Additional Contracts Principles

Question 1

Promissory Estoppel

Answer 1

A promise which induces detrimental reliance. Even though there is no contract, such promise is enforceable.

Question 2

Third Party Beneficiary

Answer 2

Intended beneficiary: If the parties intend the contract to benefit a third party. An intended third party beneficiary’s rights vest, and they can thus enforce the contract, when he learns of the contract and begins to rely on its promise to benefit him.
Incidental beneficiary: if the parties doe not intend the contract to benefit a third party, but it does so incidentally. An incidental beneficiary has no rights to enforce the contract.

Question 3

Anticipatory Repudiation

Answer 3

Prior to contract performance, one party clearly and unequivocally refuses to perform. The repudiating party may retract the repudiation, unless: 1) the non-repudiating party has relied on the repudiation to its detriment; 2) has sued for breach of contract; or 3) has accepted the repudiation. In the case of repudiation, the non-repudiating party must suspend performance in order to avoid further loss to the repudiating party.

If a party has a reasonable concern that the other party may not perform, that party can demand further assurances. if the other party responds to the assurance in a reasonable amount of time, the concerned party must allow the party to perform.
UCC: Demand for further assurance must be in writing and responded to within 30 days.

Question 4

Misrepresentation

Answer 4

Intentional misrepresentation: the party intended to induce reliance of a misrepresented material fact which causes damages.
Negligent misrepresentation: a representation was negligently made or not made that induced reliance on a material fact which causes damages.

Question 5

Warranties

Answer 5

Warranties can be express and/or implied.
Implied Warranty of Merchantability: The product is of a quality equal to a generally acceptable standard and fit for ordinary purpose. The product will perform as it is intended to.
Implied Warranty of Fitness for Particular Purpose: The seller knew or should have known of a particular purpose for which the goods are sold and that the buyer relied on the seller’s skill or judgment to furnish the goods.

Question 6

Non-Compete Clause

Answer 6

Non-compete clauses must be reasonable in terms of time, area, and line of business.

Question 7

Parole Evidence Rule

Answer 7

Oral communications prior or contemporaneous with entering the contract and are not incorporated into the contract.
If the contract is a final integration, that is it contains a merger clause stating it is the complete and final agreement of the parties, parole evidence is inadmissible except to clarify an ambiguity.
If there is no merger clause, the contract is a partial integration. In a partial integration, parole evidence is admissible if it does not contradict or materially alter a term of the written contract.
Parole evidence is also admissible to prove a condition precedent, to proffer a defense to enforcement, to interpret vague/ambiguous terms, or to correct clerical error.
In a sale of good contract, parole evidence is admissible to prove industry or party custom.