Contracts Barbri Outline-Video
Contracts Barbri Outline-Video
o >erson who made (romise must "e asking for something in return
o Willie my "oy)if "argaining for return (romise and (erson does not (erform then
no consideration
1. Is there some new "enefit or detriment?
o ?hing she was "argaining for, was it "enefit to (romisor and detriment to
(romisee?
o Geed "enefit to (romisor and detriment to (romisee
o * situations where issue of detriment needs to "e discussed in answering 0uestion
'ast consideration
cant "argain for anything already done
must have "argain for new "enefit and detriment
?here is no such thing as (ast consideration. >ast consideration is no
consideration at all. (;enerally) If you are grateful for someone
saving your life and you (romise to (ay them ,$.., this is not a legally
enforcea"le (romise. ?here is no consideration for the (romise. @ou
cannot "argain for something that you have already done. An
agreement is not the same thing as a contract. ?hings must ha((en
"efore an agreement
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+re2e/isting legal dut.
!oing something you are already legally o"ligated to do is not
consideration for (romise to (ay you more money to do it
?here is no legal detriment in doing something that you are already
o"ligated to do. ?here is no >CA!8 in the +%%.
E/am'le & When s(orts stars renegotiate their contracts, there is
usually a different term of years in the new contract. If there were
* years left in the original contract, the renegotiated contract would
"e for 1 years. Otherwise, the contract would "e su"Bect to the (reF
existing legal duty rule.
Amount of consideration is not discussed)(e((ercorns will suffice
+art 'a.ment on de(t
2uestion is usually o"tuse as to what the (ro"lem is
>romise in 0uestion will often "e the creditor (romising to release the
rest of the claim
>art (ayment of a de"t that is due and undis(uted, is not
consideration for a release
3ince you have legal o"ligation already for the whole amount, it is no
new detriment to me to (ay smaller amount
CO"S!DE*A!O" SUBS!UES45 of t%em
+romissor. Esto''el (R$)
5 ste( a((roach
$. what is the (romise in 0uestion
'. la"el (romisor and (romisee
*. what did (romisee do after (romise was made? what was reliance?
1. was this thing, action or inaction, that (romisee did, was it induced or caused "y, did it
ha((en "#c of (romise?
?ells you whether you are doing consideration or (romissory esto((el
Go one has asked (romisee to do what she is doing)she is doing "#c of the (romise
Cx. I hold the mortgage on your house. I (romise I will not foreclose your
mortgage for - years. ((romise in 0uestion)
a. I try to foreclose anyway. 6ut after you have (ainted house. ?here is no
consideration for my (romise, "ut under (romissory esto((el it may "e.
". Is it legally enforcea"le?
i. I wasnt asking for anything, sim(ly making (romise not to foreclose
c. In Willy, if uncle Bust (romised money for "eing a good (erson and Willy
chose to refrain from smoking)that wasnt asked for
After (romise, (romisee does something that was caused "y the (romise "ut not
asked for (like refraining from smoke
-. 3hould guy who made (romise antici(ated this action? was it reasona"ly foreseea"le?
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3hould mortgage holder have antici(ated that mortgagee would (aint house?
5. Would it "e unBust not to enforce this (romise?
>romissory esto((el
#; /our elements of >C
$. (romise
'. reasona"ly relied on to the actors detriment
*. only way to avoid inBustice
-O*AL OBL!<A!O" (R')
may make a (romise legally enforcea"le
situation in which worker inBures himself saving his em(loyers life and em(loyer
(romises to (ay em(loyee
no consideration for modifications
:odification of %ontract & does a modification of a contract have to "e in writing? @ou have to
look to the contract as modified. If after you made the contract, it still falls within the 3O/
the modification must "e in writing. If the contract no longer falls within the 3O/, the
modification does not have to "e in writing.
Cxam(le & Cnter into lease for ' years, it has to "e in writing. If the amount (aid in rent
changes, the modification must "e reflected in the writing. If you change the length of
the lease to Bust $ year, then the modification does not have to "e reflected in the lease.
Why would you not (ut it in writing, when you really trust the (erson?
+%% MPT)enforcea"le modification contracts made in good faith even if no consideration
Statute of )rauds (R*)
certain agreements have im(ortant su"Bect matter or susce(ti"le to fraudulent claims
Dwithin the statute of fraudsE
o need to use this (hrase
o a"ove (hrase only means statute of frauds a((lies
#7 Which contracts fall within the 3O/?
?he 3O/ is concerned with contracts that are so im(ortant or so susce(ti"le to fraud
that we need s(ecial (roof of their existence.
#; >ersonal services contracts not ca(a"le of "eing (erformed in $ year
a. %ontract to cut down all trees on your land. It is ca(a"le of "eing done in one year
regardless of siKe with enough men and saws.
". If I hire you to work for me for the rest of your life, this too could only last for
one year. @ou could die within the year.
c. If I hire you to work for me for ' years & 3O/ a((lies. ;ranted, you could still die
tomorrow, "ut then you would not have com(leted (erformance.
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d. If I hire you to (erform at my wedding on Iuly $, '..', the contract cannot "e
(erformed within one year and is su"Bect to 3O/.
$. full (erformance "y either (arty satisfies the 3O/, it (rovides needed (roof that
this was what the agreement was
'. (art (erformance does not satisfy 3O/, "ut you can "e 0uick to add 0uasiFcontract
claims
2; ?ransfers of interest in real estate &If the interest in real estate is for one year or
less, the contract does not fall within the 3O/. /or exam(le a $'Fmonth lease would
not fall under the 3O/, "ut a lease for $*Fmonths would.
8egardless of dollar amount
4ey is that it has to "e real estate interest that has a term of duration of more
than a year
6 orally agrees to "uy 6lackacre from 3. >art (erformance can satisfy the 3O/ in
real estate dealings if two or more of the following occur9
a. (artial (ayment "y the "uyer
". (ossession "y the "uyer
c. im(rovements made "y the "uyer
5; 3ale of goods of ,-.. or more (+%% M'F'.$)
Article ' a((lies regardless of if you are a merchant and dollar amount does not
a((ly
3(ecially manufactured goods & for goods that are custom made the start of
(erformance satisfies the 3O/
Ordinary goods & (artial (erformance of a contract for the sale of goods
satisfies the 3O/, "ut only to the extent of (artial (erformance. Cxam(le &
you contract to sell me $... widgets for ,$.... @ou deliver 1.. widgets. @ou
can recover for the 1.. widgets "ecause you (artially (erformed. 6ut the deal
was for $... widgets, what a"out the other 5..? I cannot recover those, "ut I
must (ay for the 1.. delivered. (what if there was reliance on the entire $...
"eing delivered? If you dont have them all its not worth having any, is there
anything that can "e done in that instance?)
27 =ow do you satisfy the 3O/?
/ull (erformance is a way of satisfying that there was an agreement and you followed
through with its terms
Aook at what 0uestion tells you a"out what writing says
Got enough that there is a writing)there are re0uirements for writing
In order for writing to satisfy statute of frauds, all material terms must "e in writing
(not for sale of goods "#c that is +%%)
o /rom the writing alone you can tell
Who the contracting (arties are
What did each agree to do
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If sale of goods, all the writing must say is 0uantity
!oesnt have to name (arties
o Aook at who signed the writing unless it is sale of goods 0uestion which would "e +%%
In order to satisfy statute of frauds it mustve "een signed "y Q)if common law
+%% s(ecial rule for sale of goods of ,-.. or more there is situation under 'F'.$ in
which all that is needed is signing "y O
?his would ha((en when "oth are merchants and Q received notice of the
contract and never answered the letter
If dont answer the letter, assumed that you are on "oard with deal
o 3ituations where (erformance can satisfy statute of frauds
Ignore for exam
=%at t.'e of writing does it need to (e&
What ty(e of writing de(ends on the ty(e of contract in consideration.
#7 Common Law
$. material terms
'. signed "y (erson against whom you are trying to enforce agreement
All material terms must "e included in the writing. D@our offer on Govem"er T, $TTT is
acce(tedE is not an ade0uate writing. ?here is no indication of who they are and what they are
intending to do. It is im(ortant to look at who signed the writing, "ecause only those who
signed their name to the document can "e held to what it says. Cxam(le & A contract for 4U3
and :arsha %lark for a *Fyear term at ,1..,... a year exists. ?his contract was signed "y
4U3, "ut not "y :arsha %lark. :arsha can sue 4U3 (who did sign the contract) on the contract
even though she did not sign her name to it. 4U3, on the other hand, cannot sue :arsha on the
contract "ecause she did not sign her name to the terms. 3he may have agreed to the terms,
"ut its not "inding and she has an 3O/ claim.
27 UCC
$. 2uantity term
'. 3igned
+nlike the common law re0uirement for all material terms, under the +%% a valid writing
only needs 0uantity term to com(lete, the +%% will fill in the rest.
?here is a s(ecial rule that a((lies if "oth (arties are merchants. If one of the (arties
sends a letter to the other claiming that the other has entered into a contract, the notified
(arty has $. days to res(ond or else the contract "ecomes legally "inding.
+A*OL E>!DE"CE *ULE
Im(act of a written agreement)su(eriority of written agreement
Im(act a writing has on earlier agreements
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o Cven if earlier agreements are in writing
>arol evidence9 evidence of some agreement made (rior to this writing
o !oes not have to "e oral
Integrated agreement9 it is written, intended "y (arties to "e their last word
o Written and final word
%om(lete integration9 it is a writing that is final and com(lete
>artial integration9 it is written, final as to what it covers "ut it may not "e the whole
deal
:erger clause9 shorthand way of descri"ing a contract (rovision that says this is the
com(lete deal
o ?o determine if com(lete or (artial
+arol E,idence *ule
?here is a contract, "ut what are the terms? 8ule of contract law a"out what the terms of the
contract are. /our issues to know9 what the rule is, what facts trigger the rule, (ossi"le issues,
how the rules are different from statute of frauds. Often the two are confused and tested
together.
$. >arol evidence rule & when there is a W8I??CG contract that is intended "y the (arties to
"e their final agreement, then you %AGGO? use earlier agreements to change the terms of
that written contract.
'. What triggers the rule?
a. ?here :+3? "e a W8I??CG %OG?8A%? (if there is nothing in writing you never get to
the (arol evidence rule). Cffect the written contract has, the im(ortance of the terms
included.
". It :+3? "e the contract that the (arties intended to "e the final agreement.
(Integrated agreement & writing intended to "e the final agreement)
c. ?here :+3? have "een some earlier agreement, oral or written. Cffect of agreement
has on earlier agreements, the effect is that you cannot use the (revious agreements to
change the terms.
*. >ossi"le issues
a. !oes the (arol evidence rule a((ly (Was it an integrated agreement? ?his is a 0uestion
of law for the Budge.)
". Was there a merger clause? & a contract (rovision stating that this is our final
agreement.
c. Is there an a((lica"le exce(tion to the (arol evidence rule?
$) @ou can always introduce evidence to esta"lish a defense to the existence of the
contract. (i.e. argue fraud, duress)
') @ou can introduce the earlier agreement to show a mistake in reducing the agreement
to this final writing. (i.e. evidence through (artial writings, oral conversations)
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*) ?he earlier agreement doesnt change the terms of the written agreement, "ut it adds
terms to the written agreement. Was the writing intended "y the (arties to "e their
com(lete and final agreement? (was it (artial integration?) A8C GO? ?8@IG; ?O
%=AG;C ?=C W8I?IG;. It is at the Budges discretion as to whether the contract
is integrated or (artially integrated. !id the (arties mean for the writing to "e their
final and com(lete agreement?
1. =ow different from the 3tatute of /raud?
?he 3O/ is "rought u( when you are deciding whether you have a legally enforcea"le agreement.
?riggered "y the (hrase there was an O8AA agreement. /or >arol Cvidence, you are (ast that
stage and you are considering the terms of the contract. ?here must "e a W8I??CG contract.
* "asic (oints
$) where you have an integrated agreement, (arol evidence can never contradict it
2; What if (arol evidence doesnt contradict the integrated agreement "ut sim(ly adds terms
to it?
o When will the court consider (arol evidence here?
o 2ues. for courtFFGeed to find out if this is a com(lete integration?
5; even if it is a com(lete integration, (arol evidence can "e used to ex(lain am"iguous terms
(arol evidence rule9 cant contradict, can su((lement and can ex(lain
CO"*AC !"E*+*EA!O"
what does the deal mean?
course of 'erformance
all a"out what these (eo(le have (reviously done under this very duty
(ersuasive form of extrinsic evidence as to what the deal means
same (eo(le, same deal
course of dealings
not as (ersuasive
what these very (eo(le have done under earlier similar deals
same (eo(le, similar deal
custom and usage
what different (eo(le have done under different "ut similar deals
relevant and some evidence "ut not as (ersuasive as first two
<A+ )!LLE*S
what if deal is more than what (arty has said?
/act (attern governed "y common law
Im(lied duty of good faith
Wood v. Aucy Aady !uff ;ordon
+%% it is sale of goods 0uestion you are encountering
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+%% is great to fill ga(
o !m'lied o(ligation of good fait%)good faith is made (art of (erformance of any
sale of goods contract
3ale of goods)always do article '
/irm offer rule
o !m'lied warrant. of merc%anta(ilit.
3ituation in which a (erson who regularly sells goods of that kind, sells
something and it turns out to "e defective
Cx. anytime Bewelry store sells Bewelry, even though no discussion of 0uality,
you have to assume it is ok
3eller must "e in "usiness of selling goods of that kind, then law im(oses
o"ligation on that seller
Adds a term to the contract)the goods must "e okay)must "e fit for
ordinary (ur(oses
QUES!O" ?4D!D SO-EO"E "O DO =0A 0E A<*EED O DO&
@es o"viously
QUES!O" @4DOES 0E +A*A 0A>E A" EBCUSE )O* "O DO!"< =0A 0EA
A<*EED O DO&
E/cuses for not doing w%at .ou agreed to do
$) situation in which there is an unmet condition of (erformance
>erformance was conditional and one condition was unmet
Cx. 6 contracts to "uild "uilding for O)there are (rogress (ayments
o >ayment of (rogress (ayments is conditioned on an architects certificate
o If an architect doesnt a((rove a month of work, dont have to make the (ayment
"#c you are excused
o Ok not to (erform "#c condition not met
Cx. will "uy house if a((raised at $..,... "ut it was only a((raised at T.,...)no need to
"uy
:ust look for ex(ress condition in fact (atterns
o Aook for words DifE D(rovided thatE Dso long asE
o Anything short of the (hrase Don condition thatE you are going to add statement to
answer, Dif there is any dou"t a"out whether the contract language creates an
ex(ress condition, that the (referred inter(retation is no conditionE
If you determine that there is language of condition, the general test for conditions is
conditions must "e strictly com(lied with
o If the house is a((raised at only ,T.,...
o Iaco"s U @oung v. 4ent
Owner wanted 8eading (i(e "ut "uilder used a different kind of (i(e
%ourt said this was not language of ex(ress condition
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=omeowner did not say I will only (ay you if you use reading (i(e
!ifferent result if language was an ex(ress condition
o %ourts try to conclude that there isnt a condition
If there is any way to conclude that there is not an ex(ress condition, that is way court
will go
') 6reach "y the other (arty as an excuse for non (erformance
I dont have to (erform "#c other guy didnt do what he was su((osed to do
8emem"er to look to see what law to a((ly
Article ' differs most from common law here
o Article ' has (erfect tender standard
Anytime the seller of goods is less than (erfect, not exactly what "uyer
wants, "uyer is excused from (erforming "#c seller did not do (erfect
tender
;eneral standard for sale of goods is (erfect tender
?hat standard is su"Bect to ' "ig exce(tions
o $. cure9 in certain limited situations, "#c (erfect tender standard is so high and
demanding, give seller second chance
watch for situation in which the seller sends the wrong stuff earlySS
:ust give delivery deadline in this fact situation
If seller can still get right stuff there "y deadline, then no (ro"lem
o 27 installment sale contract9 where (arties in their agreement have agreed that
there will "e deliveries in several se(arate installments
if agreement (rovides for these installments, a (ro"lem with one installment,
so long as not su"stantial (ro"lem, will not excuse (ayment
it can "e adBusted in future installments
if common law contract, not a sale of goods and one guy is arguing that one guy "reached so
dont have to (erform, must do a material (reac% rule Cmajor screw u' rule;
when will one (arties non (erformance excuse the other?
o Cx. = hires > to (aint his house)deal is that house must "e (ainted in two coats
with 3herwin Williams (aint
?his is common law contract
?urns out that (ainter you hire is "ig fan of >rice
3o he (aints your house (ur(le
!ont have to (ay "#c material "reach
What if (ainter "uys different "rand of (aint instead "y accident?
It is a "reach "ut still have to (ay "#c not a maBor screw u( or
material "reach
' exce(tions to material "reach rule
o language of condition exce(tion)if contract said I will (ay you $... for (ainting
my house white on the condition that you use 3herwin Williams (aint
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this re0uires strict com(liance "#c condition
o divisi"le contract exce(tion)
ex. = has huge house '. rooms)= hires > (ainter to (aint whole house for
1...)> only (aints * of the '. rooms
is this material "reach? @C3
is = excused from (aying? @C3
if unfair, go to 0uasi 4 (e0uity)
ex. = hires > to (aint '. different a(artments for '.. each
this is divisi"le
if (ainter (aints * of the a(artments, law would say this is divisi"le so
you did (erform with res(ect to the * a(artments
5;antici'ator. re'udiation
o I tell you "efore you finish that Im not going to (ay you
o Cxcuse for sto((ing work
o Cxcuse of non (erformance)gives right to sto( (erformance and sue immediately if
told youre not going to "e (aid
1) later agreement)' forms
no,ation9
o "oth of the guys who made first deal agree that another (erson can (erform
o other (erson is a no show
o initial guys (erformance is excused "y later agreement of ally mc"eal doing
it
accord and satisfaction9
o change in what is going to get done
o agreement to clean house instead of (aying money (that is the accord)
agreement to do something different than first agreed to do)
o "y actually cleaning house, that is satisfaction
o DandE in order to have this excuse, must have "oth accord AG! satisfaction
so that if I dont actually clean house, can still sue me on original (romise to
(ay money
!-+OSS!B!L!AD )*US*A!O" O) +U*+OSED !-+*AC!CAB!L!A
Another excuse for non (erformance
easy facts to watch for are time se0uence
deal was made and later, after the deal something ha((ened
what ha((ened was unex(ected (unless it is totally unex(ected there is no excuse)
harder facts to watch for
whether either (arty had assumed the risk in some way
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did it make the (erformance im(ossi"le?
o Casy case9 ?aylor v. %aldwell9 concert hall "urning down
o ?his is (ost contract occurrence, unforeseea"le, and so it was im(ossi"le
o ?his is destruction of su"Bect matter of the contract
o Jariations are often on exams
=omeowner contracts to "uild house)when house is T.V com(lete it "urns
down
Geither (arty assumed risk
8elationshi( "etween unforeseen occurrence and (erformance
Got im(ossi"le to re"uild house
Is guy excused from (erforming? GO
:ay "e excused from "eing late "ut still must "uild house
Got im(ossi"le nor im(ractical
8ule of thum")if all that ha((ens is that there is a later unforeseen occurrence, that makes
(erformance more ex(ensive, the tough luck rule, it is not im(ossi"ility or im(ractica"ility
3ome situations in which even if it is not im(ossi"le that the "urden may "e so great that it will
"e excused)usually Budgment call
Im(ractica"ility
)rustration of 'ur'ose is similar and different from im(ossi"ility
4rell v. =enry9 guy who rented a flat to watch the coronation (arade
o >arade gets canceled and he wants out of the deal "#c his whole reason for renting
the flat was to see the (arade so his (ur(ose has "een frustrated
o =e can still use flat though
o Where "oth guys know of the (ur(ose of the deal at the time the deal is made and
there is something that ha((ens after the deal, it doesnt affect a"ility to
(erform, it affects reason of (erformance
o Gon (erformance will "e excused
Im(ossi"ility is in +%%
Go +%% (rovision for frustration of (ur(ose
o :ay a((ly to sale of goods
Sometimes 'eo'le w%o were not 'arties to contract %a,e rig%ts under t%e
contract
5
rd
'art. (eneficiaries
24
%ontract "etween two (eo(le and "oth intend for a third (arty to "enefit from the
contract
Aife Insurance contract)insured "ought the contract, insuror is com(any and someone
else will "enefit
Where contract was made with intent to "enefit you, you can sue to enforce it
Got (urely insurance law
Intended third (arty "eneficiary
*
rd
(arty "eneficiary9 didnt make contract "ut intended to "e "enefited
(romisor9 guy whose (romise goes to *
rd
(arty "eneficiary
;uy whos (romise goes to the *
rd
(arty "ene
Insurance com(any
(romisee9 guy who takes out insurance (olicy
creditor "eneficiary or donee "eneficiary
rule of thum")if in dou"t, call it donee
only time creditor "eneficiary is when third (arty was (revious a creditor of (romisee
o ex. I owe =eidi $...)I say Ill name her in life insurance (olicy instead)she is
creditor "eneficiary
o donee "eneficiary is if I felt sorry for =eidi and said I would name her in (olicy
*
rd
(arty "ene can always sue the (romisorSS
8ights of third (arty do not de(end on (rovision of consideration or not)they are sim(ly the
intended "eneficiary
>romisor lia"le to *
rd
(arty "eneficiary
If *
rd
(arty "ene was a creditor "ene, he can also sue (romisee on original de"t
DELE<A!O"
@ou start with contract "etween ' (eo(le)later one of them gets someone else to do the work
what are conse0uences of a delegation?
o what if third (erson doesnt do work, can still sue (erson who initially shouldve
done the work "#c not mutually agreed u(on su"stitution)only delegation
o delegations do not excuse)delegating (arty remains lia"le
limitations on delegation)some duties are not delga"le
if contract says you cant delegate
or, su"Bect matter of contract)some duties re0uire s(ecial skills
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o cant delegate s(ecial skills)3alvador !ali cannot delegate to me to (aint (icture
he was su((osed to
most duties are delega"le
ex. = hires > to (aint his house
contract says nothing a"out delgation
> gets H to do work instead
If H doesnt do work, = can still sue >
H does the work)what result?
Issue of the 0uestion is is the duty delega"le? @C3
ASS!<"-E"S
Cx. 6atman makes contract with ;otham to (rovide security services
o Aater, 6atman comes to 8o"in, and tells 8o"in he can collect the money from the
contract
?o make that a third (arty "eneficiary
=ow do you tell when he wants you to talk a"out ?> "ene or assignment
*
rd
(arty, all * (eo(le are involved in contract from "eginning)intent to "enefit from the
"eginning
if 8o"in was "rought in from the "eginning and told ;otham to (ay 8o"in, then *
rd
(arty
"ene
assignor would "e 6atman)makes contract and later assigns his rights to someone else
assignee is 8o"in)didnt make contract "ut can enforce it
o"ligor);otham
effect of assignment)assignee can sue o"ligor)if 6atman does work, 8o"in can come in and sue
;otham for (ayment
common law limitation on making of assignments
cannot make an assignment that su"stantially changes the duties of the o"ligor
ex. assume 6atman makes contract with ;otham to (rovide security services and assigns
right of (ayment to 8o"in
o no (ro" "#c havent changed duties of ;otham (the o"ligor)
o Bust as easy to (ay 8o"in
o assignment of a right to (ayment is never a (ro"lem)never su"stantially changes
duties
ex. 6atman makes contract with ;otham to (rovide security services, :etro(olis wants
6atman to defend their city so ;otham gives 6atman to them
o 6atman<o"ligor
26
o ;otham<assignor
o :etro(olis<assignee
=ere we have changed 6atmans duties)he was su((osed to (rotect ;otham, not
:etro(olis
Assignments get com"ined with delegation on exams. In real life, assignments and
delegations get com"ined, es(ecially in the sale of a "usiness. Often referred to in total
as assignment.
+*!O* OUL!"E "OES
Sale of <oods & can effect the terms of the contract
1'F'.7 &6attle of the forms. :ismatching offer and acce(tance. Cach "usiness has its own
form and they arent all identical. Which sheet of (a(er controls?
$. !oesnt have to "e the mirror image, it can "e a seasona"le ex(ression of acce(tance
'. Cverything in the offer is in the contract
*. In the acce(tance form different forms that contradict the original terms are kicked out.
?hey are o"Bected to.
1. In the acce(tance form (only if "oth (arties are merchants), the new terms are acce(ted
+GAC33 they are o"Bected to or if it is a material change. ?he additional terms do make it
into the contract.
-. In an acce(tance form and "oth (arties A8C GO? "oth merchants, the new terms are
(ro(osals, it is added only if it is se(arately agreed to "y the other (arty. If the new terms
are insisted u(on, its a conditional acce(tance and there is no acce(tance.
5. Article ' is a source of terms.
=arranties 122
$. Cx(ress warranty & words of the (arty that descri"e the goods, state facts, or make
(romises with res(ect to the goods "eing sold. (distinguish from D(uffingE (sales call)
general, o(inion i.e. un"elieva"le (rice, high 0uality structure, as o((osed to a re(resentation
of fact F warranty s(ecific, all steel structure)
'. Im(lied warranty of merchanta"ility
a. when you "uy something from someone in the "usiness world, (art of the deal is that it is
merchanta"le for ordinary (ur(oses. ;o to Bewelry store for gold chain, (ut it on and
head falls off, you can sue for "reach. Add a term to the contract, nothing "ad will
ha((en to you "ecause you wear it.
". If you "uy something from someone that is in the "usiness and nothing is said a"out the
0uality, you can sue for "reach of contract if it is defective.
*. Im(lied warranty for fitness for a (articular (ur(ose
27
a. A "uyer that has a (articular (ur(ose and is relying on the seller to (rovide that good and
the seller knows of the "uyers need and reliance on the sellers ex(ertise. ?est will have
to tell you why the "uyer is "uying the good and that the seller is AWA8C. ;o to the
shoe store "ecause you need mountain clim"ing "oots, "ut shoe sales man sells you
%onverse tennis shoes. Adds term, DI know what you want, I know what you need, here it
is.E
!7 +erformance O(ligation
A. :akes certain that the terms have "een com(lied with. It turns on the terms of the
contract.
6. %onditions
$. :odifies the o"ligation to (erform (i.e. I will "uy your house if it a((raised at
,$..,...). ?hat is "eyond the (arties control
'. An ex(ress condition must "e strictly com(lied with. (i.e. if ,T-,... you are not
legally o"ligated to "uy)
*. DI will (ay if I am satisfiedE (re0uires the a((roval of one of the contracting
(arties
a. It is not illusory, it is legally enforcea"le
". If the su"Bect matter of the contract is such that it involves (ersonal taste
and individual Budgment, then it is read literally. (if the (erson is not satisfied,
they dont have to (ay). /or exam(le, if I contract a (erson to (aint my
(ortrait, satisfaction is "ased on my su"Bective satisfaction.
c. If it a more ordinary contract (i.e. (aint house), then even though the contract
language says DIE it is read as if a reasona"le (erson would "e satisfied.
O"Bective standard.
%. 3eller of ;oods >erformance O"ligations F +%%
$. ?here must "e a (erfect tender. ?he seller is o"ligated to deliver exactly what
the terms call for. (%ontract for $.. widgets, TT is a "reach. ?his only a((lies in
article ')
'. 8eBection of the goods & if the seller does not make a (erfect tender, the "uyer
has the o(tion to reBect the goods.
a. there is a difference "etween a reBection of an offer (no contract & cant sue)
and a reBection of the goods (still contract & can sue)
*. 8evocation of acce(tance of the goods & tested with reBection
a. ?he "uyer is acting immediately and the "uyer can reBect the goods if they are
anything less than (erfect.
". If there was a su"stantial (ro"lem with the goods that was difficult to discover
early on, they can still revoke the contract
28
!!7 E/cuse of "on'erformance
A. Gon(erformance is sometimes excused, - grounds for excuse
6. If there was a conditional o"ligation and the condition wasnt met (6uy house if
a((raised at ,$'.4, "ut turns out ,$$P & excused)
%. ?he other (arties "reach (+%% (erfect tender & the items are not (erfect). A
material "reach excuses the other (arty from (erforming. >ainting house for ,$4,
get (aint on the windows, can get away without (aying ,$4? >ro"a"ly, "ut will have to
(ay something. If I (aint if (ur(le rather than white, then (ayment would "e excused
"ecause that is a material "reach.
!. Antici(atory re(udiation & early revocation. ?he other (arty is excused.
C. Aater agreement that excuses non(erformance
$. Govation & two (eo(le make a contract and later "oth agree that a new (arty can
(erform the contract. If that third (arty "reaches, you cant sue "ecause it
excuses the other (arty (%ant sue the originally contracted (arty? & yes, the
original (arty is excused, agreement to su"stitution is critical)
'. Accord and 3atisfaction & the excuse re0uires "oth the accord and the
satisfaction. It changes the deal with the same two (arties. (i.e. Owe ,$.... >aint
house instead)
a. Accord < new agreement, does not affect the original agreement. 6reach
results in suing on either condition & money or (aint house.
". 3atisfaction < actual act
c. !oes agreement as modified fall within the 3O/?
d. When do we need consideration for changes in contract? Got +%% "ecause
there is no >CA!8, "ut it is re0uired in common law cases.
/. Aater unforeseen occurrence
$. Im(ossi"ility F Where there is a later unforeseen occurrence that is no ones fault,
the nonF(erformance is excused. ?aylor v. %aldwell & concert hall lease, after
agreement made the hall "urned down. ?aylor sued for "reach of contract, cant
use concert hall.
'. /rustration of >ur(ose & (erformance isnt im(ossi"le, "ut it takes away the
(ur(ose of the contract. ?he agreement is unenforcea"le. 4rell v. =enry & guy
wants to see the coronation (arade. /lu e(idemic and (arade called off. Its not
im(ossi"le, "ut the (ur(ose for agreement is frustrated "y later occurence.
!!!7 Breac% *emedies
A. Ai0uidated damages & the (arties have agreed what the damages are to "e. ?hey are
valid if
$. ?he contract is uncertain as to what the (ossi"le damages might "e
'. ?hey are a reasona"le measure of what these uncertain damages might "e.
29
?hese are tested as to the time that the agreement is made, when no one knows
what the damages are. If you are told what damages actually made it is irrelevant,
that info was not availa"le at the time of the agreement. Was this a reasona"le
way to deal with it?
6. ?here are GO >+GI?IJC !A:A;C3 IG %OG?8A%? AAW or +%%. %ontract law is
not interested in (unishing "reaching (arties. ?orts allow (unitive.
%. %onse0uential damages & recovera"le only if reasona"ly foreseea"le "y "oth of the
(arties at the time of the contract. =adley v. 6acksendale(?) Cnglish mill in small
village. Go one knew how to fix the %rank 3haft. Inexcusa"le delay. 6ecause you
"reached, something else "ad ha((ened to me. ?hese are indirect damages and only
recovera"le if reasona"ly foreseea"le "y "oth of the (arties at the time of the
contract. (Aose money "ecause delay in (ainting caused owner to miss the season to
sell the house, costing ,-.... /or recovery, this must have "een foreseea"le "y "oth
(arties.)
!. 8eformation & need to conform the written contract to what it is that the (arty
actually agreed to. We agree its the $T south acres, "ut the written agreement
comes out $T southeast acres. %onform to meet the (arties agreement.
C. 3(ecific (erformance & court order directing the (arties to do what they contracted
to do. C0uita"le remedy that is only used when the legal remedies are not sufficient.
All e0uita"le remedies are only availa"le when money damages are not enough.
$. land sales & land is uni0ue, transfer of ownershi(
'. sales of uni0ue goods (anti0ues, works of art, made to order)
*. (ersonal services contracts & GO 3>C%I/I% >C8/O8:AG%C
1. Gegative s(ecific (erformance or inBunctive relief & sto(s you from doing
something. >at 8iley under contract to coach the 4nicks, "ut he doesnt want to.
?hey cant sue him to force him to coach, "ut they can get an inBunction disallowing
him from coaching another team.
/. :oney damages
$. ?he goal is to (ut the nonF"reaching (arty in the same (osition that she would have
"een in had the contract "een (erformed. Cx(ectation damages.
a. Identify the nonF"reaching (arty
". What would the (erson receive if the contract had "een (ro(erly (erformed
c. What would it take to award damages that would have "een due?
'. Cxam(les
a. "reach contract for ,$... for (ainting house. Gew (ainter charges ,$-... If
"reaching (arty (ays ,-.., thats where the (erson would "e had the contract
"een (erformed
". Ive "ought the (aint in (re(aration and you "reach. =ow measure the
damages? ;ive costs and (rova"le lost (rofits. What a"out unilateral contract
acce(tance "y (erformance?
30
c. 3ale of goods & sell %addy thats in mint condition, "ut its not in mint condition.
@ou want to kee( the car, "ut you want some of the money "ack "ecause its not
in mint condition. !elivered in ,$-.. condition, had it "een in mint condition it
would "e worth ,-.... ?rying to (ut the innocent in the same condition as if
the contract had "een (erformed & would have had car worth ,-..., "ut you
have car worth ,$-... %onse0uential damages recovera"le only if reasona"ly
foreseea"le "y "oth (arties
!>7 %ird +art. +ro(lems
A. ?hird (arty "eneficiaries & two (eo(le contract with each other with the intent of
"enefiting a third (arty. ?he third (arty has legal rights and can enforce it (i.e. "uy
life insurance (olicy, you agree to (ay (ayments, they agree to (ay son at your death.
3on can enforce the contract.)
$. ?hird (erson "ene & (erson not a (arty to the contract "ut can still enforce it
"ecause the other (arties made the contract with the intent of "enefiting them.
a. creditor "ene
". donee "ene & most *
rd
(arty "enes. It is a donee "ene +GAC33 the *
rd
(arty
was already a creditor of the (romisee
c. canceling or modifying
i. contract language controls
ii. the contract cant "e canceled or modified until the *
rd
(arty knows and
assents
d. the *
rd
(arty can sue the (romisor and the (romisee can sue the (romisor
e. the *
rd
(arty can sue the (romisee if the *
rd
(arty is a creditor "ene.
f. >romisor < the (erson who is (romising to do something for the *
rd
(arty
(insurance com(any)
g. >romisee < other (arty to the contract
'. Assignments & an agreement "etween two (eo(le and one of the (arties to the
original contract transfers away (assigns) his rights to a *
rd
(arty
a. ?he assignee can sue the o"ligor. ?he assignee ste(s in the shoes of the
assignor.
". =a((ens in ste(s & two (arties make a contract, ?=CG one of the (arties
assigns his rights to a third (arty
c. 3im(ly su"stitutes one (arty for another (arty
*. !elegations & two (eo(le make an agreement and then later one of them gets
some"ody else to do the work
a. When (ossi"le
$) contract (rovisions always control
') if no (rovisions, you can generally delegate duties unless you are talking
a"out a situation that involves s(ecial skills or a (erson involving a s(ecial
re(utation
31
". %onse0uences
$) the delegating (arty remains lia"le
') delegatee & he is only legally o"ligated if he received consideration
c. %om(are delegation and novation
$) When you delegate, if you ask the other (arty and they agree, it "ecomes a
novation
') +nder delegation, you remain lia"le.
*) +nder novation, you can sue the delegatee.
d. %onnection "etween *
rd
(arty "ene and delegation
$) if the delegatee receives consideration from the delegating (arty, it is a
delegation for consideration AG! a third (arty "ene.
What ha((ens if the 3O/ is not satisfied?
?he 3O/ is a defense to contract formation. When you have a situation that falls within
the 3O/, and the 3O/ is not com(lied with its a defense that needs to "e (resented and (roved
to (revent enforcement. If you cant sue on the contract, always look for a 0uasiFcontract
remedy.
Equal Dignit. *ule & this concerns when it is necessary to have written authority for a third
(arty to act on "ehalf of someone else in a contract. AuthoriKation must have the same degree
as the contract the (erson is entering the other into. An agent needs written authority to
enter into a contract for another when the contract is re0uired "y the 3O/ to "e in writing.
?his issue turns on whether the 3O/ re0uires the contract to "e in writing and usually occurs in
real estate dealings. In order to enter into a lease for another (erson, do I need written
authority to do so? If the contract is over $ year I do need written authority.
!llegalit.
If there is a 0uestion of illegality, the issue turns on knowing the difference "etween a
contract with illegal su"Bect matter and an illegal (ur(ose.
$. If H contracts with @ to kill W for ,-..., neither H nor @ can enforce the agreement. ?he
contract deals with illegal su"Bect matter and is therefore void.
'. If @ contracts with a ca" driver to take him to the s(ot to kill W, the ca" driver can recover
from @ "ecause their contract dealt with illegal (ur(ose, and the ca" driver is more than
likely unaware of @s (ur(ose in going to the s(ot.
8eBection F %ounter offer, conditional acce(tance, adds terms under common law
erms of Contract
32
?he terms of a contract are found in what is written and what is said. @ou can also find
them in the terms of (revious dealings, if there has "een a course of dealings "etween the two
(arties. ?he custom of the industry is relevant and can dictate the terms and what they mean.
>rior dealings & how these (eo(le did their deals together, (erson s(ecific
%ustom and usage & info a"out how deals with other (eo(le in the industry were done
33