Ch 9 Flashcards
Parol evidence rule
Parties to a complete and final written contract can’t
introduce oral evidence in court that changes intended
Meaning of written terms
Does not apply to oral modifications, just oral agreements
Prior to written contract
In interpretation of contract terms…
Handwriting is the best evidence of intention over typing
Duty of performance
Performance dictated in contract
Discharged
When party is relieved from responsibility of performance
Condition precedent
Something must take place in future before party has duty
to perform
Ex. Building Developer may contract to buy land when the city annexes it
Condition subsequent
Excuses contractual performance if some future event
Takes place
Ex. Marine insurance policy might terminate coverage for shipping losses if war is declared
Concurrent condition
Parties have simultaneous duties to perform
Ex. In contract for transfer of title of land, buyer and seller expect to meet at closing event and perform their obligations concurrently
Delivery
Legal term referring to transfer of possession from seller
To buyer
Terms of delivery for goods
Refer to terms of UCC
Seller is obligated to deliver goods
Buyer’s duty is accept and pay for them
Terms of delivery for services
Require more specificity and reasonableness in contract
Destination contract
Requires seller to get the goods shipped and delivered
To place of business designated by buyer
Tender performance
Offer to perform
Ex. When consultants offer to send a team to your plant
Next week they are tendering performance
3 levels of performance courts recognize
1 Complete performance
2 material breach
3 substantial performance
Complete performance
Recognizes that contracting party has fulfilled every duty
Required by contract
Ex. Payment of money is a contractual duty of performance that party can perform completely
Party that performs completely on contract is entitled to…
A complete performance by other party and may sue to
Enforce right
Material breach
Level of performance below what is reasonably acceptable
Party that has materially breached contract can’t…
2) And is liable for…
Can’t sue the other party for performance
2) damages arising from breach
Substantial performance
Represents less than complete work
Work done is sufficient to avoid claim of breach
Ex. Construction contractor who gets a home built but hasn’t finished the landscaping on time
A party who substantially performs may be entitled to…
Partial recovery under contract
Employment contracts can be divided into parts because…
Performs servicesover a period of Time followed by the wages
That are due, this is a recurring pattern
4 most common ways to discharge party’s obligation under a contract
1 complete performance of contract
2 tendering performance if tender is rejected
3 substantial performance
4 performance of part of divisible contract
3 common reasons for impossibility of performance
1 death of essential party
2 destruction of essential materials
3 subject matter of contract becomes illegal
Commercial impracticability
Impractibility of performance depends on circumstances
Ex. Manufacturer may be discharged from obligation to make goods for buyer when manufactures major source of raw materials is unexpectedly interrupted
Waiver
When party intentionally relinquishes right to enforce contract
Ex. Landlord may waive a late payment fee when rent is paid 2 days late
When does a release exist?
When party announces the other party doesn’t have to
Perform as promised
It is bargained for in form of negotiated contract
5 common remedies/solutions for breach of contract
1 negotiated settlement 2 arbitration 3 various awards/damages 4 specific performance 5 rescission
Liquidated damages
Parties specify in contract the amount damages should
Be
Rescission
Requires each party to return consideration given to other
Often used in fraud and misrepresentation cases
Mitigation
Purposeful reduction of damages
Usually responsibility of nonbreaching party
Ex. If tenant moves away before lease expires, land lord
Must mitigate damages by trying to rent the room
To willing and suitable tenant
Mortgagee
2) mortgagor
Lender
2) borrower
Agents
People who get the work done
3 parties in agency relationships
1 principal
2 agent
3 3rd party
Agency relationship: Principal
Interacts with someone/or organization for purpose of
Obtaining second party’s assistance
Agency relationship: agents
Principal hires agents to do tasks and represent them in
Transactions
Ex. All employees are agents of employer/principal, but
Not all agents are employees
Independent contractor
Employers don’t directly control independent contractor
Independent contractors generally work for more than 1
Principal
Ex. Attorneys, accountants
Third party
Agent on behalf of principal interacts with 3rd party
The legal purpose of an agent is to create…
Binding relationship btw principal and 3rd party
To accomplish the good relationship between the principal and third party, what 4 duties must the agent accomplish?
1) loyalty to act in principals best interest
2 keep principal fully informed
3 obey instructions
4 account to principal for monies handled
4 forms contractual authority can take to make principal and 3rd party contractually bound
1 actual authority
2 expressed, written authority
3 implied authority
4 apparent authority
Actual authority
Specific instructions, spoken or written given by employer
To an employee to create actual authority
Ex. Written note or oral confirmation to charge money on account through obtaining goods from another business
Implied authority
Inferred from Acts of an agent who holds position of
Authority or had actual authority in previous situations
Ex. Employee goes to grocery store and charges $60 for
Tuna fish to restaurant’s account, employer receives bill
From grocery store and is contractually bound to pay it
Apparent authority
Notify 3rd parties if agent no longer works for you, this
Notice cuts off authority
Ex. If you fire employee from restaurant and you don’t let grocery store know about this. The fired worker goes to store and
Charges food to restaurants account in retaliation, your restaurant is liable for the charges to the store, but have claim against former employer for the charges
Agency law: trading partnership
One engaged in business of buying and selling commodities
Has implied authority to borrow money in usual course of business
And pledge credit of firm
Agency law: nontrading partnership
Accounting or other service firm Has no implied power
to borrow
Ratification
Occurs when principal voluntarily decides to honor
agreement, which otherwise wouldn’t be binding due to
Agent’s lack of authority
Ex. Alex enters contract on behalf of restaurant to purchase
$100,000 of kitchen equipment. If Alex had no authority to bind restaurant, but you realize it’s a great deal, you could ratify the contract and follow through with the transaction
Tort
Breach of duty that causes injury to person or their property
Tort doctrine: respondeat superior
If employee is liable for tortious acts in scope of employment,
Employer is also liable
Most respondeat superior cases involve employee negligence
Ex. If employee strikes customer when arguing about a returned business delivery, employer is liable
If employee strikes customer when arguing over football, employer isn’t liable
Frolic and detour
Employers defense against respondeat superior that
Employee was outside scope of employment
Ex. Employee was driving to see friend when accident occurred
