Contracts and Sales

Question 1

Applicable Law (UCC or Common Law)

Answer 1

The common law of contracts applies to all contracts except sales of goods, which UCC applies.

OG: The common law of contracts applies to all contracts other than the sale of goods, to which the UCC applies.

Question 2

Sale under UCC

Answer 2

A sale is a contract in which title to goods passes from the seller to the buyer for a price.

Question 3

Goods under UCC

Answer 3

UCC defines goods as all things movable at the time they are identified as goods to be sold under the contract.

Question 4

Merchants under UCC

Answer 4

One who regularly deals in goods of the kind sold or, by his occupation, holds himself out as having knowledge or skill peculiar to the practices or goods involved. Merchant must be acting in his mercantile capacity, i.e., he must be acting in his business than personal capacity.

Question 5

Unliateral Contracts

Answer 5

contracts formed from acceptance only by full performance

rare: only public rewards or accept by sending goods

Question 6

Bilateral Contract

Answer 6

unless indicated otherwise by language or circumtances, all offers are indifferent offers and thus be accepted by promising or start of performance

every written agreement and most oral agreements

Question 7

Valid Contracts

Answer 7

A valid contract requires an offer, acceptance, and consideration

Question 8

Offer

Answer 8

A promise, undertaking, or commitment to enter into a contract (i.e, intent to enter into contract) with the essential terms certain and definite which are communicated to the offeree.

An advertisement is an invitation to make an offer, not an offer.

Question 9

Essential terms

Common law

Answer 9

Essential terms requires the offeree’s identity and the subject matter, the price, the quantity, the time of performance or payment, and the nature of the work to be performed.

Vague terms manifested an intent that cannot be determined

Question 10

Essential terms

UCC

Answer 10

Essential terms requires the offeree’s identity and the subject matter, the price, the quantity, the time of performance or payment, and the nature of the work to be performed. Reasonable price and reasonable time will be supplied if none are stated. In a sale of goods contract, the quantity must be certain or capable of being made certain.

Question 11

Continuing Offer

Answer 11

Some offers are offers for a series of contracts and are revocable at will unless made irrevocable by statute or by payment of consideration.

Question 12

Revocation

Answer 12

Revocation occurs when offeror retracts an offer, terminating the offeree’s power of acceptance if it is communicated to her before she accepts.

easier to understand but longer:
Revocation occurs when the offeror retracts an offer and communicates the revocation to offeree before offeree can accepts. Revocation would terminate the offeree’s power of acceptance.

Question 13

Communicate Revocation

Answer 13

Offeree received communication of the offeror’s revocation if either: (1) offeree received it directly; or (2) the offeree received it indirectly if he received correct information from a reliable source of the offeror’s acts that would indicate to a reasonable person that the offeror no longer wishes to make the offer.

—-

Offeree received it directly;
Offeree received it indirectly if he:
1. receives correct information
2. from a reliable source
3. of acts of the offeror that would indicate to a reasonable person that the offeror no longer wishes to make the offer

UCC - reasonable time not to exceed 3 months
after 3 months, revocable at will until acceptance –> note offeree may argue for detrimental reliance

Question 14

Communication of Revocation - Timing

UCC - approach for merchant’s firm offer

not rule - see merchant’s firm offer

Answer 14

UCC merchant firm offer: if no time stated or exceeds three months, it will be held open for a reasonable time not to exceed 3 months.

But after 3 months, revocable at will until acceptance –> note offeree may argue for detrimental reliance

when merchant give firm offer to offeree

Question 15

Revocation at will

Answer 15

Offer not supported by consideration can be revoked at will.

Question 16

Limiting Power to Terminate/Revoke Offer

Answer 16

The power to terminate an offer is limited where:

1. Option Contract - The offeree gives consideration for an offeror’s promise not to revoke;
2. Merchant’s firm offer - Under the UCC, a merchant executes an offer in writing that, by its terms, gives assurance it will be held open. (if no time is stated or exceed three months, it will be held open for a reasonable time not to exceed 3 months); or
3. Detrimental reliance - Promisee exercises detrimental reliance.

e.g., Contract 2

Question 17

Revocation Not Permitted

same as limiting termination

not a rule?

Answer 17

Revocation will not be permitted where:
1. consideration was given by the offeree
2. merchant’s firm offer up to 3 months
3. promisee exercises detrimental reliance

Question 18

Acceptance under Common Law

Answer 18

At common law, an acceptance is an unqualified assent to the terms of an offer. The acceptance must be communicated to the offeror. An offer may be accepted by any medium reasonable under the circumstances, [except that if an offer limits the form of acceptance, the acceptance must comply with the offer’s limitation.]

Mirror Image

Question 19

Mailbox Rule

subrule for acceptance

Answer 19

Acceptance by mail creates a contract at the moment of dispatch.
Exception:
1. when the offer stipulates that acceptance is not effective until received or otherwise controls the form of acceptance, or
2. an option contract is involved, where acceptance is effective only on receipt

Question 20

Conditional Acceptance

Answer 20

Not an acceptance but a rejection

Question 21

Counteroffer

Answer 21

Under common law, Counteroffer operates both as a rejection of the original offer and a new offer.

Question 22

Acceptance under UCC

Answer 22

Under UCC, an accceptance that varies the terms is still a valid acceptance.

Battle of the forms - UCC 2-207

Question 23

UCC 2-207 Battle of the forms

Approach - Not analysis

Answer 23

1. Determine whether the proposals are additonal or different terms
2. Different terms
   a. majority: knock-out rule
   b. minority: treat them like additional terms if between merchants
3. Additional terms (if between merchants)

This is analysis approach

Question 24

Battle of the Forms (UCC 2-207)

Answer 24

The offeree’s proposal of additional or different terms in a definite and timely acceptance does not constitute a rejection and counteroffer, but as acceptance, unless
1. the offer expressly limits acceptance to the terms of the offer,
2. materially alter the offer, or
3. notification of objection to the additional or different terms is given within a reasonable time after notice is received.

Question 25

Battle of Forms: Different terms

Answer 25

Majority rule - Knockout rule
The conflicting terms are both knocked out of the contract, and then replaced by:
1. UCC gap fillers
2. Course of performance
3. Usage of trade

Minority rule - it will construe different terms as proposals for additional terms. (between merchants, analyzed the same way as additional terms)
—
1. Majority rule - knock out rule
The conflict terms are both knocked out of the contract and replaced by the UCC gap fillers, course of performance or usage of trade.
2. minority rule - like additional terms if between merchants

Question 26

Battle of Forms: Additional terms

Answer 26

Additional terms between merchants become part of the contract unless:
1. the offer expressly limits acceptance to the terms of the offer;
2. they materially alter the offer; or
3. notification of objection to the additional or different terms is given within a reasonable time after notice is received

if both not merchants, then the proposal would not be effective unless the other party did something to accept the proposals

Question 27

Consideration

Answer 27

It requires a bargained-for exhange - a detriment to the promisor and a benefit to the promisee. A contract requires consideration on both sides. One promise can be consideration for another promise.

barbri included

Issue against consideration is whether the facts involve past or moral consideration as opposed to current detriment to the promisor (would they have done what was promised anyway?)

Question 28

Promissory Estoppel

Answer 28

A promise without consideration is enforceable only if necessary to prevent injustice when the promisor should reasonably expect to induce definite or substantial action, or forbearance; and such action or forbearance is in fact induced.

Tip:
* the facts involve past or moral consideration as opposed to current detriment to the promisor

Promisee gets reliance damages for promissory estoppel despite the contract fails for lack of consideration or similiar flaw.

Under UCC, consideration is not required for a good faith written modification of K, and for firm offers in writing by merchants.

Question 29

Option Contract

Answer 29

Option contract is when an offer has a separate promise to keep the offer open and a valid mechanism for enforcing the subsidiary promise. If an offeree gives consideration for the promise to hold the offer open, the offer is irrevocable for the period stated. Without consideration, the offer is revocable at will.

Question 30

UCC - Consideration Not Required

Answer 30

Under UCC, consideration is not required for:
1. a good faith written modification of K, and
2. for firm offers in writing by merchants.

Question 31

Merchant Firm Offer

Answer 31

Under the UCC, a merchant executes an offer in writing that, by its terms, gives assurances it will be held open. If no time is stated in the merchant’s firm offer, or if the time exceeds three months, it will be held open for a reasonable time, but never to exceed three months, after which it can be revoked. But the firm offer remains open until it is revoked.
—
The merchant’s firm offer is the offer was made by a merchant, the writing signed by merchant, and offer expressly states it will be held open. The offer is not revocable for lack consideration for time state or reasonable time, but no more than 3 months.

Question 32

Firm Offer Still Irrevocable as Option Contract

If merchant firm offer is beyond 3 months or fails in general

Answer 32

a firm offer is irrevocable as an option contract if the offeror could reasonably expect that the offeree would rely to its detriment on the offer and the offeree does so rely.

Question 33

Defenses to Formation

Answer 33

Exist at the time of contract*
1. mistake
2. fraud
3. illegality
4. capacity

Defenses to formation arise if the main issue is remedies, not K

Not usually on contract essay

Question 34

Mutual Mistake

Answer 34

A mutual mistake occurs when both parties are incorrect as to a basic assumption (of the material fact) and of the contract prior to or during the formation of the contract. The mistake must be as the nature or identity of the subject matter of the contract. If the party who wants to rescind the contract does not bear the risk of the mistake, then the contract is voidable.

—
Mutual mistake must be as to a material fact - one that goes to the basis of the bargain. Thus, the mistake must be as the nature or identity of the subject matter of the contract - not its quality.

Question 35

Unliaterial Mistake

Answer 35

Unilateral mistake occurs where one party is mistaken as to a basic assumption of the contract prior to or during the formation.

The established rule is that a unliateral mistake will only be grounds for recission if that nonmistaken party knows or should know of the mistake.

The modern trend grants recission when the mistake is basic and the mistaken party’s hardships outweighs the detriment to the nonmistaken party’s expectations under the contract.
—
A unilateral mistake must be as to a material fact.

The established rule is that a unliateral mistake will only be grounds for recission if that nonmistaken party knows or should know of the mistake.

The modern trend grants recission when the mistake is basic and the mistaken party’s hardships outweighs the detriment to the nonmistaken party’s expectations under the contract.

Question 36

Party bear risk of mistake

Mutual or Unilateral Mistake

Answer 36

A party bears the risk: (1) when it is allocated in the contract, (2) they entered into contract with conscious ignorance and uncertainty about the facts relating to the mistake, or (3) a court believes that is it reasonable to allocate the risk.

(MB 2 Contract, Q16).

Question 37

Fraudulent misrepresentation

Answer 37

A fraudulent misrepresentation requires that, at the time the statement was made, the defendant knew the statement was false and intended to induce the other party to enter into the agreement. Fraudulent misrepresentation is grounds for equitable estoppel.

barbri

Question 38

Intentional, negligent, innocent Misrepresentation

Answer 38

Misrepresentation requires: the false representation of material fact or omission of a material fact; that the defendant knew was false (intentional); should have known was false (negligently); or innocently made (innocent); and, reasonably relied upon by plaintiff to his or her detriment.
—

Misrepresentation means a false represtation intentionally, negligently, or innocently made with the intent to induce defendant into relying on the representation which defendant in fact relies upon to their detriment.

any misrepresentations is grounds for recissions

fraudulent and negligent misrepresentation allow for damages as a remedy

Question 39

Defenses to Enforcement

not definition

Answer 39

1. statute of frauds
2. unconscionable contract

Question 40

Statute of Frauds

Answer 40

Contract must be in writing and signed by the party to be charged (the party against whom it is enforced ) if it involves:
1. A promise to pay the debt of another;
2. creation or conveyance of any interest in land - deeds, leases, easements, deeds of trust
3. contract cannot be performed within 1 year - performance date more than 1 year out
4. sale of goods of $500 or more ($5000 under revised UCC)

—

Tip:
* a contract may satisfy the SOF if the party to be charged – the party against whom it is enforced – executes a writing referencing the terms that implicates the SOF.

Question 41

Sufficiency of Writing

Answer 41

There must be one or more writings signed by the party to be bound. The writing must evidence that there is a contract and state the essential terms with reasonable certainty.

barbri

Question 42

CL Essential Terms

Sufficiency of Writing

Answer 42

Which terms are essential depends on the circumstances, including the nature of the dispute between the parties. If the writing does not include the essential terms, it does not satisfy the Statute of Frauds and extrinsic evidence cannot be submitted to supply the missing terms.

Question 43

UCC essential terms

Sufficiency of Writing

Answer 43

The UCC requires only a signed writing indicating that a contract has been made and specifying the quantity.

Question 44

Essential Terms - Land Sale K

sufficiency of writing

Answer 44

In the case of a land sale contract, a description of the land, the parties, and price are required.

Question 45

Exception to SOF

Answer 45

If K is within SOF, K is not enforceable unless:
1. admission - evidentiary or judicial
2. full performance if the contract is the sale of the goods/ service
3. if contracts for real property, any two of the three:

  a. peformance by payment (whole or part),
		b. possession, and 
		c. making of valuable improvements

4. Detrimental reliance/promissory estoppel (promisor is estoppped from asserting SOF, and K is valid and enforceable)

Question 46

Analysis of SOF

Analysis

not rule

Answer 46

1. Is the contract verbal?
2. IF CONTRACT IS VERBAL, is the contract the kind that is subject to the SOF?
   a) A promise to pay the debt of another
   b) Any interest in Land – deeds, leases, easements, deeds of trust
   c) Contract cannot be performed within 1 year – performance date more than 1 year out
   d) Sale of goods of $500 or more ($5,000 under the revised UCC)
3. IS THERE A WRITING signed by the party asserting the SOF that references the terms that bring the contract within the SOF?
4. Then, if K is within the S/F, do any of the following exceptions apply?
   a) Admission – evidentiary or judicial
   b) Full Performance if the contract is for the sale of goods/service
   c) If contracts for real property, any 2 of 3
   (1) performance by payment (whole or part),
   (2) possession, and
   (3) making of valuable improvements
   d) Detrimental reliance/promissory estoppel—
   (1) promisor is estopped from asserting SOF, and contract is thus valid and enforceable

Question 47

Unconscionable Contracts

Answer 47

The K is unconscionable when K is one-sided at the time it was formed and there was unequal bargaining power between parties

Question 48

Third-Party Beneficiaries Right to Enforce K

Answer 48

Third-party has right to enforce contract when:
1. the promisor intended K to benefit the beneficiary
2. the beneficiary is either creditor or donee
3. the beneficiary’s rights is vested.

Defenses—any defenses the promisor could have raised against the promisee is also available to third party

Question 49

Intended Beneficiary

Answer 49

A third party is the intended beneficiary if:
1. they are expressly designated or identifiable at the time of performance;
2. performance is to be made directly to them;
3. they have rights under contracts; and,
4. the relationship between the third party and the promisee suggests the promisor wishes the beneficiary to be benefitted.

if creditor: when promisor failed, 3rd party can sued promisee
if donee: when promisor failed, 3rd party can’t sued promisee unless detrimental reliance

Question 50

Vesting of Third-Party Rights

Answer 50

The third party beneficiary can only enforce a promise if their rights have vested. Rights vest when the beneficiary:

• Manifests assent in a manner requested by the parties;
• Brings suit to enforce the promise;
• Materially changes position in justifiable reliance on the promise.

Question 51

when Promisor fails to perform - TPB sued Promisor

Answer 51

If the promisor fails to perform, any third-party beneficiary may always sue the promisor on the contract. A promisor may raise any defenses against the third-party beneficiary that they could have raised against the promisee.

Question 52

When Promisor Fails - TPB sues Promisee

Answer 52

If the promisor fails to perform, a donee third-party beneficiary cannot sue the promisee unless the third-party beneficiary can claim detrimental reliance on the promise, but a creditor beneficiary can always sue the promisee on the underlying obligation that the promisor’s performance was supposed to discharge.

Question 53

Defenses of Third Party Beneficiaries

Answer 53

Any defenses the promisor could have raised agains the promisee

Question 54

Assignment of Rights

Answer 54

All rights may be assigned except those that change an obligor’s duty.

The transfer of rights under a K. The right being assigned must be adequately described in the manifestation of the assignment, and the assignor must indicate an intent to completely and immediately assign the interest to the assignee. Consideration is not required.

Assignment doesn’t have to be in writing except for interests in land, wage assignments, security interests, choses in action more than $5,000.

bad

Question 55

3 Issues of Assignment of Rights

Answer 55

1. what rights may be assigned?
2. what is required for an assignment?
3. when is an assignment irrevocable?

No writing is required except interests in land, wage assignments, security interests, choses in action > $5,000

Question 56

What rights Can be Assigned - Assignment

Answer 56

All contractual rights may be assigned except:
1. the major contracts of personal services contracts,
2. requirements and output contracts (although assignment may be okay under UCC), and
3. assignments that substantially alter obligor’s risk (e.g., asssignment of insurance contracts if the nature of the covered property would change).

Question 57

Requirement of Assignment

Answer 57

An assignment does not require a writing except wage assignments, interests in land, choses in action more than $5000, and security interests.

The assigned right must be adequately described in the manifestation of assignment, and the assignor must indicate an intent to completely and immediately assign the interest to the assignee. Consideration is not required.

Question 58

When Assignment is Irrevocable

Answer 58

The assignment is irrevocable when it vests. Otherwise, assignment is revocable except:
1. If given for consideration;
2. obligor has already performed;
3. delivery of tangible claim (such as stock certificates or a passbook);
4. assignment of chose in action in writing;
5. by estoppel - forseeable detrimental reliance

Question 59

Defense to Assignment

Answer 59

Obligor can assert any defenses against the assignee it had against the assignor, except personal defenses (e.g., defamation, other torts) that arose after the obligor had notice of the assignment.

examples?

Question 60

Delegation (of Duties)

Answer 60

Delegation is a transfer of duties. All duties may be delegated except:
* duties involving personal judgment and skill;
* there is special trust in delegator (like attorney or physician);
* delegation would create a change in the obligee’s expectancy; or,
* there is a contractual restriction.

—
Delegation of duties, rather than assignment of entire contract. Party CANNOT delegate duties involving personal skill/judgment. Delegator is always liable.

Delegatee is liable to non-delegating only if:
1. delegatee attempts to perform OR
2. delegatee promises to perform and promise is supported by consideration

Question 61

Delegator and Delegate Liabilities and Performance

Answer 61

The delegator remains liable even if delegate expressly assumes the duties. The non-delegating party cannot compel the delegate to perform, unless:

1. the delegate attempts to perform; OR,
2. delegate promises to perform and promise is supported by consideration
   —
   the delegate promises to perform the duty, and their promise is supported by consideration (such as payment between delegator and delegate). In that case, or if the delegate in fact performs or attempts to perform, the delegate is liable to non-delegating party.

Question 62

Parol Evidence Rule

Answer 62

Where the parties express their agreement in writing signed by both parties, with the intent that it embody the full and final expression of their bargain, any other written or oral expressions made prior to the writing, and any oral expressions made contemporaneous with the writing, are inadmissible to vary the terms of the writing.

Construction of K

fully intergrated - prior contemporarneous expression that vary the terms are barred, as are supplemental terms. Indicator - merger clause
partially intergrated - supplemental terms are okay

Question 63

PER - intergration complete v. partial

Answer 63

If the parties intended the writing to be the complete and final expression of their agreement, the integration is complete, and the writing may not be contradicted or supplemented.

If the parties intended the writing to cover only a portion of the agreement, the integration is partial and may be supplemented with consistent additional terms.

All relevant evidence is admissible to determine the parties’ intent.

A merger clause, which states that the writing represents the complete agreement of the parties, is evidence of intent.

Question 64

PER Exception:
Expression Outside the Scope of Evidence

Answer 64

Expression that are outside the scope of evidence under PER are:
1. Formation defects (fraud, duress, mistake, illegality)
2. Condition precedent to effectiveness;
3. Showing of true consideration; and,
4. Interpretation of an ambiguity.

Question 65

Parol Evidence Rule Analysis

Answer 65

1. is the writing intended as a final expression? is it a complete or partial integration?
2. are there any prior or contemporaneous expressions that vary the terms?
3. Exception: Are the expression outside the scope of the rule
   a. formation defects (fraud, duress, mistake and illegality)
   b. a condition precedent to effectiveness,
   c. showing of true consideration, and
   d. interpretation of an ambiguity

Note: PER issue arises when there is a written contract, but one party claims there are different or additional terms not in writing (usually from a contemporaneous or prior discussion) and where an integrated writing signed by BOTH PARTIES.

Question 66

Rule to admit Ambiguity in PER

Answer 66

If there is uncertainty or ambiguity in a written agreement’s terms or a dispute as to the meaning of those terms, parol evidence is admissible. However, if the
meaning of the agreement is plain, parol evidence is inadmissible
—
To allow in evidence of an ambiguity, there must first in fact be an ambiguity in the language, and then the ambiguity must appear on the face of writing, not oral conversation.

Under UCC, consistent additonal terms are admissible unless there is a merger clause or the Court finds the parties intended the writing as a complete and exclusive statement of the terms of the agreement.

Question 67

Modification

Answer 67

Modification is the subsequent expression or agreement that varies terms.

Question 68

Modification - common law v. UCC

Answer 68

Under common law, modification requires additional consideration.
Under UCC, no consideration is required if modification was made in good faith.

“No oral modification clauses” is enforceable under UCC but not common law.

Look whether modification is under SOF

Question 69

Condition v. Promise

Answer 69

Promise is a commitment to do or refrain from doing something.
Condition is an event, other than the passage of time, which will extinguish, modify, limit or create a duty to perform. A condition modifies a promise.

Conditions that occur leads to duty of other party to perform, and failure to perform is a breach.

Question 70

Express conditions

Answer 70

Express conditions are expressed in the contract.

Question 71

Implied Conditions

Answer 71

Implied conditions are fairly inferred from the parties’ conduct.

Question 72

Constructive conditions

Answer 72

Constructive conditions are read into the contract by the court, irrespective of the parties’ conditions.

Although not explicit, it is implied the condition had to ocurred before the other party perform.

(e.g., A can’t demand payment for a book w/out delivering the book.)
–
ex., B agrees to buy all its gasoline from S, and S agrees to place all its ads with B’s wife’s ad agency. B’s purchase of all its gas from S is a constructive condition to S’s obligation to place its ads with wife’s agency

Question 73

Condition Precendent to Effectiveness

Answer 73

Condition must arise before contract is effective at all

Question 74

Condition Precedent to Performance

Answer 74

Condition must arise before particuar duty to perform arises

Question 75

Condition Subsequent

Answer 75

Condition occur cuts off duty to perform

Question 76

Party With Condition Blocked Event that Would Trigger the Condition

Answer 76

If a party whose performance is subject to a condition prevents the condition from occurring, the condition may be excused. To invoke this rule, the prevention must be wrongful, meaning that the other party would not have reasonably contemplated or assumed the risk of this type of conduct.

Question 77

Breach

Answer 77

A breach occurs when a promisor has a duty and fails to perform it. A material breach is one where the nonbreaching party does not gain the substantial benefit of the promise and has the right to all the remedies.

Question 78

Minor Breach

Answer 78

One where the obligee gains the substantial benefit of the promise and their duty is not discharged.

Question 79

Material Breach

Answer 79

A material breach is one where the nonbreaching party does not gain the substantial benefit of the promise and has the right to all the remedies.

Question 80

Anticipatory Repudiation

Answer 80

The party to contract clearly informs the other party before the due date of the performance that he/she does not intend to perform.

The other party is entitled to treat the anticipatory repudiation as a breach of the contract, and immediately sue.

timnig issue of breach

Question 81

Breach and Anticipatory Repudation

shortcut rule for remedy

Answer 81

The party to the contract has clearly informed the other party before the due date of the performance that they unequivocally do not intend to perform.

The other party is entitled to treat the anticipatory repudiation as a breach of the contract, and immediately sue. A breach occurs when a promisor has a duty as the result of either a promise or condition, and fails to perform it.

Question 82

Demand for Assurance - UCC

Answer 82

If the circumstances give rise to reasonable grounds for insecurity with respect to the other party’s performance, a party may demand assurances in writing that performance will be timely forthcoming.

Until assurances are received, the party may suspend its own performance. If the proper assurances are not given within a reasonable time, the party may treat the contract as repudiated.

Red flag:
a) the circumstances that increase the risk that the other party may not perform.
b) the party did not clearly indicate that performance will not be made.

Question 83

Implied Covenant of Good Faith and Fair Dealing

Answer 83

Rule: Implied covenant of good faith and fair dealing exists in every contract. The clause requires that both parties do nothing to prevent performance by the other party.

breach =/=ICFGFD
ICFGFD - tort and breach of K

e.g., Employment contracts - breached by termination for refusal to do illegal act
e.g., insurance contracts - bad faith denial of coverage

Question 84

Excuse or Discharge (From Duty to Perform)

Not rule

Answer 84

1. Impossibility
2. Impractiability
3. Frustration of Purpose

Question 85

Rules before Impracticable and Impossibility

Answer 85

If (i) the nonoccurrence of an event was a basic assumption of the parties and (ii) neither party expressly assumed the risk, (iii) contractual duties may be discharged if performance becomes impossible or impracticable.

Question 86

Impossibility

Answer 86

An obligor under a contract may be excused from performance if the contract is objectively impossible to perform. An impossibility must be objective (the duties could not be performed by anyone), and must arise after the contract has been entered into.

the only issue for impossibility is whether SUP’s performance of the contract is objectively impossible
protecting eocnomic profit is not a reason for impossibility

Question 87

Impracticability

Answer 87

An obligor under a contract may be excused from performance if the contract is commercially impracticable. Impracticability requires that the party to perform has encountered extreme and unreasonable difficulty or expense, and the difficulty was not anticipated.

Question 88

Frustration of Purpose

Answer 88

An obligor under a contract may be excused from performance if the purpose of the contract becomes valueless by supervening act that was not the obligor’s fault. This requires
that the parties did not reasonably foresee the supervening act at the time of the contract. This act has almost completely or completely destroyed the purpose of the contract, which both parties realized the purpose when making the contract.

The exception is if the parties shift the risk of loss to the buyer by indicating FOB Shipper.

—
This requires:
(1) the supervening act;
(2) at the time of the contract, the parties did not reasonably foresee the supervening act;
(3) the purpose of the contract has been completely or almost completely destroyed by the act; and
(4) both parties realized the purpose when making the contract

FOB shipper risk of loss transfer from seller to buyer when buyer received and accept shipment

Question 89

Definitions of Discharge by Accord and Satisfaction

Answer 89

An accord is an agreement where one party to an existing contract agrees to accept, in lieu of the agreed-upon performance, some other, different performance. An accord must be supported by consideration, such as partial payment of the originial agreed-upon price and forbearance to sue.

Satisfaction is the performance of the accord agreement, and discharges the original contract and the terms of the accord.

—

Accord and satisfaction refers to the agreement (accord) between two contracting parties to accept alternate performance to discharge a pre-existing duty between them and the subsequent performance (satisfaction) of that agreement. The new performance is called the accord. The excusal of the initial performance obligation is called satisfaction. (Cornell)

definitions but not elements

Question 90

Discharge by Accord and Satisfaction

Answer 90

1. Agreemnt to accept something different
2. requires consideration
3. performance of accord => satisfaction

get rid of the old K and use the new K
raised this when parties had a disagreement but was resolve and argue to forbear/not sue –> consideration

Question 91

Waiver

Answer 91

The party benefited by a condition waive it

Question 92

Legal Damages

contract damaegs

Answer 92

The purpose of contract damages is to put the nonbreaching party in the economic position he would have been in had the promise been performed, i.e., had there been no breach. That is usually calculated as expectation damages, plus consequential damages, less any loss or cost saved by not performing.

barbri

Question 93

Expectancy (Benefit of the Bargain)

(Common law and UCC)

Answer 93

Expectation damage is the benefit of the bargain damages. Expectancy or out-of-pocket damages.
Common law: contract - market price = difference
UCC: difference between the contract price and either the market price (benefit of the bargain) or the cost of replacement (cover), measured at the time buyer learns of the breach (e.g., at the time of the anticipatory repudiation).

if there is expectancy, don’t discuss future damages and reliance

Question 94

Avoidable Damage

Answer 94

A nonbreaching party cannot recover damages that could have been (or were) avoided. The nonbreaching party should try to cut down losses by procuring substitute performance at a
fair price.

Question 95

Consequential/Future

Answer 95

Additional expenses or costs that are foreseeable at the time of the contract includes lost profits

Question 96

Legal Remedies (Contract damages)

Analysis

Answer 96

1. Casual (“but for”)
2. Foreseeable (at formation)
3. Certain
4. Unavoidable - reasonable duty to mitigate

Contract damages must be causal (“but for”), foreseeable at the time of formation, certain, and unavoidable.

Note: this issue of the 4 requirements for damages comes up most often where you consider consequential or speculative damages, as opposed to compensatory damages

Question 97

Certainty

subrule for legal remedies

Answer 97

Certainty w/regard to established businesses can be determined using a profit history.
Certainty is an issue w/new businesses, since future profits are often speculative.
Relevant factors in determining certainty are availability of the evidence, certainty of actual loss, and culpability of the defendant.

Question 98

Unavoidability

sub-rule for legal remedies

Answer 98

Unavoidability refers to mitigation.
A plaintiff must take reasonable steps to mitigate his or her loss

Question 99

Nominal Damages

legal remedies

Answer 99

No real harm

Question 100

Reliance

Answer 100

Where other damages difficult to calculate, it can be recovered even if no contract is completed (enforcement of promise - promissory estoppel or detrimental reliance)

Question 101

Liquidated Damages

(What’s reasonable amount for liquidated damages?)

Answer 101

Reasonable forecast and proportional
1. 10% down
2. secured K - profit up to 50%

Question 102

Damages under UCC

(List)

Answer 102

1. Perfect Tender Rule
2. Remedies - benefit of the bargain/ cover/ warranty

Question 103

Replevin under UCC

Delivery of Goods

Answer 103

Type 1: Buyer paid but Seller refuses to deliver; Seller insolvent OR goods for family/household purposes
Type 2: A rare good identified that can’t be recovered; Good identifed to the contract; buyer unable to cover

Question 104

Special Performance

Answer 104

Specific performance is an equitable remedy in which a court orders a breaching party to perform that which he has promised to perform under the contract. A party is entitled to specific performance when:
1. valid and enforceable contract
2. all conditions are met by plaintiff, or conditions excused (by defendant’s breach)
3. inadequate legal remedy (goods are unique)
4. feasible court supervision, and
5. defendant must not have a defense.

—
Personal services contracts are NOT feasible to specially enforce

barbri

Question 105

Specific Performance - Personal Service K

Answer 105

Personal services contracts are NOT feasible to specially enforce

Question 106

Provisional Remedies in Aid of Specific Performance/Replevin

Analysis

Answer 106

1. TRO/Preliminary Injuction:
   a. a reasonable likelihood of success on the merits,
   b. a threat of irreparable harm if the injuction is not granted.
   c. a balancing of the hardships in plaintiff’s favor.
2. Additional element for TRO: there is a special showing required of immediate irreparable harm if the TRO is not granted right away.

Discuss Only if essay asks for provisional remedies

1. Discuss TRO
2. Discuss preliminary injuction

Question 107

Type of Equitable Remedies

Answer 107

1. Recission
2. Reformation

grounds by mistakes

Question 108

Recission

Answer 108

Recission is the undoing of a contract. It is a restitutionary remedy. The plaintiff effects a cancellation of the K by prompt notice of the recission and tender back of the consideration, or by a lawsuit in which the plaintiff seeks recission and offers to tender back the consideration.

The grounds for recission must have existed at the time of the making of the contract, making it voidable.

Recission applies to mistake and misrepresntation.

Question 109

Reformation

Answer 109

Reformation is the remedy by which the court alters or modifies a written instrument, such as a contract or deed, to make it conform to the parties’ previous understanding. It requires a valid prior agreement in the first place.

The grounds include mutual mistake, unilaterial mistake, mistake of law and fraud.

Question 110

Perfect Tender Rule

Answer 110

1. accept all goods
2. reject all goods
3. accept some, reject some
   if accept, buyer can sue for damage = goods as is - goods under warrranty on K
   if reject, send rejection to seller within reasonable time

Question 111

Quasi-Contract

for PE and reliance damages, or party received benefit despite unenforceable K or wrongful act

Answer 111

Despite the contract is unenforceable because of the Statute of Frauds, incapacity, fraud, duress, or illegality, a defendant who has received the benefit under the unenforceable contract may be forced to make some form of restitution to avoid defendant’s unjust enrichment.