Contracts Flashcards
The issue is whether RepairCo is entitled to recover on the contract under the theory of substantial performance.
The doctrine of substantial performance provides that a party who substantially performs can recover on the contract even though full performance has not been tendered. However, there is no substantial performance if the incomplete performance was a material breach of contract. Under the common law, a material breach of contract (i.e., when the nonbreaching party fails to receive the substantial benefit of its bargain) allows the nonbreaching party to withhold any promised performance and to pursue remedies for the breach, including damages.
Substantial performance is less likely to be found when a party intentionally furnishes services that are materially different from what he promised. Such a breach is more likely to be treated as a material breach for which contract damages are recoverable.
The issue is whether RepairCo can recover some payment under the theory that the contract is divisible.
A divisible or installment contract is one in which the parties’ obligations are divisible into distinct units of performance. Recovery is limited to the amount promised for the unit of the contract performed.
But when parties expressly agree to a condition precedent (or a concurrent condition), they are generally held strictly to that condition, and a party must fully comply with that condition before the other party’s performance is due.
The issue is whether RepairCo is entitled to restitutionary relief under the theory of quasi-contract.
When a plaintiff confers a measurable benefit on a defendant and the plaintiff has a reasonable expectation of compensation, it would be unfair to permit the Δ to receive the benefit without compensating the plaintiff. Quantum meruit does not depend on the existence of a contract.
[Analysis]
If the court finds it unjust to allow GreenCar to receive this benefit of RepairCo’s partial performance without compensating RepairCo, the court would imply a promise in the contract requiring GreenCar to make restitution to RepairCo—e.g., money damages equal to the fair value of the benefit less GreenCar’s damages for RepairCo’s breach. RepairCo’s restitution recovery less the GreenCar’s damages for the breach is “quantum meruit” (“as much as [RepairCo] has deserved”). Thus, RepairCo can likely recover some payment as restitution for completing the six cars (less GreenCar’s damages) under the theory of unjust enrichment.
The issue is whether a contractor who failed to substantially perform can recover contract damages.
First, it must be established whether the common law or UCC applies to the kitchen contract in order to determine if the contractor appropriately performed and is entitled to recover on the contract. The common law applies to contracts for services or real estate and Article 2 of the UCC applies to contracts for the sale of goods. If a transaction includes both goods and services, the predominant purpose test is applied to resolve whether the common law or the UCC applies to the entire transaction.
Here, the common law applies to the kitchen contract because the predominant purpose was remodeling the kitchen (i.e., a service), that incidentally included the installation of flooring and appliances (i.e., goods).
Under common law, if the breach is minor (i.e., the breaching party has substantially performed), then the non-breaching party must still perform under the contract. This allows a party who substantially performs to recover on the contract even though that party has not rendered full performance. Generally, the substantially performing party can recover the contract price minus the cost to the other party of obtaining the promised full performance.
By contrast, a material breach of K occurs when the non-breaching party does not receive the substantial benefit of the bargain. The material breach allows the non-breaching party to withhold any promised performance and to pursue remedies for the breach, including damages. The breaching party who failed to substantially perform generally cannot recover contract damages, but may be able to recover through restitution. However, most courts hold that recovery in restitution is only available if the breach was not willful. Consequently, a party who intentionally furnishes services that are materially different from what was promised cannot recover anything in restitution unless the non-breaching party has accepted or agreed to accept the substitute performance.
The issue is whether the contractor substantially performed the bathroom contract, and if so, what are his recoverable damages.
[Same common law/UCC analysis as above]
The common law also applies to the bathroom contract as it is primarily for services and not goods. Substantial performance, as defined above, is less likely to be found if a party intentionally furnishes materially different services than he promised, which is likely a material breach.
Because the contractor substantially performed, the homeowner is required to pay the remainder of the contract price.
In construction contracts, the general measure of damages for a contractor’s failure is the difference between the contract price and the cost of construction by another builder, plus any progress payments made to the breaching builder and compensation for delay in completion of the construction. When a breach results in a defective or unfinished construction, if the award of damages based on the cost to fix or complete the construction would result in economic waste, then a court may instead award damages equal to the diminution in the market price caused by the breach. Economic waste occurs when the cost to fix or complete the construction is clearly disproportional to any economic benefit or utility gained as a result.
The issue is whether the owner may recover damages for the amount paid to the substitute contractor above the price of the contract with the original contractor.
Compensatory damages are meant to compensate the non-breaching party for actual economic losses. Expectation damages are intended to put the non-breaching party in the same position as if the contract had been performed. Expectation damages must be calculated with reasonable certainty. In construction contracts, the general measure of damages for a contractor’s failure to begin or to complete a building project is the difference between the contract price and the cost of construction by another builder, plus any progress payments made to the breaching builder and compensation for the delay in completing the construction.
The issue is whether the owner may recover for lost profits resulting from the cancellation of the film festival [new business].
Actual damages can be either direct or consequential. Consequential damages are a direct result of the breach but need not be the usual result of the breaching party’s conduct. Instead, consequential damages need only be a reasonably foreseeable result of the breach given the parties’ specific circumstances. The breaching party must have reasonably foreseen the consequential damages for them to be recoverable. Damages are foreseeable if they were a natural and probable consequence of breach, if they were “in the contemplation of the parties at the time the contract was made,” or if they were otherwise foreseeable. Consequential damages do not concern the value of the lost performance due to breach, but there must be a causal link between the breach and the consequential damages for them to be recoverable. And the plaintiff must prove the dollar amount of consequential damages with reasonable certainty not speculatively. [No, not recoverable b/c contractor didn’t know about the film festival]
The issue is if the owner were entitled to recover lost profits resulting from the film festival’s cancellation, how would his failure to mitigate affect his recovery?
A party to a contract must avoid or mitigate damages to the extent possible by taking steps that do not involve undue risk, expense, or inconvenience. A non-breaching party is held to a standard of reasonable conduct in preventing loss. The non-breaching party’s failure to mitigate does not give the breaching party a right to sue the non-breaching party for such failure; it only reduces the non-breaching party’s damages recovery.
The issue is whether the computer system conforms to the store’s contractual obligations [IWFPP]
Article 2 of the UCC governs contracts for the sale of goods. Goods are movable items that are movable as of the time of identification. A computer is a movable item and is therefore a good. Therefore, Article 2 of the UCC will apply to this transaction.
Under the UCC, an implied warranty of fitness for a particular purpose arises where a seller is an expert who makes reprsentations about a good or its qualitites, the buyer relies on the seller’s expertis, and the seller is aware of the buyer’s reliance. The implied warranty of fitness for a particular purpose may only be disclaimed by a merchant in a conspicuous writing (typically larger text, bolded, or underlined).
The issue is whether the father had a right to return the nonconforming computer system.
Under the UCC, there is an obligation of perfect tender, meaning the goods tendered by the seller must perfectly conform with the contractual specifications. Where there is not a perfect tender, the buyer has a right to accept all of the goods, reject all of the goods, or accept some of the goods. Normally, once goods are accepted, they may not be returned unless there is a specific agreement in the purchase agreement granting this right to the buyer. However, where the defect is not immediately discoverable by the purcahser or the seller specifically warrranted that the goods were suitable, the purcahser may return once the goods are discovered to not in fact be a perfect tender.
The issue is whether the father is entitled to money damages in addition to returning and obtaining a refund of the computer system.
Normally in a contract for the sale of goods where there is a breach by the seller, the buyer is entitled to expectation damages or the cost of cover. Expecation damages seek to place the nonbreaching party in the position they would have been in had the breaching party fully performed. In addition to recovery of the purchase price and expectation damages, the father could also obtain incidental damages, if any.
Was a contract formed?
In order for there to be a valid contract, there must be an offer, acceptance of the offer, and consideration. An offer is the manifestation of intent that acceptance of the offer will form a binding contract between the parties. An acceptance is the manifestation of assent to the offer’s terms. Consideration is a bargained for exchange, or a legal detriment. Contract formation is viewed from an objective reasonable person perspective. Under the UCC, the essential term necessary to create an enforceable contract is the quantity term.
The issue is whether the Statute of Frauds was satisfied.
Under the Statute of Frauds, any enforceable contract for the sale of goods for $500 or more must be in writing and signed by the party to be charged. Without an enforceable written contract, the parties are not required to perform. However, under the UCC, there is an exception to the Statute of Frauds when a merchant sends a confirmatory memo to another merchant. The memo must confirm the details of the transaction and be signed by the merchant. The receiving merchant must object within 10 days of the memo or be bound by its terms, with the Statute of Frauds no longer a defense to enforcement. A merchant is a person who regularly deals in goods of the kind sold.
The issue is whether there was an enforceable contract by Buyer against Seller arising from the January 9th telephone conversation.
Contracts for the sale of goods are governed by the UCC, while contracts for services or real estate are governed by the common law. Contracts for the sale of goods over $500 must be evidenced by a writing signed by the party to be charged under the Statute of Frauds. However, the UCC allows an exception to the Statute under the merchant’s confirmatory memo rule, in which contracts between merchants satisfy the Statute of Frauds if one of the parties sends the other a signed memo evidencing the contract. A merchant is one who typically deals with goods of the kind mentioned in the contract. Under the UCC, the only essential term to contract formation is quantity. If the memo is signed and sent by one merchant to another, and the receiving merchant does not object within 10 days and has reason to know of the memo’s contents, the memo binds both merchants and is enforceable as a contract despite the Statute of Frauds.
The issue is whether the January 9 agreement required Seller to deliver the silk to Buyer’s place of business.
The UCC does not require all terms of the contract to be evidenced by the writing in order to be enforceable. When terms are left blank, such as price or place of delivery, the UCC provides gap-fillers that govern the parties’ duties. One such gap-filler is that when the place of delivery is left out, the place of delivery is the seller’s place of business. However, the UCC also permits alternative ways to fill in gaps in a contract. If there are no express terms for the particular term, the court may look at the parties’ course of performance, course of dealing, or industry custom, in that order. Course of performance looks to how the parties conducted themselves during previous opportunities for performance under this contract. Course of dealing looks to how the parties have conducted their performance under prior contracts between these parties. Industry custom looks to how similar parties dealing in the same industry expect performance to occur.
