Combo with "Chapter 26 - Ethics and Social Responsibility of Business" and 13 others

Silence as Acceptance

• General rule: Silence NOT acceptance (****even if the offer says it is****) -this rule is intended to protect offerees from being legally bound to offers because they failed to respond-----silence does constitute acceptance in the following situations: 1. The offeree has indicated that silence means assent 2. The offeree signed an agreement indicating continuing acceptance of delivery until further notification 3. Prior dealings between the parties indicate that silence means acceptance 4. The offeree takes the benefit of goods or services provided by the offeror even though the offeree (a) has an opportunity to reject the goods or services but fails to do so and (b) knows the offeror expects to be compensated----homeowner who stands idly by and watches a painter whom she has not hired mistakenly paint her house owes the painter for the work --------------------------------------- B. SILENCE AS ACCEPTANCE. • General rule: Silence NOT acceptance (even if the offer says it is) • Policy? [why should offeror get the right to require offeree to respond, if he isn't getting anything extra for that] • In some instances, offerree does have a duty to speak, particularly if he takes the benefit of the offered services. • E.g., Columbia House deals. • Implied in fact contracts -- By not saying anything, silence created an acceptance of the contract. • Prior dealings can also create a duty to speak. • E.g.: Lawyer has been representing client for 10 years. He can keep rep'ing until client fires him.

implied-in-fact condition

-a condition that can be implied from the circumstances surrounding a contract and the parties' conduct -express condition exists if the parties expressly agree on it -ex. a contract in which a buyer agrees to purchase grain from a farmer implies that there are proper street access to the delivery site, proper unloading facilities, and the like

inferior performance

-a situation in which a party fails to perform express or implied contractual obligations and impairs or destroys the essence of the contract -no clear line between minor and material breach---case-by-case -where there has been a material breach of contract, the nonbreaching party may rescind the contract and seek restitution of any compensation paid under the contract to the breaching party -the nonbreaching party is discharged from any further performance under the contract -the nonbreaching party may treat the contract as being in effect and sue the breaching party to recover damages

complete performance

-a situation in which a party to a contract renders performance exactly as required by the contract -complete performance discharges that party's obligation under the contract -aka strict performance -fully performed contract is called an executed contract -tender of performance also discharges a party's contractual obligations

intended beneficiary

-a third party who is not in privity of contract but who has rights under the contract and can enforce the contract against the promisor -ex. the beneficiary may be expressly named in a contract from which he or she is to benefit---I leave my property to my son Ben -may be classified as either donee or creditor -------------------------------------------

personal contract service

-contracts for the provision of personal services are generally not assignable---Jay Z can reject assignment of a portrait of himself by someone artist....he can refuse anyone but one person painting it -the parties may agree that a personal service contract may be assigned---professional athletes often sign contracts with professional teams which provide that their personal service contract can be assigned

nominal damages

-damages awarded when the nonbreaching party sues the breaching party even though no financial loss has resulted from the breach -nominal damages are usually $1 or some other small amount -most courts disfavor because they use valuable court time and resources

minor breach

-a breach that occurs when a party renders substantial performance of his or her contractual duties

anticipatory breach

-a breach that occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due -the nonbreaching party's obligations under the contract are discharged immediately---also has right to sue the repudiating party when the anticipatory breach occurs; there is no need to wait until performance is due

anti-delegation clause

-a clause that prohibits the delegation of duties under the contract -usually enforced, however some courts have held that duties are totally impersonal in nature---such as the payment of money---can be delegated despite such clauses

Mode and Timeliness of Acceptance----Authorized means of acceptance? What if authorized means of acceptance is not indicated?

(T) • Gen rule: acceptance has to be TIMELY. In Bilateral, that means before the offer is terminated or revoked. • Mailbox Rule: If acceptance is sent by "authorized means", it is good upon "dispatch" ***(1) "Authorized means of acceptance"***. Of'ee has to accept by authorized means. i. "Express Authorization": Offer EXPRESSLY states the only authorized means of communicating acceptance. ii. Can also be implied by facts, circumstances, or law. • Parties are bound the minute that means of acceptance is employed. o E. g., seller offers to sell antique furniture to buyer in another state. o Offer says buyer must accept the offer via FedEx. o Seller sends his acceptance letter via FedEx. o When is the acceptance effective and the contract formed? [When he gives it to the FedEx driver]. ******(2) What if "authorized" means of acceptance is not indicated or implied?***** i. It can be made by any medium that is "reasonable under the circumstances." • Carrier pigeon vs. email. • Look to what reasonable parties would do. • Look at course of dealing, course of performance, totality of the circumstances. - E.g.: Parties have been negotiating via email. - Offeror sends formal contract by priority mail, without specifying means of acceptance. - Offeree sents acceptance by priority mail or email. Which is authorized? [Probably both of them.] (3) When authorized means of acceptance is NOT used by Offeree. • If acceptance sent by means NOT expressly or impliedly authorized: o Some states: Not effective. No contract formed because means of communication was a "condition" of acceptance. (Mirror image rule requires compliance w/ that condition) • (This is what text says. But that's only one view). o Most states: It can still be effective. But contract isn't formed until acceptance is received by the offeror. [that's the rule we'll follow]. • Why would the time of formation be important? • [calculating damages, determining breach, when did duties arise, etc.] (a) Exceptions to Mailbox Rule: (1) not properly dispatched. E.g., address is wrong. i. most states, not effective until received (2) If the offer expressly states otherwise. i.e., Offer says acceptance is only good upon receipt. - Remember: Offeror is the master of his offer. Can control the means and time of acceptance. (3) Offeree changes his mind. i. Sends rejection letter. Then changes mind and sends acceptance. ii. First communication to be received by Off'or is what controls. o So, if the rejection arrives first, no contract.

B. MATERIAL BREACH OF CONTRACT. [T]

- Legal effect of breach [T] - Breach is non-performance of a contractual duty. - material breach: when performance is not at least "substantial". - What is the Result of a material breach??? (important legal principle): ***Non-breaching party is excused and can sue for damages resulting from the breach. - If breach is minor, then non-breaching party's duty to perform can sometimes be suspended until breach is remedied. o - ***Any breach entitles non-breaching party to sue for damages. Only material breach discharges non-breaching party from contract.*** - Policy?: [Contracts go forward when only minor problems; • can be terminated on major problems.]

Definiteness of Terms - second what

-(Second Requirement for Effective Offer) ➢ Gotta know what the K really says in order to enforce it. ➢ K must have: 1. Identification of the parties. 2. Identification of the object or subject matter of K 3. consideration to be paid 4. Time of payment, delivery, or performance. ➢ Courts sometimes supply missing terms: Implied Terms o Time of performance, o price (if there's a market and a source for the price, like Blue Book) o But, if the parties have tried to say it and language is too vague, court will NOT supply a "reasonable term". • THE COURT WILL NOT REWRITE THE CONTRACT.

Communication - third what

-(Third Requirement for an Effective Offer). -offer cannot be accepted if it is not communicated to the offeree by the offeror or a representative or an agent of the offeror ➢ Offer must be communicated to the Offeree • Typically, you cannot agree to a bargain without knowing that it exists. • E.G., if you return lost dog, not knowing of the reward, you have not accepted the offer.

what is a contract? / what is contract law?

-What is a contract? • "A promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty." • (i.e., Promises. If they are broken, the court provides a remedy. Or court can enforce its performance.) -What is contract law? [set of rules re formation, keeping, enforcement of those promises]

Effect of an Assignment of a Right

-Where there has been a valid assignment of rights, the assignee "stands in the shoes of the assignor." That is, the assignor is entitled to performance from the obligor. The unconditional assignment of a contract right extinguishes all the assignor's rights, including the right to sue the obligor directly for nonperformance. An assignee takes no better rights under the contract than the assignor had. -Ex. If the assignor has a right to receive 10,000 from a debtor, the right to receive this 10,000 is all that the assignor can assign to the assignee -an obligor can assert any defense he or she had against the assignor or the assignee. An obligor can raise the defense of fraud, or duress, undue influence, minority, insanity, illegality of the contract, mutual mistake, or payment by worthless check of the assignor, against enforcement of the contract by the assignee. The obligor can also raise any personal defenses(e.g., participation in the assignor's fraudulent scheme) he or she may have directly against the assignee. ------------------------------------ a. If no conditions attached, rights of Assignor are extinguished. b. Assignee has right to demand performance from the other party. c. Assignee takes only the rights the Assignor originally had. i. E.g.: Borrower is obligated to pay Lender $1,000. ii. Lender assigns rights to receive payment to Assignee. 1. Assignee now becomes the Obligee. 2. Assignee/Obligee is entitled to enforce the payment.

material breach

-a breach that occurs when a party renders inferior performance of his or her contractual duties

concurrent conditions

-a condition that exists when the parties to a contract must render performance simultaneously; each party's absolute duty to perform is conditioned on the other party's absolute duty to perform -payment being due upon delivery of goods --------------------------------------------- - Definition: Each party's performance is conditioned on other's performance or tender of performance. o Note: Occurs only when contract calls for *****simultaneous performance***** - E.g.: Buyer and seller sign K; o seller agrees to deliver on January 1 o Buyer promises to pay for goods on Jan 1. - Each party's promise to perform is *****mutually dependent***** Buyer's duty doesn't become absolute until Seller either delivers or tenders the goods (i.e., offers to perform). Seller's duty to deliver does not become absolute until buyer tenders or makes payment. ***Therefore, neither can recover for breach without first tendering performance. [Note: this looks a lot like a typical contract, where breach by one party discharges the other. *****The key: simultaneous performance]*****

creditor beneficiary contract -creditor beneficiary

-a contract arises in the following situation: (1) a debtor borrows money (2) the debtor signs an agreement to pay back the money plus interest (3) the debtor sells the item to a third party before the loan is paid off (4) the third party promises the debtor that he or she will pay the remainder of the loan to the creditor -the original creditor is now the creditor beneficiary of this second contract. The parties to the second contract are the original debtor(promisee of the second contract) and the new party(promisor of the second contract). -original creditor is the creditor beneficiary of the second contract ----------------------- -an original creditor who becomes a beneficiary under the debtor's new contract with another party ------------------------------ • [T] Cr. Bene.: General principle: Pr'or pays Promissee's debt to 3d P. o E.g., D borrows $ from Bank to buy a car. [D --→B] o D sells car to New Guy o New Guy promises D that he will pay off loan (does NOT make a separate contract with Bank] o N defaults on promise to pay the bank. Who can the bank sue? • [Bank is 3dP Bene (creditor bene) of the second K - the one between D and N. • Can sue both. Only one recovery o Eg2: o A owes B $1 Million. C promises A that he'll pay B. • B is Cr. Bene of promise between A and C. • B can sue C directly.

contract where an assignment would materially alter the risk

-a contract cannot be assigned if the assignment would materially alter the risk or duties of the obligor -Laura, who has a safe driving record, purchases auto insurance. Laura cannot assign her rights to be insured to another driver because the assignment would materially alter the risk and duties of the insurance company

donee beneficiary contract

-a contract entered into with the intent to confer a benefit or gift on an intended third party Three Persons involved: 1. the promisee - contracting party who directs that the benefit can be conferred on another 2. the promisor - contracting party who agrees to confer performance for the benefit of the third person 3. the donee beneficiary - the third person on whom the benefit is to be conferred -if the promisor fails to perform the contract, the donee beneficiary can sue the promisor directly -------------------------------------- • Donee beneficiary: A and B contract to make a gift to 3dP. o Third party still has standing to sue promisor. • E.g.,life insurance K. • Who are parties to the K and what is the K? (that Ins. will pay upon insured's death). • Can bene sue co.? [of course] o many cases don't fit into either category. • Modern view: (Restatement), Doesn't matter (Cr or Donee). • What matters: incidental v. intended.

executed contract / executory contract

-a contract that has been fully performed on both sides; a completed contract -a contract that has not been fully performed by either or both sides

injunction

-a court order that prohibits a person from doing a certain act -requesting party must show that he or she will suffer irreparable injury if the injunction is not issued

incidental beneficiary

-a party who is unintentionally benefitted by other people's contracts -an incidental beneficiary has no rights to enforce or sue under other people's contracts -generally the public and taxpayers are only incidental beneficiaries to contracts entered into by govt. on their behalf---as such they acquire no right to enforce govt. contracts or to sue parties who breach these contracts

discharge of performance

-a party's duty to perform under a contract may be discharged by mutual agreement of the parties, by impossibility of performance, or by operation of law -discharge by agreement -discharge by impossibility -force majeure clause -commercial impracticability -statute of limitations -bankruptcy ---------------------------------- - Contract "comes to an end" when both parties fulfill duties by performing acts they promised. - Performance can also be accomplished by tender: o Def: "An unconditional offer to perform by a person who is ready, willing and able to do so." • *****Tender: the party has done everything possible to carry out terms of contract. (e.g., goods on the table; present a cashier's check, etc.)***** - If other party refuses to perform, the party making tender can sue for breach.

conditions - bolded

-a qualification of a promise that becomes a covenant if it is met. -3 types of conditions: conditions precedent, conditions subsequent, concurrent conditions -some contract provisions are conditions rather than promises -a conditional promise/qualified promise is not as definite as a covenant -the promisor's duty to perform or not perform arises only if the condition does or does not occur -it becomes a covenant if the condition is met -generally contractual language such as "if, on condition that, provided that, when, after" trigger or excuse performance

specific performance

-a remedy that orders the breaching party to perform the acts promised in the contract -specific performance is usually awarded in cases in which the subject matter is unique, such as in contracts involving land, heirlooms, and paintings ------------------------- • Provides exact bargain promised. Orders the breaching party to perform. • Normally, SP not granted *****unless a legal remedy (money) is inadequate*****. o Contracts for sale of goods rarely qualify for specific performance. o Legal remedy of money is usually adequate. o Goods are fungible. o Only if goods are unique will court grant specific performance (paintings, rare books, etc.). - Sales of Land - unique - $ damages usually inadequate o Courts usually order SP • Personal Services K's - usually no SP o That would make it involuntary servitude. o E.g., you K w/ best brain surgery in world. He wants to back out. • You don't want the court to have to compel the surgeon. ☹

intentional interference with contractual relations

-a tort that arises when a third party induces a contracting party to breach the contract with another party -a party to a contract may sue any third person who intentionally interferes with the contract and causes that party injury -the following elements must be shown: 1. a valid, enforceable contract between the contracting parties 2. third-party knowledge of this contract 3. third-party inducement to breach the contract ------------------------- -a third party can contract with the breaching party without becoming liable for this tort if a contracting party has already breached the contract and thus the third party cannot be held to have induced a breach of the other party's contract

delegation of a duty -delegator -delegatee

-a transfer of contractual duties by an obligor to another party for performance -an obligor who transfers his or her duty is called a delegator -the party to whom the duty is transferred is the delegatee -the party to whom the duty is owed is the obligee

recission

-an action to rescind(undo) a contract -rescission is available if there has been a material breach of contract, fraud, duress, undue influence, or mistake -generally, to rescind a contract, the parties must make restitution of the consideration they received under the contract

monetary damages

-an award of money -available whether the breach was minor or material -compensatory -consequential -liquidated -nominal damages

compensatory

-an award of money intended to compensate a nonbreaching party for the loss of the bargain -compensatory damages place the nonbreaching party in the same position as if the contract had been fully performed by restoring the "benefit of the bargain" --------------------------- special types of contracts: -sale of a good---usual measure of damages for a breach of a sales contract is the difference between the contract price and the market price of the goods at the time and place the goods were to be delivered -**construction contract---vary with the stage of completion of the project when the breach occurs---a contractor may recover profits he or she would have made on the contract if the owner breaches the construction contract before construction begins---if the builder breaches a construction contract, either before or during construction, the owner can recover the increased cost above the contract price that he or she has to pay to have the work completed by another contractor -employment contract---recover lost wages or salary---if employee breaches the contract, the employer can recover the costs to hire a new employee plus any increase in salary paid to the replacement ----------------------- • What are they designed to do? [compensate the non-breaching party for the loss of the bargain. o Place innocent party in position he would have been in but for breach, i.e. Make him whole". Give him "Benefit of Bargain" - Standard measure: Difference between promised performance and actual performance. (Reduced by mitigation.) - E.g.: x promises y that x will paint his house for $10,000. - X cancels and breaches. - Y has to find another painter. Best he can find is $13,000. - What remedy? [Y can sue X for breach and recover $3,000 as compensatory damages (the excess he had to pay because of the breach).] o What about the amount of time he spent to find the other painter? *****Incidental damages: Expenses caused directly by the breach. Can sometimes be recovered***** A. Breach of K for Sale of goods. • usual measure of compensatory damages: Difference between contract price and market price. o (Contract price and market price at the time and place at which the goods were to be delivered. • i.e., if you have to pay more for the stuff, the difference is the measure of damages. • If buyer breaches -→ compensatory damages = lost profits on the sale

reformation

-an equitable doctrine that permits the court to rewrite a contract to express the parties' true intentions -usually available to correct clerical errors---during typing of a contract -------------------------- • Remedy: Employed when parties have imperfectly expressed their agreement in writing. o Allows them to rewrite K to reflect intent. (e.g., fix clerical errors) o Sometimes fixes fraud or mutual mistake (not mentioned in book) INJUNCTIONS - P will suffer irreparable harm - No adequate remedy at law TORTS ASSOCIATED W/ CONTRACTS 1. Intentional Interference w/ K'ual Relations a. Utah: requires improper means or improper purpose 2. Breach of Implied Cov. Of Good Faith and Fair Dealing a. Implied in every contract b. Employment context

breach of the implied covenant of good faith and fair dealing

-an implied covenant under which the parties to a contract not only are held to the express terms of the contract but are also required to act in "good faith" and deal fairly in all respect in obtaining the objective of the contract -tort of bad faith

Acceptance---Mirror Image Rule?? Bolded.

-an offeree's acceptance must be unequivocal -for an acceptance to exist, the offerree must accept the terms as stated in the offer---this is called the mirror image rule -usually, even a "grumbling acceptance" is a legal acceptance -an equivocal response by the offeree does not create a contract----"I think I would like it, but I'm not sure" ------------------------- A. UNEQUIVOCAL ACCEPTANCE. • Mirror Image Rule, Redux: Offeree must accept the offer, unequivocally and exactly. If it is subject to new conditions, it is a counteroffer. • What about: "I accept your offer, but I wish I could have gotten a better price"? - That is an effective acceptance. You can express dismay or concerned, but it is still effective. "Grumbling" acceptance is still acceptance • What about: "I accept the offer but only if I can pay within 90 days"? - [Not unequivocal, and is a counteroffer.] What's the difference? [The second one is A CONDITION and changes the terms] - Some terms when added to acceptance will not qualify the acceptance. • What about: "I agree to pay 270k for the house. Does the swingset come with it?" • [unequivocal acceptance. There's difference between CONDITIONS and INQUIRIES.] • Inquiry does not make the acceptance conditional o E.g.: "I accept. Please send a written contract." Condition? [Probably not. The request is not a condition for acceptance.] o "I accept, if you send a written contract"? [Then, acceptance is conditioned, and it is not an acceptance but a counteroffer.] - [Stress the importance of the specific words used. It is all about the "right" words. "But" and "If" usually mean conditions or qualifications]

writ of attachment

-an order of the court that enables a government officer to seize property of the breaching party and sell it at auction to satisfy a judgment

writ of garnishment

-an order of the court that orders that wages, bank accounts, or other property of the breaching party held by third persons be paid to the nonbreaching party to satisfy a judgment -federal and state laws limit the amount of the breaching party's wages or salary that can be garnished

equitable remedies

-available if there has been a breach of contract that cannot be adequately compensated through a legal remedy -also available to prevent unjust enrichment -specific performance -reformation -injunction

sources of contract law

-common law of contracts - contract law developed primarily by state courts -Uniform Commercial Code - a comprehensive statutory scheme which includes laws that cover aspects of commercial transactions -Restatement of the Law of Contracts - a compilation of model contract law principles drafted by legal scholars---the restatement is not law---however, lawyers and judges often refer to it for guidance in contract disputes because of its stature

liquidated

-damages that parties to a contract agree in advance should be paid if the contract is breached -to be lawful actual damages must be difficult or impracticable to determine, and the liquidated amount must be reasonable in circumstances -exclusive remedy, even if actual damages are later determined to be different -penalty if actual damages are clearly determinable in advance or if liquidated damages are excessive or unconscionable -if a liquidated damages clause is found to be a penalty, it is enforceable -nonbreaching party may then recover the actual damages

condition subsquent -

-exists when there is a condition in a contract which provides that the occurrence or nonoccurrence of a specific event automatically excuses the performance of an existing duty to perform -that is, failure to meet the condition subsequent relieves the other party from obligation under the contract -------------------------------------- Definition: Party has absolute duty to perform, but subsequent event discharges party's duty. - E.g.: Law firm hires brand new licensed attorney. o K says firm's obligation is discharged if attorney fails to maintain license. o Attorney is disbarred. o Result? [condition subsequent because duty to employ had already arisen and the loss of the license would discharge that duty.] - *****[NOTE: Conditions Precedent are common, Condition Subsequent are unusual.*****

consequential [T]

-forseeable damages that flow from the breach-----called special damages sometimes....question of forseeability -foreseeable damages that arise from circumstances outside a contract -to be liable for these damages, the breaching party must know or have reason to know that the breach will cause special damages to the other party -wmart contract to sell dolls from company a at 50. company a sells to wmart for 20. dolls never come. wmart can recover each doll for 30 ------------------------------------------- • Definition: *****Foreseeable***** damages from party's breach. Also called "special damages." o *** Defendant must *****know or have reason to know*****" that breach will cause special damages. - E.g.: Seller fails to deliver computer parts. - Seller knows buyer is planning to incorporate those parts and sell large order of computers. o Buyer loses sale because of delay. - Is seller liable for loss of profits from the planned resale? [probably] o . • [SKIP] Hadley v. Baxendale. Old English case from 1850's. E.g. - o Background: Large mills, usually kept more than one crankshaft. Common knowledge that the mills did have spare crankshafts. o Facts: Hadley's ran a flour mill. Crankshaft broke, mill shutdown. o Shaft had to be sent to foundry so new shaft could be made to fit the other parts. o Baxendale was the common carrier that transported the shaft to Greenwich for repairs. Freight charges were collected in advance. o Baxendale promised to deliver the shaft the following day. It was not delivered for several days. o Consequently, the mill was closed for several days. o Hadley sued to recover the profits lost during closure. o Trial court ruled in favor of the plaintiffs, and defendant appealed. • Damages: that which is "fairly and reasonably considered either arising naturally, i.e., according to the usual course of things, from such breach of contract, or as may be reasonably in the contemplation of both parties at the time of contracting, as a probable result." • i.e., "reasonably foreseeable" o If special circumstances were communicated to the defendants, damages resulting from the breach, which damages they would reasonably contemplate, to be the amount of injury ordinarily following from the breach of the contract, under the communicated special circumstances. • i.e., if D knows or has reason to know about special circumstances, D will be liable for consequential damages arising out of those "spec circ's". - Conclusion: Case establishes the black letter rule that *****Plaintiff entitled to compensation only for injuries that defendant could have reasonably foreseen as a probable result from the breach (like proximate cause)*****.

condition precedent - bolded

-if a contract requires the occurrence(nonoccurrence) of an event before a party is obligated to perform a contractual duty 1. personal satisfaction test -a subjective test that applies to contracts involving personal taste and comfort -the only requirement is that the person given the right to reject the contract acts in good faith 2. reasonable person test -an objective test that applies to commercial contracts and contracts involving mechanical fitness -most contracts require the work to meet the satisfaction of a third person(engineer, architect) are judged by this standard ---------------------------------- - The duty to perform doesn't arise until the condition occurs (i.e., the "thing" happens). o E.g.: REPC is conditioned on getting financing. • If not approved, then no duty. • Obligation discharged. • Seller won't be able to enforce it. • Seller won't be able to enforce it. PERFORMANCE TO THE SATISFACTION OF ANOTHER. - If K says performance must personally satisfy other party, then: o Is obligee's "subjective" satisfaction a condition precedent? o Or does performance only have to satisfy a "reasonable person" (i.e., substantial performance). - When subject matter of K is personal, subj. satisfaction is a condition. Performance must subjectively satisfy the promisee. E.g., Portraits, works of art, tailored suits—all personal. Exception: bad faith.. Most other K's—only need to be performed to satisfaction of "reasonable person," unless expressly stated otherwise. - What if contract requires performance to satisfaction of third-party? o Majority: Reasonable person standard. Would a reasonable person be satisfied? o Minority: Must satisfy personal satisfaction of designated third-party. - Note: Personal judgment must be made honestly, or condition will be excused.

performance and breach[t] types

-if a contractual duty has not been discharged or excused, the contracting party owes an absolute duty(covenant) to perform the duty -*****two types of performance: Complete and Substantial*****[T]

duties that can and cannot be delegated

-if an obligee has a substantial interest in having an obligor perform the acts required by a contract, these duties cannot be transferred 1. Personal service contracts calling for the exercise of personal skills, discretion, or expertise -ex. if P Diddy is hired to give a concert on a college campus, the Dixie Chicks cannot appear in his place 2. Contracts whose performance would materially vary if the obligor's duties were delegated -ex. if a person hires an experienced surgeon to perform a complex surgery, a recent medical school graduate cannot be substituted to perform the operation -------------------------------------------- -often, contracts are entered into with companies or firms rather than with individuals. -in such cases, a firm may designate any of its qualified employees to perform the contract -ex. if a client retains a firm of lawyers to represent her, the firm can delegate the duties under the contract to any qualified member of the firm ------------------------------------- 7. DELEGATIONS. o Duties are delegated. o Delegation of duties does not relieve the delegator of the obligation to perform (typically) 8. NONDELEGABLE DUTIES. o When duties are personal in nature. • Examples? [doctors, professional athletes, musicians, actors, etc.] • any time performance depends on personal skill or talents of the Obligor o When perf by 3dP will vary materially from what is expected by obligee • E.g., Mitt Romney hires campaign manager with same political view. • Manager gets sick; assigns his duties to a socialist o When K prohibits delegation • Note, some courts: if the duties are completely impersonal, they can be delegated

enforcement of remedies

-if nonbreaching party brings a successful lawsuit against a breaching party to a contract, the court will enter a judgment in his or her favor -the judgment must be collected...if the breaching party refuses to pay the judgment, the court may: -issue a writ of attachment -issue a writ of garnishment

quasi contract--bolded

-implied in law** an equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. The doctrine is intended to prevent unjust enrichment and unjust detriment -imposed where 1. one person confers a benefit on another, who retains the benefit 2. it would be unjust not to require that person to pay for the benefit received -example----heather driving involved in a serious accident when she is knocked unconscious-----saved by hospital---hospital sends bill----charges are reasonable---even though she was in a coma when they operated...she is responsible by any charges not covered by her insurance coverage

bilateral contract

-no act of performance is necessary to create a bilateral contract - a promise for a promise • **Bilat v. Unilat: depends on what offeree must do to accept offer. • Bilateral: Offeree can accept simply by promising to perform • (i.e., a "promise for a promise"). o performance not needed. When is K formed? • [at moment of exchange of promises. ] • E.g.: I agree/promise to buy your car for 10k. • Seller: I agree/promise to sell for that amount. • valid contract? [Go through the requirements (agreement, consideration, capacity, and legality)].

Intent----How is intent determined? What would have to be present for you to not consider an offer an actual contract or agreement?

-objective theory of contracts determines intent-----whether a reasonable person viewing the circumstances would conclude that the parties intended to be legally bound -offers made in jest, anger, or undue excitement do not include the necessary objective intent INTENT. ➢ Offeror must have ****"Serious Intent"*****: What does that mean? • [Per "objective theory", not subjective intentions, beliefs, or assumptions. ] ➢ How is that determined? [by Parties' words and conduct ] • [T] *****whatever a reasonable person in the Offeree's position***** would think they meant. • Remember: objective theory of K's • e.g., basketball example: "If you make this shot, I will pay you $100." o Analysis: It is what a reasonable person in the shoes of the *****Offeree***** would interpret. o Offers made in obvious anger, jest, or undue excitement probably not serious do not qualify, .... o [T] e.g.: D gets angry at her car and says she'll sell for $5. • You know it is worth $20,000, but you say, I accept! . • Enforceable contract? • Probably not. • reasonable person in your shoes would realize it was made in *****frustration and anger*****, and there was a ******discrepancy***** between the market value and the proposed price.

assignment and delegation

-occurs when there is a transfer of both rights and duties under a contract -if the transfer of a contract to a third party contains only language of assignment, the modern view holds that there is corresponding delegation of the duties of the contract

discharge by agreement - 4 ways parties decide to discharge their contractual duties

-parties decide to discharge their contractual duties -ways: 1.***mutual recession*** - if a contract is wholly or partially executory on both sides, the parties can agree to rescind(cancel) the contract---requires parties to enter into a second agreement that expressly terminates the first one---unilateral rescission of a contract by one of the parties without the other party's consent is not effective and constitutes a breach of that contract 2.***substituted contract***---parties to a contract may enter into a new contract that revokes and discharges existing contract---if one party fails to perform his or her duties under a substituted contract the nonbreaching party can sue to enforce its terms against the breaching party -the prior contract cannot be enforced against the breaching party because it has been discharged 3.***novation***-substitutes a third party for one of the original contracting parties---the new substituted party is obligated to perform the contract---all three parties must agree to the substitution 4.***accord and satisfaction***---agreement whereby the parties agree to accept something different in satisfaction of the original contract---accord. The performance of the accord is called a satisfaction---an accord does not discharge the original contract-it only suspends it until the accord is performed---satisfaction of the accord discharges both the original contract and the accord. If an accord is not satisfied when it is due, the aggrieved party may enforce either the accord or the original contract ------------------------------------ DISCHARGE BY RESCISSION. - Rescission: K is canceled/terminated - return to status quo ante. - *****Mutual Rescission [T]: Parties make new mutual K to unwind first K***** o Note: no unilateral recsision. That's breach. o 2d K must satisfy requirements of valid K (offer, acceptance, consideration, etc). • Promise not to enforce original contract is sufficient consideration. ---- DISCHARGE BY NOVATION. - Novation: Both parties agree to substitute in a third-party for one of the original parties. • E.g.: Original contract: Union Corp. agrees to sell its pharmaceutical division to British Pharmaceuticals. • Before tx, parties agree to transfer all of BP's rights and duties under K to a 3dP • discharges original k and replaces w/ new K • BP is discharged - relieved of liability to pay.

torts associated with contracts

-party who can prove a contract-related tort may also recover tort damages -tort damages include compensation for personal injury, pain and suffering, emotional distress, and possibly punitive damages -generally, punitive damages are not recoverable for breach of contract---they are recoverable for certain tortious conduct that may be associated with the non performance of a contract -intentional interference with contractual relations -breach of the implied covenant of good faith and fair dealing

substantial performance - "minor" breach [T]

-performance by a contracting party that deviates only slightly from complete performance -if the breaching party does not correct the breach, the nonbreaching party can sue to recover damages by (1) deducting the cost to repair the defect from the contract price and remitting the balance to the breaching party or (2) suing the breaching party to recover the cost to repair the defect if the breaching party has already been paid ----------------------------------------------- Requirement 1 - Def: party performs substantially all terms of a contract, *****in good faith*****, Requirement 1: good faith* o Good faith is required. Can't intentionally fail to comply. • (e.g., If you only pay ½ the rent because you just don't want to. Not good faith) o If you substantially perform your part, you can enforce other parties' obligation. o Rationale for the rule? [almost impossible to "strictly" perform. It would bog down commerce if parties could bail on slightest breach...] Requirement 2: Performance Confers MOST of promised benefits - can't vary too widely from the promise in contract. o E.g.: Far Side moat contractor. substantial performance? Probably not. Varies too much. - ****Must create substantially same benefit as those promised in contract**** - If variance is unimportant, and can easily be compensated by $, court may find subst. perf. o E.g's.:? • Seven Peaks lease payments. • We had to deposit $285,000 by March 1. • We deposited $200k and said we substantially performed. • At hearing, Court said that if we paid other 85k within 10 days, we will have substantially performed.

anti-assignment clause

-prohibits the assignment of rights under the contract -such clauses may be used if the obligor does not want to deal with or render performance to an unknown third party. -anti-assignment clauses are usually given effect

objective theory of contracts---TEST--BOLDED

-says the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties -1. words and conduct of the parties -2. the surrounding circumstances • [T!!!.] What is key inquiry in deciding if K is formed? [Intent] • How is INTENT determined? [objective theory of contracts.] o Look at words, conduct, surrounding circs (totality of circumstances) o Looking at objective facts, would "reasonable person" think parties intended K ... o Jest, anger, undue excitement → no K o Subjective Intent of the offeror is irrelevant. ---------------------- Hypothetical: - Playing basketball: "if you make this shot, I'll pay you $10.00." The shot is made. Offeror says "just joking". o K formed? Why or why not, analyzing obj. factors? • Secret, subj intent is irrelevant • Court looks at how facts would be interp'd by "reasonable person" ------------------------ • How is INTENT determined? [objective theory of contracts.] o Look at words, conduct, surrounding circs (totality of circumstances) o Looking at objective facts, would "reasonable person" think parties intended K ... o Jest, anger, undue excitement → no K o Subjective Intent of the offeror is irrelevant.

approval clause

-some contracts contain an approval clause---such clauses require that the obligor approve any assignment of a contract -where there is an approval clause, many states prohibit the obligor from reasonably withholding approval

tender of performance

-tender of performance also discharges a party's contractual obligations -tender is an unconditional and absolute offer by a contracting party to perform his or her obligations under the contract

restitution

-the return of goods or property received from the other party to rescind a contract -if the actual goods or property are not available, a cash equivalent must be made

assignment of legal action

-the right to sue another party for a violation of personal rights cannot usually be assigned---Donald is severely injured by Alice in an auto accident caused by Alice's negligence. Donald can sue Alice for the tort of negligence to recover monetary damages for his injuries. Donald's right to sue Alice is a personal right and cannot be assigned to a third person -a legal right that arises out of a breach of contract may be assigned---Andrea borrows $10,000 from Country Bank with an 8% interest rate. The loan is to be repaid in equal monthly installments over a 5 year period. If Andrea defaults on the loan, CB may sue Andrea to collect the unpaid amount of the loan. Instead, CB may sell(assign) its legal right to a collective agency to recover the money Andrea still owes on the loan. In this case, CB is the assignor, and the collection agency is the assignee

privity of contract

-the state of two specified parties being in a contract -contracted parties have a legal obligation to perform the duties specified in their contract -a party's duty of performance may be discharged by agreement of the parties, excuse of performance, or operation of law -if one party fails to perform as promised, the other party may enforce the contract and sue for breach -with 2 exceptions, third parties do not acquire any rights under other people's contracts 1. assignees to whom rights are subsequently transferred 2. intended third-party beneficiaries to whom the contracting parties intended to give rights under the contract at the time of contracting

third party beneficiaries

-third parties sometimes claim rights under others' contracts -such third parties are either intended or incidental beneficiaries -DIFFERENT KINDS: -intended---donee---creditor -incidental ---------------------------------- Def: a 3dP, not in privity of the orig K, can claim rights under the orig K. E.g.? [life insurance] 2 main types? [Intended & Incidental] • Gen. Rule: Only intended beneficiary has rights to sue the Promisor directly for breach. o Policy? [gives 3dP direct rights and circumvents need to sue the middleman]

covenant

-unconditional promise to perform -nonperformance of a covenant is a breach of contract that gives the other party the right to sue -the majority of provisions in contracts are covenants

assignment of a future right

-usually a person cannot assign a currently nonexistent right that he or she expects to have in the future---future right -Henrietta leaves a will for Brittany. Brittany has only an expected future right not a current right to the money

notice of assignment

-when an assignor makes an assignment of a right under a contract, the assignee is under a duty to notify the obligor that 1. the assignment has been made 2. performance must be rendered to the assignee. -if the assignee fails to provide notice of assignment to the obligor, the obligor may continue to render performance to the assignor, who no longer has a right to it. The assignee cannot sue the obligor to recover payment because the obligor has performed according to the original contract. The assignee's only course of action is to sue the assignor for damages -the result changes if the obligor is notified of the assignment but continues to render performance to the assignor. In such situations, the assignee can sue the obligor and recover payment. The obligor will then have to pay twice: once wrongfully to the assignor and then rightfully to the assignee. The obligor's only recourse is to sue the assignor for damages. ------------------------------------------ o Assignee should notify Obligor of the assignment. • [Remember: Assignee of rights; obligor owes the obligation to assignee] • E.g., landlord assigns lease to new owner. o Two major problems when notice is not given. ("Ethics Spotlight", p. 248) • If Assignor assigns the same right to two different people, question arises as to which one has priority AND who the obligor pays. • Some states - first assignment - first in right. • *****Some follow English rule: first to give notice has priority.***** o Until Obligor has notice... • He can discharge the obligation by performance to the Assignor/ Obligee. o After notice, what result? [can only discharge duty by performance to the Assignee.]

effect of delegation of duties / assumption of duties

-where a valid delegation of duties contains the term assumption or other similar language -a situation in which a delegation of duties contains the term assumption, i assume the duties, or other similar language -in such a case, the delegatee is legally liable to the obligee for nonperformance -here, the obligee can can sue the delegatee and recover damages for nonperformcance or negligent performance by the delegatee. In addition, the delegator remains legally liable for the performance of the contract. -thus, if the delegatee does not perform properly, the obligee can sue the obligor-delegator for any resulting damages caused by the delegatee's nonperformance or negligent conduct -------------------------------------- o Obligee must accept performance from the delagetee UNLESS duty is nondelegable. • E.g., K w/ David Archuleta. Obligee not obligated to accept substitute o Obligee can hold the delegator AND delegatee liable. Can sue them both • E.g., Assumption of mortgages . Delegator remains liable.

Agreement - what is the meeting of the minds?

-without mutual assent there is no contract----assent may be expressly evidenced by the oral or written words of the parties or implied from the conduct of the parties - -First requirement? Agreement -Parties have to AGREE on the terms of the deal and - must manifest MUTUAL ASSENT to the same bargain. -i.e., there must be a MEETING OF THE MINDS e.g., I will sell you my car for $10,000. Cell phone cuts out, and it sounds like "$2,000" and you accept at 2k. Meeting of the minds??? [no] -*****This meeting of the minds usually evidenced by OFFER and ACCEPTANCE***** ** Remember: The Offeror is master of his offer...

classifications of contracts - formation ------------------ what is...bilateral/unilateral/express/implied-in-fact/quasi/formal/informal

1. Bilateral contract - a promise for a promise 2. Unilateral contract - a promise for an act 3. Express contract - a contract expressed in oral or written words 4. Implied-in-fact contract - a contract inferred from the conduct of the parties 5. Quasi-contract - a contract implied by law to prevent unjust enrichment 6. Formal contract - a contract that requires a special form or method of creation 7. Informal contract - a contract that requires no special form or method of creation

Defenses to the enforcement of a contract

1. Genuineness of assent---the consent of the parties to create a contract must be genuine. If the consent is obtained by duress, undue influence, or fraud, there is no real consent 2. Writing and form---the law requires that certain contracts be in writing or in a certain form---failure of such a contract to be in writing or to be in proper form may be raised against the enforcement of the contract • Even if K is valid, D can raise defenses as to its enforceability. o ASSENT: Was there assent? Consent must be genuine, no fraud, undue influence, mistake, or duress. - E.g. Dymock (forced to sign poa). o FORM: Some contracts must be in writing, or a certain form.

classification of contracts - performance

1. executed contract - a contract that is fully performed on both sides 2. executory contract - a contract that is not fully performed by one or both parties

classification of contracts - enforceability---TEST valid vs void vs voidable vs unenforceable

1. valid contract - a contract that meets all the essential elements of establishing a contract 2. void contract - no contract exists 3. voidable contract - a contract for which at least one party has the option of voiding the contract 4. unenforceable contract - a contract that cannot be enforced because of a legal defense ------------------------------- C. CONTRACT ENFORCEABILITY. [T] • Valid K: has all the elements (and at least one party can enforce). o Valid K may be: enforceable, voidable, or unenforceable. o Enforceable: both parties can enforce the K. • Voidable: A valid K that can be avoided at the option of one or both parties. 1. Can be avoided or ratified. If avoided, all parties are released. a. E.g.: Contracts made by minors (Harrier Jet). b. More in Ch. 13 • Unenforceable contracts. A valid contract that cannot otherwise be enforced because of defenses. - E.g., statute of frauds. A valid contract rendered unenforceable by some statute or law. • Void contracts. Void = No K ever formed. Void ab initio. - E.g., a mafia "hit" contract. ---neither party is obligated to perform and neither party can enforce

contract enforceability

1.valid - -agreement between the parties -supported by legally sufficient consideration -between parties with contractual capacity -accomplished a lawful objective 2. void contract - has no legal effect 3. voidable contract - contract in which at least one party has the option to avoid his or her contractual obligations---if the contract is avoided, both parties are released from their obligations under the contract---if the party with the option chooses to ratify the contract, both parties must fully perform their obligations -contracts may be voided by minors; insane persons; intoxicated persons; persons acting under duress, undue influence, or fraud; and in cases involving mutual mistake 4. unenforceable contract - there is some legal defense to the enforcement of the contract---if a contract is required to be in writing under the Statute of Frauds but is not, the contract is unenforceable ---------------------------------------------- • Valid K: has all the elements (and at least one party can enforce). -agreement between the parties -supported by legally sufficient consideration -between parties with contractual capacity -accomplished a lawful objective o Valid K may be: enforceable, voidable, or unenforceable. o Enforceable: both parties can enforce the K. • Voidable: A valid K that can be avoided at the option of one or both parties. 1. Can be avoided or ratified. If avoided, all parties are released. a. E.g.: Contracts made by minors (Harrier Jet). b. More in Ch. 13 • Unenforceable contracts. A valid contract that cannot otherwise be enforced because of defenses. - E.g., statute of frauds. A valid contract rendered unenforceable by some statute or law. • Void contracts. Void = No K ever formed. Void ab initio. - E.g., a mafia "hit" contract.

Special Offers- TEST - Advertisements - Auctions---w/ Reserve---w/o Reserve

Advertisements. [T] ➢ Generally: advertisements are NOT treated as offers o They're "invitations to negotiate" or "invitations to make an offer" o Otherwise, everyone who responded could argue acceptance: • E.g.: KSL.com. advertise your car for sale. You get 100 emails "accepting". Can't sell to all. ➢ How can some advertisements can be considered an offer? -exception---an ad is considered an offer if it is so definite or specific that it is apparent that the advertiser has the present intent to bind himself or herself to the terms of the advertisement o Ads contain definite terms and invite acceptance. o E.g., Target, mountain bikes for the boys. Auctions. ➢ Auctions are not offers. IT IS AN INVITATION ASKING BIDDERS TO SUBMIT OFFERS. -auction with reserve ➢ The bidder is the Offeror and the auctioneer is the Offeree. ➢ Offer is communicated when bidder bids. ➢ When is it accepted? [When auctioneer strikes the hammer.] ➢ Before the fall of the hammer, bidder may revoke the bid and auctioneer may reject that bid (or all bids). ➢ When the auctioneer accepts the higher bid, he rejects all previous bids. ➢ Contract is formed when the auctioneer says: "Going once, going twice, sold." ➢ Difference between "with reserve" and "without reserve" • With Reserve: o Seller can withdraw goods any time before gavel falls. o Seller reserves right to confirm or reject o But, seller has to notify bidders that sales are not final until confirmed. • All auctions are assumed to be With Reserve, unless explicitly stated to be Without Reserve. • Without Reserve: Goods cannot be withdrawn by seller and must sold to highest bidder. -without reserve = the participants reverse the roles: the seller is the offeror, and the bidders are the offerees---the seller must accept the highest bid and cannot withdraw the goods from sale----however, if the auctioneer has set a minimum bid that it will accept, the auctioneer has to sell the item only if the highest bid is equal to or greater than the minimum bid ------------------------------ REWARD - an offer to pay a reward is an offer to form a unilateral contract----to be entitled to collect the reward, the offeree must (1) have knowledge of the reward offer prior to completing the requested act and (2) perform the requested act

Requirements of the offer

REQUIREMENTS OF OFFER: Reminder: Define Offeror and Offeree. Definition: "An offer is a promise or commitment to DO or REFRAIN from doing some specified thing in the future." Three elements for effective offer: 1. Offeror must OBJECTIVELY INTEND (serious intent)to become bound by offer; 2. Terms of offer must be REASONABLY CERTAIN or definite so that parties and court can ascertain terms of K; and 3. Offer must be COMMUNICATED to Offeree. If the offer meets requirements and Offeree accepts, a K is formed.

types of monetary damages. high level

TYPES OF MONETARY DAMAGES: 1. Compensatory. (Covers direct losses and costs.) 2. Consequential. (Covers indirect and foreseeable losses.) 3. Punitive. (Punish and deter). 4. Nominal. (Recognizes wrongdoing, even when no monetary loss is shown.)

different theories of social responsibility

MAXIMIZING PROFITS -to maximize profits for stockholders --------------------------------------------------------------------- MORAL MINIMUM -to avoid causing harm and to compensate for harm caused -corporation's duty is to make a profit while avoiding causing harm to others --------------------------------------------------------------------- STAKEHOLDER INTEREST -to consider the interests of all stakeholders, including stockholders, employees, customers, suppliers, creditors, and the local community --------------------------------------------------------------------- CORPORATE CITIZENSHIP -to do well and solve social problems -argues that business has a responsibility to do well---that is, business is responsible for helping to solve social problems that it did little, if anything, to cause

how does K law affect society? commerce?

[stability and predictability, keeps commerce flowing, no one would do business otherwise] ***What if rule was "finders, keepers..."? Eeny, meeny...? (e.g., buy a car, but don't pay. What's the remedy?)

legally enforceable contract

a contract in which if one part fails to perform as promised, the other party can use the court system to enforce the contract and recover damages or other remey

unilateral contract

a contract in which the offeror's offer can be accepted only by the performance of an act by the offeree; a promise for an act -offer to create a unilateral contract can be revoked by the offeror any time prior to the offeree's performance of the requested act -offer cannot be revoked if the offeree has begun or has substantially completed performance ------------------------- • Unilateral: Offeree can accept only by completing contract performance o Time of contract formation?: [Moment when performance is rendered.] • E.g. "if you carry this package across the Brooklyn Bridge, I'll give you $ 20." When is contract formed? If Oferee doesn't take the package, is Offeror bound? [no] If she does take the package and walks across, is he bound? [Yes]. - Pay attention to the words: (example in book, p. 163) o "If you promise [or agree, etc.] to paint my house by July 1, I promise to pay you $1000. • Painter promises. If Painter doesn't paint by then, owner has claim. o But..."If you paint my house by July 1... • He can only accept by performance • What problems can you see with unilateral contracts? o [determining whether unilateral or bilateral. Splitting hairs over words] • Note: words are important: "IF you DO this, THEN I'll do that." o What if Promisor attempts to revoke after promisee has begun performance, but before completion. - [T] Modern view: offer cannot be revoked once performance has begun (or has "substantially completed"). - In Bridge example: O'ee is ¾ across and O'or says: "I revoke" • What result? [CAN'T revoke; oferee has begun or undertaken substantial performance. ]

breach of contract

a contracting party's failure to perform an absolute duty owed under a contract -three levels of performance: complete, substantial, inferior -complete---discharges that party's duties -substantial---minor breach of the contract -inferior---material breach that impairs or destroys the essence of the contract -monetary damages awarded or equitable remedies • The most common: *****Damages, rescission, specific performance, reformation***** • Optional: Remedies at law v. remedies of equity.

utlitarianism

a moral theory that dictates that people must choose the action or follow the rule that provides the greatest good to society -origins in the works of Jeremy Bentham and John Stuart

Rawls's social justice theory

a moral theory that says each person is presumed to have entered into a social contract with all others in society to obey moral rules that are necessary for people to live in peace and harmony -John Locke -Jean-Jacques Rousseau -implied contract states, "I will keep the rules if everyone else does" -fairness is justice -the rules are established from an original position of a "veil of ignorance"

Kantian ethics

a moral theory which says that people owe moral duties that are based on universal rules, such as the categorical imperative "do unto others as you would have them do unto you" -also known as duty ethics -based on two important principles (1) consistency---that is, all cases are treated alike, with no exceptions and (2) reversibility---that is, the actor must abide by the rule he or she uses to judge the morality of someone else's conduct -thus, if you are going to make an exception for yourself, that exception becomes a universal rule that applies to all others

mitigation of damages

a nonbreaching party's legal duty to avoid or reduce damages caused by a breach of contract -employee must try to find substitute employment...only required to accept comparable employment----compensation, rank, status, job description, geographical location

ethics

a set of moral principles or values that governs the conduct of an individual group

ethical fundamentalism

a theory of ethics that says a person looks to an outside source for ethical rules or commands -this may be a book....the Bible, Koran, or a person...Karl Marx -does not permit people to determine right and wrong for themselves -taken to an extreme, the result could be considered unethical under most other moral theories---"eye for an eye"

assignor - obligor - obligee - assignee

assignor - an obligee who transfers the right to receive performance - obligor - a party who owes a duty - obligee - a party who is owed a right under a contract - assignee - the party to whom the right has been transferred -assignee can assign the right to yet another person(called a subsequent assignee or subassignee -----------------------

social responsibility

corporations are considered to owe some degree of responsibility for their actions 4 things: -maximizing profits -moral minimum -stakeholder interest -corporate citizenship

express vs implied in fact----what must be established to create an implied-in-fact contract

express - stated in oral or written words---contract that is oral or written is an express contract ------------------ implied-in-fact contract---implied from the conduct of the parties -The Following must be established to create an implied-in-fact contract: 1. the plaintiff provided property or services to the defendant 2. the plantiff expected to be paid by the defendant for the property or services and did not provide the property or services gratuitously 3. the defendant was given an opportunity to reject the property or services provided by the plaintiff but failed to do so ------------------------ • Express: terms are fully and explicitly stated in words - oral or written. o E.g.: I promise to buy 100 widgets for $1000. o Uses WORDS. • Implied in fact: contract is implied from the underlying conduct of the parties. ELEMENTS: - P furnishes service or property - P expected to be paid by defendant - didn't provide products or service gratuitously. (in Utah, D knew or should have known...) - D had a chance to reject the services or property and did not. • E.g.: House painter shows up and begins painting house. - You watch from your living room window and say nothing. - Implied in fact contract? [Go through the analysis] • E.g.: Tijuana squeegee boys. - If I yell at them to stop, is there a binding contract?

ethical relativism

individuals decide what is ethical based on their own feelings as to what is right or wrong

Parties - offeror/offeree

offeror - the party who makes an offer to enter into a contract ---------- offeree - the party to whom an offer to enter into a contract is made---if offer is not accepted, then no contract

assignment of rights / assignment - bolded - [T]

the transfer of contractual rights by an obligee to another --------------- • [T] Transfer of rights - Assignment, • Transfer of duties - delegation. o *** Understand the difference*** • Assignment and delegations occur after contract is entered. • Assignments. E.g., Financing a vehicle. K is assigned to financing co.

anticipatory repudiation [T]

• ANTICIPATORY REPUDIATION. [T] - Definitions of anticipatory repudiation: Before the time performance is due, one party refuses to perform obligations. o Can be express or implied by conduct - Treated as material breach of the contract. Which means?... o [ non-breaching party is entitled to sue immediately; doesn't have to wait for the time for performance; o Non-breaching party is excused from performance. Discharge immediately. ***Rationale: Why should AR be treated as present material breach? AR in the Market - efficient breach. Explain.

ELEMENTS OF A CONTRACT

• Agreement. - One party must offer, the other party must accept. - Mutual assent: "Meeting of the Minds" • Consideration. - Legally sufficient and bargained for consideration (something of value) (money, or something equivalent) in exchange for the deal. • Contractual Capacity. - Both parties have to have capacity. Law must recognize them as having capacity. - Some lack capacity (i.e. mental incapacity, minors, etc.) • Lawful object/Legality. - Legal and not against public policy. ----------------------- A. REQUIREMENTS OF A VALID CONTRACT. [T] • Agreement. - One party must offer, the other party must accept. - Mutual assent: "Meeting of the Minds" • Consideration. - Legally sufficient and bargained for consideration (something of value) (money, or something equivalent) in exchange for the deal. • Contractual Capacity. - Both parties have to have capacity. Law must recognize them as having capacity. - Some lack capacity (i.e. mental incapacity, minors, etc.) • Legality. - Legal and not against public policy.

limitations on quasi-contractual recovery

• Carwash example (Compare this with the doctor): - Take your car to the local carwash and ask for it to run through the washer - While being washed you go to the store. - worker mistakes your car for one that he's supposed to hand wax. - You're presented with the bill for wash and an expensive hand wax. - Liable for wax? Why different from doc. o Benefit was conferred by mistake. You have not been unjustly enriched. o Also: not liable for benefits that are forced upon you or not necessary • Not applicable if the services or benefit were conferred by mistake or because of negligence of party conferring benefit. • Also, Quasi-K generally not applicable when there is an actual contract.

formal vs informal

• Formal contracts: require special form or method of creation o Letters of credit, marriage, car titles • Informal contracts - no special form required o Contract usually based on substance rather than form. o Most commercial contracts are in writing to ensure proof and enforceability.

punitive damages

• Generally not recoverable in contract law, even for intentional breach. • Designed to punish wrongdoer, set example, and deter conduct. Doesn't really fit in contract law. • But, in some cases a breach may also be a breach of the standard of care and constitute negligence. o (T): Conduct ****can**** be both breach AND tort • For example, Some breaches involve fraud, which may warrant seeking punitive damages. • Example: Insurance company, bad faith in not providing coverage or defending. Courts sometimes award punitive. - State Farm case. $100 million. Biggest in Utah at time. - Bottom line: Punitive damages almost never available in contract disputes.

Termination of an offer by operation of law

• Offer could be terminated by (1) Lapse of time (2) Destruction of the subject matter (3) Death or incompetence of the Offeror or Offeree (4) Supervening illegality of the contract. ------------------------- [Now in detail] (1) Lapse of Time: • Offer terminates auto'ly when the time specified in the offer has passed. • What if offer doesn't specify a time? [terminates after "reasonable" time] - What is reasonable? [jury question - totality of circumstances.] - E.g., what about an offer to sell perishable goods? A reasonable time would probably be shorter than for other items. (2) Destruction of the subject matter. • Offer is automatically terminated if the subject matter is destroyed. • E.g., I offer to sell you my car. • Before you can accept, my car blows up. Offer terminated. • E.g., semi crushes car in Bountiful. It had been sold two days ago... What result? (3) Death or Incompetence. • Offeree's power of acceptance is terminated when the offeror dies or is deprived of legal capacity. • Revocable offer is personal to both parties. Does not pass to the estate or the heirs. • This rule applies regardless of notice of death or incompetence. • Note: If the offer is irrevocable, the death of the offeror does not terminate the offer. Can bind the estate... (4) Supervening illegality of the contract. • A statute or a court decision that makes the offer illegal automatically terminates. • E.g., offer to lend money at an interest rate of 30%. • On Monday, a law is enacted that prohibits usurious (too high) interest rates. On Tuesday, I accept the deal. • What result? [Offer automatically terminated.

II. TERMINATION OF THE OFFER. It Doesn't Last Forever: -Offer can be terminated 3 ways

➢ An offer can be terminated in three ways. What are they?: 1. Revocation - the offeror revokes(withdraws) the offer any time prior to its acceptance by the offeree 2. Rejection - the offeree rejects the offer by his or her words or conduct 3. Counteroffer - a counteroffer by the offeree creates a new offer and terminates the offeror's offer ------------------------- TERMINATION BY ACTION OF THE PARTIES A. Revocation of the offer by the Offeror. • Def: Offeror's act of withdrawing or revoking offer. • When: Offeror can revoke anytime before Oferee accepts. (unless it's an irrevocable offer) • Can be by Express repudiation of the offer. ("I withdraw my previous offer of October 17"). • Can be by inconsistent action: What if offerror turns and offers it to someone else in front of 1st offerree? o [that's revocation: by doing something inconsistent with the offer and making that known to the Offeree] ➢ Remember: THE OFFEROR IS MASTER OF HIS OFFER. ➢ In Most States: Revocation becomes effective when the Offeree or his agent actually receives it. ➢ What about Offer made to general public?: Has to be revoked in same manner that offer was originally communicated. (e.g.: Publication in newspaper, etc.). B. IRREVOCABLE OFFERS ➢ Some can be irrevocable. (Cannot be revoked or canceled). • Option contracts. Explain. C. REJECTION BY OFFEREE • If the offeree rejects the offer, the offer is terminated. • Can be express (words) or implied (conduct) • Note: inquiry about the offer does not equal rejection. D. COUNTEROFFER BY THE OFFEREE • A counteroffer is a rejection of the original offer and the simultaneous issuance of a new offer. • E.g. house sale. Seller offers for $270,000. • Buyer says "too high, I'll offer $250,000. • Buyer's response is a counteroffer, rejecting the previous offer. • Mirror Image Rule: Offeree's acceptance must match the offeror's offer exactly to be effective. - Any change in the terms of the original offer terminates/rejects the original and is a counteroffer. - E.g., I'll pay $270,000, but you have to throw in the dog. Acceptance? [no. adds a new term] - What about: "I'll pay it, but I still think it's way too high?" ["grumbling" acceptance is still valid] - (more in a minute...)