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181 Cards in this Set

  • Front
  • Back
Definition of a contract?
A legally enforceable agreement.
Quasi Contract? When applied?
An equitable remedy. Mention when strict application of contract law rules produces an inequitable result.
P has conferred a benefit on D.
P reasonably expected to be paid.
D realized unjust enrichment if P not compensated.
Measure of recovery under Quasi Contract?
Value of the benefit conferred. (not the contract price)
Unilateral Contract?
An offer that expressly requires performance as the only possible method of acceptance.
Bilateral Contract?
All contracts that are not unilateral contracts.

Assume a bilateral contract unless a reward/prize/contest or a unilateral contract.
What does Art. 2 of the UCC apply to?
(primarily) sales of goods
How to determine whether UCC Art. 2 applies?
1. type of transaction: SALE
2. subject matter of transcation: GOODS (tangible, personal property)
What law is applied to real estate transactions?
The Common Law.
What law is applied to service contracts?
The Common Law.
MIXED DEALS: What law should be applied if a transaction is a mix between sale of goods and services/something else?
1. Identify whether the sale of goods is the most important part of the sale.
2. If yes, apply UCC to the ENTIRE contract.

UCC is all or nothing.
MIXED DEALS EXCEPTION: What is the exception to the mixed deals 'all or nothing' rule?
If the contract divides payment, then apply UCC to the sale of goods portion and the common law to the rest.
When should you apply the Revised Article 2?
Never - it has not been adopted in any state.
When do you apply UCC Article 2A?
Lease of goods. (Will not be on essay exams.)
How to tell if you have an contract?
1. An Agreement
a) offer and
b) acceptance

2. The agreement is legally enforceable.
When is there an offer?
General Test: Manifestation of Commitment
Would a reasonable person in the position of the offeree believe that his or her assent creates a contract?

words or conduct showing a commitment are adequate
What is the intent requirement to create an offer?
Actual intent is irrelevant to whether there is an offer. What matters is the perception of a reasonable person in the position of the offeree.
In a contract for sales, when must a price term be present for there to be an offer?
1. Sale of real estate (common law): price and description are required for there to be an offer.

2. Sales of goods (Art. 2) - no price requirement, it's an offer if the parties so intend
What is the effect of vague or ambiguous material terms on an offer?
Under BOTH common law and UCC, it is not an offer if it contains vague or ambiguous material terms.
Examples of vague or ambiguous material terms?
"appropriate"
"fair"
"reasonable"
What is a requirements contract?
What is an output contract?
Requirements Contract:
where the quantity of goods to be delivered is stated in terms of the buyer's requirements.

Output Contract:
where the quantity of goods to be delivered is stated in terms of the seller's output or in terms of exclusivity.
Terms that signal a requirements or output contract?
"all"
"exclusively"
"only"
"solely"
Is this an offer for a requirements or output contract?
S offers to sell B all of the grits it might request for 5 years.
No. Under these facts the buyer is not committing to buy only from seller.
Increase in requirements under a requirements contract?
Increases under a requirements contract may not be UNREASONABLY DISPROPORTIONATE. Increase must be in line with prior demands.
Can an offer be accepted after it is terminated?
No. An offer that has been terminated is "dead."
What are the methods of terminating an offer?
1. Lapse of Time
2. Death of a Party Prior to Acceptance
3. Revocation of an Offer
4. Rejection
Termination: Lapse of Time?
Either time stated or reasonable time.
Usually over a month is beyond reasonable time.
Termination: Death of a party prior to acceptance?
Death or incapacity of either party after the offer but before acceptance terminates offer.

EXCEPTIONS:
1. option
2. part performance of offer to enter into a unilateral contract
Termination: Revocation of an Offer?
Ways an offer may be revoked:
1. unambiguous statement by offeror to offeree of unwillingness or inability to contract.
or
2. unambiguous conduct by offeror indicating an unwillingness or inability to contract that offeree is aware of.

*Only offer maker can revoke, but offeree must be aware.
If I make an offer to A and then make the same offer to B and A finds out, is the offer to A revoked?
No.
When is a revocation sent through the mail effective?
Offer is not terminated until received by the offeree.
Can an offer be revoked after it has been accepted?
No.
What offers are irrevocable?
Generally offers can be freely revoked. 4 situations where offers are irrevocable:
1.Option
2. UCC "Firm Offer Rule"
3. If there has been (a) reliance that is (b) reasonably foreseeable and (c) detrimental
4. Start of performance pursuant to an offer to enter into a unilateral contract makes that offer irrevocable for a reasonable time to complete performance.
What are options?
Offer has been made and offeror
1. promised to not revoke (or has promised to keep the offer open) AND
2. this promise is supported by payment or other consideration ("option")

Options are irrevocable.
What is the UCC Firm Offer Rule?
An offer can't be revoked for up to 3 months if:
1. offer to buy or sell goods
2. signed EXPRESS written promise to keep the offer open, and
3. party is a merchant
What is a merchant?
Generally, a person in business.
What if in a contract for sale of goods, merchant promises in writing to keep the offer open for six months?
The offer may terminate after 3 months. The firm offer rule is only good for three months.
Unilateral start of performance v. mere preparation and irrevocable offers?
Start of performance on a unilateral contract makes the contract irrevokable. Mere preparation does not.

*However, if the mere performance constitutes detrimental reliance that was reasonably foreseeable, then will be irrevokable.
Termination of an offer: Rejection
Rejection comes from the words or conduct of the offeree.
Methods of Indirect Rejection?
1. counteroffer
2. conditional acceptance
3. additional terms / mirror image rule (common law only - doesn't apply to UCC sale of goods)
Effect of a counteroffer?
A counteroffers alway terminates the offer and becomes a new offer.

Note: bargaining is not a counteroffer and does not terminate the original offer
Effect of a conditional acceptance?
A conditional acceptance operates as a counteroffer. It terminates the offer and becomes a new offer.
Words to signal a conditional acceptance?
"if"
"only if"
"provided"
"so long as"
"but"
"on condition that"
Indirect Rejection: Mirror Image Rule?
Under the COMMON LAW ONLY a response to an offer that adds new terms is treated like a counteroffer rather than an acceptance.
Additional terms with acceptance under UCC Article 2?
An offer to buy or sell goods and a response with additional terms raises 2 questions:
1. is there a contract?
Under UCC a response to an offer that adds new terms (but does not make the new terms a condition of acceptance) is generally a 'seasonable expression of acceptance.' It is not relevant whether the parties are merchants.

2. are the additional terms part of the contract?
If at least 1 party is not a merchant, the additional term is merely a proposal that is to be separately accepted or rejected.
If both parties are merchants, the GENERAL RULE is the additional term is a part of the contract.
EXCEPTIONS:
not part of the contract if additional term materially changes the contract or if offeror objects to the change
Methods of Acceptance?
1. Offer can control the method of acceptance.
2. Improper verbal response to an offer then later conduct indicating a contract.
3. Offeree fully performs
4. Offeree starts to perform
5. Offeree promises to perform
6. Mail Box Rule
7. Seller of goods sends the 'wrong' goods
Acceptance: Improper verbal response to an offer then later conduct indicating a contract?
(Recall conditional acceptance is a counteroffer.)
Sometimes, notwithstanding a response to an offer that does ont qualify as an acceptance, teh parties thereafter act as if there is a contract.
Under COMMON LAW, such conduct is treated as acceptance of a counteroffer.
Under ARTICLE 2, such conduct is treated like a new contract based solely on conduct.
Acceptance: The offeree fully performs?
Fact pattern:
1. verbal offer but
2. no words of acceptance, instead
3. offeree fully performs
Question: is notice of performance required? Turns on
1. what the offer requires or
2. whether offeree has reason to believe that offeror will not learn of the accptance

*Full performance is always acceptance, if no notice then payment may be excused.
Acceptance: The offeree starts to perform?
Fact pattern:
1. verbal offer but
2. no words of acceptance, instead
3. offeree starts to perform

Start of performance is acceptance of an offer to enter into a bilateral contract (treated as an implied promise to perform) but is not acceptance of an offer to enter into a unilateral contract (must complete performance to accept a unilateral contract).
Acceptance: The offeree promises to perform?
Fact pattern:
1. words of offer
2. words of acceptance, but
3. no performance

Most offers may be accepted by a promise to perform.

Exceptions where performance is required for acceptance:
1. offers that expressly require performance for acceptance (unilateral)
2. reward offers
Acceptance: Mailbox Rule?
1. all communications OTHER THAN ACCEPTANCE are effective only when received.
2. acceptance is GENERALLY effective when mailed.
3. if offeree sends a REJECTION and then an acceptance the first to arrive is effective
4. you can't use the mailbox rule to meet an option deadline.
Acceptance: Seller of goods sends the 'wrong' goods?
General Rule: Acceptance and breach.

Accomodation: if an explanation is provided for the wrong goods, then Counteroffer and No Breach
Who can accept an offer?
Only:
1. a person who knows about the offer AND
2. who is the person to whom it was made

Offers cannot be assigned. Options can be assigned unless the option provides otherwise.
I offer a $10 reward for whoever finds my dog. You find my dog and return it but don't know about the offer. Did you accept?
No. A person to whom an offer is made, but who does not know about the offer, cannot accept.
Reasons an agreement might not be legally enforceable?
1. lack of consideration or a consideration substitute for the promise at issue
2. lack of capacity of the person who made the promise
3. statute of frauds
4. existing laws that prohibit the performance of teh agreement
5. public policy
6. misrepresentation
7. nondisclosure
8. duress
9. unconscionability
10. ambiguity in words of agreement
11. mistakes at the time of the agreement as to the material facts affecting the agreement
Forms of consideration?
1. performance (doing something not legally obligated to do)
2. forbearance (not doing something not legally entitled to do
3. promise to perform
4. promise to forbear
'bargained for' requirement for consideration?
Consideration should be asked for by the promisor IN EXCHANGE for her promises.
Is there sufficient legal detriment to be consideration?
You offer to pay me $100 not to bicycle. I don't bicycle anyway. Is there sufficient legal detriment?
If there was a forbearance, this is sufficient. It doesn't matter whether you found it to be an actual detriment.
Is a promise sufficient consideration?
Yes! This is how the world works.
Unless:
Illusory promise exception - "i promise unless i change my mind" (this is not consideration - usually illusary promise will be a wrong answer)
Should you inquire into the adequacy of consideration?
No - not relevant in contract law.
Is past consideration adequate consideration?
No. The general rule is that past consideration is not consideration.

Exception: If the past performance was expressly requested and there was an expectation of payment.

Homer asks Apu to save Lisa, knowing that Apu would expect to be paid. After Apu saves Lisa, Homer promises to pay Apu $3,000. This is legally enforceable.
Preexisting contractual or statutory duty rule?
COMMON LAW:
Generally - New consideration is required for contract modification.
Exception -
1. addition to or change in performance
2. unforeseen difficulty so severe as to excuse performance
3. third party promises to pay
4. fixing a mistake in the k
UCC ARTICLE 2
No Preexisting Legal Duty Rule. New consideration is not required to modify sale of goods contract. Good faith is the test for changes in an existing sale of goods contract.
Partial payment as consideration for release? (promise to forgive balance of debt?)
If debt is DUE and is UNDISPUTED, then part payment is not consideration for release.

If debt is not yet due or is disputed then partial payment can be considertaion for release.
What are consideration substitutes?
A promise is legally enforceable even though there is no consideration is there ia a consideration substitute:
1. Seals
2. Written promise to satisfy an obligation for which there is a legal defense.
3. Promissory Estoppel (Detrimental Reliance)
Is a seal a substitute for consideration?
No. The majority rule is now that a seal is not a consideration substitute.
A owes B $1,000. Legal action to collect this debt is barred by SOL. A writes B, I know I ower you $1,000. I will pay you $600. Is there consideration for B's new promise? Can A enforce the new promise?
No, there is no consideration because B did not ask for anything in return.
Yes, A can enforce the new promise, there is a consideration substitute.

*A WRITTEN promise to satisfy an obligation for which there is a legal defense is enforceable without consideration.
Promissory Estoppel?
Promissory Estoppel / Detrimental Reliance:
1. Promise
2. Reliance that is reasonable, detrimental and foreseeable.
3. Enforcement necessary to avoid injustice.
Who lacks lacks capacity to contract?
1. infanct (under 18)
2. mental incompetents (lacks ability to understand agreement)
3. intoxicated person (if other party has reason to know)
What are the consequences of incapacity?
1. Right to disaffirm by person without capacity.
2. Implied affirmation by retaining benefits after gaining capacity (Ratification)
3. Quasi-contract liability for necessaries (A person who does not have capacity is legally obligated to pay for things that are necessary like food, clothing, medical care, shelter. That liability is based on quasi-contract, not on contract law.)
How do courts feel about the Statute of Frauds?
They are hostile to it!
What is the goal of the statute of frauds?
To require more than just oral proof of a contract. To prevent fraudulent claims.
Proof required by the Statute of Frauds?
1. performance OR
2. a writings signed by the person asserting that there was not agreement.
What contracts are within the statute of frauds?
MY LEGS (marriage, year, land, executor, goods, surety)

1. Promises to Answer for (Guarantee) the Debts of Another (Suretyship)
Main purpose exception: if the obligation allegedly guaranteed was to benefit the guarantor, then not even that guarantee is within the SOF
2. Promises by executor to 'answer for personally' (guarantee personally) the debts of the decedent)
3. Promise in consideration of marriage
4. Service contract not CAPABLE of being performed in a year from the time of the contract.
5. Transfers of Interest in Real Estate (except leases for a year or less)
6. Sale of goods for $500 or more (UCC Art 2)
When is there a Statute of Frauds defense?
1. The agreement is within the Statute of Frauds AND
2. the SOF is not satisfied AND
3. the D asserts a SOF defense AND
4. if SOF defense is asserted and establised there is no legally enforceable agreement (no k liability)
How is the SOF satisfied?
1. Performance or
2. a Writing or
3. a Judicial Admission
When does performance satisfy the SOF?
1. Service Contract
FULL performance by EITHER party

2. Sale of Goods Contract
a) Seller's part performance of delivery of ordinary goods, to the extent of the part performance (SOF satisfied for delivered goods; not satisfied for undelivered goods)
b) Part performance of specially manufactured goods: SOF is satisfied as soon as seller makes a 'substantial beginning' (seller has done enough work that it is clear that they are working on custom made goods)
c) buyers part performance when there are multiple items: SOF satisfied w/ respect to those items paid for
d) buyer's part performance (single item) - payment for part of the single item satisfies the SOF w/ respect to the entire item

3. Real Estate Contract: most jurisdictions do not apply SOF if there is performance that unequivocally indicates that the parties contracted for the sale of land. Usually need at least two of:
a) payment in whole or part
b) possession
c) valuable improvements
When does a writing satisfy the SOF?
Non UCC contracts:
1. Look at the contents of the writing OR writings - All Material Terms test (who & what)
2. Writing must be signed by the person who is asserting there is no agreement.

UCC Art 2 Contracts:
1. Writing must indicate there is a contract for sale of goods and contain the quantity term
2. Generally the writing must be signed by the defendant. Exception: a person's failure to respond to a signed writing; both parties must be merchants and teh person who received a signed writing w/ a quantity term that claims there is a k fails to respond w/in 10 days of receipt.
When does Judicial Admission satisfy the SOF?
If the D asserting a SOF defense has admitted in a pleading or testimony he entered into an agreement w/ plaintiff, the SOF defense will be barred. Admission includes 'there was a k but never in writing.'

Includes (under oath):
1. testimony in ct.
2. signed pleading
3. response to an interrogatory
When do RULES OF LAW require authorization to enter into a contract for someone else need to be in writing?
RULES OF LAW require only when that agreement is covered by the SOF. (authorization must be of 'equal dignity' to the k)
When do RULES OF LAW require written evidence of modification to a written contract?
1. look at the deal with teh alleged change
2. determine whether the deal w/ the alleged change would be w/in the SOF
If the deal w/ the alleged change would be w/in the SOF, then the alleged modification agreement must be in writing.
What if the agreement is in writing and requires that all modifications be in writing?
Under common law, these provisions are not effective. Ignore this k language.

Under UCC, these provisions are effective unless waived.
Contract w/ illegal subject matter?
Agreement is not enforceable.
Contract w/ legal subject matter but illegal purpose?
Agreement is enforceable only by the person who did not know of the illegal purpose.
Examples of when a court will not enforce an agreement because of public policy?
An exculpatory agreement that exempts intentional or reckless conduct from liability or a covenant not to compete w/out a reaonsable need or reasonable time and place limits.
When will a k be unenforceable because of misrepresentation?
A false assertion of fact that induces the k. No wrongdoing required for misrepresentation.
When will nondisclosure be a reason for not enforcing a k?
When it is wrongful.
When is a contract not enforceable because of duress?
1. Economic duress
a) bad guy - improper threat
b) vulnerable guy - no reasonable alternative

2. Physical duress
Doctrine of unconscionability?
Empowers a court to refuse to enforce all or part of an agreement:
The court looks to see whether UNFAIR SURPRISE or OPPRESIVE TERMS were present at the time the agreement was made.
(applies to UCC and common law)
When will an ambiguity in words of agreement be a reason for not enforceing an agreement? 2 SHIPS PEERLESS
no contract if:
1. parties use a MATERIAL term that is open to at least two reasonable interpretations and
2. each party attaches different meaning to the term, and
3. neither party knows or has reason to know the term is open to at least two reasonable interpretations
(2 ships peerless)
When will mistake of fact be a reason for not enforcing an agreement?
Mistake of Fact Existing at Time of Contract:

A. Mutual mistake of material fact = no contract if:
1. both parties mistaken and
2. basic assumption of fact and
3. materially affects the agreed exchange, and
4. not a risk that teh party trying to get out of the deal bears*
How is the parol evidence rule like an evidence rule?
1. the issue is whether evidence is admissible and
2. purpose for which the evidence is to be introduced is often determinative
Vocabulary of parol evidence:
1. integration
2. partial integration
3. complete integration
4. merger clause
5. parol evidence
6. reformation
1. integration - WRITTEN agreement that court finds is the FINAL agreement, triggers the parol evidence rule
2. partial integration - WRITTEN and FINAL, but NOT COMPLETE(usually wrong answer)
3. complete integration - WRITTEN and FINAL and COMPLETE (usually wrong answer)
4. merger clause - k clause such as 'this is the complete and final agreement'; is pursuasive but not conclusive
5. parol evidence - words of a party (or parties) before integration; oral or written
6. reformation - equitable action to modify written k to reflect actual agreement
What is parol evidence?
-words of party (or parties)
-before integration, i.e., before agreement was put into written form
-oral or written
Parol evidence fact pattern: contradicting the written deal.
Cannot admit parol evidence to contradict the terms of a written agreement.

Clerical error exception: Judge may consider for the limited purpose of determining whether there was a mistake when reducing the agreement to writing.
Parol evidence fact pattern: getting out of a written deal.
A court may admit evidence of earlier words of the parties for the limited purpose of determining whether there is a defense to the enforcement of the agreement such as misrepresentation, fraud, or duress.
Parol evidence fact pattern: explaining a term in the written deal.
A court may admit evidence of earlier agreements for the limited purpose of resolving ambiguities in the written contract.
Parol evidence fact pattern: adding to the written deal.
A court may only admit evidence of earlier agreements as a source of consistent additional terms if the court finds:
1. the written agreement was only a partial integration or
2. the additional terms would ordinarily be in a separate agreement
Sources of contract terms (such as when the court is looking at parol evidence)?
In addition to words, conduct can be a source of contract terms:
Such conduct takes three forms:
1st - court looks to course of PERFORMANCE (most persuasive)
2nd - court looks to the course of DEALING (more persuasive)
3rd - court looks to CUSTOM and usage to explain words in contracts or to fill gaps (persuasive)
Delivery obligations of seller of goods if delivery by common carrier.
1. Shipment Contracts: The seller completes is delivery obligation when it
a) gets the goods to a common carrier, and
b) makes reasonable arrangements for delivery and
c) notifies the buyer

2. Destination Contracts
seller does not complete its delivery obligation until the goods arrive where the buyer is

3. Determining whether a contract is a shipment or destination contract:
Most are shipment contracts.
"FOB City where seller is/goods are" = shipment contract
"FOB any other city" = destination contract
Risk of loss problem:
1. after k has been formed but before buyer receives goods
2. the goods are damages or destroyed
3. neither the buyer nor seller is to blame
1. Agreement of the parties controls. If none then,
2. Breaching party is liable for any uninsured loss even though breach is unrelated to the problem. If none, then
3. If delivery was by common carrier other than seller, then risk of loss shifts from seller to buyer at the time that the seller completes its delivery obligations. If none, then
4. The determining factor is whether the seller is a merchant. Risk of loss shifts from a merchant-seller to the buyer on the buyer's receipt of the goods. Risk of loss shifts from a non-merchant seller when he or she tenders the goods.
What types of warranties are there?
1. Express Warranties

2. Implied Warranty of Merchantability

3. Implied Warranty of Fitness for a Particular Purpose
Express Warranty
Words that promise, describe or state facts or for use of sample or model. (not sales talk which is more general, an opinion)
"all steel"
"guaranteed to operate for two years"
"seller shows buyer a sample"
Implied Warranty of Merchantability
when any person buys any goods from a merchant of goods of that kind, a term is automatically added to the k by operation of law that:

the goods are fit for the ordinary purpose for which such goods are used.
Implied Warranty of Fitness for a Particular Purpose
1. Buyer has particular purpose;
2. buyer is relying on seller to select suitable goods;
3. seller has reason to know of purpose and reliance.

Warranty: goods fit for particular purpose.
Privety: Horizontal and Vertical
Manufacturer
|
Wholesaler
|
Retailer
|
Customer - Spouse - Neighbor- Bystander
Types of Contractual Limitations of Warranty Liability?
1. Disclaimer

2. Limitation of Remedies
Disclaimers (Limitation on Warranties)?
eliminates implied warranties in EITHER of the following ways:

1. CONSPICUOUS language of disclaimer, mentioning merchantability OR

2. "as is" or "with all faults"
Limitation of Remedies (Warranties)
(Can't eliminate warranty)

Limits or sets recovery for any breach of any warranty.

1. general test is unconscionability
2. prima facie unconscionable if breach of warranty on consumer goods causes personal injury
Perfect Tender Rule?
1. Applies only to sale of goods.
2. Seller's performance must be perfect:goods and delivery.
3. Less than perfect tender generally gives the buyer the option of rejection.
Rejection of Goods - General Rule?
If seller does not meet perfect tender standard, buyer may retain and sue for damages or reject "all or any commercial unit" and sue for damages.
Cure?
In some instances, a rejection of goods by buyer under Perfect Tender Standard can be "cured" by seller (meaning seller gets a second chance).
1. If seller had reasonable grounds for believing the initial imperfect tender would be acceptable, then has the opportunity to cure when goods are rejected. Look for information about past dealings between the parties.
2. Time for performance has not yet expired.
Can buyer compel seller to cure?
No.
What is an installment contract?
A k that REQUIRES or AUTHORIZES:
1. delivery of the goods in separate lots
2. to be separately accepted
(not the same as buying something on credit and paying for it in monthly installments.
Imperfections in delivery of installment contract goods?
Buyer has the right to reject an installment only where there is a SUBSTANTIAL IMPAIRMENT in that installment can't be cured.
(Installment Ks allows for fixes in the next delivery)
Acceptance of an imperfect tender?
1. if buyer accepts the goods, it can't later reject them.
2. Payment w/out opportunity for inspection is not acceptance.
3. If buyer keeps the goods w/out objection it implies acceptance.
Revocation of Acceptance of goods?
A buyer who accepts goods cannot later reject them.

In limited circumstances, a buyer can effect a cancellation of the k by revoking its acceptance of the goods:
1. nonconformity substantially impairs the value of the goods and
2. excusable ignorance of grounds for revocation or reasonable relieance on seller's assurance of satisfaction and
3. revocation w/in a reasonable time after discovery of nonconformity
In rejection of goods or revocation of acceptance of goods, what other requirements does buyer have?
1. seasonably notify seller
2. hold the goods for seller
3. follow reasonable seller instructions
Consequences of a rejection of goods or revocation of acceptance of goods from seller?
1. Goods go back to seller
2. No buyer payment obligation
Open price term in a sale of good k?
price must be reasonable at time of delivery
"Price to be fixed by buyer or seller"?
Price must be fixed in good faith.
Price payable in goods?
Each party is seller of goods it provides.
Common law performance requirement?
Perfect Tender Rule does not apply.

SUBSTANTIAL PERFORMANCE: In a common law k, if one party SUBSTANTIALLY PERFORMS then the other party must pay or otherwise perform.
Nonmonetary remedies (in rem) for unexcused nonperformance?
1. Specific Performance / Injunction
2. Reclamation
Specific Performance / Injunction?
Equitable remedy. Look for adequacy of remedy at law or unclean hands or other parties' equities.

Real estate: special rules for land; specific performance will usually be available unless purchased by 3rd party bona fide purchaser for value.

Contract for sale of goods: will get specific performance for unique items (antiques, art, custom made) or other appropriate circumstances

Contracts for services: no specific performance, possible injunctive relief
Reclamation?
Right of an unpaid seller to get its goods back.
1. buyer must have been insolvent at the time it received the goods and
2. seller demands return goods w/in 10 days of receipt (or "reasonable time" if before delivery there had been an express representation of solvency to buyer)
3. buyer still has goods at time of demand
What are the rights of a buyer in the ordinary course of business in entrustment?
If owner leaves goods w/ a person who sells goods of that kind
and
that person wrongfuly sells the goods to a third party
then
such a good faith purchaser from dealer cuts off rights of the original owner / entruster.
What if B steals goods from A and sells to good faith purchaser for value C?
A can recover her watch from C. If stolen, original owner will always prevail.
What are the goals of money damages for breach of contract?
Compensate plaintiff, not punish defendant.
Measure of monetary damages for breach of contract - general approach?
Protection of Expectation:

Put plaintiff in same economic position as if contract had been performed. Compare value of D's performance w/out breach to value of D's performance w/ breach.
What is the EXPECTATION element in money damages?
Expectation: the party believes the other contracting party won't breach
Measure of monetary damages for breach of contract - protection of reliance interest?
Pay plaintiff by putting plaintiff in same economic position as if contract had never happened.

*only apply on bar exam if you are told to
Measure of monetary damages for breach of contract - protection of restitution interest?
Pay plaintiff by putting D in same economic position as if k had never happened.
(Value of what D got)

*only apply on bar exam if you are told to
Policy of damages rules for Sales of Goods - Art. 2?
Reflect the general contract damages policy of putting the innocent party where it would have been had the k been performend (EXPECTATION).
Damages rules for Sales of Goods - Art 2?
Two relevant facts:
1. who breached
2. who has the goods

Four sets of rules:

1. Seller breaches, buyer keeps the goods
2.Seller breaches, seller has the goods
3. Buyer breaches, buyer keeps the goods
4. Buyer breaches, seller has the goods
Seller breaches, buyer keeps the goods?
FMV if perfect tender
- FMV as delivered
= damages
Seller breaches, seller has the goods?
Market price @ time of discovery of the breach
- contract price
= damages

or

replacement price
-contract price
= damages
Buyer breaches, buyer keeps the goods?
Contract Price
Buyer breaches, seller has the goods?
Contract Price
-Market Price @ Time & Place of Delivery
= Damages

or

Contract Price
- Resale Price
=Damages

*AND IN SOME SITUATIONS, LOST PROFITS
Lost profits for volume seller?
Lost profits.

(Even if sells to another person because would have sold 2 in case of nonbreach.)
Incidental Damages?
Costs incurred in finding replacement performance - always recoverable.
Consequential Damages
Only recoverable if foreseeable at the time of K (what the breacher knew or should have known).

Think of damages as either being:
1. general damages - the kind any person would sustain or
2. Consequential damages - the kind of loss that is special to this plaintiff and was foreseeable
Avoidable Damages?
No recovery for damages that could have been avoided without undue burden on Plaintiff. Burdens of pleading and proof on Defendant.
Certainty (limitation on damages)? Liquidated Damages?
If damages don't meet 'reasonable certainty test' then Plaintiff probably won't get Expectation Damages.

Liquidated Damages - not valid if too high and will operate as a penalty on D. Tests:
1. damages were difficult to forecast at time k was made and
2. provision is a reasonable forecase
(fixed damage amounts are presumptively invalid!)
Excuse of nonperformance of contract because of other guy's improper performance?
1. Common Law and Material Breach Rules
a) damages can be recovered for any breach
b) only a material breach by one guy excuses the other guy from performing
c)whether a breach is material is a fact question
d) if there is substantial performance then the breach is not material. If the breach is material, then the performance was not substantial.
(*if you perform <half of a numerical k, then breach is material)
Divisible Contract Exception: there can be a k recovery for substantial performance of a divisible part even though there has been a material breach of entire k; look @ whether price is states as lump sum or per performance basis)


2. Article 2 Perfect Tender Rule
Excuse becaues of non-occurence of a condition:
What is a condition?
a mutually agreed upon promise modifier. Language in a k that that does not create a new obligation, but merely limits obligations created by other language in the k.

"if"
"only if"
"provided that"
Excuse becaues of non-occurence of a condition:
What is the standard for determining whether a condition has occurred / been satisfied?
General Rule: strict compliance is required for 'satisfaction' of a condition.
Excuse becaues of non-occurence of a condition:
How can a condition be excused?
Generally, if the condition does not occur, all remaining contract obligations are excused.

Exceptions:
1. Waiver/estoppel
2. Prevention
3. Avoidance of Forfeiture
Excuse becaues of non-occurence of a condition:
How can a condition be excused:
WAIVER/ESTOPPEL
Waiver/estoppel: the person who benefitted from the condition may waive it and the other party must perform as if the condition had occurred. (Statement of condition beneficiary before=estoppel, after=waiver)
Excuse becaues of non-occurence of a condition:
How can a condition be excused:
PREVENTION
If the party protected by the condition hinders or prevents the occurrence of teh condition, then the condition is excused and the k must be performed.
Excuse becaues of non-occurence of a condition:
How can a condition be excused:
AVOIDANCE OF FORFEITURE
Sometimes courts excuse the non-occurrence of a condition to avoid excessive harm to the party not protected by teh condition.
Anticipatory repudiation?
Unambiguous statement or conduct indicating:
1. the repudiating party will not perform
2. made prior to the time that performance was due

Anticipatory repudiation by one party excuses the other party's duty to perofrm. It also generally gives rise to an immediate claim for damages for breach unless the claimant has already finished her performance.
Can an anticipatory repudiation be retracted?
Yes, it can be reversed / retracted so long as there has been no material change in position by the other party. If timely retracted, duty to perform is reimposed but performance can be delayed until adequate assurance is provided.
Reasonable grounds for insecurity?
1. If the words or conduct of one party give 'reasonable grounds for insecurity' then

2. the other party can in writing demand adequate assurance and

3. if it is 'commercially reasonable' can suspend performance until it gets adequate assurace.
Excuse by reason of a later contract?
1. Recission
2. Accord and Satisfaction
3. Modification
4. Novation
Recission?
Recission (cancellation):
Valid recission will only occur when at least some performance remains for all parties.
Accord and Satisfaction?
Substituted performance
(Look for if...then)

Accord: an agreement by the parties to an already existing obligation to accept a different performance in satisfaction of the existing obligation; the new agreement is the accord

1. If the new agreement (the accord) is performed (satisfaction), then performance of the original obligation is excused.
2. If the accord is not performed, then the other party can sue on either the original obligation or the accord.
Modification?
Substituted agreement

An agreement by parties to an existing obligation to accept a different agreement in satisfaction of the existing obligation.
Novation?
Substituted person.

Novation: an agreement between both parties to an existing contract to the substitution of a new party (samer performance, different party)

Who is liable after novation? Excuses the contracted performance of the party who is substituted for or replaced.
Delegation v. Novation?
Novation requires the agreemetn of both parties to the original contract and excuses the person replaced from any liability for nonperformance.
Delegation does not require the agreement of both parties and does not excuse.
Excuse of performance by reason of a later, unforseen event.
Performance of contractual duties (other than a k duty to pay $) can be excused under
impossibility, or impracticability or frustration of purpose.
1. something that happens after k formaiton but before the completion of the k performance; and
2. that was unforeseen; and
3. that makes the performance impossible or commercially impracticable or frustrates the purpose of the performance
Difference between impossibility and impracticability?
1. impossibility is objective, impracticability is subjective
2. impossibility can't be done, impracticability can only be done with extreme and unreasonable difficulty and expense
Death after contract?
Generally, death does not make a person's k obligations disappear.

However, where contract is for performance by a 'special person' (celebrity) and the person dies, then impossibility will apply.
Effect of subsequent law or regulation that makes performance of k illegal?
Excused by impossibility.
Effect of subsequent law or regulation that makes mutually understood purpose of k illegal?
Excused by frustration of purpose.
Vocabulary of 3rd party beneficiary problems:

Third party beneficiary

promisor

promisee

intended / incidental

creditor / donee
Third party beneficiary: not a party to the k, able to enforce k other made for her benefit

promisor: person who is making the promise that benefits the 3rd party

promisee: person who obtains the promise that benefits the 3rd party

intended / incidental: only intended beneficiaries have k law rights; intent of parties to k determines whether intended or incidental

creditor / donee: intended beneficiaries are either donees or creditors (usually donees); look at whether beneficiary was already a creditor of the promisee.
When can a contract with a 3rd party beneficiary be modified?
If the 3rd party knows of and has relied on or assented as as requested, then her rights have vested and teh k can't be cancelled or modified w/out her consent unless the k otherwise provides.
In a k w/ a 3rd party beneficiary, who can sue whom?
1. beneficiary can recover from promisor
2. promisee can recover from promisor
3. beneficiary can't recover from promisee -- EXCEPT a creditor beneficiary can recover from promisee on pre-existing debt
What defenses can a promisor being sued by a 3rd party beneficiary raise?
Any defenses promisor would have been able to raise against promisee under normal k law.
What is an assigment?
Transfer of rights under a contract:
1. k between only two parties
2. one of the parties later transfers rights under that k to a 3rd party

(Note difference between assignment and a 3rd party beneficiary is that 3rd party beneficiary is named in the k)
Vocabulary of assignments:

Assignor

Assignee

Obligor
Assignor: party to the k who later transfers rights under k to another

Assignee: not a party to the k; able to enforce the k because of the assignment

Obligor: other party to the k
Limitations on assignments through contract provisions?
Courts favor assignability of k rights.

1. language in k prohibiting assignments: takes away the right to assigne but not hte pwoer to assign. Assignor is liable for breach of k, but an assignee who does not know of the prohibition can still enforce the assignment.
("rights hereunder are not assignable")

2. k language invalidating assignments: language that takes away the right and power to assign. Assignment is breach by assignor and leaves no rights in assignee.
("all assignments of rights under this k are void")
Is it a prohibition on assignment or an invalidation of assignments?
When in doubt assume prohibition.
Common law bars on assignments?
common law bars an assignment that substantially changes the duties of the obligor

1. assignment of a right to payment is never a substantial change

2. assignments of a right to k performance other than right to payment is usually a substantial change
Is consideration required for k assignments?
Generally no, but gratuitous assignments can be revoked.
In an assignment of a k, who can recover from whom?
Assignee can recover from obligor.

Assignor for consideration cannot recover from obligor. Assignor transfered his rights to performance/payment to the asignee.

Obligor has same defenses against assignee as it would have had against assignor.

Payment by obligor to assignor is valid until he finds out about the assignee.

Modification agreements between obligor and assignor are effective if assignor didn't know about assignee.
Implied warranties in an assignment for value?
Assignment FOR VALUE creates 3 implied warranties:
1. the right assigned actually exists
2. the right assigned is not subject to any defenses by the obligor and
3. the assignor will do nothing to impair the value of the assignment. Assignor however, does not warrant what the obligor will do.
Multiple gratuitous assignments?
If competing multiple gratuitous assignments, then the last in time wins.

Exceptions:
A gratuitous assignment is not revocable if it is:
-the subject matter of a writing delivered to teh assignee,
-the assignee has received some sort of indicia of ownership, or
-the assignee has relied on teh assignment in a way that is reasonable, foreseeable, and detrimental. If a gift assignment is not revocable, then it will take priority over a later assignment.
Multiple assignments for consideration?
First in time wins. Amt. of consideration is irrelevant.

Very limited exception:
A subsequent assignee take priority over an earlier assignee for value only if he both:
1. does not know of the earlier assignment and
2. if the first to obtain
a) payment
b) a judgment
c) a novation or
d) indicia of ownership
(4 horsemen rule)
What is a delegation?
Party to a k transferring work under that k to third party.
Difference between a delegation and an assignment?
An assignment is the transfer of a party's rights under a k.

A delegation is a transfer of a party's duties under a k.
What duties are delegable?
Generall, k duties are delegable.

Limitations:
1. k prohibits delegations or prohibits assignment
2. k calls for VERY SPECIAL skills or
3. person to perform k has a VERY SPECIAL reputation
What if, after delegation, the 3rd party delegate does not perform?
1. Delegating party always remains liable.
2. Delegatee liable only if she receives consideration from delegating party.