Contracts Final
What is the mental incapacity doctrine?
(Hauer v. Union State Bank) Cognitive test: can they seen the chain of events that follows as consequence of actions? Volitional Test: Someone can see the chain but cannot control themselves -If either is found, absent a showing of fraud or some malicious intent, contract is void and both parties must be returned to state just prior to agreement
What is Promissory Estoppel?
(1) must be clear and unambiguous promise -Doesn't have to be express; could be implied via the party's conduct (2) reasonable to expect reliance on said promise -NOTE: (Feinberg v. Pfeiffer) (3) Actual detrimental reliance on the promise (4) You can avoid injustice now only by enforcement of the promise -NOTE: Hayes v. Plantations Steel Co
What is an express condition?
-There are on/off switches in a contract; often times, express agreements in contracts will state that performance is not due unless AND until some specified event has taken place. Performance is conditioned on the switch being activated -Express conditions can be waived or excused, however, and if that occurs the duty to perform becomes unconditional. NOTE: -When parties agree to an express condition to the formation of a contract, or for an obligation of performance, if the condition is not activated by the party in control of it (could refer to at time limit activation too) the contract never actually came about -When the contract is found to have never actually come about, there is no basis for a lawsuit on the subject. After all, you cannot sue for breach of a non-existent contract. There is nothing there to sue over
What is restitution implied in law for a subcontractor against an owner?
1. Subcontractor must have exhausted all legal remedies against the contractor general and 2. Owners must have received benefit to their property without paying either general or subcontractor ( must demonstrate unjust enrichment
Requirement Contracts
Agreements to take everything that a buyer needs from one seller (exclusive buying)
Output Contracts
Agreements where a seller agrees to sell any and all of their output to one buyer; exclusive selling
Reasons to Contract
Allocate risks of future contingencies and protect relationship specific investments
What is the Mailbox Rule?what is its purpose?
An acceptance will in some circumstances be treated as effective as soon as dispatched (mailed, telegraphed) by the offeree, even if the acceptance is never actually received by the offeror Purpose: to hold offeror accountable for their choice of method of transport Letter must: 1) be properly addressed 2) such other precautions are taken as are oridinarily observed to insure safe transmission; (reasonable belief that the mail will reach the offeror) 3) for the acceptance to be effective
What is a Contract?
An agreement between two or more persons -Legally speaking: a promise or set of promises that the law will enforce.
Option Contract
An agreement to hold open an offer for a certain period of time; requires consideration of some sort (could be even a dollar)
What are the two theories for Consideration?
Benefit/Detriment test: promisor benefitted, promisee suffers detriment via giving up a legal entitlement or right. What is the key promise? ( Hammer v. Sidway) -NOTE: Detriment is giving up a legal entitlement or right (money,property, etc) Bargained for Exchange: Promisor and promisee each receive a benefit or a detriment, and both of those things induce the other party into entering the contract relationship (if you do not do this, you will not get the promise)
What is non enforcement/ bad formation?
Failures of terms, offers, acceptance, consideration, warranties, etc. can constitute no contract existing. In addition, you should also ask: 1. Were the parties competent to make an agreement 2. Was the bargaining processs surrounding formation of the agreement fair? 3. Are there any problems with the resulting substance of an agreement?
Where can Unconscionability standards be found? What is it?
Falls under BOTH Restatement (common law) and UCC 2-302 Generally, unconscionability was construed as an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. -Must consider all the circumstances to evaluate this
What is Consideration?
Consideration is required for a contract to be formed; it usually means you gave something or promised something in return for the benefit you received from the contract. (you are paying for the promise of performance of the other party via your own promise or performance) - Without consideration K is generally not enforced
What is the rule with "past consideration"
Consideration must be something contemporaneous, it cannot be past performance, affection, desire to do justice, fear of trouble, desire to equalize, provide for a child (etc.)
What is mutual assent under the UCC
Contract can form through express acceptance, or even conduct that recognizes the existence of a contract. -Parties can be bound if there is an intention to be bound, even if some of the terms are not decided. NOTE: Boiler plate language is not enough to actually accept -Needs to be to specific to the situation
What is forfeiture?
Forfeiture (applies more to lease agreements): party may be excused equitably from condition of a contract if: 1. Party fails to condition through venial inattention or mistake, AND 2. The hardship they would suffer as a result outweighs the magnitude of the mistake/negligence, AND 3. The other party won't suffer hardship either (either landlord or third party that landlord was starting to negotiate with).
What is the difference between conditional and unconditional acceptance?
Frequently an offeree while making a positive acceptance of the offer, also makes a request or suggestion that some addition or modification be made So long as it is clear that the meaning of the acceptance is postively and unequivocally accepted whether such request is granted or not, a contract is formed - otherwise this is a conditional requirement
Modern Contract Law
Fundamental goal: draw a dividing line between promises that the law should and will enforce and promises that the law should not and will not enforce Developed over the past century reflecting: UCC, case law and non-formal contract law Examples: 'good faith' and 'unconscionability'
What is the Plain Meaning Interpretation?
General doctrine that courts will read terms in their plain meaning (i.e. what a reasonable person would say the term meant)
What is the contra preferentem doctrine?
General doctrine that when a phrase is ambiguous, it will be read against the party who drafted it; idea is sort of like pushing those who would use ambiguous terms in their contract.
What is Restitution in a Quasi Contract?
Generally restitution can be sought under a "contract implied by law" when: (1) Plaintiff conferred a benefit on the defendant (unofficiously) -Officious intermeddler: someone conferring a benefit that you don't want (2) Defendant has knowledge of said benefit (3) Defendant has accepted/retained the benefit conferred (4) the circumstances demonstrate it would be inequitable for defendant to retain benefit without paying for it
When can an offer be revoked?
Generally, anytime before or until performance or acceptance is made (petterson v. pattberg)
What is the doctrine of reasonable expectations?
Generally, applies to Insurance contracts or adhesion contracts; the objectively reasonable expectations of applicants and intended beneficiaries reg. terms of insurance contract will be honored even though painstaking study of policy provisions would have negated those expectations
Letters of Intent
If a letter of intent is sent between two or more parties with sufficient details of a specific nature of an agreement, where intent to be bound is clear, it can be an "agreement to agree" Factors: - the language of such an agreement -the context of the negotiations -the number of open terms and their relative importance - the extent to which the agreement has been performed or preparations for performance have begun - usage of trade
Destruction of Thing, death of person necessary for performance
If a thing or person necessary for performance is destroyed or dies, respectively, courts will likely excuse performance (foreseeability plays here)
When are agreements to agree not enforceable?
If parties have not actually reached an agreement, then by definition they have no intention to be bound K, remember, is about the voluntary agreement of parties
Failure to give assurance?
If you fail to give the assurance requested of you by a party, you have 'anticipatorily repudiated' the contract, under both the UCC and Common Law
What is the Material Benefit Rule? NOTE: Know it but don't use it
If you have a benefit that seems close to the time of the start of the contract and seems reasonable, then we can use this as an exception to the 'past consideration rule'
Can agreements to negotiate be enforceable?
In such a case, parties want to bind themselves in good faith negotiations NOTE:remedies are tricky- what actual harm comes from a breach here?
What constitutes innocent misrepresentation?
Lacks intent to deceive and knowledge of false claim Look instead to materiality of misrepresentation to judge how much plaintiff/defendant relied on misrepresentations.
What are the three rules of Document Aggregation under the SofF?
Liberal Rule: Memos may be aggregated so long as one of them is signed and they all clearly relate to the same transaction (extrinsic evidence may be used to create that link) Moderate Rule: Memos may be aggregated so long as one of them is signed, that signed document evidences the existence of a contract, and the other document all clearly relate to the same transaction (extrinsic evidence may be used to create the link) Conservative Rule: Memos may be aggregated so long as one is signed and the unsigned ones expressly reference the signed one
A promise is
a manifestation of intent to act or refrain from acting in some specified way made so as to justify a promisee in undertanding that a commitment has been made
What if a contract states that "this shall serve as consideration"
a recital in a contract that consideration is present creates an assumption that there was valid consideration; courts can still double check (Marshall Durbin v. Baker)
What are generally not considered to be promises? why?
advertisements, preliminary discussions, and ridiculous jokes ( Pepsico and Lonergan) Offers are generally understood to be : direct, complete proposals that the contract be entered into, providing for an exchange or defined performances
Offers can be revoked at any time before acceptance by:
expressly revoking the offer, acting inconsistently with maintaining the offer (Normile v. Miller)
What is waiver?
if party trying to sue for breach has waived the condition (by ignoring it, accepting something anyway or acting as though condition was met) the condition was present
What is the Doctrine of Impossibility?
it is logically impossible for the contract to be satisfied (foreseeability plays here)
What is the minority or infancy doctrine?
minors are not generally permitted to enter into agreements on the grounds that they wouldn't really be able to protect themselves (Dodson v. Shrader) Factors: -Under the age of majority -K is voidable -At any time, minor can disaffirm the K -Can only ratify (go forward) with K when they reach the age of majority- must be soon after reaching 18 Majority Rule: If minor has entered into contract, minor can invalidate the contract while still a minor; 1. They must return product they received 2. They are entitled to a refund 3. They do NOT need to pay for reduced value or depreciation Minority Rule: - Holds that minors should be required to pay for 'benefit' derived from use (i.e. value that minor got out of it) -NOTE: Minors or parents may be liable for cost of necessaries (things that re needed to live): shelter, food, clothing; -Policy: courts don't want to discourage people from providing a minor essential items of life.
Adhesion contracts
standard documents; presented on take it or leave it basis (insurance documents)
What does UCC 2-209 discuss?
Modification. -You do NOT need new consideration to modify a contract -Usually, modifications must be in writing, especially if modifications brings contract into statute of frauds, or if original contract was already in statute of frauds. Private Statute of Frauds: -There is a "NO Oral Modification Clause" and "No Waiver" clause built into the contract that prevents oral modification and prevents parties from waiving that protection
Are gift consideration?
No, generally gifts are not considered consideration- if the reliance is justified enough to enforce some promises , use promissory estoppel
Damages for partial performance by contractor
Normally, where a contractor's performance has been defective or incomplete, measure of damages is usually reasonable cost of replacement or completion. -HOWEVER: where there has been substantial performance in GOOD FAITH, AND when the reasonable cost of replacement/completion would result in ECONOMIC WASTE, courts have measured damages as THE DIFFERENCE BETWEEN THE VALUE OF PROPERTY AS CONSTRUCTED, AND VALUE IF PERFORMANCE HAD BEEN PROPERLY COMPLETED (Jacobs v. Young). Economic Waster: -Cost of completion/replacement is large and non-proportional to resultant benefit to property that it would be wasteful. -If completion/replacement requires undoing what was done in good faith, & benefit of ordering completion is minor, it is probably wasteful. HOWEVER: Economic waste is NOT PRESENT because a defendant said that performance in that way wasn't beneficial (i.e. they chose to do it otherwise, or ignore required performance specifications).
What is the substantial performance test? where is it from?
Offeror may not revoke an offer where substantial performance has been made towards completion of total performance of contract (Cook v. Caldwell)
Unilateral Contract
Offeror offers to exchange promise for a future performance only in return for the offeree's actual rendering of the performance Offeror has maximum protection and is not bound until her receives the performance sought
What is anticipatory repudiation?
One party expresses their unwillingness to perform, or acts in a way that seems to suggest unwillingness to perform. -The other party now has reasonable grounds for insecurity about the ability or the willingness of the first party to perform on time
What are the exceptions under the Statute of Frauds for Common Law?
Part Performance: if party to be charged has started to perform in some meaningful way, then this qualifies Judicial admission: party to be charged may not have signed, but in court there is a signed pleading or (Middle ground) Promissory Estoppel: detrimentally relying on someone else's promise in an actual/reasonable way (heightened clear/convincing burden) -1. Clear and unambiguous promise -2. Reasonable to expect reliance on promise -3. Actual, detrimental reliance -4. avoid injustice only by enforcement of promise
What can you bargain for under consideration?
Peppercorn theory is that anything a reasonable person would bargain in exchange for could be consideration - the fairness or inadequacy of consideration is not relevant to establishing a contract; only its presence matters (Batsakis v. Demotsis)
What is a Charitable Gift? How is it different than Promissory estoppel?
Requires Donative Intent and Consideration or reliance on said donative intent by the promissee
What is restitution in emergency rescue of persons?
Requires that 1. The things you are doing prevented harm 2. You had no reason to know they wouldn't consent OR 3. That it was impossible for the other to give consent, either through impairment or mental conditions at the time
An offer can be terminated by:
Revocation expressly prior to acceptance counteroffer rejection of original offer Lapse of Time Death or Incapacity
Under the mailbox rule, when can you revoke?
Revocation is effective upon the receipt of communication Exception: Option Contracts under the Restatement 2nd need exact agreement on the terms for it to be binding; argues that "acceptance should be on receipt"
When can you demand assurance of performance?
Right to Demand Assurances of Performance: -When parties have reasonable grounds for insecurity about other party's performance in a sale of goods (U.C.C) they can demand adequate assurance of due performance. Reasonable Grounds for Insecurity: -Must arise after contract was formed; could be financial insecurity, failure to perform important obligations, etc. -UNRELIABLE RUMORS, or INSIGNIFICANT RISK DO NOT COUNT as reasonable grounds. Demand Adequate Assurance of Due Performance -You can demand verbal guarantees, posting of bond, really anything that fits the facts and circumstances, is adequate, and is made in good faith. How: in writing usually, though verbal common law might be ok if it gives clear understanding of worried party's intent to suspend performance until assurance is provided (at most 30 day wait)
What is the Parole Evidence Rule?
Rule that once things are in writing, no other evidence should be allowed on its formation (i.e. on past negotiations or other draft agreements) Parties will often put merger/integration clauses into their contracts that declare that the final agreement is the whole and complete agreement (Mitchell v. Lath)
What are UCC Gap fillers?
Set terms for interpretation: 1. Delivery 2. Payment 3. Damages Unless parties stipulate otherwise, these terms and their definitions mean what the UCC says they mean. They are also mandatory terms that parties are not free to modify
What are electronic agreements?
Shrinkwrap terms: terms of sale included with the product when it is delivered -Competing Theories on how offer and acceptance work: Clickwrap terms: terms of sale that are presented before a person can complete the purchase of the product; typically presented in "I agree" button Browsewrap terms: terms of agreement related to the use of a website or use of free things on the website -Notice to the user of the website usually needs to be apparent; either actual or constructive (Hines v. Overstock)
What is the big picture about Restitution?
Terms under this section rarely used; fallback arguments of equity. Use Breach of K if you can Two general principles trigger RESTITUTION 1. Was there NOT a promise? 2. Was there an enrichment on the part of the party defending? Was the retention of that enrichment unjust?
Was the work/performance satisfied?
That is the general question; if it was you do not have a breach of K claim
What are the two minority tests for determining if K is governed by common law or UCC?
The Gravamen Test (minority but some courts go rogue) -Look to see if the "portion of the transaction on which the complaint is based" involved goods or services -Focus here is on the plaintiff's allegations- what is it that the plaintiff is really complaining about? Severability Test ( minority) -Can you sever a contract into goods and services portions and apply the UCC to the goods portion?
What are the two types of misrepresentation?
Two Types of Misrepresentations 1. Lead promisees to enter into contracts that they otherwise might avoid by convincing them that the promised performance will be more valuable than it actually is 2. Lead promisees to enter into contracts that they might otherwise avoid by convincing them that the promisor has a greater intent or ability to perform than he actually does
What if the K is against the public policy?
Two arguments for refusing to enforce based on public policy -The courts may consider un-enforcement appropriate to deter undesirable conduct by one or both parties (or by others) -The court may think that enforcement is inappropriate because it would amount to the judicial approval of an unseemly agreement Three big things to think about in public policy cases -How does the court identify the public policy that is potentially negatively effected - in other words where does the court locate the public policy? ==Most courts locate, highest court can create public policy ==Look to highest court or look at legislative intent ==When does public policy come up? First impression, new problem Or want to change existing law -What are the rules/guidelines that the court uses to balance the competing policies? -Does the court simply deny enforcement to a K that violates a public policy? Are there less dramatic alternatives?
Where and How does the SofF govern under the UCC?
UCC 2-201:Applies to Sale of Goods for price of $500 or more 1. Is sale of goods if for $500 or more? -If No, SofF doesn't apply and case continues 2. Was there a 'sufficient writing', signed by party against whom enforcement is sought? -If Yes, SOF is satisfied, to the extent of the goods shown in writing -If No, continue to exceptions 3. Does the case fit any of the exceptions? -BOTH parties are merchants, and confirmation of agreement is sent; -If no objection within1 10 days, recipient cannot rais SOF defense. -Goods are specially manufactured, and process of manufacture has substantially begun, buyer cannot rais SOF defense -Party who admits to agreements in existence under oath in court cannot raise SOF defense -Where payment has been made or accepted, or delivery of products made and accepted, party may not raise SOF defense.
Where can you find unconscionability under the UCC?
UCC 2-302 Unconscionable Contract or Clause 1. If a contract is found to be unconscionable, court can -Refuse to enforce -Enforce remainder of contract without unconscionable clause, -May limit application of unconscionable clause to avoid unconscionable results 2. If unconscionable claim made, parties must be allowed to present evidence as to setting, purpose and effect of contract to evaluate that claim Note: try not to argue too much, courts generally don't allow use of this doctrine too frequently -99% of all these cases are arbitration cases
What does the UCC apply to?
UCC Art. 2 applies to all sales of goods that are tangible and moveable?
Last Shot Rule?
Under Non-UCC rules, the terms must match exactly, if they don't then the last "offer" on the table (most recent set of terms) is considered a counter offer and doing something to indicate acceptance (payment) will be considered acceptance ( Princess Cruises)
What is a Firm Offer under 2-205?
Under this rule, there can exist and offer that is assured to be kept open without consideration. -Must be an offer: (1) by a merchant (2) to buy or sell goods (3) in signed writing (4) which by its terms gives assurance that it will be held open -Such an agreement is NOT REVOKABLE for lack of consideration during the time stated, or if no time is stated, for a reasonable time not to exceed three months NOTE: A firm offer can be open even after maximum 3 months as long as the person offering it doesn't revoke it; the firm offer is just in the period where it COULD be revoked by the offeror.
What is the statute of frauds used for?
Used as an affirmative defense to Breach of K claims. Both UCC and common law designed to require some contracts be in writing to enforce them
What is the rule about illegal contracts?
You can't contract for anything illegal (McConnell v. Commonwealth)
Are Changed Circumstances an excuse for non performance?
yes but only in certain instances
What is the implied obligation of good faith?
There is an implied obligation of good faith performance in every contract; extrinsic evidence going to show that good faith was not met refers to breach of contract, and thus does not fall under Parol Evidence Rule Applies only to performance and enforcement, not formation
What is an offer?
A manifestation of willingness to enter into a bargain so made as to justify an offeree in understanding that her assent to that bargain is invited and will conclude it
what is the second step of Parole evidence rule?
2. Is Parol Evidence under Common Law or UCC? The parol evidence rule excludes extrinsic evidence when an agreement has been reduced to writing. The rule is designed to prevent either party from contradicting or supplementing the written agreement with extrinsic evidence of prior agreements or negotiations Exceptions: (ARMIES) -After-the-fact: doesn't apply to agreements made after writing -Remedy: doesn't apply to evidence trying to show right to equitable remedy (such as reforming contract). -Meaning: doesn't apply to explain meaning of agreement. -Invalid: doesn't apply to evidence trying to shy invalidity of formation (i.e. duress, mistake, etc) -Effectiveness: doesn't apply to evidence showing effectiveness of agreement was subject to oral condition -Side or Collateral Agreements: doesn't apply to side agreements UCC Parol Evidence Rule (2-202), but is subject ot following exceptions: -Exceptions to Explain/ Supplement 1. Course of Performance- how parties performed agreement at issue 2. Usage of Trade trade practices of industry or locality 3. Course of dealings-how parties performed past agreements/contracts
What is promissory restitution?
(1) Requires a promise (can be express or implied) (2) Made in recognition of a benefit previously received. (3) Necessary to prevent injustice -Rarely Used Exceptions: Gifts, Promisor was not unjustly enriched, or if benefit of subsequent promise is disproportionate to original benefit.
What are the two tests for unconscionability?
1)Procedural: Absence of a meaningful choice -Some evidence of indication that one party used practices which impermissibly reduce an individual's ability to make rational choices concerning the bargain (Adhesive Contracts- but not enough to actually break whole contract) -Inequality of bargaining power -Speed of transaction -Sophistication of parties (Courts look at relative sophistication between parties) -Conspicuousness and intelligibility of terms (Always balanced against the general rule that courts don't care what people actually understood, did they read it?) 2) Substantive: Commercial reasonableness -Indicia that one party will benefit unreasonably at the expense of the other -Fact specific -Look to similar transactions in the relevant market -Is there a risk of forfeiture? Note: Use Maxwell type of arguments for this -Price water heater that never actually worked
When modifying a contract, you need new consideration... what are the exceptions?
1. 'Slight/Insignificant differences' in consideration are considered valid for modification 2. 'Unforeseen Circumstances' are such that modification is fair and equitable in light of the surrounding context, and that the changed circumstances were unforeseen by either of the parties 3. 'Reliance' on promised modification may be basis for enforcing modified agreements, despite absence of fresh/new consideration 4. When both parties agree to a 'mutual release' of the old contract, the new contract stands as a valid modification. -BUT NOT Economic Duress: when one party does a wrongful act that gives the other party (who objects) no reasonable alternative to accepting modified agreement is then voidable.
What is the first step in applying the Parole evidence Rule?
1. Determining if written agreement is actually complete (what did the parties intend the document to be? ) -Absent a merger clause, it can be hard to determine threshold question if document is complete. -Complete and Exclusive Statement or a Full Integration (common law term) Four Corners Doctrine- Willistonian 1) Focus on four corners of document. Don't look at extrinsic evidence. -Protects parties who rely on written agreement to be enforced as written. Look for plain and ambiguous language ( the terms they wrote down are the final version of those terms) 2)Final Expression or a Partial Integration ( Corbinian) -Take a peek at extrinsic evidence to determine intent of parties as to whether this is the final agreement. Value in determining party intent to check as to whether parties intended this to be final -Follows reasonable susceptibility test which asks if contract language is reasonably susceptible to interpretation asserted by proponent, evidence is admissible to determine meaning intended by parties
What are the 4 questions of formation of contract (heart of contract law) according to Blair?
1. have the parties behaved in a way that creates a legally recognizable expectation in each other? 2. If they have, how should those expectations be characterized and understood? 3. was the expectation carried out or was it thwarted? Did each side get what they understood they had bargained for? 4. If not, is there anything that the law should do about it?
What is the mirror image rule?
Acceptance must be a mirror image of the offer (no material changes from the offer)
What are Additional Terms under the UCC?
Additional terms are to be constructed as proposals for additions to the contract -Terms are the original terms WITHOUT additions unless they were SPECIFICALLY agreed to This prevents the offeree from adding in terms without making it clear that they are counteroffers
What is material breach?
As if the breach is actually material; consider the following factors: (a) Can injured party still obtain the substantial benefit reasonably anticipated (b) Can injured party be adequate compensated in damages for incomplete performance? (c) Has the failing party already partly performed, or made preparations to perform? (d) Will there be great hardship on party failing to perform is contract terminated? (e) Was party failing to perform willful, negligent, or innocent in failure (f) How certain is it that failing party will perform remainder of contract? Total Breach? 1. Consider the factors above as well as, 2. Will further delay prevent/hinder innocent party from substitute agreements? 3. How important non-delayed performance is to the agreement?
How does at will employment and the implied covenant of good faith and fair dealing relate?
At will employees can sue under implied covenant of good faith and fair dealing ONLY when they are seeking compensation for term that exists beyond the at-will employment contract, this could be: -Money/bonus/commission you have earned -You were asked to violate public policy, do something illegal and were fired for it -You gave up so much for the company that it constituted consideration to be more of a salaried employee than at-will, such that your legal rights are different.
What is the basis of the capacity doctrine?
Autonomy and economic justifications for enforcement of contracts require that courts uphold bargains only to the extent that the parties have the capacity to understand and weigh the consequences Fundamental Question: The law generally presumes that all persons have the capacity to enter contracts Although, bargaining improprieties may contribute to capacity defenses, there is no requirement that there be improper bargaining to invoke a capacity defense.
What are the general canons of interpretation?
Courts prefer interpretations of contracts that: 1. On the whole, or in party, make them valid 2. Are aligned with the purpose and understanding of the parties, 3. If public interest involved, in favor of the public interest.
How are additional terms between merchants decided under the UCC?
Between merchants such terms become part of the contract UNLESS the offer expressly LIMITS acceptance to the terms of the offer or materially alter -If they are in the business of selling Additional terms -Additional terms are to be constructed as proposals for additions to the contract -Terms are the original terms WITHOUT additions unless they were SPECIFICALLY agreed to -This prevents the offeree from adding in terms without making it clear that they are counteroffers -Between merchants such terms become part of the contract UNLESS the offer expressly LIMITS acceptance to the terms of the offer or materially alter -If they are in the business of selling
What happens if there is a non-disclosure?
Contract may be voidable if: 1.subject of the contract is something actually valuable (i.e. a house) 2. The nondisclosed fact is hart to discern (i.e. not clear on its face) 3. The nondisclosed fact is Material (i.e. a reasonable person would attach importance to it in determining his choice of action in the transaction in question.) Common Law 1. Disclosure is necessary to prevent prior representation ofrom beoming false 2. Disclosure is needed to correct other party's error on a material matter, and to do otherwise would go against implied obligation of good faith and fair dealing 3. Disclosure is needed to correct other party's error regarding content of writing embodying agreement between parties 4. There exists a fiduciary relationship between the parties ( i.e. lawyer-client)
Is a mistake a justification for Non performance on a K?
Contract may warrant rescission if mistake can be demonstrated: 1. The mistake relates to a material feature of the contract -Especially bad if other party knows about it, and relies on it nonetheless 2. Mistake occurred despite exercise of reasonable care -Common law requires that conduct not fall below good faith and fair dealing 3. Results in grave consequences such that enforcement of K would be unconscionable 4. The party can still be placed in the status quo -Often courts will only rescind for a mistake of fact (miscalculation or clerical error) -Mistakes of judgment (i.e. oh I shouldn't have done that, or mistake despite right information) are rarely rescinded
Can you form a contract under economic duress?
Contracts created under economic duress are voidable at the option of the victim. Must show; 1. There was a wrongful act, usually creating the situation that the victim is suffering from, and 2. There is no alternative for the victim (i.e. no other source for services, goods, loans, etc.) NOTE: You get recission of contract not damages
What is a satisfaction clause?
Contracts often contain express terms that obligate one party to perform to satisfaction of the other, or condition party/s duty of performance on his 'satisfaction' with performance of other party. Often they do not confer unlimited power to declare whether you are satisfied with performance. Two Kinds of Interpretation 1. Standard of Objective Reasonableness -Asks if objectively reasonable person would consider performance to be complete. Often used in cases of commercial quality, fitness or utility are performance goals 2. Honest Dissatisfaction:Applies to things that actually require approval of personal asthetics or fancy
What is the predominant purpose test?
Court looks to what percentage of the contract was for sale of goods, and what percentage was for non-sale of goods; Factors: -Language of the contract -Nature of the supplier's business -Paid more for service or labor Parties can act as though a contract has been formed and if that agreement is 1. For the sale of goods, and 2. Has essential terms like price and what not then the contract is enforceable even without a start date (Jannusch v. Naffziger)
What is the doctrine of anticipatory repudiation?
Court must find that: 1) There is a clear manifestation of an intent to not perform contract when 2) The intent is definite and unequivocal that performance will not be endered at the time it is due; doubtful or indefinite statements do not meet this. NOTE: A suggestion for a modification of a contract is NOT a repudiation
What is the common law objective test /modified objective test?
Court will determine what knowledge each party knew about the other's interpretation of the ambiguous/disputed phrases, and decide in favor of the innocent party. (i.e. the party that didn't know the other party meant something else), as long as the non-innocent party knew, or had reason to know, of the innocent party's different understanding. If both seem to be innocent, term will generally be held against the party who wrote the contract; general idea is that they would have been more specific if they thought it was an issue.
Can you read implied terms into a contract?
Courts will rarely read terms into a contract; usually it's an implied mutuality of obligation to use best efforts in performance or enforcement
What is the Doctrine of Frustration of Property?
Doctrine of Frustration of Property § 265 Restatement 2d: -After a contract is made, party's principal purpose is 'substantially frustrated without his fault' by occurrence of event, the non-occurrence of which was a basic assumption on which the contract was made, duty to perform is discharged 1. Purpose must have been "principal purpose" for party to make the contract. -I.e. without that purpose, transaction makes little sense 2. Frustration must be substantial and severe -i.e. so severe likely wasn't contemplated as a risk at time of contract 3. Frustrating even must NOT have been basic assumption of contract -When government regulations frustrate a party's purpose under a contract, there is a higher chance this doctrine will work
What is the doctrine of impracticability?
Doctrine of Impractibility § 261 Restatement 2d. -After a contract is made, if a party's performance becomes impracticable without his fault by occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made, duty to perform is discharged. -Impracticability cannot be found for lack of profit; small changes in expense or difficulty don't change anything either. It would have to be a large change.
What are the Common Law requirements under SofF?
Does K fall within the statute of frauds? -Land (leasing or selling) -One year ( K performance cannot be completed within one year) -Sale of Goods ( $500 or more) -Marriage (Dowry deals) -Executor ( Promise to be an executor NOT K's that executor enters into) -Suretyship (Commercial law: you agree to pay the debt of another) If so, is the K (memoranda) evidenced by a sufficient writing? i.e. evidence of an agreement NOTE: this can be pieced together by multiple documents -Reasonable identify the subject matter -Material terms -Signed by the party to be charged If not, does an exception exist?
What can qualify as a signature under SofF?
Email address Actual signature Signature block Voicemail message or recording
What is the indefiniteness doctrine?
Essentially the question of whether the parties inteded to be legally bound to perform their promissory obligations is addressed indirectly by lookin gat the extent to which material terms are let unspecified by them If a court finds that terms are sufficiently complete and definite, it infers that the parties intended to be bound If the court finds that the terms are incomplete and indefinite, then it infers that the parties did NOT intend to be bound
What are the functions of consideration?
Evidentiary: - provides evidence of the existence and purport of the contract, in case of controversy -through writing, attestation ,or notary -oral pronouncement is sufficient if there are participants and bystanders Cautionary: - provide caution or deterrent by acting as a check against inconsiderate action Channeling function - mark or signalize the enforceable promise
What is the time limitation of an offer?
Explicit: if offer has a time limit, that is enforceable Implicit: if there is not a time limit, offer is open for a "reasonable" amount of time; what is reasonable is based on the entire context of the case Rule of Thumb: face to face agreements= once you leave the room, that is when the offer lapses
What is acceptance
Manifestation of assent to the terms of the agreement, you can accept expressly or by acting consistently with acceptance Must be unequivocal and unqualified
What must the plaintiff show for a misrepresentation claim?
Plaintiff must show that: 1. There was an actual representation made, not 'puffing' or 'opinion' -This could be a false impression or implication, or it could also be concealment. 2. The representation was false. -If you were asked a direct question about it, to answer it truthfully would be not to imply falsity, tell half-truths or conceal something 3. The false statements were material to the transactions 4. The defendant knew the representations were false 5. The defendant made representations with the intent to deceive 6. Plaintiff reasonably relied on false representation 7. Plaintiff suffered harm from reliance on the representation.
What are expectation damages?
Plaintiff's suffering a breach are entitled to seek expectation damages, or what the plaintiff would have realized was a gain from the contract had it been fully performed, minus mitigated damages and avoided costs or loss. values typically excluded: punitive and emotional
Classic Contract Law
Prefers clear rules= legal formalism; rigid Indifferent to questions of morality or social policy; reflects a very clear intention of freedom to contract
What is Agency?
Someone actin gon behalf of a principle - they need "actual authority" to act on behalf of the principle, which can be found in a couple of ways 1. Agent receives authority via 'designation by principal' 2. Agent receives authority to perform acts 'necessary and incidental to achieve principal's goals' Can also have 'apparent authority' if one party believes the agent was acting with 'actual authority' (harder to prove)
What is time limit of repudiation?
Timely Retraction of Parties can retract their repudiation unless the other party has: 1) Materially altered/changed their position 2) Indicated to repudiating party that they consider repudiation final, or 3) Brought a lawsuit for a breach
Can you form a contract under undue influence?
To show undue influence on agreement to a contract, plaintiff must show: 1. There was, at time of agreement, an undue susceptibility/vulnerability on the part of the person being influence 2. Person exerting influence does so via excessive strength/ over-persuasion against the servient or weakened person. This is characterized by: -Discussion of transaction at unusual or inappropriate time -Transaction is actually entered into at unusual place -There is an insistent demand that transaction be done right away -Extreme emphasis is placed on how bad delaying this would be -There could be multiple persuaders by dominant side against a single party -Absence of third party advisors to the weak party -Statements exist such as "there is no time to get an attorney"
When modifying a contract, do you need new consideration?
Yes.
To form a contract you need
offer, consideration and acceptance
Bilateral Contract
parties exchange promises of performance to take place in the future; each party is both a promisor and a promisee; the offeree's communicated acceptance also constitutes their promise to perform
Agreement to Agree
parties in a contract may agree to agree on something in the future; but they must provide under UCC 2-307: 1) parties agree to be bound 2)there is either a clear term that will be agreed upon in the future, or a sufficiently objective standard for figuring out what they want to agree on. - IF they don't make it clear what they will agree on in the future, the future agreement provision is void for indefiniteness, vagueness, and/or uncertainty and it may make the contract void
