UCC and Common Law Definitions

Question 1

U.C.C. 1-303

Answer 1

(a) A “course of performance” is a sequence of conduct between the parties to a particular transaction that exists if: (1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and (2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection.
(b) A “course of dealing” is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.
(c) A “usage of trade” is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage must be proved as facts. If it is established that such a usage is embodied in a trade code or similar record, the interpretation of the record is a question of law.

Question 2

Anticipatory Repudiation

Answer 2

So you now know three things about anticipatory repudiation: 2-609

(1) an anticipatory repudiation, if material, excuses further contract performance by the other guy just like in the case of an actual failure perform at the agreed upon time of performance,
(2) an anticipatory repudiation is a form of breach of contract,

and (3) anticipatory repudiation requires an unequivocal indication of intention not to performance; i.e., “absolutely declaring that he will never act under it.”

Question 3

Assurance of performance

Answer 3

Under Uniform Commercial Code (UCC) Section 2-609, a party may demand written assurance of performance and suspend its own performance until after receiving such assurance only if reasonable grounds for insecurity exist as to the other party’s performance.

Question 4

Test for Divisibility

Answer 4

As the Second Restatement puts it, a contract is divisible if it can be “apportioned into corresponding pairs of part performances so that the parts of each pair are properly regarded as agreed equivalents .…”

Question 5

What are the gap filler terms?

Answer 5

1: Place of delivery (Sellers residence or place of business)
2: Time for performance (a reasonable time)
3: Price: A reasonable price, assuming the parties otherwise agreed to conclude their deal without agreeing to a price, which would occur if the object of the sale had a well-established market price).

Question 6

Consequential Damages Common Law

Answer 6

Damages are those arising not from the ordinary course of events due to the breach, but from special circumstances peculiar to injured party. Not recoverable unless breaching party had reason to know of the special circumstance 351

To be charged with consequential or special damages, the breaching party must have been able, at the time of contract formation, to reasonably have foreseen the loss its breach could ultimately cause.

Question 7

Incidental Damages Common Law

Answer 7

Arise in the ordinary course of events from the breach which the breaching party should reasonable foresee the injured party to incur.

Example: Costs to find a substitute. 341

Question 8

Anticipatory Breach Happens When

Answer 8

1: The contract has not been breached but one party justifiably anticipates the other will breach the contract.
2: One party repudiates the contract (unconditionally refuses to perform under the contract as promised) before its performance is due.

Section 2-609 recognizes each party’s right to adequate assurance that its counterparty will perform under the contract and provides a mechanism for an insecure party to seek adequate assurances that its counterparty will perform as required. If the counterparty fails to provide adequate assurances within a reasonable time, the failure is deemed a repudiation and a breach of the contract.

Note: The Anticipatory Breaching party can revoke its Anticipatory Breach before the date the contract is due, if the other party has not materially changed its position.

Question 9

California Extrinsic Evidence Rule for Exam

Answer 9

In California and some other jurisdictions, even if the language is clear, plain, and unambiguous, a court will employ the following two-step process:

(1) provisionally admit extrinsic evidence offered to demonstrate that the language in dispute is reasonably susceptible to more than one meaning;
(2) admit the evidence if it demonstrates that the language is reasonably susceptible to more than one meaning but exclude the evidence if it does not. If admitted, the evidence, together with any evidence to the contrary and any other appropriate tools of interpretation, will be considered in determining the meaning of the language in dispute.

Question 10

What kinds of Extrinsic evidence are allowed on the exam?

Answer 10

1: Circumstances existing at the time of contract formation
2: The purpose of the contract as reflected in written recitals or as otherwise established
3: Course of dealing between the parties
4: Course of performance
5: Usage of the trade

Question 11

Ejusdem generis

Answer 11

Ejusdem generis is latin for “of the same kind.” When a law lists lists classes of persons or things, this concept is used to clarify such a list.

For example, if a law refers to automobiles, trucks, tractors, motorcycles, and other motor-powered vehicles, a court might use ejusdem generis to hold that such vehicles would not include airplanes, because the list included only land-based transportation.

Question 12

Inclusio unius est exclusio alterius

Answer 12

A maxim of interpretation meaning that the expression of one thing is the exclusion of the other. When certain persons or things are specified in a law, contract or will, an intention to exclude all others from its operation may be inferred.

Question 13

Implied Warranty of Merchantability

Answer 13

(2) Goods to be merchantable must be at least such as
1: pass without objection in the trade under the contract description; and
2: in the case of fungible goods, are of fair average quality within the description; and
3: are fit for the ordinary purposes for which such goods are used; and
4: run, within the variations permitted by the agreement, of even kind, quality and quantity within each unit and among all units involved; and
5: are adequately contained, packaged, and labeled as the agreement may require; and
6: conform to the promise or affirmations of fact made on the container or label if any.

Question 14

Implied warranty of fitness for a particular purpose

Answer 14

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller’s skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.

Question 15

Express Warranty

Answer 15

(1) Express warranties by the seller are created as follows:
1: Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.
2: Any description of the goods which is made part of the basis of the bargain creates an express warranty that the goods shall conform to the description.
3: Any sample or model which is made part of the basis of the bargain creates an express warranty that the whole of the goods shall conform to the sample or model.

Question 16

Warranty of Title and Against Infringement

Answer 16

(1) Subject to subsection (2) there is in a contract for sale a warranty by the seller that
1: the title conveyed shall be good, and its transfer rightful; and
2: the goods shall be delivered free from any security interest or other lien or encumbrance of which the buyer at the time of contracting has no knowledge

Question 17

Express Terms: What to do when there is no ambiguity or vagueness?

Answer 17

If language is clear, plain, and unambiguous, courts in some jurisdictions will give the language it’s obvious meaning, declining, in the process, to admit extrinsic evidence and declining to apply any other tool of interpretation.

Question 18

Misunderstanding (common law)

Answer 18

1: If both parties assigned the same meaning, the courts will use it.
2: If parties assigned different meanings, and one party knew of the other’s understanding, the court will interpret against the one who knew the others understanding
3: If both parties assigned different meaning, and neither knew of the others meaning, the court will void for lack of mutual assent.

Question 19

UCC Good Faith

Answer 19

Good faith means honesty in fact and the observance of reasonable commercial standards of fair dealing

Question 20

Notice To Seller

Answer 20

Under the Uniform Commercial Code, a buyer must notify the seller of any breach regarding purchased goods within a reasonable time after the buyer discovers, or should have discovered the breach, or be barred from remedies for the breach

The purposes of this notice requirement are to give the seller an opportunity to:

(1) cure any breach by making adjustments or replacements in order to minimize the buyer’s damages and the seller’s liability,
(2) learn the facts in order to prepare for negotiation and litigation, and
(3) protect himself from old claims that are asserted after it is too late for the seller to investigate them.

Question 21

Burden of Proof

Answer 21

The burden is on the buyer to establish any breach with respect to the goods accepted.

Question 22

Privity

Answer 22

UCC 2-318

1. Alternative A: Alternative A extends the seller’s warranty (express or implied) only to a member of the buyer’s family or household , or a house guest, and only where it is foreseeable that the person may use and be injured by the goods. A person other than the buyer thus cannot recover in states adopting Alternative A unless he is physically injured , and is a relative or house guest of the buyer.
2. Alternative B: Alternative B covers any person, even if not a relative or house guest of the buyer, who may reasonably be expected to use or be affected by the goods. But, as with Alternative A, only personal injury is covered.
3. Alternative C: Alternative C is the broadest: it extends the warranty to all persons who may be expected to use or be affected by the goods. Most importantly, it covers property and economic damage as well as personal injury, and may even cover intangible economic loss.

Question 23

Disclaimer of Remedies

Answer 23

Under the UCC and to a lesser extent the common law, limitation of damage clauses are not enforced when the exclusive or limited remedy “fails of its essential purpose.”

This can occur, for example, if a television seller repeatedly fails to fix a television, and becomes clear that the seller can’t or won’t fix it within a reasonable time. If a court won’t enforce the limitation or exclusive remedy, the parties go back to the general remedies given by the UCC.

Question 24

Can we disclaim consequential damages?

Answer 24

Exclusion or limitation of consequential damages is likewise permitted unless the exclusion or limitation would be unconscionable. Under the UCC, for example, limiting or excluding consequential damages for personal injury in the sale of consumer goods is prima facie unconscionable. UCC § 2–719(3).

Question 25

Terms Implied in Fact (Lady Duff Gordon)

Answer 25

(1) A contract may be enforced when there is no evidence of a promise, exchanged as consideration, in the explicit terms of the contract.
(2) A promise to use reasonable efforts may be implied from the entire circumstances of a contract.

Question 26

How to determine if a breach is Material

Answer 26

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

1: the extent to which the injured party will be deprived of the benefit which he reasonably expected;
2: the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
3: the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
4: 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;
5: 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 27

Restatement Impossibility

Answer 27

1: that the event occurred after the contract was made
2: that the event was one whose non-occurrence was a “basic assumption” on which the contract was made
3: that the event was not the fault of the party seeking the discharge; and
4: that the language or circumstances don’t dictate that discharge should be denied (e.g., because the parties allocated the risk of the event to the party now seeking to use the impossibility doctrine).

Question 28

UCC Perfect Tender Rule

Answer 28

As long as the K does not involve installments, (i.e. multiple deliveries), “unless otherwise agreed…
if the goods or the tender of delivery fail in any respect to conform to the contract, the buyer may:
1: reject the whole; or
2: accept the whole; or
3: accept any commercial unit or units and reject the rest.

Question 29

What does buyer have to do for seller to get a remedy?

Answer 29

What does buyer have to do for seller to get a remedy?

1: Wrongful rejection or revocation of goods
2: Failure to make payment
3: Repudiates whole or part contract

Question 30

Seller’s Remedies If Buyer Repudiates or Rejects and Returns Goods

Answer 30

Seller can choose to

1: The difference between the contract price and resale price
2: The difference between the contract price and market price
3: The entire contract price

May also be able to recover incidental damages. (costs incurred by seller to recover from breach)

Also may be able to recover consequential damages such as lost profits to a volume seller.

Other examples of consequential damages
-Seller specially manufactured the goods for buyer.

• There is no readily accessible market for the goods.
• There is no way to determine a reasonable market price for the goods.
• The seller is a components seller who agrees to assemble or manufacture contract goods for a buyer, the buyer breaches before the goods are finished, and the seller elects not to complete production.

Question 31

Seller: Recover the Difference Between the Contract Price and Resale Price

Answer 31

An aggrieved seller may resell the goods under terms and conditions that depart from the terms and conditions of the original contract if the terms and conditions are commercially reasonable under the circumstances.

1: The manner of resale (for instance, whether a resale is private or public and where a sale takes place).

To determine whether the manner of resale is commercially reasonable, courts consider:

• Relevant trade practices.
• Relevant trade usages.
• Whether the aggrieved seller gave the original buyer reasonable notice if the resale is to be by private sale.

For example, resale of goods at a private sale is commercially reasonable if the aggrieved seller provides the required notice to the original buyer, the resale is the result of an arm’s length negotiation, and the price agreed to was not appreciably less than that negotiated in the original transaction.

2: The timing of resale.

To determine whether the timing of resale is commercially reasonable, courts consider:
• The nature of the goods.
• The condition of the market.
• Other circumstances of the case.

For example, a resale that was not accomplished quickly will be deemed commercially reasonable if the goods are not fungible and were custom made, the aggrieved seller devoted a significant amount of time to finding a buyer, and the original buyer could not find any other buyer.

Question 32

Seller: Recover the Difference Between the Contract Price and Market Price

Answer 32

If an aggrieved seller has not resold the goods, it can pursue a claim for damages, minus expenses saved because of the buyer’s breach, including

1: The difference between the contract price and the market price.
2: Lost profits, if the difference between the contract price and market price will not adequately compensate the seller. For example, if a seller specifically designs a telephone system for a buyer, including constructing component parts and modifying equipment purchased by the seller to be incorporated into the system, the system is not generally marketable and the seller can recover lost profits.
3: Any incidental damages.

Question 33

Seller: Recover Entire Contract Price

Answer 33

An aggrieved seller can pursue an action for the entire contract (purchase) price if seller:
1: Cannot resell the goods.

2: Can establish that any attempt to resell would be unavailing.

Before a seller can pursue an action for the entire contract price, the seller must mitigate its damages by making a reasonable effort to resell the goods at a reasonable price. If it fails to resell the goods despite making reasonable efforts, the seller can make a claim for the entire contract price. For example, an aggrieved seller can recover the entire contract price if the seller custom-made the goods for the breaching buyer and tried but failed to resell them.

Question 34

Seller’s Remedies If Buyer Accepts Goods but Does Not Pay for Them

Answer 34

If the buyer accepts goods but does not pay for them or if the goods are destroyed or lost and the risk of their loss has passed to the buyer, the seller can recover the contract price

The UCC does not require an aggrieved seller to mitigate its damages before pursuing an action on the price if the buyer has accepted the goods or within a reasonable time after the risk of loss of the goods has passed to the buyer. This is because the buyer is in possession and control of the goods, and the seller, who does not have possession or control of the goods, is not able to do anything to reduce the amount of its damages.

Question 35

Seller’s Remedies If Buyer Repudiates Before Manufacture Is Complete

Answer 35

1: Stop production
2: Finish production and sell the goods
3: Recover the contract price

Although the aggrieved seller can determine which of these remedies to pursue, it must exercise reasonable commercial judgment when it decides whether to complete performance or stop production

Question 36

Damages Available If Seller Stops Production After Buyer Repudiates

Answer 36

If an aggrieved seller stops production after a buyer repudiates and the decision to stop production was commercially reasonable, it can recover:

1: The lost profits (including reasonable overhead) that the seller would have made from full performance by the buyer.
2: Any incidental damages, such as damages incurred by the seller to stop delivery of the goods.
3: Costs reasonably incurred

For example, if a buyer repudiates a contract for 50,000 made-to-order gold coins after only 29,000 were manufactured and the seller stops production because there is no market for the coins, the aggrieved seller has a claim for:

• Lost profits on the 21,000 coins under the contract.
• Incidental damages incurred by the seller in conjunction with the decision to stop manufacture of the 21,000 coins, such as freight charges incurred.
• Other costs reasonably incurred, including attorney’s fees and court costs.

Question 37

Damages Available If Seller Finishes Production After Buyer Repudiates

Answer 37

If an aggrieved seller finishes production after a buyer wrongfully repudiates, it can sell the goods and recover, minus expenses saved because of the buyer’s breach:

1: The difference between the contract price and the resale price.
2: Any incidental damages, including damages incurred by the seller to stop delivery of, recover, temporarily store, and resell the goods.

Question 38

Damages Available If Seller Cannot Resell Goods

Answer 38

If a buyer wrongfully repudiates, an aggrieved seller can sometimes recover the contract price. However, a seller can only elect this remedy if it produces the goods but cannot resell them despite making reasonable efforts

for example, if the seller fails to resell the goods because they were custom-made for the breaching buyer.

Question 39

Buyer’s Remedies Before Acceptance

Answer 39

If the seller retains possession of the goods because:
• The seller failed to deliver the goods.
• The seller repudiated the contract before delivery of the goods.
• The buyer rightfully rejected non-conforming goods.

In other instances, the aggrieved buyer received the goods but did not accept them, for example, if the goods were:
• Non-conforming.
• Delivered past the agreed-on delivery date.

If the seller breaches before acceptance, the aggrieved buyer may, for any goods involved and for all the goods if the seller’s breach goes to the whole contract:

1: Cancel the contract.
2: Recover any of the purchase price that has been paid plus:
3: cover and recover the difference between the cost of cover and the contract price, plus any incidental and consequential damages; or
4: recover the difference between the market price of the goods and the contract price, plus any incidental and consequential damages.

Buyers must act in good faith and a commercially reasonable manner to effect cover. An aggrieved buyer that opts to pursue damages rather than to cancel the contract must subtract expenses it saved because of the seller’s breach from the amount it is seeking in damages. This could include shipping or other costs that the buyer would have been responsible for under the original contract.

Incidental damages available to aggrieved buyers that received goods but did not accept them can include expenses reasonably incurred in:

1: The inspection of goods.
2: The receipt of goods.
3: The transportation of goods.
4: Effecting cover

Consequential damages available to aggrieved buyers that received goods but did not accept them can include lost profits in the amount of the profit the buyer could have made by reselling the goods. The buyer must prove consequential damages with reasonable certainty, and they must have been reasonably foreseeable.

Question 40

Buyer’s Remedies If It Has Accepted Goods

Answer 40

If the buyer has accepted the goods and the goods are defective or non-conforming, it is entitled to monetary damages that equal “the loss resulting in the ordinary course” so long as the buyer did not timely revoke acceptance. If the buyer did timely revoke acceptance, it is entitled to the same remedies that are available to a buyer that never received the goods

In this case, the buyer may recover:
1: Damages for breach of express or implied warranty, calculated as the difference between the value of the goods as warranted and their value as received. The buyer can use “any manner which is reasonable” to measure its damages. However, many courts use the contract price to determine the value of the goods as warranted.

2: Incidental damages, including expenses reasonably incurred in:
• the inspection of goods;
• the receipt of goods; and
• the transportation of goods

3: Consequential damages, including:
• any loss resulting from general or particular requirements and that the seller at the time of contracting had reason to know and could not reasonably be prevented by cover or otherwise; and
• injury to person or property.

Alternatively, a buyer that accepts non-conforming goods can opt to use the self-help remedy of deducting from the price damages resulting from the seller’s breach. The buyer must give reasonable notice of his intent to withhold all or part of the price to the seller if it elects this remedy.

Question 41

What are the 4 gap filler terms?

Answer 41

1: Place of delivery at sellers place of business or residence
2: Time for performance is is a reasonable time
3: Reasonable price if there is a well established market price
4: Unless the parties to a contract agree otherwise, payment is due when and where the buyer takes delivery.

Question 42

UCC Installment Contracts

Answer 42

The Code is more lenient to sellers under installment contracts (i.e., contracts calling for several deliveries) than in single-delivery contracts. In the case of an installment contract, “the buyer may reject any installment which is non-conforming if the non-conformity substantially impairs the value of that installment and cannot be cured This rule has two major consequences:

1: A slight non-conformity in one installment does not allow the buyer to reject that installment, as he could in a single-delivery contract.
2: Even where the non-conformity is major, the buyer can’t reject the installment without giving the seller a chance to cure if circumstances permit. (This rule is the same as in the non-installment “one shot” scenario.)

Question 43

Satisfaction of a party:

Answer 43

If there is a satisfaction clause in the contract, USE IT

1: If not dissatisfaction only (fancy taste). Must be honest, but doesn’t have to be reasonable
2: Mechanical or more established items, honest and reasonable

Question 44

350: Avoidability as a Limitation on Damages

Answer 44

(1) Except as stated in Subsection (2), damages are not recoverable for loss that
the injured party could have avoided without undue risk, burden or humiliation.

(2) The injured party is not precluded from recovery by the rule stated in
Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to
avoid loss.

Question 45

351: Unforeseeability and Related Limitations on Damages

Answer 45

(1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.
(2) Loss may be foreseeable as a probable result of a breach because it follows from the breach
(a) in the ordinary course of events, or
(b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.
(3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.

Question 46

§ 353. Loss Due to Emotional Disturbance

Answer 46

Recovery for emotional disturbance will be excluded unless the breach also caused bodily harm or the contract or the breach is of such a kind that serious
emotional disturbance was a particularly likely result.

Question 47

Liquidated Damages Provision

Answer 47

Such liquidated damages clauses, where enforced by the court, determine the measure of damages which the court will award. In order to be enforceable, however, the liquidated damage clause must always meet one (and in some courts, both) of these two requirements:

[1] Reasonable forecast: The amount fixed must be reasonable relative to the anticipated or actual loss from breach (all courts require this); and

[2] Difficult calculation: In some courts, the harm caused by the breach must be uncertain or very difficult to calculate accurately, even after the fact.

The purpose of damages is to put the plaintiff in the same position he would have been in had the contract been fulfilled, not a better one. Where a provision that is labeled a “liquidated damages” clause really serves to penalize a party for breach in an amount far beyond the loss suffered by the plaintiff, the courts simply refuse to enforce the provision, and award ordinary damages.

Question 48

§ 355. Punitive Damages

Answer 48

Punitive damages are not recoverable for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable.

Question 49

Restitution for breaching party

Answer 49

If one party has breached the contract in a manner giving the other party the right to terminate, the breaching party is entitled to restitution, but only to the extent that the value of the benefit conferred exceeds losses arising from breach.

Question 50

Intended Beneficiary

Answer 50

For a third party to be an “intended beneficiary,” it must first of all be the case that giving him the right to sue would be “appropriate to effectuate the intentions of the parties…”If he meets this test, he must furthermore fit into one of the two following categories:

1: Payment of money: Either “the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary;” or
2: Intended benefit: “The circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.”

Question 51

Factors to determine who is “intended” beneficiary

Answer 51

The primary question is whether the promisee intended that the third party have the benefit of the contract. But where the promisee’s intention is not clear from his language, several other factors may be considered.

1: Reliance: If the beneficiary would be reasonable in relying on the contract as having been intended to confer a right on her, she is an “intended” beneficiary. That is, the purpose of the contract may be looked at from the beneficiary’s point of view.
2: To whom performance runs: If the performance is to run directly from the promisor to the third party, the third party is usually an intended beneficiary. On the other hand, if the performance is to run from the promisor to the promisee, and the third party’s benefit will only be indirect, he is probably just an incidental beneficiary.
3: Carrying out of parties’ intentions: A beneficiary may be an “intended” one even though helping the beneficiary was not the “primary” intent of the parties, as long as giving him these benefits was part of the parties’ overall object.

Beneficiary’s assent or knowledge unnecessary: The intended beneficiary has a right to sue despite the fact that at the time the contract was made, he didn’t know about it, or, if he did know about it, did not assent to it.

Question 52

“Curing” Defective Goods

Answer 52

A key section of the UCC gives a seller the right to cure goods delivered to a buyer that are defective or non-conforming. In other words, if a seller delivers goods that don’t match the contract, and the buyer rejects those goods, the UCC gives the seller an opportunity to fix the problem. The seller has the right to cure in two specific situations:

1: where goods were rejected because of non-conformity, but the seller still has time under the contract to provide conforming goods; or
2: where the seller had reasonable grounds to believe that the non-conforming goods delivered to the buyer would be acceptable to the buyer, with or without a money allowance (discount).

An example of the first of these situations would be a seller who, under a sales contract, has until March 31 to deliver goods to a buyer, and delivers defective goods on March 15, which the buyer rejects. The seller would still have until March 31 to deliver conforming, non-defective goods to the buyer. An example of the second situation might involve a seller delivering “better” goods to a buyer—such as a more expensive, higher-quality model of a device, with more features, which the buyer nonetheless rejects. The seller likely would have the right, within a reasonable time, to provide the model actually ordered by the buyer.

Question 53

Avoidance of forfeiture:

Answer 53

Courts frequently avoid applying the “strict compliance” rule where a forfeiture would result. A “forfeiture” would occur when one party has relied on the bargain (either by preparing to perform or by actually making part performance), and insistence on strict compliance with the condition would cause him to fail to receive the expected benefits from the deal.

Question 54

Wrongfully discharged employee

Answer 54

The measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon, less the amount which the employee has earned or with reasonable effort might have earned from other employment. In such cases, the employer must show that the other employment was substantially similar to the other employment, and the employee’s need not seek other available employment of a different or inferior kind to mitigate damages.

Question 55

Assignable rights exceptions

Answer 55

All contracts rights are by default assignable, that is unless it triggers one of the three exceptions.

1: It damages the obligors interests. Would materially change the duty of the obligor, or materially increase the burden of risk, impairs chances of receiving return performance.
2: Forbidden by statute
3: Valid Anti-Assignment Clause

Question 56

What Is an Assignment?

Answer 56

An assignment involves two separate transactions. First, two people make a contract. Then, later, in a separate transaction, one of the two parties to that contract transfers its rights under that contract to somebody else.

Terms: Assignor, assignee, and obligor

The “assignor” is thus the party to the contract who later transfers his rights under the contract to someone else. The “assignee” is that someone else. And, the “obligor” is the first party in the contract who the duty is owed to.

Can do Assignment of right to services and Assignment of a right to payment.

Generally, most contract rights can be assigned. The primary common law limitation on the power to assign contractual rights is that an assignment cannot “materially change the duty of the obligor.”

Question 57

What Is a Delegation?

Answer 57

Contracts create not only rights but also duties. Each party to a contract has both rights and also duties. If Markell contracts to wash Ponoroff’s car for $15, Markell has not only a contract right to be paid $15 for washing Ponoroff’s car, but also the contract duty to perform the service of washing Ponoroff’s car.

Delegation terms: The person who first makes a contract and then finds someone else to do his work under the contract is called the “delegator” or the “delegating party,” and that “someone else” is the “delegatee.” In the preceding paragraph’s car wash hypothetical, Markell is the “delegating party” and Epstein is the “delegatee.” Ponoroff, the other party to the contract—the person who has a right to the car wash—is the “obligee.”

What Are the Legal Consequences of a Delegation?

In sum, the mere act of delegation does not absolve the delegating party of its contract duty. Rather, absolution of the delegating party requires both the delegation and then proper performance by the delegatee.

2 exceptions:

1: Contract has a clause saying no delegation of duties
2: The contract is for a specific person to do something. Aka a contract for a specific singer to preform.