I. (Interpretation of Terms) G. (Gripe Performance/Breach) D. (Damages) R. (Remedies) E. E. (Equity)

Question 1

Ambiguity

Answer 1

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

Question 2

Plain Meaning Rule

Answer 2

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 of the contract and any documents referenced within it.

Question 3

Ambiguity Can Negate Mutual Assent

Answer 3

In the event each part: 1) attached materially different meaning to a particular term, and 2) neither knows or has reason to know the meaning attached by the other, or 3) each party knows or has reason to know of the meaning attached by the other, courts will find that the parties have not mutually assented to the contract, thereby resulting in the contract’s unenforceability.

Question 4

Weight of the Evidence

Answer 4

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 5

Interpretation Against the Drafter

Answer 5

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 6

Reason to Know of Another’s Meaning

Answer 6

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 of a different meaning other than their own and 2) the first party knows or has reason to know of the other party’s intended meaning.

Question 7

Good Faith

Answer 7

Every contract or duty with [the UCC] imposes an obligation of good faith in its performance or enforcement.

Question 8

Partial Breach

Answer 8

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

Question 9

Material Breach

Answer 9

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

Question 10

Perfect Tender Rule

Answer 10

Under Article 2 of the Uniform Commercial Code, when dealing with the sale of goods, the perfect tender rule states that a buyer is permitted to reject goods shipped or delivered to it from a seller if the seller’s tender of the goods is in some way not perfect.

Question 11

Defect? If not, no breach. If yes:

Answer 11

Time Expired? (2-508) or Reject Revoke? (2-608)

Question 12

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

Answer 12

(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 13

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

Answer 13

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 14

Seller’s Remedies

Answer 14

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 15

Buyer Remedies

Answer 15

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 16

Total Breach

Answer 16

Breach
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 17

Repudiation

Answer 17

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 18

Anticipatory Repudiation

Answer 18

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 19

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

Answer 19

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 20

Assessing Materiality Restatement 2d § 241 Broken into Rule Parts B.R.A.G.S

Answer 20

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 21

Reasonable Assurances/Cure

Answer 21

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 22

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

Answer 22

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

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.”

“A party’s uncured material failure to perform or to offer to perform not only has the effect of suspending the other party’s duties but, when it is too late for the performance or the offer to perform to occur, the failure also has the effect of discharging those duties. Ordinarily, there is some period of time between suspension and discharge, and during this period, a party may cure his failure.:

Question 23

Promissory Estoppel/Reliance

Answer 23

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

Question 24

Unjust Enrichment/Restitution

Answer 24

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

Question 25

When is Specific Performance Available?

Answer 25

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 26

Specific Performance

Answer 26

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

Question 27

Recission

Answer 27

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

Question 28

Restitution

Answer 28

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

Question 29

Reliance

Answer 29

Costs incurred in reasonable reliance on a promise

Question 30

Punitive/Constructive Trust

Answer 30

Fraud, Breach of Trust, Undue Influence, Breach of Fiduciary Duty

Question 31

Promissory Estoppel/Reliance

Answer 31

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

Question 32

Unjust Enrichment/Restitution

Answer 32

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

Question 33

Expectation Damages

Answer 33

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 34

Policy Arguments

Answer 34

Evidentiary-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.

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

Channeling-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

(Promote) Private Autonomy – 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”

(Encourage) Reliance-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 caused through broken faith.

(Prevent) Unjust Enrichment-Injustice resulting from breach of a promise relied on by the promise is aggravated…Not only has A lost five dollars but B has gained five dollars unjustly. Suppose A and B have initially, ten units of goods. The relation between them is one of equivalence, 10:10. A loses five 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 35

Compensatory Damages

Answer 35

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

Question 36

Consequential Damages

Answer 36

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 37

Incidental Damages

Answer 37

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

Question 38

Reliance Damages

Answer 38

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 39

Restitution Damages

Answer 39

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