c o nt r ac t s o v e r v i e w

(1) Are we in UCC or

Common law wor ld? (4) What are the remedies
for breach of K ?

- Common L aw: (2) Has an enforceable (3) Has the K been prefor med?
- Real estate and K been for med? - Anticipatory Repudiation
"Pizza With Crawling Escargot"
- Services "All Contracts Don't Stink" - Money Damages
- UCC: - Expectation
- Goods - Reliance
- Restitution
- Parol Evidence Rule - Specific Preformance
- Agreement - Warranties - Third Party After-party
- Consideration - Conditions - 3rd party beneficiaries
- Defense - Excuses - Assignment
- Statute of Frauds - Delegation
 c o nt r ac t s

Ar ticle 2 of Mixed contract?

Common L aw
UCC

- (1) All-or-nothing r ule

- unless divisible K real estate or
goods - (2) pre-dominant pur pose test - does services
the good or service play a bigger role?

Fo r mat i o n o f a Co nt r ac t

(1)
(2)
o f f er (3 )
ac c e pt anc e
c o ns i de r at i o n
- a manifestation of a willingness to enter - objective
into an agrmt that creates a power of - a seller shipping the wrong goods is a - bargained-for-exchange
acceptance acceptance + breach - parties exchange promises involving
NOT offer s? I mplied-in-Fact
- objective test - With an open-to-all offer, you must a legal detr iment or value
Contr acts can be
- must be directed to a specific per son, KNOW about the offer to accept it - not doing something ur legally
accepted w/ silence
unless its a contest or reward offer - generally u have to communicate entitled to is a detriment
acceptance - excludes gift promises and
invitation to a general
AD is NOT conditional gifts
deal is NOT
How specific does an an offer an offer
M ailbox Rule Past consider ation is
offer need to be? NOT consider ation Promising not to
Sue?
UCC: - acceptance my mail is
Common L aw: - more willing to fill in the settling a legal claim can be
ALL essential valid when sent
gaps - inapplicable for: sufficient consideration if:
terms need to be - only QUANTI TY is - (1) P has a good faith belief
- other types of
included needed communcations
in the validty of the claim,
- price NOT needed - option contracts OR
- Requir ment and Output - (2) there is reason to doubt
contracts are valid offers, the validty of the claim due
though not specific to uncer tain law
 Acceptance w/Additional Contr act
Ter minating an Offer Ter ms? M odification?

Offeror UCC: Less strict

constr uctive Offeror a reasonable Common L aw: Common law: UCC:
revokes by offeree
revocation dies amount of Mirror-Image Rule: - less strict
express rej ects the Acceptance will govern,
(offeree learns that time passes acceptance must - modification just
communication offer OR unless acceptance is Pre-existing Duty r ule
offeror has taken mirror offer, or its a
makes a made conditional on the you need new needs to be made
an inconsistnent counteroffer
counteroffer addtl terms consider ation to in GOOD
action)
modify a K, unless... FAI TH

Will the Will

ADDI TI ONAL DI FFERENT EXCEPTI ONS: Debt-Obligations:
I r revocable Offer s Ter ms Control? Ter ms Control? - (1) a change in promising par tial
preformance payment for release
- (2) a 3r d par ty from a debt
Yes, if: promises to pay obligation is ok if
No; K nock-out r ule
- (1) both parties are merchants - (3) unfor seen debt is:
(maj or ity)
UCC Fir m Unilater al K - - (2) doesnt mater ially alter deal difficulties that - (1) currently DUE,
Option K Detr imental
Offer Rule Offeree has - (3) initial offer didnt expressly would excuse and
Star ted Reliance diff terms are knocked
limit acceptance to its terms, and preformance - (2) UNDI SPUTED
Prefor mance out and gap-filling
- (4) offeror doesnt rej ect w/in a priovisions will apply
consider ation is reasonable time to the new terms from UCC
paid to keep the - (1) M erchant - when an offeree
starting
offer open for a - aka a business person reasonably and
preformance in
period of time - (2) wr itten detrimentally relies on
- (3) signed by offeror
a Uni K is
accepting the K the offer in some
Consider ation
- (4) explicit language
NOT to revoke
forseeable manner Substitutes
- frequent in general
- (5) time per iod: contractor/subcontractor
- either as specified in context
offer, OR not to
exceed 90 days Promissor y Quasi-Contr act?
Estoppel?

- (1) a promise is made that - (1) P confers a measur able

would be reasonably be benefit on the D
expected to induce reliance - (2) P reasonably expected to
- (2) promisee takes get paid
detr imental action in reliance - (3) unfair to let D keep
- (3) inj ustice can only be benefit w/o paying
avioded by enforcement of - damages are limited to fair
promise value of benefit conferred
 s t at u t e o f f r au ds is the K
enforceable?

K s in SOF wor ld have higher bur den

- A Signed Wr iting M ust Show:
- (1) K has been made
- (2) identify parties
- (3) contain essential elements of the deal
- (4) signed by the party against whom K is asserted
- (5) in WRI TI NG
- or, for some K s, par t prefor mance

UCC goods
Marriage Suretyship One Year Real property
+$500

K promising to gaurentee
K made in K made that by its K for the sale of an
the debt of another applies to goods for
consideration of ter ms can NOT be interest in real
$500 or more
marriage, like a preformed within one property
M ain pur pose
prenup year from its making
exception: if main
purpose in agreeing to
pay debt of another is for Writing must mention
surety's own benefit, we the QUANTI TY Par t prefor mance can
Full prefor mance of
are NOT in SOF world satsify SOF if any of the
a services K by either
TWO are met:
side satisfies SOF
- (1) Posession
Par t prefor mance - (2) Payment
satisfies SOF, but only for - (3) improvement to
quantity delivered and land
accepted

modifications SOF exemptions

of K

- if the deal with the

modification would be in
custom-made goods:
Confir ming M emo
SOF world, then SOF maker satsifies SOF as
failure to obj ect
requirmennts are needed soon as it makes a Judicial
within 10 days if
for the modification substantial beginning Admission
BOTH parties are
- if not, no SOF required toward manufacturing
even if intital deal was in
merchants
the goods
SOF world
 Has t he k be e n pr e f o r me d? o r i s i t e x c u s e d?

Parole-evidence Rule Warranties Conditions Excuse of Preformance

if the parties have reduced their frustration of

writing to a fully integr ated express impracticability
I mplied war r anty I mplied Constr uctive conditions must purpose
writing, then PRI OR statments or
of fitness for a war r anty of Condition of
writings related to this agrmt are be str ictly
par ticular pur pose merchantability Exchange (CCE)
NOT admissible satisfied
Common patter ns:
exclusions - Preformance becomes - Preformance
I ntegrated or partial illegal after K is can still occur,
triggered when - seller is a merchant
writing? one party's party receiving the formed but something
buyer relies on a that commonly deals
preformance is protection of the - subject matter of K is happened that
Evidence of pr ior or seller 's exper tise to w/ these goods condition can WAI VE it
conditioned on the destroyed, or under mined
contempor aneous buy something for a - warrant that the goods by: wor ds, or conduct
other side's - in a services K w/ a the reason for
I ntegrated writing: oral/written agreement special pur pose are fit for or dinar y
preformance "special person" the the K
- K expresses all Partial is admissible to commercial purposes
preforming party dies - very rare
terms of the K integration: establish: - can be discalaimed
or is incapacitated
- Merger Clause is there is a final - whether writing is if:
evidence of full writing, but some integrated and, if - conspicuous
integration terms left out so, completely or language and common law: UCC:
partially merchantability is - doctrine of I nexcusable Factor s:
- requires per fect
- meaning of mentioned substantial - Increase in cost is not
tender :
ambiguous term preformance - perfect goods excusable
UCC: - defense to states that CCE is - dying after the K is made is
- perfect delivery
- Less strict. formation or satsfied if there is normally inexcusable
- exceptions:
- Presumes a wiriting is enforcement NOT a mater ial - thier estate becomes liable
- K changes the
partially integrated, - ground for granting breach default rule, or
UNLESS the parties or denying remedy - failure must not - installment Ks
would have certainly - subsequent be willful
included a disputed contract
term in the writing modifications
- condition method of delivery
precedent to
effectiveness
buyer needs to give seller
Buyer has a a chance to cure defect if: - Shipment contr act (FOB Seller's place of busniess)
revocation of - there is time left on the - Seller needs to:
acceptance if K, or - get goods to common carrier
defect discovered - seller had reasonable - arrange delivery
in delivered grounds to believe a - notify buyer
goods w/in a buyer would accept a - Destination Contr act (FOB Buyer's place of business)
reasonable time replacement - seller must deliver goods to buyer's busniess, and
- notify buyer
 Other Ways that Might risk of loss during delivery?

Excuse Preformance
- (1) If mentioned in K, K controls risk of loss
- (2) If not, has a par ty breached?
- If yes, they bear risk of loss even if unrelated to delivery
Prefor mance is - (3) If no breach, and goods shipped, was it a shipment or
excused bcs the Accor d and destination K?
initial K has been Novation - Shipment K - Risk of loss on buyer
M odified or
Satisfaction - Destination K - Risk of loss on seller
- (4) In all other cases, is seller a merchant?
Canceled
- if yes, risk of loss stays with seller until the buyer receives the
goods
- if no, the risk of loss moves to the buyer when the seller
- Both parties can walk - Parties enter into earlier K
- BOTH parties agree tenders the goods
away from the K as agree that preformance will
be satisfied instead by the that a substitute person
long as there is some will take over the
prefor mance completion of a different
prefor mance contractual obligations
remaining from each - new person becomes
side - new preformance is the
accord responsible under
- otherwise, there is no the K
consider ation for this - excusal of initial
preformance is the - different than
modification delegating duties
satisfaction

- An accord agreement must be

- A unilater al offer may be supported by new
revoked at any time consider ation.
before the offeree begins - If the new consideration is
per for mance.
- But if the offeree relies on
worth less than what was
the offeror's promise and originally promised, then it is
incurs expenses in mere sufficient only if
prepar ation for (1) there is a good-faith
performance, the offeree dispute as to the amount owed
may be entitled to or
reliance damages. (2) it is of a different type than
what was originally owed.
 De f e ns e s t o FOr mat i o n

Fr aud/
M isunder standing incapacity mistake misrepresentation/ Duress illegality unconscionability
Non-disclosure

- (1) parties use a - illegal Ks are - Shocks the

material term that - Lacks capacity to enter A misrepresentation is an untrue
A mistake is a belief that uneforceable conscience
is open to 2 or into K: is not in accord w/ a assertion that is presented as a fact
or an opinion.
- BUT, a K entered - Procedural v.
more - minors present fact
interpretations into in fur ther ance Substantive
- mentally ill
- (2) each side - very intoxicated When a misrepresentation occurs, a of an illegal act that unconscionability
attached a diff people contract is voidable and can be is not itself illegal
meaning to the - K is voidable rescinded by the adver sely affected will still be
word - K for necessites: the M utual M istake: allows the party if: enforced
- (3) neither party party must still pay the adversly affected party to rescind - the misrepresentation was
knows or should fair value if: fr audulent OR mater ial
know about the - (1) there is a mistake of - the misrepresentation induced I mproper threats
confusion fact existing at time the assent to the contract and
deal is made - the adversely affected party Always improper
- (2) mistake relates to a j ustifiably relied on the - Threat to commit crime or tort
basic assumption of the K misrepresentation.
- Threat of criminal prosecution
and has a material impact, - Threat of civil litigation made in bad
AND faith
- (3) impacted party didnt - Threat that breaches contractual duty of
bear the risk of mistake good faith & fair dealing

I mproper if resulting ter ms are unfair

Unilater al M istake: allows the - Threatened act would harm recipient &
adversly affected party to rescind if: not significantly benefit threatening
- (1) she can prove all the party
elements of mutual mistake, - Threat's effectiveness significantly
AND increased by threatening party's prior
- (2) either: unfair dealing
- mistake would make K - Threatened act would otherwise
unconscionable, or constitute use of power for illegitimate
- other side had reason to ends
know or caused the mistake
 Re me di e s f o r br e ac h

Constr uctive
Anticipator y
Condition of
Repudiation
Exchange (CCE)
M itigation:
Common L aw:
Common L aw: party needs to take - If a party clear ly and unequivocally
Has there been substantial reasonable steps to mitigate repudiates, the nonbreaching party can UCC:
preformance by the breaching damages from breach either: - Reasonable grounds for
UCC: - (1) treat repudiation as a breach and
party? insecur ity about the other
Perfect tender rule. sue immediatley for damages,
- failure to substantially prefor m UNLESS
side's preformance allows
means the nonbreaching party can - the nonbreaching party has you to demand an adequate
withold their own preformance Perfect goods and perfect completed the entire preformance assur ance of preformance
- but if the breaching party has delivery. Seller must strictly and is only awaiting payment, - if party fails to respond w/in
substantially prefor med, the comply or be in breach. then they cannot sue early and a reasonable time, you can
nonbreaching party must must wait untill the contract treat this as a repudiation
preform, but may be entitled to deadline
- (2) ignore repudiation, demand
recover damages for breach
preformance and see what happens

a party can RETRACT its repudiation

as long as either side has not:
(1) commenced a lawsuit, or
(2) acted in reliance on the repudiation
 Ty pe s o f Damag e s

OTHER Types of
Expectation Damages
Damages

- Goal is to put party in the same economic Specific Restitituition Reliance

L iquidated
position it would be if K has been preformed Prefor mance Damages Damages
Damages
- measured by comparing value of
preformance w/o the breach to the value of
the prefromance w/ the breach gives plaintiff an
- UCC: - puts party in
- The nonbreaching party must be able to prove amount equal to the same posisiton as Punitive
allowed for economic benefit
these damages with reasonable cer tainty, unique goods if K never Damages
that the plaintiff
and the damages must be foreseeable. happened
conferred on the - cant recover both
- Damages are foreseeable if they were defendant
contemplated by the parties at the time the RD and ED almost
contract was made. never
allowed

Unfor seeable I ncomplete Diminution in

L ost Volume
Consequential Prefor mance M ar ket Value
Profits
Damages

- sometimes the
Not recover able unless the Builder should stop
cost-to-complete damages
breaching party had some reason to preforming if paying party will dramatically
know about the possiblity of these breaches in a partially overcompensate plaintiff,
special damages at time of K. completed building K so...
- Two types: - how much lower is the MV
- Gener al damages - loss that of what you got vs. what
you wanted?
anyone would incur from
- breaching party must have
breach. includes incidental acted in an innocent and
damages unintional manner for DMV
- Consequential damages - damages
losses that are unique to this
plaintiff
 3 r d Par t y Be ne f i c i ar i e s

As s i g nme nt De l e g at i o n
I ncidental I ntended Revocation or
beneficiar ies beneficiar ies M odification by I nitial
par ties
transfer of transfer of
r ights under a K do NOT have a
have a right allowed if the 3rd party duties under a K
right to sue
to sue beneificary did not reasonably
rely on the promise.

K benefits can be assignor still on 3rd party can enforce rights if a delegatee is gener ally
assigned unless K the hook for the right has vested: not liable for breach
says otherwise contract, unless - (1) 3rd party detr imentally UNLESS they receive
novation relies on rights consideration from the
- (2) 3rd party manifests assent delegating party
to the K
- (3) 3rd party filed a lawsuit
to enforce K