Mbe K3 2007

Front 1

Reliance interest defined

Back 1

1) Put plaintiff in the same economic position as if K had never happened.
2) Only use RELIANCE if exam directs.

Front 2

Restitution

Back 2

1) Put DEFENDANT in same economic position as if K had never happened.
2) I.e. if Defendant in breach has received value of $150, restitution returns that value to Plaintiff.

Front 3

UCC sale of goods, measure of damages
4 scenarios

Back 3

UCC measure of damages is generally expectation. Ask who breached & who has the goods. 4 scenarios
1) Seller breaches and buyer has the goods
(a) Fair market value if perfect minus fair market value of goods delivered.
2) Seller breaches, seller keeps goods.
(a) Market price at breach minus K price OR replacement price minus K price
3) Buyer breaches, buyer has gds.
(a) Damages equal K price.
4) Buyer breaches, seller has gds.
(a) K price minus market price at time and place of delivery OR K price minus resale price
(b) Lost volume seller gets provable lost profits.

Front 4

Incidental damages define

Back 4

1) Incidental damages are costs incurred in dealing with breach. Typically costs of finding a replacement. Incidental damages are always recoverable.

Front 5

Foreseeable consequential damages defined

Back 5

1) Consequential damages are those that arise from P’s special circs. Recoverable only if reasonably certain and D had reason to know at the time.
2) Analyze consequential damages on ESSAY.

Front 6

Avoidable damages defined

Back 6

1) No recovery for damages that could have been avoided w/out undue burden on Plaintiff.
2) Def has burden of pleading and proving avoidable damages.

Front 7

Reasonable certainty test for damages

Back 7

1) Damages must be established w reasonable certainty.
2) EXAM where new business w/out established sales record.

Front 8

Liquidated damages requires

Back 8

1) Liquidated damages where damages difficult to forecast at time of K
2) And whether provision is a reasonable forecast
3) Liquidated damages void if in the nature of a penalty

Front 9

Excuse of nonperformance
6 scenarios

Back 9

Look for nonperformance and something happening AFTER K WAS MADE.
1) Excuse based on party’s breach.
2) Excuse based on non-occurrence of a condition
3) Excuse based on anticipatory repudiation
4) Insecurity
5) Excuse by reason of a later K
6) Excuse by reason of later unforeseen event
If excuse available, there is no contract liability. Recovery must be under quasi K.

Front 10

Excuse based on party’s breach

Back 10

1) Requires material breach by the other party.
2) Materiality of breach is a question of fact
3) Regardless of excuse, damages still avail for breach.
4) If breach before ½ complete on the K, that’s material breach. Excuse from performance for material breach. Thus breaching party may NOT recover for part performance! Instead, Quasi K. Quasi K provides recovery OUTSIDE CONTRACT LAW
5) If divisible contract, apply material breach test on a division by division basis. I.e. paint 10 apts.

Front 11

Excuse based on non-occurrence of a condition

Back 11

1) A condition is a promise modifier. Distinguish conditional acceptance. A condition is agreed on by BOTH parties.
2) Non-occurrence of a condition is an excuse for non-performance
3) However, the person who benefits from the condition may voluntarily give up the condition.

Front 12

Excuse based on anticipatory repudiation

Back 12

1) Anticipatory repudiation is an unambiguous statement or conduct indicating
(a) That the repudiating party will not perform
(b) Made prior to the time that party’s performance was due
2) Anticipatory repudiation by one party excuses the other party’s duty to perform
3) Immediate claim for damages unless THE CLAIMANT HAS ALREADY COMPLETED PERFORMANCE. Then must wait till other party’s performance is due.
4) Anticipatory repudiation sometimes called “inability to perform.” Where there’s a barter, and the bartered object is no longer available.

Front 13

Anticipatory repudiation retracted

Back 13

1) Anticipatory repudiation can be retracted so long as neither party has not materially changed their position.
2) There must be adequate assurance that the repudiating party will perform.

Front 14

Excuse of insecurity

Back 14

1) Where words or conduct that are ambiguous as to intent to perform give rise to reasonable grounds for insecurity, other party can suspend performance till it receives adequate assurances,
2) If commercially reasonable to suspend performance.

Front 15

Excuse by reason of a later K
4 TYPES

Back 15

1) Rescission
(a) requires performance still remaining from each of the parties to the K. (executory)
2) Accord & satisfaction
3) Modification
4) Novation

Front 16

Excuse by reason of a later K:
Accord and satisfaction

Back 16

1) Accord requires later agreement to do something else instead. NOT an agreement to pay less money on the debt, but to do something different in order to satisfy the debt.
2) If accord (the new agreement) and satisfaction (performance of the new agreement) then performance of the original K is EXCUSED.
(a) If no satisfaction, party can recover on original K or new accord K, but not both.
(b) Accord & satisfaction is an IF, THEN agreement. IF new agreement, then earlier agreement excused. Old agreement still in place.
(c) Modification is INSTEAD. New agreement is “instead” of old agreement. Upon modification, old agreement is EXCUSED.

Front 17

Novation

Back 17

1) A novation is an agreement between BOTH parties to existing K to the substitution of a new party. Both agree that new party will REPLACE existing party. Novation is an excuse to non-performance.
2) In contrast, where delegation (of duties) original party still liable!

Front 18

Excuse by reason of later unforeseen event
definition
(3 types)

Back 18

1) Impossibility, impracticability, or frustration of purpose.
2) Later unforeseen event must be...unforeseen!
3) That makes performance basically impossible. Look at purpose of K w/r/t performance
4) Seller’s risk of loss and destruction. When seller still has the risk of loss and goods destroyed so as to prevent performance, seller has exciuse of impsssibility. Can’t be sued for breach. BUT only if goods are unique. Look at the impact of the later event on PERFORMANCE.

Front 19

Requirements for 3d party beneficiary sue under K?

Back 19

1) If shared understanding that K is for the benefit 3d party, then 3d party can sue under the K
2) Only intended beneficiaries, not incidental beneficiaries, can sue. EXAM intended beneficiaries are named in K.
3) Most beneficiaries are DONEE beneficiaries. Creditotor beneficiaries must be prior creditor of promisee.

Front 20

Cancellation or modification of K w 3d party beneificiaries

Back 20

1) If the 3d party knows of and has relied on or assented as requested then rights have vested and K cannot be cancelled or modified w/out consent
(a) Exception if K specifically provides otherwise.

Front 21

3d party beneficiaries, who can sue?

Back 21

If shared understanding that K is for the benefit 3d party, then 3d party can sue under the K
1) Beneficiary can recover from promisor
(a) Promisor has all defenses that would be available against ORIGINAL PROMISEE.
2) Promisee can recover from promisor. Duh.
(a) No recovery from both promisee AND beneficiary
3) Donee beneficiaries can not recover from promisee. Cuz they’re a donee.
4) Creditor beneficiary can recover from promisee but only on the pre-existing debt.

Front 22

Assignment defined

Back 22

1) Assignment is the transfer of rights under a K in 2 separate steps
(a) 1st, there must be a K between 2 parties
(b) 2d one party transfers rights to a 3d party.
2) Transfers RIGHTS. Assignee can enforce the K because of the assignment.
(a) Assignee can recover from the obligor
(b) Assignor can not recover from obligor. Transferor of rights!
(c) Obligor has same defense against assignee as would be available against assignor.

Front 23

Limitations on assignments

Back 23

Generally disfavored
1) Prohibition of assignment. “rights hereunder are not assignable"
(a) Assignor still liable but assignee can enforce so long as unaware of the prohibition.
2) Invalidate assignment. “all assignments of rights under this K are void.”
(a) If assignment, assignor is in breach! Assignee has no rights.

Front 24

Distinguish assignment for consideration from gratuitous assignment

Back 24

1) If assignment for consideration, assignor warrants he will do nothing to impair the value of the assignment.
2) If multiple GRATUITOUS assignments, LAST IN TIME WINS.
3) If multiple assignment for consideration, first assignee wins.
(a) Later assignee for value takes priority if unaware of prior assignment and is first to obtain payment.

Front 25

Delegation defined

Back 25

1) Delegation is the transfer by a party to a K of his duties or burdens under the K to a 3d party not a party to the K.

Front 26

Limitations on delegation

Back 26

1) Delegation freely permitted unless
(a) K prohibits delegation or assignment
(b) K calls for very special skills
(c) Or party to perform has special reputation.

Front 27

Liability under delegation

Back 27

1) Delegating party always liable
2) Delegate liable only if there is consideration from the delegating party.