Contracts Final Flashcards
Mutual Assent
Definition: “parties manifestation of present intent to be legally bound upon terms sufficiently certain”
Common Law: often in the form of offer and acceptance but does not have to be
UUC: can be any manifestation to show agreement, if parties think that they’re in an agreement then there a contract
Offer
“Presenting a desire to form a legally binding contract, inviting someone to consent”
Acceptance
a manifestation of assent to the terms thereof, made by offeree in a manner invited/required by the offeror
Termination of Acceptance
(i) Revocation (taking offer back)
(ii) Lapse (ran out of time)
(iii) Counter Offer
(iv) Rejection (Offeree declines the offer)
(v) Death
(vi) Incapacitation (physically cannot perform anymore)
(vii) Silence (silence means no, unless the have a reason to believe it = accepting §69)
Bilateral v Unilateral Contract
(i) Bilateral (acceptance by promise)
(ii) Unilateral (acceptance by perform)
Option Contracts
The buyer pays the seller an agreed-upon sum to ensure that, for a specified time, the seller will not sell to someone else
- MUST have consideration or else it is not an option contract (saying “ill hold it”)
- This is Irrevocable
Consideration
a bargain for exchange
Elements of Promissory Estoppel
- A promise made to a promisee
- In which the promisor reasonably expects their promise to induce action or forbearance of action by the promisee or a third party
- And the promise being made induces the action or forbearance of action
- Injustice for the promisee can be avoided by enforcement of the promise.
Elements of Misrepresentation
1.A false statement of fact, intention or opinion
2.Addressing a fact, intention or opinion material to the contract
3.Made with the requisite state of mind (intentional, negligent, or innocent)
4.Actually and justifiably relied on by the other party; and
5.Caused damage to the other party.
Elements of Non-Disclosure
1.Failure to disclose a fact
2.A duty to disclose that fact
3.The non-disclosed fact was material
4.The other party actually and justifiably relied on the state of things in the absence of disclosure of the fact; and
5.Damage
Defenses
- Deception
a. Misrepresentation
b. Non-Discosure
c. Concealment - Mistake
a. Mutual
b. Unliateral - Duress
a. Traditional
b. Economic - Illegality
a. Public Policy
b. Licensing
c. Non Compete
5.Incapacity
a. Mental
b. Minority/Infancy
c. Intoxication
6.Unconscionability
a. Procedural: Inability
to bargain OR gross
inequality of power
b. Substantive: Shock
the conscience - Statue of frauds
Elements of Concealment
1.The active efforts to prevents another party from learning a fact
2.The concealed fact was material
3.The other party actually AND justifiably relied on the facts as they appeared without the concealed fact; and
4.Damage
Elements of Mutual mistake
1.A mistake made by both parties about a fact surrounding a transaction at the time the contract is made.
2.Must be concerning a basic assumption to the contract
3.Must have a material effect on the parties’ contractual exchange
*Assumption of Risk
Elements of Unilateral Mistake
1.A Mistake by one party about a fact surrounding a transaction at the time the contract is made.
2.Concerning a basic assumption of the contract
3.Which had a material effect on the parties contractual exchange
4.Either
(a) Non-mistaking party knew or should have known, or caused the mistake OR
(b) The mistake makes the contract grossly unfair (think policy here
Elements of Duress
- One party commits a wrongful act
- Such a wrongful act precludes the other from exercising their free will/induce action (or if economical no other feasible option)
Elements of Illegality
- Contracts prohibited by statutes
- Contracts in violation of licensing statutes
- Covenants not to compete
- Tangential illegality
Elements of Unconscionability
Procedural Unconscionability
1. Absence of a meaningful ability to bargain
2. Little opportunity to understand the terms
3. Use of fine print and legalese
4. Deceptive sales practices
5. Take it or leave it; boiler plate agreements
OR – Gross inequality of bargaining power
Substantive Unconscionability
1. Terms that shock the conscience!!
Statute of frauds
Common Law
1. Is it a land sale?
2. Is it something that cant be performed within a year?
UCC:
1. Is it over $500?
Issues with Consideration (when they are not)
- Invalid Claims
- Nominal
- Moral
- Past
- Pre-existing duty
- Illusory Promise
Policy
- Predictability:
Encourages people to enter a contract secure in the knowledge that they will be enforced - Freedom of Contracts:
the freedom to make whatever contracts we choose to make - Fairness:
Justice & Fairness encourages contract-making. - Efficiency/economy: Something one values more greatly than what they currently possesses.
Damages Measured___
Measured by the Loss to Plaintiff
Damages Definition
Compensation given to the P for the harm suffered by a breach of contract
Damages Equation
General Damages + Special Damages ¬– Expenses Saved
Types of Damages
General Damages
Special Damages
(1) Reliance
(2) Consequential
What is General Damages
Benefit of the Bargin
Goal: To Put the plaintiff in the position economically identifiable to what it would have been if the other party properly performed the contract
Kprice - FMV / FMV - Kprice
What is Special Damages
(1) Reliance
a. Incidental: reasonable expected (ex; buying the paint for the house)
b. Essential: required by the K (ex; if the insurance was required by the contract)
(2) Consequential
a. Lost profits
Restitution Measured___
Measured by Gain to Defendant
Define Restitution
Remedy sought when the defendant is unjustly enriched at the defendant’s expense, and the defendant retains the benefit without compensating the plaintiff
The four ways one would be entitled to restitution…
(1) When damages would not be efficacious remedy
(2) Tort
(3) Overperform or perform under alleged unenforceable contract
(4) Partial performance then breach unfair for non-breaching party to retain (ex: deposits)
Liquated Damages Defined as
Agreed upon damages that were specified in a contract
Liquated Damages is enforceable if…
(1) Difficult to Calculate
(2) Reasonable
“Penalty” –> meaning it is unenforceable
Types of Equitable Relief
(1) Injunctive: Preventing party from breaching by making them NOT do something
(2) Specific Performance: Preventing party from breaching by making them do something
Basic Requirement aka Damages would be Inadequate if…
(1) Irreplaceability (Rare, land, etc.)
(2) Uncertainty (value is difficult to ascertain)
(3) Insolvency (D cant pay)
Parol Evidence (Terms Not In Contract)
(1) Does the Parol Evidence Rule Apply?
a. Prior Written/Oral OR Contemporaneous Oral, and
b. No Separate Consideration
(2) Consistent or inconsistent
a. Relating to subject matter
b. Or not (if not the stop analysis because evidence is barred)
(3) Integration
a. Completely Integrated —> Bar
b. Partially Integrated –> Bar Some
c. None Integrated –> Admit all
Should it be included? Williston v Corbin
(1) Williston:
* Four Corners
* Compete on Face
* Policy –> predictability
(2) Corbin
* Context is needed
* Policy –> Fairness and Efficiency
UCC 2-202
Should it be included under UCC
- Course of performance (what they have done prior in THIS contract)
- Course of dealing (what has happened in PAST contracts)
- Trade usage the least effective (What happened in the industry)
Ambiguity Types
*Parol Evidence always admissible for ambiguous words/phrases
Types….
(1) Patent
Words/Phrases, grammatical sloppiness, conflicting
(2) Latent
Only revealed after learning additional info
(3) Gap Filling
Contracts silent so court imply
Resolving Ambiguity
- Course of performance (This Contract)
- Course of dealing (Past Contract)
- Evidence of admission
- Trade Usage (Industry)
- Public Policy
- Contra Proferentem (Last resort) non drafter wins
Limitations on damages
(1) Avoidability –> No recovery for damages that could have been easily be avoided
(2) Foreseeability–> No recovery for damages that wee not reasonably foreseeable.
(3) Certainty –> Damages must be established with reasonable certainty.
Types of Breach
(1) Non Performance
(2) Defective Performance–> They would seek both: Cost of repair and diminish in value
Parol Evidence: Rule statement
“Rule to bar Extrinisic evidence, Extrinsic Evidence relating Terms that are alleged to be in the contract but is not written”
Waivers
the beneficiary of the condition intentionally gave up her right to enforce the
