final exam

terminate offer

by revocation up until acceptance. you cane revoke until accepted. option contract.

Types of Damages (Remedies)

compensatory,consequential(Cover losses), Punitive(punish), and Nominal(recognize wrong)

mental incompetencne

contracts can be void, voidable, or valid! void contract. mentally competent. court rules you are retarded and you have guardian. VOID

undue influence in certain siutations

. if you're lawyer and you write yourself in their will, it's undue influence. in the law of contract, the doctrine that will render a contract at least voidable if a person is reasonably considered to be in a position of trust (used non-technically) in relation to another person and abuses that trust.

3 exceptions to statue of frauds

1. unique manufac goods 2. what/? 3. partial performance

quasi contract

2 parties without obligations to each other but court creates. e.g. For example, consider a pizza that is delivered to the wrong address. The pizza has already been paid for. If the individual does not correct the delivery man and instead keeps the pizza, the court system could issue a quasi contract that would require the individual to pay back the amount of the pizza to the party that paid for the pizza. The contract is used to prevent any party from benefiting from the situation at the other party's expense; the restitution required under the contract is to make the situation fair.

offer (what is not?)

8 different things that were not offers (statement of opinion, negotation)

What happens if the owner breaches construction contracts before contract,during contract, or during performance?

B4 contract: Contractor recovers profits made on contracts During Contract:Contractor recovers profits made on contract & costs After Contract: recovers contract price plus interest

Incidental damages

Expenses caused directly by a breach of contract e.g. Luna doesn't give car for $1,000. so Mr GErm is entitled to $1,000 plus costs.

assignments to remember

GIVE NOTICE. YOU GOTTA LET PEOPLE KNOW THAT IT HAPPENED OR OTHERWISE Mr GERM COULD HAVE PAID AND THE GUY GOES TO USA.

choice of language, choice of form, choice of majeur

IGNORE THESE, HE WON'T TEST US ON THIS. HE JUST TALKED ABOUT IT TO LET US KONW. NOT ON EXAM!!!!!

if you receive counter offer

IT IS REJECTION AND NEW OFFER.

Elements of consideration

Legally sufficient value 1. Can consist of: a. A promise to do something with no prior legal duty to b. Performance of an action otherwise not obligated to take c. Refraining from an action one can legally undertake (forbearance) 2. Bilateral contracts = promise for promise 3. Unilateral - promise for performance (or forbearance) B. Bargained-for exchange - provides basis for bargain between contracting parties 1. Item of value must be given by promisor (offeror) in return for promise, performance, or forbearance by promisee (offeree) C. Adequacy - how much consideration given (fairness of bargain) 1. Courts do not question solely based on comparative value a. Parties decide worth; need not be direct economic/financial value 2. Only when large disparity exists (can indicate fraud, duress, etc) a. Unconscionable consideration - so shockingly inadequate it raises concern

deal in good faith

UCC

6 forms of contract

agreement, consent, legality, and form the 6 things of contract

acceptance

as long as properly dispatched, acceptance is good on dispatch.

exception to exception under assignments

assignment in real estate, negotiable instruments, something under UCC receivign damages (DONT WORRY ABOUT UCC)

consideration is?

bargained for!

unconciouble contract

bargains so appressive, courts relieve innocent parties to be free. e.g. bargain is to pay us 80 million dollars. big bang roommate theory

contractual capacity

binds a party, the minimum

In pari delicto

both parties at fault. think drug deal example.

material breach of contract

breach is material when performance is not at least substantial

misrepresentation

by law, silence,

sufficency of the writing

can be memo, electronic record, signatures don't have to be at the end

one party breaches, good enough this time around, ramifications

can breaching breqch next time around or does non-breaching party have to accept breach.

right to cancel

cancel at anytime, no notice

requireemnts and ouput contract

consideration is not necessary

effective legality

contract void, courts won't help either party. you give $1K to drug dealer for fake weed. court will not help you.

illegal

contracts to pay for a vote; YOU CANNOT ENFORCE ILLEGAL CONTRACTS. CAN'T SUE DRUG DEALER. UNENFORCABLE!

specific performanc

court says you must DO x, y, and z. will not offer specific performance bc that would be slavery.

contracts for international

do not worry!!! DO NOT WORRY

impossibility

mining, the mine blows up. Impossibility means that some specific duty under the contract has become impossible to fulfill under any reasonable circumstances. For example, John pays Bob $5,000 to paint his house in January, but the house burns down in December before the payment is made. This excuses John from the contract legally since it is no longer possible for the house to be painted. Bob has no recourse to seek damages in a legal lawsuit because this issue falls under the doctrine of impossibility.

Mitigation of damages

mitigates or reduces damages they suffered

consideration is

motif that causes someone to jion agreement

gaurantees, land, or sale of goods more than $500

must be in writing?

agreement

mutual assent; manifest the agreement together offer, then acceptance

intnagilbe

negotiable instruments, patents, etc.

illusory promise

no promise at all

mitigation

non breaching party has duty not to let damages rack up. landlord can't just let the expenses rack up; they gotta find someone that will take the lease. employee; you got fired, you have to go find a similar job

punitive damage

not awarded.

complete performance

party performs as agreed

satisfaction contracts

performing to the satisfaction as another. the picture vs the roof

conditions precedent, subsequent, current

precedent: i will hire you to be my driver once you get license. must be done first. subsequent: you can live in my house until you get married.

procedural, substative

procedure: putting it together. substative: the stuff of the contract

reformation

re write contract, the court does this.

equitable remedies

recision: unamke contract

mailbox rule

rejection, revocation, counteroffer all have to be received in hand!!!!!

remedy

relief provided for innocent party when other party breaches

Specific Performance

remedy calls for performance of act promised in contract

Limited liability clauses

remedy for breaches are limited to certain replacement,repair or refunds

substantial vs complete performance

remember house example. i leave out outlet. i leave out entire second floor. won't be close.

damages and remedies

remember if someone is non breaching you are entitled to damages

Article 2 - Sale of Goods

requirements for sales contracts, also duties/obligations involved for parties. article 2A covers similar issues for lease contract

what has to be in writing?

sale of goods: quantity, most states require the parties, the subject matter, essential terms

contracts restrain trade

sales of a business. non compete for an employee. 2 main issues: reasonableness of time and reasonableness of geography. not more than a year and geography is specific to what you're talking about

intent to decieve

scientor: Scienter is a legal term that refers to intent or knowledge of wrongdoing. This means that an offending party has knowledge of the "wrongness" of an act or event prior to committing it.

additional terms

sell car for $10K. buyer says add seat cover. seat will fall out of contractd. non-merchant: additional terms falls out. if both merchants, contract for car with seat covers. ??? additonal terms part of contract except 3 times. exceptions: if i limit to terms, i reject if nick come back and wantws seat cover, nick's term

option contract

seperate consideration! can't be revoked until option expires.

condition

something that has to happen

misrepresentation

sometimes by conduct, or statement of opinion

sale of land

specific performance BREACH NOT DELIBERATE, STATES WILL LMIT BUYER'S DAMAGES TO DOWN PAYMENT ONLY

discharge by operagion of law

statue of limiataitons, bankruptcy, impossibility

statue of frauds

statue that requires certain contracts to be in contract. refers to the requirement that certain kinds of contracts be memorialized in a writing, signed by the party to be charged, with sufficient content to evidence the contract.

goods

tangible property, has to be movable. land, anything attached to land nO GO

subsequently modify if void

terms are ambiguious (bimonth, biweek)

sale of lands

the back 40 doesn't cut it???

compensatory damage

covers direct losses actual damages, injured party is compensated for any monetary damage from breach of duty compensate loser party for loss and replace what was damaged

time is of the essence

date is mere suggestion on contract unless it says time is of the essence

Article 1 (General Provisions of UCC

definitions and general principles

I. Writing requirements

A. Statute of fraud - what types of contracts must be in writing 1. Originally, parties in contract could not testify, so third parties had to 2. Act for Prevention of Frauds and Perjuries established 1667 a. Required contracts to be signed in writing to provide basis for enforceability B. Current state legislation - can be written or electronic; statutes of states vary 1. Must be signed regardless of form 2. If made orally when required to be written, contract is voidable C. What requires written contract: 1. Contracts involving interest in land a. Land is real property and includes all physical objects permanently attached to soil i Buildings, fences, trees, etc. b. Requires written evidence for transfer of other interests (leases, etc.) i Also includes option to buy 2. Contracts that can't, by their terms, be performed within one year of formation a. Required because memory of contract terms not reliable after 1 year b. Begins day after contract formed in writing c. If oral, must be objectively established objectively impossible (as opposed to likely) to perform within 1 year to be enforceable i Oral contract for lifetime employment does not fall within statute ii Theoretically, employee can die within one year so can be performed 3. Collateral contracts (secondary) a. Made by third party to assume obligation if party does not perform b. Primary obligations: promise to pay another person's debt not conditioned on failure i Does not need to be in writing to enforce c. Secondary: assumes obligation due to failure i Third party becomes guarantor; must be written to be enforceable ii If made to secure personal benefit, considered "main purpose" and need not be in writing iii Also includes guarantee of debt to forestall litigation 4. Promises made in consideration of marriage a. Unilateral: must be in writing i Also includes prenuptial agreements 5. Contracts for sale of goods $500 or more (UCC) a. Need only state quantity term b. Other terms can be omitted or imprecise as long as they adequately reflect both parties' intention D. Exceptions to writing - when made orally 1. Partial performance - court can grant specific performance if parties cannot be returned to original position prior to performance a. Indicates unmistakable belief that contract exists 2. Admissions - one party admits under oath at any stage that contract exists a. Only enforceable to the extent of admission 3. Promissory estoppel - justifiable reliance must have been made to detriment a. Must be no way to avoid injustice except for enforcement 4. Special UCC exceptions - sales contracts a. Oral contracts between merchants confirmed by memo E. Sufficiency of writing - contract, memorandum, or record 1. Signature (even initials) can be anywhere 2. One document can incorporate another by expressly referring to it a. Several documents can constitute one if attached (stapled, same envelope, etc.) 3. Must contain essential terms, not every term (quantity, etc.) a. Most states also require naming of parties and identify subject matter to reasonable certainty 4. Because only one party needs to sign, may only be enforceable by one party

special rules merchants

determine if someone is merchant: 1. deal with goods of kind 2. hold them selves out 3. someone hires expert to help him out

Compensatory damages for sale of goods

difference between contract price and market price

Standard measure of compensatory damages

difference between value of breaching party promised performance and value of actual performance

standard measure

difference between value of promised performance and value of actual performance

Uniform Commerical Code

codification of laws that are involved in commercial transaction

past consideration

doctor performs operation and afterwards. already made bargain, the money that i promised did not induce them to do anything differently. after the fact, no past consideration

dude props up stock

doesn't have to be in writing because main purpose is to benefit yoursle.f

types of damages

1. compensatory 2. consequential 3. punitive 4. nominal

II. Formation of sales contracts

A. Offer - common law requires unqualified acceptance 1. Under UCC, verbal exchanges, correspondence, and actions can constitute contract even if the moment of its making is undetermined B. Open terms - common law requires definite terms (essential terms can be ascertained) 1. Under UCC, contracts will not fail for indefiniteness even if terms are open, so long as: a. Parties intended to make a contract b. Reasonably certain basis for the court to grant an appropriate remedy 2. Open price - courts determine reasonable price at time of delivery if parties have not agreed on one a. Determined in good faith (honesty and in fact, commercial reasonableness) 3. Open payment - due at time and place buyer is to receive goods if no terms specified 4. Open delivery - takes place at seller's place of business (residence if no business) or known location of goods 5. Duration of ongoing contracts - reasonable notice before termination required 6. Options and cooperation - seller has right to make shipping arrangements in good faith using commercial reasonableness a. Buyer can specify when sales contract omits terms relating to assortment of goods 7. Output and requirement contracts - implicit consideration because right to buy or sell forfeited 8. Merchant's firm offer - when merchant-offeror gives assurances in a written, signed writing that offer will remain open a. Irrevocable without necessity or consideration C. Acceptance - either by prompt promise to ship or by prompt/current shipment of conforming or nonconforming goods 1. Prompt shipment of nonconforming goods constitutes both acceptance and breach a. Breach does not apply if seller seasonably notifies buyer that nonconforming goods are an accommodation 2. Communication of acceptance - UCC requires notification within reasonable time a. Offeror can treat as offer offeree having lapsed if not notified by beginning performance 3. Additional terms - UCC indicates definite acceptance if it includes terms additional or different to original offer a. If one or both are nonmerchants, contract does not include additional terms b. When both are merchants, additional terms automatically become part unless: i Original offer expressly limits acceptance to those terms ii New or changed terms materially alter the contract iii Offeror objects to new or changed terms within reasonable time 4. Condition on assent - regardless of merchant status a. Offeree's response not acceptance if it contains additional terms and is conditioned to the offeror's consent to those terms b. Additional terms - courts may strike terms if parties don't agree i Still constitutes contract but those terms stricken from the contract D. Consideration - UCC does not require a contract modification to be supported by new consideration 1. Must still be made in good faith, must be in writing in some situations 2. If consumer buying from merchant, consumer must sign separate acknowledgement of any prohibition of modification E. Statute of frauds - contracts of sale over $500 or more required to be in writing to be enforceable 1. Sufficiency - indicates intent and is signed by the party or their agent 2. Merchant rules -if writing indicates terms and receiving merchant has reason to know of it contents, signature not needed if not objected to within reasonable time (10 days) 3. Exceptions - cannot repudiate oral contract if: a. Specially manufactured goods have been substantially started, cannot be resold, or are specially manufactured for a particular buyer b. Admission in pleadings made c. Partial performance - if payment made and goods received = partial performance i Enforceable at least to the extent that performance took place F. Parol evidence - fully integrated contracts cannot be contradicted by parol evidence, but partial can: 1. Course of dealing - prior actions that establish a common basis for their understanding a. UCC feels this may give particular meaning or supplement or qualify terms 2. Usage of trade - practices regularly observed as to justify an expectation by the parties 3. Course of performance - conduct that occurs under particular agreements a. Parties themselves best know what they meant so how it's carried out is best indication 4. Rules of construction for interpreting contracts - consistent with each other whenever reasonable G. Unconscionability - UCC can evaluate any contract or clause to determine and can either refuse to enforce, enforce remainder without unconscionable part, or limit application of unconscionable term

IV. Contract provisions limiting remedies

A. Provisions - designed to limit recovery of damages for certain breaches (or no recovery at all) 1. UCC allows sales contracts to limit remedies B. Enforceability - depends on type of breach excused by provision 1. Generally not enforceable if it excludes intentional injury or fraud 2. Not enforceable if it excludes acts deemed illegal, contrary to public policy 3. Negligence may have some liability if bargaining position roughly equal

III. Undue influence

A. Requirement - free will is overcome by party, therefore agreement lacks voluntary consent B. One party dominates - unfair influence by guardians, caretakers, etc. 1. Presumption of undue influence in regards to fiduciaries, lawyers, etc.

III. Waiver of breach

A. Waiver - knowing relinquishment of legal right to require full performance 1. Nonbreaching party may be willing to accept defective performance a. Typically allowed if benefit is still possible 2. Waiver does not waive subsequent, additional, or future breaches 3. B. Pattern-of-conduct exception - can extend to subsequent performance if a reasonable person would conclude that similar defective performance is acceptable 1. Nonbreaching party must give notice that full performance required in the future 2. Party who has rendered defective performance remains liable for damages caused by breach

Rescission

Action to undo or cancel a contract to return non breaching party to position they were in before. They must do restitution

Breach of Contract

Failure to perform what a party is under duty to perform.

With sale of land what happens to the buyer if they decide to breach?

Awarded difference between contract price and market rate of land

Penalty Provision

Certain amount to be paid on a breach to penalize the breaching party

Liquidated damages

Certain dollar amount be paid in an event of future default or breach

Damages

Compensate party for harm sufferred due to wrongful act

Economic waste

Cost of repairing or completing the performance, outweighs the benefit to the owner

construction contracts

DONT WORRY ABOUT CONSTRUCTION CONTRACDTS

Remedies for non breaching parties(5)

Damages,rescission/restitution,specific performance, and reformation

I HIRE NFL STAR

HE SENDS WATER BOY. CONTRACT CAN SAY NO DELEGATION ALLOWED!

Consequential Damages

Foreseeable damages that result from breach of contract

What happens if both the contractor and the owner breach contract?

Judge strikes a fair balance in awarding damges

Nominal damages

No damage of financial loss resulted from breach

Consequences of waiver of breach

Party that waived the breach cannot take later action on it

What happens when the seller breaches a sale of land?

Seller must do specific performance and award buyer a parcel of property

open delivery term

open quality term ALMOST NEER!!! IF NO QUANTITY, the contract fails. we can't provide adequate remedy. two exceptions

offer for UCC comes in play

open terms. common law has to be definite. UCC does not fail for indefiniteness

in particiapiotino

party will not perform contract before performance is due. we have contract until tomorrow. we will not perform it.

restitution

pay back contract

Restitution

To rescind a contract, the parties must make restitution by returning to each other goods, property, or money previously conveyed

When specific performance is available?

When damages(usually moetary) are inadequate as a remedy

SPECIAL TRUST

YOU HIRE SOMEONE AND MATERIAL DIFFERENCE.

Reformation

equitable remedy used when the parties have imperfectly expressed their agreement in writing

contract provision

exculpatory clauses, ???

I. Damages A. Compensatory - covers loss of bargain to make party whole 1. Only applies to actual damages that arise directly from breach 2. Standard measure - difference between value of performance and value of actual a. Reduced by any loss avoided 3. Incidental - expenses caused by breach (such as having to hire someone else) 4. Sale of goods - difference between market price and contract price a. When buyer breaches and seller has not yet produced goods, damages equal lost profits 5. Sale of land - all land considered unique, remedy is specific performance (bargained

for land) a. If buyer breaches, remedy is difference between contract price and market price of land i Only used when specific performance not available (i.e. land sold) b. If seller breaches and but not deliberately, some states limit damages to refund of down payment and expenses (title fee, escrow, etc.) 6. Construction - varies by time (before, during, after performance) of breach and by which party a. By owner - can occur at all stages i If breach occurs before performance, contractor can only recover profit (not materials, labor, etc.) ii If during, can recover profit plus costs already incurred iii If after, can recover price plus interest b. By contractor - measure of damages is cost of completion if breach occurs before completion i If contractor finishes late, measure of damages is equal to loss of use ii Economic waste - occurs when cost of completion far outweighs benefit to owner c. By both - courts attempt to find balance for equitable remedy B. Consequential - special damages caused by circumstances beyond the contract 1. Ex: failing to produce goods knowing they will be immediately used or re-sold, courts may award loss of profits 2. Breaching party must have knowledge of consequences (foreseeability) C. Punitive - generally not awarded in breach lawsuits unless breach also causes a tort D. Nominal - no actual damage or loss incurred; injury "technical" only 1. Awarded mainly to establish wrongdoing from a legal standpoint E. Mitigation of damages - party who suffers loss has a duty to minimize loss 1. Rental agreements - landlord must actively try to lease property if breach occurs 2. Employment contracts - if wrongfully terminated, employee has to actively search for a similar position of employment F. Liquidated damages vs penalties 1. Liquidated damages - contractual provisions that designate a specific amount to be paid in the event of a future breach 2. Penalties - designed only to penalize breaching party, not to make innocent party whole 3. Enforceability of penalties and liquidated damages - two requirements to meet: a. Was it apparent that damages would be difficult to estimate when contract was entered into b. Was the amount a reasonable estimate (not excessive)

sale of goods

if buyer breaches, market + contract price if seller breaches, specific performance

if you determeined to be incompetent

mentally ytou can't form a contract

Waiver

when non breaching party accepts defective performance

minors

you create a contract, yo ucan VOID it. you are on hook for necessaries such as food. (age 18)

liquited vs penalties

liquidated damages: generally ok if apparent it would be difficult to estimate and reasonable estimate and not excessive.

kill offer?

lapse of time, death or incompetenance

article 2A

leases NOT ON EXAM

duress

force into an agreement

fraudulent misrepresentation

fraud, lying for money, has to be damages or harm. you go into car dealer and salesman lies 6 ways to sunday to you but you walk out, no damages. you can't sue someone for just lying. you can only sue if someone lies and it causes you harm

sale of goods

goods areticle 2

offer

has to be definite

firm offer

has to be written and signed

e contracts

have to match written counterparts.

exculpatory clause

i can do whatever i want in this contract and you can't do anything about it. GENERALLY NOT LEGAL, AVOID OR VOID THE CONTRACT

promissory estoppel

i promise to hire you as my aide but you flake. you moved across country; you dentrimetally relied on my promise, i will be liable. difference is enforcement is necessary to avoid injustice (not fair)

mirror image rule

i wanna buy X? i will sell X if it differs, it's not mirror image and it is COUNTER OFFER

i can tell you

i'm shipping it or i'm sending what you're ordeing

in non compete clauses.

if contract is over broad, in terms of time and geographic scope, court can come in and re-write it

parole evidence

if everything set in, fully integrated. don't look outside contract.

merchants special rule

if one merchant sends confirmatory memo within reasoanble amount of time afterwards we have .a contract unless you object in 10 days. ANSWER YOUR MAIL RULE

intoxication

if ur drunk, u disaffirm contract, you sshould be able to get over. tiger in the bathroom, chickens. you can't make contract while you're dunk?

chartible subsccriptions

if you promise to give money to charity, it's gift. charity relies on it because they build a hospital. they need to be able to rely on gifts. a charity. lack consideratoin but courts will enforce them

enforcement of limited liability

if you tryna limit fraud, you can. hey imma shoot you, you signing this says if can. this is a no go!

statue of frauds

in writing if $500 or more

focus on what

it takes to have agreement

frustration of purpose

king's coronation. i hire flat to watch parade. it never happened. Unlike impossibility and impracticability, both of which involve duties, frustration of purpose, or "frustration of contract," specifically involves the reason for the contract. Jack Appleseller contracts to buy a commercial building to rent out, and, while the sale is pending, the building is condemned by the city as unsafe for any use. Mr. Appleseller can back out of the purchase without obligation. For example, Louise leases a storefront shop from Bob in order to sell exotic snakes to the public. The lease term is set for five years. After two years into the business venture, laws are passed making it illegal to sell exotic snakes within the United States. Louise might then be excused from the final three years of the lease, as Bob knew the specific purpose of the lease was to sell exotic snakes. With the ban on the snakes, Louise no longer has a reason to continue with the lease unless she desires to do so. On the other hand, Bob may also be able to end the contract and lease the property to another business.

mistakes

lack of voluntary consent.

If the contractor breaches contract...

they must pay the cost of completion

assignments/delegations

third party benefiicaries

commercial practicability

too expensive. For example, John's company signs a contract with the city to remove all of the gravel in a specific area. After surveying the area, the company quickly learns that a large portion of the gravel is underwater and removing it will cost the company 20 times more than was originally agreed to. The company could claim impracticability since the cost to remove the gravel underwater will be far too great.

delegation

transfer of duties

assignment

transfer of rights. can be done without everyone's permission. i owe this due $5,000. i transfer the right of the owes to you.

adhesion contracts

unconsionability, written exclusively by one party. take it or leave it. mobile phone contracts; you want an iphone this is it! no other choice

UCC

under common law: services/law contracts

disaffirmance

undo a contract?

acceptance of offer

unequivocal, silence = not acceptance!

mistakes of fact unilateral, bilateral

uni: one party is mistaken. you're out of luck. if both parties are mistaken, you can rescind or unmake the contract

undue influence

usually confidential relatonship, fudiciary duty. it's lawyer doing wills, the kids usually happens to older generations. one person dominates another

consideration

value given in return for a promise if it's bilateral or performance in a ulateral contract

Subsequent Breaches

waiver extends only to the matter waived and not the whole contract nor to future breaches

discharge by mutual decision

we both back out contract

acceptance UCC

we do acceptance by either prompt proise to ship or prompt shipment of confirming or non-confirming goods

performance and discharge

when is contract over, how is it performed

When Quasi Contracts are used

when party has partially performed under a contract that is unenforceable. Party may recover fair market value

option contract

you can revoke offer anytime up til accepteence unless option. under UCC, you make irrevocable by buying it. no sepereate consideration needed. merchant's firm offer

voidable contract (mental)

you haven't been found retarded by court but you have times of incompetence. if you make contract while incompetent, it is voidable. if you make a contract during period of lucidity (not incompetent) it is a valid contract.

most common remedies

1. damages 2. rescission and restitution 3. specific performance 4. reformation

The requirments of Quasi contracts for remedy

1. party has conferred a benefit on other party 2. Party conferred benefit with reasonable expectation of being paid 3. Party did not act as a volunteer for benefit 4. Party would be unjustly enriched if they retained benefit without paying for it

II. Discharge by performance

A. Accomplished by tender (unconditional offer to perform by a person ready, willing, and able to do so) 1. Once tendered, party has done everything possible to carry out contract; refusal to perfom by other party gives tenderer right to sue for breach of contract B. Complete performance - performed exactly as agreed, no question as to whether performed 1. All expressly stated conditions fully occur; aka strict performance C. Substantial performance - performs substantially all terms in good faith 1. Must not vary greatly from promised performance 2. Must create substantially the same benefits as those promised a. Intentional failure is breach 3. Effect on duty to perform: other party's duty remains absolute a. Can sue for minor deviations but must still continue to perform 4. Measure of damages - limited to cost to bring contract into compliance a. If cost is unreasonable, value between performance rendered and performance that would have been rendered D. Performance of satisfaction of another - work must satisfy party or a third party 1. When contract is personal - obligation is conditional, must satisfy party specified in contract a. Only excused if party expresses dissatisfaction to avoid payment or otherwise 2. Reasonable person standard - satisfies performance unless expressly stated otherwise E. Material breach of contract - nonperformance or does not even meet substantial performance 1. Excuses other party from performance; can sue for breach a. If minor, duty is suspended until performance resumes unless major difficulties arise F. Anticipatory repudiation - refusal to carry out obligation before duty to perform occurs 1. Until non-breaching party treats as a breach it can still be retracted 2. Treated as a present material breach; non-breaching party should not have to remain ready for retraction and should be given opportunity to seek similar contract to minimize loss

III. Settlement of claims

A. Accord and satisfaction - debtor offers to pay less than owed and creditor accepts 1. Accord: agreement, Satisfaction: performance (typically payment) a. No satisfaction w/o accord; debt must be in dispute for A/S to occur 2. Liquidated - A/S cannot take place; debt has been ascertained, fixed, or determined a. Debt still legally owed; debtor gave no consideration to satisfy balance of creditor 3. Unliquidated - debt is no settled, fixed, or determined a. A/S occurs, acceptance is considered valid consideration B. Release - one party forfeits right to pursue legal claim and bars further recovery 1. Must be made in good faith (honesty), accompanied by consideration, and signed in writing C. Covenant not to sue - substitutes contractual obligation for another type of action 1. Not barred from recovery; party can still sue if the other party does not perform

III. Discharge

A. By agreement - mutually by parties to discharge agreement 1. Can be contained in contract or in the form of a new contract B. By mutual rescission - both parties agree to return to original position and cancel/terminate contract 1. Requires offer, acceptance, and consideration of another agreement to replace 2. Original promises serve as consideration for second contract 3. Can be made orally or in writing (in sales, UCC requires written rescission) C. By novation - parties agree to substitute a third party for original party 1. Requires a valid obligation with an agreement by all parties to a new, valid contract 2. Extinguishes old obligation (discharge of prior party) D. By settlement agreement - when genuine dispute over obligations arises over an enforceable contract 1. Between original parties, compromise/settlement substituted as new contract 2. Expressly or impliedly revokes and discharges obligations of prior contract E. By accord and satisfaction 1. When accord made (promise to perform different than promise) a. Suspends original obligation, does not revoke (can sue for nonperformance

III. International contracts

A. CISG - does not apply to consumer sales; neither UCC or CISG applies to service contracts 1. If UCC and CISG conflict, CISG applies (is a US treaty and therefore supreme law) B. Mirror image rule - UCC does not require; acceptance with additional terms does not negate formation 1. CISG does not require unless additional terms materially alter the contract a. Material terms include price, quantity, time, place, liability, etc. (almost everything) C. Irrevocable offers - under UCC merchant's firm offer irrevocable, even without consideration if in writing 1. Under CISG, offer can become irrevocable without consideration or writing if: a. Offeror orally stated offer to be irrevocable b. Offeree reasonably relies on the offer as being irrevocable D. Writing requirement - UCC requires for over $500 1. CISG states contract of sale can be proved by any means E. Time of contract formation - UCC, common law: acceptance effective on dispatch 1. CISG: effective on its receipt by offeror, but irrevocable when sent F. Special provisions - avoiding disputes due to international contracts 1. Choice of language clause - designates official language in which contract is interpreted 2. Choice of forum clause - determines jurisdiction (does not have to be within regions of parties) 3. Choice of law clause - what law will govern relationship 4. Force Majeure clause - "act of god" clause to excuse liability; includes other unforeseen events

I. Uniform Commercial Code

A. Comprehensive coverage of UCC 1. Facilitates commercial transactions by governing laws of sales and contracts clearer 2. Single integrated framework for commercial transactions ordinarily arising in commercial transactions B. Sale of goods (Article 2) - sets requirements for sales contracts and duties of parties 1. Modifies common law of contracts to apply to sales contracts a. When UCC provision addresses a conflict, it prevails b. Common law prevails when no provision is present 2. Sale of goods only a. If subject matter is dispute of goods, UCC governs b. Does not deal with property, services, or intangibles 3. Rules can vary if buyer or seller is a merchant C. Goods - items of property that are tangible and movable 1. Goods associated with real estate do not fall within Article 2 unless those items are severable a. Ex: timber, minerals, etc. (regardless of who severs them from the land) 2. Goods and services combined - predominant factor test determines if contract is primary purpose a. If mix contract primarily for goods, all disputes (even for service) decided under UCC D. Merchant status - special business standards imposed due to commercial expertise 1. Merchants deal in goods of the kind involved in that sales contract 2. Merchants, by occupation, hold themselves out as having knowledge of involved goods 3. Persons who employ a merchant has the status of merchant in that transaction

I. Conditions and performance

A. Conditions - qualifications in a contract based on possible future events 1. Occurrence (or nonoccurrence) triggers performance of obligation or terminate existing 2. In contracts, usually just referred to as "conditions" as opposed to specific ones B. Conditions precedent - condition must be fulfilled before duty to perform can be required 1. I.e. physical exam for insurance, appraisal before buying property, etc. C. Conditions subsequent - terminates the promise to perform, occurs after duty arose 1. I.e. failing drug test gets your contract terminated D. Concurrent conditions - when each qualification is conditional on the other's 1. Only exist when contract expressly or impliedly calls for simultaneous performance of duties E. Express - provided for by the parties' agreement (if, provided, after, when, etc.) F. Implied - understood but not expressed; are necessarily inherent in actual performance

I. Assignments and delegations

A. Contract of privity 1. Private agreement between two parties who alone have rights and liabilities of it a. Third parties do not typically have rights B. Assignments - transfer of contractual rights to a third party after contract is made 1. Especially important in business financing (transfers of loan payments) a. Ex: Banks sell right to collect mortgage payments for a fixed fee 2. Assignor - assigns rights to a third party (assignee receives) 3. When rights are assigned unconditionally, rights of the assignor are extinguished a. Obligor owes obligation, obligee receives b. Obligee can pursue enforcement in court 4. Assignee's rights are subject to same defense assignor had 5. Form can be oral or written, must follow statute of frauds when needed C. Rights that cannot be assigned 1. When assignment is prohibited by statute 2. Contract is for personal services unless all that remains is monetary payment a. When legal action involves personal rights, they are considered personal by nature and cannot be assigned 3. When contract prohibits assignment - assignment clause depends on how phrased a. Exceptions to assignment clause that prohibits assignment: i Cannot prohibit right to receive funds ii Cannot prohibit assignment of rights in real estate (against public policy) Considered restraints against alienation iii Assignment of negotiable instruments (notes, checks, etc.) iv Right to receive damages for breach of contract or payment of an account in sale of goods 4. When assignment changes the risk or duties of another significantly D. Notice of assignment - must notify the obligor of the assignment; two major issues: 1. Priority - if same right assigned to two different people, who gets priority to the righ? a. Typically first in time, but many states also say to the first assignee to give notice 2. Discharge by performance to wrong party - if obligor performs assignment to assignee before being notified

III. International statute of frauds

A. Contracts for International Sale of Goods (CISG) - does not incorporate Statute of Frauds provisions 1. Article 11: states that "a contract for sale need not be concluded in or evidenced by writing and is not subject to any other requirements as to form a. Accords with legal customs of most nations, which have mostly repealed fraud provisions

V. Adhesion contracts

A. Defined - dictated by party with overwhelming bargaining power 1. Written exclusively by one party, presented as "take it or leave it" 2. Second party given no opportunity for negotiation B. Standard form - fine print provisions that shift risk normally taken by that party to the other 1. Must be proven to be unconscionable to avoid enforcement a. UCC typically only applies unconscionability to sale of goods, though some states have not adopted

III. Third party beneficiaries

A. Intended third party beneficiary -performance rendered to or benefit a third party 1. Original parties to contract must agree 2. Promisor - in bilateral both commit so courts determine to avoid beneficiary suing wrong party 3. Types of intended beneficiaries: a. Creditor - benefits from a payment of debt b. Donee - when promise is made to give a gift to a third party i Most commonly in life insurance c. Most do not fit into one of these, so courts usually only distinguish between intended and incidental 4. When rights of intended beneficiary vest (have taken effect, cannot be taken away) a. Third party materially changes position in justifiable reliance on the promise b. Third party brings a lawsuit on the promise c. Third party demonstrates consent to the promise at the request of promisor or promise i i.e. sending letter indicating they are aware and consent B. Incidental - receives unintentional benefit from contract even though that benefit is not reason made 1. Party has no expressed rights in the contract; any party not deemed intended is deemed incidental and cannot sue to enforce contract 2. If party is expressly designated in contract, if performance is rendered directly to third party or third party can control details, they are intended

IV. Discharge by operation of law

A. Material alteration of contract - one party has no knowledge or consent regarding changes 1. Innocent party can treat as terminated or discharged B. Statutes of limitations - oral usually 2-3yrs, 4-5 for written 1. 10-20 years to file for recovery awarded in judgments 2. Breach: 4yrs after cause of action accrued a. Contract can reduce to one year but cannot extend C. Bankruptcy - prevents creditors from enforcing most of debtor's contracts 1. Liquidates and allocates a debtor's assets to creditors in fair and equitable fashion D. Impossibility of performance - supervening events (not reasonably foreseeable) 1. Three situations: death or incapacitation, subject matter destroyed, or law renders illegal 2. Objective impossibility cannot be done by anyone 3. Subjective impossibility can't be done by that party (subjective; does not discharge) 4. Temporary impossibility - suspends performance until impossibility ceases a. Gross lapse in time or change in circumstances can lead to discharge E. Commercial impracticability - performance becomes significantly costly or difficult 1. Must not have been known by parties when contract was made F. Frustration of purpose - supervening event makes it impossible to obtain intended purpose when contract was made 1. Typically involves event that decreases value of what a party receives

II. Parol Evidence Rule

A. Parol evidence - common law rule regarding admissibility of oral evidence 1. If a court finds written agreement represents final agreement, parol evidence denied B. Exceptions to oral evidence: 1. Evidence contract was subsequently modified, oral or written a. May not be enforceable 2. Contract was voidable or void a. Especially if fraud occurred b. With ambiguity, oral evidence admissible to determine meaning 3. Incomplete contracts: used to "fill in gaps" 4. Prior dealing (course of performance/usage of trade) a. When buyers/sellers have consistent dealings, customary practices develop b. Shows how parties have acted in past transactions c. Can also be used for clarifying ambiguity 5. Condition precedent - condition required to be fulfilled before performance a. Allowed if oral precedent doesn't conflict with what is written 6. Obvious or gross clerical error - clearly does not represent the agreement of the parties a. Parol evidence admissible to correct these errors C. Integrated contracts - written contract is intended to be final statement of terms 1. Extraneous information not included in contract is excluded 2. Completely integrated - contains all terms agreed upon 3. Partially integrated - contains some, but not all a. Evidence of consistent additional terms admissible to supplement written agreement 4. Excludes evidence that conflicts with written, only parol evidence that adds to terms of a partial integration allowed

II. Agreements that lack consideration

A. Preexisting duty - when legal duty to do already exists 1. If a party is bound by contract, that duty cannot serve as consideration for a second contract 2. Unforeseen duties - when extraordinary changes arise not foreseen at the time contract was formed a. Court must decide if modification of contract is fair and equitable in view of circumstances 3. Rescission - the unmaking of a contract so as to return the parties to positions they occupied before the contract was made a. Often done to make new contract at same time B. Past consideration - promises in return for actions that have already taken place 1. Bargained-for exchange missing, therefore unenforceable a. Past consideration = no consideration 2. Noncompete agreements (covenants not to compete) often not enforced a. Employment not sufficient consideration C. Illusory promises - terms express uncertainty, indicating promise is illusory 1. Said to be without consideration and therefore unenforceable a. Option-to-cancel contracts - promisor has option to cancel i If before performance begins, it is illusory ii If after, it is valid b. Uncertainty of performance i Requirements contract: buyer agrees to buy all it requires ii Output contract: buyer agrees to buy all seller produces

IV. Exceptions to consideration

A. Promissory estoppel (detrimental reliance) - person has reasonably and substantially relied on the promise of another; can be enforced even if no consideration is present 1. If requirements are met, promisor will be estopped (prevented) from asserting consideration as a defense: a. Must be a clear and definite promise b. Promisor should have expected promisee would rely on promise c. Promisee reasonably relied on promise by acting or refraining from act d. Promisee's reliance was definite and resulted in substantial detriment e. Enforcement is necessary to avoid injustice 2. Application of doctrine: originally applied to gifts and donations, but courts began applying to business B. Statute of limitations - if debtor promises to pay even though recovery is barred by statute, it is still enforceable (needs no consideration); extends limitation period 1. Can be considered extended via agreement, partial payment, etc. C. Charitable subscriptions - originally not enforceable (no bargained-for consideration) 1. Now applicable through estoppel to prevent inequity (promise reasonably relied on donation)

IV. Duress

A. Requirement - threatened act must be wrongful or illegal 1. Forces party into agreement, blackmail, extortion a. Must render party incapable of exercising their free will 2. Serves as a defense to enforcement and grounds for rescission B. Economic duress - extreme economic need not typically sufficient for duress 1. Exception could occur if situation prevents reasonable alternatives

II. Fraudulent misrepresentation

A. Requirements - same as torts 1. However, to collect damages, party must have been harmed; otherwise can only rescind and be restored to original position at time contract was formed 2. Misrepresentation by conduct - specific action to conceal fact material to contract a. Statement of opinion/prediction not typically fraudulent 3. Misrepresentation of law - relief typically not allowed (buyer should know laws) a. Exception: fraudulent party is in a profession requiring special knowledge 4. Misrepresentation by silence (omission) - no obligation to volunteer info a. Only required to disclose if problem cannot be reasonably expected to be discovered i Latent defect, fiduciary relationship, etc. B. Intent to deceive 1. Scienter - guilty knowledge; knowing that facts were falsely represented 2. Innocent misrepresentation - don't know misrepresentative, so not fraud a. Party can rescind but not seek damages (no intent to deceive) 3. Negligent misrepresentation - often considered scienter a. Not purposeful, but culpable ignorance supplies intent C. Reliance on misrepresentation 1. Reliance - must be reasonable and justifiable a. Obvious misrepresentation or equal knowledge of facts not justifiable b. Misrepresentation must be an important factor in inducing the party into contract i If contract would have occurred regardless, not relevant D. Injury to party - not required to rescind; party can be restored 1. Courts may also award punitive or exemplary damages in cases of gross negligence or fraud

II. Equitable remedies

A. Rescission - rescinding party must give prompt notice when other party is in breach 1. Restitution - required for a rescission; must return property/goods to other party a. If consumed, equivalent dollar amount required B. Specific performance - not granted unless legal remedy is inadequate (item not replicable) 1. All land is unique, so specific performance applies 2. Personal service generally refused; considered involuntary servitude C. Reformation - parties have imperfectly expressed agreement in writing 1. Allows court to rewrite contract to reflect true intentions of parties a. Most often when fraud or mistake occurs b. Can also be when covenants to not compete are excessive or written contract does not properly reflect oral agreement D. Recovery in quasi contract 1. Requirements - when one party has partially performed under unenforceable contract a. Party has conferred a benefit on the other party b. Party conferred a benefit with the reasonable expectation of being compensated (paid) c. Party did not act as a volunteer in conferring benefit d. Party receiving benefit would be unjustly enriched if they retain benefit without paying for it

XIV: Capacity and Legality

I. Contractual capacity - the legal ability to enter a contractual relationship A. Age of majority - typically 18, though exceptions exist (marriage, operating business as adult, etc.) B. Minors - can enter into legal contracts except where laws forbit (alcohol, etc.) 1. Minority can be terminated through petition for emancipation a. Minor can petition court to be treated as an adult 2. Voidable by minor at any point; intent to avoid through disaffirmance must be clearly manifested a. Adult entering contract with minor is bound; only minor can disaffirm C. Disaffirmance - the legal avoidance or setting aside of a contractual obligation 1. Must disaffirm entire contract (no partial), 2. Obligations - states differ a. Must return consideration, can recover full value (even if damaged) i Some states require minor makes adult party whole b. If reaching majority, must be within reasonable time, otherwise contract can be considered ratified and therefore enforceable 3. Exceptions a. Marriage contracts, enlisting in armed service (public policy) b. Misrepresentation of age c. Contracts for necessaries - food, shelter, etc. i Only enforceable to the value needed, not charged 4. Ratification - act of accepting and giving legal force to an obligation not previously enforceable a. Occurs when reaching majority i Explicit - states orally in writing that they intend to be bound ii Implied - indication of intent (such as continued use, etc.) b. Executed are often considered ratified, whereas executory are disaffirmed 5. Parents' liability - not normally liable a. Co-signing holds them liable even if child avoids b. Can be held liable for torts, especially if they had knowledge or encouraged D. Intoxication - even if voluntary, it can be voidable 1. Enforceable if it can be proved they understood terms despite intoxication (ex. writing out terms, etc.) 2. Can disaffirm during or within a reasonable time after becoming sober; must return consideration a. Contracts for necessaries are voidable but can be liable in quasi contract 3. Ratified if fail to disaffirm or continues to use E. Mental incompetence - voidable, void, or valid 1. If a court previously judged a person mentally incompetent, contract is void a. Only appointed guardian can enter into obligations on their behalf 2. If person not judged incompetent but was at time, it is voidable a. Person must not have had capacity to understand nature, purpose, and consequences 3. If person had capacity at the time contract was formed, it is valid a. Common with those with lucid intervals due to age, disease, etc.

II. Legality

the contract must be formed for legal purpose A. Contracts contrary to statute 1. To commit a crime - void and unenforceable a. If statute renders illegal after formation, contract discharged by law 2. Usury - charging loans at a rate above maximum level a. Most states limit interest to ceiling; can sue for principal recovery but not interest b. Many states exempt rates on corporate loans to facilitate business transactions or for those unable to receive credit otherwise 3. Gambling - any scheme involving paying valuable consideration for chance to receive property a. Regulated gambling mostly enforceable 4. Licensing statutes - a. Unenforceable if license's purpose is to protect public from unauthorized practitioners (lawer, doctor, etc.) b. Enforceable by other party if unlicensed (practitioner has no recourse) B. Contracts contrary to public policy - immoral acts, etc. 1. In restraint of trade - anticompetitive clauses a. Typically violates antitrust laws, negative for economy so often unenforceable i Only recognizable if restraint is reasonable and contained in ancillary clause 2. Noncompete clauses (covenants to not compete) a. In sale of business - valid if reasonable and will prevent actions detrimental to the business b. In employment - must be reasonable period of time and within reasonable geography i In many states, employee must receive consideration for it to be valid c. Both must protect legitimate business interest, no greater than necessary i Can also be reformed rather than voided 3. Unconscionable contracts/clauses - does not apply to foolish decisions, only grossly unfair a. Procedural - buried in legalese, inconspicuous print, disparity in bargaining power b. Substantive - deprive benefit, leave without remedy, overly harsh terms c. Exculpatory - release party from liability "no matter what" i Enforceable when they do not indemnify misconduct or equal bargaining position d. Discriminatory contracts 4. Contracts to commit tortious acts - considered fraudulent misrepresentation and unenforceable C. Effect of illegality - courts will not aid either party 1. Both parties considered "in pari delicto" - equally at fault a. If executed, no party can recover, if executory, cannot be enforced 2. Exceptions a. Justifiable ignorance of fact (illegality) - didn't know b. Member of protected class (statute designed to protect) c. Withdrawal from an illegal agreement - can recover value if not yet performed and find out illegality d. Through fraud or under duress or undue influence D. Severable (divisible) contracts - separate consideration for each part performed 1. If parts are illegal, legal parts still enforceable a. Indivisible - must be performed completely

II. Delegation

transfer of contractual duties to a third party after contract is made A. Delegations - transfer of duties through an assignment 1. No special form needed as long as delegator expresses intent B. Duties that can't be delegated 1. Duties personal in nature - specifically if trust has been placed in someone for their skill a. Ex. pay a doctor to do your surgery, he cannot delegate it out to someone else 2. When performance will vary materially than expected 3. When contract prohibits delegation C. Effects of delegation - if enforceable, oblige must accept performance from delegate 1. Obligee can legally refuse performance of duty cannot be delegated a. Valid delegation does not relieve delegator of obligations b. Obligee can sue both D. Assignment of "all rights" - can create both assignments of rights and delegation of duties 1. Courts still hold assignor liable

accord and satisfaction

you owe 10K on credit card. imma give you 7K only, as long as dispute that's okay