Final Exam Review notes for ALL professors for Business Law 212
Final Exam Review notes for ALL professors for Business Law 212 BSL212
Popular in Intro to Business Law
Popular in Business Administration
This 91 page Bundle was uploaded by Nuyev on Tuesday October 6, 2015. The Bundle belongs to BSL212 at University of Miami taught by J.Martinez Evora in Spring2014. Since its upload, it has received 83 views. For similar materials see Intro to Business Law in Business Administration at University of Miami.
Reviews for Final Exam Review notes for ALL professors for Business Law 212
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 10/06/15
Introduction to Law 11292012 Classi cation Civil Law vs Criminal Law 0 Civil private against individual think of it as person to person 0 Criminal law state against individual 0 Substantive Law vs Procedural Law 0 Substantive deals with the facts it is a person or companies or states right because of a law example right to privacy right to vote at 18 etc 0 Procedural how to implement the substantive laws go to court le suit etc 0 Federal Law vs State Law 0 Two should balance out Which court do we use 0 2 types ofjurisdiction Subject Matter and In Personam 0 Subject Matter content of law whether it be civil trademark domestic landlord dispute etc This will help decide whether or not it is federal state or either 0 In Personam defendant and plaintiff jurisdiction Deciding Which Court A Trial should be Held in Subject Matter jurisdiction authority of a court to judge a controversy 0 Exclusive Federal 0 Cases dealing with admiralty bankruptcy antitrust patent trademark copyright cases suits against the US cases arising under certain federal statues expressively for exclusive fed jurisdiction Concurrent federal or state either federal or state can hear the case 0 Federal question Case arising under the constitution statues US treaties Diversity Case exceeds 75000 and the price is clearly states Diversity of citizenships Plaintiff and defendant from different states Foreign country brings a case against the US 0 Plaintiff and defendant are from different countries 0 Exclusive State 0 2 people from different states issue is under 75000 0 All other matters included but not limited to property torts contract agency commercial transactions most crimes etc In Personam personal Jurisdiction need to give an individual a summons 0 Minimum contacts between an individual and the forum state Longarm statues developed so states can expand their in personam jurisdictional reach allow courts to obtain jurisdiction over nonresident defendants if the defendant s 0 Principal place of business is in the state transacted business within the state that is the subject matter of the lawsuit 0 Has committed a civil wrong in the state 0 Owns property within the state property in lawsuit 0 Entered into a contract within the state Civil Dispute Resolution Court the last resort for solving a problem 0 When a dispute arises civilly 0 Civil dispute resolution OOOOOO 1 Negotiation conversation and agreement between the two parties 2 Consolation introduce a third party but make the agreement decision between the two initial parties 3 Arbitration call expert allow them to make the decision binding 4 Mediation 3rd party makes life easy suggests a decision but is not a binding decision 0 People don t always go to court because it is less expensive and less formal It also salvages relationships no hard feelings Civil Procedure 0 Pleadings the complaint and the answer 0 Plaintiff les complaint the defendant is then noti ed of the complaint and has 20 days to answer to the complaint and then they can reply and then the discovery time is set forth 0 Types of Discovery meant to narrow issues and prevent surprises o Depositions 0 Request for admission 0 Interrogations Before trial during discovery defendant and plaintiff can le motions to dismiss charges because of issues such as a resolution deal lack of evidence etc Moral Philosophies o Egoism o De nes right or acceptable actions as those that maximize a persons own selfinterest 0 Different for all people Relativism 0 Ethical behavior is based upon an individual or groups personal experiences Utilitarianism 0 Right or acceptable if the action is for the greater good greatest good for the greatest number of people 0 Systematic comparison of the costs and bene ts to all affected parties Teleology 0 Something is right if it produces a desired result self interest or utility Libertarianism 0 Live free or die believes in the doctrine of free will 0 humans have absolute rights that must be respected Virtue ethics and justice 0 Virtue ethics deems something right or wrong based on the current societal de nitions of what is moral in a given situation and what a mature person with good moral character would do Business virtue ethics a Trust a Selfcontrol n Empathy n Fairness n Truthfulness Nonbusiness virtue ethics n Lying n Cheating a Fraud n Corruption 0 Justice evaluate the idea of fair treatment and due reward in accordance with ethical or legal standards Distributive justice evaluation of the outcome of a business relationship Procedural justice refer to the processactivities that produce the outcomes lnteractional justice based on the communication process in business Contracts 0 Freedom of contract gives you the right to enter into a contract or not choose to sign one or not 0 Contracts exist in all aspects of a persons life 0 Fundamental institution in our lives 0 Can they be modi ed 0 When you sign a contract that is binding sometimes you can get out of them but HOW UCC vs Common Law 0 UCC 0 Deals with whether or not a transaction is a sale ofgoods tangible movable governed by article 2 of this code 0 COMMON LAW 0 Deals with a performance of a service 0 When it comes to a case of installation the installation is normally just and addition to the sale of the good so it remains under UCC o CISG 0 International contact Essential Elements What isisn t a contract o 6 basic requirements of contracts 0 O 0 Mutual ascent offer and agreement Established through conduct or written consent Consideration Legal benefitgains in a transaction and legal detrimentlosses can be money product time etc Legality of a contract Contract is not valid if the objects discussed in the contract are illegal criminal or tortuous Capac y Absolute lack of capacity declared incompetent by law example would be mentally challenged or incapable of understanding the law or limited lack of capacity minors can invalidate contracts unless the services are necessary Writing Some contracts must be in writing to satisfy the statue of clause Absence of an invalidated conduct Misrepresentation undue in uence Classi cation 0 Express v Implied Contract 0 0 Express contracts agreed upon by both parties at time of the contract lmplied parts of contracts that may not have been mentioned by both parties at time of contract but are included to quotmake sensequot of the contract 0 Bilateral v Unilateral Contract 0 O Bilateral both parties agree to perform their promises at some time in the future not at the same time Unilateral one party performs their promise at time of contract and other party performs at later time Executed v Executory Contract o Executed contract completed by both parties 0 Executory contract yet to be completed or partially completed by one party 0 Valid v Void Contracts 0 Valid meets all essential elements and requirements 0 Void contract never existed because from its birth it was wrong NonContractual Remedies Two instances where the law recognizes an obligation to pay or perform because it is fair can be awarded without contracts 0 Promissory Estoppel detrimental reliance Detrimental reliance promisor promises another individual something in exchange for a good service etc that cannot be taken back I Basically 3 points need to be met Promise Detrimental Reliance Unjust can be avoided o Quasi Contract Unjust Enrichment Implied in Law Act of a person permitted by law by which he obliges himself towards another without any agreement between them No promises made or reliance s involved in quasi contracts Professionals should be paid for reasonable value of services rendered for clients Fairness Doctrines In rare occasions there is no valid contract a court might award a remedy as if there were a contract under the theories of o Promissory Estoppel o Unjust Enrichment All business disputes do not end up in court only a few percentage of business cases go to court e Mutual assent Essential requirement to have a contract Offer and Acceptance Offer Essentials Communicated offerer has to say what they are offering to the offer 0 As intended Offerer s intention did not happen by accident 0 As authorized directly communicated to the offere Usually in words can also be in contact Intent to enter into a contract Jokes 0 Ex selling a lambo For 1000 Excited utterances Preliminary negotiations o Negotiations prior to contracts Auctions 0 Invitation to an offer 0 Ex auctioning a portrait one person offers 1000 next offers 3000 settle on 5000 one the hammer is sounded that portrait must go to the person who offered 5000 It can not be revoked General ads 0 Speci c ads De nite and Certain 0 General Common Law Rule every contract should have the name of parties quantity quality time place etc UCC rule deals with open terms only thing that matters is quantity 0 Special Cases 0 Output contracts buyer will buy merchandise for a period of time 0 Requirements contracts seller will sell merchandise for a period of time Duration of an Offer Until acceptance 0 Offer is open until the offere accepts the offer offere has the power of acceptance Lapse of reasonable time when time is not mentioned in contract 0 If there is no mention of time period in the offer than it is subject to the jury to decide ex perishable goods and real estate will have different periods of reasonable time Revocann The offer is going to be open until 0 The offere accepts 0 There is a lapse of reasonable time o The maker of the offer revokes the offer and the offer is closed 0 REVOCATION CANNOT occur when exception 0 A Common Law exception to revocation rule An option contract an irrevocable person getting offer pays considerationnormally money to keep contract open for task so the offerer cannot revoke the contract 0 B UCC exception to revocation rule Merchants rm offer an irrevocable offer that is signed by the merchant that is open for 3 months if no time is stated 0 C CISG rule for irrevocable offers If offere relied on the offerer then the offerer is bound to the offer and has to sell the goods or provide services Reiection The offere does not want what the offerer is offering 0 Does not have to verbally reject the offer because it will expire over a certain lapse of time 0 Can verbally say that they don t want it to substantiate it if they choose to but this is not necessary Counteroffer Terminate offer as well as introduce a new offer 0 Rejection of the rst offer but introduces a new offer 0 Ex a quotdo you want to buy this watch for 5 dollarsquot 8 quotno I want to buy it for four dollarsquot Death and incompetency of Either Party 0 If either party dies then the offer is terminated Destruction of subject matter lf the subject at hand is destroyed then the offer is terminated Subseduent Illedalitv lf the subject matter at hand is deemed illegal example prohibition then the offer is terminated Acceptance Communicate o Silence is usually not a way of acceptance unless there were prior course dealings 0 Timing o What do all of these have in common Offers Rejections Counteroffers Revocations o Mailbox Rule 0 If you communicate your acceptance by reasonable means then the acceptance is effective upon dispatch If you put it in the mail we have a contract 0 Generally in the form of a letter as long as there is proof that you send something then there is a a contract In order to have a contract the mutual assent must be Voluntary and knowing 4 situations fail the test 0 1 Duress 0 When a person performs an act under Physical threats physically forcing someone to perform an act threat pressure etc Improper threats socia coercion or economical duress n Economic Duress idea that one party is forcing another party though economic threats to negotiate with them Sophisticated Disfavored to nd economic duress by the US court Reasonable alternative 0 2 Undue in uence o Unfair persuasion by a dominant party where there is a con dential or duciary relationship 3 main points italicized 0 Can also occur between Guardianminor Agentexpertlawyerclient Trustee trusterbeneficiary creditors 3 Fraud 0 5 Elements of fraud in the inducement are A false representation Of a fact That is material That is made with the knowledge of its falsity and the intention to deceive Which representation is justi ably relied on Duty to disclose reed v king Fact is material Affects value of property Known or accessible to seller Buyer did not know Materiality gravity of the harm af icted by nondisclosure the fairness of imposing a duty of discovery on the buyer as an alternative the impact on the stability of contract if rescinded o 4 Mistake 0 mutual affected party can claim mistake and get money or damages 0 unilateral only one party is mistaken if the nonmistaken party should have known or knew of the mistake than the case can be taken to court Perfect Contract 0 Mutual assent Consideration Legal objet Capacity 0 Writing 0 Absence of invalid conduct Contract 0 Parties capacity 0 Object 0 Cause subjective objective Consideration Exchange of products promises are enforceable when both parties have exchanged something of value in the eye of the law A Court Will Find Consideration When Both are Met Legal suf ciency either legal detriment obtaining something to which one had no prior right to the promisee or the legal benefit doing and act one is not legally obligated to do or not doing an act that one has a legal right to do to the promisor Illusory promises promise that doesn t oblige the promisor to keep it shall wish may want desire NO CONSIDERATION Promises not illusory have consideration 0 Output K agree to sell all products to one buyer Requirements K agree to buy all needs from single producer 0 Exclusive Dealing K grant to a franchisee or licensee by a manufacturer or the sole right to sell goods in a de ned market 0 Conditional K obligations are contingent upon occurrence of a stated event may or may not have happened Example if a person promises to buy a man s car for 8000 provided they get money from their dead aunt if the aunt does not die they don t have to pay since they were conditioned on the expectation of that money Preexisting Public obligations duties imposed by tortcourt law that deal with neither a legal bene t or a legal detriment o Duties are already deemed preexisting by criminaltort law so there is no consideration 0 No contract because it is imposed by members of society or a previous lawcontractcriminal law 0 Example if someone pays someone else 10 not to harm them that is not supported by consideration since because it is already a duty that people should not be doing tort law 0 Deals with false imprisonment negligence battery PreExisting contractual obligation both parties mutually agree to change one or more of their contract s terms 0 Modification of prior K s Under Common Law service employment land real estate we need mutual consideration inducement to enter into a contract and there must be a separate and distinct modi cation contract Under UCC Rule sale of goods we need good faith no separate contract Under ClSGinternational element in transaction we need mere agreement of the parties 0 Settlement of Debts Undisputed debt a Payment of a lesser sum of money to discharge an undisputed debt one whose amount is stated is legally insuf cient consideration Disputed debt UPayment of a lesser sum of money to discharge a disputed debt one whose amount is not stated is legally suf cient consideration 0 El If a lawyer performs services for a client and does not state how much his services are worth then bills his client for 600 but his client only sends him 250 because he thinks that s sufficient and the lawyer cashes that check then the client has no further liability to the lawyer to pay anymore since the cashing of the check substantiates for the services Bargained for exchange Mutually agreed upon exchange 0 Each party gives something to the other in exchange for hisher promise Past Consideration 0 An act completed before the contract is made is not consideration 0 Promise is based on something that happened in the past so it is not good enough Contracts Which are Enforceable that do not have Consideration Promissory Estoppel when a person depends on another person s promise and goes and performs a task based on the dependence of the promise oTypicaly a situation in which there is no consideration Contracts under Seal o When a person binds himself with a seal bond deed or solemn promise the seal acts as a substitute for consideration Promises Made Enforceable by Statue o Some gratuitous promises are made enforceable by a Code Contract modi cations Renunciations Firm offers Promises to Perform Prior Unenforceable Obligations o Promise to pay debt barred by the statue of limitations a new promise by the debtor to pay the debt renews the running of the statue of limitations for a second statutory period Promise to pay debt discharged in bankruptcy may be enforceable without considerations Voidable promises new promise to perform a voidable obligation that has not been previously avoided is enforceable Moral obligation a promise made to satisfy a preexisting moral obligation is generally unenforceable for lack of consideration Unenforceable contracts Can be validly formed but can still be unenforceable Contracts that violate regulatory licensing laws Generally Unenforceable doctors lawyers plumbers etc need licenses to perform duties 1 Regulatory license v revenue license Regulatory person cannot recover for services rendered if they are unlicensed 0 Designed to protect the public from unquali ed practitioners Revenue an unlicensed person may recover for services he has performed if the licensing statue seeks to raise money 0 Looking out for greater good raising money Gambling Statues Contracts Two or more people enter into a contract on which they bet on the outcome of an event winner and loser They are only concerned with the possibility of a gain or a loss Generally unenforceable unless permitted by a statue Usurious Statues Contracts Usury statues law that establishes a maximum rate of interest for which a lender and borrower of money may contract When a company is charging above the legal interest courts will need evidence to prove a transaction usurious o 1 A loan 0 2 Of money 0 3 That is repayable absolutely in all events 0 4 For which an interest charge is exacted in excess of the interest rate allowed by the law 1 2 amp 3 are all violations of STATUES 49 are all violations of PUBLIC POLICIES 4 Common Law Restraint of Trade 0 Sale of business amp employment contracts 0 Contracts that try to eliminate competition or obstruct tradecommerce Also contracts that prevent employees to compete against competition 0 Example covenant not to trade agreement to refrain from entering into a competing trade profession or business 0 Can be enforceable IF 0 Purpose of restraint is to protect a property interest or legitimate interest of the employer 0 The contract is reasonable Depends on geography period for which it is effective and the hardship it imposes on the promisor public Contracts with OverReaching Excupatory Clauses Courts generally disapprove of contractual provisions excusing a party from liability for his own tortious conduct One case it is enforceable negligence o Duty Breach of duty Cause in fact ega proximate Damage Intention is absent it is not on purpose different from intentional conduct U39l OOO 01 Unconscionable Contract Court will go against contracts that are unfair and offend public policies Procedural unconscionability o The way the business is introduced to your client was it fair 0 How the contract handled with a client did the seller act reasonably Did he explain all of the terms and information Did he explain the interest rate If he didn t then the court will rule against the contract Substantive unconscionability 0 When courts look at the actual terms of a contract and deem them fair or unfair exorbitant prices unfair exclusionlimitations etc Looking at the contract terms themselves 0 Example ltalian man comes to NYC from Italy moves into an apartment but has no appliances Homeseller approaches him and offers him Italian immigrant a fridge for 1000 ltalian guy thinks it is great because he gets it at home doesn t even have to go out and buy it BUT after two months the Italian man nds out that the fridge is actually 15000 in the real market Sues and wins WHY Nobody normal would have entered into this contract but because he was an immigrant he was ignorant to the market and the businesscontract O Adhesion Contract Standardform contract made by one party offering a quottakeitor leaveitquot offer to another party Generally these are not automatically found unenforceable they instead are under scrutiny for substantive or procedural unconscionability You don t have bargaining or negotiating Tortious Contracts Any contract that requires a person to commit a tort is illegal and unenforceable example paying someone to kill someone or paying someone to run someone else s company out of business Corruption of Public Officials Agreements that may negatively affect the public interest Corrupt public officials lmpair legislative processes o Unenforceable Every person who enters into a contract MUST have contractual capacity Minor 0 Contracts entered in by minors are enforceable but can almost always be voided by their guardian 1 Power of disaf rm o A minor can disaf rmdo away with release from liability a contract at any time before reaching the age of majority generally this age is 18 0 Can be either expresssaid or implied through conduct 0 They can also disaf rm to contract within a reasonable time after the age of majority 0 As long as they have not rati ed the contract 2 Rati cation words or conduct that shows a minor wants to be bound by a contract Minor cannot ratify a contract when they are a minor Minor can ratify a contract after they reach age of majority Rati cation makes a contract binding from the beginning Rati cation is nal and cannot be withdrawn and is done through 0 Express language 0 Conduct 0 Failure to make a timely disaf rmance Necessaries Minor is responsible for reasonable value for necessaries Necessaries UL 0 Food lodging clothing medicine medical services textbooks school instruction student loans legal advice articles of property If merchants are providing necessaries they win 0 Merchants don t have to reimburse them If merchants are providing unnecessary items they lose 0 Merchants have to reimburse them Liability for Misrepresentation of Age If a minor misrepresents his age he can still disaf rm the contract Widely debated on throughout the country but the prevailing view is that minors may still disaf rm contracts even though they misrepresent their age Liability for Tort Connected with Contracts Minors are generally liable for their torts o Tort when a persons behavior causes someone else harm 0 When a tort and a legal contract are so interwoven then minors are not held responsible and not liable in tort Incompetent Individuals 0 Person under guardianship 0 Contracts made by a person placed under guardianship by court order are void 0 Court declares person insane for a period of time because a court said so in a judgment 0 Guardians are given to people because they are impaired in someway to control and manage themselves 0 A quotwardsquot person under guardianship s contract may be rati ed by his guardian or by himself once his placement under guardianship is terminated 0 Person with a mental illness or mental defect 0 When a person is mentally incompetent has a mental illness or does not have an appropriate level of mental capacity and enters into a contract the contract is voidabe 0 Not declared quotmentally illquot by a court more concerned with metal defects gt U39l One who is unable to understand the nature and consequences of his acts Intoxicated Individuals 0 A contract entered into by an intoxicated person is voidable 0 One who cannot understand the legal consequences of his ac ons o Slight intoxication 0 Contracts are perfectly ne and enforceable if the person signing it only had a minimal amount of alcohol glass of wine one shot one beer etc 0 Look and act ne 0 Major intoxication 0 Contracts are unenforceable if a person who has consumed a substantial amount of alcohol bottle of vodka multiple shots multiple beers etc prior to signing a contracts 0 Even though they look and act ne the contract is still Voidable o If there is a lab test proving that the person is over the legal drinking level then the contract is most likely voidable contracts are typically enforceable when they are said orally but it is highly desirable that signi cant contracts be written Statue of Fraud States that certain designated types of contracts must be in writing in order to be enforceable No relation to any kind of fraud practiced in contracts Relates only to the proof or evidence ofa contract Contracts Within the Statue of Fraud Must be in Writing 1 Suretyship Provision Applies to a contractual promise by a surety promisor to a creditorpromisee to perform the duties or obligations of a third party if the principal debtorthird party does not perform carry out his debt or duties owner Promisor is not primary liable only agree to cover the debt if the principal debtor cannot pay 2 contracts 0 lst between initial creditor and debtor that creates the indebtness o 2 d between initial creditor person covering principal debtors debt aka promisor and suretypromisor which has the surety promising to cover the debt if the principal debtor cannot cover it Both contracts must be in writing and signed Exceptions don t have to be in writing can be oral 0 Main purpose doctrine If the promisor s main purpose of his promise is to obtain an economic bene t that he did not previously have 0 Original promise Statue of frauds does not apply when the promisor originaly promises to become primary liable for the entire debt cover entire debt regardless if the principal debtor can pay it or not 0 Promise made to the debtor Promisor cannot promise the debtor anything needs to go straight to the creditor Example D owed debt to C S promises D to pay D s debt not a Suretyship contract Executive or Administrative If a person who dies appoints a speci c person to answer personally for them in regards to duties the contract must be in writing in order for the executoradministrator person appointed by dead person to answer for personal duties to be enforceable Land Contract Provision Any contract that deals with the rights privileges powers or immunity in real landproperty must be in writingZ All promises to transfer buy or pay interest in a land including ownership interests leases mortgages options are included in this provision and also need to be in writing Exception do not need to be in writing 0 Partperformance plus detrimental reliance Buyer makes improvements on land and detrimentally relies on sellers promise to sell 0 Seller conveys property One Year Provision Contracts that cannot be fully performed within one year of the making of the contract must be in writing Year runs from the date the contract is made to one year from that day not from the day performance is to begin Exceonns o Possibility test Courts ask whether it is possible that a contract be performed within a year All we pay attention to is quotis it possiblequot don t take into account probabilities or subsequent events not quotI thinkquot or quotwe cantquot Court will ask themselves whether it iswas possible for a contract to be carried out within one year or not Marriage If there is an agreement made upon consideration of marriage the contract must be in writing Example quotI will sell you my house if we get marriedquot must be in writing Exceonn o If two people mutually decide to get married no promises 0 Proposal I love you lets get married nothing to be promised or contracted therefore it does not need to be in writing 6 Sale of Goods over 500 Must be in writing Goods movable personal property Exceptions don t need written contracts 0 Oral contract is acceptable when a defendant in court admits admission that a contract was made 0 When goods are speci cally designed for a buyer that the buyer cannot just go sell in his business special order 0 When part of the goodsprice are deliveredpaid validates the contract but only for the goods that have been accepted Modi cation or Rescission of Contracts Within the Statue of Frauds 0 Oral contracts modifying previously existing contracts are unenforceable if the resulting contract is within the statue of frauds 0 Common sense Compliance Within the Statue of Frauds General contract provisions the writings or record must 0 Specify the parties by contract 0 Specify the subject matter and essential terms o Be signed by the party to be charged or by his agent oSale of Goods UCC Merchant Rule 0 Provides a general method of compliance for all parties and an additional one for merchants 0 Writing or record must be sufficient to indicate that a contract has been made between the parties be signed by the party against whom enforcement is sought or by his authorized agent and specify the quantity of goods to be sold Written con rmation between merchants a written con rmation that is suf cient against the sender is also suf cient against the recipient unless the recipient gives written notice of his objection within Third Parties 0 Persons who are not parties to a contact but who have a right to or an obligation for its performance 0 Generally only the parties have rights and duties under a contract Privity of Contract 0 The contract is private to the people involved in them 0 Third parties are not originally part of the contract but if they become assignees delegates or thirdparty bene ciaries then they in turn gain rights and duties Rights and Duties of Third Parties Arise BV 1 Assignment of Rights bene ts you will receive original contract between AampB third party is now introduced into the contract 0 Assignor party making an assignment Assignee party to whom contract rights are assigned by the assignor Obligor person who owes duty to the assignor under the original contract after third party is introduced heshe will only deal with the them aka assignee Obligee person to whom a contractual duty is owed to 0 Assignment of rights is the voluntary transfer to a third partyassignee of the rights arising from the contract 0 Third party is called assignee and the person who deals with the assignee is the assignor o Assignor s right to receive performance is terminated when heshe introduces the third party assignee All rights are assignable BUT o Assignments that materially increase the duty risk or burden upon the obligor When an assignment materially alters the duty between the obligor and the assignee differs from the obligors duty to the assignor 0 Assignment of Personal rights If the assignment deals with rights that are extremely personal to the Obligee Example if two people are getting married one of the parties cannot assign hisher right to marry 0 Express Prohibition Against Assignment If the assignment is against a statuecontract or law it is prohibited Form of assignment 0 Orally is okay 0 Consideration is not required but With consideration assignments become irrevocable Delegation of Duties things that are to be done Delegator person in contract that introduced the third party and gives himher duty initial contract makes the delegator liable to the Obligee to perform some type of duty 0 Still held responsible even though he delegates his duty Obligee person receiving something part of the original contract performance is owed by the delegator and delegatee Delegatee person assuming a duty from the delegator Delegation of duties is a transfer of a contractual obligation to a third party Most contractual dealings are delegable UNLESS 0 Language in contract prohibiting the contract Sublease o Duties are personal 0 Duties whose delegations are prohibited by statue or public policy Duties of the Parties 0 Delegation delegator is still bound to perform original obligation regardless of if their delegatee does so 3 Third Party Bene ciary Contracts 0 Contract itself when it is made between two parties promises that performance will be rendered to a third party bene ciary Intended bene ciary O O 0 Third partyies intended by the two contracting parties to receive a bene t from their contract Donee Bene ciary a third party intended to receive a bene t from the contract as a gift Credit Bene ciary a third person intended to receive a bene t from the contract to satisfy a legal duty owed to him Incidental bene ciary 0 Conditions Third party whom the two parties to the contract have no intention of bene ting by their contract and who acquires no rights under the contract many contractual promises are not absolute promises to perform but are conditional they depend on the happening or nonhappening of a speci c event 0 Condition event whose happenings or nonhappenings affect a duty of performance under a contract 0 Noliability carried with conditions for the promisor or promisee How do you classify conditions Express Conditions Explicitly set forth in language 0 Must be fully and literally performed before the conditional duty to perform arises Satisfaction of a Contracting Party 0 O 0 Parties in a contract agree that performance by one of them shall be to the satisfaction of the other who will not be obligated to perform unless he is satis ed Example You make me a suit and I agree to pay you 300 if it satis es me As long as the dissatisfaction is honest and in good faith then the party does not have to pay or perform o Subjective satisfaction Conditions of the contract are based on taste opinion orjudgment and the promisor does not have to perform if he is in good faith dissatis ed 0 Objective satisfaction Not whether the promisor was actually satis ed personally but if the reasonable person would be satis ed Satisfaction of a Third Party 0 Contract may condition the performance of a party on the approval of a third party lmpliedlnFact Conditions 0 Must fully and literally occur and are understood by both parties as part of their agreement but they are NOT stated in expressed language ImpliedlnLawConditions Imposed by law to accomplish a just and fair result 0 Not contained doesn t have to be implied from the contract and it needs to only be substantially performed When do you classify conditions Concurrent Conditions 0 When the mutual agreements of a contract are to take place at the same time Condition Precedent 0 An event that must occur before performance is due under a contract 0 Immediate duty of one party to perform depends on the condition that some other event must rst occur Condition Subsequent 0 An event that terminates an existing duty Discharge Discharge is the termination of a contractual duty Not liable to pay the contract Discharge by Performance Complete performance by one party of the required duty no longer hold that party responsible for the duty Discharge by Breach Breach of a contract is a wrongful failure to perform its terms Material Breach O O O 0 More serious failure to perform a substantial obligation Aggrieved party party that expected some substantial duty to be performed is discharged from a contract Example if a limo driver is paid to pick up the groom at 5 for a 6 o clock wedding and he shows up at 550 the groom is discharged from the contract and does not have to pay the limo drive Considered a material breach if Partial performance omits some essential part of a k Intentional breach of a contract I Failure to perform a promise promptly lF TIME IS OF THE ESSENCE If parties specify what breaches are material Perfect tender under UCC any deviation from the original contract is considered a material breach Substantial Performance 0 0 An incomplete performance of a contract that does not defeat the overall purpose of a contract If a party substantially but not completely performs her obligations under a contract that party can generally be able to obtain the other parties performance less any damages the partial performance caused Example Adam builds a 200000 house for Betty but deviates from the speci cations causing Betty 10000 in damages So Adam will still be paid but will only be paid 190000 instead of the 200000 Anticipatory Repudiation 0 When a party announces that he will not perform or that he may commit an act that makes him unable to perform before the due date of which the party is to be performed Discharge by Agreement of the Parties Parties can agree amongst one another to be discharged for the obligations of a contract Mutual Rescission o A contract between two parties that terminates both of their duties both give up their rights in exchange for the other to do the same Accord and Satisfaction 0 Contract when an Obligee promises to accept a stated performance in satisfaction of the obligor s existing contractual duty the performance is called a satisfaction 0 Example Dan owes Sara 500 and the parties agree that Dan will paint Sara s house in satisfaction of the debt the agreement is an executor accord When he paints the house he will by satisfaction discharge the 500 debt Substituted Contracts 0 New contract between parties that immediately discharges the old contract and imposes new obligations under its terms 0 Agree to substitute old contract for a new one Novation o A substituted contract involving a new third party promisor or promisee 0 Example 1 A owes B 500 but C agrees to pay B the 500 or 2 A owes B 500 but parties agree that A will pay C the 500 Discharge by Operation of Law Discharge brought on by the operation of law Impossibility performance of the contract cannot be done 0 Frustration of purpose principal purpose of a contract cannot be ful lled because of a subsequent event 0 Subsequent illegality if performance become illegal or impractical as a result of a change in the law the duty of performance is discharged Commercial lmpracticability if a duty becomes too expensive to perform 0 As a result a person is discharged Contract Remedies When one party to a contract breaches the contract by failing to perform his contractual duties the law provides a remedy for the injured party Impossible for any remedy to equal the promised performance Goal is to put the nonbreaching party in the position they would have been in had the contract been carried out Do not want to punish the breaching party Relief a court gives the equivalent of the promised performance 3 kinds of remedies Monetary Damages Most frequently granted judicial remedies for breach of contracts Awarded only for losses that are foreseeable Compensatory Remedies Always available to the injured party Purpose is to place the injured party in a position as good as the one he would have been in had the other part performed under the contract Damages losses costs avoided incidentals consequential damages 0 Losses promised performance actual performance 0 Costs avoided saved expenses or mitigations o lncidentals expenses transportation etc o Consequential damages lost pro ts and injuries ONLY IF FORSEEABLE Reliance Remedies Contract damages placing the injured party in as good a position as she would have been in had the contract not been made Liquidated Remedies Reasonable damages agreed to in advance by the parties to a contract Limits on Monetary Damages Foreseeability of Damages o The losses have to be foreseeability in order for the injured party to be remedied Certainty of Damages Reasonable Certainty 0 Cannot be speculative damages Mitigation of Damages o Breaching party has the duty to mitigate damages 0 He cannot sit at home waiting for the damages to be mitigated Equitable Damages Speci c Performance Injunctions 0 Court order prohibiting a party from doing a speci c act Restitution Party injured by Breach Party in Default Statue of Frauds Voidable Contracts Limitations on Remedies Transfer of Title Ownership when you have title and rights to something 0 Title of Ownership 0 Fundamental right 0 Owner is able to selldestroytradeetc goods as long as heshe is the rightful owner of the goods or is authorized to sell goods for the rightful owner Transfer or Rights 0 Owner transfers ownership and risk to buyer Lease Transferring the right to possess lssue here is possession o Ownerleaser keeps the title but is transferring the right to possess and use the goods for a certain period of time to the leasee in return for consideration generally Shipment v Destination Contracts Seller gtgtgt Carrier gtgtgt Buyer o Shipment contract 0 As long as the seller delivers the good to the carrier person who is going to ship the goods to the buyer then the title of ownership is transferred to the buyer 0 Destination contract 0 The title of ownership is not transferred to the buyer until the buyer receives the goods o Requires the seller to deliver the goods to a particular destination Warranties 0 An obligation of the seller to the buyer or lessor or lessee concerning title quality characteristics or conditions of goods Warranty of Title 0 Seller has title of the product he made it he owns it etc 0 Basically he did not steal it Express Warranty Writtenoral representations of facts about a product or service that a seller makes 0 Seller is bound by these facts that they claim are true about their product or services 0 Can sue anyone Implied Warranty 0 Warranties that are not written in the contract but implied by operation of law 0 Merchantability Warranty that a product is reasonably t for the ordinary purpose for which they are manufactured or sold Performs fair and average quality Basically that a product works for its intended purpose Example an air conditioner will provide cool air 0 Fitness for Particular Purpose Warranty by any seller that their goods are reasonably t for a particular purpose Seller has to know that their buyer is relying on their skill and judgment to furnish suitable goods o Disclaimers of Implied Warranties 0 1 if a seller says they are selling their goodsproduct quotas isquot quotwith all faultsquot or other similar language 0 2 by course of dealing course of performance or usage of trade 0 3 as to defects an examination ought to have revealed where the buyer has examined the goods or where the buyer has refused to examine the goods buyer have the right to inspect the goods before purchasing Strict Product Liability Any participant in the chain of distribution can sue the seller 0 We don t care how careful the seller was when the seller was manufacturing the good the seller is liable REGARDLESS o If the good 0 1 Design The product though made as designed is dangerous because the design is inadequate o 2 Manufacturer defect Defect in the product itself Failure to meet manufacturing speci cations so the product is not properly made 0 3 Failure to warn Failure to warn anyone of the dangers of the product Failure to provide appropriate directions for use of product 0 Then the participant can sue the seller 6 Elements to Prove a Case 1 Merchant 2 Defective 3 Unreasonany dangerous to an ordinary average consumer 4When it left the manufacturers hand it was defective 5 Harm is caused Causann 01 Chapter 3 Civil Dispute Resolution 1 Substantive law sets for rights amp duties of individuals amp other legal entities 2 Procedural law determines how these rights are asserted Fair amp impartial operate efficiently 3 Judicial process balance bw 2 objectives 4 The Court System III III Courts established by gov t to settle disputes Dual court system federal amp states DC b Federal Courts US Constitution 1 Supreme Court amp lower Congress courts district special appeals III III District Courts general trial courts Issues of fact decided I judge sometimes 3 Appeals to Circuit Court of Appeals of appropriate circuit sometimes Supreme Court 100 judicial courts Court of Appeals 12 judicial circuits Hear appeals from district courts in their circuit amp review decisions 3 judges sometimes all Examine record amp determine prejudicial error Reverse modify remand or affirm judgment Supreme Court 9 justices Chief Justice 8 Associate Justices Quorum of 6 Review decisions of Federal Court of Appeals amp decisions involving federal law 0 Appeal by right few 0 Writ of certiorari requires lower court to produce records 4 justices vote to hear the case when federal or con ict in Circuit Court of Appeals Special Courts Jurisdiction over particular subject matter c State Courts voters elect judges for stated term III Inferior Trial Courts Least serious criminal amp civil matters No written record Preliminary hearings for more serious criminal cases 0 Small claims courts inferior trial courts that hear civil cases w limited amount of money No jury Informal No attorney Trial courts each state has of general jurisdiction 0 County district superior circuit common pleas court No dollar limitation Hear all criminal cases other than minor offenses Formal records Special trial courts jurisdiction over particular areas Appellate courts states court of last resort Reviewing court Supreme Court of the state Decision is final except for US Supreme Court Some have intermediate appellate courts 5 Jurisdiction power or authority of a court to hear amp decide a given case a Subject Matter Jurisdiction the authority of a particular court to judge a particular controversy federal courts limited state courts all matter the ConstitutionCongress neither denies nor gives exclusively to federal courts III Exclusive federal jurisdiction only if Congress so provides bankruptcy antitrust patent trademark copyright suits against US Concurrent federal jurisdiction shared w state courts Plaintiff can choose federal or state 0 Federal question jurisdiction any case arising under the Constitution statutes or treaties of the US that the federal courts don t have exclusive jurisdiction b over No minimum dollar requirement Federal substantive law but state procedural rules 0 Diversity jurisdiction civil suit w diversity of citizenship amp amount gt 75000 Federal courts use state substantive law amp federal procedural rules El Exclusive State Jurisdiction all matters not granted to federal courts in the ConstitutionCongress Diversity of citizenship where amount lt 75000 All cases federal judicial power doesn t reach 539 Choice of law provision states may choose to apply diff substantive laws depending on location amp participants Jurisdiction over the parties the power to bind the parties involved in the dispute 393 Over plaintiff when they file a complaint El Defendant 0 In personam jurisdiction personal the resident s location or activities of the defendant By serving process in the state the court is located a Longarm statutes give their courts in personam jurisdiction over certain out of state defendants 0 In rem jurisdiction presence of property win a state even if person is outside of the state Property must be the subject of the lawsuit Give reasonable notice amp opportunity to be heard 0 Attachment jurisdiction quasi in rem jurisdiction over property rather than person Owns property in the state but that property is not related to the suit State can seize the property to satisfy claim over defendant 6 Civil Procedure a Pleadings written statements where each side states claims amp defenses Gives notice amp establishes issues of fact amp law 539 Issues of fact events that gave rise to the lawsuit Decided by jury 539 Issues of law legal rules that apply Decided by judge Complaint amp summons plaintiff files complaint that contains 1 statement of the claim amp supporting facts amp 2 demand for relief 539 Summons served on defendant Needs to answer win amount of time usually 30 days Answer default judgment if no response denial affirmative defense admit breach but there s something else that means you could win counterclaims new claim from defendant D Reply plaintiff s pleading in response to defendant Pretrial motions contest courts jurisdiction or statute of limitations El Demurrer move that complaint be made more certain or dismissed Pretrial procedure 539 Judgment on pleadings request judge to rule as matter of law whether facts are sufficient to warrant granting the requested relief El Discovery obtain evidence El Pretrial conference bw judge amp attorneys Simplify issues amp identify everything before trial Encourage settlement gt 90 g h E39 Summary judgment judge rule that bc no issues of fact to be determined by trial the side should prevail by law Trial 539 Jury trial all federal cases involving gt 20 539 Jury selection unlimited challenges Limit of peremptory challenges no cause 539 Conduct of trial opening statement Plaintiff amp plaintiff s witnesses on direct examination crossexamination redirect examination Defendant s evidence Rebuttal evidence Rest conclusion Either party directed verdict Closing arguments rebuttal argument by plaintiff El Directed verdict final binding determination by judge for defendant bc plaintiff s evidence not sufficient before jury reaches verdict 539 Jury instructions 539 Verdict El Motions challenging verdict motion for new trial motion for judgment notwithstanding the verdict Appeal determine whether the trial court committed prejudicial error Appellate court only reviews errors of law Enforcement demand payment 7 Alternative Dispute Resolution a quothC39DQ OO Arbitration neutral 3rd person render binding decision after hearing arguments amp evidence Conciliation nonbinding informal 3rd party selected to attempt to help Mediation 3rd party helps resolve Minitrial structured settlement process When both disputants are corporations Summary jury trial mock trial Not binding Negotiation consensual bargaining process Chapter 9 Introduction to Contracts All contracts are promises not all promises are contracts 1 Common Law primarily governed by state common law a Restatements of the Law of Contracts authoritative reference work composed by scholars 2 Uniform Commercial Code UCC sale of personal property a b Sale passing of title to good from seller to buyer for a price Personal property any property other than an interest in real property land 3 Contract binding agreement that the courts will enforce lhC39DQdOO SD Mutual assent offer amp acceptance Consideration intentional exchange Legality of object must not be criminal Capacity Absence of invalidating conduct Does not have to be in writing 4 Classification of Contracts a Express amp Implied may indicate assent in words express or conduct implied b BilateralUnilateral El Bilateral each party is a promisor amp promisee 539 Unilateral 1 party makes promise to perform an actrefrain from performing an act 5 Valid meets all requirements of a binding contract a Void doesn t meet requirements Not a contract b Voidable Defective bc of the manner the contract was formed or lack of capacity Injured party has right to cancel obligations c Unenforceable meets requirements but not enforceable for some other legal rule Law no remedy for breach 6 Executed amp Executory Contracts a Executed contract fully carried out by all parties to it b Executory contracts that have yet to be fully performed 7 Exceptions to noncontractual promises a Promissory Estoppel a doctrine enforcing some noncontractual promise b Quasi contracts implied in law contract an obligation not based upon contract that is imposed by law to avoid injustice El When the plaintiff confers a benefit on the defendant D The defendant knowsappreciates the benefit El Defendant s retention of the benefit is inequitable Chapter 10 Mutual Assent 1 Offer indication of willingness to enter into a contract Must be communicated to offeree manifest an intent to enter into a contract amp be sufficiently definite amp certain a Communication offeree must have knowledge of offer authorized by offeror b Intent determined by words or conduct meaning based off of what a reasonable person would believe 539 Jokes emotional strain don t count El Preliminary negotiations advertisements auction sales invite offers c Definiteness terms must be clear enough to give a court reasonable bias for the existence of a breach amp an appropriate remedy 539 Parties subject matter price quantity quality time of performance 2 Duration of Offers a Lapse of time offeror specifies time offer is open If not stated reasonable amount b Revocation offeror can cancel offer any time before acceptance Must give notice Terminates when offeree receives notice 539 Exception option contract offeror agrees to hold open for amount of time in exchange for consideration 539 Exception Firm offers UCC a merchant s irrevocable offer to sell goods in a signed writing that ensures the offer won t be terminated for up to 3 months El Exception statutory irrevocability if there s a specific statute that says it can t be revoked El Exception irrevocable offers of unilateral contracts after offeree has started to perform the act amp has substantially accomplished it Offeree must notify offeror of performance e f g 539 Exception promissory estoppel noncontractual promise Enforced when promisee expected to take action in reliance on it Rejection offeree can reject if they see fit Can wait for offer to terminate by time Counteroffer counterproposal willing to contract on different terms Rejection amp new offer Death or incompetency of the offeror or offeree Destruction of the subject matter Subsequent illegality if the performance of the contracts becomes illegal 3 Acceptance a b d Bilateral some overt act by the offeree that manifests his assent to the terms Notice required Unilateral performance of the requested act w intention of accepting Notice not required Communication of acceptance 539 Silenceinaction does not indicate acceptance El Effective upon dispatch Unless specifically states otherwise is unauthorized means of communication or follows prior rejection mailbox rule El Defective acceptances latedefective Can t be accepted Does manifest willingness to enter into a contract amp makes new offer 539 Variant acceptance one that contains different terms from or in addition to those in the offer Mirror Image Rule acceptance can t deviate from the terms of the offer Common Law Chapter 11 Conduct Invalidating Assent 1 Duress any wrongfulunlawful actthreat that overcomes the free will of a party a b Physical compulsion void Improper threats No reasonable alternative Voidable Subjective 2 Undue In uence unfair persuasion of a person by a party in a dominant position in a confidential relationship w trust amp confidence Voidable 3 Fraud prevents assent from being knowingly given a b Fraud in the execution misrepresentation that deceives the other party as to the nature of a document Void Fraud in the inducement intentional misrepresentation of material facts Voidable El False representation silence is not fraud alone 539 Of a fact D That is material of substantial importance El Made w knowledge of its falsity amp intent to deceive El Which representation is justifiably relied upon El Armslength transaction owe each other nothing amp no obligation to tell what they know don t need to disclose 539 Fiduciary relationship person in a confidential relationship that owes trust loyalty amp confidence to another 4 Nonfraudulent misrepresentation must contain all elements of fraud except the knowledge of falsity amp intent to deceive a b Negligent misrepresentation false representation made wo care to truthfulness Voidable Innocent misrepresentation false representation made wo knowledge of falsity w due care Voidable 5 Mistake a belief not in accord w the facts a b Mutual mistake both parties mistaken about the same facts Voidable by either party Unilateral mistake only 1 of the parties are mistaken Unlikely for courts to grant relief unless error should be known by other party Assumption of risk mistake 1 party assumes risk By agreement of the parties conscious or by conscious ignorance Chapter 12 Consideration Inducement to make a promise enforceable 1 Legal Sufficiency legal detriment to the promise or a legal benefit to the promisor a b c Legal detriment the doing of that which the promise was under no prior legal obligation to do or refrain from doing Legal benefit the obtaining by the promisor of what he had no prior legal right to obtain Adequacy of consideration doesn t matter whether it was a good deal or not as long as parties agreed to it Unilateral consideration is promise amp performance Bilateral promise amp return promise Illusory promises statement in promise form but imposes no obligation performance is optional Not consideration 539 Outputrequirements contracts agreement for a seller to sell all their productions purchaser to purchase all Good faith limitation El Exclusive dealing contract manufacturer grants distributors exclusive rights to sell w best efforts 539 Conditional promise obligation to perform depends on the happeningnonhappening of an event Preexisting obligations not legal detrimentbenefit ex contractual duties public duties El Preexisting contractual duty doesn t count El Modification of preexisting contract need new consideration under common law Settlement of debt 539 Undisputed debt acceptance of lesser amount not sufficient but can give additional consideration 539 Disputed debt accepting lesser amount is legally sufficient Giving up right to dispute further 2 Bargainedfor Exchange mutually agreed exchange of consideration a Past consideration not enforceable Chapter 13 Illegal BargainsAgreements 1 Unenforceable when the formationperformance of an agreement is criminal tortious contrary to public policy illegal 2 Agreements in violation of a statute a Licensing statutes laws require licenses for those who engage in certain trades professions businesses 539 Regulatory license to protect public from unqualified practitioners El Revenue license to raise money Courts see as taxing measure lacking legislative intent b Gambling statutes prohibit wagers parties stipulate 1 shall win and other lose depending on the outcome of an event in which their only interest is the possibility of a gainloss c Usury statutes establish a maximum rate of interest Max generally is 18 if they agree on interest rate 6 if they don t 3 Violations of Public Policy a Common Law Restraint of Trade any contractagreement that eliminatestends to eliminate competition or obstructs trade commerce 539 Covenant not to compete agreement to refrain from entering into a competing trade profession or business Enforceable if 1 the purpose is to protect a property interest of the promise 2 it s no more extensive than is reasonably necessary 0 Sale of business seller promises not to compete in that type of business in a defined area for a stated period of time To protect business goodwill asset 0 Employment contracts prohibiting them from competing w their employers during their employment amp after termination Restriction must be necessary to protect employer s legitimate interests trade secrets etc must be reasonably time amp space b Exculpatory clauses excuses 1 party from liability for their own tortious conduct Courts generally disapprove D For harm caused intentionallyrecklessly unenforceable 539 For harm caused by negligent conduct carefully scrutinized Nullify if 1 party s superior bargaining power enabled him to impose it on the other party El Adhesion contract forced upon unknowingunwilling public for services that can t be readily obtained elsewhere Necessary service on a take it or leave it basis Subject to scrutiny 4 Unconscionable Contracts unfair or unduly harsh agreements are not enforceable a Procedural Unconscionability scrutiny for the presence of bargaining naughtiness b Substantive unconscionability examine the actual terms of a contract for oppressive grossly unfair provisions c Both must be present d Permits court to resolve issues of unfairness wo recourse of formalistic rules amp regulations 5 Tortious conduct an agreement that requires someone to commit a tort illegal agreement a Unenforceable 6 Corrupting public officialsimpairment of legislative process unenforceable 7 Effect of Illegality a Unenforceable neither party can sue Parties are in pari delicto in equal fault b Exceptions El Party withdrawing before performance recover what they contributed 539 Party protected by statute El Party not equally at fault El Excusable ignorance 539 Partial illegality 1 may taint whole contract 2 court may separate illegal part from legal part Chapter 14 Contractual Capacity 0 Capacity whether you have the ability to incur legal obligation 1 Minors hasn t attained the age of legal majority usually 18 a Disaffirmance exercise of the power of the minor to avoid at their option At any time before the age of majority or win reasonable time after coming of age as long as not ratified b Ratification after the minor comes of age can surrender his power of avoidance by adopting or ratifying the contract Makes contract binding from the beginning El Through express language implied conduct or failure to make timely disaffirmance c Always liable for necessaries those things that reasonably supply personal needs food shelter clothing medicine Not liable for value only reasonably price d Misrepresentation of age minor may disaffirm 2 Incompetent Persons person under guardianship by court order a Void b Still liable for necessaries c Mentally impairedvoidable d May be ratified by guardian or on termination of guardianship 3 Intoxicated Persons a Voidable b May be ratified when capacity is regained c Must act promptly upon regaining capacity to disaffirm amp offer to restore consideration he received Chapter 15 Contracts in Writing 0 Oral contracts are good too unless it s specifically said it needs to be in writing 1 Statute of frauds determines what contracts need to be in writing to be enforced a Suretyship provision Promise to answer for the duty of another if principal debtor doesn t perform Collateral promise promisor not primarily liable 2 contracts primary contract amp collateral contract El Original promise promisor makes original promise to become primarily liable Statute of frauds doesn t apply 539 Main purpose doctrine Exception to suretyship leading object rule main purpose of promisor is to obtain an economic benefit that they didn t previously have Outside the statute 539 Promise made to debtor not suretyship enforceable by oral b ExecutorAdministrator Provision Promise of an executoradministrator to answer for a duty of the decedent whose funds he s administering 539 Same suretyship exceptions apply c Marriage provision if promise to marry is made in consideration for some other promise d Land contract provision promises to transfer any interest in land 2 3 4 5 6 g 539 Not personal property Not short term leases lt 1 year Not contracts to build a building do work on that land or to insure a building 539 Part performance exception paid portionall amp taken possession of or started to make valuable improvements 539 Oral accepted if seller fully performs by conveying property to purchaser OneYear provision if can t be fully performed win 1 year of making the contract El Possibility test whether it s possible not likely to be performed in 1 year D For life indefinite not win statute D Full performance by 1 party other party s promise is enforceable NOT IN STATUTE OF FRAUDS Sale of goods UCC El Price of 500 El Exception admission Limited to quantity they admit 539 Exception specially manufactured goods if they can t be resold in the ordinary course of the seller s business El Exception delivery or payment amp acceptance Some states require writing for wills to authorize an agent to sell real estate or to pay commission to real estate broker Electronic records that have signatures are accepted as writings w signature of paper Modificationrescission of contracts win the statute Oral modifications are unenforceable if new contract is win SOF Compliance w the Statute of Frauds a General Contract Provisions 539 Specify the parties to the contract 539 Specify the subject matter amp essential terms of the unperformed promises 539 Be signed by the party to be charged or their agent Sale of goods more liberal Require 1 sufficient to indicate a contract has been made bw parties 2 signed by the party against whom enforcement is sought 3 specify quantity of goodssecurities to be sold El Merchants 1 party sends written confirmation sufficient unless recipient gives notice of objection win 10 days Effect of Noncompliance a b c Full performance statute no longer applies Restitution recover in restitution the benefits conferred upon the other Promissory estoppel where the party seeking enforcement has reasonably amp foreseeably relied upon a promise in such a way that the court can avoid injustice only by enforcing the promise Parol Evidence Rule final signed end product of negotiations is final Excludes prior oralwritten negotiationsagreements that vary an integrated written contract a b c Applies to integrated contract parties have assented as being the complete amp exclusive agreement Will not permit evidence of any prior agreement Situations to which the rule doesn t apply D A contract that is partly written amp partly oral 539 Clericaltypographical error El Lack of contractual capacity 539 Defense of fraud misrepresentation duress undue in uence mistake illegality lack of consideration or other invalidating cause 539 Condition precedent parties agreed orally or entire agreement was made subject 539 Subsequent mutual rescissionmodification El Parol evidence admissible to explain ambiguous terms in the contract 539 A separate contract Chapter 16 Third Parties to Contracts 1 Assignment voluntary transfer to a 3rd party of contractual rights so that the assignor s right to perform is extinguished 3 00 i j 539 Obligor the person who owes a duty to perform 539 Obligee person to whom the obligor owes 539 Obligee assignor I assignee amp obligor No special formwords may be oral Must include intent but not consideration 539 When consideration given assignor may not revoke without assignee s consent 539 Gratuitous assignment no consideration revocable until obligor performs obligation El Also irrevocable if assignee has received payment from obligor obtains a judgment against obligor or obtains new contract w obligor Partial assignment Rights that can t be assigned 539 Contrary to public policy prohibited by law D If it materially increases the duty risk or burden upon the obligor El Expressly forbidden in the contract can be valid but breach of contractdamages 539 Personal rightsskill Rights of assignee they acquire all assignor s rights Notice not required to be given to obligor Recommended Implied warranty when an assignor is paid assignor presumed by law to make 539 Assignor won t do anything to screw up assignment El Assigned right actually exists El Assignor has no knowledge of facts that would affect the value of the assignment El Any writing that evidences the right is genuine amp what it purports to be Express warranties explicitly made contractual promise regarding contract rights Successive assignments of the same right majority rule 1st assignee has priority 2 Delegation of duties an obligor appoints another person to perform his duty to the oblige b 539 Delegatee appointed to perform obligor s duty 539 Obligor I delegator 539 Doesn t extinguish duty owed by delegator remains liable unless oblige agrees to make delegatee liable novation 0 Substitutes a new promisor for an existing promisor who is no longer liable 0 Separate agreement Most duties are delegable except 539 Those that are prohibited public policystatute 539 Nature is personal individual traits skill expertise judgment 539 Duties that are expressly nondelegable 3 Third Party Beneficiaries 539 One party promises to render a performance to a 3rd person the beneficiary b Intended 3rd party beneficiary has rights under contract El Donee beneficiary promisee s purpose is to make a gift to beneficiary Cane sue promisor 539 Creditor beneficiary already have creditordebtor relationship W promisee amp purpose is to satisfy a legal duty owed Can sue either promisor or promise c Incidental beneficiary 3rd party to Whom parties have no intention of benefitting by their contract Acquires no rights Chapter 17 Performance Breach and Discharge 0 Discharge the release of all obligations under a contract 1 Condition an uncertain future event that affects a party s duty to perform 539 Condition precedent a future uncertain event that creates a duty to perform if it occurs 539 Condition subsequent a future uncertain event that discharges an existing duty to perform b Express condition specified in the language of the contract 539 Satisfaction clause makes performance contingent on one party s approval of the other s performance As long as it s honest amp in good faith Can be unreasonable 0 Subjective satisfaction approval based on honestly held opinion Personal tastejudgment typically employment contracts 0 Objective satisfaction approval based on Whether a reasonable person would be satisfied Mechanical fitnessutility test typically buildingsale of goods c ImpliedinFact Conditions Contingency understood by parties to be part of the agreement Not stated in express language Inferred from terms of the contract nature of transaction or conduct of parties Must fully amp literally occur d ImpliedinLaw conditions a constructive condition Imposed by law to accomplish a fair amp just result Need only be substantially performed e Concurrent conditions When the mutual duties of performance are to take place simultaneously 2 Discharge by performance a Duty of good faith amp fair dealing in it s performance amp enforcement b Tender an offer by 1 party Who is ready Willing amp able to perform to the other party to perform his obligation according to the terms of the contract offer of performance 539 May excuse tendering party 3 Discharge by breach a wrongful failure to perform its terms Fives rise to a cause of action for damages a Material breach an unjustified failure to perform substantially the obligations promised in a contract Serious El Discharges aggrieved party b D Includes partial performance if omits essential part If qualitativelyquantitatively serious If intentional If delayed when time is of the essence Parties may specify what they consider material El Prevention of performance discharges other party 539 Perfect tender rule UCC any deviation discharges Substantial performance incomplete performance that doesn t defeat the purpose of the contract Obtain other party s performance minus lossesdamages doesn t discharge Anticipatory repudiation a party may announce before due date she will not perform or commit an act that makes her unable to perform Notifies a breach is imminent Discharges nonrepudiating party Must come before injured party has materially changed their position Nonbreaching party doesn t have to wait until date of performance to sue may wait to see if other party will retract Material alteration of written contract unauthorized change is a discharge of entire contract 539 Material if would vary any party s legal relations w maker of alteration or would adversely affect that party s legal relations w a 3rd person 539 Discharge must be material amp fraudulent amp the act of either party to the contract 4 Discharge by agreement of the parties a b Mutual rescission an agreement to terminate their respective duties under the contract Separate contract Substituted contracts a new contract accepted by both parties in satisfaction of the parties duties under the original contract Discharges original contract immediately Accord and satisfaction 539 Accord a contract by which an obligee promises to accept a stated performance in satisfaction of the obligor s existing contractual duty 539 Performance of accord satisfaction Discharges original duty Novation a substituted contract that involves an agreement among 3 parties to substitute a new promisee for an existing promisee or replace existing promisor w new one D Discharges old obligation by creating new contract 5 Discharge by operation of law a b Impossibility when performance becomes impossible after formation of a contract 539 Subjective impossibility the promisor but not all promisors can t perform Doesn t discharge 539 Objective impossibility no promisor is able to perform Discharges promisor 539 Subsequent illegality change in law makes illegalimpractical after contract formed Performance of duty is discharged El Frustration of purpose wo his fault by occurrence of an event whose nonoccurrence was a basic assumption of which the contract was made Remaining duties discharged Unless 1 party has contractually assumed that risk Commercial impracticability where performance can be accomplished only under unforeseen amp unjust hardship Discharged Code amp Restatement 539 Only bc of supervening event not caused by own fault Nonoccurrence was basic assumption of both parties Neither party assumed the risk 539 Not mere hardship or increase in cost C 539 Lapse of limitation period statute of limitations Bankruptcy for a debtor who by requirements of Bankruptcy Code obtains an order of discharge 539 Statute of limitations of time win which to bring an action Chapter 18 Contract Remedies Purpose compensate injured parties Expectation interests interest in having the benefit of their bargain by being put in a position as good as the one they would have been in had the contract been performed compensatory damages specific performance injunction Reliance interest interest in being reimbursed for loss caused by reliance on contract by being put in a position as good as the one they would have been in had the contract not been made reliance damages Restitution interest interest in having restored to them any benefit that they had conferred on the other party restitution 1 Monetary damages most common Have to be foreseeable certain amp not avoidable 2 a Compensatory damages place injured party in position if breach hadn t occurred Benefit of the bargain El DamagesLosses Costs avoided incidentals Consequential damages Reliance damages reimbursement for foreseeable loss caused by her reliance on contract To place injured party in position if contract hadn t been made Nominal damages even though plaintiff hasn t sustainedcan t prove any injuryloss resulting from breach Small fixed sum wo regard to amount of loss Damages for misrepresentation 539 Basic remedyrescission avoidance of contract Restitution when appropriate 539 Common law alternatesuit for damages El Fraud recover damages in tort action Permit defrauded party to recover benefit of the bargain rule general damagesthe difference bw the value of what she received amp fraudulent party s performance as represented consequential damages if proved 539 Nonfraudulent amp negligent deceived party may recover general damages out of pocket the difference bw value of what she received amp what she has given for it consequential damages 0 Nonfraudulent amp not negligent only general damages Punitive damages monetary damages in addition to compensatory damages in certain situations willful wanton or malicious conduct To punish defendant Liquidated damages parties agree in advance to damages to be paid in event of breach If reasonable forecast unenforceable if not Limitations on damages 539 Foreseeability breaching party only liable for these risks Objective test 539 Certainty of damages El Mitigation of damages injured party can t recover damages for loss he could have avoided w reasonable effort amp wo undue risk burden or humiliation Remedies in Equity money damages aren t enough compensation where there is no adequate remedy at law Court has discretion to whether to grant them They determine generally if you can quantify the damages then it s going to be monetary Specific performance compels the defrauding party to perform their contractual obligations 539 When seller breaches a contract for personal property that s uniquerare El Always for sale of real property 539 Not personal services Injunctions a formal court order to refrain from doing a specific act or cease engaging in specific conduct 539 Valid covenants not to compete El Enforce employee s promise of exclusive personal services as long as doesn t deprive them of reasonable means of making a living 539 Only when services are unusual or extraordinary 3 Restitution the act of returning to the aggrieved party the consideration or it s value that he gave the other party Restore injured party to position before contract was made a b c d Party injured by breach if the other party breaches by nonperformance or repudiation Party in default for any benefit conferred in excess of the loss caused by the breach Statute of frauds can recover benefits conferred on other party if contract is unenforceable bc of SOF Voidable contracts for a party wishing to avoid a voidable contract 539 Lack of capacity duress undue in uence fraud in the inducement nonfraudulent misrepresentation mistake 4 Limitations on Remedies a Election of remedies manifestation of 1 remedy doesn t prevent seeking another unless remedies are inconsistent amp other party materially changes their position in reliance on manifestation Loss of power of avoidance a party w the power to avoid a contract may lose that power by affirming the contract delaying unreasonably in exercising the power of disaffirmance the rights of 3rd parties intervene Chapter 22 Product Liability Warranties 1 Warranties create a duty on the seller to ensure that the goods he sells will conform to certain qualities characteristics or conditions a b C Seller not required to warrant goods May disclaimmodify a warranty Bringing an action must provide D A warranty existed D The warranty has been breached D The breach proximately caused the loss suffered 539 Notice of the breach was given to seller Buyer may rejectrevoke acceptance of the goods May recover damages 2 Types of warranties a Warranty of Title UCC D The title conveyed is good amp its transfer rightful b C E39 The goods are subject to no security interest or other lien a claim on property by another for payment of debt of which the buyer didn t know at time of contracting El Arise from specific language or circumstances giving buyer reason to know that seller doesn t claim title Express warranties an explicit undertaking by seller w respect to the quality description condition or performability of the goods 539 Doesn t need to use formal words is liable even if seller doesn t know of falsity of statement Orally or in writing 539 Creation by 0 Affirmation of factpromise that relates to goods affirmation of value of goods or opinionrecommendation does not create 0 Sample or model 0 Description Implied Warranties exists by operation of law 539 Arises out of the circumstances under which the parties enter into their contract amp depends on factors El Merchantability Code merchant seller makes one of kind of goods he deals w saying goods are reasonably fit for ordinary purposes for which they are used pass in the trade under description are of fair average quality 539 Fitness for a particular purpose any seller at time of contracting seller knows buyers purpose amp was relying on sellers skill amp judgment to select suitable goods Specific not ordinary purpose 3 Obstacles to Warranty Action a Disclaimer of warranties El Express warranties in general can t disclaim 539 Warranty of title may be excluded by specific languagecertain circumstances El Implied warranty of merchantability language must mention merchantability amp be conspicuous amp in writing El Implied warranty of fitness for a particular purpose must be in writing amp conspicuous D As is or with all faults type of language El Defects an examination ought to have revealed LimitationModification of warranties permitted as long as not unconscionable 539 Seller may impose warranty time limits Privity of contract plaintiff can t recover for breach of warranty unless he s in a contractual relationship w defendant El Horizontal privity determines who benefits from a warranty amp may sue for breach Code relaxed by permitting family to recover 539 Vertical privity determines who is liable for breach Notice of breach of warranty Required to notify seller of any breach win reasonable time or else barred from remedy Plaintiff s conduct 539 Contributory negligence no defense of seller Comparative negligence does apply court apportions damages bW parties in proportion to degree of fault Voluntary assumption of a known risk knows of a defect but proceed to make use of them Is a defense Chapter 3 0 Court systems I Jurisdiction court needs to have 0 Subject matter jurisdiction authority of a particular court to judge a controversy of a certain kind I Exclusive federal criminal bankruptcy statute etc MEMORIZE I Concurrent federate federal amp state court share federal question diversity of citizenship amount gt 75000 I State everything else 0 Jurisdiction over both parties plaintiff gives court jurisdiction when they file petition Can establish over other party I In personem jurisdiction jurisdiction over a party who is temporarily present or lives in that state 0 Long arm statutes allow state courts to obtain jurisdiction over non resident who committed a tort owns property has entered into a contract has done business in that state that is the subject of that suit Only some states have I In rem jurisdiction deal w property Over defendant w claims to property that they own that is subject to that suit I Attachment jurisdiction quasi deal w property Owns property in the state but that property is not related to the suit State can seize the property to satisfy claim over defendant 0 Civil procedure 0 Pleadings complaint answer summary judgment 0 Trial post trial motions appeal 0 Alternative dispute Chapter 9 Introduction To Contracts 0 Common law primarily governs contract I UCC sale of goods 0 All contracts are promises not all promises are contracts 0 Capacity consideration legality 0 Different kinds 0 Valid void voidable 0 Executedexecutor contracts 0 Noncontractual obligations don t meet all requirements are promises Some exceptions O Promissory estoppel O Quasi contract Chapter 10 Mutual Assent 0 Offers 0 Termination of offers acceptance 0 Must have O Intent offeror must show an intent Based off reasonable person Advertisements 0 Communication offeree must know about offeror in order to accept must be communicated in intentional manner 0 Definiteness terms must be clear as to subject matter price quality quantity duration UCC commercial reasonableness Duration of offers stay open until accepted or O Lapse of time 0 Revocation done by offeror Has power to revoke any time prior to acceptance I Option contracts I Firm offers under UCC seller must be merchant someone who regularly deals in the sale and purchase of a certain good sale of goods a signed writing signed writing must say it will be held open for a specified amount of time only up to 3 months I Unilateral contracts I Promissory estoppel Rejection offeree Counter offer Deathincapacity Destruction of subject matter 0 Subsequent illegality Acceptance effective when sent True unless offeror states otherwise or offeree responds by unauthorized means or acceptance follows prior rejection 0000 Common law mirror image rule have to accept all terms if you don t it s a counteroffer Chapter 11 conduct invalidating assent Not effective because not knowingly given Absence of real assent 5 Void voidable Duress void Undue in uence Fraud false representation of a fact that is material w knowledge of falsity amp intent to deceive Justifiable reliance Silence misrepresentation 0 In the inducement Nonfraudulent misrepresentation 0 Innocent O Negligent Mistake mutual Parties don t communicate Voidable Confusing Chapter 12 Consideration Inducement to make a contract enforceable Legal sufficiency legal detriment to promise or legal benefit to promisor Remember definitions Bargained for exchange parties had to negotiate Past consideration is not consideration Performance of preexisting legal obligations public or private via contract Modification of preexisting contracts 0 Common law new and additional consideration 0 Restatement guidance not law fair amp equitable O UCC modification is binding despite no additional consideration if parties acted in good faith amp intended to modify contract Settlement of disputedundisputed debt 0 If I accept a lesser amount can I come back and sue you for the remainder of the debt The acceptance of a lesser amount of an undisputed debt is not sufficient consideration to discharge the debt 0 Payment of a lesser amount is sufficient consideration is if there s something new ex if you pay early or if you give a fountain pen or something else you didn t have a legal obligation to do If it s disputed Chapter 13 Legal bargaining Criminal tortious contrary to public policy illegal amp unenforceable Void doesn t meet requirements of a contract Voidable does meet requirements but because of the way it was formed law requires 1 or more of the parties to void their legal duties Unenforceable neither party can sue for lack of performance Court won t give any remedy O In violation of a statute regulatory or revenue raising O Violation of public policy restraints of trade covenant not to compete Effective illegality courts won t interfere Court will provide remedy even if illegal Chapter 14 Capacity The ability to incur legal obligations Minors Incompetent persons Always liable for necessaries Chapter 15 contracts in writing Oral contracts enforceable unless specified Statute of frauds O Suretyship provision pay debt of another if debtor doesn39t pay I Exception main purpose doctrine O Executor administrative provision promise by executor of estatewill to answer personally for debt of deceased person Form of suretyship 0 Marriage provision when marriage is consideration 0 Land contract provisions real property Transfer of interest Not shortterm leases 1 year or less I Exceptions part performance doctrine full performance 0 Can t be performed in 1 year Possibility test Year from time agreement was made not when performance started I Exception full performance by 1 party UCC sale of goods over 500 must be in writing I Exceptions specially manufactured goods deliverypayment amp acceptance Modification of a preexisting contract is unenforceable if resulting contract is in statute of frauds Writing Subject matter included Quantity if sale of goods Writing must be signed by party to be charged Merchant 10 day rule more lenient under UCC didn t go past parole evidence Chapter 16 third parties to contract 0 Assignment of rights That are not assignable 0 What kind of duties are not delegable 0000 O O O O 0 Personal General provision in the contract Notice for assignments not required but advisable Novation Assumption of liability 3rd party beneficiary contracts intended Intended donee Intended creditor beneficiary Incidental beneficiary Chapter 17 performance breaching discharge 0 How a party can be unbound O 0 Performance Material breach nonperformance that significantly impairs Qualitativequantitative disparities Failure to perform when time is of the essence Prevention of performance Perfect tender rule UCC any deviation from promised performance Anticipatory repudiation can sit back amp wait to see if repudiating party changes mind or can sue immediately amp be discharged under contract Repudiating party can retract at any time until nonrepudiating partyinjured party materially alters its position Agreement of parties mutual rescission need consideration accord amp satisfaction new contract Operation of law something happened after contract was formed that excuses performance Impossibility objective test to determine whether performance is possible Destruction of subject matter Subsequent illegality I Frustration of purpose Commercial impracticability Not fault of party completely unexpected Not foreseeable when contract was made Determine if particular event was foreseeable Was it within the scope of risk the parties should have contemplated If not party may be discharged by commercial impracticability under UCC I Bankruptcy statute of limitations 0 Partial performance does not defeat main purpose Still liable for obligation minus losses incurred O Novation Chapter 18 Contract remedies 0 When performance is due does not occur 0 Legal remedies monetary damages Not to punish but to compensate 0 Most common compensatory designed to place injured party in position they would have been in if contract breach had not occurred Give party benefit of the bargain Measured by loss of value losscost avoided by injured party incidental damages consequential damages 0 Reliance damages purpose is to place injured party in as good a position if the contract had not been made If incurred a loss 0 Liquidated specific provision where parties have agreed on specific sum that will be paid in event of a breach If amount of damages is unreasonably great the court will refuse to enforce it amp declare it as a penalty Was the amount reasonable Look at provision amp surrounding facts amp try to figure out if that was a reasonable amount If not enforceable injured party can seek normal remedy O Willful wonton or are meant to punish not compensate O Foreseeable breaching party responsible for paying damages that were foreseeable to him at time of contract 0 Must be certain only those that he can prove 0 Not for damages that he could not have avoided O Equitable O Nonmonetary 0 Only available if monetary damages are inadequate 0 Court has discretion to whether to grant them They determine generally if you can quantify the damages then it s going to be monetary 0 Specific performance tell them to do something Not for sale of goods unless they are uniquerare Typically for real property Never available in contracts for personal services 0 Injunction tells a party to cease or refrain from doing something 0 Restitution 0 If a party has conferred a benefit on another party can sue for restitution for benefit or value of it 0 To restore injured party to state they were in before contract was made Chapter 22 Product Liability OO Warranties Strict liability 2 concepts that provide protection to a buyer who received defected goodswas injured by defected goods Warranties expressimplied promises about the nature of a product sold 0 Express seller makes an express statement Oral or in writing Can only be given by seller 0 Implied talked about w assignments Not created by expressions of seller but are imposed by operation of law to protect the buyer If circumstances are correct automatically be present unless surrendered by buyer I By title I Infringement I Merchant ability guaranteed that product will be fit for ordinary purpose for which it is intended Most common warranty that is breached Given whenever a merchant of goods makes a sale I Fitness or particular purpose any seller merchant or not may give Specific purpose If the seller has reason to know that the buyer is purchasing a particular good in relying on seller s judgmentexpertise 0 Must show warranty existed was breached loss 0 Strict liability injured by product amp no warranty or has expired Remedy that protects a buyer from defected goods The requirements in order to prove a claim The defenses from strict liability 0 Don t read statement part CHAPTER 3 Civil Dispute Resolution Federal Courts State Courts Supreme Court State Supreme Court Circuit Court of Appeals District Court of Appeals District Court Trial Court 1m Court that hears a dispute must have jurisdiction to hear the matter Subject Ma tter jurisdiction Authority of a court to decide a particular kind of case Substantive Law law creating rights and duties Procedural Law rules for enforcing substantive law Federal Jurisdiction 1 Exclusive Federal jurisdiction 0 Federal courts have sole jurisdiction over federal crimes bankruptcy antitrust patent trademark copyright and other special cases 2 Concurrent Federal jurisdiction 0 Authority of more than one court to hear the same case 0 Plaintiff has choice of bringing action in either fed court or state court o If plaintiff brings it in state court defendant can have it removed shifted to fed court a Federal Question jurisdiction Any case arising under the constitution statutes or treaties of the US that don t involve exclusive federal juris No minimum dollar requirement Always federal substantive law applied Procedural rules depends on what court it is in b Diversityjurisdiction Diversity of citizenship and amount in controversy exceeds 75000 i Damages exceeds 75000 ii Citizens of Different States when plaintiffs and defendants are citizens of diff states when foreign country brings action against citizens of US when controversy is bw citizens of a state and citizens of a foreign country must have complete diversity When federal district court hears case solely under diversity of citizenship jurisdiction no fed question is involved Always state substantive law applied Exclusive State jurisdiction 0 Have jurisdiction over all other matters 0 Contract agency property torts commercial transactions and most crimes jurisdiction over the Parties 0 Court must have power to bind parties involved in the dispute 0 Court obtains jurisdiction over the plaintiff when they voluntarily submit to court s power by ling complaint with the court 0 Court obtains jurisdiction over the defendant by In Personam jurisdiction 0 The power of a court to bind the parties to a suit Obtain by 0 Serving process on a party win the state in which court is located 0 Or can serve process upon defendant win a state if person is domiciled in that state 0 Applies if nonresident defendant is temporarily present in that state 0 By reasonable noti cation to a party outside the state in instances long arm statute applies 0 Long Arm Statutel gives court jurisdiction over nonresident defendants if the defendant 0 O O 0 Has committed a tort civil wrong within the state Owns property within the state and if that property is the subject matter of lawsuit Has entered into a contract within the state Has transacted business within the state and if that business is the subject matter of lawsuit Alternative Dispute Resolution Arbitration 0 Expert in eld Nonjudicial proceeding in which a neutral third party selected by disputants renders a binding decision Mediation o In conjunction to court system 3rd party disinterested is there to facilitate settlement before going to court 0 Not binding CHAPTER 9 Contracts Contracts 0 An agreement of the parties such that essential elements are satis ed and the court is willing to enforce it in the event of a breach RequirementsElements of a Contract Mutual Assent Parties must manifest by words or conduct they ve agreed to enter into k 0 To show mutual assent 0 Offer 0 Acceptance Consideration 0 Each party to a contract must intentionally exchange a legal bene t or incur a legal detriment as an inducement to the other party to make a return exchange 0 Some kind of detriment to the promisee in exchange for the bene t to be conferred Legality Purpose of a contract must not be criminal tortious or against public policy Capac y Parties to a contract must have contractual capacity 18 years old not drunk Consent 0 No contract if lack of consent Classi cation of Contracts Express Implied Explicit contract that details terms in writing or oral Contract where agreement of partiesterm is understood by course of dealing or standard of the industry or inferred from their conduct Bilateral Unilateral Promise between 2 parties 1 party makes offer or promise other party doesn t commit Turns into bilateral contract by act of agreement or act of performance from 2nCI party Valid Meets all requirements of contract and is enforceable Void 0 Doesn t meet all requirements of a binding contract not a contract at am merely an agreement or promise with no legal effect 0 Entered into by a person incompetent Voidable It is a contract but because of the manner in which it was formed OR because of a lack of capacity of a party to it a party can avoid the legal duties of contract Unenforceable 0 Missing a technicality needed to be in writing and isn t Promissory Estoppel De nitionType of Promise A doctrine enforcing some noncontractua promises to avoid injustice Requirements 1 A promise was made 2 That promise must induce reliance by the promisee to the promisee s detriment AND reliance is reasonable and foreseeable Remedies Promise enforced to the extent necessary to avoid injustice Only x damages from what you relied on om De nitionType of Promise An obligation not based upon contract that s imposed by law to avoid injustice Requirements impose a quasik when 1 Bene t conferred upon defendant by plaintiff 2 Defendants appreciationknowledge of bene t 3 Defendant s retention of the bene t is inequitable without compensating the plaintiff for its value Remedies Reasonable value of bene t conferred What LaWAppies to the Contract ask does the goods part of agreement or service part of agreement predominate Common Law 0 Most contracts are governed by state common law including k s involving 0 Employment Services Insurance Real property Patents Copyrights OOOOO Uniform Commercial Code UCC The Code Governs the sale of good 0 Sale transfer of title from seller to buyer Goods tangible personal property 0 NOT A GOOD 0 Stocks 0 Real estate 0 Bonds CISG Convention of International Sales and Goods Treaty that governs disputes between countries that are members 0 As long as you are a member of treaty you re bound to terms of the treaty Requirements for it to apply 0 Disputes involving countries who are members of CISG o Involves the sale of goods 0 NO CISG for disputes involvingout of Goods bought for personal family household use Stocks bonds or securities Boating shipping or aircraft Electricity Personal injury OOOOO CHAPTER 10 Offer amp Acceptance m Elements of Offer 1 Intent to Enter into a contract by offeror 0 With a joke no intent Subjective intentl law rejects Objective intent what the reasonable person would understand the intent to be 2 De niteness of terms 0 All material terms are saidthere 3 Communication directly to offeree by the offeror Special Offer Probem Areas Advertisements Not offers 0 Its an invitation to negotiate o Exceptionl valid offer when 0 it speci cally identi es the precise nature of the thing offered and o where ad isn t susceptible to in nite acceptances Rewards Offeror is master of the offer Considered offers for unilateral contracts Contests 0 You accept by performance 0 Subject to terms and conditions act like rewards Duration of Offer 1 Terms of Offer 0 If offer speci es when it terminates then the language in offer tells you how long offer is open before expires When it expires cant be remade 2 Lapse of Time o If offer is silent as to when it terminates it expires after a reasonable amountlapse of time 3 Counteroffer 0 Act of biding against original offer terminates original offer 0 Function to reject initial offer 4 Rejection Terminates an offer 5 Revocation Offeror is able to revoke offer any time prior to acceptance by offe ree Effective upon receipt 0 EXCEPTIONS restrictions for offeror to revoke an offer a Option Contract Agreement bw parties to hold offer open for a speci ed time Must be accompanied by consideration Example I want to lock house down for 30 days to hold 2 mil price Im not bound to buy but paying 10000 for right to think about it If don t buy don t get 10000 back bc it was the price to hold offer And if I buy don t get 10000 back or in credit Shapiro says he will do it but for 10000 will cover his expenses for the time amp if another offer at higher price comes along its less painful to have to say no to that other offer bc he s getting something out of holding my offer hes agreeing to tie his hands for 30 days detrimentfor consideration b Firm offer under the UCC Involving a merchant who agrees to hold offer open for a speci ed period of time does not exceed 30 days Sale of goods Signed by merchant in writing l merchant agrees to hold offer open for sale of goods for 2 months and specifies time frame and signs it and its in writing So cant revoke as merchant bc it s a firm offer under UCC Acceptance Occurs when response to the offer mirrors the offer in all material respects Silence as Acceptance Silence will not be acceptance UNLESS parties have agreed that silence constitutes acceptance Conduct as Acceptance If there s silence but performance occurs under the contract performance is acceptance of all terms of the offer When Acceptance Becomes Effective Terms of the Offer 0 Offer must de ne the time acceptance occurs and how it can be accepted When Offer ls Silent As To When Acceptance Is Effective If REASONABLE means of acceptance occurs The Mailbox Rule applies acceptance is effective upon dispatch acceptance is effective when its put into stream of commerce 0 Even if it doesn t arrive If UNREASONABLE means of acceptance occurs acceptance is effective upon receipt acceptance is effective when I arrive to Shapiro 0 He can revoke entire time im hitchhiking bc its before I get there HOWEVERl if acceptance arrives within the time it would have had reasonable means been used acceptance is effective upon dispatch CHAPTER 11 Consent Disaffirm The law allows a party to disaffirm a contract roll it back cancel it pretend it doesn t exist where a party lacks consent 0 Must disaffirm within a reasonable amount of time and the time to disaffirm starts when you rst learn the basis of disaffirmance o If you behave in a way that seems like you intend to follow contract after you know of the basis to disaf rm you cant disaffirm Voidable contract that is disaffirmed RESCISSION 0 When you disaffirm parties are put back in the position they would have been had no contract ever been made basically the detriment gets returned 0 Law requires agreement be voluntary and knowing consent If these requirements aren t met the agreement is voidable or void 00 These are situations in which the consent by one of the parties to the contract is not effective because it was not knowingly and voluntarily given so contract is DISAFFIRMED consent not effective if there s 1 MISREPRESENTATION A Innocent Misrepresentation renders a contract voidable False representation 1 Untrue Statement of Fact I Concealment 0 where you have a situation where there is a concealment of a KNOWN defect 0 The act of concealment will function AS the Statement for the untrue Statement of fact 0 when he paints over crack he s saying quottheres no crackquot ll NonDisclosure will function as a Statement for an untrue Statement of fact a Fiduciary obligation fiduciary someone in position of truth hired to perform in that position of trust doctor 0 where somebody is in duciary relationship the failure to disclose a fact will arise to level of the Statement in Nondisclosure untrue Statement of fact bw buyer and seller b Correcting half truths Failure to make a disclosure w the correction of half truth will arise to level of the Statement in untrue Statement of fact scena o c Correcting statements made false by later events 0 Failure to correct statement that was true when made but later false will arise to level of the Statement in Untrue Statement of Fact 0 Duty of good faith and fair dealing Obligation by law to disclose known defects by duty of acting in good faith and fair deaHng oFailure to disclose will rise to level of Statement in Untrue Statement of Fact Ill Statement of Opinion rises to level of fact when a Relationship of trust 0 when statement of opinion comes from someone in position of trust doc lawyer its classi ed as a fact b Relying party is unusually susceptible to opinion 0 if said to someone who s unusually susceptible to statements of opinion it ll be treated as a fact c Reliance on person of superior skill or judgment 0 opinion comes from someone where there s reliance on a person of superior skill or judgment itll be treated as a fact o If grace goes to eric as HER automechanic No special obligations in typical merchant buyer relationship 2 Untrue Statement is Material Must be an untrue statement about something that matters based on the reasonable persons standards 3 Reliance on Untrue Statement Butl lf transaction is one where seller would expect buyer to do own due diligence and inspect by themselves or on their own terms and they get an opinion that suggests that statements made by seller are untrue then buyer cant rely on what statements seller says bc buyer already knows its not true 4 Reliance is Reasonable That reliance must be justi ed B Fraudulent Misrepresentation must also be the following to prove misrep 5lntent to Deceive where seller KNOWS that the thing they are saying is untrue Concealment Scienter an intent to deceive You need this intent to deceive to prove fraudulent misrep If you re intentionally trying to deceive law will award punitive damages on top of damages for innocent misrep Both innocent and fraudulent misrep are voidable contracts that will result in rescinding consent not effective if theres 2 MISTAKE A Bilateral Mutual Mistake to have mistake to rescind need 1 Basic assumption upon which contract is made is incorrect 2 parties who make basic assumption both buyer and seller are mistaken of nature of contract If someone is wrong about cost not a mistake worth isn t basic assumption Only mistake when incorrect about intrinsic nature of thing pretty painting vs a van gogh original 2 Incorrect assumption is material Looking at value of it Of course jake cares its worth 20 mill 3 Adversely affected party does not bear risk of mistake contract is voidable by adversely affected party unless he bears risk of mistake Does not bear risk of mistake so can rescind when 0 Not an expert nothing is being hidden he GENUINELY thinks he knows what it is and its an honest mistake So he DOES NOT BEAR RISK OF MISTAKE It is not a transaction where he quotknows that he doesn t knowquot 0 So he adversely affected party does not bear risk of mistake he honestly believes he knows what it is so he gets to rescind because consent is not effective due to bilateral mutual mistake Bears the risk of mistake and consent effective and cannot rescind or cancel K when 0 They know that they do not know the nature of the thing but they enter into the transaction anyway They know quotthey don t knowquot what the nature of the thing is but do deal anyway So they bear risk of mistake and will not be able to rescind 0 Someone who is an expert in the eld of the subject of transaction is the one that bears the risk so will NOT be able to rescind 0 Someone who enters into an quotas isquot contract garage sales no one knows what it is you re buying it as is They bear risk of mistake B Unilateral Mistake 4 Non mistaken party knows or has reason to know of the other party39s mistake Harder to rescind bc hard to prove but if Amanda recognized painting and knew it was a VG and knew she could get it cheaper bc jake didn t know So it s a unilateral mistake analysis 0 If satis ed jake can rescind Need all four of these for adversely affected party to rescind in unilateral mistake consent not effective if theres 3 DURESS Duress wrongful act or threat that overcomes the free will of a party A Improper threat 0 Threat of physical violence contract is void 0 Threat to invoke criminal authorities give me your car for 500 or im telling police you re a drug dealer 0 Threat to pursue civil proceedings that is baseless can be an abuse of process threat to abuse court system is an improper threat Threat to use civil system when you have no good reason EXCEPTION Threat to impose civil lawsuit Where theres a good faith basis to pursue it is NOT an improper threat I pay you 500 for your car and i forgive the debt you owe me or I m going to sue you I have right to pursue her for my money if she owes me money B Must be no reasonable alternative but to enter into the contract must overcome the free will of a party C Economic Duress o The improper threat is to take the property that they already promised they wouldn t execute on taking consent not effective if theres 4 UNDUE INFLUENCE A Unfair Persuasion B Persuader must be in a position of dominance as to the other person in a con dential relationship together renders contract voidable CHAPTER 12 Consideration the inducement to make a promise enforceable Consideration is exchanged for a promise 1 Legal Suf ciency Consists of either a bene t to the promisor or a detriment to the promisee 0 Legal benefitl obtaining something to which one had no prior legal right 0 Legal Detrimentl doing an act one is not legally obligated to do or not doing an act that one has a legal right to do 1 Bilateral Contracts 0 Exchange of promises each party is both a promisor and promisee o In exchange for a promise the other party must do something they otherwise had no prior obligation to do or must forgo from doing something they otherwise could have Some Requirements 0 Consideration is not gratuitous lnothing coming in exchange for that promise o In order for there to be consideration have to be something coming in exchange 0 When you re giving up something but you don t have the right to be doing it in the rst place weed another form of gratuitous promise no consideration Agreements to share as long as you can prove theml In exchange for agreeing that they split costs of tickets they split winnings of ticket Both were incurring detriment in exchange for incurring cost to share 0 Example A will pay B 100 ifB washesA s car 0 Offerpromise byA to pay B is binding if that promise is supported by legal consideration from Bif B s promise to wash cash is either A legal detriment to B legal detriment to B bC he was under no prior legal duty to wash A s car Legal bene t to A legal bene t to A bc A had no prior legal right to the service So A s promise to pay is supported by consideration and is enforceable o 100 in EXCHANGE FOR service lncurring detriment of 100 that they did not otherwise have obligation to pay 2 Unilateral Contract A promise is exchanged for a completed act or a forbearance to act EX of completed act A promises to pay B 200 if B paints A 5 house B paints A 5 house A s promise is binding only if its supported by consideration consisting of either 1 a legal detriment to B the promisee offeree or 2 a legal bene t to A the promisor offeron EX of forebearance to act A hurts B B could recover damages by suing A promise to pay 5 if B forebears from bringing suit B accepts by not suing Only one promise exists so only one party the offeror makes a promise and is therefore the promisor while the other party the offeree is the person receiving the promise and is the promisee No consideration yet but if performance by offeree or agreement occurs contract is made and it becomes bilateral clearly detriment As long as there is detriment from person receiving promise promisee by doing something they otherwise had no prior obligation to do or must forgo from doing something they otherwise could have legal suf ciency element is satis ed Consideration Probem Areas 1 lllusory where you aren t binding yourself to a promise it LACKS consideration When you do something at your own convenience or never bind yourself Promise that imposes no obligation on the promisor Statement in the form of a promise but imposes no obligation upon the maker of the statement not consideration for a return promise A statement committing the promisor to purchase such quantity of goods as he may desire quotwish to buyquot or quotwantquot is an illusory promise bc its performance is entirely optional Isn t incurring any detriment at the moment 2 Adequacy of Consideration is there some amount that quali es a detriment There is consideration if parties have agreed to an exchange There is consideration as long as there is some meaningful detriment There is consideration if subject matter exchanged or promised in exchange either imposed a legal detriment on the promisee or conferred a legal bene t on the promisor o The law does not inquire to the adequacy of consideration the items or actions that the parties agree to exchange don t need to have the same value 3 Preexisting obligations No preexisting obligation to form a new contract a Created by Law 0 You cant use a preexisting moral obligation to create consideration Public duties such as those imposed by tort or criminal law are neither a legal detriment nor a legalbene t b Created by contract 0 When you add to an original contract add obligations to it there is no consideration 0 Where you have pre existing contact cant use it to form consideration for some subsequent event 0 Performance of a preexisting contractual duty is not consideration because the doing of what one is legally bound to do is neither a detriment to a promisee nor a bene t to the promisor Modi cation of a K occurs when parties to K mutually agree to change one or more of its terms Common law UCC CISG all have different rules as to how you are allowed to modify K When you modify a K what are the requirements so that you will have an enforceable contract 393 Modi cations to a preexisting contract 0 Common law modi cation must be supported by some new consideration beyond that which is already owed under the original k must be a separate and distinct modi cation contract Modi cation requires new consideration but rule is very rigid o UCC contract for sale of goods can be modi ed without new consideration as long as modi cation is done in good faith 0 CISG No new consideration is required to modify a k if both parties agree oz Settlement of an undisputed debt 0 Modi cation to K involving undisputed debt will be unenforceable because it lacks consideration 0 When andy agrees to take less money it will have no legal impact because we all know how much Shapiro owes Wheres the detriment Shapiro is incurring in exchange for shapiros bene t to pay 500 less 0 use traditional common law rule oz Settlement of a disputed debt 0 Modi cation to a contract or agreement to pay something less than demanded involving a disputed debt will be enforceable because the dispute itself creates consideration that debt is not yet de ned 0 Some kind of debt that s not speci cally de ned at time of contract Dispute arises over how much is actually owed dispute creates consideration 0 When Shapiro is owed 20000 but andy gives him 3000 and Shapiro takes the money KNOWING hes owed more the act of performance is acceptance therefore it is consideration and an enforceable k 0 Shapiro sends andy bill for 20000 but andy says no I should only owe you 3000 Andy sends check for 3000 When Shapiro s accounting dept deposits that check can Shapiro himself go after andy for the difference No 0 When Shapiro accepts the 3000 that is an enforceable modi cation to the contract 2 Bargained for Exchange Parties have entered into a bargained for exchange w each other and have each given to the other something in a mutually agreed upon exchange for his promise or performance Present as long as there is some kind of consideration between the parties Exchanging price for services Only a problem when 1 Past consideration Element of exchange is absent where promise is given for an act already done so unbargained past events are not consideration Doesn t form basis for bargain for exchange Once performance occurred that formed basis for consideration any promise made after that isn t consideration Charitable contribution issue Andy cas UM saying he will leave 20 mill to build building He doesn t do it Can UM sue him for breach of K NO it lacks consideration because um does nothing for that promise they do not incur any detriment for that promise Courts will hold it through under promissory estoppel Because um relies on promises like that they will plan for it If the um can rely on that promise to their detriment and it was reasonable for them to rely they will sue They will get back whatever they spent in reliance for that promise CHAPTER 13 lllegality Violations of Statutes RULE Courts will not enforce agreements declared illegal by statute o A and B in contract for A to pay B to kill C B doesn t follow through I can t sue her because there s a statute that says murder is illegal Wagering Statutes 0 Gambling statutes prohibit wagers o agreements that 1 party will win and the other lose 0 depending on the outcome of an event 0 in which their only interest is the gain or loss Usury Usury statutes establish a maximum rate of interest prohibit charging of excessive interest max is usually 18 Licensing Statutes 0 Licensing statutes require formal authorization to engage in certain trades professions or businesses Regulatory purpose License 0 Licensing statute that s intended to protect public against unquali ed persons 0 An unlicensed person may NOT recover for services he has performed o If purpose of a license is to regulate a person assure competency failure to have a license will invalidate a contract Revenue License 0 Licensing statute that seeks to raise money 0 An unlicensed person MAY recover for services he has performed o If it is a license where all you have to do is pay a fee to get it revenue raising license than lack of a license wont invalidate a contract Violations of Public Policy 0 Court invalidates an agreement even though parties agree on it though bc it violates public policy 0 These contracts are illegal bc of violating public policy Agreements in Restraint of Trade Unreasonable restraints of trade are not enforceable 0 Any contract or agreement that eliminates competition or obstructs tradecommerce Agreements in restraint of trade are enforceable though if the following are satis ed 1 Noncompeting agreement must be ancillary to a contract and serve a legit purpose Ancillary Addition to a noncompete cant be a stand alone it has to be a part of a bigger contract 0 Simply preventing someone from competing isn t legit has to be legit reason 2 Restriction is reasonable in time scope and geography 3 No duty to the public Cant ask someone to sign a noncompete if they have a duty to the public or their lack of performance will cause hardship to the public 0 Anyone in occupation that serves public interest reman police Examples of enforceable agreements in retrain of trade 1 Sale of a Business promise by the seller of a business not to compete in that particular business in a reasonable geographic area for a reasonable period of time is enforceable 2 Employment Contracts an employment contract prohibiting an employee from competing with his employer for a reasonable period following termination is enforceable provided the restriction is necessary to protect legitimate interests of the employer Exculpatory Provisions Clausg Courts disapprove of contractual provisions excusing a party from liability for his own tortious conduct 0 Releasing a party from their own negligence failure to exercise reasonable care 0 Ex banana peel on walmart s oor and nobody cleans it and someone slips on it Enforceable though if 1 They are clear and unambiguous as to what you are releasing 0 has to be written in a way that the reasonable person would understand that they are releasing the biz from biz s negligence 2 Only enforceable if you are releasing act of negligence but nothing else other than negligence 3 Must be a reasonable alternative to signing the agreement 4 If you own duty to public cant have someone sign an exculpatory provision Amtrak airlines doctors lawyers lf biz is there to perform public service so biz cant have you sign it 0 We need society to function bc of them so don t allow biz to ask them to sign provision Unconscionable Agreements Unfair or unduly harsh agreements are not enforceable Some agreements are so 1 fundamentally unfair that we refuse to enforce them when 2 there is an alternative to entering into the agreement Procedural Unconscionability Unfair or irregular bargaining Substantive Unconscionability Oppressive or grossly unfair contractual terms Effect of Illegaity Unenforceabilityl neither party may recover unenforceable under an illegal agreement where both parties are in equal fault Exceptions permit one party to recover payments 0 Party withdrawing before performance 0 Party protected by statute Party not equally at fault Excusable ignorance Partial illegality CHAPTER 14 Capacity 0 Contracts that lack capacity are voidable by party that lacks capac y Party who seeks to disaffirm must do so in reasonable amount of time upon reaching capacity Manners in which party can lack capacity Minors Person who is under 18 years old Liability on Contracts Minor s contracts are voidable at the minor s option After minor comes of age may choose to ratify or adopt Disaffirmance avoidance of the contract may be done during minority and for a reasonable time after reaching majority o Rati cation af rmation of the entire contract It is binding May be done upon reaching majority Liability for Necessaries minor is liable for the reasonable value of necessary items those that reasonably supply a person s needs o If minor s guardian provides her with adequate wardrobe blouse minor purchased isn t a necessary Liability for Misrepresentation of Age 0 Minor may disaffirm contract Liability for Tort Connected with Contract o If a tort and a contract are so intertwined that to enforce the tort the court must enforce the contract minor is not liable Mentally Incapacitated People Way to be name a mentally incapacitated person 1 Determined incompetent in court o If person is determined incompetent by court and then person enters in k the k isn t voidable its just void its completely unenforceable 2 Mental illness or defect This person may not be completely incompetent all the time but there s some defect that causes them to lose competence for pedods If person is unable to comprehend subject of contract its nature or probable consequences then contract is voidable In toxica ted People Contract entered into by an intoxicated person when you cannot understand nature and consequence of her actions is voidable Did sober person or reasonable person know or have reason to know that drunk period is unable to know nature of transaction CHAPTER 15 Contracts in Writing Statute of Frauds Statue of frauds requires that certain types of contracts be in writing to be enforceable Most oral contracts are as enforceable as written contracts BUT if a certain contract subject to the statute of frauds is within the statute it must comply with the requirements of the statute to be enforceable O Akal if a contract is a type of contract under the statute of frauds and follows all the rules of the type of contract under the statute of frauds it must be in writing to be enforceable All other types of contracts are not within or outside the statute and don t need to comply with its requirements to be enforceable Contracts that fall within statute of frauds that s the type of contract that has to be in writing 6 types of agreements that falls win statute of frauds Contracts Within the Statute of Frauds These types of K s are within the statute of frauds so in order to be enforceable contracts they are required to be in writing all of these contracts WONT be enforceable if only made orally SOME SOME L 1 Suretyshipl promises to answer for the dutydebt of another Where a party agrees to pay the debt or another in the event of a default that agreement is a suretyship agreement thus must be evidenced by writing to be enforceable Surety promisor promises a creditor promisee to perform the dutiesobligations of a principal debtor if principal debtor doesnt perform So if A orally promises to C to pay debt of B in event of default and its never in writing A isn t obligated to pay bc in order to be enforceable contract it must be in writing 2 Qriginal promise If promisor makes an original promise by undertaking to become primarily liable then statute of frauds doesn t apply and contract doesn t need to be in writing to be enforceable if said orally its still enforceable father pays merchant to deliver items to daughter 4 5 6 a Main Purpose Exception 0 Where the main purpose of the promisor is to obtain an economic benefit for herself that she did not previously have then the promise is outside the statute agreements upon consideration of Marriagel contracts where marriage is the consideration must be in writing I The only reason you enter into the contract is be you re getting married prenup so needs to be in writing to be enforceable Executoradministrator provision 0 This provision applies to the promises of an executor of a decedent s will the administrator of the estate if no will 0 If an executor or administrator promises to answer personally for a duty of the decedent whose funds he is administering promise must be in writing akaljis unenforceable and they don t have to pay out of their own money if only said orally 0 But if promise to pay debts of the deceased is out of assets of the estate it does NOT need to be writing and oral contract is enforceable Sales of goods of 500 or more 0 Contract for the sale of goods of 500 or more must be evidenced by a writing or record to be enforceable if it is said orally there is no contract I If contract to modify a sale of goods that then raises price to 500 must be in writing Look at final agreement 0 EXCEPTIONS oral agreement is enforceable 0 Admission an admission in court as to the existence of a contract will satisfy the writing requirement for a sale of goodsmake the contract enforceable for the quantity of goods admitted O Specially manufactured goods an oral contract for specially manufactured goods in enforceable What s a specially manufactured good I goods that are developed specially for buyer I goods that are unsuitable for sale to others in ordinary course of biz I seller substantially began to manufacture goods I manufacturing must occur prior to notice of cancellation Queyear provisionl 0 If contract cannot be performed in less than 1 year it must be in writing 0 If contract has the POSSIBILITY to be performed in less than 1 year it is enforceable if made orally 0 Count the 1 year from the date contract is entered into not the day performance starts Performed in less than 1 year Performed in more than 1 year Contract is Oral Enforceable Unenforceable Contract is Written Enforceable Enforceable 7 Modification or rescission of contracts within the statute of frauds 0 Oral contracts modifying existing contracts are unenforceable if the resulting contract is within the statute of frauds 8 Electronic records 0 Full effect is given to electronic contracts and signatures 9 Land Contract Provisionl contract for the sale of real estate must be in writing to be enforceable If said orally its unenforceable 0 Promise to transfer any right privilege power immunity in real property 0 Promises to transfer buy or pay for an interest in land including ownership interests leases mortgages options and easements must be in writing 0 Exceptionslj don t need to be in writing oral k is enforceable 0 Full performance by the seller once seller fully performs k delivers all does to buyer etc you don t need any writing because that s all the situation needed Performance is done aka seller conveys property 0 Partial performance by the buyerl buyer gives seller partial payment buyer starts knocking down walls all they have is verbal agreement to buy and sell Where the buyer provides someany consideration towards the purchase of land and modifies the property to the detriment of the seller the contract doesn t need to be in writing and oral k is enforceable Compliance with the Statute of Frauds Under the Common Law 0 Writing needs to have these 3 things to satisfy the statute of frauds O Specify the parties to the contract 0 Specify with reasonable certainty the subject matter and the essential terms of the agreement 0 Be signed by the party against whom the enforcement is sought Under the UCC 0 For the sale of goods the Code requires the writing have these 3 things to satisfy the statute of fraud 0 Some indication by the parties that they are entering into an agreement 0 Specify the quantity of goods or securities to be sold 0 Signed by the party against whom enforcement is sought or by her authorized agent 0 Writing or record is sufficient even if it omits or incorrectly states an agreed upon term THE RULE Parol Evidence Rule When parties express their contract in a writing intended to be the complete and final expression of their rightsduties prior oral or written negotiationsagreements of the parties that vary or change the written contract are NOT admissible Parol evidence refers to any evidence whether oral or in writing that s outside the written contract and not incorporated into it either directly or by reference I Parol evidence rule deals with what TERMS are part of the contract statute of frauds deals with what contracts must be evidenced by a writing to be enforceable Integrated contract Written contract where parties intend the statement to be the complete and exclusive agreement or contract between them 0 Rule applies only to an integrated contract so you cant add any terms When parol evidence rule does NOT apply so when you CAN use parol evidence 1 Partially integrated contract 0 One that is intended to summarize the critical terms of the agreement but is not intended to be the full recitation of every term agreed uponIt s the highlights 0 All parties agree that not every term is listed on the written doc 0 Can use parol evidence shit outside contract aka you can add stuff to k 2 To explain ambiguities in the contract 3 Reformation 0 To reform a mistake typographical error that obviously doesn t represent the agreement of the partie 4 To establish a condition precedent 0 Condition prec a term or agreement that has to happen before a contract obligation is triggered Such evidence doesn t vary alter change terms of agreement it just shows whether the entire unchanged written agreement ever became effective 0 I agree to buy katies car but we DISCUSSED that before I had the obligation to buy the car I had to get a loan If I couldn t get loan Katie knows I wont buy car Condition is that I need loan 5 A subsequent mutual recession or modi cation of the contract 0 To establish the existence of a subsequent agreement 6 Showing that contract was voidvoidableunenforceable 0 Lack of contractual capacity of one of the parties minority intoxication mental etc would make agreement void 0 A defense of fraud misrep duress undue in uences mistake illegality lack of consid etc I evidence establishing any of these defenses would not allow changes to written doc but would just make the agreement voidvoidableenforceable 0 The rule does not prevent a party from proving the existence of a separate distinct contract between the same parties CISG and Parol Evidence 0 Rejects the parol evidence rule If a party wants to introduce new termsevidence in contract they re allowed because there is no provision for it CHAPTER 16 Third Parties to Contracts Assignment of Rights Assignment transfer of a right to a third party under the contract so that assignor s right to performance is extinguished Assignor party making an assignment Assignee party to whom contract rights are assigned Obligor party owing a duty to the assignor under the original contract Obligee party to whom a duty of performance is owed under a contract 0 An effective assignment terminates assignor s right to receive performance by obligor Bart buys car from Ann and pays in installments Ann transfers her right to the payments to Clark Assignorl Ann Assigneel Clark Obligorl Clark Obligorl Ann Requirements of an Assignment 0 Include intent but not consideration Revocability of Assignment 0 When the assignee gives consideration the assignor may not revoke the assignment without the assignee s consent o If no consideration is paid I just give Amanda the money as a gift the transfer is revocable It can be undone by transferor bc its gratuitous payment Partial Assignment 0 Transfer of a portion of contractual rights to one or more assignees Assignability Most contract rights are assignable except 0 Assignments that materially change obligor s obligationperformance o If Amanda is new boss and andy works there still if Amanda is awful it change andy s performance bc whats expected of him changed 0 Assignments of personal rights 0 Assignments against public policy 0 Cant assign wages Assign my wage to someone else Assignments prohibited by law or forbidden by contract Rights of Assignee Assignee stands in the shoes of the assignor Defenses of Obligor may be asserted against the assignee Notice is not required but advisable Delegation of Duties Delegation transfer to a third party of a contractual obligation Delegator party delegating his duty to a third party Delegatee third party to whom the delegator s duty is delegated Obligee party to whom a duty of performance is owed by the delegator and delegatee Ann and Doris agree that Doris should deliver car to Bart Delegatorl Add Delegateel Doris Obligeel Bart Delegability Most contract duties may be delegated except Duties that are personal 0 Such that obligee has a substantial interest in the performance of the original obligor Personal service contract 0 Duties that are expressly nondelegable Duties whose delegation is prohibited by statute or public policy Duties of the Parties Delegation Delegator is still bound to perform original contract Delegator is going to retain responsibility under k even after delegation Novation Contract 0 A substituted contract to which the promisee is a party which substitutes a new promisor for an existing promisor who is consequently no longer liable on the original contract and is not liable as a delegator Novation occurs where obligee agrees to release the delegator from further responsibility 0 Where theres successive delegations who does she sue now She can sue all parties unless novation Bene ciary Contracts 3rd party beneficiary contract is one in which one party promises to render a performance to a third party the bene ciary Intended Bene ciaries 3rd parties intended by 2 contracting parties to receive bene t from their contract Donee Bene ciary o a 3rd party intended to receive a bene t from the contract as a gift Creditor Bene ciary a 3rd person intended to receive a bene t from the contract to satisfy a legal duty owed to him Rights of Intended Bene ciary an intended donee bene ciary may enforce the contract against the promisor an intended creditor bene ciary may enforce the contract against either or both the promisor and promisee Vesting of Rights 0 if the bene ciary s rights vest the promisor and promisee may not thereafter vary or discharge these vested rights Defenses Against Bene ciary in an action by the intended bene ciary to enforce the promise the promisor may assert any defense that would be available to her if the action had been brought by the promisee Incidental Bene ciary 0 3rd party whom the two parties to the contract have no intention of bene ting by their contract and who acquires no rights under the contract CHAPTER 17 Performance Breach and Discharge M an event whose happening or nonhappening affects a duty of performance under a contract 1 Express Conditions Contingency explicitly articulated in language of contract 0 An express condition usually preceded by quotprovided thatquot quoton condition thatquot quotifquot quotsubject toquot while quotafterquot upon quotas soon asquot 0 Must be fully and literally performed before the conditional duty to perform arises a Satisfaction of the Parties 0 Parties to a k may agree that performance by one of them shall be to the satisfaction of the other who the other will not be obligated to perform unless he is satis ed 0 Express condition making performance contingent on one party s approval of the other s performance 0 Where satisfaction relates to a matter of personal taste opinion orjudgment the law applies the subjective satisfaction standard and the condition hasn t occurred if the promisor is in good faith dissatis ed Approval based on a party s honestly held opinion o If contract doesn t indicate that satisfaction is subjective or if performance contracted for relates to mechanical tness or utility law assumes an objective satisfaction approval based on whether a reasonable person would be satis ed b Satisfaction of Third Parties 0 Contract conditions the performance of a party on the approval of a third party 0 The duty of performance ex quotpaymentquot is made expressly conditional on quotthe presentation of the certificate 2 Implied Conditions 0 Conditions that must occur and contingency are understood by parties to be part of the agreement but are not stated in express languagethey are inferred from terms of the contract nature of transaction or conduct of the parties 0 A condition contingency imposed by law that is not contained in the language of contract or inferred from contract and it need only be substantially performed 3 Conditions Precedent An event that must occur before performance is due under a contract oEXAMPLE Rachel promises to buy justin s land for 50 provided she can obtain nancing in amount of 40 at 10 or less for thirty years win sixty days of signing k rachels obtaining speci ed nancing is a condition precedent to her duty lf condition is satis ed Rachel is bound to perform if its not met shes not bound to perform Rachel though is under an implied in law duty to use her best efforts to obtain nancing under these terms 4 Conditions Concurrent Conditions or mutual duties of performance are to take place simultaneously 5 Conditions Subsequent 0 An event that terminates an existing duty 0 EXAMPLE ill pay you 10 each month as long as im employed I then lose job I can stop paying after I lose job bc there was a condition subsequent as long as im still employed 4 Kinds of Discharges Discharge termination of a contractual duty Performance the ful llment of a contractual obligation RULE IF performance is due under a contract and that performance has not been discharged is not excused the failure to perform will be a breach of contract entitling the nonbreaching party to damages 1 Discharge by Performance 0 Performance will discharge person from further obligation 2 Discharge by Breach Breach of contract wrongful failure to perform the terms of a contract that gives rise to a right to damages by the injured pa y One party s breach results in the other party s discharge lf breach isn t material nonbreaching party isn t discharged from contract still have performance obligation but may recover money damages arising from nonmaterial breach a Material Breach An unjusti ed failure to perform substantially the obligations promised in a contract KEY IS 1 whether the injured party obtain substantially what he had bargained for despite the breach or 2 whether the breach signi cantly impaired his rights under the contract It discharges the injured party from his duty of performance and injured party MAY recover damages The following are a material breach of contract 0 Partial performance if it omits essential part of the contract o If it is quantitatively or qualitatively serious 0 Intentional breach 0 Failure to perform a promise promptly if time is of the essence if the parties indicated that failure to perform by stated time is material otherwise injured party may recover damages only for loss caused by delay 0 Parties may within limits specify what breaches are to considered material b Substantial Performance Performance that is incomplete but that does not defeat the purpose of the contract does not discharge the injured party but entitles him to damages EXAMPLE adam builds 300000 house for betty but deviates from speci cations causing betty 10000 in damages lf courts considered this a material breach betty would not have to pay for house that s not on land a result that would clearly be an unjust forfeiture on adam s part So bc adams performance has been substantial courts would not deem the breach material and he would collect 290000 from betty c Anticipatory Repudiation An inability or refusal to perform before performance is due that is treated as a breach allowing the nonrepudiating party to bring suit immediately Party may announce before due date that she wont perform or will commit an act that makes her unable to perform it s a repudiation of contract which noti es other party that breach is imminent Courts view it as a breach and discharge the nonrepudiating party s duty to perform and permit her to bring suit 0 Nonbreaching party can wait until time performance is due to see if repudiator will retract repudiation and perform duties 0 To be effective retraction must come to attention of injured party before 1 she materially changes her position and starts relying on the repudiation OR 2 she indicates to other party that she considers repudiation to be nal o If retraction is effective 0 and repudiator does perform then there s a discharge by performance contract is complete and done o If repudiator doesn t perform there s a material breach 3 Discharge by Agreement of the Partie By agreement parties can discharge each other from performance under the contract a Mutual Rescission 0 Agreement between the parties to terminate their respective duties under the contract 0 A contract to end a contract o If one party has already fully performed a mutual rescission isn t binding b Accord and Satisfaction o Accord a contract by which an obligee promises to accept a stated performance in satisfaction of the obligor s existing contractual duty 0 Performance of the accord or satisfaction discharges the original duty 0 Substituted duty under a contract accord and the discharge of the prior contractual obligation by performance of the new duty satisfaction 0 EXAMPLE dan owes sara 50 parties agree dan will paint sara house in satisfaction of the debt the agreement is an executory accord When dan performs accord by painting her house he will by satisfaction discharge the 50 debt c Novation o A substituted contract involving a new third party promisor or promisee 4 Discharge by Operation of Law 0 Before duties were discharged from the actions of one or both parties 0 Here discharge is brought about by operation of law a Impossibility Subjective impossibility Promisor but not all promisors cannot perform does not discharge the promisor o If contracting party is unable to perform bc of nancial inability or lack of competence doesnt excuse promisor from liability for breach of contract 0 Objective impossibility no promisor is able to perform generally discharges the promisor o in situations where no one could render performance common law excuses a party from duties Destruction of the subject matter or of the agreed upon means of performance of a contract without the fault of the promisor is excusable impossibility b Subsequent lllegality 0 After the contract is entered into if performance becomes illegal or impractical as a result of a change in the law the duty of performance is discharged c Frustration of purpose 0 Principal purpose of a contract cannot be ful lled because of a subsequent event o If some circumstance arises that was unforeseen at the time of contracting which renders performance of the contract useless to one of the parties that contract will be discharged under the doctrine of frustration of purpose 0 Need to nd the THING that makes the contract have frustration of purpose what makes it useless d Commercial impracticability Where performance can be accomplished only under unforeseen and unjust hardship the contract is discharged under the Code and the Restatement o A party will be discharged from performing her duty only when her performance is made impracticable by a supervening event not caused by her own fault The nonoccurrence of the subsequent event must have been a basic assumption made by both parties when entering into the contract neither party having assumed the risk that the event would occur CHAPTER 18 Contract Remedies Monetarv Damages Compensatory Damages Contract damages placing the injured party in a position as good as the one he would have held had the other party performed loss of value to injured party caused by other party s failure to performde cient performance losscost avoided by injured party incidental damages consequential damages TYPES 1 Loss of Value value of promised performance minus value of actual performance 2 CostAvoded loss or costs the injured party avoids by not having to perform 3 Incidental Damages damages arising directly out of a breach of contract costs that arise ow from a breach expenses that arise in having to correct whatever the breach was 4 Consequentia Damages damages not arising directly out of a breach but arising as a foreseeable result of the breach lost pro ts Reliance Damages Contract damages placing the injured party in as good a position as she would have been in had the contract not been made 0 Include expenses incurred in preparing to perform in actually performing or in forgoing opportunities to enter into other contracts 0 This is better than compensatory when 1 unable to establish lost pro ts with reasonable certainty 2 the agreed upon contract would be unpro table Punitive Damages Monetary damages in addition to compensatory damages awarded in situations where breaching party acted with malice intent to cause harm or with careless disregard for the nonbreaching party 0 Purpose is to punish defendant and discourage himothers from wrongful conduct 0 Generally not recoverable for breach of contract unless conduct constituting the breach is also a tort Liquidated Damages Damages agreed to in advance by the parties to a contract in the event of a breach Clauses are only enforceable if they are 0 A reasonable estimate from likely damages from a breach 0 lnvolve a contract where those damages are not subject to actual calculation cant be quanti ed o Cant be used as penalty Limitation on Damages Foreseeability of Damages 0 Damages are recoverable only for loss that the party in breach had reason to foresee as a probable result of a breach when the contract was made o If loss was not foreseeable at time of entering into contract breaching party isn t liable 0 Test of foreseeable damages is objective based on what the breaching party had reason to foresee 0 Loss is deemed foreseeable as probable result of a breach because it followed from a breach 1 in the ordinary course of events or 2 as a result of special circumstances abt which the party in breach had reason to know Certainty of Damages Damages are not recoverable for loss beyond an amount that the injured party can establish with reasonable certainty lf injured party cant prove element of her loss with reasonable certainty she can only recover the portion of loss that she can prove No speculation Mitigation of Damages lnjured party may not recover damages for loss he could have avoided by reasonable effort 0 Must try to mitigate damages Remedies in Equity 0 When damages don t adequately compensate injured party equitable relief to protect injured party s interest Courts decision Speci c Performance 0 Speci c performance is doing that which you promised to do Equitable remedy that compels defaulting party to perform contractual obligations available when there is no adequate remedy at law Courts grant speci c performance in connection with contracts for sale of personal property ONLY if it is rare or unique 0 Always grant speci c performance in case of breach of contract for the sale of real property 0 Will not grant speci c performance of contracts for personal services 0 Where a contract is one not involving personal services and the thing that s subject of k is unique one of a kind special then law allows for speci c performance as a remedy assuming money is adequate Injunctions Court order prohibiting a party from doing a speci c act 0 Formal court order enjoining commanding a person to refrain from doing a speci c act or to cease engaging in speci c conduct 0 Designed to force a party to stop breaching the contract 0 Employees promise of exclusive personal services may be enforced by an injunction against serving another employer as long as the probable result wont deprive employee of other means of making a living 0 When services contracted for aren t unusual or extraordinary in character injured party cannot obtain injunction relief only remedy is an action at law for damages 0 To get an injunction need 0 Irreparable injury in the absence of injunction There is not way to recover the damages 0 No adequate remedy of law Money damages aren t going to be suf cient to compensate plaintiff o The plaintiff must prove a likelihood of success on the merits CHAPTER 21 Transfer of Title and Risk of Loss Rules 0 Title cant pass under a contract for sale until existing goods have been identi ed as those to which the contract refers 0 Future goods not existing and not identi ed cant constitute a present sale If buyer rejects the goods title revests to seller 0 In a lease title doesn t pass the lessee obtains the right to possess and use the goods for a period of time in return for consideration Identi cation If good is fungible identi cation of a share of undivided goods occurs when contract is entered intoformed good is identi ed when quantity is identi ed at time of sale 0 Fungibe all the goods are the same oil grain Its not a distinct item that can be separated from its counterparts its not physically distinct Passa e of Title 0 Title passes when parties intend it to pass provided goods existare identi ed 0 If parties have no explicit agreement as to transfer of title contract is silent as to when title transfers Code has rules to say when it passes look to whether contract requires movement of goods Physical Movement of the Goods 0 When delivery is made by moving goods title passes at time and place seller completes his performance with reference to delivery ofgoods Shipment Contract 0 Requires seller to send goods to buyer but doesn t require seller to deliver them to a particular destination 0 Title passes to buyer at time and place the goods are delivered to the carrier for shipment to buyer 0 Destination Contract 0 Requires seller to deliver goods to a particular destination 0 Title passes to buyer when goods are tendered to the buyer 0 Tenderl requires that seller at a reasonable time 1 make the goods available to the buyer at the particular destination 2 give notice to buyer that goods are available 3 keep the goods available for a reasonable period of time No Movement of the Goods 0 When delivery is made without movement of goods unless otherwise agreed title passes o On delivery of a document of title when contract calls for delivery of such document 0 At the time and place of contracting if the goods at that time have been identi ed by either seller or buyer as the goods to which the contract refers and no documents are to be delivered 0 When the goods are not identi ed at time of contracting title passes when the goods are identi ed Power to Transfer Title 0 The purchaser of goods obtains such title because his transferor either has or had the power to transfer however to encourage and make secure good faith acquisitions of goods its necessary to protect certain 3rd parties under certain circumstances Void Title to Goods 0 A void title is no tite A person claiming ownership of goods by an agreement that is void obtains no title of the goods 0 A thief or nder of goods or a person who acquires goods from someone under physical duress or under guardianship has no title to them and can transfer none 0 No title can be transferred Voidable Title to Goods 0 A voidable title is one acquired under circumstances that permit the former owner to rescind the transfer and revest herself with title as in the case of mistake common duress undue in uence fraud misrepresentation mistake or sale by a person without contractual capacity 0 The buyer has acquired legal title to the goods which may be divested by action of the seller o If the buyer were to resell the goods to a good faith bona de purchaser for value before the seller has rescinded the transfer of title the right of rescission in the seller is cut off and good faith purchaser acquires good title 0 Code no longer permits a minor seller to prevail over a good faith purchaser for value 0 The good faith purchaser acquires good title Entrusting Goods to Merchant Buyer in the ordinary course of a business is a person who in good faith and without knowledge that the sale to him is in violation of the ownership rights or security interest of another buys the goods in the ordinary course of business from a person in the business of selling goods of that kind Merchant who deals in goods of that kind is cloaked with appearance of ownershipauthority to sell code protects the innocent third party purchaser Any such entrusting of possession bestows on the merchant the power to transfer all rights of the entruster to a buyer in the ordinary course of business Does not protect the buyer in the course of business from a merchant to whom the goods have been entrusted by a thiefunauthorized person When a buyer of goods to whom title has passed leaves the seller in possession of the goods buyer has quotentrusted the goodsquot to the seller If that seller is a merchant and resells and delivers the goods to another buyer in course of business this second buyer acquires good title of the goods and sylvia s only remedy is against dennis
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'