K Flashcards
Does SOF apply?
A entered into an employment K “for A’s lifetime”
NO
SOF requires a K that cannot be performed w/in 1 year to be in writing
Here, an agreement for lifetime employment is not subject to SOF bc it could be performed in a year if A dies or retires
Essential K Terms
CL v. UCC
CL: parties, subject matter, price, quantity
UCC: parties, subject matter, quantity
Implied in Fact K
- Party’s assent
- to enter K
- Is inferred
- From party’s conduct or failure to act
Implied in fact can be established by conduct alone!
When is Reform a remedy
Court reform a written K that fails to capture parties’ initial intent due to mistake by both parties when:
- parties had prior agreement (oral or written)
- Parties put that agreement into writing; and
- Diff btw K1 and written K
Unilateral Offer
Accepted only by completing performance
EX: reward offer, contest prize
Bilateral Offer
Offer presumed to be bilateral
Accepted by:
1. return promise; or
2. starting performance –> operates as implied promise to render complete performance
Mutual Mistake
Defense to Formation
Both parties are mistaken as to material term of K
K can be voidable if:
1. mistake relates to basic assumption
2. mistake materially affects K
3. adversely affected party did not bear the risk
How to bear risk?
Party can assume a risk of a K by proceeding with conscious ignorance, aka knowing their knowledge is limited and not trying to change that
Mutual Mistake
Defense to Formation
Both parties are mistaken as to material term of K
K can be voidable if:
1. mistake relates to basic assumption
2. mistake materially affects K
3. adversely affected party did not bear the risk
Condition Precedent
Uncertain future event that, if it occurs, CREATES party’s obligation to perform
ie, A agrees to hire B, if B graduates college
Look for: “on condition that” “ provided that”
Condition Subsequent
Uncertain future event, that if it occurs, EXCUSES party’s existing obligation to perform
ie, B agrees to work for C until B graduates college
Expectation Damages
$ arising naturally from breach of K
Goal: put parties in position as if K happened
Measure: (K price) - (market price or cost of substitute performance)
Construction K: (K price) - (cost of construction by another builder)
TIP: if you have a contractor & subcontractor, and subcontractor backs out, look for…
Promissory Estoppel – Contractor’s detrimental reliance
C can recover expectation damages bc that was an irrevocable offer for a reasonable time
Reliance Damages
Goal: put party in same posititon as if K never happened
Measured: out of pocket expenses incurred
cannot recover both reliance & expectation
Promissory Estoppel –Offer
offer is irrevocable for a reasonbale period of time if:
- offeror reasonably expected to induce reliance of offeree
- offeree reasonably relied on the offer
- reliance caused offeree to suffer substantial detriment
Misrepresentation
Untrue assertion of fact that makes a K voidable and rescindable by the adversely affected party when all elements met:
- misrep was fraudulent or material
- misrep induced assent to K
- OP justifiably relied on the misrep
Includes nondisclosure of known fact
Nondisclosure of known fact is treated as
untrue assertion of fact, aka misrepresentation if party knows that disclosure is necessary to prevent previous assertion from being a misrep
Anticipatory Repudiation
- Contracting party
- Clearly and unequivocally 3. communicates (via words or conduct) 3. To OP
- That it will not perform
Note: mere insecurity ≠ AR
Do K modifications need both parties consent?
YES, true for CL and UCC
Promise to surrender a claim or defense is valid when?
Valid consideration if:
- Claim/defense is valid or subject to a good-faith dispute; or
- Surrendering party honestly believes that the claim/defense may be valid.
When are goods identified?
Per UCC, identified when:
- stated in K
- absence of explicit mention, when they are marked/shipped/designated by the seller for buyer
How will UCC supply missing terms? Favor one party over the other?
NO, it will find a term that is reasonable to both parties
will not construe term negatively against drafter
FRIM SCAN
Ways to discharge K obligations
- Full performance
- Impossibility/ Impracticability/ Frustration of Purpose
- Release (writing only)
- Mutual Rescission
- Substituted K
- Contract or Covenant not to sue
- Accord & Satisfaction
- Novation
Ways to discharge K obligations –8 types
FIRM SCAN
- Full performance
- Impossibility/ Impracticability/ Frustration of Purpose
- Release (writing only)
- Mutual Rescission
- Substituted K
- Contract or Covenant not to sue
- Accord & Satisfaction
- Novation
Restitution Damages
arise where a party has been unjustly enriched
Awarded based on value of the benefit wrongfully conferred
Party cannot recover both expectation damages and restitution damages
Impracticability
performance discharged if:
- unforseeable event occured
- K was formed under basic assumption that event would not occur
- party seeking discharge not at fault
Remedy: restitution
Common Impracticability/Impossibility Fact Patterns
- Substantial damage or destruction of K’s subject matter (can’t be fault of either party)
- Death—K obligations generally survive the death of a party, unless deceased party’s K obligations are non-delegable
- Usually only unique personal services are non-delegable - Subsequent law or regulation (e.g., supervening illegality)
- If performance becomes illegal, excuse by impossibility
Expectation damages usually available when
a party has breached
Frustration of Purpose v. Impracticability
Reasons v. Duties
FoP – not impossible to perform, but main purpose of entering into K is frustrated––reason entered into K is out the window
Impracticability – impossible or SUPER hard to perform DUTIES
When are K modifications for services allowed w/o new consideration
- modification rests on circumstances not anticiped by parties; and
- fair & equitable in light of those circumstances
When does 1 year period start for SOF
The day after the offer is ACCEPTED––not the day after the offer was made!
Duty of Good Faith + Fair Dealing
obligation of good faith is imposed on the performance and enforcement of a K
Good faith means:
1. honesty in fact
2. observance of reasonable commercial standards `
UCC: what happens if both parties fail to perform?
Both parties’ K obligations are discharged
3 types of recovery for Anticipatory Repudiation
- Cost of Cover – (cost of subsitutute goods –cost of K)
- Incidential Damages – commercially reasonable charges/expenses incurred
- Consequential Damages – losses resulting from buyer’s circumstances that are (1) known to Seller and (2) forseeable and could not be prevented
Consequential Damages
losses resulting from buyer’s circumstances that are
(1) known to Seller and
(2) foreseeable and could not be prevented by cover
Divisible K
K imposed of multiple bargained for exchanges that can be separately enforced
Performance of entire K is generally not a condition precedent
UCC: Priority of E for Parole E Rule
In order of priority
- express terms always control
- court of performance
- Court of dealing
- Trade usage
Course of Performance
used for PER
sequence of conduct under K involving repeated occasions for performance
Course of Dealing
Used for PER
Sequence of conduct pertaining to previous K
When are these damages used:
expectation
reliance
restitution
Expectation – minor breach
Reliance – minor breach; out of pocket
Restitution – material breach via failure to substantially perform
Two theories of recovery for an Illegal K
If the party did not know of illegal purpose/les culpable, can recover under:
- expectation –> recover full value of lost performance
- restutiton –> recover reasonable value of benefit conferred
