MBE Contracts All

  1. An enforceable agreement occurs when there is an offer, acceptance of that offer, and consideration.
  2. Common law universe governs ___
    real estate or services
  3. UCC governs _____
    Goods
  4. Ucc governs all parties not just___
    Merchants
  5. 4 big elements to see if enforceable contract formed
    Agreement, Consideration, Defenses, Statute of Frauds
  6. An offer is: 
    • a manifestation of a willingness to enter into an agreement (offeror) that creates a 
    • Power of acceptance(in the offeree)
  7. Offeror must display an _____ to be bound
    Objectively serious, present intent
  8. a statement is an offer only if the person to whom it is communicated could reasonably interpret it as an offer.
  9. An offer must usually be directed to a ____offerree. (Can't accept unless directed at you)
    Specific

    Except: contest offers or reward offers that promise something to anyone who accomplishes a certain task
  10. Common law offeer- elements
    • Parties
    • Subject
    • Price
    • Quantity
  11. Ucc offer- elements:
    • Parties
    • Subject
    • Quantity

    [Note: no price, UCC more willing to plug the gaps]
  12. " I don't know how many I need over the next Xyears, but I promise to buy all of them from you
    "Requirements contract example:
  13. I don't know how many I will make over the next XXX years, but I promise to sell all of them to you
  14. "You'd better decide fast if you want to buy my house, as I expect to have a ton of offers next week." Is this an offer? Why/why not?
    No. This is an invitation to deal that reserves additional approval with the speaker. Other side cannot say "I accept"and know for a fact that deal is concluded
  15. The offeror can revoke the offer by ( 6 types):
    • 1. express communication to the offeree
    • 2. Offeree learns that the offeror has take an action absolutely inconsistent with a continuing ability to contract (Constructive revocation)
    • 3. Offeree rejects
    • 4. Offeree makes counteroffer
    • 5. Offeror dies
    • 6. Reasonable about of time passes
  16. Four irrevocable offers:
    • 1. option
    • 2. firm offer
    • 3. offeree has started performance
    • 4. detrimental reliance
  17. irrevocable offer- option hypo: I offer to sell you my house for $1 mil. You also pay me $100 in exchange for a promise that I will not revoke this offer for one week. Five minutes later I say "Never mind..I revoke the offer!" Can you still accept?
    Yes
  18. irrevocable offer- firm offer elements
    (MWES90)

    • 1. A merchant (someone who makes a business out of buying or selling goods at issue)
    • 2. makes offer in writing 
    • 3. with explicit promise not to revoke
    • 4. signed by the merchant
    • 5. duration of reasonable time not to exceed 90 days
  19. firm offer: a merchant's signature could be a handwritten memo on merchant's letterhead. Key is authentication, not necessarily "signature."
  20. UCC offer: if no price, UCC will make the price under the K a reasonable price at the time for delivery.
  21. UCC offer: only term that cannot be supplied by the court is  ____, which must be certain or capable of being made certain.
    quantity
  22. irrevocable offer- firm offer- hypo:Your law school bookstore offers to sell yo ua contracts textbook for $100 and it promises via a signed writing not to revoke this offer for one week. 10 dyas later, you stop by the bookstore to accept the offer. Can you still accept? Why/not?
    Yes. As long as a reasonable amount of time has not squashed the deal
  23. irrevocable offer: offeree has started performance. RULE: a unilateral offer to contract cannot be revoked by the offeror if the offeree has started performance
  24. unilateral contract: definition:
    arises from a promise that requests acceptance by an action of the promisee (vs. return promise)
  25. unilateral contract: promisee has the right to finish and right to stop at any time
  26. irrevocable offer: detrimental reliance: RULE: an offer cannot be revoked if the offeree reasonably and detrimentally relies on the offer in a foreseeable manner [NOTE: look for GC/subcontractor context]
  27. acceptance is a manifestation of a wllingness to enter into the agreement by the offeree and is governed by the objective test
  28. UCC offer/acceptance: If seller tries to accept by shipping the wrong goods, UCC treats this as acceptance PLUS breach
  29. UCC offer/acceptance: if seller "seasonably notifies the buyer that the nonconforming goods are tendered as an accommodation, then no acceptance has occurred and no K has formed.
  30. UCC offer/acceptance: accommodation is deemed a counteroffer. Buyer may then either accept (thereby forming a K) or reject (no K formed)
  31. UCC offer/acceptance: if buyer requests that goods be shipped, the buyer's request will be construed as inviting acceptance by the seller either by a promise to ship or by prompt shipment of conforming or nonconforming goods.
  32. mailbox rule: an acceptance sent by mail is valid when the letter is sent
  33. mailbox rule does not apply:
    • when the offeree sends something else first
    • to other types of communication (e.g. revocations, rejections)
    • to options contracts

    NOTE: unclear if applies to other media (fax, email)
  34. mailbox rule hypo:I send you an offer. You mail back a rejection. You change your mind and mail back an acceptance a few hours letter. Both letters arrive at my house on the same day. Is there a contract?
    Depends on what's opened first (this is an example of mailbox rule not applying because "something else," a rejection, was sent first.
  35. There may be acceptance without communication if there is a past history of silence service as acceptance (e.g. offeree should reasonably notify the offeror if she does not accept)
  36. May be implied-in-fact contract that communicates acceptance through gestures or actions (e.g. at a salon)
  37. common law: mirror image rule: Terms in the acceptance must match the terms of the offer exactly. Otherwise, it is not an acceptance but a counteroffer
  38. Conditional acceptance is a counteroffer
  39. Conditional acceptance hypo: I offer to mow your law on Saturday for $50. You say, "OK if you come over Sunday." A contract?
    NO
  40. UCC counteroffer: §2-207 (1) rule
    • - definite expression of acceptance [or written confirmation];
    • - sent within a reasonable time
    • - is acceptance even if additional or different terms from offer UNLESS
    • - acceptance expressly made conditional upon assent to additional/different terms
  41. UCC counteroffer: §2-207 (2): new term b/w 2 merchants in the purported acceptance may not control if [4 elements]:
    • [MEO]
    • 1. new term materially alters the deal OR
    • 3. initial offer expressly limits acceptance to its terms OR
    • 4. offeror objects within a reasonable time to the new term.
  42. terms that materially alter an agreement: warranty disclaimer, a clause that flies in the face of trade usage with regard to quality, a requirement that complaints be made in an unreasonably short time period; arbitration clause, and terms that surprise or create hardship without express awareness by the other party
  43. terms that usually do not materially alter the contract: fixing reasonable times for bringing a complaint, setting reasonable interest for overdue invoices, reasonably limiting remedies.
  44. different terms: most jurisdictions apply knock out rule: different terms in the offer and acceptance nullify each other and are knocked out of the contract. When there are gaps, the court uses Article 2's gap-filling provisions to patch the holes
  45. Very difficult for new terms in the acceptance to govern the contract
  46. If there is not a real contract but the parties act as if there is an agreement (e.g. by exchanging goods for money) only the terms that both writings agree on become part of the contract, with other terms supplied by the UCC acting as default rules
  47. If verbal agreement and one party sends confirming memo with additional terms that go further than the earlier agreement, the new terms rarely come in
  48. most courts require valuable consideration for an agreement to be enforceable.
  49. valuable consideration:
     a bargained for change in the legal position between the parties
  50. most courts conclude consideration exists if
    there is a detriment to the promisee irrespective of the benefit to the promissor
  51. consideration can take the form of (4 types):
    • 1. a return promise to do something
    • 2. a return promise to refrain from doing something legally permitted
    • 3. the actual performance of some act OR
    • 4 refraining from doing some act
  52. the promise of a charitable donation is enforceable only if (Second Restatement):
    • - promise in writing
    • - charity relied on the promise (detrimental reliance/promissory estoppel)
  53. Steps to determine if bargained for consideration exists
    • 1. Who is making the promise that needs to be supported by law 
    • 2. Is there a benefit to the promisor OR a detriment to the promisee?
    • 3. Was this bargained for (i.e. parties think they were making a deal?)
  54. Consideration hypo: You are trying to win a race to Alcatraz, when the sharks start to circle. I swing my boat over to pick you up. Grateful, you promise to pay me $500 for the rescue. Is there bargained for consideration? Why/not?
    No. Past consideration is not consideration
  55. Preexisting duty rule (common law): a promise to do something that you are already legally obligated to do is not consideration
  56. preexisting duty rule (common law): exceptions. There is consideration when a contract is modified if:
    • - there is a change in performance (e.g. promisor gives something in addition to what is already owed or varies the preexisting duty in some way)
    • - a third party promises to pay
    • - unforeseen difficulties would excuse performance
  57. To determine if partial payment for release of a debt obligation is binding, ask:
    • 1. Is debt currently due and
    • 2. undisputed?

    If yes, modification is NOT binding
  58. Under UCC, if modification made in good faith, it is binding even without new consideration
  59. UCC and consideration: good faith requires honesty in fact and, in the case of a merchant, fair dealing with reasonable commercial standards
  60. even if no consideration, contract could be enforced if promissory estoppel,  quasi-contract, or moral obligation with a subsequent promise
  61. promissory estoppel: 3 elements:
    • 1. a promise is made that would be reasonably expected to induce reliance
    • 2. the promise does indeed take detrimental action in reliance on the promise; and
    • 3. injustice can be avoided only by enforcement of the promise
  62. quasi contract elements
    • 1. plaintiff confers a measurable benefit on the defendant
    • 2. P reasonably expected to get paid AND
    • 3. it would be unfair to let D keep the benefit without paying
  63. defense to contract formation: misunderstanding: basic definition/elements
    • 1. the parties use a material term that is open to two or more reasonable interpretations (So the objective test cannot apply)
    • 2. each side attaches a different meaning to the term
    • 3. neither party knows, or should know, of the confusion
  64. defense to contract formation: incapacity: who lacks it?
    • 1. minors (under 18)
    • 2. the mentally ill: i. person cannot understand the nature and consequences of his actions or ii. the person cannot act in a reasonable manner in a relation to the transaction
    • 3. very intoxicated persons, IF the other side knows this
  65. where a guardianship over an individual’s property has been recognized by a court, the seller’s lack of actual knowledge of the guardianship or the individual’s inability to contract is irrelevant
  66. if make a contract with person who lacks capacity, the contract is voidable (incapacitated party can disaffirm)
  67. For necessities, the party without capacity must still pay fair value for the necessity (e.g. food, clothing, shelter)
  68. a party without capacity can ratify the deal by keeping the benefits of the contract after capacity is obtained
  69. defense to contract formation: mistake: basic definition/elements
    A belief that is not in accord with a present fact
  70. defense to contract formation: mutual mistake: basic definition/elements
    there is a mistake of fact, existing at the time the deal is made; the mistake relates to a basic assumption of the contract and has a material impact on the deal; and the impacted party did not assume the risk of mistake
  71. defense to contract formation: unilateral mistake: basic definition/elements
    one party is mistaken and 1) can prove all the elements of mutual mistake 2) mistake would make the contract unconscionable, or 3) the other side knew of, had reason to know of, or caused the mistake
  72. defense to contract formation: misrepresentation: basic definition
    • a statement at the time of contracting that is not true.
    • -It can be intentional (Fraudulent) or accidental
  73. defense to contract formation: misrepresentation: elements- to assert party must show:
    • - a misrepresentation of a present fact (not opinion);
    • - that is material OR fraudulent (intentional); AND
    • - that is made under circumstances in which it is justifiable to rely on the representation
  74. defense to contract formation: fraud in the execution: basic definition
    to trick someone into signing something that she doesn't know is a contract
  75. defense to contract formation: nondisclosure: basic definition
    • The other party doesn't learn the truth about something, but you just remain quiet.
    • -Normally, ok but may be defense if there is a special fiduciary relationship or active concealment
  76. defense to contract formation: duress: basic definition and types
    • an improper threat that deprives a party from making a meaningful choice to contract
    • - economic duress: one party makes threats to induce another party to contract or modify a contract. 
    • - undue influence: a party puts very intense sales pressure on another party- who often seems weak minded or susceptible to high-pressure sales tactics.
  77. duress makes contract voidable, but not automatically void
  78. defenses to contract formation: if person withdraws from the illegal conduct, may recoup whatever loss from the transaction
  79. defense to contract formation: illegality: illegal contract are unenforceable, but a contract entered in furtherance of an illegal act (that is not itself illegal) will still be enforced (e.g. cab drive to complete a hit)
  80. defense to contract formation: against public policy: basic definition
    not formerly illegal but present some other policy concern
  81. defense to contract formation: unconscionability: 2 types:
    • 1. procedural- a defect in the bargaining process itself, such as a hidden term or an absence of meaningful choice
    • 2. substantive- a rip-off in some term of the contract
  82. defenses to formation: The purchaser of an annuity contract assumes the risk that the person on whose life the annuity is based will die before the price paid for the annuity is recouped, and the issuer of the L assumes that the person will live beyond the recoupment date.
  83. Statute of Frauds: goal is to prevent false assertions about a contract that never really created
  84. SOF applies to only these types of contracts:
    • [MSOUR]
    • Marriage: a contract made in consideration of marriage (e.g. prenup)
    • Suretyship: contract promising to guarantee the debt of another
    • One year: contract that by its terms cannot be performed within one year from its making
    • UCC: goods contracts for a price of $500 or more
    • real property: contract for the sale of an interest in real property
  85. SOF: main purpose exception
    if the main purpose in agreeing to pay the debt of another is for the surety's own economic advantage, not SOF!
  86. SOF: one year rule: the question is whether there is ___
    no possible way that the contract could be performed within one year
  87. SOF: one year rule: hypo: I contract on April 1 to hir a 1L student as my RA for three months during her 2L summer. SOF world?
    Yes. Only three months, but will start after one year
  88. SOF: one year rule: hypo: William Shatner hires me to teach him contract law for the rest of his life. SOF?
    No. It's possible Shatner dies within one year
  89. SOF: two ways to satisfy:
    • 1. performance
    • 2. a writing
  90. SOF: satisfy by services: hypo: Shatner verbally agrees to hire Spock to build a house on Enterprise Acre estate. In exchange, Shatner will provide "charm lessons" to Spock for the next 3 years. SOF world?
    Yes. Charm lessons will not be complete in one year
  91. SOF: satisfy by services: hypo: Same facts as before. Spock builds the house, Shatner refuses to provide the lessons, asserting Statute of Frauds defense. Shatner right? Why/not?
    No. Full performance of a services contract by either side satisfies SOF. Spock fully performs his end of services contract, so SOF satisfied
  92. SOF: satisfy by writing: Requirements:
    • - Indicate a contract has been made
    • - Identify the parties
    • - Contain the essential elements of the deal

    • NOTE:
    • Both signatures not necessary.
    • Writing does not have to be a formal contract
  93. SOF: part performance of a real estate contract CAN satisfy the SOF if any two of three elements met:
    • 1. Possession
    • 2. Payment
    • 3. Improvements on the land
  94. SOF: $500 goods: contract is only enforceable under SOF for the quantity mentioned
  95. SOF: goods: must be signed by the party against whom enforcement is sought
  96. SOF: goods: part performance on a goods contract satisfies SOF, but only for the quantity _____ and _____.
    delivered and accepted
  97. SOF: goods: Custom-made goods (or specially manufactured goods) are exempted from the SOF as soon as maker takes a substantial beginning toward the manufacturing of the goods.
  98. SOF: goods: the failure to object to a confirming memo within 10 days will satisfy SOF IF both parties are merchants
  99. SOF: modification: If initial deal in SOF world but modification isn't, modification doesn't have to satisfy SOF requirements. If modification SOF world, must satisfy SOF requirements
  100. PER: evidence of oral or written statements PRIOR TO CONTRACT FORMATION barred by the court
  101. PER: if an extrinsic term of the agreement would "naturally be omitted" from the writing, may not violate PER and can be introduced as evidence if it does not contradict the writing
  102. PER: UCC: presumes writing is at most only partially integrated unless the parties would have certainly included a disputed term in the writing
  103. PER: evidence of these three things can be admitted in court even if final agreement
    • -evidence relevant to a defense against contract formation (duress, mistake, fraud, etc.)
    • - evidence of a second separate deal
    • - evidence of a prior communication that is designed to interpret an ambiguous term in the final agreement
  104. SOF v. PER
    • if just contemplates a signed writing --> SOF
    • if contemplates signed writing AND earlier discussion of the deal --> PER
  105. warranty: basic definition
    a promise about a term of the contract that explicitly shifts risk to the party making the promise
  106. express warranty and example
    • - unless it's the seller's opinion, a promise that affirms or describes the goods and that itself is part of the basis of the bargain 
    • - floor sample or model good --> express warranty that the goods sold will be like the sample
  107. implied warranty of merchantability- triggered only when:
    a merchant makes an implied warranty that the goods are fit for their ordinary commercial purposes UNLESS disclaimed.
  108. implied warranty of merchantability: if disclaimed must be VERY clear (e.g. "sold as is")
  109. implied warranty of fitness for a particular purpose: triggered when:
    a buyer relies on a seller's expertise to select a special type of good that will be used for a special purpose
  110. nonmerchants can give someone an implied warranty of fitness for a particular purpose and either merchant or nonmerchant can disclaim
  111. condition: one party's contractual obligation will kick in only if some future event will take place
  112. express condition met generally based on objective standard of satisfaction. But contracts involving aesthetic taste based on subjective standard, but party can still breach subjective standard if he claims dissatisfaction in bad faith
  113. condition may be waived if:
    • - a party receiving the protection of the condition waives by words or by conduct
    • - other party wrongfully interferes or hinders occurrence of the condition. This is based on the good faith standard
  114. constructive condition of exchange: one party's performance is conditioned on the other side's performace
  115. COMMON LAW and performance
  116. in common law, doctrine of substantial performance states that a party will satisfy the CCE [and thus there is an agreement] if:
    • - there is not a material breach
    • - failure is not willful
  117. Nonbreaching party can recover damages for a deficiency in CCE (but not terminate contract) if not material. Typically damages = cost to complete the performance
  118. Breaching party who fails to satisfy the CCE- due to a material breach or failure to substantially perform cannot get paid under the contract (but maybe quasi contract i.e. if benefit conferred and unfair to keep benefit without paying)
  119. breaching party who fails to satisfy an express condition usually cannot get paid in quasi-contract
  120. if a contract is clearly divisible, it will be chunked up for the purposes of determining substantial performance
  121. UCC and Performance
    UCC requires perfect tender
  122. perfect tender has two main obligations
    • 1. perfect goods
    • 2. perfect delivery
  123. UCC perfect tender hypo: Mickey contracts for 500 pints of Fireball whiskey for $5000. Fireball sends Mickey only 495 pints. Is this perfect tender?
    No. Mickey can reject all of the whiskey
  124. in order to property reject the goods, a buyer must:
    • notify the seller of the rejection within a reasonable time
    • notify the seller of the particular defect; AND
    • hold the goods for a reasonable time so the seller can get them back
  125. if the goods are rightfully rejected and the buyers has paid some or all of the price, then she will have a security interest in the rejected goods
  126. if seller fails to give reasonable instructions as to what the buyer should be doing once the bad goods have been delivered, buyer has 3 options:
    • 1. continue to store the goods on the seller's account;
    • 2. ship back; OR
    • 3. resell the goods for the seller
  127. Rejection of the goods is not the same as rejection of the offer
  128. Buyer may revoke an acceptance of the goods e.g. goods seem OK at delivery but a defect is discovered within a reasonable time
    --what's a reasonable time?
  129. If the seller fails to tender perfect goods and time is left on the contract OR had reasonable grounds to believe buyer would accept, then the buyer must give the seller a chance to cure
  130. a buyer must notify the seller of any breach within a reasonable time or be barred from recovering any remedy.
  131. Default method of deliver is one delivery of the goods, but UCC allows installment contracts
  132. Installment contracts: buyer can reject a specific delivery that isn't perfect only when there is a substantial impairment in the installment that cannot be cured. [maple syrup question]
  133. if goods tendered at seller's place of business, seller just needs to give the goods to the buyer
  134. if shipment contract, seller must take three actions:
    • 1. get goods to a common carrier
    • 2. make arrangements for delivery
    • 3. notify the buyer
  135. if destination contract (i.e. Free On Board "F.O.B" buyer's place of business), seller must get the goods to the buyer's business and notify the buyer
  136. If a goods contract followed by damage or destruction of the goods before buyer receives them, probably a ____ question
    risk of loss
  137. Risk of loss: if parties already dealt with the risk in K, K will control
  138. risk of loss: if parties haven't dealt with risk of loss in K, ask whether either party has breached (could be another part of the contract) --> breaching party bears risk of loss even if breach totally unrelated to delivery damages
  139. risk of loss: if no breach + goods shipped --> ask what delivery type. If shipment__. If delivery___
    shipment: risk of loss during delivery rests with the buyer
  140. If no breach and niether shipment or WHATEVER THAT IS contract + seller is a merchant --> risk of loss stays with the seller until buyer receives goods
  141. If no breach and neither shipment or WHATEVER THAT IS contract + seller is NOT a merchant --> risk of loss moves to buyer when seller tenders the goods.
  142. buyer's performance obligations: payment to seller is due at the time and place at which the buyer is to receive the goods
  143. buyer's performance obligations:tender of payment is a condition to the seller's duty to complete its obligation
  144. a seller may ship under reservation: it is entitled to hold the goods until the buyer pays
  145. buyer's performance obligations: tender of payment may be made in any reasonable manner but a seller can demand cash payment (legal tender) if she gives any extension of time necessary to procure the cash
  146. for installment sales, payment may be made or demanded with each installment
  147. the buyer enjoys a right to inspect prior to payment
  148. if K that requires payment on delivery (COD) buyer does not have the right to inspect
  149. buyer's performance obligations:buyer pays for any expenses associate with buyer inspection, unless the goods do not conform and are rejected.
  150. 6 types of excuses:
    • 1. impossibility/impracticability
    • 2. death (ONLY if something special about dead person)
    • 3. frustration of purpose
    • 4. modified/cancelled
    • 5. accord and satisfaction
    • 6. novation
  151. excuse: impossibility =____. impracticability =_____
    • impossibility= can't be done at all
    • impracticability= great difficulty
  152. common impossible/impracticable ("imp") fact patterns:
    • performance becomes illegal after K formed
    • subject matter of K destroyed
    • services K and "special person," and that person dies or is incapacitated
  153. Just because more expensive not normally imp
  154. imp: unforeseeable event in which the non-occurrence of the event was a basic assumption of the K, and party seeking discharge was not at fault
  155. estate normally on hook for K if a party in K dies. BUT if something special about person performing the K, may be excuse
  156. frustration of purpose: something happened to undermine entire reason for creation of contract. MUST BE EXTREME and not allocated to one of the parties (think of apt rental near Wrigley field)
  157. excuse: cancellation/modification: basic rule
    • - both parties can walk away if still performance on each side
    • - otherwise a modification without consideration
  158. excuse: accord and satisfaction: basic rule
    parties to an earlier K agree that performance will be satisfied instead by the completion of a different performance
  159. excuse: new performance=
    accord
  160. excuse: excusing the initial performance obligation =
    satisfaction
  161. excuse: if accord not performed then___
    the other side can sue on either the original obligation or the new promise
  162. until satisfaction occurs, creditor can still recover under the original contract
  163. substitute agreement vs. accord
  164. excuse: novation: basic rule
    BOTH parties agree that a substitute person will take over the contractual obligations

    (NOTE: if one side decides to ask someone else to do the work, this is a delegation)
  165. anticipatory repudiation: If other party says she's not going to perform, I can stop performance if her repudiation is
    clear and unequivocal
  166. anticipatory repudiation: nonbreaching party has two options:
    • 1. treat as a breach and sue immediately for damages. (BUT if party A completed entire performance and only waiting for payment from party B, party B cannot sue early!)
    • 2. ignore the repudiation, demand performance, and see what happens
  167. Where a party to a contract breaches the K and the only remaining duty is payment of money in installments, breach does not give other party a claim to damages for total breach. Other party only entitled to damages based on the payments that are currently due and owing.
  168. a party can retract repudiation as long as the other side has not commenced a lawsuit for breach or acted in reliance on the repudiation by materially altering his position
  169. anticipatory repudiation: UCC: demand adequate assurance of performance
    if reasonable grounds of insecurity about the other side's performance
  170. adequate assurance of performance: if questionable party fails to respond within a reasonable time, then you can treat this as repudiation
  171. money damages are the typical remedy in contract law
  172. money damages: expectation damages: basic
    put a party in the same economic position that it would be in if the contract had been performed as promised
  173. measure expectation damages by comparing the value of the performance without the breach to the value of the performance with the breach
  174. Expectation damages must be proven with reasonable certainty [look for Qs with new or unproven business ventures]
  175. unforeseeable consequential damages are not recoverable unless the breaching party had some reason to know about the possibility of these unforeseeable consequential damages
  176. consequential damages are:
    losses that are unique or special to this plaintiff
  177. general damages are:
    the type of losses that almost anyone would suffer from a breach. These include incidental damages, such as the cost of storing rejected goods, or finding a new buyer, or finding a replacement vendor
  178. limits to expectation damages: doctrine of mitigation states that a breached-against party must take reasonable steps to reduce damages from breach
  179. if you refuse to mitigate, the law will calculate damages as if you did mitigate. D bears burden of proving a mitigation failure
  180. mitigation efforts must be reasonably similar to the original contract
  181. lost volume profits: if seller is a retailer who sells this type of product all the time, the seller can try to argue for LVP [speedboat and Dump]
  182. incomplete performance: if the paying party breaches in a partially completed building contract, can the builder continue to work on the job? why?
    no. runs counter to mitigation.
  183. formula for incomplete performace
    expectation damages= contract price=amount already paid- amount that would be needed to finish job

    (this takes into account fact that builder did not finish job)
  184. use diminution in market value when cost to complete damages will dramatically overcompensate P (e.g. rebuilding towers just to fix lobby walls).
  185. DMV= how much lower is the market value of what you got versus what you wanted. breaching party must normally have acted in an innocent and unintentional manner for DMV damages (instead of coughing up cost-to-complete damages)
  186. reliance damages: put a party in the same economic position that it would be in if
    the contract had never been created.
  187. reliance damages: ask what loss a P incurred that would have never taken place but for the breached contract.
  188. a party cannot recover both expectation and reliance damages, typically, P must elect one or the other
  189. restitution damages: give P an amount equal to the economic benefit that P conferred D [ Owen Wilson nose hypo]
  190. Although expectancy damages normally awarded in breach-of-contract action, restitution damages permitted in cases where the nonbreaching party has partially performed a below-market-price K.
  191. punitive liquidate damages awarded only if:
    • 1) amount of liquidate damages was reasonable at the time of contracting and
    • 2) actual damages from breach would be uncertain in amount and difficult to prove
  192. specific performance (a type of equitable relief) awarded only when monetary damages are considered inadequate for some reason
  193. specific performance is presumptively available for real estate transactions
  194. specific performance is presumptively not available for contracts of personal service. rarely a court might grant an injunction prohibiting a breaching party from:
    performing services for a competitor for a reasonable period of time/place
  195. specific performance is available only for unique goods like art or custom-made items
  196. right of reclamation: an equitable right of an unpaid seller to reclaim goods when the buyer is insolvent. to assert:
    • - buyer must be insolvent at the time of purchase
    • - seller must demand the return of goods within 10 days of receipt (or wi/in a reasonable time if buyer misrepresented his insolvency to the seller) and
    • - buyer still has the goods
  197. third-party beneficiaries: intended beneficiaries have the right to sue, ___________ beneficiaries do not
    incidental
  198. to determine whether a given third party is an intended beneficiary or an incidental beneficiary, ask whether:
    the initial counterparties (promisor and promisee) intended to convey enforcement rights to the third party in the event of breach
  199. creditor beneficiary hypo: Cam loaned Abe $500 last month. In satisfaction of this debt, Abe agrees to pay Beth $500 if Beth mows Cam's lawn 10 times. Beth never shows up, and Cam files a lawsuit against Beth. Cam can sue Beth because he is a creditor beneficiary.
  200. the promisor can assert any contract defense against the third party that he would be entitled to assert against the promisee
  201. assignment: transfer of rights under a K
  202. delegation: transfer of duties under a K
  203. If K just prohibits assignments, then the assigning party has breached the deal when he makes the assignment, but the 3rd party can still recover from the guarantor
  204. If the K invalidates assignments, then the 3rd party cannot recover (b/c there is no power or right to assign).
  205. Delegation of duties generally acceptable as long as K does not prohibit delegation or other party does not have some special interest in having a specific individual perform
  206. a delegatee is generally not liable for breach unless she receives consideration from the delegating party
  207. NOTE: on exam "assignment" could be either an assignment or a delegation. Read for the context to determine which one.
Author
mjabali
ID
291631
Card Set
MBE Contracts All
Description
All contracts cards
Updated