BLAW 341 Final Exam

Contractual Performance - What are the Conditions of Performance - Example Allegheny Power

- Allegheny Power contracts with Westmoreland Coal for the delivery of 17 tons of coal to its electrical plant - Allegheny promised to pay when Westmoreland delivers the coal - What type of condition is this? - Concurrent - What effect does this have on the contract? - If they deliver, Allegheny pays

Capacity to Form a Contract - Minor Ratification of Contract - Example with Amy Computer Outcome

- Amy cannot disaffirm because she is 18 and past the infancy period rule. -Infancy Period Rule: she has been 18 for over 6 months and is no longer considered a minor - Also, implied conduct since she continued to pay payments until november - Computer store CAN obtain contract amount of $1200

Capacity to Form a Contract - Minors Ratification of Contract - Example with Amy's computer

- Amy is 17 years old - Jan. 2016 - signs installment contract for computer and must pay $100/month for 12 months. - Amy turns 18 on February 28th - Amy skips payment for November then calls computer store and tells them she wants to disaffirm contract - Is she permitted to disaffirm contract in Nov 2016? May the Computer store obtain the entire contract price of $1200?

Third Party Rights and Assignments - What is an Assignment? - Example with Banks and Student

- Bank A is Assignor - Assigns right to receive loan repayment from student to Bank B - Bank A sends money to students college - Bank A obligations are done - Student promises to repay student loan - Bank B is the third party AND Assignee - after valid assignment, student must make loan payments to Bank B. Student does not pay bank A. Bank A NOT entitled to receive student loan repayments - Repayment is Bank A's RIGHT to receive under the terms of the original contract

Misrepresentation Lack of True Assent - Unilateral Mistakes - Bart and Car Salesman outcome

- Bart cannot cancel the contract since the salesperson did not know Bart's preference. You can rescind a contract if the salesperson knew a mistake of fact was made but that was not the case here

Misrepresentation Lack of True Assent - Unilateral Mistakes - Bart and Car Salesman example

- Bart wants to buy a car with automatic transmission - Looks at several models, but does NOT tell salesperson his preference on automatic rather than manual - Bart buys a model that he believes is his preferences, but it is not. - May Bart cancel the contract?

Misrepresentation Lack of True Assent - Mutual Mistake of Material Fact - May this contract be rescinded EXAMPLE

- Beth cleans out grandma's attic and finds this silkscreen print - Beth believes its a Warhol print and sells it to Susie for $200K, which is the value of a genuine Warhol - Susie has it appraised for insurance and finds out its clever fake - May Susie cancel the sale and recover contract price? - Yes because both Susie and Beth thought the print was a genuine Warhol print. Therefore, since both parties were wrong, they both could cancel the sale

Breach of Contract and Contractual Remedies - What are Compensatory Damages - Bride Example 2

- Bride contracts with seamstress for a gown costing $5000 to be ready by June - Seamstress profit is $1500 - Seamstress delivers gown - Bridge runs away and cancels wedding - What are the Damages for Breach of Contract? - $1500 because seamstress already has a dress worth $5000 - Seller only receives the lost profit

Breach of Contract and Contractual Remedies - What are Compensatory Damages - Bride Example 1

- Bridge contracts with seamstress for a gown costing $5000 to be ready by June - Seamstress cannot complete it causing the Bride to buy new dress for $6000 - Shipping and expedited alterations cost $1000 - What are the Damages for Breach of Contract? - $7000. Bride gets her $5000 back from seamstress and an additional $2000 for cost of new gown

Statutes of Fraud - Collateral Promises - Is writing required? - Example 2 with Cindy Student

- Cindy sends her mother a gift certificate for spa services - Cindy and the beautician agree on the telephone that Cindy will pay after her other has obtained the services - Mitsy gets an expensive diamond facial - Cindy tells the beautician that she does not have to pay because the contract was not in writing - May beautician enforce this contract? - Yes because Cindy verbally created a contract on the phone

Statutes of Frauds - Collateral Promises - Is writing required? - Example 1 with Cindy Student

- Cindy student would like to buy a car - Mother Mitsy calls dealership and agrees on telephone to pay car note if Cindy does not pay - Cindy misses 2 payments and dealership calls Mitsy seeking payment - May dealership enforce the contract? - NO because mom in this case is the guarantor and in order to enforce the agreement, the mom must have signed a written contract

Contratual Performance - Discharge by Performance - Anticipatory Breach - Example Coal

- Coal Mine contracts to deliver 14,000 tons of coal to an electrical plant on June 1, 2016 in exchange for $53/ton - On May 1, 2016, coal mine tells electric plant that it may not deliver any coal next month because of inspection shut-downs - What happens if the electric plant treats the statement as a material breach? - The plant can force the coal mine to somehow come up with 14000 tons of coal or the plan can ask for enough money to buy elsewhere - What happens if electric plant does not treat statement as material breach? - The plant can wait and see if coal mine can perform or not. If the coal mine cannot perform then material breach. If it does perform, then both parties performed and contract is discharged

Contractual Performance - What are the Conditions of Performance - Conditions Concurrent

- Conditions Concurrent: each party must render performance simultaneously

Contractual Performance - What are the Conditions of Performance - Conditions Precedent

- Conditions Precedent: an event that must occur (happen) or not occur before a party is required to perform

Contractual Performance - What are the Conditions of Performance - Conditions Subsequent

- Conditions Subsequent: occurrence or nonoccurence of an even that end a party's obligation to perform

Breach of Contract and Contractual Remedies - Nominal Damages - Example contract on apples

- Contract for sale of 100 pounds of apples at $2/pound - Farmer breaches; supermarket buys apples on market at $1/pound - What are the damages? - Nominal (no economic loss) - $1 damage that is symbolic to say that the person did not keep their promise

Breach of Contract and Contractual Remedies - Consequential Damages - Example with Antique Doll

- Contract for sale of an antique doll for $5K - Seller knows buyer intends to re-sell doll to collector for a 10% profit - Seller breaches; dolls value at time of breach is $6K - Contract Price = $5K - Value at time of breach = $6K - Market price minutes contract price = $1K - Lost Profit (consequential damages) = $600 (10% of $6000) - TOTAL the non-breaching party gets = $1,600

Breach of Contract and Contractual Remedies - What are Compensatory Damages - Sale of Land Example

- Contract for sale of unique home for $200K - Market price at time of breach is $250K - Seller breaches contract - Home has been sold to someone else - What is the remedy? - Non-breaching party can get $50K from the seller so than the non-breaching party has the ability to buy another house - What is the seller never sold the home yet and still broke the contract? - Buyer can ask the court to force the seller to sell him his home

Misrepresentation Lack of True Assent - Justifiable Reliance on Misrepresentation - Cronkleton v. Guaranteed Const. services LLC

- Cronkleton was looking to buy a car was from the owner - Almost winter time so the owner hired LLC to winterize the car wash to prevent any frost damage - Upon inspection, Cronkleton noticed that the car was will need to be winterized to survive the winter - Cronkleton told the owner that the car wash better be winterized - LLC fails to winterize the car wash and tells the owner - In spring, Cronkleton buys the car wash and notices the frost damages then sues - Cronkleton wins because the owner failed to disclose that the car was was not winterized which resulted in frost damages

Contractual Performance - What are the Conditions of Performance - Example DOW Chemical

- DOW chemical offers to sell a plant to DuPont - DuPont accepts, only if engineers inspect the plant and certify it to be free of dioxin contamination - What type of condition is this? - Precedent (before we close we need this condition) - What effect does it have on contract? - If condition is satisfied then we go to closing an performance in necessary. If its contaminated, the contract is not official and you can walk away without breach of contract

Statute of Frauds - One Year Rule - Chart

- Date Contract Formed - 1 year to complete duties - If contract can be completely performed within 1 year, no writing is needed - if contract can't be completely performed within 1 year, writing is needed

Misrepresentation Lack of True Assent - Unilateral Mistakes - Bart and Honda Salesman example

- Honda Salesman advertises car for $19K - Sends Bart an email offering to sell car for $17K - Is the Contract price of $17K enforceable? - Yes, because the writing matches the formation of the agreement

Misrepresentation Lack of True Assent - Unilateral Mistakes - Bart and Honda Salesman part 2

- Honda salesman offers to sell Bart a car for $19K - Bart agrees to buy car for $17K - Next day, Bart signs a sales agreement with price of $18K - Is the $18K contract enforceable? - NO because the writing doesn't match the formation of the agreement

Contractual Performance - Discharge by Performance - Kohel v. Bergen Auto Enterprises LLC

- Kohel trades in his old car and buys a used car from Bergen - Kohel still had payments on his old car so Bergen agreed to do the payments on the old car and give Kohel some credits towards the new car - Bergen realizes the old car doesn't have its vin which is required to sell it - Bergen stops the payments and refuses to cooperate with Kohel - Kohel attempts to get another vin for Bergen and Bergen is not having it - Court ruled in favor of Kohel because he displayed that his acts are not intentionally whereas Bergen's acts are purposeful

Misrepresentation Lack of True Assent - Mutual Mistakes of Fact - L&H Const. Co v. Circle Redmont

- L&H Const. Co tries to hire Redmont to engineer, fabricate, and install a staircase - Redmond says they will engineer, fabricate, and SUPERVISE the installment because L&H is not paying them to install - L&H agrees and writes up a contract stating that Redmond will engineer, fabricate, and install - When its time to install, Redmond refuses to install and L&H sues - Court rules the word "install" is ambiguous and was a mutual mistake made by both parties - Court rules Redmond only had to engineer and fabricate

Capacity to Form a Contract - Mentally Incompetent - Example with Sam Outcome

- No because sam is not mentally competent. He has a guardian - If sam had no guardian and only limited cognitive skills? No because Sam is still not mentally competent

Statute of Frauds - One year Rule - Example 1 with PSU professors

- PSU hires a new professor July 1, 2016 to reach Fall 2016 - Parties do not have a written agreement - Is this contract enforceable? - Yes because professor will complete his performance (teaching) within a year

Statute of Frauds - One Year Rule - Example 2 with PSU professor

- PSU hires new professor on July 1, 2016 to teach for Fall 2017 - Parties do not have written agreement - In this contract enforceable? - No because professor won't complete teaching within a year. Parties must create a written agreement to make this contract enforceable

Exceptions to the Statute of Frauds - Partial Performance

- Parties can't be returned to their original position because one party to the contract has partially performed his duties

Contractual Performance - What is Contractual Performance? Definition

- Performance that (doing what is promised) discharges/fully excecutes/ ends a party's contractual duties or obligations

Misrepresentation Lack of True Assent - Intent to Deceive - Example

- Sally is selling a used car that she bought from a Katrina victim - When Bill sees car's Louisiana plates, he says "I hope this car was not flooded in the hurricane" - Sally says it was not, even know she knows the former owner was a New Orleans resident - Bill later finds out the car was underwater - May this contract be cancelled? - Yes, Sally made reckless statement by saying the car was not flooded in the hurricane

Capacity to Form a Contract - Mentally Incompetent - Example with Sam and head trauma

- Sam suffered head trauma in car accident - Sam has been found mentally incompetent and a guarding has been appointed for him - Mailman says "let me have your car for $1" and Sam agrees - Mailmain drafts contract on back of letter and Sams signs it -Mailman jumps into car and drives away, Sam becomes upset and calls police - Enforceable Contract?

Misrepresentation Lack of True Assent - Justifiable Reliance on Misrepresentation - Simon Bed and Breakfast Example

- Simon offers his Vermont bed and breakfast inn for sale to Ben - Simon says that the autumn foliage on the landscape ground are spectacular - Later that year, Ben is disappointed to see very ordinary colors - His guest depart early - May this contract be rescinded? - Yes because the opinion affects the objective of the contract - The scene of autumn foliage is important factor to the business

Misrepresentation Lack of True Assent - Justifiable Reliance on Misrepresentation - Simon Farm Example

- Simon offers his Vermont dairy farm and cows for sale to Ben - Ben intends to continue working the dairy farm - Simon says the autumn foliage is spectacular - Later that year, Ben is disappointed to see very ordinary fall colors - May this contract be rescinded? - No because the object of the contract is not destroyed, Ben can still work on the dairy farm

Contractual Performance - What are the Conditions of Performance - Example UPS

- UPS hires Millie to drive a truck - Employment contract state thats she must maintain her drivers license and not be convicted of a moving violation to keep her job - Millie is convicted of drunk driving - What type of condition is this? - Subsequent - What effect does it have on the contract? - She is no longer employed (contract terminated) and she can't file lawsuit for breach of contract

Statute of Fraud - Contracts for the Sale of Goods - Example 2 Used Car Salesman

- Used car salesman Alison offers to sell Bob a used car for $6K - Alison prepares the contract - Alison is unable to sell the car - Is the contract enforceable? - NO, no one signed contract

Statute of Fraud - Contracts for the Sale of Goods - Example 1 Used Car Salesman

- Used car salesman Alison offers to sell Bob her used car for $6K - Alison prepares the contract and sends it to Bob - Bob signs it, but Alison does not sign it - Alison decides to sell her car to Carl because he offers $7K - Is this contract enforceable? - NO, defendant did not sign

Third Party Rights and Assignment - When do the Rights of an Intended Beneficiary Vest? - Intended Beneficiary (3parts)

1. 3rd Party Intended Beneficiary (Both creditor and donee) - Original parties to contract at the time of contracting that the contract performance directly benefit a third party 2. When rights vest: - Third party demonstrates express consent - Third party materially alters her position - When conditions are satisfied 3. After rights vest, third party can sue for breach - Ex: Life insurance, buying a gift card to give as a present

Third Party Rights and Assignment - When do the Rights of an Intended Beneficiary Vest? - Incidental Beneficiary

1. 3rd party incidental beneficiary: - Benefit is unintentional - 3rd party has no rights

Third Party Rights and Assignments - What is a Privity of Contract? - 3 parts

1. A contract is a private agreement between the parties who have created it 2. Only the parties to a contract owe obligations to the other and also enjoy the benefits of performance from the other 3. Unless there is a valid exception, a third party has no rights in a contract to which he or she is not a party

Statute of Frauds - The One Year Rule

1. A contract that cannot, by its own terms, be performed within one year from the date it was formed must be in writing to be enforceable 2. One year period begins to run the day after the contract is made - Test: whether performance is possible (although unlikely) within one year

Third Party Rights and Assignments - What is an Assignment? - 3 parts

1. A party to a contract's transfer of contractual rights arising under the contract to a 3rd party (from the obligator to the assignee) 2. Effect: Assignee has the right to demand performance from the original party (obligator) to the contract 3. Notice of Assignment

Third Party Rights and Assignments - What is Delegation - 3 Parts

1. A party to the contract's transfer of duties arising under the contract to a 3rd party 2. From the delegator to the delegates 3. Delegator still owes duty to original party in contract, and is still liable for performance

Statute of Frauds - Collateral Promises

1. A promise made by a third party to assume the debts or obligations of a primary party to a contract if that party does not perform his/her contractual obligations 2. Example: Guarantor (parent) agrees to pay debt if primary debtor (college student) does not pay original creditor (apartment complex)

Misrepresentation Lack of True Assent - Introduction

1. A valid contract may be unenforceable if the parties have not genuinely assented to its terms (no agreement) because of: - mistakes of facts - misrepresentation - undue influence - duress 2. Genuinely Assent: means there is an issue because there is no meeting of the minds

Third Party Rights and Assignments - What is Delegation - Example with Airline and Passenger

1. Airline A is delegator - delegates duty to fly passenger to Airline B 2. Passenger pays Airline A for flight - Airline promises to transport passenger - Airline owes the duty to transport the passenger under the terms of the original contract 3. Passenger - ticket price paid in full - passenger has satisfied his contractual obligation 4. Airline B is the third party and DELEGATEE - passenger flies on Airline B but not not pay additional money. After valid delegation, Airline A still owes duty to transport, If Airline B does not transport passenger

Statute of Frauds - Image from Power Point Primary v Secondary contract

1. College Student -- Original Contract (contract 1 is primary contract) --- has it with Apartment Complex near PSU 2. Parent of College Student -- Secondary Guaranty Contract -- has it with Apartment complex near PSU to collateral student obligations

Capacity to Form a Contract - Intoxication (4 parts)

1. Contracts can either be voidable or valid (enforceable) 2. Voidable only if person was so intoxicated when the contract was entered into that he was incapable of understanding the nature of the transaction 3. Courts look at objective indications to determine if contract is voidable (look to see if person was drunk at formation of contract) 4. If voidable: 1. person has the option to disaffirm or 2. person may ratify the contract expressly or impliedly

Capacity to Form a Contract - Contracts Contrary to Public Policy (Definition and 4 parts)

1. Contracts that have negative impact on society, or interferes with publics safety and welfare - Immoral Contracts - Restraint of Trade - Unconscionable contracts or clauses- clauses that make you forfeit rights given to you by statutes - Exculpatory Clauses - clauses that relieve a party's liability

Capacity to Form a Contract - Contracts Contrary to Statue (5 parts - 4 laws)

1. Contracts to Commit a Crime: Agreements to engage in conduct which violates criminal statutes 2. Unsury Laws: charging an interest rate on loans that are higher than state limit 3. Gambling Laws: wagering is either prohibited or regulated 4. Sabbath Laws: limits on secular activities on Sundays 5. Licensing Laws: certain professionals must be licensed to do business

Exceptions to the Statue of Frauds - 3 parts

1. Exceptions: these contracts are enforceable without a writing: -Partical Performance - Admissions - Promissory Estoppel

Statute of Frauds - Sufficiency of the Writing - Non UCC Contracts - 5 parts it needs

1. For non UCC contracts the writing (written or electronic evidence of the contract) needs: - name of the parties - identity of the subject matter - the consideration - the quantity term - to be signed by the party against whom enforcement is sought

Statute of Frauds - Sufficiency of the Writing - Non UCC Contracts - Sale of goods (UCC) writing needs

1. For the sale of goods the writing needs - quantity term - to be signed by he party to be charged

Statute of Fraud - Contracts for the Sale of Goods - General Rule of Thumb

1. If the defendant signed the contract, the plaintiff (the one suing) will win the case

Statute of Frauds - Sufficiency of the Writing - Non UCC contracts - Sale of land requirements

1. Information needed for land contracts - legal description of land like an address

Misrepresentation Lack of True Assent - Justifiable Reliance on Misrepresentation (3rd element of Fraudulent Misrepresentation)

1. Innocent party must have justifiable reason (ex: material to transaction) for relying on misrepresentation of fact 2. Misrepresentation must be an important fact in causing innocent party to enter contract

Statute of Frauds - Contracts Involving Land

1. Land includes the soil and all physical objects that are permanently attached to the soil - includes buildings, fences, trees 2. All contracts for the transfer of other interest in land must be in writing

Capacity to Form a Contract - Legality (3 parts)

1. Legality: to have enforceable contract, the object of agreement must be lawful 2. A contract to do something against the law is illegal and void from the outset 3. Who can enforce a void contract? NO ONE

Capacity to Form a Contract - Exceptions to Minor's Disaffirmance of a Contract (4 parts)

1. Marriage Contracts, Contracts to Enter into Armed Services 2. Misrepresentation of Age 3. Contracts for Necessaries, Insurance, and Loans 4. Ratification of Contracts

Contractual Performance - Discharge by Performance - Material Breach

1. Material Breach: occurs when a party renders inferior performance of his or her contractual duties - Non breaching party can rescind contract or recover damages

Capacity to Form a Contract - Exception for Necessaries of Life - Minor Pays Contracting Adult Part if.. (3 parts)

1. Minor is not under care of parent or guardian who should provide the necessaries of life 2. Contract item is necessary for minor existence 3. Items value commensurate with minors social standing and lifestyle

Capacity to Form a Contract - Exception for Necessaries of Life - Necessaries definition and purpose

1. Minor who disaffirm are obligated to pay reasonable value of necessaries 2. Necessaries: things that guardians/parents are supposed to provide for minors (food, clothing, shelter, medical/educational services, tools of trade)

Misrepresentation Lack of True Assent - What is Fraudulent Misrepresentation? - 4 parts

1. Misrepresentation has occurred when: - Wongdoer made false statement of material fact - Wrongdoer intended to deceive innocent party - Innocent party justifiably relied on misrepresentation in making the contract - For damages, innocent party must show some injury

Misrepresentation Lack of True Assent - What are Mutual Mistakes of Fact?

1. Mutual (BiLateral) Mistake of Fact: a mistake of both parties concerning a material fact that is important to the subject matter of the contract - Either party may cancel or rescind a contract due to mutual mistakes of material fact - contract is voidable

Misrepresentation Lack of True Assent - What are Mistakes?

1. Occurs when one or both parties have erroneous belief about - subject matter - value - some other aspect of the contract 2. Mistakes may be either unilateral or mutual (bilateral)

Misrepresentation Lack of True Assent - What are Unilateral Mistakes<

1. Occurs when only one party is mistaken about a material fact regarding the subject matter of the contract 2. Material Facts: whatever is important to the subject matter of the contract 3. May the mistaken party cancel a contract due to unilateral mistakes of material fact? NO

Capacity to Form a Contract - Parental Liability for Minor Children's Contracts (3 parts + emancipation definition)

1. Parents are not liable for contracts made by minor children acting on his/her own 2. Emancipation: when a minor is no longer under the care of his/her parents/guardians 3. Parents of non-emancipated minors are liable for contracts for necessaries

Exceptions to the Statute of Frauds - Admissions

1. Party against whom enforcement is sought concedes that a contract for sale was made 2. Admission is made in court documents or proceedings 3. Contract is enforceable

Misrepresentation Lack of True Asset - Unilateral Mistakes: When may contracts be rescinded?

1. RULE: unilateral mistakes are not grounds to cancel contracts 2. Exceptions: - Nonmistaken party to the contract knows or should have known that a mistake of fact was made - If mistake was due to clerical or mathematical mistake and was made inadvertently and without gross negligence

Exceptions to the Statute of Frauds - Promissory Estoppel

1. Same equitable remedy used in problems with contract consideration - Must be foreseeable - Partys against whom enforcement is sought made promises that the injured party relied upon justifiable to his detriment - Detrimental reliance must have been foreseeable - Contract is enforced to prevent unjust enrichment

Third Party Rights and Assignments - Rights that Cannot Be Assigned - 4 parts

1. Statute Expressly Prohibits Assignment 2. Contract is for Personal Services 3. Assignment will Materially Change Risks or Duties of Obligator 4. When contract itself prohibits assignment

Capacity to Form a Contract - Minors Ratification of Contract (3 parts)

1. The act of a minor after reaching the age of 18, whereby he accepts a contract entered into when he was a minor 2. Types of act that indicate a minor has accepted the contract (Express Conduct: written or oral words) (Implied Conduct: actions or continued performance) 3. Minors right to disaffirm is lost upon ratification

Capacity to Form a Contract - Contracts in Retrain of Trade (Definition plus Exceptions)

1. These contracts (anticompetitive agreements) are generally unenforceable because they are contract to public policy 2. Exceptions -Covenants not to compete and the sale of an ongoing business (can't sell your business and then open a new business right across the street) - Covenants not to compete in employment contracts (Cant directly compete against your former employer for x amount of time if you know the trade secrets of former employers) - Covenants = promise

Statute of Fraud - Contracts for the Sale of Goods - Definition plus requirements in writing

1. UCC required a writing or memorandum for the sale of goods priced at $500 or more 2. Writing must include the following: - Quantity term - Signed by the party against whom enforcement is sought (typically the defendant in a lawsuit)

Misrepresentation Lack of True Assent - Undue Influence and Duress

1. Undue Influence: one party unfairly dominates the other party during the formation of the contract (contract is voidable) 2. Duress: one party, through the threats of force, extortion, or blackmail forces the contract to enter into the contract (contract is voidable)

Capacity to Form a Contract - Mentally Incompetent Persons (3 parts)

1. Void Contract: the person has been found mentally incompetent by a court of law and a guardian has been appointed 2. Voidable Contract: person is mentally incompetent and does not know he is entering into contract or lacks mental capacity to comprehend its nature, purpose, consequences (voidable by incompetent) 3. Valid Contract: Mentally incompetent person is able to understand the nature and effect of entering into contract at time contract was made yet lack capacity to engage in other activities (contract enforceable if entered into during lucid period)

Misrepresentation Lack of True Assent - What is Fraudulent Misrepresentation? - Intent to Deceive (2nd Element)

1. Wrongdoer must make false statement with the intent to deceive innocent party 2. Scienter or guilt knowledge is inferred from wrongdoer's conduct: - Wrongdoer's knowledge the fact is not stated - Wrongdoer makes a reckless statement with disregard of truth - Wrongdoer implies that statement is based on personal knowledge or investigation when it is not

The Statute of Frauds - Overview (5 parts too)

1. to be enforceable, the following 5 types of contracts must be in writing (or evidenced by a written memorandum or an electronic record) and signed: 1.) Contracts involving interest in land 2.) Contracts involving "one year rule" 3.) Collateral or Secondary Contracts 4.) Promise made in consideration of marriage 5.) Contracts for the sale of goods priced at $500 or more (uniform commercial code)

Contractual Performance - What are the Conditions of Performance? - Definition and 3 types

1.) A condition is a possible future event that triggers the: - Performance of a legal obligation; or - Terminates an existing obligation under a contract 2.) 3 types of Conditions: Precedent, Subsequent, Concurrent 3.) If conditions are not satisfied, then contract cannot be enforced

Contractual Performance- What is Contractual Performance? - Discharge 5 ways

1.) A contract may be discharged in many ways: - Full performance = complete or substantial - Conditions = precedent, subsequent, concurrent - Breach = material breach or anticipator repudiation - Operation of law = material alteration, statute of limitations, bankruptcy, impossibility or impracticability of performance, frustration of purpose - Agreement of the parties = mutual rescission, novation, accord, satisfaction

Contractual Performance - What is Discharge by Operation of Law - Bankruptcy (2 parts)

1.) Allocation of debtor's assets to creditors in fair and equitable fashion 2.) Debtor's estate is marshaled and all creditors paid from those proceedings. Any outstanding claims are excused or discharged

Contractual Performance - Discharge by Performance - Anticipatory breach (4 parts)

1.) Anticipatory breach occurs when: - A party tells the other that - He or she will not perform his or her contractual obligations - Before the performance is due - The non breaching party can treat it as a material breach or force the other party to perform

Breach of Contract and Contractual Remedies - Consequential Damages (4 parts)

1.) Consequential (Special) Damages: indirect and foreseeable losses 2.) Breaching party knows or should know that the innocent party will suffer additional losses 3.) Innocent party gets the whole benefit of the bargain 4.) Add on to compensatory damages before

Breach of Contract and Contractual Remedies - What are Contract Damages? - Definition and 4 Categories

1.) Damages are: - the relief provided to the non-breaching party - for losses suffered by the breaching party 2.) 4 Categories Are: - Compensatory - Consequential - Punitive - Nominal

Breach of Contract and Contractual Remedies - What are Compensatory Damages? - Definition and 3 Measurements

1.) Damages paying the non-breaching party for the loss of the bargain 2.) Standard Measurement - difference between value of promised performance and value of actual performance 3.) Buyer's Standard Measurement - difference between contract price and the market price when goods were to be delivered 4.) Sellers Standard Measurement - sellers lost profits on the sale of the goods

Contractual Performance - What is Discharge by Operation of Law - Definition and 6 ways

1.) Duties under contract are discharged by law - Material Contract Alteration - Statute of Limitations - Bankruptcy - Where Performance is Impossible - Commercial Impracticability - Frustration of Purpose

Contractual Performance - What is Discharge by Operation of Law - Frustration of Purpose (2 parts)

1.) Impossible to attain the purpose of the contract that both parties had in mind when it was formed 2.) A superseding event thats unforeseen and make it impossible to obtain the principle that parties had it mind

Third Party Rights and Assignments - Who are Third Party Beneficiaries? - Incidental Beneficiary (3 parts)

1.) Incidental Beneficiary: a third party ... - Who benefits from the contract, but whose benefit was not the reason for the contract, and/or - Who has no rights in the contract - CAN NOT SUE TO ENFORCE THE CONTRACT

Contractual Performance - What is Discharge by Operation of Law - Material Contract Alteration (2 parts)

1.) Innocent party discharged where other party materially altered a written contract without consent 2.) Looking for material of fact that changes significantly the obligor's promised performance; no assent; element of agreement is flawed

Third Party Rights and Assignments - Who are Third Party Beneficiaries? - Intended Beneficiary (4 parts)

1.) Intended Beneficiary: a third party .... - To whom performance is rendered directly, and/or - Who has the right to control the details of the performance, or - Who is designated a beneficiary in the contract - CAN SUE TO ENFORCE THE CONTRACT

Contractual Performance - What is Discharge by Operation of Law - Where Performance is Impossible (2 parts)

1.) No duty to perform where performance is objectively impossible or totally impracticable 2.) Where object of contract is destroyed. Typically impossible performance does not extinguish breach of contract

Contractual Performance - What is Discharge by Operation of Law - Statute of Limitations (4 parts)

1.) No lawsuit for contract breach after limitations period has passed 2.) Limit the time one can raise any complaints about the performance of others 3.) Oral contracts (2-3years) 4.) Written contracts (5-6 years)

Breach of Contract and Contractual Remedies - Nominal Damages (2 parts)

1.) Nominal Damages: no financial loss 2.) Defendant has breached the contract

Breach of Contract and Contractual Remedies - What are Compensatory Damages? - Construction Contacts (Owner v. Contractor Breaches - 5 total)

1.) Owner Breaches: - Breach Before Construction has Begun: profits that would have been made on the contract - Breach During Construction: Profits plus costs incurred in partially constructing the building - Breach after completion of construction: entire contract plus interest 2.) Contractor Breaches: - Breach Before Construction has Begun: costs in excess of contract price to complete work - Breach before Completion of Construction: all of the owner's costs to complete contract

Contractual Performance - Discharge by Agreement (Definition and 3 Discharge ways)

1.) Parties can discharge by agreement by way of: - terms of the original contract - creation of new contact for purpose of discharging new contract 2.) Discharge by Rescission: cancellation of original contract 3.) Discharge by Novation: substitution of one of the original parties 4.) Discharge by Accord and Satisfaction: acceptance of performance different from original promised performance

Contractual Performance - What is Discharge by Operation of Law - Commercial Impracticability (2 parts)

1.) Performance becomes more difficult or expensive than contemplated at the time the original contract was made 2.) The event that made the costs increase must be foreseen. The oblige will sue for breach of contract and obtain additional money to perform from another party

Breach of Contract and Contractual Remedies - Punitive Damages (3 parts)

1.) Punitive Damages: punish or deter future conduct 2.) Generally not available for only a breach of contract 3.) Usually a tort (ex: negligence or fraud) is also involved in breach of contract dispute - Innocent party gets punitive damages for the tort claim AND - Compensatory and Consequential Damages for the breach of contract claim

Contractual Performance - Discharge by Performance - Definition and 3 types of performance

1.) The contract comes to an end when both parties do what they have promised 2.) Types of Performance - Complete or Full Performance - Substantial Performance (minor breach) - performance by a party that deviates only slightly from complete performance - Good faith is required - Performance to the satisfaction of one of the parties or a third party

Third Party Rights and Assignment - Intended versus Incidental Beneficiary

1.) To determine whether a beneficiary is intended or incidental, courts use the reasonable person test: - Would a reasonable person in the position of the beneficiary believe that the promisee intended to confer on the beneficiary the rights to enforce the contract? 2.) The presence of one or more of the following factors is also needed - Performance is rendered directly - Third party has right to control details - Third party is expressly designated

Third Party Rights and Assignments - Duties that May not be Delegated - 4 parts + examples

Generally any duty can be delegated, except in following areas: 1.) When performance depends on personal skills or talent of original debtor - Ex: Celebrity boxing match. You can't substitute one of the celebrities with look alike because the people want to see the real people fight 2.) When special trust has been placed in the obligator - Ex: doctors at hospitals. If a doctor is buys, the hospital asks you to reschedule 3.) When 3rd party performance will materially vary - Ex: You go to a Kanye concert to specifically see Kanye. The venue just can't substitute Kanye for a guy that does Kanye covers 4.) When the contract expressly prohibits delegation