Contract Performance Flashcards
Quantum meruit.
A court will imply a contract to prevent unjust enrichment when:
(i) the plaintiff has conferred a “measurable benefit” on the defendant;
(ii) the plaintiff acted without gratuitous intent; and
(iii) it would be unfair to let the defendant retain the benefit.
Doctrine of promissory estoppel
A promise that the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and that does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.
Liquidated Damages Clause
Parties can agree in advance of liquidated damages when:
1. Damages from breach would be uncertain and is difficult to ascertain at the time of breach and
2. The amount agreed to is reasonable in relation to the possible harm that may occur.
If does not meet these two then the clause is void and unenforceable.
Breach of Contract Damages - Generally
Damages that flow naturally from the breach and are reasonably foreseeable at the time of contracting.
Objective standard of what defendants reasonably knew or should have known could happen as result of breaching K.
Breach of Contract Damages - Not allowed
Plaintiff cannot recover damages resulting from, mental anguish unless can prove tortious conduct.
Punitive damages not allowed because goal of contracts is to make party whole not punish breaching party.
Parol Evidence Rule
Evidence of oral or written agreements that contradict or vary the written contract, is not admissible to change contract which is clear and unambiguous.
Integration agreements also will prevent the admission of evidence of prior writings.
Types of Third Party Beneficiaries
The First Restatement classifies third-party beneficiaries as creditor, donee, or incidental beneficiaries.
Intended beneficiary (Creditor and Donee)
An intended beneficiary is one to whom the promisee intends to confer his contractual benefit to.
The General rule is that once an intended beneficiaries right VEST, they have a right to sue on the contract.
The rights vest when:
(i) detrimentally relies on the rights created;
(ii) expressly assents to the contract at of one of the parties’ request; or
(iii) files a lawsuit to enforce the contract.
Incidental beneficiary
An incidental beneficiary is one who benefits from a contract even though there is no contractual intent to benefit that person. An incidental beneficiary has no rights to enforce the contract.
Third Party’s Right to Enforce Contract
To recover a third-party beneficiary must establish:
1) A contract between A and B; was for 3PB’s benefit.
2) Breach of contract by A or B.
Donee can only sue the promisor
Creditor can sue Promisee and Promisor
MI Creditor Beneficiaries
Under Michigan law, if a third-party beneficiary is a creditor beneficiary, the promisor and promisee may, by mutual agreement, divest the beneficiary of his rights, if (i) this is done without intent to delay or defraud the beneficiary, and (ii) the beneficiary has not yet taken any legal steps to enforce the promise made for his benefit.
Assignment and Delegation of a Goods K
A contract for the sale of goods can be delegated to a third party without the consent of the other party unless the other party has a “substantial interest” in having the original party perform. The assignee assumes all duties thereof and promises to perform them.
Liability
The assignment does not relieve the assigning party of its obligation under contact. Neither does consent by the 3rd party.
Breach
Assignor is only released from liability if the Assignee and 3rd party agree to a novation to release assignor. 3rd party can hold both Assignor and Assignee liable if there is a breach.
intended beneficiary
The general rule is that only an intended beneficiary has a right to bring an action on the contract. The rights of an intended beneficiary vest when the beneficiary: (i) detrimentally relies on the rights created; (ii) expressly assents to the contract at of one of the parties’ request; or (iii) files a lawsuit to enforce the contract.
Waiver of Contract rights
In Michigan, a party to a contract may waive the other party’s breach either expressly in writing or implied through affirmative acts/conduct.
