OUTLINE FOR KIEFF S CONTRACTS CLASS - Auction Public contracting: Sealed bidding must be utilized if (1) time permits. (2) the award will be made on

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1 OUTLINE FOR KIEFF S CONTRACTS CLASS - Auctin Public cntracting: Sealed bidding must be utilized if (1) time permits. (2) the award will be made n the basis f price and ther price-related factrs, (3) it is necessary t cnduct discussin with the respnding surces abut their bids, (4) there is a reasnable expectatin f receiving mre than ne bid. - Auctin Unflding: (1) prepare an invitatin t bid (IFB), (2) IFB is distributed r publicized widely enugh, (3) bidders prepare and submit their bids, (4) bids are pen and evaluated by the gvernment, (5) award is made. - Interpretatin: The standard criterin fr determining the existence f requisite assent in a cntract is bjective. One is bund by the reasnable impressin created in the mind f the ther party. While the avwed purpse f interpretatin is the ascertainment f the cntracting parties intentin, it is nt actual subjective intentin which is sught, but expressed r apparent intent. Primarily, this invlves cnsideratin f the language used, be it ral r written, taken in the cntext in which it was fund. - In an adhesin cntract, ambiguus terms must be treated in a way that a reasnable cnsumer wuld s expect. - An express cnditin is an express statement in the cntract prviding either (1) that a party t the cntract des nt cme under a duty t perfrm unless sme state f events ccurs r fails t ccur; r (2) that if sme state f events ccurs r fails t ccur, the bligatin f a party t perfrm ne r mre f his duties under the cntract is suspended r terminated. An express cnditin is a prvisin whse fulfillment creates r extinguishes a duty t perfrm n the part f the prmisr under a cntract. Cnditins precedent must be satisfied befre a cntractual duty f this type cmes int existence; the effect f the ccurrence f a cnditin subsequent is t extinguish r discharge a duty. - Excuse f Cnditins - The law f cnditins fsters a plicy favring freedm frm cntract. If an express cnditin precedent has failed, the prmisr has a defense and may be discharged frm the cntract withut any bligatin t cmpensate the prmise fr part-perfrmance. - The cnditin turns ut t be immaterial t the prmisr and the prmise has relied r cnferred a benefit n the prmisr, discharging the prmisr may prvide a severe test fr the freedm frm cntract plicy. - A way t temper frfeiture is t excuse the cnditin n sme grund: (1) An agreement by bth parties mdifying the cntract t discharge the cnditin; (2) Cnduct by the party fr whse benefit the cnditin was made that waives the cnditin; (3) Changed circumstances that make cmpliance by the prmise with the cnditin impracticable; and (4) Discharge by the curt. - Excuse f Express Cnditins: Nrmally, there is n bligatin t perfrm a cntractual duty unless all applicable express cnditins have been fulfilled. In sme

2 cases, hwever, a cnditin may be excused, s that a duty must be perfrmed despite the fact that the cnditin has nt been fulfilled. - Waiver: A party by wrds r cnduct may waive his right t insist n the fulfillment f a cnditin upn which his duty f perfrmance depends. - A cntract term that prhibits a nn-written mdificatin can be waived withut writing at cmmn law. - Effect f an anti-waiver clause: anti-waiver clause is relevant but nt dispsitive. - Impssibility: Impssibility r impracticability excuses the fulfillment f a cnditin if fulfillment f the cnditin is nt a material part f the agreed exchange and frfeiture wuld therwise result. - Think abut wh is the better risk bearer and least cst avider. Types f damages: Expectatin net gains prevented by the breach Reliance ut f pcket expenditures assciated with the perfrmance. Restitutin Fur types f enfrceable prmises r cntracts Prmise plus cnsideratin Prmise plus antecedent benefit Prmise plus un-bargained-fr reliance Prmise plus frm. Types f enfrceable prmises r cntracts (4-5) Party based theries: Will Theries cmmitments are enfrceable because the prmisr has willed r chsen t be bund by his cmmitment. Reliance Theries Cntracts are an effrt t prtect a prmisee s reliance n the prmises f thers. Basis bligatin f detrimental reliance Standards-based theries: Efficiency Theries legal rules and practices are assessed t see whether they will expand r cntract the size f the pie. 3 cnclusins frm negtiating csts are pssible: (1) we dn t knw whether exchange is wrthwhile, (2) Gvernment may be respnsible fr preventing exchange and apprpriate respnse is t eliminate the inefficiency, (3) Alternatives: (a) frm a new cmpany by merging, (b) cmbine prducts int a single package.

3 Substantive Fairness Theries assumes value can be fund by which the substance f any agreement can be bjectively evaluated. Prcess-based theries: Bargain thery f cnsideratin Where cnsideratin is present, an agreement rdinarily will be enfrced. Where there is n cnsideratin, enfrcement is suppsed t be unavailable. Restatement 2d 71: (1) t cnstitute a cnsideratin, a perfrmance r a return prmise must be bargained fr. (2) A perfrmance r return prmise is bargained fr if it is sught by the prmisr in exchange fr his prmise and is given by the prmise in exchange fr that prmise. Estppel Elements fr equitable estppel: (1) a representatin r cncealment f material facts, (2) representatin must be made with knwledge f the facts, (3) party t whm it was made must have been ignrant f the matter, (4) must have been made with the intentin that the ther party shuld act upn it, (5) the ther party must have been induced t act upn it t his detriment. Can nly be used as a shield r defense. Prmissry Estppel: (Restatement 90) A prmise which the prmisr shuld reasnably expect t induce actin r frbearance n the part f the prmise r a third persn and which des induce such actin r frbearance is binding if injustice can be avided nly by enfrcement f the prmise. Yu have t shw why there was reliance and why the reliance was reasnable. Used as a swrd in a cause f actin fr damages. Factrs that are relevant: plicies implicit in the transactin type, the reasn fr the nn-perfrmance, the degree f disprprtin assciated with enfrcement f the prmise, and any histrical patterns f enfrcement assciated with the transactin type. Damages = amunt f reliance A cntract has been perfrmed if there is: Offer Acceptance Perfrmance/willingness t perfrm

4 Whether there is a BARGAIN If perfrmance r a return prmise has been bargained fr? If perfrmance r a return prmise is cincidental? If perfrmance r return prmise is bargained fr it is sught by the prmisr in exchange fr his prmise (and v.v.) If prmise must be either an act ther than a prmise, r frbearance, r creatin mdificatin, r destructin f a legal relatin If perfrmance r return prmise may be given t prmisr r t sme ther persn (3 rd party). Whether there is CONSIDERATION A valuable cnsideratin may cnsist f sme right, interest, prfit r benefit accruing t ne party, r sme frbearance, detriment, lss r respnsibility given, suffered r undertaken by the ther. A prmise withut cnsideratin is just a prmise (except in sme places, where charitable subscriptins are binding). If cnsideratin made in gd faith? If cnsideratin cnscinable? If it has value? (i.e. is it nt a peppercrn?) Nte, there are sme nn-peppercrn jurisdictins If there a pre-existing duty? If there is reliance n a prmise t the prmisee s detriment? Whether an agreement is BINDING If there cnsideratin? If there isn t cnsideratin, wuld nn-enfrcement lead t an injustice upn the prmise? If the prmise is disprprtinate t the benefit? If the prmise cnferred as a gift? If the reasning fr enfrcement merely mral, rather than legal? If a material benefit been gained? If there manifestatin f mutual assent (bjective test)? A cntract is uncnscinable when: Yu usually need bth frms f uncnscinability t win in curt: Prcedural Uncnscinability deceptin r verreaching in prcess f bargaining.

5 Substantive Uncnscinability bjectinable r ppressive clause in cntract It is the general rule that inadequacy f cnsideratin, exrbitance f price r imprvidence in a cntract will nt, in the absence f fraud, cnstitute a defense. Inadequacy is rarely an avwed reasn fr relief frm a bargain, but it may be grunds fr denying specific perfrmance. Kieff desn t like this (neither des the curt, very much) Burden f prf ges n persn wh claims uncnscinability. She must give evidence fr a prima facie case by shwing a substantial disparity between the value f the bargain as measured by the price agreed fr and the value f the bargain when the seller invkes a particular cntract term against the cnsumer. Once P has fulfilled the burden, burden shifts t the ther party t persuade the curt that the cntract r clause was cnscinable at the time f cntracting. there is a disclaimer in car warranty against persnal injury. Whether a MODIFICATION is valid If the parties already agreed t whatever is prpsed t be mdified? If mdificatins made under duress? If there is gd faith? Did D say this is a cntract t mdify and it is supprted by cnsideratin? Is there a fundamental change in sme basic assumptin? (Angel) Whether there is a CONTRACT IMPLIED IN FACT If: (1) D requires P t perfrm wrk, (2) P expected D t cmpensate him r her fr thse services, and (3) D knew r shuld have knwn that P expected cmpensatin? Whether PAROL EVIDENCE can vary, add t, r cntradict a cntract If the cntract is fully integrated? (Parle Evidence Rule) If (1) the agreement is a cllateral ne; (2) it des nt cntradict express r implied prvisins f the written cntract; (3) ne f the parties wuld nt rdinarily be expected t embdy in the writing. Sme say there shuld als be (4) cmparisn rule: must cmpare the writing and the negtiatins befre determining whether they were in fact cvered. If the ral terms are incnsistent with the written agreement? Whether a writing is INTEGRATED If there is intent shwn in the face f the instrument (bject test)? Minrity f jurisdictins, including CA

6 If the parties actually intended it t be an integratin? These curts will cnsider any relevant evidence t determine whether the parties actually intended the writing as the final and cmplete expressin f their agreement. Leads t narrwer applicatin f the parl evidence rule and leads t the admissin f parl evidence. If the integratin clause des, in fact, express the genuine intentin f the parties t make the written cntract the cmplete and exclusive statement f their agreement? Whether the cntract is valid If the cntract bilateral? Des ne side hw pwer t enfrce and the ther nt? If the cntract seems unilateral, is there, maybe, an implied prmise? (Crdz apprach) Whether the OFFER is valid If the persn t whm the prmise r manifestatin is address knw r have reasn t knw that the persn making it des nt intend it as an expressin f his fixed purpse until he has given a further expressin f assent? If there been revcatin f the ffer (prvided it fllws prcedures) If the fferr die? If there been an unreasnable lapse f time? If there been a cunter-ffer? The fferr cannt mdify the cntract terms after perfrmance. If fferee changed the ffer? If fferee said n? If the ffers language make it terminate? If there definiteness in the prpsal? If price included in ffer? Price is a lynch pin; if it is left ut, curts get fidgety abut finding an ffer. If the ffer is fr a sale that can nly be dne nce, and the fferr sld the prperty befre fferee issued his acceptance? If the ffer is fr a sale that can nly be dne nce, and the prperty gets destryed?

7 If the ffer supprted by a binding cntract that the fferee s pwer f acceptance shall cntinue fr a stated time, and fferee rejects and then accepts? Offeree can d whatever she wants during the cntracted time. If acceptance f the fferr has materially changed his psitin in reliance n the cmmunicated rejectin (such as by selling r cntracting sell the subject matter f the ffer elsewhere), the subsequent acceptance will be inperative. If fferee has actual knwledge that fferr has dne sme act incnsistent with the cntinuance f the ffer? Whether there is acceptance If the ffer been accepted by authrized party? If the acceptance been cmmunicated t the fferr? If fferr repudiates befre he is aware f the fferee s acceptance, the ffer is dead. If the cntract indicates that ntice is by perfrmance, t kill the ffer, fferr has t repudiate befre fferee perfrmance. There needs t be separate cnsideratin in the cntract f the ffer t be irrevcable. If the fferee stipulate that the gds delivered are merely an accmmdatin f the rder? If the persn making the ffer expressly r impliedly intimates in his ffer that it will be sufficient t act n the prpsal withut cmmunicating acceptance f it t him, and fferee perfrms the cnditin? If, when giving infrmatin, claimant knws f ffer f reward fr the infrmatin? (If nt, there s n mutual assent). If acceptance is made in a manner and by a medium invited by an ffer? If s, as sn as put ut f the fferee s pssessin, withut regard t whether it ever reaches the fferr, the ffer is accepted. Abve is the mailbx rule. Acceptance is made by actin, even thugh it may nt be intended. If the cntract at the cnvenience f the fferr? (If s, there s autmatic acceptance unless ntice therwise.) If there been ntificatin f acceptance? If it a mirrr ffer? If there a cunter-ffer?

8 T accept with additins that dn t cunt as cunter-ffer, say I m nt rejecting it, I m trying t think abut it, can we talk abut smething different? The mre independent the subject matter, the mre likely it will be seen as an independent subject prpsal. If the acceptance n new terms? Whether a STANDARD FORM is binding If all f the agreement cntained in the frm and the ther party has signed the frm r appeared t assent t it by cnduct? If there n manifestatin f assent? If the party manifesting assent had an pprtunity t review the frm? If the terms uncnscinable? Nte: higher standard f care required fr custmers If it is an adhesin cntract? Whether the sale falls within the STATUTE OF FRAUDS If the item fr sale valued at mre than $500? If the prmise, by its terms, have t be dne within ne year? If it s less than a year, it desn t have t be dne in writing If it a prmise made in cnsideratin fr marriage? If it a prmise t sell land? If it the prmise by an executr t pay fr the debts f the estate? If it a prmise t pay fr the debts f smene else? MYLEGS: Marriage Prmise that may nt be perfrmed within ne Year Land Executr Gds ver $500 Surety. Have the requirements f the statute been satisfied? YES N frmal barriers t enfrcement NO agreement is nt enfrceable unless ther grunds (waiver, admissin r estppel) can be established Under the statute f frauds, whether the cntract is enfrceable If it s an ral prmise fr smething that cannt pssible be dne in ne year? (unless als in writing) If it s an ral prmise t wrk fr tw years?

9 If it s an ral prmise fr smething that may, hwever remte, be dne within ne year? If the written agreement is in mre than ne dcument (that may be cnnected with ne anther either expressly r by internal evidence f subject-matter and ccasin)? If the cntract fails, but the party in-the-right wants t cntinue? If there is cmplete perfrmance? If there is n writing, but the gds are t be specially manufacturer fr buyer and can t be sld t anther and seller withut knwledge f refusal, has made a substantial beginning r cmmitment fr their prcurement? (This is an exceptin t the statute f frauds) Whether parties INTEND TO BE BOUND in the absence f a dcument executed by bth sides When there been an express reservatin f the right nt t be bund in the absence f a writing? When there been partial perfrmance f the cntract? When all the terms f the alleged cntract been agreed upn? When the agreement at issue the type f cntract that is usually cmmitted t writing? Despite evident intentin t be bund, s called agreements t agree have generally been held t be unenfrceable. UCC 2-204(3) breaks with the traditinal apprach. Is there evidence that the cntract was t set the stage fr the negtiatins f details? Did P rely n the cntract ther than basic inquiry csts? If there is parl evidence saying there was intent? Whether there is a MEETING OF THE MINDS When a mistake ccurs and A thinks ne thing and B things anther? In Peerless, Kieff thinks the prblem is defective cntract frmulatin, nt mistake. If the parties attach materially different meanings t their manifestatins and neither knws r has reasn t knw the meaning attached by the ther? Dctrine desn t apply if misunderstanding is thrugh the party s wn fault. If the prmise, r agreement, f the parties is certain and explicit, and their full intentin may be ascertained t a reasnable degree f certainty?

10 If bjective criteria are available that will establish an ambiguus term that is nt in the agreement itself, it can be fund in cmmercial practice r ther usage and custm. Whether all curts enfrce the cntract If are impermissible parties t the agreement? If there are impermissible defects in the bargaining prcess? If there are impermissible terms in the agreement? Whether a cntract is VOIDABLE If it is fr a necessary item t an infant? If necessaries are invlved, recvery is limited t unjust enrichment. If there is a statute against infant rule? If it deals with duties impsed n infant by law (i.e. marriage, child supprt)? If it is with a m.i. persn wh is unable t understand in a reasnable manner the nature and cnsequences f the transactin? Curts say that burden f prf rests n the persn asserting lack f capacity t establish the same by clear and cnvincing prf. If it is with a m.i. persn wh is unable t act in a reasnable manner in relatin t the transactin and the ther party has reasn t knw f his cnditin? If the cntract is made n fair terms and the ther party is withut knwledge f the mental illness r defect? If there is a guardian appinted t the m.i. persn? All 4, abve, are frm Restatement 2d If the m.i. persn can restre the ther party t her pre-cntractual psitin? If the item cntracted-fr is necessary fr the m.i.? If a persn taking part in a cntract is a bit drunk? If a persn engaging in a cntract is intxicated t such a degree that he was, at the time f the cntracting, incapable f exercising judgment, understanding the prpsed engagement, and f knwingly what he was abut when he entered int the cntract? Ratificatin is a fix fr a cntract that is vidable drunk guy sbers up and ratifies, s it s nw binding; same true fr infancy. Upn age f majrity, and upn sbering up, express disaffirmance gets the incmpetent ut, r the minrity ut.

11 Whether MISTAKE makes the cntract vidable If ne can shw by clear and cnvincing evidence either mutual mistake r a unilateral mistake f which the cntracting fficer had actual r cnstructive knwledge? Fr such mistakes, agencies are authrized t rescind the cntract r refrm the cntract s as t delete the times invlved in the mistake r t increase the price f the cntract price, as crrected, des nt exceed that f the next lwest acceptable bid under the riginal invitatin fr bids. If mistake f bth parties makes a material effect n the agreed exchange f perfrmance? If mistake is made by the party wh des nt bear the risk f mistake and the effect f the mistake is such that enfrcement f the cntract wuld be uncnscinable? If there is a mistake but it has n legal significance? If the cntract was fr smething materially different than what was being sld? Example: barren cw If mistake is made by the party wh des nt bear the risk f mistake and the ther party has reasn t knw f the mistake r his fault caused the mistake. If an errneus letter f admissins is sent? If the mutual mistake is in the frmulatin rather than the refrmatin f the cntract? Rather, the apprpriate remedy is rescissin rather than refrmatin f the cntract. Refrmatin is an equitable remedy. Refrmatin is designed t restre the efficacy f a writing which des nt reflect the earlier agreement f the parties, frequently ral, which they apparently intended t be reflected in the writing Mutual mistake in refrmatin refrm Mutual mistake in frmulatin rescissin If the mistake is material and prmpt ntice f errr is given? In the case f an errneus bid, is ne entitled t the equitable relief f rescissin If she can establish: (1) the mistake is material, (2) enfrcement wuld be uncnscinable, (3) the mistake did nt result frm vilatin f a psitive legal duty r frm culpable negligence, (4) the party t whm the bid is

12 submitted will nt be prejudiced except by the lss f his bargain, (5) prmpt ntice f errr is given? Whether FRAUD ccurs A statement frm a party having superir knwledge may be regarded as a statement f fact althugh it wuld be cnsidered as an pinin if the parties were dealing n equal terms. If there was an intentinal misrepresentatin f fact AND reasnably induced detrimental reliance? Cnstructive fraud is abve actual fraud. In rder t find cnstructive fraud, the parties must have duties t each ther (cnfidential trust relatinship). If there is suppressin f material circumstances within the knwledge f the vendee, and nt accessible t the vendr, is equivalent t fraud, and vitiates the cntract? If vendr remains silence abut circumstances? If silence may be cnstrued t mean that there s nthing the buyer shuld knw. Yu want t say smething like that s a great questin; find ut fr yurself." Yu can t cntract yurself ut f cnsequences f yur wn fraud. Whether there is DURESS If the party making the claim can prve deprivatin f his free will? If the party making the claim can prve that immediate pssessin f needful gds is threatened? If the party making the claim culd have btained the gds frm anther surce f supply? If there was n cntinuing cntract between P and D when D demands payment cupled with a threat t terminate an existing cntract? If D s threat is within D s legal rights?

13 Whether ILLEGALITY bars restitutin If denial f restitutin causes disprprtinate frfeiture, If P was excusably ignrant f factrs r f legislatin f a minr character, in the absence f which the prmise wuld be enfrceable, If P was nt equally in the wrng with the prmisr and P did nt engage in serius miscnduct and he withdraws frm the transactin befre the imprper purpse has been achieved? If a cntract is funded n an illegal cnsideratin? If a cntract is made fr the purpse f furthering any matter r thing prhibited by statute, r t aid r assist any party therein? If the illegality part is a minute part (such chabitatin)? in WI/ in IL In jurisdictins like WI, yu need t shw there s a lt mre ging n than the illegality; therwise, it s against p.p. & unenfrceable. Curts will find illegality, even if it s nt pleaded, when statute is brken. Whether failure t fulfill a CONDITION bars recvery If P fails t meet the cnditin fr which he agreed upn? If the cnditin is implied? If, thrugh the weighing methd, the curt finds cnditin nt fulfilled can be mitigated t avid ttal frfeiture? (Majrity) Whether a prmise is mutually dependent If parties intend perfrmance by ne t be cnditined upn perfrmance by the ther? If ne party des nt have t perfrm until after the ther party has perfrmed ( cnditin precedent ) If a cnditin which, if nt met by ne party, abrgates the ther party's bligatin t perfrm (cnditin subsequent) If the cnditins are t be met cncurrently (cnditin cncurrent). If there is n mentin abut dependency? If cntrary intentin t dependence clearly appears? Whether a cnditin may be nullified If the cnditin is deemed immaterial? If the parties intent is mutual perfrmance f a cnditin (i.e. cnditin precedent) and the first actr has nt yet acted? If yu the ther party s duty is cnditinal upn yur perfrmance, and yu have perfrmed?

14 Yu dn t need t perfrm, yu nly need t shw yu culd have fully perfrmed. Whether there has been SUBSTANTIAL PERFORMANCE When a prvisin is very imprtant, it is treated as a cnditin. When a prvisin is minr, it is treated as substantial perfrmance. If ne cmpletely has t replace the disputed gds? If perfrmance meets the essential purpse f the cntract? Factrs taken int cnsideratin: extent f the cntracted-fr benefits that the inncent party ahs received, the extent t which damages will be an adequate cmpensatin fr the breach, the extent t which a frfeiture will ccur if the dctrine is nt applied, and the extent t which the breach was wrngful r in bad faith. Whether a cntract is DIVISABLE If it is pssible t apprtin the party s perfrmances int matching r crrespnding parts that the parties treat as equivalents? If a cntract prvisin is very imprtant, payment fr the part perfrmance can be made if the cntract is divisible. If labrer renders substantial perfrmance but breach their emplyment cntract befre its terms are cmpleted? If the persn wh breaches des s willfully and this is the way cntracts f that type (real estate) are dne? Whether QUASI-CONTRACT is an ptin If the event (1) cnferring a benefit frm P t D (2) D appreciates benefit (3) D accepts and retains the benefit? If parties had n pprtunity t bargain, but the issues cncern survival? bligatin is impsed despite intent. When there is n cntract remedy and the utcme seems unfair, apply quasi-cntract analysis Whether IMPRACTABILITY r FRUSTRATION discharges perfrmance... If impracticability arises withut perfrmer s fault by the ccurrence f an event the nn-ccurrence f which was a basic assumptin n which the cntract was made? If language r circumstances indicate impracticability was an assumed pssibility upn cntract frmatin? If availability is nt impssible, but nly available at great csts? If the essential persn dies r becmes incapacitated?

15 If the prmisr dies r becmes incapacitated, but that persn s respnsibility may be delegated t a 3 rd party withut the ther party s cnsent? If the parties specify a particular surce f supply in the cntract and that surce fails, and bth parties assumed that the surce was exclusive, the seller emplyed all due measures t assure that the surce wuld perfrm, and the seller turned ver t the buyer any rights against the supplier crrespnding t the seller s claim f excuse? If market price at the time fr perfrmance has dramatically changed? If prmisr s cst f perfrmance dramatically exceeds the cntract price due t supervening events? If the subject matter f the cntract r the specified means fr perfrmance is destryed r becmes nnexistent after the cntract is entered int, withut fault f the prmisr? If middleman s surce f supply fails? If middleman s surce f supply fails and (1) the spruce f supply is shwn t have been cntemplated r assumed by the parties at the time f cntracting the exclusive surce f supply; and (2) the seller ahs taken all due measures t assure himself that the supply will nt fail? Frustratin: (rarely allwed defense) Requires (1) an event that frustrates the purpse f ne f the parties and the ccurrence f this even must be the basis n which bth parties entered int the cntract, (2) the frustratin must be ttal r nearly ttal, (3) The party wh asserts the defense must nt, expressly r impliedly, have assumed the risk f this ccurrence nr be guilty f cntributry fault. Accrding t Crdz, depending n whether yu imply a warranty r a cnditin decides wh wins. This is cnsistent with Crdz s willingness t imply duties f gd faith in Lady Duff and Alleghany If parties have allcated fr risk, curts will nt rewrite cntracts even when there is impracticability if the parties have cntracted fr the risk. Whether there is a DUTY f GOOD FAITH When mdifying a cntract? When discharging an agreement? When there is evidence that there was reliance n the cntinuatin brught abut by the prmisr, in terminating an at-will cntract? Whether the party has acted in GOOD FAITH If party evades the spirit f the bargain?

16 If the party lacks diligence and slacks ff? If there is willful rendering f imperfect perfrmance? If there is an abuse f pwer t specify terms? If there has been interference with r failure t cperate in the ther party s perfrmance? If D, in a reserved digressin case, cntinues prductin until cancellatin, even thugh there will be n prfit. If D, in a reserved digressin case, discntinues prductin befre cancellatin because there will be n prfit. If a party refuses t negtiate in respnse t changed circumstances. Mst curts say that neither cntract law nr the UCC impses a duty n the parties t negtiate in respnse t changed circumstances. If a cntract needs remedy and, (1) disadvantaged party prpses a mdificatin that wuld be enfrceable if accepted by the advantaged party; (2) the disadvantaged party didn t assume the risk f the unanticipated event by agreement r under the UCC 2-625(a), r therwise; (3) the cnclusin is blstered by what might be the imperatives f an emerging thery f relatinal law. Whether prmisr wes THIRD PARTY BENEFICIARY... If prmisee enters int a cntract with the purpse f having a gift cnferred upn a 3 rd party? 3 rd party = creditr beneficiary Incidental beneficiary = untended benefited 3 rd party. Creditr beneficiary = if a prmisee extracts frm the prmisr a prmise t render a perfrmance t 3 rd party because prmisee is indebted t 3 rd party. If the cntract is accepted, adpted, r acted upn by the 3 rd party? Majrity view: prmisr can rescind r mdify the 3 rd party cntract until this pint. The curt says that 3 rd party des nt have t be cnsulted fr mdificatin f the cntract. The restatement says that yu d have t be cnsulted if yu knw abut it and yu relied t yur detriment. If 3 rd party is a member f a class f peple intend t/expected t/suppsed t benefit frm the cntract (think: liability insurance).

17 When parties enter int cntract with intent t benefit 3 rd party? Whether a party may EXCULPATE frm cnsequences f negligence If, in a cmmercial transactin, they clearly and cnspicuusly set ut the purpse f the drafter? If it is attempted by a party wh is under a public duty entailing the exercise f care? Matter f pp. Example: cmmn carrier If the party is in a psitin f superir bargaining pwer? Example: hspital exacting a release frm an entering patient. If it exempts a party frm trt liability fr harm caused intentinally r recklessly? If the terms exempt a seller f a prduct frm his special trt liability fr physical harm t a user r cnsumer? If the cvenant prtects sme legitimate interests f the prmise and/r if it is reasnable in scpe? Curts tend t be mre favrably dispsed t thse cvenants which are ancillary t the sale f a business, because they re usually seen as prtective f the gd being sld, than t thse which restrict an emplyee s cmpetitive activities. Whether there has been breach Has P r D acted in bad faith? Has either party intentinally interfered with the ther party s ability t perfrm? Has either party unintentinally interfered with the ther party s ability t perfrm? REMEDIES Hw t remedy an INDEFINITE cntract: If it s t indefinite, it s nt a cntract, s smebdy gets t walk away. Sme curts say there s n such that as a cntract that is t indefinite; the curt will just fill in the gaps. Sme curts will cut away parts f the cntract and keep ther parts and cnsider the cntract definite. Hw t remedy an UNCONSCIONABLE cntract: Curt may refuse t enfrce Enfrce remainder w/ uncnscinable part. Thus, after striking an uncnscinable clause, a curt may then award damages fr breach f the cntract withut that clause.

18 Limit the applicatin f the uncnscinable clause s as t avid any uncnscinable result. (Aggrieved party is limited t defensive weapns). Damages may be recvered under a state s deceptive trade practice statute. Blue pencil jurisdictin: they can crss ut any wrds that they dn t like. Jurisdictin where they can rewrite: the curt can strike what they dn t like, and rewrite t make the cntract better. Whether an actin cunts as REPUDIATION If it is a vluntary act that disables the prmisr frm perfrming? If there is a psitive, uncnditinal refusal t perfrm as prmised in the cntract? If there is a mere expressin by the prmisr f dubts that he will be able t perfrm? Such expressins may, hwever, cnstitute a prspective inability t perfrm, permitting the ther party t suspend cunter perfrmance. If prvider annunces that services are nt needed? It is an immediate trigger f the ability f a prmise t sue fr damages. Efficiency (hlder s) Rule If ne party has t sit arund wasting resurces waiting fr an actual breach, the party may be able t sue fr repudiatin right away. One must prve that there is pprtunity cst. If the repudiating cnduct makes cntract s perfrmance impssible? If the repudiating party s cnduct creates the impssibility? If an insecure party demands, in writing, assurance f adequate perfrmance and des nt receive adequate assurance? Whether ANTICIPATORY BREACH is apprpriate Insistence n terms that are nt cntained in a cntract? If party t a cntract demands a perfrmance t which he has n right under the cntract, and states that unless his demand is cmplied with he will nt render his prmised perfrmance? Remedies fr breach f enfrceable bargain: Nn-breaching party may suspend perfrmance r cancel cntract Mnetary damages are preferred ver perfrmance (i.e. jail) Deterrence is NOT a primary bjective.

19 Limitatins: prvable lsses must be reasnably freseeable t D. P has t make all reasnable effrts t avid cnsequences f breach Respnses t Breaches: MATERIAL BREACH: A may (1) sue B fr damages resulting frm the breach but let the cntract cntinue, (2) terminate the cntract and sue B fr breach f the whle cntract ( ttal breach ) MINOR BREACH: A can sue B fr damages resulting frm the breach. Hwever, A cannt terminate the cntract. In fact, if A terminates the cntract, A will be in ttal breach, and B can sue A. Therefre, a decisin by A as t whether a breach by B is material r minr is fraught with danger, because if A guesses wrngly that the breach is material and terminates the cntract, A will end up wing substantial damages t B. Breaches f representatin: Yu culd argue that yu dn t have a duty t perfrm because yu re excused because f a failure f cnditin if yu ve already perfrmed, yu ve waived that cnditin. Yu can try t argue n frmatin, fraudulent inducement. Anther way t think f that is mistake. The best time this wrks is when the ther side knws yu re mistaken. Then, yu can als try unilateral mistake yu ve gt a great argument when yu can t find fault because the reasn yu re mistaken is because I caused yu t be mistaken. All mistake will d is get yu ut f yur bligatin yu dn t get t sue fr breach. Whether there has been mutual terminatin (DISCHARGE) If payment is tendered and accepted t discharge an un-liquidated debt r a disputed claim? If there has been accrd and satisfactin where: invlves an agreement t settle a claim fllwed by its perfrmance discharging the claim? Accrd a.k.a executry accrd. If there has been accrd and satisfactin invlving immediate discharge f a claim by a new cntract? A.k.a substituted cntract Usually the liquidatin f an un-liquidated claim r the existence f a gd faith dispute prvides cnsideratin. Whether D is liable fr PUNITIVE DAMAGES (a.k.a. exemplary damages ) If a trt accmpanies the breach? ( I m n it = GFY) If there is a blurring between criminal and private law? Example: rlling back the dmeter. Whether injured can sue fr CONSEQUENTIAL DAMAGES

20 If D culd reasnably fresee risk f harm t P? If D has duty t P and negligence is cause in fact creating extensive damage? Un-freseeability des nt necessarily insulate D frm liability. I the fact f lss and its amunt cannt be prved with reasnable certainty? Alternatives where expectancy is uncertain: prtectin f reliance interest where the aggrieved party cannt establish the lst expectancy interest with sufficient certainty, the aggrieved party is permitted t recver expenses f preparatin fr and f part perfrmance as well as ther freseeable expenses incurred in reliance upn the cntract. If d can shw that the cntract wuld have been a lsing prpsitin fr P, an apprpriate deductin will be made f the lss that was nt incurred. If P is unable t use D s prmised perfrmance, either because D failed t perfrm r because perfrmance did nt cnfrm t the cntract, and lsses are freseeable, cause in fact, and there is prf with reasnable certainty and the requirements f damage mitigatin. If P des nt attempt t mitigate the damages? If P attempts t educate the cntracting party abut freseeable lsses? If at the time the cntract was made, the seller had reasn t fresee that the cnsequential damages were the prbable result f breach? Hadley v. Baxendale: Under the rule f H v. B, special r cnsequential damages (as ppsed t general damages that s bviusly result frm a breach that all cntracting parties are deemed t have cntemplated them) will nly be awarded if they were in the parties cntemplatin, at the time f cntracting, as a prbable cnsequence f a breach f cntract. If the breach was f a specific perfrmance that was envisined when entering the cntract, where prvider culd have reasnably anticipated what happened as a result f breach? Hadley test: was it freseeable that late shipment wuld cause P t suffer damages? If lsses were freseeable t the breached but nt the breacher? If P wuld have lst had the cntract been enfrced? D pays P s investment (reliance damages) and then argues t reduce it by whatever he can shw that the buyer wuld have lst had the cntract been enfrced.

21 Whether LIQUID DAMAGES will be enfrced by the curt If (1) the injury caused by the breach is difficult r impssible t estimate accurately; (2) parties intend that the agreed payment be fr the lss, rather than as a deterrent t breach; (3) the stipulated amunt f damages is a reasnable estimate f the prbable cause? If the prvisin fixing damages fr breach cnstitute a reasnable mechanism fr estimating the cmpensatin which shuld be paid t satisfy any lss frm the breach? If damages wuld be (1) uncertain as t amunt and difficult f prf, and if (2) the cntract as a whle is nt s manifestly uncnscinable, unreasnable, and disprprtinate in amunt as t justify the cnclusin that it des nt express the true intentin f the parties, and if (3) the cntract is cnsistent with the cnclusin that it was the intentin f the parties that damages in the amunt stated shuld fllw the breach theref? If (1) the fixed amunt is a reasnable frecast f just cmpensatin fr the harm that is caused by the breach, and (2) the harm caused by the breach is incapable r very difficult f accurate estimatin? That s the tw-prng test f liquidatin damages. Yu have t satisfy bth prngs. If the clause is uncnscinable s as t shck the cnscience? If the limitatin fails its essential purpse? Whether an INJUNCITON may be enfrced as an equitable remedy If withut such relief P wuld suffer irreparable harm? If there is a substantial prbability f success n the merits? If thers will be injured by the injunctin? If the injunctin is cnsistent with public interest? If the liquidated damages prvisin is valid and the cntract prvides that is the exclusive remedy? If there is n exclusive remedy clause and liquidated damages wuldn t be enugh fr the emplyer? The emplyer can t have bth, but if injunctin is enfrced, she can sue fr actual damages between the time f the breach and the date the injunctin was issued. If perfrmance desn t mean anything mre than ecnmics t P? If P says perfrmance means mre than just a quick mney fix? If D says 13 th Amendment, I dn t want t perfrm? Curt will say, s hire smene else t perfrm.

22 If specific perfrmance wuld require extensive supervisin? Pp issue. If (1) damages wn t make P whle, (2) damages will be inadequate, (3) there is n pssibility f accurately estimating the amunt f damages, (4) D can t get the prduct thrugh anther means? When a sale f gds leads t easily calculable damages? If an injunctin wuld unduly interfere with D s livelihd and inhibit free cmpetitin where there was n crrespnding injury t P ther than the lss f a cmpetitive edge?

23 UCC 2-104: Merchant means a persn wh deals in gds f the kind r therwise by his ccupatin hlds himself ut as having knwledge r skill peculiar t the practices r gds invlved in the transactin r t whm such knwledge r skill may be attributed by his emplyment f an agent r brker r ther intermediary wh by his ccupatin hlds himself ut as having such knwledge r skill (1)(b): Gd faith in the case f a merchant means hnesty in fact and the bservance f reasnable cmmercial standards f fair dealing in the trade : Gds means all things which are mvable at the time f identificatin t the cntract fr sale ther than the mney in which the price is t be paid, investment securities, and things in actin. Gds als include the unbrn yung f animals and grwing crps and ther identified things attached t realty as described in the sectin n gds t be severed frm realty. Gds must be bth existing and identifiable befre any interest in them can pass. Gds which are nt bth existing and identified are future gds. A purprted present sale f future gds r f any interest therein perates as a cntract t sell. There may be a sale f a part interest in existing identified gds. An undivided share in an identified bulk f fungible gds is sufficiently identified t be sld althugh the quantity f the bulk is nt determined. Any agreed prprtin f such a bulk r any quantity theref agreed upn by number, weight r ther measure may be the extent f the seller s interesting the bulk be sld t the buyer wh then becmes an wner in cmmn (1)(b): Gd faith in the case f a merchant means hnesty in fact and the bservance f reasnable cmmercial standards f fair dealing in the trade : Any claim r rights arising ut f an alleged breach can be discharged in whle r in part withut cnsideratin by written waiver r renunciatin signed and delivered by the aggrieved party (3): defines agreement as the bargain f the parties in fact as fund in their language r by implicatin frm ther circumstances including curse f dealing r usage f trade r curse f perfrmance : A cntract f the sale f minerals r the like r a structure r its material t be remved frm realty is a cntract f r the sale f gds within this Article if they are t be severed by the seller but until severance a purprted present sale theref which is nt effective as a transfer f an interest in land is effective nly as a cntract t sell. The Statute f Frauds is mdified thrugh the UCC 2-201: Except as therwise prvided a cntract fr the sale f gds fr the price f $500 r mre is nt enfrceable by way f actin r defense unless there is sme writing sufficient t indicate that a cntract fr sale has been made between the parties and signed by the party against whm enfrcement is sught r by his authrized agent r brker. A writing is nt insufficient because it mits r incrrectly states a term agreed upn but the cntract is nt enfrceable under this paragraph beynd the quantity f gds shwn in such writing. Between merchants if within a reasnable time in cnfirmatin f the cntract and sufficient against the sender is received and the party receiving it has reasn t knw its cntents, it satisfies the requirements f subsectin (1) against such party unless written ntice f bjectin t its cntents is given within 10 days after its receipt. A cntract which des nt satisfies the requirements f subsectin (1) but which is valid in ther respects is enfrceable If the gds are t be specially manufactured fr the buyer and culdn t be sld t smene else, if the buyer desn t warn f rejectin befre the

24 seller has made either a substantial beginning r cmmitments fr their prcurement, r If the party against whm enfrcement is sught admits in his pleading, testimny r therwise in curt that a cntract fr sale was made, but he cntract is nt enfrceable under this prvisin beynd the quantity f gds admitted; r with respect t gds fr which payment has been made and accepted r which have been received and accepted. Applies fr sale f gds wrth mre than $500. Rental desn t cunt (1996) Draft: repeals the statute f frauds, including the ne year clause fr cntracts fr the sale f gds. A mve t restre the statute f frauds has been made and the utcme is unclear Cmment: the required writing need nt cntain all the material terms f the cntract and such material terms as are stated need nt be precisely stated. All that is required is that the writing affrds a basis fr believing that the ffered ral evidence rests n a real transactin. It need nt indicate which party is buyer and which the seller. The nly term which must appear is the quantity term which need nt be accurately stated. The price, time and place f payment r delivery, the general quality f the gds, r any particular warranty may be mitted. A writing includes printing, typewriting, r any ther intentinal reductin t tangible frm. Curts have tended t be strict respecting the need fr a statement f quantity in the writing (39): The questin always is whether the symbl was executed r adpted by the party with present intentin t authenticate the writing (re: electrnic sig.) 2-202: If the additinal terms are such that the evidence wuld certainly have been included in the dcument in the view f the curt, then evidence f their alleged making must be kept frm the trier f fact (everything else will be allwed). *This differs frm Restatement 240(1)* Terms with respect t which the cnfirmatry memranda f the parties agree, r which are therwise set ut in a writing intended by the parties as a final expressin f their agreement with respect t the terms included in the writing, may nt be cntradicted by evidence f a prir agreement r f a cntempraneus ral agreement, but may be explained r supplemented (1) by curse f dealing r usage f trade; and (2) by evidence f cnsistent additinal terms unless the curt finds the writing was intended als as a cmplete and exclusive statement f the terms f the agreement (a) The terms which are nt cntradicted because f the finality f the writing may be explained r supplemented by curse f dealing r usage f trade r by curse f perfrmance : The affixing f a seal t a writing evidencing a cntract fr sale r an ffer t buy r sell gds des nt cnstitute the writing a sealed instrument and the law with respect t sealed instruments des nt apply t such a cntract r ffer (1)(b): Gd faith in the case f a merchant means hnesty in fact and the bservance f reasnable cmmercial standards f fair dealing in the trade : Every cntract r duty within this Act impses an bligatin f gd faith in its perfrmance r enfrcement (1): A cntract fr sale f gds may be made in any manner sufficient t shw agreement, including cnduct by bth parties which recgnizes the existence f such a cntract.

25 2-204: A cntract fr sale f gds maybe made in any manner sufficient t shw agreement, including cnduct by bth parties which recgnizes the existence f such a cntract. An agreement sufficient t cnstitute a cntract fr sale may be fund even thugh the mment f its making is undetermined. Even thugh ne r mre terms are left pen a cntract fr sale des nt fail fr indefiniteness if the parties have intended t make a cntract and there is a reasnably certain basis fr giving an apprpriate remedy (3) states the basic principle as t pen terms agreement underlying ther sectins: Even thugh ne r mre terms are left pen a cntract fr sale des nt fail fr indefiniteness if the parties have intended t make a cntract and there is a reasnably certain basis fr giving an apprpriate remedy Tw standards: (1) Parties must have intended t make a cntract. (2) There must be a reasnably certain basis fr giving an apprpriate remedy The agreement may be t indefinite t warrant specific perfrmance but nt mney damages, r, as in Oglebay, the curt may, in the exercise f its equitable jurisdictin, appint a mediatr and rder the parties t negtiate. Damages measured by lss expectatins may be unwarranted, but nt damages measured by csts reasnably incurred in reliance upn the ther s prmise. P shuld have a restitutin remedy fr the value f benefits cnferred n the defendant thrugh past perfrmance. UCC 2-204(3) Even thugh ne r mre terms are left pen a cntract fr sale des nt fail fr indefiniteness if the parties have intended t make a cntract and there is a reasnably certain basis fr giving an apprpriate remedy If a cntract is frmed under this sectin, and the acceptance cntains terms that vary the cntract, the fllwing terms are nt part f the cntract: (1) terms in the acceptance that materially vary the cntract, and (2) cnflicting terms : An ffer by merchant t buy r sell gds in a signed writing which by its terms gives assurance that it will be held pen is nt revcable, fr lack f cnsideratin, during the time stated r if n time is stated fr a reasnable time, but in n event may such perid f irrevcability fferee must be separately signed by the ffer : An ffer by a merchant t buy r sell gds in a signed writing which by its terms gives assurance that it will be held pen is nt revcable, fr lack f cnsideratin, during the time stated r if n time is stated fr a reasnable time, but in n event may such a perid f irrevcability exceed 3 mnths; but any such term f assurance n a frm supplied by the fferee must be separately signed by the fferr : Merchant s frm ffer is an ffer that stays pen. Yu dn t need cnsideratin because a merchant s firm ffer stays pen (a) during the time stated, (b) if n time stated, a reasnable time (never mre than 3 mnths). 2d 205: every cntract impses upn each party a duty f gd faith and fair delaying in its perfrmance and its enfrcement A curse f dealing is a sequence f previus cnduct between the parties t a particular agreement which is fairly t be regarded as establishing a cmmn basis f understanding fr interpreting their expressins and ther cnduct (b) 1996 Draft: If a cnsumer manifests assent t a standard frm, a term cntained in the frm which the cnsumer culd nt reasnably have expected is nt part f the cntract unless the cnsumer expressly agrees t it (2): A lawful agreement by either the seller r buyer fr exclusive dealing in the kind f gds cncerned impse unless therwise agreed an bligatin by the seller t use best effrts t supply the gds and by the buyer t use best effrts t prmte their sale. >> implies mutuality

26 2-206: An rder r ther ffer t buy gds fr prmpt r current shipment shall be cnstrued as inviting acceptance either by a prmpt prmise t ship r by the prmpt r current shipment f cnfrming r nn-cnfrming gds, but such a shipment f nncnfrming gds des nt cnstitute an acceptance if the seller seasnably ntifies the buyer that the shipment is ffered nly as an accmmdatin t the buyer : There are three ways t find a cntract: (1) ral agreement with cnfirmatin memranda, (2) writings which d nt cntain identical terms, but cnstitute a seasnable agreement, and (3) cnduct f parties recgnizing an existence f a cntract : A definite and seasnable expressin f acceptance r a written cnfirmatin which is sent within a reasnable time perates as an acceptance even thugh it states terms additinal t r different frm thse ffered r agreed upn, unless acceptance is expressly made cnditinal n assent t the additinal r different terms. The additinal terms are t be cnstrued as prpsals fr additin t the cntract. Between merchants such terms becme part f the cntract unless: (1) the ffer expressly limits the acceptance t the terms f the ffer; (b) they materially alter it, r (c) ntificatin f bjectin t them has already been given r is given within a reasnable time after ntice f them is received. Cnduct by bth parties which recgnizes the existence f a cntract is sufficient t establish a cntract fr sale althugh the writings f the parties d nt therwise establish a cntract. In such case the terms f the particular cntract cnsists f thse terms n which the writings f the parties agree, tgether with any supplementary terms incrprated under any ther prvisins f this act. This is intended t eliminate the mirrr image rule f cmmn law. In the future, d I want the mirrr image rule t apply, r d I want a mre cmmn law, like the UCC, t apply? 2-207(2): deals with hw we view additinal terms in the battle f the frms. This sectin says, the additinal terms are t be cnstrued as prpsals. Then, it cntinues with stuff abut whether the additinal terms materially alter (such as warranty, and disclaimer warranty, r the agreement t g t arbitratin). Yu dn t get t that part f 2-207(2) if yu dn t get past the merchant part f the clause, because it says, between merchants. If yu re nt a merchant, the additinal terms are just prpsals. A merchant is a DIGOTeK and sells t the BIOCOB (Buyer in the rdinary curse f business) (1) Any curse f perfrmance accepted r acquiesced in withut bjectin shall be relevant t determine the meaning f the agreement : An agreement mdifying a cntract fr the sale f gds needs n cnsideratin t be binding. Hwever, such mdificatin btained by extrtin withut a legitimate cmmercial reasn is unenfrceable (must be in gd faith) (1). A party s ability t mdify an agreement is limited nly by Article Tw s general bligatin f gd faith In determining whether a particular mdificatin was btained in gd faith, a curt must make tw distinct inquiries: whether the party s cnduct is cnsistent with reasnable cmmercial standards f fair dealing in the trade, and whether the parties were in fact mtivated t seek mdificatin by an hnest desire t cmpensate fr cmmercial exigencies; UCC Yu dn t need t find cnsideratin. Yu need t find bth (1) cnsistent with reasnable standard f fair dealing and (2) cnsistent with desire t cmpensate fr cmmercial exigencies : Fr the sale f gds, the assignments f cntractual rights are presumptively unless therwise agreed r unless the assignment wuld materially change the duty f the ther party r increase materially the burden r risk impsed n him by his cntract.