Contracts Flashcards

Question

Formation Issues --> Defenses to Formation: SoF - Performance w/in One Year

Answer 1

Ks not to be performed w/in one year: measured from date K made, not date performance begins. --> Ask: at point of formation, is it at all possible (even if not probable) to complete reqd performance w/in one year? Frequently tested situations: (1) K that can be breached/excused w/in a year of its formation. - -> This is potentially true of any K and so would swallow the one-year rule - -> Irrelevant; what matter is not whether the K can be breached w/in one year but whether the K can be performed in full by its terms w/in one year of formation. (2) A lifetime or permanent K of employment not governed by the one year rule because employee's death is possible w/in one year

Answer 2

Land provision governs Ks for sale of interest in land; most cts look to whether K is for future sale of land or present conveyance. - --> K for future sale governed by land provision and reqs signed writing; present conveyance of land promised for money is outside land provision. - --> Leases generally treated as Ks falling w/in the land provision bec a leasehold is an interest in land; however, most states except from land and 1 year provisions short term leases (for one year or less) or Ks to lease.

Answer 3

The writing need not be a single document; a party may satisfy the SoF by tacking together several documents which (once combined) satisfy all the nec reqs of SoF. - --> If all documents are signed by the party against whom K is being enforced (or if signed doc incorporated unsigned docs by reference) sig req is satisfied. - --> If unsigned docs are not incorp by reference, tacking together still satisfies SoF if: (1) there is at least one signed writing unambiguously esting a contractual relationship between the parties; (2) the signed and unsigned docs clearly refer to the same subject matter; and (3) there is clear and convincing evidence of acquiescence to the unsigned documents by the party against whom enforcement is sought.

Answer 4

Despite absence of writing, an otherwise valid K is enforceable for: (1) goods for which payment made/accepted; or (2) goods which have been received/accepted Part performance reqs a showing of any combination (2) or all three of the following: (1) payment of all or part of purchase price (2) taking possession of land (3) making substantial improvements to property

Answer 5

Where one party bestows benefits on another in connection w/ an oral K (even if K is barred by SoF) aggrieved party has option of filing cause of action for RESTITUTION (recovery of benefits conferred). Alternatively, if services are involved, party may recover on theory of QUANTUM MERIUT (meaning he could sue to recover the reasonable value for the services rendered).

Answer 6

Where a party suffers losses in reliance on an oral K barred by the SoF, the party may be able to recover damages via PE. Promissory estoppel serves as a substitute for consideration. - --> The P must show: (1) a promise, (2) reliance that is foreseeable and justifiable, and (3) that enforcement is necessary to avoid injustice. Among cts recognizing PE, some impose stiffer reqs on claimant than those applicable under ordinary PE action; those cts look for: (1) the definite and substantial character of reliance, and its relationship to the remedy sought; (2) the extent to which the reliance is corroborated by the evidence of the formation and terms of the K; and (3) the extent to which the formation and terms of the K are otherwise est'd by clear and convincing evidence.

Answer 7

Mistake: Faulty assumptions regarding present material facts. Unilateral Mistake 1 party's mistake about present material facts is NOT excused unless the other party knew/had reason to know of the party's mistake. Mutual Mistake Voidable by disadvantaged party when all 3 met: (1) mistaken assumption relates to material facts (not just value); (2) mistake made by both parties; and (3) disadvantaged party did not bear the risk of mistake under the K Remedies -Rescission; Unjust Enrichment

Answer 8

Untrue statements or assertions that relate to existing facts. -----> Do not relate to future conduct or actions, nor do they relate to statements based on a party's mere opinion, guess, or supposition. Exception Where one party disguises a fact as opinion, then this will constitute misrepresentation. -----> Where a party holds himself out to have knowledge or special skill, and asserts an opinion on the basis of the skill/knowledge, his assertions are held to relate to underlying facts and (therefore) suff to est misrepresentation. May be: (1) fraudulent misrepresentation, (2) non-fraudulent misrepresentation, or (3) fraudulent nondisclosure.

Answer 9

4 Elements: (1) A misrepresentation - -----> D must have made an assertion inconsistent w/ existing facts. - -----> What would be suff to prove this element? - Oral or written misrepresentations - Fraudulent conduct such as concealment - A half-truth - -----> Misrepresentations are not: - Broken promises, but rather only misstatements of existing fact - Opinions or guesses (2) State of Mind (need BOTH scienter and intent) - -----> Scienter: satisfied if D made assertion either knowing it to be false OR knowing he had no idea whether true or false; AND - -----> Intent to mislead: satisfied if D made assertion for purpose of misleading the aggrieved party OR knowing there was a substantial likelihood to mislead (3) Materiality of Misrepresentation - -----> Objective materiality: where such an assertion is likely to induce a reasonable person to enter into a K. - -----> Subjective materiality: if the party making the assertion had reason to know that it was likely to induce the particular aggrieved party into entering the K (4) Reasonable reliance on the misrepresentation - -----> What counts as unreasonable reliance? - If aggrieved party has independent knowledge or reason to know that the statement in question is false. - If aggrieved party has reason to believe that the statement in question was made by a person who is unreliable - If no reasonable person would have believed the assertion - If aggrieved party could have easily ascertained the truth by cursory inspection of the goods

Answer 10

2 Types: Negligent and Innocent Misrepresentation Elements: (1) A misrepresentation (2) Materiality of misrepresentation (3) Reasonable reliance on misrepresentation (4) (DIFFERENT) Don't need scienter/intent to mislead; rather: - -----> For negligent misrepresentation, D would have known the assertion was false had he exercised reasonable care. - -----> For innocent misrepresentation, D made an assertion not in accord w/ existing facts

Answer 11

The fraud consists of D's silence when duty to disclose. Elements: (1) The nondisclosure was material to the K; (2) Reasonable reliance on nondisclosure; (3) A duty of disclosure and failure to fulfill it Is there a duty? (Element 3) - -----> Although there is generally NO duty of disclosure for trading partners, if a party is aware of material facts that are unlikely to be discovered by the other party in the exercise of ordinary care and diligence, then there will be a duty to disclose that info in these circumstances. Duty in 3 situations: (1) Parties enjoy relationship of trust and confidence (eg familial relationships or the relationship between a professional and a client) (2) Party has made an assertion that was true at the time but has been rendered untrue by intervening events (3) If obligation of good faith would req that the party disclose the info (eg real estate transaction where one party knows of a termite infestation).

Answer 12

Victims of fraudulent misrepresentation, non-fraudulent misrepresentation, and fraudulent nondisclosure may use those claims in 2 ways: (1) avoidance; or (2) rescission and reliance damages Victims of fraudulent and non-fraudulent misrepresentation have 3rd option: they may live with the K and sue for benefit of the bargain. Punitive damages -----> Because fraudulent misrepresentation is an intentional tort, the aggrieved party may secure punitive damages against the D to penalize the D on the basis fo the fraudulent intention.

Answer 13

The public policy defense is a claim that cts should not enforce a K bc doing so would violate or undermine some important public policy. ---> Rescission available

Answer 14

Infancy Rule Modern Rule: Minors (under 18) may enter into a K, but it is voidable at minor's option. ----> Majority of jdxs: neither of the following affect minor's avoidance rights: (1) marriage or emancipation (2) misrepresenting the minor's age Infancy Exceptions 1. Power of Avoidance - --> If minor exercises right to disaffirm K: minor is obligated to return any goods received but not liable for any damages or reasonable value for use of any goods/services. 2. Ratification - --> Once minors turn 18, they may expressly or impliedly ratify Ks entered into during minority and bind themselves to obligations they might otherwise have disaffirmed. 3. Necessaries - --> A minor's K for necessaries (food, clothing, shelter, medical care) is voidable, but merchant has quasi K right to recover reasonable value of goods/services. 4. Misrepresentation by Minor - --> Minority: if a minor has misrepresented her age to the contracting party in order to obtain the goods/services of the K, he may be equitably estopped from proving his real age in ct. - ----> This would deny the minor the defense of infancy and make the K enforceable.

Answer 15

Under modern rules, a person lacks capacity to K if mentally incompetent (ie to reasonably understand the transaction) at the time of contracting. Cognitive Defects A person will be deemed mentally incompetent and lacking the capacity to enter a K if the person is unable to understand in a reasonable manner the NATURE and CONSEQUENCES of the TRANSACTION. Volitional Defects Mental incompetence can be est'd if: (1) a person is unable to ACT in a reasonable manner in relation to the transaction; and (2) the other party has reason to KNOW of this condition Legal Consequences 1. Power of Avoidance (Disaffirmation) - ---> If mentally incompetent person exercises right to disaffirm K: (1) Unlike minors, the mentally incompetent person is obligated to not only return any goods received, but IS ALSO liable for any damages or reasonable value for use of any goods/services. - --->UNLESS other party was aware of incompetence then mentally incompetent parties are treated just like minors. 2. Ratification - ---> A party who was mentally incompetent at the time of contracting may expressly/impliedly ratify the K if he becomes competent at a later time. 3. Necessaries Exception - ---> The mentally incompetent party can disaffirm the K but the provider of the necessaries can recover in quasi-K for the reasonable value of the goods/services. - ---> Additional necessary: legal representation in connection w/ incompetency proceedings - ---> Incapacity defenses are unavailable under CL and the UCC

Answer 16

A promise to increase compensation for duties already owed is unenforceable because there is no consideration for the modification. ---> Preexisting duties are not deemed consideration because the promisor must already perform that duty on the basis of the original K. Exceptions (1) Mutual modification - -> MM of an existing K is enforceable if both parties agree to different performance from what was originally reqd by the original K. (2) Unforeseen Circumstances - -> Preexisting duty rule not applicable if increased compensation is given in exchange for a promised performance that has been rendered substantially more burdensome than reasonably anticipated when K formed.

Answer 17

Agreement modifying an existing K needs no consideration to be enforceable as long as made in good faith.

Answer 18

Unless reqd by SoF, mods can generally be oral or written. ----->However, enforceability of an oral mod to an agreement may depend on whether K contains a "no oral mod" clause. CL Cases - ----> Originally, there was a CL rule that made oral mod clauses invalid; even today, most cts will NOT ENFORCE them where a party has reasonably RELIED on the oral agreement. - ----> However, enforcement becoming more likely in modern cases, particularly in construction context. UCC Cases - ----> Under 2-209, clauses prohibiting oral mods are PRESUMPTIVELY INVALID. - ----> An oral mod made in violation of such a clause may nevertheless be enforceable if the disadvantaged party relies on the mod or the parties perform in accordance therewith.

Answer 19

Governs admissibility of oral and documentary evidence of negotiations and other communications between the parties that took place prior to or contemporaneously w/ the execution of the K. Analysis When a party seeks to introduce parole evidence, the ct will determine the admissibility of the evidence based on 2 questions: (1) What is the purpose for which the evidence is being introduced? (2) Does the evidence relate to a term or K which is integrated?

Answer 20

Partial/Full integration - -> Terms w/in K are intended as final expression of those specific terms (note: full integration and partial integration are interchangeable). - --> Judge will rely on following evidence: (1) the thoroughness and specificity of the written instrument in connection w/ the terms at issue, which are considered strong indicators that the parties intended the writing to represent their final agreement; and (2) parole and other extrinsic evidence are admissible - --> Determination not based on writing alone; all the circumstances (including proffered parole evidence and other extrinsic evidence to written K) is considered. Complete integration - -> K intended to represent a complete and exclusive statement of all the terms - --> Presence of merger clause indicates complete integration. - --> merger clause: writing contains complete/entire agreement or other words to that effect

Answer 21

Effect of the rule depends on the purpose the parol evidence is being introduced. Purpose #1: to explain/interpret terms of written K --> (Majority) Parol evidence is always admissible for this purpose. Purpose #2: to supplement terms of written K - -> Rule: parol evidence admissible for this purpose UNLESS K is completely integrated (ie has merger clause). - -> UCC distinction: trade usage, course of dealings, and course of performance CAN supplement a completely integrated agreement Purpose #3: to contradict terms of written K --> parol evidence is not admissible for this purpose

Answer 22

(1) Subsequent agreements (2) Collateral agreements - -> PE rule will not affect agreements between parties that are entirely distinct from the written agreement of the K at issue. (3) Attack on validity of the written agreement - -> PE rule only applies if there's a valid written agreement; thus, the PE rule will not bar efforts to prove the following bases for the invalidity of the K: 1. Failure of oral condition precedent to agreement 2. Mistake or duress 3. Fraud 4. Reformation (4) Ambiguity (5) No Formation (no deal) (6) Condition precedent

Answer 23

Promissory v. Pure Conditions - --> Promissory condition: K performance is conditioned on the occurrence of the promised performance by the other party. - --> Pure condition: K performance is conditioned on the occurrence of events beyond the control of either party Express v. Implied Conditions Identifying express conditions: look for clear language of the parties. ----> "The party'd duty to perform is expressly conditioned on the promised performance." ----> " There is no obligation to proceed unless and until the following steps are taken." ----> "The party has a duty to perform on the condition that certain events occur" or "only if certain event occur" ----> "Payment is due upon completion" ----> OTHER CONDITIONAL PHRASES: "on condition that" "as long as" "when" "provided that"

Answer 24

CL The rights of the parties in the event of a failed condition depends on whether the condition is express or implied. --> Any failure of an express condition (ie less than 100% strict compliance) will discharge the party's obligation to perform. UCC Parties are free to specify the order of performance, and where the K contains those specifications, the performance obligations under that K will be performed according to K terms. -----> Because sales Ks most commonly involve delivery and payment of goods, performance is treated as concurrent, and so each performance is conditioned on the performance of the other.

Answer 25

In some Ks, the obligation to perform is conditioned upon some event or action by the other party. --> Where there are such conditions in a K, obligations are triggered when the conditioning event or action occurs. In CL cases, the rights of the parties in the event of a failed condition depend on whether the condition is express or implied.

Answer 26

Where the party's performance under the K is subject to an express condition, the failure of that condition will discharge the party's obligation to perform. Excusing Failed Express Conditions Two situations in which failure of the condition may be excused such that the performance obligation of the party who stood to benefit from the condition is not discharged. (1) Situation 1: Waiver - ---> The party who has been discharged from performing by the failed condition may waive the right to discharge and perform anyway. - ---> Some cts treat this as a mid-tern modification, which in a CL case reqs consideration (2) Situation 2: Bad Faith Conduct - ---> When a party acts in bad faith so as to prevent the condition, that party's performance obligation will not be discharged.

Answer 27

When the possibility of a breach is not addressed by an express condition, it is still a breach. --> However, under the law of implied conditions, cts can treat that breach in one of two ways: either as a material breach or substantial performance. Material Breach - ---> If breach is serious enough, ct will treat like failure of an express condition. - ---> The aggrieved party is generally discharged from his own performance obligations. Substantial Performance - ---> If the breach is less serious, ct will treat performance as "close enough," party has rendered substantial performance. - ---> The aggrieved party will not be discharged of his own performance obligations. A material breach can be treated as either a partial breach or a total breach. - ----> A claim for damages for total breach is one for damages based on all of the injured party's remaining rights to performance. - ----> A claim for damages for partial breach is one for damages based on only part of the injured party's remaining rights to performance. A nonmaterial breach can only be a partial breach.

Answer 28

Under the perfect tender rule, terms of a K for sale of goods are enforced exactly, every K term treated as an express condition. - ---> The seller is in breach if the goods fail in any respect to conform to the K. - ---> If seller fails to make perfect tender, buyer had 3 courses of action available: reject goods; accept goods; accept some reject some Reject the Goods - --> Must reject w/in reasonable time AND notify seller. - --> Buyer may then sue for damages unless cure applies. - --> If buyer fails to reject in manner specified above, then it is deemed an acceptance of the goods by the buyer. Accept the Goods - --> Occurs when buyer had reasonable time to inspect AND signifies acceptance by: (1) Stating that goods conform to the K; (2) Taking the goods despite non-conformance; (3) Failing to make effective rejection; OR (4) Taking any action inconsistent w/ seller's ownership of goods (like putting goods on the showroom floor). - --> Legal consequences of buyer's acceptance: (1) Buyer must pay K price; (2) Buyer may seek damages for any non-conformity if seller has been reasonably notified; (3) Buyer can revoke acceptance if non-conformity substantially impairs value of the goods, AND: - ---> 1. if buyer accepted because unaware of non-conformity; OR - ---> 2. seller assured cure but failed to cure

Answer 29

Right to Cure (before K deadline) - ---> If seller makes non-conforming tender but time for performance has not passed, then seller may substitute conforming goods. - ---> 2 Requirements: (1) Seller must give buyer reasonable notice of intent to cure; and (2) Seller must make conforming delivery by K deadline Right to Cure When There Were Reasonable Grounds to Believe Delivery Was Acceptable (after K deadline) - ---> Belief must be based on buyer's express assurances, trade usage, course of dealing, or course of performance. - ---> If such grounds for belief exist, there are 2 requirements for seller's cure: (1) Seller must give buyer reasonable notice of intent to cure; and (2) Seller must make conforming delivery w/in reasonable time

Answer 30

AR may be estd by: (1) Party's definitive statement that it will breach; or (2) Party's voluntary act that renders party unable to perform its contractual obligations If AR cannot be estd but there are reasonable grounds for insecurity, the insecure party may make a demand for adequate assurance of performance. Failure to give adequate assurance - -> Failure to respond w/ reasonable assurances: repudiation - -> This can occur where the other party: (1) does not respond to a demand for assurance in reasonable time (30 days under the UCC); or (2) Does not respond in a way that provides reasonable assurances

Answer 31

Upon making a demand for assurances, a party w/ reasonable grounds for insecurity may suspend its own contractual performance so long as: (1) suspension is commercially reasonable; and (2) the insecure party has not yet received the agreed upon return for the performance in question

Answer 32

(1) Cancel K and terminate all rights/obligations under it; (2) Bring action for damages or specific performance; OR (3) Ignore the repudiation and continue under the K

Answer 33

1. Novation 2. Accord/Satisfaction 3. Later unforeseen events - --> Impossibility - --> Impracticability - --> Frustration of purpose 4. Breach - --> Minor - --> Material 5. UCC - --> Perfect Tender Rule - --> Cure

Answer 34

A party entering a K makes many assumption about the present and future; when such assumptions turn out to be faulty, the parties may be excused under the doctrines of mistake, impossibility, impracticability, and frustration of purpose.

Answer 35

Both parties excused if performance has been rendered impossible by events occurring after K formed. Requirements: (1) Impossibility must be objective. (2) The contingency that creates the impossibility was not known to the parties at the time of making the K; it arose after the K and was unanticipated. Objective Impossibility ---> Objective impossibility occurs when performance literally impossible for anyone due to circumstances beyond control of the parties. Subjective Impossibility - ----> Occurs when the performance under the K becomes impossible bc of some failure/fault on the part of the performing party. - ----> Under these circs, performance obligation not excused and will be considered breach of K. - ----> EXCEPTION: Will not apply where... (1) the parties have allocated the risk of the contingency and provided remedial measures in the event of tis occurrence; or (2) events render performance only temporarily impossible (this typically only suspends the obligations of the parties until the impossibility ends).

Answer 36

What circumstances are we likely to find objective impossibility? (1) when the subject matter of the K is destroyed (2) when there is a personal services K and the performing party has died or becomes incapacitated (3) when supervening law/legal developments have rendered performance legally impermissible

Answer 37

If the existence of a particular person is necessary for the performance of a K (eg personal performance by individual is reqd, or performance is to be rendered to a specific person) then that persons's death/incapacity will trigger the doctrine of impossibility and parties obligations will cease.

Answer 38

Doctrine of Impracticability Courts are reluctant to excuse performance for any reason other than impossibility; however, under the doctrine of impracticability, a promisor may be excused from performance where the following 2 Elements are proven: (1) Contingency causing impracticability was unforeseen; and (2) Increased cost/burden of performance would be far beyond what either party anticipated Contingencies Not Excusing Performance - ----> Increased cost alone, unless due to an unforeseen contingency and it alters the essential nature of performance. - ----> Rise or collapse of the market Contingencies Excusing Performance - ----> Where a severe shortage of raw materials/supplies is caused by: (1) was/embargo (2) local crop failure; or (3) unforeseen shutdown of major sources of supply -----> Where the severe shortage either caused a market increase in cost or prevents the seller from securing the necessary supplies for performance.

Answer 39

Where a contingency occurs that dramatically reduces the value of performance to the receiving party. Modern Test (3 Requirements): (1) Principal purpose is entering K is substantially frustrated; - ----> This means that the frustration of incidental / non-material purposes would not trigger the excuse of frustration of purpose. (2) Frustration must be substantial in nature; and (3) non-occurrence of the event that cause frustration was a basic assumption of the K Where the parties contractually allocate the risk of nonoccurrence of the event, the doctrine of frustration of purpose will not be available.

Answer 40

Definition A transfer of a right to receive a K performance; to be effective, owner of the right must: (1) manifest an intention... to make a present transfer of an existing right. ---> Manifestation of intention is ordinarily est'd by the oral /written words of the assignor. ---> There are no magic words (not even an express reference to assignment) req'd to make a manifestation effective. (2) to make a present transfer of an existing right. ---> Neither of the following are effective assignments: 1. a promise to transfer a currently existing right at a future date; or 2. a promise to transfer a right that the assignor expects to acquire in the future. Rule All rights generally assignable except when (EXCEPTIONS): (1) When assignment would materially change the duties of other party; (2) When the obligor has personal interest in rendering performance to the obligee and not a third party (3) When it would violate applicable law or public policy (4) When assignment is prohibited by the K ----> However, most cts will treat this as a breach of K by assignor, but not a basis for nullifying assignee's rights. ---->EXCEPTION: If the K provision provides that any assignments of the K "ARE VOID" or similar language, then any assignment is completely negated.

Answer 41

Rule An assignee gets whatever rights to the K his assignor had; AND an assignee takes subject to whatever defenses the obligor could have raised against the assignor. Payment to Assignor Obligor's payment to assignor is a defense unless the obligor has been notified that the payments are now owed to the assignee. Defenses These defenses include infancy, other incapacity that voids a K, fraud in the execution, duress (when it removes the parties' capacity to K), discharge in bankruptcy, and any other discharge of which the assignee has reason to know.

Answer 42

Unless a contrary intention is manifested, one who assigns, or purports to make an assignment for value impliedly warrants to the assignee: (1) that he will do nothing to defeat or impair the value of the assignment and has no knowledge of any fact that would do so; (2) that the right as assigned actually exists and is not subject to any limitations or defenses against the assignor other than those stated or apparent at the time of the assignment; and (3) that any writing evidencing the rights that are being delivered to the assignee to induce him to accept the assignment is genuine.

Answer 43

Where an assignor assigns his right to receive money owed by the obligor to mult assignees, the assignor is liable to both assignees for assigning the same right twice. ----> However, if the assignor is bankrupt or has fled the jdx and both assignees attempt to collect from the obligor, the majority rule is that the first assignee prevails. In several jdxs (and under 2R) a subsequent assignee who has paid value and took the assignment in good faith will prevail if he: (1) obtains payment from the obligor; (2) recovers a judgment the debt; (3) enters into a new K w/ the obligor; or (4) receives delivery of a tangible token or writing from the assignor, the surrender of which is req'd by the obligor's K.

Answer 44

Occurs when a third party agrees to satisfy a performance obligation owed by one of the parties to a K. ---> Generally, all contractual duties are delegable (exceptions: personal service Ks and when K prohibits delegation) Rights of Obligee Against Delegator A delegation of duties does NOT operate as a "transfer" of duties from delegator to delegatee. ----> Absent a novation (agreed substitution of one obligor for another), a delegation does not relieve the delegator from his obligations under the K (obligee can still sue delegator). Liability of Delegatee (1) To the delegator - ---> If delegation was for consideration, delegator has a breach of K action against delegatee who doesn't perform. (2) To the obligee - ---> If delegation was for consideration, obligee can bring action against delegatee as an intended third-party beneficiary (a creditor beneficiary) of the delegation.

Answer 45

In some Ks, one of the parties promises a performance that will benefit a third party (a third-party beneficiary). - ---> Critical issue: the circumstances under which the third-party beneficiary can sue to enforce the K. - --> The right of an aggrieved third-party beneficiary to bring an action against a breaching promisor or promisee depends on the classification of the beneficiary (intended or incidental). Intended Beneficiary: one whom the contracting parties intended to benefit (often named in the K). - ---> Creditor Beneficiary: Promisee seeks a performance from promisor to satisfy an obligation owed to a third party. - ---> Donee Beneficiary: Promise seeks performance from promisor in order to make a gift of that performance to a third party. - ---> Standing to sue (YES): intended beneficiaries can sue the promisors who directly promised to provide the benefit, but can't sue the promisees based on the K, although they can still sue on any prior obligation (if any). Incidental beneficiary: third parties who will benefit from a promisor's performance as a practical matter, but are not intended beneficiaries. ----> Standing to sue (NO): incidental beneficiaries cannot sue anyone to enforce the K.

Answer 46

Under the 1R and 2R, an incidental beneficiary does not enjoy any right to seek enforcement of the K from either the promisor or promisee to the original agreement. Third-Party's Rights Against the Promisor Any 3rd party beneficiary has a right to secure enforcement of the agreement from a breaching promisor. ----> Applies to creditor and donee beneficiaries under the 1R and intended beneficiaries under the 2R. Third Party's Rights Against the Promisee A 3rd party beneficiary will only have rights against the promisee resulting from the promisor's failure to perform based on whether or not there is an independent obligation between the promisee and the 3rd party beneficiary.

Answer 47

Parties to a K are free to modify or rescind by mutual consent, and they may modify or rescind a third party beneficiary provision w/o consent unless beneficiary's rights under the K have vested. With intended beneficiaries, vesting occurs when: (1) beneficiary brings suit on the matter; (2) beneficiary changes position in justifiable reliance on the K; (3) beneficiary manifests assent to the K at the request of promisor or promisee; (4) rights of beneficiary have vested under express K terms

Answer 48

1. Causation 2. Certain (not speculative) 3. Foreseeable 4. Unavoidable (mitigate)

Answer 49

Ct's default; Aggrieved party will be entitled to amount that will restore him to the position he would have been in had the K been fully performed. Formula Loss of value of breaching party's performance [+] Any incidental and consequential costs generated by the breach [-] Any costs saved as a result of the breach [=] Expectation damages of the aggrieved party

Answer 50

Aggrieved party may not be able to recover the full amount in the following situations: (1) Expectation damages cannot be calculated w/ reasonable certainty. - -----> Mathematical certainty is not reqd, but the ct can't pull numbers from thin air (2) Damages are unforeseeable. (3) Where damages can be mitigated.

Answer 51

Under this rule, a breaching party will be liable for general damages (those damages naturally flowing from the breach) but not for special or consequential damages (those that result from the particular circumstances of the aggrieved party). ----> UNLESS: at the time of contracting, the breaching party knew or had reason to know that the consequential damages would result from breach. Common type of consequential damages: lost profits

Answer 52

Under the UCC, buyer can additionally recover consequential damages that were reasonably foreseeable to the seller at the time the K was entered into (eg lost profits because of delay in obtaining goods). -----> Article 2 does not explicitly give seller right to consequential damages

Answer 53

Designed to restore the aggrieved party to the position he was in prior to the K; measured by: (1) any expenditures made in preparation for performance or in actually performing (2) Less: any loss which the breaching party can prove the aggrieved party would have suffered even if the K had been fully performed ------> May be available where expectation damages are not available, such as when they are too uncertain or speculative

Answer 54

Designed to provide damages of their own choosing in the event of breach. - -----> Enforceable if ct finds it to be valid liquidated damages clause designed to compensate for breach - -----> Unenforceable if ct finds it constitutes a penalty designed to punish a breach: - If cts find it is in fact a penalty --> strike from K, damages in accordance w/ default rules Anticipated v. Actual Harm LDP Test: 2 Prongs, either can uphold the clause: (1) Was the clause reasonable at the time of contracting in relation to anticipated harm? ------> Key question: whether there was an anticipated harm that would be difficult to prove? (2) Was the clause reasonable in relation to the harm and losses that actually occurred due to breach? ------> Hindsight question

Answer 55

Parties may contract out of the legal and equitable remedies available under the law by specifying agreed-to remedies in the K. Two typical forms: (1) liquidated damages provisions; and (2) provisions limiting or excluding damages Provisions Limiting/Excluding Damages - ---> Provisions that limit/alter the measure of damages available. - ---> Exclusive remedies, such as limits to repair or replacement of defective goods - ---> Such provisions are generally enforceable UNLESS unconscionable OR they fail of their essential purpose - ---------------> Limitation of consequential damages for personal injury in he case of consumer goods is prima facie unconscionable.

Answer 56

Is permissible where both parties to a K have remaining performance due. - -> Consideration is provided by each party's discharge of the other's duties. - -> Equitable remedy Cancels the K (and forms the basis for restitution); both parties are placed back where they were before the K was executed. ----> Party seeking rescission must be ready to return to the other party all benefits received. Rescission available: (1) by consent of both parties (2) for mistake (unilateral or mutual) (3) for fraud, misrepresentations, and nondisclosure (4) for duress or undue influence (5) for illegality; or (6) for failure of consideration (which would also be a material breach)

Answer 57

Must show: (a) Was an antecedent valid agreement; (b) Was incorrectly recorded due to mistake or fraud; and (c) Proof by clear/convincing evidence

Answer 58

Extraordinary remedy by which breaching party is ordered to perform. -----> Only available when monetary award is considered inadequate. Money damages are generally presumed inadequate when party is purchasing: (1) Unique objects (works of art and precious heirlooms) (2) Real property Where SP is not available; Ks for: (1) Personal services (2) Long-term relationships

Answer 59

Whether to grant or deny SP is committed to the ct's remedial discretion based on the competing equities in particular cases, and is not bound by hard-and-fast rules (such as those governing money damages). Ct will take into account following factors: (1) whether the aggrieved party has clean hands (has dealt fairly and in good faith w/ the breaching party) (2) whether the terms of the K in question are suff definite (3) whether performance by the aggrieved party can be reasonably assured (4) whether the terms of the K are fair; and (5) whether SP would be in the public interest

Answer 60

The UCC liberalizes the rules governing the availability of SP. "Uniqueness" Req -----> Need only adequately search and be unable to find reasonable substitutes, and so is unable to "cover" the breach by seller. "Capable of immediate performance" Req -----> SP allowed in output and reqs Ks (classic long-term relationship that reqs cooperations of the parties)

Answer 61

The buyer also has a right of replevin (action to repossess property) for goods identified in the K if: (1) after reasonable effort, the buyer is unable to recover; (2) the circumstances reasonably indicate that an effort to cover will be unavailing; or (3) if the goods have been shipped under reservation (ie the seller has reserved a security interest in the goods) and satisfaction of the security interest in them has been made or tendered.

Answer 62

1. Enforceable Contract 2. Certain and definite terms 3. Legal remedy inadequate 4. Mutuality 5. Feasible 6. Defenses

Answer 63

Unreasonable delay in making an assertion or claim, such as asserting a right, claiming a privilege, or making an application for redress, which may result in refusal.

Answer 64

Clean hands, sometimes called the clean hands doctrine, unclean hands doctrine, or dirty hands doctrine, is an equitable defense in which the defendant argues that the plaintiff is not entitled to obtain an equitable remedy because the plaintiff is acting unethically or has acted in bad faith with respect to the subject of the complaint—that is, with "unclean hands".

Answer 65

General Unjust Enrichment (no express K) ----> A party that confers benefits on another may recover their value where it is unjust for the recipient to retain the benefits w/o paying, even absent any express or implied-in-fact K. 2 Recurring Situations where recovery is approp: (1) Med services provided by a med professional; and (2) Benefits conferred by mistake to one who availed himself of the benefits at issue Recovery not approp: - ---> A person who bestows benefits w/o request by the benefitting party is considered an "officious intermeddler," not entitled to recovery. - ---> EXCEPTION: drs and other health care professionals who provide emergency health care to a patient unable to consent (eg because too ill or unconscious)