Contract Flashcards
(42 cards)
Theory of Promissory estoppel
“a promise which the promisor should reasonably expect to induce action or forbearance . . . and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.” This is known as the doctrine of promissory estoppel. Under this doctrine, a promise may be partially or fully enforced, even if it is not supported by consideration.
Here, the man already had decided to retire when the company promised him a pension. Therefore, the promise did not induce the man to leave his job earlier than he would have otherwise, and he will likely be unable to recover under a theory of promissory estoppel. If the man had decided to retire early based on a promise of a lifetime pension, he likely would have a case. Therefore, this issue will be dispositive in determining the outcome of the case.
Statute of frauds
The Statute of Frauds forbids the enforcement of a contract unless it is set down in a signed writing. There are six classes of contracts that fall within the Statute of Frauds, which means that they require a signed writing in order to be enforceable. You can remember these six classes of contracts using the mnemonic “MY LEGS.” The six classes of contracts are: marriage contracts, contracts that cannot be performed within 1 year, land contracts, executor-administrator contracts, sale of goods contracts for $500 or more, and suretyship contracts. Let’s take a closer look at each of these classes of contracts.
Breach
When performance of a duty under a contract is due, any non-performance is a breach.” In other words, a breach occurs when a party has failed to fully perform by the due date of the performance. If a total breach has occurred, in that the party has not performed at all, then the injured party may sue for a remedy. For example, suppose that Jack has agreed to paint Jill’s house within three days of the contract. If Jack fails to paint Jill’s house within three days, then Jack has breached the contract, and Jill may sue for a remedy. But what if the party has already rendered part of the performance? The injured party may still sue for a remedy, but only if the breach is material. So if Jack has only painted part of Jill’s house, then he has likely committed a material breach, and Jill may sue for a remedy. However, if Jack has painted Jill’s house the wrong shade of blue, and the difference is not discernible, then it is unlikely that he has committed a material breach, and Jill may not sue for a remedy.
No MATERIAL Breach if substantial performance has been completed
Consider even party has offered to cure for example rainstorm unable to complete the painting the house and assures that will complete at a later point of time
Anticipatory repudiation
So, if Jack calls Jill and says, “I’m not sure if I’ll be able to paint your house tomorrow,” then Jill may not sue Jack for a remedy until Jack has actually failed to perform. Second, the repudiating party may take an action that renders him unable to perform. The action must be voluntary and affirmative. For example, if Jack shuts down his house painting business before his time of performance, then his action repudiates his original contract with Jill, who may sue for a remedy.
Will not sue if notice of retraction or events occur to take back the repudiation. Any anticipatory repudiation that has not become final may be retracted, and the injured party may no longer sue before a breach occurs. The injured party must either receive notice of the retraction or know that events causing the repudiation have ceased to exist.
retraction not possible if material change of events. For example,For example, if Jill has already hired another painter based on Jack’s anticipatory repudiation, then Jack may no longer retract his repudiation. The second is where the injured party has indicated to the repudiating party that the anticipatory repudiation is considered final.
Material breach
There are four circumstances that must be considered in determining whether a breach of contract is material: (1) the loss of benefit to the nonbreaching party, (2) the adequacy of compensation for the nonbreaching party’s loss, (3) the likelihood of a cure by the breaching party, and (4) the extent of forfeiture by the breaching party if the breaching party is denied the bargained-for compensation or benefit. See Restatement (Second) of Contracts § 241 (1981).
anticipatory repudiation final once non breaching party accepts notice of retraction?
he anticipatory repudiation is considered final when either the injured party has materially changed position in reliance on the repudiation or where the injured party has indicated to the repudiating party that the anticipatory repudiation is considered final. Id. at § 256.
Here, the chef anticipatorily repudiated the contract when he notified the woman that he would be unable to perform. The woman accepted his repudiation and canceled the contract. At that point, the repudiation was final and the chef could not retract it.
Interpretation
Typically, courts will consider the terms of the agreement, as well as the intent of the parties regarding those terms. Also, as a general rule, the purpose of the parties is given significant weight, and their words and conduct are interpreted in light of the circumstances
reasonable, lawful, and effective meaning to all of the terms.
specific over general
Third, courts will give greater weight to negotiated or added terms than to non-negotiated or standard terms. For example, if Jack and Jill print out a standard agreement and add a handwritten provision before signing the contract, then the court will give greater weight to the handwritten provision. Finally, courts will interpret the contract against the drafter when choosing among reasonable meanings. So, if Jack wrote the contract, then the court will be more inclined to interpret the contract in favor of Jill.
interpretation often involves determining the meaning of indefinite, ambiguous, or even omitted terms.
The terms of a contract may be indefinite in that they are left open or uncertain. If so, then courts may void the contract for indefiniteness, depending on the importance of the terms. If the indefinite terms are essential, then the court will conclude that the parties never intended to make a contract.
Minor indefinite terms- Court sets them ex reasonable time
Ambiguous terms: If so, then courts may void the contract for a lack of mutual assent, depending on what the parties understood. er minivan, then the court will interpret the term “car” to mean Jill’s convertible. If the parties had different meanings for the term due to a misunderstanding, then the court will typically find a lack of mutual assent and void the contract. However, if one party knew of the misunderstanding, then the court will interpret the contract based on the other party’s meaning.
nally, the terms of a contract may be omitted in that the parties have not provided for what should happen in a given situation. If so, then courts will usually fill in the gaps of the contract by supplying a reasonable term under the circumstances. Courts will also impose a duty of good faith in the performance and enforcement of the contract
open and indefinite terms
Under the U.C.C., “Even though one or more terms are left open a contract for sale does not fail for indefiniteness if the parties have intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.” U.C.C. § 2-204(3) (2002). If the price is left to be agreed or nothing is said about price, the price can be set at a reasonable price at the time for delivery. See id. § 2-305. If the contract is silent on the place of delivery, the place of delivery can be the seller’s place of business (or residence). See id. § 2-306. If the time of delivery is not provided, it can be set at a reasonable time. See id. § 2-309. Quantity, however, is more difficult and is often unable to be filled in by the courts. See id. § 2-306.
Parol evidence rule
The rationale behind the parol evidence rule is that the parties to an agreement will include all of their terms in a written contract, so any terms that are not in the written contract were not intended to be part of the final agreement.his means that a completely integrated agreement may not be supplemented by a prior agreement or a contemporaneous spoken agreement.
For instance, any related documents that were also signed by Molly when she signed her lease contract would be considered part of the same integrated agreement. A completely integrated agreement is a writing that has been adopted by the parties as a final and complete statement of the terms. A partially integrated agreement, on the other hand, is a writing that has been adopted by the parties as a final but incomplete statement of the terms. For example, if Molly’s lease contract contains all of the final terms of her agreement, except for the amount of her security deposit, then her contract will be a partially integrated agreement. For the parol evidence rule to apply, an integrated agreement must also be binding. For example, if Molly’s lease contract is not supported by consideration, or if it is merely a draft or proposal, then it will not be considered binding and the parol evidence rule will not apply.
Exceptions to Parole evidence
First, extrinsic evidence may be used to establish whether a written contract is an integrated agreement, as well as whether an integrated agreement is completely or partially integrated.
Second, extrinsic evidence may be used to clarify the meaning of an ambiguous term.
Third, extrinsic evidence may be used to support a defense to enforceability, such as illegality – for instance, if the leasing office previously agreed to lease Molly an apartment for the purpose of storing stolen goods, then their prior agreement may be used as evidence of illegality. Finally, extrinsic evidence may be used to determine whether a remedy should be granted or denied to one of the parties. For example, the leasing office may have previously agreed that Molly would receive a discount on her first three months of rent, and that Molly has the right to modify any integrated contracts to include the discount. Evidence of their agreement may be used to prove that Molly should receive the discount.
See less
Material misrepresentation
contract is voidable by the recipient.Normally, a party’s silent failure to mention a fact will not constitute a misrepresentation as to that fact. But intentional acts of
concealment are deemed to be equivalent to misrepresentations
Defense of impracticability
a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a
basic assumption on which the contract was made, his duty to render
that performance is discharged, unless the language or the
circumstances indicate the contrary
Manifestations of assent
Manifestations of assent that are in themselves sufficient to conclude
a contract will not be prevented from so operating by the fact that the
parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the
agreements are preliminary negotiations.”
specific priority of express terms, trade usage etc.
among express terms, course of performance, course of
dealing, and trade usage, trade usage has the lowest (not highest)
priority. Rest. 2d of Contracts § 203(b). So if the case involves either
an express term, a course of performance or a course of dealing, the
presence of a trade usage on the same issue will be irrelevant.
Hadley v Baxdale
Under the principle of Hadley v. Baxendale, the breaching party is
responsible only for those types of damages that, as of the making of
the contract, he had reason to foresee as a likely result of breach. In
the case of a contract to lend money, the lender is usually entitled to
presume that an alternative source of loan money will be readily
available, unless the borrower has brought home to the lender at the
time of the loan contract the borrower’s likely inability to borrow
elsewhere
creditor beneficiary
See, e.g., Rest. 2d of Contracts § 302(b): putting
aside the creditor-beneficiary scenario (not present here), the
beneficiary is an intended one only if “the circumstances indicate that
the promisee intends to give the beneficiary the benefit of the
promised performance.” So, unless there is affirmative evidence that
the hospital intended to give its patients the benefit of the promise (an
intent that would presumably have to include an intent to give the
patient the right to sue the janitorial service if it didn’t perform), each
patient would merely be an incidental beneficiary.
condition and
Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”
Rest. 2d of Contracts § 205. Where a duty of one party is subject to
the occurrence of a condition and that party’s cooperation is necessary
for the condition to occur, a court will typically conclude that such
cooperation is part of that party’s duty of good faith. See Rest. 2d §
245, Comment a. That’s the case here: The buyer’s duty was
conditional upon receipt of financing, and that financing could not
occur without the cooperation of the buyer (by his making an
application). So the court will find an implied term requiring the buyer
to make a good-faith application for the financing. Since the buyer did
not fulfill this duty to make good-faith efforts, he has breached.
Furthermore, “Where a party’s breach by non-performance contributes
materially to the non-occurrence of a condition of one of his duties,
the non-occurrence is excused.” Rest. 2d § 245. See also Illustr. 3 to §
245, which is exactly on point (buyer’s failure to make mortgage
application causes him to lose the benefit of the mortgage-financing
contingency in the contract). So when the buyer failed to make
reasonable efforts to get financing, he lost the right to assert the lack
of bank financing as the non-occurrence of a condition to his duty to
close
doctrine of accord and satisfaction
An ‘‘accord’’ is an agreement under which a
party to a contract agrees to accept, as complete satisfaction of the
contract, some performance different from that originally due under
the contract. ‘‘Satisfaction’’ is performance of the accord, and once
satisfaction takes place, both the accord and the original contractual
duty are discharged. Here, there was a good-faith (although mistaken)
dispute as to whether the architect had produced defective plans. The
‘‘accord’’ was the client’s offer to pay $7,500 for the settlement of the
claim. ‘‘Satisfaction’’ of the accord occurred when the architect
accepted the payment. As a result, the original obligations under the
contract were discharged,
Expectation damages
The most common measure of damages sought by a party as the
result of the other party’s breach is expectation damages, which seek
to put the non-breaching party in the same position as he would have
been had there been no breach. W
Reliance damages
A non-breaching party may seek reliance damages, which aim to
repay the plaintiff for expenses that he has undergone in reliance on
the breaching party’s promise. Notably, this does not allow the
plaintiff to recover expected profits, so it is unlikely to afford the
plaintiff the greatest measure of damages when expectation damages
are available.
SOF
Contracts for the sale of an interest in land fall within the Statute
of Frauds, and thus require a writing in order to be enforceable (unless
they are partially performed). In order to suffice, the writing must
specify with reasonable certainty:
1. the contract’s subject matter;
2. the parties’ identities;
3. promises, by whom and to whom made, and essential terms and
conditions; and
4. the signature of the party to be charged (the one who denies the
contract’s existence).
Is a unilateral performance revocable?
An offer is unilateral if it allows acceptance only by performing
the requested act. Here, the bank’s offer of $25 is unilateral since it is
only acceptable by actually standing in line for five minutes, not by
promising to do so. A unilateral offer becomes irrevocable once the
offeree begins performance. As a result, the offer from the bank to the
customer became irrevocable the moment the customer got in line.
Since the offer was irrevocable, the bank manager’s attempt to revoke
it was ineffective. The statement on the sign that ‘‘This offer may be
withdrawn at any time’’ has no effect.
intended beneficiary
If he meets this test, he must
further fit into one of the two following categories: (1) either the
performance of the promise will satisfy an obligation of the promisee
to pay money to the beneficiary; or (2) the circumstances indicate that
the promisee intends to give the beneficiary the benefit of the
promised performance
assignment
n assignment is not a contract, but rather is a present transfer of contractual rights. See Restatement (Second) of Contracts § 317, with comments; 29 Williston on Contracts § 74:47 (4th ed.). Any contractual right may generally be assigned, with or without either a writing or the obligor’s assent. See Restatement (Second) of Contracts §§ 317, 323 cmt. a. However, where there is no contractual right, any language purporting to create an assignment is ineffective. Therefore, here, because the debtor had no right to $500 from her roommate, her writing created no assignment. Therefore, the creditor may only recover damages from the debtor.
