakota, 1987 Hyland had Mervin co-sign a promissory note for him. Apparently, at the time, Mervin was intoxicated. This note went unpaid, but Hyland brought a check from Mervin to pay the interest on it and asked for another extension. The bank drafted another, but Mervin refused to sign this one, and Hyland declared bankruptcy. The Bank sued Mervin, and he argued he was not liable because he was intoxicated when he signed. Trial court agreed and said it was void. However, to disaffirm that sort of contract, you have to do it quickly after regaining capacity and receiving notice of the contract. Mervin did not, and in fact paid the interest for Hyland. Mervin's obligation WAS voidable, but he failed to disaffirm. His paying of the interest made the voidable contract fully binding. Conclusion: REVERSE and REMAND.

Case 14-3 Minors: Liability for Necessaries Zelnick v. Adams

Where: Supreme Court of Virginia, 2002 Question: is a contract for legal services, entered into on behalf of a minor, voidable upon a plea of infancy? Is it subject to enforcement as an implied contract for necessaries? If enforceable, what is the basis for determining the value of the services rendered? Johnathan is the child of unwed parents Adams (mother) and Hylton (father). His paternal grandfather died when he was 9 and established 2 different trusts for his grandchildren. At 16, Johnathan's mom met with an attorney (Zelnick) about the trusts. She had contacted people but no one would give her info about whether or not Johnathan was a beneficiary. Adams did not have money for Zelnick and requested legal services on her son's behalf (on a contingency fee basis.) Adams signed a contract for Zelnick to represent Johnathan in a 1/3rd contingency fee basis in his claim against the estate of his grandfather. In 1997, Zelnick filed and won a bill of complaint for the benefit of the trust. In March 1998 (1 month before Johnathan turned 18), his father brought a bill of complaint for declaratory judgment to have the contract with Zelnick declared void. When J turned 18, he filed a petition to intervene and disaffirmed the contract. He argued the contract was unnecessary and void because it was not for necessaries. Trial court granted his motion for summary judgment, and ruled that the fee agreement was void. It was not binding on J and was not for necessaries because it could have been adjudicated after he turned 18 instead. However, trial court said Zelnick was entitled to a fee under "quantum meruit" and awarded him $60k. Both Z and J appeal. We find that the trial court's reason for considering it not a necessary is an error of law. A contract for legal services is within the "general classes of necessaries" and so can defeat a plea of infancy. Conclusion: REVERSED and REMANDED.

Case 14-2 Minors: Ratification In Re the Score Board, Inc.

Where: US District Court, D, New Jersey, 1999 Appellant: Kobe Bryant Appellee: The Score Board Inc. ("Debtor") Bryant was 17 in Spring 1996 when he contracted to forgo college and enter the 1996 lottery draft of the NBA. In May 1996 Debtor contacted Bryant's agent (Arn Tellem) intending to make a deal with him on making memorabilia with his image. Bryant rejected the agreement on July 11, 1996 (while still a minor) and made a counter-offer, signing it and returning it to Debtor. Debtor signed but then misplaced the counter-offer. Debtor is only able to produce a copy signed only by Bryant. On August 23 Bryant turned 18. He performed the contractual duties for about 1.5 years. In March 1998, Debtor filed for bankruptcy. Tellem returned a recent check from them with a letter questioning the validity of the contract. Tellem asserted in April 1998 that no contract existed because the counter-offer was never signed. Debtor sold the contract but Bryant argued that was impossible because the contract didn't exist or was voidable. In December 1998 the Bankruptcy Court ruled that the parties' conduct demonstrated acceptance via performance and created an enforceable contract. Though contracts made during minority are disaffirmable within a reasonable time, conduct can amount to ratification. Bryant had deposited a check from Debtor and continued performing the contract. Conclusion: Bryant's appeal of the Bankruptcy Court's orders (finding a valid and enforceable contract) is DENIED.

Running of the statute of limitations

Which of the following generally is not grounds for discharge of a contract by operation of law? a. Objective impossibility b. Subsequent illegality c. Running of the statute of limitations d. Bankruptcy

Roger bought a VCR, but he may return the VCR within ten days and get all of his money back.

Which of the following is a contract with a condition subsequent? a. Rhonda enters into a contract to buy a new car conditional upon her getting a loan from her bank. b. Roger bought a VCR, but he may return the VCR within ten days and get all of his money back. c. Both (a) and (b) are examples of a condition subsequent. d. Neither (a) nor (b) is an example of a condition subsequent.

A promise, the leading object of which is to obtain an economic benefit for oneself

Which of the following is an exception to the suretyship provision requirement under the statute of frauds? a. A collateral promise made to the creditor b. A promise, the leading object of which is to obtain an economic benefit for oneself c. A collateral promise where there are three parties and two contracts involved d. A promise by an executor to pay the debts of the decedent from the executor's own funds

For executed, fair contracts with a mentally incompetent person who understands but cannot control his behavior to act rationally, the incompetent must restore the competent party to the status quo before the transaction by a return of the consideration received or its equivalent in money.

Which of the following is correct regarding the contractual liability of incompetent persons? a. An incompetent person's responsibility upon disaffirmance is the same as for a minor. b. For executed, fair contracts with a mentally incompetent person who understands but cannot control his behavior to act rationally, the incompetent must restore the competent party to the status quo before the transaction by a return of the consideration received or its equivalent in money. c. The contracts of a person under guardianship by court order are voidable. d. The contracts of a ward are binding without the approval of the guardian.

All of the above are correct.

Which of the following is correct with respect to election of remedies? a. The Code rejects any doctrine of election of remedies; its remedies are cumulative. b. The remedy of specific performance is inconsistent with that of restitution. c. A person who seeks an injunction may also seek incidental damages for the breach. d. All of the above are correct.

A camera

Which of the following is least likely to be classified as a necessary for which a minor will be held liable on a contract? a. A camera b. School supplies c. Boots for a snowy climate d. An automobile

Unlike a minor, an incompetent person can never ratify a contract.

Which of the following is not true regarding the contracts of incompetent persons? a. An incompetent person is liable for necessaries. b. Unlike a minor, an incompetent person can never ratify a contract. c. To avoid a contract, a person need not be permanently incompetent. d. A person is competent unless he is unable to understand the nature and effect of his act.

Slight intoxication will destroy one's contractual capacity.

Which of the following is not true regarding the contracts of intoxicated persons? a. If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable. b. The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency. c. Slight intoxication will destroy one's contractual capacity. d. Contracts made while a person is too intoxicated to act in a reasonable manner may be ratified when the intoxicated person regains his capacity.

A party to a contract which was unenforceable because of the statute of frauds but who relied upon the contract may recover in restitution the benefits he conferred on the other party.

Which of the following is true regarding noncompliance with the statute of frauds? a. The basic legal effect under the statute of frauds and the UCC differs. b. The statute of frauds applies to executed and executory contracts. c. A party to a contract which was unenforceable because of the statute of frauds but who relied upon the contract may recover in restitution the benefits he conferred on the other party. d. The doctrine of promissory estoppel cannot displace the requirement of a writing under a statute of frauds.

Technical terms will always be given technical meaning even where a different intent is manifested by the parties.

Which of the following is untrue with regard to the interpretation of contracts a. Express terms prevail over course of performance, and course of performance prevails over course of dealing. b. Technical terms will always be given technical meaning even where a different intent is manifested by the parties. c. Handwritten or typed terms are given greater weight than preprinted terms. d. All writings that are part of the same transaction are interpreted together.

A "sale or return" contract is an example of a contract with a condition subsequent.

Which of the following is/are correct with regard to conditions subsequent? a. Conditions subsequent are quite common in contracts. b. A "sale or return" contract is an example of a contract with a condition subsequent. c. A condition subsequent must occur before performance is due under a contract. d. All of the above are correct.

The signature of the party suing

Which of the following need NOT be contained in a memorandum, which satisfies the general statute of frauds writing requirement? a. The names of the parties to the contract b. The signature of the party being sued c. The signature of the party suing d. The subject matter and essential terms of the unperformed promises

Mindy's agreement with Susan to buy her bike for $400

Which of the following promises does not have to be evidenced by writing in order to be enforceable? a. Jones' agreement with Smith to sell his condominium for $100,000 b. Stewart's promise to work for Austin for a two-year period c. Dad's promise to the credit union that he will make payments on his son's truck if his son does not pay d. Mindy's agreement with Susan to buy her bike for $400

John and Joan mutually promise to marry each other in a formal ceremony on June 23.

Which of the following promises in consideration of marriage would be outside the statute of frauds? a. In consideration of Joan's promising to marry him, a man promises to pay her an allowance and to give her all of his property upon his death. b. John and Mary mutually agree that their marriage shall not affect the existing property rights of the other. c. John and Joan mutually promise to marry each other in a formal ceremony on June 23. d. Joan promises to release a money judgment against Steven in consideration of his marrying her.

All of the above meet the signature requirement.

Which of the following would NOT meet the signature requirement for a writing to satisfy the statute of frauds? a. A typewritten name b. Handwritten initials c. A printed name d. All of the above meet the signature requirement.

Where a landscaper agrees to landscape the lot surrounding an office building

Which of the following would NOT require a writing under the statute of frauds? a. Where the buyer of a five-acre lot pays the $40,000 purchase price, thus fully performing his obligation b. Where a renter agrees to rent a building for a 5-year period c. Where a contractor enters into an agreement for an easement across adjoining land to run cables d. Where a landscaper agrees to landscape the lot surrounding an office building

All of the above

Which of the following would be a valid ratification? a. Two weeks after his eighteenth birthday, Jerry sells the motorcycle he contracted to buy when he was seventeen. b. Two weeks after attaining his eighteenth birthday, Jerry calls the bank to assure them that he will continue making payments on the loan agreement he signed a month before his eighteenth birthday. c. Two weeks after his eighteenth birthday, Jerry makes a payment on the installment contract he signed a month before. d. All of the above

A letter dated July 9, 2007, reciting agreement to new delivery terms

Which of the following would be admissible under the parol evidence rule? Assume the written contract was made on June 1, 2007, and that it is an integrated document. a. A letter dated July 9, 2007, reciting agreement to new delivery terms b. A chart showing the dates for delivery written on August 16, 2006 c. A copy of two letters while the parties were in the negotiation stage of their contract which showed agreement to a term not included in the June 1, 2007 contract d. A copy of common carrier rules on the duty of delivery persons for uncrating merchandise, which is dated December 1, 2003

All of the above would be material breaches.

Which of the following would be considered a material breach of a contract? a. Partial performance that omits some essential part of the contract. b. Delivery of 50 chairs in a contract that calls for 100 chairs. c. An intentional breach of the contract. d. All of the above would be material breaches. e. Only (a) and (b) above would be material breaches.

Medical care received in a hospital

Which of the following would not be subject to the writing requirements of Article 2 of the UCC? a. An unborn puppy whose mother is an AKC champion b. Trees that will be cut from a ten-acre tree farm c. Food served in the banquet room of a Florida resort d. Medical care received in a hospital

an express condition.

William has a contract to build a new office building for Angela. The contract contains a provision requiring William to furnish a certificate of occupancy from the building inspector before Angela is required to pay. This provision is: a. an express condition. b. an implied-in-fact condition. c. an implied-in-law condition. d. a condition subsequent.

Minors: Liability on Contracts Disaffirmance

Word of avoidance of the contract; may be done during minority and for a reasonable time after reaching majority, but not after ratifying the contract. Ordinarily this releases the minor from any liability in the contract. Minors' contracts can also be voidable by their parent or guardian. Can be express or implied. Must show intention not to be bound. Exception: minor cannot disaffirm sale of land until AFTER reaching the age of majority. See Case 14-1 Berg v. Traylor

Condition Precedent

a condition that must be fulfilled before a party's performance can be required is called a condition precedent. the condition proceeds the absolute duty to perform. many contracts are conditioned on an independent appraisal of value. example: restoration motors offers to buy Charlie's 1960 Cadillac limousine only if an expert appraiser estimates that it can be restored for less than a certain price. thus, the parties obligations are conditioned on the outcome of the appraisal. if the condition is not satisfied-that is, if the appraiser deems the cost to be above that price-there obligations are discharged. PN: condition that must be satisfied before a party contractual obligation become absolute. Ex: I promise to hire someone as my driver once she gets her license. precedent is that she has to get her license first.

Accord

a contract between a promisee and promisor by which the promisee agrees to accept and the promisor agrees to render

Mental Illness or Defect

a contract entered into by a mentally incompetent person (one who is unable to understand the nature and consequences of his acts) is voidable. Either party may be liable in restitution.

Mental Illness or Defect

a contract entered into by a nonadjudicated mentally incompetent person (one who is unable to understand the nature and consequences of his acts) is voidable • Still liability necessities

Intoxicated Persons

a contract entered into by an intoxicated person (one who cannot understand the nature and consequence of her actions) is voidable

Sale of Goods

a contract for the sale of goods for the price of $500 or more must be evidenced by a writing or record to be enforceable.

Persons Under Guardianship

a contract made by a mentally incompetent person placed under guardianship by court order is void o State has to come in and remove their ability for a binding contact like healthcare, contracts, etc. o Void if person under guardianship- fact pattern that court/state appointed guardian o Voidable contract if proven aren't capable of taking care of themselves o Interdictions- Louisiana

Liability for Necessaries

a minor is liable for the reasonable value of necessary items (those that reasonably supply a person's needs) - Grocery store example, teens could come in and return consumed goods

Liability for Necessaries

a minor is liable for the reasonable value of necessary items (those that reasonably supply a person's needs).

Restitution

a minor who has disaffirmed a contract is entitled to restitution from the other party for any benefit the minor has conferred on the other party; the courts differ regarding the obligation of the minor to make restitution to the other party

Restitution

Liability on Contracts

a minor's contracts are voidable at the minor's option.

Substantial Performance

a party who in good faith performs substantially all of the terms of a contract can be enforce the contract against the other party under the doctrine of substantial performance

Cognitive Test

a person is mentally incompetent if he is unable to comprehend the subject of the contract, its nature, and its probably consequences -applied if no court order

Statute of Frauds

a. Witness were bought and paid for the say people said they would sell land b. Contracts within statues: a sale/purchase of land i. Can be carried out c. Contracts within statues: agreement to be guarantor i. Executor of estate ii. Prenup d. $500 limit of contracts of sale of goods

Ratification

affirmation of the entire contract; may be done upon reaching majority.

Ratification

affirmation of the entire contract; may be done upon reaching majority; affirmation of the entire contract; may be done upon reaching majority

Ratify

after the minor becomes of age, she may choose to adopt or ________ the contract, in which case she surrenders her power of avoidance and becomes bound.

Hochster v. De La Tour

an anticipatory breach discharges the injured (nonbreaching) party and entitles her to bring suit immediately. Does not have to wait to time of performance to bring the lawsuit - can sue straight away as soon as he finds (can also start mitigating damages).

Ward

an infant or insane person placed by authority of law under the care of a guardian

Hochester v De La Tour (1853)

anticipatory breach; Hochster engaged as a courier, 3 weeks before de la tour said he was not needed, refusing to compensate him. A week before his employment was meant to commence, Hochster sued for breach-anticipatory breach-entitled to sue.

Executor-Administrator Provision

apples to promises to answer personally for the duties of decedents.

Land Contract Provision

apples to promises to transfer any rights, privileges, powers, or immunities in real property.

Suretyship Provision

applies to a contractual promise by a surety (promisor) to a creditor (promisee) to perform the duties or obligations of a third person (principal debtor) if the principal debtor does not perform.

One Year Provision

applies to contracts that cannot be performed within one year.

Marriage Provision

applies to promises made in consideration of marriage but not to mutual promises to marry.

Suretyship Provisions

applies to promises to pay the debts of others.

In Re the Score Board, INC

at 17, Kobe stated his intention to forego college and enter the 1996 lottery draft for the NBA Debtor wanted rights to Kobe Bryant's name to market products Kobe rejected offer with a counteroffer Debtor became bankrupt and tried to sell Bryant's licensing agreement Kobe agreement with Debtor-company lost signed contract with kobe in counteroffer, so kobe had financial trouble -Kobe is to make 2 personal appearances and 32,500 autographs -he would received $2.00 per autograph after the first 7,500 -also receive a base $10,000 compensation Counteroffer from Bryant: -changed the # of autographs he had to sign -changed the amount of prepaid autographs from 7,500 to 500 **contract existed even though Debtor did not signed the contract. Because both parties performed the duties discussed which acts as non-verbal mutual assent.** **kobe contract became ratified when he kept performing the duties of the contract after he became 18.** **also the acceptance of the $10,000 check by Bryant without dispute in a reasonable time after reaching majority-18** =Court said there was a contract, even though there was no verbal or definitive written assent, the conduct by both parties work as acceptance =Debtor has been granted the right to sell Bryant's contract to Oxxford =Once you turn 18 you have to immediately show intention to void a contractual performance Minors: Ratification Kobe Bryant vs. Score board 17-yr-old Kobe was sent contract and promised compensation for autographs, base compensation of 10K and 5K would be awarded early if he returned agreement within 6 weeks Bryant rejected agreement and sent counteroffer Balser signed counteroffer, misplaced it, never found it. Bryant turned 18 and deposited 10K check from Score Board into account One month later Bryant began performing tasks assigned for a year and a half. Then he decided he didn't want to sign autographs and his agent decided the contract didn't exist Score Board sent Bryant $1130 check and Bryant claimed he was owed $10130 Agent sent check back and questioned validity of contract. Score Board filed for bankruptcy Tellem said contract didn't exist because it wasn't signed by debtor Debtor began selling assets including executory contracts with other athletes Judge ruled that debtor accepted bryant's counter offer and therefore a valid contract existed Even if bryant's counter offer wasn't signed by debtor, the parties' subsequent conduct demonstrated their acceptance of the contractual obligation, creating an enforceable contract Burns denied claims of mutual mistake, infancy, and his motion for stay relief Final Orders: Bankruptcy court overrules bryant's objection to the sale. The right to disaffirm is subject to infant's conduct Bryant cashed check, signed autographs, etc. after reaching legal majority Bryant's appeal of the Bankruptcy Court's orders finding that a valid and enforceable contract exists is denied

Disaffirmance

avoidance of the contract; may be done during minority and for a reasonable time after reaching majority o Any time as minor or for a reasonable time after turning 18 o Real estate minor has to be 18

Disaffirmance

avoidance of the contract; may be done during minority and for a reasonable time after reaching majority, but not after ratifying the contract. Cannot disaffirm sale of land until after reaching age of majority.

many states certain business contracts entered into by minors (can/cannot) be disaffirmed

cannot -if minor does business or engages in employment in the manner of an adult, his or her related contracts are fully enforceable

Contractual Discharge

concerns the termination of contractual duties.

Compensatory Damages

contract damages placing the injured party in a position as good as the one he would have held had the other party performed; equals loss of value minus loss avoided by the injured party plus incidental damages plus consequential damages

Person Under Guardianship

contracts made by a person placed under guardianship by court order are void - a guardian is appointed by a court, generally under the terms of a statute, to control and preserve the property of a person whose impaired capacity prevents her from managing her own property - the contracts of the ward may be ratified by her guardian or by herself upon termination fo the guardianship

Person Under Guardianship

contracts made by a person placed under guardianship by court order are void.

Rule

contracts within the statute of frauds must be evidenced by a writing to be enforceable

Incidental Damages

damages arising directly out of breach of contract

Electronic Records

full effect is given to electronic contracts and signatures.

Liability for Tort Connected with Contract

if a tort and a contract are so intertwined that to enforce the tort the court must enforce the contract, the minor is not liable in tort.

Main Purpose Doctrine

if primary object is to provide an economic benefit to the surety, then the promise is not within the statute

Admission

in pleadings, testimony, or otherwise in court makes the contract enforceable for the quantity of goods admitted.

Conditional Performance

in some situations, however, performance is contingent on the occurrence or nonoccurrence of a certain event. a condition is a qualification in a contract based on a possible future event. the occurrence or nonoccurrence of the event will trigger the performance of the legal obligation or terminate an existing obligation under a contract. if the condition is not satisfied, the obligations of the parties are discharged. Conditions are classified as express or implied. PN: suspends or terminates somones obligations and will be concerned with

Specially Manufactured Goods

in this case an oral contract for goods is enforceable

Novation

is a substituted contract that involves an agreement among three parties

Conditions Subsequent

is an event that terminates an existing duty. For example, where goods are sold under terms of "sale or return," the buyer has the right to return the goods to the seller within a stated period but is under an immediate duty to pay the price unless she and the seller have agreed upon credit. A return of the goods, which operates as a condition subsequent, terminates the duty to pay the price. Conditions subsequent occur very infrequently in contract law, while conditions precedent are quite common.

Executor-Administrator Provision

is thus a specific application of the suretyship provision. Accordingly, the exceptions to the suretyship provision apply to this provision as well.

Parol Evidence Rule

is when parties express a contract in a writing that they intend to be the complete and final expression of their rights and duties, evidence of their prior oral or written negotiations or agreements of their contemporaneous oral agreements that vary or change the written contract are not admissible.

Berg vs. Traylor

kid on tv show paying agent. A minor may dissaffirm his contracts during minority or for a reasonable time after reaching the age of majority, nevertheless the minor's right to disaffirm does not extend to an adult party to the agreement

Supplemental Evidence

may be admitted

Disaffirmance

may be either express or implied. No particular form of words is essential so long as they show an intention not to be bound. This intention also may be manifested by acts or by conduct. For example, a minor agrees to sell property to Alice and then sells that property to Brian. The sale to Brian would constitute a disaffirmance of the contract with Alice.

Restitution

minor who has disaffirmed contract is entitled to restitution; courts are divided on whether minor is LIABLE for restitution.

minors entering contracts involving necessaries

necessities required for standard of living -minors may disaffirm the contract but remains liable for the reasonable value of the goods

Modification or Rescission of Contracts within the Statute of Frauds

oral contracts modifying existing contracts are unenforceable if the resulting contract is within the statute of frauds.

Parental Liability

parents will be liable if they co-sign the contract and, thereby, assume personal liability for performance of the contract.

Substantial Performance

performance that is incomplete but that does not defeat the purpose of the contract; does not discharge the injured party but entitles him to damages

Minor

persons who are under the age of majority (usually 18 years)

Liability for Misrepresentation of Age

prevailing view is that a minor may disaffirm the contract o Majority rule, let minor out of contract anyway even if minor lies about age

Liability for Misrepresentation of Age

prevailing view is that a minor may disaffirm the contract. Some states prohibit disaffirmance; some states require repayment and some allow defrauded party to recover damages.

Promise Must Be Collateral

promisor must be secondarily, not primarily, liable

Sale of Goods

provides a general method of compliance for all parties and an additional one for merchants.

Interpretation of Contracts

the asecrtainment of the meaning of a promise or agreement or a term of the promise or agreement.

Intoxicated Persons

the law considers contracts made by the party voidable, although they may be ratified when the intoxicated party regains his capacity. slight intoxication will not destroy one's contractual capacity; on the other hand, a person need not be so drunk that he is totally without reason or understanding. most courts find that the intoxicated person must act promptly once regaining his capacity to disaffirm and generally must offer to restore the consideration he has received.

Computation of Time

the year runs from the time the agreement is made

Hochester v De La Tour (1853)

where a condition is breached the innocent party has the right of election, can choose to terminate or affirm the contract

Rule Contracts

within the statute of frauds must be evidenced by a writing to be enforceable.

Mackay

• 1 year provision • stewart mckay said they made a promise the keep him until he retires • statues of promise to apply to it • court said it applies and statues of fraud compliance writing o absence of writing not enforceable • mckay said don't need writing because 1 year provision/ performance , from when contract signed • possibility test not probability, possibility • not admitting that

Minors: Disaffirmance: Berg v. Traylor

• Berg- plaintiff, agent • Traylor- defendant, actors family • Child actor • Agent needs actor to sign contract • Get offered gig o Malcolm in the middle • Craig Traylor's mom signs contract for 3 years • Mom announces done with contract before its over o Cancelling on account that Craig is a minor o Behind on taxes • Sharron said it was a breach of contract o Big money owed • Allowed minors to enter into contracts with adults o Disaffirmance- declare no longer actable o Always avoidable, either all or nothing, not just some parts o If exercising right to avoid it- void o General rule- Window of time of reasonable time after turning 18 or anytime while a minor Minor real estate- has to wait until 18 to exercise disaffirmance • Sharron had presence of mind- got mom to sign as not just child's guardian but also individual capacity o Craig got off o Mother was responsible

Minors: Liability for Necessaries: Zelnick v. Adams

• Engaged with services of attorney • Minors ability to discern contract • Are attorney's fee's part of the necessaries • Jonathan Adams 17, grandfather passed away o Mother wants to make sure Jonathan gets his share o Is Jonathan is paternal grandson of his grandfather- not the main issue of case • Zelnick- attorney o Cuts mother deal, contingency fee of what is going to be jonathans portion • While Jonathan is 17, the father goes as the confirmed dad and disaffirms contract on jonathans behalf • Jonathan turns 18 and disaffirms contract • Zelnick- wants to be paid at least reasonable value of services • Does not hold- legal services aren't always necessary or never necessary • not generally necessary but minors may be in necessity to legal services o like if in car wreck • reviewing court, punts case back down to trial level for jury to choose

Hyland

• Intoxication and ratification • Father son promissory notes o Extension of note if dad signs o Dad signs for extensions o Accrued interest • Father didn't sign again but signs check for interest • Bank sues • Son files bankruptcy • Father, the first time of extension, was intoxicated, significantly o Involuntary rehab o Disaffirmance due to intoxication • Ratification for check for interest→ liable, accepting liability

Minors: Ratification: In Re the Score Board, Inc.

• Kobe Bryant case, 17 years old o No college, straight into NBA o Enters into merchandising contract with sports paraphernalia company • Company Scoreboard pays for appearances, autographs on merchandise o Ups to $75,000 o $10,000 up front for signing • agent decides its not generous enough, so they tweak it for less autograph requirement o scoreboard keeps it and tucks it away • Kobe turns 18, turns in $10,000 check • 18 months in, he learns that his autograph is worth more • Scoreboard goes bankrupt, owes many people money o Disclose everything that has money o Pay creditors best they can o Value: contract Kobe Bryant signed • Kobe is notified that contract might be sold o Kobe said he's cancelling it because he signed it when he was 17, voidable • Found that when Kobe turned 18, examined contract to see if he disaffirmed it o Kept $10,000 o Signed autographs o Performed contract for 18 months after turning 18 o Consistent with someone who wants to be bound to contract • Kobe wasn't allowed to disaffirm and held to contract

One-Year Provision: Mackay v. Four Rivers Packing Co.

• MacKay gets fired then rehired before rehire he said he had to know he can work until retirement • one year provision- if performance cant be completed then agreement doesn't exist • MacKay thinks the verbal agreement is sufficient • four rivers- needs writing • ultimate holding- no statues of fraud didn't apply, possible for him to retire even though he said he had no plans to. Because it is possible the performance could have been fulfilled • retirement

Berg vs. Traylor

• Minors disaffirmance • Minors can disaffirm anytime in the age of minority or a reasonable time after turning 18, unless real estate • Mom didn't want to be in charge of amount of money owed to Shannon • Craigs disaffirmance was allowed and owes no money o Mother is responsible for money owed

In Re The Score Board

• Minors ratification • Must occur once a minor is 18, ratify through words or conduct • Kobe Bryant • Board had to evaluate cohesive conduct • Entered into contract with scoreboard at 17 years old o Turned 18 shortly after • Turned 18, received and deposited check, and performed contract for 18 months • Tried to disaffirm after o Minor when signed • Not up help, consistent with someone wanting to ratify contract

Zelnick vs. Adams

• Necessaries • Get grandpa money • Legal services are necessaries of john Adams • Attorney services are sometimes necessary for minors o Rarely absolute terms • Case was sent back to lower court • Attorneys fees may rise to necessaries for certain minors

Rosewood

• Suretyship and main purpose rule • Didn't decided if suretyship existed or main pupose rule • Narrative for contract being in place and main purpose o Suretlyship- collateral promise between o Promise to pay debt of another person if they fail to complete it • Rosewood took over for catipillar employee o Catipillar said take care of Betty Joe, we'll pay • Time to get paid- Catipillar said assurity, need writing • Rodewood- weren't assurity, made part of original promise, send to invoice o Collateral promise • Rosewood said catipillar was assurity for their own economic gain/ get their employee back • Doesn't find anything zeros in on rules

Rules of Interpretation

• all the circumstances are considered, and the principal purpose of the parties is given great weight • a writing is interpreted as a whole • commonly accepted meanings are used unless the parties manifest a different intention • wherever possible, the intentions of the parties are interpreted as consistent with each other and with course of performance, course of dealing, or usage of trade • technical terms are given their technical meaning • specific terms are given greater weight than general language • separately negotiated terms are given greater weight than standardized terms or those not separately negotiated • specific terms control general terms • the order for interpretation is express terms, course of performance, course of dealing, and usage of trade • where a term has several possible meanings, the term will be interpreted against the party who supplied the contract or term • written provisions are given preference over typed or printed provisions, and typed provisions are given preference over printed provisions • if an amount is set forth in both words and figures and they differ, words control figures

northern vs electrical

• northern was hired to repair damn • contract whole time was once lake was deeply frozen enough, they could drive heavy trucks to bring rocks and • plan tanked, ice never sufficiently frozen • lives lost of northern • issue of notion of impossibility but specifically commercial impartibility o court saw it wasn't truly contractually impossible to complete o embraced doctrine of commercial impractibikty- business standpoint, doesn't make since to perform, unduely burdomsom, cost to perform was disproportionate • northern was cut loose of obligations

Silvestri

• obejective subjective standard to satifcation clauses • mike lulvestry was let go/ fired • software let him go because his conduct didn't comply with satisfaction of company • mike argued that decision to let him go based on satifocatry of his work is objector o my work is not subpar to anyone reasonale • subjectivity of CEO or objectiry of performance o micromanagement CEO • court found when it comes to business, cant absuolutly use subjective and not objective or satifcation in employment agreement • satifcation of other party of 3rd party

Intoxicated Persons/Incompetent Persons: First State Bank of Sinai v. Hyland

• randy Hyland- son, 2 outstanding loans, lets bank know he cant pay loan back • first bank is used by randy, and says extension request is fine if Mervin, father, signs to agreement o go home get dad to sign it and brings back to bank signed • randy still cant pay after extension o bank needs check for interest and need dad to sign paperwork dad doesn't sign off on note but rights check for $900 • randy files for bankruptcy o creditor is in standstill o but they have signed note from Mervin let Mervin know they look for him for payment • Mervin says contractual liability intoxication o Went into involuntary rehab o Proved in rehab and alcohol problem and intoxicated when signed agreement • However court holds that attempted disaffirmance is denied because he became aware of entering into contract and didn't try to disaffirm it o Signing the $900 check- ratification, not acting like someone who wants to disaffirm • Involuntary intoxication

Kalas vs. Cook

• specially manufactured goods • general rule: value is greater or equal than $500 then you need writing • party charged with performace • outstanding budle of goods and invoice amount • excecutory who owed money o said needed writing • court said exception for customized goods made by request o verbal agreement is okay if it can only be used by 1 company • verbal was uphelp

de la tour

• tour guide case • one party of contract announces advanced that they aren't completing contract o letting them know they aren't doing what they were supposed to • non-breaching party should wait before or after not completing • can see if you actually breach or just go ahead • if he would have sued on de la tour early, he could have gotten them to fulfill o if wait, send signal you don't care

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