Contracts Ii W/professor Stephens

Front 1

2 components of avoidability

Back 1

1. The injured party is precluded from recovering for loss that it could reasonably avoid.
2. a. There is only a duty to mitigate if it can be done on comparable grounds (Terms/Duties/Compensation/job, etc.)

Front 2

ways to mitigate damages

Back 2

1. ceasing performance
2. cover under the principal of avoidability

Front 3

5 elements of forseeability

Back 3

1. Forseeable at the time the K was entered.
2. Forseeable that a loss will occur
3. Would a D have foreseen this?
4. Damages that are foreseeable need not be certain, only probable.
5. Damages must reasonably flow from breach.

Front 4

doctrine of certainty

Back 4

In order to recover damages, they must be proven to a reasonable degree of certainty.

Front 5

liquidated damages
RRRD

Back 5

purpose; to compensate the promise conditionee for non-performance
i. Elements to be enforceable:
1. Reasonable pre-estimate of loss
2. Amount must bear a reasonable relationship to the harm
3. At the time of formation it is difficult or impossible to assess damages

Front 6

restitution elements

Back 6

benefit is conferred with expectation of payment
unjust enrichment

Front 7

condition precedent

Back 7

An event must occur before one’s performance is due.
An express condition precedent must be strictly complied with or performance is excused.

Front 8

2 ways of measuring restitution

Back 8

1) Difference in value before and after benefit conferred from perspective of recipient. Cannot exceed quantum meruit.
2) Quantum meruit – value of services rendered from perspective of person rendering services.

Front 9

independent condition

Back 9

party has to perform whether or not other party performs.

Front 10

formula for expectation damages

Back 10

Expectation Damages = LOSS IN VALUE + OTHER LOSSES – COSTS AVOIDED – LOSS AVOIDED
easier said: E.D. are equal to the value of D's promised performance (generally K price) minus what ever benefits P has received for not having to perform his own performance. DO NOT include overhead in the cost avoided.

Front 11

condition subsequent

Back 11

event must occur later or performance is excused

Discharges an earlier duty or performance

Front 12

loss in value

Back 12

1) Differential between what you should’ve received and what you did receive
2) Can be Lost profits
3) Contract Price – Cover Price
4) Contract Price – Resale Price

Front 13

concurrent condition precedent

Back 13

each sides performance is a CP to the other sides’ performance

Front 14

other losses

Back 14

1) Incidentals or out of pocket expenses from breach
2) Consequentials – loss, not expenses (pain and suffering, personal injury, reputation, etc.)ex. When a dressmaker breaches a K to make a dress

Front 15

Implied Condition Precedent (constructive)

Back 15

court implies a condition precedent when it is unclear whether there is a condition precedent or if the circumstances surrounding them imply one.

Front 16

cost avoided

Back 16

Sometimes may save costs by breach (shipping costs are example)

Front 17

consequences of constructive conditions

Back 17

Material breach = no substantial performance. Excuses performance of the other party.

Immaterial or Minor breach = substantial performance but all contract terms have not been met. Non-breacher must pay breacher for part performance and sue for damages.

Front 18

loss avoided

Back 18

Amounts party received in mitigation (ex. difference in pay of jobs after being fired and getting a new job)

Front 19

Divisible contracts

Back 19

Divisible contracts can be reasonably divided into 2 or more parts and with regard to each part, each party receives the benefit of the bargain.

Front 20

overhead isn't factored in to expectation damages. What's overhead?

Back 20

cost of doing business: accounting fees, advertising, depreciation, insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone bills, travel and utilities costs

Front 21

waiver

Back 21

Waiver is the voluntary relinquishment of a known legal right

Front 22

When will court grant specific performance?
MUCC

Back 22

a. money won’t make you whole,
b. if goods are unique,
c. if damages can’t be calculated,
d. when a buyer can’t cover (rebuy from somewhere else)

Front 23

election

Back 23

Making a choice & voluntary relinquishing known alternatives.
Election is a choice between two inconsistent rights.

Front 24

Anticipatory repudiation

Back 24

Anticipate that a party will not or cannot perform a future obligation under the contract.

Clear, definite, absolute, and unequivocal announcement that party will not or cannot perform.

Front 25

Anticipatory repudiation

Back 25

Anticipate that a party will not or cannot perform a future obligation under the contract.

Clear, definite, absolute, and unequivocal announcement that party will not or cannot perform.

Front 26

To recover under anticipatory repudiation theory,non breacher must show...?

Back 26

a. Ready,
b. Willing, and
c. Able to perform, and
d. Would have performed had breach not occurred.

Front 27

If party anticipatorily repudiates, there are 3 options for non-breacher...?

Back 27

a. Wait until performance is due and sue for breach at that time.
b. Sue immediately for breach.
c. Do nothing, wait until performance is due and see what happens

Front 28

rule of assurance

Back 28

if a party has reasonable grounds to feel insecure that party has a right to demand in writing assurance of performance, if he does not give assurance w/in 30 days, the K can be treated as antic. Repud.

Front 29

When are damages calculated for antic. repud.?

Back 29

a. UCC indicates that damages are calculated at time non-breaching party “learns of breach”. Courts have interpreted three ways:
1) At time of repudiation
2) At time breach actually occurs
3) At a reasonable time after repudiation

Front 30

When can antip. repud. be retracted?

Back 30

prior to reliance upon the repudiation.
a. Reliance is a change in position.
b. If there is a firm declaration of AP accepted by innocent party

Front 31

impossibility of performance

Back 31

1. An act of God
2. Law (zoning ordinance, illegality, etc.)
3. Conduct of other party prohibits performance
4. Performance is absolutely impossible under all circumstances.
5. Commercial impractibility
6. Destruction

Front 32

mutual mistake

BMF

Back 32

1. When the parties have a mistaken belief of material fact and both parties are mistaken about the past or existing basic fact (not a future fact)
2. K CAN be rescinded if:
i. If there is a mutual mistake that relates to a basic assumption of the contract by both parties.
ii. Mistake has a material effect on agreed consideration or consideration would be grossly unfair.
iii. Party seeking enforcement is not at fault for mistake.

Front 33

commercial impracticability

U.A.O

Back 33

a. Something unexpected or unforeseen
b. Party claiming impracticability must not have assumed risk.
1) If you should have foreseen the act, then you assumed the risk.
c. The occurrence of the unexpected event rendered performance impracticable
1) Impracticable is unreasonably and excessively expensive.

Front 34

frustration of purpose

BAFED

Back 34

i. The non-occurrence of the event is a Basic assumption of the contract.
ii. Party asserting frustration did not Assume the risk by contract, etc.
iii. Party asserting Frustration did not cause frustration.
iv. Event must have occurred that substantially frustrates party’s principal purpose of contract, known by both parties to the contract. K has no value now
v. Performance is possible but value is Diminished or fruitless.

Front 35

When can one get restitution if there IS a valid K?

Back 35

To the extent that, before a party’s performance became impracticable, it has conferred a benefit on the other party through part performance, courts are receptive to a claim for restitution

Front 36

creditor beneficiaries

Back 36

If the purpose of the promisee in obtaining the promise from the promisor is to discharge a debt or duty owed to a third party, the third party is considered a creditor beneficiary.

Front 37

donee bebeficiaries

Back 37

ii. If the purpose of the promisee in obtaining the promise of the promisor is the intent to confer a gift to a third party, the third party is considered a donee beneficiary and has standing to sue the promisor.

Front 38

intended beneficiaries (restatement)

Back 38

iii. In order to bring an action as an intended beneficiary, some courts hold that both parties to contract must intend that the third party be able to enforce rights under the contract and benefit , and either the K requires one to pay a debt on behalf of a party or just to benefit the 3rd party

Front 39

assignment

Back 39

relinquish all rights

Front 40

delegation

Back 40

Unlike an assignment, a delegation does not extinguish the duty of the delegator unless ALL parties agree. Delegator remains liable even after the delegation.

Front 41

how can a breacher recover?

Back 41

a. breaching party can recover in restitution if the other is unjustly enriched.
b. Divisibility will allow recovery if K can be divided

Front 42

economic waste

Back 42

A party is entitled to get what they bargained for, but the court will not create economic waste.
a. Economic waste is anything that causes an overall monetary loss.
b. Cost to Perform as Promised > Value Received if Performed as Promised = Economic Waste
c. Exception- personal taste; you get the cost of replacement despite the difference in value

Front 43

importance of the Reading pipe case (Jacob and young)

Back 43

economic waste- when there is a gross discrepancy in difference in value versus cost of correction, difference in value is used,
courts will try to avoid forfeiture.

Front 44

exception to specific performance

Back 44

A ct will not order specific performance of a K to provide service that is personal in nature.

Front 45

avoidance of forfeiture

Back 45

courts will avoid applying a strict compliance rule in reference to express condition precedents where a forfeiture results.
a forfeiture occurs when one party has relied on the bargain and insistence on strict compliance would cause him to fail to receive the expected benefits.

Front 46

destruction

Back 46

Where a particular person or thing is necessary for performance and the parties contemplated the continued existence of the person or thing, performance is excused as long as it is no the fault of either party if the thing perishes.

Front 47

recovery in quantum meruit

Back 47

A P who has materially breached may normally bring a quasi-K suit and recover his restitution interest less the D's damages for the breach.

Front 48

consequences of willful breach

Back 48

some states won't allow one to cover in a quasi-K if their breach was willful

Front 49

Hadley v. Baxendale

Back 49

The shaft case:for damages that don't naturally flow, the D needs actual notice of these damages prior to or at contracting

Front 50

When are restitution damages used?

Back 50

1. a non-breaching party has partly performed, and the restitution measure is greater than the K price
2. a breaching P has not substantially performed but is allowed to recover the benefit of what he has conferred on the D

Front 51

has substantial performance occured? Factors:

Back 51

Helpful factors:
Qualitatively, how much work has been done?
Was the breach willful?
How soon or early did breach occur?
what is the extent to which the aggreived party actually achieved the main purpose of the K?
What is the likelihood of a cure?
the extent to which the party failing to perform would suffer forfeiture?

Front 52

Second semester defenses

Back 52

Impossibility
commercial impracticability
frustration of purpose
mutual mistake