Quick Glance

Question 1

Expectation Damages

Answer 1

Loss Benefit of the bargain + other loss (incidental and consequential damages). Benefit of the bargain = value of promise - cost avoided.

Question 2

When is Loss Profit used?

Answer 2

Loss profit is used when breach does not create opportunity for resale.

Question 3

Incidental Damages

Answer 3

Costs in responding to a breach or arranging a substitute.

Question 4

Consequential Damages

Answer 4

Often largest sources of reasonably foreseeable loss caused by the breach that may include loss in profits and personal injuries.

(Limits: Duty to mitigate loss, forseeability, reasonably certain damages were caused by breach)

Question 5

Attorney Fees

Answer 5

Only if statute or contract authorizes. Know TX rules.

Question 6

Liquidated Damages Clause

Answer 6

DAS difficult to prove and Formula or fee reasonable forecast of likely loss. (Forfeiture of prepayment, other fee if remedy is loss caused by breach, limiting damages must not be unconscionable, substitute remedy if needed).

Question 7

Parol Evidence Rule: Omitted Terms Are Rejected

Answer 7

First ID each term on which party will assert their dispute. Fraud, mistake, oral condition precedent the existence of K are exemptions.

Question 8

Interpretation of Terms

Answer 8

Judges prefer to interpret within four corners of contract. If both proposed meanings are still plausible, judge accepts extrinsic evidence. If still unclear, is there a best meaning?

Question 9

Implied Duties of Contract (4)

Answer 9

1) Implied by Other Terms. 2) Implied by custom of trade or community or of the parties. 3) Implied as a matter of policy. 4) Or by concept of good faith (settings for good faith: Discretion, need for information sharing, need for cooperation, non interference, and effort).

Question 10

Express Conditions

Answer 10

Party who can affect a condtion has an implied duty to not limit the effectuation of the condition. Condition v. Promise v. both condition and promise. (Failure of condition, alone, is not a breach. Breach is not necessarily failure of condition. Failure depends of terms. Is a condition very precise or soft). Waiver, estoppel, or election: Ways to avoid effect of failed condition.

Question 11

Waiver, Estoppel, or Election

Answer 11

Protected party has option to proceed or treat its duties as now excused. Waiver-Promise before or after failure of condition binding if for consideration, not material, or if it induced reliance. Estoppel-Words or action reasonably causing other party to believe obligor will perform regardless of condition. Election-Decision (or implied decision by virtue of delay) to disregard a failure of condition that has now happened.

Question 12

Basic Assumptions

Answer 12

Basic Assumption can be another source of implied in law condition. Mistake, impossibility, frustration. Modern Impossibility-broader rule of impracticability. Forseeability of risk?Excusable failure to draft express condition?Complete dischar v. partial discharge of K.

Question 13

Constructice Conditions

Answer 13

Not negotiated: Implied not by particular circumstance of parties but by realities of exchange transactions for all parties. RS breach material? Old law especially during building contracts, is it substantial performance? (If material breach, injured party may suspend performance pending cure. Possibility of cure is one factor. If breach becomes total, party may cancel and substitute). Sets order of performance if contract does not do so expressly. Determines effect of breach in absence of express term. RS: Each party’s remaining duties to perform are conditioned on there being no prior, material, uncured breach by the other (“The first material breach rule”). Subject to waiver, estoppel, and election.

Question 14

Failure of Consturctive Condition

Answer 14

UCC adopts perfect tender standard of perfomance but not as perfect as it seems. Limits of perfect tender rule. Limits of implied warranties. Substantial impairment rule for installment contracts: Is this installment substantially impaired? Whole K impaired?

Question 15

Anticipatory Breach

Answer 15

Condition has failed even before the required performance was due. Allows immediate discharge, substitution and suit for damages. Repudiation, or ones own act making a performance impossible. (Retraction possible until promisee’s relaince or declaration of intent). Doubt NOT EQUAL to anticpatory breach. Can make a reasonable demand for assurance based on a reasonable ground for insecuirty. (Demanding an assurance is modifying the contract. Failure to respond to a proper demand is anticipatory breach).

Question 16

Breach Parties Remedies (3)

Answer 16

1) If defendant has not rendered substantial performance it might still have delivered performance of something of value. Divisibility: (2) If contract price is expressly or implicility unitez and each unit yields same measure of benefit to promisee, use the unit price. (3) Restitution.

Question 17

Not All Duties Are Constructive Conditions

Answer 17

Interdependence of duties is implied, but parties can draft express rules to the contrary (an independent covenant). Beware of implied contract duty beyond text of contract. Breach of one contract isn’t breach of separate contract.

Question 18

Q+A

Answer 18

Combination of Parol Evidence and Warranties. (UCC says that a lot of stuff that happens before purchase is an express warranty even if not included in the contract. Don’t have to be included in integration to be part of the contract. Standard integration clause is not good enough to disclaim warranties. UCC says can have an express disclaimer but most follow the rules. Have to expressly disclaim express warranties and warranty of merchnatbilility.