Chapter 12, 13, 14

What does "parol" in parol evidence mean

"speech" or "words," specifically words outside the original writing

The UCC requires assignments to be in writing when the amount being assigned is more than _____

$5000

Remedies

- A number of factors of into the decision of whether or not to sue

Exceptions to the Statute of Frauds

- Admission - Partial performance - Promissory estoppel - Exceptions under the UCC

Contracts with obvious typographical errors

- Allowing parol evidence to correct typos doesn't fundamentally alter the written agreement because the typo is not an accurate reflection of the parties' agreement - The agreement is not altered by correcting a typo; rather, the agreement is clarified

Further requirements specific to certain states

- Equal dignity rule - A minority of states have special provisions related to promises to pay debt

Contracts that have been subsequently modified

- Evidence regarding a contract's subsequent modification is admissible - To be admissible, the modification must've been made after the writing, and the evidence must clearly indicate this later modification - Not all evidence of modification is admissible - If the agreement is required to be in writing under the statute of frauds, oral modifications are unenforceable (however, oral evidence of a subsequent written agreement is admissible). - If the contract's terms require modification to be in writing, oral modifications are inadmissible and unenforceable

Evidence of prior dealings or usage or trade

- Falls under the UCC and not the statute of frauds - Allows otherwise inadmissible parol evidence for a specific reason - Parol evidence is admissible for the sake of clarification if the evidence addresses prior dealings between the parties or usages of trade in the same business field as that which the parties are in - Evidence related to past dealings can help clarify missing or ambiguous terms by examining how the parties had previously interacted - If a term is missing or ambiguous, courts rely on evidence of what was done between the parties in the past to attempt to gauge what was intended in the contract in question - If a contract is ambiguous or incomplete, the courts examine the standard practices in the business - This allows evidence to clarity a contract as opposed to changing any material terms of the contract

Objective possibility

- It is in fact not possible to lawfully carry out one's contractual obligations - It's illegal to follow out what you said you would do - Discharges the parties' obligations under the contract 3 things: - Destruction of the subject matter—Something is impossible (A painting is burned) - Death or incapacity or a person whose services are needed - Subsequent illegality (if the law changes after the contract was made, rendering the performance of the contract illegal, the contract is discharged)

2 types of remedies

- Legal remedies (money damages) - Equitable remedies (some form of court order action)

Exceptions under the UCC

- Merchants - Contract for customized goods - Oral contracts between merchants need not be in writing to be enforceable - If one merchant agrees to sell goods to another, the contract is enforceable even if it is not in writing

The major obstacles to genuine assent

- Mistake - Misrepresentation - Undue influence - Duress

Any of the following would trigger a successful request for rescission on grounds of duress:

- One party threatens physical harm or extortion to gain consent to a contract. - One party threatens to file a criminal lawsuit unless consent is given to the terms of the contract (Threats to file a civil case against a party don't constitute duress unless the suit is frivolous). - One party threatens the other's economic interests. For example, Jim refuses to perform according to a contract unless Ellen either signs another contract with him or pays him a higher price than that specified in the original agreement. The injured party makes the case for duress by demonstrating that the threat left him or her no reasonable alternatives. The point is that the free will necessary for legal consent had been removed by the specifics of the threat.

Anticipatory Repudiation

- Sometimes a contracting party may decide not to complete the contract before the actual time of performance. This situation often arises when market conditions change and one party realizes that it won't be profitable to carry out the terms of the contract. The breaching party may convey the anticipatory breach to the nonbreaching party either by making an express indication of her intent not to perform or by taking an action that would be inconsistent with her ability to carry out the contract when performance was due. - Once the contract has been anticipatorily repudiated, the nonbreaching party is discharged from his obligations under the contract. He is free to go ahead and sue for breach and to find similar contract elsewhere. However, if the nonbreaching party wishes, he may decide to give the party who repudiated the opportunity to change her mind and still perform.

Void or voidable contract

- The courts allow parol evidence to demonstrate that the contract is void or voidable. - Allowing evidence that proves a contract is void or voidable doesn't fundamentally alter the terms of the contract. - The parol evidence would address the enforceability of the agreement, which isn't the same as changing the terms of the agreement - Evidence of a defense against a contract is admissible to prove a contract is void or voidable

Required elements in the writing to prove the existence of a written agreement

- The identification of the parties to the contract - The subject of the agreement - The consideration if any is given - Any pertinent terms of the contract Also: - The contract must be signed o The signature doesn't have to be located at the end, which is the traditional location for a signature - The signature doesn't have to be full; a mark, such as an initial, is permissible as long as the mark is placed with the intent to function as a signature - Only the party against whom action is sought needs to have signed the writing o If only one party signed, the agreement is enforceable against the signing party but not against the non-signing party - The required elements can be contained in a memorandum, a written document, or a compilation of several written documents

Contracts conditioned on orally agreed-on terms

- The parol evidence rule doesn't prevent parties from introducing evidence proving the written agreement was conditioned on terms agreed to orally (because the evidence being elicited doesn't substantially modify the written agreement) - No terms are altered, so the parol evidence rule doesn't apply

Mitigation of damages

- This to prevent an angry party from wanting to make the breaching party pay through the nose - To recover damages in a breach-of-contract case, the plaintiff must demonstrate that he used reasonable efforts to minimize the damage resulting from the breach - Ex. If you're the manager of a hotel, and a person who had booked 10 rooms for the week calls to cancel all the reservations, you have a duty to attempt to rent the rooms to minimize the damages. The mitigation must be reasonable, and no one is expected to settle for less than what was contemplated under the contract in order to mitigate the damages - Ex. One area in which interesting mitigation issues arise is when an employee is wrongfully discharged and must seek new employment to mitigate her damages.

Third party rights to contracts

- Usually parties not in privity of contract (parties other than the two contracting parties) don't have a right to the contract—but there are exceptions

Requirements for a written agreement under the UCC for sales contracts

- Vary slightly from those under the statute of frauds - UCC doesn't require the parties to be named in the agreement - UCC requires the writing to state clearly the quantity to be sold - UCC allows a variety of written documents to constitute a writing, including faxes, e-mails, invoices, bills of lading, sales slips, check, or any combination of these documents

Nonfinalized, partially written and partially oral, contract

- When a contract consists of both written and oral elements, judges tend to treat the agreement as nonfinalized - The judge makes the assumption that the parties don't intend the written agreement to represent the entire agreement. - Oral evidence related to the contract is admissible because the written document is not the complete and final representation of the agreement

Contract containing ambiguous terms

- When a contract contains what the court deems to be ambiguous terms, the court is faced with a dilemma in interpretation - To attempt to reach the most accurate interpretation of the original agreement, the court allows evidence, even if it is oral, for the sole purpose of clarifying ambiguous terms - Evidence used to clarify ambiguity isn't believed to modify the contract but, rather, to clarify it - Oral evidence related to ambiguity is admissible only to clarify, and not to change, any of the contractual terms

Incomplete contracts

- When a contract is fundamentally flawed because it's missing critical information, courts can allow parol evidence to provide the missing information (typically related to essential terms of the contract) - Parol evidence will be admitted to clarify the contract by filling in the missing parts while not modifying the written agreement - Parol evidence is used to facilitate business transactions as opposed to forcing the parties to enter into a new, complete agreement.

Recovery based on Quasi-Contract

- When an enforceable contract doesn't in fact exist, the court may grant a recovery based on quasi-contract; that is, the court may impose a contractlike obligation on a party to prevent an injustice from occurring. - Recovery in quasi-contract is often sought when a party thought a valid contract existed and gave up something of value in relying on the existence of a contract. - You're asking the court to make a contract to avoid unjust enrichment - To recover under a theory of quasi-contract, a plaintiff must prove that o The plaintiff conferred a benefit on the defendant o The plaintiff had reasonably expected to be compensated for the benefit conferred on the defendant o The defendant would be unjustly enriched from receiving the benefit without compensating the plaintiff for it

For a mutual mistake to interfere with legal consent, it must involve all of the following...

1. A basic assumption about the subject matter of the contract. 2. A material effect on the agreement. 3. An adverse effect on a party that did not agree to bear the risk of mistake at the time of the agreement. *Courts will not void contracts for reason of mutual mistake if even one of the preceding attributes is missing.

Courts will find nondisclosure as having the same legal effect as an actual false assertion under certain conditions:

1. A relationship of trust exists between the parties to the contract. In this situation, the relationship provides a reasonable basis for one person's exception that the other would never act to defraud him or her. 2. There is failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement. An illustration is my failure to inform you of the recent outbreak of rust on my rust-free car that you have agreed to purchase next month.

Discharge by operation of law

1. Alteration of the contract • When one of the parties materially changes a written contract without the other party knowing, the courts have held that the innocent party is discharged from the contract. 2. Bankruptcy • When a party files bankruptcy, the court allocates the assets of the bankrupt among the bankrupt's creditors and then issues the party a discharge in bankruptcy • Once the assets have been distributed, all the bankrupt's debts are discharged 3. Tolling of the statute of limitations • The expiration of the time allowed by the statute • Once the statute of limitations has tolled, neither party can any longer sue the other for breach, so for all practical purposes the parties are not longer bound to perform 4. Impossibility of Performance • When an unforeseen event occurs that makes it physically or legally impossible for a party to carry out the terms of the contract • The parties will be discharged on grounds of impossibility of performance • Objective impossibility- impossible o Destruction of the subject matter o Death or incapacity of a party whose personal services are necessary to fulfill the terms of the contract o Subsequent illegality • Subjective impossibility- very difficult 5. Commercial impracticability - If it's impossible to perform (objective or subjective) 6. Frustration of purpose • When an unforeseen event occurs that makes it physically or legally impossible for a party to carry out the terms of the contract • Courts distinguish between objective impossibility and subjective impossibility

3 types of conditions

1. Condition precedent 2. Condition subsequent 3. Concurrent conditions

5 contracts that fall within the statute of frauds

1. Contracts whose terms prevent possible performance within one year. 2. Promises made in consideration of marriage. 3. Contracts for one party to pay the debt of another if the initial party fails to pay 4. Contracts related to an interest in land. 5. Contracts for the sale of goods totaling more than $500

2 types of indented beneficiaries

1. Creditor beneficiaries 2. Donee beneficiaries

Duties that cannot be delegated

1. Duties that are personal in nature • When it requires the specific talents, skills, or expertise of the obligor 2. Duties for which the delegatee's performance will vary significantly from the delegator's 3. Duties in contracts that forbid delegations

4 ways parties to a contract agree to discharge each other from their obligations

1. Mutual rescission • Parties may agree that they simply wish to discharge each other from their mutual obligations and therefore may rescind or cancel the contract 2. Substituted contract • Instead of canceling the contract, the parties may substitute a new agreement in place of the original 3. Discharge by accord and satisfaction • When one of the parties wants to substitute a different performance for his original duty under the contract. • The promise to perform the new duty is called the accord, and the actual performance of that new duty is called the satisfaction • The party's duty under the contract is not discharged until the new duty is actually performed. Thus it is the satisfaction that discharges the party. 4. Discharge by novation

A party seeking equitable relief must prove

1. No adequate legal remedy is available 2. Irreparable harm to the plaintiff may result if the equitable remedy is not granted 3. The contract is legally valid (except when seeking relief in quasi-contract) 4. The contract terms are clear and unambiguous 5. The plaintiff has "clean hands," that is, has not been deceitful or done anything in breach of the contract.

Conditions that would permit a court to invalidate a contract on grounds of unilateral mistake

1. One party made a mistake about a material fact and the other party either knew or had reason to know about the mistake. 2. The mistake was caused by a clerical error that did not result from gross negligence. 3. The mistake was so serious that the contract is unconscionable, that is, so unreasonable that it is outrageous.

Assignments that cannot be assigned

1. Rights that are personal in nature 2. Rights that increase the obligor's risk or duties 3. Rights whose assignment is prohibited by contract 4. Rights whose assignment if prohibited by law or public policy

When is discharge by operation of law used?

1. That an event occurred whose nonoccurrence was a basic assumption of the contract. 2. That continued performance is not commercially practicable. 3. That the party claiming discharge didn't expressly or impliedly agree to performance in spite of impracticability that would otherwise justify his nonperformance.

Frustration of purpose must show

1. The contract must be at least partially executory 2. The frustrated party's purpose in making the contract must have been known to both parties when the contract was made 3. This purpose must have been basically frustrated by an event not reasonably foreseeable at the time the contract was made, the occurrence of which was not due to the fault of the frustrated party and the risk of which was not assumed by him

Remedies considerations

1. The likelihood of success 2. The desire or need to maintain an ongoing relationship with the potential defendant 3. The possibility of getting a better or faster resolution through some form of alternative dispute resolution 4. The cost of litigation or some form of alternative dispute resolution compared to the value of the likely remedy

Merger clause

A clause in a written agreement within the statute of frauds that states that the written agreement accurately reflect the final, complete version of the agreement. - Not all courts consider merger clauses to be conclusive proof of a contract - However, where merger clauses are accepted, they greatly reduce the amount of guesswork courts must do in determining whether a written agreement was in fact intended to be the final statement of the agreement.

Parol evidence rule

A common law rule that states that oral evidence of an agreement made prior to or contemporaneously with a written agreement is inadmissible when the parties intend the written agreement to be the complete and final version of their agreement. - A written agreement is assumed to be complete, and evidence contradicting this final agreement usually impedes business transactions, which is why the parol evidence rule exists. - A written agreement is assumed to be complete, and evidence contradicting this final agreement usually impedes business transactions, which is why the parol evidence rule exists. - However, when a court determines that the written agreement doesn't represent a complete and final version of the agreement, evidence may be admissible to further the court's understanding of the agreement. o The admissible evidence is limited to additional elements, missing in the writing, that are consistent with the written agreement o These elements may be terms typically included in similar transactions that were left out of the specific writing, or they may be separate agreements in which consideration was offered. - Writings are more readily admitted as part of the written agreement that is oral evidence regarding conditions or terms in the final agreement (this is because judges are allowed discretion in determining which documents constitute the final contract). - The parol evidence rule doesn't usually exclude extrinsic written evidence.

Express condition

A condition specifically and explicitly stated in a contract and usually preceded by words such as conditioned on, if, provided that, or when

Implied condition

A condition that is not specifically and explicitly stated but is inferred from the nature and language of the contract.

Third-party beneficiary contract

A contract created when two parties enter into a contract agreement with the intended purpose of benefiting a third party. - The third party doesn't need to be explicitly named in the contract as long as the terms of the contract or events occurring after the creation of the contract make it clear who the intended recipient of the contractual benefits is

Conditional contract

A contract that becomes enforceable only on the happening or termination of a specified condition. - May be either implied by law or expressly inserted into the contract by the parties

Delegation

A contracting party's (a delegator's) transfer of his or her duty to perform to a third party who is not part of the original contract (a delegatee). - Instead of the third party receiving something, as in an assignment, delegations require the delegatee to fulfill the delegator's contractual obligation to the obligee—the party to the contract to whom a duty is owed

Assignment

A contracting party's transfer of his or her rights to a contract to a third party. - In some situations contractual rights cannot be assigned

Obligor

A contractual party who agreed to do something for the other party.

Obligee

A contractual party who agreed to receive something from the other party.

Injunction

A court order either forcing a party to do something or prohibiting a party from doing something. - Ex. Charlotte Ruse Case - Most commonly, injunctions are prohibitions against actions. - Ex. A remedy in a contract case involving a personal service

Nondisclosure

A failure to provide pertinent information about a projected contract. - A passive form of misleading conduct.

Intentional misrepresentation

A false representation of a material fact made by a party who either knows or believes that the factual claim is false or knows that there is no basis for the assertion. Scienter is clear.

Fraudulent misrepresentation

A false representation of a material fact that is consciously false and is intended to mislead the other party. - Fraudulent misrepresentation is intentional misrepresentation.

Innocent misrepresentation

A false statement about a fact material to an agreement that the person who made the statement believed to be true. - The person who made the false statement had no knowledge of the falsity of the claim (we say that person lacked scienter). - Innocent misrepresentation permits the party that was misled by the false statement to rescind the contract. However, because the party that made the false statement had no intent to mislead, the aggrieved party cannot sue for damages

Negligent misrepresentation

A false statement of material fact made by a party who thinks it is true but who would have known the truth about the fact had he or she used reasonable care to discover or reveal it. - Even though there was no actual intent to deceive, the party making the false statement is treated in contract law as if the intent were present. - Courts find negligent misrepresentation only when the party making the false statement should've known the truth had she used the competence required of a person in her position or profession. - The impact is identical to that of fraudulent misrepresentation.

Delegator

A party in a contract who transfers his or her duties to perform to a third party who is not part of the original contract (a delegatee).

Equal dignity rule

A rule requiring that contracts that would normally fall under the statute of frauds and need a writing if negotiated by the principal must be in writing even if negotiated by an agent.

English rule

A rule that states that the first assignee to give notice of assignment to the obligor is the party with rights to the contract.

First-assignment-in-time rule

A rule that states that the first party granted the assignment is the party correctly entitled to the contractual right.

Admission

A statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing. - All states except Louisiana and California adhere to the admission exception

Material breach

A substantial breach of a significant term or terms of a contract that excuses the non-breaching party from further performance under the non-breaching party the right to recover damages.

Voidable

A term applied to a contract that one or both parties have the ability to either withdraw from or enforce. - A contract may be considered voidable if there was a problem with the acceptance.

Intended beneficiary

A third party to a contract whom the contracting parties intended to benefit direction from their contract. - They may enforce their rights to a contract when both parties to the contract intended for the third party to benefit

Donee beneficiary

A third party who benefits from a contract in which a promisor agrees to give a gift to the third party. - Most common form is life insurance policies. Someone (the promise) pays premiums on a life insurance plan to have the insurer (the promisor) agree to pay a third party (the done beneficiary) on the promisee's death

Creditor beneficiary

A third party who benefits from a contract in which the promisor agrees to pay the promisee's debt.

Delegatee

A third party who is not part of the original contract but to whom duties to perform are transferred by one of the contracting parties (a delegator).

Integrated contract

A written contract intended to be the complete and final representation of the parties' agreement. - Once the courts deem a contract integrated, parol evidence is inadmissible (unless one of the above exceptions apply) - A merger clause is one way parties can indicate they want to create an integrated contract

Prenuptial agreement

An agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party's property. To be enforceable, the agreement must be in writing.

Mistake

An erroneous belief about the facts of a contract at the time the contract is concluded. When a mistake occurs, legal assent is absent. - Mistakes in contract law do not result from the untrue statements of the other party to the contract.

Partial performance

An exception to the statute of frauds in which the performance of portions of an unwritten agreement by one or both parties can constitute proof that an oral contract exists between the parties. - If the buyer in an alleged contract for the sale of land has paid any portion of the sales price and either has begun to improve the land permanently or had taken possession of the land, the courts will consider the contract partially performed, and this partial performance will amount to proof of the contract.

Tender

An offer by a party in a contract to perform, along with being ready, willing, and able to perform, a duty outlined in that contract.

Specific performance

An order of the court requiring a breaching party to fulfill the terms of the contract. - Rare and courts will only do it when monetary damages aren't adequate, usually because the subject matter of the contract is unique.

Misrepresentation

An untruthful assertion by one of the parties about a material fact. - One party said something that prevented the parties from having the mental agreement necessary for a legal contract. The parties only appeared to agree, so their contract lacked legal assent. - Courts insist that there must be a meeting of the minds for a valid contract, so they may rescind a contract even though the person making the false assertion was entirely innocent of any intentional deception.

Duress

Any unlawful act or threat exercised on a person whereby the person is forced to enter into an agreement or to perform some other act against his or her will. - Found when one party was forced into the agreement by the wrongful act of another.

Equitable remedies

Asking the court to order someone to do something

Difference between assignments and delegations

Assignment- transfers rights - After the assignment is made, the assignor has no right left to the original contract Delegation- transfers duties - The delegator is not relieved of his duty to perform by making a delegation - If the delegatee fails to fulfill the contract, the delegator is still liable to the oblige for fulfillment of the contract

Punitive damages

Compensation awarded to a plaintiff that goes beyond reimbursement for actual losses and is imposed to punish the defendant and deter such conduct in the future. - Rarely awarded - Usually only awarded when the defendant has engaged in reprehensible conduct such as fraud - The primary factor in determining the amount of punitive damages is how much is necessary to punish the defendant; thus the amount depends on matters such as the wealth and income of the defendant.

Equivalent of actual assertion

Concealment and Nondisclosure

Complete performance

Contract performance that occurs when all aspects of the parties' duties under the contract are carried out perfectly.

Substantial performance

Contract performance that occurs when nearly all the terms of the agreement have been met, there has been an honest effort to complete all the terms, and there has been no willful departure from the terms of the agreement.

Liquidated damages

Damages specified as a term of the contract, before a breach of contract occurs. - If these go to court, they are looking to see if the agreed on damages are reasonable - If one party is in a much superior bargaining position - The parties specify this amount in advance - Henry v. Baxendale case: A case where the court had to decide whether the clause at issue was an unenforceable penalty clause or a valid liquidated-damage clause

Scienter

Deliberately or knowingly.

The importance of genuine assent

If assent is not genuine, or legal, a contract may be voidable. For purposes of planning, it is important for people to understand the circumstances under which failure of assent may render their contracts voidable.

Condition subsequent

In a contract, a future event that terminates the obligations of the parties when it occurs

Condition precedent

In a contract, an event that must occur for a party's duty to arise - If the event doesn't occur, the party's duty to perform does not arise - Ex. Real estate contracts are conditioned on an event such as the buyer's ability to sell his current home by a certain date. If the home doesn't sell, the condition does not arise, and the parties have no duty to perform and are thus discharged from the contract.

Condition precedent

In a contract, an event that must occur for a party's duty to arise. - When an entire contract is conditioned on something occurring first - Evidence of the existence of a condition precedent agreed to orally is admissible because the contract isn't modified by such evidence; rather, its enforceability is called into question - Since the statute of frauds is concerned primarily with the enforceability of agreements, it logically follows that the parol evidence rule doesn't apply to evidence of condition precedents

Consequential damages

In a contract, foreseeable damages that result from special facts and circumstances arising outside the contract itself. The damages must be within the contemplation of the parties at the time the breach occurs. Also called special damages. - Often especially difficult to prove

Concurrent conditions

In a contract, terms under which each party's performance is conditioned on the performance of the other; occur only when the parties are required to perform for either other simultaneously - The legal effect is that each party must offer to perform before being able to sue the other for nonperformance

Assignee

In a contract, the party who receives the rights of another party (an assignor) to collect what was contractually agreed on in the original contract - Basically fills in for the assignor as the legal recipient of the contractual duties - The assignee is offered no additional protection than the assignor had - An assignee must agree to accept the assigned rights

Assignor

In a contract, the party who transfers his or her rights to the contract to a third party (an assignee), giving the assignee the right to collect what was contractually agreed on in the original contract. - When an assignor transfers her rights to an assignee, the assignor legally gives up all rights she previously had to collect on the contract

Novation

In a contract, the substitution of a third party for one of the original parties; the duties remain the same under the contract, but one original party is discharged and the third party takes that original party's place.

Promisor

In a third party beneficiary contract, the party to the contract who made the promise that benefits the third party.

Promisee

In a third party beneficiary contract, the party to the contract who owes something to the promisor in exchange for the promise made to the third party.

Most common equitable remedies

Include rescission and restitution, orders for specific performance, and injunctions

Intended v. Incidental beneficiaries

Intended: - Contracting parties intended to benefit the third party with their contract - Beneficiary has the right to enforce the contract - Beneficiary benefits from direct reception of contractual performance Incidental: - Contracting parties did not intend to benefit the third party with their contract - Beneficiary doesn't have the right to enforce the contract - Beneficiary benefits from indirect circumstances created by contractual performance

Manderville v. PCG&S Group, INC

Issue- Should a lack of diligence and the existence of an exculpatory clause prohibit a buyer from raising a claim of intentional misrepresentation? Decision: The summary judgment was reversed, and the plaintiffs will have the opportunity to prove the elements of fraudulent misrepresentation. Significance- This case shows that misrepresentation is serious enough that courts will not let defendants hide behind an exculpatory clause.

Simkin v. Blank case

Issue- should the plaintiff be permitted to use a mutual mistake claim in the context of a marital settlement agreement? Decision- The Court of Appeals found in favor of the defendant and reversed the decision of the lower court. Significance- this case provides illustration of the criteria courts use to determine whether a plaintiff can use a mutual mistake claim.

Telekenex v. Charlotte Russe case

Issue: Is economic loss in the business setting sufficient to establish a defense of duress? Decision: The case was originally decided on a motion for default judgment. The court found that Russe had established a prima facie defense or duress and remanded for further proceedings. Significance: Demonstrates that duress in the business setting must amount to more than the simple pecuniary loss. To establish the duress defense, one must be able to prove significant business loss.

Martha A. Nix & Charles Upham v. Wick's & Oldfield:

Issue: does oral testimony constitute a writing that satisfies the statute of frauds? Decision: Court affirmed the trial court's judgment, saying that the contract was void under that statute of frauds Significance: Demonstrates the requirement included in the statute of frauds that establish oral testimony as a writing

Subjective possibility

It would be very difficult to carry out the contract

Nominal damages

Monetary damages awarded to a plaintiff in a very small amount, typically $1 to $5, to signify that the plaintiff has been wronged by the defendant even though the plaintiff suffered no compensable harm. - Usually to prove a point if no actual damages resulted from the breach of contract

Compensatory damages

Money awarded to a plaintiff as reimbursement for her or his losses; based on the amount of actual damage or harm to property, lost wages or profits, pain and suffering, medical expenses, disability, and so on - Make them whole as if the contract had been performed

Incidental beneficiary

One who unintentionally gains a benefit from a contract between other parties.

Creditor beneficiary v. Donee beneficiary

Purpose of the contract: Creditor- contractual performance fulfills an obligation to a third party Donee- Contractual performance gives a gift to a third party Enforcement of rights: Creditor- Beneficiary can enforce rights to a contract if the contract is valid and the rights have vested. Beneficiary can enforce rights against the promisor or the promise Donee- Beneficiary has limited ability to enforce contract, depending on the jurisdiction. Beneficiary can enforce rights against the promisor.

Statute of frauds

State-level legislation that addresses the enforceability of contracts that fail to meet the requirements set forth in the statute; serves to protect promisors from poorly considered oral contracts by requiring certain contracts to be in writing. - Everyone who wants to enforce the contract has to have signed the agreement

Concealment

The active hiding of the truth about a material fact. - Ex. Removing 20,000 miles from the odometer on our car before selling it to me.

Promissory estoppel

The legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract. - For it to be in effect, the party's reliance must be to his or her own detriment - The reliance must have been reasonably foreseeable; the party who didn't rely on the contract should've known that the other party would rely on it

Mutual mistake

The result of an error by both parties about a material fact, that is, one that is important in to context of a particular contract. - Either party can choose to rescind the contract. - This is fair because any agreement between the parties was an illusion (an ambiguity in some key fact prevented the parties from being in actual agreement). - Story of the ship Peerless: has taught generations of students the importance of being very clear in defining material facts in any contract. The court ended up rescinding the contract

Unilateral mistake

The result of an error by one party about a material fact, that is, one that is important in the context of a particular contract. - In general, this kind of mistake does not void a contract.

Restitution

The return of any property given up under a contract

Undue influence

The situation in which one person has taken advantage of his or her dominant position in a relationship to persuade the other person unduly to the extent that the dominant person's persuasive efforts have interfered with the other person's ability to make his or her own decision. - When people are bargaining with their attorney, doctor, guardian, relative, or anyone else in a relationship involving a high degree of trust, unusual pressures unique to that relationship can persuade them.

Rescission

The termination of a contract

Exceptions of the Parol Evidence Rule

There are situations in which parol evidence, which is normally excluded, may be admissible in court These exceptions pertain to: 1. Contracts that are subsequently modified 2. Contract conditioned on orally agreed-on terms 3. Contract that are not final because they are part written and part oral 4. Contracts with ambiguous terms 5. Incomplete contracts 6. Contracts with obvious typographical errors 7. Voidable or void contracts 8. Evidence of prior dealing or usage of trade

Intent to deceive

This is present when the party making the false statement claims or implies that he or she has personal knowledge of the accuracy of the assertion. - Any resulting assent is not legal because the injured party was not allowed to joining the mind of the deceiving party

Rescind

To cancel a contract. - When a contract is voidable, is may be rescinded. - Permits the person who canceled it to require the return of everything she gave the other party. - The person who rescinds the contract must herself return whatever she has received from the other party.

Vest

To mature, as in the maturation of rights that allows a party to act legally on the rights. - Before a third party's rights have vested, the original contracting parties can make changes to the original contract without the permission of the third party

Elements to fraudulent misrepresentation

Two elements from the definition: 1. A false statement about a past or existing fact that is material to the contract. 2. Intent to deceive. Intent can be inferred from the particular circumstances. Then add a third necessary element: 3. Justifiable reliance on the false statement by the innocent party to the agreement. Justifiable reliance is general present unless the injured party knew, or should have known by the extravagance of the claim, that the false statement was indeed false. For example, a person couldn't justifiable rely on a claim by another that a hair on her head, although worth $1,000, was available for $10.

2 types of mistakes

Unilateral and mutual

Reformation

When a written contract doesn't reflect the parties' actual agreement, or there may be inconsistencies in the contract, such as the price being listed as "$200,000 (twenty thousand dollars)." - In such a case, the written document may be rewritten to reflect what the parties had agreed on - We ask the court to rewrite it

Discharge by performance

When parties discharge their obligations by doing what they respectively agreed to do under the terms of the contract.

Incidental damages

When the plaintiff suffers other losses caused

2 types of performance

complete and substantial

Rescission and restitution are most frequently awarded in situations in which there is a lack of

genuine assent

2 situations where a third party gains rights to a contract

o One of the contracting parties transfers rights or duties to a third party o The third party is a direct beneficiary of a contract involving two other parties

Purpose of the parol evidence rule

to restrict evidence from being admitted that substantially contradicts the agreement in its written form. o Evidence of prior agreements and negotiations, as well as of contemporaneous agreements and negotiations, is typically excluded under the parol evidence rule.

Promises made in consideration of marriage.

• Agreements regarding marriage in which one party is gaining something other than a return on his or her promise to marry are within the statute of frauds and must be in writing. • When one party promises something to the other as part of an offer of marriage, the contract must be in writing to be enforceable • Mutual promises to marry do not fall within the statute of frauds

Rights whose assignment is prohibited by law or public policy

• Even when no statute prohibits an assignment, if the assignment is determined to be against public policy, the assignment is deemed ineffective

Contracts for the sale of goods totaling more than $500

• Required by UCC • The contract need only state the quantity to be sold • Buyer, seller, price, and method of payment don't need to be included in the writing • For the contract to be enforceable against a party, the party against whom action is sought must have signed the written document

Rights that are personal in nature

• The obligor must've promised something specific to the person receiving it • Exception to this is payment, because rights to payment can always be transferred

Contracts whose terms prevent possible performance within one year.

• The one year period begins to run the day after the contract is created, not when the contract is scheduled to begin • Not related to the likelihood of the completion of the contract within one year, rather the test considers the possibility of the completion of the contract within one year • Contracts for complex construction projects need not be in writing because they can be

Contracts related to an interest in land.

• The statute is intended to prevent oral claims to the existence of a contract for the sale of land • Because the statute requires a writing as evidence of the contract, a claim to an oral contract for the sale of land is not enough to prove such a contract existed • Contracts transferring other interests in land are also within the statute of frauds • Mortgages and leases are within the statute of frauds because they're considered transfers of interest in land

Contracts for one party to pay the debt of another if the initial party fails to pay

• These promises are referred to as secondary promises, collateral promises, or suretyship promises • Refer to agreements in which a third party agrees to pay the debt owed by another party if that other party fails to pay his or her debt

Rights whose assignment is prohibited by contract

• When parties include an antiassignment clause in their contract, the parties are attempting to limit their ability to assign their rights under the contract