FL DISTINCTIONS AND PTS OF LAW FOR CONTRACTS Flashcards
HOW DOES FL DIFFER FROM THE RESTATEMENT AND COMMON LAW ON WHAT CONSTITUTES CONSIDERATION?
“MUTUALITY OF CONSIDERATION”
CONSIDERATION CAN TAKE THE FORM :
- A RETURN PROMISE TO DO SOMETHING
- A RETURN PROMISE TO REFRAIN FROM DOING SOMETHING LEGALLLY PERMITTED
- THE ACTUAL PERFORMANCE OF SOME ACT
- REFRAINING FROM SOME ACT.
FLORIDA DISTINCTION: CONSIDERATION CAN BE SATISFIED BY EITHER A BENEFIT, LEGAL DETRIMENT OR BOTH.
PREEXISTING DUTY RULE: AT COMMON LAW, A PROMISE TO PERFORM A PREEXISTING DUTY DOES NOT QUALIFY AS CONSIDERATION BECAUSE THE PROMISOR IS ALREADY BOUND TO PERFORM (THERE IS NO LEGAL DETRIMENT)
NOTE: IF THE PROMISOR GIVES SOMETHING IN ADDITION TO WHAT IS ALREADY OWED (HOWEVER SMALL) OR VARIES THE PREEXISTING DUTY IN SOME WAY (HOWEVER SLIGHT), MOST CTS FIND THAT CONSIDERATION EXISTS.
THE RESTATEMENTS PROVIDES FOR AN EXCEPTION TO THIS RULE THAT IS ALSO FOLLOWED BY FL. STATE THIS EXCEPTION.
EXCEPTION FOR A THIRD PARTY: WHEN A THIRD PARTY’S PROMISE IS EXCHANGED FOR THE PROMISE TO PERFORM AN ACT THAT THE PROMISSOR IS ALREADY CONTRACTUALLY OBLIGATED TO PERFORM—-THAT 3RD PARTY’S PROMISE TO THE PROMISSEE IS SUFFICIENT CONSIDERATION.
ILLUSORY PROMISE: ONE THAT ESSENTIALLY PLEDGES NOTHING BECAUSE IT IS VAGUE OR BECAUSE THE PROMISSOR CAN CHOOSE WHETHER TO HONOR IT OR NOT.
A PROMISE THAT IS BASED ON THE OCCURRENCE OF A CONDITION WITHIN THE CONTROL OF THE PROMISSOR MAY BE ILLUSORY, BUT COURTS OFTEN FIND THAT THE PROMISOR HAS ALSO PROMISED TO USE HIS BEST EFFORTS TO BRING ABOUT THE CONDITION.
UCC: A PROMISE TO PURCHASER GOODS UPON THE PROMISOR’S SATISFACTION WITH THE GOODS IS NOT ILLUSORY BECAUSE THE PROMISOR IS REQUIRED TO ACT IN GOOD FAITH.
THERE IS A FLORIDA DISTINCTION AND RULE REGARDING ILLUSORY PROMISES. EXPLAIN.
FL DISTINCTION: ILLUSORY PROMISES - TO PREVENT A CONTRACT FROM BEING ILLUSORY, FLORIDA CTS REQUIRE THE NON-BREACHING PARTY HAVE BOTH THE ABILITY TO SUE FOR DAMAGES AND THE ABILITY TO COLLECT ON THE RESULTING JUDGMENT.
THERE ARE SOME PROMISES THAT ARE BINDING WITHOUT CONSIDERATION IN A NUMBER OF CIRCUMSTANCES:
ONE OF THESE HAS SOME FLORIDA DISTINCTIONS - PROMISE TO PAY A DEBT BARRED BY THE STATUTE OF LIMITATIONS
A NEW PROMISE TO PAY A DEBT AFTER THE STATUTE OF LIMITATIONS HAS RUN IS ENFORCEABLE WITHOUT NEW CONSIDERATION (C/L).
WHEN THE NEW PROMISE IS AN EXPRESS PROMISE, MOST STATES REQUIRE THE NEW PROMISE TO BE IN WRITING AND SIGNED BY THE DEBTOR.
ADDITIONALLY, A NEW PROMISE MAY BE IMPLIED WHEN THE OBLIGOR:
- VOLUNTARILY TRANSFERS SOMETHING OF VALUE (MONEY, NEGOTIABLE NOTE) TO THE OBLIGEE AS INTEREST ON, PART PAYMENT OF, OR COLLATERAL SECURITY FOR THE PRIOR DEBT;
- VOLUNTARILY ACKNOWLEDGES TO THE OBLIGEE THE PRESENT EXISTENCE OF THE PRIOR INDEBTEDNESS OR
- STATES TO THE OBLIGEE THAT THE STATUTE OF LIMITATIONS WILL NOT BE PLED AS A DEFENSE
A NEW PROMISE MADE TO PAY A DEBT DISCHARGED IN BANKRUPTCY IS ENFORCEABLE WITHOUT ANY NEW CONSIDERATION.
WHILE THERE MUST BE AN EXPRESS PROMISE TO PAY RATHER THAN A MERE ACKNOWLEDGEMENT OR PARTIAL PAYMENT OF THE DISCHARGED DEBT, THE NEW PROMISE NEED NOT BE IN WRITING.
IT IS THE NEW PROMISE THAT IS ENFORCEABLE AND NOT THE PRIOR DEBT OBLIGATION ITSELF. SO THE AMT TO WHICH THE OBLIGEE IS ENTITLED MAY BE LESS THAN THE PRIOR DEBT OBLIGATION.
WHAT DOES FL REQUIRED TO ENFORCE A PROMISE TO PAY A DEBT BARRED BARRED BY THE STATUTE OF LIMITATIONS?
FL DISTINCTION: IN FL, FOR A PROMISE TO PAY A DEBT AFTER THE STATUTE OF LIMITATIONS HAS RUN TO BE ENFORCEABLE, IT MUST SATISFY THE STATUTE OF FRAUDS AND BE IN WRITING AND SIGNED BY THE PARTY TO BE CHARGED.
FRAUDULENT MISREPRESENTATION
C/L: FRAUDULENT MISREPRESENTATION REQUIRES PROOF OF THE FOLLOWING:
i) THE MISREPRESENTATION IS FRAUDULENT;
- A FALSE ASSERTION OF FACT MADE KNOWINGLY, OR RECKLESSLY WITHOUT KNOWLEDGE OF ITS TRUTH; AND
- WITH INTEN TO MISLEAQD THE OTHER PARTY;
ii) THE MISREPRESENTATION INDUCED ASSENT TO THE CONTRACT; AND
iii) THE ADVERSELY AFFECTED PARTY JUSTIFIABLY RELIED PON THE MISREPRESENTATION.
THERE IS A FL DISTINCTION HERE
THERE IS A FL DISTINCTION HERE……………………………………………………………………
IN FLORIDA: RELIEF FOR A FRAUDULENT MISREPRESENTATION IS GRANTED WHEN:
(1) A PERSON MAKES A FALSE STATEMENT CONCERNING A MATERIAL FACT;
(2) THAT PERSON KNOWS THAT THE REPRSENENTATION IS FALSE;
(3) THE REPRESENTATION WAS MADE WITH THE INTENT OF INDUCING ANOTHER TO ACT ON IT; AND
(4) THE PARTY ACTING IN RELIANCE ON THE REPRESENTATION WAS INJURED AS A RESULT
A SELLER IS NOT EXEMPTED BY THE DOCTRINE OF CAVEAT EMTPOR FRIN RESPONSIBILITY FOR THE STATEMENTS AND REPRESENTATIONS HE MAKES TO INDUCE A BUYER TO ACT, WHEN UNDER THE CIRCUMSTANCES, THE STATEMENTS AMOUNT TO FRAUD.
A RECIPIET MAY RELY ON THE TRUTH OF A REPRESENTATION, EVEN THOUGH ITS FALSITY COULD HAVE BEENB ASCERTAINED HAD HE MADE AN INVESTIGATION, UNLESS HE KNOWS THE REPRESENTATION TO BE FALSE OR ITS FALSITY IS OBVIOUS TO HIM.
TYPES OF CONTRACT WITHIN THE STATUTE OF FRAUDS
MARRIAGE: A CONTRACT IN CONSIDERATION OF MARRIAGE
SURETYSHIP: A CONTRACT TO ANSWER FOR THE DEBT OR DUTY OF ANOTHER;
ONE YEAR: A CONTRACT THAT CANNOT BE PERFORMED WITHIN ONE YEAR OF ITS MAKING
UCC: UNDER THE UCC, A CONTRACT FOR THE SALE OF GOODS FOR A PRICE OF $500 OR MORE, AND
REAL PROPERTY CONTRACT: A CONTRACT FOR THE SALE OF AN INTEREST IN REAL PROPERTY
FL HAS SOME ADDITIONAL CONTRACTS WITHIN THE STATUTE OF FRAUDS
EXECUTOR CONTRACT: (A TYPE OF SURETYSHIP 1. CONTRACT): A PROMISE BY AN ADMINI-STRATOR OF A WILL TO PAY ANY DEBT OR DAMAGES FROM HER OWN ESTATE
- NEWSPAPER SUBSCRIPTIONS: SUBSCRIPTIONS TO NEWSPAPERS, PERIODICALS, OTHER PUBLICATIONS;
- HEALTH CARE: A GUARANTEE, WARRANTYU OR ASSURANCE AS TO THE RESULTS OF ANY MEDICAL, SURGICAL, OR DIAGNOSTIC PROCEDURE PERFORMED BY A LICENSES PHYSICIAN, OSTEOPATHIC PHYSICIAN, CHIROPRACTOR, PODIATRIST, OR DENTIST; AND
- DEBT: A CONTRACT SATISFYING A DEBT OR OBLIGATION FOR LESS THAN THE FULL AMOUNT.
**FL ALSO PREVENTS A DEBTOR FROM ENFORCING A CREDIT AGREEMENT (e.g. A LOAN) AGAINST A CREDITOR UNLESS THE AGREEMENT IS IN WRITING AND SIGNED BY BOTH THE DEBTOR AND THE CREDITOR.
AS IT RELATES TO THE SURETYSHIP PROVISION, THERE IS AN EXCEPTION TO THE SOF REQ FOR INDEMNITY CONTRACTS.
AN INDEMNITY CONTRACT (i.e. A PROMISE TO REIMBURSE FOR MONETARY LOSS) DOES NOT FALL WITHIN THE STATUTE OF FRAUDS AS A SURETYSHIP PROVISION.
FL DISTINCTION: CONSTRUCTION CONTRACTRS AND INDEMNIFICATION
IN FL, A CONSTRUCTION CONTRACT INVOLVING ANY CONSTRUCTION, REPAIR OR DEMOLITION OF REAL PROPERTY OR ITS ATTACHED STRUCTURES BETWEEN A REAL PROPERTY OWNER AND AN ARCHITECT, ENGINEER, GENERAL CONTRACTOR, SUBCONTRACTOR, SUB-SUBCONTRACTOR, MATERIALMAN OR ANY COMBINATION THEREOF, THAT CONTAINS AND INDEMNITY PROVISION MUST CONTAIN A MONETARY LIMITATION ON THE EXTENT OF THE INDEMNIFICATION THAT BEARS A REASONABLE COMMERCIAL RELATIONSHIP TO THE CONTRACT. THE MONETARY LIMITATION MUST NOT BE LESS THABN $1 MILLION PER OCCURRENCE, UNLESS OTHERWISE AGREED BY THE PARTIES.
INDEMNIFICATION CLAIMS DO NOT INCLKUDE CLAIMS OF, OR DAMAGES FROM GROSS NEGLIGENCE, OR WILLFUL, WANTON OR INTENTIONAL MISCONDUCT OF THE INDEMNITEE, ITS OFFICERS, DIRECTORS, AGENTS, OR EMPLOYEES, OR FOR STATUTORY VIOLATION OR PUNITIVE DAMAGES EXCEPT AND TO THE EXTENT THE STATUTORY VIOLATION OR PUNITIVE DAMAGES ARE CAUSED BY OR RESULT FROM THE ACTS OR OMISSIONS OF THE INDEMNITOR OR ANY OF THE INDEMNITOR’S CONTRACTORS, SUBCONTRACTORS, SUB-SUBCONTRACTORS MATERIALMEN, OR AGENTS OR THEIR RESPECTIVE EMPLOYEES.
EXCEPTION TO THE STATUTE OF FRAUDS: REAL ESTATE CONTRACTS AND PART PERFORMANCE
PART PERFORMANCE: EVEN IF AN ORAL CONTRACT FOR THE TRANSFER OF AN INTEREST IN REAL PROPERTY IS NOT ENFORCEABLE AT THE TIME IT IS MADE, SUBSEQUENT ACTS BY EITHER PATERY THAT SHOW THE EXISTENCE OF THE CONTRACT MAY MAKE IT ENFORCEABLE, EVEN WITHOUT A MEMORANDUM. SUCH ACTS INCLUDE:
(i) PAYMENT OF ALL OR PART OF THE PURCHASE PRICE;
(ii) POSSESSION BY THE PURCHASER; OR
(iii) SUBSTANTIAL IMPROVEMENT OF THE PROPERTY BY THE PURCHASER.
MOST JURISDICTIONS REQUIRE AT LEAST TWO OF THE ABOVE THREE ACTS TO ESTABLISH SUFFICIENT PART PERFORMANCE.
FLORIDA DISTINCTION HERE
IN FL, ALL THREE OF THE AFOREMENTIONED ELEMENTS MUST EXIST TO APPLY THE DOCTRINE OF PART PERFORMANCE.
IN ADDITION, FL RECOGNIZES THE DOCTRINE OF PART PERFORMANCE IN AN EQUITABLE ACTION AS A RELIEF FROM FRAUD (e.g. QUIET TITLE ACTION, EJECTMENT ACTION) BUT NOT IN AN ACTION AT LAW (e.g. AN ACTION SEEKING MONDEY DAMAGES)
FL ALSO APPLIES THIS DOCTRINE TO STATUTE OF FRAUDS PROVISIONS NOT BASED ON THE SALE OF PROPERTY.
PAROL EVIDENCE RULE: WHEN THIS RULE IS INAPPLICABLE
AMBIGUITY AND INTERPRETATION
EVIDENCE MAY BE ADMITTED FOR THE PURPOSE OF INTERPRETING OR CLARIFYING AN AMBIGUITY IN THE AGREEMENT. THIS CAN INCLUDE EVIDENCE OF TRADE USAGE OR EVEN LOCAL CUSTOM TO SHOW THAT A PARTICULAR WORD OR PHRASE HAD A PARTICULAR MEANING. COURTS APPROACH INTERPRETATION IN TWO WAYS:
A. PLAIN MEANING RULE
THIS RULE PROVIDES THAT THE OBJECTIVE DEFINITIONS OF CONTRACT TERMS CONTROL THE MEANING OF THE CONTRACT, REGARDLESS OF WHETHER THE MEANING CORRESPONDS WITH THE ACTUAL INTENT OF THE PARTIES. SOMETIMES, COURTS WILL GO OUTSIDE THE DOCUMENT TO CLARIFY THE ORDINARY MEANING OF TERMS THAT ARE AMBIGUOUS OR OVERLY VAGUE.
B. CONTEXT RULE
SOME STATES PERMIT COURTS TO USE A CONTEXTUAL APPROACH TO CONTRACT INTERPRETATION. UNDER THE CONTEXT RULE, JUDGES DETERMINE THE CONTRACT’S MEANING BY CONSIDERING ALL EVIDENCE OF THE FACTS AND CIRCUMSTANCES RELATED TO THE TRANSACTION. THE GOAL IS TO EFFECTUATE THE PARTIES’ ACTUAL CONTRACT OBJECTIVES AND PURPOSES.
FL DISTINCTION ON AMBIGUITY AND INTERPRETATION
IN FL, A PHRASE IS CONSIDERED AMBIGUOUS WHEN IT MAY BE FAIRLY UNDERSTOOD MORE THAN ONE WAY.
FOR EXTRINSIC EVIDENCE TO BE ADMISSIBLE, THE AMBIGUITY MUST EXIST ON THE FACE OF THE CONTRACT AND MUST BE LATEN (i.e. THE AMBIGUITY OF A PHRASE MUST REQUIRE EXTRINSIC EVIDENCE TO INTERPRET ITS MEANING.)
ANTICIPATORY REPUDIATION
THE DOCTRINE OF ANTICIPATORY REPUDIATION IS APPLICABLE WHEN A PROMISOR REPUDIATES A PROMISE BEFORE THE TIME FOR PERFORMANCE IS DUE.
THE REPUDIATION MUST BE CLEAR AND UNEQUIVOCAL (AS OPPOSED TO MERE INSECURITY), MAY BE BY CONDUCT OR WORDS, AND IF A STATEMENT, MUST BE MADE TO THE PROMISEE OR A THIRD PARTY BENEFICIARY OR ASSIGNEE OF THE PROMISE.
NON BREACHING PARTY’S OPTIONS: EXCUSES THE OCCURRENCE OF ANY CONDITION THAT WOULD OTHERWISE PREVENT THE REPUDIATING PARTY’S DUTY FROM BEING ABSOLUTE.
UPON REPUDIATION, THE PROMISEE CAN GENERALL TREAT THE REPOUDIATION AS A BREACH AND SUE THE PROMISOR IMMEDIATELY OR IGNORE IT AND DEMAND PERFORMANCE.
IF THE REPUDIATION IS IGNORED, THEN CONTINUED PERFORMANCE MUST BE SUSPENDED IF THE PERFORMANCE WOULD INCREASE THE DAMAGES OF THE PROMISOR.
HOWEVER, WHEN THE DATE OF PERFORMANCE HAS NOT PASSED, AND THE PROMISEE HAS FULLY PERFORMED, THE PROMISEE MUST WAIT UNTIL THE PROMISOR’S PERFORMANCE IS DUE BEFORE FILING SUIT. IN THIS SITUATION, ANTICIPATORY BREACH IS INAPPLICABLE AND THE PROMISEE MUST WAIT FOR ACTUAL BREACH BEFORE FILING SUIT. TYPICALLY, THIS OCCURS WHEN THE PROMISOR’S OBLIGATION IS THE PAYMENT OF MONEY.
ANTICIPATORY REPUDIATION DOES NOT APPLY TO A UNILATERAL CONTRACT WHEN THE OFFEROR WITHDRAWS THE OFFER ONCE THE OFFEREE HAS BEGUN TO PERFORM SINCE THE OFFEREE IS NOT REQUIRED TO COMPLETE PERFORMANCE.
FL POINT OF LAW ON ANTICIPATORY REPUDIATION
FL FREQUENTLY TESTS ANTICIPATORY REPUDIATION. IDENTIFY SITUATIONS IN WHICH A PARTY’S COMMENTS OR ACTIONS DEMONSTRATE A PROBABLE FAILURE TO PERFORM.
A REFUSAL TO PERFORM THAT IS “DISTINCT, UNEQUIVOCAL, AND ABSOLUTE” IS REPUDIATION PERMITTING THE OTHER PARTY TO SEEK ASSURANCE OF PERFORMANCE, TO SEEK DAMAGES, OR TO MITIGATE DAMAGES.
REMEDIES: LIQUIDATED DAMAGES AND PENALTIES
LIQUIDATED DAMAGES ARE DAMAGERS TO BE RECOVERED BY ONE PARTY WITHOUT PROOF OF ACTUAL LOSS IN THE EVENT THE OTHER PARTY BREACHES THE CONTRACT.
ENFORCEABILITY: FOR A LIQUIDATED DAMAGES CLAUSE TO BE ENFORCEABLE, THE FOLLOWING TWO-PRONG TEST MUST BE MET AT THE TIME OF CONTRACTING:
- THE AMOUNT OF LIQUIDATED DAMAGES WAS REASONABLE, BEARING SOME RELATION TO THE DAMAGES THAT MIGHT BE SUSTAINED; AND
- ACTUAL DAMAGES WERE UNCERTAIN IN AMOUNT AND WOULD BE DIFFICULT TO PROVE.
**SOME JURISDICTIONS AS WELL AS THE UCC AND SECOND RESTATEMENT ADD A THIRD PRONG TO THE TEST, AND REFUSE TO ENFORCE A CLAUSE UNDER WHICH THE LIQUIDATED DAMAGES ARE DISPROPORTIONATE TO THE ACTUAL DAMAGES INCURRED BY A PARTY.
IF LIQUIDATED DAMAGES CLAUSE IS UNENFORCEABLE, RECOVERY IS LIMITED TO ANY ACTUAL DAMAGES THAT A PARTY CAN PROVE.
FL POINT OF LAW: LIQUIDATED DAMAGES AND PENALTIES
A CONTRACT THAT PROVIDES FOR EITHER LIQUIDATED DAMAGES OR A LAWSUIT TO ASCERTAIN ACTUAL DAMAGES IS NOT PERMISSIBLE IN FL. THE CHOICE BETWEEN THE TWO DESTROYS THE CHARACTER OF THE FORFEITURE AS AGREED DAMAGES AND THE FORFEITURE BECOMES A PENALTY.
REMEDIES: PUNITIVE DAMAGES
PUNITIVE DAMAGES ARE RARELY AVAILABLE IN CONTRACT ACTIONS. SOME STATES ALLOW PUNITIVE DAMAGES TO PUNISH FRAUD, FOR VIOLATION OF A FIDUCIARY DUTY, FOR ACTS OF BAD FAITH, OR FOR DETERRENCE.
RESTATEMENT SECOND OF CONTRACTS: PUNITIVE DAMAGES ARE NOT RECOVERABLE “UNLESS THE CONDUCT CONSTITUTING THE BREACH IS ALSO A TORT FOR WHICH PUNITIVE DAMAGES [CAN BE RECOVERED]”.
FL POINT OF LAW ON PUNITIVE DAMAGES
FL FOLLOWS THE RESTATEMENT WITH REGARD TO RECOVERY OF PUNITIVE DAMAGES IN A CONTRACT ACTION.
REMEDIES: RECOVERY OF ATTORNEY’S FEES IN A CONTRACT ACTION
IN MOST JURISDICTIONS, AN AWARD OF ATTORNEY’S FEES IS NOT PERMITTED IN A CONTRACT ACTION UNLESS AUTHORIZED BY STATUTE OR BY THE CONTRACT ITSELF.
FL FOLLOWS THE TRENT, BUT HAS A POINT OF LAW HERE WHEN ATTORNEY FEES ARE PERMITTED FOR ONE OF THE PARTIES AS PER THE CONTRACT.
IF A CONTRACT COINTAINS A PROVISION ALLOWING ATTORNEY’S FEES TO A PARTY WHEN THE PARTY IS REQUIRED TO TAKE ANY ACTION TO ENFORCE THE CONTRACT, THE COURT MAY ALSO ALLOW REASONABLE ATTORENY’S FEES TO THE OTHER PARTY WHEN THAT PARTY PREVAILS IN ANY ACTION, WHETHER AS PLAINTIFF OR DEFENDANT, WITH RESPECT TO THE CONTRACT.
REMEDIES: WHAT IS THE RULE IN FL REGARDING RESTRICTIVE COVENANTS REGARDING NON-COMPETITION, NON-SOLICITATION, AND NON-DISCLOSURE/CONFIDENTIALITY?
IN FL, THE VIOLATION OF AN ENFORCEABLE COVENANT CREATES A PRESUMPTION OF IRREPARABLE INJURY TO THE PARTY SEEKING ENFORCEMENT OF THE COVENANT. A RESTRICTIVE COVENANT MUST BE EXPRESSLY CONTAINED IN A SIGNED CONTRACT.
THE COVENANT MUST BE REASONABLE IN TIME, GEOGRAPHIC AREA, AND LINE OF BUSINESS. WHEN NOT PREDICATED UPON THE PROTECTION OF TRADE SECRETS OR AS A RESULT OF A SALE OF A BUSINESS, A RESTRAINT OF SIX MONTHS OR LESS IS PRESUMED TO BE REASONABLE.
THE PARTY SEEKING ENFORCEMENT OF THE RESTRICTIVE COVENANT MUST ALSO PLEAD AND PROVE IT HAS A LEGITIMATE BUSINESS INTEREST THAT JUSTIFIES THE NON-COMPETE CLAUSE. A LEGITIMATE BUSINESS INTEREST INCLUDES THE PROTECTION OF TRADE SECRETES OR CONFIDENTIAL BUSINESS INFORMATION, AS WELL AS GOODWILL ASSOCIATED WITH A SPECIFIC LOCATION OR A SPECIFIC MARKETING OR TRADE AREA.
