Contracts

Front 1

Article 2

Back 1

Sale of Goods
(moveable, personal property)

Front 2

Common Law

Back 2

All Other Contracts

Front 3

Article 2A
(Mississippi)

Back 3

Lease of Goods

Front 4

Contract

Back 4

Legally enforceable agreement

(1) Express
(2) Implied

Front 5

Express

Back 5

Created by the parties' words (oral or written)

Front 6

Implied

Back 6

Created of parties' conduct

Front 7

Quasi-Contract

Back 7

An equitable remedy that protects against unjust enrichment whenever contract law yields an unfair result.

**Remedy of last resort!

Front 8

Bilateral Contract

Back 8

Offer can be accepted in any reasonable way

"flexible"

Front 9

Unilateral Contract

Back 9

Offer can be accepted only by performance

Look for these fact patterns:
(1) Offer expressly states "offer by performance"
(2) Reward, contest, or prize

Front 10

Contract Formation Analysis

Back 10

(1) Was there an offer?

(2) Was the offer terminated?

(3) Has the offer been accepted?

Front 11

Offer

Back 11

A manifestation of the intention to be bound

Front 12

Offer: Advertisements

Back 12

An advertisement is NOT an offer!

EXCEPTION: Unless it specifies the quantity

Front 13

Offer Validity: Indefiniteness

Back 13

See if any of the tersm are too vage to enforce

Could be a requirements contract or open price

Front 14

Requirements Contract
(Article 2)

Back 14

-Definite enough, even though there's no specific quantity mentioned.

**Quantity can be measured by need , but cannot deman quantity out of line from previous needs

Front 15

Open Price

Back 15

Court will read in a reasonable price except in a contract for the sale of real property.

As long as NOT real property, Article 2 will FILL THE GAP

Front 16

Offer Termination

Back 16

(1) Lapse
(2) Revocation
(3) Rejection
(4) Death of a Party Before Acceptance

Front 17

Lapse

Back 17

An offer lapses:

(1) After a stated term
OR
(2) After a reasonable time has passed

Front 18

Revocation

Back 18

An offer terminated when the offeror revokes the offer.

**An offer can be revoked any time before acceptance, either direct or indirectly.

Front 19

Direct Revocation

Back 19

The offeror indicates directly to the offeree that he has changed his mind about the deal.

**Doesn't have to include direct language.

Front 20

Indirect Revocation

Back 20

Offeror engages in conduct that indicates he's changed his mind AND the offeree is aware of the conduct.

Front 21

Revocation Exceptions

Back 21

(1) Option
(2) Foreseeable Reliance Before Acceptance
(3) Starting to Perform a Unilateral Contract
(4) Firm Offer [Art 2]

Front 22

Revocation Exception: Option

Back 22

A promise to keep the offer open that is paid for.

Front 23

Revocation Exception: Foreseeable Reliance Before Acceptance

Back 23

RARE

Before accepting an offer, the offeree acts in reliance of the offer--this reliance is not protected usually....

EXCEPT a case (such as a contractor/sub contractor situation) where reliance on the offeror knows the offeree will have to rely.

Front 24

Revocation Exception: Starting to Perform a Unilateral Contract

Back 24

Unilateral contract is started once the contracted work is began. Once the offeree begins the contract, revocation is not allowed.

HOWEVER,

Mere preparation doesn't make offer irrevocable under this exception. [Could be a foreseeable reliance situation]

Front 25

Revocation Exception: Firm [Article 2]

Back 25

In a sale of goods, if a merchant promises in a signed writing to keep an offer open, then the offer is irrevocable

[almost every business person is a merchant under Article 2's broad definition]

**Offer firm for reasonable time (not more than 3 months)

Front 26

Timing of Revocation

Back 26

Revocation of an offer is effective only on receipt.

Front 27

Rejection of an Offer

Back 27

An offer terminates when the offeree rejects it through:
(1) Counteroffer
(2) Conditional Acceptance
(3) Acceptance Varying the Offer

Front 28

Counteroffer

Back 28

Operates as a rejection, but mere bargaining does not.

Front 29

Conditional Acceptance

Back 29

Operates as a rejection.

**Offeree cannot accept under conditional terms stating that they will accept "so long as" a condition is met.

Front 30

Acceptance Varying Offer: Common Law

Back 30

Acceptance must mirror offer
"Mirror Image Rule"

Cannot add or change any terms--this operates as a rejection!

Front 31

Acceptance Varying Offer: Article 2

Back 31

*No Mirror Image Rule: the offeree's change or adding a term doesn't prevent acceptance

BUT

Offeree's Term is Included only if:
(1) Both parties are merchants
(2) No material change
AND
(3) Offeror does not object within a reasonable time.

*Article 2 wants to make it easier to contract for sale of goods.

**If a term is customary it is NOT material.

**Addition/Change can be kept out with an objection within reasonable time.

Front 32

Death of a Party Before Acceptance

Back 32

Terminates a revocable offer.

However, if the offer falls under one of the irrevocable offers---it survives!!

Front 33

Acceptance of the Offer

Back 33

Language of the offer controls.

Front 34

Starting Performance: Bilateral Contract

Back 34

Starting performance is acceptance of an offer to enter a bilateral contract and carries with it an implied promise to finish the job.

Front 35

Starting Performance: Unilateral Contract

Back 35

Starting performance is NOT acceptance of an offer to enter a unilateral contract; only completing performance is acceptance.

Front 36

Improper Performance: Common Law

Back 36

Simultaneous acceptance and breach.

Ex) Contract to to paint house and you paint it the wrong color.

Front 37

Improper Performance: Sale of Goods
[Art 2]

Back 37

Simultaneous acceptance and breach unless seller is sending the goods as an accomodation to the buyer.

Ex. Sending goods to accomodate---buyer can accept or reject.

Front 38

Silence as Acceptance

Back 38

Generally not considered acceptance.

Front 39

Timing of an Acceptance: Mailbox Rule

Back 39

Acceptance is effective when mailed (MAILBOX RULE)

Front 40

Exceptions to the Mailbox Rule

Back 40

(1) Offer language provides otherwise
(2) Irrevocable Offer
(3) Offeror relies on overtaking rejection
(4) Rejection sent first

Front 41

Mailbox Rule Exception: Offer Provides Otherwise

Back 41

Offeror can override MB Rule with language in contract.

Front 42

Mailbox Rule Exception: Irrevocable Offer

Back 42

The offeree does not need the MB Rule to protect him against revocation---the offer is already irrevocable.

Front 43

Mailbox Rule Exception: Offeror Reliance on Rejection

Back 43

Where an acceptance is sent first, but rejection arrives first.

MB Rule still applies unless offeror relies on the rejection. Rejection 1st doesn't change.

Front 44

Mailbox Rule Exception: Rejection Sent First

Back 44

The offeree doesn't need the MB Rule to protect him because he rejected the offer FIRST.

Front 45

Defenses Against Contract Formation

Back 45

(1) Lack of Capacity
(2) Ambiguity/Misunderstanding
(3) Mistake
(4) Lack of Consideration
(5) Public Policy: Covenant no to Compete
(6) Unconscionability

Front 46

Formation Defense: Lack of Capacity

Back 46

**Minors, intoxication, mentally incompetent

An incapacitated D has the right to disaffirm the contract if he wants to avoid it.

Exception: An incapacitated party is liable for necessaries but only a quasi-contract basis

**Can be overcome by Implied Affirmation

Front 47

Implied Affirmation

Back 47

Retaining the benefit of the contract without complaint after gaining (or regaining) capacity.

Front 48

Formation Defense: Ambiguity/Misunderstanding

Back 48

If there is an ambigous or misunderstanding in the contract, there is not a contract.

UNLESS

One of the parties knows or has reason to know the true meaning of the term and doesn't divulge this tot the innocent party.

**The innocent party's meaning governs!

Front 49

Formation Defense: Mistake

Back 49

Mutual Mistake--MUST BE ABOUT A MATERIAL FACT

(note: this doesn't include value)

Unilateral Mistake---is usually not a defense; one party's mistake is not fatal unless other party knew (or had reason to know) about the mistake.

Front 50

Formation Defense: Lack of Consideration

Back 50

A "bargained for" legal detriment/benefit. Can bargain for a promise, performance, or even forbearance.

**Past consideration is not consideration at all (OKAY IN MS)

Front 51

Adequacy of Consideration

Back 51

Irrelevant as long as there's a bargain.

Front 52

Contract Modification:Common Law

Back 52

New consideration is required to modify a contract.

**Performing a pre-existing duty is not enough
[Pre-existing Duty Rule.]

Front 53

Contract Modification: Article 2 Sale of Goods

Back 53

Consideration is not required to modify a contract, but you must show good faith.

Front 54

Lack of Consideration: Partial Payment of a Debt

Back 54

Depends on whether the debt is disputed.

Front 55

Lack of Consideration: Time Barred Debt

Back 55

A written promise to pay a debt, collection of which is barred by statute of limitations, is enforceable even without consideration.

Front 56

MS Statute of Limitations (Contracts)

Back 56

1 year: Unwritten employment contract

6 year: sale of goods

3 year: everything else

Front 57

Promissory Estoppel
(as a substitute for consideration)

Back 57

Foreseeable reliance may makie a promise enforceable even without consideration.

(not a good first choice!)

Front 58

Public Policy: Covenants Not to Compete

Back 58

Must be reasonable as to time, scope, and geographic area

MS:
-"Not Favorites of the Law": burden of showing reasonableness is on the party who wants to enforce covenant
-Not permitted for lawyers (but permitted for doctors)

Front 59

Formation Defense: Unconscionability

Back 59

Shocks the conscience of the court.

(look for oppressive terms or unfair surprise at time of agreement; the fact that terms seem harsh later is irrelevant)

(1) Substantive: terms of agreement are grossly unfair
(2) Procedural: process by which agreement was reached was unfair
(3) Judicial Power: if court invalidates part of a contract, it can enforce the rest.

Front 60

Statute of Frauds: When is a writing required?

Back 60

Most oral contracts are enforceable. Only certain kinds of contracts need a writing to be enforced.

"within the SOF"

(1) Interest in real property
(2) Performance cannot be completed within a year
(3) Sale of Goods for $500 or more
(4) Lease of Goods for $1,000 or more
(5) Suretyship
(6) Contract Modifications

MS law: if a contract can be fully performed within 15 mos from the date of agreement, no writing is required within SOF.

Front 61

Suretyship

Back 61

A promise to "answer for" the debt of another.

Front 62

Contract Modification under the SOF

Back 62

Must be in writing only if the contract as modified (not the original contract) is within the SOF

**Under common law, clauses that prohibit oral modification are not enforceable (so you can always modify a contract orally under the common law, even if you have agreed not to)

Front 63

SOF: Satisfactory Writing

Back 63

**Depends on the nature of contract

Article 2: Must contain a quantity term and be signed by party to be charged with breach

Other contracts: Must contain all material terms and be signed by the defendant.

Front 64

SOF Exceptions

Back 64

(1) Real Property
(2) One Year Prong
(3) Sale of Goods for $500 or More (Article 2)
(4) Suretyship

Front 65

SOF Exception: Real Property

Back 65

(1) Leases of One Year or Less: legislative exception to ensure that short term-leases are not invalidated by the Statute of Frauds

(2) "Part Peformance': Requires two of three facts:
(a) buyer is in possession of the property
(b) made at least some payment
(c) made improvements to the property

Front 66

SOF Exception: Sale of Goods for $500+ (Article 2)

Back 66

(a) Goods Accepted or Paid for By Buyer [Note: This exception applies only to the goods accepted or paid for, not to the whole contract]

(b) Custom Made Goods: If seller has made a substantial start and the goods are not suitable for sale in the ordinary course of seller's business

(c) Judicial Admission

(d) Merchants' Confirmatory Memo

Front 67

Merchants' Confirmatory Memo

Back 67

One party can use its own signed writing to satisfy the Statute of Frauds against the other party if:

(i) Both parties are merchants
(ii) The writing claim a prior oral agreement
(iii) The writing is signed and has a quantity
AND
(iv) There is no written objection within 10 days

Front 68

Suretyship

Back 68

"Main Purpose" Exception

**If buy something on credit to use in performing contract--someone else promises to pay if you do not.--- as long as surety's main purpose was to benefit himself, no writing req'd

Front 69

SOF: Reliance/Estoppel

Back 69

**Need a writing/Does not fall into an exception.

Ex. If someone orally agrees to employs for 2 years. Moves to another city in reliance on our agreement---if fired without cause, reliance is irrelevant.

Front 70

Parol Evidence Rule

Back 70

Keeps out evidence of a prior agreement (either oral or written) that contradicts a later writing.

**A PER problem requires a writing, if not a writing---it's a SOF problem

Subsequent Developments: PER has nothing to do with what happens AFTER an agreement is reduced to writing.

Front 71

Exceptions to the Parol Evidence Rule

Back 71

(1) To correct a clerical error
(2) To establish a defense against formation
(3) To interpret a vague/ambiguous term
(4) To supplement a partially integrated writing
[a final statement of the terms included, but not a complete statement of all terms agreed to]

Front 72

Terms of Contract: Conduct

Back 72

Can explain all terms or fill in gaps.

(1) Course of Performance: what the parties did under this contract--the best evidence of what the parties intended

(2) Course of Dealing: what they did under prior contracts with each other--more removed from this contract

(3) Usage of Trade: what others in the trade do in similar contracts--furthest removed from this contract

(in descending order of importance)

Front 73

Seller's Warranties of Quality in a Sale of Goods
(Article 2)

Back 73

(1) Express Warranties
(2) Implied Warranties
(a) Implied Warranty of Merchantability
(b) Implied Warrant of Fitness for a Particular Purpose

Front 74

Express Warranties

Back 74

Seller is liable for breach of express warranty.

Ex) Statements of fact, promises, descriptions of the goods, and the use of a sample or model are express warranties.

**Opinion is NOT.

**Must be the Basis of the Bargain: if buyer could have relied on the warranty, it was a basis of the bargain. However, a case applying MS law held that a buyer must prove ACTUAL DAMAGES in order to prevail.

Front 75

Implied Warrant of Merchantability

Back 75

**Goods are fit for their ordinary purpose

Triggering Fact: Seller is a merchant who deals in goods of the kind

(A dealer who has special knowledge about the particular goods involved)

Front 76

Implied Warrant of Fitness for Particular Purpose

Back 76

**Goods are fit for buyer's particular purpose

Triggering Fact: Seller knows that buyer has a special purpose in mind and is relying on seller to select suitable goods

(Seller does not have to be a merchant at all!)

Front 77

Limitations on Warranty Liability in a Sale of Goods

Back 77

(1) Disclaimers
(2) Limitation of Buyer's Remedies
(3) Privity of Contract
(4) Choice of Law

Front 78

Disclaimers

Back 78

Seller can disclaim implied, but not express warranties

Magic phrases:
"as is"
"with all faults"

MS: Can't disclaim in MS. Seller is allowed to disclaim implied warranties with sales except with consumers.
MS Code 11-7-18

Front 79

Limitation of Buyer's Remedies

Back 79

Seller can limit buyer's remedies for breach of any warranty (express or implied) if the limitation is not unconscionable

EXCEPTION: Limiting buyers remedies for personal injury from consumer goods is presumed to be unconscionable ("prima facie")---consumer protection clause {presumption is rebuttable, but hard to do}

Front 80

Choice of Law

Back 80

MS Law governs disclaimers, limitation of remedies, and privity even if the parties have agreed otherwise.

Front 81

Risk of Loss in a Sale of Goods (Article 2)

Back 81

When goods are damaged before buyer gets them and neither buyer nor seller is to blame, who bears the risk of loss.

(a) If Seller bears ROL: Must provide new goods to buyer for no additional cost or be liable for breach of contract
(b) If Buyer bears ROL: Buyer must still pay the contract price.

Look for (in order):
(1) Agreement: this controls!
(2) Breach: breaching party bears ROL, even if loss is unrelated to breach.
(c) Delivery by Common Carrier
(d) Non-Carrier Cases

Front 82

ROL: Delivery by Common Carrier

Back 82

ROL shifts to buyer when seller completes its delivery obligation.

(1) Shipment Contract: Seller must get the goods to a common carrier, make delivery arrangements, and notify buyer.

(2) Destination Contract: Seller must get the goods to a specific destination (usually, where buyer is located)

Note: look for shipment contract, where buyer bears ROL long before it actually gets teh goods! It's frequently tested because it's counterintuitive.

Front 83

FOB: Free on Board

Back 83

MBE!!!!

Usually followed by the name of a city or place.

ROL passes to buyer at the named location. If the city or place is where the seller is located, then it is a SHIPMENT contract.

If it's anywhere else, it is a destination contract.

Front 84

ROL: Non-Carrier Cases

Back 84

**Where buyer is to pick up or seller is to deliver goods. Answer depends on whether selelr is a merchant.

(1) If Seller is a merchant: Seller bears ROL until buyer takes possession of the goods

(2) If Seller is not a merchant: Seller bears ROL until it "tenders" the goods

Front 85

Option to Cure
(Article 2)

Back 85

A seller who fails to make perfect tender may have an option to cure. It usually depends on whether the tiem for performance has expired.

(a) NOT EXPIRED: Seller has an option to cure

(b) EXPIRED: Seller does not have an option to cure unless buyer has shown flexibility in the past in acceptance of goods

Front 86

Perfect Tender Rule

Back 86

Seller must deliver perfect goods in the right place at the right time. If tender is not perfect, buyer has the right to reject the goods.

(Article 2)

Front 87

Installment Sales Contracts
(Article 2)

Back 87

**Requires or authorizes delivery in separate installments (otherwise, the goods have to be delivered in a single delivery)

*Buyer may reject for SUBSTANTIAL impairment--Perfect Tender Rule does not apply to an installment contract, so harder for buyer to reject.

Front 88

Buyer's Acceptance of Goods
(Article 2)

Back 88

IMPLIED ACCEPTANCE
-When buyer keeps the goods without objection after having an opportunity to inspect.

Front 89

Consequence's of Buyer's Acceptance of Goods

Back 89

(1) Timing: once buyer accepts, it is too late for buyer to reject

(2) Damages: a buyer who accepts non-conforming goods can still get damages

Front 90

Buyer's Revocation of Acceptance of Goods
(Article 2)

Back 90

**A buyer cannot revoke acceptance of goods.

EXCEPTION: If the non-conformity substantially impairs the value of the goods ad was difficult to discover (it was a latent defect)

Front 91

MS: Rules of Revocation of Acceptance
(Article 2)

Back 91

(1) Substantial is judged both objective and subjective standard. Must show substantial impairment of value to a reasonable person.

(2) MS is the only state where Seller can cure when Buyer tries to revoke

Front 92

Consequence of Rejction/Revocation of Acceptance
(Article 2)

Back 92

(a) Return: buyer can return the goods to seller at seller's expense

(b) Refund: buyer can get back any money buyer has paid for the goods

(c) Damages: buyer can get damages from seller for breach of contract

Front 93

Buyer's Payment Obligation
(Article 2)

Back 93

Buyer can pay by check, but seller can refuse it. If seller refuses, buyer has an additional reasonable time to get cash.

Front 94

Performance of Common Law Contracts

Back 94

Under the common law, performance does not have to be perfect.

**Substantial performance is all that is required [ex. a party cannot commit a material breach]

Front 95

Excuse: Other Party's Breach

Back 95

The other party's breach may provide an excuse for non-performance. Whether it does depends on the nature of the conduct.

Front 96

Other Party's Breach: Sale of Goods (Article 2)

Back 96

If seller's performance is not perfect in every respect, buyer has free reign. (Can accept all, reject all, or accept/reject some)

Front 97

Other Party's Breach: Common Law Contracts

Back 97

(a) Damages: available for any breach, whether it's material or not

(b) Excuse: Only a material breach provides an excuse for not performing.

(c) Divisible Contracts

Front 98

Divisible Contracts

Back 98

Where payment is to be made on a per unit basis, the breaching party can recover the contract price for any unit on which he has substantially performed.

Front 99

Anticipatory Repudiation

Back 99

Provides an excuse for non-performance unloess the repudiation is retracted.

(Contract with material breach)

Front 100

Failure to Give Adequate Assurance
(Article 2)

Back 100

A party with reasonable grounds for being insecure about the other party's performance may request in writing adequate assurance that hte other party will perform in accordance with the contract.

Front 101

Later Agreements by the Parties

Back 101

(1) Rescission
(2) Modification
(3) Accord & Satisfaction
(4) Novation

Front 102

Rescission

Back 102

An agreement to cancel the contract

Front 103

Modification

Back 103

An agreement to replace an existing contract with new one.

Front 104

Accord & Satisfaction

Back 104

Accord: agreement to accept performance in future satisfaction of an existing duty

Satisfaction: performance of the accord

Front 105

Novation

Back 105

An agreement to substitute a new party for an existing one.

Look for consent of the parties on this issue

For example: If A contracts to complete a task for C and A, B, and C later agrees that B will do the task--if B doesn't complete the task, A cannot sue C for completion--excused by novation. If C delegated task to B without consent of A, C is still liable.

Front 106

Impossibility
(Seller's Excuse)

Back 106

At common law, a later unforeseen event that makes performance impossible may provide a seller with an excuse for non-performance.

In ARTICLE 2, it is called impracticability--seller's performance has become much more difficult.

(1) Destruction of Something Necessary for Performance
(2) Death/Incapacity of Essential Person
(3) Supervening Governmental Regulation
(4) Increase in the Cost of Seller's Performance
(5) Force Majeure

Front 107

Impossibility: Destruction of Something Necessary for Performance

Back 107

COMMON LAW: Destruction provides an excuse for non-performance

SALE OF GOODS (ART. 2): Adopts the same general rule as CL, but there are two tricks here
(a) Unidentified Goods: seller is excused only if the damaged or destroyed goods had been "identified to the contract"
(b) Risk of loss: a seller who bore risk of loss when goods were damaged or destroyed is excused by impracticability.

Front 108

Impossibility: Force Majeure

Back 108

Act of God

UNDER ARTICLE 2!!

This rarely works. Seller is excused only if the non-occurrence of the event was a basic assumption on which contract was made.

MS: No basic assumption test, so this is more readily available to seller as an excuse.

Front 109

Frustration of Buyer's Primary Purpose
(Buyer's Excuse)

Back 109

This is where the sole purpose of the Buyer's reason for contracting with Seller has been unforeseeably thwarted.

Front 110

Failure of an Express Condition

Back 110

Limits obligations created by other contract language.

**It does not create an independent obligation.

Magic Words:
"if", "as long as", "when", "provided that", "on condition that" and "unless"

***Strict Compliance Required

Front 111

Failure of an Express Condition: Satisfaction Clauses

Back 111

"Satisfaction" is measured by a reasonable person standard unless the contract deals with art or matters of personal taste

Front 112

Types of Express Conditions

Back 112

[precendent, concurrent, and subsequent]

Tiger Woods agrees to let Derek Jeter use his golf clubs for $100/week. . . .

if it rains on July 4: condition precedent

as long as Derek is a Yankee: condition concurrent

untill the Astros win the World Series: condition subsequent

Front 113

Excusing Occurrence of a Condition

Back 113

Occurrence of a condition may be excused by the later action or inaction of the person who is protected by the condition

[EVERY condition protects someone]

(a) Failure to Cooperate
(b) Waiver (voluntarily giving up protection)

Front 114

Non-monetary Remedies

Back 114

(1) Specific Performance
(2) Unpaid Seller's Right to Reclaim Goods

Front 115

Failure of an Express Condition

Back 115

Limits obligations created by other contract language.

**It does not create an independent obligation.

Magic Words:
"if", "as long as", "when", "provided that", "on condition that" and "unless"

***Strict Compliance Required

Front 116

Failure of an Express Condition: Satisfaction Clauses

Back 116

"Satisfaction" is measured by a reasonable person standard unless the contract deals with art or matters of personal taste

Front 117

Types of Express Conditions

Back 117

[precendent, concurrent, and subsequent]

Tiger Woods agrees to let Derek Jeter use his golf clubs for $100/week. . . .

if it rains on July 4: condition precedent

as long as Derek is a Yankee: condition concurrent

untill the Astros win the World Series: condition subsequent

Front 118

Excusing Occurrence of a Condition

Back 118

Occurrence of a condition may be excused by the later action or inaction of the person who is protected by the condition

[EVERY condition protects someone]

(a) Failure to Cooperate
(b) Waiver (voluntarily giving up protection)

Front 119

Non-monetary Remedies

Back 119

(1) Specific Performance
(2) Unpaid Seller's Right to Reclaim Goods

Front 120

Non-Monetary Remedies: Specific Performance

Back 120

Equitable remedy available only if monetary damages are clearly inadequate.

**Whether specific performance is available in a given case depends on the nature of the contract (real property or sale of goods or service contracts)

Front 121

Specific Performance in Real Property Contracts

Back 121

Generally available because real property is considered unique (even if it's not)

Front 122

Specific Performance in Sale of Goods (Art. 2)

Back 122

Available only if the goods are unique or there are other proper circumstances

ex. inability to buy substitute goods in the market

Front 123

Specific Performance in Service Contracts

Back 123

NOT AVAILABLE in service contracts, but injunctive relief may be available.

Front 124

Non-Monetary Remedies: Unpaid Seller's Right to Reclaim Goods
(Article 2)

Back 124

Not available under Article 2

EXCEPT: If buyer was insolvent when it received the goods AND seller demands return within 10 days after buyer receives them.

EXCEPT 2: Seller can reclaim goods at any time if buyer misrepresented its solvency to seller in writing within 3 months before delivery.

Front 125

Monetary Remedies

Back 125

(1) Punitive Damages: generally NOT awarded

(2) Liquidated Damages: upheld if damages were difficult to estimate and are a reasonable forecast of probable damages but cannot operate as a penalty

(3) Expectation Damages: put an injured party in as good a position as full performance. GENERAL RULE.

(5) Consequential Damages: damages special to the plaintiff that were reasonably foreseeable to breaching party at the time of the contract (not available under Art 2)

(6) Avoidable Damages: an injured party cannot recover damages he could have avoided or mitigated with reasonable effort

(7) Incidental Damages: cost to the injured buyer or seller of transporting/caring for goods after a breach and of arranging a substitute transaction

Front 126

Monetary Remedies: Expectation Damages
(Common Law)

Back 126

Examples:

A agrees to paint H's house for $10,000. A breaches. H pays B $13,000 to paint. H can recover $3,000 from A to put him in the position of full performance. [10,000 would have paid minus the 13, 000 he had to pay]


OR


Same facts, except that H refuses to pay A after A begins the project. A has already spent $5,000 in supplies and expected to clear $1, 500 profit. A can recover $6,500 from H to coup the expenses and cover the profit.

**REMEMBER the hand balancing test!

Front 127

Monetary Remedies: Expectation Damages
(Article 2 Sale of Goods)
BUYER'S DAMAGES

Back 127

(a) Cover Damages: cover price minus contract price if buyer covers in good faith (usual measure)

(b) Market Damages: market price minus contract price if buyer doesn't cover in good faith or doesn't cover at all

(c) Loss in Value: value as promise minue value delivered if buyer keeps non-conforming goods.

Front 128

Monetary Remedies: Expectation Damages
(Article 2 Sale of Goods)
SELLER'S DAMAGES

Back 128

(a) Resale Damages: contract price minus resale price if seller resells in good faith (usual measure)

(b) Market Damages: contract price minus market price if seller does not resell in good faith or does not resell at all.

(c) Lost profit: lost profit, if seller is a lost volume dealer

(d) Contract Price: contract price if seller cannot resell the goods.

Front 129

Entrustment
(Article 2)

Back 129

An owner who entrusts goods to a merchant who deals in goods of the kind has no rights against a bona fide purchaser.

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Third Party Beneficiary

Back 130

Two people enter a contract intending to benefit a 3rd party

3rd Party Beneficiary: person who is not party to a contract but has rights because the contract was intended to benefit him

Promisor: party who promises to perform for the TPB

Promisee: party who secures the promise

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Intended Beneficiary

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the person to whom performance was to be given according to the contract. A incidental beneficiary just happens to benefit from the contract. Only an intended beneficiary has legal rights

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Donee Beneficiary

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If the promisee's purpose was to confer a gift on the TPB, the TPB is a donee beneficiary. If the promisee's purpose was to pay off a debt to the TPB, the TPB is a creditor beneficiary.

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Third Party Beneficary: Rescission and Modification

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The promisor and promisee can rescind or modify the contract until the rights of the TPB have "vested"

EXCEPTION: Contrary language in the contract controls.

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Third Party Beneficiary: Liability

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(a) Promisor liable to 3rd party beneficiary

(b) Promisee liable to a creditor beneficiary

(c) Promisor liable to promisee

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Delegation of Duties

Back 135

Contractual duties may be delegated without the consent of the person to whom performance is owed (the "obligee")

Exceptions:
(1) Contract Language Controls
(2) Special Skill or Reputation

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Delegation of Duties: Rights of the Obligee

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(A) Delegating Party Remains Liable

(b) A Delegate who gets consideration is liable.

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Assignment of Rights

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Two people make a contract; later, one assignor transfers his rights to third party assignee. The party who owes the duty is the obligor.

**An assignment of rights transfers only rights. Assignment of an entire contract transfers both rights and obligations.

**Must have language of present transfer

**Consideration is not required

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Restrictions on Assignments

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(a) Contract Language Controls

(b) Cannot substantially change duties of obligor

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What is the dying declarations exception?

Back 139

Statements made under sense of impending death are admissible in a homicide or civil case if:
1) Declarant believed his death was imminent (need not actually die), AND
2) Statement concerned cause or circumstances of impending death, AND
4) Declarant now unavailable

**Traditional rule: could only be used in homicide case and D must have actually died.