Contracts

Restatement, Second §162. When a misrepresentation is fraudulent . . .

(1) A misrepresentation is fraudulent if the maker intends his assertion to induce a party to manifest his assent and the maker (a) Knows or believes that the assertion is not in accord with the facts, or (b) Does not have the confidence that he states or implies in the truth of the assertions, or (c) Knows that he does not have the basis that he states or implies for the assertion

R, 2 § 176. When a threat is improper

(1) A threat is improper if (a) What is threatened is a crime or a tort, or the threat itself would be crime or a tort if it resulted in obtaining property (b) What is threatened is a criminal prosecution, (c) What is threatened is the use of civil process and the threat is made in bad faith, or (d) The threat is a breach of the duty of good faith and fair dealing under a contract with the recipient. (2) A threat is improper if the resulting exchange is not on fair terms, and (a) The threatened act would harm the recipient and would not significantly benefit the party making the threat, (b) The effectiveness of the threat in inducing the manifestation of assent is significantly increased by prior unfair dealing by the party making the threat, or (c) What is threatened is otherwise a use of power for illegitimate ends

R,2 § 175. When duress by threat makes a contract voidable

(1) If a party's manifestation of assent is induced by an improper threat by the other party that leaves the victim no reasonable alternative, the contract is voidable by the victim

UCC 2-301. Unconscionable Contract or Clause.

(1) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (2) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose and effect to aid the court in making its determination Comment 1 "The basic test is whether, in light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of making the contract." "The principle is one of the preventions of oppression and unfair surprise . . . and not of disturbance of allocation of risks because of superior bargaining power"s

Mistake

(1) The mistake must relate to a fact that was in existence at the time of the contract. It cannot be a mistake in judgment or a mistaken prediction as to future events. (2) The mistake must relate to something that is central to the contract, rather than a minor or peripheral matter, and it must have a significant effect on the benefits the mistaken party receives or the burdens he undertakes under the contract. (3) For relief to be available in cases of mistake, it must be unfair or otherwise inappropriate to allocate the risk of the mistake to the aggrieved party.

(d) Justifiable Inducement [Justifiable Reliance]

(d) Justifiable Inducement [Justifiable Reliance] Justifiable reliance mixes objective and subjective elements to determine if the victim, given her personal attributes and circumstances, should have been taken in by the falsehood. If the party would have entered the contract regardless of the misrepresentation, it did not induce the manifestation of assent, and the party is not entitled to relief. If the reliance was unjustified, the party is not entitled to relief.

Fraud (c) Materiality

(still required by vast majority of courts, but not in R for fraud) - The misrepresentation must be regarding a material/important aspect of the K - this seems likely if it creates inducement . . . R, 2 §162(2) - A misrepresentation is material if it would be likely to induce a reasonable person to manifest his assent, or if the maker knows that it would be likely to induce the recipient to do so. As the language shows, R,2 only recognizes materiality as an element of negligent misrepresentation but does not include it as an element of fraud. (Negligent misrepresentation claims can often be prevented by disclaimers or merger clauses)

Regarding arms length transactions . . .

- A person in a business deal must be under a duty to disclose a material fact before he can be charged with a failure to disclose Often, where the buyer claims fraud by nondisclosure it can be difficult to decide if the seller has a duty to disclose in light of the buyer's responsibility to conduct adequate inquiry to protect his own interests

Escape clauses -

- Avoidance of K should some condition not vest (or be satisfied)

R,2 § 208. Unconscionable contract or term

- If a contract or term thereof is unconscionable at the time the contract is made a court may refuse to enforce the contract, or may enforce the remainder of the contract without the unconscionable term, or may so limit the application of any unconscionable term as to avoid any unconscionable result.

Reliance Damages

- Reliance Damages The ability to recover reliance damages is subject to the same limitations as damages generally. They too must be established with reasonable certainty. An injured party may, if he so chooses, ignore the element of profits and recover as damages his expenditures in reliance. Easier to prove sometimes than, say, lost profits

Public Interest regarding in pari delicato rule

- The public interest is the most important consideration, and it encompases many concerns: the reluctance of the court to aid a lawbreaker, the public policy of upholding the law that has been violated, the creation of a disincentive to future violations of the law, whether refusal of a remedy would further or hinder the purpose of the law that has been violated, and the impact of refusing relief on the public good. In some cases, the curt may take into account the remedy sought pr restitution conferred on the defendant under the K

Concurrent conditions

. . .

Conditions of Satisfaction

A condition of satisfaction is a form of escape clause that allows a party to escape its obligations under the contract if that party is not satisfied with the other party's performance or some other specified state of affairs - (such as a lender being disappointed with a customer's credit rating)

Illegality

A contract is illegal if it violates a statute or rule of common law - no cause of action arises out of an immoral act expresses that a court will not give relief to a plaintiff arising out of the plaintiff's illegal conduct -

Contracts in Violation of Public Policy

A contract violates public policy when it does not violate a law but is so contrary to public interest that the court concludes that it should not be enforced. . . . The distinction between illegal Ks and Ks that violate public policy is often a matter of degree, as Ks that are continuously struck down for violation of a specific public policy essentially become illegal under common law

Cure

A material breach may be "upgraded" to substantial performance if the breaching party corrects the issue (ideally before the deadline of the project; if completed after, depending on whether the deadline is a material breach, the offending party may be in breach or have a reasonable time to rectify the issue and pay for the additional time required . . .)

Material Breach vs. Substantial Performance

A material breacher cannot recover damages under the contract. If the breacher has partially performed under the K, he may be allowed to recover the value of his performance under principles of unjust enrichment; IF THE DEFENDANT HAS SUBSTANTIALLY PERFORMED, HE MAY SUE TO ENFORCE THE K AS ENTITLED TO THE FULL K PRICE LESS ANY ALLOWANCE FOR RECTIFYING THE DEFECT OR COMPENSATING FOR LOSS OF VALUE CLEARLY THE STAKES IN DETERMINING IF A BREACH IS MATERIAL IS QUITE SIGNIFICANT

Fraud (a) A misrepresentation of fact

A misrepresentation per Restatement, Second §159 is an assertion not in accordance with the facts. Restatement, Second § 160. When Action is Equivalent To An Assertion (Concealment) - Action intended or known to be likely to prevent another from learning a fact is equivalent to an assertion that the fact does not exists.

A party to a business transaction has a duty to disclose a fact where:

A party to a business transaction has a duty to disclose a fact where four conditions are satisfied: (1) she knows the other party is unaware of it; (2) the knowledge would be reasonably likely to influence the other's decision to enter the transaction; (3) the information is not readily accessible to the other by diligent inquiry; and (4) the information is not fairly regarded as the party's own property (having been acquired by special efforts or study).

R, 2 § 161. When Non-Disclosure Is Equivalent to an Assertion

A person's non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only: (a) Where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material. (b) Where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. (c) Where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part. (d) Where the other person is entitled to know the facts because of a relation of trust and confidence between them.

When statements of opinion count as fact for purposes of misrepresentation:

A statement, though couched in terms of opinion, may constitute a statement of fact if it may reasonably be understood by the reader or listener as implying the existence of facts that justify the statement There is a fine line between puffery and opinions constituting misrepresentation

Anticipatory repudiation

Anticipatory repudiation is essentially advance notice of breach - the party who has promised a performance makes it clear by words or conduct that she will not perform when the time for performance falls due A party may retract repudiation by giving notice to the injured party or the event constituting repudiation ceases to exist before she materially changes his position in reliance on the repudiation

Economic Duress

City of Scottsbluff v. Waste Connections of Nebraska, Inc. (NE 2011) - Waste removal company raises price after finding that city would not renew K; city had no other option at the time so agreed to price increase and sued later to recover difference (restitution) . . . Economic Duress = Duress

Condition Subsequent

Condition Subsequent - Discharges an existing duty should a condition fail to vest

Conditions Precedent -

Conditions Precedent - Gives rise to a duty should the condition vest

The Mitigation Principle

Contract law places a burden on the nonbreaching party to reduce the negative consequences of breach. If a party fails to reasonably mitigate damages, she may only be able to recover damages equal to the amount as if she had mitigated the damages . . . The mitigation principle is typically raised as an affirmative defense by the breaching party.

Justifiable Inducement and Contracting Out of Fraud

Courts often state that, as a matter of public policy, a party cannot contract out of fraud—that is, it cannot insulate itself from a claim of fraud by including a disclaimer of representations, a waiver, or some other provision in the contract that precludes the other party from asserting a claim of fraud. Justifiable reliance is an element of fraud and in some cases the fact that the victim of the fraud executed a contractual disclaimer or waiver could lead to the conclusion that the party was not justified in relying on misrepresentation or nondisclosure that is at odds with disclaimer or waiver.

Damages for Pain, Suffering, and Emotional Distress

Damages for mental suffering and emotional distress are generally not recoverable in an action for breach of an ordinary commercial contract. Recovery for emotional disturbance will be excluded unless the breach (1) also caused bodily harm or the contract, (2) the breach is of such a kind that serious emotional disturbance was a particularly likely result, (3) where emotional tranquility is the contract's essence, or (4) in willful, wanton, or malicious breach

Foreseeability of Damages

Damages, to be recoverable, must be foreseeable at the time the contract is entered; that is, in the contemplation of both parties at the time they made the contract as the probable result of the breach of it. Whether special circumstances are communicated, then, will have a bearing on the foreseeability of damages As the loss becomes more and more remote from the ordinary consequences of breach, the foreseeability principle increasingly comes into play.

Duress

Duress, the compulsion of a manifestation of assent by force or threat, has long been recognized as a basis for avoiding s contract

Efficient breach

Efficient breach . . . when one breaches a K for a better deal . . . (even though damages for substitute may be unknown)

Elements of Unilateral Mistake

Elements: (1) The mistake relates to facts in existence at the time of the contract (2) The mistake may be by only one party (3) The mistake relates to a basic assumption on which the mistaken party made the K (4) The mistake has a material effect on the agreed exchange of performances that is adverse to the mistaken party (5) The mistaken party did not bear the risk of the mistake (6) Either (a) the effect of the mistake is such that enforcement of the contract would be unconscionable or (b) the other party had reason to know of the mistake or his fault caused the mistake

Unfair forfeiture (Excuse of Conditions)

Equitable discretion may be used (sparingly) to avoid an unfair result by excusing technical noncompliance with the a condition when courts cannot use equitable estoppel or waiver and cannot interpret the language of the K to yield a fair result

Estoppel ( Excuse of Conditions)

Estoppel operates [with respect to excuse of conditions] where the beneficiary of a condition indicates by words or conduct that he will perform the contingent promise despite nonfulfillment of the condition to detrimental reliance -->The party to be stopped must have known or have reason to know that his words or conduct were likely to have been relied upon by the other party, and they must in fact have been relied on by that party to her detriment

Divisible K

Even where a breach is material, the contract may be structured in a way that allows the breacher to argue that it can be divided into self-contained units, so that a breach relating to some of the units is isolated and confined to those units and does not affect other aspects of the contract. a contract is said to be divisible when performance is divided in two or more parts with a definite apportionment of the total consideration to each part Ks presumed to be entire Ks rather than divisible Ks

Misrepresentation of Intent

Fraud generally involves misrepresentation of fact, however, it sometimes happens that the victim of the breach can show that the breaching party never intended to perform as promised. If the victim can prove that when the breacher entered the contract, she had already determined to breach it, this could constitute a fraudulent misrepresentation.

Fraud in the factum

Fraud in the factum relates to representations about the document itself, such as claiming a contract for eternal employment to be merely a letter of recommendation. -If this fraud is found, then courts will find that mutual assent was never manifested, and the agreement is completely void. The agreement, then, was never made. In this manner, there is no option for the person defrauded to opt to keep the contact in force

Fraud in the inducement

Fraud in the inducement relates to a material component of the transaction, but not as to the nature of the agreement itself. If this kind of fraud is found, then the person defrauded can pursue either rescission or damages.

Fraudulent Misrepresentation

Fraud is a material misrepresentation of fact, made with knowledge of its falsity and intent to induce a contract, which does in fact justifiably induce the other party to enter a contract. Fraud is not mentioned under UCC-2, so common law governs per UCC 1-103(b)

Restitution on Disaffirmance

Generally after a minor disaffirms a K, the minor is entitled to full restitution and the adult party is entitled to as much restitution as the minor can provide, including $0. In the case of intangible services, the minor often is not responsible for any costs. This policy places the risk in contracting with minors with the adult party. Some courts believe this can be unfair and may hold the underaged contractors liable for more depending on the facts.

(e) Injury and Remedy [fraud]

Generally the injured party must show that the misrepresentation resulted in damages; otherwise, the party will not be able to recover (obvs)

Assignments That Violate Public Policy

Generally, alienability of Ks is encouraged. But it violates public policy to assign tort claims

Excuse of Conditions

Generally, express conditions are upheld exactingly by courts, but there are some (four) exceptions Waiver Estoppel Obstruction or uncooperative conduct Unfair forfeiture

Duress versus normal pressures and hard bargaining

Hard bargaining or unfair pressure may not rise to the level of duress. It is natural for a party to feel some pressure in bargaining, especially if, say, their market is struggling or they really need the deal

Failure to deliver with respect to conditions or promises . . .

If a condition is not fulfilled, the performance contingent on it need not be rendered If a promise is broken, the promise has a claim for breach If a promissory condition is broken, then the offended party is entitled to decline performance and claim breach

R,2 § 174 Duress

If conduct that appears to be a manifestation of assent is not intended as such by a party, and is physically compelled by duress, the conduct is not effective as a manifestation of assent. The contract, then, was never formed. As such, the contract is not merely voidable, but completely void

Intentional misrepresentation through omission

Intentional misrepresentation through omission occurs when (1) the non-disclosing party knew that the other party was not aware of the fact; (2) the mistaken party could not discover the fact by ordinary investigation or inspection, or he or she could not otherwise reasonable be expected to discover the fact; and (3) the mistaken party would not have entered into the transaction if he or she knew the fact Where the material facts are peculiarly and exclusively within the knowledge of one party to the transaction and the other party is not in a position to discover the facts for himself, disclosure is required

Penalties

It is a long-standing common law rule that contract penalties are unenforceable as against public policy - in the common law there remains a very strong hostility toward agreed remedies that are intended to act as penalties.

Material and total breach

Material and total breach - if a condition is not fulfilled (and there are no grounds for excusing it), the performance contingent on it need not be rendered. We have also seen that if a promise is broken, the promisee has a claim for breach. If the term is a promissory condition—both a promise and a condition—then its nonfulfillment results in both of these consequences: The breach of the promissory condition entitles the other party both to decline her performance and to claim breach.

Measurement of the Expectation Interest When Neither Party Performs

Measurement of the Expectation Interest When Neither Party Performs a. Measurement by Reference to Market Value When a court uses a market value measure, it determines a party's direct losses by comparing the contract price to the market value of the performance promised under the contract. b. Measurement by Reference to a Substitute Transaction Sometimes, the plaintiff obtains a replacement for the defaulted performance. If the replacement is less advantageous than the contract performance would have been, a comparison between the two can serve as a measure of the direct losses the plaintiff has suffered because of the breach. c. Measurement by Reference to Lost Profits In some situations, a court will conclude that neither the market value measure nor the substitute measure of the plaintiff's loss adequately compensates the plaintiff. Instead, the court concludes that the plaintiff should receive the profit it would have earned under the contract at issue. (Lost volume)

Minors continued . . .

Minors, if they would disaffirm a contract, must disaffirm the entire contract, not just the irksome provisions . . . minors may not accept the benefits of the contract and then seek to disaffirm the contract "in an attempt to escape the consequences of a clause that does not suit them." - with respect to continuing a K

Obstruction or uncooperative conduct (Excuse of Conditions)

Most conracts will likely contain the undertaking not to do anything to obstruct of hinder the occurrence of a condition (this may be stated expressly but is more often implied) Some Ks have such contingencies worked in . . . such as a farmer who only will sell the farm if his daughter refuses to take over. It can be expected/implied that the farmer will actively try to persuade his daughter to take over the farm (which works to actively obstruct completion of K) There is an implied contractual understanding to not obstruct the completion of a contractual condition

Incapacity Based on Mental Illness

Must prove incapacity at time of contracting Burden is on P to show that he was incapacitated via mental illness - capacity is presumed of an adult (unlike a minor) unless proved otherwise K is voidable not void

Modification of K through Duress

Often defeated by the preexisting duty rule with respect to consideration . . . Modifications to a contract made under duress are voidable

Promissory conditions

Promissory conditions - Where a term in a K is both a promise and a conditions (the breach of which will entitle the offended party to damages)

Pure conditions

Pure conditions are unattached to promises and failure of such conditions voids the K

Pure promise -

Pure promise - an event that must not occur before some performance under the K becomes due (a promise to do something without anything promised or delivered in return)

R, 2 § 253. Effect of a repudiation as a breach and on other party's duties

R, 2 § 253. Effect of a repudiation as a breach and on other party's duties (1) Where an obligor repudiates a duty before he has committed a breach by non-performance and before he has received all of the agreed exchange for it,3his repudiation alone gives rise to a claim for damages for total breach. (2) Where performances are to be exchanged under an exchange of promises, one party's repudiation of a duty to render performance discharges the other party's remaining duties to render performance.

Claims for emotional distress

R,2 240 . . . Claims for emotional distress might be available in contract law when the contract is over funeral services . . .

R,2 § 152 When mistake of both parties makes a contract voidable

R,2 § 152 When mistake of both parties makes a contract voidable (1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule in § 154. (2) In determining whether the mistake has a material effect on the agreed exchange of performances, account is taken of any relief by way of reformations, restitution, or otherwise.

R,2 § 154 When a party bears the risk of a mistake A party bears the risk of a mistake when

R,2 § 154 When a party bears the risk of a mistake A party bears the risk of a mistake when (a) The risk is allocated to him by agreement of the parties, or (b) He is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) The risk is allocated to him by the court on the ground that it is reasonable in the circumstances to do so.

R,2 § 224 Condtions

R,2 § 224 - A condition is an event, not certain to occur, that must occur . . . before performance under a K becomes due R,2 advise that any condition that can be interpreted as a condition precedent rather than a condition subsequent should be interpreted as a condition precedent

R,2 § 241 Circumstances significant in determining whether a failure is material

R,2 § 241 Circumstances significant in determining whether a failure is material In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) The extent to which the injured party will be deprived of the benefit which he reasonably expected (b) The extent to which the injured party can be adequately compensated for the part of the benefit of which he will be deprived (c) The extent to which the party failing to perform or to offer to perform will suffer forfeiture (d) The likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances The extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing (look @ intent; was it a mistake, negligence? Or was the K breached intentionally to benefit one party, hoping the other wouldn't notice)

R,2 §15 Mental Illness or Defect

R,2 §15 Mental Illness or Defect (1) A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect (a) He is unable to understand in a reasonable manner the nature and consequences of the transaction, or (b) He is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of his condition. (2) Where the contract is made on fair terms and the other party is without knowledge of the mental illness or defect, the power of avoidance under subsection (1) terminates to the extent that the contract has been so performed in whole or in part or the circumstances have so changed that avoidance would be unjust. IN such a case a court may grant relief as justice requires

RESTATEMENT, SECOND §251. WHEN A FAILURE TO GIVE ASSURANCE MAY BE TREATED AS A REPUDIATION

RESTATEMENT, SECOND §251. WHEN A FAILURE TO GIVE ASSURANCE MAY BE TREATED AS A REPUDIATION (1) Where reasonable grounds arise to believe that the obligor will commit a breach by non-performance that would of itself give the obligee a claim for damages for total breach . . . the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance. (2) The obligee may treat as a repudiation the obligor's failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case. UCC substantially the same

RESTATEMENT, SECOND §261. DISCHARGE BY SUPERVENING IMPRACTICABILITY

RESTATEMENT, SECOND §261. DISCHARGE BY SUPERVENING IMPRACTICABILITY Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary. §262 If the existence of a particular person is necessary for the performance of a duty, his death or such incapacity as makes performance impracticable is an event the nonoccurrence of which was a basic assumption on which the contract was made.

RESTATEMENT, SECOND §265. DISCHARGE BY SUPERVENING FRUSTRATION

RESTATEMENT, SECOND §265. DISCHARGE BY SUPERVENING FRUSTRATION Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary. The UCC doesn't contain an analogous provision for frustration of purpose. In the rare case where the buyer of goods, rather than the seller, seeks excuse for supervening circumstances, UCC 2-615(a) will not provide relief for frustration of purpose; but common law (Restatement, Second § 265) might apply under UCC 1-103(b)

RESTATEMENT, SECOND §302. INTENDED AND INCIDENTAL BENEFICIARIES

RESTATEMENT, SECOND §302. INTENDED AND INCIDENTAL BENEFICIARIES (1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either (a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or (b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. (2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.

RESTATEMENT, SECOND §304. CREATION OF DUTY TO BENEFICIARY

RESTATEMENT, SECOND §304. CREATION OF DUTY TO BENEFICIARY A promise in a contract creates a duty in the promisor to any intended beneficiary to perform the promise, and the intended beneficiary may enforce the duty.

RESTATEMENT, SECOND §311. VARIATION OF A DUTY TO A BENEFICIARY

RESTATEMENT, SECOND §311. VARIATION OF A DUTY TO A BENEFICIARY (1) Discharge or modification of a duty to an intended beneficiary by conduct of the promisee or by a subsequent agreement between promisor and promisee is ineffective if a term of the promise creating the duty so provides. (2) In the absence of such a term, the promisor and promisee retain power to discharge or modify the duty by subsequent agreement. (3) Such a power terminates when the beneficiary, before he receives notification of the discharge or modification, materially changes his position in justifiable reliance on the promise or brings suit on it or manifests assent to it at the request of the promisor or promisee. . . .

RESTATEMENT, SECOND §317. ASSIGNMENT OF A RIGHT

RESTATEMENT, SECOND §317. ASSIGNMENT OF A RIGHT (1) An assignment of a right is a manifestation of the assignor's intention to transfer it by virtue of which the assignor's right to performance by the obligor is extinguished in whole or in part and the assignee acquires a right to such performance. (2) A contractual right can be assigned unless (a) the substitution of a right of the assignee for the right of the assignor would materially change the duty of the obligor, or materially p. 978increase the burden or risk imposed on him by his contract, or materially impair his chance of obtaining return performance, or materially reduce its value to him, or (b) the assignment is forbidden by statute or is otherwise inoperative on grounds of public policy, or (c) assignment is validly precluded by contract.

RESTATEMENT, SECOND §318. DELEGATION OF PERFORMANCE OF DUTY

RESTATEMENT, SECOND §318. DELEGATION OF PERFORMANCE OF DUTY (1) An obligor can properly delegate the performance of his duty to another unless the delegation is contrary to public policy or the terms of his promise. (2) Unless otherwise agreed, a promise requires performance by a particular person only to the extent that the obligee has a substantial interest in having that person perform or control the acts promised. (3) Unless the obligee agrees otherwise, neither delegation of performance nor a contract to assume the duty made with the obligor by the person delegated discharges any duty or liability of the delegating obligor.

RESTATEMENT, SECOND §322. CONTRACTUAL PROHIBITION OF ASSIGNMENT

RESTATEMENT, SECOND §322. CONTRACTUAL PROHIBITION OF ASSIGNMENT (1) Unless the circumstances indicate the contrary, a contract term prohibiting assignment of "the contract" bars only the delegation to an assignee of the performance by the assignor of a duty or condition. (2) A contract term prohibiting assignment of rights under the contract, unless a different intention is manifested, (a) does not forbid assignment of a right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation; (b) gives the obligor a right to damages for breach of the terms forbidding assignment but does not render the assignment ineffective; (c) is for the benefit of the obligor, and does not prevent the assignee from acquiring rights against the assignor or the obligor from discharging his duty as if there were no such prohibition.

RESTATEMENT, SECOND §328. INTERPRETATION OF WORDS OF ASSIGNMENT . . .

RESTATEMENT, SECOND §328. INTERPRETATION OF WORDS OF ASSIGNMENT . . . (1) Unless the language or the circumstances indicate the contrary, . . . an assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of the assignor's rights and a delegation of his unperformed duties under the contract. . . .

RESTATEMENT, SECOND §344. PURPOSES OF REMEDIES

RESTATEMENT, SECOND §344. PURPOSES OF REMEDIES Judicial remedies under the rules stated in this Restatement serve to protect one or more of the following interests of a promisee: (a) his "expectation interest," which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed, (b) his "reliance interest," which is his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made, or (c) his "restitution interest," which is his interest in having restored to him any benefit that he has conferred on the other party.

RESTATEMENT, SECOND §347. MEASURE OF DAMAGES IN GENERAL

RESTATEMENT, SECOND §347. MEASURE OF DAMAGES IN GENERAL Subject to the limitations stated in §§350-53, the injured party has a right to damages based on his expectation interest as measured by (a) the loss in the value to him of the other party's performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach, less (c) any cost or other loss that he has avoided by not having to perform.

RESTATEMENT, SECOND §355. PUNITIVE DAMAGES

RESTATEMENT, SECOND §355. PUNITIVE DAMAGES Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.

RESTATEMENT, SECOND §356. LIQUIDATED DAMAGES AND PENALTIES

RESTATEMENT, SECOND §356. LIQUIDATED DAMAGES AND PENALTIES (1) Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty. . . . If there is a trend, it is probably toward enforcing liquidated damages clauses among sophisticated parties. Liquidated damages clauses can often act as a cap on damages (and are enforced as such)

Damages Recap

Recap: damages are recoverable only if they can be established with reasonable certainty, they were foreseeable, and they were not reasonably avoidable. Damages recap! Damages mus be reasonably (1) certain - not overly speculative, (2) foreseeable - contemplated within the minds of the parties at the time of K, (3) unavoidable - mitigation Courts will not always honor remedies agreed to in the K

Choices of Remedy for Fraud

Rescission (accompanied by restitution is there has been partial performance) and damages. There can also be punitive damages levied against the defendant, however, this often requires an initial pursuit by the plaintiff of damages (though not always)

Rescission + Restitution

Rescission (annulment, this contract never existed) + Restitution (reimbursement) Avoidance allows the parties to stop performing on what they have already performed . . . Avoidance (think minors) + restitution is another option . . .

Rescission on the grounds of unilateral mistake

Rescission on the ground of unilateral mistake is inappropriate unless a four-part test is met. First, the mistake was of a so fundamental a character that the minds of the parties have not, in fact, met. Second, there was no gross negligence on the part of the plaintiff. Third, no intervening rights have accrued. Fourth, the parties may still be placed in status quo. In addition, equity will not act to rescind a contract where the mistake was induced by the negligence of the party seeking rescission

Restatement, Second § 250. When a statement or an act is a repudiation

Restatement, Second § 250. When a statement or an act is a repudiation A repudiation is (a) A statement by the obligor to the oblige indicating that the obligor will commit a breach that would of itself give the oblige a claim for damages for total breach . . ., or (b) a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach.

Fraud (b) Knowledge of falsity and intent to mislead (scienter)

Scienter = knowledge of falsehood and intent to mislead "Courts have had little difficulty finding the required intent to deceive when the evidence shows the statement is false or that the defendant made the statement 'without any belief as to its truth, or with reckless disregard whether it be true or false'"

Mistake of Law

Some jurisdictions believe that existing law can be considered a fact for the purposes of mistake doctrine and that mistakes of law can sometimes allow for avoidance or reformation of a K. Some courts do not operate this way, believing that the parties are presumed to know the law and thus a failure to verify laws in a mistake in judgement not fact

Tests for Mental Capacity

Some jurisdictions recognize only the "cognitive test" with respect to mental incapacity which requires the party seeking avoidance by means of incapacity to prove that the party has such a severe mental illness at the time of contracting that he was unable to understand the nature and consequences of the transaction Other jurisdictions employ the motivation test or volitional test, which includes cases in which the party may have understood the transaction but the mental illness affected her ability to act rationally in relation to the transaction (like in the Restatements) Incapacity by means of mental illness must be attributed to a psychiatrically recognized condition (illness, injury, old age, drug abuse); Thus, expert testimony is often necessary

If only portion of the K is unsonscionable or in violation of PP

Sometimes it is not the entire contract that is illegal, or in violation of public policy; it may just be one clause. In such a case, it may be that the court will only void the offending term—this decision to void only the offending term depends on various factors, including the seriousness of the violation of law or public policy, the nature of the contract, and the appropriateness of enforcing the contract without the term

Special Damages (consequential damages)

Special damages (consequential damages) are damages for losses that are the natural and proximate—but not the necessary—result of the injury, and may be recovered only when sufficiently stated and claimed.

The consequences of substantial performance

Substantial performance is nevertheless a breach and gives rise to a claim of damages for the deficient performance - damages for substantial performance are usually the cost of rectifying the deficiency in performance The most important difference between a total, material breach and substantial performance is that a total material breach allows the victim of the breach to withhold her own performance and terminate the contract. The victim has no such right of termination if there has been substantial performance.

Incapacity Based on Minority

The basic general rule relating to a minor's contract is that it is avoidable at the instance of the minor. Because the contract is avoidable, not void, a minor who wishes to keep the contract may simply refrain from disaffirming it - A minor may disaffirm all obligations under a contract, even for services previously rendered, without restoring consideration or the value of the services rendered the other party A minor can typically avoid a contract simply by showing she was a minor at the time she made it

Exceptions to a Minor's Lack of Capacity, Especially Contracts for Necessaries

The common law recognizes a number of limited circumstances under which a minor may be bound to his contract or at least liable for the reasonable value of what he received under the K - The most important common law exception relates to a contract for necessaries, which covers goods or services essential for the minor's health and sustenance or reasonably necessary for the preservation or enjoyment of life, such as food, medical supplies, clothes or shelter. - Necessaries are not necessities and can include services or goods beyond those merely essential to life; as such, courts can often differ on what constitutes a necessary The issue of whether goods or services are necessaries is tied to whether the minor is emancipated

Economic Waste Rule With Respect to Substantial Performance

The economic waste rule provides that if repair of a construction defect will involve unreasonable economic waste (that is, the cost of repair is grossly disproportionate to the good to be attained), damages are measured by the difference between the market value that the structure contracted for would have had and the of the imperfect structure received by the plaintiff

The distinction between fraudulent and negligent misrepresentation

The essential difference between fraud and negligence lies in the state of mind of the party making the misrepresentation. A negligent misrepresentation is not deliberately false but made carelessly: The party making the misrepresentation failed to exercise reasonable care in obtaining or communicating the information. - A limitation, disclaimer or merger clause is usually effective where the misrepresentation is negligent whereas such clauses would be inefficient if the misrepresentations were fraudulent

"Lost Profits"

The modern trend is to allow recovery lost profits if they can be proven with reasonable certainty. To preclude recovery "as a matter of law merely because a business is newly established would encourage those contracting with such a business to breach their contracts. In determining whether a plaintiff has met its burden of proof, courts have considered the profit history from a similar business operated by the plaintiff at a different location, and the profit history from the business in question if it was successfully operated by someone else before the plaintiff took over.

Procedural Component of Unconscionability

The procedural element relates to the way in which the contract was formed, focusing on unfair bargaining tactics, disparity of power leading to imposition, and other factors that made it possible for one party to take unfair advantage of the other. (THIS INCLUDES Ks of ADHESION) Procedural unconscionability is the lack of meaningful choice, considering all the circumstances surrounding the transaction including the manner in which the contract was entered, whether each party had a reasonable opportunity to understand the terms of the contract, and whether the important terms were hidden in a maze of fine print.

Substantive Component of Unconscionability

The substantive element relates to the terms of the resulting contract, focusing on whether, as a result of behaving in a procedurally unconscionable way, one of the parties was able to impose an unfair contract or term on the other - "the substantive component is satisfied by overly harsh or one-sided results that shock the conscience"

Assignment

The transfer of a right is called "assignment," When a right is assigned, the party who transferred the right is the obligee (the person who is owed the right) under the original contract and, upon assignment, is called the assignor. The person who acquires the right is called the assignee. The party who owes the right under the original contract, and whose obligation now runs to the assignee, is called the obligor.

UCC 1-305(a). REMEDIES TO BE LIBERALLY ADMINISTERED

UCC 1-305(a). REMEDIES TO BE LIBERALLY ADMINISTERED The remedies provided by [the Uniform Commercial Code] must be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed but neither consequential or special damages nor penal damages may be had except as specifically provided in [the Uniform Commercial Code] or by other rule of law. . . .

UCC 2-210(1), (5), AND (6). DELEGATION OF PERFORMANCE . . .

UCC 2-210(1), (5), AND (6). DELEGATION OF PERFORMANCE . . . (1) A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach. . . . (5) An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract. (6) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee (Section 2-609).9

UCC 2-210(2) . . . ASSIGNMENT OF RIGHTS

UCC 2-210(2) . . . ASSIGNMENT OF RIGHTS Except as otherwise provided in Section 9-406,6 unless otherwise agreed, all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise. sometimes the obligor objects on the basis that the assignment diminishes or defeats his own rights under the contract. Where a plausible claim of such prejudice is asserted, the court must balance the policy of free assignability of rights against that of protecting the reasonable contract expectations of the obligor.

Cure under the UCC

UCC 2-508(1) applies if the seller tenders the goods and the buyer rejects them before the agreed date for delivery. At this state the seller has a broader right to cure by substituting a conforming tender before the expiry of the agreed time for delivery. The seller must have acted in good faith in making the nonconforming tender. The seller must give the buyer timely notice of its intent to cure and must pay the expenses of curing and compensating the buyer for any loss caused by the breach. If the seller acted in good faith and takes these steps, the buyer is obligated to accept the cure

UCC Perfect Tender Rule

UCC 2-601. Buyer's Rights on Improper Delivery Unless otherwise agreed, . . . if the goods or the tender fail in any respect to conform to the contract, the buyer may (a) Reject the whole; or (b) Accept the whole; or (c) Accept any commercial unit or units and reject the rest

UCC 2-610. Anticipatory repudiation

UCC 2-610. Anticipatory repudiation When either party repudiates the contract with respect to a performance not yet due the loss of which will substantially impair the value of the contract to the other, the aggrieved party may (a) for a commercially reasonable time await performance by the repudiating party; or (b) resort to any remedy for breach (Section 2-703 or Section 2-711), even though he has notified the repudiating party that he would await the latter's performance and has urged retraction; and (c) in either case suspend his own performance or proceed in accordance with the provisions of this Article on the seller's right to identify goods to the contract notwithstanding breach or to salvage unfinished goods (Section 2-704).

UCC 2-615. EXCUSE BY FAILURE OF PRESUPPOSED CONDITIONS

UCC 2-615. EXCUSE BY FAILURE OF PRESUPPOSED CONDITIONS Except so far as a seller may have assumed a greater obligation . . . (a) Delay in delivery or non-delivery in whole or in part by a seller . . . is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid. . . A seller . . . will not be excused under this section if (1) the non-occurrence of the contingency was the seller's fault; (2) the seller had reason to know of the impracticability (i.e., the contingency was foreseeable); or (3) the seller assumed the risk of the contingency. .

UCC 2-706. SELLER'S RESALE INCLUDING CONTRACT FOR RESALE

UCC 2-706. SELLER'S RESALE INCLUDING CONTRACT FOR RESALE (1) Under the conditions stated in Section 2-703 on seller's remedies,26 the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article (Section 2-710), but less expenses saved in consequence of the buyer's breach. . . .

UCC 2-708. SELLER'S DAMAGES FOR NON-ACCEPTANCE OR REPUDIATION

UCC 2-708. SELLER'S DAMAGES FOR NON-ACCEPTANCE OR REPUDIATION (1) Subject to subsection (2) and to the provisions of this Article with respect to proof of market price (Section 2-723), the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article (Section 2-710), but less expenses saved in consequence of the buyer's breach. (2) If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Article (Section 2-710), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale. (often applies to a lost volume seller - the seller lost voume while trying to accommodate this deal)

UCC 2-710. SELLER'S INCIDENTAL DAMAGES

UCC 2-710. SELLER'S INCIDENTAL DAMAGES Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer's breach, in connection with return or resale of the goods or otherwise resulting from the breach.

UCC 2-712. "COVER"; BUYER'S PROCUREMENT OF SUBSTITUTE GOODS

UCC 2-712. "COVER"; BUYER'S PROCUREMENT OF SUBSTITUTE GOODS (1) After a breach . . . the buyer may "cover" by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller. (2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages as hereinafter defined (Section 2-715), but less expenses saved in consequence of the seller's breach. (3) Failure of the buyer to effect cover within this section does not bar him from any other remedy. The Official Comment to this section stresses that resort to cover is not mandatory; the buyer is free to choose between cover and a market measure of damages established by UCC 2-713.

UCC 2-713. BUYER'S DAMAGES FOR NON-DELIVERY OR REPUDIATION

UCC 2-713. BUYER'S DAMAGES FOR NON-DELIVERY OR REPUDIATION (1) Subject to the provisions of this Article with respect to proof of market price (Section 2-723), the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article (Section 2-715), but less expenses saved in consequence of the seller's breach. (2) Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.

UCC 2-714. BUYER'S DAMAGES FOR BREACH IN REGARD TO ACCEPTED GOODS

UCC 2-714. BUYER'S DAMAGES FOR BREACH IN REGARD TO ACCEPTED GOODS (1) Where the buyer has accepted goods and given notification (subsection (3) of Section 2-607) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable. (2) The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount. (3) In a proper case any incidental and consequential damages under the next section may also be recovered.

UCC 2-715. BUYER'S INCIDENTAL AND CONSEQUENTIAL DAMAGES

UCC 2-715. BUYER'S INCIDENTAL AND CONSEQUENTIAL DAMAGES (1) Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach. (2) Consequential damages resulting from the seller's breach include (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and (b) injury to person or property proximately resulting from any breach of warranty.

UCC 2-719. CONTRACTUAL MODIFICATION OR LIMITATION OF REMEDY

UCC 2-719. CONTRACTUAL MODIFICATION OR LIMITATION OF REMEDY (1) Subject to the provisions of subsections (2) and (3) of this section and of the preceding section on liquidation and limitation of damages, (a) the agreement may provide for remedies in addition to or in substitution for those provided in this Article and may limit or alter the measure of damages recoverable under this Article, as by limiting the buyer's remedies to return of the goods and repayment of the price or to repair and replacement of non-conforming goods or parts; and (b) resort to a remedy as provided is optional unless the remedy is expressly agreed to be exclusive, in which case it is the sole remedy. (2) Where circumstances cause an exclusive or limited remedy to fail of its essential purpose, remedy may be had as provided in this Act. (3) Consequential damages may be limited or excluded unless the limitation or exclusion is unconscionable. Limitation of consequential damages for injury to the person in the case of consumer goods is prima facie unconscionable but limitation of damages where the loss is commercial is not.

The usual rule: There is no duty to disclose in an arms-length transaction

UNLESS the seller actively conceals a defect or where [the seller] prevents investigation; where the seller has told a half-truth or has made an ambiguous statement if the seller's intent is to create a false impression and [the seller] does so; where there is a fiduciary relationship between the parties; or where the facts are peculiarly and exclusively within the knowledge of one party to the transaction and the other party is not in a position to discover the facts

Components of Unconscionability

Unconscionability has both a procedural and a substantive components Some courts require both elements, others just one. Many will allow for only a minor showing of one if the other element is shown emphatically. It seems to me that the term "element" above is imprecise.

The Delegation of Contractual Duties

Unlike assignment, delegation does not result in a complete substitution of the delegate for the obligor. The obligor remains ultimately liable for any breach. In a novation, the obligee agrees to accept the delegate as a complete substitute for the obligor and to release the obligor from her duties under the contract. A novation is not inferred merely from the fact that the obligee accepts performance by the delegate. The obligee's intent to enter into a novation must be clearly and expressly manifested.

Waiver (Excuse of Conditions)

Waiver - A knowing and voluntary abandonment of a right The waiving condition must be nonmaterial, otherwise it can only be waived through modification of the contract under which consideration is given for relinquishing it. So, generally, to succeed on a waiver claim, the party must show that the waived condition was nonmaterial Waiver does not require justifiable reliance and detriment (like estoppel)

Reasonable Certainty of Damages

When a party to a contract is disappointed by breach, it is up to that party to prove the fact and amount of damages suffered. - if damages are entirely speculative and uncertain, the plaintiff will not be able to recover. Courts are particularly skeptical of unsubstantiated claims for loss of goodwill, business reputation, or future profits.

Substantial Compliance with Construed (or implied) Conditions

Where the parties clearly and unambiguously express a condition, the doctrine is that the court should strictly enforce it to give effect to the parties' manifested intent and should not find that approximate or substantial satisfaction is good enough. However, if the term is not expressly stated as a condition, so that the court has to interpret or construe it as such, the court has much more flexibility. It may interpret or construe the content and terms of the condition in a way that allows it to find that the condition has in fact been satisfied, or it may use its discretion to find that the condition can be satisfied by substantial compliance.

Liquidated damages versus penalty

Where the parties have agreed on the amount of damages, ascertained by estimation and adjustment, and have expressed this agreement in clear and unambiguous terms, the amount so fixed should be treated as liquidated damages and not as a penalty, if the damages would be (1) uncertain as to amount and difficult of proof, and if (2) the contract as a whole is not so manifestly unconscionable, unreasonable, and disproportionate in amount as to justify the conclusion that it does not express the true intention of the parties, and if (3) the contract is consistent with the conclusion that it was the intention of the parties that damages in the amount stated should follow the breach thereof.

Factors for deciding whether to invoke in pari delicto:

Where, by applying the [general rule], the public cannot be protected because the transaction has been completed, where no serious moral turpitudes is involved, where the defendant is the one guilty of the greatest moral fault, and where to apply the rule will be to permit the defendant to be unjustly enriched at the expense of the plaintiff, the [general] rule should not be applied

Donee Beneficiary

essentially receives a "gift" in the form of the promisor's obligation to it - if the promisor does not perform its obligation to the donee beneficiary, the promisee will not be liable to the beneficiary for such performance and presumably will suffer only nominal damages If nominal damages are an inadequate remedy the third-party beneficiary can try to seek specific performance

Creditor Beneficiary

receives payment from the promisor of a debt or other obligation owed the beneficiary by the promisee - If a promisor does not pay the promisee's debt to the creditor beneficiary, then the promisee will remain liable to the beneficiary for the full amount of the debt and could directly suffer damages in this full amount

Specific Performance and Injunctions

specific performance still retains its character as an equitable remedy. As a result, specific performance continues to be an exceptional remedy—that is, it is available only if damages would be inadequate to compensate the plaintiff. Restatement, Second §359(1) states that "specific performance or an injunction will not be ordered if damages would be adequate to protect the expectation interest of the injured party." Traditionally, damages are routinely considered inadequate if a seller breaches a contract to sell real estate.

Delegation

the transfer of a duty is called "delegation." When a duty is delegated, the person who transfers the duty is called the obligor (or is sometimes referred to as the delegator), and the person to whom the duty has been transferred is called the delegate. The party to the original contract to whom the delegated duty is owed is called the obligee.

Adhesive contracts

used to describe any contract in which one of the parties has enough bargaining power to be able to dictate the terms of the contract to the other on a take-it-or-leave-it basis, and the weaker party has no choice but to "adhere" to the terms - The opportunity to negotiate by itself does not end the inquiry into procedural unconscionability. Courts consider factors such as the buyer's sophistication, the use of high-pressure tactics or external pressure to induce acceptance, and the availability of other sources of supply. - Determining adhesive K: (1) whether the contract is a standard form printed K, (2) whether it was prepared by one party and submitted to the other on a take-it-or-leave-it basis, and (3) whether there was not true equality of bargaining power between the parties THE FACT THAT A K IS A ADHESIVE K DOES NOT NECESSARILY RENDER IT UNCONSCIONABLE

in pari delicto rule

where the parties are in equal guilt, the defendant's position is stronger - This maxim suggests that the court will not completely bar the plaintiff's remedy, but will only refuse relief where the plaintiff was as or more guilty than the defendant in entering into the illegal transaction - This is an equitable defense raised to be raised by the defendant

Unilateral Mistake

§ 153. When Mistake of One Party Makes a Contract Voidable Where a mistake of one party at the time a contract was made as to a basic assumption on which he made the contract has a material effect on the agreed exchange of performances that is adverse to him, the contract is voidable by him if he does not bear the risk of the mistake under the rule stated in § 154, and (a) the effect of the mistake is such that enforcement of the contract would be unconscionable, or (b) the other party had reason to know of the mistake or his fault caused the mistake.