Contracts final

Trailing promise

A trailing promise, like a gratuitous promise, is not enforceable, even if motivated by understandable gratitude. Trailing promises fail to provide consideration (b/c promisee's promise or performance was not sought as it has already passed) and fail to satisfy the promissory estoppel requirements (b/c promisee's detrimental reliance was not induced by the promisor's promise; the promise occurs after the act is performed)

Agreement

An agreement is a manifestation of mutual assent on the part of two or more persons. A bargain is an agreement to exchange promises or to exchange a promise for performance or to exchange performances. (R2K 3)

Option K R2K 25

An option is an enforceable k to keep an offer open. Thus, a promise to hold an offer open for a period of time, if supported by a consideration, is enforceable as an option k. The promise is not revocable for the option period, and if the power of acceptance (option exercise) is not exercised prior to the termination of the stated period, the consideration is forfeited to the offeror as compensation for keeping the k subject matter off the market for that period.

Consideration

BArgained for exchange of legal detriments Consideration makes promises enforceable only when they are made within the context of a bargained-for exchange of legal detriments. (R2K 71)

Gifts

Conditioned Gifts do not make a contract as there is no bargained for exchange.

Noscitur a sociis

Known from associates -rule applies to a list of specific words without a general catchall term -meaning of each specific word effects the meaning of the other -no guns, knives, prostitution or drugs (in this context would mean illegal drugs not prescription drugs)

Trust

a fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it

pre contract negotiation

a party detrimentally relies on non-contractual promises or representations by the other party to the transaction; negotiations do not form a k until the parties manifest the necessary intent to form a k.

Contract

a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty. (R2K 1)

contra proferentem or omnia praesumuntur contra proferentem

all things are presumed against the proponent -when one party has drafted a contract with objectively ambiguous terms, the ambiguity should be resolved against the drafter -tie-breaker when all other things are equal -used a lot when one party has greater sophistication and bargaining power than the other party

UCC Section 2-202(b)

allows consistent terms to supplement the writing, provided a court determines the writing is only partially integrated and not completely integrated.

UCC 2-205

an offer is irrevocable only if the offer: is made by a merchant, is included in a writing signed by the merchant, and makes an assurance it will be held open.

Discharge of Duty by Assent or Modification

at some point in their relationship, the parties to a contract may mutually agree to discharge their respective duties under the contract (mechanisms in which parties may alter or rearrange their contractual relationship: Rescission, Executory bilateral accords (accord and satisfaction) and substituted contracts) (p. 718)Discharge of Duty by Assent or Modification

How to determine whether contract enforceable

consideration, promissory estoppel, and restitution

substituted contract

discharges parties obligation at time of formation -novation: contract that replces one or both parties with new parties and frees old aprties completely

incidental v. essential reliance

essential is capped by contract price -if you are in a losing contract, you cannot recover more than the contract price by electing to recover reliance damages over expectancy

standard and handwritten terms

handwritten/ crossed out terms control

4 corners rule

if the meaning of the agreements was clear, complete, integrated, and unambiguous as determined by judge reviewing the text of the writing (within the 4 corners of the document), no parol evidence of ambiguity or non-integration could be admitted.

bilateral k

involve promises on both sides of the transaction, rather than only a promise and performance. Ex. General contractors show pre-acceptance reliance when they rely on a bid from a subcontractor in preparation for their own bid for the general contract.

• R2K 201 Meaning of a K

o If one of the parties actually knew that the other party attached a different meaning to the term, and the innocent party did not know of the difference, the Ct. should adopt the meaning understood by the innocent party. o Where a special meaning is shared by both parties, it will become the legal meaning

Statue of frauds analysis

o Is the contract within the the statute of frauds? o If the contract is within the statute of frauds, is it evidenced by a written memorial and signed by the party to be charged? o If a contract within the scope of the statute of frauds is not evidenced by a writing or signed by the party to be charged, is compliance with the statute excused?

PER

o Issue facing the Court is not enforceability of the parties' agreement, but whether the written memorial represents a complete and unambiguous statement of the parties' bargain.

• Unconscionability and arbitration

o Polices arbitration clauses in consumer, employment, franchise, and similar contracts

• R2K 36 the power acceptance may terminate before exercise in any of following ways:

o Rejection or counter offer by the offeree, or o Lapse of time, or o Revocation by the offeror, or o Death or incapacity of the offeror or offeree

Illegality doctrine: is subset of public policy doctrine

o Specifies source of public policy o If contract is contrary to public policy, it is a crime ♣ Ex: murder for hire o Courts will let losses lie where they fall o With illegality if terms arent fulfilled, contract is void

• Statue of frauds

o The statue of frauds is at issue where the parties' agreement is a valid oral contract but the parties have not have evidenced a written memo ♣ Concerned with fraud ♣ Not about formulation of k, but about providing evidence that a k exists

Warranty Liability UCC 2-314 and UCC 2-315

o To exclude or modify the warranty of merchantability, the language of the exclusion or modification need not be written, but must specifically mention merchantability. o An express warranty as to the quality of goods was enforceable as a promise and was never truly subject to the caveat emptor doctrine.

integration

o Whether an agreement is partially integrated determines whether and to what extent the parol evidence rule is applied. o A "extrinsic," (parol), is one method for the parties to indicate that they intend the writing to be a final integration of their agreement and to bar parol evidence. o The absence of a merger clause is often evidence that the parties did not view the writing as a final integration of the agreement.

Ejusdem generis

of the same kind -general word is limited by the specific one -when a constructive covenant says no rollarblades, cars, skateboards or other vehicles are allowed in the community park =would not be interpreted to include horses since common denomenator of the above is wheels

presumptive relief is damages

specific performance is an affirmative order by court that the breaching party must perform its obligations under the contract -never available in some contexts, like in personal service, cannot force someone to do something -always available for contracts w/ interest in real property -ocassionally available in a sale of goods contract

injunction relief

specific performance or an order to one of the parties to perform their obligations under the contract or with employment contracts a negative injunction by working for a competitor in the employment context

executory accord

suspends underlying obligation while parties attempt to perform under the accord, anticipatory repudiation -obligations under some underlying obligation like a tort, will suspend it until the executory accord is either performed or breached

Revocation

Offeror(master of the offer) retains power of revocation offeree subject to liability to lose power of acceptance.

Past consideration

Past consideration is NO consideration Valid consideration must be bargained for and must induce the return act or promise. The purported consideration must not have been delivered before a promise is executed.

Pre-Contractual Agreements R2k 27

Permits Cts. To enforce the parties' agreement and treat the lack of a final written memorial as a breach of one of the terms

reliance damages

Reliance damages designed to put the injured party in status equal to that prior to entering the K (R2K 344b); makes a promise binding where the promise has detrimentally relied on a promise that otherwise lacks consideration

Jural correlatives

Right Privilege Power Immunity Duty No-right Liability Disability

Jural opposites

Right Privilege Power Immunity No-Right Duty Disability Liability

Equitable Estoppel

Shield when the payee changes their position to their disadvantage in reliance on the promise, a right of action does arise.

UCC v. common law

UCC involves to sale of goods. The common law deals with services.

donor-gift or donative-promise principle

Unenforceable gratuitous promises, not supported by consideration, are referred to as the donor-gift or donative-promise principle.

expressio unius est exclusif alterius/ expressio unius/ exclusif alterius est

the expression of one thing is the exclusion of others -expressio unius means that when a list of things is specifically mentioned w/o being followed by a general term, it is implied that other things of the same kind are excluded -no guns, knives, prostitutes or drugs allowed on premises can be interpreted not to exclude a legal internet gambling operation

Promissory estoppel

the promisee reasonably relied on the promise despite the absence of consideration.

○ R2k 45, if it is the type of offer that can be accepted by performance (unilateral or bilateral)once there has been an unequivocal

§ Unequivocal perfromance, step on the bridge, have to say there is an option that came into being to complete the performance Reasonable amount of time to complete performance

♣ Modern impracticability and Frustration at Risk: §261 (Supervening impracticability).

• A party bears the risk of a supervening event unless the non occurrence of the event was a "basic assumption of the contract" • If the supervening event was reasonably foreseeable, the promisor will forfeit the excuse where the agreement itself does not allocate the risk of foreseeable event to the other party.

K in UCC v. common law

• Common Law K, the memo must identify the parties to the, the subject matter of the k, and the essential terms of the k. o Most difficult is that the applicable writing or memo state 'with reasonable certainty' the 'essential terms' of the k. o Essential terms are those necessary to enable a court to calculate the expectancy remedy of a non-breaching party. • UCC 2-201—a memo must o 1. Be sufficient to indicate that a k for sale has been made between the parties and signed by the party against whom enforcement is sought... o 2. Indicate the quantity of the goods sold. • In both cases the memo MUST BE SIGNED by the party AGAINST whom enforcement is sought "the party to be charged" • The signature requirement may be satisfied by any mark that may be reasonably understood by the other party to the K as indicating the signer's intent to authenticate the written document and to adopt or assent to that document. o Question is always whether the symbol was executed or adopted by the party with present intention to authenticate the writing UCC 1-201 (39).

UCC 2-207Last Shot Rule:

• Common law permits the parties to trade competing forms, treating each new form as a new counteroffer to the last form. The first party to begin performance is deemed as a consequence of the objective theory of k, to have accepted the terms of the last counteroffer—typically the terms contained on the last-transmitted form before acceptance.

No compete in employee contracts

• Covenant Not to Compete—should the employee terminate the employment or be terminated, the employee will not go to work for a competitor of the employer engaged in the same or similar business, within a proscribed geographic area, for a limited period of time following the termination. Threaten the ability of employees to change employers

expectancy interest

• Expectancy Interest = Loss in Value + Other Losses - Cost Avoided - Losses Avoided

limitations on expectancy and reliance interests

• Forseeability Limitation—If damages are not forseeable, then they are not recoverable; profits are generally recoverable • Certainty Limitation—profits are not foreseeable • Avoidability—mitigation with reasonable effort

Fraud

• Fraud in the inducement creates a voidable contract in which the defrauded or injured party has a power to avoid the contract and obtain rescission and restitution for any consideration transferred to the fraudulent party.

Duress

• From Silsbee we get the rule that non-physical threats can be duress and the standard is subjective, was the threat sufficient to overcome the will of the threatened person NOT the reasonable person.

remedies modified by K

• General Rule: parties may agree by k to act with respect to one another in a manner that would be tortious in the absence of such a k. Likewise, the parties may also k to limit their liability to one another for negligence in the course of their contractual relationship. such liquidated damages clauses are enforceable provided that the amount: -reasonable in the light of the anticipated or actual loss caused by the breach -the damages are difficult to prove or ascetain

Public policy doctrine

• Generally, contracts that contravene public policy are void. o R2K 178 a promise or agreement is unenforceable on the grounds of public policy in situations: o Where the legislature has directly declared certain agreements or promises illegal; o Or where the judicial precedent has recognized the existence of public policy against enforcement of such promises.

rescission and restitution damages

• Generally, the k operates as a practical upper limit on damages recovery, except where the breaching party commits an uncured material breach before the injured party has fully performed and the injured party seeks restitution off the k. • The injured party will argue the value of its services exceeds the k price, and having committed serious breach, the breaching party is not in a position to reject a restitution damage recovery. R2K 373, R2K 349

K in statue of frauds

• If a K is within the Statute of Frauds, the court's analysis must shift to the sufficiency of the written memorialization of that K, not its meaning. o Memo may be, but doesn't need to be a fully integrated and written K. o Focuses on whether the writing evidences that the parties actually did make an enforceable oral agreement.

damages

• Liquidated damages--per occurrence pay this amount if we breach the k. Set at the time of contracting for certain circumstances of breach. • Exculpatory clause—we are not liable in the event of a breach and if we are, we are only liable for contract amount. • UCC Buyer and Seller Remedies • 2-703 and 2-711 attempts to put individual in position has k been fully performed. • Sellers' Damages: 2-706; 2-708; 2-709; 2-710 • Buyers' damages: 2-711; 2-712; 2-713; 2-714; 2-715; 2-716 o Buyer's Remedies ♣ Delivery of Non-Conforming Goods—The "Perfect Tender Rule" v. Damages for Loss in Value • Specific Performance—is equitable only when there is no other recovery available at law

♣ Plain Meaning Rule (Thompson)

• Look only a face of documents. Does it appear to be a full integration within the four corners of the document. • Is it ambiguous or unambiguous. • Is the new term/parol evidence a natural omission? Or would an objective person reasonably think it should have been included.

breaches

• Material Breach—measure of damages is the cost of completion • Substantial Performance—Diminution in value is the measure of damages • Willful Breach—Not in good faith, look @ intent of the damage

Acceptance: R2K 50(1)

• Offeree's manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.

• Doctrine of Good Faith

• R2K 245 The parties must exercise good faith and fair dealing: o To refrain from preventing or hindering the occurrence of the condition (doctrine of prevention). o To take affirmative steps to cause its occurrence, at least when the occurrence is within the party's control.

• Constructive Conditions for Simultaneous Exchanges

• Where performances can be exchanged simultaneously, they are due simultaneously. R2K 234(1). • In a simultaneous performance exchange, each party's duty to perform is subject to an 'implied condition' that the other party actually performs or offers to perform "tender". R2K 238 • Most consumer transactions in goods are simultaneous transactions because the goods are available for immediate purchase.

Nonsimultaneous Exchanges

• Where the performances cannot be exchanged simultaneously because one party's performance takes time, the performance requiring time is due first. R2K 234 (2). • In a non-simultaneous exchange, the party's performance due second is subject to an "implied condition" that the first party's performance will not be materially defective. R2K 237. o The first party must substantially perform before the other party's performance is due. i.e. getting a house painted and paying for it (service and construction contracts). o Protects the second party from having to pay for an uncured materially defective performance.

Caveat Emptor

• let the buyer beware; the buyer implicitly agreed to bear all risks of poor quality, bad workmanship, or other defects in the property being sold. o Shifted risks from the seller to the buyer at the moment of the sale o Only if the seller committed fraud in making the sale could the buyer recover for patent or latent defects. o Buyer has full inspection before purchase.

Unilateral contract

• offer can only be accepted by performance. Acceptance by Performance: R2K 50(2)-requires that at least part of what the offer requests be performed or tendered and includes acceptance

Offer, R2K 24

• the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. o To determine, look at: statement itself o Factors- preliminary negotiations, s. 26 o Offeror cannot force offeree to do something w/o preexisting dealings or contract

Undue influence

•: (1) Unfair persuasion of a subservient party under the domination of another person; or (2) unfair persuasion of a person by another using a relationship of trust and confidence to deceive the other party R2K 177 ○ Relationship between the parties § If no relationship, no opportunity for domination or control o Discussion of transaction at unusual time or inappropriate place ♣ (principle and superintendent at Odorizzi's apartment at 1AM) o Consummation of the transaction in an unusual place ♣ (in teachers apartment) o Insistent demand the business be finished at once ♣ (if he doesn't sign now they will make is indiscretion public) o Extreme emphasis on untoward consequences of delay o Use of multiple persuaders (2 v. 1) o Absence of 3rd party advisors to the servient party. o Statement no time to consult atty's or financial advsiors.

Unilateral mistake

•♣ Unilateral Mistake §153: If the mistaken party can prove the other party had reason to know of the mistake, the contract is voidable even if it is not an unconscionable mistake. Mistake of material fact by one party; • As to a basic assumption (which has a material effect on the K) on which the K was made; • Making the K voidable unless the mistaken party bears risk of the mistake AND o The effect of the mistake is such the enforcement of the K would be unconscionable OR o Other party had reason to know of the mistake or his fault caused the mistake. • Party bears the risk of mistake when: o The K specifies who bears the risk of loss o Consciously ignorant, know they didn't know all the facts (one or both parties could have gotten n appraisal, Diamond case). o The risk is allocated to him by the court on the ground that it is reasonable to o so.

Conditions are either satisfied or not satisfied

○ Condition Is an event not certain to occur ○ Ex: insurance company's obligation to pay is you notifying them within two days of the event Don't care about performance

Contracts not to be performed within 1 year of the making thereof

○ Different from contracts not capable of performance within one year of the making thereof Contracts not to be performed

• Can raise an affirmative defense

○ Has to appear In answer? Statue of frauds § Sale of goods § Oral contract § $1,000 in MI § Not satisfied because any reason to excuse satisfaction? □ Part performance □ Judicial admission § Affirmative defense acts as an immunity Most contracts involve right/duty, privilege/right, immunity/disbility

Option contract

○ Just an option ○ Optionee can simply choose not to exercise option

Promises are performed or breached-common law

○ May be perfect performance § Person under duty will discharge full duty, cant be sued for breached Can substantially perform promise or materially breach promise

Promise-UCC

○ Perfect tender ○ Applies to everything in ordering stuff for "mobile home" Everything going into site prep and construction services

Once you have part perfromance, than they are entitled to contract

○ R2k 45, part performance ○ What types of contracts can be accepted by performance? § Unilateral-have to be □ Ex: a reward-offer, only way to accept is by bringing cat § Bilateral contracts- can be accepted in any reasonable way in light of the offer or that is specified in the contract

express warranty

♣ 1)Affirmation of fact, promise or description: statements made by the seller in the course of negotiation are presumptively affirmations of fact. The statements made by a retailer in a brochure can create express warranties. The statements in the brochure are specific and unequivocal and nothing indicates that the vessel is experimental in nature. ♣ 2) Basis of the bargain test: No particular reliance need be shown to weave seller's affirmations into the fabric of the contract. The buyer doesn't need to show that he would not have entered into the agreement absent the warranty or that it was a dominant factor in inducing the agreement. An inspection by the buyer of goods does not necessarily discharge the seller from an express warranty if the defect was not actually discovered and waived.

Mental capacity

♣ A person incurs only voidable contractual duties by entering into a transaction if by reason of mental illness or defect if: • He is unable to understand in a reasonable manner the nature and consequences of the transaction, or; • 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

• For promissory estoppel to substitute consideration, there must be:

♣ A promise made under circumstances where the promisor reasonably expects the promise to act in reliance of promise ♣ The promise acts reasonably in reliance on the promise ♣ Refusing to enforce the promise would result in fraud or injustice ♣ D was unable to show he acted reasonably in reliance on promise by P ♣ D was under no obligation to find a buyer and had made no promise to purchase the land (not option promise and not made enforceable by certain acts)

Economic duress

♣ Business ppl coerced under threats to drive them out of business or withholding payments necessary to continued business. Not complying w demands and bringing claim to court not an option because they would be out of business before the court could provide relief. (Totem Marine v. Alyeska) • Manifestation of assent is induced by an improper threat by the other party.

Concealment

♣ Concealment §160: action intended or known to be likely to prevent another from learning a fact is equivalent to an assertion that the fact does not exist

o Express Conditions

♣ Express conditions provide the parties with tools to provide that one or both parties need not perform contract promises unless a specified event occurs.

Statue of frauds if there is no satisfactory writing

♣ If there is no satisfactory writing, is the statue excused? • Specifically manufactured goods that k made • Admit in pleading, testimony • Full performance, evidence • Partial performance, evidence substantial reliance o Above two are based on performance • Merchant both parties

Impossibility

♣ Impossibility (objective): The duty of a promisor was discharged when after formation of the contract, a duty became impossible by reason of a supervening event not reasonably anticipated and occurring without the fault of the party • A thing is rendered impossible when it is not practicable

impracticability

♣ Impracticability (Subjective): Impracticability doctrine as a defense requires an extreme and unreasonable expense and difficulty that cannot be surmounted by reasonable efforts • Performance may be impracticable because extreme and unreasonable difficulty, expense, injury, or loss to one of the parties will be involved o A thing is impracticable when it can only be be done at an excessive and unreasonable cost.

Mutual mistake

♣ Mutual Mistake: When are we justified in shifting the risk of loss back to A when K is from A to B? (Lenawee Cnty v. Messerly)

charitable subscriptions

♣ Promises to make a gift to a charity are not likely to be supported by consideration. ♣ Unless the gift is of enormous size and importance, the charitable organization cannot prove reliance on any specific promise -not enforceable unless a charity can establish reliance.

o Test for the statue of frauds asks: Step 1

♣ Step 1: Is the contract w/in the statue of frauds? • UCC sale of goods at price of $500 or more (MI $1,000) • Sale of interest of real property • Not to be performed w/in a year of making thereof K itself specifies time period • Consideration for marriage/ marriage contracts, ex: prenup • By executor to pay damages out of his own estate (answer/ settle debts) • Surety for debts or defaults of another

o Test for the statue of frauds asks: Step 2

♣ Step 2: Does the contract satisfy the statue of frauds? • Written memorandum, P. 537-38 that shows agreement has been made • Signed by party charged- signature, letterhead, electronic sig. o Present intent to adopt or accept writing • Enough material terms to show agreement made

implied warranty

♣ The major question in determining the existence of an implied warranty is the reliance by the buyer on the skill and judgment of the seller. The buyer had experience with sailboats at the time of the purchase and precise specifications in regard to the type of boat he wanted.

Mailbox rule

♣ Under the mailbox rule as soon as an acceptance is placed in the mail it is binding. ♣ UCC doesn't adhere to the mailbox rule, acceptance is binding when received by the offeror.

frustration of purpose

♣ situations in which performance of the contract remains feasible but the purpose for which one or both parties entered the contract has been defeated • The purpose that is frustrated must have been a principal purpose of that the party in making the contract. • The frustration must be substantial. It is not enough that the transaction become less profitable for the affected party or even that he will sustain a loss. • The non-ocurrence of the frustrating event must have been a basic assumption on which the contract was made

Voidable contract

♣ §7 Voidable contract: one where one or more parties have the power, by a manifestation of election to do so, to avoid the legal relations created by the contract, or by ratification of the contract to extinguish the power of avoidance. • Innocent party has option to: o avoid; or ♣ avoidance may be exercised by one or both parties ♣ before or after performance by either or both o Enforce and seek damages • Contract may be a criminal act • Fraud in inducement of contract

ut res magis valsat quan pereat

The thing should rather have effect than be destroyed -a contract for the sale of hot cars should be interpreted as the sale of corvettes, ferraris, etc. rather than for stole vehicles

• Mutual Assent. R2K 20(1).

There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to the manifestations and Neither party knows/has reason to know the meaning of the other; or

promise

A manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promise in understanding that a commitment has been made. (R2K 2)

R2K 71

A performance or return promise is bargained for if it is sought by the p'or in exchange for his promise and is given by the p'e in exchange for that promise.

Elements of Promissory Estoppel. R2K 90(1)

A promise is made. Promisor reasonably expects promisee to rely. Promisee does reasonably rely to his/her detriment. Binding if injustice can only be avoided by enforcement. Remedy limited as justice requires

essential/incidental reliance damages

-certain acts of reliance are the price of whatever benefits the contract may involve for P, what you are required to do to perform your elements of the bargain -incidental reliance: other costs incured on reliance on contract, unrelated to performance on contract itself

liquidated damages v. exculpatory clause

-liquidated damages: per occurence pay the amount if we breach k, set @ time of contracting for certain circumstances of breach -exculpatory clause: we are not liable in the event of a breach, and if we are, we are only liable for contract amount

when restitution is available

-promisee elects restitution as alternative remedy of breach of contract -contract void or voidable -breaching party seeks recovery -SOF prevents enforcement

Legal intent w/ objective theory

According to 'objective theory of contracts', a maker's legal intent is determined not from the promisor's actual or subjective intent but from objective manifestations of the promisor's intent (The promisee's discernable reasonable understanding of the maker's words or conduct).

Elements of equitable estoppel

Starts w a representation of present/existing fact. Maker of respresentation reasonably expects the recipient to rely (change position in the world for worse) Recipient does reasonably & detrimentally rely Maker is estopped from asserting an inconsistent position.

R2K 38 and 36

To be effective acceptance must be unconditional and on the precise terms of the offer—Must be the mirror image of the offer and must not vary the terms of the offer in any manner.

With PER, need to look at:

What are the terms of the K? 1. Does it include a merger clause or is it a full integration of the agrmnt? 2. OR is it a partial integration

R2K 225(1).

Where a party renders a materially defective performance, the defective performance does not discharge the other party's duty to perform. Rather, the duty is suspended

objective theory

Would a reasonable person in the promisee's shoes (person attempting to enforce promise, usually) understand that the promisor intended to make a contract?

Parol Evidence Rule

precludes (prevents) proof of terms to add to or vary the terms of subsequent written contract where the writing was intended as the final and complete expression of the agreement R2K 213 and UCC 2-202

specific or precise provisions should be given greater weight than general provisions

restrictive covenant in a planned community gives rules of where can ride bike

remedies specified by contract

• R2K 356 Liquidated damages clauses are enforceable, provided the amount is 1. Reasonable in light of the anticipated or actual loss caused by the breach; and 2.the damages are difficult to prove or ascertain. • UCC 2-718 The parties may liquidate damages but only at an amount that is reasonable in light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. • The reasonableness std. is satisfied if the parties' estimate at the time of contracting is reasonable but does not approximate the actual loss or If the liquidated damages clause approximates the actual loss even though it does not reflect other losses that might have been anticipated.

Right

• Right: legally enforceable claim you have against another person o In order for a right to exist, there must be a corresponding duty for someone to satisfy that right

elements of unconscionability

• Supporters argue that the doctrine has provided needed flexibility to the Court to regulate bargains based on duress, fraud, etc. without being deceitful. • Critics focus on: o The lack of judicial discretion that it allows o Inability of the doctrine to remedy later incrementally unfair behavior by the offending party o Likelihood that the doctrine might help out the party in front of the court in the short term but likely to injure the class to which the party belongs in the long term

UCC difference

• The UCC specifically abandons the offer and acceptance focus of the common law by stating that a k for sale of goods may be made in any manner sufficient to show agreement including conduct by both parties recognizing the existence of a k. UCC 2-204 and 2-206.

Unconscionability

• The doctrine of unconscionability—when the courts refuse to enforce part or all of a purported agreement that is so unfair, inequitable, one-sided, or unjust that it 'shocks the conscience'. • Courts would manipulate other doctrines in place of the unconscionability doctrine to rule for the outcome that they favored given unfair contracts • UCC 2-302 permits courts to regulate the unconscionability of a contract or term without making up their own rules (deceit).

Condition of acceptance

• The existence of an offer creates a power of acceptance in the offeree. That power may be exercised by acceptance provided that the offer has not been terminated prior to acceptance. • A condition of acceptance is a condition attached to the promise by the maker of the promise that renders the promise enforceable iff acceptance occurs in the manner invited by the offer.

Doctrine of waiver

• The party who benefits from the nonoccurrence of the condition may waive the effect of the condition in most cases. • R2K 93 Contractual waiver of conditions at common law do not require that the waiving party actually know their legal rights, only that they have a mere reason to know. • R2K 84(1)(a) A waiver of an express condition is not effective if the condition was a material part of the exchange and the promisee was under no duty that it occur. • Normally waiver occurs when a party makes an express or implied promise to perform despite the nonsatisfaction of an express or constructive condition.

K in contravention of public policy

• The public policy doctrine appears to contravene directly principles of freedom of contract and private autonomy. o Risks: judicial bias, ambiguity, and paternalism. • The value of the illegal contracts or public policy doctrine lies in the quality of the statutes and public policies it seeks to promote. • The source of judicially created public policies itself challenges principles essential to the rule of law.

3 forms of monetary damage recovery

• The restitution interest—simplest compensation method; requires the party against whom restitution is sought to disgorge the value of any benefits received from the other party. Ex. P.759 • The reliance interest—compensates the nonbreaching party for expenditures made in performing or preparing to perform that party's obligations under the k. As opposed to restitution damages, which examine the benefits received by the breaching party, reliance damages focus on the injuries suffered by the nonbreaching party in detrimentally relying upon the enforceability of the k. • The expectancy damages (interest)—Attempts to compensate the nonbreaching party for the benefits lost by reason of non-performance of the k. Attempts to give the nonbreaching party the value of full performance of the k and place the nonbreaching party in the position she would have been in if the k had been fully performed as promised • Direct Reliance Damages—always forseeable v. Indirect Damages—incidental damages

Misrepresentation

• There is a duty to disclose when: o To prevent a prior assertion from being fraudulent o When you know the other party is mistaken (Hill) (related to defense of unilateral mistake) o Fraud in execution-you know one party believes one thing and you believe another. When there is a

Hadley

• UCC Hadley I Damages—presumptive, direct damages, arise naturally from K • UCC Hadley II Damages—Indirect damages, to avoid this there needs to be a written disclaimer

Ks within the statue of frauds

• UCC identifies 6 transaction types o K by an executor or administrator to pay damages out of his own estate. o K to act as a surety for the debts or defaults of another person. o K made in consideration of marriage. o K for the sale of an interest in real property. o K not to be performed within one year of the making thereof. o K for the sale of goods at a price of $500+ • If a K is one of these 6 transaction types, then it must be evidenced by writing and signed by the party against whom enforcement is sought or the K is unenforceable unless the writing requirement is otherwise excused.

Void and voidable contracts

• Void Contracts—cannot be enforced at either party's election. o Contracts that violate public policy, unconscionable contracts, • Voidable Contracts—contracts that the promisee may choose to enforce or avoid at the promisee's election. o Contracts induced by fraudulent representation, by infants, etc. • Void ab initio—void from the beginning.

Acceptance by Silence: R2K 69(1)-

• Where an offeree fails to reply to an offer, his silence and inaction operate as an acceptance in the following cases only: o Where an offeree takes the benefit of offered services with (1) reasonable opportunity to reject them and (2)reason to know that they were offered with the expectation of compensation. Where the offeror has stated or given the offeree reason to understand that assent may be manifested by silence or inaction, and the offeree in remaining silent and inactive intend to accept the offer