Final Review Deck

Question 1

Expectation Damages

Answer 1

The measure of damages needed to put the non-breaching party in as good a position as they would have been had the breaching party performed

Question 2

Compensatory Damages

Answer 2

Damages that compensate the non-breaching party for the damages caused directly by the breach, and nothing more.

Question 3

Consequential Damages

Answer 3

Damages that do not flow directly from the act of breach, but only from the consequences or results of the breach. Available where provided by statute (UCC) or when foreseeable at the time of contracting.

Question 4

Incidental Damages

Answer 4

Commercially reasonable charges expenses or commissions incurred in ceasing performance or taking steps to preserve performance so it may be rendered to another.

Question 5

Reliance Damages

Answer 5

Expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with a reasonable certainty the injured party would have suffered had the contract been performed.
(R § 349)

Question 6

Restitution Damages

Answer 6

The amount of value transferred from one party to another under circumstances that do not support the donation of a gift.

Question 7

When Specific Performance is Available?

Answer 7

1) Party seeking order/injunction has performed all obligations required under the contract;
2) There is no adequate “remedy at law” (money damages);
3) The terms of the contract are susceptible to judicial enforcement;
4) The balance of equities favors the party seeking the order/injunction.

Question 8

Assignment

Answer 8

All contracts create rights
An assignment is a contract that transfers certain rights gained through a contract (or otherwise) to another party.
A right cannot be assigned if:
Assignment materially changes the duty of the obligor, or materially increases the burden or risk imposed on him by his contract, or materially impair[s] his chance of obtaining return performance, or materially reduce[s] its value to him.
The assignment is prohibited by statute or public policy.
The assignment is prohibited by contract.

Question 9

Delegation

Answer 9

All contracts create duties
A delegation is a contract that transfers certain duties gained through a contract (or otherwise) to another party.
Duties cannot be delegated if:
It is prohibited by statute, public policy, or the “terms of the promise.”
The promisee has a substantial interest in having the particular promisor perform the duties promised (i.e., employees)

Question 10

Intended Third-Party Beneficiaries

Answer 10

Recognition of a third-party’s right to performance is appropriate to effectuate the intention of the parties AND
The performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary (promisee owes money to beneficiary but provides for rights in a contract with another instead) OR
The circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance (e.g., a parent purchasing an insurance policy for a child)
INTENDED BENEFICIARIES MAY SUE TO ENFORCE THE CONTRACT.

Question 11

Incidental Third-Party Beneficiaries

Answer 11

Anybody who is not an intended beneficiary.
INCIDENTAL BENEFICIARIES MAY NOT SUE TO ENFORCE THE CONTRACT

Question 12

Impractibility

Answer 12

Occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made;
Event occurs after contract is formed;
Occurrence of event makes party’s performance “impracticable (commercially unreasonable);
Party seeking to stop performance is not at fault in causing the event.
Party cannot use defense if the “language or the circumstances indicate” otherwise (the risk of the event is allocated to them)

Question 13

Frustration of Purpose

Answer 13

Occurrence of an event, the non-occurrence of which was a basic assumption on which the contract was made;
Event occurs after contract is formed;
Either party’s principal purpose in entering the contract is substantially frustrated;
Party seeking to stop performance is not at fault in causing the event.
Party cannot use defense if the “language or the circumstances indicate” otherwise (the risk of the event is allocated to them)

Question 14

Impossibility

Answer 14

Performance becomes impossible after event occurs.

Question 15

Undue Influence

Answer 15

Special relationship between individual and party to the contract;
Relationship is such that the party to the contract is justified in assuming the individual would not act in a manner inconsistent with their welfare;
Individual exercises domination over party to the contract;
Individual unfairly persuades the party to enter the contract.
Contract is voidable by victim of undue influence.

Question 16

Duress

Answer 16

Assent procured by physical force or threat is not legitimate. (Physical Duress)
If a party’s manifestation of assent is procured by an improper threat by the other party and leaves the victim no reasonable alternative, the contract is voidable by the victim. (Physical or Economic Duress, “no reasonable alternative” is an incredibly high standard)
If a party’s manifestation of assent is procured by a non-party to the contract, the contract is voidable by the victim unless the other party acted in good faith without reason to know of the duress either 1) gave value; or 2) relies materially on the transaction.

Question 17

Three Circumstance Defenses

Answer 17

Impracticability- Performance becomes commercially impracticable after event occurs

Impossibility- Performance becomes impossible after event occurs.

Frustration of Purpose- Party’s principal reason for contracting is useless after event occurs.

Question 18

Need Procedural Unconscionability

Answer 18

“Contract of adhesion” (take-it-or-leave-it; no opportunity for party with lesser bargaining power to negotiate different terms)

Actual unequal bargaining power between the parties

Question 19

Need Substantive Unconscionability

Answer 19

Terms that are so unjust that a party would never be able to obtain them through genuine negotiation.

The exchange between the parties lacks a “modicum of bilaterality.”

Question 20

Unconscionability

Answer 20

Unconscionability is an equitable defense, and generally may not be put before a jury. Courts often use “sliding scales” to find unconscionability in contracts, where greater procedural unconscionability permits the defenses even if the substantive unconscionability is not particularly oppressive, and vice versa.

Question 21

UCC Resale 2-706

Answer 21

If buyer wrongfully rejects, wrongfully revokes acceptance, fails to make a payment due before delivery, or repudiates, seller may resell in a commercially reasonable manner after notice to buyer..

Question 22

UCC Market Price 2-708(1)

Answer 22

If buyer repudiates or wrongfully withholds acceptance, measure of damages is difference between market price and unpaid contract price + incidental damages, less expenses saved.

Question 23

UCC Lost Profit 2-708(2)

Answer 23

If (1) is insufficient, the measure of damages is profit the seller would have made from the buyer, + incidental damages, (less expenses saved).

Question 24

UCC Lost Volume Seller 2-708(2)

Answer 24

BUT Seller can prove it had sufficient inventory to make second sale if buyer had accepted AND that second sale would have happened regardless of buyer’s breach.

Question 25

Seller’s suit for Price or Damages 2-710

Answer 25

If buyer fails to pay price as it becomes due seller may recover price of: 1) goods accepted or those for which risk of loss has passed to buyer (will be stated in contract); or 2) goods that seller has been unable to resell.

Question 26

UCC Cost of Cover 2-711 & 712

Answer 26

If seller fails to make delivery or repudiates, or buyer rightfully rejects delivery or revokes acceptance, buyer may purchase replacement goods and recover difference in price + incidental or consequential, less expenses saved. Cover does not exclude availability of other remedies, but no double recovery is allowed.

Question 27

UCC Difference in Market Price 2-713(1)

Answer 27

If seller repudiates or delivers non-conforming goods, measure of damages is difference between market price and contract price + incidental& consequential damages, less expenses saved.

Question 28

UCC Incidental Damages 2-715(1)

Answer 28

Expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.

Question 29

UCC Consequential Damages 2-715(2)

Answer 29

Any loss resulting from general or particular requirements and needs of which the seller had reason to know at the time of contracting and which could not be reasonably prevented by cover; and injury to person or property resulting from breach of warranty.

Question 30

Ambiguity

Answer 30

A term is ambiguous when it is reasonably susceptible to more than one meaning

Question 31

Interpretation Against the Drafter

Answer 31

A party will be charged with a term’s meaning advanced by the other party if: 1) the first party was entirely responsible for drafting the term at issue and 2) the other party had no input into the negotiation and drafting process.

Question 32

Reason to Know of Another’s Meaning

Answer 32

A party will be charged with a term’s meaning advanced by the other party if the other party: 1) Does not know or has reason to know f a different meaning other than their won and 2) the first party knows or has reason to know of the other party’s intended meaning.

Question 33

Weight of the Evidence

Answer 33

A party seeking to prove a term with an objectively understood meaning has a different meaning in the context of the contract has the burden of proving the different meaning is what the parties intended.

Question 34

Parol Evidence Rule

Answer 34

Evidence of prior or contemparaneous agreement is not admissible to contradict the terms of an integrated contract. But such evidence may be admissible to show the contract is not integrated or only partially integrated.

Question 35

Plain Meaning Rule

Answer 35

When interpreting possible ambiguity, the court will look first to the four corners of the contract and determine whether the ambiguity can be resolved by analyzing the terms fo the contract and any documents referenced within it

Question 36

What is a Condition?

Answer 36

An event, not certain to occur, which must occur, unless its non-occurrence is excused, before performance under a contract becomes due.

Question 37

Some Conditional Magic Words

Answer 37

“IF”- If Buyer obtains financing, closing will occur on Mar. 1”

“Unless”- Buyer’s obligation to purchase will not vest unless it obtains financing by Mar. 1

“Provided That”- Closing will occur on Mar. 1 provided that Buyer obtains financing.

“Whereupon”- Buyer shall makes its best efforts to obtain financing, whereupon its obligation to close on Mar. 1 shall vest.

“Contingent”- The Mar. 1 closing is contingent upon Buyer obtaining suitable financing by that date.

Question 38

Conditions

Answer 38

Something that must occur to activate the obligation to perform something promised.

Non-occurrence is not a breach and usually excuses the promisor’s performance.

Question 39

Promises

Answer 39

A manifestation of intent (through words or acts) to act or refrain from acting in a specified way, so made as to justify a promisee in understanding a commitment has been made.

Non-performance is usually a breach and excuses the promisee’s performance.

Question 40

Promissory Conditions

Answer 40

A promise which must be performed in order to trigger the promisee’s duty to perform their own promise.

A condition which one party has a duty to satisfy.

Question 41

Promissory Estoppel

Answer 41

A promise that creates detrimental reliance and enforcement is necessary to prevent injustice.

Question 42

Unjust Enrichment

Answer 42

Recipient receives value it should reasonably expect to pay for and reversing the transfer is necessary to prevent injustice

Question 43

Mistake

Answer 43

One or both parties are incorrect about a factual assumption underlying the contract and the party seeking relief did not bear the risk.

Question 44

Fraud

Answer 44

A misrepresentation of material fact that induces the promise to rely on the falsity in entering the contract.

Question 45

Duress

Answer 45

A physical or economic coercive force that leaves the promise with no reasonable alternative other than acceptance.

Question 46

Result of Ambiguity

Answer 46

Analysis includes Four Corners, What is the Ambiguity, and the Cannons of Construction

Question 47

Unresolved Ambiguity

Answer 47

Ambiguity
Interpretation Against the Drafter
Reason to Know of Anothers Meaning
Weight of the Evidence
Burden of Proof

Question 48

Burden of Proof

Answer 48

The party arguing for a meaning other than the commonly-accepted one bears the burden of proving that the parties intended another meaning to control performance of the contract

Question 49

Three Burdens of Proof in American Law

Answer 49

Preponderance of the Evidence- More likely than not.

Clear and Convincing Evidence- Evidence that “leaves you with a firm belief or conviction that it is highly probable that the factual contentions of the claim or defense are true.” Often applicable to claims or defenses involving fraudulent intent.

Beyond A Reasonable Doubt- Beyond “the kind of doubt that would cause a reasonable person, after careful and thoughtful reflection, to hesitate to act in the graver or more important matters in life.” Never the burden in civil cases.

Question 50

Restatement 210 Determining Integration

Answer 50

(1) A completely integrated agreement is an integrated agreement adopted by the parties as a complete and exclusive statement of the terms of the agreement.

(2) A partially integrated agreement is an integrated agreement other than a completely integrated agreement.

(3) Whether an agreement is completely or partially integrated is to be determined by the court as a question preliminary to determination of a question of interpretation or to application of the PER.

Question 51

Judicial Purpose

Answer 51

The primary purpose of a judge’s role in interpreting a contract is to determine the intent of the parties.

Question 52

Substantial Performance

Answer 52

Breach of the contract’s terms, but a minor failure given the circumstances of both the agreement and the contemplated performance. Does not suspend the non-breaching party’s duty to perform.

Question 53

“Material” Breach

Answer 53

Breach of terms. Performance is both non-compliant and fails to provide the benefit of the bargain. Suspends non-breaching party’s duty to perform.

Question 54

Partial Breach

Answer 54

Terminology for breach that relates to a claim for compensation for only party of the rights the non-breach party was entitled to demand from breaching party.

Question 55

Total Breach

Answer 55

Terminology breach that relates to a claim for compensation for all of the rights the non-breaching party was entitled to demand from the breaching party.

Question 56

Restatement Second of Contracts § 241 Circumstances Significant in Determining Whether a Failure is Material

Answer 56

In determining whether a failure to render or to offer performance is material, the following circumstances are significant:

the extent to which the injured party will be deprived of the benefit which he reasonably expected;
the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances;
the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.

Question 57

Assessing Materiality Restatement 2d § 241 Broken into Rule Parts

Answer 57

In determining whether a failure to render or to offer to performance is material, the following circumstances are significant:

Benefit
Extent to which injured party will be deprived of the benefit which he reasonably expected

Reasonable Assurance/Cure
Likelihood that party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances, including any reasonable assurances

Adequate Compensation
Extent to which injured party can be adequately compensated for the benefit of which it will be deprived

Good Faith
Extent to which behavior of the party failing to perform or to offer to perform comports with standards of good faith

Suffer Forfeiture

Extent to which party failing to perform will suffer forfeiture

Question 58

Reasonable Assurances/Cure

Answer 58

If a party to a contract has reasonable grounds to believe that the other party will commit a breach by non-performance that would of itself give rise to a claim for total breach, he or she may demand adequate assurance of due performance.”
A party demanding reasonable assurances “may treat as repudiation the other party’s failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of a particular case.”
The “relevant factors to be considered in assessing the adequacy of assurances include the relationship between the parties, any prior dealings they may have had, the reputation of the party whose performance has been called into question, the nature of the grounds for insecurity, and the time within which the assurance must be furnished.”

Question 59

Restatement 2d. § 242 Circumstances Significant in Determing When Remaining Duties Are Discharged

Answer 59

In determining the time after which a party’s uncured material failure to render or to offer performance discharges the other party’s remaining duties to render performance under the rules stated in the, the following circumstances are significant

Those stated in Restatement 2d § 241; [material breach vs. substantial performance];
The extent to which it reasonably appears to the injured party that delay may prevent or hinder him in making reasonable substitute arrangements;
The extent to which the agreement provides for performance without delay, but a material failure to perform or to offer to perform on a stated day does not of itself discharge the other party’s remaining duties unless the circumstances, including the language of the agreement, indicate that performance or an offer to perform by that day is important.”

Question 60

Restatement 2d. § 250 When a Statement or an Act Is a Repudiation

Answer 60

A repudiation is a statement by the obligor [promisor] to the oblige [promisee] indicating that the obligor will commit a breach that would of itself give the oblige a claim for damages for total breach under § 243 OR
A voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach.

Question 61

Restatement 2d. § 253 Effect of a Repudiation as a Breach and on Other Party’s Duties

Answer 61

Where a party repudiates before its has committed a breach by non-performance and before it has received all of the benefits agreed to be received in exchange for it, repudiation alone gives rise to a claim for damages under total breach [“anticipatory repudiation”]
Where performances are to be exchanged under a bilateral contract, one party’s repudiation of a duty to render performance discharges the other party’s remaining duties to render performance.

Question 62

What is Common Law Breach?

Answer 62

Material Breach vs. Substantial Performance
Cure & Reasonable Assurances
Repudiation & Anticipatory Repudiation

Question 63

UCC Breach

Answer 63

Perfect Tender Rule
When Can the Seller Cure Imperfect Tender
When Can the Buyer “Revoke Its Acceptance” in the event of Imperfect Tender

Question 64

UCC 2-601 Buyer’s Rights on Improper Delivery

Answer 64

Subject to the provisions of this Article on breach in installment contracts (Section 2-612) and unless otherwise agreed…, if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may
(a) reject the whole; or
(b) accept the whole; or
(c) accept any commercial unit or units and reject the rest.

Question 65

UCC 2-602 Manner and Effect of Rightful Rejection

Answer 65

(1) Rejection of goods must be within a reasonable time after their delivery or tender. It is ineffective unless the buyer seasonably notifies the seller.
(2) Subject to the provisions of the two following section on rejected goods (Sections 2-603 and 2-604),
(a) after rejection any exercise of ownership by the buyer with respect to any commercial unit is wrongful as against the seller; and
(b) if the buyer has before rejection taken physical possession of goods . . ., he is under a duty after rejection to hold them with reasonable care at the seller’s disposition for a time sufficient to permit the seller to remove them . . .

Question 66

UCC 2-606 What Constitutes Acceptance of Goods

Answer 66

Acceptance of goods occurs when the buyer
(a) after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that he will take or retain them in spite of their non-conformity; or
(b) fails to make an effective rejection (subsection (1) of Section 2-602), but such acceptance does not occur until the buyer had has a reasonable opportunity to inspect them; or
(c) does any act inconsistent with the seller’s ownership, but if such act is wrongful against the seller it is an acceptance only if ratified by him . . .

Question 67

UCC 2-508 Cure By Seller of Improper Tender or Delivery (Replacement)

Answer 67

(1) Where any tender or delivery by the seller is rejected because non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery.
(2) Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute conforming tender.

Question 68

UCC 2-607 Effect of Acceptance

Answer 68

(1) The buyer must pay at the contract rate for any goods accepted . . .

Question 69

UCC 2-608 Revocation fo Acceptance in Whole or In Part

Answer 69

The buyer may revoke his acceptance of a lot or commercial unit whose non-conformity substantially impairs its value to him if he has accepted it
(a) on the reasonable assumption that its non-conformity would be cured and it has not been seasonably cured; or
(b) without discovery of such non-conformity if his acceptance was reasonably induced either by the difficulty of discovery before acceptance or by the seller’s assurances.
(2) Revocation of acceptance must occur within a reasonable time after the buyer discovers or should have discovered the ground for it and before any substantial change in condition of the goods which it is not caused by their own defects. It is not effective until the buyer notifies the seller of it.
(3) A buyer who so revokes has the same rights and duties with regard to the goods involved as if he had rejected them.

Question 70

UCC 2-508 Cure by Seller of Improper Tender or Delivery (Replacement)

Answer 70

(1) Where any tender or delivery by the seller is rejected because it is non-conforming and the time for performance has not yet expired, the seller may seasonably notify the buyer of his intention to cure and may then within the contract time make a conforming delivery.
(2) Where the buyer rejects a non-conforming tender which the seller had reasonable grounds to believe would be acceptable with or without money allowance the seller may if he seasonably notifies the buyer have a further reasonable time to substitute conforming tender.

Question 71

When Seller May Cure UCC § 2-508

Answer 71

Before time for performance expires, so long as cure happens before that time
After time for performance expires, if it reasonably believed that the goods would be acceptable with or without a money allowance (allowing credit for difference in value, cost of repair, etc.), so long as cure happens within a reasonable time

Question 72

When Buyer May Revoke Acceptance

Answer 72

The nonconformity “substantially impairs” the value of the goods AND
He has notified the buyer of the non-conformity within a reasonable time after acceptance, taking into account the reasonableness of discovering the non-conformity before seller has changed position for a reason not caused by the defect AND
The buyer accepted the goods on the premise that the nonconformity would be cured and it has not been “seasonably” cured OR
The buyer accepted the goods not knowing of the non-conformity either because of the difficulty to discover it or because of seller’s assurances of conformity

Question 73

Buyer Holding Goods

Answer 73

Under a duty to keep them under circumstances reasonably allowing seller to collect them
Any action inconsistent with seller’s ownership of the goods amounts to acceptance

Question 74

“Equitable” Remedies

Answer 74

Specific Performance
Available only where monetary damages will not compensate for breach because subject of contract is unique

Recission
Eliminating the contract and putting the parties in the position they were in before the contract was entered

Restitution
Plaintiff’s value that has been unjustly retained by the defendant

Reliance
Costs incurred in reasonable reliance on a promise

Punitive/Constructive Trust
Fraud, Breach of Trust, Undue Influence, Breach of Fiduciary Duty

Question 75

UCC Damages- Buyer’s Remedies

Answer 75

If Seller breaches in any manner: Purchase substitute goods and recover: difference in price+incidental damages-expenses saved (2-712)(A.K.A. “Cover”)
If Seller does not deliver or repudiates: Difference between market price + incidental and consequential damages - expenses saved (2-713)
“Replevin” (judicial order for delivery)
Specific performance for certain goods

Question 76

UCC Damages- Seller’s Remedies

Answer 76

Re-sell goods to another buyer and recover: difference in price+ incidental damages- expenses saved (2-706)
If Buyer wrongfully refuses delivery or repudiates: Difference between market price and contract price+ incidental damages- expenses saved (2-708)
“Lost volume seller” damages (2-708(2)) (seller is able to prove it would have made two sales (one to buyer & one to 3d party) instead of one (just to 3d party after buyer’s breach))
Sue for price (if buyer has not accepted but seller cannot reasonably find another buyer) (2-709(b))

Question 77

Public Policy Argument-Evidentiary

Answer 77

Requiring a writing, an attestation, or certification of a notary provides evidence of the existence and purpose of the contract to better adjudicate in instances of controversy

Question 78

Public Policy Argument- Cautionary

Answer 78

The seal, the signature, the requirement of writing, attestation requirements , certification, “perform a cautionary deterrent function by acting as a check against inconsiderate action.

Question 79

Public Policy Argument- Channeling

Answer 79

Each of these formalities (seals, signatures, attestations, certifications, writings) serves to mark or signalize the enforceable promise, it furnishes a simple and external test of enforceability. It “facilitates judicial diagnosis” of the dispute

Question 80

Public Policy Argument-Private Autonomy (Promote)

Answer 80

The law views private individuals as possessing a power to effect, within certain limits, changes in their legal relations.” When a court enforces a promise, it is merely arming with legal sanction a rule or lex (law) previously established by the party himself. Commonly known as the principle of “freedom of contract”

Question 81

Public Policy Argument- Reliance (Encourage)

Answer 81

The breach of a promise may work an inquiry to one who has changed his position in reliance on the expectation that the promise would be fulfilled. In these cases we are not “upholding transactions” but healing losses cause through broken faith

Question 82

Public Policy Argument- Unjust Enrichment (Prevent)

Answer 82

Injustice resulting from breach of a promise relied on by the promise is aggravated… Not only hs A lost five dollars but B has gained five dollars unjustly. Suppose A and B have initially, ten units in reliance on a promise by B which B breaks. The resulting relation is 5:10. If however, A paid these five units over to B, the resulting relation would be 5:15.

Question 83

Expression Unius

Answer 83

The expression of thing is the exclusion of another

Question 84

Esjudern Generis

Answer 84

The reference to specific things after a general reference limits the general reference to only those things specified.

Question 85

(Nulle peona sine lege - (“There is no punishment without law”))

Answer 85

What is not explicitly prohibited is permitted

Question 86

Judicial Interpretation- Rules of Construction

Answer 86

Expression Unius – The expression of one thing is the exclusion of another

Esjudem Generis – The reference to specific things after a general reference limits the general reference to only those things specified.

What is not explicitly prohibited is permitted. (Nulle peona sine lege – (“There is no punishment without law”))

Where possible, a document must be read to give effect to all provisions so that none are rendered meaningless.