CONTRACTS OUTLINE

Christopher Brainard

Contracts(C/L&Art 2)

Applicable Law=C/L/Art2*. All/None: more important part test. Art2a=lease goods.

Formation

Offer=objective manifestation of a present willingness by definite terms to enter into K.

1)Indefinite/Ambiguous=Hypo:  S offers car(Art2) for “fair price”=Vague&material term=indefinite.

2)C/LèLand must state price & describe., ok if intended court to set it.

3)Art2*è price absent=ok. Need Q(Output/Require=ok) Unrsbly Disproportionate=change a lot: unenforceable.

4)Ads=generally no offer. Exception: 1)Specific Q(limited #) & 2)who can accept(1^st come).

Irrevocable

1)Frsbl Reliance(e.g. SubKs){buy paint?};

2)UniK=Start performance=option K(not mere preparation{buy paint)

3)OptionK: C/L=promise + consideration.

4)Art 2*: Firm Offer/Option K=1)Written; 2)Promise open, 3)Sign, 4)Mrchnt, 5)state or rsbl (<3mo).

Termination

1)Lapse rsbl time{sneaky dates};

2)Revocation=express/implied{reliable conduct}: Effective on receipt. Publication=(same/comparable).

3)Rejection/Counteroffer(by offeree)=Not Mere Bargaining=“Will you take. .?” Definite Statement=“I won’t pay more than. . . ” Acceptance on Condition=counteroffer. Regardless Art2. “conditional on…” “I accept if. . .”

4)Mirror Image Rule=C/Làadditional terms is rejection/counteroffer=no K. 

5)Art2*à2-207: Additional/Different terms=K. Both Mrchnts=Add unless 1)rsbl time object, 2)offer expressly limit terms, 3)Material/different.  One not Mrchnt=K, additional/different merely proposals need acceptance.

6)Death/Incapacity Terminates=unless otherwise irrevocable(option K).

Acceptance=eligible offere w/knowlege, communicates in required manner.

1)UniK=accept w/full performance=start,may quit(but irrevocable). Rewards=UniK. Know,act&complete. 

2)Bilateral K=accept rsbly, words or start to perform(irrrevocable).

3)Mailbox Rule=Acceptance 1^st=when mailed. Overtaking Rejection=no K: 1)rejection 1^st & 2)offeror relies/changes position. Eveything else on Receipt=Rejection sent 1^st; Option Ks(Art2* too).

4)Silence as Acceptance=Offeree’s words or context.  E.g. If you don’t hear from me in week I accept.

5)Art2*: Acceptance=any rsbl means: promise/sending goods.

6)Acceptance/Breach(Art2*)=Imperfect. Reject/Accept/Part=rsbly Notify&Allow cure=right to damages.

Accommodation Exception = non-conforming w/explanation, no breach rather counteroffer.

Consideration=Bargained legal detriment (Adequacy =irrelevant): 1)perform/promise; 2)forbear/promise;

1)Conditional Gift= “come over & I’ll give car.”=K? Context:  Bargaining to get to your house=K.

2)Legal Detriment= “I’ll give you $ to not smoke or listen to records.”  Legal right to do.

3)Past Consideration/Moral Obligation=no consideration. Expressly ask save life &expects $=consideration.

4)Preexisting Duty=C/L=Modify, need new consider(eg. add party). Art2*=Modify w/o consider, good faith. SoF?

5)Debt Payment=due&undisputed=part payment no consideration. 1)Honestly dispute or Tech defense=consideration.

6)Illusory Promises(usually wrong answer)=Only, “I’ll buy it if I feel like it.” Good faith can be consideration here.

7)PEstoppel=1)promise; 2)frsbl; 3)rely; 4)avoid injustice; 5)Enforce reliance. (Look for Consideration 1^st).

Enforceability

1)Capacity=Avoidable(not void).  Implied Affirmation=retain benefits K when attain capacity{17 to 18ys).

1)Infancy (not necessaries(in QuasiK-only value of benefit not K $); 2)Mentally Incompetent(unable to understand); 3)Intoxicated+other has reason to know.  Not void just Avoidable. 

2)Ambiguity=1)Term open to multi rsbl interpretation; 2)each attaches different; 3)neither knows or reason to know of meaning attached by other.  If one party knows ambiguity then K according to innocent party.

3)Mistake=Mutual: material, basic assumption fact. Unilateral: No, unless one knows/should know of; avoidable.

4)Illegality=Subject matter: “Injure Kerigan”=void.  Illegal purpose: “drive Galloli”=voidable by innocent.  

5)Fraud=Voidable. Fraud in factum: trick into signing. Fraud in inducement: tricked as to what is in K..

6)Duress/Coercion=gun to head etc(not natural economic duress):  voidable by innocent party.

7)Unconscionability=1)Very Oppressive/Unfair; 2)At time of K formation; 3)Judge decides. (No essay).

8)Stt of Frauds=renders K Unenforceable. Within Stt of Frauds:

MàMarriage, in consideration of. Prenuptial Ks. Not, “I promise to” Only, “Your dad can live w/us if”

YàServices W/NO POSSIBILITY of PERFORMANCE w/i Yr of K. “3yrs, terminate w/30dys notice.”  In Stt!(dies not perform); “Cut down trees in US”: not in stt! “Work for life,” die ergo performed w/I yr.                 

LàTransfer of % of Land of duration more than yr.  1yr lease/easement: not in Stt.

EàExecutor:  not from the estate but from the executor’s own funds. Not frequently tested.

GàGoods (Art2*) > $500:  SWAP.  Art2A Lease personal Prop=total lease payments > $1000:  SWAP.

SàSurety(Narrow):  Not, “I will pay.”  Only, “I will pay her debt if she doesn’t.”

Main Purpose Exception:  Guarantor’s main purpose was own %, not within Stt of Frauds.

Satisfaction of SoF=

S:    Art2* specialty goods.

W:  C/L:      Material Termsè1)Who;  2)What(Services: duration); 3)Signed by D.

       Art2*:  1)Q term; 2)Signed by D:(Both Merchants signed by P & D failed object w/i 10days.

       Art2A:  1)Lease; 2)Describe what is being leased; 3)Duration of Lease

A:   admission=Judicial:  pleading, discovery or testimony.

P:   Part Performance=

Services K > 1yr:  Full performance, no Part Performance, only in Quasi K.

Art2*: Part performance good for Q performed(& damages, but no Buyer recovery for alleged Q).

Land:  Part Performance(2of 3 of following:  1)part payment, 2)improvements, 3)possession; 

           Full Performance by Seller: 1)seller conveyance, but buyer payment $ not enough!

Equal Dignity for Signature Authorization=underlying K in SoF=written authorization of Equal dignity.

K Modification=C/L: Need new consideration, but if new K as modified w/I SofF need writing. 

                          Art2*:  No new consideration just good faith, but if K as modified w/I SofF need writing.

K clause Modifications in Writing onlyèC/L: Ignore(Like irrevocable)  Art2*: Honor unless waived.

Terms

1)Parol Evidence Rule=Decided by judge.

Writing intended to be final-i.e. INTEGRATED; No prior/contemporaneous(subsequent OK) oral/written.

Add=1)Only Partially(or not at all); 2)Integrated, can add terms that would naturally & normally not be included!

Change=No parol for Partially/Fully Integrated unless a Mistake in putting into writing.

Enforceability=parol to show defense-i.e. SoF/Illgality/Fraud/Duress/Unconscionable/Ambiguity/ Mistake.

Explain=can always use parol evidence to explain writing{chickens-fryers, roasters, hens}

Art2*=look to usage & custom & Delivery terms auto add despite Parol evidenceè  Shipment K: Seller: 1)Get to carrier; 2)Delivery arrangements; 3)Notify Buyer. Done when gets to carrier.  Presume Shipment K=C&F; CIF; FAS; FOB(unless FOB buyer’s location).  Destination K:  Seller done when gets to buyer.

2)Risk of Loss Term:  After K made something destroys goods w/o fault. Examiners love this!!

1)K controls;  2)Breaching party; 3)Carrier:  Shipment K=shifts when to carrier. Destination K=at destination. 

4)No agree/breach/carrier:  Seller Mrchnt: shift w/receipt. Non-Mrchnt seller: shift w/tender(available!). 

5)Sale on Approval then risk is on Seller until approved.

3)Warranties(not mere “puffing”{mere opinion}). Breach warranty is breach of K!!

Express W=Sample or model.  It went to the “Basis of Bargain.”

Implied W Mrchntblty: Mrchnt who regularly deals in these goods. (Normally just business person) (“They’re OK”).

Implied W Fitness=1)Purpose; 2)Relies seller to select; 3)seller should know of purpose&reliance.(“good for that”)

Art2A=same Express, Mrchntblty, Fitness:  Finance leases=sue lessor, must make lease payments to not financer!

Disclaimers: Express=Can’t.  Implied=Can:  “as is” or “with all faults”  or conspicuously mention merchantability.

Limit Remedy=1)may limit remedy(even express Ws) 2)unless unconscionable(prima facie if limit personals) 

Performance

Art2*=Perfect(Accept/Breach)èReject/Accept/Part. Accommodation Exception=non-conform w/explanation=c/offer.

Reject=Notify Timely, w/ReasonsàOpportunity to Cure(Seller)=1)wrong goods; 2)time left=still right damages. 

Installment Sales Ks=K REQUIRES OR AUTHORIZES: 1)delivery separate lots; 2)separately accepted. 

Buyer Reject: Installment=substantial impairment of installment. K=substantial impairment the whole K.

Acceptance=once accept goods(even impliedly by not rejecting) can never reject them! Rsbl time to inspect.

Revoke Acceptance: 1)substantially impairs value; 2)good reason ignorant; 3)revoke w/i rsbl time discovery. 

Payment=cash(or check) Unless Agreement for credit.  Reject check, buyer gets additional rsbl time.

Conditions=“if,” “provided that,” “so long as,” “subject to.”

1)True or Coupled w/promise=Precedent/Concurrent(either duty activate other’s)/Subsequent(cuts of duty).

2)Express Conditions=General rule=strictly satisfied. If it is a promise then breach(material?).

Except=“if I’m satisfied”=approval by rsbl person.  Unless portrait &“if I’m satisfied” subj standard!

3)Constructive Conditions=Benefit of bargain=order of performanceè1)doing work before payment. 2)K’s order of performance, then 1^st performance is constructive condition precedent to 2^nd.

4)Substantial Performance=still damages but excuses condition if not express so other’s duties activated.

5)Failure to Cooperate(breach of implied)=Condition for one party’s protection&party doesn’t cooperate.

6)Estoppel/Waiver=Estoppel:  inconsistent enforcement of condition/promise & reliance.  Every mo not requiring architect signature as proscribed then try to enforce after reliance=no. Waiver=after failure says never mind.  Election Waiver=condition precedent not fulfilled & elects to go on=still damages.

Promises

1)Excuse b/c of Failure of Condition=substantial performance? express condition then material?

2)Excuse by Other Parties Breach=C/L=material breach=excuses your duties(payment). Immaterial(still get benefit of bargain)=you perform duties, but get damages.

3)Anticipatory Repudiation=1)repudiating party unequivocally will not perform; 2)made prior to time performance due. Unilateral Ks=Doesn’t exist. Bilateral Ks=only if executory for both sides; otherwise must wait for date of performance before suit!  1)Treat as Breach; 2)Suspend & Wait; 3)Urge performance;  4)Offer of recission.

Adequate Assurance of Future Performance=something knew gives rsbl basis for insecurity may request: 30days. 

4)Later Unforeseen Eventè Unforeseen occurrence can be, destruction, unavailability of raw materials or supplier problems like labor strikes or person necessary for performance, gov regulations. 

5)Impossibility=Objective; temporary impossibility suspends but springs back when impossibility removed.  Subject matter destruction: identified subject matter of K destroyed w/o anticipation.(Krell v. Henry).

Shingles, house destroyed=impossible(Quasi-K). Build house 90%=not impossible b/c not identified.

6)Impracticability=unforseen increase in cost to perform 10X.  Art2*: unforeseen casualty to identified goods, before risk of loss shifts from seller.  Only excuses seller. Seller cannot be sued for breach. 

7)Frustration of Purpose=performance would frustrate Buyer’s purpose. eg. subject matter use outlawed.

8)Accord&Satisfaction=Accord=existing K & agree to some new consideration to extinguish.  Suspends enforcement of prior K. Satisfaction=Performance of new K.  No satisfaction=may sue on new/old K!

9)Novation=existing K in which both agree w/new person that new person will assume duties.  Excuse of your duty ergo you can’t be sued!  Both parties agree to new person.

Remedies=Liquidated Damages Clause=1)Time of K damages difficult to determine; 3)rsbl forecast.  If Penalty(unrsbl estimate)=invalid.  Actual damages irrelevant if was rsbl at time of K. 

Damages=benefit of bargain + incidental + frsbl consequential damages at time of K.

1)Avoidable Damages=Cover/Mitigation burden on defendant!{D show comparable employment available}.

2)Certainty Rule=no speculation

3)Lost Profits=unlimited supply Q(“regular inventory” “off the rack”)&Buyer didn’t take=get lost profit.

4)Reformation=correcting errors in error of vocabulary in written K.

5)Adequate Assurance of Future Performance=something knew gives rsbl basis for insecurity may request: 30days. 

6)Reclamation=buyer insolvent when received goods; seller demand w/i 10days(rsbl time solvency fraud).

7)Entrustment=give to seller of that kind.  Eg. bring watch for repair&sold; BFP wins; still conversion.  No K action.

Quasi K=Unjust enrichmentàvalue of benefit conferred despite breach.

Specific Performance=applies if law inadequate & uniqueàland %, special. (hard to get)

1)Services=never specific performance; but injunction barring breaching party from going to competitor. 

2)Covenants Not to Compete=valid: 1)Rsbl business need; 2)Geographically rsbl; 3)Time limit rsbl.

Third Party Problems

3^rd Party Beneficiaries=1)Identifies 3^rd party;  2)Benefit directly to 3^rd party;  3)Vests in 3^rdparty(modify prior): i)knows&assents as specified, ii)rsbl relies, iii)brings suit.  4)Suit: i)Donee/Promisee vs Promisor; ii)Creditor vs both;  Promisor defenses good against both.

Assignment(of rights): Obligor to Obligee/Assignor to Assignee. Consideration unnecessary.

1)Present tense: (not “Promises” rather “assigns”).No future assignments or of future rights.

2)Stt of Frauds=if underlying K was in SoF(not if it was, only if it had to be in writing).

3)C/L=no substantial change duties of obligor=payment of $ is always ok;  but not personal services.

4)Prohibition of Assignments{“rights not assignable”}èAssignee may enforce if didn’t know. Obligor may sue Assignor for breach.  “all assignments are void.” Assignee may not enforce even if didn’t know.

5)Before Notice Obligor May Deal w/Obligee(no notice perform to Assignee & modify w/obligee).

6)Revocability=

w/o Consideration=Revocable=express, death, Last-n-time wins(unless token chose). 

w/Consideration=Irrevocable=1^st w/consideration wins;  2^nd 1)No Notice & 2)1^st w/payment, judgment, indicia.

7)Suit: Assignee vs Obligor: real party at %.  Obligor retains defenses. W/Consideration Assignee vs. Assignor.

Delegation

1)Delegable unless:  1)prohibited by K or 2)special skill/special reputation in original performer.

2)Obligee vs Delegator(surety). (Novation gets you off). Obligee vs Delagatee if consideration as 3^rdparty benficiary!

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