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261 Cards in this Set

  • Front
  • Back
unilateral K
THE ONLY POSSIBLE method of acceptance is PERFORMANCE
bilateral unless
reward, prize, contest

only way to accept is to perform
quasi k
equitable remedy- k rules dont apply!
no consideration, sof etc
elements of quasi k
1. p has reasonably been conferred a benefit on D and
2. p reasonably expected to be paid
3. d realized unjust enrichment if P not compensated
measure of recovery of quasi K
1. k price is not the measure of recovery
2. focus on value of benefit conferred
3. the k price is a ceiling if P is in default
armadillos from texas play rap, eating tacos
1. applicable law
2. formation of K
3. terms of K
4.performance
5.remedies for unexused nonperformance
6.excuse of nonperformance
7.third party problems
8.
Common Law for...
1. real estate
2. services contracts
(employment, painting, washing car etc)
Art 2 UCC for...
Sale of Goods
1. type of transaction :sale
2. subject matter of transaction: goods (tangible property)
mixed deal/part goods part services
what is the more important part? goods or services?

if K divides payment for goods and services then use both!
K defined
agreement that is legally enforceable

agreement: offer and acceptance and consideration!
offer test
manifestation of willingness to enter into an agreement

words or conduct by ONE PERSON

not meant to or intended to! stay away from those words no offer there
offer standard.,..
would a reasonable person in the position of the offeree believe that his or her assent creates a L
missing price term in sales K
common law: for sale of real estate MUST HAVE PRICE TERM in order to be an offer

UCC: sale of goods no price term requirement
vague or ambiguous material terms?
Then NO OFFER under either common law or UCC

magic words:
appropriate,
fair,
reasonable
requirement Ks
output Ks
instead of using number for quantity the:
buyer agrees to buy all of the outputs or
the seller agrees to sell all of her requirements

magic words: all, only, exclusively, solely
increase in requirements...
B can increase requirements as long as the increase is in line with prior demands

cant increase if unreasonably disproportionate
are advertisements offers?
Generally, NO

unless the ad is in the nature of a reward (smokeballs) or

if it specifies quantity and expressly indicates who can accept (fur coat)
a terminated offer is
a dead offer
4 methods of termination
1. lapse of time
2. death of a party b4 acceptance
3. revocation
4. rejection
lapse of time
time stated or
reasonable time

if they give u the date the offer was received and the date it was responded to chances are its a lapse question (look for 1 month or more)
death
death or incapacity of either party after the offer but before the acceptance terminates offer

UNLESS irrevocable
Revocation
offers are freely revocable by offeror unless irrevocable!
can be done by unambiguous statement or conduct.
Offeree MUST BE AWARE of revocation
irrevoable offers are...
1. Option Ks
2. Firm Offers
3. Detrimental Reliance
4. start of Performance on Unilateral K
Option K
offeror makes offer
promises not to revoke it or promises to keep it open AND
Offeree supports it by PAYMENT or other consideration

when option expires the oferee can still accept unless the offer has been revoked
UCC Firm Offer Rule
an offer cannot be revoked for UP TO 3 MONTHS
1. offer to buy/sell goods
2. signed
3. written promise to keep offer open
4. party is a merchant

if it says 6 months only enforceable for 3
if there is no time limit court will chose one up to 3 months
detrimental reliance
an offer can be revoked if there has been
1. reliance that is
2. reasonably foreseeable and
3. detrimental
unilateral K and irrevocable offer
start of performance of unilateral k makes offer irevocable for a reasonable time to complete performance

mere preparation (buying paint) is not enough!
Rejection
can be words or conduct of offeree
3 methods of indirect rejection
1. counteroffer
2. conditional acceptance
3. additional terms (does not apply to sale of goods/UCC)
counteroffer
if made, no express k unless counteroffer has been accepted.

not bargaining (will u take? thats a bargain. ill only pay- thats a counteroffer)

counteroffers DO NOT terminate option Ks
conditional acceptance
terminates offer
after accept look for
if, only if, provided, so long as, but, on condition that
conditional acceptance under common law v. UCC
common law: both rejects and replaces the original offer
UCC: a conditional acceptance simply rejects
additional terms/
mirror image rule/
common law
response to offer that adds new terms is a counteroffer
if there are different terms then NO K
additional terms UCC/Art 2
still acceptance under art 2
1. is there a k?
2. additional terms are part of K if:
-both parties are merchants AND
-additional term is not material term AND
-additional term is not objected to by offeror
The Offer and the Offeror can control...
1. the method of acceptance
2. time and distance acceptance is effective or
3. whether the offeree must give notice that it has accepted performance
3 fact patterns for method of acceptance
1. offeree starts to perform
2. distance and delays in communication
3. sale of goods where seller sends the wrong gods
offeree starts to perform
1. verbal offer then
2. no words in response then
3. start of performance
rule for acceptance of start of performance
start of performance is acceptance
treated as implied promise to perform
exception to start of performance as acceptance
Unilateral Ks- require completion of performance!!!
distance and delay in communication 4 rules (mailbox rule a)
1. all communications other than acceptance are effective ONLY WHEN RECEIVED
2. acceptance is generally effective when MAILED/SENT
3. if a rejection is mailed before an acceptance is mailed then NEITHER IS EFFECTIVE UNTIL RECEIVED- first come first served
4. you cannot use mailbox rule to meet an option deadline
sale of goods where the seller sends the wrong goods- acceptance rule
b orders red cups and S sends blue cups there is a K but there is a breach.
exception when seller sends the wrong goods
accomodation/explanation exception.
there is a counteroffer and no breach when b orders red cups and s sends explanation that he is out of red cups and asks if b wants blue
there is no K and no breach
who can accept?
only a person who KNOWS ABOUT THE OFFER at the time she accepts
person to whom the offer was made
can offers be assigned?
NO
what can and cant be assigned
offers CANT
contracts and options CAN
u can sell an option to someone else
11 issues with formation
1. consideration (lack of or substitute)
2. lack of capacity of person who made promise
3. SOF
4. existing laws that prohibit the performance or the agreement
5. public policy
6. misrepresentations
7. nondisclosure
8. duress
9. unconscionability
10. ambiguity in words of agreement and
11. mistakes at the time agreement was made as to the material facts affecting the agreement
consideration is
a bargained for legal detriment
3 steps for consideration analysis
1. who is the promise breaker
2. did that person ask for something in return for her promise?
3. what requested legal detriment is the person trying to enforce the promise sustaining?
bargained for...
asked for by the promisor in exchange for her promise
look for someone being asked to do something in return!
legal detriment...
u dont listen to music and i will pay u
u have a legal right to listen to music
promise as consideration
promise for a promise is consideration!
illusory promise exception
i promise u i will UNLESS I CHANGE MY MIND...
illusory promise is probably wrong answer on test!
adequacy of consideration
NEVER RELEVANT!!!
Past Consideration
general rule: not consideration

No consideration for something ALREADY DONE
exception to past consideration
expressly requested by promisor and expectation of payment by promisee
example:
i beg u to save her life (with belief she will be paid)
*** pre-existing contractual or statutory duty rule
doing what u are already legally obligated to do is not new consideration for a new promise to pay u more to do merely that!
if you are going to modify a contract under common law u need...
new consideration!!!

if u are already obligated to sing u cant modify price to sing unless u agree to sing more or louder or a specific song etc
exceptions to preexisting contractual or statutory duty rule
1. an addition or a change in performance
2. unforeseen difficulty so severe as to excuse performance (promise to pay 5k more because sound system doesnt work)
3. 3rd party promise to pay
article 2/UCC and the preexisitng duty rule
DOES NOT EXIST
new consideration is not required to modify a sale of goods k.
good faith is the test for changes to an existing sale of goods K
part payment as to consideration for release of a debt
1. is debt due and undisputed?
2. if debt is due and undisputed then part payment is NOT consideration for release!
What is consideration for release of debt?
if debt is not yet due...
early payment is new consideration even if payment is less than full amount!
consideration substitutes/exceptions
promise is legally enforceable without consideration if there is:
1. a written promise to satisfy an obligation for which there is a legal defense enforceable without consideration or
2. promissory estoppel
a written promise to satisfy an obligation for which there is a legal defense enforceable without consideration
d owes C 1k and legal action to collect is barred by SOL.
if D WRITES c and says i know i owe u 1k but i will pay u 600
no new consideration but because it is written new promise is legally enforceable!
promissory estoppel
must have a promise and
reliance that is reasonable, detrimental and foreseeable
enforcement is necessary to avoid injustice
if u get fact pattern where someone is doing something they were asked to do analyze with
CONSIDERATION
if u get fact pattern where someone is not doing something they were asked to do
PROMISSORY ESTOPPEL
lacks capacity to k
under 18
intoxication
mental incompetence(age)
consequences of incapacity
1. right to disaffirm by person without capacity
2. implied affirmation by retaining benefits after gaining capacity
3. quasi k liability for necesities
right to disaffirm by person without capacity
cant enforce k against child but child can enforce k against other person
implied affirmation by retaining benefits after gaining capacity
3 requirements
1. agreement without capacity
2. that person now has capacity
3. retaining without objection
quasi k liability for necessities
a person who does not have capacity will still have to pay for necessities under quasi k law because k law does not apply to persons without capacity
SOF
necessary to get to trial
when is a claim within the SOF?
Requirements:
proof of
1. performance
2. a writing signed by the person who is asserting that there was no such agreement
contracts within the SOF
1. suretyship
2. service contract not capable of being performed within a year
3. transfers of interest in real estate
4. sale of goods over 500
suretyship
promises TO ANSWER FOR the debts of another
look for a GUARANTEE not merely a promise to pay but rather a promise to pay IF SOMEONE ELSE DOES NOT
The main purpose exception to suretyship
if the main purpose of the obligation allegedly guaranteed was to benefit the guarantor then not even the guarantee is in the SOF
think sof is to avoid fraud.
service K not capable of being performed within a year from the time of the K
if there is a specific time period- more than a year then SOF applies

early termination possibilities are IRRELEVANT

more than a year from the date of the K
lifetime deals
SOF NEVER APPLIES to lifetime deals because u could die tomorrow
exception to transfers of interest in real estate
leases of a year or less do not have to be inwriting
sale of goods of 500 or more
if they give u a sale of goods and the amount is less than 500 SOF does not apply but then they want u to apply other Art 2 money damages issue!
how is SOF satisfied?
if sof is applicable then reqs must be met/satisfied in order for agreement to be satisfied
if requirements of SOF are not satisfied then....
there is an SOF defense!
if defense is asserted and established then there is no legally enfoceable agreement
performance and the SOF
can be satisfied by performance!
6 rules for satisfaction of SOF by performance
1. transfer of real estate
2. full performance by either party
3. part performance of serivces K DOES NOT satisfy SOF
4. part performance of a K for the sale of goods satisfies SOF but only to extent of part performance (delivered goods)
5. if it is a sale of goods k and lawsuit over undelivered goods there is a defense
6. specially manufactured goods
performance and transfer of real estate
part performance satisfies the SOF if it is a transfer of real estate and oral agrement enforcable if:
requires 2 or 3
1. improvements to the land
2. payment
3. possession
service K and ful performance by either party
satisfies SOF
oral agreements will be believed if one of the parties fully performs- less chance of fraud
part performance of service K
does not satisfy the SOF!
if party only partially performs sof not satisfied and other party will have SOF defense!
party can still recover under quasi-k!
part performance of a K for sale of goods
satisfied SOF but only to the extent of the part performance
if lawsuit is about delivered goods part performance satisfied the statute and there is no defense
if it is about undelivered goods then there is a defense!
specially manufactured goods
if the k is for the sale of goods that are to be specially manufacturd then SOF satisfied as soon as seller makes a SUBSTANTIAL BEGINNING
Writing Requirement
can satisfy SOF, but sof can also be satisfied by performance
Material Terms Test
who is making the K and what have they agreed to?
look for two or more parties and what they are contracting for- both names!
who signed the writing?
defense to SOF only if the writing hqas been signed by the person asserting the defense
Art 2 SOF writing requirement for sale of goods
QUANTITY TERM REQUIRED no requirement that price be there
more to the Art 2/sale of goods writing requirement
must be signed by person asserting the SOF defense
Exception: if that person fails to respond to a signed writing and..
1. both parties are merchants and
2. the person who receives a signed writing with a quantity term that claims there is a K
3. fails to respond within 10 days of receipt
FAILURE to respond in 10 DAYS satisfies the SOF as an acceptance! if it wasnt true u would respond!
Judicial Admission
admission made in a sworn testimony, pleading or discovery satisfies the SOF so no defense if u admit under oath that there was an agreeement
Authorization to enter into K for someone else (equal dignity doctrine)
authorization must be in writing if the K is signed within the SOF
authorization must be of equal dignity with the K
equal dignity- if the k has to be in writing then so does the authorization agreement!
requirement of writing for K modification
look at the original k (doesnt have to be in SOF) if the chages to that K puts it in the SOF then it needs to be in writing! (lease for 1 year then one party claims it is now 3 yrs- 3 yrs in SOF so needs to be in writing
what if the original K is in writing and says that all modifications must be in writing?
common law:
not effective- ignore language- future modifications do not have to be in writing unless they are within SOF
ucc:
K provisions requiring written modifications are effective unless waived (even if sale of goods under 500)
illegal subject matter v. illegal purpose
if subject matter is illegal k is not enforceable

if the subject matter (plane tix) is legal but the purpose(flying to la to kill someone) is illegal then the agreement is enforceable BY THE PERSON WHO DIDNT KNOW OF ILLEGAL PURPOSE
public policy
courts can refuse to enforce an agreement because of public policy
examples:
exculpatory agrement that exempts intentional or reckless coduct from liability or
covenant not to compete without a reasonable need or reasonable time and place limits
misrepresentation
1. statement of fact before K
2. by one of the parties/agent
3. that inducts the K
4. that is false

no wrongdoing required (if u sell house and u say no termintes and u believe that, then there is termites the k can be rescinded)
nondisclosure
person making K has no duty to disclose what she knows UNLESS there is a fiduciary (trust) relationship that creates duty (selling house and u hide termite damage from buyer) this is concealment so K can be rescinded
Duress (physical is gun to head economic is...)
bad guy makes improper threat which is usually threat to breach existing K and
vulnerable guy has no reasonable alternative (i wont deliver ur order unless u place an order for next month too- only plac that sells this item)
unconscionability
applies to both sale of goods and K law generally
2 tests
1. unfair surprise (procedural) and oppressive terms (substantive)
-problem with agreement process that resulted in unfair surprise
2. tested as of time agreement was made
example of unconscionability
agreement was made 10 years ago and was good then, now its not -too bad was good when it was made
remedy for unconscionability
court can grant relief from a consumer lease even though no provision of the lease is unconscionable if there is unconscionable conduct in inducing or enforcing the lease
ambiguity in words of agreement
NO k if:
parties use a material term that is open to at least 2 reasonable interpretations
1. each party attaches different meaning to term and
2. neither party knows or has reason to know the term is open to 2 reasonable interpretations (Peerless ship case)
mistake of fact existing at time of K
incorrect belief as to facts
-person on her own acquired wrong idea as to existence of facts and its her problem- no relief
mistake v. misunderstanding v.
misrepresentation
mistake:
incorrect belief as to facts NOT based on what other party said or what K says
misunderstanding:
words in the K
misrepresentation:
words before the K
mutual mistake of material fact ....
the unfertile cow that got pregnant!
when u own something and u sell it without knowing everything about it u are ASSUMING THE RISK- no relief
unilateral mistake of fact...
did the other party have reason to know of mistake?
palpable mistake
look for orders for goods with bids and one bid is substantially lower than the rest- unilateral mistake of fact- no K!!!
when analyzing the terms of K...
1. look for info about words used by ppl making the K
2. look for info about past or similar deals
3. think about UCC warranty, delivery and risk of loss terms (if sale of goods)
Parol Evidence, is it admissible?
premise- final written deal more reliable than anything else!
integration
written agreement ct finds is the final agreement that triggers parol evidence
partial integration
written and final but not complete
complete integration
written and final and complete
merger clause
clause that says "this is the complete and final agreement"
this is persuasive but not conclusive
parol evidence
words of party/parties
before integration, before agreement was put into writing
oral or written
reformation
equitable action to modify written K to relfect actual agreement
triggering facts
written k that ct finds is the final agreement and
oral statements made at time the k was signed or earlier oral or written statements by the parties to the k
5 different parol evidence fact patterns
1. changing or contradicting terms in the written deal
2. mistake in integration
3. getting out of a written deal
4. explaining terms in a written deal
5. adding to the written deal
changing/contradiciting terms in a written deal
cant use PER to change or contradict the written K regardless of whether writing is complete or partial integration
the final written evidence is MOST reliable!
when are changing/contradicting terms allowed?
evidence to POST K statements and telefaxes are admissible
mistake in integration
ct can consider evidence of such terms for the limited purpose of determining whether there was a mistake in integration (mistake in reducing the agreement to writing)
getting out of a written deal
ct can admit evidenc of earlier words of the parties for the limited purpose of determining whether there is a defense to enforcement or the agreement such as:
fraud
misrepresentation or
duress
if party is suing for recissison then parol evidence will be admitted for
when there is a defense to enforcement due to misrepresentation fraud or duress
explaining term in the written deal
ct can consider evidence of pre k statements to determine what a word in the k means
adding to the written deal
ct will not admit earlier agreement unless
1. the written agreement was only partial integration OR
2. the additional terms would ordinarily be in a separate agreement
example of adding to the written deal
s and b k for chickens but dont specify how to package/wrap them. this info will be admitted unless the k is a complete integration
when we do SOF v. when we do PER
SOF- there is no written agreement so SOF defense
PER- we have a written agreement
Source of K terms: conduct and course of performance
conduct takes one of 3 forms
1. course of performance
2. course of dealing
3. custom and usage to explain words or fill in gaps
course of performance
what they have already done under THIS K (more persuasive than course of dealing)
course of dealing
SAME PEOPLE but SIMILAR K
custom and usage
DIFFERENT but SIMILAR people
DIFFERENT but SIMILAR k
UCC Shipment K
seller completes delivery obligation when it
1. gets goods to carrier
2. makes reasonable arrangements for delivery and
3. notifies buyer
FOB- follwed by city where seller is then its a shipment K
destination K
seller does not complete delivery until goods reach buyer- wherever buyer is

FOB followe by any city other than where seller is
risk of loss problem when
after k has been formed but before buyer receives goods they are damaged or destroyed and neither buyer nor seller is to blame
if buyer has risk of loss then
he has to pay full k price for the lost or damaged gooed
is the seller has risk of loss then
no obligation on the buyer. possible liability on the seller for nondelivery
5. risk of loss rules
1. agreement of the parties controls
2. breaching party is liable for any uninsured loss even though the breach is unrelated to problem
3. risk of loss shifts from seller to buyer at the time the seller completes its delivery obligations
4. risk of loss shifts from merchant seller to the buyer on the buyers receipt of the goods
5. risk of loss shifts from non merchant to seller when he or she tenders the goods
express warranty of quality
1. words that promise
2. describe or state facts or
3. for use of sample or model
examles:
all steel- statement of fact
guaranteed to work for 6 months- promise
seller shows buyer a model- use of model
top quality- NOT- this is opinion
implied warrantty of merchantability
person buys goods from merchant then a term is automatically added to K by operation of LAW!
warranty: the goods are fit for the ordinary purpose for which such goods are used
trigger to implied warranty of merchantability
1. seller is a MERCHANT
-merchant in this instance means they deal in THE GOODS OF THAT KIND!
example of implied warranty of merchantability
b buys gold chains from S, a jewelry store. chains pull out bs hair. does he have breach of warranty? yes!
implied warranty of fitness for a particular purpose
trigger
1. buyer has a particular purpose (like buying shoes for an interview)
2. buyer is relying on seller to select suitable goods
3. seller has reason to know of purpose and reliance
warranty of fitness for particular purpose is...
goods are fit for purpose
K limits on warranty liability
disclaimer
1. eliminates implied warranties
2. express warranties generally cannot be disclaimed
3. implied warranties of mechantability and fitness can be disclaimed
2 ways implied warranties of merc/fitness can be disclaimed
1. conspicuous language or disclaimer mentioning merchantability or
2. AS IS or WITH ALL FAULTS (doesnt have to be conspicuous)
limitations of remedies on warranties
recovery for any breach of warranty can be limited
UNLESS unconscionable
if breach of waranty on consumer goods causes personal injury then remedies are available
example of limitation on remedies
B buys over from S providing that all operating parts are guaranted (express warranty) and warranty liability should be limited to replacement parts(effective limitation of remedies)
if over catches on fire and b sues for breach what can b recover?
only replacement parts`
6 sale of goods performance concepts
1. perfect tender
2. rejection of goods
3. cure
4. installment Ks
5. acceptance of goods
6. revocation of acceptance of goods
perfect tender
only applies to sale of goods
Sellers performance must be perfect (perfect goods and delivery)
if there is less than perfect tender by seller then
buyer gets the option of rejecting the delivered goods
rejection of the goods
different from rejection of offer.
if seller does not meet perfect tender then buyer has option to
1. retain and sue for damages or
2. reject all or any commercial unit and sue for damages
rejection alternative is always limited by
cure installment contract and acceptance
cure
seller who makes imperfect tender will be given chance to cure if
1. seller has reasonable grounds to believe imperfect tender would be acceptable(perhaps with a money allowance)
look for info about prior deals between B and S with such allowance
2. TIME FOR PERFORMANCE HAS NOT YET EXPIRED!
Installment Ks
requires or authorizes
1. delivery of goods in separate lots
2. to be separately accepted
rejection of installment ks
buyer has right to reject installment ONLY where there is a SUBSTANTIAL IMPAIRMENT in that installment that cant be cured (cant reject keg of beer thats 30 min late because u are getting kegs every day for a month!)
NO PERFECT TENDER in installment ks
acceptance of the goods
if buyer accepts the goods it cannot later reject them
payment for goods
payment without opportunity for inspection is NOT acceptance
if buyer keeps goods without objection
then this is implied acceptance
look for fact pattern where
date buyer receives goods
date buyer complained about goods!
revocation of acceptance of goods ***
if buyer accepts goods it cant later reject them but buyer can effect a cancellation of K by revoking acceptance of goods
requirement for revocation
1. nonconformity substantially impairs the value of the goods
2. excusable ignorance of grounds for revocation or reasonable reliance on sellers assurance of satisfaction and
3. revocation within a reasonable time after discovary (sleeping bag she cant reject goods but she can revoke acceptance)
payment
look for
open price terms means reasonable price at time of delivery
price to be fixed by buyer or seller means that price must be fixed in good faith
non monetary remedies (IN REM)
specific performance is a last resort!
specific performance injunction
equitable remedy
look for adequacy of remedy at law or
unclean hands or
other parties equities
specific performance on K for sale of real estate
where S ks to sell land to B and S breaches B can get specific performance but where S ks to sell land to B and S breaches but sells land to X B cant get specific performance because X is innocent party
specific performanc on K for sale of goods
if goods are UNIQUE/ ANTIQUE/ ART/ CUSTOM MADE then specific performance is ok
specific performance on Ks for services
NEVER, but injunction to keep d from providing service to competitor is ok
reclamation
test:
1. buyer must have been insolvent (broke) at time that it received goods and
2. seller demand return of goods within 10 days of receipt and
3. the buyer still has goods at time of demand
(if buyer already sold them to someone else then no recclamation)
money damages for breach of K
COMPENSATE P dont punish D
vocab
expectation damages, incidental damages, consequential damages, avoidable damages, certainty damages, reliance damages, and liquidation damages
measure of damages
expectation means that ppl who contracted expect the other wont breach
measure of damages TEST
1. what is the dollar value of performance without breach?
2. what is the dollar value of performance with breach?
compare to determine damages
when answering money damages question say:
the various ca money damages rules are based on the protection of the expectation interest and this means that to compensate for breach of K we put the P in the same dollar position as if there had been no breach!
p ks to paint os house for 1 k. p breaches and o has to hire x for 1400. how much does p owe o
400
p ks to paint os house for 1k. p expects to make 300. p spends 100 on paint. o breaches what does p get?
300
damages rules for sale of goods
look at
1. who breached and
2. who has the goods
seller breaches and buyer keeps the goods
fair market value if perfect tender minus
fair market value as delivered
seller breaches and seller has the goods
marker price at time of discovery of the breach minus
contract price OR

replacement price minus k price
buyer breaches and buyer keeps the goods
contract price
even if fmv goes up buyer only owes seller the k price
buyer breaches seller has goods
contract price minus
resale price and in some situations provable lost profits (if they have a bunch to sell and all they lost was ur one sale and they were gonna make 20% profit from the sale then thats what they recover)
Plus Incidental damages...
costs incurred in dealing with the breach are always recoverable@
plus consequential damages...
includes
1. general damages or
2. consequential damages (kind of loss that is SPECIAL to P)
damges are limited to...
damages arising from Ps special circumstances and recovery of consequential damages is limited to situations in which D had reason to know of these special circumstances
example where there are recoverable consequential damages
B tells S BEFORE K that without S's product his store will remain closed. S breaches and doesnt deliver product. B can get BOTH general expectation damages and consequential/speial damages
Less Avoidable Damages
continuing to perform..
if other party breaches and u continue to perform u can only recover amount up to breach
tyrning down other comparable opportunities
p ks to paint os house for 1k. o breaches. X offers P job to paint fence and P estimates 100 profit from x fence. p declines x offer
p can recover 100 from O assuming its COMPARABLE OPPORTUNITY
certainty limitation
fact patter w services K and a P engaged in new business- anytime its a new biz we dont know with certainty how much he would have made unless its with REASONABLE CERTAINTY
reliance alternative
where expectation damages cant be incurred then courts will allow reliance damages to the non breaching party of costs incurred
liquidated damages
look for provision fixing amount of damages and if the amount is TOO HIGH!
test:
1. damages were difficult to forecast at time K was made and
2. provision is a reasonable forecast

liquidated damages are presumptively invalid
non performance because something happened after K was made
either
excuse because of other guys nonperformance (rare) or
excuse because of other parties improper performance
4 rule for excuse because of other parties improper performance
1. damages can be recovered for any breach
2. only a MATERIAL breach by one guy excuses the other from performing
3. whether breach is MATERIAL is not a fact question
4. if there is a substantial performanc then the breach is not material.
if the breach is material then there was no substantial performance!
problems with quantity/amount of performance
if u have K that provides one price for entire service and there is a material breach the non breaching party is not obligated to pay full amount
divisible contract exception
if u have k with prices for parts of performance and there is a material breach, the breaching party has a right to recover for the part of the K he didnt breach
divisible contract exception rule
in a divisible k there can be a k law recovery for substantial performance of a divisible part even though there has been a material breach of entire K
problems with quality of performance
if u want white house and it gets painted purple thats a material breach and non breaching party does not have to perform and can recover money damages!
problems with quality of performance when P substantially performed...
if painte whole house white except for a closet the non breaching party is not excused from performance but can recover amount to have closet painted
copper pipe case
NOT A MATERIAL BREACH
100 k house and the breach only caused the house to be worth 1k less so can recover 1k
article 2 and perfect tender rule
never do material breach or divisible k in sale of goods
do perfect tender and installment k
excuse because of non-occurrence of an express condition
an express condition is a mutually agreed upon promise modifier

language in a K not in an offer that limits obligations created by other language in the K
express condition words...
if
only if
provided that
so long as
subject to
in the event that
unless
when
until
on condition that
conditional acceptance v. express condition
conditional acceptance: party SAYS i will buy ur house if i can get a 6% mortgage

express condition :
parties enter into agrement that STATES that house will be bought if one party gets 6% mortgage
how to determine if express condition has occurred/been satisfied?
strict compliance is required for satisfaction of a condition
if says house has to be appraised at 200 and its only 199 then NOT satisfied!
how can an express condition be eliminated?
if the express condition does not occur the rest of the K obligations are excused.
express condition can be eliminated/excused if there is no excuse for the performance of remaining K obligations
elimination of express condition by Wiaver
if the person who is protected by the express condition gives up the benefits and protection of the express condition
statement by person protected by express condition AFTER conditioning event was to occur and does not require reliance
elimination of express condition and Estoppel
statement by person protected by express condition BEFORE the condition event was to occur requires reliance
Prevention of express condition
if the party protected by the express condition hinders or prevents its occurrence then the express condition is excused and the k must be performed
anticipatory repudiation-
excuse of performance by other party
unambiguous statement or conduct indicating
1. that the repudiating party will not perform
2. made prior to the time performance was due
anticipatory repudiation by one party excuses the other partys duty to perform and.
it also generally gives rise to an immediate claim for damages for breach unless the claimant has already finished performance
anticipatory repudiation can be reversed or retracted if...
there has not been a material change in position by the other party
if the repudiation is timely retracted then the duty to perform is reimposed but performance can be delayed until adequate assurance is provided
insecurity (limited to sale of goods)
if words or conduct of party make performance uncertain then the other party can demand IN WRITING adequate assurance and if it is commercially reasonable they can suspend performance until they get assurance.
3 concepts for insecurity
1. reasonable grounds for insecurity
2. written demand for adquate assurance and
3. commercially reasonable to stop performance
excuse by reason of later K
rescission /
accord and satisfaction/
modification/
novation
rescission
is performance remaining for each of the parties?
ok to rescind before work is completed
can rescind when work completed!
accord and satisfaction (substitute performance)
(triggered by words IF and THEN)
agreement by parties to an already existing obligation to accept a different perfrormance in satisfaction of the existing obligsation
the effect of making accord and satisfaction
if the new agreement is performed then the performance of original obligation is excused
the effect of gettin no satisfaction
if the accord is not performed then the other party can sue on either the original obligation OR the accord not both
modification
(substituted agreement)
agreement by parties to an existing obligation to accept a different agreement in satisfaction of existing obligation
accord and satisfaction v. modification
accord: intention that old agreement remains in place until new agreement performed
modification: intention to replace old obligation with new promise
novation
(substituted person)
an agreement between both parties to an existing K to substitution of a new party-
same performance different party
who is liable after novation?
if there is mutual agreement to the new party taking over then the new party is liable not the original party
what is the facual and legal differences between a novation and delegation?
novation requires the agreement of BOTH parties and excuses person replaced from liability
delegatuon DOES NOT require agreement of both parties and DOES NOT excuse liability
excuse of performance for later unforeseen event
impossibility, impracticability, or frustration of purpose
scenario for unforeseen event
something happens after K formed but before performance completion and
it was unforeseen and
it makes performance impossible, commercially impractical or frustrates purpose of performance
impossibility
objective test
cant be done
impracticability
subjective test
cant be done without extreme and unreasonable difficulty and expenses
damage or destruction of subject matter after k
if painting and house burns down impossible to paint.
if building house and it burns down u can still rebuild!
sale of goods and unforeseen event
do risk of loss first!
if risk of loss is on seller and buyer sues for damages for the sellers non-performance then..
if car destroyed by unforeseeable flood then ok to excuse, but if grits destroyed by same flood no excuse cuz u can get grits anywhere!
death after K
death does not make a persons K obligations disappear
party to K who is a SPECIAL person
performance only possible by them and they die then nonperformance is caused by impossibility
subsequent law or regulation
if later law makes performance illegal then excuse by impossibility
if later law makes mutually understood prupose of K illegal then excused by frustration of purpose (plastic surgery)
3rd party problems
3rd party beneficiaries, assignments of K rights and delegation of duties
3rd party beneficiary
not party to k. able to enforce k others made for her benefit
promisor
person who is making promise that benefits 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 a creditor of promisee
test for cancelling or modification
1. did the 3rd party know of and rely on or assented as requested?
2. if so her rights have vested and the k cannot be canceled or modified without her consent unless the k provides otherwise
who can sue whom?
1. beneficiary can recover from promisor
2. promisee can recover from promisor (but if promisee recovers then beneficiary cant)
3. beneficiary cannot recover from promisee
4. creditor beneficiary can recover from promisee but only on pre-existing debt
defenses
if the beneficiary sues the promisor then the promisor can assert any defense that he would have if sued by the promisee.
Assignment of K
transwer of rights under a K
1. k between only 2 parties
2. one of the parties later transfers rights under that K to a 3rd party
what can and cant be assigned?
offers cant
contracts can!
difference between assignment and beneficiary?
beneficiary named in the K and assignee is not named in K
limitations on assignment
k provision regarding assignment in fact patterns includes language of k regarding assignability determine whether the k prohibits assignment or invalidates assignment
if k prohibits assignment (rights hereunder are not assignable)
then assignee can still collect from obligor, but obligor can also recover from breach of K from assignor
if k invalidates asignments (all assignments of rights under this k are void)
takes away BOTH the right to assign and the power to assign so that there is a breach by assignor and no right in the assignee
if there is nothing about K law regarding assignability
even if k does not limit the right to assign common law bars assignment that substantially changes duties of the OBLIGOR (city other than gotham!)
requirements for assignment
1. conwideration is not required but gratuitous assignments can be revoked
2. gift assignments can be revoked
the rights of assignee
1. assignee can recover from obligor
2. assignor for consideration cannot recover from obligor
3.obligor haqs same defenses against assignee as it would have against assignor
4. payments by obligor to assignor is effective until obligor knows of assignment
implied warranties of assignor in an assignment for value
an assignment for consideration only the assignor warrants
1. the rights actually exist and
2. the right assigned is not subject to any then existing defense by the obligor and
3. the assignor will do nothing after the assignment to impair the value of the assignment
no warranty
assignor does not warrant what the obligor will do after the assignment!
multiple assignments
all gratuitous assignments
-last assignee wins

assignments for consideration
-first assignee for consideration wins UNLESS
he doesnt know of earlier assignment and he is first to obtain payment, judgment, novation or indicia of ownership
first to notify?
irrelevant for k law
delegation of duties
party to a k transfers work under k to 3rd party
relationship of assignment and delegation
assignment is transfer by a party of a k of his rights or benefits under the k to a 3rd party who was not a party to the k
delegation is the transder of his duties or burdens under the k to a party not in the k
can assignment involve a delgation too?
yes often on bar they will say assignment but it can include delegation too!
getting payment- assignment v. delegation?
with assignment the asignee can collect the payment but for a delegation that person cannot collect payment directly from original k party they have to get it from person who delegated to them
what duties are delegable
all duties unless
1.k rohibits delegation or assignments or
2. personal service k calls for very special skills
non performance by delegate. what if after delegation the 3rd party delegatee does not perform?
delegating party ALWAYS liable
delegatee party only liable if she receives consideration from delegating party! ($$$)